Inquiry is pointless - intelligence is always open to interpretation
By John Keegan
(Filed: 03/02/2004)
The Government is facing demands for yet another investigation of the part played by the intelligence services in leading Britain to join the United States in the Iraq war. Two questions should be asked about such demands. The first is about the usefulness of intelligence in general to the inception and conduct of military operations. The second, more difficult to answer, is what specifically such an investigation might reveal.
The usefulness of military intelligence has a very mixed history. I say that with confidence, having recently published a long study, Intelligence In War, which set out to answer the question: how useful is intelligence? It consists of a number of case studies of intelligence operations from more than 100 years of military history chosen because evidence was available and clear-cut.
The studies yielded very varied conclusions. Among the most striking were that even the possession of perfect intelligence may not avert defeat. In May 1941, the British, having intercepted and deciphered the complete German plan for the airborne invasion of Crete, including date, time, place, strength, methods and aims, were still unable to mount an effective defence and lost the island to a weaker force.
Excellent intelligence may, contrarily, appear to have been the key to victory, but closer inspection reveals that other factors were more important. At Midway in June 1942, the American Navy had again correctly identified the Japanese intentions for the operation and its date, location and timing; but, when action was joined, it was accidental factors that won the battle. In practice, the Japanese were winning the battle until the very last moment.
Usually, however, intelligence does not provide unequivocal answers, but only indications, which require imagination to interpret correctly. Interpretation inevitably leads to disagreements among the intelligence officers concerned. Before Midway, the most important naval battle ever fought, the heads of the naval plans and communication departments in Washington were at open war over interpretation.
An even more striking example of disagreements, bearing directly on the current Iraq controversy, was over intelligence of German secret weapons. A strange leak, the Oslo report, had warned the British in 1940 that Hitler was developing pilotless aircraft and rockets. It was ignored until, in 1943, reports from inside occupied Europe referred to the subject again.
A committee was set up, chaired by Duncan Sandys, Winston Churchill's son-in-law. Its findings were reviewed by another committee, of which Lord Cherwell, Churchill's scientific adviser, was the most important member. Cherwell absolutely denied the possibility of Germany having a rocket, and produced the scientific evidence to prove it. He persisted in his denial throughout 1943 until June 1944, when remains of a crashed V2 were brought to Britain from neutral Sweden. Shortly afterwards, the first operational V2 landed on London. Churchill was furious. "We've been caught napping," he burst out in Cabinet.
Worse than napping. More than 1,500 V2s landed on London, killing thousands, at a time when Hitler was also trying to develop a nuclear warhead. The whole pilotless weapons episode demonstrates that, even under threat of a supreme national crisis, and in the face of copious and convincing warnings, intelligence officers can disagree completely about the facts and some can be 100 per cent wrong.
Little or nothing about the past, even about such a well-known episode as the V-weapons, has influenced those who have so violently denounced the Government over the so-called September dossier. Its critics have taken the view throughout that intelligence can and ought to be perfect, and that the editing of the dossier's contents amounted to systematic falsification. Not only does that attitude reveal the critics' complete ignorance of how intelligence is collected and assessed, it also suggests that they have not bothered to read the dossier, included complete in the Hutton report.
Almost all the material in the dossier is uncontroversial, a well-substantiated survey of Iraq's development and use of chemical and biological weapons and missiles (based, as it happens, on the V2) before 1998. What strikes anyone who has taken the trouble to read other intelligence dossiers, which exist in thousands in the Public Record Office, is what a completely normal document it is. If anything, it is remarkable for the sobriety of its tone and the caution of its conclusions.
Only in Chapter 3 of Part I does it include false information - that Iraq had procured nuclear material from an African country - and claims about Iraqi capabilities, such as the range of some missiles, that are exaggerated. As to the first, that seems simply a mistake, based on what is now known to be a forged document; at least one mistake in a large intelligence assessment might be expected. The exaggerations are regrettable, but assessment is inherently relative. Intelligence officers deal in a balance of probabilities and must sometimes err on the wrong side.
Above all, it must be remembered that British intelligence was attempting to penetrate the mentality of a man and a regime which were not wholly rational. It now seems probable that most of Iraq's weapons of mass destruction had been destroyed in the early 1990s, either by the first UN inspection team (UNSCOM) or as a precautionary measure on Saddam's own orders. Saddam was, however, unwilling to admit to such a loss of power, because of the prestige his possession of WMD brought him in the region. His policy of disposing of his WMD while refusing to admit the disposal was completely illogical.
But then almost nothing in Saddam's megalomaniac world was logical. What logical ruler would deliberately provoke two disastrous wars, either of which might have been avoided by the practice of a little prudence?
Finally, what purpose would be served by a further assessment of the dossier? Any inquiry would shortly resolve into a semantic argument about the nature of text editing: a sentence here, a phrase there.
It is supremely ironic that the BBC is demanding such a semantic argument, when the trouble it has got itself into was caused precisely by its failure to undertake any sort of editing at all of an unscripted text by a reporter with a less than perfect reputation for reliability.
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Inelegant Lies
Making sense out of mullahs.
To underline one of my favorite themes, notice that Deputy Defense Secretary Paul Wolfowitz's arrival in Iraq last week was, as usual, welcomed by massive suicide bombings, this time in the north. At least sixty Kurds were killed in Irbil by simultaneous attacks on the two big political parties, and hundreds were injured, some of whom will likely die. This sort of message -- you come, we kill you and your allies -- is well understood in the Middle East, although not so well back here. Last time he was in Iraq, they tried to kill Wolfowitz, when he was unaccountably put in one of the terrorists' favorite target areas, the al Rasheed hotel in Baghdad.
Anyway, Agence France Presse quoted Mr. Tachlo Khodr Najmeddine, the official spokesman for the Patriotic Union of Kurdistan -- the attractively acronymned PUK -- as convinced that Iran was involved. "We (the two Kurdish groups) have a common enemy: the terrorists who come from Iran and other countries, and we must face them."
On January 29, our excellent General Ricardo Sanchez, the commander of Combined Joint Task Force 7, said that "al Qaeda's fingerprints have been here in Iraq (for months)." He said that their methods had been evident at least since the suicide attacks against the Italian carabinieri in Nassiriyah last November.
Apparently nobody thought to ask him from which planet the terrorists had entered Iraq, although Mr. Najmeddine had undoubtedly shared his concerns with the leader of Task Force 7. In any event, General Sanchez knows full well where the operations are staged, for he named Abu Musab Zarkawi as the ringleader, and Zarkawi has long worked out of Tehran (and briefly from Baghdad, according to Secretary of State Powell's presentation to the United Nations Security Council on the eve of Operation Iraqi Freedom).
Not that Iran limits itself to organizing suicide missions. The pattern is, in fact, distinctly multicultural: They send non-Iranians to blow themselves up, but their own people get easier duty. On February 2, an Iranian and an Afghan were arrested planting bombs in a major oil refinery in Baghdad. And, in darkest Africa: "An Iranian has been arrested by Nigerian police for taking photographs of what they say are strategic buildings in the capital, Abuja." Iranians -- including official diplomats -- have previously been caught taking pictures of Jewish community centers in London, and the New York City subway system. While Iranians are brilliant moviemakers, it is unlikely that these guys were planning to enter an artistic competition.
These are the gentle souls with whom our diplomats and a handful of their willing handmaidens in Congress wish to "improve relations." One can only imagine the negotiations that have already taken place, the only results of which have been broken Iranian promises regarding al Qaeda terrorists "held" in Iran and concerning the ongoing Iranian nuclear program. The mullahs are not models of consistency. Just the other day, President Mohammed Khatami delivered himself of a line worthy of George Orwell at his finest. "We have reached a deadlock with the Guardians Council regarding the qualifications of candidates" he was quoted by the official news agency, the student news agency and several other media outlets. But a few hours later his office produced the Orwellian masterpiece:
"In the official and quotable comments of the esteemed president, this sentence and comment does not exist." This sort of inelegant lie should be a warning to anyone who tries to understand Iran through the words of their spokesmen. You have to watch their feet, not their lips. Thus, for example, the pathetic charade over the upcoming elections -- a charade that has produced an incredible quantity of misreportage -- has been portrayed exactly as the mullahs want: as an important power struggle between "hard liners" and "reformers." The "hard liners" dissed several thousand would-be candidates for the February 20 parliamentary elections, including some sitting "reformers," and many of the parliamentarians have been protesting. On occasion, they have announced their resignations (although they are still there, debating and protesting).
If you ignore the rhetoric and just watch the behavior, you will see that it all signifies nothing, as the Iranian people know full well. Foreign journalists have been baffled by the near-total indifference of the populace to what the journalists see as a really big story, but their bafflement only bespeaks their own lack of understanding. There is no real power struggle, because all effective power is in the hands of the two main thugs: Supreme Leader Ali Khamenei and his henchman Akhbar Rafsanjani. The others, most decidedly including the esteemed president, do not matter at all. They hold no power, they can do nothing for the oppressed Iranian people, and the people know it. Recent polling in Tehran suggests that less than 15 percent of the electorate plans to go to the polls on election day, and even that number may be high.
The most likely explanation for the passionate protests is quite mundane: In a country reduced to economic misery, where workers are not paid for months on end, a government job is a miracle well worth fighting for. Has no one noticed that some 9,000 people signed up to run for a few hundred seats in the Majlis? Why such an enormous number? Because those are paying jobs, and paying jobs in Iran nowadays are hard to come by.
Despite the cheery words from Foggy Bottom and the eager appeasement from Capitol Hill, the Iranian regime is at war with us. The talk about "improved relations" has a double objective: to delay our support for democratic revolution in Iran, and to discourage the democratic revolutionaries b showing them that even the ferocious Bush administration is seeking a modus vivendi with the regime itself.
Our diplomats have it wrong. Sanchez and Najmeddine are the reliable sources. We will never get a firm grip on Iraq until the regime is changed in Tehran.
Faster, please.
http://www.nationalreview.com/ledeen/ledeen200402030840.asp
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The UN and the Jews
Anne Bayefsky
Anne Bayefsky, a new contributor, is a professor of political science at York University in Toronto and an adjunct professor at Columbia University Law School.
the assistance of Brazil) tried to include a reference to anti-Semitism in the International Convention on the Elimination of All Forms of Racial Discrimination, the effort failed, thanks to the Soviet Union, its satellites, and its Arab allies, who among other things insisted that anti-Semitism was a question not of race but of religion. When the UN finally got around to adopting its first declaration on religious intolerance in 1981, anti-Semitism was again excluded. By 2003, the lead sponsor of the perennial resolution on religious tolerance, Ireland, insisted with a straight face that anti-Semitism should be omitted because it was more properly considered under the rubric of race. Against this unrelievedly dark record of omission, a few glimmers of progress have appeared over the past decade. After tumultuous multi-week negotiations in 1994, the U.S. persuaded the UN Commission on Human Rights to adopt its first resolution including the word "anti-Semitism" in over 30 years--and only the second in its history. Even so, a full third of the commission's members refused to support it, and eight years later, with the U.S. temporarily voted off the commission, it returned to form, withdrawing its short-lived concern and excising anti-Semitism from the racism resolution. Last year, after drawn-out negotiations, the General Assembly did manage to permit references to anti-Semitism in two resolutions on racism, one of them without effect or follow-up and the second in the full knowledge that other elements in the resolution would force the United States and Israel to vote against it.
By the summer of 2001, at the now notorious UN World Conference Against Racism in Durban, South Africa, the notion that Jews were the target of any special animus, now or in the past, was being treated with simple contempt. References to anti-Semitism were removed from almost all parts of the final declaration. Not only was there no mention of the Holocaust in the conference's demand that those who incite racial hatred should be brought to justice, but absent as well was any mention of the need to study the Nazi war against the Jews. The only references to the Holocaust and anti-Semitism appeared as part of a "Middle East package" in which Palestinians were declared to be victims of Israeli racism.
And what of today, as we experience the world's most virulent outbreak of anti-Semitic deeds and speech in over a half-century? Concern over this phenomenon did make an appearance, however fleetingly, in two reports issued in 2003 by the UN special investigator on racism, Doudou Di?ne. In one of them, his comment consisted of a short, vague reference to the controversy surrounding the recent broadcast on Egyptian television of a series based on the infamous czarist forgery, The Protocols of the Elders of Zion. Unnamed "authorities of the countries concerned," Di?ne wrote, were in the process of sending him further information on this "allegation" of anti-Semitism.
In a second report published last year, this one addressed to the General Assembly itself, Di?ne offered a seemingly new approach, promising to turn his attention to the "clear resurgence of anti-Semitism." But his only action to date has been to take note of the obvious fact that attacks on Jews are "on the rise in Europe, Central Asia, and North America." Entirely absent from his statements has been any mention of the boiling cauldron of Middle Eastern anti-Semitism--a silence all the more remarkable in light of the multiple examples of "Islamophobia" that he has documented with alarm.
In this connection, it is worth noting that, though Di?ne is now required to produce annual reports "on discrimination against Muslims and Arab peoples in various parts of the world," no report dedicated to the problem of anti-Semitism has ever been produced by any organ of the UN. This indifference to anti-Semitism has been mirrored by the UN's growing refusal over the decades to support the principle of self-determination for the Jewish people--that is, Zionism. The irony, of course, is that the UN General Assembly was very much present at the creation of the state of Israel, having endorsed the postwar partition plan for British-ruled Palestine. But much has changed since 1948.
In general, and in the abstract, the UN has remained committed to the ideal of self-governing nation-states. As one characteristic declaration of the General Assembly puts it, "All peoples have a right to self-determination; by virtue of that right they freely determine their political status and freely pursue their economic, social, and cultural development." Indeed, over the years, the UN has developed and extended the principles of self-determination, which are now taken to entail not just the basic right of political independence but guarantees of non-interference by other nations, a realm of domestic jurisdiction and national sovereignty, and the preservation of historical, cultural, and religious particularities.
Where the UN has fallen markedly short is in the application of these principles, and in no case more strikingly than that of Israel. The key factor
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has been the changing composition of the international body. From the late 1940's to the mid-60's, the original membership more than doubled. Of the 67 new states joining in this period, 80 percent attached themselves to the Group of 77--the UN's third-world caucus, made up of many former European colonies--and some 40 percent had Muslim majorities. By 1977, the five members of the Arab League who helped to found the UN had been joined by all sixteen others. To this radicalized and often Soviet-influenced contingent, self-determination was invoked in UN circles not as a general principle but as a tool to wield against the West, especially the U.S. and its increasingly stalwart ally, Israel. Self-determination was a right of the oppressed, to be exerted against oppressors. In the prosecution of this cause, the weight assigned to historical claims was itself selective and discriminatory: those who rejected the UN's 1947 partition plan for Palestine were labeled the oppressed, while Jewish victims, from Palestine to Europe, were characterized as the oppressors. By this means has the UN negotiated the passage from omission to commission. Not only has it consistently failed to appreciate or even to acknowledge the state of Israel's preservation of Jewish independence and identity, it has become the loudest and most determined foe of the Zionist project. In 1975 the UN General Assembly passed its notorious resolution explicitly equating Zionism with racism. Ever since then, and notwithstanding the formal repeal of the resolution in 1991, the repellent imagery of Israelis as racists has been a staple of UN rhetoric. Today, diplomats from Arab and Muslim states--states that effectively rendered themselves Judenrein in the late 1940's--refer to Israel's new security fence against terrorism as an "apartheid wall." Palestinian towns and villages are called "Bantustans." And the Palestinian Marwan Barghouti, on trial in Israel for acts of terrorism, is labeled another Nelson Mandela.
To judge by the UN's official pronouncements, the Jewish state is the world's archetypal humanrights villain. Over the past 40 years, almost 30 percent of the resolutions passed by the UN Commission on Human Rights to condemn specific states have been directed at Israel, which also has the distinction of being the only state to which the commission has devoted an entire item on its agenda. As for the General Assembly, of the ten emergency special sessions it has convened in its history, six have focused on the purported misdeeds of Israel, from the Suez campaign of 1956 to the current dis-
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pute over the security fence. The abuse of this process has gone so far that the tenth session, originally convened in 1997, has become a permanent, open-ended forum; it has now been "reconvened" twelve times, most recently this past December. Israel has been singled out in other ways as well. In the UN bureaucracy, it is the only country with its own standing inter-state monitor: the Special Committee to Investigate Israeli Practices Affecting the Human Rights of the Palestinian People and Other Arabs of the Occupied Territories. Established as long ago as 1968, this body has issued annual reports ever since. Another committee, on the Exercise of the Inalienable Rights of the Palestinian People, was established in 1975, on the same day the General Assembly passed the Zionism-is-racism resolution. Still going strong almost three decades later, with 24 members and 25 observers, it too summarizes its findings every year while at the same time sponsoring a full program of meetings, conferences, and publications. In 2003 alone, the UN bureaucracy generated 22 reports and formal notes on "conditions of Palestinian and other Arab citizens living under Israeli occupation." The UN's response to an Israeli military incursion into the West Bank town of Jenin in April 2002 typifies the organization's treatment of the Jewish state. At the time, even a report by Yasir Arafat's Fatah movement recognized Jenin as "the suicider's capital," a place where organizations like Hamas and Islamic Jihad had sought shelter, among civilians, for their ongoing murderous operations. But the UN saved its venom for Israel's armed response to the violence directed against its citizens. Terje Roed- Larsen, the organization's special coordinator for the Middle East peace process, described the scene after Israel's strike--a strike expressly designed to limit civilian casualties--as "horrific beyond belief." Peter Hansen, commissioner general of the UN Relief and Works Agency, called it "a human catastrophe that had few parallels in recent history." A UN press release was headlined, "End the horror in the camps." Only much later, in mid-summer, did the UN Secretary General release a report on Jenin noting that the Palestinian death toll from this "massacre" was 52, approximately 35 of whom were armed combatants.
Israel's policies are, of course, fair game for legitimate criticism. But the UN's outrage is grossly selective, especially when one considers the record of any number of other member nations. In 2003, the General Assembly passed eighteen resolutions that singled out Israel for criticism; humanWhat that something is has become too clear to deny: over the past several decades, the UN has fashioned itself into perhaps the foremost global platform for anti-Semitism. The leading agent of this process, needless to say, has been the Palestine Liberation Organization (PLO), Israel's supposed "partner in peace," in close cooperation with Arab and Muslim members of the UN. In presentations to the UN Commission on Human Rights, Palestinian delegates have repeatedly devised new variations on the medieval blood libel, accusing the Israelis of such things as needing to kill Arabs for the proper observance of Yom Kippur and of injecting Palestinian children with HIV-positive blood.
By Palestinians and others, Israelis are now routinely condemned with Nazi terminology--current resolutions speak of the "Judaization" of Jerusalem-- or are themselves likened to Nazis. As the Algerian representative recently observed, in an especially memorable outburst:
Kristallnacht repeats itself daily. . . . Israeli soldiers are the true disciples of Goebbels and of Himmler, who strip Palestinian prisoners and inscribe numbers on their bodies. . . . Must we wait in silence until new death camps are built. . . . The Israeli war machine has been trying for five decades to arrive at a final solution. The nadir of the UN's record in these matters was the conference on racism and xenophobia held under its auspices in Durban in 2001. It would have been bad enough if (as we have already seen) the event had simply refused to acknowledge the growing problem of anti-Semitism; but it went much farther, turning into a festival of hatred against the Jews. Though the Durban conference concluded with a formal meeting of government representatives, its first half consisted of an NGO forum--a meeting, that is, of the various nongovernmental organizations purportedly devoted to combating racism. NGO's play a key role in the UN system, with some of them receiving formal status, but here Jews have once again been singled out for discriminatory treatment.
Over the years, attempts have been made to impede groups like Hadassah, the Simon Wiesenthal Center, and the International Association of Jewish Lawyers and Jurists from obtaining official accreditation. Durban gave some idea why. At the conference's NGO forum, the Arab Lawyer's Union freely distributed books containing cartoons of swastika-festooned Israelis and fanged, hooked-nosed Jews, blood dripping from their hands. Another best-selling title was The Prorights situations in the rest of the world drew only four country-specific resolutions. Nor, despite serious and well-documented charges of abuse reported to the UN over the years from, among others, the organization's own special rapporteurs, has any resolution of the UN Commission on Human Rights ever been directed at China, Syria, Bahrain, Egypt, Saudi Arabia, the United Arab Emirates, Yemen, Pakistan, Malaysia, Mali, or Zimbabwe. Consider the case of Sudan. This past year, members of the UN Commission on Human Rights had before them the report of their own special rapporteur on torture, which described the articles of the Sudanese penal code mandating "cross amputation"--the amputation of the right hand and the left foot--for armed robbery and, for other offenses, "death by hanging crucifixion." The report also took note of various cases in which Sudanese women had been stoned to death for adultery after trials conducted in a language they did not understand and in which they were denied legal representation.
The response to these gruesome findings? On behalf of the Organization of the Islamic Conference, Pakistan vehemently objected to a draft resolution condemning this sort of "cruel, inhuman, and degrading treatment or punishment," declaring such views "an offense to all Muslim countries." The resolution went down to defeat; for good measure, the commission terminated the tenyear- old position of rapporteur on human rights for the long-suffering people of Sudan.
The justifications that are typically given for turning a blind eye to human-rights violations in 95 percent of UN states are predictable enough. In 2003, teaming up to defeat a resolution condemning Russian behavior in Chechnya, Syria and China called it "interference in the internal affairs of that country." India said that "every state had the right to protect its citizens from terrorism." When it came to reproving Zimbabwe, South Africa objected to "naming and shaming," while Libya, complaining that the resolution was "an attempt to make the commission a forum to settle differences between countries," declared its preference for "the language of cooperation and dialogue." How is it, one might wonder, that such reservations never give the UN a moment's pause when it comes to the organization's relentlessly one-sided prosecution of Israel--a democratic state with an independent judiciary that, unlike all these others, can point to a long and distinguished record of respect for human rights? The demonization of Israel would seem to be about something else entirely.
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tocols of the Elders of Zion. Hundreds of flyers were distributed with a picture of Hitler and the words, "What if I had won? The good thing--there would be no Israel." Appeals to the conference's secretarygeneral, UN High Commissioner for HumanRights Mary Robinson, to demand the removal of this anti-Semitic literature went unheeded. The NGO forum at Durban did sponsor a single event on anti-Semitism, but it was disrupted by an angry mob of protesters, shouting, "You are killers! You are killers!" A news conference the following day, called by a broad range of national and international Jewish organizations, was similarly interrupted, this time for the benefit of the TV cameras, and was finally called off.
As the NGO forum drew to a close, the Jewish caucus, like all the other caucuses, submitted provisions for the conference's final document. The group's contribution stated that anti-Semitism could take many forms, including the equation of Zionism with racism, the attempt to de-legitimize the self-determination of the Jewish people, and the targeting of Jews throughout the world for violence because of their support of Israel. When the time finally came for a vote, a representative of the World Council of Churches called for the deletion of this language; the Jewish caucus was alone in voting against the motion. Jewish NGO's from all over the world walked out in protest, even as representatives of Amnesty International, Human Rights Watch, and the Lawyers Committee on Human Rights stood by in silence. No statement proposed by any other caucus was deleted. Did the UN system learn a lesson from this fiasco? To the contrary. Just months after Durban, Vladimir Petrovsky, director-general of the UN office in Geneva, declared the conference "the most extensive and momentous expression of the global resolve to combat the scourge of racism and intolerance in all its forms and at all levels." Commissioner Mary Robinson agreed, telling a subsequent UN human-rights gathering that the Durban conference's International Youth Summit--a part of the NGO forum at which young Jews from all over the world were jeered, heckled, and threatened, before eventually walking out--had been "an inspiring event."
In the two years since Durban, whose outrages were quickly overshadowed by the events of 9/11, anti-Semitism voiced under the auspices of the UN has taken a new and, arguably, even more dangerous turn. In every UN body, Arab and Muslim states have opposed any effort to give meaningful definition to the notion of terrorism, largely because of its obvious implications for the Palestinian "uprising." The UN Counter Terrorism Committee, set up by the Security Council in the wake of 9/11, has yet to identify publicly a single terrorist organization or state sponsor of terrorism.Worse still, organs of the UN have taken to glorifying terrorist violence against Israeli targets. In 2002, John Dugard, a special rapporteur for the Commission on Human Rights, could barely contain his admiration for the murderous enemies of the Jewish state: "The Palestinian response is equally tough: while suicide bombers have created terror in the Israeli heartland, militarized groups armed with rifles, mortars, and Kassam-2 rockets confront the IDF [Israeli army] with new determination, daring, and success."
In 2003, as Israel suffered successive waves of attack against its civilians, the commission itself put forward a resolution affirming the legitimacy of suicide bombing, declaring that movements against "foreign occupation and for self-determination" were entitled to "all available means, including armed struggle." The only members to vote against the resolution were Australia, Germany, Peru, Canada, and the United States. (France and the United Kingdom abstained.) The American and Canadian delegates protested that the resolution was "contrary to the very concept of human rights" and "deeply repugnant to the commission's core values." It carried by a wide margin. It is no accident that a UN apparatus which, for decades, has ignored anti-Semitism and distorted beyond recognition the idea of Zionism would seek to isolate Israel from the global community. At the UN, Israelis and Jews are, by definition, oppressors, as are the nations and organizations that rally to their cause. The energy with which these hateful views are expressed has ebbed and flowed over time, but there is no reason to think that the underlying reality will change anytime soon.
To appreciate the dimensions of this tragedy one need only recall the lofty promises of the UN Charter, ratified in the hope of securing the "equal rights of men and women and of nations large and small." By this plain and unambiguous standard, anti-Semitism is not some necessary if unfortunate by-product of multilateral progress, as some would suggest. It is an out-and-out malignancy, and it has compromised the integrity of the entire organism. Perhaps it is time to stop holding seminars and conferences on whether the UN glass is half-full or half-empty. The contents of the glass have been poisoned.
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China set to flood the world with chips
By Macabe Keliher
TAIPEI - Last September Morris Chang alarmed the semiconductor industry when he said there would be an industrywide recession in 2005 and that the Chinese chip makers would cause it. "I stand by that statement. China's capacity in 2005 will have a big impact," the chairman of the world's largest made-to-order integrated-circuit and computer-chip manufacturer, Taiwan Semiconductor Manufacturing Co (TSMC), has told Asia Times Online.
That's something of an understatement. In pursuit of a policy that will make China nearly self-reliant in semiconductor manufacturing, and enable the country to source its own chips domestically for everything from tape recorders to computers, Beijing is funding and bankrolling what is being called reckless expansion in semiconductor fabrication plants, or "fabs". Through low-interest loans, tax exemptions and even direct investment, the Beijing government has set China on pace to provide the world with 20 percent or more of its capacity next year in the made-to-order chip industry, or foundry.
This volume is enough, industrialists and analysts say, to cause a serious glut that will drive down prices, slash profit margins and suppress return on equity. From a robust 20-30 percent growth this year to more than US$200 billion, the global semiconductor industry will register only 10 percent or less in 2005, according to Chang, and some analysts are predicting negative growth. "Just as in any industry governed by supply and demand, an increase in capacity anywhere in the world will have effects," said Chang, interviewed at a TSMC investors' conference here last Thursday.
When Beijing designated the semiconductor industry as one of China's pillars of economic growth, the industry was sure to take off, and what has occurred is unprecedented on any scale. From virtually nothing a few years ago, Chinese fabs hold about 9 percent of the foundry market's capacity today, and they are expected to produce 15 percent of the industry's chips by the end of the year, and well over 20 percent in 2005.
China is sitting on a mountain of wafers
Take, for example, Semiconductor Manufacturing International Corp, China's largest manufacturer. It currently has three eight-inch-wafer fabs in Shanghai that will increase capacity by 70 percent this year. Add a recently purchased Tianjin eight-inch fab, a 12-inch fab in Beijing that is expected to go online in the fourth quarter, and two more 12-inch fabs scheduled for 2005 and 2006, and China is sitting on a mountain of wafers that the market is just not ready to absorb.
"The overcapacity will be massive. And taken with a modest fall in global chip sales, there will be a rough landing for the industry," said Rick Hsu, semiconductor analyst at Nomura Securities.
As part of the government's strategy, Chinese foundries aim to supply the local market. Currently almost 80 percent of China's chip demand, which totaled about $22 billion last year, is being met by foreign makers. The Chinese government hopes to raise the country's self-sufficiency above 50 percent in the coming years, and has invested heavily in a few of the companies. Advanced Semiconductor Manufacturing Corp, for instance, is 62 percent government-owned, and Grace Semiconductor Manufacturing Corp is partially held by the son of former Chinese president Jiang Zemin.
In addition to owning majority stakes in some of the semiconductor companies, China offers tax incentives to semiconductor investments. Chip makers pay no income tax in the first five years of investment and then pay half of the regular tax in the next five years. The standard income-tax rate is 15 percent, well below that of many developed countries, including Taiwan's 25 percent. These tax incentives, along with lower land and labor costs, give Chinese companies a cost advantage. They can manufacture about 10 percent more cheaply than their competitors elsewhere, according to Andrew Lu at Citigroup Smith Barney.
With these political and financial incentives, analysts estimate that Chinese companies will increase their wafer-manufacturing capacity by nearly 60 percent by the second half of this year. Such a trend is only expected to intensify until Chinese makers can fill more than 50 percent of the domestic demand, possibly regardless of whether there is new demand or not.
Analysts warn that the local market is expected to grow less than 20 percent this year and about 13 percent next year - a rate slower than that of the manufacturing capacity. "There is a demand shift, not the creation of demand," said Hsu, at Nomura. "Foundries are unlikely to see a return to the days of ROEs [returns on equity] in the 20 percent range."
China's mass chip production to hurt others
Although Chang said Taiwan Semiconductor Manufacturing's 2003 fourth-quarter return on equity was 19.9 percent, and that he expects more than 20 percent by this June 30, all of those high numbers may drop when Chinese companies begin mass production in their new fabs, probably some time next year. Nomura estimates that TSMC will recover to only 18 percent return on equity in 2005, the year in which the chip cycle is expected to peak. TSMC's ROE peak was in 1995, at 45 percent.
"The pricing power of Taiwan's foundries in this sector should just about disappear," said Hsu. He estimates that China foundries sell at about 20-30 percent lower than the industry as a whole, and 40-50 percent lower than TSMC.
The industry is in the midst of an upswing now, to be sure. Arizona-based Semico Research Corp forecasts 26.8 percent revenue growth for the global semiconductor industry this year, and 39.7 percent growth for the foundries. And last week TSMC announced record revenues for fourth-quarter sales in 2003, an increase of 5.3 percent over the third quarter, and Chang said he expects single-digit growth in the first quarter of 2004, monumental in an industry that peaks in December. Profits for TSMC in the fourth quarter rose sixfold over 2002.
The problem is, the industry overall is expanding. TSMC is raising its capital expenditure by 60 percent this year to $2 billion, and United Microelectronics Corp, the world's second-largest foundry, is expected to increase its capital expenditure fourfold, from $350 million to $1.5 billion. The Chinese companies are planning initial public offerings, either in Hong Kong or on the United States Nasdaq in the next year or so. China's largest manufacturer, Semiconductor Manufacturing International Corp, for instance, will float a $1 billion initial public offering (IPO) in the first half of this year. Grace is also scheduling a $3 billion IPO, probably next year.
"Enjoy it while it's great," said Dan Hutcheson, president of US-based VLSI Research Inc, "but expect a decline on the order of 30 percent to start in late 2005."
(Copyright 2004 Asia Times Online Co, Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)
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Korea: Naming names of Japan's collaborators
By David Scofield
SEOUL - The planned departure of the United States Forces in Korea from Seoul and the Yongsan area is prompting more than just the expected rush of eager real-estate speculators eyeing this US$3 billion, 255-hectare island of relative green embedded in a sea of concrete within one of the world's most congested cities.
The effective repatriation, in two or three years, of Yongsan - real estate formerly held by the Chinese and for the first half of the 20th century by the Japanese - is prompting soul-searching about the past and a possible, belated re-evaluation of Korea's recent history, especially under Japanese occupation. Alleged collaborators with the Japanese are expected to be named this summer by an umbrella group of civil organizations.
Complicity and collaboration are among the issues surfacing in what is sure to be a complicated, painful and, some say, politically motivated reassessment - general elections approach in less than three months. The umbrella group, the Korean Issues Research Center, has already published the names of hundreds of groups and businesses it says collaborated with the Japanese. And this summer it promises to go even further and name individuals who, it alleges, sided with the Japanese to the detriment of the Korean people. Some big names may well come to the fore, but probably few surprises.
The return in a few years of the property occupied by the US military forces, and before that the Japanese and the Chinese, has reminded the nation of its colonial history. But the return of this property to South Korea and the linked revisitation of Korea's colonial past has the potential either to help the nation come to terms with its recent history, or to undermine a better understanding of history, fueling political vendettas and exacerbating strains in an already divided nation.
The Japanese officially colonized the Korean Peninsula from 1910 to the end of World War II in 1945, though their presence was felt at least a decade before that. The Yongsan (Dragon Mountain) area at the foot of Namsan in the center of Seoul was the headquarters of the Imperial Army - the subsequent occupation of the area by the US military has encouraged obvious comparison parallels to that time. Indeed, the headquarters of the US Forces in Korea (USFK) and the US 8th Army are currently housed in Japanese occupation-era buildings on Yongsan Main Post, which served similar functions for the Japanese army.
The forthcoming so-called "liberation" of the Yongsan area has encouraged at least one civil organization to question Korean complicity with the Japanese colonizers, and it plans to name the names of collaborators and those it considers to have been complicit in the occupation. Some of those are believed to be members of families now highly placed in Korean government, business and culture.
New facts emerge about the rape of Korea
Korea's official history is careful to define the time of Japanese colonization as a brutal rape of Korea and its people, which is largely true. However, other facts recently unearthed and largely unreconciled to the textbook history suggest there is more to the story.
At the end of the 19th century, Korea was languishing under the ineffectual rule of the later Joseon (Yi) Dynasty. Long a Chinese vassal state, by the end of the 19th century Korea's leadership had made few attempts to develop the country, preferring instead to turtle up and hope the world would pass on by. The monarch remained in Seoul, and had little interaction with any forces outside the capital. The remainder of the peninsula was ruled by the landed class called Yangban who maintained many Koreans as indentured servants, landless peasants.
Japan's colonization of Korea came on the heels of its own Meiji restoration. Korea's first Japanese governor, Ito Hirobumi, himself one of the original architects of the Meiji restoration and an acolyte of Prussian-style bureaucracy, installed a strong system of centralized bureaucracy on the peninsula, while quietly buying off and removing the Yangban overlords.
The Japanese mobilized the country's resources in order to develop the infrastructure of Korea - not out of altruism, but in the knowledge that a well-functioning Korea could better serve the needs of Japan, initially through agriculture and then through industry. The "industrialist mindset" and a belief in the efficacy of large business groups maintained by strong government-business relationships got its start during this period and propelled Korea forward in the second half of the century.
Japan's quest to exploit both the nation's human and material resource capital included a comprehensive mapping campaign that cost about 20 percent of the country's total revenue for eight years from 1910-18. This was followed by land redistribution and the eviction of landowners who lacked written deeds, appropriation of lands for Japanese farmers, incorporation of property rights, abolition of slavery, introduction of a Western-style legal code, the development of Korea's logistical infrastructure and the formation of a strong, integrated bureaucracy.
The Japanese style of colonialism was very hands-on - Japan truly wanted to integrate Korea into Japan, in terms of infrastructure and bureaucracy. According to Korean scholar Michael Robinson of Indiana University, Korea's bureaucracy grew from 10,000 members in 1910 to 87,552 in 1937, about 40 percent of them ethnic Koreans.
Many Koreans worked in police, army, government
The Japanese ruled with an iron fist. Dissension was quelled swiftly, and often brutally. But the large numbers of Koreans serving in the police, the military and the central government have yet to be fully accepted or incorporated into Korea's official history. Indeed, studies by people such as Atul Kohli of Princeton University indicate that the application rate for the police force was 20 Koreans for each vacancy, since such positions with the new authority were much sought after and prized in the colonized country.
World War II ended and the Japanese left, but the Japanese infrastructure, ideas and bureaucratic "software" remained. Indeed, the United States occupied the same ground the Japanese had just vacated, made use of the law-enforcement and government bureaucracy created by Tokyo, and left many Koreans in the same positions they had held during the Japanese colonial period.
After the withdrawal of Japanese forces, there were calls for committees to identify and expose those who were Japanese sympathizers and collaborators, thus beginning the process of reconciliation. This idea - Korean truth commissions, in effect - was dropped by Korea's first president Rhee Syngman (better known in the West as Syngman Rhee) as being too divisive.
The idea of examining complicity and collaboration was scrapped and the country marched forward, never fully confronting or reconciling itself to its colonial past, and to those who benefited from it - some understandably out of need, others out of greed. Among the questions never asked: Were the economically hard-pressed Koreans who joined the Japanese-run police force wicked collaborators who harmed their Korean compatriots, or were they ordinary people who needed jobs and helped to maintain law and order in the colonial period?
Fast-forward 50 years and the forthcoming removal of the US forces from the geo-historical nexus of Yongsan, Dragon Mountain, headquarters of both the Japanese Imperial Army and the US forces in Korea.
The timetable calls for the USFK in Seoul and the bases to the north of Seoul along the Demilitarized Zone (DMZ) to close, and thousands of US soldiers and others to be relocated to two hubs - Osan-Pyongtaek and Daegu-Busan - to be completed by the end of 2006. The United States has stationed about 37,000 soldiers in South Korea and an equal number of dependants, contractors and others. The exact number to be moved is not definite at this time and it is not known how many will be removed from the country altogether. South Korea, however, is now saying that it might take until late 2007 for the government to comply with its contractual obligations - paying the cost of removal and relocation of USFK - an estimated $3 billion to $4 billion.
Exposing 'collaborators' a possible vendetta
A civic group called the Korean Issues Research Center is ready to name names this summer and expose those it says were complicit with the Japanese. It claims it has wide popular support, saying it has independently raised $500,000 for the project. The group's tone and mission suggest a vendetta, but it is possible that making public more information about the past may promote the thoughtful re-evaluation of history and help shape a more positive future. This could mean better relations with Japan and other countries in the region, and better chances of conflict resolution.
The implication of many families, including some very powerful and prominent figures in contemporary Korean society, seems likely. Punishment appears out of the question, but public humiliation could be severe.
The scope and the sheer numbers of those involved might prompt South Korea to take another, more balanced and objective look at its recent history and its place in the region. This would be a vitally important step forward for a nation that has declared its intention to pursue an independent path of foreign policy and diplomacy.
A more comprehensive and realistic public recognition of Korea's history with Japan, for example, would allow Seoul to formulate policy and strategies based on less nationalistically charged interpretations of history. It would be a crucial first step in South Korea's maturation into a developed democratic nation and a positive lesson for its regional neighbors, especially Japan, that have yet to come to terms with their own recent histories. Incomplete and distorted understandings of history by all parties fuel contemporary conflicts, such as the Korea-Japan disputes over Tokdo Island and the naming of the East Sea/Sea of Japan - among others.
But given the timing of the complicity-exposure project and the politically charged atmosphere of the nation - less than three months to go before general elections - it is very possible that the long-overdue historical reassessment may become nothing more than a political weapon. This could be wielded to undermine and discredit political foes, as the names of families sympathetic to the Japanese are leaked to the press prior to official publication of The Dictionary of Pro-Japanese Koreans, slated for 2006.
Given that President Roh Moo-hyun's progressives largely support the exposure initiative, while members of the conservative Grand National Party do not, the destructive politicization of what could be a constructive national historical exercise appears a distinct possibility.
Seoul feared exposure project too divisive
The complicity-exposure initiative is spearheaded by the Korean Issues Research Center, an overarching organization of civic groups, many of them Internet-based. It has been functioning since 1991 and it studies Korea-Japan issues. The exposure campaign was first envisaged as a five-year project, from 2002-06. The government initially agreed to fund it, but conservative politicians got nervous when they realized the politically divisive nature of the campaign and the embarrassment to key conservative and other public figures.
In order to compensate for the loss of promised government funding, the Korean Issues Research Center then launched a funding appeal on January 8. It received considerable support from like-minded progressive online newspapers such as Hankyoreh, Oh My News, Voice of the People, The Whanin Period and many more. The umbrella organization and its cause - naming names - also received exposure through a television news special on MBC (Munhwa Broadcasting Co).
The research center had predicted that it would take until this summer to raise the $500,000 for its complicity-exposure project, but says it secured the money in only 11 days. Most donors, it says, were average citizens or "netizens", though it is possible that large donors contributed.
In late 2002, the organization first began publishing the names of alleged collaborators, and the first installments identified what it called 500 pro-Japanese groups and places of business in Korea. This was not too damaging, since it only identified organizations, not individuals. Names will come later.
In 2003 the group published the names of 400 pro-Japanese Korea groups in China. This coming summer it plans to publish the names of pro-Japanese groups in the provinces outside of Seoul, in more detail than contained in its previous efforts. The publication of individual names - The Dictionary of Pro-Japanese Koreans - will be completed in 2006, the same year the US forces are to withdraw from Seoul and the DMZ to large base hubs in the south.
David Scofield is a lecturer at the Graduate Institute of Peace Studies, Kyung Hee University, Seoul.
(Copyright 2004 Asia Times Online Co, Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)
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South Korean Mayor Hangs Himself
By JAE-SUK YOO
ASSOCIATED PRESS
SEOUL, South Korea (AP) - The mayor of South Korea's second-largest city, who is on trial for allegedly taking $85,000 in bribes, hanged himself in his jail cell, a prison official said Wednesday.
Busan Mayor Ahn Sang-young, 64, was found early Wednesday hanging from a rope made with undershirts, the official at Busan Detention House said on customary condition of anonymity.
Ahn had been arrested in October on charges of taking $85,500 in bribes from a construction company in return for business favors. He was in the prison's medical ward because of digestive problems.
Prosecutors had sought a 10-year prison sentence.
Ahn was elected to his second four-year term as mayor of Busan in 2002. Prosecutors were also investigating allegations that he took $28,500 from another business.

