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Tuesday, 10 February 2004

Iraq and the Issue of Imminence listen
The failure to find Iraq's weapons of mass destruction has produced heated controversy over the adequacy of US intelligence as the basis for pre-emptive war. George Tenet's CIA never said the threat from Iraq was "imminent," and that has been the accepted standard for pre-emptive attack. But President Bush says, in this age of terrorism and nuclear weapons, waiting until the threat became "imminent" would have been waiting too long. Was removing Saddam Hussein the right thing to do, even if the intelligence reports were all wrong? Has Pakistan's worldwide sharing of nuclear secrets made it a far more "imminent" threat than Iraq ever was? We get perspective from experts in national security, domestic policy, and foreign affairs.
Scowcraft interview (6:00)
Brent Scowcroft, National Security Advisor to Presidents Ford and Bush-Senior, warned against launching a war against Iraq in an opinion piece for "The Wall Street Journal." Host Lisa Mullins speaks with Mr. Scowcroft about the state of affairs today and whether he feels his warning have been vindicated.
ECB's Trichet News Conf.: G-7 Currency Statement, Economies Listen
Feb. 7 (Bloomberg) -- European Central Bank President Jean-Claude Trichet speaks at a news conference in Boca Raton, Florida, about the Group of Seven's condemnation of "excess volatility" in exchange rates, ECB monetary policy, strategy for the euro and Europe's economic conditions. He speaks at a meeting of G-7 finance ministers and central bankers. (English and French)

>> thinking through...
Getting the Lead Out
Bill Perkins New York City Deputy Majority Lader (D-9th District-Northern Manhattan)
discussing the new lead paint law the city council passed over the Mayor's veto

China Posts $20 Mln Trade Deficit for January, 1st in 10 Months
Feb. 11 (Bloomberg) -- China had a $20 million trade deficit last month, the country's first in 10 months. Imports rose 15.2 percent to $35.74 billion from a year earlier, while exports gained 19.8 percent to $35.72 billion, the Commerce Ministry said on its Web site.


Islamic extremists invade U.S., join sleeper cells
By Jerry Seper
Islamic radicals are being trained at terrorist camps in Pakistan and Kashmir as part of a conspiracy to send hundreds of operatives to "sleeper cells" in the United States, according to U.S. and foreign officials.
The intelligence and law-enforcement officials say dozens of Islamic extremists have already been routed through Europe to Muslim communities in the United States, based on secret intelligence data and information from terrorists and others detained by U.S. authorities.
A high-ranking foreign intelligence chief told The Washington Times in an interview last week that this clandestine but aggressive network of training camps "represents a serious threat to the United States, one that cannot be ignored." The official said as many as 400 terrorists have been and are being trained at camps in Pakistan and Kashmir.
U.S. intelligence officials said the camps, located in the remote regions of western Pakistan and in Pakistan-controlled Kashmir, are financed in part by various terrorist networks, including al Qaeda, and by sources in Saudi Arabia.
Pakistani Ambassador Ashraf Jehangir Qazi denied in an interview that terrorist camps are operating in his country, including the remote regions of western Pakistan or in Kashmir.
"We have never accepted the allegation that there were training camps here, not now, not ever," Mr. Qazi told The Times. "These allegations have persisted despite our repeated denials. I assure you there is absolutely no reason to believe that any terrorist camps exist in Pakistan or Kashmir."
Al Qaeda sleeper cells are believed to be operating in 40 states, according to the FBI and other federal authorities, awaiting orders and funding for new attacks in the United States. Financed in part by millions of dollars solicited by an extensive network of bogus charities and foundations, the cells use Muslim communities as cover and places to raise cash and recruit sympathizers.
Last month, Pakistan and India announced a new round of peace talks on Kashmir, in which Pakistani President Pervez Musharraf, the target of two recent assassination attempts, said Pakistan had agreed "not to allow the use of Pakistan's territory anywhere in the world" for terrorism.
In announcing the talks, Gen. Musharraf said his military-led government would act to "eradicate" religious extremists in Pakistan. "We will get to them, I am sure," he said.
But U.S. and foreign intelligence authorities said terrorist training camps have been documented in some of western Pakistan's remote areas and in the disputed regions of Kashmir, and that military officials and others in the Musharraf government have not fully disassociated themselves from al Qaeda or the former Taliban regime in Afghanistan.
Some U.S. officials have privately expressed concern that members of Pakistan's intelligence community have assisted in the concealment of al Qaeda members and associates.
In December, the government of India said terrorist training camps in Pakistan and Kashmir that had been closed after the September 11 attacks on the United States had been reactivated, mostly along the disputed border area near the so-called Line of Control in Jammu and Kashmir.
The Indian government said its army had photographs and other evidence of ongoing terrorist training, much of which was turned over to U.S. officials. That information included satellite photos and communication intercepts, U.S. law- enforcement authorities said, that documented 60 to 70 camps in Pakistan-occupied Kashmir as well as in Pakistan.
Officials at the Indian Embassy in Washington declined comment.
Since September 11, Pakistan has publicly ordered a clampdown on terrorism and arrested hundreds of suspected al Qaeda members and associates, transferring many of them to the United States. The captured include Abu Zubaydah, the organization's top recruiter; Ramzi Binalshibh, paymaster for the September 11 hijackers; and Khalid Shaikh Mohammed, chief of operations for Osama bin Laden and mastermind of September 11.
One veteran U.S. law-enforcement official with an extensive history in counterterrorism said many of the training camps in the Pakistan-controlled regions of Kashmir are operated by the Harakat ul-Ansar, an Islamic militant group tied to bin Laden.
The group's leaders joined with bin Laden in signing a February 1998 "fatwa" calling for attacks on U.S. and Western interests. Also known as the "Movement of Holy Warriors," Harakat ul-Ansar has been tied by U.S. and foreign intelligence officials to the January 2002 abduction and murder of Wall Street Journal reporter Daniel Pearl.
Several other camps are being operated by an anti-U.S. Muslim group known as Lashkar-e-Taiba, according to U.S. and foreign intelligence officials. Listed by the State Department in 2001 as a terrorist organization, Lashkar-e-Taiba is the armed wing of the Pakistan-based religious organization Markaz-ud-Dawa-wal-Irshad.
Eleven men, including nine U.S. citizens, were arrested last year in Virginia in what authorities called the "Virginia jihad." The men were accused in a 41-count grand jury indictment of engaging in "holy jihad" to drive India out of the disputed Kashmir territory. Six have since pleaded guilty.
The indictment said some of the men traveled to Lashkar-e-Taiba terrorist camps in Pakistan, where they were trained in the use of various weapons, including small arms, machine guns and grenade launchers. The indictment also said the trips occurred both before and after the September 11 attacks.

Palestinian Panel Probes Qureia Cement
Associated Press Writer
JERUSALEM (AP) -- A Palestinian parliamentary committee is investigating whether Palestinian cement companies are providing Israel with material for a controversial West Bank barrier and have been selling concrete to Jewish settlements.
A Palestinian lawmaker, speaking on condition of anonymity, said Tuesday there is evidence that a company owned by Prime Minister Ahmed Qureia's family is among them. But other lawmakers said Qureia was not part of the investigation.
Israel's Channel 10 TV also reported that the Al-Quds Cement Company - owned by Qureia's family - has been providing the materials to help build the barrier, allegations Palestinian officials denied.
The TV report said Qureia was providing the cement to build the concrete slabs right outside his house in Abu Dis, a town near Jerusalem divided by a 25-foot wall.
Television footage also showed cement mixers leaving the Al-Quds company and driving to the Jewish settlement of Maale Adumim, just a few miles away.
The lawmaker who spoke on condition of anonymity said there was "evidence" that Al-Quds was selling cement to Maale Adumim. He said Qureia transferred ownership of the company to another member of his family a few months ago.
The lawmaker said this strengthened suspicions that Qureia was involved in improper activities.
The Palestinian premier was in Rome and unavailable for comment.
Qureia is one of the most vocal opponents of Jewish settlements and the barrier, and he is leading a Palestinian effort to garner global support for the Palestinian position.
Israel says the barrier is needed to prevent Palestinian suicide bombers from entering the country. But the structure dips into the West Bank in some areas, and Palestinians have condemned it as a land grab.
Palestinian efforts led the U.N. General Assembly to ask the International Court of Justice in The Hague, Netherlands, to hand down an advisory opinion on the barrier's legality. The court is to begin its hearings at the end of the month.
Palestinian lawmaker Jamal Shati, a member of a parliamentary committee that is going to Jordan and Egypt on Thursday to investigate whether Palestinian cement companies are providing Israel with material for the barrier, denied Qureia was part of the investigation.
"But when we open the issue of the concrete it will include everything, not only the wall but also the settlements, because building the settlements is the same as building the wall. There is no difference," Shati told The Associated Press. "This is a very dangerous national issue. This is something that belongs to the core of the Palestinian cause."
Lawmaker Hassan Khreishe, who is also on the inquiry committee, also denied the team was investigating Qureia.
Khreishe told AP the committee was investigating allegations - which originated in an Egyptian newspaper report published in November - that three Palestinian cement companies had illegally imported concrete from Egypt and sold it to an Israeli businessmen.
"We want to know if this cement was used to build the barrier or any other Israeli needs. This is the information we are investigating," Khreishe said. "There are several names mentioned, but for sure, the name of Abu Ala (Qureia) is not mentioned in this issue."
Palestinian Cabinet minister Jamil Tarifi is among those being investigated, said Palestinian officials, who spoke on condition of anonymity.
Copyright 2004 Associated Press. All rights reserved.

Embassy Row
By James Morrison
Moscow mayor upset
The mayor of Moscow is alarmed by the influence of the United States, which he accused of abusing its superpower status.
Yuri Luzhkov, on a recent Washington visit to promote his new book, criticized the Bush administration for pre-emptive strikes against what it deemed terrorist states and called on the United States to explore the root causes of terrorism, our correspondent Megan McCloskey reports.
"Perhaps efforts should have been made to identify the fundamental cause of those acts," Mr. Luzhkov said of the September 11 terrorist attacks.
He complained that the United States is trying to impose its will in international affairs.
"One country is making the decisions for the entire world," he said.
The sovereignty and self-determination of smaller nations are concepts that have "disappeared into thin air," he said.
Mr. Luzhkov, a popular politician in Russia, was re-elected recently to a third term. After his remarks at the Library of Congress last week, he signed copies of his book, "The Renewal of History," for admirers who crowded around him for photographs.

Japan's straight talk
Japanese Ambassador Ryozo Kato wants to recruit Japanese-Americans to help promote greater understanding between Washington and Tokyo, but he does not want apologists for his country.
"To strengthen this relationship, I would like to seek the help of the Japanese-Americans who possess in-depth understanding of the United States, not as 'no-matter-what' kind of defenders of Japan and its policies but as fair-minded, enlightened and effective public arbitrators between the peoples of the two countries," he said after a recent meeting in Washington between Japanese diplomats and U.S. leaders.
Sen. Daniel K. Inouye, Hawaii Democrat and a Japanese-American, pledged to help Mr. Kato improve communications between the two countries, Japan's Kyodo news service reported.
"The time has come to ensure that the relationships between Japanese-Americans and Japan are strong at all levels from business and politics to arts and academia," Mr. Inouye said.
"We want to build bridges of understanding so that our children and grandchildren will be Americans proud of their Japanese ancestry."
Mr. Inouye and Mr. Kato endorsed an education initiative to increase mutual understanding and to encourage Japanese-Americans to participate in the Japan Exchange and Teaching Program, a government program to promote foreign languages in Japanese schools.
They also endorsed a tourism program that will include building support for the 2005 World Exposition in central Japan.

2nd term in Colombia
William Wood, the U.S. ambassador to Colombia, says Washington supports a constitutional amendment to allow President Alvaro Uribe to run for a second term and keep up his tough fight against Marxist rebels.
Mr. Uribe is limited to one term under the Colombian Constitution, but some legislators are seeking an amendment to allow presidents to run for re-election.
Mr. Wood noted Mr. Uribe's popularity, especially because of his fight against the Revolutionary Armed Forces of Colombia (FARC), which has been hiding in the country's jungle and mountain strongholds for several months to avoid troops.
"When the country has a firm and popular president like Uribe, this group has always used the tactic of waiting for the next president," Mr. Wood told the El Tiempo newspaper during the weekend.
He said an amendment to the constitution is "an element that the Colombian people ... need to consider."

*Call Embassy Row at 202/636-3297, fax 202/832-7278 or e-mail
Canadian Government to Probe `Scandalous' Spending in Quebec
Feb. 10 (Bloomberg) -- Canadian Prime Minister Paul Martin announced an investigation of a government program that promoted federalism in Quebec after the auditor general called it a ``scandalous'' use of taxpayers money.
Sheila Fraser, in a report released today, widened her probe of the C$250 million ($188 million) program to include government- owned companies such as the Business Development Bank of Canada, Canada Post Corp., the Old Port of Montreal Corporation Inc. and Via Rail Canada Inc.
Fraser said the spending was often designed to funnel money to advertisement agencies. The agencies received C$100 million between 1997 and 2001 to arrange conferences and sporting events that promoted a united Canada. The program was canceled in December.
Government bureaucrats intended ``to provide commissions to communications agencies while hiding the true source of the funds,'' Fraser said in the report. ``Some officials of the Crown (government-owned) corporations were knowing and willing participants in these arrangements.''
Fraser told reporters in Ottawa she referred the report to the Royal Canadian Mounted Police, which also received money from the advertisement agencies.
The federal police force is already investigating some of Fraser's past findings about government advertising and sponsorships contracts.
The cabinet minister in charge of the program, Alfonso Gagliano, was recalled from his job as ambassador to Denmark today, before Fraser's report was presented to Parliament.
To contact the reporter on this story:
Greg Quinn in Ottawa at
To contact the editor of this story:
Boyd Erman at
Last Updated: February 10, 2004 15:11 EST


Hyflux May Have S$1 Billion in Sales From Desalination Plant
Feb. 11 (Bloomberg) -- Hyflux Ltd., Singapore's biggest publicly traded water-treatment company, may reap as much as S$1 billion ($596 million) in water sales from its desalination plant over its 20-year contract with the Singapore government.
``By selling water, we can actually get a very stable income,'' chief executive Olivia Lum said in a televised interview with Bloomberg News. She said revenue from selling water from the desalination plant will range between S$30 million and S$50 million per year.
Companies like Hyflux are benefiting from a dispute over the price Singapore should pay Malaysia for water that has soured relations between the countries and led the city to try to reduce its dependence on its neighbor. Hyflux last month started building Singapore's first desalination plant.
``The company will be definitely much more stable because you now have recurring income,'' said Tan Chong Koay, who oversees $450 million at Pheim Asset Management in Singapore.
Hyflux reported sales growth slowed to 66 percent in fiscal 2002, from a five-year peak of 154 percent in 2000. Potentially up for grabs are management contracts from Singapore's government, which has built three water treatment plants and is reportedly working on a fourth.
The company said it will seek waste-water treatment contracts if the return is at least 10 percent, Lum said.
``Given their track record with desalination projects, that is certainly a workable strategy for them,'' said Roy Phua who helps to manage the equivalent of $5.6 billion at DBS Asset Management including Hyflux shares. It ``should be positive,''
Other companies are also seeking such contracts. SembCorp Industries, Southeast Asia's biggest civil engineering company, is keen to bid to build Singapore's fourth water treatment plant, the Straits Times reported last month, citing Tang Kin Fei, chief executive of the group's SembCorp Utilities unit.
Shares of Hyflux have risen about 61 percent in the past year, compared to a 46 percent gain in the benchmark Straits Times Index.
Hyflux is aiming to expand in countries like China, where its more than 50 contracts are mainly for factory water systems, and India. It wants to help produce drinking water in both countries, which have a combined population of more than 2.3 billion people.
``We want to cooperate with people from the home consumer line,'' Lum said. ``The market is huge -- even for the bottle market, it's exceeding a billion dollars in the whole of Asia.''
`Truck Load of Water'
At present, more than 90 percent of the company's fiscal 2002 sales came from water treatment projects for municipal and industrial customers in China and Singapore. The company wants to expand sales of its Aquosus air-to-water devices, which can extract water from vapor in the air, to homes, schools, and factories.
It's now in talks with several potential Indian distributors and Lum said that with ``polluted rivers everywhere in China,'' the country may need to tap the company's ``membrane'' technology if it's to produce quality water.
In much of Asia, ``they practically can't get access to clean drinking water,'' Lum said. ``They have to depend on the truck load of water delivered to the township and yet they cant be guaranteed of the clean quality of the water.''
To contact the reporters on this story: Leslie Tan in Singapore
at Haslinda Amin in
Singapore at
To contact the editor for this story:
Bruce Grant at
Last Updated: February 10, 2004 19:01 EST