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Failed Suicide Bomber Lost Will to Die
By JUDITH INGRAM
ASSOCIATED PRESS
MOSCOW (AP) - A Chechen suicide bomber who was arrested after failing to detonate an explosive in a Moscow cafe last summer said in an interview published Tuesday that she had lost her will to die and purposely tried to attract attention to herself.
Zarema Muzhakhoyeva, 23, was detained in July after her strange behavior attracted the attention of security guards at Mon Cafe, a restaurant just off a main avenue leading to the Kremlin. A bomb disposal expert, Maj. Georgy Trofimov, was killed trying to defuse the explosive that she had carried in a bag and left on the sidewalk.
The arrest sent jitters through the Russian capital, still shaken by a double suicide-bombing at a Moscow rock concert five days earlier that killed the two attackers and 14 other people.
Muzhakhoyeva faces charges of terrorism, conspiracy to murder two or more people, and illegal possession and transfer of weapons, the Izvestia daily reported. If convicted, she could spend 25 years in prison.
Muzhakhoyeva told Izvestia that she hopes for acquittal under a law lifting criminal responsibility from people who warn of a terrorist act or its preparation. She described doing her best to attract attention to herself without provoking punishment from the controllers she was sure were following her - and who, she was convinced, could detonate her bomb by remote control.
"Briefly, I decided to surrender with the bomb and hide from everyone in prison - even though they could get me in prison, too," Muzhakhoyeva was quoted as saying.
Suicide bombings are a relatively new phenomenon in Russia, which has been fighting an insurgency in Chechnya for most of the last decade. The most flamboyant surviving rebel leader, Shamil Basayev, is credited with creating a special battalion of female bombers known as black widows, who have gained notoriety with attacks including the seizure of a Moscow theater in fall 2002.
The Federal Security Service, the main successor to the Soviet-era KGB and the agency leading Russia's fight against terrorism, maintains that many of the female bombers are drugged or otherwise forced into their work. But Chechens and human rights advocates argue that the bombers are women whose husbands, fathers and children have been killed and feel they have nothing more to lose.
Muzhakhoyeva saw herself in that light.
Abandoned by her mother at 10 months and widowed after her much older husband was shot in a business dispute, Muzhakhoyeva told Izvestia that she turned to terrorism as a way out of shame. She had stolen jewelry from her grandparents and sold it in hopes of being able to start a new life with her young daughter, whom her husband's family had placed with another relative, but the family prevented her from taking the child and then froze her out.
Muzhakhoyeva said she then turned to terrorism, having heard that suicide bombers' families were rewarded $1,000. She spent time in rebel training camps in the mountains of southern Chechnya, and then was assigned to blow up a bus in Mozdok, the Russian military headquarters in the Caucasus region. When the targeted bus turned up, however, she could not bring herself to connect the wires of the bomb she carried, she said.
"At that moment I realized that I could not blow myself up," she recalled.
Another woman completed the job a few days later, killing herself and 15 others.
In spite of her failure, Muzhakhoyeva's handlers sent her to Moscow. She lived in a safe house outside the capital with a male guard, a male explosives expert and two women, who blew themselves up at the rock concert just a few days after arriving.
On the day the cafe attack was planned, the two men drove her to the square in front of St. Basil's Cathedral, at the end of Red Square, and instructed her to flag down a car to get to the cafe. She stared at the driver in the rearview mirror and muttered verses from the Quran, hoping he would turn her in to the police. But he dropped her off at her destination and sped away.
Muzhakhoyeva walked up to the plate glass front of the cafe and stuck out her tongue at men inside, then smirked. A trio of men came out, asked for her passport and asked what was in her bag.
"An explosive," she said. Within minutes, she was in police custody.
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World Court Refuses to Disqualify Judge
By ARTHUR MAX
ASSOCIATED PRESS
AMSTERDAM, Netherlands (AP) - The World Court rejected an Israeli request to disqualify an Egyptian judge from the tribunal, which will rule on the legality of the security barrier Israel is building in Palestinian territories, the court said Tuesday.
Israel wanted Judge Nabil Elaraby to step down, citing his earlier job as legal adviser to the Egyptian government and what it described as a prejudicial newspaper interview in 2001.
By a vote of 13-1, the court ruled on Friday that Elaraby would remain on the bench. Only the court is empowered to excuse one of its judges. The Hague-based panel has 15 judges; Elaraby didn't vote.
The International Court of Justice, the highest U.N. judicial body, was asked in December by the General Assembly to give a nonbinding opinion on "the legal consequences" of the 440-mile complex of walls and fences on Palestinian land, some of which slice deeply into the West Bank.
Israel says the barrier is meant to stop suicide bombers. The Palestinians say it is an attempt to redraw borders and has already disrupted tens of thousands of lives.
As a government legal adviser, Elaraby sat across from the Israelis at the negotiating table on several occasions, dating back to the successful Camp David agreements in 1978 that led to the Egypt-Israel peace treaty. He was elected to the court in October 2001 for a nine-year term.
The court ruled Elaraby's previous activities "were performed in his capacity of a diplomatic representative of his country, most of them many years before" the current case arose.
It said Elaraby had said nothing about the barrier in the newspaper interview, and "could not be regarded as having previously taken part in the case in any capacity." No details about the interview were immediately available.
Israel raised no objection to the Jordanian judge on the panel, Awn Shawkat al-Khasawneh, even though Jordan was expected to take the lead in arguing against the security barrier.
U.S. judge Thomas Buergenthal dissented, arguing that the opinions Elaraby expressed in the interview create "the appearance of bias incompatible with the fair administration of justice" in the barrier case. Elaraby gave the interview three months before joining the world court.
The ruling cited a 1971 precedent when South Africa objected to three judges sitting in a case concerning South Africa's presence in Namibia. They also were allowed to remain.
The nationality of the 15 judges on the tribunal reflect the geographic composition of the United Nations. The court can't include more than one judge of any nationality. Judges are elected to nine-year terms by the United Nations General Assembly and Security Council.
In a separate statement, the court said 44 countries have submitted depositions in the case, from Japan to Brazil and the tiny Pacific island of Palau, which has only 20,000 people.
European countries outnumbered Arab states, with the United States and Cuba also weighing in. Palestine was allowed to submit an argument even though it is not a recognized state. The court also accepted submissions from the 22-member Arab League and the 57-member Organization of Islamic Conference before Friday's deadline.
At the United Nations, Nasser Al-Kidwa, the Palestinian U.N. observer, accused Israel of violating the rules of the court by commenting on submissions before the court makes them public. The Palestinian envoy also accused Isreal of "straightforward lies" and "spinning the facts."
Specifically, he accused Israel of releasing the names and number of countries supporting their position and characterizing the position of groups of countries like the European Union.
"All of this is illegal because it violates the rules of the court that prohibit talking about the content of the statements before they are made public by the court, and they also are not true," Al-Kidwa said.

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Deals Signed for Caspian Sea Oil Pipeline
By AIDA SULTANOVA
ASSOCIATED PRESS
BAKU, Azerbaijan (AP) - Government officials Tuesday signed financing agreements for a $3.6 billion pipeline to transport Caspian Sea oil to Western markets.
The 1,100-mile pipeline is to extend from Baku, across Georgia and to the Turkish port of Ceyhan, where the oil can be loaded onto tankers for Western markets.
Representatives from the three countries and a group of creditors signed the agreements.
The project is seen as key for the United States and other Western markets to reduce their dependence on Middle Eastern oil.
Azerbaijan President Ilham Aliev hailed the pipeline as having a stabilizing effect on the region. The pipeline is already 15 percent completed and could begin operation in 2005.
"The Baku-Tiblisi-Ceyhan project will promote the development of regional cooperation, and closer ties," he said.
The pipeline is expected to supply international markets with 1 million barrels a day of Caspian Sea oil by the end of the decade.
The pipeline consortium, headed by BP oil company, came up with $1 billion of the funding, while the remainder of the cost comes from export-import banks and credits from the European Bank for Reconstruction and Development and the International Finance Corporation.
Azerbaijan's state oil company along with Statoil, Eni, Total, Unocal and ConocoPhillip are also involved in the project.

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Annan: U.S. OKs U.N. Iraq Election Plan
By TERENCE HUNT
ASSOCIATED PRESS
WASHINGTON (AP) -
A United Nations team heading to Iraq to help break the impasse over creating a transitional government is expecting White House support for its recommendations, U.N. Secretary-General Kofi Annan said Tuesday.
Annan said a U.N. team would go to Iraq soon to seek a consensus on a transitional Iraqi government, which would take power by June 30. "We are going to help them work out this problem and hopefully they will come to some consensus and agreement as to how to move forward," Annan said after meeting with President Bush in the Oval Office.
The Bush administration's plans to hand over Iraq were thrown into turmoil when Iraq's most prominent Shiite leader, Ayatollah Ali al-Husseini al-Sistani, demanded direct elections to choose a provisional assembly. The United States wants to stick with a plan agreed upon on Nov. 15, which calls for caucuses to choose the body.
The White House said it is open to some changes but the June 30 deadline is firm. The administration is anxious to settle the problem as Bush heads into a presidential election campaign and faces a steadily rising U.S. death toll in Iraq.
Annan said the U.S.-led Coalition Provisional Authority, headed by L. Paul Bremer, and the Iraqi Governing Council had indicated "they would accept the conclusions of the U.N. team. So we do have a chance to help break the impasse which exists at the moment and move forward."
He said all parties agree sovereignty should be handed over to Iraq as soon as possible. "The date of 30 June has been suggested, but there is some disagreement as to the mechanism for establishing the provisional government," Annan said.
"And I hope this team I'm sending in will be able to play a role, getting the Iraqis to understand that if they could come to some consensus and some agreement on how to establish that government, they're halfway there," he said.
Annan said the U.N. group was authorized by the coalition authority and the governing council "to review whether elections are possible or not, help with the design of the caucus system or propose other options."
The secretary-general declined to criticize the United States for going to war based on what now appears to be faulty intelligence that had asserted Iraq had weapons of mass destruction. Bush is about to announce an investigation to look into the Iraq error and other intelligence failures. Annan said he would await the results of the U.S. investigation before commenting.
Underlying the U.N. team's mission are concerns about their safety. Annan ordered U.N. international staff to leave Iraq in October following two bombings at U.N. headquarters and a spate of attacks targeting humanitarian organizations.
"Obviously we are concerned about security," Annan told reporters in the White House driveway as he left. "I cannot say that we today have a secure environment in Iraq for the U.N. to resume its normal activities, but I hope that day will come."
Bush spoke briefly. "I'm upbeat and optimistic about the future of the world," he said.
Bush said he and Annan had discussed ways to ensure the "Iraqi people can be free and the country stable and prosperous and an example of democracy in the Middle East. And the United Nations does have a vital role there, and I look forward to working with the secretary-general to achieve that."

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White House Promises Libya 'Good Faith'
By BARRY SCHWEID
ASSOCIATED PRESS
WASHINGTON (AP) - The Bush administration told Libya on Tuesday it was still branded a supporter of terrorism but said some restrictions on commerce may be lifted if Moammar Gadhafi's country keeps scrapping its weapons programs.
American and British officials will meet jointly on Friday with Libyans in London on "how to move ahead" toward improved relations, State Department spokesman Richard Boucher said.
Libya is in the midst of dismantling its nuclear and missile programs and has shipped thousands of pounds of parts to the United States for storage and conversion.
"As the Libyan government takes these essential steps and demonstrates its seriousness, good faith will be returned," Boucher said.
At the London meeting, plans will be made for another onsite survey by U.S. and British experts, and more weapons parts may be sent to the United States, Boucher said.
"We've seen a couple of weeks of action on the removal and verification," Boucher said. "It's appropriate to have a political dialogue on what lies ahead.
"The situation with Libya has fundamentally changed."
Many of the curbs on dealing with Libya stem from its having been designated by the State Department as one of the seven nations that support terrorism.
"For many years we have said that countries like Libya need to take steps to end their relationships with terrorism," Boucher said. "If they had, we would have taken them off."
Last month, a U.S. cargo plane carrying some 55,000 pounds of nuclear and missile parts arrived in Tennessee from Libya.
Earlier, documents involving the country's nuclear program arrived by plane, and the White House said Libya had begun destroying chemical munitions.
Gadhafi, seeking a lifting of U.S. economic sanctions, promised on Dec. 19 to end development of nuclear and all other weapons of mass destruction.
"The world can see that Col. Gadhafi is keeping his commitment," White House spokesman Scott McClellan said last week. "As they take these essential steps and demonstrate its seriousness, its good faith will be returned and Libya can regain a secure and respected place among the nations."
However, he said the shipments were "only the beginning of the elimination of Libya's weapons."

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Calif. Utility Abandons Plan to Ship Nuclear Reactor Vessel Around Tip of South America
By Seth Hettena Associated Press Writer
Published: Feb 3, 2004
SAN DIEGO (AP) - A California utility on Tuesday abandoned a plan to send a 600-ton decommissioned reactor vessel on what would have been the longest voyage ever for a piece of nuclear waste in U.S. history.
Southern California Edison blamed delays that came as it finalized plans to send the vessel on a 15,500-mile trip around the icy tip of South America to a nuclear graveyard in Barnwell, S.C., spokesman Ray Golden said.
The vessel will remain safely in place, wrapped in tons of steel and concrete, at the San Onofre Nuclear Generating Station next to the ocean between Los Angeles and San Diego. Edison will explore other options to get the vessel to the East Coast, including a domestic route.
Edison has spent several million dollars getting the vessel ready for shipment and seeking approval from more than a dozen government agencies since 1999.
Plans had called for a truck to carry the decommissioned reactor vessel down a 17-mile stretch of the California coast. A barge was to take the vessel on a 90-day voyage past Cape Horn to the East Coast. Finally, a train was to haul the vessel to South Carolina.
"It's good news from an environmental perspective because the reactor's much safer in our opinion ... on site," said Tom Clements, senior adviser to Greenpeace International's nuclear campaign. "Plus, it avoids a diplomatic confrontation with Chile and Argentina."
Critics said the company was risking disaster by sailing the vessel past Cape Horn, one of the world's most dangerous nautical passages. Daniel Hirsch, president of the Committee to Bridge the Gap, a Los Angeles-based nuclear watchdog group, called it "the worst possible route from a safety standpoint you can come up with."
Countries along the route had raised objections, most notably Argentina, where a federal court last month banned the vessel from entering its 200-mile territorial waters.
Continued delays would mean the passage around Cape Horn would occur closer to South America's winter, when the weather often turns treacherous, Golden said. The utility also had to avoid the March breeding season of the western snowy plover, a threatened species that nests on the beaches where the reactor would have passed.
Edison's record-breaking route wasn't its first choice. A plan to get the vessel to South Carolina by rail and barge fell apart when Edison failed to reach terms with a railroad company. Then the Panama Canal refused to waive new weight limits for nuclear waste.
The decommissioned reactor generated enough power for 450,000 homes from 1968 until it was shut down in 1992. Modifications that could have kept it running were deemed too expensive.
On the Net:
Southern California Edison: http://www.edison.com/
Transportation Department: www.dot.gov
Nuclear Regulatory Commission: www.nrc.gov
Barnwell disposal site: http://www.chemnuclear.com/
AP-ES-02-03-04 2234EST
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Ricin Probe Starts With Effort to Identify if Mail Carried Substance to Senate

By Curt Anderson Associated Press Writer
Published: Feb 3, 2004
WASHINGTON (AP) - Federal investigators sought Tuesday to identify a letter or package that may have carried ricin into a leading senator's mailroom as new links emerged between letters containing the deadly poison found in South Carolina and a White House mail facility.
A senior law enforcement official, speaking on condition of anonymity, said investigators had established strong links between the South Carolina and White House letters. What remained unclear, the official said, was whether those letters were connected to the substance found in the office of Senate Majority Leader Bill Frist.
The letter found in October in South Carolina - signed by someone who called himself "Fallen Angel" - and one found in November at a facility that processes mail for the White House both complained about new regulations requiring certain amounts of rest for truck drivers, the official said. Both also contained ricin.
Investigators said Tuesday they had not identified the letter or package that might have carried ricin into Frist's office. An initial check found no extortion, threat or complaint letter in the office, said a second law enforcement source also speaking on condition of anonymity.
There also were no indications of involvement by foreign terrorists such as al-Qaida, which the FBI has said is interested in using ricin in an attack.
The powdery white substance was found on a device that opens mail in Frist's office, authorities said. The area in the Tennessee senator's office was quarantined and stacks of mail were to be checked.
"We have an open mind about the source of this," said Terrance Gainer, chief of the U.S. Capitol Police, which is conducting the probe along with the FBI and the multi-agency joint terrorism task force based at the FBI's Washington field office.
Gainer said authorities were interviewing members of Frist's staff and others who had access to the mailroom. Although it was considered remotely possible that the ricin was physically planted in Frist's office, investigators were concentrating on mail as the likely source.
The package found in a South Carolina mail facility had a letter claiming that the author could make more ricin and a threat to "start dumping" large quantities if his demands to stop the new trucking regulations were not met. The FBI offered a $100,000 reward in that case but no arrests have been made.
The White House letter, intercepted in November, contained nearly identical language but such weak amounts of ricin that it was not deemed a major health threat, said another law enforcement official. That letter's existence was not publicly disclosed before Tuesday.
In Connecticut, a coarse gray powder found at one of the state's postal facilities tested negative for ricin, said Mark Saunders, spokesman for the U.S. Postal Service. The material was leaking out of a letter addressed to the Republican National Committee.
Saunders said officials also are testing a material found at a Washington, D.C., postal facility on V Street "out of an abundance of caution." Government mail is sorted at that facility, which was closed Tuesday.
At the Capitol, an FBI hazardous materials team was helping police isolate and examine the mail in Frist's office and will in the coming days collect other unopened mail in the Capitol complex, said FBI spokeswoman Debra Weierman. The FBI also will do forensic analysis at its laboratory in Quantico, Va., checking evidence for fingerprints, fibers, hair and the like.
The latest discovery comes as the FBI continues its 28-month-old investigation into the fall 2001 mailings of anthrax-laced letters to Senate and news media offices. Five people died and 17 were injured in that attack.
The anthrax investigation is ongoing, FBI spokesman Ed Cogswell said.
Twenty-eight FBI agents and 12 postal inspectors are assigned full-time to the anthrax case, which has involved some 5,000 interviews and issuance of 4,000 subpoenas.
The FBI has focused recently on an intensive scientific effort to determine how the spores were made and narrow the possibilities in terms of who had the means to make them. Authorities have many theories on who might be responsible, ranging from al-Qaida terrorists to a disgruntled scientist to an expert who sought to expose U.S. vulnerabilities to bioweapons attacks.
The one man named a "person of interest" by authorities, Dr. Steven J. Hatfill, says he has nothing to do with the attacks and has sued the government for publicly identifying him. Hatfill is a former government scientist and bioweapons expert who once worked at the Army Medical Research Institute of Infections Diseases at Fort Detrick, Md.
Hatfill has been under constant surveillance for months but has not been charged.
Michael Greenberger, director of the University of Maryland's Center for Health and Homeland Security and a former Justice Department official under President Clinton, said the Hatfill episode should change the way the federal authorities handle such investigations.
"The only lesson that's been learned is that they will be very slow to announce they have a person of interest," Greenberger said. "They won't make their investigation so public."
AP-ES-02-03-04 2224EST
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Halliburton Subsidiary Wins British Military Contract
The Associated Press
Published: Feb 3, 2004
LONDON (AP) - Britain's government on Tuesday awarded a Halliburton Co. subsidiary a contract for running the supply chain for shipping military equipment to British troops, a day after the company agreed to pay $11.4 million in potential overcharges to the U.S. Pentagon.
The $22 million contract was given to the construction and engineering group Kellogg Brown & Root.
The Ministry of Defense stressed the deal would be "the best way forward" for logistic support for the British forces, saying the company would deal with all their equipment supply needs.
Kellogg Brown & Root, the Halliburton subsidiary, was chosen for the contract based on "performance, responsiveness and overall value for money," a ministry spokeswoman said.
Rigorous checks had been carried out into the subsidiary in collaboration with the U.S. Defense Department and regular audits will be done during the seven-year contract, she said on condition of anonymity.
Kellogg Brown & Root agreed Monday to reimburse the Pentagon $11.4 million for potential overcharges on meals served at military dining facilities in Iraq, a Pentagon official said Tuesday, speaking on condition of anonymity.
That is in addition to $16 million it had already agreed to reimburse for other potential overcharges at a Kuwait dining facility.
Last month, Kellogg Brown & Root reimbursed the U.S. Pentagon $6.3 million after disclosing that two employees had taken kickbacks from a Kuwaiti subcontractor in return for work providing services to U.S. troops in Iraq.
Halliburton, which is based in Houston, Texas, has complained repeatedly that criticism of its work in Iraq is politically motivated, in part because of its past ties with U.S. Vice President Dick Cheney.
He was the company's chairman from 1995 to 2000.
AP-ES-02-03-04 2152EST
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READERS' FORUM
Accessing the Full Range of Open Sources
It is with some satisfaction that I have seen increased attention to Open Source Intelligence (OSINT) in the International Journal of Intelligence and CounterIntelligence, with Dr. Robert Pringle's ``The Limits of OSINT: Diagnosing the Soviet Media, 1985-1989'' (IJIC, Vol. 16, No. 2, pp. 280- 289) being but the most recent. I have no quarrel with his conclusions. I do, however, wish to make a suggestion to those who might wish to pursue, as Dr. Pringle recommends, additional case studies. It is essential that scholars and practitioners carefully note both what was known from open sources of information, and what could have been known had the United States Intelligence Community been more professional and more thorough in its exploitation of the full range of open sources, not only from principal countries such as Russia and China, but from the adjacent countries as well.
The reality is that during the Cold War the U.S. exploited, at best, perhaps 20 percent of the available open sources. Even today, on such an important target as China, its coverage is mediocre. On harder targets, such as Central Asia, or East Africa, or the Pacific Rim nations, it sinks to abysmal. The U.S. continues to lack an earmarked OSINT Program within the National Foreign Intelligence Program (NFIP), and it continues to lack both a nonprofit or governmental center of excellence for constantly inventorying and evaluating ``best practices, best prices'' for all manner of open source offerings in 29? languages, and a dedicated governmental center or executive agency for actually ``doing'' OSINT on behalf of the 100,000 allsource professionals whose access to open sources continues to be, more often than not, at their own expense on their own time. OSINT has been marginal in the past, and it continues to be marginal today. It would be helpful if all future case studies helped to document the difference between what was, what could have been, and what might in the future be under enlightened and truly ``all-source'' leadership.
Robert David Steele
Open Source Solutions, Inc.
Oakton, Virginia
AND COUNTERINTELLIGENCE VOLUME 17, NUMBER 1 183
O?ering Insights into the Present
As the title of his recent review of our book Strategic Denial and Deception: The Twenty-First Century Challenge1 suggests, Jeffrey T. Richelson takes Roy Godson and me to task for ``Avoiding New Issues''--if not violating the principle of truth in advertising--by not selecting a more appropriate name for our collection of essays.2 Richelson suggests that we ignore the hot issues of the day (e.g., al-Qaeda, Iraq) and remain mired in some distant, and apparently irrelevant, past. Admittedly, we should probably beg forgiveness for the choice hyperbole used to pitch our book to a broader market: at the outset of the project we considered--but rejected--a more mundane title for the volume (i.e., Expect Your Enemies to Hide Their Plans: A Few Inconsequential Thoughts on an Old, Reoccurring Problem That Policymakers Often Ignore). On a more serious note, Richelson clearly wrote his review of our work with the 11 September 2001 tragedy in mind. By contrast, our volume, which took form between July 1999 and July 2000, could only anticipate that day's tragic events. In hindsight, we probably should have included a short preface that noted when the papers were written, but we did not anticipate how much and how quickly attitudes and circumstances would change. I believe, however, that our contributors have produced a collection of essays able to withstand the test of time because they offer important insights into a recurring threat in international politics, a problem now made salient by a skyline that will never be the same. Richelson's suggestion that it might be better to use current events instead of history to make our points reflects the severity of today's threats to U.S. security, not some methodological flaw on our part. His critique of our work is misleading in three important ways: it suggests that our use of history offers little insight into today's events; it focuses on tertiary issues related to the relationship between the release of classified data and denial and deception; and it ignores an important observation about who is likely to integrate denial and deception into diplomatic and military policy.
The Past as Prologue
Imagine a time when the U.S. economy is booming. People are preoccupied with day trading, sex scandals, and finding a way to become involved in a red hot telecommunications industry that is producing millionaires by the score. Concern about foreign and defense policy, intelligence, counterintelligence, and internal security seem to many to be just ``old think,'' something only
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a few Cold War dinosaurs consider to be much of a problem. Globalization promises to bring wealth to everybody as international air travel, credit cards, and virtually free and potentially universal Internet access makes a small world even smaller.
This was the environment that prompted us to put pens to paper to remind our readers that strategic denial and deception had not been relegated to the ash heap of history along with the Soviet Union. We suggested that without denial and deception, terrorists, nefarious non-state actors, and criminal organizations would not exist and would be unable to carry out their operations. We also surveyed the ways various kinds of regimes were likely to employ denial and deception. As a methodology, we selected incidents of denial and deception drawn from history to highlight theoretical points of interest.
Richelson criticizes us for failing to talk about current concerns. In reality, however, we did a reasonable job of anticipating what was about to unfold. J. Bowyer Bell's analysis of the role of denial and deception in the first attack on the World Trade Center could easily serve as an explanation of the 9=11 tragedy. Bell explained how denial and deception allowed extremists to blend into American society, passing beneath our collective radar screen, so to speak. As for its relevance to current events, it is clear now that Bell's focus on Islamic fundamentalism, how terrorists could easily emerge from our midst, and the identification of the World Trade Center as a prime target was, unfortunately, accurate.
Richelson also criticizes Barton Whaley for retelling some ancient history (i.e., the interwar denial and deception campaign undertaken by Germans to hide their rearmament activities) instead of focusing on the obvious contemporary case of Iraq to illustrate the way dictatorships employ denial and deception. But Whaley's case study is a multifaceted tale that offers insight into virtually every twist and turn of the Iraq saga. For example, Whaley suggested that dictatorships would use denial and deception not only to hide clandestine weapons programs, but also to exaggerate their military strength once opponents discovered their nascent military capability. History might in fact judge that Iraqi denial and deception was at its best when it came to exaggerating rather than hiding Iraqi military capability. But it would be impossible to reach this conclusion, for instance, by recounting Saddam Hussein's effort to lull the world into a false sense of security prior to the first Gulf War, because much of Iraq's denial and deception in the late 1980s was intended to minimize the scope of its efforts to develop weapons of mass destruction.
Declassi?cation and Denial and Deception
Richelson also takes exception to James Bruce's and Lynn Hansen's suggestion that the authorized and unauthorized release of intelligence data
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can aid an opponent's denial and deception efforts. By tipping opponents off to intelligence sources and methods, disclosure of classified information makes it harder for the U.S. intelligence community to generate timely and accurate analyses once the opponent has been alerted to vulnerabilities that are being exploited for information. Richelson suggests that sloppy analysis, inattention, or misplaced priorities, rather than the opponent's denial and deception, are at least partially to blame for instances of poor performance by the intelligence community. I agree with Richelson on this point, but would also emphasize that a comprehensive analysis of the intelligence community's performance was beyond the scope of our study. I also would add one point to Richelson's observation. There is no reason to make it harder for the intelligence community to get things right by compromising sources and methods, which in fact was the point of the essays written by Bruce and Hansen.
I lose the thread of Richelson's argument, however, when he suggests that ``tradition and compulsion'' often govern classification schemes within the intelligence community. In Richelson's view, mundane material is frequently classified, even though it already is in the public domain. As a result, according to Richelson, ``national security reporting will continue to involve the reporting of classified information.'' Admittedly, much material that gets a classification stamp is available from unclassified sources, but the media or the public rarely notices the release of these mundane classified materials (e.g., how much would the world change if I produced a highly classified document stating that the United States possesses nuclear weapons?). Richelson is suggesting, however, that those who report this ``inappropriately classified'' information are really just writing about things everyone knows anyway, which seems to me to be a bit disingenuous. After all, to be newsworthy or noteworthy, information has to have some significance. By contrast, Bruce and Hansen are concerned not about the release of some thirty-year-old National Intelligence Estimate, but about press leaks that destroy highly sensitive and valuable intelligence operations.3 Bruce and Hansen understand why the media areattracted to sensational leaks from the intelligence community (i.e., to sell newspapers and books), and are more concerned about changing a culture within the intelligence community and the U.S. government that often ignores the long-term consequences of releasing details about ongoing operations or state-of-the-art collection systems to the public.
Americans Don't Do D&D
Richelson states that we ignore U.S. efforts at denial and deception. He reiterates both Walter Jajko's categorical statement of this position (``the United States does not know how to practice systemic strategic deception in peacetime'') and the explanation for this state of affairs by Illana Kass
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(``why bother with fancy footwork, since we have overwhelming force''). In fact, I would go farther than Jajko and assert that the United States in recent times has not relied on strategic denial and deception in wartime either. Because they possess overwhelming military capability compared to their potential opponents, U.S. officials use coercion, compellence, and threats short of war to get weaker opponents to comply with their wishes. Beyond a certain ``sporting assumption,''4 there is little role for denial and deception in U.S. diplomacy because it would make no sense to surprise opponents with unexpected death and destruction when one is trying to force them to comply with one's wishes without a fight.
The classic example of this phenomenon occurred on the eve of the first Gulf War, when Secretary of State James Baker delivered a letter for Saddam Hussein to Iraqi Foreign Minister Tariq Aziz outlining in detail what was to befall Iraq if it did not withdraw its forces from Kuwait. Officials in the first Bush administration believed that the sycophants surrounding Saddam were preventing accurate information about what was soon to befall Iraq from reaching the top of the kleptocracy in Baghdad. Powerful states, cerates paribus, have far more reliable, effective and readily available ways of dealing with opponents than denial and deception (e.g., coercion or outright destruction). Strategic denial and deception has been at best a tertiary factor in U.S. foreign and defense policy, although U.S. military planners use it as a minor force multiplier on the battlefield to obtain tactical advantages.5
Wrong Country, Wrong Past?
In the end, Richelson suggests that a focus on history might not be so bad after all; it is just that we focused on the wrong history. He suggests that we should have retold the history of U.S. denial and deception over the last twenty-three years, with the starting point a meeting attended by William J. Casey on 8 April 1981 that included a ``DoD brief on U.S. strategic deception program.'' I have no idea what was discussed that spring day twenty-three years ago, but I doubt that it would shed much light on the threats posed today by organized crime, terrorists, or states that seek to hide clandestine programs to develop weapons of mass destruction. A better understanding of denial and deception is not to be found in the mundane bureaucratic record of a state that does not use denial and deception as a strategic instrument in its foreign and defense policy.
By contrast, Strategic Denial and Deception: The Twenty-First Century Challenge continues to offer important insights into our current predicament. I only wish that I were smart enough to grasp the full implications of Bo Bell's suggestion, made in the summer of 1999, that a new form of denial and deception was being employed by terrorists; i.e., to
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blend in at the fringes of society to work amongst us and right under the noses of civil authorities to perfect some complex scheme. But that is what denial and deception is all about: sometimes only a little is needed to enable fanatics to return to lower Manhattan and destroy their chosen target.
REFERENCES
1 Roy Godson and James J. Wirtz, eds., Strategic Denial and Deception: The Twenty-First Century Challenge (New Brunswick: Transaction Publishers, 2002).
2 Jeffery T. Richelson, ``Avoiding New Issues,'' International Journal of Intelligence and CounterIntelligence, Vol. 16, No. 1, Spring 2003, pp. 131-139.
3 James Bruce has recently cited a September 1971 Washington Post article written by Jack Anderson as a case in point. Anderson wrote that U.S. intelligence organizations were intercepting telephone calls made by Politburo members from their limousines as they drove around Moscow. Soon after the report, the transmissions ceased. See James B. Bruce, ``The Consequences of Permissive Neglect,'' Studies in Intelligence, Vol. 47, No. 1, 2003, p. 41.
4 It would not be sporting to expect that U.S. officials would tell allies or enemies everything that is on their minds and everything they might do under all circumstances.
5 For example, Salim Sinan al-Harethi, the senior al-Qaeda operative killed on 4 November 2002 by a U.S.-controlled Predator unmanned aerial vehicle, probably never even knew what hit him (denial). Rumor has it, however, that the missile ``whistled Dixie'' just before impact (deception).
James J. Wirtz
Monterey, California
188 READERS' FORUM

>> KOREA UPDATE...POSTURE DISSONANCE? SEND JUSTIN?


http://www.theworld.org/latesteditions/20040203.shtml
North Korea report (4:30)
North Korea has agreed to a fresh round of multilateral talks on its nuclear program. The previous round ended badly last August after just three days. The World's Jeb Sharp reports.

North Korea intelligence interview (4:30)
The United States doesn't know precisely what's in North Korea's nuclear stores. There IS some intelligence available, but its reliability can be called into question in light of the debacle with Iraq's weapons of mass destruction. Host Marco Werman speaks with Joel Wit, senior fellow with the International Security Program at the Center for Strategic and International Studies in Washington.


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U.S. military blames lap dances for declining military discipline
Special to World Tribune.com
EAST-ASIA-INTEL.COM
Tuesday, February 3, 2004
SEOUL - The U.S. military has asked South Korea to ban lap dancing and other lewd acts at local nightclubs near its bases, saying they negatively impact military discipline.
The officials said the military was taking similar steps at other bases in the United States and overseas against lap dancing.
The U.S. Army's 2nd Infantry Division, which has 15,000 troops near the border with North Korea, recently sent letters to the South Korean Special Tourist Association and local mayors urging a crack down on lap dancing clubs near barracks.
Describing "client-focused exotic dancing" as the principal cause of worsening military discipline, the military letter called for local club owners to "prohibit any physical contact between dancers and (U.S.) customers." South Korean lap dancing clubs are totally dependent on American customers because they are not allowed to take local clients.
U.S. officials declined to specify what they meant by worsening military discipline.
"We are following trends in the United States," Lt. Col. Chris Bailey, the 2nd Infantry Division's assistant chief of staff, told the Stars & Stripes newspaper. The U.S. Forces Korea has consulted mainland laws banning lap dancing, he said.
The more than 90 American installations throughout South Korea have long been a source of friction between residents living near the U.S. facilities, who complain of pollution, noise and traffic from the U.S. bases and occasional crimes by American troops.
Many crimes committed by U.S. servicemen involve nightclubs near their barracks. Amid an increasing number of American troops accused of crimes, their legal protection has become a sensitive issues for the two governments.
"The USFK will root out any practices that go contrary to a positive environment for U.S. soldiers, Korean residents and people of all nationalities," said Chae Yang-To, a spokesman for the 2nd Infantry Division.
The United States maintains 37,000 troops in South Korea to help defend it from a potential conflict with North Korea under a bilateral defense treaty signed after the 1950-1953 Korean War.

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More expulsions of Saudis expected
By LOU MARANO
WASHINGTON, Feb. 2 (UPI) -- More expulsions from the United States of Saudis with diplomatic status are expected, a Middle East area expert who has closely been following developments, said Monday.
On Thursday State Department Spokesman Richard Boucher confirmed that 16 Saudi nationals who had been accredited to the embassy in Washington had been asked to leave. "We were able to determine that they were not, in fact, working as diplomats in the Saudi Embassy, but rather were teaching in Northern Virginia and therefore were not entitled to diplomatic status. Since they were on diplomatic visas, ... we had to tell them your visa status is no longer valid. We gave them till Feb. 22 to clean up their affairs and leave the country," Boucher said.
The place of instruction is the Institute of Islamic and Arabic Sciences in America in Fairfax, Va. Phones at the institute were not answered Monday. The institute's Web site says it was established in 1989 and is affiliated with al-Imam Muhammad Ibn Saud Islamic University in Riyadh, Saudi Arabia.
One of the "Frequently Asked Questions" is: "What kind of Islam does IIASA teach?" The answer, in part, is that the institute teaches Islam as it was revealed. "IIASA believes in teaching and presenting Islam in the best way peacefully and moderately. Unlike what some might think, there is no such thing as the 'Wahabi' teachings of Islam," the Web site said.
About 70 Saudis with diplomatic visas have left the United States since late 2003, published sources have reported.
Some have been involved with the Saudi defense attache's office, and others with the cultural attache's office, said the Middle East expert, who asked not to be identified.
"Saudi Arabia is giving cover to a whole bunch of preachers under diplomatic cover, including military cover," said the source, "and more expulsions are expected."
On Friday the Saudi government commented in three brief statements. The deputy chief of the Saudi diplomatic mission, Ambassador Ahmad bin Abdulaziz Kattan, said the institute was established for teaching the Arabic language "as well as for preaching the Islamic religion in America."
After Sept. 11, 2001, the ambassador said, the State Department "started to strictly implement the diplomatic systems." Therefore, "it was an impossible matter for the embassy to interfere or mediate as long as the work of the (institute's staff) was outside the building of the embassy in violation to the diplomatic norms."
Kattan made it clear that the departure of the instructors does not mean the institute will be closed or cease performing its mission.
"On the contrary, the institute will legally be turned into a charitable American foundation, and subsequently it will be possible for personnel of universities in the (Saudi) kingdom to obtain regular entry visas to the U.S. and to work at the Institute."
The ambassador said the expelled employees could return to the United States in the same capacity or visit the United States for any other purpose.
Copyright 2004 by United Press International.
All rights reserved.
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Belligerent Behavior by Saudi Traveler, Vague Answers Raised Inspector's Suspicions
By Mike Schneider Associated Press Writer
Published: Feb 2, 2004
ORLANDO, Fla. (AP) - The first thing that raised immigration inspector Jose Melendez-Perez's suspicions was that the visitor from Saudi Arabia did not have a return airplane ticket.
The second red flag was his body language - belligerent and defiant. He pointed his finger at Melendez-Perez's face during an interview Aug. 4, 2001 at the Orlando airport. Melendez-Perez refused entry to the man, who investigators now believe may have been the 20th Sept. 11 hijacker.
"I thought when this guy made the gestures, something was wrong," Melendez-Perez told reporters at a news conference Monday. "The look he gave me. His body language."
The Saudi man, identified by U.S. officials only as al-Qahtani, was placed on an airplane back to Saudi Arabia. He wound up in Afghanistan where he was captured by U.S. forces. He now is being held at the U.S. naval base at Guantanamo Bay, Cuba.
After the attacks, Melendez-Perez asked the airport to contact the FBI about the August interview and give the agency copies of the file. But he never heard from the FBI.
"I really can't answer why they didn't contact me," Melendez-Perez said. "I don't know if it's because the investigation was going in a different direction."
Special Agent Sara Oates declined to comment on why the FBI had not interviewed Melendez.
Melendez-Perez's actions earned him the praise of his supervisors and an invitation to testify before the National Commission on Terrorist Attacks Upon the United States, which he did last week.
"He's the kind of officer who believes that 100 percent is the standard," said H. Denise Crawford, director of field operations for the U.S. Customs and Border Protection.
Melendez-Perez spent an hour and a half interviewing al-Qahtani, who was sent to him because the inspector on the front line could not communicate with the traveler. Using an Arabic translator, Melendez-Perez asked his first question, "Why don't you have a return ticket?"
The well-groomed man was defiant, pointing his finger at Melendez-Perez, and answered that a friend was arriving in the United States a few days later and knew where he would be going.
"His body language was showing, like, 'I don't care,'" Melendez-Perez said. "This guy didn't show me any respect at all."
When Melendez-Perez asked the purpose of his trip, the man told him a vacation. But the answer didn't make sense to the inspector.
"Why are you coming in for vacation for six days and you're going to wait for someone who is coming over from overseas for three or four days to take you around?" Melendez-Perez said.
After the man refused to answer further questions under oath, Melendez-Perez decided to deny the man entry, but only after checking with supervisors because complaints had made supervisors wary of denying people entry.
The man became upset and said he wasn't going to purchase a return ticket.
"So we said, 'No problem, we'll pay for your plane ticket and tonight you'll spend in a detention facility,'" he said.
AP-ES-02-02-04 1754EST
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Saudi agents arrest 7 Al Qaida, may have foiled major attack
SPECIAL TO WORLD TRIBUNE.COM
Monday, February 2, 2004
ABU DHABI -- Saudi Arabia has recorded what could be a major success in foiling Al Qaida plans to launch an attack during the current Islamic pilgrimage to the kingdom.
Saudi authorities have arrested seven Al Qaida insurgents who were said to have been planning an imminent attack. The Interior Ministry said security forces also captured large amounts of weapons and explosives that suggested plans for a suicide strike.
The raids took place on late Thursday, the sources said, hours after six Saudi security agents were killed in a shootout with Al Qaida insurgents in Riyad. The shootout and the raids took place in the Al Siliye district in eastern Riyad, Middle East Newsline reported.
[Nearly 250 Muslim worshipers died in a hajj stampede Sunday during the annual stoning of Satan ritual in one of the deadliest tragedies at the notoriously perilous ceremony, AP reported. The stampede, during a peak event of the annual Muslim pilgrimage, or hajj, lasted about a half-hour, Saudi officials said. There were 244 dead and hundreds of other worshippers injured, some critically, Hajj Minister Iyad Madani said. "All precautions were taken to prevent such an incident, but this is God's will. Caution isn't stronger than fate," Madani said. Most of the victims were pilgrims from inside the Saudi kingdom and many were not authorized to participate, he said.]
Saudi security agents raided at least two suspected insurgency strongholds over the weekend in Riyad on the eve of the Id Al Adha holiday.
About 1.4 million pilgrims have flocked to Mecca, where the kingdom has deployed about 5,000 troops.
The ministry said authorities captured a car packed with explosives as well as 21 explosives belts in the weekend raids. In addition, security forces found such weapons as booby-trapped mobile phones, detonators, grenades, machine guns, AK-47 Kalashnikov rifles, rocket-propelled grenades and launchers.
Saudi security sources said the Al Qaida agents apparently had sought to enter a Western compound or sensitive facility in Riyad. The sources said the insurgents obtained military uniforms in an attempt to smuggle weapons past checkpoints and roadblocks.
On Jan. 12, the Interior Ministry said security forces had captured about 300 explosives belts and nearly 24 tons of explosive materials. At the time, security sources said the material was believed to have arrived from neighboring Yemen.