Posted by maximpost at 10:36 PM EST

"PART" of the Solution: The Performance Assessment Ratings Tool
by Keith Miller and Alison Fraser
WebMemo #418
February 9, 2004
Released in concert with the President's budget proposal, the second set of Performance Assessment Ratings Tool (PART) marks are now available. The President's budget proposes that twenty programs either be eliminated or have their budgets significantly reduced because of low PART scores. While there is still great room for improvement, this first step is a good sign that the administration is starting to take public accountability of government spending seriously.
Finding Waste
PART, commissioned in 2002 and produced by the White House's Office of Management and Budget (OMB), assesses the purpose, planning, management, and accountability of individual government agencies. Based on an agency's response to the PART questionnaire, OMB evaluators grade its programs as "effective," "moderately effective," "adequate," "ineffective," or "results not demonstrated." "Results not demonstrated" indicates that are no objective criteria in place to measure the program's effectiveness; a failing that the PART evaluation process seeks to remedy.
To this point 399 programs--representing nearly half of the federal budget--have received PART scores. One hundred and forty-seven of these have been rated "results not demonstrated." Of the remainder, most have received poor marks. While the OMB judges the 232 programs with scores of above 50 percent to be "adequate" or better, the raw scoring isn't nearly so rosy:
PART Score # of Programs Grade Equivalent
90% - 100% 20 programs A
80% - 90% 56 programs B
70% - 80% 70 programs C
60% - 70% 47 programs D
50% - 60% 39 programs F
0% - 50% 20 programs "F-"
As the table above demonstrates, if these scores were children's grades, 59 programs would be flunking. Programs that have not yet received a grade may be struggling undetected, but by the spring of 2007, when PART's first 5-year cycle concludes, the entire federal government will have been rated.
The PART score is a very effective tool to identify which programs should have their budgets pared. While nearly every politician rails against "waste, fraud, and abuse" in government, it can be difficult to identify such spending items. PART points out where the waste is. Politicians can cut the failing or mistargeted programs knowing that they are cutting fat from the federal ledger.
The Ineffective
Programs graded by PART to be "ineffective," that is, those scoring under 50 percent, epitomize "wasteful federal spending." While the President's budget cuts some of these programs, it deals leniently with others: fewer than half face cuts and, overall, only 6 percent less money is budgeted to them - still $17.3 billion in total. This may be the beginning of accountability for federal programs, but in this time of record spending more forceful action may be in order. Ninety percent of the federal government performed better than these "ineffective" agencies. If the budget needs tightening, this is the place to do it.
Table: Ineffective programs
The Ill-Conceived
Another place to find candidates for cuts is among those programs that have a "Purpose and Design" score of less than 50 percent. Such a score indicates that a program possesses three of the following five faults:
The program lacks clear purpose;
The program does not address any specific need;
The program is redundant;
The program has a major flaw in design; and
The program fails to reach its target audience.
These programs, no matter how effectively managed or held accountable to standards, cannot be effective because they are ill-conceived. One example of this sort of program is the Advanced Technology Program (ATP). Although this program has good planning, capable management, and decent results, it only benefits wealthy corporations who could--and do, in other circumstances--fund their research without government money.[1] The President advocates terminating ATP in his 2005 budget proposal.
Still, the President's budget actually proposes that the government spend more on similarly challenged programs. Much of that increase comes from the mandatory spending for Veterans Administration disability compensation.[2] Under the President's budget, discretionary spending on purposeless programs would decline by 11 percent--from $15.4 billion to $13.8 billion--but there is room for much more to be cut.
Table: Programs without a purpose
Many Opportunities
The PART program could be a great aide to those trying to trim the federal budget. Although the tool is only two years old and has yet to address half of the federal government, it has already identified many targets for cuts. Taken together, its lists of ineffective and ill-conceived programs show many opportunities for the President and Congress to cut spending based on a systematic analysis using objective criteria.
While the President deserves praise for cutting programs poorly ranked by PART from his 2005 budget proposal, much remains to be done. If the administration and Congress are serious about holding the line on spending, cutting more of these programs would be a great place to start.
Keith Miller is Research Assistant in the Thomas A. Roe Institute for Economic Policy Studies, and Alison Fraser is Director of the Thomas A. Roe Institute for Economic Policy Studies, at The Heritage Foundation.
[1] For more on ATP, see Brian M. Riedl, "The Advanced Technology Program: Time to End this Corporate Welfare Handout,"
[2] Since World War II, no study has been completed to determine appropriate levels of disability compensation. This lack of accountability is the main reason the PART score was so low. For more information see the VA chapter in the President's 2005 Budget,
? 1995 - 2004 The Heritage Foundation
All Rights Reserved.

Social Security Reform: An Idea Whose Time Has Come
by Jack Kemp
Posted Feb 4, 2004
Before Ronald Reagan came on the scene, the Republican Party presented itself as the fiscally responsible party, which meant the Democrats had the political pleasure of spending money while Republicans dolefully raised taxes to pay for it - what one quick wit later characterized as being the "tax collector for the welfare state." Reagan figured out that not only wasn't that role politically successful, it also was bad policy and very harmful to the economy.
In his run for the presidency in 1964, Barry Goldwater had attacked the Kennedy tax cuts, which lowered the top income tax rate from 91 percent to 70 percent, as fiscally irresponsible. The economy boomed after the Kennedy tax cuts took effect. When Richard Nixon became president, he raised the capital gains tax in 1969, the economy tanked and the deficit swelled. Then he raised taxes again, implicitly, by taking America off the gold standard and allowing inflation to push average workers into tax brackets formerly reserved for the truly rich. President Gerald Ford also tried his hand at raising taxes and was promptly voted out of office.
It wasn't until Reagan offered a way out of the austerity box that Republicans regained their political footing and the economy recovered from a decade of stagnation. Reagan's great insight was that economic growth and the marvel of compound interest on saving put into productive investment is the only solution to the problem of big government. If the economy is flourishing and people have jobs, they don't clamor for the government to "do something" to ease their distress.
I never thought I would live to see the day when both political parties are clamoring for the fiscally responsible label. In order to feed the big-government beast, most Democrats insist on raising taxes, and too many of them refuse to consider allowing workers to place a significant portion of their payroll taxes into personal retirement accounts. Republicans, on the other hand, are reverting to the austerity rant, and while many of them want to allow workers to invest a small portion of their payroll taxes into personal retirement accounts, too many of them believe Social Security benefits must be cut to pay for it.
To my Democratic friends I would say the problem is not that tax rates are too low; the problem is that government spending is growing too fast. Moreover, we don't have to slash government spending to get it under control; we merely have to slow its growth.
To my Republican friends I would say scheduled Social Security benefits are not too high; retirees' incomes are, in fact, too low because the payroll taxes workers pay into the Social Security system are not put into productive investment in the private sector.
To both parties I would say the solution is not to raise taxes or, heaven forbid, cut Social Security benefits; the solution is to allow workers to invest at least half the payroll taxes into personal retirement accounts so that their retirement income can increase. Just as Reagan had to convince his party to take bold action to cut tax rates across the board in 1980, this president and the other presidential candidates must convince their own parties to take similar bold action today to reform Social Security.
I'm not alone in this belief. Former House Majority Leader Dick Armey and former Social Security Commissioner Dorcas Hardy are joining me as co-chairs of a brand-new coalition, the Alliance for Retirement Prosperity, that is embarking on a single-minded campaign to transform Social Security for the 21st century by making it possible for all workers to invest in personal retirement accounts at least half the payroll tax they and their employers currently pay (i.e., at least 6.2 percent) without cutting benefits or increasing taxes. And, rather than raising taxes or cutting benefits to pay the cost of transitioning from the old system to the new, we will work tirelessly to convince Congress and the president to restrain other government spending growth and to borrow the balance required to make the transition.
Joining me, Armey and Hardy as founding partners in this effort are some of the countries most influential conservative leaders and organizations, including CNN commentator Larry Kudlow, Grover Norquist and Americans for Tax Reform, Steve Moore and the Club for Growth, David Keene and the American Conservative Union, Art Linkletter and the United Seniors Association, Social Security guru Peter Ferrara with the Institute for Policy Innovation, the 60-Plus Seniors Organization, the National Tax Limitation Committee, the American Civil Rights Union, the Black American Political Action Committee, the Small Business Survival Committee, the Leadership Institute, Wall Street financial analyst Don Luskin along with Star Parker and the Coalition on Urban Renewal and Education.
We are energized and ready for this campaign to transform Social Security into a wealth-generating opportunity for workers and retirees. As the country learns more about this formidable coalition and its mission in the days and weeks to come, the American people will rally to the cause and make it their own.

Copyright ? 2003 HUMAN EVENTS. All Rights Reserved.

Posted by maximpost at 1:54 AM EST


The picture Democrats have been hoping nobody had: John Kerry sitting behind Jane Fonda during an anti-war rally at Valley Forge, PA in September 1970.

Kerry Photo Shocker: Candidate Teamed Up With 'Hanoi' Jane Fonda
Jane Fonda and John Kerry at an anti-war rally in Valley Forge, Pa. (Corbis Images)
A photo seemingly showing Democratic presidential front-runner John Kerry protesting the Vietnam War with anti-American actress "Hanoi Jane" Fonda - the photo Dems fear most - exists, and has been obtained by
On Labor Day weekend 1970, Kerry - then a rising star with Vietnam Veteran Against the War - teamed up with Fonda as the two headlined an ugly anti-war in rally in Valley Forge, Pa., railing against U.S. policy in Southeast Asia from the back of the same flatbed truck.
The photo shows "Hanoi Jane" listening raptly as speakers denounced American soldiers for committing "genocide" in Vietnam and accusing the U.S. of "international racism."
Three rows behind 'Hanoi Jane" sits a man who bears a striking resemblance to the Democratic presidential front-runner.
According to Corbis Images, which owns the image, the photo was taken at the same 1970 Valley Forge protest that turned Sen. Kerry into an anti-war star.
Douglas Brinkley's biography "Tour of Duty" chronicles Kerry's exploits at Valley Forge, where he reportedly followed Fonda onto the back of that pick-up truck to deliver his own diatribe against the war in Vietnam.
"We are here because we above all others have earned the right to criticize the war on Southeast Asia," Kerry shouted into the microphone, as Fonda and the crowd cheered wildly.
"By the time [Kerry] hopped off that pick-up truck to thunderous applause," writes Brinkley, "he was the new leader of the VVAW by popular default."
The Massachusetts Democrat's speech also cemented his alliance with Fonda, and the two traveled to Detroit to organize a January 1971 event they called the "Winter Soldier Investigation."
At a Detroit motel, Kerry and Fonda assembled a myriad of disgruntled witnesses claiming to be Vietnam vets, each with his own story of American atrocities.
According to Jug Burkett, whose landmark Vietnam war history "Stolen Valor" chronicles some of Kerry's anti-war misadventures, Fonda played a key role at the Detroit event.
"There's no doubt that Jane Fonda financed the Winter Soldier hearings," Burkett told NewsMax on Monday.
He said that several of the witnesses who testified at the protest's "hearings" later turned out to be complete impostors.
The event prompted "Hanoi Jane" to "adopt" Kerry's group "as her leading cause," writes Brinkley. It was at Kerry's Winter Soldier protest that the anti-American actress met her future husband, Students for a Democratic Society radical Tom Hayden.
The next year Fonda was off to Hanoi, where she mounted an anti-aircraft battery and pretended to shoot down American pilots.
Of Kerry, Burkett told NewsMax, "Any Vietnam veteran who knows what Kerry did after he came home from Vietnam is definitely not a fan of John Kerry."

A Question Russert Should Have Asked
Posted Feb 9, 2004
Week in and week out, Tim Russert is the best interviewer on network television. But he didn't perform to his normal high standard, when he interviewed President Bush for the February 8 edition of NBC's "Meet the Press."
The questions Russert asked Bush about U.S. intelligence on Iraq roughly mirrored the politically motivated accusations that Democratic presidential candidates have been flinging at Bush from the stump. These Democratic accusations are uniformly disingenuous, lacking the hard factual predicate that is the hallmark of the typical Russert question.
For example, Russert asked Bush: "How do you respond to critics who say that you brought the nation to war under false pretenses?" In asking this, Russert presented no analysis of the credibility of the "critics'" underlying assumption that Bush had any reason before the war to believe Iraq did not possess weapons of mass destruction.
What could Russert have asked that he didn't? Here's a suggestion:
"Let me read you, sir, a remarkable thing that David Kay told the Senate Armed Service Committee when he testified January 28. Kay said: 'In interviewing the Republican Guard generals and Special Republican Guard generals and asking about their capabilities and having them [WMD], the assurance was they didn't personally have them [WMD] and hadn't seen them [WMD], but the units on their right or left had them [WMD].' My question to you is: Given that even Iraqi Republican Guard generals were convinced that Iraq did have WMD, would it have been reasonable for the American President to assume that Iraq did not have WMD?"
Russert missed the chance to put this question to President Bush. He should not miss the chance to put it to Sen. John Kerry--the next time Kerry appears on "Meet the Press."
Copyright ? 2003 HUMAN EVENTS. All Rights Reserved.

Intelligence war: Pentagon faults CIA finding on Iraqi WMD
Friday, February 6, 2004
The U.S. military community has disputed a CIA determination that Iraq was unlikely to have transferred weapons of mass destruction to neighboring Syria and Lebanon's Bekaa Valley in early 2003.
Defense Department officials said U.S. Army intelligence and the Pentagon's Defense Intelligence Agency have concluded that Saddam Hussein might have transferred Iraq's WMD arsenal to Syria a year ago, according to reports by and Middle East Newsline.
The officials said the U.S. intelligence community has amassed sufficient evidence to press Syria to open its facilities to British-U.S. inspection.
Pentagon sources said Rumsfeld and Tenet have long been at odds regarding WMD programs under Saddam as well as in other Middle East regimes. The sources said Rumsfeld has advocated a shakeup in the intelligence community.
"The record of the [U.S.] intelligence community, particularly with respect to the Middle East and the Persian Gulf, is an appalling record," Richard Perle, former chairman of the Defense Policy Advisory Board, which advises the Pentagon, said. reported in its Aug. 19, 2003 edition that Israeli intelligence had identified what were believed to be Iraqi weapons of mass destruction goods in Hizbullah-controlled Lebanon. The Israelis used a spy satellite to photograph several tractor-trailer loads of suspected weapons into the Bekaa Valley, where the Islamist terrorist group is based, according to U.S. officials cited by the report. Shipments were made between January and the first week of March in 2003.
The Iraq Survey Group - the 1,300-member team examining WMD issues - was told by members of the Saddam regime that Iraq sent biological weapons to Syria and chemical weapons to the Syrian-controlled Bekaa Valley in Lebanon, Pentagon officials said. In addition, Middle East Newsline reports that the group was told that components of Saddam's chemical weapons program were shipped to Syrian Air Force facilities in central Syria.
In contrast, the State Department and the CIA leadership back the view that Saddam was unlikely to have transferred his arsenal of WMD and extended-range Scud missiles in March 2003. Officials said the department, as well as significant elements in the CIA, has quietly concluded that Saddam would not have trusted Syria or any other of its neighbors with Iraq's WMD arsenal.
On Wednesday, Defense Secretary Donald Rumsfeld said Iraq might have transferred its weapons of mass destruction arsenal to other countries. In testimony to the Senate Armed Services Committee, Rumsfeld cited the transfer of Iraq's WMD as the second of three possibilities regarding the whereabouts of Saddam Hussein's. He did not say where the WMD was transferred to, but earlier U.S. intelligence officials said the most likely destination was Iraq's neighbor Syria.
But Rumsfeld discounted the possibility that Iraq did not have WMD in March 2003, when the United States launched a war to oust the Saddam regime.
"That's possible, but not likely," Rumsfeld said.
Rumsfeld did not discount the other prospects. One is that the WMD was transferred "in whole or part to other countries. The other theory was that Saddam concealed WMD throughout Iraq or destroyed such weapons before the start of the war."
"And once something is buried, it stays buried," Rumsfeld said. "In a country the size of California, the [chance] of finding something buried in the ground - without being led to it by someone knowledgeable -- is minimal."
In January, David Kay, director of the Iraq Survey Group, said Baghdad did not have WMD when the United States invaded Iraq in March 2003. Kay also said that Iraq could have transferred its WMD arsenal to Syria.
Yet another prospect, Rumsfeld said, was that Iraq contained small quantities of biological or chemical agents and a surge capability, which means the ability to produce weapons on short notice. Such a prospect would mean that the Iraq Survey Group could find these weapons in the months ahead.
"Finally, there is the possibility that it was a charade by the Iraqis," Rumsfeld said. "Saddam Hussein himself might have been fooled by his own people, who may have tricked him into believing he had capabilities he didn't really have."
Senate Intelligence Committee chairman Sen. Pat Roberts has supported the Pentagon assessment that Iraq transferred WMD components to Syria. On Thursday, the committee reviewed a 300-page classified report of the panel's eight-month inquiry into the fate of Iraq's WMD arsenal.
On Thursday, CIA director George Tenet did not raise the prospect that Iraq transferred WMD to Syria or other countries. Instead, he cited a finding by the Iraq Survey Group that the Saddam regime systematically destroyed and looted forensic evidence before, during and after the war. "We have been faced with organized destruction of documentary and computer evidence in a wide range of offices, laboratories and companies suspected of weapons of mass destruction work," Tenet said. "The pattern of these efforts is one of deliberate, rather than random, acts."
Planned railroad would connect Mideast with Europe, Asia
Monday, February 9, 2004
ABU DHABI - Arab countries have completed a plan to establish a railway network throughout the Middle East.
The multi-billion dollar plan would form a rail link between the Middle East and Europe and Asia as well as connect the Gulf region to the rest of the Arab world. The plan was completed at a recent meeting of the Directors General of the Mideast Railways Organizations.
"We will convene the next meeting of the Middle East railways organization in Damascus, Syria in March or April, and in this meeting all the parties to the regional railway link will present their respective plans to execute their individual expansions, including the financing scheme to fund their country's railway expansion program," Abdul Razak Abdul Feilat chairman of the group, said in late January.
Israel was not cited in the railway plan, Middle East Newsline reported.
Under the plan, a railroad would run through Gulf Cooperation Councl states and proceed through Saudi Arabia's Red Sea system toward Jordan, Syria and Turkey. From Turkey, the train network would move northwest toward the rest of Europe or Asia. Jordan, Syria and Saudi Arabia have also been discussing a railway link.
Officials said the regional network would depend on whether member countries of the Middle East agree to finance their portion of the railway.
Abdul Feilat told the Riyad-based Saudi Gazette that the organization was trying to coordinate funding from a consortium of regional banks or international financial institutions. He said the cost of a rail link betweeen Amman, Jordan and the Syrian border would cost $200 million. The cost from Damascus to the Turkish border was estimated at $600 million.
A key obstacle to the plan is Iraq, which does not yet have a permanent government. Abdul Feilat said the rest of the Arab world would have to wait for the emergence of a permanent Iraqi government until Baghdad could be linked to the rest of the planned network.
Saudi Arabia is expected to be the hub in two-phase GCC railway system. In the first phase, Manama, Bahrain would be linked to Saudi Arabia's Eastern Province and Doha, Qatar. That phase would include construction of a bridge that connects Bahrain to Qatar.
The second phase would link Kuwait, the United Arab Emirates and Oman with Bahrain, Saudi Arabia and Qatar. Saudi Arabia is expected to begin construction of a rail link from the Arabian Gulf to the Red Sea, in 2005. Each of the countries has plenty of disused rail lines. They include the Saudi line to Syria as well as railways between Syria and each of the following Arab countries - Iraq, Jordan and Lebanon.
In a related development, Iran has delivered 180 railroad cars to Sudan worth $10 million. Iranian Transportation Minister Ahmad Khorram said Teheran would deliver another 320 railway carriages to Sudan.
Arafat's bodyguards recruited for suicide attackes
Special to World
Thursday, February 5, 2004
JERUSALEM - Bodyguards of Palestinian Authority Chairman Yasser Arafat have been recruited for suicide operations against Israel.
Israel military sources said special operations forces have arrested at least one member of Arafat's Force 17 praetorian guard. Force 17 is responsible for Arafat's security and has branches throughout the West Bank and Gaza Strip.
Arafat's ruling Fatah movement has been cited for being the leading force in suicide operations against Israel. But the Israeli arrests marked one of the first times that Arafat's bodyguards have been involved in such attacks.
Israeli security agents captured Muhammad Abu Lil, 18, on Dec. 13 along with another Fatah agent from the West Bank city of Nablus, both of whom were on their way to bomb a restaurant in the Israeli city of Petah Tikva. The statement said Abu Lil's accomplice, Ahmed Abu Hawila, had been recently recruited to Force 17.
A Fatah commander was said to have recruited suicide attackers from Force 17. The sources identified Nader Abu Lil, a 25-year Fatah commander, for responsibility for the recruitment of Force 17 and other Palestinian security officers, as well as planning operations.
The information of Fatah's recruitment from Arafat's guard came in wake of the arrest of suspected suicide squads in December. The suicide squads were said to have been recruited and organized in Nablus.
Nader Abu Lil was also accused of having planned to launch a suicide attack in January 2004. The military statement said an Israeli raid on Jan. 2 in Nablus's old city quarter yielded two large bombs meant for use in Israel. A suspected suicide squad composed of Palestinians from Nablus-area refugee camps was captured.
Military sources said the use of Arafat's bodyguards for attacks has been encouraged by Iran and Hizbullah, which finance up to 90 percent of Fatah insurgency operations. They said that in many cases Fatah has teamed with the Iranian-sponsored Islamic Jihad or Hamas to launch operations in Israel.
On Wednesday, Israel's military reported that troops captured a Fatah commander in the northern town of Tubas in the West Bank. The commander was identified as Jihad Sawafta, who survived a previous assassination attempt by Israeli forces.

Rumsfeld invites 7 Mideast allies to sign up for counter-terror duty
Monday, February 9, 2004
WASHINGTON -- The United States wants its allies in the Middle East to participate in NATO efforts to intercept shipments of weapons of mass destruction.
U.S. officials said the Bush administration has approved a program for a range of states located in the Mediterranean to help intercept suspected WMD and ballistic missile shipments to such countries as Iran and Syria. They said these countries comprise the seven that participate in the Mediterranean Dialogue.
The countries are Algeria, Egypt, Israel, Jordan, Mauritania, Morocco and Tunisia. The countries have been participating in a NATO dialogue effort since 1994.
"We can look at ways to strengthen and expand NATO's Mediterranean Dialogue so the alliance can better engage nations in North Africa and the Middle East," Defense Secretary Donald Rumsfeld told a security conference in Munich on Saturday. "Strengthening the Mediterranean Dialogue, I believe, should be high on our agenda for the NATO Summit in Istanbul."
Rumsfeld cited two key areas of cooperation: the interdiction of WMD and what he termed counter-terrorism. Other areas cited by the secretary were peacekeeping missions, border security, opportunities for attendance at NATO schools, and participation in the Partnership for Peace exercises.
The Mediterranean Dialogue has failed to achieve multilateral cooperation amid Arab differences with Israel on numerous issues, particularly Israel's nuclear program and relations with the Palestinians. Instead, NATO has focused on separate efforts with each of the seven members of the dialogue. The last NATO consultation with the seven members took place in September 2003.
In 2003, scientists from Algeria, Jordan, Mauritania and Morocco were recruited for NATO's science program. The panel sought to obtain input from scientists from Arab League states "concerning the implications for civil science of the fight against terrorism," a NATO statement said. The activities -- which included the detection of WMD, decontamination, medical countermeasures and agro-terrorism -- were termed as unclassified.
Administration officials said the United States plans to press for the inclusion of the seven Middle East states in the Mediterranean Dialogue in NATO's PfP. They said Turkey has agreed to support the U.S. demand at the Istanbul summit in June.
At the same time, the United States has pressed the European Union to delay an economic and political cooperation agreement with Syria because of its WMD program. Several EU members have agreed with Washington that any pact with Syria must be preceded by guarantees that Damascus will eliminate its biological and chemical weapons programs.
For its part, Iran canceled its participation in the Munich conference.
The administration has also determined that several Middle East states began steps toward democracy that should be encouraged by NATO. The developments cited by the administration include the establishment of a new parliament in Morocco, the 2002 parliamentary elections in Bahrain, the decision by Oman to allow men and women to vote, the adoption of a constitution in Qatar, elections in Jordan in the summer of 2003 and direct elections for Kuwait's parliament.
[On Monday, the Washington Post reported that the Bush administration plans to promote democracy in the Middle East via a model similar to the 1975 Helsinki accords with the former East Bloc. The reported initiative would commit Arab and South Asian regimes to adopt democratic reforms and be held accountable on human rights.]
"Our challenge is to think creatively about how we can harness the power of the alliance and to contribute to similar democratic progress across the Middle East," Rumsfeld said.

Gigantic Outlay Party
Republicans stuff record pork down federal piehole
Ralph R. Reiland
"The pledge not to waste our tax dollars rings hollow," says Stephen Moore, president of the Club for Growth and a senior fellow at the Cato Institute, "given that in a matter of days [President Bush] will sign into law a budget-buster that provides money for Alaska skating rinks, Michigan swimming pools and Iowa indoor rain forests."
Moore is referring to the president's pronouncement in his State of the Union address that "we must spend tax dollars wisely" and the complete lack of opposition from the White House to the mile-high pile of pork in the recently passed fiscal 2004 Omnibus spending bill.
In addition to the tropical forest, the new Michigan pools and the Alaska skating rinks, the Omnibus bill gouges taxpayers to the tune of $725,000 for the Please Touch Museum in Philadelphia, $2 million for the Appalachian Fruit Laboratory, $1 million for the Alaska SeaLife Center, $300,000 for the National Wild Turkey Federation, $500,000 for the Montana Sheep Institute, and $2 million for a golf awareness program in St. Augustine.
The indoor rain forest gets a whopping $50 million. This faux paradise for parrots will be built in Coralville, Iowa, a town with a population of 17,246 according to the latest Census Bureau survey, or about 5,000 households. The $50 million, in other words, averages out to $10,000 per household, not bad for a place that doesn't even have an airport.
For taxpayers wanting to visit their money, Coralville boasts a low crime rate (there was one murder back in 2001) and a "Nightlife" section in the town's Convention & Visitors Bureau guide that lists 12 restaurants. None stays open past 9 p.m.
The "star attraction" in Coralville is fossil watching, according to the Visitors Bureau, thanks to the flood of 1993. "For the first time in the history of the dam, water overtopped the emergency spillway," the guide tells us. "The overflow lasted a month, washing away tons of soil, huge trees, and part of our new road. When the waters receded, the 375-million-year-old fossilized Devonian ocean floor was revealed."
On top of all that, with things still up in the air in Iraq and Afghanistan, George W. Bush says he wants to have a U.S. base on the moon, by 2015 or so, for "human missions to Mars and to worlds beyond." This interplanetary escapade comes with a price tag of $50 billion per year in spending that will supposedly be pulled from other federal programs over the next decade, plus an extra $200 million per year in new spending.
Add to that, on the more evangelical side of things, the President's proposal to have the federal government spend $1.5 billion to promote "healthy marriage." Between the lines, that means we'd better stop thinking it might be okay to have a wedding cake with two little plastic grooms sticking in the icing. But on the spending side, it means federal abstinence instructions for anyone in need of what the President is calling "character education"--plus some communication courses for the poor, so they quit fighting so much and getting divorced and driving up the deficit.
The bottom line? The Congressional Budget Office is projecting that the federal government will build up $2.4 trillion in red ink spending over the next decade, a number $1 trillion higher than the CBO's estimate in August.
"The big story is Republicans have become a big spending party," says Moore. "And I think the White House is really the ring leader of the spending spree."
With the federal budget costing more than $20,000 on average per year for every family in America and this year's deficit projected to hit a record $477 billion, Moore points to a philosophy in George W. Bush's State of the Union address that only promises to hike the level of unnecessary and wasteful spending.
"The State of Bush's Union has become in some ways a State of Dependency and a State of Entitlement," says Moore. "He has this unattractive tendency to believe that there's a government grant program for every problem that afflicts America. He wants to spend millions to promote holy matrimony. He wants to spend $200 million to fight obesity. Why can't we just tell fat people to stop overeating?"
The numbers tell the story. The average annual real increases in domestic discretionary spending were 2.0 percent under Jimmy Carter, minus 1.3 percent in the Reagan years, 4.0 percent with George H.W. Bush, 2.5 percent in the Clinton years, and 8.2 percent with George W. Bush.
Ralph R. Reiland is a columnist for the Pittsburgh Tribune-Review and the B. Kenneth Simon Professor of Free Enterprise at Robert Morris University.

Tbilisi: Russia Was Warned of Attack
By Anatoly Medetsky
Staff Writer
Abu Walid, third from left, seen at an undisclosed location in the North Caucasus.
A man showed up at the Russian Embassy in Tbilisi a day before the metro blast and warned that Chechen rebels planned to carry out a "huge" terrorist attack in Moscow on Friday, Georgia's state security minister said Monday.
The announcement came as investigators said Friday's explosion bore the trademarks of a train suicide bombing in Stavropol last year and Moscow observed a day of mourning.
The blast in the metro tunnel near the Avtozavodskaya station killed at least 39 people. President Vladimir Putin has blamed Chechen rebels.
Georgian Security Minister Valery Khaburdzania said the man was recruited by authorities in the breakaway region of Abkhazia who knew of the bombing in advance and plotted to place the blame for the attack on Georgia, Interfax reported.
He said the man, Nazir Aidabolov, a Russian citizen from the republic of Kabardino-Balkaria, was told to go to Georgia's Pankisi Gorge and collect the names of several Chechens there that he could later give to Federal Security Service officials at the Russian Embassy. The Pankisi Gorge has long been a hideout for Chechen rebels.
This would have created "the impression that the terrorist acts had been planned specifically in the Pankisi Gorge," Khaburdzania told reporters in Tbilisi, Interfax reported.
He said Aidabolov went to the embassy and warned an FSB officer there that Chechens were planning a major attack for Friday.
Abkhaz officials denied Khaburdzania's allegations Monday.
New Georgian President Mikheil Saakashvili arrives for his first official visit to Russia this week.
Aidabolov also warned the FSB officer that a second attack would be carried out at an outdoor market in the southern Stavropol region two or three days later, Khaburdzania said.
Stavropol authorities ordered all regional markets closed for three days after the Moscow bombing for sanitary inspections, local media reported.
The FSB has detained Aidabolov for questioning, Ekho Moskvy radio reported.
FSB officials could not be reached for comment late Monday.
But earlier in the day, the FSB, which is in charge of the metro bombing investigation, reiterated that Friday's blast was most likely the work of a suicide bomber.
"This terrorist act is identical to the one committed last year in Yessentuki," FSB deputy director Vyacheslav Ushakov told a gathering of State Duma deputies in the Moscow region.
In December, a suicide bomber blew up a train near the Stavropol region town, killing 46 people.
Ushakov did not elaborate on the similarities.
But sources close to the investigation said Monday that the explosive device used Friday had been packed with nuts and metal bolts -- shrapnel meant to increase the force of the blast and used by Chechen suicide bombers in a series of attacks last year, Interfax reported.
The investigation is being headed by Alexander Zhdankov, the FSB's point man for combating terrorism and a former commander of the federal forces in Chechnya. Local media said his involvement might help investigators trace possible links between the explosion and Chechen rebels.
As one of his first acts, Zhdankov ordered FSB departments in the North Caucasus region to search for possible accomplices in the Moscow bombing and focus on the families that have lost relatives in the ongoing war with federal troops, Kommersant reported Monday.
FSB sources said the blast might have been ordered by Arab warlord Abu Walid, who is thought to be responsible for distributing foreign financial aid among Chechen rebels, Moskovsky Komsomolets reported.
While the main theory being investigated is that a suicide bomber detonated the explosives, the FSB is also looking into the possibility that a time bomb might have been left on the train and exploded when a passenger picked it up, Kommersant said. Investigators earlier established that the device detonated about 50 centimeters above the floor. A third theory is that the blast might have been accidental.
Although the official death toll has been placed at 39, reports from a morgue official familiar with the situation and in the local media put the number at between 50 to 120 people.
Gazeta reported Monday that City Hall has a list of the actual number of people killed that is much higher than the official one, but the FSB has barred it from releasing the information.
The FSB denied this. "We are ignoring this report. The main thing now is to conduct the investigation," an FSB spokesman said by telephone.
The Moscow prosecutor's office issued a vague statement saying that 39 is not the final figure but it was unlikely to change.
Prosecutors said 34 bodies had been identified as of Monday -- 18 men and 16 women. They said the dead included two Armenians and one Moldovan. The youngest was a teenager who was to turn 18 this month, and the oldest was a man of 57.
Pavel Ivanov of the Russian Forensic Medicine Center said the exact death toll could be established in four weeks, after experts study all the body fragments, RIA Novosti reported.
The type of metro car that exploded can carry up to 200 passengers, which was probably the case when the blast occurred during the Friday morning rush hour, metro spokeswoman Yelena Krylova said.
Russian newspapers gave heartbreaking accounts of how relatives identified the dead. Natalya Kiselyova, 35, died as she was headed for work at the Central Elections Commission, her parents told Izvestia. They said they recognized her by a finger with a ring and a piece of a fur coat. Kiselyova was among the election officials who oversaw the legality of last year's Chechen referendum.
TV Center television reported that one of those killed was the wife of a man who died in the Dubrovka theater hostage crisis in 2002.
Ushakov on Monday called for new laws giving more power to the FSB to prevent terrorism, saying that among other things the FSB needs to be able to arrest suspects without a court warrant, Interfax reported. He urged the government to study the experience of the United States, which passed security laws after the Sept. 11, 2001, attacks.
Amid the accusations that rebels are behind Friday's bombing, Chechens complained of a growing animosity Monday. Rudnik Dudayev, head of the Chechen Security Council said authorities have received hundreds of calls from Chechen students in other regions complaining of "cynical treatment" and "reproaches" by teachers.
Chechen President Akhmad Kadyrov condemned what he called "the instigation of ethnic enmity."
Nationalities Minister Vladimir Zorin echoed his comments, saying, "International terrorism is no doubt enemy No. 1 today, but it is no less dangerous to instigate anti-Caucasus and xenophobic sentiments in a great multinational country like Russia."
As of Monday, 102 people remained hospitalized, Interfax reported.
Flags flew at half-staff in Moscow and theaters canceled shows as the city held a day of mourning. Residents placed hundreds of red and white carnations at the entrance to the tunnel between Avtozavodskaya and Paveletskaya stations.
The first two victims were buried at Moscow's Danilovskoye and Kotlyakovskoye cemeteries on Monday, and more funerals were planned for Tuesday.
A poll released Monday indicated that 59 percent of residents -- mostly elderly people and women -- are now afraid to ride the metro, Interfax reported. Some 38 percent said they were not affected by the blast, according to the poll of 500 Moscow residents carried out Saturday and Sunday by the Romir Monitoring agency.
Blast Stirs Up Conspiracies
By Pavel Felgenhauer
Moscow police and FSB operatives are still investigating last Friday's blast in the metro that killed 39 people and injured more than 100. It seems there is still no clear answer as to whether it was a terrorist attack or an accident.
Terrorist bombs usually include nails, bolts etc. to kill as many people as possible, but no traces of prepared shrapnel have been found in the ripped-up subway car or in the bodies of the dead and wounded. The intent to inflict maximum damage has not been established. The attack cannot be unquestionably declared a terrorist outrage -- it may still conceivably be an accident.
Muscovites regularly carry dangerous items on the metro. Once, in the late 1970s, I went into the metro with a 20-liter container filled with liquid nitrogen gas at -196 degrees Celsius and frozen radioactive biological specimens. I wanted to take it from Kazansky Station to my institute and could not get a car. The container was a cone of shining metal that looked like a ballistic missile warhead. A policeman did not like the way it looked or my explanation, and turned me away. I covered it with my coat, re-entered the metro and made the journey.
Someone could have been carrying explosives in the metro, stolen from army stockpiles or from an industrial plant (together with detonators), to sell to someone on the black market. In the rush-hour crowd, someone could have accidentally pushed and activated the detonator.
We may never know for sure whether it was an accident or not, just as we do not know for sure who planned the explosions of apartment blocks in 1999 in Moscow and other cities. The authorities blamed Chechen separatists and used the outrages as a prime motive for going to war. Since then, independent investigators have questioned this official narrative; and a number of people have been charged in connection with the bombings, but none of the accused have been ethnic Chechens.
The day after the metro blast, when the facts had not yet been established and nothing was known about who did it and why, President Vladimir Putin accused the Chechen rebels and their leader, Aslan Maskhadov, of being behind it. Maskhadov's foreign envoy, Akhmed Zakayev, denied the rebels were involved. In today's Russia, it's virtually impossible to imagine that any FSB investigator would have the nerve to say that Maskhadov was not guilty, when Putin publicly says that he is.
Talking to journalists, Putin announced: "Once more we hear calls from abroad to hold talks with Maskhadov. This would not be the first time we have encountered a synchronization of crimes committed in Russia and calls to hold talks with terrorists. The fact that we are called to hold talks with Maskhadov after crimes are committed is in itself indirect proof of Maskhadov's connection with bandits and terrorists. As a matter of fact, we do not need this indirect evidence. We know for sure that Maskhadov and his bandits are linked to this terror."
In his statement, Putin cited as a "call to hold talks with Maskhadov," a letter signed by 145 members of the European Parliament in Strasbourg that envisages a withdrawal of Russian troops from Chechnya and the creation of a temporary UN administration to bring peace to the region. Apparently, Putin assumed that the fact the publication of the EU letter coincided with the metro explosion is in itself evidence (albeit indirect) that Maskhadov was behind the blast. Putin has also announced that "certain elements in the Russian Federation" also "synchronize" their sinister activities with Chechen terrorist attacks. but "Russia does not conduct negotiations with terrorists -- it destroys them."
Taken at face value, Putin's statement exposes an amazingly complicated and widespread conspiracy. It is reminiscent of things uttered at different times by Belarussian dictator Alexander Lukashenko, Yugoslavia's Slobodan Milosevic or Josef Stalin.
This may be a glimpse of Putin's true mind-set as formed by the reports of his spooks, diplomats and prosecutors. In this world, the Kremlin is besieged by unscrupulous Westerners who aspire to grab our oil and other natural wealth and synchronize their antics with deadly Chechen terrorist attacks, as well as with "certain elements in the Russian Federation."
If that's Putin's true outlook on the world, no one should be surprised that in several days' time our military will be holding an exercise that simulates a nuclear war with the West as part of Russia's "war on terrorism."
Pavel Felgenhauer is an independent defense analyst.
Germany Offering 200 Used Airplanes
By Lyuba Pronina
Staff Writer Germany says it has the answer to one of the most pressing problems facing Russia's booming airline industry -- aging fleets.
The German government has sent a letter to Transportation Minister Sergei Frank offering Russia the chance to lease up to 200 secondhand mid-range passenger jets to replace some of the roughly 500 Soviet-era Tupolev Tu-134s and Tu-154s that make up the backbone of Russia's commercial aviation sector.
Once the world's most prolific producer of civilian aircraft, Russia's aviation industry has virtually ground to a halt in recent years, a decline the government is trying to reverse with a project to develop a new and affordable line of mid-range craft. Mass production, however, is still years away, and most of Russia's hundreds of airlines cannot afford foreign-made craft.
The German government, together with international carriers SAS and Germania, as well as American leasing company General Electric Capital Aviation Services, is offering to negotiate the lease of up to 200 McDonnell Douglas MD-80s and Fokker-100s.
"This could be an interim solution for Russian airlines," said GЯnter Zaibt, who heads Germania's operations in Russia.
Russian aviation authorities were mixed on the idea.
"The arrival of these jets will crush the industry, but something has to be done," said one State Civil Aviation Service official who asked not to be named.
Viktor Samokhin, deputy head of the State Civil Aviation Service's flight airworthiness department, was more categorical. "We are not preparing any reply," he said. "We have enough old aircraft of our own and don't need another's old aircraft."
Zaibt dismissed concerns that a deal would retard efforts to revive domestic aviation production.
"It will help Russian airlines to bridge the demand gap until Russian manufacturers will be able to provide sufficient number of new airplanes," he said.
Zaibt declined to go into the specifics of the proposal, saying talks are at an early stage. But he did say that the 172-seat MD-80s are 14-years-old on average, while the 107-seat Fokker-100s are at least 8-years-old, and that both models are valued at under $10 million.
He said the money airlines will save operating more efficient Western aircraft will allow them to buy domestically produced jets when they become available.
"This will not require any investment from the Russian government," he said.
Although top domestic carriers have been struggling to find ways to modernize and expand capacity to keep up with surging demand, they were mixed on the German pitch.
Sergei Koltovich, head of fleet planning and procurement for Aeroflot, which operates 27 Boeings and Airbuses, said that the flagship carrier is not interested in the American-made MD-80s, but it may be interested in the Dutch Fokkers. "Aeroflot has a shortage of regional craft, and Fokker-100 is a proven and reliable aircraft that has been used extensively by foreign airlines," he said.
Mikhail Koshman, spokesman for Sibir, said that although both aircraft are not quite what his company is looking for, it still may be interested. "All will depend on the price," he said.
Sibir last week leased its third Airbus for its Armenian subsidiary Armavia, and a second ATR-42 regional craft.