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Dozens injured in second stampede
From correspondents in Mina, Saudi Arabia
February 3, 2004
DOZENS of unconscious pilgrims were taken to hospital in the town of Mina near the Muslim holy city of Mecca today after being caught in another stampede during the stoning of the devil ritual, the Saudi health minister said.
Unlike yesterday's stampede in which 251 pilgrims were killed, there were no deaths this time, Hamad al-Mani told reporters.
"A stampede occurred this evening (local time) on the stoning bridge which caused a large number of pilgrims to fall to the ground," said Mani.
"But security officers intervened and stopped the flow of people onto the bridge, as they attended to the fallen pilgrims who were unconscious or breathless."
He said "dozens of pilgrims" were transported to Mina's General Hospital where they were treated and their "lives saved".
Since dawn, hundreds of thousands of Muslim pilgrims have flocked to the 272-metre-long esplanade and the bridge above it to throw stones at three pillars representing the devil, in the last major ritual of the pilgrimage.
They were channelled by a wall of hundreds of security officers who prevented any of them from taking their bags or belongings onto the esplanade in an effort to avoid a repeat of yesterday's tragedy.
The high-risk ritual, which has resulted in similar deadly incidents in the past, is expected to continue until midnight (8am AEDT) today and to resume at dawn tomorrow for a final day.
Agence France-Presse

-----------------------------------------------------------
2 Caught Placing Bomb Near Iraq Refinery
Iraqi Police Catch Two Men Placing a Roadside Bomb Near Baghdad's Main Oil Refinery, U.S. Says
The Associated Press
BAGHDAD, Iraq Feb. 2 -- Iraqi police caught two men placing a roadside bomb Monday near the capital's main Doura oil refinery, a U.S. commander said.
The two men were believed to be an Iranian and an Afghan, but "we have to first develop that through interrogation and try and determine what that means," Brig. Gen. Martin Dempsey, commander of the 1st Armored Division, told a news conference
He did not elaborate.
With a refining capacity of 110,000 barrels of oil a day, Doura produces much of the gasoline, heating oil and cooking gas supplies for Baghdad. It also distributes crude oil used as fuel by two of the capital's four electric plants.
Dempsey, whose division is in charge of Baghdad, did not say how destructive the bomb could have been or how close it was to the main facility of the refinery.
Last month, guards at Doura seized a group of intruders and a subsequent search turned up more than 80 containers of explosives, suggesting a planned attack that could have crippled the facility.
Insurgents have attacked or tried to bomb oil pipelines in several other parts of the country in the past in a bid to cripple the country's main export.
Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
---------------------------------------------------------------

>> FOGGY BOTTOM WATCH 1...

Counter-terror tops in State Dept. budget
WASHINGTON, Feb. 2 (UPI) -- The State Department's budget request for the next fiscal year will fund the war on terror and "vigorous" public diplomacy, documents released Monday said.
The FY 2005 request totals $8.552 billion out of a $2.4 trillion federal budget that shows increases for defense and homeland security.
The request provides $659 million in upgrades to the security of diplomatic personnel and facilities in the face of terrorism, and it adds 71 security staffers worldwide.
Another 183 positions overseas will be funded by $44 million, including staffing for U.S. embassies in Baghdad and Kabul.
The request provides $1.54 billion to support security-related construction projects, including the construction of new embassy compounds in eight countries.
Some $1.2 billion is allocated to 44 international organizations, including the United Nations.
The budget requests $309 million in direct appropriations for public diplomacy to influence foreign opinion and encourage support for U.S. foreign policy goals.
Copyright 2004 by United Press International.
All rights reserved.

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>> FOGGY BOTTOM WATCH 2...

U.S. denies it will compensate Libya for WMD
SPECIAL TO WORLD TRIBUNE.COM
Monday, February 2, 2004
The United States has rejected the precendent set by the Clinton administration on North Korea, and will not compensate Libya for the dismantling of its weapons of mass destruction program.
"No, we're not compensating nations for dismantling illicit nuclear weapons programs," State Department spokesman Richard Boucher said on Jan. 29. "And we're confident Libya understands that."
Boucher rejected an assertion by Seif Al Islam, the son of Libyan ruler Moammar Khaddafy, that the United States would compensate Tripoli for the cost of its nuclear program. Al Islam said Libya sought to use its nuclear program for such civilian purposes as desalinating water.
Last week, the United States flew Libyan centrifuge equipment along with guidance systems for extended-range Scud C and Scud D missiles to a nuclear facility in Tennessee. Officials said this would be the first of several shipments of Libyan WMD to the United States, Middle East Newsline reported.
The department said Libya has not made this a condition in the dismantling of Libya's nuclear weapons and other WMD programs.
U.S. officials said the Bush administration would not offer Libya the deal made with North Korea in 1994. At the time, the Clinton administration agreed to compensate Pyongyang for the halt in its nuclear weapons program by financing the purchase of two light water reactors. The agreement was never implemented.
"I speak of the policy of this administration," Boucher said.
Officials said the United States was discussing with Libya its participation in a project meant to reduce the risk of dismantling Tripoli's nuclear weapons program. This would include help to protect civilian nuclear facilities as well as the training of Libyan nuclear scientists so that they would not be recruited in such countries as Iran or Pakistan.

>> TRIUMVIRATE WRECK?
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Suicide Bombings in Northern Iraq
The Bush administration is in a race with time and Iraqi insurgents, who want to stop the orderly transfer of power now scheduled for mid-summer. This weekend's double suicide bombing brought terrorism and chaos to the Kurdish North and may create a new obstacle to unifying the country. Meantime, In the South, massive street demonstrations have raised the prospect of tyranny by the majority Shiites, who are demanding direct elections. With just three weeks until the deadline for an interim constitution, can Iraq's diverse populations be reconciled? Will the US get any help from the United Nations? We update America's race against time and the violence that threatens an orderly process.


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washingtonpost.com
Musharraf Named in Nuclear Probe
Senior Pakistani Army Officers Were Aware of Technology Transfers, Scientist Says

By John Lancaster and Kamran Khan
Washington Post Foreign Service
Tuesday, February 3, 2004; Page A13
ISLAMABAD, Pakistan, Feb. 2 -- Pakistan's top nuclear scientist, Abdul Qadeer Khan, has told investigators that he helped North Korea design and equip facilities for making weapons-grade uranium with the knowledge of senior military commanders, including Gen. Pervez Musharraf, Pakistan's president, according to a friend of Khan's and a senior Pakistani investigator.
Khan also has told investigators that Gen. Mirza Aslam Beg, the Pakistani army chief of staff from 1988 to 1991, was aware of assistance Khan was providing to Iran's nuclear program and that two other army chiefs, in addition to Musharraf, knew and approved of his efforts on behalf of North Korea, the same individuals said Monday.
Khan's assertions of high-level army involvement came in the course of a two-month probe into allegations that he and other Pakistani nuclear scientists made millions of dollars from the sale of equipment and expertise to Iran, Libya and North Korea.
They contradict repeated contentions by Musharraf and other senior officials that Khan and at least one other scientist, Mohammed Farooq, acted out of greed and in violation of long-standing government policy that bars the export of nuclear weapons technology to any foreign country.
In conversations with investigators, Khan urged them to question the former army commanders and Musharraf, asserting that "no debriefing is complete unless you bring every one of them here and debrief us together," according to the friend, who has met with the accused scientist twice during the past two months.
On the basis of Khan's claims, Beg and another former army chief of staff, Gen. Jehangir Karamat, who occupied the post from 1996 to 1998, have been questioned by investigators in recent days, but both have denied any knowledge of the transactions, according to a senior Pakistani military officer who spoke on condition of anonymity.
Gen. Shaukat Sultan, Pakistan's chief military spokesman, declined to comment on the specifics of the allegations but asserted that "General Pervez Musharraf neither authorized such transfers nor was involved in any way with such deeds, even before he was president." Beg and Karamat could not be reached for comment Monday night.
Khan and other senior scientists and officials at the Khan Research Laboratories, the uranium-enrichment facility Khan founded in 1976, have been under investigation since November, when the International Atomic Energy Agency presented Pakistan with evidence that its centrifuge designs had turned up in Iran. The flamboyant European-trained metallurgist, who is 67, became a national hero in Pakistan after the country detonated its first nuclear device in 1998.
In a briefing for Pakistani journalists late Sunday night, a senior Pakistani military officer said that Khan had signed a 12-page confession on Friday in which he admitted to providing Iran, Libya and North Korea with technical assistance and components for making high-speed centrifuges used to produce enriched uranium, a key ingredient for a nuclear bomb.
Lt. Gen. Khalid Kidwai, commander of Pakistan's Strategic Planning and Development Cell, described Khan as the mastermind of an elaborate and wholly unauthorized smuggling network involving chartered cargo flights, clandestine overseas meetings and a Malaysian factory that reconditioned centrifuge parts discarded from Pakistan's nuclear program for sale to foreign clients, according to a journalist who attended Kidwai's 21/2-hour briefing.
The technology transfers began in 1989 and were brokered by a network of middlemen, including three German businessmen and a Sri Lankan, identified only as Tahir, who is in custody in Malaysia, Kidwai told the journalists.
According to Kidwai's account, Khan told investigators that he supplied materials and assistance to Iran, Libya and North Korea not to make money but to deflect attention from Pakistan's nuclear program and -- in the case of Iran and Libya -- as a gesture of support to other Muslim countries.
The senior Pakistani investigator and a senior intelligence official said Monday that Khan also said he supplied Iran and Libya with surplus, outmoded equipment from the laboratory that he knew would not provide either country with any near-term capability to enrich uranium.
"Dr. Khan is basically contesting the merit of the nuclear proliferation charges," the investigator said. "Throughout his debriefing, Dr. Khan kept challenging the perception that material found from the Libyan or Iranian programs would allow them to enrich uranium."
Investigators contend that Khan accumulated millions of dollars in the course of a 30-year career as a government scientist, investing some of it in real estate in Pakistan and abroad. Kidwai told Pakistani journalists that investigators had reached no conclusions about the source of Khan's wealth, but he acknowledged that Khan's lavish lifestyle was "the worst-kept secret in town" and should have triggered suspicions among those responsible for protecting Pakistan's nuclear secrets, according to a journalist who attended the briefing.
Kidwai "admitted to oversight and intelligence failure," the journalist said.
Kidwai avoided any suggestion of complicity on the part of senior military commanders, including Musharraf, who has maintained throughout the investigation that any transfer of nuclear technology abroad was the work of individuals driven by greed.
By all accounts, Khan ran the laboratory at Kahuta, about 20 miles from Islamabad, with scant oversight from either civilian or military-led governments eager to achieve nuclear parity with arch rival India.
The military was ultimately responsible for the facility, where security was overseen by two army brigadiers and a special detachment from Pakistan's Inter-Services Intelligence agency, or ISI. And Khan is said to have insisted during his sessions with investigators that senior military commanders were well aware of his efforts to help other countries with their nuclear programs.
The senior Pakistani investigator said that Beg was "in the picture" regarding Khan's assistance to Iran, but said the former army chief of staff was "probably . . . under the impression that material and knowledge being transferred to Iran would not enable them to produced enriched uranium" because of Khan's claim that he was withholding top-of-the-line equipment. Investigators have found evidence that Khan informed Beg of the transfer of outdated hardware from his laboratory to Iran in early 1991, the official said.
Khan told two generals who jointly questioned him last month that three army chiefs of staff, including Musharraf, had known of his dealings with North Korea, according to the friend of the scientist. "Throughout his debriefing, Dr. Khan kept asking the generals why he was not being asked specific questions about the material he passed on to the North Koreans," the friend said.
U.S. officials have long suspected that Pakistan supplied uranium enrichment technology to North Korea in exchange for help with its ballistic missile program, and that Khan acted as the principal agent of the arrangement. After stating in 2002 that it had a program for enriching uranium for use in weapons, North Korea more recently has denied it.
A retired Pakistani army corps commander said Monday that the barter arrangement dates to December 1994, when then-Prime Minister Benazir Bhutto traveled to North Korea at the request of Gen. Abdul Waheed, the army chief of staff at the time. A few months later, Khan led a delegation of scientists and military officers to Pyongyang, the North Korean capital, according to the retired general and a senior active duty officer, both of whom spoke on condition of anonymity. Musharraf was serving at the time as Waheed's director general for military operations.
In January 1996, Waheed was replaced as chief of staff by Karamat, who secretly visited North Korea in December 1997, according to the retired corps commander. Four months after the trip, in April 1998, Karamat presided over the successful test-firing of a medium-range missile the Pakistanis called a Ghauri. According to U.S. intelligence officials and a former Pakistani nuclear scientist, the Ghauri was simply a renamed North Korean-supplied Nodong missile. Pakistani officials maintain publicly that the Ghauri missile is indigenous to Pakistan.
The senior investigator said Khan claimed that Karamat was privy to the details of the barter arrangement through which Pakistan received the missile, and that Khan had insisted that Karamat's role also be examined.
Khan also has asserted that Musharraf had to have been aware of the agreement with North Korea because Musharraf took over responsibility for the Ghauri missile program when he became army chief of staff in October 1998, according to the scientist's friend and the senior investigator.
According to Kidwai's account to journalists, senior military commanders did not get wind of Khan's nuclear dealings with North Korea until 2000, when the ISI conducted a raid on an aircraft that the laboratory had chartered for a planned flight to North Korea. Although a search of the aircraft turned up no evidence, authorities were sufficiently concerned that they warned Khan against pursuing any clandestine trade with North Korea, Kidwai told the journalists.
That concern deepened, according to Kidwai's account, after U.S. officials in 2002 and early 2003 presented evidence that Pakistani nuclear technology may indeed have found its way to North Korea.

? 2004 The Washington Post Company

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washingtonpost.com
Pakistan's Nuclear Hero Defended
By Jefferson Morley
washingtonpost.com Staff Writer
Tuesday, February 3, 2004; 10:18 AM
Online commentators in Pakistan are rallying to the defense of the country's leading nuclear scientists, one of whom has confessed to selling weapons technology to North Korea, Iran and Libya.
Abdul Qadeer Khan, the father of Pakistan's nuclear program, is reportedly under house arrest in connection with a U.S.-backed investigation into the lucrative black market in nuclear weapons technology. Correspondents John Lancaster and Kamran Khan (no relation to the physicist) report in today's Washington Post that Khan has signed a 12-page confession. Khan has also reportedly told investigators that Pakistani President Pervez Musharraf knew about his efforts to help North Korea's nuclear program.
The revelation will likely stoke an already intense debate. While many Pakistanis defend Khan as a national hero, others in the South Asian media see Khan, a flamboyant self-promoter, as the scapegoat of Musharraf and the permissive nonproliferation policies of the U.S. government.
The 67-year old scientist is "being held incommunicado with heavy security around his house," according to the Times of India. The paper's headline suggests that U.S. officials in Washington are not keen to hear Khan recount the story of his nuclear-related activities in the past two decades: "US, Pak dread Khan's Disclosures."
"Washington and Islamabad," says the Delhi-based daily, are "holding their breath" to see if Khan "will spill the beans about Pakistan's official complicity in the spread of nuclear weapons technology."
In Islamabad, the pro-democracy daily The Nation says Khan's detention is "bound to create a wave of puzzled resentment among a populace which has been accustomed to regard him as the father of the national nuclear programme."
"Dr Khan could not have done anything wrong or even inappropriate without the connivance or neglect of those controlling" Pakistan's nuclear program, the editors say.
Another commentator in The Nation wonders why Musharraf has been so cooperative with the U.S. effort to hold Khan accountable.
"Why it is so that the general who shows fists to the opposition in the parliament, has become so nervous that he is not prepared to face the situation and instead seems to have become a part of the international press campaign against Pakistan's nuclear programme."
Dawn, the English-language daily that often gives voice to the Pakistani establishment, reports that opposition political leaders in the country say the sacking of Khan will cause "irreparable damage to the country's integrity."
The press in India, Pakistan's South Asian nuclear rival, turns a critical eye on the U.S. role over three decades. The Times of India goes back to the early 1980s, when Pakistan, like Saddam Hussein's Iraq, was a quietly favored U.S. ally.
As correspondent Syed Saleem Shahzad notes in the Asia Times, the U.S. Congress cleared the way for Pakistan's nuclear program. In 1981 the Congress, under pressure from Ronald Reagan's White House, voted to formally exempt Pakistan from U.S. laws prohibiting aid to any non-nuclear country engaged in illegal procurement of equipment for a nuclear weapons program. The Pakistani government also won a six-year aid package from the United States worth $3.2 billion. Free from the threat of sanctions, Pakistan conducted a cold test at a small-scale nuclear reprocessing plant in 1982. From there, the so-called Islam bomb began to grow.
Pakistan proceeded to spend some $10 billion developing a nuclear arsenal, say the editors of the Times of India. The money came from Libya, Saudi Arabia, Iraq, the United Arab Emirates and the depositors of the BCCI (Bank of Credit and Commerce International), which became notorious in the early 1990s for myriad criminal activities. The bank, say the editors of the Times of India, was founded by a Pakistani and operated freely in the Persian Gulf oil enclave of Dubai. It is inconceivable, they argue, that Western intelligence agencies didn't know all about this black market.
In the early 1990s, Khan began selling his technological prowess to other parties, enabling him to amass substantial properties in Pakistan as well as building a hotel in the African city of Timbuktu, according to numerous reports.
The "fabulous" Hendrina Khan Hotel, named after Khan's Dutch wife, was one of dozens of the scientist's business undertakings investigated by Pakistani intelligence officials, according to the The Indian Express.
Rajesh Mishra, a New Dehli-based defense analyst writing for the Hindustan Times, says the danger of nuclear proliferation Pakistan poses remains "alarmingly high."
"Discoveries that some members of Pakistan's scientific community are under the influence of extreme ideologies further raise the fear of sensitive information, technology or material falling into rogue hands," he writes.
Abdul Qadeer Khan himself once said: "All western countries, including Israel, are not only the enemies of Pakistan but, in fact, of Islam.'"
The Indian daily notes that one leading Pakistani physicist Bashir-uddin Mahmood, had several meetings in August 2001 with Osama bin Laden.
The Indian editors pose some hard questions about the realities of the international nuclear black market.
"Is it possible that the [Pakistani] scientists involved in State-managed clandestine deals overreached the arrangement of cooperation? "
"If so, was it a planned move [on the part of the Pakistani and U.S. governments] to overlook this extended relationship?"
They answer that question with another question:
"Or was the Pakistan government unable to question the illegitimate affairs within secret arrangements that involved a scientist like Khan?"
In other words, was the United States totally clueless while a Pakistani scientist supplied nuclear technology to Iran and North Korea?
? 2004 Washingtonpost.Newsweek Interactive
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Iranians Don't Want To Go Nuclear
By Karim Sadjadpour
Tuesday, February 3, 2004; Page A19
Do the people of Iran want the bomb? Iran's recent decision to allow for tighter inspection of its nuclear facilities -- which Iran says are for civilian purposes -- was hailed by Iranian and European officials as a diplomatic victory, while analysts and officials in Washington and Tel Aviv continue to be wary of Tehran's intentions. But despite the attention given to Iran's nuclear aspirations in recent months, one important question has scarcely been touched on: How do the Iranian people feel about having nuclear weapons?
Iranian officials have suggested that the country's nuclear program is an issue that resonates on the Iranian street and is a great source of national pride. But months of interviews I have done in Iran reveal a somewhat different picture. Whereas few Iranians are opposed to the development of a nuclear energy facility, most do not see it as a solution to their primary concerns: economic malaise and political and social repression. What's more, most of the Iranians surveyed said they oppose the pursuit of a nuclear weapons program because it runs counter to their desire for "peace and tranquility." Three reasons were commonly cited.
First, having experienced a devastating eight-year war with Saddam Hussein's Iraq that took the lives of hundreds of thousands of their compatriots, Iranians are opposed to reliving war or violence. Many Iranians said the pursuit of nuclear weapons would lead the country down a path no one wanted to travel.
Two decades ago revolutionary euphoria was strong, and millions of young men volunteered to defend their country against an Iraqi onslaught. Today few Iranians have illusions about the realities of conflict. The argument that a nuclear weapon could help serve as a deterrent to ensure peace in Iran seemed incongruous to most. "If we want peace, why would we want a bomb?" asked a middle-aged Iranian woman, seemingly concurring with an influential Iranian diplomat who contends that a nuclear weapon "would not augment Iran's security but rather heighten its vulnerabilities."
Second, while a central premise of Iran's Islamic government from the time of its inception has been its steadfast opposition to the United States and Israel, for most Iranians no such nemeses exist. Iran's young populace -- more than two-thirds of the country is younger than 30 -- is among the most pro-American in the Middle East, and tend not to share the impassioned anti-Israel sentiment of their Arab neighbors. While the excitement generated on the Indian and Pakistani streets as a result of their nuclear detonations is commonly cited to show the correlation between nuclear weapons and national pride, such a reaction is best understood in the context of the rivalry between the two countries. The majority of Iranians surveyed claimed to have little desire to show off their military or nuclear prowess to anyone. "Whom would we attack?" asked a 31-year-old laborer, echoing a commonly heard sentiment in Tehran. "We don't want war with anyone."
Finally, many Iranians, youth in particular, are opposed to the Islamic republic's becoming a nuclear power because they believe it would further entrench the hard-liners in the government. "I fear that if these guys get the bomb they will be able to hold on to power for another 25 years," said a 30-year-old Iranian professional. "Nobody wants that." In particular some expressed a concern that a nuclear Iran would be immune to U.S. and European diplomatic pressure and could continue to repress popular demands for reform without fear of repercussion.
At the same time, most Iranians -- including harsh critics of the Islamic regime -- remain unconvinced by the allegations that their government is secretly pursuing a nuclear weapons program. Many dismiss it as another bogeyman manufactured by the United States and Israel to further antagonize and isolate the Islamic regime. "I don't believe we're after a bomb," said a 25-year-old Tehran University student. "The U.S. is always looking for an excuse to harass these mullahs." A recently retired Iranian diplomat who said he is "strongly critical" of the Islamic government agreed with this assessment, saying Iran's nuclear program "is neither for defensive nor offensive purposes . . . It's only for energy purposes."
I draw two lessons from this. First, the European-brokered compromise on Iran's nuclear program, which appealed to reformists and pragmatists within the Iranian government, was also a victory of sorts for the Iranian people, who are eager to emerge from the political and economic isolation of the past two decades and are strongly in favor of increasing ties with the West. A blatant lack of cooperation with the international community would not have been well-received domestically.
Second, a more aggressive reaction by the international community -- a U.S. or Israeli attempt to strike Iran's nuclear facilities -- could well have the unintended consequence of antagonizing a highly nationalistic and largely pro-Western populace and convincing Iranians that a nuclear weapon is indeed in their national interests. Such a reaction would be disastrous for U.S. interests in the region, especially given Iran's key location between Iraq and Afghanistan.
Western and Israeli diplomats and analysts should know that the ability to solve the Iranian nuclear predicament diplomatically has broad implications for the future of democracy and nonproliferation in Iran and the rest of the Middle East. The goal is to bring the Iranian regime on the same page with the Iranian people. A non-diplomatic attempt to destroy Iran's nuclear facilities could do precisely the opposite.
The writer, an analyst with the International Crisis Group, is a visiting fellow at the American University of Beirut.
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U.S. Treads Carefully With Libya
By Robin Wright
Washington Post Staff Writer
Tuesday, February 3, 2004; Page A14
The United States is scheduled to open a political dialogue with Libya on Friday in London, with the Bush administration also considering sending a State Department envoy to Tripoli to discuss diplomatic issues with senior Libyan officials, U.S. officials said yesterday.
But the Bush administration is split over the next steps to take with the government of Moammar Gaddafi, with the Pentagon resisting major reciprocal gestures in response to Tripoli's agreement to surrender its weapons of mass destruction, the officials added.
Secretary of State Colin L. Powell said yesterday that Libya's cooperation warranted deepening the level of engagement through "political openings and developments," as promised by President Bush and British Prime Minister Tony Blair when they announced Tripoli's agreement to hand over all equipment and data for nuclear, chemical and biological weapons.
"We've seen a fascinating sign of change in Libyan attitudes," Powell said in an interview with editors and reporters at The Washington Post.
"We've now had a couple weeks of action on removal and verification [of weaponry], and we've learned a lot, and it was appropriate at this point that we begin a political dialogue to see what lies ahead. We're still removing material and we're still verifying, but it is a fundamentally changed situation with respect to Libya."
Assistant Secretary of State William Burns and British officials will meet with their Libyan counterparts to discuss the next steps. One possibility is to lift the ban on Americans traveling to Libya once Libya completes the dismantling of its weapons programs, U.S. officials said. Pentagon policymakers are balking, however, at other steps that U.S. officials had thought were in the pipeline. And they are actively opposed to taking Tripoli off the U.S. list of state sponsors of terrorism, which comes out annually in the spring.
"There's a cold wind blowing on a number of forward-leaning, reciprocal moves that we thought we'd queued up. And there's outright opposition to removing Libya from the list of the state sponsors of terrorism," said a well-placed U.S. official who spoke on the condition of anonymity.
Although the State Department issues the list, making any changes to it involves an interagency decision, and Pentagon opposition could kill prospects of formal removal of Libya this year, U.S. officials said. Some officials and Libya experts are concerned that failing to provide the promised diplomatic carrot could frustrate and disillusion officials in Tripoli who encouraged cooperation with the United States and Britain.
On other countries, Powell indicated that the strongest prospect for removal from the terrorism list may be Sudan, which hosted al Qaeda leader Osama bin Laden in the 1990s. Powell said he hopes negotiations later this month to end Sudan's civil war can produce agreement on the disputed oil-rich area of Abyei, the last major hurdle. A formal peace accord would be the key in getting Sudan off the list, U.S. officials say.
But Powell also said Syria is even further away than it was last year, after failing to respond to concerns he outlined during talks with President Bashar Assad in Damascus. "They started doing a few things, but it wasn't adequate," he said.
Powell said the time had come for the Syrians to "take a hard look" at what is happening in the region "and see whether or not they want to modify some of their policies."

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>> PROGRESS NOTES...

Tax Cuts and Savings Plans
Proposal Would Change Pension Rules, Retirement Accounts
By Albert B. Crenshaw
Washington Post Staff Writer
Tuesday, February 3, 2004; Page A05
The Bush administration yesterday rolled out an array of tax cuts, savings incentives, loophole closers and collection initiatives that officials said would encourage investment, promote trade, combat abuse and simplify the tax laws.
The proposal, outlined by Treasury Department officials, would also make it easier for companies that operate traditional pension plans to convert them to "cash balance" plans -- a process that has stirred heated controversy in recent years
If enacted in its entirety, the administration's tax plan would cost the government $1.24 trillion over 10 years -- almost $1 trillion of that from extending the tax cuts passed by Congress last year, and making permanent both those cuts and others enacted in 2001 and scheduled to expire after 2010.
Many of the items on the list presented yesterday by the Treasury Department have been proposed before, including lifetime and retirement savings accounts (LSAs and RSAs), in which Americans could deposit $5,000 each year. Anyone, including children, could have an LSA, and anyone with wages could have an RSA. Contributions would not be tax-deductible, but earnings inside the account would not be taxed, and withdrawals would generally be tax-free.
Assistant Treasury Secretary Pamela F. Olson said the contribution amounts were reduced in this year's proposal, from $7,500 last year, to meet criticism that they would undermine existing retirement plans, especially in small businesses.
The proposal would also simplify the present system of 401(k) and similar employer-sponsored retirement plans by consolidating them all into a single, uniform type of plan called an employer retirement savings account, or ERSA. And it would create individual development accounts (IDAs) for low-income individuals, that would give sponsoring financial institutions a 100 percent tax credit for matching savings contributions of up to $500.
The proposals came under immediate attack from Democrats in Congress, who cited the ballooning national debt and a federal deficit that could reach $521 billion this year. Sen. Tom Harkin (D-Iowa) called the Bush budget "sadly out of touch" for asking for "another $1.2 trillion in tax cuts for the wealthy."
The proposal on cash-balance plans, though, seems likely to get attention on Capitol Hill. Last month, the legislators asked the Treasury Department for a legislative proposal on these pensions, and Olson said officials had already been working on one and thus were able to include it in the budget.
Traditional pensions tend to reward long-serving employees but do not do as well for those who change jobs frequently. Cash-balance plans are more easily portable but may provide smaller pensions to long-serving workers. When a company converts, older workers sometimes find they will ultimately receive smaller pensions, and in some cases see benefits cease to increase for years while the formula for the new plan catches up with the old one -- a process dubbed "wear-away."
The administration would deem cash-balance plans to be not age-discriminatory as long as certain tests were met, something corporate sponsors have pushed for since a recent court case ruled they were discriminatory. The proposal also would allow companies to convert if they gave workers benefits during the five years after conversion that were at least as valuable as those they would have earned under the old plan. It would also ban "wear-away."
Any company that improperly reduced benefits would be charged an excise tax equal to any savings it realized from the cuts. But companies that were losing money and also operating underfunded pension plans would not be subject to the tax, potentially rendering the protections moot for some workers, officials said.
Private pension experts were cautious in reacting to the pension proposal, since many of its details have not been disclosed or even worked out.
"Treasury deserves a lot of credit for trying to move the discussion forward. There's general agreement that the survival of cash-balance plans is fairly integral to the future survival of the [traditional pension] system," said Kyle Brown of benefits consultant Watson Wyatt Worldwide. He and others expressed reservations about how the plan might work in practice.
Also in the Treasury plan are a wide range of tax cuts, including deductions for charitable contributions by non-itemizers, a refundable tax credit for the purchase of health insurance and an exclusion of the value of employer-provided computers for telecommuters.
It would also crack down on leasing deals between taxpayers, who get deductions, and "tax-indifferent parties," such as foreign entities and U.S. subway systems and municipal water authorities, who aren't taxed on their income. The Equipment Leasing Association promptly termed that a tax increase.

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>> STATE DEPT. COMES AROUND?

'The Right Thing to Do'
Tuesday, February 3, 2004; Page A15
Excerpts from an interview yesterday with Secretary of State Colin L. Powell by Washington Post reporters and editors.
Q Do you still feel confident that military invasion [of Iraq] was the right thing to do?
A Yes, I think it was the right thing to do, and I think history will demonstrate that. . . . Let me just go right into kind of the issue of the day, which is weapons of mass destruction. . . .
What was the threat that we talked about [before the war] with respect to weapons of mass destruction? And to talk about a threat, you have to look at the intent and you have to look at capabilities, and two of them together equals a threat.
And with respect to intent, Saddam Hussein and his regime clearly had the intent -- they never lost it -- an intent that manifested itself many years ago when they actually used such horrible weapons against their enemies in Iran and against their own people. That's a fact and that's a statement of his intent. . . .
There are different levels of capability. One level is that you have the intellectual ability, you have people who know how to develop such weapons and you keep training such people and you keep them in place and you keep them working together. He did. . . . And also you keep in place the kind of technical infrastructure, labs and facilities. . . . Did he do that? Yes, he did that.
And then the final level of capability is the one that's started getting all the attention now, is: Did it all come together and produce for everybody to see and be afraid of, an actual stockpile over there? And that is what is at question and that is what we have not found and that is what the various committees will be looking at. . . .
A lot has been said about [former U.S. weapons inspector David] Kay . . . and he did say, with respect to stockpiles, we were wrong, terribly wrong. . . . But he also came to other conclusions that deal, I think, with the intent and with capability which resulted in a threat the president felt he had to respond to. . . .
And there is no doubt in my mind that if Iraq had gotten free of the [United Nations] constraints and if we had gone through another year of desultory action on the part of the United Nations . . . there's no doubt in my mind that intention and capability was married up . . . and they would have gone to the next level and reproduced these weapons. Why wouldn't they? That was always [Hussein's] intention.
If CIA Director George Tenet had said a year ago today, if U.S. weapons inspector David Kay had said, that there are no stockpiles, would you still have recommended the invasion?
I don't know. I don't know, because it was the stockpile that presented the final little piece that made it more of a real and present danger and threat to the region and to the world. But the fact of the matter is the considered judgment of the intelligence community, represented by George Tenet, and also independently by the United Kingdom and other intelligence agencies, suggested that the stockpiles were there. I can't go back and give you the hypothetical as to what I might have done.
But the absence of the stockpiles . . . .
The absence of a stockpile changes the political calculus. It changes the answer you get, the formula I laid out. But the fact of the matter is that we went into this with the understanding that there was a stockpile and there were weapons, and for my own personal perspective, you know, I was the chairman for the first Gulf War, and we went in expecting to be hit with chemical weapons. We weren't hit with chemical weapons, but we found chemical weapons. And so it wasn't as if this was a figment of someone's imagination. . . . And so what assumption would one make some nine years after the inspectors had been moved, had been gone for four years? I think the assumption to make and the assumption that we came to, based on what the intelligence community gave to us, was that there were stockpiles present.
When you went over to the [CIA] to get more information about the things you were going to say to the United Nations [in a speech in February 2003], did you, as we have heard, push them to tell you what their sources for the conclusions were? . . . When you look back on that experience, did you push hard enough? Did you get, do you think, forthright answers?
[In meetings with intelligence officials] what I wanted to know is what information could I present that you guys feel comfortable to declassify and that you will give me sources and methods on, and that you're absolutely sure was multi-sourced, because I didn't want to put something out that would be shot down later, or that same afternoon, by some other intelligence agency or by the Iraqis. And so we really went through it. And I only used that information that I was confident the [Central Intelligence] Agency stood behind. . . . It was multi-sourced, and it reflected the best judgments of all of the intelligence agencies that spent that four days out there with me. And there wasn't a word that was in that presentation that was put in that was not totally cleared by the intelligence community.

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SPIEGEL ONLINE - 03. Februar 2004, 16:25
URL: http://www.spiegel.de/politik/ausland/0,1518,284788,00.html
Irakkrieg
Powell bekommt Skrupel
Colin Powell ist sich nicht mehr so sicher, ob die Entscheidung f?r den Irakkrieg richtig war. Wenn damals bekannt gewesen w?re, dass der Irak keine Massenvernichtungswaffen besitzt, h?tte er sich vielleicht nicht f?r den Feldzug gegen Saddam ausgesprochen, gestand der US-Au?enminister jetzt.
REUTERS
Au?enminister Powell
Washington - Auf die Frage, ob er sich f?r den Krieg ausgesprochen h?tte, wenn bekannt gewesen w?re, dass der Irak keine Massenvernichtungswaffen hatte, antwortete Powell: "Ich wei? es nicht, weil (Waffen)-Lager das letzte entscheidende Glied waren, das es mehr zu einer echten und akuten Gefahr f?r die Region und die Welt machte."
In dem Interview der "Washington Post" verteidigte der Au?enminister zugleich die Politik der US-Regierung. Er erkl?rte, der gest?rzte irakische Pr?sident Saddam Hussein habe die Absicht gehabt habe, biologische und chemische Waffen zu erwerben. Die Geschichte werde zeigen, dass die Entscheidung zum Krieg richtig gewesen sei.
Powell hatte in seiner Rede vor dem Uno-Sicherheitsrat am 5. Februar 2003 detaillierte Informationen ?ber angebliche irakische Massenvernichtungswaffen vorgelegt und damit der Welt die Begr?ndung f?r einen Krieg gegen den Irak pr?sentiert. Wie die "Post" berichtete, versuchte Powell in dem Interview nun die damalige Begr?ndung mit der heutigen Realit?t in Einklang zu bringen. Er gestand aber ein, dass die "Abwesenheit von (Waffen)-Lagern die politische Berechnung ver?ndere".
Der Minister reagierte mit dem halbst?ndigen Interview auf die Erkenntnisse des zur?ckgetretenen US-Chefwaffeninspektors David Kay, der dem Kongress in Washington k?rzlich erkl?rt hatte, dass Bagdad zu Kriegsbeginn wahrscheinlich keine Massenvernichtungswaffen besessen habe. Pr?sident George W. Bush hatte am Vortag erstmals einer Untersuchung der Geheimdienstinformationen ?ber angebliche irakische Massenvernichtungswaffen zugestimmt. Bush best?tigte, dass er eine unabh?ngige Kommission einberufen werde.
? SPIEGEL ONLINE 2004
Alle Rechte vorbehalten
Vervielf?ltigung nur mit Genehmigung der SPIEGELnet GmbH

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SPIEGEL ONLINE - 03. Februar 2004, 15:12
URL: http://www.spiegel.de/politik/deutschland/0,1518,284775,00.html
Deutsche AKW
Terroristen k?nnen GAU ausl?sen
Die Umweltschutzorganisation BUND schl?gt Alarm: Nach einem bislang unver?ffentlichten Gutachten der Gesellschaft f?r Reaktorsicherheit k?nnten Terroristen durch einen gezielten Flugzeugabsturz auf ein Kernkraftwerk eine Katastrophe ausl?sen, die den GAU von Tschernobyl in den Schatten stellen w?rde.
AP
Besonders gef?hrdet: AKW Obrigheim
Berlin -Der BUND sieht sich in dieser Ansicht durch ein Gutachten der Gesellschaft f?r Reaktorsicherheit (GRS) best?tigt. Eine vom Umweltministerium erstellte Zusammenfassung dieser bisher nicht ver?ffentlichten Studie hat der BUND heute vorgelegt. Damit solle die ?ffentlichkeit ?ber die Risiken des Weiterbetriebs der Kernkraftwerke aufgekl?rt werden.
"Terroristen sind in der Lage, an jedem Atomstandort in Deutschland einen Super-GAU auszul?sen. Auf Grund der vielfach h?heren Bev?lkerungsdichte k?nnen seine Folgen weit katastrophaler sein als in Tschernobyl", sagte die BUND-Vorsitzende Angelika Zahrnt. Bundesregierung und Bundesl?nder w?ssten seit langem von dieser Gefahr und blieben dennoch eine Erkl?rung schuldig, welche Gegenma?nahmen sie ergreifen wollen.
Besonders gef?hrdet sind nach BUND-Angaben die neun ?lteren Atomanlagen Obrigheim, Stade, Biblis A und B, Brunsb?ttel, Isar 1, Philippsburg 1, Neckar 1 und Unterweser. Hier k?nnte schon der Absturz eines kleineren Verkehrsflugzeugs die Katastrophe ausl?sen. Beim Absturz eines gro?en Flugzeugs auf einen Atomreaktor k?nnen aber auch die zehn neueren AKW au?er Kontrolle geraten.
? SPIEGEL ONLINE 2004
Alle Rechte vorbehalten
Vervielf?ltigung nur mit Genehmigung der SPIEGELnet GmbH

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>> GREENSPAN WATCH...

Magic Test
The estimable Alan Greenspan has a tightrope to walk.
By Larry Kudlow
Out on the campaign trail, Gov. Howard Dean has criticized Federal Reserve chairman Alan Greenspan for being "too political." Dean argues that Greenspan should be harping on Bush budget deficits and opposing tax cuts. Like so many Deanisms, this charge is whacky. Greenspan was in fact an obstacle to Bush's tax cut last May. At the time, the estimable Fed leader was worrying publicly about budget deficits, even though his emphasis has always been on spending restraint rather than higher taxes.
Dean's Fed attack may have legs, but for different reasons. The little-known fact is that Greenspan's job as chairman of the Federal Reserve Board is up for renewal this summer. While his seat as a board member doesn't expire until 2006, a decision on his reappointment is scheduled to be made in six months.
As events would have it, the Fed's most recent policy statement on interest rates removed the term-of-art phrase "considerable period" and inserted in its place the word "patient." Financial markets took this to mean a Fed rate hike has been brought a little nearer. Actually, futures markets are predicting a minor one-quarter-of-a-percentage-point increase in the fed funds policy rate sometime this summer. That's about when President Bush will decide on Greenspan's reappointment fate.
But Greenspan's reworking of the Fed's policy language may have been a brilliant move. Just the mere hint that a rate hike could come in mid-2004, instead of next year, caused the beleaguered U.S. dollar to appreciate. This in turn knocked the gold price down nearly $25 to around $400 -- a much more comfortable level, suggesting a diminished risk of higher future inflation. And while broad commodity indexes have had quite a run, these raw-material indicators are simply recouping prior losses and responding to huge industrial demands from the economic booms in China, the rest of Asia, and the U.S.
Yes, the stock market has been selling off since the announced change in Fed rhetoric. But after a continuous rally since early November, stocks were probably due for a minor correction anyway.
Keep in mind, part of the reason why the Fed is preparing us for an earlier rate rise is the positive economic story. Second-half real growth for 2003 has come in above 6 percent, with more of the same expected this year. Business profits are also coming in above expectations, productivity is gaining rapidly, and thanks to President Bush's last round of tax cuts, business investment spending is surging. Even exports are coming on strong.
President Bush told a White House meeting of economists that "the U.S. economy is strong and getting stronger," just as he urged Congress to make his tax cuts permanent and pledged to cut the deficit in half in five years. There's nothing on the Fed's plate that will disrupt this scenario -- certainly not a tiny rate hike this summer.
In political terms, however, the stock market looms as an important influence on the election. The risk of even a minor Fed rate hike a few months before the November tally might lead investors to assume that a string of interest-rate increases are coming. With 95 million shareholders in the U.S., and at least 164 million stock market accounts (up from only 20 million in 1988, according to the Investment Company Institute), there can be no doubt that the market's mood running up to November will have a big impact on the voting-booth decisions of investors.
In the 2000 presidential race, stocks slumped most of the year. The onset of the bear market substantially undermined the solid Clinton-Gore economic growth record, and helped elect George W. Bush. This time, any decisive market losses -- such as a 15 percent downward correction -- could jeopardize Bush's reelection shot, even though he is clearly the pro-investor candidate. How could he not be? His large economy-boosting tax-cuts on dividends, capital gains, upper-bracket income, and small owner-operated businesses are exactly the tax measures that John Kerry and the other Democrats intend to repeal.
So, this is the political tightrope that Alan Greenspan will have to walk. His renomination at the Fed as well as the election itself may be up for grabs.
And yet, with core inflation less than 1 percent, the economy on a tear, and job-creation set to explode, the question remains: Is any Fed tightening necessary this year? Or, if the Fed decides that a minor rate hike is necessary this summer, will they be able to sell it in a non-threatening way, so as to not upset the politically powerful stock market?
The so-called Greenspan Standard will be put on full public display during the political season. The Fed chairman's magic touch will be tested as never before.
-- Larry Kudlow, NRO's Economics Editor, is CEO of Kudlow & Co. and host with Jim Cramer of CNBC's Kudlow & Cramer.
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>> FBI WATCH...