Ivanov Says Russia May Pull Out of Arms Treaty

By Greg Walters
Special to The Moscow Times Russia may abandon a security treaty limiting conventional weapons and troop deployments in Europe, Defense Minister Sergei Ivanov said at an international security conference in Munich on Monday, unless it is changed to rule out NATO forces in the Baltic states.
Ivanov protested that the Conventional Forces in Europe treaty, negotiated in the 1980s between the North Atlantic Treaty Organization and the Warsaw Pact, does not include Baltic countries, which are scheduled to become NATO members in April.
"With NATO enlargement, they start operating in the zone of vitally important interests of our country," Ivanov said, The Associated Press reported. "They should -- in deed, not only in words -- take into account Russian concerns."
Ivanov's comments come as the United States is considering a wide-ranging reorganization of its forces based in Europe.
Talks between Russia and NATO have broken down in recent years over an updated version of the CFE, which reworked the treaty to take the collapse of the Soviet Union into account.
Europe and the United States have protested Russia's reluctance to withdraw troops from Georgia and Moldova, despite commitments made by Moscow when the treaty was updated in 1999.
Since then, Russia has repeatedly delayed ratification of the new version of the treaty. On Monday, Ivanov said the CFE could become a relic of the Cold War.
Speaking at the conference, U.S. Senator John McCain said, "Undemocratic behavior and threats to the sovereignty and liberty of her neighbors will not profit Russia -- but will exclude her from the company of Western democracies," The New York Times reported.
Independent military analyst Pavel Felgenhauer said Monday that despite Ivanov's rhetoric, Russia is not likely to unilaterally pull out of the treaty. "This will not bring Russia any kind of gain," he said. "There's no real need for withdrawal, just to make some noise."
But in its current form, the treaty appears to be unworkable, Felgenhauer said.
"Russia is clamoring for ratification of the treaty to happen, and the Baltic states to be included," he said. "But the West says Russia must first withdraw from Georgia and Moldova."
The Baltic countries' exclusion from the CFE means that, in theory, NATO could mass any amount of troops and weaponry there when those countries join the alliance.
But Felgenhauer said such an action would be highly unlikely. Both NATO and Russia maintain forces well below the treaty's limits.
On Monday, Lithuanian Defense Minister Linas Linkevicius told The Associated Press that there are no "concrete plans" to set up NATO bases in Lithuania, but also said, "It's not excluded in the future."
Rybkin's Location Is a Mystery to Police

By Caroline McGregor
Staff Writer The mystery shrouding the disappearance of presidential candidate Ivan Rybkin deepened Monday, amid conflicting reports of his whereabouts and the abrupt opening and closing of a murder investigation.
Local media reported Monday afternoon that police had located Rybkin, a former State Duma speaker who has been bitingly critical of President Vladimir Putin. The reports did not specify his location.
But police spokesman Alexei Vakhromeyev said Rybkin reportedly surfaced on his own and police were in the process of verifying that information. "For now, we haven't found him," he said by telephone.
Rybkin's campaign manager, Ksenia Ponamaryova, who with Rybkin's wife signed a missing persons report Sunday night, said Monday that they have had no contact with him since he disappeared Thursday evening.
His wife, Albina, said both of his cars are in his garage and she feared he might have been kidnapped.
At the request of Rybkin's relatives, the Presnenskaya district prosecutor's office opened a criminal inquiry into Rybkin's disappearance on suspicion of premeditated murder at 11 a.m. Monday.
The Moscow city prosecutor's office learned of this and canceled the inquiry at noon, spokeswoman Svetlana Petrenko said. "It was judged as premature," she said.
She said the city prosecutors were, however, continuing to investigate Rybkin's disappearance and would decide within 10 days whether the facts warranted a criminal case.
Gennady Gudkov, a member of the State Duma security committee, said Monday afternoon that security service officials had told him that Rybkin might have been located at a sanatorium in Odintsovo, just west of Moscow.
Calls to the sanatorium indicated that Rybkin had never been there. The presidential administration, which owns the sanatorium, also denied Rybkin had ever been there.
Gudkov later retracted his statement, saying that his sources might have been joking.
The search for Rybkin comes as a Moscow court is trying six suspects in last year's murder of his former colleague in the Liberal Russia party, Deputy Sergei Yushenkov. (See story, Page 2.) A third colleague from Liberal Russia, Vladimir Golovlyov, was also gunned down in murky circumstances, in August 2002. Liberal Russia is backed by businessman Boris Berezovsky, and he and Rybkin are closely associated.
Fueling confusion about Rybkin's disappearance, Berezovsky said in a telephone interview Sunday night that he was "pretty certain" that Rybkin was safe and would reappear Monday.
Ponamaryova said she remained skeptical about that prediction. "There is information that Boris Abramovich [Berezovsky] interprets in a certain way. I have the same information, but my interpretation is different," she said.
Rybkina said in an interview published in Berezovsky-owned newspaper Kommersant on Monday that she thought her husband's disappearance was intended to remove him as a challenger to President Vladimir Putin in the March 14 election.
Central Elections Commission chief Alexander Veshnyakov said Rybkin's registration, granted Friday, remains in place. Until Friday, some had doubted that the commission would approve the 2 million signatures submitted by Rybkin to register his candidacy.
Viktor Fedoruk, 49, the head of one of Rybkin's signature-drive teams, was arrested Wednesday night on suspicion of falsifying signatures, and a Moscow court has ruled that he should remain in custody.
Late last month, state television cast doubt on the validity of Rybkin's signatures, suggesting in news reports that students had been hired to falsify them.
Rybkin fired back that the lists of signatures shown on television were not his but Putin's, bearing the president's date of birth at the top. He argued this in a letter sent to Veshnyakov and media outlets on Thursday, the day he disappeared.
As a candidate, Rybkin was allotted free airtime to participate in televised debates by the Central Elections Commission on Monday. Deciding how to handle it, though, is complicated, because only in the two "exceptional cases" of illness or official obligations can a candidate send a representative to appear in his stead, Veshnyakov said.
Ponamaryova said Rybkin would "most likely" forgo the debate slots, since no one is prepared to stand in for him.