The Technology Trade
By Konrad Trope, Esq.*
February 2004
A New Chapter in the War on Terrorism: The FBI Wants Expanded Wiretapping Authority
The debate over government interception of Internet communications has expanded to a new technology, namely Voice over Internet Protocol ("VoIP") transmissions. Indeed, representatives of the FBI's Electronic Surveillance Technology Section in Chantilly, Virginia have been meeting secretly with the Federal Communications Commission since July, 2003, exploring ways to provide the FBI with more regulatory authority to "wiretap" Internet communications, and in particular VoIP transmissions. [i] The FBI along with the U.S. Drug Enforcement Administration and the U.S. Department of Justice want VoIP providers declared as "telecommunications carrier[s]" under the Federal Communications Act of 1996 and the Communications Assistance for Law Enforcement Act of 1994 ("CALEA").[ii] These three federal law enforcement organizations declared that if left unregulated, VoIP would provide a means of communications whereby "terrorists, spies, and criminals ... [can] most likely evade lawful electronic surveillance." [iii]
Voice Over Internet Protocol allows analog voice signals to be digitized into packets of data, sent over a series of networks, and reassembled at the other end. [iv]. In other words, telephone calls that have traditionally, since the late 19th century, been made through Public Switching Technology Networks ("PSTN") are now initiated, transmitted and received through computer networks, and thereby avoid long distance telephone charges. The technology, introduced in 1995, stumbled along until recent improvements in the sound quality and transmission reliability have made "phone carriers ...practically tripping over each other to announce aggressive VoIP strategies aimed at both consumers and businesses." [v]
Today, VoIP transmissions constitute up to ten percent of all calls made in the United States, with estimates of up to 2.5 million U.S. subscribers.[vi] By 2006, it is anticipated that well over 7 million VoIP units will be in circulation.[vii]
The most popular reason that businesses and consumers give for switching to VoIP is cost savings. Flat rate service plans, including unlimited local and long distance calls range from $20-$40, which is 20-40% lower than service plans being offered by PSTN companies. The main reason for the cost savings is that VoIP transmissions are not regulated like regular telephone service. VoIP providers therefore do not have to pay the same taxes and access fees that are passed onto consumers. [viii]
A technological benefit of VoIP is more efficient use of the broadband cable, which currently carries half of all VoIP transmissions. Voice, data (e.g., faxes, e-mail, instant messaging), and video can all be transmitted simultaneously through broadband cable, record an outgoing message and leave it in their customers' voice mail inboxes with one click, instead of repeating the same message several times a day. Moreover VoIP transmissions can be recorded, labeled, indexed, stored, and retrieved when necessary. [ix] These technological benefits have made VoIP the new "target" of the Federal Government's War on Terrorism.
Under existing federal wiretapping laws, the FBI already has the ability to seek a court order to conduct surveillance of any broadband user through its DCS 1000 system, previously called Carnivore. [x] But federal law enforcement agencies worry that unless Internet service providers, and in particular VoIP providers, offer surveillance hubs based on common standards, lawbreakers can evade or, at the very least, complicate surveillance by using VoIP providers such as Vonage, Time Warner Cable, Net2Phone, 8X8, deltathree and Digital Voice. [xi]
The origins of this debate date back nine years, to when the FBI persuaded Congress to enact a controversial law called the Communications Assistance for Law Enforcement Act ("CALEA"). [xii] The 1994 legislation requires that telecommunications services rewire their networks to provide police with guaranteed access for wiretaps. The legislation also empowered the FCC to issues regulations defining what categories of companies were subject to the broad sweeping legislation.[xiii] So far only traditional PSTN (analog) companies and wireless phone services have been subject to CALEA.
The FBI now has taken the position that the combination of the federal wiretap laws, originally enacted in 1964, and amended numerous times since,[xiv] along with CALEA, give it the authority to wiretap DSL and other types of broadband services, including VoIP. [xv]
Critics are worried about privacy issues. Under CALEA, "telecommunications services" as defined under CALEA and the 1994 Federal Communications Act [xvi] are required to modify their equipment so that law enforcement officials can effectively "wiretap" both data and voice transmissions. [xvii] In particular, since VoIP represents the "blending" of data and real time voice transmissions, privacy advocates worry that VoIP "wiretapping" will lead to "dataveillance", where data such as location information will be routinely collected for surveillance, without any investigatory predicate.[xviii] Moreover, neither VoIP providers nor the FBI can explain what will be done to ensure that private parties do not engage in illegal monitoring of private citizens, gaining access to privileged information, confidential business/trade secrets, or even sensitive medical information.[xix]
Moreover, the FBI has said that if broadband providers cannot isolate specific VoIP calls to and from individual users, they must give police access to the "full pipe"--which, therefore, inevitably would include hundreds or thousands of customers who are not the target of the investigation.[xx] This technological short-coming of VoIP "wiretapping" would inevitably lead to over-inclusive sweeps of conversations and data transmissions that are not the "target" of any government probe.
Some companies like MetaSwitch and Cisco Systems, Inc. have already cooperated with the FBI's request for CALEA compliance to make their VoIP hardware products "surveillance friendly." These two companies have "developed backdoor technology in their VOIP products that enables the FBI to eavesdrop at will." [xxi] Yet segregating particular voice packets not the target of a search warrant still presents technological hurdles to many VoIP providers, leaving many VoIP transmissions subject to interception despite falling outside of the scope of the federal search warrant that authorized the interception.
On the other hand, not all Internet service providers see themselves as "adverse" to the interests of the FBI. EarthLink, for instance, wants CALEA and the Federal Wiretapping Statutes applied to VoIP calls. If VoIP calls escape being subjected to this expanded regulatory scheme, it would mean that VoIP stays "unregulated" as far as the FCC is concerned. Such de-regulation of Internet services, would allow the Baby Bells such as Verizon and BellSouth to raise the rates charged to ISP's, such as EarthLink, for access to the copper wire that runs to subscribers' homes and businesses. [xxii]
EarthLink, as an ISP provider has, therefore, admitted that it sees "the FBI as an ally of sorts," said David Baker, EarthLink's vice president for law and public policy. [xxiii]
The federal courts are split on this issue of expanding government power to regulate [and therefore intercept Internet transmissions], and in particular VoIP. The Ninth Circuit Court of Appeals, for instance, in October, declared, to the delight of Internet Service Providers (ISP's) such as EarthLink, that the cable operators to the extent that their broadband services use the Internet, are telecommunications providers, making them subject to state and federal regulations, including FCC regulations. [xxiv] In the same month, a federal district judge in Minnesota issued an injunction against the Minnesota Public Utilities Commission, barring it from seeking to impose tariffs on VoIP provider Vonage. [xxv] Consequently, the Minnesota Federal District Court decision allows Vonage to escape being subjected to the FBI's request to the FCC to expand the reach of CALEA. [xxvi]
CONCLUSION
Everything is pointing to the exponential growth of VoIP use. VoIP usage might even exceed the prediction that by 2007, seventy-five percent of all voice traffic will travel over the Internet. Thus, it appears that the FBI's request for expansion of its "wiretapping" authority versus and the FCC Chairman Michael Powell's stated desire to further unleash the Internet, making it free from government regulation are set on a collision course.
The same statutes that allow for wiretapping also authorize other government activity such as taxation of the Internet and the mandating of services such as 911, guaranteed access, remote area service, and service for the hearing impaired. On the other hand, if the Internet and in particular VoIP is ultimately declared to be free from the string of regulations and tariffs that surround traditional PSTN providers, then government officials seeking broader "wiretapping" authority may be stymied in their efforts to intercept VoIP transmissions and neutralize this new form of a national security threat.

* Konrad Trope is a cyberspace and intellectual property attorney with a national practice, based in Los Angeles. His practice focuses on cyberspace, intellectual property and entertainment litigation, transactions, and regulatory counseling. He is a member of the ABA Cyberspace Committee and a member of the California State Bar Cyberspace Committee. He can be reached at ktrope@earthlink.net .

Endnotes:
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[i] See 18 U.S.C. ?? 2510, 2511, 2518; Declan McCullagh, FBI targets Net phoning, CNET News.com, July 29, 2003 at http://news.com.com/2100-1028_3-5056424.html?tag=mainstry ; Joint Comments of U.S. Department of Justice, U.S. Drug Enforcement Administration, and the Federal Bureau of Investigation, December 15, 2003, submitted to December 1, 2003 Federal Communications Commission VoIP Forum at http://ww.fcc.gov/voip/materials-submit.html.031215VOIPForum .
[ii] See 47 U.S.C. ??153, 1000 et. seq.; Joint Comments of U.S. Department of Justice, U.S. Drug Enforcement Administration, and the Federal Bureau of Investigation, December 15, 2003, submitted to December 1, 2003 Federal Communications Commission VoIP Forum at http://ww.fcc.gov/voip/materials-submit.html.031215VOIPForum; LightReading.com, FBI Protests VoIP Approach, January 9, 2004 at http://www.lightreading.com/document.asp?site=lightreading&doc_id=45695 .
[iii] Joint Comments of U.S. Department of Justice, U.S. Drug Enforcement Administration, and the Federal Bureau of Investigation, December 15, 2003, submitted to December 1, 2003 Federal Communications Commission VoIP Forum at http://ww.fcc.gov/voip/materials-submit.html.031215VOIPForum.
[iv] Jeff Tyson, How IP Telephony Works, howstuff works.com, at http://computer.howstuffworks.com/ip-telephony1.htm , telephony2.htm, telephony3.htm, and telephony4.htm, (last visited on December 4, 2003; Voice Over Internet Protocol, International Engineering Consortium Online Tutorial, at http://www.iec.org/online/tutorials/int_tele/ (last visited Nov. 16, 2003).
[v] Knowledge@Wharton, Behind VoIP's renaissance, Wharton School of the University of Pennsylvania, January 17, 2004.
[vi] Ben Charney, Free ride over for VoIP, CNET New.com, August 25, 2003 at http://news.com.com/2100-1037-5067465.html?tag=n1 .
[vii] Frost & Sullivan, VoIP Analysis, October 16, 2003, VoIPWatch.com at http://www.voipwatch.com/article.php3?sid=101 .
[viii] Michael Powell, Chairman Federal Communications Commission, The Age of Person Communications: Power to the People", January 14, 2004 Speech to the National Press Club, Washington, D.C.; Charles M. Davidson, Florida Public Service Commission, VoIP, FCC Forum--December 1, 2003 at http://www.fcc.gov/voip/presentations/davidson.ppt ; Knowledge@Wharton, Behind VoIP's renaissance, Wharton School of the University of Pennsylvania, January 17, 2004
[ix] The Siemon Company, White Paper: Video over IP, www.siemon.com , August 2003; Cisco Systems, Inc., White Paper: The Strategic and Financial Justification for IP Communications, 2002.
[x] Declan McCullagh, FBI targets Net phoning, CNET News.com, July 29, 2003 at http://news.com.com/2100-1028_3-5056424.html?tag=mainstry;
[xi] Id.; see also Joint Comments of U.S. Department of Justice, U.S. Drug Enforcement Administration, and the Federal Bureau of Investigation, December 15, 2003, submitted to December 1, 2003 Federal Communications Commission VoIP Forum at http://ww.fcc.gov/voip/materials-submit.html.031215VOIPForum
[xii] See 47 U.S.C. ??1000, et. seq.
[xiii] Id.
[xiv] See 18 U.S.C. ??2510, et. seq.
[xv] Joint Comments of U.S. Department of Justice, U.S. Drug Enforcement Administration, and the Federal Bureau of Investigation, December 15, 2003, submitted to December 1, 2003 Federal Communications Commission VoIP Forum at http://ww.fcc.gov/voip/materials-submit.html.031215VOIPForum
[xvi] 47 U.S.C. ?? 153, 1000 et. seq
[xvii] Id.
[xviii] Marc Rotenberg, Electronic Privacy Information Center Comments on VoIP, December 15, 2003 submitted to December 1, 2003 Federal Communications Commission VoIP Forum at http://www.fcc.gov/voip/comments/EPIC.txt
[xix] Id.
[xx] Declan McCullagh, FBI targets Net phoning, CNET News.com, July 29, 2003 at http://news.com.com/2100-1028_3-5056424.html?tag=mainstry; see also Joint Comments of U.S. Department of Justice, U.S. Drug Enforcement Administration, and the Federal Bureau of Investigation, December 15, 2003, submitted to December 1, 2003 Federal Communications Commission VoIP Forum at http://ww.fcc.gov/voip/materials-submit.html.031215VOIPForum
[xxi] LightReading.com, FBI Protests VoIP Approach, January 9, 2004 at http://www.lightreading.com/document.asp?site=lightreading&doc_id=45695
[xxii] See 47 U.S.C. ??251(c)(3) &(4)(A); Declan McCullagh, FBI targets Net phoning, CNET News.com, July 29, 2003 at http://news.com.com/2100-1028_3-5056424.html?tag=mainstry
[xxiii] Declan McCullagh, FBI targets Net phoning, CNET News.com, July 29, 2003 at http://news.com.com/2100-1028_3-5056424.html?tag=mainstry
[xxiv] Brand X Internet Services, et. al. v. FCC, 345 F3d 1120 (9th Cir. 2003)
[xxv] Vonage Holdings Corp. v Minnesota Public Utilities Commission, et. al., 290 F. Supp. 2d 993 (D. Minn. 2003)
[xxvi] Marc Rotenberg, Electronic Privacy Information Center Comments on VoIP, December 15, 2003 submitted to December 1, 2003 Federal Communications Commission VoIP Forum at http://www.fcc.gov/voip/comments/EPIC.txt

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>> DEMS WATCH...

Issues of Civil Justice and Tort Reform:
What Role Will They Play in the Democratic Primaries?
By ANTHONY J. SEBOK
tsebok@findlaw.com
----
Monday, Jan. 26, 2004
The early stages of the Democratic presidential primary race have been marked by intense media scrutiny of the personalities of the candidates. Still, it is not too early to begin thinking about where they stand on the issues that matter to the voters and the party that the candidates seek to represent.
On certain "big" issues, such as the war in Iraq and the economy, it is easy to find out what the candidates think, although sometimes it is more difficult to figure out whether they actually disagree with each other. In this column, I will take a look at an issue that does not often get a lot of attention: civil justice and tort reform.
Tort reform may not be a "hot button" issue for many voters in New Hampshire or South Carolina. But it is a very important issue for some of the largest contributors to both parties.
The Democratic Party, especially, has become increasingly more dependent on contributions from members of the plaintiffs' bar. In fact, in my opinion, trial lawyers, in a sense, play the same role in the Democratic Party that the National Rifle Association plays in the Republican Party: The role of the eight hundred pound gorilla no one dares to disobey Even if a Democrat disagreed with the views of the American Trial Lawyers Association (ATLA), I think it would be very difficult for him or her to vote against its wishes.
Because tort reform is not an issue that wins primaries, the candidates have said very little on the subject so far. Still, a lot can be gleaned from their websites and, more importantly, their past statements and actions.
I am going to focus on the major four candidates who are currently leading in New Hampshire; I suspect that some or all of them will be the focus of the primaries until a winner emerges, or is selected in Boston.

Howard Dean's Views on Tort Reform
I begin with Howard Dean because he seems, at first glance, to be the candidate who, for personal reasons, would be ATLA's least favorite candidate. After all, he is a doctor married to a doctor. Last year doctors marched in front of state houses and went on strike in many states demanding tort reform and protection from trial lawyers.
Furthermore, as the website Overlawyered has pointed out, in 1988 then-Lieutenant Governor Dean published a letter in the New York Times that seemed to imply that he would support limitations of tort damages at both the state and federal level.
Presidential candidate Dean has moderated his views, however. The question is whether his current positions fall within the Democratic Party's conventional views on tort reform.
Fortunately, Dean's campaign website is unusual in that it has a section devoted to the candidate's position on medical malpractice. Dean notes that both patients and doctors are ill-served by the current liability system. Dean believes that the states should "discourage frivolous lawsuits while still holding the health care system accountable." This formula seems appealing but vague: The problem is that these two ideals often conflict in practice.
So what concrete state-levels reforms does Dean endorse? On his website, he mentions only "non-binding pre-litigation review" of malpractice suits by expert panels, and the use of arbitration panels as a last resort before litigation. However, these reforms have been adopted by many states already, and, unfortunately, while they are excellent ideas, they do not seem to have effectively addressed the concerns of physicians and tort reformers.
What about on the federal level? Dean says that he opposes the Republican federal medical malpractice reform bill, which would cap damages throughout the nation. Dr. Dean is to be applauded for having broken ranks with the AMA on this issue, although it is hard to tell whether his stand is principled or driven by a realistic understanding of who hold the pursestrings in his party.
In any event, Dean does endorse one federal reform that has been supported by the AMA. He calls for the passage of the Patient Safety and Quality Act, which was co-sponsored by Vermont's maverick ex-Republican Senator Jim Jeffords. This bill tries to promote patient safety by allowing doctors and hospitals to report medical "adverse events" to specially-designated organizations in confidence. The law is based on recent theoretical work by public health specialists who believe that fear of litigation is inhibiting the free flow of information that could be used to review and improve medical procedures.
While I think that the Patient Safety and Quality Act sounds like a good idea, it should come as no surprise that consumer groups, who are traditionally skeptical of any thing that might inhibit litigation, are suspicious of the act. Consumer Union, for example, has said that the bill "would make it nearly impossible for consumers to compare the quality of care provided by doctors and hospitals, as well as keep hospital infection rates from becoming public."
Thus, in this one area, Dr. Dean may have trumped the judgment of Candidate Dean -- alienating numerous consumers and patients, in order to aid doctors and the progress of medicine.

John Edwards's Views on Tort Reform
If Howard Dean might have appeared to be ATLA's least favorite candidate, John Edwards appears to be its poster child. John Edwards was, until he entered the Senate a few years ago, one of America's most successful trial attorneys. He made his fortune, in part, on trying very large medical malpractice suits.
John Edwards is to be credited for using his career as a plaintiffs' attorney as a device to build and bridge between liberalism and the individualism that appears to have led critical voters (especially Southern males) to vote Republican. This view has become very clear both from Edwards' book published last fall, Four Trials and an essay he published in Newsweek in response to their cover story criticizing the tort system. (I discussed the original article in a recent column.)
In his book and in his Newsweek essay, Edwards describes himself as a champion of the "old-fashioned" values of personal responsibility and just deserts. In his view, the doctors and corporations he sued "deserved" to be punished no more and no less than Willie Horton -- the famous parolee used by the Republicans to paint the Democrats as "soft on crime" -- did.
Furthermore, while Edwards is a vociferous critic of tort reform, he is willing to admit that the medical malpractice system has been abused by his fellow lawyers. On his campaign website he suggests, like Dean, that before a medical malpractice suit can be filed, a lawyer should be required to get an expert physician to certify that there may be a valid medical complaint. As I noted above, however, this type of expert-based reform is pretty weak stuff.
But then Edwards goes on to make a more daring suggestion. He suggests that a lawyer who brings three frivolous lawsuits should be forbidden from bringing another one for ten years. Constitutionally, this reform would probably have to be enacted on the state level -- outside of the President's bailiwick. Nonetheless (or, perhaps, for this reason), it's very smart of Edwards to support it..
The truly brilliant part of Edwards's proposal, is how it once again uses criminal justice rhetoric associated with the Republican Party. At the end of his proposal on sanctioning lawyers, Edwards says, "in other words, three strikes and you're out."
Later on, Edwards says the same thing about sanctioning doctors who have been proven to have committed malpractice. I have no idea whether Edwards really wants to adopt the "three strikes model" for professional malpractice, but the net effect of this language is to make it harder for his opponents to paint Edwards as a knee-jerk defender of the tort system.

John Kerry's Views on Tort Reform
John Kerry has been in the Senate longer than any of the other leading candidates, and so, along with Joe Lieberman, he has had the most opportunities to actually respond to national tort reform efforts. However, Kerry seems to have stayed on the sidelines as much as possible with regard to questions of civil justice.
Kerry voted for the 1995 Private Securities Litigation Reform Act, a Clinton-era limitation on the right to sue for federal securities fraud. The Act was passed in part because in the mid-90's, the Democratic Party was sensitive to the concerns of a new group of wealthy funders--Internet entrepreneurs who thought the class action plaintiffs' bar was unfairly targeting Silicon Valley.
Later, Kerry voted against the Common Sense Product Liability Reform Act of 1996. But that was unexceptional: Almost all of the Democratic Party (Lieberman excepted) opposed the Act.
Finally, and curiously, Kerry was absent for the vote to end the Democrats' filibuster of the Class Action Fairness Act, a major recent tort reform effort.
Kerry's website says nothing specifically about tort reform. But he does, in an oblique way, suggest that he wants to see more federal civil litigation in one area--RICO, the Racketeering-Influenced Corrupt Organizations Act. (RICO was enacted to address organized crime, but by its language may reach a number of different kinds of patterns of conduct involving criminal activity.) Kerry, who was once a prosecutor, suggests that one step he would take as president is to propose that RICO be expanded so that "investors who have lost money due to late-trading schemes" can sue in federal court to recover their losses.
Obviously, Kerry's view on RICO, in particular, does not tell us much, if anything, about his true feelings about civil litigation in general. What this view does tells us, though, is that Kerry understands that Americans are quite angry about corporate fraud.

Wesley Clark's Views on Tort Reform
For obvious reasons, Wesley Clark has had the least opportunity of all the other candidates to experience the civil justice system firsthand. Thus, it is very hard to predict from his background and past actions what, if anything, he thinks about the civil justice system.
Clark's website does, however, have a section devoted to civil justice. It reports that Clark opposes the major recent Republican tort reform efforts to cap medical malpractice awards and to shift class actions from the state to the federal courts.
The site suggests that Clark, or whoever is advising him, understands what is at stake in debates over tort reform. It notes that President Bush described the medical malpractice system as a lottery where plaintiffs enter hoping that they hold "winning tickets" -- and strongly counters this view of our system. As Clark points out, it is not true -- as Bush suggests -- that patients who sue and win are not really suffering, and thus feel like lottery winners when they get compensated. More likely, the patients breathe a sigh of relief that the jury recognized that they were truly injured, and compensated them accordingly.
Clark is also right to the extent that he suggests that if our medical malpractice system does need to be reformed, it is because many of the injuries suffered by plaintiffs were not caused by anyone's carelessness -- and thus, it is unfair for corporations to pay the bill for these injuries. (Yet on the other hand, it would be tragic if plaintiffs were left uncompensated because they lacked health or disability insurance.)
Overview of the Candidates: Democrats Who See Some Need for Tort Reform
This brief review of the four leading candidates tells us as much about the current state of debate over tort reform in the United States, as it does about the differences between the candidates.
This composite picture of the Democratic Party shows that the party is not unaware of the need to reform parts of the civil justice system. Even the positions taken by Dean and Edwards--though the two are members of professions that view each other as natural enemies--are nuanced and reasonable, and not so wildly dissimilar.
The message I take from the candidates positions, then, is an optimistic one: If the special interests that control the Democratic Party can be kept at bay, it is possible that the party may be able to develop a true "common sense" approach to tort reform.

Anthony J. Sebok, a FindLaw columnist, is a Professor of Law at Brooklyn Law School, where he teaches Torts, among other subjects. His previous columns on tort law can be found in the archive of his columns on this site.

Iraq's Oil Mess

"Reconstructing Iraq's oil industry the right way is essential to the ongoing reconstruction of the country. Unfortunately, it might not be possible."

Fall 2003
by Irwin Stelzer
"We're dealing with a country that can really finance its own reconstruction, and relatively soon," Deputy Defense Secretary Paul Wolfowitz assured Congress shortly after the war to oust Saddam Hussein was launched. That was then, this is now. Wolfowitz seems to have been off by a few hundred billion dollars.
The opponents of the war--with what National Interest editor John O'Sullivan calls their "sleeping radical instincts and . . . inverted patriotism" aroused--predicted a long and bloody battle; they were wrong. The advocates of regime change foresaw garland-bearing welcoming committees and an Iraq so awash in oil and so ripe for Western-style democracy that the cost to the United States of Iraq's reconstruction would be minimal; they, too, were wrong. The former are, predictably, unapologetic. The latter are faced with the costly proposition that he who would call the tune must pay the piper--or share tune-calling authority with other potential paymasters.
The expense of reconstruction will be exacerbated by ongoing acts of sabotage and efforts to stop them. A recent survey by the U.S. Army Corps of Engineers of 700 miles of wire in Iraq found 623 destroyed transmission towers, compared with just 20 after the war (Wall Street Journal, September 5, 2003). Even under the most optimistic assumptions about our ability to secure the nation's oil field equipment, pipelines, ports, and transmission grid--and optimistic assumptions are the sp?cialit? du maison of the Pentagon--Iraq cannot possibly export enough oil in the foreseeable future to cover the costs of reconstructing its clapped-out physical and government infrastructures, never mind paying off whatever portion of its massive debt falls outside the category known as "odious debts" (those taken on by despots merely to strengthen the regime and repress the population).
There is worse, much worse. Solving current security problems is only one essential if the Bush administration is to achieve its long-term goal of creating a democratic, market-oriented government that will be a model for other Middle Eastern countries. Equally and arguably even more important is the question of just what sort of oil industry we plan to bequeath to the new Iraqi government; for if we know one thing about countries that rely on oil revenues for the great bulk of their incomes and wealth, it is that government control of a preponderant portion of a nation's gross domestic product (GDP) distorts economic activity, creates incentives for the entrepreneurial classes to seek their fortunes by catering to government bureaucrats rather than to consumers, provides governments with the ability to purchase the tools necessary to repress their peoples and to buy off terrorists by funding their activities in other countries, and results in the sort of society and government we now see in Saudi Arabia--unless, of course, we are among those blinded by the administration's penchant for shielding the Saudi royal family from criticism.
Unsafe for Democracy
As things now seem to be shaping up, any hope for major changes in the structure of Iraq's oil industry has become the most important victim. Pentagon sources say that all energy, physical and intellectual, is being absorbed by the current attempt to gain control of the country, at the expense of all other policy chores. When all is said and done, Iraq will have a state-owned-and-operated monopoly oil industry that is a dutiful member of the OPEC cartel, providing a flow of funds to a central government that we will find uncongenial. Indeed, even if we do find the energy to attempt to plant the seeds of a free-market economy of the sort that our designated administrator, Paul Bremer, originally had in mind, it is unlikely that those seeds will flower in Iraq's desert soil and hostile climate--witness the rallying of Iraq's business class around the protectionist banner. (One leading Iraqi businessman says that in the absence of protection from foreign competition, "local companies will be completely smashed" [Wall Street Journal, June 25, 2003], a not-unreasonable assumption given the lack of investment in these companies for several decades, and their forced operation in a non-market economy.)
Start with the fact that there is nothing in the history of the region or of the Arab states to suggest that democracy can take root in Iraq. Of twenty-two Arab states, not one has an elected government. As conservative columnist George Will puts it, it is not clear that "national cultures . . . are infinitely malleable under the touch of enlightened reformers." Even if democracy in some form can be imposed on Iraq, only a truly (wildly?) optimistic analyst can believe that it will result in anything approximating Americans' notions of a liberal society, replete with institutions erected to shield the citizen from an overweening state. If you doubt the possibility that our plans to shape Iraq's future--plans based on the premises that we have the knowledge and will have the power to do that--will prove to be nothing more than an imperial conceit, treat yourself to a combination of Bernard Lewis (The Crisis of Islam: Holy War and Unholy Terror, London: Weidenfeld & Nicolson, 2003) and Fareed Zakaria (The Future of Freedom: Illiberal Democracy at Home and Abroad, New York: W. W. Norton & Company, 2003). Or consider whether the outcome of a free election in Saudi Arabia is more likely to confer power on one of the enlightened young Arab democrats whom New York Times columnist Tom Friedman is so fond of interviewing, or on Osama bin Laden or one of his acolytes.
While pondering that question, consider the statement of Hussein Jassem Ijbara, a former general in the Iraqi Republican Guard, now installed by American forces as governor of Salahadin province, and ensconced in what has been described by observers as "a well-appointed office in the government palace in Tikrit" (Financial Times, June 24, 2003). "In my opinion," says the new governor, "they needed someone strong who could run Salahadin province in the place of Saddam Hussein. . . . We have a system now very much like they have in the United States. Our province is like an American state. I have all the power." So much for the new Iraqi leaders' understanding of the American-style democratic government that our policymakers have in mind not only for Iraq but for the entire Middle East.
We are already witnessing the execution of liquor merchants, the censoring of films, and the unwilling use of the hijabe head covering by frightened women who felt no need to cover up when Saddam was in power, perhaps foretelling the emergence of what columnist Nicholas Kristoff calls "Iran Lite." (See "Cover Your Hair," New York Times, June 24, 2003. Kristoff also quotes a leader of a Shiite fundamentalist party that is winning support as saying, "Democracy means choosing what people want, not what the West wants.") And reports from Iraq suggest that after the devastation of the 1991 war, which destroyed power plants and other infrastructure facilities, the country was up and running within forty days, in contrast with the current situation, in which the Coalition Provisional Authority (CPA) was unable until recently to restore services to prewar levels despite inheriting an infrastructure far less war-damaged than the one we left to Saddam after the first Gulf war. (See the report by Charles Clover in the Financial Times, June 25, 2003.)
Sure, there are large parts of the country in which our pacification and reconstruction efforts are bearing fruit. But only those blinded by hatred of the one-sidedly gloomy reports of the antiwar, I-told-you-so faction would argue that we are succeeding at anything approaching the pace we had anticipated when occupying Iraq. Or even that we have figured out how to succeed. Our early plan to assign an adviser to each of the twenty-odd newly appointed Iraqi ministers reflects an arrogance not seen since the last Soviet Gosplanner hung up his computer (more likely, his slide rule).
Our plan is to have each ministry, under the guidance of an American adviser, draw up plans that accurately predict revenues, costs, tax receipts, and the like, while other technocrats set wages, prices, and the right exchange rate for the new currency; decide which debts should be repaid and which repudiated; and perform other chores ordinarily left to the market. Note that we are not content to talk about getting things running at pre-war levels, but are aiming to produce far higher levels of services and prosperity, levels never before seen in Iraq.
Crude Oil Realities
The plans for the oil ministry are a case in point. Ibrahim Mohammed Bahr al-Uloum, the minister appointed by the Governing Council to run the oil industry, is a petroleum engineer, but his main qualification seems to be his choice of father--a leading Shiite cleric who sits on the Council when not temporarily suspending his membership to protest some aspect of U.S. policy or performance. Mr. Bahr al-Uloum favors privatization of downstream facilities such as refineries, but is less certain that the nation's 112 billion barrels of proven reserves, the world's largest with the exception of Saudia Arabia's, should pass from state control. Production-sharing agreements with American and European countries might be countenanced, and Arab neighbors will be asked to help in the rehabilitation of existing fields, but any decision for complete privatization must, the new minister says, await the election of a new government, with the prospects for a "yes" vote on privatization somewhat dimmed by a culture described by the new minister as dominated by the fact that "people lived for the last thirty to forty years with this idea of nationalism" (Financial Times, September 5, 2003), suggesting that a bit of humility about our prospects for reorganizing Iraq's oil industry along private, competitive lines might be in order.
Iraq is believed to be capable of producing about 1.8 million barrels per day at present, but is probably producing less than that. A few hundred thousand barrels are used for oil field operations, and another 500,000 barrels are needed for domestic consumption--to produce fuel for power plants, and to make gasoline, diesel, and kerosene for domestic use. In addition, the Kurds are siphoning off significant quantities. Repeated sabotage of the main northern pipeline to the Turkish port of Ceyhan makes it impossible to export all of what is produced. Latest figures suggest that exports are running at something like 645,000 barrels per day, far below both prewar levels and the occupying powers' forecasts. In sum, oil revenues won't come close to meeting the costs of occupation and reconstruction, even when exports rise substantially.
But let's assume that, like my fellow economists, I am so accustomed to practicing my "dismal science" that I have difficulty seeing the bright side of things. And let's assume further that it is indeed within our power to impose a durable new order on Iraq's oil industry, and that the free-market plans set out by Paul Bremer can indeed be implemented. And just to keep things on the bright side, let's assume that Iraq can soon again become an important exporter. The principles to follow if we are to have any hope of achieving our goals are straightforward.
First: No return to the prewar structure. We know that the typical system of state ownership is a failure in every particular. In the end, it impoverishes the citizens (if that is the right word) of the producing country; witness the two-thirds decline in per capita income in Saudi Arabia in the past decade. This is a consequence of
? an inflated currency valuation that makes the producing country unable to compete in world markets as anything but a seller of oil;
? the belief that wealth springs from the ground, no work needed, which leads a native population, already ill-educated to function in the modern world, to refuse to work and instead to rely on immigrants to do not only the dirty work but all the work;
? the corruption incident to the huge revenues flowing to a ruling elite, a generally unsavory crowd that uses a small portion of the oil money to bribe the masses into lethargy with free telephone service and a few other amenities, and most of the rest to support a life of luxury unimaginable even in the affluent West, with a little left over to support the terrorist organization du jour so as to fuel the fires of the Israeli-Palestinian war and focus local discontent on Israel rather than on the ruling regime.
That describes Saudi Arabia as it is today, and Iraq as it was before the overthrow of Saddam Hussein and likely will be again if the oil industry is not restructured.
Second: Any reform must have a good chance of surviving the departure of the occupying forces. If we optimistically assume that we have the nous and power to change the way Iraq's oil wealth is used, the new order we impose must be irreversible. We may be in Iraq longer than we had hoped, and certainly longer than we had planned, but we won't be there forever. So we must consider the possibility that a post-CPA Iraqi regime will want to turn the clock back to the good old days of palaces for the few and poverty for the many.
In my view, that eliminates as a possibility any scheme that involves setting up some sort of fund to be used in the interests of the Iraqi people. A post-CPA regime could very easily redirect to itself and its Swiss bank accounts, or its military, or its weapons program, the funds flowing into any pot intended to be used for education, health, and other "good" purposes.
In short, Iraq ain't Alaska, and not only because of differences in climate. In Alaska, oil royalties go into a fund that is distributed directly to the state's citizens, for them to spend as they see fit, to the consternation of Alaska's legislators, who repeatedly fail in their attempts to have the money flow into the state's coffers for redistribution as the politicians and bureaucrats see fit.
The need for a scheme that would survive the departure of American and coalition forces also rules out having the occupying authorities turn ownership of Iraq's oil reserves over to foreign, and especially American, oil companies. No matter how transparent any bidding procedure, no matter how inflated the price paid to Iraq for rights to its reserves, those contracts will be seen as negotiated between an American administrator and American oil companies. They could not possibly survive the departure of our soldiers.
Third: Durable change can come only if we vest ownership in Iraq's oil wealth directly in the people. Shares in the nation's oil companies--and it would be well to have several companies--can be distributed to all Iraqis, perhaps with the proviso that they are not immediately tradable, so as to prevent those who are now very wealthy from extracting unreasonable terms from desperately needy sellers who fared poorly under the old regime. This is not the place to develop all of the details of this plan, even were I competent to do so. That chore is best left to the economist Hernando de Soto and others who specialize in this area. All we need know at this point is that a new Iraqi government, no matter how much it might want to seize control of the nation's oil income, would have a more difficult time confiscating or nationalizing shares held by Iraqis than it would recapturing ownership rights held by American and other foreign oil companies.
Back to OPEC?
Which leaves the knotty question of OPEC. One of our hopes was that Iraq, eager for current revenue, might remain outside the embrace of the oil cartel, which has invited it back into the fold, an invitation Mr. Bahr al-Uloum has said he will accept. There is still a possibility--increasingly remote--that Iraqis will apply a higher discount rate to future revenue flows than, say, Saudi Arabia, and produce all the oil that Iraq's fields can pump out without further damaging the nation's fields. But even if we decide to embrace this rosy scenario, we can't ignore the fact that, at least for the foreseeable future, the Saudis and their partners are cutting back their own output to make room in the market for such oil as Iraq is capable of producing, leaving the volume of oil reaching world markets unchanged--unless some major new region comes on line more rapidly than it is now reasonable to anticipate. (My Hudson Institute colleague, Max Singer, believes that the production of Canada's ample reserves of shale oil is increasingly economic and is a viable long-run alternative to Saudi oil. See his "Saudi Arabia's Overrated Oil Weapon," The Weekly Standard, August 18, 2003.)
Of course, we do not live only for cheap oil, although competitive prices would have the same effect as an additional tax cut and would entail none of the long-term negative consequences of the current plunge into long-term federal budget deficits. So a restructured Iraqi oil industry that contributed to the dilution of the power of the central government by depriving it of first call on the industry's oil revenues would be good news not only for Iraqis but also for those of us hoping that a less troublesome Iraq, and a possible model for other countries in the region, will be the long-term payoff for our current pain and that the new Iraqi government will decide not to play ball with the oil cartel.
But regardless of whether it chooses to operate within or outside of OPEC, it is unlikely--not impossible, but unlikely--that Iraq will become an important enough exporter in the next few years to fund its reconstruction. The country's industry must first be made safe from sabotage, and billions must be invested to upgrade old fields that have suffered from underinvestment and to find new reserves.
Which brings us back to where we started. If America is willing to pay the piper to the tune of, say, 1 percent of its GDP, it can continue to call the tune and hope that my pessimistic view of our chances of converting Iraq and its Middle Eastern neighbors into freedom-loving, tolerant, and largely capitalist nations is simply wrong. If not, we must make the trade-off of further lowering the cost in U.S. blood and treasure by sharing authority with France and "donor" countries that do not share our goals--which will reduce the probability of success below even its low current level.
Whatever else we do, we should remember Kuwait, the country we saved from Saddam and has since refused to allow American companies to participate in its oil industry. Like Kuwait, Iraq's future behavior is unlikely to be informed by any sense of gratitude.
"What soon grows old? Gratitude." So said Aristotle. Therein lurks a lesson for American policymakers who are relying on just that virtue as they attempt to reconstruct Iraq, and who continue to rely on the OPEC countries we saved from Saddam in 1991 to provide an uninterrupted flow of competitively priced crude oil. The French, saved by us more than once from becoming German-speakers, and the Germans, saved by us from becoming Russian-Speakers, are living proof of the proposition that expectations of gratitude have no place in the development of foreign policy.


Irwin Stelzer is a Senior Fellow and Director of Economic Policy Studies for the Hudson Institute. He is also the U.S. economist and political columnist for The Sunday Times (London) and The Courier Mail (Australia), a columnist for The New York Post, and an honorary fellow of the Centre for Socio-Legal Studies for Wolfson College at Oxford University. He is the founder and former president of National Economic Research Associates and a consultant to several U.S. and United Kingdom industries on a variety of commercial and policy issues. He has a doctorate in economics from Cornell University and has taught at institutions such as Cornell, the University of Connecticut, New York University, and Nuffield College, Oxford.
To respond to this article, please send an email to amoutlook@hudson.org


CHINESE CITIZENS' RIGHTS ACTIVIST APPEALS WEB SITE CLOSURE
2004-01-30
The founder of a Chinese Web site set up to advise ordinary people of their legal rights has lodged an appeal with a Beijing court, renewing his battle to reverse the government's closure of his site, RFA's Mandarin service reports.
"This afternoon, my attorney officially submitted the appeal to the First Intermediate Peopls's Court of Beijing," Web site founder Li Jian told RFA on Jan.29. "The court agreed to deliberate on the case, and we paid the legal fee. This means that our lawsuit is reactivated again."
Li said the lawsuit against the Beijing municipal government's Telecommunications Management Bureau had only one aim--to get his Web site up and running again. He argues that the decision to pull the plug on his site violates Chinese law, because no regulations exist yet governing sites run by private individuals.
"I got hold of a faxed copy of the bureau's decision through a merchant who provided our Web servers," Li said. "In that document, it says the Beijing Telecommunications Management Bureau reached the decision, which was based on an internal memo issued by the Ministry of Information Industry."
So Li went to visit the Ministry, where he was told that they had instructed the municipal regulators to deal with the matter "according to the law." The trouble is, according to Li, that no relevant law yet exists.
"They don't have specific laws and regulations on which to base their administrative actions. That's why it's illegal to shut down my Web site because they don't have any laws regulating individual Web sites. They didn't follow any legal procedures," he said.
Li is also hoping that this case will highlight the very issues that led him to set up the site in the first place.
"China is moving more and more towards becoming a society ruled by law, and we all have seen law playing a greater and greater role. So through this channel, I'm hoping that the citizens' rights protection Web site will become a legally recognized site in China," he said.
China has kept a tight hold on Internet use by its citizens, for fear that its critics could organize themselves into an effective opposition and disseminate their views to China's fast-growing population of cyber-surfers. While the government is keen to promote the rule of law in theory, the idea of citizens protecting their rights via the Internet is extremely sensitive.
Government filters block access to Web sites abroad run by dissidents, human rights groups, and some news organizations. The Chinese authorities are thought to have detained more than 30 people since the Internet boom began in the late 1990s, often for simply expressing pro-democratic leanings in online postings and articles.#####
Copyright ? 2001-2004 Radio Free Asia. All Rights Reserved.


IN SMUGGLED LETTER, SOUTH KOREAN IN CHINESE JAIL REPORTS SUFFERING
2004-02-02
'I am suffering in prison not for doing evil but for doing good'
A South Korean man currently serving a five-year sentence in a Chinese prison for helping defectors from North Korea has smuggled a heart-rending letter to his family, cut painstakingly from the pages of a prison Bible, RFA's Korean service reports.
"Someone mailed me a letter from my husband," the man's wife, Bong-soon Kim, told RFA. "I think this person secretly received it from my husband in the prison... He cut out letters that he needed from the Bible and pasted them onto the paper one by one."
Kim said her husband, Young-hoon Choi, was arrested by Chinese police along with a photographer, Jae-hyun Seok, for helping North Korean defectors in the northern Chinese port city of Yantai, which lies on the Bohai Bay and Yellow Sea, across from the Korean Peninsula.
She said she had been allowed to visit Choi during his trial, when he looked unhealthy. "I think they took the glasses away to prevent accidents. He has very poor eyesight," she told reporter Won-hee Lee. "As you know, letters in the Bible are quite small. It is painful to think that he had to cut out every single letter and pasted them onto a paper without even glue to send his heart to us."
In the letter, Choi called on his family to band together to support each other in his absence. "As you know, I am suffering in prison not for doing evil but for doing good. So I hope that you will not be ashamed of your father for being in prison," he wrote.
"I am spending time every day thinking of you and your mother and serving God."
Kim said Choi had begun to get involved with the troubles of North Korean defectors during his frequent business trips to China. "I think during that time, he saw people in trouble and thought about ways to help them and started participating in helping them. I am hoping for an early release but I still haven?t heard anything," she said.
She said repeated appeals to the South Korean government to work for Choi's early release had met with reassurances, but no result so far. "The government tells me not to worry, saying that it is continuously requesting China for an early release but no progress has been made. So as his family we are having a very hard time," Kim said.
She called on the South Korean government to work harder to secure Choi's release, adding that her two daughters, aged 16 and 11, were still unable to cope with their father's absence.
"I can't talk about their dad because they cry whenever I talk about him. I think my daughter?s feelings toward her dad became more intense when the holiday season came around and the weather became cold... One day I came home from work and found out that she posted her writing on the Web site."
Choi's letter said: "I would like to tell my beloved wife that I love her truly and faithfully. I also want to say that I am sorry and grateful. To you, I am a sinner."
"Listen my children. During my absence, respect my beloved wife, your mother. And I hope that you, Sun-hee and Soo-jee, will love each other and make your mother happy every day by being earnest, diligent, and cheerful good daughters," the letter said.
Kim said Choi had recently been transferred to a prison in Yantai, along with Jae-hyun Seok. "I guess my husband and Mr. Jae-hyun Seok cross each other?s path every now and then. And now he is allowed to use writing tools," she added. ###


CAN CHINA AFFORD TO FUEL ITS ECONOMIC GROWTH?
2004-01-29
Booming demand squeezes global oil stocks, boosts prices
China, which has already overtaken Japan as the world's second-largest oil importer, surprised industry analysts last year with a huge increase in oil imports, prompting concerns that the country may not be able to afford its fuel bill for much longer, Radio Free Asia (RFA) reports.
"I can't think of any country where oil imports have increased so rapidly both in relative and absolute terms, and the consensus seems to be that this growth will continue, at least in absolute terms," Robert Ebel, of the U.S.-based Center for Strategic and International Studies, told RFA in a recent interview.
"You have to wonder, can they continue to afford buying the oil that they need to support their economy, particularly if prices of oil stay where they are at today's level--32 or 33 dollars a barrel?" Ebel told special correspondent Michael Lelyveld.
China's oil imports soared far above official forecasts last year, prompting concerns that the energy deficit could damage the country's economy. Crude oil imports rose by 31 percent in 2003 to more than 91 million tons, compared with the previous year. And the overall bill for foreign oil rose by 55 percent year-on-year to almost U.S.$20 billion.
Firstly, domestic production simply cannot keep up with demand. PetroChina's output increased by less than one percent last year, while production at the country's biggest resource, the Daqing oilfield, actually fell.
Secondly, the war in Iraq and recovery from the SARS outbreak brought bumps and shocks to China's oil demand, which is having a global impact, boosting demand and prices--and adding more to China's energy costs.
Edward Morse, an energy analyst at Hess Energy Trading Company, says that China can afford the growing cost of oil imports in the near term, but that there may be problems sustaining such import levels in the longer term. "I don't think it's getting to be a problem in the short run. The problem comes from compounding the rate of growth over a few years," he said.
Morse predicted that China's fleet of cars and trucks would double over the next five years, resulting almost certainly in a doubling of fuel consumption for transportation purposes.
"Looked at in the perspective of five or 10 years from now, the current trend really could cause them to rethink whether they can afford to do what they're doing," he told RFA.
What's more, China's booming oil demand is in itself contributing to higher costs by driving up global prices. "Their growth in demand this (past) year was surprising," said Jason Feer, Singapore bureau chief for the oil industry weekly Petroleum Argus. "China alone accounted for a third of the overall world growth in demand for oil. So, that certainly had an impact on price."
"And I think there's certainly a valid point that the more they demand, or the faster their rate of growth, the more impact that will have on their own economy," Feer said, adding that China's plans to build an emergency crude reserve would exacerbate the effect, if implemented.
Last year, the cost of foreign oil rose to 1.4 percent of GDP from one percent a year before. Total consumption of crude oil was equal to nearly four percent of GDP. The figures do not include the cost of refined fuels or other energy sources like coal, which have also grown.
And China so far has shown few signs of addressing energy efficiency issues which might ease the situation. "So far, the government has swung back forth with arguments about whether the economy is overheated or not," Ebel said. "In the meantime, the economy has powered ahead with unrestrained growth in sectors like auto manufacturing despite energy shortages, leaving no option but to buy more foreign oil."
Plans to impose new rules for better fuel mileage in new cars are in the pipeline, but the effect may not be felt for years, he said. #####

MONGOLIAN OIL COULD HELP CHINA'S ENERGY WOES
2004-02-02
Company hopes for pipeline into northern China
A Mongolian oilfield first discovered in the early 1990s has proven far more promising than originally believed, prompting calls for a pipeline linking it to northern China, RFA's Mandarin service reports.
The UK-based Soco International oil company said it had drilled four exploration wells in the Zuunbayan field, at the northeastern tip of Mongolia, during 2003. It said it had found significant reserves of a higher quality and greater predictability than was previously known in the area.
"We've discovered oil in a much better reservoir, at a shallower depth than the previous wells and one which we think we'll be able to predict with much greater certainty where to drill in the future," Soco International's president and chief executive Ed Story said in an interview.
"The key in what we've been about is to get enough quantity, proven reserves, to then go forward to build a pipeline so you can move larger quantities to sell to China," Story said, adding that Soco and its Chinese and Vietnamese partners had long had an eye on the China market.
China is facing skyrocketing oil bills as a result of strong economic growth, overtaking Japan in 2003 to become the world's second-largest oil importer. So far, its attempts to negotiate pipeline deals with major producers like Russia and Kazakhstan have not yielded fruit.
Wang Baoji, a Chinese representative at the project for the Huabei Petroleum Management Bureau, agreed that the oilfield was a significant find. "We've been cooperating with Soco since 1989," he told RFA. "As for production, it's been coming onstream fairly fast now. It's not bad... particularly Area 19 [in the Tamtsag Basin area]." He said the project had also promoted cooperation between China and Mongolia.
Huabei currently holds a 10 percent stake in the venture, with PetroVietnam holding 5 percent, and Soco 85 percent. The oilfield currently exports around 500 barrels daily by truck to China.
Story said Soco had chosen to work with Huabei--which provides drilling services--partly because of their previous experience drilling in a similar deposit in China, and partly for economic reasons.
"We use Chinese rigs and Chinese personnel who've come over actually from the Huabei area, and that's the key, so we've got the costs down," he said, adding that Soco was probably the first oil company even to use Chinese drilling rigs outside China.
Those savings meant that Soco could afford to drill more wells in any given year, with a potential to export as much as 10,000 barrels per day if a pipeline were built. He said that now that the potential of the Mongolian oilfield was known, a pipeline would stand a good chance of attracting development funding.
"From the standpoint of China... it would be the closest source of additional oil reserves, although not on the scale of those in Russia, but certainly it could become significant, it could be very secure, and really support a trading relationship between China and Mongolia," Story said.
China's oil imports soared far above official forecasts last year, prompting concerns that the energy deficit could damage the country's economy. Crude oil imports rose by 31 percent in 2003 to more than 91 million tons, compared with the previous year. And the overall bill for foreign oil rose by 55 percent year-on-year to almost U.S.$20 billion. #####
Copyright ? 2001-2004 Radio Free Asia. All Rights Reserved.


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Company reports

Real-time reality
Jan 29th 2004
From The Economist print edition
Why does it take firms so long to produce their annual results?
"THE market has given unusual attention to the report of the Deutsche Bank," noted The Economist of March 5th 1904, "owing to the splendid results announced."* This year the Deutsche Bank will announce its results (expected to be less than splendid) on February 5th. In a century the bank has speeded up the production of this vital piece of information by four weeks. Other German firms have persisted with 19th-century reporting schedules. TUI, a big travel group, has declared that it will not reveal its 2003 results until it holds its annual press conference on March 31st. That is much later than most German banks were reporting their annual profits a century ago.
Next to the snail-like TUI, big American firms look like accounting cheetahs (sic). America's biggest financial business and its biggest manufacturing firm--Citigroup and General Motors (GM), respectively--each produced their annual results this year on January 20th, within three weeks of the end of the reporting period. That is considerably less than the 90 days that firms are allowed by America's securities legislation to file Form 10-K, the document revealing their annual results.
But even the speed of American firms is by no means as impressive as it seems. For one thing, there has been little improvement for 20 years. In 1984, General Electric announced its results on January 17th, one day later than this year; the same year Citicorp (as Citigroup then was) came out with its results two days earlier than in 2004. Given the advances in information technology in the intervening decades, could corporate accounting departments have been expected to do better? Cisco Systems, one of the most advanced users of IT in America, is scheduled to produce its results for the quarter to January 24th on February 3rd. Given its enthusiasm for the "real-time enterprise", should Cisco by now be coming up with its results on the day after the period to which they apply, if not on the day itself?
A real-time enterprise (RTE) has computer systems that are so intimately inter-linked that information flows among them almost instantaneously. Many firms are trying to set up such systems so that they avoid nasty shocks. GM is keen on the idea, to such an extent that its boss, Rick Wagoner, is said to know the firm's bottom line some two weeks before it is revealed to outside investors. Others, such as Wet Seal, an American retailer, are today gathering most cost and revenue data daily.
In "Heads Up" (to be published in April by the Harvard Business School Press), Kenneth McGee, a vice-president of Gartner, a research firm, describes a "large services company" whose fixed costs are so stable that it can predict its profits for the current quarter, within a 1% margin of error, on the basis of the number and type of customers in the early part of the quarter. Its boss is thus able to spot business icebergs well before they hit him. These days, says Mr McGee, "there is no such thing as a legitimate business surprise."
Mr McGee's enthusiasm for RTEs comes from the power they give managers to anticipate problems. He also believes that by the end of this decade high-performing RTEs will be publishing their earnings per share on a daily basis. This, he claims, will give them a competitive edge in raising capital. Most accountants, however, remain sceptical. Baruch Lev, professor of accounting at New York University's Stern School of Business, points out that earnings figures are based on more than raw facts. They involve estimations and assumptions about things like losses from bad debts. Calculating those will always take time. So perhaps Citigroup will not, after all, announce its 2103 results any earlier than the third week in January 2104.
* "Since a week ago the annual statements of the remaining large banks of the city have been published. The market has given unusual attention to the report of the Deutsche Bank, owing to the splendid results announced. The dividend (11 per cent), it is true, is not increased, owing to the heavy amounts written off and carried to the reserves, but the net earnings of the bank show a large gain over 1902. These reached ?1,215,350, being ?183,700 more than for the previous year. From the earnings ?181,500 is carried to the reserves, which now stand at ?2,950,000, and ?63,900 is written off on buildings. The total turnover for the year shows a further large gain, having amounted to ?2,982,000,000, or ?132,850,000 more than for 1902. The bank's quick assets are returned at ?36,100,000, being an increase of ?2,400,000; deposits and creditors at ?39,450,000, or ?3,500,000 more than at the end of 1902. The above are all record figures. Of the ?2,785,000 in securities owned by the bank only ?168,000 represents railway, bank and industrial shares, all the rest being in fixed interest-bearing paper. While the market had expected an increase of the dividend to 12 per cent, the report has made a most satisfactory impression."
Copyright ? 2004 The Economist Newspaper and The Economist Group. All rights reserved.
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Corporate tax
A taxing battle
Jan 29th 2004
From The Economist print edition
Governments around the world are scrabbling for scarce corporate taxes
NOBODY wants to pay taxes. No wonder, then, that so many companies spend so much effort trying to avoid them. Almost every big corporate scandal of recent years, from Enron to Parmalat, has involved tax-dodging in one form or another. In the latest revelation on January 26th, Dick Thornburgh, the man appointed to look at the collapse of WorldCom, released a report claiming that, as well as the slew of other crooked dealings of which the bankrupted telecoms company is guilty, it also bilked the Internal Revenue Service (IRS) of hundreds of millions of dollars in taxes through a tax shelter cooked up by KPMG, its auditor.
Tax authorities around the world rightly fret that such cases are the tip of a large iceberg, and they are starting to act. In America, home to many of the best-known corporate-tax scams of recent years, the Bush administration has announced a series of anti-tax-dodging measures in its new budget, which will be presented to Congress on February 2nd, including an extra $300m to boost enforcement and the shutting of corporate-tax dodges that could bring in, it reckons, up to $45 billion over the next ten years.
But the IRS was becoming stroppier even before these measures. In early January, it slapped GlaxoSmithKline, a big British drugs company, with a $5.2 billion bill, claiming that Glaxo Wellcome, its predecessor, underpaid taxes on profits made in America from 1989 to 1996. Even though Glaxo had paid taxes on its profits in Britain, and although there is a "double-taxation" agreement between Britain and America, which means that a company should not have to pay tax on the same profits in both countries, the IRS decided that much of this profit had, in fact, been made in America. GlaxoSmithKline is to fight the tax bill in court.
Whatever the outcome of that case, the company's woes, and the prospect of being taxed twice on the same profits, have sent a shiver through the tax departments of multinationals everywhere. A tax partner at one big accounting firm says that "transfer pricing" is the biggest worry for tax directors at the overwhelming majority of big companies. Disputes between multinationals and tax authorities have been rising anyway, according to tax experts at the accountancy firms that are often embroiled in them. The IRS has showed that it is upping the stakes further.
Many of these disputes, which rarely see the light of day, occur over transfer pricing. This is the method used by multinational firms to value goods and services bought and sold among subsidiaries, and is a big determinant of the profits booked--and thus taxes paid--in a given country.
Two trends show the increasing rift between companies and the tax authorities. The first is a spike in so-called "advance pricing agreements" (APAs). In these, tax authorities and a nervous multinational essentially agree on its transfer-pricing methodology. Even though these are cumbersome and time-consuming, by March last year the IRS had signed 434 such agreements since the first one in 1991, and their number has surged in recent years: in 2002, the IRS signed 87 APAs, 40% more than two years earlier.
The second revealing trend is the way in which the big accounting firms are beefing up their transfer-pricing departments. In Britain alone, the combined numbers employed by the four-biggest accounting firms in transfer pricing has tripled in recent years, even though their clients have themselves also been employing more people to deal with tax issues.
A global headache
These spats demonstrate a growing unease among governments that the obvious benefits of a globalising economy come with a high price: a loosened grip on the companies that increasingly can and do shift their employees, know-how, capital and even headquarters overseas--and with them their taxable profits.
Put simply, multinationals are becoming more, well, multinational. According to UNCTAD, a United Nations agency, in the early 1990s there were 37,000 international companies with 175,000 foreign subsidiaries. By last year, there were 64,000 with 870,000 subsidiaries. Increasingly, such companies are being managed on regional or even global lines, not national ones. An extraordinary 60% of international trade is within these multinationals, ie, firms trading with themselves. Many have global brands, global research and development, and regional profit centres. The only reason for preparing national accounts is that tax authorities require it. But it is hard to say quite where global firms' profits are generated.
Governments have responded to this fluidity partly by reducing their corporate-tax rates. According to KPMG, a big accounting firm, OECD countries cut corporate-tax rates by nearly seven percentage-points between 1996 and 2003. Some have cut aggressively. Ireland slashed corporate-tax rates by some 23 percentage points over the same time period, and attracted much foreign investment as a result--to the fury of fellow EU members.
Countries have also built ever-higher barricades of complex rules to retain what they see as their fair share of corporate profits. And rich countries are not alone in doing this. In recent years, India, Thailand and other developing countries have added their own transfer-pricing regulations to the existing jumble.
Navigating this mishmash of regulations is no easy task. Transfer prices are very tricky. Most countries set them at "arm's length"--ie, the price an independent party would pay for a given service or product. Though the principle is a nice one, the practice is complicated, particularly because companies are increasingly service-oriented and rely more on brands, intellectual property and other hard-to-price intangibles. The issues raised by transfer pricing can thus be dauntingly philosophical. "You are dealing with fundamental questions, such as what creates value," says KPMG's Ted Keen. "And the answer is different every time."
The quarrel between GlaxoSmithKline and the IRS, for instance, revolves around what made Zantac--its hugely profitable ulcer drug--so valuable. Was it the money poured into research and development in Britain, or the advertising and marketing in America? Clearly, both were factors, but deciding how much was contributed by whom, and thus how to divvy up costs, profits and taxes is hard.
Of course, transfer pricing is open to manipulation. A report by America's Senate in 2001 claimed that multinationals evaded up to $45 billion in American taxes in 2000. Whatever the truth of this claim, some of the report's details were eye-catching: one firm sold toothbrushes between subsidiaries for $5,655 each.
Moreover, there is a mound of evidence, says James Hines, a tax expert at the University of Michigan, that shows that international companies tend to report higher taxable profits in countries where taxes are lower. Yet, as he says, this is not necessarily illegal or bad. Companies owe it to their shareholders to avoid paying unnecessary taxes. The trouble is that one person's abuse is another's smart planning. And the tension between those two views is likely to increase.
Copyright ? 2004 The Economist Newspaper and The Economist Group. All rights reserved.
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Galileo and GPS
Where it's at
Jan 29th 2004
From The Economist print edition
A European satellite-navigation network is on its way
IT IS now almost two years since the European Union decided to go ahead with plans to launch a satellite-navigation network to rival America's existing Global Positioning System (GPS). For much of this time, Galileo, as the European system is called, met with staunch opposition from America. However, a round of talks last November seems to have assuaged American concerns. The final details remained to be negotiated in talks in Washington, DC, on January 29th and 30th, as The Economist went to press. But the outlook for an agreement was good.
The core of the disagreement between the EU and America was whether the signals from the two competing systems might interfere with one another. More specifically, the Americans wanted the ability to jam Galileo without rendering GPS signals ineffective. The agreement reached in November was the first step in this direction. In return for the modification of Galileo's signals, the Americans agreed to give Europe technical assistance in developing Galileo, and to make sure that the third generation of GPS, to be deployed in 2012 (Galileo should be operational by 2008), will conform to Galileo's standards. This will aid the interoperability of the two systems, which is a commercial goal of both sides. It will also, in principle, give the Europeans the ability to jam the American signals in the event of a crisis in which the two sides' interests differ.
There is a bewildering array of different sorts of signals involved in each network. GPS currently has two, a civilian channel known as C/A and a military one, Y-channel. Plans for an additional military channel, called M-code, are in the works. Galileo will debut with five different signals: one freely available to all, like the GPSC/A signal; a commercial service which is more precise; a "safety-of-life" service that can be used for critical applications such as automatically landing aeroplanes; a "public regulated service" (PRS), which will be used by the EU's governments, and presumably, their armed forces; and a fifth, unique, service that combines positioning information with a distress beacon, which could be used by ships at sea or intrepid mountaineers. The negotiations in November resolved a conflict between America's M-code and the European PRS. What remains is to harmonise Galileo's free signal with the M-code.
Both systems rely on signals precisely timed from atomic clocks carried by the satellites (GPS has 24 satellites, Galileo will have 30). A user looks at the time on at least four satellites, and triangulates (or, perhaps, "quadrangulates") between them to find his position. Differences in the details of the different signals are what make the "premium" applications. Some are more precise than others, and they also have different levels of encryption, to prevent unauthorised users from accessing them.
What makes the situation bizarre is that several of these signals will overlap with one another, within a frequency range known as the L-band (this is about 10 times higher than the frequency used by commercial FM radio stations). That can be done using a technology called spread spectrum, which is now common in mobile telephones.
The trick is to embed the signal in a dense "pseudorandom" sequence (it is pseudorandom because it looks random but is actually generated by a computer program). To an uninitiated recipient, the result appears to be noise. However, if the recipient knows the right starting values for the program, he can regenerate the sequence and disentangle the original signal. The signals can overlap because each, to the others, resembles noise.
Galileo will be in part a commercial system. A concessionaire will get the right to operate the system for a fixed period in return for plunking down two-thirds of the deployment costs--around ?2.2 billion ($2.8 billion). But control and ownership of the network will remain with the EU (most of whose members are, or soon will be, America's military allies in NATO), through a yet-to-be-formed, and ominously titled, "Surveillance Authority".
This means that American fears about the use of Galileo during, say, a crisis in the Taiwan Strait, are perhaps overblown. Despite the fact that China recently agreed to pay ?200m towards Galileo's development, it will not have access to the PRS channel, nor a say in how Galileo is run during a crisis, according to Paul Flament, an engineer at the European Commission who is working on Galileo. The same is true of other prospective partners such as India and Israel. (Brazil is involved in an early stage of negotiations as well.)
Sceptics question whether Galileo will indeed prove profitable. They suggest that the concessionaire might face huge liabilities in the event of an accident. But at least four consortia are bidding to become the concessionaire, and these consortia include such firms as EADS (the owners of Airbus) and Alcatel. Optimistic projections talk of 2.5 billion users by 2020. If even a small fraction of that number needed additional precision and were willing to pay for it, the business would be lucrative. America may yet regret not privatising part of GPS.
Copyright ? 2004 The Economist Newspaper and The Economist Group. All rights reserved.

Japanese charged for espionage

2004-02-03 / Associated Press /
Prosecutors in Japan detained a Japanese man yesterday in response to an American request that he be handed over to face industrial espionage charges in the United States, media reported.

Takashi Okamoto, 43, a former researcher at the Cleveland Clinic in Cleveland, Ohio, was charged in May 2001 with conspiracy, economic espionage and interstate shipment of stolen property related to Alzheimer's disease research.

Tokyo prosecutors took Okamoto into custody after receiving an order from Justice Minister Daizo Nozawa to investigate the case, Kyodo News Agency reported. The prosecutors will decide whether to take the matter to the Tokyo High Court, which would rule whether he should be extradited.

Japan and the United States have an extradition treaty, but Tokyo only sends its citizens to face charges abroad if they have been accused of acts that are also illegal in Japan. While Japan doesn't have any economic espionage laws, the Justice Ministry decided Okamoto's acts constituted theft and destruction of property under Japanese law.

Okamoto is now a doctor at a hospital on Japan's northernmost main island of Hokkaido. He resigned from the Cleveland Clinic in 1999.

According to the indictment, Okamoto left the United States on August 17, 1999, a day after he and another Japanese man, Hiroaki Serizawa, allegedly left vials of tap water in place of missing genetic materials.

Okamoto allegedly arranged for them to be sent to the Institute of Physical and Chemical Research, north of Tokyo.

U.S.-accused industrial spy nabbed as Japan studies extradition request
The Tokyo High Public Prosecutor's Office placed a researcher in detention Monday in preparation for an examination into an extradition request filed by the United States, where he has been charged with industrial espionage.
Takashi Okamoto
Takashi Okamoto was taken to the Tokyo Detention House after Justice Minister Daizo Nozawa ordered prosecutors to examine the extradition request. They were to ask the Tokyo High Court to conduct the examination, sources said.
The high court will decide within two months whether Japan should hand the 43-year-old Okamoto over to the United States based on a bilateral extradition treaty, they said.
If the court approves extradition -- which is likely given that no such request in the past has been rejected -- the justice minister will order the prosecutors to hand him over within 30 days.
Okamoto, a former researcher at the Institute of Physical and Chemical Research (Riken) in Japan, was charged in the U.S. in May 2001 with stealing genetic material on Alzheimer's disease developed by the Learner Research Institute at the Cleveland Clinic Foundation, where he had previously worked.
He had returned to Japan by the time the indictment was handed down.
There is no industrial espionage charge in Japanese law, but the Justice Ministry has concluded that Okamoto's actions would be equivalent to theft and destruction of property if committed in Japan, according to the sources.
The conclusion led the ministry to support the handover of Okamoto to U.S. authorities in line with the extradition treaty, under which an offense must violate laws in both countries for extradition to take place, they said.
It is the first case in which the U.S. Economic Espionage Act has been invoked, and it has led to an amendment of Japan's Unfair Competition Prevention Law to criminalize the leakage of business secrets.
In the U.S., economic espionage carries a maximum penalty of 15 years in prison or a $500,000 fine.
The U.S. asked Japan in March 2002 to extradite Okamoto. The ministry has been studying whether he could be legally handed over on the basis of U.S. investigation findings.
Okamoto initially denied taking the genetic material from the institute, but later admitted it. However, he has argued that he is not guilty because the material is of no value.
According to the indictment, Okamoto took DNA, cell line reagents and other research materials on Alzheimer's disease from the foundation without permission when he was working as a researcher at the foundation in July 1999.
He left the materials with Hiroaki Serizawa, 42, a former assistant professor at the University of Kansas, before taking them to Japan for the benefit of Riken, a government-backed laboratory, according to the U.S. allegations.
Serizawa was also indicted for industrial espionage in the U.S., but the charges were dropped in a plea bargain in which he pleaded guilty to perjury and agreed to cooperate in the investigation. He was fined in connection with the case last May.
According to the Justice Ministry, eight Japanese have been handed over to U.S. authorities since the bilateral extradition treaty took effect.
The Japan Times: Feb. 3, 2004
(C) All rights reserved

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Mexico First Lady Could Run for Mayor
ASSOCIATED PRESS
MEXICO CITY (AP) - Members of President Vicente Fox's political party have formed a committee to back the first lady in a run for Mexico City mayor - despite polls consistently showing her as a leading presidential candidate, a newspaper reported Monday.
El Universal newspaper quoted two Congressmen in Fox's conservative National Action Party as saying the mayor's office would be a natural first step in Marta Sahagun's untested political abilities.
"With this support committee we are starting a network that will help Marta Sahagun and that will begin making the necessary contacts," said Rep. Jorge Triana Tena.
Sahagun's spokesman David Monjaraz said the first lady "had no knowledge of the existence of this alleged committee, not to mention who would be on it. This was not her initiative."
In January, Sahagun applied to become a member of National Action's 300-delegate national council, a first step toward officially seeking the presidential nomination. Term limits bar Fox from seeking the presidency again.
Initially, Sahagun denied having any presidential hopes, but that soon changed to a wait-and-see attitude.
"It will take strong reflection, and it has to make complete sense," she told The Associated Press on the sidelines of the Special Summit of the Americas earlier this month in the northern city of Monterrey.
Shortly thereafter, National Action director Luis Felipe Bravo Mena said rumors that the first lady will seek the presidency were "speculation that a lot of people are having fun with, but ultimately is not the least bit serious."
"I have always had the clear conviction that Mrs. Marta Sahagun will not be our candidate," Bravo Mena said.
Sahagun was Fox's spokeswoman before the couple married in 2001 on the one-year anniversary of his historic election. She has never held public office.
From the beginning, she broke the Mexican tradition of seen-but-not-heard first ladies, traveling around the country in support of the government and championing her private anti-poverty foundation.
Sahagun consistently has placed very high in 2006 presidential polls, close behind the front-runner, populist Mexico City Mayor Andres Manuel Lopez Obrador. Lopez Obrador also has denied presidential aspirations, and term limits prevent him from running again for mayor.
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AP: Nuclear Black Market Is Small, Covert
By GEORGE JAHN
ASSOCIATED PRESS
VIENNA, Austria (AP) -
The nuclear black market that supplied Iran, Libya and North Korea is small, tight-knit and appears to have been badly hurt by the exposure of its reputed head, the father of Pakistan's nuclear program, diplomats and weapons experts told The Associated Press.
They describe the network that circumvented international controls to sell blueprints, hardware and know-how to countries running covert nuclear programs as involving people closely dependent on one another.
Abdul Qadeer Khan, who founded Pakistan's nuclear program, is emerging as the head of the ring believed to have been the main supplier through middlemen over three continents. A Pakistani government official revealed Monday that Khan has acknowledged in a written statement transferring nuclear technology to Iran, Libya and North Korea.
The sales, during the late 1980s and in the early and mid-1990s, were motivated by "personal greed and ambition," the official said, speaking on condition of anonymity. The official added that the black market dealings were not authorized by the Pakistani government.
European diplomats also said it appeared unlikely President Pervez Musharraf sanctioned the deals. But with Khan close to previous governments, senior civilian and military officials before Musharraf's takeover in 1999 likely knew of some of the dealings, they said, speaking on condition of anonymity in interviews Monday and this past week.
They described Khan as the head of an operation likely involved in supplying both North Korea and Iran with uranium enrichment technology and hardware in the late 1980s and early 1990s. Libya was also a customer, receiving an array of nuclear-related equipment and know-how that included blueprints of a nuclear bomb handed over to U.S. and British intelligence officials late last month, they said.
Middlemen responsible for meshing supply and demand were located in European capitals, Asia and the Middle east, they said, typically working with Iranian, Libyan and North Korea's diplomats stationed abroad.
These would identify their country's needs and the intermediaries would then procure the orders, often ordering sensitive parts from manufacturers unaware of the end destination or purpose of what they were selling, they said. Most of those companies, were in Germany, Austria and Switzerland and other West European countries with the technological expertise to make finely machined centrifuge parts and other components.
Hundreds of millions of dollars changed hands over the past 15 years, in deals as easy to hide as a floppy disc storing sensitive drawings or as bulky as thousands of centrifuge parts for nuclear enrichment, a key part of building a weapons, the diplomats said.
A key beneficiary appears to be Khan, whose salary as a civil servant cannot account for what Pakistani newspapers say are far-flung real estate holdings and other assets worth millions of dollars.
Khan, who hasn't spoken publicly about the charges, but has been prevented from leaving Pakistan, has denied during interrogations with investigators that he made the transfers for personal gain.
Pakistani authorities began investigating Khan and key associates on information from the Vienna-based International Atomic Energy Agency that some Pakistani nuclear scientists helped Iran and Libya get centrifuges for uranium enrichment.
Libyan leader Moammar Gadhafi revealed - and renounced - his weapons and programs of mass destruction in December. Iran continues to maintain it has no nuclear weapons ambitions, but IAEA officials said Tehran has cooperated in revealing the sources of its centrifuges.
U.S. officials also suspect Pakistan bartered nuclear secrets in exchange for North Korean missile technology, a charge Pakistan denies. American officials believe North Korea already has one or two nuclear bombs and could make several more within months. North Korea has never confirmed or denied having atomic weapons.
While he has not been linked to the nuclear network headed by Khan, the case of Asher Karni, an Israeli businessman awaiting trial in the United States, offers a window on how those suspected of nuclear smuggling cover their tracks.
Court records allege Karni used a series of front companies and misleading shipping documents to buy detonation devices whose possible uses include setting off nuclear weapons from a Massachusetts company, then had them sent through New Jersey to South Africa and on to the United Arab Emirates and later to Pakistan.
A federal judge in Washington D.C. ruled last week Karni could be released while he awaits trial as long as he agreed to waive his immunity from extradition from Israel or South Africa, to pay a $100,000 bond and to be electronically monitored while he stays in Maryland.
The diplomats said thousands of components used for uranium enrichment and bound for Libya that were seized on a German ship in October had bogus papers masking their use, point of origin and end destination.
The ring supplying Iran, North Korea and Libya was small - probably no more than around a dozen major players who knew details of what was being sold to whom, said the diplomats. Many of them were probably dependent on Khan for his contacts, first as an employee of Urenco, the West European uranium enrichment consortium and then as the architect of the clandestine weapons program that publicly established Pakistan as a nuclear power in 1998.
The fact that he is now sidelined has, in combination with the world focus on interdiction and monitoring countries under suspicion, probably crippled the supply chain, the diplomats said.
David Albright, a former Iraq nuclear weapons inspector who now runs the Institute for Science and International Security, agreed. With Khan exposed, the ring that accounted for much of the three countries' illicit nuclear hardware and know-how is "now busted up," he said.
"There are still remnants, and that has to be watched, but this is a major victory for nonproliferation," he said from Washington.
On the Net:
Institute for Science and International Security, www.isis-online.org

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Former Pakistan Army Chief Niazi Dies
ASSOCIATED PRESS
ISLAMABAD, Pakistan (AP) - A former Pakistani army commander, whose surrender in a 1971 war allowing Bangladesh to win independence was considered by some a national humiliation, has died, the state news agency reported Monday. He was 89.
Lt. Gen. Amir Abdullah Khan Niazi, a diabetic who also suffered respiratory problems, died of cardiac arrest Sunday at a military hospital in the eastern city of Lahore, the state-run Associated Press of Pakistan news agency reported.
The report said he was one of Pakistan's most decorated soldiers and was wounded in action at least five times.
Niazi served as a junior officer during World War II, and later held various command positions in Pakistan's army after the country won independence from Britain in 1947.
As chief of the Pakistan army command in what was then called East Pakistan, Niazi and his forces fought Bangladeshi separatists and Indian forces in a bloody 1971 war and later surrendered.
The defeat is still considered by many Pakistanis to be a national humiliation. East Pakistan was renamed Bangladesh and became an independent country on Dec. 16, 1971.
According to Bangladeshi historians, some 3 million Bangladeshis died during the nine-month war.
Niazi was buried Monday in Lahore. He is survived by his two sons and three daughters, the state news agency said.

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Suspects on Trial for 2002 Kenya Bombing
By ROB JILLO
ASSOCIATED PRESS
NAIROBI, Kenya (AP) -
The November 2002 car bombing of a resort hotel on the Kenyan coast was part of an elaborate al-Qaida plot, a prosecutor said as four suspects went on trial for murder Monday.
Al-Qaida has twice struck Kenya, and Monday's trial, along with another trial of three other al-Qaida suspects on lesser charges, are the first attempts by authorities in the East African country to seek convictions against alleged terrorists.
Critics say the government's apparent lack of hard evidence shows Kenya is only prosecuting the men to satisfy the United States, which has criticized the country's anti-terror efforts.
On Monday, prosecutor Edwin Okello told the packed Nairobi High Court that witness testimony and physical evidence will clearly implicate the defendants.
The four Kenyan men first established ties with Osama bin Laden's network in January 2002, Okello said in his opening statement.
The suspects had "frequent communication with network members," he said, citing links between the defendants, the unidentified suicide bombers and Fazul Abdullah Mohammed, who is believed to be al-Qaida's ringleader in eastern Africa and who remains at large.
To keep a low-profile in the Indian Ocean port of Mombasa where the attack was planned, the suspects "rented ... houses for short periods, moving from one house to another to avoid suspicion," Okello said.
Omar Said Omar, Mohammed Ali Saleh Nabhan, Aboud Rogo Mohammed and Mohamed Kubwa have been charged with 15 counts of murder each for the Nov. 28, 2002, bombing of the Paradise Hotel north of Mombasa, an attack that killed 15 people, including three Israeli tourists.
Issa Kombo Issa, the first witness called Monday, testified he lost his national identity card in 1997.
Another witness, Reginald D'Souza, told the court that Omar rented a house from him in Mombasa from March 2002 until June 2002 using the same name, Issa Kombo Issa. Another man who identified himself as "Saleh" also lived in the house, D'Souza said.
Saleh Ali Saleh Nabhan, a Mombasa native, is believed to have helped build the bomb used in the hotel attack. He remains at large, but his brother is one of the defendants.
"The evidence presented by the prosecution does not link our clients to the actual terror attack," Mohammed Nabhan's lawyer, Kioko Kilukumi, said after the trial adjourned for the day. "The prosecution ... has no tangible evidence."
Prosecutors have, however, amassed a wealth of circumstantial evidence linking the defendants to the attack, according to a review of pretrial statements by The Associated Press. There were frequent telephone calls among some of suspects and Fazul, who married a sister of one of the defendants.
About the same time the car bomb struck exploded, several men fired two surface-to-air missiles that missed an Israeli charter airliner taking off from Mombasa's nearby airport.
Al-Qaida claimed responsibility for those attacks as well as for the August 1998 embassy bombings in Nairobi and in Dar es Salaam in neighboring Tanzania, which killed 231 people, including 12 Americans.
The other three Kenyan suspects are being tried on charges of conspiracy for their alleged roles in the hotel and embassy bombings, the attempt to shoot down the airliner, and an alleged plot last June to destroy the new U.S. Embassy in Nairobi.
The trial of the four men is expected to last at least a month. If convicted, they could face a death sentence.
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World Court Weighs Israel Security Wall
By ARTHUR MAX
ASSOCIATED PRESS
AMSTERDAM, Netherlands (AP) - A world court battle concerning Israel's security barrier on Palestinian land shaped up Monday, with one camp demanding judges denounce it as illegal and the other urging them to say nothing at all.
Nearly 50 countries and international blocs submitted depositions to the International Court of Justice in The Hague by Friday's deadline, diplomats said.
That sets the stage for the first confrontation on the Arab-Israel conflict to reach the United Nations' highest judicial body. The case will be one of the most scrutinized in the court's 57-year history.
The court normally arbitrates boundary or maritime disputes between consenting countries, but the U.N General Assembly asked it in December to give an advisory opinion on the "legal consequences" of the 440-mile barrier Israel is building in the West Bank. Its opinion would be nonbinding.
In an initial legal skirmish, a court official confirmed Israeli news reports that Jerusalem sought the removal of an Egyptian judge from the 15-member bench. The official said "the court has taken a decision on that," but he declined to elaborate.
The judge, Nabil Elaraby, is a former legal adviser to the Egyptian Foreign Ministry and has been involved in the Mideast conflict for three decades. He was part of the Egyptian delegation that negotiated the 1978 Camp David peace accords.
Most of the world court judges, who are elected to nine-year terms, are from countries that have submitted representations on the security fence. Court rules allow them to remain on the bench even when they are nationals of a country directly involved in a dispute before the court.
Israel's barrier - a complex of trenches, fences, concrete walls, razor wire and electronic sensors - snakes through the West Bank, often close to the internationally recognized border before Israel captured the West Bank in 1967, but in places it dips deep into Palestinian territory.
Israel said its purpose is to block suicide bombers, who have killed more than 400 Israelis in the last three years.
But the Palestinians call it "the apartheid wall," saying it is a land grab that isolates tens of thousands of Palestinians from their farmlands, jobs, schools or hospitals.
Palestinian leader Yasser Arafat criticized nations supporting Israel's position.
"They don't respect international law ... but rather follow in this mentality, the mentality of racist actions," Arafat said after a meeting of Christian leaders from Jerusalem.
The court must first decide whether it should render an opinion at all. Israel and its supporters argue the question is political and the court has no jurisdiction.
Israel, the United States and the European Union said the court's intervention in the dispute was inappropriate, and could undermine chances of reviving the U.S.-backed "road map" peace plan.
Diplomatic sources said Russia, Japan, Canada and Australia also urged the court not to intervene. The EU filed a deposition, as did several of its 15 members.
The court also agreed to accept depositions from the Arab League and the 57-nation Organization of Islamic Conference, which want the court to declare that the barrier violates international law.
Many of those supporting Israel's argument have said they oppose building the barrier through Palestinian territory.
"You very well know our position on the wall, it does not contribute to peace," Javier Solana, the EU's foreign policy representative, said Monday.
The court said the written submissions would remain confidential until oral arguments begin Feb. 23. Countries wishing to state their case before the judges must sign up by Feb. 13.

>> BBC AMERICA?