Fact or fiction? The truth is out for politicians
A poll of what voters want offers a reality check for those in power and those who are seeking it
By Brendan Pereira
KUALA LUMPUR - One of the interesting things about politics anywhere is that assumptions and hunches once put into the spin cycle often come out dressed up as fact.
It is no different here in Malaysia. Take the current buzz over elections and preoccupation with the choice of candidates.
Some say the Muslim electorate here expects its assemblymen and elected representatives to be packing impressive religious credentials.
Recycled enough times by journalists, political pundits and even seasoned politicians, this information acquires a veneer of truth and authority.
But occasionally, along comes a study or survey that separates fact from fiction. One such survey was conducted recently by Universiti Utara Malaysia (UUM) to gauge the political climate in Kedah, where the battle for the Malay vote is going to have the intensity of an iron cage wrestling match.
Several hundred people were surveyed and they were categorised as Umno supporters, Parti Islam SeMalaysia (PAS) supporters or those without political affiliation. The findings turn a few assumptions on their heads.
FACT? In an increasingly religious Malaysia, religious credentials are a crucial factor.
SIX out of 10 respondents said leaders should be trustworthy. The public also wanted them to be disciplined, hardworking and accessible.
Sure, it was important that candidates be grounded in religion, but it was not among the top five criteria that voters looked for in their potential elected representatives.
Voters also did not expect leaders to be visionaries or corporate figures.
From this, it is clear that what most want is clean politicians who visit their constituencies regularly, rub shoulders with the electorate often and listen to voters' woes with some empathy.
This finding could come in useful for those among the senior Umno leadership who are in the midst right now of choosing candidates for the coming general election.
Some politicians have been making a beeline for Putrajaya, the administrative capital, to lobby Prime Minister Abdullah Ahmad Badawi and other senior figures.
They have touted their educational qualifications, corporate credentials and loyalty to the political party.
Some have gone the extra mile, backing up their claim for candidacy by conducting street polls among Umno members in their divisions.
FACT? In the Muslim heartland up north, it is the future of religious schools and corruption that weigh heavily on the minds of rural voters.
GUESS what? Umno supporters, PAS supporters and fence-sitters all share the same concern: Worry about how little money is flowing into their pockets.
More than half of poll respondents were perturbed about the low price of padi, and many others complained that it was tough to make a living as a rubber smallholder.
A significant number of them were concerned about the unemployment rate for young people in Kedah.
The survey findings were supported by focus group discussions which Universiti Utara Malaysia lecturers had with Umno members, PAS members, non-governmental organisations and civil servants.
Dr Mansor Mohamed, a member of the team, said: 'By and large, people are concerned about their economic well-being. They are also tired of the politicking.'
These findings point a way forward for those eyeing the Malay vote. It suggests that the pride over Alor Star being granted city status and the Kedah Menteri Besar's fixation on achieving developed status for the northern state may be misplaced.
The hungry and disenchanted voter cares less about what lies ahead, more about concrete answers for his woes today.
This suggests that despite years of economic progress, there are significant pockets of Malaysians who have yet to taste the fruit of development.
Such people are not interested in flash, skyscrapers or an Islamic state.
Perhaps all they want is simply a better life
Copyright @ 2003 Singapore Press Holdings. All rights reserved.
"Dominate. Intimidate. Control."
The sorry record of the Transportation Security Administration
James Bovard
When 9/11 exposed the holes in American airport and airline security, the Bush administration and Congress responded with the usual Washington panacea: a new federal agency. Congress quickly deluged the new Transportation Security Administration (TSA) with billions of dollars to hire an army of over 50,000 federal agents to screen airport passengers and baggage.
But before the agency was even a year old, it was clear that it had "become a monster," to quote the chairman of the House Aviation Subcommittee, John Mica (R-Fla.). Arrogant, abusive, incompetent, and expensive, the TSA is, in the words of the House Appropriations Committee, "seemingly unable to make crisp decisions...unable to work cooperatively with the nation's airports; and unable to take advantage of the multitude of security-improving and labor-saving technologies available."
The attacks of September 11, 2001, changed many things, but they did not make the federal government more competent or effective, and they did not make it more willing to respect the dignity or liberty of its citizens. For proof, one need only examine the TSA's sorry record.
Jumpy Screeners
In June 2002 news leaked out that TSA airport screeners missed 24 percent of the weapons and imitation bombs planted in the government's undercover security tests. At some major airports, screeners failed to detect potentially dangerous objects in half the tests. The results were worse than they first appeared, because the testers were ordered not to "artfully conceal" the deadly contraband and instead pack their luggage "consistent with how a typical passenger in air transportation might pack a bag." Although the tests seemed designed to see if screeners could catch terrorists with single-digit IQs, they still failed to find the weapons much of the time.
That does not mean TSA screeners don't find anything. Notable triumphs have included seizing a tiny pair of wire cutters from a Special Forces veteran who had been shot in the jaw in Afghanistan and needed the cutters to snip his jaw open if he started to choke; evacuating terminals in Los Angeles upon discovering that travelers were carrying such dangerous devices as a belt buckle or a tub of jam; and shutting down several concourses in St. Louis after a federal security screener spotted what appeared to be a "cutting tool" in a carry-on bag. After detecting the suspicious object, the St. Louis screener followed proper procedure: He fetched his supervisor to take a look at the frozen image on the video screen at the checkpoint. A few minutes later, the supervisor concluded that the bag was indeed suspicious and needed to be manually searched. But the passenger had long since retrieved it and headed to his or her flight. Hundreds of passengers were evacuated and up to 60 flights were delayed; despite many searches, the suspicious item was never found.
On January 15, 2003, the Tampa airport was evacuated after screeners discovered an abandoned briefcase that appeared to be packed with bombs. The ticketing level of the terminal was cleared, the roads outside were closed,
and the bomb squad arrived. An hour later, it was determined that the briefcase was a TSA dummy designed to test airport security. "We use these bags repeatedly, so the fact that the bag was in that area was not surprising," TSA Security Director Dario Compain told the St. Petersburg Times. "That it was unattended, that there was no one with it who knew its true nature and could stop the escalation of our action before it reached the evacuation stage, is what's troubling."
The TSA detains more than just packages. More than 1,000 people have been arrested at airport checkpoints since the feds took over security in February 2002. A regulation passed that month made it a federal crime to interfere with airport screening personnel. A single word can be sufficient to trigger an arrest.
Betsylew Miale-Gix, a 43-year-old personal injury lawyer and former world boomerang record holder, was stopped at a security checkpoint at Hartford's Bradley International Airport on June 30, 2002, and informed that she could not carry her boomerangs onto the plane. The boomerangs weighed less than three ounces each and were fragile -- the type of item that is routinely crushed if sent as checked luggage. Miale-Gix had flown many times after 9/11 and had never encountered any objections to her boomerangs. They wouldn't be much use as weapons, after all; as one of her fellow boomerang enthusiasts commented, throwing a competitive boomerang at someone is "like throwing a first-class letter."
The state trooper who banned the boomerangs from the flight refused to listen to Miale-Gix's explanation, and she swore at him as she was departing the screening area. She was quickly arrested, handcuffed, charged with breach of the peace, and compelled to pay $500 for bail. TSA spokeswoman Deirdre O'Sullivan told The New York Times that although boomerangs are not on the official list of prohibited carry-on items, "the screeners have the discretion to decide whether or not that item could be used as a weapon."
Travelers who assert their legal rights can find themselves bounced. Della Maricich was banned from a Portland-to-Seattle flight on May 1, 2002, after she asked an airport screener to keep her purse where she could see it while he searched it. (Many airport screeners have been accused of theft since the new search procedures were introduced.) The screener refused, and Maricich demanded to speak to his supervisor. A National Guardsman arrived on the scene a few minutes later and, Maricich later told The Wall Street Journal, "He told me that because I had disrupted the line by calling for a supervisor, I would not be allowed to fly out of PDX that day. He told me that I was a troublemaker and I was the only one who had ever complained."
On August 2, 2002, a screener at Hartford's Bradley International Airport poked through the wallet of Fred Hubbell, an 80-year-old World War II combat veteran who had already undergone two full searches in that airport that morning. "What do you expect to find in there, a rifle?" the exasperated Hubbell asked. He was then arrested for "causing a public disturbance" and fined $78. Dana Cosgrove, the TSA airport security chief, later justified the arrest on the grounds that "all that the people around him in the waiting room heard was the word rifle."
The TSA flaunts its power to bar people from flights. A group of 20 high school students and Catholic priests and nuns, members of Peace Action Milwaukee, were detained at Milwaukee's airport on April 19, 2002, after some of their names turned up on a "No Fly Watch List" issued by the federal government. According to one member of the group, a sheriff's deputy told her, "You're probably being stopped because you are a peace group and you're protesting against your country." Many of the travelers missed their flights and had to fly the following day. Yet Sgt. Chuck Coughlin of the Milwaukee sheriff's department insisted, "Although it was time-consuming, and although they were flight-delayed, the system actually worked."
The TSA's no-fly lists are often poor sources of information. Many travelers are repeatedly stopped erroneously and taken aside for intensive questioning, regardless of how many times they have previously proved that they are not a threat to national security. As David Sobel, general counsel of the Electronic Privacy Information Center, told the Financial Times, "Nobody wants to accept responsibility for the maintenance of the [no-fly] list, and nobody wants to claim the authority to remove a name." Now the TSA, at Congress's behest, is creating the Computer Assisted Passenger Prescreening System (CAPPS II), which will assign a "threat level" to every person who flies within the United States. The TSA has provided almost no information on how the system will operate, although the government has indicated that it could sweep up a vast amount of personal information on each traveler -- including credit history, financial and transaction records, Internet usage, and legal records (including speeding and parking tickets).
In January 2003 the TSA revealed a new regulation allowing it to suspend pilot licenses based on unproven suspicions that the pilot might pose a security risk. Those who lose their livelihoods as a result of such edicts will not necessarily be permitted to see the evidence against them. The TSA did not seek comments from the public before announcing its new rule, which fails even to define "security risk." Phil Boyer, president of the Aircraft Owners and Pilots Association, protested that the TSA was being "the cop, prosecutor, judge, jury and appeals court....Clearly, this is a violation of basic constitutional rights." But agency spokesman Brian Turmail dismissed the concerns: "The bottom line is: If you're not a terrorist, you don't need to worry about this."
Crazy Cops
The TSA has proven inept in the air as well as on the ground. It was determined to expand the number of air marshals quickly from a few hundred to more than 6,000. When most of the applicants failed the marksmanship test, the agency solved that problem by dropping the marksmanship test for new applicants. (The ability to shoot accurately in a plane cabin is widely considered a crucial part of a marshal's job.) Some would-be marshals were hired even after they repeatedly shot flight attendants in mock hijack response exercises.
USA Today's Blake Morrison noted a report that "one marshal was suspended after he left his gun in a lavatory aboard a United Airlines flight from Washington to Las Vegas in December. A passenger discovered the weapon." Another air marshal left his pistol on a Northwest flight from Detroit to Indianapolis; a cleaning crew discovered the weapon. Morrison noted: "At least 250 federal air marshals have left the top-secret program, and documents obtained by USA Today suggest officials are struggling to handle what two managers call a flood of resignations."
The Transportation Department responded to the USA Today expos? by sending Secretary Norman Mineta to an air marshal training facility, where he witnessed a training exercise in which marshals shot a would-be hijacker. Afterward Mineta commented, "I not only saw a remarkable demonstration of skill and marksmanship, but a degree of professionalism we are instilling throughout our aviation security system."
Eight days later, on August 31, 2002, Delta Flight 442 was proceeding from Atlanta to Philadelphia with 183 people on board when a disheveled passenger began rummaging in the overhead bin. The Philadelphia Inquirer reported that the trouble began when the man "made inappropriate comments to a female passenger a few rows behind him." Two plainclothes air marshals jumped up and tackled the guy, shoving him first to the back of the plane and then dragging him to the first class area.
Then the trip got interesting. One of the marshals returned to the front of the coach section, drew his Glock semiautomatic pistol, and started screaming and pointing his gun at passengers. Philadelphia Judge James Lineberger, a passenger on the flight, later told the Associated Press, "I assumed at that moment that there was going to be some sort of gun battle....There were individuals looking to see what they were pointing at, and [the air marshals] were yelling, `Get down, get out -- get your head out of the aisle.'" In a formal complaint to the TSA, Lineberger declared that "there was no apparent reason for holding all the passengers of the plane at gunpoint, and no explanation was given."
Lineberger was sitting diagonally across from the initial target of the marshals, yet did not notice any problem on the flight until the marshals went ballistic. Susan Johnson, a social worker from Mobile, Alabama, was also unaware of any disturbance until the air marshals seized the man. "It never made sense," she told the Inquirer. "This guy was not any physical threat that we could see. Maybe he said some things to them that made them concerned. He just appeared to us unstable, emotionally." According to Becky Johnson, a reporter who wrote a column about the episode for her Waynesville, North Carolina, newspaper, "They never, ever said who they were, that they were air marshals or whoever."
After the flight landed, the marshals nailed another terrorist suspect: a physician and retired U.S. Army major named Robert Rajcoomar. He was handcuffed and taken into custody because, as TSA spokesman David Steigman later explained it, he "had been observing too closely."
Rajcoomar had been sitting in first class quietly reading and drinking a beer until the marshals dumped the allegedly unruly passenger from coach class into the adjacent seat. Rajcoomar told the Inquirer: "One [marshal] sat on
the guy....he was groaning, and the more he groaned, the more they twisted the handcuffs." Rajcoomar asked the stewardess for permission to move to another seat in first class; she told him to take one of the seats the marshals
had vacated.
When the plane landed, Rajcoomar recalled, "One of these marshals came down to me and said, `Head down, hands over your head!' They pushed my head down, told me to bend down." Rajcoomar said one of the marshals told him, "We didn't like the way you looked" and "We didn't like the way you looked at us." He was locked up in a filthy cell for three hours before being released without charges. His wife was left to roam the Philadelphia airport, not knowing what had happened to her husband.
And the person who initially set off the marshals? He was questioned after the plane landed, but a U.S. attorney decided not to file charges.
The air marshal who brandished his weapon had twice applied to be a cop in Philadelphia but failed the police department's psychological tests. He had also been rejected in an attempt to become a prison guard. When he threatened scores of coach passengers, he had received only two weeks of training.
What escalates this episode beyond a mere bizarre anecdote is the fact that the TSA hailed these marshals as models. Several days after the incident, Thomas Quinn,
the national director of the air marshal program, asserted, "The federal air marshals did a very good job. They did exactly as they're trained to do." And TSA spokesman Robert Johnson, speaking to the Associated Press, blamed the passengers for being held at gunpoint: "If people would have stayed in their seats and heeded those warnings, that would not have happened. It's our opinion that it was done by the book."
Not Just Birth Pangs
Dallas-Fort Worth International Airport is home to 1,800 TSA screeners. At 1:50 p.m. on January 9, 2003, one of them swabbed the outside of a passenger's laptop bag to check for explosives. The screener returned the bag to the pas-senger, who proceeded to his plane. Three minutes later, the screener noticed that the explosive trace detection machine indicated a positive alert for Semtex, a plastic explosive, from the laptop. The screeners then spent three more minutes checking the machine to confirm the accuracy of the positive alert before they informed a TSA supervisor of the problem. The supervisor and screeners then left the checkpoint to walk around and see if they could find the man suspected of having plastic explosives in his laptop. (The explosive detection test is notorious for false positives.)
The group searched four airport departure gates and, after they could not find the man, returned to the checkpoint to retest the machine. More than half an hour after the positive alert for plastic explosives occurred, the TSA notified an airport policeman standing 15 feet from the checkpoint of the problem. Orders were quickly given to empty the terminal. Almost an hour after the laptop owner passed through the checkpoint, his description was circulated through the airport.
Three terminals at the nation's third-largest airport were closed for almost two hours. Thousands of people were evacuated from the airport and at least 200 flights delayed. Hundreds of passengers already on planes waiting for takeoff were obliged to deplane. Forty other airports were affected.
Because the Dallas-Fort Worth airport was not blown up that afternoon, the TSA declared victory. Agency spokesman Ed Martelle told the Fort Worth Star-Telegram: "We caught him, but we lost him. But what he couldn't do was harm anyone. The system worked." The TSA refused to name either the manufacturer of the machine that gave the alert or the screener; as spokesman Brian Doyle explained, "There are privacy issues involved here." After prying into tens of millions of Americans' bags, the agency suddenly developed respect for privacy -- for itself and its corporate suppliers.
Although the TSA promised to issue a full report on the incident, it reneged, announcing a few weeks later that national security concerns prevented it from releasing any more details of the debacle. The TSA also declared that "details about future breaches also would be kept secret because of national security," The Dallas Morning News reported. The Fort Worth Star-Telegram added: "Too much information was made public about the breach, local TSA officials have been told. Further disclosures by airport officials or anyone else privy to the final report could result in fines and/or jail time."
While some people may retain hope that the preceding fiascoes are merely birth pangs, contrary evidence continues to cascade in:
* On February 6, 2003, according to Airport Security Report, San Francisco International Airport was disrupted after a Taiwanese woman with two carry-on bags "sprinted through an unmanned security checkpoint at 10:46 a.m. It wasn't until 1 p.m. that TSA officials evacuated the terminal." TSA agents looked for the woman, concluded she was "lost in the crowd," and then spent time reviewing the videotape of the security checkpoint before ordering an evacuation and rescreening.
* On March 8, 2003, a terminal at the Hartford, Connecticut, airport was evacuated after a screener was caught taking a late afternoon nap by an X-ray machine.
* On March 11, 2003, according to Airport Security Report, TSA officials shut down the Birmingham, Alabama, international airport after "four people were discovered lurking on the airport tarmac. They fled on foot when officers questioned them about their badges identifying them as airport security workers." Dozens of flights were delayed and hundreds of people were evacuated before it was learned that the four suspicious individuals were TSA officials testing airport security.
* On March 21, 2003, Cleveland Hopkins International Airport was placed under a 40-minute lockdown, prohibiting all passenger entries or exits and all plane departures. TSA agents hit the alarm when they spotted a little toy gun on a child's belt buckle in a carry-on bag.
The TSA confiscated the child's belt buckle. Spokesman
Rick DeChant announced, "Had Mom or Dad helped this kid pack, this [airport lockdown] could have been avoided."
* On April 3, 2003, a passenger at Baltimore-Washington International airport refused to be rescreened after the metal detector signaled an alarm from her first pass. Instead, she walked on to her flight. Although two concourses were closed for an hour, the woman was never apprehended.
* In May 2003 Americans learned that the TSA had fired scores of screeners who had been on the job for several months in Los Angeles and New York after finding that they had criminal records. The Los Angeles Times reported that the agency "lost background questionnaires, failed to run some employee fingerprints through a national crime database and was unable to complete background checks." The Times noted that congressmen began investigating the TSA's "background check process after reports that a screener at Kennedy airport was arrested earlier this year for allegedly stealing $6,000 from a passenger." At Dulles International Airport in Washington, D.C., the agency failed to complete background checks on more than a third of the 600 screeners. One employee complained: "It defeats the purpose of what you are here for. It's a 200-plus [person] security breach." Nationwide, more than 20,000 TSA screeners were on the job even though the government had not completed background checks on them.
One reason for the federal takeover of airport security, you may recall, is that private companies had hired screeners of dubious character and poor trustworthiness.
On March 10, 2003, a TSA press release proudly announced, "The Transportation Security Administration has intercepted more than 4.8 million prohibited items at passenger security checkpoints in its first year, contributing to the security of the traveling public and the nation's 429 commercial airports." Agency chief James Loy bragged that "those statistics are strong testimony to the professionalism and attention to detail of our highly trained security screeners." A few weeks later, he upped the ante, informing the House Appropriations Committee: "We have identified, intercepted, and therefore kept off aircraft more than 4.8 million dangerous items."
And so all the fingernail clippers and cigar cutters seized since 9/11 transmogrified into proof that the federal government is protecting people better than ever. The press release did not mention that the checkpoint seizures included frying pans, dumbbell sets, horseshoes, toy robots, and an unknown but huge number of small pointy objects.
Security as Theater
Here's a more sobering measure of the agency's effectiveness: The New York Daily News celebrated the first anniversary of 9/11 by sending two reporters around the country, taking 14 flights on six airlines, and passing through 11 major airports during Labor Day weekend 2002. The reporters carried box cutters, razors, knives, and pepper spray in their luggage. They took their contraband through the checkpoints at all four of the airports used by the hijackers on 9/11. "Not a single airport security checkpoint spotted or confiscated any of the dangerous items, all of which have been banned from airports and planes by federal authorities," the paper revealed. The reporters were selected for hand searches several times, but even then nothing was found. There were more security personnel and searches than a year before, "but it amounted to nothing more than a big show."
The TSA blamed the failures on its prehistory, commenting that the Daily News' findings "underscore the failures of an aviation security system inherited by the federal government last fall." A spokesman for Department of Transportation Secretary Mineta, Leonard Alcivar, greeted the findings with a spurt of positive thinking: "The reality is Americans have never had a higher level of security in the history of aviation."
There was less room for positive thinking a year later, when college student Nathaniel Heatwole pulled a similar stunt, planting box cutters and fake bombs on six different planes to probe the gaps in security. In September 2003 he sent the TSA an e-mail message explaining what he had done, in the hope of sparking improvements in the system. Instead he was brought up on charges and now faces up to 10 years in jail.
There is no series of tricks or reforms that will guarantee safe air travel. But a first step toward better security is to recognize the facades the feds have created. The TSA should no longer be permitted to burden travelers or taxpayers. The armies of federal agents occupying American airports should be disbanded. In the meantime, airports and airlines must not be shielded from liability if their negligence results in carnage. The specter of devastating liability lawsuits could produce more innovations and sounder security policies than the incentives produced by Washington political circuses.
Federal intelligence agencies should do a better job of notifying airports and airlines of specific current threats. Resources should be focused on determining actual threats, rather than treating every grandmother and toddler as a potential hijacker. And it would be helpful to amend U.S. foreign policy to reduce the number of foreigners willing to kill themselves to slaughter Americans.
In the wake of 9/11, the federal mentality toward air travelers is best summarized by the motto posted at the headquarters of the TSA air marshal training center: "Dominate. Intimidate. Control." But it takes more than browbeating average Americans to make air travel safe.
James Bovard is the author of Terrorism and Tyranny: Trampling Freedom, Justice, and Peace to Rid the World of Evil (Palgrave Macmillan, 2003), from which this article is adapted.
Airline Surveillance Office Director Resigns
TSA Says Bell's Departure Will Not Affect Rollout of Proposed Passenger Screening System
By Robert O'Harrow Jr.
Washington Post Staff Writer
Tuesday, February 10, 2004; Page A08
The director of a program to develop an electronic screening system for airline passengers plans to resign April 3, according to his resignation letter.
Ben H. Bell III, director of the new Office of National Risk Assessment in the Transportation Security Administration, said he would retire after almost 35 years of service in the federal government.
His decision comes at a delicate time for the data-surveillance system known as CAPPS II, which has been delayed for almost two years by technical issues and questions about its impact on privacy.
The U.S. General Accounting Office is scheduled to issue a report in coming days about the proposed system's effectiveness and potential impact on civil liberties. Congress ordered that the report be completed before allowing CAPPS II to move forward. An unfavorable outcome could further delay implementation.
Testing of the system is scheduled to begin in late spring. If successful, officials expect to start phasing in CAPPS II this summer.
TSA spokesman Mark Hatfield said Bell's departure would have no impact on the rollout. "His legacy will be the addition of one of the most important layers of security in aviation," he said.
In his resignation letter, Bell praised the "risk assessment platform," saying it will serve as a model for use by government intelligence and private information services to enhance U.S. security.
"Fully implemented and supported, it will be among the first fruits of a new kind of partnership between the government and the private sector -- where the best technology used in commerce is leveraged to protect our freedom, and where privacy and security are not competing interests, but complementary goals," Bell wrote.
The CAPPS II system is designed to use giant reservoirs of personal information stored by Acxiom Corp., LexisNexis Group and other companies to authenticate every passenger's identity. Government computers, based in suburban Washington and Colorado, will then match those names against intelligence and lists of known or suspected terrorists.
Under current plans, passengers will be assigned one of three designations: regular screening, extra screening or apprehend.
Few homeland security initiatives have spurred as much controversy as CAPPS II. JetBlue and Northwest airlines have been harshly criticized for sharing passenger information with the government -- including some agencies not directly involved in CAPPS II -- and now they and others have expressed reluctance to participate.
Major U.S. carriers are scrambling now to create disclosure policies that tell customers how personal information is being used, in anticipation that the government may force the airlines to turn over records for the system.
Democratic presidential candidate Wesley K. Clark also came under fire from rivals for working as a lobbyist for Arkansas-based Acxiom in its bid to secure a role in CAPPS II and other security initiatives.
Though some privacy advocates acknowledge the need for an aviation screening system, they complain that development of CAPPS II has been overly secretive. Some advocates have expressed concern that the screening will turn airports into all-purpose checkpoints.
Bell and other government officials have insisted in congressional testimony and interviews that that will not happen. Last summer, the government declared its intentions to use CAPPS II to apprehend wanted violent criminals, an apparent expansion of its original aim.
David Sobel, general counsel of the Electronic Privacy Information Center in the District, said Bell's departure raises new questions about how the system is coming along. "There are still lots of questions to be answered," Sobel said.
James X. Dempsey, executive director of the Center for Democracy and Technology in the District, said Bell "honestly was trying to protect privacy." But he predicted Bell's resignation would not impede the program's implementation.
"We need some kind of passenger screening system," Dempsey said. "It's not a task, it seems to me, that we can walk away from."
Bell, a retired Marine officer, was asked to build CAPPS II in late 2002 because he mixed computer savvy with foreign, domestic and law enforcement intelligence experience. He has also served as deputy assistant commissioner for intelligence at the Immigration and Naturalization Service. Part of Bell's appeal, officials said, was that he was committed to building an effective system that would use passenger records narrowly only to stop terrorists.
? 2004 The Washington Post Company


Microsoft offers cut-rate Windows
By Matthew Broersma, CNET
Tuesday, February 10 2004 9:34 AM
Microsoft has provided a modified version of Windows XP with reduced features for use in the Thai government's low-cost PC program, and may make this software available to other governments, the company said.
The "entry-level" version of Windows was created to allow Microsoft to participate in the Thailand ICT Ministry's program without adjusting its policy of charging the same price for Windows and Office no matter where in the world they are sold, Microsoft said Monday. The software was provided at a cost of 1,500 baht, or about US$40, compared with the usual price of several hundred dollars.
"The Microsoft software provided for the ICT program in June 2003 is a Thai-language specific, customized, entry-level version based on Windows XP Home and Office XP Standard," said a Microsoft spokeswoman.
Last year, market research firm Gartner said the Thai deal was the beginning of the end for the one-price policy, predicting Microsoft would be compelled to halve its prices in poorer countries by the middle of 2004. Now Microsoft says it is looking to collaborate with more governments on low-cost PC initiatives, using customized software with reduced functionality, as in Thailand.
Andrew McBean, Microsoft Thailand's managing director, said in an interview with The Bangkok Post last week that the company was developing an entry-level version of Windows for sale in poorer countries.
Microsoft has come under increasing competitive pressure from open-source software such as Linux in developing countries, where the single-price policy makes Microsoft software too expensive for most. The Thai ICT PCs were originally available only with Linux. Linux PCs are seen as a threat to Windows partly because buyers are considered likely to replace the operating system with pirated copies of Windows.
Several Asian governments have recently embraced open-source software in an attempt to fix problems such as high software costs and wide-scale software piracy. The price of Microsoft software is often cited as the root of the problem.
Authorities in Asia have bemoaned the company's lack of flexibility, arguing that market price should be tied to local economic conditions. Being forced to use English-language versions because of the lack of local-language options is also a sore point.
Countries like Malaysia, Vietnam, China, Japan and Korea have said they are wary of giving monopolistic control of crucial software to a foreign-based corporation, free to charge any price without regard for national interests.
Microsoft has repeatedly denied it will adjust its one-price policy. Speaking at the Singapore launch of the Office System 2003 productivity suite last November, Oliver Roll, Microsoft general manager for Asia-Pacific and Greater China, said that while the single-price policy won't change, the company was willing to give discounts if it would help certain IT-disadvantaged groups.
Today, a copy of the Microsoft Windows operating system or Office productivity suite costs roughly the same in every country. For example, Windows XP Home is US$199 and Office XP, US$399. Given that the average income of a Thai worker is US$7,000 a year, it would be the equivalent of charging US$3,000 for the bundle in the United States, according to Gartner Hong Kong.
Matthew Broersma of ZDNet UK reported from London. John Lui of CNETAsia contributed to this report.

IBM switches Korean head after bribery scandal
By Winston Chai, CNETAsia
Friday, February 6 2004 6:13 PM
IBM has replaced the head honcho for its South Korean operations, following a high-profile bribery fiasco last month.
In January, Korean authorities indicted 48 government officials and executives, mostly from IBM and affiliated companies such as LG IBM PC--a joint venture between IBM and Korean firm LG Electronics-- for rigging public-sector computer contracts.
According to the Seoul District Prosecutor's Office, IBM Korea allegedly amassed a slush fund worth almost 3 billion won (US$2.5 million) which was used to pay off government officials. Big Blue has since denied the existence of this fund and said it has fired the employees in question.
An IBM Asia-Pacific spokesperson told CNETAsia it has named Tony Romero, a 23-year veteran with the company, as the new head for Korea.
Romero was previously the general manager of IBM ASEAN and South Asia. He also served as president for IBM Argentina between 1997 and 1999, a period when the business unit faced a similar bribery probe pertaining to a rigged deal with Argentinean bank Banco Nacion.
Romero takes over from former IBM Korea head, Chae-Chol Shin, who was appointed as the country's general manager in 1996. IBM said Shin made a "personal decision to retire" after 31 years with the company.
ZDNET Korea's Yong-Young Kim contributed to the story.

China gears up for RFID
By ZDNet China, Special to CNETAsia
Monday, February 9 2004 9:43 AM
The Standardization Administration of China has created a working group that will establish a national standard for radio frequency identification tags.
Called "electronic tags" in China, these small transmitters--essentially high-tech bar codes that can be scanned from a distance and even through the walls of boxes--are seen by many as the key to a far more efficient supply chain than is achievable today.
There is no single standard for RFID. The SAC said that it will try to draft its standard so that it will be compatible with similar technologies.
RFID companies are likely to closely monitor how the standardization process moves forward. Recently, the Chinese government demanded that the Wi-Fi chips sold in the country contain an encryption standard controlled by 11 local companies. To sell Wi-Fi parts in the large and rapidly growing market in China, foreign companies necessarily have to partner with Chinese companies or license the technology from them.
With manufacturers and distributors scrambling to meet those retail and military mandates, research firm IDC said it expects RFID spending for the U.S. retail supply chain to grow from US$91.5 million last year to nearly US$1.3 billion in 2008.
Privacy advocates, however, assert that the radio-tag technology could allow companies to track individuals. Although many in the industry have said this is more difficult than it sounds (RFID tags can be disabled by a trip through a microwave), some companies have backed away from trials.
Another controversy with RFID is finding companies to make the tags. Intel, IBM and others are very interested in the technology, but because it will allow them to sell more servers and software for managing networks of tags. The RFID tags themselves will only sell for a few cents when volume production begins.
ZDNet China is based in Beijing. CNET's Michael Kanellos contributed to this story

Posted by maximpost at 1:24 AM EST

Saddam's Global Payroll
It's time to take a serious look at the U.N.'s oil-for-food program.
Monday, February 9, 2004 8:00 a.m. EST
On Dec. 5, during a trip to Baghdad, Claude Hankes-Drielsma faxed an urgent letter to U.N. Secretary-General Kofi Annan. Mr. Drielsma, the U.K. Chairman of Roland Berger Strategy Consultants, had recently been appointed to advise the Iraqi Governing Council. What he saw in Baghdad left him shocked. "As a result of my findings here, combined with earlier information," he wrote, "I most strongly urge the U.N. to consider appointing an independent commission to review and investigate the 'Oil for Food Programme.' Failure to do so might bring into question the U.N.'s credibility and the public's perception of it. . . . My belief is that serious transgressions have taken place and may still be taking place."
Just how serious these transgressions were became clear late last month, when the Iraqi daily Al Mada published a partial list of names, compiled by Iraq's oil ministry, of those whom Saddam Hussein rewarded with allocations of Iraqi oil. Mr. Hankes-Drielsma, who says he was among the first to see the list in early December, says it is based on numerous contracts and other detailed documents and was compiled at the request of the Iraqi Governing Council.
The list, a copy of which has been seen by the Journal's editorial page, is in spreadsheet format and details (in Arabic) individuals, companies and organizations, grouped by country, who oil ministry and Governing Council officials believe received vouchers from the Iraqi regime for the purchase of oil under the oil-for-food program. Mr. Hankes-Drielsma said the recipients would have been given allocations at below-market prices and then been able to pocket the difference when a middleman sold the oil on to a refinery; 13 time periods are designated and with indications of how much crude, in millions of barrels, each recipient allegedly received.
The list reads like an official registry of Friends of Saddam across some 50 countries. It's clear where his best, best friends were. There are 11 entries under France (totaling 150.8 million barrels of crude), 14 names under Syria (totaling 116.9 million barrels) and four pages detailing Russian recipients, with voucher allocations of over one billion barrels. Many of the names, transliterated phonetically from Arabic, are not well-known or are difficult to identify from the information given. Others stand out. There's George Galloway, the Saddam-supporting British MP recently expelled from the Labour Party, who has always denied receiving any form of payment from Saddam. Other notables include Indonesian President Megawati Sukarnoputri (also listed separately as the "daughter of President Sukarno"), the PLO, the Popular Front for the Liberation of Palestine, the Russian Orthodox Church, the "director of the Russian President's office" and former French Interior Minister Charles Pasqua. Some--including Mr. Pasqua, the Russian Church and Ms. Megawati--have denied receiving anything from Saddam. Patrick Maugein, a close friend of Jacques Chirac and head of Soco International oil company, says his dealings were all within "the framework of the oil-for-food program and there was nothing illegal about it."
The list's breadth, and the difficulty in reading and interpreting it, has slowed its exposure. There's also the question of authentication. Mr. Hankes-Drielsma (who is not an Arabic speaker) is convinced it is authentic and will be followed by more detailed evidence as the Iraqi oil ministry and Governing Council conduct further investigations. "I've seen the documents that have satisfied me beyond any doubt that we're dealing with a genuine situation," he told me.
One of the most eye-catching names on the list is easy to miss as it's the sole entry under a country one would not normally associate with Iraq--Panama. The entry says: "Mr. Sevan." That's the same name as that of the U.N. Assistant Secretary-General Benon V. Sevan, a Cyprus-born, New York-educated career U.N. officer who was tapped by Kofi Annan in October 1997 to run the oil-for-food program.
When I tried Mr. Sevan for comment, a U.N. spokesman wouldn't put me through to him directly but offered to pass on e-mailed questions. In an e-mail reply to questions about Mr. Sevan's apparent inclusion on the list and interest in the Panama-based business that allegedly received the discounted oil, the spokesman quoted Kofi Annan's statement Friday: "As far as I know, nobody in the Secretariat has committed any wrongdoing. If there is evidence, we would investigate it very seriously, and I want those who are making the charges to give the material they have to me so that we can follow up to determine if there has been any wrongdoing and I would take necessary action. So far statements are being made but we need to get facts." The pro forma U.N. response certainly seems inadequate. Mr. Sevan should take the opportunity to defend himself against the inference that the presence of his name on this list could help explain how Saddam was able to get by with so much influence-buying around the world with little apparent objection from the U.N.
In the seven years that Oil-for-Food was operational, (it was shut down in November and its obligations are being wound up) Saddam was able to skim off funds for his personal use, while at the same time doing favors for those who supported the lifting of sanctions, supplied him with his vast arsenal of weapons, and opposed military action in Iraq. Indeed, it was clear from the outset that Saddam would be able to use the program to benefit his friends. The 1995 U.N. resolution setting out the program--Resolution 986--bends over backwards to reassure Iraq that Oil-for-Food would not "infringe the sovereignty or territorial integrity" of Iraq. And to that end it gave Saddam power to decide on trading partners. "A contract for the purchase of petroleum and petroleum products will only be considered for approval if it has been endorsed by the Government of Iraq," states the program's procedures. Predictably, Saddam exploited the program for influence-buying and kickbacks, and filled his coffers by smuggling oil through Syria and elsewhere. With Oil-for-Food and smuggling, he was able to sustain his domestic power base and maintain a lavish lifestyle for his inner circle.
The system was ripe for abuse, in part because a divided Security Council gave Saddam far too much flexibility within the program. Oil-for-Food not only gave Iraq the power to decide with whom to deal, but also freedom to determine the official price of Iraqi oil, revenues from which went legally into the U.N.'s Oil-for-Food account. U.N. rules did not allow it to order Iraq to deal directly with end-users and bypass all those lucky middlemen who got deals from Saddam. Nor was the U.N. allowed to view contracts other than those between the oil ministry and the first purchaser, so it had no way of verifying that surcharges were being imposed by the middlemen on end-users. That enabled him to add surcharges to finance his own schemes while still making the final price competitive.
U.N. rules were ostensibly devised to prevent pricing abuses, but in one of the many indications of administrative failure, those safeguards appear not to have been enforced. In response, the U.S. and Britain tried often from 2001 to impose stricter financial standards, but Russia blocked changes. Then the U.S. and Britain instituted a system of retroactive pricing--delaying approval of the Iraqi selling price so that they could take account of the market price when giving their approval. This too met with grumbling from Friends of Saddam and while it reduced oil exports, it didn't end the corruption.
Throughout most of the program's life, Mr. Sevan's office seemed to see no evil. When overwhelming evidence finally surfaced that Oil-for-Food had become a gravy-train for the Iraqi regime, U.N. officials acknowledged some of the abuses but refused any of the blame. Criticism is routinely portrayed as politically motivated. "The [program] has existed in a highly politicized environment from day one," explains the U.N. Web site. "The scale of these operations has also made it a rather large target." Its last line of defense was to punt to the Security Council, whose sanctions committee (authorized by the 1990 sanctions resolution and composed of Council members) was meant to oversee the program, receive reports and review audits.
The record of systemic abuse of the program lends credence to claims that the oil-ministry list is genuine and should be investigated. The Iraqi Governing Council says it's considering legal action against anyone found to have profited illegally from Oil-for-Food. The U.S. Treasury's Bureau of Immigration and Customs Enforcement is investigating possible violations of U.S. law. But the U.N. has resisted calls for an independent investigation into abuses. Says Mr. Hankes-Drielsma: "I would urge the U.N. to take the high moral ground and instigate a truly independent investigation."
To this end, he wrote a second letter to the U.N. secretariat on Feb. 1, this time addressed to Hans Correll, Under Secretary for Legal Affairs and Legal Counsel of the U.N., with a copy to British Foreign Secretary Jack Straw. He catalogs questions on areas "which need urgent investigation," e.g. "Why did the U.N. approve oil contracts to non-end users?" His letter alleges that "not less than 10% was added to the value of all invoices to provide cash to Saddam . . . why was this not identified and prevented?" The letter also asks "What controls were in place to monitor BNP [the French bank] who handled the bulk of the LCs, the total value of which may have [been] in the region of $47 billion?"
In a June 2000 statement on Oil-for-Food, Mr. Sevan said, "As [Mr. Annan] put it recently, we, as international civil servants, take our marching orders from the Security Council." It might have been more accurate to acknowledge the U.N. took its marching orders from Saddam.

Ms. Raphael is editorial page editor of The Wall Street Journal Europe.