Whole family 'gassed to death' in chemical test
SEOUL:
South Korean officials cast doubt yesterday over the credibility of a documentary by the BBC that said North Korea was testing chemical weapons on women and children.
An official at South Korea's intelligence agency said a North Korean refugee used as a key source in the programme had made false claims about his positions in the Pyongyang regime and may have other motives for going public with his allegations.
"We know the person named as Kwon Hyuk in the report and we know he never worked at a political prison in North Korea," a National Intelligence Service official said.
The BBC report, aired on Sunday, included comments by a person known as Kwon Hyuk, a new name given to a former military attache at the North Korean embassy in Beijing and chief of management at Prison Camp 22.
Kwon said in the programme political prisoners, including women and children, were used to test suffocating gas and put to slow and painful deaths.
"I witnessed a whole family - the parents, son and a daughter - being tested on suffocating gas and dying in the gas chamber," he told the BBC.
He said it was 11.5 feet wide, 10 feet long and made of glass so that scientists could observe inmates as they were gassed.
"We know that he was also never a military attache in Beijing, as he claims," the official said, adding he believed there was little credibility in his testimony.
"We believe that he may be trying to get media attention," the official said, declining to elaborate.
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N Korea tests weapons on people: BBC
A program made by Britain's BBC says North Korea is killing political prisoners in experimental gas chambers and testing new chemical weapons on women and children.
Titled Access to Evil and being aired on Sunday, the program features an official North Korean document that says political prisoners are used to test new chemical weapons.
In a statement, the BBC said the documentary included comments by Kwon Hyuk, a new name given to a former military attache at the North Korean embassy in Beijing and chief of management at Prison Camp 22.
Using a drawing, he describes a gas chamber and the victims he says he saw at the prison in the north-east of the secretive communist state, near the Russian border.
"I witnessed a whole family being tested on suffocating gas and dying in the gas chamber. The parents, son and a daughter. The parents were vomiting and dying, but till the very last moment they tried to save kids by doing mouth-to-mouth breathing," he said.
"Normally, a family sticks together (in the gas chamber)... and individual prisoners stand separately around the corners. Scientists observe the entire process from above, through the glass."
Asked how he felt about the children, he said: "It would be a total lie for me to say I felt sympathetic about the children dying such a painful death. Under the society and the regime I was in at the time, I only felt that they were the enemies. So I felt no sympathy or pity for them at all."
The documentary was made for the BBC's This World series.
North Korean officials in London were unavailable to comment.
BBC journalist Olenka Frenkiel told Reuters she had three independent confirmations that Kwon Hyuk was genuine.
The human rights group Amnesty International said it had been unable to confirm previous reports of such testing.
"We have heard of these allegations but we cannot confirm them," a spokeswoman said.
North Korea - described by US President George W Bush as part of an "axis of evil" because of a nuclear weapons program and authoritarian system - has denied accusations of human rights abuses.
A top secret North Korean document also says political prisoners are used for "human biological experimentation and for production of biological weapons", the BBC said.
It interviews a person said to be a former prisoner in North Korea who had been ordered to poison others.
"An officer ordered me to select 50 healthy female prisoners. One of the guards handed me a basket full of soaked cabbage, told me not to eat it but to give it to the 50 women," Sun Ok Lee said, according to the BBC statement.
"All who ate the cabbage leaves started violently vomiting blood and screaming with pain. It was hell. In less than 20 minutes, they were quite dead."
Frenkiel said she had also seen other official North Korean documents, one of which referred to the transfer of a prisoner "for the purpose of human experimentation of liquid gas for chemical weapons" in February 2002.
--Reuters
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'N.K. tests chemical arms on prisoners'
Kwon Hyok is one of about 4,000 North Korean defectors living in Seoul, South Korea.
Most escaped because of hunger, fear, torture, imprisonment or a simple hatred of the regime.
But Kwon Hyok is not one of those. In 1999 he was a North Korean intelligence agent stationed in Beijing when he was persuaded by the South Koreans to defect.
Six years before, in 1993, Kwon Hyok says he was head of security at Prison Camp 22 in Haengyong, an isolated area near the border with Russia.
Camp 22 is one of a network of prisons in North Korea modeled on the Soviet gulag where hundreds of thousands of prisoners are held.
Most of them have been charged with no crime. They are there because of the "heredity rule."
"In North Korea, "Kwon Hyok explains, "political prisoners are those who say or do something against the dead President Kim Il-sung, or his son Kim Jong-il. But it also includes a wide network of next of kin. It's designed to root out the seeds of those classed as disloyal to North Korea."
In prison, says Kwon Hyok, "there is a watchdog system in place between members of five different families. So if I were caught trying to escape, then my family and the four neighboring families are shot to death out of collective responsibility."
Torture, he says, was routine. "Prisoners were like pigs or dogs. You could kill them without caring whether they lived or died."
"For the first three years," he explained, "you enjoy torturing people but then it wears off and someone else takes over. But most of the time you do it because you enjoy it."
But Kwon Hyok had something else he wanted to tell.
He says he witnessed chemical experiments being carried out on political prisoners in specially constructed gas chambers.
"How did you feel when you saw the children die?" I asked.
His answer shocked me.
"I had no sympathy at all because I was taught to think that they were all enemies of our country and that all our country's problems were their fault. So I felt they deserved to die."
There have been many rumors of human experimentation on political prisoners in North Korea. But never has anyone offered documentary proof. Until now.
In Seoul I met Kim Sang-hun, a distinguished human rights activist.
He showed me documents given to him by someone else completely unrelated to Kwon Hyok. He told me the man had recently snatched them illicitly from Camp 22 before escaping.
They are headed 'letter of transfer,' marked top secret and dated February 2002. They each bear the name of a male victim, as well as his date and place of birth. The text reads: "The above person is transferred from Camp 22 for the purpose of human experimentation with liquid gas for chemical weapons."
I took one of the documents to a Korean expert in London who examined it and confirmed that there was nothing to suggest it was not genuine.
But I wanted to run a check of my own with Kwon Hyok. Without showing him the letter of transfer, I asked him very specifically, without prompting him in any way.
"How were the victims selected when they went for human experimentation? Was there some bureaucracy, some paperwork?"
"When we escorted them to the site we would receive a letter of transfer," he said.
Sadly, as long as these reports continue from defectors, and as long as the North Korean government continues to deny all allegations of human rights abuse, while refusing to allow access to its prisons, such allegations cannot be dismissed or ignored.
(BBC Online News)
2004.02.02
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Military eases construction bans near bases
A vast tract of areas bordering North Korea will no longer be subject to construction bans that have been in place to facilitate military operations, the Ministry of Defense announced yesterday.
Officials said the deregulatory move would affect some 8.3 million pyeong of land from 460 locations, mostly in Seoul and Incheon as well as northern border regions of Gyeonggi and Gangwon provinces.
Instead, 36 tiny sites amounting to 10 million pyeong along the border will newly be placed under the military ban, officials said. One pyeong equals about 3.3 square meters.
The liberalization policy will go into effect as of March 20.
"In line with drastic change in the military's operational environment, we are planning to lift or ease construction bans in many border areas where property rights were severely limited," said Major Kim Ju-baek, who is in charge of deregulation policies at the Joint Chiefs of Staff.
Owners of real estate in these areas will be given much more liberty to build new structures.
Twenty-six communities in Seoul, including mountainous areas in Hongje-dong and Jeongneung-dong, will be categorized as normal residential zones, providing further impetus for new town projects pursued by the Seoul government.
In other areas deemed more important to the military's strategic operations, regional construction authorities will gain the administrative power to grant permission for commercial development of the land.
(khjack@heraldm.com)
By Choe Yong-shik
2004.02.03

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Unclassified Part of Wen Ho Lee Report Due for Release
By Richard Benke Associated Press Writer
Published: Feb 2, 2004
ALBUQUERQUE, N.M. (AP) - Unclassified portions of a never-released Justice Department report on the investigation and prosecution of nuclear scientist Wen Ho Lee will be given to a government secrecy watchdog.
"It's the answer to the question: What went wrong?" said Steven Aftergood, who will receive the materials.
The report was prepared after the criminal case against Lee crumbled and he was freed in 2000. Its release had been repeatedly rejected by the Justice Department under both Janet Reno and John Ashcroft.
Aftergood appealed their refusals, and Justice Department official Richard Huff responded by working out a plan for the release. Huff wrote Aftergood on Jan. 21 that the office would send him "the releasable information contained in the unclassified portions of the report."
Another Justice Department committee, meanwhile, will consider declassifying portions of the classified material in the report, Huff's letter says.
Aftergood, director of the Project on Government Secrecy for the Federation of American Scientists, said Monday he expects to see part of the report by March 1.
The Taiwan-born Lee acknowledged downloading sensitive nuclear weapons data to an unsecure computer tape cassette. Lee, a U.S. citizen, was never charged with espionage and said he never passed any sensitive or classified material to anyone.
AP-ES-02-02-04 1931EST

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Aflac Takes Hit in Parmalat Scandal
The Associated Press
Published: Feb 2, 2004
COLUMBUS, Ga. (Dow Jones/AP) - Aflac Inc. Monday said fourth-quarter net income fell 61 percent as the insurer was hurt by losses from its investment in fallen Italian dairy giant Parmalat Finanziaria SpA.
Aflac posted a loss of $257 million from the sale of its stake in Parmalat, which is under investigation in an alleged multibillion-dollar fraud scandal. The insurer decided to sell its $428 million investment in Parmalat in December after the conglomerate's credit rating was cut to junk status.
Columbus-based Aflac said its fourth-quarter net profit fell to $73 million, or 14 cents a share, from $186 million, or 35 cents a share, a year earlier.
The company's investment losses widened to $175 million, or 34 cents a share, from $4 million, or 1 cent a share, a year earlier.
Aflac also recorded a loss of $38 million from the sale of its investment in Levi Strauss & Co.
Excluding the investment sales and a loss of $14 million from currency exchange-related items, Aflac posted earnings of $262 million, or 50 cents a share, matching a Thomson First Call average of analyst estimates.
Aflac's revenue rose to $2.85 billion from $2.67 billion a year earlier. The revenue was below analysts' expectation of $3.05 billion, according to a First Call poll.
Aflac repeated that its expects a 17 percent rise in 2004 operating earnings, which exclude investment gains or losses. The company expects 15 percent operating earnings per share growth in 2005. The forecasts for both years exclude the effect of currency translation.
Aflac's operating earnings for all of 2003 rose to $989 million, or $1.89 a share, from $825 million, or $1.56 a share, a year earlier. Excluding a 6 cent benefit from currency translation, earnings per share met Aflac's forecast for 17 percent growth in 2003.
Aflac raised its quarterly dividend to 9.5 cents from 8 cents. The dividend is payable March 1 to shareholders of record Feb. 13.
Aflac's board also approved a plan to purchase up to 30 million of its shares, in addition to the seven million shares previously authorized for repurchase. The company has about 512.8 million shares outstanding.
Aflac shares closed Monday, before the earnings release, at $37.81, up 93 cents, or 2.5 percent, on the New York Stock Exchange. In extended trading, the shares were up $1.19, or 3.2 percent, at $39.
AP-ES-02-02-04 1854EST
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Pentagon Says No Internet Voting Experiment in S.C. Primary
The Associated Press
Published: Feb 2, 2004
COLUMBIA, S.C. (AP) - The Pentagon will not test an Internet voting project Tuesday during South Carolina's Democratic presidential primary, a spokesman says.
The system, known as SERVE, is the Secure Electronic Registration and Voting Experiment. It is being developed for U.S. citizens overseas and is supposed to allow potential voters to register and vote according to their local procedures and state laws, Pentagon officials have said.
Last month, several leading computer experts criticized the system, arguing that it could be penetrated by hackers, criminals, terrorists or foreign governments.
"The SERVE system will not be used for the South Carolina primary, since certification of the system is still in progress," Pentagon spokesman Glenn Flood told The Associated Press. "It is estimated that independent testing of the system for certification will take several more months to complete."
AP-ES-02-02-04 1852EST
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Chirac gives full support to convicted Jupp?
By Robert Graham in Paris
Published: February 2 2004 22:37 | Last Updated: February 2 2004 22:37
President Jacques Chirac on Monday intervened to give his full support to Alain Jupp?, the former prime minister and his favoured successor, who is contemplating quitting politics after being found guilty of political corruption.
With the 58-year-old Mr Jupp? due to announce his position on Tuesday , the intervention appeared designed to bolster a controversial decision to remain in politics and fight the court sentence through appeal.
Until Friday's court verdict, Mr Jupp? had said he would resign if found guilty. But since he received an 18 month suspended sentence and was barred from office for 10 years, his supporters have campaigned to make him stay.
"He has to take a decision, and I respect him for that but whatever he decides he will be fully aware of what he is doing," President Chirac said in Marseilles.
He then added: "He is a politician of exceptional quality, competence, humanity and honesty, and France needs people with his qualities."
Although he did not formally ask him not to resign, there was a clear message for Mr Jupp? to stand firm and fight the courts with an appeal. Pending appeal, the sentence is automatically suspended.
The overt endorsement of the man President Chirac chose to be his prime minister after winning the presidency in 1995 and who masterminded his re-election in 2002 by unifying the centre-right under the UMP banner, drew criticism from the leftwing opposition. By publicly backing Mr Jupp?, Socialist politicians said, the head of state was implicitly impugning the court's judgment.
Earlier Fran?ois Hollande, the Socialist party leader, had taken premier Jean-Pierre Raffarin to task for describing the judgment as "a surprise" and "provisional". "The prime minister's role is to respect the decisions of the courts and above all not to question how the judicial system works," Mr Hollande said.
If Mr Jupp? does step down, albeit for the period until his appeal is heard towards the end of the year, the ruling UMP will have to find a new leader to manage the campaign for the March regional elections. Mr Jupp? had been due to launch the campaign next Sunday.
Another possible influence on his decision is President Chirac's move on Sunday to order an investigation by members of France's highest administrative, financial and judicial bodies into reports the three judges in the Jupp? trial received threats and interference with their computer systems.
This will be on top of a police inquiry ordered by justice minister Dominique Perben over the weekend and the likelihood of a separate parliamentary mission looking into the alleged pressures on the judiciary.
On Monday a spokesman for the mainstream judges' union warned: "All these inquiries are being devoted to the same dossier with the risk of creating confusion and reaching divergent conclusions." The statement went on to criticise politicians for attacking the Jupp? sentence: "This affair shows that France is a developing country as regards its democracy where the deputies have yet to get into their heads the idea that judges are independent."
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Potemkin WMDs?
Really?
So now comes David Kay, a good man, a person I like a lot, with a lot to say. He set out to find large stockpiles of weapons of mass destruction and didn't. He says there's evidence that some stuff may have gone to Syria, but nothing like the quantities he expected to find. He has no doubt that Saddam had -- or rather had ordered, and was told he had -- a full-blown WMD program. But there's no sign of it, at least so far as David Kay and his CIA minions could find.
So what happened?
David now thinks that it was a Potemkin program. Count Potemkin was the lover of Tsarina Catherine the Great of Russia, and he was told to build new towns and cities for the grandeur of the regime. He couldn't manage it, but he couldn't tell his mistress the terrible truth. So he lied to her. And when she asked to see the new places, he created the eighteenth-century equivalent of movie sets. She sailed down the river, the movie sets were set up on the banks, and happy people waved at her. When the royal ship was out of sight, the villagers packed up the set, and raced downstream to the next site. From this, the expression "Potemkin village."
Thus, David tells us, Saddam's WMD program. He ordered his loyal servants to make him atomic bombs, chemical and biological weapons, and effective delivery systems. They couldn't manage it, but they couldn't tell Saddam because he would have killed them. So they faked it, producing a vast documentation for a program that did not really exist. The CIA (and the Brits, the French, the Germans, the Israelis, the Russians, etc. etc.) got some of this, and got some of the same false reports as Saddam received, and they went for it, just as Saddam did.
It's a great theory. It's imaginative and entertaining. It explains our failure to find what we expected to find, and it explains what we did find: considerable documentation about WMD programs. It also explains how Saddam could have ordered the deployment of WMDs, and nothing happened. Nothing could happen, because there was nothing there.
It's also devastating to the CIA and the other intelligence services, because one of its central conclusions is that the intelligence world didn't really have a clue about what was really going on -- or rather, what wasn't going on. It suggests that the intelligence world never really challenged its own conclusions, even though there was no physical evidence to support them. If David Kay is right, then every datum in the analysis was fictional.
What a scandal! CIA's supposed to create such fictions, not be gulled by them.
As I say, it's a terrific theory. But I'm skeptical, and I've got a real reason for my skepticism, which David can easily confirm. Last August I called him in Baghdad to tell him that I had a person -- a good person, like himself, a person I trust -- who was prepared to take him to an underground laboratory from which a quantity of enriched uranium had been taken a few years ago, and smuggled to Iran. Wow, he said, let's go look. Have the guy call me, we'll check it out.
The guy could never get David on the phone because the CIA decided not to investigate after all. The CIA never went to look, and I don't know if that stuff was real or fictional. But this case was totally different from the Potemkin WMDs of David's elegant theory. Because my guy was in contact with the people who said they had moved the stuff from Iraq to Iran. They were now sick, and wanted to tell their story before they got much worse. But, as I say, the CIA never went to look. They pretended they wanted to, they finally met with my guy, but they told him they didn't believe his story (although there was really no reason to either believe it or not, it was a matter of either looking or not, and if you didn't look you couldn't know anything one way or the other). He said the people who had done the smuggling had a full description of the material on a CD Rom, which they were willing to provide. CIA wasn't interested. And that's the end of it, so far as I know.
So there's one instance where the CIA wasn't curious enough to take a ride and look at a lab. And I ask myself whether there were other such cases. I know of other examples, not involving WMDs, but involving Saddam's money, where CIA refused to look, and the stories they were told -- and decided not to believe -- turned out to be true.
And then I read the words of Peter Hain, the leader of the House of Commons in London. He says "I saw evidence that was categorical on Saddam possessing chemical and biological weapons of mass destruction." And we know, from the recent Hutton Report, that Tony Blair's claim that Saddam could be prepared to launch WMD attacks against Coalition forces "within 45 minutes," had come directly from MI6. Were the Brits fooled too? Hain insists they were not.
And then there's the story from the Syrian journalist in Paris who claims to have maps from high-ranking military intelligence officials in Damascus, identifying the sites where, he says, some of Saddam's stockpiles were moved. Have we checked that story?
I love the theory. But I have my doubts. Maybe time will tell.
http://www.nationalreview.com/ledeen/ledeen200402020833.asp

Dr. Kay Had Maps with Coordinates of WMD Hiding Places in Syria

DEBKAfile Exclusive Report and Analysis
February 2, 2004, 3:33 PM (GMT+02:00)
No mirage...
Setting up an inquiry commission is the political leader's favorite dodge for burying an embarrassing problem until the pursuit dies down. President George W. Bush will this week bow to election-year pressures from Democrats and his own Republicans alike and sign an executive order to investigate US intelligence failings regarding Saddam Hussein's weapons of mass destruction on the eve of war. Both his senior war partners, the Australian and British prime ministers, face the same public clamor ever since WMD hunter Dr. David Kay resigned, declaring there were probably no stockpiles in Iraq and "we were all wrong."
At the same time, the CIA and other intelligence bodies accused of flawed performance do not look particularly dismayed by the prospect of facing these probes. They point to the cause of the political flap, Dr Kay, as contradicting himself more than once in the numerous interviews he has given since he quit as head of the Iraq Survey Group.
In the last 24 hours, DEBKAfile went back to its most reliable intelligence sources in the US and the Middle East, some of whom were actively involved in the subject before and during the Iraq war. They all stuck to their guns. As they have consistently informed DEBKAfile and DEBKA-Net-Weekly , Saddam Hussein's unconventional weapons programs were present on the eve of the American-led invasion and quantities of forbidden materials were spirited out to Syria. Whatever Dr. Kay may choose to say now, at least one of these sources knows at first hand that the former ISG director received dates, types of vehicles and destinations covering the transfers of Iraqi WMD to Syria.
Indeed the US administration and its intelligence agencies, as well as Dr Kay, were all provided with Syrian maps marked with the coordinates of the secret weapons storage sites. The largest one is located at Qaratshuk at the heart of a desolate and unfrequented region edged with marshes, south of the Syrian town of Al Qamishli near the place where the Iraqi, Syrian and Turkish frontiers converge; smaller quantities are hidden in the vast plain between Al Qamishli and Az Zawr, and a third is under the ground of the Lebanese Beqaa Valley on the Syrian border.
These transfers were first revealed by DEBKAfile and DEBKA-Net-Weekly in February 2003 a month before the war. We also discovered that a Syrian engineering corps unit was detailed to dig their hiding places in northern Syria and the Lebanese Beqaa.
A senior intelligence source confirmed this again to DEBKAfile, stressing: "Dr. Kay knows exactly what was contained in the tanker trucks crossing from Iraq into Syria in January 2003. His job gave him access to satellite photos of the convoys; the instruments used by spy planes would have identified dangerous substances and tracked them to their underground nests. There exists a precise record of the movement of chemical and biological substances from Iraq to Syria."
Armed with this knowledge, Kay was able to say firmly to The Telegraph's Con Coughlin on January 25: "We are not talking about a large stockpile of weapons. But we know from some of the interrogations of former Iraqi officials that a lot of material went to Syria before the war, including some components of Saddam's WMD program. Precisely what went to Syria and what has happened to it, is a major issue that needs to be resolved.
Yet in later interviews, the last being on February 1 with Wolf Blitzer on CNN's Late Edition - and for reasons known only to himself - Kay turned vague, claiming there was no way of knowing what those convoys contained because of the lack of Syrian cooperation.
What caused his change of tune?
Since he began talking to the media, interested politicians have been rephrasing his assertions on the probable absence of stockpiles, by dropping the "probable" and transmuting "no stockpiles", to "no WMD." These adjustments have produced a telling argument against Bush's justification for war and a slogan that has deeply eroded public confidence in US credibility in America and other countries. Tony Blair and John Howard will no doubt set up outside inquiry commissions like Bush. In Israel too, opposition factions have seized the opportunity of arguing that if Israel's pre-war intelligence on Iraq's arsenal was flawed, so too was its evaluation of Yasser Arafat's role as the engine of Palestinian suicidal terror. The fact that intelligence was not flawed - UN inspectors dismantled missiles and Iraq fired missiles at Kuwait - is easily shouted down in the current climate.
By the same token, no connection is drawn between the Iraqi WMD issue and the grounding this week of transatlantic flights from Europe to America by credible intelligence of an al Qaeda plot. The Washington Post spelled the threat out as entailing the possible spread of anthrax or smallpox germs in the cabin or planting of poison chemicals in the cargo.
It was also suggested that suicidal pilots might crash an airliner on an American city and drop payloads of toxic chemicals and bacteria.
Two questions present themselves here. One: if minute quantities of weaponized biological and chemical substances dropped by Osama bin Laden's killers from the air are menacing enough to trigger a major alert, why would Saddam need stockpiles to pose an imminent threat to world security and his immediate neighbors? Would not a couple of test tubes serve his purpose? Two: Where did al Qaeda get hold of the WMD presumed to be in its possession and who trained its operatives in their use?
Once again, DEBKAfile's senior intelligence sources recall earlier revelations. The ex-Jordanian terror master Mussab al Zarqawi is key director of al Qaeda's chemical, biological and radioactive warfare program. In late 2000, we reported him operating WMD laboratories under the supervision of Iraqi intelligence in the northern Iraqi town of Bayara. Since then, the same Zarqawi has masterminded some of the deadliest terrorist attacks in Iraq, such as the blasts at the Jordanian embassy and the murder of Italian troops in Nassariya.
Zarqawi is and was the embodiment of the link between Saddam and al Qaeda going back four years, long before the American invasion of Iraq - which indicatges the source of Osama bin Laden's unconventional weapons purchases.
In another interview, the former ISG director expanded on his statement that Iraq was falling apart "from depravity and corruption." The Saddam regime, he said, had lost control. Saddam ran projects privately and unsupervised, while his scientists were free to fake programs.
A senior DEBKAfile source commented on this assertion:
"That's one way of describing the situation - and not only on war's eve but during all of Saddam Hussein's years of ruling Iraq. We are looking at institutionalized corruption of a type unfamiliar in the West; it was built up in a very special way in Iraq." The country was not falling apart, but it was being looted systematically. Just imagine, he said, Saddam and the two sons the Americans killed in July 2003 had their own secret printing press for running off Iraqi dinars and other currencies including dollars for their own personal use. The central bank went on issuing currency in the normal way, unaware that it was being undermined from within by the ruler's private press. "Saddam's corruption was structured, a hierarchical pyramid with the ruler, his sons and inner circle at the top and the petty thieves at the bottom making off with worthless paper."
Some of our sources challenged two more of Dr. Kay's assertions to Wolf Blitzer: a) After 1998 when the UN left, there was no human intelligence on the ground, and b) "There were no regular sources of information, not enough dots to connect." If this is true, how does he explain another statement in the same interview that the US entered the war on the basis of "a broad consensus among intelligence services - not just the CIA, but also Britain, France and Russia?"
On what did this consensus rest if there were no informants on the ground?
And furthermore, how were the American and British invading armies able to advance at such speed from Kuwait to Baghdad with no obstructions and without blowing up a single bridge, road or other utility, including oil fields, ports and military air fields? Every obstruction had clearly been removed from their path by intelligence agents on the ground , who reached understandings with local Iraqi commanders before the war began.
In the face of this evidence, the question must be asked: Why does Bush take David Kay's assaults and demands with such stoicism instead of going after Damascus - as defense secretary Donald Rumsfeld has proposed from time to time?
One theory is that he does not trust any of the evidence. Saddam was famous among UN inspectors for his deception techniques; he may have practiced a double deception. Hard and fast facts are likewise hard to come by in Damascus. Above all, Bush may simply be determined to adhere to his plan of action come what may, whatever crises happen to cross his path, in the confidence that his path will lead to a November victory at the polls.
Three inquiry commissions will most likely be set up to examine the American, British and Australian intelligence assessments of Saddam's weapons of destruction in the run-up to the Iraq war. In the meantime, the actual weapons will continue to molder undisturbed in the ground of Syria and Lebanon


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At Syrian Weapons Mart, T-72 Tanks for Sale, One Owner, Good Condition

From DEBKA-Net-Weekly 141 Jan. 16
January 23, 2004, 7:51 PM (GMT+02:00)
There were no giveaways, balloons or barbecues, but business was booming this month at a bizarre Syrian bazaar - a used tank lot at al-Qamishli, located at the point where the borders of Syria, Iraq and Turkey meet. On sale: Russian T-72 tanks.
No, not in mint condition, hardly top-of-the-line merchandise, the tank on sale was a Soviet product purchased by the Syrian army in the 1980s, well enough maintained and offered at a rock bottom price of $3,000 apiece.
This arms market has sprung up, as DEBKA-Net-Weekly's exclusive intelligence and counter-terrorism sources have discovered, in back of the large train station at al-Qamishli, a forward point whence freight trains laden with oil and other products picked up at Syria's Mediterranean ports once set off for Saddam Hussein's Iraq. One dark night in January, our sources sighted a tank transporter, its lights extinguished, pulling into the railway station, loading up a number of tanks and heading toward the Iraqi border. The buyer's identity is unknown, and US military intelligence is working on the problem on the premise that an Iraqi guerrilla or Baath party group has little use for medium-sized tanks. The most likely proposition examined by intelligence officials is that the buyers are US-allied Kurds who are engaged in establishing an autonomous border police force in northern Iraq.
Iraqi guerrilla forces may not be in the market for tanks but, in the second week of January, their agents purchased US-made 106 mm recoilless cannons in another Syrian city, Dayr az Zawr on the eastern banks of the Euphrates River. The cannon, mounted on jeeps, sell for about $900 to $1,000 apiece.
How did these American tools of war end up in Syria?
The long arms of Middle Eastern arms merchants stretch from the Middle East to Pakistan in the north, the Persian Gulf in the east and Jordan in the west, a country whose border is only a hop and a skip from Dayr az Zawr. The arsenals of all the countries in the region are packed with masses of recoilless guns made in the USA. Any emergency store might overlook 200 to 300 missing weapons filched for the Syrian black market.
According to DEBKA-Net-Weekly's sources, the purchases on behalf of the Iraqi insurgents are made by agents of Iraqi mafia groups and "imported" into Iraq by several multi-forked routes.
Some of the guns and ammunition are floated down the Euphrates River aboard rafts under cover of dark. At dawn, the rafts are hidden in the tall reeds growing on the banks. Smugglers jump in the water and tow them with heavy ropes to hideouts out of sight of reconnaissance aircraft, drones and satellites. A second route for the recoilless guns is overland from Dayr Az Zawr south to the al-Qaim region, where they are disassembled and piled on pickup trucks for their next destination, the Iraqi cities of Anal and Al Hadithah.
The route splits again here, heading east toward Tikrit and Samarra or south to Ramadi, Falluja, Habaniyah and Baghdad.
According to our sources, the weapons emanating from al-Qamishli, mainly tanks, are smuggled along two routes into Iraq - directly into Mosul and via the Iraqi towns of Sinjar and Tall Afar.
The transactions for the sale of tanks and recoilless guns in northern and eastern Syria are carried out with no questions asked. All that matters is that the $100 bills for payment are not counterfeit. According to our sources, a whole region of Syria - running from al-Qamishli in the north southward to Dayr az Zawr - is one big arms bazaar. All of the dozen or so villages and towns in the region are in on the traffic, each specializing in a particular type of weaponry, from explosives to AK-47 rifles. Larger items like 60 mm machineguns or rocket-propelled grenade launchers, can be purchased at gas stations in the area. The concept of convenience store acquires a whole new meaning in this corner of the world.
According to our sources, prices are now climbing at a dizzying rate. As recently as November, a Kalashnikov A-47 assault rifle sold on the Syrian arms market for a mere $10. The same weapon - ammo not included - is now selling for $100. A crate of Russian grenades that cost from $17 to $22 is now going for $52 to $58, depending on year of manufacture.
DEBKA-Net-Weekly's intelligence sources attribute the rise to heavy demand - not only on the part of anti-American Iraqi guerrilla forces but also their sworn rivals, the Kurds as well as the pro-American militias. The militia forces are in the process of being organized in the Mosul area by former Iraqi defense minister Hashem Sultan and in the al-Anbar region by the US 82nd Airborne Division.
Officers in charge of creating the new militias say the illicit traffic in fighters and black market weapons into Iraq cannot be choked off without the cooperation of local tribal leaders. Every tribal chief controls a swathe of territory and has his price for directing his men to report on cross-border movements. Some of the tribal leaders demand arms, some cash - either a steep one-lump sum or monthly payment. Payoffs may be in the six-figure dollar range, depending on the size of the region and its topography, most extortionate for tribes controlling sections of the Euphrates. Other chiefs want guns - lots of them. Some require as many as 500 Kalashnikov assault rifles, apparently to shift them at a profit. New cars and machineguns are also on their wish lists.
That's where the Syrian black market comes in. It is close at hand, available, reliable and well-stocked. Anyone may place orders with local smugglers and delivery in Iraq is made within two to three days.
No one knows how much Syrian president Bashar Assad is pocketing out of this thriving trade. After all, the weapons bazaars are located in his country and much of the wares on sale come from the Syrian armed forces' own stocks. He and his family are almost certainly clearing a cut of the profits.
Washington is now waiting to see when and where Iraqi guerrilla forces start firing their US-made recoilless guns against American troops. Intelligence officials expect them to be used for long-range attacks on US military convoys.
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Talabani Accuses Turkish Intelligence of Massacre

DEBKAfile Exclusive Report

February 2, 2004, 12:21 AM (GMT+02:00)
Two huge bombs were detonated Sunday, February 1, at the very moment that Iraq's Kurds joined their leaders for a mass celebration at the headquarters of their two parties in the north Iraqi town of Arbil. The crowds had gathered to mark the Muslim Feast of the Sacrifice and the passing of their archenemy Saddam Hussein.
The carnage was unimaginable, the worst terrorist assault ever seen in post-war Iraq. The death toll rose fast towards 70 with more than 200 injured. Hospitals recalled staff from their holidays and US helicopters rushed in medical assistance. The extent of the bloodshed and damage indicated strongly that vehicles packed with explosives outside the buildings must have backed up the suicide killers within.
According to DEBKAfile's sources in Kurdistan and Washington, PUK leader Talal Jalabani talking later to senior US officials - believed to include visiting US Pentagon second-in-command Paul Wolfowitz - bluntly accused Turkish intelligence of orchestrating the massacre with the aim of wiping out the entire Iraqi Kurdish leadership at a single stroke.
Kurdish PM Baram Salah repeated the allegation during a visit to White House that day.
Kurdish sources declared the Qaeda-linked Ansar al Islam lacked the resources and capabilities for mounting an operation of such magnitude and precision. It was clearly the work of a professional intelligence agency, who knew the two Kurdish heads Masoud Barzani, leader of the KDP and Jalal Talabani, head of the PUK, were to greet their followers at their respective headquarters in Arbil, along with the entire Iraqi Kurdish political and military leadership.
Talabani smelled a rat at the last minute and went into hiding. Barzani is in deep shock.
Among the dead are Sami Abdul Rahman, Dep. PM of the Kurdish region and his two sons, and Medhi Khoshnau, Dep. Governor of Arbil Province.
Turkish prime minister Tayyep Erdogan and foreign minister Abdullah Gul have just ended four days of talks in Washington at which they voiced concern over the generous measure of autonomy Iraq's Kurds had been promised as America's primary allies in the new Iraq. DEBKAfile's sources report that they were not satisfied with the replies they received from President George W. Bush. Neither were they happy when secretary of state Colin Powell told them that the Kurdistan problem would be resolved in negotiations between the future sovereign government in Baghdad and Kurdish leaders.
The American responses were seen by Turkish leaders as leading inevitably to near-Kurdish independence, creating a model in Iraq that threatened to inflame Turkey's own Kurdish minority.
Copyright 2000-2004 DEBKAfile. All Rights Reserved.

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IRAQ: 'CHAOS' IS PROGRESS

By AMIR TAHERI
February 2, 2004 -- AT a radio phone-in program the other day, some listeners took me to task for Iraq's "slide into chaos."
"You campaigned for the liberation of Iraq, and now look what has happened." This was followed by a "what has happened" list of events that included Shi'ites demonstrating, Kurds asking for autonomy, Sunnis sulking and various political parties and groups tearing each other apart in the Iraqi media over the shape of the future constitution.
The view that Iraq is plunging into chaos, and even civil war, is echoed by many who did all they could to prolong the Ba'athist rule in Baghdad. French Foreign Minister Dominique de Villepin, for one, is going around lamenting what he labels as "uncertainties" that face Iraq.
The truth is that, far from sliding into chaos or heading towards civil war, Iraq is beginning to become a normal society. And all normal societies, as de Villepin might acknowledge, face uncertainties, just as do all normal human beings.
One should welcome the gradual emergence of a normal political life in Iraq after nearly half a century of brutal despotism, including 35 years of exceptionally murderous Ba'athist rule.
The central aim of the war in Iraq, as far as I am concerned, was to create conditions in which Shi'ites can demonstrate without being machine-gunned in the streets of Baghdad and Basra, while the Kurds are able to call for autonomy without being gassed by the thousands.
It is good that Grand Ayatollah Ali-Muhammad Sistani can issue fatwas, as he never could have under Saddam. It is even better that those who disagree with the grand ayatollah can say so without being murdered by zealots.
Why shouldn't the Sunnis sulk if they feel that they may not get a fair deal in the new Iraq? What is wrong with Kurds telling the world that they are a distinct people with their own languages, culture and even religious faiths, and must be allowed to develop within the parameters of their identity?
If anything, the Iraqi political fight is taking place with an unusual degree of courtesy, which is not the case even in some mature democracies. (Consider what Howard Dean has to say about George W. Bush.)
The new Iraq, as it is emerging, will be full of uncertainties. But that is precisely why the liberation war was justified. Under Saddam, the Iraqis faced only the certainty of concentration camps and mass graves.
The Iraqis are now free to debate all aspects of their individual and national life. Like other normal societies, Iraq is home to different, often conflicting, views on many issues. The fact that these views are now expressed without fear is a positive achievement of the liberation.
Democracy includes the freedom to demonstrate, especially against those in charge, and to "tear each other apart" in the media and town-hall debates. It includes the difficulty of reaching consensus on major issues. It is only in a despotic regime that complex issues can be settled with a nod from the tyrant.
Those who follow Iraqi politics would know that Iraq today is the only Arab country where all shades of opinion are now free to express themselves and to compete for influence and power in a free market of ideas. (Even the Ba'athists, whose party was formally banned after the liberation, are beginning to group in a number of local clubs.)
Here are some of the key issues of political debate in Iraq today:
* The Arab Sunnis want Iraq described as "part of the Arab nation," based on the principle of Arabitude (uruba). This is opposed by the Kurds, who say the constitution must describe Iraq as a "bi-national: Arab and Kurdish" state. The Shi'ites, some 60 percent of the population, reject both the Arab and the "bi-national" formulae. Instead, they wish to emphasize the concept of Iraqitude (Uruka). Various minorities, including Christians, share that view.
* The Kurds want Iraq to become a federal state so that they can enjoy autonomy in their provinces. This is opposed by Arab Sunnis and Shi'ites, who argue that a federation is made up of pre-existing states that come together. Iraq, however, was created as a unitary state in 1921 and could not develop federal structures out of nothing. Also, a centralized state is needed to control the oil revenue and organize the use of water resources.
* Some parties, both Sunni and Shi'ite, want Islam acknowledged as the religion of the state in the new constitution. Other parties, including some on the left, oppose this; they want a secular system.
* Some parties want Iraq to withdraw from OPEC, the Arab League and the Organization of the Islamic Conference (OIC) and, instead, seek some form of association with the European Union. Others insist that the new constitution should preserve Iraq's traditional foreign relations.
* Several parties and personalities want a clause for peace and cooperation with all nations to be included in the constitution. They see this as a step towards an eventual recognition of Israel. Others, however, insist that Iraq should not recognize Israel until there is a solution to the Palestinian problem.
* There are deep divisions on economic philosophy. The Kurds, and some Arab Sunnis, seek a welfare state in which the public sector provides the basic services free of charge. Many Shi'ites want a free-enterprise market economy to prepare Iraq for joining the World Trade Organization.
* There are divisions on the electoral system. The Kurds and Sunni Arabs want proportional representations, with measures that could prevent Shi'ites from using simple majority rules to impose their will. The Shi'ites want a first past-the-post system that could give them up to 70 percent of the seats in any future parliament.
Most of these debates have haunted Iraq since it was carved out of the Ottoman Empire and formed into a nation-state some seven decades ago. Successive Iraqi despots tried to keep a lid on these issues either by denying their existence or by stifling debate.
This is what most Arab regimes, which share many of Iraq's problems, have done for decades - and still do. If Iraq is to become a model for all Arabs, it should take a different path right from the start.
The U.S.-led Coalition could revert to that despotic tradition by imposing an artificial consensus. The fact that the Coalition has chosen not to do so is to its credit.
Real consensus is bound to be harder to achieve, and Iraq is certain to experience a lively political debate, including mass demonstrations and a war of leaflets, until a compromise is reached on how to form a provisional government and how to handle the task of writing a new constitution.
Most Iraqi political figures, acting out of habit, constantly turn to the Coalition authorities with the demand that their own view be adopted and imposed by fiat. The Coalition should resist the temptation to dictate terms. It should also refrain from making any partial alliances. Today, the entire Iraqi nation, in all its many different components, could be regarded, at least potentially, as a friend of the United States and its allies.
The Coalition should accept that the road ahead will be bumpy. But that is not necessarily bad news. For democracy is nothing but a journey on constantly bumpy roads.
E-mail: amirtaheri@benadorassociates.com
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Iraqi Forces Ready to Take Over Security of Baghdad
By Vijay Joshi Associated Press Writer
Published: Feb 2, 2004
BAGHDAD, Iraq (AP) - U.S. troops are ready to hand over security patrols in Baghdad to Iraqi forces, a U.S. commander said Monday, adding that his soldiers had made significant inroads against insurgent networks in the capital.
American soldiers will gradually move to the edge of the city as more Iraqi Civil Defense Forces and police graduate from U.S.-supervised training, said Brig. Gen. Martin Dempsey, commander of the 1st Armored Division, which is in charge of Baghdad.
"It is a necessary and correct step," he said.
Dempsey's announcement comes two weeks after a suicide bomber blew up his vehicle at a gate of the U.S.-led coalition's headquarters, killing at least 31 people and wounding more than 120. Still, Dempsey said the number of insurgent attacks have gone down with the arrest of 118 people during the last three weeks.
"The insurgency in Baghdad is much less organized than it was a month ago and much more fearful than it was a month ago," he said.
The 1st Armored Division had 60 operating bases in Baghdad last year, but now operates only 26. It plans to have only eight bases in the city by May 1 as it hands over responsibility to the 1st Cavalry Division.
The division changes are part of a scheduled rotation in which nearly 130,000 American forces who have been in Iraq will leave and be replaced by about 110,000 fresh troops by this summer.
"When we are talking about moving out of the city, we are talking about kilometers, not hundreds of kilometers," Dempsey said.
U.S. troops now can move to locations in Baghdad in about five minutes. In the future, their response time will increase to about 15 minutes, he said.
Instructions from Washington, he said, were to hand over control of Baghdad to local forces whenever he felt they were ready to cope with the challenges. That stage has been reached, he said.
"Clearly we think we have made a very significant dent in the former regime's apparatus and network," Dempsey said.
Baghdad now has almost 8,000 Iraqi policemen, and the number will go up to 10,000 by May and to 19,000 by February 2005. In addition, the Iraqi Civil Defense Force, which now has 4,000 troops, will have 6,000 in the next few months. It also has 5,700 guards at important facilities and ministries.
AP-ES-02-02-04 1325EST
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Saddam's First Wife Moves to Little Baghdad, Sanaa
DEBKAfile Exclusive Report
January 19, 2004, 2:16 PM (GMT+02:00)
From palatial Baghdad to typical Yemeni home.
A new colony is quietly establishing itself in the Yemen capital of Sanaa as, one by one, Saddam Hussein's close family and senior loyalists settle into a new life as political exiles.
"Little Baghdad" was discovered by DEBKAfile's exclusive Persian Gulf sources, who note that almost every incoming flight from Damascus, Amman or Beirut - or even Baghdad - drops one or two members of the old regime at the Saudi airports of Jeddah and Riyadh, where they change over to Saudi or Yemeni planes bound for Sanaa. Sometimes, an entire clan of 15 to 20 members deposits three generations in Sanaa. Up until mid-December last year, Saddam's fleeing supporters entered the southern Arabian republic in a trickle and were lodged in the few luxury hotels the Yemeni capital boasts. But in January, as their numbers jumped to hundreds, the Yemeni authorities began housing them all together in the Wadi Asrah suburb on the eastern edge of the town.
Like Damascus, Aleppo, Palmyra, Beirut and Dubai, the Yemeni capital can now boast its own "Little Baghdad," inhabited by some 600 Iraq expatriate officials.
Leading lights of the new Baath community, according to DEBKAfile sources, are Saddam's first wife Sajida Kheirallah Telfah, mother of the late Uday and Qusay and three daughters and her two brothers. Their late father was Saddam's uncle and mentor. Their closest neighbors are the two sisters of Ali Hassan al Madjid, otherwise known as "Chemical Ali," for poisoning thousands of Kurds to death in Halabja. Ali Majid, the deposed ruler's closest adviser, has vanished since the American invasion of Iraq. Contrary to various reports, he escaped unharmed from the US-British bombardment of his palace near Basra in the first part of the Iraq war. In August, rumors of his capture circulated but were never confirmed. It is generally believed that he is the only key functionary of Saddam's weapons of mass destruction programs to make good his escape. His whereabouts are a mystery to this day.
Other denizens of the Yemeni Saddamstan are 40 former Iraqi ambassadors and 120 senior Baath administration officials. Some former regime VIPs would have been allowed to stay in Baghdad unscathed, but preferred not to live under American occupation. One is the widow of the 90-year old widow of Ahmed Hassan Al Bakr, who was president of Iraq in the 1960s.
Yemeni president Abdallah Salah is happy to make the refugees of the Saddam regime at home for three reasons:
1. He was always on friendly terms with the Saddam regime's heads. Chemical Ali and vice president Izzat Ibrahim al Douri were frequent visitors to the presidential palace in Sanaa. In December 2002, weeks before the war, Salah, always on the lookout for profitable deals, put together a plan for a North Korean freighter carrying illegal Scud missiles for Iraq to secretly unload its cargo in a Yemeni port and have it transported overland to Iraq. The plan did not come off. A Spanish vessel acting on information relayed by US spy satellites intercepted the North Korean ship in the Indian Ocean before it reached Yemeni shores. It was boarded by US special forces and the missiles impounded.
2. Salah believes that providing ex-Saddam regime insiders with sanctuary adds to his credibility in his secret dealings with al Qaeda and lends him an image boost in the Arab world. At the same time, he claims to the Americans that this posture helps him maintain contacts with Osama bin Laden's people for the purpose of gathering intelligence.
3. Salah's overriding and constant motivation is the profit factor. Iraq's evicted regime leaders arrive in Sanaa with bags of money, some smuggled out of Iraq, some salted away in secret Arab, Persian Gulf and European bank accounts. DEBKAfile's intelligence sources report that in the last two months, the Iraq expatriates of Sanaa's Little Baghdad have deposited an estimated $350 m in Yemeni banks. There is most certainly more to come. The Yemeni president has high expectations that the vast sums of Iraqi cash reposing in Syrian banks will follow the affluent Iraqi refugees and end up in Yemeni banks.
The Washington Times reveals a Syrian army intelligence letter confirming earlier DEBKAfile reports of at least $3 bn worth of Iraqi funds held in Syria. The letter says $1.3 bn in cash is held in an official "presidency" account in the Syrian Central Bank, together with gold bullion and platinum, as well as $700m in Lebanon's Medina Bank.
Wary of upsetting the Americans, our sources report that Salah has set up a special advisory committee in his presidency office with the task of regulating and keeping tabs on the flow of Iraqi ex-officials to his capital. Candidates must file applications with the committee, with particulars of their companions and the sums of money they are bringing with them. These applications are relayed to the US authorities. If approved, the Iraqis are given the status of political exiles.
The Americans prefer to have all Saddam Hussein's stalwart concentrated in one place in Sanaa where they can be kept under surveillance, rather than letting them wander loose around the Middle East.

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Egypt Slides down Regional Scale, Tries Its Luck in Ramallah
From DEBKA-Net-Weekly 142 Updated by DEBKAfile
January 28, 2004, 6:40 PM (GMT+02:00)
Two senior Egyptian cabinet members, foreign minister Ahmed Maher and minister of intelligence Gen. Omar Suleiman, arrived in Ramallah Tuesday, January 27. They called on Yasser Arafat and Palestinian prime minister Ahmed Qureia, who are not used these days to receiving visitors of such high rank. Their errand was to urge Arafat to instruct Qureia to do as job and seek a meeting with the Israeli prime minister, Ariel Sharon, for a real effort to restart dialogue and obtain benefits for his people. Abu Ala duly relayed this request via visiting US officials John Wolf and David Satterfield who arrived in Ramallah the next day.
DEBKAfile's Palestinian sources report that Arafat instructed the PM to make an appointment with Sharon a week ago, but Qureia believes Arafat is laying a trap for him as he did for his predecessor and will publicly accuse him of making undue concessions to the Israeli prime minister.
This episode speaks volumes about Egypt's current standing in inter-Arab affairs. Not so long ago, a telephone call from the Egyptian president's office to Arafat would have sufficed to get action. These days, two senior ministers have to travel from Cairo to put in a personal appearance to get anywhere with a leader whose own international standing is in tatters.
The Egyptians are still smarting from a series of brush-offs from former friend and ally, Muammer Qaddaffi, as DEBKAA-Net-Weekly 142 revealed on January 23.
Like fellow Egyptian Dr. Mohammed ElBaradei, director of the UN's nuclear watchdog, Mubarak first heard of Muammar Qaddafi's decision to give up his nuclear option over the television news. So two days after Qaddafi dropped his WMD bombshell, Mubarak got on the phone and called him and took him to task.
Qaddafi mumbled something indistinct and the two rulers agreed to talk again in a couple of days.
However, DEBKA-Net-Weekly 's sources have learned that whenever Mubarak's office tried to call the Libyan ruler, he was put off by some excuse. But there was an even graver knock to come, which sent a top-level Egyptian delegation running to Tripoli on Wednesday, January 21, with a personal message from Mubarak to Qaddafi. It was carried by no less than prime minister Safwat al-Sherif, Maher and personal presidential adviser Osama el-Baz.
About a week after the foreshortened Mubarak-Qaddafi conversation, Libyan border posts began turning away Egyptian arrivals, starting with petty harassment and when Egypt complained slamming the door in earnest. According to DEBKA-Net-Weekly' 's sources, Tripoli also suddenly stopped money transfers from Libya to Egyptian banks, creating a whole set of new headaches for Mubarak and his government.
About a million Egyptians have jobs in Libya. Now, they have no way of sending money home each month or paying regular visits to their families every couple of weeks lest their return to work is blocked. Without the remittances, their families could starve.
Ripples of disgruntlement are spreading through Egyptian towns where the Mubarak government's powerlessness to cope with national problems is sensed. Our sources in North Africa quote senior Libyan officials as reporting Qaddafi's explanation of his conduct to his inner circle. Mubarak, he says, will have to get used to the new balance of power in Africa and understand that the Arabs no longer have the clout they had for more than a century.
"The Egyptians may be upset by my dealings with America, but I know exactly how they talked about me and that made me pretty angry too," Qaddafi said this week to his close circle.
"I'm not the least interested in what's going on in the Arab countries and their governments - and that goes for the Arab League as well," he added. "I'm finished with the Arabs - I am now turning to Africa."
Our sources interpret Qaddafi's comments and his border closure as aimed at cutting Mubarak down to size and teaching him to change his tone with Libya.
Qaddafi's attitude is not the only thing bothering Mubarak. Aged 75 and in poor health, the Egyptian ruler sees his last term as president occasioning the collapse of his country as a regional power.
Since the 1950s, Egypt's prestige has rested on four pillars:
1. Influence in West Africa through Qaddafi.
2. Control over the Sudanese regime in Khartoum which provided Egypt with a clear run to the western coast of Red Sea, the main shipping artery to and from the Suez Canal and the Saudi coast.
3. Complete domination over the White and Blue Nile rivers.
4. Possession of the Sinai Peninsula, the key to power over the Palestinians. Yasser Arafat, like Qaddafi in Libya, served Egypt as an obedient tool.
All of these old truisms have been swept away. The pillars upholding Egypt's regional standing have crumbled in the face of the Bush initiatives with regard to Libya and Sudan and Yasser Arafat's 40-month violent confrontation against Israel.
Sudan's President Umar Hasan Ahmad al-Bashir paid a courtesy visit to Mubarak last week. Our sources report that he pointedly refrained from consulting with the Egyptian president on his accord with rebel leader John Garang or the new US alliance with Sudan. He simply presented them as an accomplished fact.
Mubarak, while taking deep offense, nonetheless held on to his temper. The last thing he needs is a feud with another of his neighbors after his falling-out with Qaddafi. He therefore smiled to his guest through clenched teeth.


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Copyright 2000-2004 DEBKAfile. All Rights Reserved.

Assad Buries Hatchet with Arafat, Woos Washington via Ankara
DEBKAfile Special Report
January 14, 2004, 1:38 PM (GMT+02:00)
Syrian leaders taken aback by Israel`s uncertainty
The Syrian leadership, in an urgent session on Sunday, January 11, resolved on two fresh initiatives after failing to make head or tail of Israel's wordy and inconsistent responses to Bashar Assad's feelers for the resumption of the peace talks that broke down four years ago. The first such feeler was broached in a New York Times interview last month. Since then, different Israeli government and military officials have been tacking and weaving between outright rejection and wary affirmatives. The Damascus meeting decided to seize the diplomatic high ground provided by Israel's apparently negative response and move forward in two seemingly opposite directions: in the first instance, a charm campaign to throw off Washington's heavy pressure and its implied threat of military action against Syrian targets both on its soil and in Lebanon's Bekaa Valley; in the second, to bury the twenty-one-year old hatchet between the Assad regime and Yasser Arafat.
This week Damascus moved forward on both these fronts:
A. A special presidential envoy is expected in Ankara with a personal message from Assad to President George W. Bush for delivery by Turkish prime minister Tayyip Erdogan who is due in Washington in the coming days. The Turkish prime minister thus becomes senior mediator between Washington and Damascus, a role that was sought by and eluded Greek leaders when Bush visited Athens earlier this month. Assad hopes an offer to Bush to sponsor the resumption of the Syrian-Israel dialogue will lift the weight of Washington's hand on his collar with regard to his backing for the anti-American campaign in Iraq and for anti-Israel terrorists in Damascus and Lebanon.
The letter to Bush still lacks the final touch of a Syrian concession on at least one bone of contention, whether on the Iraqi, Lebanese or Israeli tracks.
B. The breach between the house of Assad and Arafat dates to the days of Bashar's father Hafez. In 1983, Arafat and his PLO leadership were sent packing from Beirut and spent ten years in Tunisian exile. Palestinians were strictly confined to refugee camps in the south. Continuing the feud, Assad junior has consistently refused to welcome the Palestinian leader in Damascus.
In an exclusive report, DEBKAfile's Palestinian and Beirut sources disclose that the Syrians have now embarked on two reconciliatory steps:
1. For the first time in 21 years, Arafat's mainstream Fatah has been permitted by Lebanon's overlord in Damascus to open up a base in the Lebanese capital.
2. Arafat's close confidant and emissary Hani al-Hassan, a member of Fatah's central committee, has been received in Beirut to open a dialogue with pro-Syrian elements and Syrian military intelligence officers in Lebanon. DEBKAfile's Palestinian sources say al-Hassan has just returned to Ramallah to make his report to Arafat. He will return to Beirut early next week to continue the interchange.
Syria's initial exchanges with Arafat's representative have already had an unsettling effect in Lebanon and the Palestinian rejectionist organizations which enjoy Syrian patronage. The Lebanese people have not forgiven the pivotal role played by Arafat's legions in its 15-year long civil war. The return of a Palestinian official presence in Beirut revives the bad blood. The fact that al-Hassan was allowed to set foot in Beirut marks the Lebanese government's impotence in the face of the will of Damascus. As for the PLO hard-liners, they fear the Assad-Arafat rapprochement will cost them the favored status they enjoy in Damascus which derives from traditional Syrian backing for the anti-Arafat rejectionist movement. After decades of deferring to the Assad regime, they now fear its betrayal.
What is Assad really up to?
In Jerusalem, Israel's military intelligence chief, major-general Aharon Zeevi, addressed the Knesset's foreign affairs and defense committee on Tuesday, January 13, on another rift building up between Damascus, on one side, and the Hizballah and Iran, on the other. Zeevi held this fracture up as evidence that Assad's avowed wish to start talks with Israel is on the level.
Not everyone in the Israeli military and security establishment agrees with him.
Prime Minister Ariel Sharon and defense minister Shaul Mofaz are particularly skeptical - to the point that a crisis of confidence is developing between Mofaz and his intelligence chief.
Last week, officials close to Mofaz leaked reports to the Israeli media alleging that Syrian planes that delivered humanitarian aid to earthquake-struck Iran carried Iranian arms shipments for the Hizballah on their return flight. The information was accurate, but it neglected to mention - unlike a special report by DEBKAfile's military sources - that the entire "airlift" consisted of only two Syrian transports.
These discrepancies do not resolve the real question of whether Assad has truly decided to sever his terrorist alliance with Iran and Hizballah and cozy up to the Palestinians instead. The Americans are not convinced that this is so.
Washington has been in touch with Assad for the past several weeks, using visiting US congressmen and senators as intermediaries. After studying their reports, the White House has come to believe that Assad's talk of peace moves and apparent cooling towards Iran and Hizballah are stratagems to throw off US demands that he withdraw from anti-American activities in Iraq and the Iraqi-Syrian frontier. For the Bush administration, severance of the collaboration between Syria and the Sunni triangle in Iraq matters, whereas whether Assad and Arafat bury the hatchet or not is of little interest.
Indeed, the creation of a new Damascus-Ramallah axis may well be seen in Washington as an act of defiance rather than a pacific gesture. Assad may well be in the process of cutting down his involvement in one terrorist track - the Hizballah and radical Palestinian groups Hamas, Islamic Jihad and the Popular Front for the Liberation of Palestine-General Command, even possibly shutting down their Damascus headquarters - in order to rebuild them on an alternative track - with Arafat. Syria would thus bow to pressure from Washington and Jerusalem in order to challenge them in another sector, demonstrating that he can do without Iran's political and financial support because he has added the Palestinian mainstream faction to his Palestinian stable.
Assad may therefore be in the process of remaking himself as leading champion of the Palestinian cause. This would make him a key player in any practical attempt to forge an Israel-Palestinian peace.
The Syrian president is thus shoring up his Lebanese-Palestinian stake. The response from Jerusalem remains hesitant and uncertain leaving it to Washington to lead the way.

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Veteran US Diplomat Djerejian to Explore Syrian, Israeli Intentions
DEBKAfile Special Report
January 16, 2004, 5:19 PM (GMT+02:00)
Djerejian will carry US initiative to Damascus and Jerusalem
At its wits' end to pierce the thicket of rhetoric emanating from Damascus and Jerusalem, the White House has plucked the veteran Middle East hand, Edward P. Djerejian, from academia for a fresh initiative to try and decode the conflicting signals broadcast by the Assad regime on whether or not and under what conditions they are prepared to resume peace talks.
It has been a month since Assad gave his seemingly groundbreaking interview to the New York Times and two weeks since he visited Ankara and hinted to Turkish leaders that if it were up to him, he would resume peace talks with Israel immediately
Wednesday, January 14, Damascus rejected Israeli president Moshe Katsav's public invitation to Assad to put his money where his mouth is and come to Jerusalem. It was Katsav's intention to bring some clarity to the verbal jousting. However, Syrian prime minister Naji Otri said there could be no peace with Israel as long as Ariel Sharon headed the "Zionist regime". Other Syrian officials, including Bouthaina Shaaban, Syrian minister of expatriates and one of Assad's close associates, said Katsav's offer was "not serious".
There was no hint in any of Syria's official statements of the infighting going on inside the Syrian administration.
Last Saturday, January 10, US senator Bill Nelson (D-Florida) spent five hours in Damascus, where he met Assad. Later, he gave two conflicting reports of their conversation. In the first, which caused a sensation in the Israeli media, Nelson quoted Assad as accepting Sharon's condition to start any renewed peace negotiations from scratch - not necessarily from the point they were broken off four years ago when Ehud Barak was prime minister.
But on Thursday, January 15, members of the Nelson party to Damascus leaked a quite different report. The senator was described as harboring strong doubts about whether Assad was really in control of his regime or strong enough to pursue a peace course in the face of resistance from the old guard left over from his late father Hafez.
Reports reaching DEBKAfile's Middle Eastern sources confirm that these veterans have moved into action to plug the shower of leaks from Damascus that indicate the president's willingness to restart talks. They are led by such powerful figures as vice president Abdel-Halim Khaddam, foreign minister Farouk a-Shara, army chief Hassan Turkmani and defense minister Mustapha Tlass - whose daughter Nahed met Israeli foreign minister Silvan Shalom's senior adviser Ron Prossor, in Paris last month.
These hard-liners are stating firmly that Assad never meant to meet Ariel Sharon's condition that negotiations start from scratch. On the contrary, they must be picked up from the point at which they collapsed and after Israel effectively agreed to relinquish almost all of the Golan Heights to Syria in return for peace. On a side note, the old-timers suggested that this and other misunderstandings were rooted in the manner in which the Syrian foreign ministry and Shaaban mispresented the government's position to the world.
The old Hafez loyalists have long regarded Shaaban as a dangerous new broom in the on-going rivalry for influence.
The Bush administration is left stumped by the inconsistencies in Damascus and the uncertain responses of Jerusalem. According to DEBKAfile's sources in Washington, the White House has decided on a two-week cooling period at the end of which Djerejian, former ambassador to Israel and Syria and current head of the James A. Baker III Institute for Public Policy at Rice University in Houston, will pay lightning trips to both capitals. Baker himself, the president's envoy on Iraqi debt relief and a former secretary of state, may also be involved at some point.
Djerejian will seek clear answers from the Syrian and Israeli leaders on just where they stand on restarting peace talks, conditions, format and agendas, and whether or not a face-to-face meeting is desired.
Djerejian's Damascus leg will be the more important of the two. Before the question of Syrian-Israeli talks is broached, the US envoy will confront the Syrian president with probing questions on the issues of Syrian involvement in the anti-American guerrilla war in Iraq, the storage of Iraqi weapons of mass destruction in Syria, the Syrian military presence in Lebanon and Assad's support for Hizballah terrorists.

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Syria dismisses Israel's invitation for Assad
Katsav slams Syria's rejection of invitation to visit Jerusalem after Syrian officials call it as 'not serious'.
DAMASCUS & JERUSALEM - Israeli President Moshe Katsav criticised Syria's rejection of his invitation Monday for Syrian President Bashar al-Assad to visit Jerusalem for peace talks.
"This rejection shows that president Assad is not made of the same stuff as Egyptian president Anwar al-Sadat," Katsav told reporters.
Sadat made a groundbreaking visit to Israel in 1977 that paved the way for the signing of the Jewish state's first peace treaty with an Arab country two years later.
The Egyptian president was assassinated in 1981 by an Islamic militant.
Syrian officials dismissed Katsav's invitation for Assad to visit Jerusalem for peace talks as "not serious" and evading the issue.
"I invite President Assad to come to Jerusalem to seriously negotiate with Israeli leaders on the conditions of a peace accord," Katsav had said on Israeli public radio earlier.
"Mr Assad will be welcome, but there should be no preconditions," he added.
But Syria's Expatriates Minister Bussaina Shaaban told CNN that Israel must state its willingness to resume negotiations from where they broke off four years ago.
"This is not a serious response" to Assad's call last month for a revival of contacts with Israel, the minister said, accusing the Israeli president of seeking a "photo opportunity".
And a senior official, quoted by the state news agency SANA, charged that the Israeli leader was trying to "sidestep" the land-for-peace basis of the Middle East peace process.
"It is not a matter of visits or initiatives. Israel's recent remarks are a bid to sidestep the peace process," said the unnamed official.
"Making peace in line with the land-for-peace references of the 1991 Madrid conference and international resolutions is the only way to guarantee security and stability in the Middle East," he said.
"Partial solutions and manoeuvres cannot lead to peace in the region," the official said.
In the previous talks with Assad's father and predecessor, Hafez al-Assad, then Israeli premier Ehud Barak agreed to an almost total withdrawal from the Golan, save for a narrow strip of land bordering the east bank of the Sea of Galilee.
But Damascus rejected the proposal, wanting the return of all of the strategic plateau which Israel seized in the 1967 Arab-Israeli war and annexed in 1981.
Current Israeli Prime Minister Ariel Sharon has said that if talks are renewed they should start again from scratch.
"If they are serious they should say they are prepared to start negotiations from where they broke off," countered Shaaban, a former foreign ministry official, reiterating Syria's position.
Assad last month called for a revival of the peace talks which broke down in acrimony in January 2000.

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US yanks diplomatic status from 16 Saudis
Washington says 16 would be Saudi diplomats are teaching Islam rather than working full-time in Saudi embassy.
WASHINGTON - The United States has revoked diplomatic accreditation from 16 would be Saudi diplomats and asked them to leave the country, a State Department official said Wednesday.
"There are 16 Saudis who we've asked to leave because we looked at the accreditation list and we found that they were not working at the embassy," the official said on condition of anonymity.
"Rather they were teaching Islam outside the embassy and therefore not entitled to diplomatic status...I think they are leaving soon," the official added.
State Department spokesman Richard Boucher told reporters the action "was related solely to the fact that these individuals did not appear to be engaged full-time in the conduct of diplomatic duties within the Saudi Embassy."
The State Department's "action was not based on any other information regarding these individuals' activities," he said.
He said the department had recently obtained information that, "subsequent to their accreditation at the Saudi embassy, the persons in question were not engaged in the conduct of administrative or other duties within the embassy, and were therefore not entitled to diplomatic status.
"We have asked the Saudi mission to arrange for the immediate departure of these individuals," said Boucher.

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Somali Orphanages Financed by Saudi Charity Forced to Close for Lack of Funds
By Mohamed Olad Hassan Associated Press Writer
Published: Feb 2, 2004
MOGADISHU, Somalia (AP) - Eleven orphanages in Somalia that were financed by a Saudi charity also suspected of bankrolling al-Qaida activities closed Monday after the relief agency cut off funding, one of the charity's Somali officials said.
Abuu Ali Sheikh Amuud said he was told by the Al-Haramain Islamic Foundation on Jan. 15 that it could no longer provide funding for the orphanages, which cared for about 6,000 children.
Amuud condemned the closures as "inhuman and discriminatory against orphans."
On Monday, many children were turned away from an orphanage where they expected to receive food, medicine, clothing and small gifts usually distributed on the Muslim feast day of Eid al-Adha.
The charity's seven offices in Somalia, a lawless nation without a central government since 1991, closed six months ago. More than 500 Somalis who worked in the orphanages will lose their jobs, Amuud said.
In March 2002, the United States and Saudi Arabia moved to block the funds of the Somali and Bosnian branches of al-Haramain, saying they were "diverting charitable funds to terrorism."
On Jan. 22, the two countries said they were seeking international support to cut off funding to the group's other branches in Indonesia, Pakistan, Tanzania and neighboring Kenya.
At its height, Saudi-based Al-Haramain raised $40 million-$50 million a year in charitable contributions worldwide, a Saudi official has said.
Al-Haramain has denied any link to terrorist activities and said it was only involved in charity work for the poor.
AP-ES-02-02-04 1332EST

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Saudis Promise Measures to Avoid Future Stoning Ritual Deaths
By Rawya Rageh Associated Press Writer
Published: Feb 2, 2004
MINA, Saudi Arabia (AP) - Saudi Arabia's top religious cleric promised measures Monday to prevent more tragedy at the annual Muslim pilgrimage, a day after 251 people were trampled to death during the "stoning the devil" ritual.
Sheik Abdul Aziz bin Abdullah al-Sheik's comments came a few hours after the Saudi government said it would form an agency to redevelop Mecca and Medina, Islam's two holiest cities.
But some pilgrims questioned the resolve of the Saudis to end the string of tragedies that have marred the hajj, or pilgrimage, in recent years.
"We are tired of this broken record that keeps blaming the pilgrims. The government keeps saying that more people were performing the hajj this year than in previous years, as if Muslims are just now realizing the importance of the hajj. We don't want excuses or a scapegoat. We want a solution," said Ibrahim Abdul Radi, an Egyptian pilgrim.
Ezzedin Hemeida, a Sudanese construction technician attending the hajj with seven relatives, said they were "quite anxious" before they went to perform the stoning ritual.
Saudi "authorities need to find a way to handle this crowd, it's becoming intolerable," he said, adding that men, women and the elderly should have separate time slots.
The senior cleric's statement did not elaborate on what measures would be taken, but it is likely that al-Sheik will issue an Islamic fatwa, or edict, related directly to performing the stoning.
"The Board of Senior Theologians is pained by the incident and continues to search for any means that could prevent such incidents. It will meet on Thursday in Mecca to issue a decisive statement to solve this problem, God willing," al-Sheik said in a statement, reported by the official Saudi Press Agency.
In 1998, following a stampede during the ritual in which 180 people were killed, religious authorities issued an edict permitting the stoning to begin at dawn instead of after midday. The idea was to give worshippers more time and enable authorities to control them.
The stoning - often the most emotionally charged ritual at the pilgrimage - is performed three days in a row before sunset. Pilgrims also were trampled to death on their way to the stoning ritual in 1994, 1998, 2001 and 2003.
Seven more pilgrims died of their injuries Monday, the Saudi Health Ministry said.
The Saudi government's announcement that it would form an agency to redevelop Mecca and Medina came in response to Sunday's stampede.
Saudi King Fahd said the agency would develop the holy sites "according to the current and future circumstances," the official Saudi Press Agency reported Monday. Plans would be "comprehensive" and serve for "no less than 20 years."
Sunday's tragedy was the worst disaster at the hajj since 1997, when 340 pilgrims died in a fire at the tent city of Mina, near Mecca.
To control the crowds, the Saudis had set quotas for pilgrims from each country. About 2 million Muslims are participating in this year's pilgrimage.
The crowd got out of control Sunday as pilgrims moved along a wide ramp leading to the stoning - where they throw pebbles at three stone pillars, symbolizing their contempt for the devil.
Bishr Abdullah, a Nigerian pilgrim who dislocated his shoulder in Sunday's melee, said he was very close to the pillar when pushing began from two directions.
"When the pressure intensified, I could not breath and I fell. People stepped on me, but luckily someone I don't know pulled me out," he said from his bed at King Faisal Hospital in Mecca.
Many Muslims who have performed the ritual have harrowing tales to tell about being swept away by the crowds, and being afraid to trip or fall for fear of being crushed to death.
"All precautions were taken to prevent such an incident, but this is God's will," Saudi Hajj Minister Iyad Madani said Sunday. "Caution isn't stronger than fate."
About 10,000 security officers were on duty at the time in that area, said Brig. Mansour al-Turki of the Saudi General Security Forces.
No major incidents were reported Monday, as pilgrims continued the ritual.
AP-ES-02-02-04 1353EST

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Father of Pakistan Nuclear Program Confesses to Transfers to Iran, Libya and North Korea

By Matthew Pennington Associated Press Writer
Published: Feb 2, 2004
ISLAMABAD, Pakistan (AP) - The admission by Pakistan's nuclear founder that he spread weapons technology to Iran, Libya and North Korea raised questions Monday about whether military figures knew of the transfers.
Officials said for the first time that two former army chiefs have been questioned in the scandal but weren't implicated.
The revelations Monday came as Pakistan completed its investigation that began in late November after Iran provided relevant information to the U.N. nuclear watchdog, the officials said.
President Gen. Pervez Musharraf was expected to announce the results of the nuclear probe in an address to the nation after a period of national holidays ends Thursday.
The seven key suspects include scientists and security officials from the country's top nuclear facility.
Chief among them is Abdul Qadeer Khan, long seen as a hero in Pakistan for creating the Islamic world's first nuclear bomb. Officials said he confessed in a written statement to spreading nuclear "drawings and machinery" to Iran, Libya and North Korea for about a decade starting in the late 1980s.
Khan was fired Saturday as a scientific adviser to the prime minister. Perhaps to forestall a public backlash over his dismissal, two top military officials briefed Pakistani journalists about his confession, submitted to investigators late last week.
According to journalists invited to the briefing, Khan told investigators he had provided the secrets to other Muslim countries - Iran and Libya - so they could become nuclear powers. The transfer to North Korea "was to divert attention of the international community from Pakistan."
Officials said Khan acted for personal gain but that he denied it.
In recent days, newspapers have reported Khan had a vast array of real estate holdings, and even used a C-130 military transport plane - which landed in Libya with Khan's top aide on board - to ship furniture to a hotel he owned in Timbuktu, Mali.
Pakistani authorities have conceded there was a security lapse but deny there had been any official knowledge of Khan's actions. But there are growing doubts over how top military officers overseeing the nuclear program couldn't have known about the spread of technology to at least three countries.
A government official said "questions have been put" to two former army chiefs to check information provided by Khan and other suspects - the first time that such top figures have been quizzed in the proliferation probe.
Gen. Jehangir Karamat and Gen. Mirza Aslam Beg, a nationalist and strong advocate of a strategic alliance with Iran during his tenure, denied they had authorized nuclear transfers, the official said.
Beg has said Pakistani scientists may have spread nuclear secrets to Iran and Libya, but that it was "no crime" and the probe was a mistake and a sign the government was caving to Western pressure.
Military officials told journalists that authorities didn't closely scrutinize what was going out of the nuclear lab because Khan was a trusted figure.
The revelations that the top nuclear scientist in Pakistan - now a key ally in the U.S. war on terror - sold sensitive technology to two nations among President Bush's "axis of evil" alarmed the international community.
But analysts said Musharraf's apparent willingness to come clean about the shady past of Pakistan's covert nuclear program would count in his favor. He has won foreign plaudits for his opposition to Islamic extremism and eagerness for peace with India, Pakistan's nuclear rival.
AP-ES-02-02-04 1304EST


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Unleashing CSIS
National Post
Monday, February 02, 2004
For years, security and spy agencies, including the Canadian Security and Intelligence Service (CSIS), have claimed they were unable to locate the family of Ahmed Said Khadr, a suspected senior al-Qaeda member known in international intelligence circles simply as "al-Kanadi," the Canadian. After being in Pakistan only a matter of days, however, the National Post's own Stewart Bell recently managed to track down the female members of the Khadr clan and arranged a candid interview with them.

So why couldn't CSIS do the same? Because Canada's timid political leaders refuse to permit its agents to deploy much beyond our own borders (or to carry guns and participate in high-speed chases for that matter).
International terrorists operate within Canada in large numbers -- representing perhaps 50 terrorist organizations. These terrorists have no respect for our borders. Yet our politically correct leaders refuse to unleash many Canadian spies into the world's hot spots to collect information that might foil attacks here at home for fear of offending other countries' sovereignty, even though those countries themselves are often state sponsors of terrorism.
The Khadrs might be called Canada's First Family of Terrorism, and it is something of an embarrassment that CSIS has not been able to do more to track down its members. "Al-Kanadi," whom Pakistani security forces are certain they killed during a raid on an al-Qaeda compound last October, was a terror suspect long before 9/11. Mr. Khadr emigrated to Canada from Egypt in the 1970s, where he is believed to have been a member of the Muslim Brotherhood, a radical fundamentalist group that was the precursor to al-Jihad, the Egyptian wing of al-Qaeda. He studied computer engineering at the University of Ottawa and worked for Bell Northern Research before moving to Pakistan to raise money for refugees of the Soviet-Afghan war and, many suspect, al-Qaeda.
In 1995, Mr. Khadr was arrested in Pakistan on suspicion of financing the bombing of the Egyptian embassy in Islamabad by al-Jihad. But he was released when then-prime minister Jean Chretien intervened on his behalf with Pakistan's government -- another less-than-proud moment in the history of Canadian counter-terrorism policy.
During Mr. Bell's interviews in Islamabad, Mr. Khadr's daughter Zaynab admitted that her family and Osama bin Laden's were fast friends, often socializing together and inviting each to the other's family celebrations. She also freely admitted that her father, accompanied by bin Laden, frequently took large sums of money into Afghanistan from his relief agency in Pakistan during the 1980s, a practice the Khadrs had previously denied.
Zaynab's 20-year-old brother Abdurahman returned to Canada in December from the American terrorist detention camp at Guantanamo Bay, Cuba, where he had been held since being captured in November, 2001, during the U.S. invasion of Afghanistan.

He had been taken while allegedly fighting for al-Qaeda on behalf of the Taliban. Seventeen-year-old brother Omar remains at Guantanamo and is accused of using a grenade to kill a U.S. army medic in Afghanistan in July, 2002, long after the war had ended. Fourteen-year-old Abdul, another brother, was captured by Pakistani forces in the same gunfight in which his father died. Only the eldest Khadr son, Abdullah, who is believed to have run an al-Qaeda training camp in Afghanistan, remains at large. To our knowledge, CSIS has played little, if any, role in the effort to kill or capture any of these men (though, given the secretive nature of their operations, it is impossible to say so with certainty).
Last October, in a speech to a security conference in Vancouver, Ward Elcock, director of CSIS, admitted more forthrightly than ever before that "events have increasingly required us ... to operate abroad." He further admitted CSIS "has been conducting operations abroad for many years," even covert operations. Unfortunately, the practice of overseas spying has long been frowned upon by successive Liberal solicitors-general and Cabinet officials, who prefer to think of this country as the international nice guy, the honest broker, the consensus builder. The agency's budget and staff were cut by more than one-quarter during the tenure of the Chretien government. So no matter how long CSIS has been conducting overseas operations, they cannot have been extensive: The service has neither the money nor manpower for foreign intelligence gathering and must rely on the Americans and the British for many of its facts and warnings.
It is not CSIS's fault that Stewart Bell could locate the Khadrs when it could not. By all accounts -- including Mr. Bell's -- the agency is full of bright, capable people. Given sufficient official encouragement and enough resources, there is no doubt CSIS would build a fine international intelligence network, one which would both do Canada proud with its professionalism and gather valuable information for preserving our national security here at home. All that is lacking is the political will. Paul Martin, it is time to give this country the intelligence service it deserves.
? National Post 2004

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SISTANI'S WAY
Part 2: The marja and the proconsul
By Pepe Escobar

Part 1:Democracy, colonial-style

An extremely discreet and reclusive man, rarely seen in public, Grand Ayatollah Ali al-Sistani, born in Iran's holy city of Mashhad, is the primus inter pares of four great marjas who lead the roughly 150 million Shi'ites spread around the world - including Iraq, Iran, India, Pakistan, the Saudi peninsula and Europe - through the Hawza, the so-called "Shi'ite Vatican" in Najaf, Iraq. A great marja - deemed to be infallible - is the equivalent to a pope: a "source of imitation" - not only as an interpreter of sacred words, but because of his intelligence and his knowledge, ranging from philosophy to the exact sciences.

Sistani rarely travels and spends most of his time reading, studying and receiving endless religious delegations in his small, Spartan study in central Najaf. His organization controls millions of dollars in donations, but the marja himself lives like an ascetic. He controls no army. He leads no political party and he harbors no political ambitions. Unlike other spiritual leaders, he never gives major speeches. He never holds press conferences and he never meets journalists - as Asia Times Online has found out in Najaf on many occasions. But any serious observer knows that all it takes is one word from Sistani for the Shi'ites to embark on a jihad against the Americans and forever bury the United States Deputy Secretary of Defense Paul Wolfowitz-concocted scenario of a new era of American supremacy in the Middle East.

Like Ayatollah Ruhollah Khomeini - the now-deceased leader of the Iranian Islamic Revolution of 1979 - Sistani spent many years studying in Qom, as crucial in Iran as a holy city as Najaf is in Iraq. The Sistani seminary in Qom is still one of the most important in the Shi'ite world. According to insiders in Najaf, when Sistani speaks in Arabic, he still retains "a vague Persian accent". Khomeini spent 13 years exiled in Najaf and held a status similar to that of Sistani. But Khomeini never became a marja - because no living marja at the time appointed him as such. Another striking difference is that Khomeini was heavily supportive of Velayat-e-Faqih - or the primacy of religion over everything, including politics. Sistani flavors total separation between mosque and state - because he fears politics may pollute spiritual matters.

This leads to the crucial point: Sistani is not in favor of an Islamic republic in Iraq, a development that although an anathema in Washington, at the same time would immensely please the ayatollahs in Tehran. What Sistani wants is an Iraqi constitution written with no foreign interference, with no articles contrary to Islam. And he wants a secular government, but composed of good Muslims who respect Islamic principles. French expert on Shi'ism, Pierre-Jean Luizard, explains that Sistani essentially wants religion to be protected from politics. But in an occupied Iraq subjected to such extreme volatility, he cannot but express a political position - because his is the supreme word.

It may be pure malice to juxtapose a sayyed (descendant of Prophet Mohammed) like Sistani with a blunt, unsophisticated, alleged former counter-terrorism expert like L Paul Bremer, the US administrator in Iraq. But whatever the marja says in his small Najaf studio invariably drives the proconsul - working in a luxurious Baghdad palace formerly occupied by Saddam Hussein - crazy. Sistani's fatwas (religious edicts) are implacable: short and straight to the point. The marja has qualified the American "democratization" plans that Bremer seeks to impose as "not democratic enough", or worse still, "fundamentally unacceptable".

Sistani had no reason to support Saddam - who for three decades systematically persecuted and killed Iraqi Shi'ites. During the war in 2003, Washington interpreted Sistani's call for the Shi'ites not to oppose the American army as an endorsement.

But since April 9, 2003 another story has emerged: what most of Iraq's 15 million Shi'ites see is the military occupation of holy Islamic lands by an army of infidels. Sistani's fatwas are the succinct expression of their outrage.

Sistani may have been crucial in forcing the Americans to get United Nations Secretary General Kofi Annan back in the game.

However, Annan did not react as the marja expected. Annan started by basically repeating the usual American excuses: there had been no census in Iraq in the past 45 years and all electoral lists disappeared during the war. Sistani stood his way, and Annan was forced to send in an UN exploratory mission to Baghdad. But Annan's priority remains the end of the occupation - and organizing "free, just and credible" elections only when security allows.

Last week at the World Economic Forum in Davos, Switzerland, Iranian President Mohammed Khatami expressed what hundreds of millions of Muslims are feeling all over the world: "The American administration invaded Afghanistan to find [Osama] bin Laden, where is bin Laden? The Americans occupied Iraq under the pretext of installing democracy and finding weapons of mass destruction. Where are these weapons and where is democracy?" Khatami also revealed how Iran is closely monitoring the confrontation between the proconsul and the marja: "Ayatollah Sistani demanded direct democracy, and the Americans refuse it.

That's what we have always proposed, one man, one vote." Also in Davos, John Ruggie, professor of international affairs at Harvard and an adviser to Annan, has been far from enthusiastic: "The Bush administration has not changed. The Americans' attitude does not incite anybody to cooperate with them."

One of Sistani's sons has already recognized that "the marja cannot resist the anti-American popular pressure forever". Ali Hakim al-Safi, one of Sistani's spokesmen in southern Iraq, clarified that "we don't want any violence. But if there is obstruction, the people will take its responsibilities". Asia Times Online has had credible information since late 2003 that Shi'ites of all factions are building a "secret army" to engage the Americans in case their democratic aspirations are not met.

Even with all its military might, the US has never looked so fragile and discredited in Iraq. An occupying power which refuses democratic elections using all manners of excuses is being judged by the Islamic world - and the international community - for what it is: a neo-colonial power. It has now been proved there were never any weapons of mass destruction in Iraq - much less the means to deliver them. It is now being proved the invasion of Iraq had nothing to do with introducing democracy to the Middle East.

The UN mission - "driving under the [Washington] influence" - may estimate that direct elections are impossible before the American-imposed deadline of July 1. US President George W Bush will then be left with two extremely unsavory options. The caucuses will proceed in Iraq's 18 provinces, and 15 million Shi'ites will smash - by any means necessary - the legitimacy of any government that might emerge. Or the Americans may hold direct elections - and in this case Sunnis, not only in the Sunni triangle - will upgrade their already ferocious guerrilla war to code red, because they will never accept losing power to Shi'ites. Jihad or civil war: these are the options ahead.

(Copyright 2004 Asia Times Online Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)

SISTANI'S WAY
Part 1: Democracy, colonial-style
By Pepe Escobar

Much more than George W Bush vs the-yet-unknown-Democrat-who-would-be-king, this is the ultimate confrontation of 2004. In one corner, the military might of United States power. In the other, the white-bearded, black-turbaned Grand Ayatollah Ali al-Sistani, 74, three wives, three sons and spiritual leader of 15 million Iraqi Shi'ites.

As things stand, the Bush re-election scenario for Iraq goes like this: the Medusa - Saddam Hussein - has been decapitated by Perseus - Bush - the war hero. On July 1 there will be a transfer of sovereignty to some sort of Iraqi authority. This would mark the official, theoretical end of the American occupation of Iraq. The stage will then be set for the first round of American troops to be sent back home. And as Bush's economic policy consists of little else than a successful Iraqi policy, non-stop spinning and propaganda will be enough to secure a second term in the White House.

The Sistani scenario does not involve campaigning, spinning or propaganda. Its political agenda is monothematic: free, direct, one-man, one-vote elections in Iraq as soon as possible. In case free, direct elections are deemed to be impossible - both by the occupying power and a mission to be sent in by the United Nations - "this does not mean that we will accept the principle of designation" of members of the future Iraqi provisional National Assembly, as Sheikh Abdel Mehdi al-Karbalai, one of Ayatollah Sistani's spokesmen, made it clear in Najaf over the weekend.