Bush: Hussein Eluded Containment Efforts
By Walter Pincus
Washington Post Staff Writer
Monday, February 9, 2004; Page A08
In defending his decision to go to war in Iraq, President Bush suggested yesterday a belief that U.N. inspections and sanctions were of limited utility in preventing Saddam Hussein from acquiring weapons of mass destruction.
"Containment doesn't work with a man who is a madman," Bush said during his interview on NBC's "Meet the Press," even as he acknowledged banned weapons have yet to be found.
Bush's assessment of the U.N. efforts, however, does not appear to be shared by his own former chief weapons inspector, David Kay. In testimony Jan. 28 before the Senate Armed Services Committee, Kay lauded the effectiveness of past U.N. efforts. "In holding the [Iraq arms] program down and keeping it from break out [building numbers of weapons], I think the [U.N.] record is better than we would have anticipated," Kay said.
Kay also said Iraqi scientists had told him recently that they were surprised the U.N. inspectors were so tough and reported some programs were ended in the mid-1990s because of the inspections, but without specific evidence the U.N. inspectors did not believe the Iraqis because they had lied before.
NBC's Tim Russert asked Bush about statements he had made during fall 2002 when the administration was building support for a congressional authorization for war. These included Bush saying, "The Iraqi regime is a threat of unique urgency," and "Saddam Hussein is a threat that we must deal with as quickly as possible." Bush did not acknowledge having made those statements and said, "In my language, I called it a 'grave and gathering threat,' " a phrase he used in a speech before the United Nations on Sept. 12, 2002.
White House aides have insisted, since no weapons have been found, that Bush never used the word "imminent" in describing the Iraq threat. Yesterday, Bush said, "I don't want to get into a word contest."
In describing the threat posed by Hussein, Bush said twice that the former Iraqi leader was a threat to the United States because he "was paying for suicide bombers" that went into Israel, implying that the Iraqi money generated the attacks. After suicide bombings, Hussein in recent years said that, as Saudi Arabia and several Gulf states had been doing for years, he would give $25,000 to support each of the perpetrators' families. But many experts agree those funds, no matter where their origin, were not the motivation for the attackers.
Bush also said Hussein was a threat because "he was funding terrorist groups." Iraq had granted asylum to terrorists such as Abu Nidal and supplied money and training to Palestinian groups that fought Israel. Authorities say there is no evidence that Hussein gave direct financial support to Osama bin Laden's al Qaeda network either before or after the attacks on the World Trade Center and Pentagon, although some al Qaeda operatives and associates passed through Baghdad.
? 2004 The Washington Post Company

U.S. Criticized for Dimissing Iraqi Companies in Reconstruction
By Jackie Spinner
Washington Post Staff Writer
Monday, February 9, 2004; 11:00 AM
The Iraqi Governing Council's top diplomat in Washington today criticized the U.S. occupation authority for passing over Iraqi companies in favor of giving reconstruction contracts to foreign firms.
Rend Rahim Francke, the council's ambassador-designate to the United States, said she was "appalled" that U.S. companies initially imported laborers from Asia during the first critical months of reconstruction.
"Ultimately, American companies can come and build bridges and power plants. But these companies will be gone," she said during speech at a conference today in Washington on reconstruction in Iraq. "We need to build capacity in Iraq" for Iraqi firms, she said.
Francke said in an interview afterward that the Coalition Provisional Authority, the occupation administration headed by L. Paul Bremer, is "opaque to Iraqis. It's still not transparent."
Joe Benkert, the authority's chief of operations in Washington, said U.S. officials were committed to involving Iraqis in the rebuilding of their country. "It's very clear to us this is a job for the Iraqi people and the Iraqi people are up to the task," he told about 150 people attending the conference, which is sponsored by Equity International, a private firm.

Republican Rot
Is Congress's GOP majority becoming as corrupt as the Democrats were?
Monday, February 9, 2004 12:01 a.m. EST
One way you can tell that Republicans have become the dominant political party in Washington is to watch them cash in.
Rep. Billy Tauzin of Louisiana has announced that next Monday he will step down as chairman of the powerful House Energy and Commerce Committee. Observers expect he will soon leave Congress to become the chief lobbyist for the pharmaceutical industry at an annual salary that's rumored to approach $2.5 million, a record for a trade association head. Mr. Tauzin isn't doing anything illegal, but what's good for him isn't good for the country or for the Republican Party. Their voters are already showing signs of concern that congressional Republicans are taking on the bad habits of the Democrats they ousted from power in 1994.
House Democrats finished their annual three-day retreat at the Homstead Resort in Virginia on Saturday. Among the topics they discussed was how to exploit the perception that Mr. Tauzin was being paid off for steering the Medicare prescription drug bill through Congress only two months ago, legislation Democrats say will be a big boon to drug companies. "If you want to know the price of selling seniors down the river," Minority Leader Nancy Pelosi told reporters, "it's approximately $2 million a year, if you want to hire the manager of the bill on the floor of the House." It doesn't help that Mr. Tauzin already has a wheeler-dealer image or that some House Democrats are still bitter with him for abandoning their caucus after more than 15 years to become a Republican in 1995.
Mr. Tauzin's office insists he is stepping down mainly for health reasons; he is 60 years old and was recently hospitalized for a bleeding ulcer. But his sudden interest in the top job at the Pharmaceutical Research and Manufacturers of America, known as Pharma, looks unseemly when the ink is barely dry on the massive prescription drug law. Only last month, he turned down an offer of more than $1 million a year from the Motion Picture Association of America, the film industry's lobbying arm. That would have been a much less controversial soft landing.
Some Republicans fear that Mr. Tauzin has sped up Washington's infamous "revolving door" between Congress and the K Street lobbying shops to a point that could hurt the public perception of Congress. Rep. Deborah Pryce of Ohio, head of the House Republican Conference, admitted to reporters last month that she is worried the Tauzin job offer will make it easier for Democrats to bash the GOP as a tool of pharmaceutical companies. While Mr. Tauzin would be barred from lobbying members of Congress for a year after he leaves office, nothing prevents him from sitting down with executive branch officials with suggestions on how they might draft the drug bill's regulations.
Rep. Mike Pence of Indiana, who was one of only 25 GOP House members to vote against the Medicare bill, says Democratic colleagues have told him that the two major reasons they lost control of the House to the GOP in 1994 were the reckless liberalism of the Clinton administration during its first two years and "the Jim Wright and House Bank scandals that convinced people that Democrats were looking out for themselves first. For our own good, I hope we don't fall into that trap."
He and other members say Mr. Tauzin's jackpot couldn't have come at a worse time. Last week, the House Ethics Committee revealed that for the past two months it has been investigating an allegation by Rep. Nick Smith, a Michigan Republican, that party leaders offered him a bribe in exchange for his vote on the Medicare bill. Mr. Smith voted against the bill and later said unnamed members of his party had said they'd contribute $100,000 to his son's congressional campaign if he had voted in favor. If not, Mr. Smith said, they told him they'd see that the younger Mr. Smith lost his race. Mr. Smith later recanted, saying his claim of bribery was "technically inaccurate" and has since refused to discuss the matter further.
But other GOP members stood by their stories of strong-arm tactics. South Carolina's Rep. Jim DeMint said contributors threatened to withhold donations for his upcoming Senate race unless he voted for the Medicare bill, while Rep. Todd Akin of Missouri said a state legislator threatened to run against him. Rep. Tom Feeney of Florida was told his path towards a party leadership position would be blocked if he voted against the bill.
Republicans should view such tactics and the bidding war for Mr. Tauzin on K Street as warning signs of ideological dry rot. No matter how well gerrymandered their districts, the GOP majority could be in jeopardy if it develops the same reputation for ruthlessness and selfishness that burdened the Democrats in the early 1990s.
If Republicans consolidate their control over Washington while failing to reduce the size of government, they will inevitably be caught up in the care and feeding of the state. Industries that want favors or protection from government will seek out and hire powerful people to move the levers of power. F.A. Hayek warned decades ago against the dangers of a creeping corporate welfare state: "As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of the directing power."
K Street is beginning to fill up with Republican lobbyists as companies realize the near-monopoly that Democrats had on lobbying jobs no longer makes sense. Lobbying is becoming a family affair. At least 17 current senators and 11 House members have had close relatives working in lobbying or government relations.
Some Republican lobbyists pride themselves on advocating free markets and deregulation, but too often they also take on questionable projects. Before he became chairman of the Republican National Committee last year, Ed Gillespie ran a lobbying practice with former Clinton White House counsel Jack Quinn. They successfully pushed for tariff protections for American steel makers, an economic and foreign-policy disaster President Bush had to pull the plug on last year. Former Rep. Vin Weber has successfully held up the deregulation agenda of FCC Chairman Michael Powell. GOP lobbyists respond that they are only following in the footsteps of Democrats such as Reps. John Dingell and Tony Coelho who in the 1980s perfected the cozy connections between Capitol Hill and K Street.
Naturally, liberal newspapers and ethics watchdog groups propose to deal with the Tauzin problem with new restrictions on lobbying. One sensible idea is to extend to departing members of Congress the yearlong ban on lobbying executive branch officials that already applies to congressional staffers. Other proposed rules are probably unworkable. The Los Angeles Times suggests that lawmakers be banned from direct lobbying for three years and also not be allowed to negotiate a new job while they're still in office. Bob Livingston, the former Appropriations Committee chairman who now operates one of Washington's most popular lobbying shops, says such rules are impractical and would prevent qualified people from seeking seats in Congress "because they won't be able to provide financial security for their families after leaving office."
The problem is that voters have never felt that Congress should be a stepping stone for lucrative postretirement careers. Every few years someone conspicuously crosses an unseen line and rubs the face of the American people in the seamy side of Washington influence peddling. In the 1980s, an infamous Time cover photo of former Reagan White House aide Mike Deaver making lobbying calls from his car led to public outrage and Mr. Deaver's indictment on charges that he lied to a grand jury, He was fined $100,000 and required to complete 1,500 hours of community service. In 2001, President Clinton's midnight pardons of disgraced financier Marc Rich and others confirmed the worst suspicions of many about his character.
Mr. Tauzin's transgression isn't in that league, but blogger Mickey Kaus nonetheless writes that it "provides a Washington scandal that virtually everyone in the press can feel righteous about playing up. Meanwhile, what pol is going to risk his or her neck to defend a once-powerful Congressman who has given up his power."
There is a strong chance that the Tauzin scandal--coupled with the Nick Smith bribery controversy--will only build in coming days. The fear of that may be why Pharma is taking a wait and see attitude towards formally signing up Mr. Tauzin. Rumors have it that internal memos from the pharmaceutical industry that refer to Mr. Tauzin as someone who will always do the industry's bidding may be leaked to the media by his jealous colleagues.
But this political firestorm may die out if Pharma executives realize that Mr. Tauzin is already damaged and thus would be less effective as a lobbyist. Mr. Tauzin ought to be in pictures; the MPAA's offer was quite generous. If he insists on pursuing the drug industry's even more lucrative deal he will only create headaches and embarrassment for all concerned.

North Korea balks, then agrees to talk. Why now?
By Tom Tobback
BEIJING - "Time is not on the American side," said North Korea's vice foreign minister, Kim Gye-gwan, to Jack Pritchard, the former United States negotiator with North Korea, when he visited the Yongbyon nuclear facilities in North Korea last month. And, Kim added: "As time passes, our nuclear deterrent continues to grow in quantity and quality."
Indeed, time is not on the US side in this nuclear standoff. However, the Democratic Peoples Republic of Korea's (DPRK's) recent and rather surprising announcement that it has agreed to resume the six-party talks in Beijing on February 25 indicates that time is not entirely on North Korea's side either.
North Korea's leader Kim Jong-il agreed in principle to participate in a second round of six-party talks when China's Number 2 leader, chairman of the standing committee of the National People's Congress Wu Bangguo, visited him in Pyongyang last October. The DPRK had described the first round of talks that took place in Beijing last August as a waste of time.
So to ensure progress in the second round of talks, which involve North and South Korea, China, Japan, Russia and the US, Pyongyang demanded - and has been demanding - agreement on a joint statement before the talks. This proviso was supported by China after US President George W Bush stated he was willing to discuss a written multilateral security guarantee. However, in December Pyongyang announced additional conditions for its proposed first step, a re-freeze of the Yongbyon nuclear facilities that had been under inspection from 1994 to 2002 by the International Atomic Energy Agency (IAEA).
The US accused North Korea of setting preconditions for the talks, and the six-party process seemed to have hit a deadlock. Then suddenly last week the official (North) Korea Central News Agency announced, "The DPRK and the US, the major parties concerned to the six-way talks, and China, the host country, agreed to resume the next round of the six-way talks from February 25 after having a series of discussion."
Officials in Seoul said that the DPRK had not bothered to notify the US or South Korea before announcing this decision.
Pyongyang drops precondition, scope limited
Pyongyang has obviously dropped its demand for a pre-talks joint statement. At the talks, North Korea will expectedly elaborate on its known proposal for "simultaneous actions" and the other parties will then respond. Thus the scope is minimal, and that is probably why the duration of the talks has not yet been announced. Russian Deputy Foreign Minister Alexander Losyukov warned not to expect any breakthrough, given the disagreement over the proposed joint pre-talks statement.
North Korea has done its best to convince the US of its nuclear deterrent by showing the recent private US delegation reprocessed plutonium at Yongbyon, and DPRK officials reportedly were disappointed when US nuclear scientist Siegfried Hecker told them he had seen nothing that convinced him Pyongyang possesses a nuclear deterrent.
On the other hand, Pyongyang assured the delegation it does not have the uranium enrichment program US intelligence claims to know about. Possibly North Korea wants to capitalize on doubts about the Bush administration's use of intelligence. Last week KCNA stated: "Now the Bush administration finds itself in a tight corner as it provoked a war against Iraq after deceiving Americans and the world."
Other recent events might have also have convinced Pyongyang that a continuing crisis does not serve its interests. The US-led international consortium KEDO (Korea Energy Development Organization) responsible for building the two light-water reactors in exchange for the freeze of Yongbyon in 1994, halted work on the project on December 1.
After Libya vowed to dismantle its secret nuclear program on December 22, evidence is emerging of a nuclear black market run by the Pakistani nuclear scientist Abdul Qadeer Khan, who admitted last week to having passed nuclear secrets to various countries - including the DPRK.
Japan threatens economic sanctions
Other incentives to North Korea are the desperate state of the country's population and its economy. The Japanese parliament's decision last week to allow the government to impose economic sanctions and halt trade between the two neighboring countries could hurt the DPRK's economy severely.
According to the deputy director of the DPRK Finance Ministry, Yang Chang-yoon, Pyongyang does need outside assistance and loans to resuscitate its economy, despite the issuance of state bonds last year. One of North Korea's first demands is to be removed from the US list of terrorism-sponsoring nations and to be allowed to join international financial institutions such as the World Bank and the International Monetary Fund (IMF).
Today the UN World Food Program (WFP) in Beijing warned that its cereal stocks in North Korea are all but depleted, with little donations in the pipeline. "We are scraping the bottom of the barrel," Masood Hyder, the WFP's representative in Pyongyang, told a news conference here. "Over four million core beneficiaries - the most vulnerable children, women and elderly people - are now deprived of very vital rations. It's the middle of the harsh Korean winter and they need more food, not less."
Some observers argue that Pyongyang's decision to resume the six-party talks is the result of external political and economic pressure. On the other hand, having the talks take place during the current uproar over the uses of US intelligence about Iraq's weapons of mass destruction might enable Pyongyang to keep its alleged uranium-based nuclear program off the table - at least in this round. However, if Pyongyang is not prepared to make further major concessions at the talks, the six-party process is likely to derail.
After his latest visit to the DPRK's Yongbyon nuclear facilities, US negotiator Jack Pritchard brought up a scenario in which this could exactly be Pyongyang's intention, or at least a realistic option. Pritchard is concerned that the talks will fail and that Pyongyang will withdraw from the diplomatic process. If it then declares it has produced all the nuclear weapons it needs and does not intend to make more, China, South Korea, and Russia might accept this as a status quo, arguing the threat is minimal. This would dissolve the six-party process, and would leave the region a lot less secure.
Tom Tobback is the creator and editor of Pyongyang Square, a website dedicated to providing independent information on North Korea. He is based in Beijing.
(Copyright 2004 Asia Times Online Co, Ltd. All rights reserved. Please contact for information on our sales and syndication policies.)
Nordkorea: UNO ruft humanit?ren Notstand aus
Weltern?hrungs?programm hat keine Vorr?te mehr: "Wir kratzen Reste aus den Tonnen zusammen" - ?sterreich will helfen
Johnny Erling aus Peking
Das Weltern?hrungsprogramm im Netz
Nordkoreas Regierung steht zwei Wochen vor dem Beginn der Pekinger Sechs-L?nder- Verhandlungen zur Beilegung ihres Atomstreits mit den USA vor einer neuen humanit?ren Katastrophe an der heimischen Front. Das UN-Weltern?hrungsprogramm WFP (World Food Programme) rief am Montag auf einer Pressekonferenz in Peking den Notstand f?r die Versorgung des Landes aus. Die Organisation hat ihre Vorr?te an Nahrungsmitteln aufgebraucht.
Sie hatte bereits im Vorjahr vor so einer Krise gewarnt, nachdem die internationale Spendenbereitschaft auf den tiefsten Stand seit Beginn der Hungerwinter 1995 gesunken war. Das WFP muss f?r mindestens zwei Monate mehr als sechs Millionen hungernde Nordkoreaner, vor allem Alte, Frauen und Kinder, in ihrer Notlage alleine lassen.
"Totale Einstellung"
"Das ist keine Einschr?nkung der Versorgungshilfe mehr. Wir reden von der totalen Einstellung", sagte der UNO-Gesandte f?r Nordkorea, Masood Hyder. "Wir kratzen buchst?blich Reste aus den Tonnen zusammen." Hyder appellierte an alle Nationen, "so schnell wie m?glich weitere Hilfe zu leisten".
Seit Anfang Februar sind die Rationen auf 250 Gramm Nahrungsmittel pro Tag und Person zusammengeschmolzen. Sie k?nnen nur noch an 83.000 Menschen, die sich in allergr??ter Not befinden, ausgegeben werden, darunter an 75.000 schwangere Frauen und 8000 Babys und Kleinkinder in Waisenheimen.
Nordkoreaner erhalten ?ber das staatliche Verteilungssystem nur noch 300 Gramm Reis und Mais pro Person und Tag. Rund 40 Prozent ihrer Kinder sind laut Untersuchungen des WFP bereits chronisch unterern?hrt.
Emp?rung ?ber das Regime von Kim Jong-il, das sich durch den angedrohten Einsatz von Atomwaffen mit atomarer Erpressung am Leben erh?lt, die in vielen Gebieten nicht m?gliche ?berwachung der Verteilung von Lebensmitteln und die seit 1995 ununterbrochen notwendige humanit?re Hilfe f?r Nordkorea sind einige der Gr?nde f?r den internationalen Spendenr?ckgang.
Das WFP h?lt dennoch unbeirrt an seiner Aufgabe fest: "Wir k?nnen Kinder, Kranke und Alte nicht Opfer einer Lage werden lassen, die sie nicht verschuldet haben."
Ferrero-Waldner k?ndigt Hilfe an
?sterreich hat inzwischen Hilfe f?r die Hunger leidende Bev?lkerung in Nordkorea angek?ndigt. "Wir k?nnen dem Hunger in Nordkorea nicht tatenlos zusehen", erkl?rte Au?enministerin Benita Ferrero-Waldner (V) in einer Presseerkl?rung vom Montag. ?sterreich werde 1.000 Tonnen Nahrungsmittelhilfe f?r Nordkorea in Form von Baby- und Kindernahrung ?ber das Weltern?hrungsprogramm (WFP) abwickeln. (red/APA/DER STANDARD, Printausgabe, 10.2.2004)