Things are changing fast in Mesopotamia. On April 9, 2003 Saddam Hussein's statue on Paradise Square in Baghdad was toppled. It was replaced by a monument which is now topped by a yellow flag inscribed with a Shi'ite slogan.

Time is running out - and the calendar is littered with pitfalls. By the end of February, the 25 members of the current Iraqi Governing Council (IGC) will have to adopt a law which will define the boundaries of the next transitional government, as well as the procedures to elect the delegates of the convention which will appoint the provisional national assembly. This law will be enforced until late 2005. By the end of March, another law will deal with the all-important issue of security.

And before May 31, the transitional national assembly must be designated.

This is the crucial issue. In each of Iraq's 18 provinces, the Americans want to impose an "organizing committee" of 15 members: five designated by the IGC, five named by provincial councils and five named by municipal councils of the five largest cities. These 250 indirectly-appointed people will then select the candidates for the national assembly, according to fuzzy criteria which have not been made public. And the new assembly will then name a new Iraqi government. It's fair to estimate that by applying this criteria, the Americans will be able to choose at least two-thirds of the members of the new assembly.

Shi'ites have seen through the scheme - and have been denouncing it with all their power. Street slogans in a series of demonstrations are clear: "We want a constitution written by Iraqi hands, not by the occupying powers or the IGC." Shi'ites also cannot accept that general elections would only happen around December 31, 2005.

It's no wonder the occupying power privileges a system of 18 regional caucuses to form the provisional national assembly. The whole process - and practically all the participants - are controlled by the Americans and by American-appointed Iraqi officials and formerly exiled politicians with absolutely no popular respect or support inside Iraq. The IGC was appointed by the Americans, and includes people like Ahmad Chalabi, a convicted fraudster in Jordan. Many Iraqis - Sunni and Shi'ite alike - call the IGC "the imported government". Heads of provincial and municipal councils were also American-appointed.

On January 12, Sistani said: "We want free and popular elections, not nominations." On January 16, he reiterated that "it's possible to have elections in the next few months with an acceptable level of transparence and credibility". Sistani even proposed as electoral identities the rationing cards held by practically all Iraqi families for the duration ofthe UN oil-for-food program.

The official American excuse for not holding direct elections - as expressed by Iraqi proconsul L Paul Bremer's minions in Baghdad - is lack of time. No wonder. The occupying power has not taken a single measure since last April to even give the impression it was interested in organizing direct elections. The July 1 deadline cannot be postponed because it falls four months before the American presidential election - and Bush and the neo-cons must as soon as possible, according to the ideal scenario, furnish proof to the electorate that the American military adventure in Iraq may be over soon.

Why is this 74-year-old ayatollah, an Iraqi born in Iran, so dangerous? He is dangerous because he has destabilized the three-way pillar supposed to assure an easily-pliable and controlled post-occupation Iraq: the provisional constitution, the electoral system and the security agreements through which the Americans wanted to permanently install, before the end of March, their military bases - all of this before handing over power to the new Iraqi government, an unknown entity.

Sistani could not have been more straight to the point. He bound 15 million Iraqi Shi'ites to his word when he said he is against any agreement which authorizes the presence of foreign troops in Iraq after July 1, 2004. So much for the neo-cons' dream of a "democratic" oil colony under an American military umbrella.

Now it's UN Secretary General Kofi Annan's call - and it was Sistani who put him on the spot. Sistani never agreed to as much as be in the same room with Bremer - although he met the UN's former special envoy Sergio Vieira de Mello. Sistani will only agree to a modified version of the the American plan if UN experts confirm the impossibility of organizing the elections.

Kurds and Sunnis favor the Americans in this case. The Kurds have made it clear they will not tolerate concessions to the Shi'ites unless they are able to preserve their autonomy. Sunnis are afraid at the prospect of losing the power they have exercised in Iraq since the 1920s.

There are 13 Shi'ites in the IGC. Already despised by the majority of the Iraqi population, the IGC may well implode as it is squeezed between Bremer's agenda and Sistani's free election calls. The IGC is now betting everything on Annan's mediation.

More interesting is the Shi'ite reaction outside the IGC - reflecting the opinion of the poorest of the poor in Iraq. Popular firebrand mullah Muqtada al-Sadr - Sistani's young rival - says he is against any UN role because "the UN is a servant of the United States".

Bush and his neo-conservative entourage did everything in their power to bypass the UN to get inside Iraq. Now they need the UN to get out. But it's not the UN that holds the magic key. It is Grand Ayatollah Sistani. If he issues a fatwa (religious edict) condemning the caucuses and the future, indirectly-appointed national assembly, 15 million Shi'ites will follow - and whatever government chosen indirectly will be considered a fake. Sistani has also made it very clear that only a government chosen by free, direct elections will have the legitimacy to negotiate the crucial issue with the Americans: when the occupying troops will actually leave.

But what do Sistani and the Shi'ites ultimately want? It is not a theocratic state modelled on Iran, where the principle of Velayat-e-Faqih - politics subordinated to religion - is paramount. They want a democracy, with Shi'ite politicians holding most of the levels of power - something consistent with the fact that Shi'ites make up 62 percent of the national population.

And crucially, they want no political involvement by Islamic clerics. But no one in Washington seems to be listening.


(Copyright 2004 Asia Times Online Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)


Pakistan loses ground in Afghanistan
By Syed Saleem Shahzad

ISLAMABAD - As the Taliban prepare for a crucial phase of their struggle against foreign troops in Afghanistan, a prelude for the final "spring offensive", the resistance movement has lost its support from Pakistan's establishment, under pressure from the United States.

The resistance, meanwhile, under a new commander, is regrouping in the remote Khyber Agency region of Pakistan, using the infrastructure of people and fortifications laid by Osama bin Laden's al-Qaeda several years ago.

Asia Times Online has learned from insiders within the security administration of President General Pervez Musharraf in Islamabad that strategists have bowed to pressure from Washington, and will end all covert support for the resistance in Afghanistan.

Up to now, Pakistan has aided some commanders in Afghanistan belonging to the Hizb-i-Islami Afghanistan (HIA) of Gulbuddin Hekmatyar, the veteran mujahideen leader now largely responsible for orchestrating the Afghan resistance.

Pakistan's purpose was not so much to damage US interests, but to establish a counter-force to the growing pro-India presence along the Afghani border areas with Pakistan. Pakistan's support, though limited, did, nevertheless, work against the interests of the US. As a result, US intelligence tracked HIA recruiting offices in Pakistani cities such as Karachi and Peshawar, and pointed to various locations in Pakistan where HIA volunteers were being given training, money and arms. And for example, legendary Afghan commander Jalaluddin Haqqani ( who joined the Taliban and became a minister and who is now the main force behind the resistance in Khost and Paktia) visited Miran Shah in Pakistan several times, but authorities turned a blind eye.

Confronted with this, and coming at a time of revelations of some Pakistani scientists being accused of nuclear proliferation to Iran, among other countries, Islamabad had little option but to pledge to pull out all of its operators and their proxy networks from Afghanistan.

Musharraf, did, however, apparently manage to extract a concession from the US that coalition troops would increase their presence in Afghanistan in areas where warlords are hand-in-glove with the Indian establishment. For example, Pakistan wants more International Security Assistance Force (ISAF) troops in Jalalabad and Kandahar, where warlords associated with the anti-Pakistan former Shura-i-Nazaar and the Northern Alliance are active. The US leads a 12,000-person force in Afghanistan.

Carry on in the Khyber
These developments come as the Taliban step up their struggle to include more suicide attacks. Asia Times Online was first publication to report this strategy (Taliban raise the stakes - Oct 30, 2003). These attacks are the prelude to a broader struggle that will start in spring in which the Taliban will attempt to retake the major cities in Afghanistan that they held before being ousted by the US in late 2001.

One British soldier of the ISAF was killed on Wednesday morning and three of his comrades wounded in a car bomb attack on an eastern Kabul highway. The attack occurred just a day after a Canadian peacekeeper lost his life and three others were injured in a suicide bomb attack in southern Kabul area. About 10 civilians, including a French aid worker, were also wounded in the two attacks.

In the latest unrest, an explosion near an ammunition dump in southern Afghanistan on Thursday killed seven US soldiers and wounded three other soldiers and an interpreter. The US Army central command said that the soldiers were working near an arms cache in the southern province of Ghazni. The cause of the blast is unclear.

For some time the US has focused on South Waziristan Agency in Pakistan as a hotbed of the resistance, where guerrillas hide and receive support from the local population between raids in Afghanistan. As a result, at US instigation, the Pakistan army has undertaken a number of missions to the region, but to date without major success in tracking down resistance ringleaders.

Now, though, it emerges that the real center of resistance action is the remote Khyber Agency in North West Frontier Province. Two mountainous areas here, Tera and Moro, which lie on the Pakistan-Afghanistan border, have no roads and the local population is almost 100 percent behind bin Laden and the Taliban. Some years ago, bin Laden had a network of tunnels and underground bunkers built here, which the resistance is now using as hideaways and for the storage of supplies and ammunition as a source of most supply lines into Afghanistan.

Obviously, this region is known to both the US and Pakistani authorities - the problem is dealing with it. Clearly, the US cannot utilize its massive air strength in Pakistan as it did in ousting the Taliban from Kabul. And due to the terrain - and the completely hostile population - the Pakistani army is in no position to make an offensive of any significance. The use of helicopters would also be hazardous as they would have to fly low in the valleys, opening themselves up for ground-to-air missile attacks. According to Taliban sources, the resistance for the spring offensive is now under the command of Mullah Sabir Momin of Orugzan province. The battle lines are drawn.
(Copyright 2004 Asia Times Online Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)

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Time for the Change, Again - Focusing on North Korea.
By Roger D. Carstens
Last month Amnesty International released a report stating that North Korea had publicly executed its own starving citizens for the crime of stealing food. The report's release coincided with another issued by the International Institute for Strategic Studies, which claimed that North Korea could produce four to eight nuclear bombs in the coming year, eventually manufacturing up to thirteen bombs per year by 2010. Considering North Korea's massive human-rights violations, its production of WMDs, its untrustworthy national government, and its ties to states that sponsor terrorism, isn't it time for the United States to start thinking about what a postwar united Korea should look like? After all, if the same logic used to justify action against Iraq is applied to North Korea, there's actually a more solid case for regime change.
In terms of human-rights violations, a review of Amnesty International's report shows a regime that is unwilling to live up to the Universal Declaration of Human Rights. By starving its citizens, jailing, torturing, and executing those who desire their fundamental human rights, and restricting access to independent human-rights monitors, Kim Jong Il's government shows that it has failed to carry out its most basic responsibility: taking care of its citizens.
Concerning WMDs: In 2002, North Korea removed itself from the 1994 Agreed Framework -- a treaty designed to freeze its proliferation efforts -- and announced that it intended to restart its mothballed nuclear program. Not long after, North Korea revealed that it had a secret nuclear-weapons program, one that had been in operation while the country was still under the obligations of the 1994 treaty. Then, in January of 2003, North Korea withdrew from the Nuclear Non-Proliferation Treaty (NPT). Unlike Saddam, who spent years trying to thwart international efforts to determine the intent and extent of his weapons program, Kim Jong Il is taking great pains to make sure that we know about it. Add in North Korea's chemical and biological-weapons arsenal, and its burgeoning missile program (over 600 Scuds in its inventory, including Taepo Dong 2 missiles capable of reaching the United States), and it doesn't take a rocket scientist to see that we won't waste much time hunting for WMDs there, post-regime change.
Unfortunately, by violating the 1994 Agreed Framework and by engaging in a strategy of deception, North Korea has proved that further negotiations are meaningless, as any treaty signed by North Korea is not worth the paper it's written on. The North Koreans are simply allowing us to make diplomatic overtures while they continue to build up their WMD program.
But perhaps most disturbing are North Korea's ties to states that sponsor terror. Evidence suggests that North Korea has sold ballistic-missile technology to countries that the State Department lists as sponsors of terrorism, namely, Iran, Syria, and Libya. If North Korea is willing to sell missile technology to these states, what is to stop her from selling nuclear technologies to them as well? A cash-strapped North Korea might even consider cutting out the middleman and selling WMDs or related technology to the terrorists themselves.
Those who would argue against a regime change in North Korea cite the military capabilities of Kim Jong Il's forces, specifically the artillery pieces that can range Seoul and the nuclear weapons that may already be in Kim's possession. They might also argue that U.S. forces are stretched thin and are unable to force an invasion against such a foe.
These arguments are dealt with quite readily by former CIA Director James Woolsey and Lt. Gen. (Ret.) Thomas McInerney, who argue that massive air power -- using stealth and precision weapons -- could effectively neutralize North Korea's antiquated artillery and destroy its nuclear capability. Such a campaign -- combined with a U.S./South Korean ground offensive -- would likely result in rapid victory.
And unlike Iraq, we will not have to look far for troop contributions in support of a post-war strategy: South Korea would be well suited to lead these efforts.
As Vice President Cheney told a gathered crowd of world leaders at the World Economic Forum in Davos last weekend: "There

comes a time when deceit and defiance must be seen for what they are. At that point, a gathering danger must be directly confronted. At that point, we must show that beyond our resolutions is actual resolve."
It is time to show North Korea our resolve.
Roger D. Carstens is a member of the Council of Emerging National Security Affairs.
http://www.nationalreview.com/comment/carstens200402020903.asp
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Is Bush a Conservative?
Daniel Casse

http://www.commentarymagazine.com/Archive/digitalarchive.aspx?panes=1&aid=11702021_1
Daniel Casse is a senior director of the White House Writers Group, a Washington, D.C. communications firm.
His articles in Commentary include "An Emerging Republican Majority?" ( January 2003) and "Bush and the Republican Future" (March 2001).
Commentary
February 2004
But criticism of the President has not been confined to Democrats or the Left. For the past year, a chorus of dissent has arisen as well among some conservative pundits and intellectuals--the very group one might have thought would rush to the defense of a President under assault by his liberal antagonists. In a particularly harsh and surprising condemnation, the talk-radio host Rush Limbaugh told his listeners in December that Bush's legacy to the nation would be the greatest increase in domestic spending, and one of the greatest setbacks for liberty, in modern times. "This may be compassionate," warned Limbaugh, playing on Bush's 2000 campaign slogan, "but it is not `conservatism' at all." To be sure, conservative discontent with President Bush is likely to have few if any political consequences in the short term; unlike his father before him, George W. Bush will win the Republican nomination unopposed. Despite grumbling among some conservatives in the House of Representatives, no splinter group of disaffected Republicans seems set to take on the cause of Bush's Democratic opponent the way some embraced Clinton in 1992. Still, Bush's ability to remain a popular Republican President while causing so much dismay on both Left and Right does demand an assessment of the direction in which he has been taking the GOP and the country. Should he be reelected this fall, he will remain not only a controversial figure but possibly one of the most consequential Presidents we have had in the modern era.
That Bush should engender so much antipathy among liberals and Democrats is hardly surprising. Among activists, for whom the fundamental legitimacy of the Bush presidency remains in doubt to this day, the bitter, prolonged battle over Florida ballots in November 2000 still deeply rankles. Never mind the thorough study of the 61,000 disputed ballots by USA Today and the Knight Ridder chain, with its ringing conclusion that "Bush would have won by 1,665 votes--more than triple his official 537-vote margin--if every dimple, hanging chad, and mark on the ballots had been counted as votes." Despite such findings, Democratic leaders have continued to treat the Florida vote as a monumental act of injustice. As recently as December 2003, Terry McAuliffe, the chairman of the Democratic National Committee, declared that "Al Gore won the state of Florida in 2000, and we should never forget it." "We had more votes. We won," chimed in Senator John Edwards at a party rally last month.
A similar air of unreality, not to say irrationalism, hangs over much of the liberal and left-wing case against Bush. When Bill Clinton ran against the incumbent Bush, Sr. in 1992, the Democrats put together a partisan but compelling case: the economy was in recession; Bush was ignoring health care; and he had failed to be tough enough abroad, leaving Saddam Hussein in power and going easy on the Chinese leaders who had crushed dissent in Tiananmen Square. By contrast, today's critics are conspicuous for their lack of sustained argument. Though all of the Democratic contenders want to repeal at least some of Bush's tax cuts, none has offered a serious economic plan. Alarmed by the growing federal-budget deficit, they present no program to reform domestic spending; indeed, most argue that the country should be spending even more on education, the environment, and health care.
Democrats were divided last year on whether to support the war in Iraq. But, aside from mourning the loss of American life in Iraq, it is not clear what alternative policy Bush's critics now have in mind. Nearly all speak of "increased security" and greater "internationalization" of the war on terrorism, but as the early Democratic debates attest, these have simply become liberal shibboleths, unsubstantiated by thought-out ideas.
More often, the case against Bush from the Left has degenerated into an exercise in name-calling and fear-mongering. Jonathan Chait, a journalist whose reputation has grown almost entirely on account of his loudly advertised hatred of the President, recently asserted in passing that "Bush is the worst President in the past 80 years." Not to be outdone, Howard Dean has declared him our "most dangerous President" ever, and both he and Wesley Clark have publicly flirted with crackpot theories about the secret origins of the Iraq war. According to Harold Myerson, writing in the liberal quarterly, the American Prospect, Bush "is incomparably more dangerous than Reagan or any other President in this nation's history." To the New York Times columnist Paul Krugman, Bush is a radical who "wants to undo much of the Great Society and the New Deal." Books announcing that Bush is a liar, an imbecile, or a dangerous brute have been published by established journalists and prominently reviewed in reputable journals. Al Gore has associated himself with MoveOn.org, an advocacy group whose website briefly featured a mock political ad depicting images of Hitler followed by images of Bush, with an accompanying text declaring that "1945's war
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Commentary February 2004
crimes" are "2003's foreign policy." The content of websites with flaky names like BushIsAMoron.org, WhoDiesforBushLies.com, or EvilGOPBastards-.com seems little different from the material available at the official site of the Democratic National Committee.
In his new book, Bush Country, John Podhoretz has collected and carefully analyzed representative statements from the core liberal critique of Bush, maintaining persuasively that they have become so unmoored from the reality of the President's policies as to take on "the paranoid style of American politics"--the phrase used nearly 40 years ago by the political scientist Richard Hofstader to describe the mentality of the John Birch Society and other fringe elements of the American Right. The result, Podhoretz writes, is an angry opposition that is no longer capable of participating constructively in political debate.
By contrast, whatever may be said of Bush's critics on the Right, they do present a more reasoned set of contentions. Last summer, the columnist George F. Will suggested that, under Bush, American conservatism was undergoing an identity crisis, one that might well end by rendering it incoherent. The crisis, according to Will, was being caused by the policies of the administration and a series of decisions by the purportedly conservative Supreme Court; jointly, these were gnawing at the very foundations of limited government and the preference for market forces over governmental intrusion in economic affairs. In the months since Will raised these doubts about the conservative bona fides of the administration, the murmurs of discontent have turned into a din. The critics are not Bush-haters; they would likely support his reelection over just about any conceivable Democratic nominee. Still, their discomfort is unmistakable. Speaking for many, Ramesh Ponnuru in National Review laid out the brief against the President as of last September: Bush has increased the federal role in education, imposed tariffs on steel and lumber, increased farm subsidies, okayed federal regulations on campaign finance and corporate accounting, and expanded the national-service program President Clinton began. Since September 11, he has also raised defense spending, given new powers to law enforcement, federalized airport security, and created a new cabinet department for homeland security. No federal programs have been eliminated, nor has Bush sought any such thing. More people are working for the federal government than at any point since the end of the cold war.
But it was Bush's decision to sign the Medicarereform law passed by Congress just before Thanksgiving that pushed even quietly skeptical conservatives into open opposition. The new law, projected to cost as much as $2 trillion over the next two decades, is surely the greatest expansion of entitlement spending ever endorsed by a Republican President. TheWall Street Journal, in a harsh criticism, called the bill "too expensive a gamble for principled conservatives to support." The supplyside economist Bruce Bartlett described himself as "apoplectic." Major conservative think tanks from the Heritage Foundation to the Cato Institute and the National Center for Policy Analysis all vigorously lobbied against the bill's passage. By year's end, Bush had become the target of dismissals once reserved by conservatives for the likes of Tip O'Neill or Bill Clinton. "He's a champion big spender," said Stephen Moore of the Club for Growth, while Edward Crane of Cato accused him of causing the "philosophical collapse of the GOP." Andrew Sullivan, a staunch supporter of the President on foreign policy, wrote in Time that when it came to domestic affairs, he was "fast becoming a deadbeat dad, living it up for short-term gain while abandoning his children to a life of insecurity and debt." Announcing a new online publication, Conservative Battleline, the veteran conservative activist Donald Devine wrote caustically that "The Republican President and party in Congress clearly have no interest in reducing the stifling burden of national government bureaucracy in peoples' daily lives. Someone must represent them." The noisy sound of ranks breaking ought to be placed in context. Conservative opposition to an incumbent Republican is hardly new. Bush, Sr. was famously confronted by Patrick J. Buchanan, who actually beat him in the New Hampshire primary. Although Buchanan's attempted revival of pre-World War II nationalism never evolved into a potent electoral force, he did help create a small but vocal movement of cultural conservatives who have long been uncomfortable with the modern GOP's affinity for free trade, military intervention abroad, a relatively open immigration policy, and support for Israel. Their views, published regularly in periodicals like the American Conservative and Southern Partisan, have failed to have a discernible impact on either the Bush administration or the larger conservative movement.
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Is Bush a Conservative?
The new critique, though, is closer to the center and more intellectually sophisticated. Does it signal an end to the conservative electoral coalition that, with whatever internal fissures, has existed as a force in the country since the days of Ronald Reagan? In the opinion of Kevin Hassett, a freemarket economist who served as a close adviser to Senator John McCain during the latter's 2000 presidential run, it certainly should. "Conservatives might shudder at the thought of `President Howard Dean,'" Hassett has written, "but it is hard to see exactly what has been gained if the strategy employed to keep him out of the White House is to adopt all of his [big-government] policies in advance." Some Bush supporters have taken a more sanguine view. Fred Barnes of the Weekly Standard, for one, argues that Bush is to be understood as a "biggovernment conservative": that is, one who wants to use the resources and imprimatur of the federal government to advance conservative ends. In Barnes's judgment, Bush has simply recognized that Americans do not mind big government, and has adjusted accordingly. More important, Barnes thinks, is that Bush is personally very conservative. Unlike his father, he has no history of association with moderate or liberal ("Rockefeller") Republicans, is comfortable with cultural and religious conservatives, and has never shown any eagerness to find common ground with liberal Democrats. Barnes is on to something, but his terms may be too narrow. The real question is not whether Bush is betraying the conservative movement but whether he is redefining the meaning of conservative governance--and if so, in what direction. Obviously, the events of September 11, 2001 confronted Bush's presidency with a new set of priorities, both foreign and domestic. Partly in response to those events, Bush has no less obviously departed from the trajectory of traditional conservative thinking, and in a manner that goes beyond such touchstones as balanced budgets and governmental minimalism. Nevertheless, it is impossible to ignore the ways in which the sometimes surprising and unorthodox politics he has been advancing, albeit unevenly, have created a new type of conservative agenda.
Foreign policy is the starting point. Over the previous decade, the prevailing contention among most Republicans and conservatives had been that the United States could not be the world's policeman but must choose its involvements carefully. The so-called Powell doctrine, according to which military engagement should be pursued only with overwhelming force and with a clear exit strategy in mind, had become the accepted view among most leaders on the Right--including George W. Bush. Throughout the 1990's, Republicans joined Democrats in persistently and aggressively cutting the Pentagon budget.
Faced with different realities after September 11, Bush and his advisers have effectively crafted a new American posture, one that tacitly rejects the Powell doctrine, broadens the definition of the American national interest and hence the criteria of intervention, and has developed a reliance on the sophistication of our weaponry rather than on the number of men on the ground.
The simplistic shorthand adopted by the media to characterize (and/or demonize) the Bush approach is to call it a triumph of "neoconservatism." And it is true enough that, like today's administration strategists, neoconservative thinkers in the late 1970's and 1980's strove to redefine the role of American power at a time of retreat and growing isolationism; it is also true that a number of neoconservatives hold policy positions in the Bush administration itself. That said, it is necessary to add that Bush's policy choices have been driven less by ideology than by the clear-cut need to combat terrorism and the states that sponsor it, and to confront rogue regimes whose very existence represents a threat to freedom and security. In so doing, Bush and his team have devised a policy that breaks with almost every single tenet of yesterday's prevailing model of liberal multilateralism, and that exhibits an energy and coherence missing during the Bush, Sr. and even during the Reagan administrations. Of course, many conservatives distinguish between Bush's muscular posture toward the world, which they applaud, and his deviation from the dogma of balanced budgets. But here Bush is less out of step with conservative practice (as opposed to conservative theory) than his critics contend. Writing in the Washington Post this past November, the libertarian analyst David Boaz complained that the administration's domestic agenda is "a far cry from the less-government, `leave-us-alone' conservatism of Ronald Reagan." Yet this is what the same David Boaz was writing in August 1982 about the "`leave-us-alone' conservatism" of the Reagan administration:
Soaring military spending for overseas commitments and the refusal to make significant cuts in most major domestic programs have
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Commentary February 2004
created the worst deficits in American history. . . .People around the country seem to understand what no one in Washington will admit: the budget is out of control. The growth of government is out of control. . . . Spending in FY [fiscal year] 1983, the first real Reagan budget, will be about $100 billion higher than President's Carter's last full budget. Nor was Boaz alone at the time. The late Norman Ture, a father of supply-side economics, left his Treasury Department post in protest at what he took to be Reagan's deviation on taxes in 1981. Reagan's own budget director, David Stockman, was similarly shocked into resigning by the President's unwillingness to make steep cuts in spending, a failure of leadership that to Stockman explained, in the subtitle of his 1985 book, "how the Reagan revolution failed."
But what Reagan recognized, and George W. Bush after him, is that, conservative rhetoric to the contrary notwithstanding, balanced budgets and cuts in federal spending are far less important to economic health than is the promotion of growth. This lesson, explained repeatedly over the decades by the Wall Street Journal's late editor Robert L. Bartley, is still regularly forgotten by some conservatives. In the early 1990's, the obsession with deficit reduction led the first Bush administration to a short-sighted deal with a Democratic Congress to raise taxes. Five years later, Newt Gingrich squandered the authority of his new Republican majority in the House of Representatives by insisting on a showdown with Bill Clinton over cutting spending-- a goal that Gingrich held to be so vital and urgent that it necessitated a shutdown of the federal government. Within a few years of Gingrich's disastrously unpopular move, the budget "crisis" of the mid-1990's was completely eliminated by means of economic growth, a booming stock market, and entrepreneurial breakthroughs that were flooding the federal treasury with new revenues. Given this very recent history, it is remarkable that hysteria over looming deficits should reappear among conservatives as if nothing had been learned. At the end of 2003, the federal deficit was approaching $500 billion, including $50 billion spent on the war in Iraq. Although, numerically, that is the largest deficit in our history, it represents only 4.2 percent of the nation's GDP. Under Reagan, the deficit ran as high as 6 percent of GDP, and it stood at 4.7 percent into the early 1990's. Historically, it is in line with post-recession deficits under both Republican and Democratic administrations.
Nor should the deficit be looked at without reference to the significant pro-growth tax cuts Bush championed and signed last year. Part of this 2003 package was designed to accelerate the reductions in personal income-tax rates passed in 2001; but, by reducing the capital-gains tax rate and the rate on dividends as well, the new Bush package deliberately aims at boosting the fortunes of investors who now make up close to 50 percent of American households. In short, Bush has not merely recapitulated the pro-growth cuts of the Reagan era but greatly expanded their reach. The decision to cut dividend taxes alone, by encouraging companies to return more profits to their stockholders rather than spending on acquisitions, may have contributed significantly to the market surge during 2003.
Is it possible to extrapolate from Bush's record on spending to his other domestic initiatives? While granting that many of the administration's budget decisions were made on the basis of pragmatic necessity, Ramesh Ponnuru warns that conservatives "should not try to dress up this necessity as a coherent philosophy." But there may be a more constructive view to be taken.
The Medicare bill is a case in point. Without doubt, it represents a massive expansion in spending and, with the addition of prescription-drug coverage, amounts to a new entitlement for seniors. No one, however, seriously doubts that this coverage had to be added--even free-market conservatives agree that inclusion of prescription drugs was long overdue. The real issue is whether the legislation permits a fundamental shift in the debate over how a government entitlement like Medicare ought to operate.
To Grace-Marie Turner, a veteran champion of free-market health-care reform, the bill is well worth its high cost. "Tucked away in this huge and hugely expensive legislation," she writes, "are seeds that can lead to transformative changes in the health-care sector." Two such "seeds" are Medical Savings Accounts and experiments to allow private providers to compete for Medicare. The inclusion of such provisions, coupled with the fact that the bill's final draft attracted the support of leading Democrats and the AARP, means that liberal opposition to genuine reform of Medicare has finally been broken.
In this large sense, the bill is a turning point in conservative efforts to challenge the entitlement
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Is Bush a Conservative?
status quo. For nearly twenty years, Senator Edward M. Kennedy, Congressman Henry Waxman, and other Washington champions of governmentrun health care have made increased spending levels the only yardstick by which to measure a President's concern for Medicare; in the process, they have successfully quashed any serious discussion of introducing market forces into Medicare or providing seniors with choices of coverage in the private sector. The Bush legislation hardly resolves the issue, and the reform elements in the bill are too small and are postponed too far into the future; but, going forward, the debate will center at last on whether we are advancing toward market reform quickly enough. This is something conservatives have long argued for but, until now, never achieved. A similar assessment can be entered for some of Bush's other domestic initiatives, starting with education. The No Child Left Behind legislation, passed during his first year in office, is extremely expensive and much flawed, but it, too, has succeeded in changing the terms of debate. For years, "progress" in education was measured by the expenditure of ever more federal dollars and the appeasement of Washington-based pressure groups--the organizations that former Secretary of Education William J. Bennett called "the blob." The new legislation emphasizes performance standards and school autonomy. As Bennett and Chester E. Finn, Jr. recently summed up the bill's achievements so far, it has done well on standards while leaving much to be desired on school autonomy. Still, today's discussion is surely healthier for education itself, and more in tune with conservative ideals, than the mindless argument over spending levels that dominated federal education policy for so long.
On still other fronts, the outlook is less clear. The creation of a mammoth Department of Homeland Security, for example, can hardly be reassuring to advocates of small government; but it does offer a much-overdue opportunity to reform the isolated and dysfunctional bureaucracies that have long been responsible for our border security, our immigration enforcement, and our publichealth apparatus. As for the Sarbanes-Oxley bill launching an array of new regulation of corporate governance, this was something no President could face down in the wake of the Enron and World- Com scandals; if nothing else, it serves as a barrier to Republican corporatism, an anathema to conservative ideology since the 1950's.
Far more provocative to some conservatives was the speech by Bush in early January urging dramatic reforms to the country's immigration policies. His proposals would make it easier for immigrants to enter the country to fill jobs and for undocumented aliens already here to stay legally.
Such initiatives were almost guaranteed to create a firestorm in conservative ranks. For some time, populist figures on the Right like the talk-show host G. Gordon Liddy and the columnist Michelle Malkin have railed against any effort to grant amnesty to illegal aliens; others, including Peter Brimelow and John O'Sullivan (both immigrants themselves), have argued that future surges in immigration from Hispanic countries will unacceptably dilute the nation's cultural unity.
But there is a strong economic case to be made for increasing immigration to the U.S. Despite the recent surge in productivity and the relatively high rate of unemployment, most economists believe that future growth will depend on the availability of both high- and low-skilled workers from elsewhere. There is also a moral dimension to the immigration issue. Is it really right to track down and oust workers and their families who, though here illegally, are otherwise law-abiding residents, who provide much-needed labor, and whose families and children are often deeply integrated into their communities? What is certain is that a new policy that attempts to promote immigration and legitimizes those who have come here illegally will force the conservative movement to grapple with an issue it has long swept under the rug, and will itself help to redefine Bush's coalition.
Finally, there is a set of policy decisions that are hard to defend on any principled grounds. These include Bush's support for the anti-market 2002 farm bill, the protectionist steel tariffs, the utterly ineffective campaign-finance reform bills, and the porkladen energy bill of 2003. True, there is no evidence that Bush was passionate about any of them; but his willingness to support such policies, even for tactical purposes, is clear evidence that his conservative themes have yet to coalesce into an easily summarizable vision. Where Reagan had a simple message-- stronger defense plus tax cuts--and Gingrich his Contract for America, Bush has yet to offer the country an equivalently streamlined philosophy. What he has offered is something no less necessary: a very bold, and very ambitious, reordering of conservative priorities. The list alone is impressive. Bush has launched an unprecedented campaign against global terrorism and tyranny. He has barely paused before using federal resources to reshape large swaths of our education and health-care programs. In the midst of a weak
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Commentary February 2004
economy and in the face of unrelenting criticism, he has pursued and signed the third-largest tax cuts in history. He has significantly increased the scope of federal power to protect domestic security while, just two years after foreign terrorists attacked the country, contemplating a new openness to foreigners who want to live and work here. He has willingly entered fractious cultural debates on stemcell research and homosexual marriage, making it clear that he believes government cannot be indifferent to such questions. He is entertaining the idea of remaking Social Security by offering individuals private accounts.
If this loose collection of initiatives and preferences is causing a conservative identity crisis, as George Will would have it, that may be because American conservatism has been in search of an identity ever since Ronald Reagan left the public stage. To most conservatives, George H.W. Bush, in raising taxes and in implicitly impugning his predecessor by calling for a kinder, gentler America, was not the best steward of the Reagan legacy. But by the early 1990's, with the threat of Soviet Communism having disappeared, the purpose of conservative politics had become uncertain. The old mission so memorably defined by William F. Buckley, Jr.--that the job of conservatives was "to stand athwart history yelling `stop'"--was seeming insufficient in a world where, even after eight years of Reaganism, the government was continuing to grow and Democrats still dominated the Washington debate.
Newt Gingrich's theory was that the purpose of the next Republican revolution was to undermine the welfare-state mentality of the Democrat-controlled Congress by reforming the rules that protected incumbents. He succeeded brilliantly in reforming the rules, but the new conservative-Republican majority in the House was soon at a loss about what to do next, especially with Bill Clinton in the White House as a still-popular and indefatigable adversary.
Bush's own effort to reinvent the conservative alliance began, in his 2000 campaign, with the slogan of compassionate conservatism. To some, this signaled a reintroduction of his father's kinder, gentler philosophy. To others, it captured who Bush said he was: a "reformer with results," someone willing to use the power of government to advance conservative ends. But whatever the slogan, his first yearand-a-half in office was hardly encouraging. Proposals on taxes, education, and faith-based communities looked like compromises and half-measures. Compassionate conservatism was no replacement for the real thing.
As so many have noted, September 11 gave Bush a new sense of personal purpose. At the same time, it may also have given his brand of political conservatism a new lease on life. Today his conservative critics, focused on increased spending and larger government, do not see this. They are still measuring by the Reaganesque barometer of conservative purity. "Government is the problem," Reagan proclaimed in one of the rhetorical high points of his first inaugural address. (The Reagan reality, as we have seen, was something else again.) Today, however, with the country at war and all of us highly dependent for our security on government intelligence, law enforcement, and even health-care monitoring, the blanket distrust of government no longer is an odd conservative rallying-cry. Besides, in advancing conservative ends, the credo of small government also has its limitations. The welfare reform of the late 1990's was a conservative victory--ending a pernicious federal entitlement and the corrosive disincentives to work that came with it. But most states ended up spending more than before on welfare, increasing payments and investing in the training of social workers charged with a smaller case load. The result was larger government; was the triumph any less a conservative triumph for that? Similarly, such conservative causes as school vouchers, modernized weapons systems, and privatized Social Security all require expanding the role of government. Conservatives have long avoided acknowledging this tension, which is now at the heart of the conf lict between Bush and his critics on the Right. What it comes down to is that, for Bush, there are conservative goals that take precedence over limiting the reach of government. Of course, this shift in priorities is easily misunderstood or distorted. In one of its rare efforts to explain the Republican party to its readers, the New York Times editorialized at the end of the year that "the two halves of Republican policy no longer fit together. A political majority that believes in big government for people and little or no government for corporations has produced an unsustainable fiscal policy that combines spending on social programs with pork and tax cuts for the rich."
But there are more cogent and less demagogic ways of putting this. Michael Barone, likewise writing at the end of the year, suggested that Bush has successfully replaced the conservative touchstones of small government and spending cuts with the bolder, more inspirational ideas of choice and accountability. That these are also the values most cherished in the world of business, and by today's consumers, is
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Is Bush a Conservative?
no accident. As the columnist David Brooks has observed, the "ownership society" is a hallmark of Bush's politics, appealing to Americans who want to be rewarded for self-reliance and responsibility. To these two themes of choice and accountability, I would add a third: not big government but strong government. The notion of a strong central government sounds like a bitter pill for conservatives to swallow; but strong government need not be intrusive government, or even all that large. Indeed, the central error of liberalism over the past two decades has been to make government both large and weak--that is, ineffectual and unworthy of public respect. By contrast, a primary goal of conservative governance ought to be to restore to government the power to defend the nation's interests while providing citizens with the services they want in the most efficient manner possible. Liberalism has failed at that task, and economic libertarianism has little or no interest in it. Hence the opportunity for a new era of conservative leadership. Looked at in this way, Bush's focus on the global expansion of democracy, the ongoing war against terrorism, economic growth (rather than government spending levels), and deconstructing domestic- policy monopolies (Medicare, Social Security, teachers' unions, etc.) does rise to the level of a new conservative approach to government. In his insightful memoir of working inside George W. Bush's White House, David Frum remarks that "Bush was not a lightweight. He was, rather, a very unfamiliar type of heavyweight." The same could be said for his politics: an unfamiliar type of conservatism, but one that will likely define the American political scene for some time to come.
--January 8, 2004
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Commentary February 2004
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David Frum: "Is George Bush a conservative?" 02/02 12:54 a.m.
http://www.nationalreview.com/frum/diary020204.asp

FEB. 2, 2004: WHAT IS THE PRESIDENT DOING?
"Is George Bush a conservative?" My friend Daniel Casse poses that question on the cover of the current Commentary
Daniel's answer is that Bush is a new kind of conservative: an advocate of choice and accountability in government rather than of reduction of government.
Daniel's article is characteristically perceptive and original, and I don't want to quibble with it, especially since Daniel has nice things to say about my book The Right Man. Nevertheless, it seems to me very implausible to suggest that President Bush's new programs and policies offer Americans significantly more choices or more accountability today than they enjoyed four years ago. The tax relief programs of 2001 and 2003 are the only unequivocally free-market achievements of the president's first four years. Against them have to be weighed such deviations and disappointments as these: steel tariffs, the free-spending farm-bill, the explosion in federal domestic spending, the abandonment of Social Security and tort reform, and of course the new prescription drug entitlement - whose costs, as we learned Friday, are now estimated at $534 billion over ten years, 30% more than was predicted when the new entitlement was submitted to Congress last year.
How to understand the discrepancy between Bush's record on taxes and his much less commendable record on spending? I don't think Daniel is right that Bush has discovered some grand new ideological synthesis. If choice and accountability were the administration's touchstones, it would never have adopted either steel tariffs or the farm bill. Of course Bush is conservative personally, on most issues anyway. But he is manifestly not governing in a consistently conservative way. To understand that discrepancy, it is more important to understand Bush's situation than his beliefs.
America in 2004 is a less ideologically conservative country than it was in 1984. The partisan map has been trending Democrat for a dozen years: Dick Morris points out that Minnesota is the only state in the Union that has grown more Republican since 1988. Conservatives sometimes forget that George Bush won 500,000 fewer votes than Al Gore in 2000; the Bush political operation can never afford to let that fact slip out of mind.
What has changed since the 1980s? Many things, but here are the four most important:
1) The Democrats have moved rightward on economics. After the defeat of Hillarycare in 1994, Bill Clinton gave up the attempt to enact major new federal programs - and reaped an economic boom and re-election in 1996 as his reward. His example has been noted. Voters just aren't as scared of a Democratic presidency messing up the economy as they were when memories of Jimmy Carter were fresh. That leaves upper-income voters free to vote for the Democrats' lifestyle liberalism.
2) The American family has weakened. One of the most portentous facts in American politics is this: married women vote Republican, single women vote Democratic. And since 1990 the proportion of US women who are now married has dropped by more than two percentage points.
3) Hispanics are voting their interests rather than their values. Hispanics as a group are culturally conservative, but economically needy. Their values suggest that they ought to vote Republican - but their hopes for more government aid are pushing them toward the Democrats.
4) The growing African American middel class, meanwhile, is voting its values rather than their interests. African Americans did well in the 1990s: The median income of married black families is now reaching $50,000 - more than enough to make them net losers from government redistribution. Yet these voters have not rethought their traditional loyalty to the party of Franklin Roosevelt and Lyndon Johnson.
Bush has earned his political success by understanding these trends and adapting to them. Where he can hold onto traditional conservative principles, he does - as he did on taxes. But where he cannot safely uphold conservative principles, he is not prepared to suffer martyrdom for them. On domestic issues, Bush is not a conviction politician of the Ronald Reagan/Margaret Thatcher type. He is a managerial politician of the Eisenhower/Ford type - a dealmaker, a compromiser, coping with an adverse political climate. If he could be more conservative, he would. If he has to be less conservative, he will be that too. He's not steering in some new direction. He's steering to avoid hitting the guardrails on a suddenly very narrow stretch of road.
So let me suggest that Daniel is posing the wrong question. The question is not, "Is Bush a Conservative?" It is, "How conservative can Bush be?" An honest answer to that second question may be a good deal less reassuring than the answer to the first.