North Korean Group Calls for Japan to Be Excluded From Talks
Feb. 10 (Bloomberg) -- A North Korean state agency called for Japan to be excluded from six-nation talks scheduled for the end of the month after Japan moved to impose economic sanctions on the communist nation.
The North Korea-Japan Friendship Association asked the government ``not to have any bilateral contact with Japan nor allow Japan to participate in the six-way talks'' after Japan's lower house passed a bill that would allow it to impose economic sanctions on other countries, the official Korea Central News Agency reported.
North Korea ``has explicitly stated more than once that it would consider any sanctions or blockade against it as a declaration of a war and take legitimate self-defense measures,'' the report cited the association as saying.
North Korea agreed to take part in the talks in Beijing, which will also include South Korea, the U.S., China and Russia, to try to resolve a 16-month impasse over its nuclear program.
Japan's Chief Cabinet Secretary Yasuo Fukuda said last month Japan would take ``appropriate'' steps in dealing with North Korea, including using the sanctions law.
To contact the reporter on this story:
Heejin Koo in Seoul at
To contact the editor of this story:
Paul Tighe in Sydney at

M. Perben pr?pare le terrain judiciaire de M. Jupp?
LE MONDE | 09.02.04 | 13h11 * MIS A JOUR LE 09.02.04 | 14h00
Le ministre de la justice, Dominique Perben, "d?ment formellement", dans un communiqu? publi? lundi en milieu de journ?e, les affirmations selon lesquelles une ?tude serait en cours ? la chancellerie sur le remboursement des sommes dues ? la Ville de Paris.
Dominique Perben a indiqu? au Monde, dimanche 8 f?vrier, en marge du congr?s de l'UMP, que la chancellerie analyse le jugement prononc? par le tribunal de Nanterre contre d'Alain Jupp? pour v?rifier si le remboursement des sommes dues ? la ville de Paris peut modifier la situation judiciaire du pr?sident de l'UMP. "Une ?tude est en cours", a affirm? le garde des sceaux, "pour voir quelles seraient les cons?quences judiciaires de ce remboursement". M. Perben a pr?cis? que l'arr?t de la cour d'appel de Versailles n'interviendra sans doute pas avant le d?but de l'ann?e prochaine.
La pol?mique sur les suites de cette affaire continue. M. Perben s'en est pris ? Roger-G?rard Schwartzenberg, d?put? (app. PS) du Val-de-Marne, l'accusant de "m?langer" justice et politique. Samedi 7 f?vrier, M. Schwartzenberg s'?tait adress? au ministre de la justice, lui demandant s'il comptait "ou non engager des poursuites devant les juridictions ordinaires contre les ministres qui ont enfreint l'article 434-25 du code p?nal" apr?s les propos tenus par certains d'entre eux au lendemain de la d?cision des juges de Nanterre. "Avant de faire des d?clarations, M. Schwartzenberg aurait d? relire la loi, car il aurait d?couvert tr?s clairement qu'aucune d?claration de ministre n'a jet? le discr?dit sur la justice", a r?pliqu? M. Perben.
Par ailleurs, le garde des sceaux a d?plor? "l'emballement incroyable" qu'a suscit? la mise en place de la mission d'enqu?te administrative, ? la demande du pr?sident de la R?publique. "Je trouve d?solante la contestation de la m?thode qui est la seule m?thode s?rieuse si on veut aller jusqu'au bout" de l'enqu?te, a indiqu? M. Perben.
Justifiant la mise ? l'?cart du Conseil sup?rieur de la magistrature (CSM) dans le d?clenchement de cette proc?dure exceptionnelle, M. Perben a rappell? que "le CSM ne pouvait pas" ?tre saisi de cette enqu?te car "il n'est pas comp?tent pour contr?ler les services techniques comme les t?l?communications ou l'interception des ?coutes".
Jacques Barrot, pr?sident du groupe UMP de l'Assembl?e nationale, a comment? le jugement de Nanterre, dimanche, sur Europe 1 en estimant que "ses attendus sont tr?s durement r?dig?s", qualifiant ?galement de "contestable" l'automaticit? des peines.
Yves Bordenave


M. Delors contre "le berlusconisme"
Interrog?, dimanche 8 f?vrier, par Radio J, sur la condamnation d'Alain Jupp?, Jacques Delors a critiqu? "le ch?ur des d?put?s UMP, -qui- ont des propos qui mettent en cause la justice et qui exercent une pression sur le tribunal d'appel". L'ancien pr?sident de la Commission europ?enne a souhait? que "la France ne fasse pas du berlusconisme sans le savoir", allusion au conflit ouvert entre le pr?sident du conseil italien et la justice.
La d?claration de M. Delors r?pond ?galement aux propos tenus, jeudi 5 f?vrier, par Silvio Berlusconi, en marge du congr?s organis? ? Bruxelles par le Parti populaire europ?en (PPE). Apr?s avoir adress? un "message de solidarit?" ? M. Jupp?, le pr?sident du conseil italien avait d?nonc? "une forme de communisme -consistant ?- ?liminer l'adversaire en faisant un usage politique de la justice".

Perben, avocat de luxe pour Alain Jupp??
Le garde des Sceaux a d?menti les informations parues dans ?Le Monde? selon lesquelles ses services ?tudieraient les b?n?fices d'un changement de d?fense d'Alain Jupp? en vue de son proc?s en appel * Un incident ?scandaleux? pour les syndicats de magistrats *
Par Lib?
lundi 09 f?vrier 2004 ( - 17:19)
Parole de ministre contre parole de journaliste. Selon ?Le Monde? dat? de mardi, le garde des Sceaux, Dominique Perben, aurait confi? ce week-end, en marge du congr?s de l'UMP, que la Chancellerie examinait quelles pourraient ?tre les cons?quences d'un remboursement des sommes dues ? la ville de Paris sur la situation judiciaire d'Alain Jupp?. ?Une ?tude est en cours pour voir quelles seraient les cons?quences judiciaires de ce remboursement?, aurait l?ch? le ministre de la Justice. Apr?s la publication lundi matin de cette information, Dominique Perben a d?menti cat?goriquement ces ?affirmations?.
Contact? par Reuters, le journaliste du ?Monde?, Yves Bordenave, a maintenu que le garde des Sceaux avait bien fait ces d?clarations en salle de presse du congr?s de l'UMP, lors d'un apart? avec plusieurs journalistes. ?Le Monde? a d'ailleurs indiqu? qu'il maintiendrait sa version des faits dans son ?dition dat?e de mercredi.
L'affaire des emplois fictifs ? la Mairie de Paris, qui a valu au patron de l'UMP une condamnation ? 18 mois de prison avec sursis et 10 ans d'in?ligibilit?, aurait caus?, selon l'actuel maire socialiste, Bertrand Delano?, un pr?judice de 1,2 million d'euros ? la ville. D?s l'annonce de la condamnation de Jupp?, Delano? avait souhait? que ?les sommes d?tourn?es du patrimoine municipal soient restitu?es ? la ville de Paris?.
Poursuivi ? la fois comme ancien secr?taire g?n?ral du RPR et adjoint aux Finances ? la mairie de Paris, Jupp?, qui a d?cid? de faire appel et de conserver ses fonctions et mandats, s'est vu reprocher d'avoir couvert la r?mun?ration par la Ville de sept personnes qui travaillaient en r?alit? pour son parti. S'il remboursait entre les deux proc?s, la cour d'appel de Versailles semblerait n?anmoins toujours tenue de le condamner, puisque le paiement serait une forme d'aveu.
R?agissant aux informations du ?Monde?, les Verts ont d?nonc? une ?grave confusion entre l'Etat? et un parti politique. Dans un communiqu?, Alain Riou, pr?sident du groupe ?cologiste au conseil de Paris, assure qu'en d?cidant la mise en place d'une ?tude sur un possible remboursement des sommes dues ? la municipalit?, Perben ?se livre ? une grave confusion, en mettant les services de l'Etat ? la disposition d'un justiciable, voire d'un parti politique?. ?Il ne s'agit pas d'emplois fictifs, mais d'emplois d?tourn?s?, ajoute-t-il.
Pour les magistrats, d?j? remont?s par ?l'affaire dans l'affaire?, qui a vu une mise ? l'?cart du Conseil sup?rieur de la magistrature (CSM) dans le d?clenchement de la mission d'enqu?te administrative charg?e de faire le point sur les pressions pr?sum?es dont les juges ont ?t? victimes, il s'agit d'un nouveau coup bas. L'Union syndicale des magistrats (USM, majoritaire et mod?r?e) a d?clar? lundi qu'il n'appartenait pas ? la Chancellerie ?de r?fl?chir ? la d?fense d'un pr?venu quel qu'il soit. Ce r?le appartient ? l'avocat de la d?fense?. Le Syndicat de la magistrature (SM, gauche et minoritaire) rench?rit: ?Si, effectivement, le garde des Sceaux a demand? ? ses services de diligenter une ?tude, c'est scandaleux?. Un ?nouvel incident? qui illustre, selon le syndicat, ?de mani?re plus g?n?rale la volont? du Garde des sceaux de s'ing?rer dans les affaires judiciaires et d'utiliser la justice ? des fins politiques?.
Les syndicats de magistrats craignent ?galement des man?uvres qui viseraient ? pr?parer un proc?s en appel plus favorable ? Alain Jupp? d'ici un an ? Versailles. Ils s'inqui?tent notamment de voir circuler le nom de Jean-Claude Marin, actuel directeur des affaires criminelles et proche collaborateur de Dominique Perben au minist?re, comme candidat au poste de procureur g?n?ral de la cour d'appel de Versailles en remplacement de Henri Desclaux, qui doit partir en retraite dans les prochains mois. Le poste est strat?gique puisque c'est le procureur g?n?ral qui sera charg? de fixer l'attitude de l'accusation lors des audiences ? venir.
? Lib?ration

Affaire Jupp? : pol?mique
autour de l'?tude de Perben
Selon le Monde, une ?tude est en cours ? la Chancellerie pour examiner les cons?quences judiciaires pour Alain Jupp? d'un remboursement des sommes dues ? la ville de Paris. Dominique Perben d?ment.
Dominique Perben (AP)
Alors que le quotidien Le Monde indique dans ses colonnes que le ministre de la Justice a lanc? une ?tude sur les cons?quences judiciaires de la condamnation d'Alain Jupp?, Dominique Perben d?ment formellment cette affrimation. Dominique Perben a d?clar? qu'une ?tude ?tait en cours ? la Chancellerie pour examiner les cons?quences judiciaires pour Alain Jupp? d'un remboursement des sommes dues ? la ville de Paris dans l'affaire des emplois fictifs du RPR, avance Le Monde dans son ?dition dat?e de mardi. Dominique Perben, "d?ment formellement" dans un communiqu? publi?e lundi les affirmations parues dans le journal.
Pour sa part, le Syndicat de la magistrature (SM, gauche et minoritaire) a jug? "scandaleux" l'?tude que m?nerait la Chancellerie. "Si, effectivement, le Garde des Sceaux a demand? ? ses services de diligenter une ?tude, c'est scandaleux", a d?clar? la pr?sidente du SM, A?da Chouk.
Interrog? sur la r?alit? de ces propos, la Chancellerie n'avait pas r?agi en d?but d'apr?s-midi.
"La Chancellerie n'a pas ? ?tre le conseiller juridique de personnes qui ont ?t? condamn?es en premi?re instance par un tribunal", a soulign? A?da Chouk.
"Ce nouvel incident illustre de mani?re plus g?n?rale la volont? du Garde des sceaux de s'ing?rer dans les affaires judiciaires et d'utiliser la justice ? des fins politiques", a conclu la responsable syndicale.
Dans un communiqu?, Alain Riou, pr?sident du groupe Vert au Conseil de Paris assure qu'avec ces propos sur les cons?quences du remboursement, "le Garde des Sceaux affirme une conviction : celle qu'Alain Jupp? est coupable et n'a aucune chance de ne pas ?tre condamn? en deuxi?me instance".
"Au moins, contrairement ? ses coll?gues, il n'attaque pas les juges", ajoute l'?lu parisien. "Mais il se livre ? une grave confusion, en mettant les services de l'Etat ? la disposition d'un justiciable, voire m?me d'un parti politique. Il ne s'agit pas d'emplois fictifs, mais d'emplois d?tourn?s", ajoute Alain Riou.
Le maire PS de Paris Bertrand Delano? avait ?voqu? plusieurs millions d'euros de pr?judice, mais il s'agit, pr?cise-t-on ? la mairie, de millions de francs, soit, pr?cis?ment, 1,2 million d'euros.

? Le Nouvel Observateur 1999/2000

Perben et l'affaire Jupp?
Le ministre de la Justice "d?ment formellement" des d?clarations au "Monde"
"Une ?tude est en cours" pour "voir quelles seraient les cons?quences judiciaires" pour Alain Jupp? d'un remboursement des sommes dues ? la ville de Paris d?tourn?es pour r?mun?rer des permanents du RPR, aurait d?clar? au journal Dominique Perben.
"Le Monde" date de mardi affirme avoir interrog? le ministre ce week-end en marge du congr?s de l'UMP
?Le communiqu? du garde des Sceaux
"Dominique Perben, garde des Sceaux, ministre de la Justice d?ment formellement les affirmations selon lesquelles une ?tude serait en cours ? la Chancellerie concernant un remboursement des sommes dans le cadre de l'affaire ayant abouti ? la condamnation r?cente de Monsieur Alain Jupp?", a affirm? le ministre de la Justice dans un communiqu?.
Le pr?sident de l'UMP et d?put?-maire de Bordeaux, Alain Jupp?, a ?t? condamn? ? 18 mois de prison avec sursis et 10 ans d'in?ligibilit? dans le proc?s des emplois fictifs de la mairie de Paris au profit du RPR. Il a fait appel, ce qui lui permet de garder ses mandats jusqu'? un autre proc?s en appel.
Le maire de Paris Bertrand Delano? estime ? "plusieurs millions d'euros" le pr?judice subi par la ville dans l'affaire des emplois fictifs du RPR.
Les d?clarations de Dominique Perben "sont surprenantes", a d?clar? l'Union syndicale des magistrats, principal syndicat de magistrats. "Ce n'est pas le r?le de la direction des affaires criminelles et des gr?ces du minist?re de la Justice de r?fl?chir ? la d?fense d'un pr?venu quel qu'il soit. Ce r?le appartient ? l'avocat de la d?fense", ajoute l'USM.
"D'un point de vue juridique, il revient aux seuls magistrats d'appel d'appr?cier les efforts effectu?s par la personne condamn?e en premi?re instance pour indemniser la victime", rappelle le syndicat.
Au Syndicat de la magistrature (gauche), les propos du ministre ont ?galement suscit? l'?tonnement. "Il ne me semble pas normal que la chancellerie ?tudie la situation de justiciables. Le garde des Sceaux peut donner des instructions aux parquets mais pas des conseils aux justiciables. Cela souligne la dangerosit? d'un pouvoir d'action minist?riel sur la justice", a d?clar? ? A?da Chouk, pr?sidente du Syndicat de la magistrature.

A Saudi Home
Al Qaeda in the kingdom.
By Evan Kohlmann
These days, there appears to be serious internal controversy in Saudi Arabia over the degree to which al Qaeda has managed to infiltrate the kingdom. In mid-January, an unnamed Saudi official admitted to the Associated Press that his country had discovered "a number" of al Qaeda terrorist training camps hidden in the desert of the Arabian Peninsula. This assertion was quickly downplayed by Saudi Interior Minister Prince Nayif, who countered that "there are no training or terror camps in the kingdom, not yesterday, not today... He who says the kingdom harbors terrorism should reconsider his words." Prince Nayif's denial is in inexplicable contrast to his own previous admission last July that at least a "small number" of al Qaeda militants active in the region had indeed been recently "trained on farms and the like" on Saudi soil. In fact, the interior minister has contradicted not only himself, but also compelling visual evidence distributed on the Internet confirming the presence of al Qaeda safehouses and training camps inside Saudi Arabia.
Until approximately November 2001, the vast majority of hardcore al Qaeda recruits were schooled in the arts of sabotage and terrorism at Osama bin Laden's main operational bases in southern and eastern Afghanistan -- including such notorious camps as Al-Sadda, Al-Farooq, Khalden, Jihad Wal, and Derunta. Video recordings of training at the Afghan camps depict an education in everything from basic physical fitness to the operation of advanced shoulder-fired surface-to-air missiles (such as the one that narrowly missed an Israeli civilian airliner in Kenya over a year ago). Ahmed Ressam, an al Qaeda-trained terrorist who sought to blow up Los Angeles International Airport on the eve of the Millennium, testified in federal court how he was taught advanced urban-warfare skills at these centers, varying from "how to blow up the infrastructure of a country... Electric plants, gas plants, airports, railroads, large corporations" to "how to mix poisons with other substances... designed to be used against intelligence officers and other VIPs."
Within only weeks of the 9/11 tragedy, U.S. military forces and their Northern Alliance partners were able to put the notorious Afghan jihad camps permanently out of operation. As the hardened mountain fortresses of bin Laden and his acolytes fell to coalition troops, the membership of al Qaeda fled across the Hindu Kush into Pakistan, seeking a safe haven among conservative local tribesmen and sympathetic Taliban-style fundamentalist groups located just across the border. Some of bin Laden's scattered cadres decided to remain in the relative safety of Pakistan -- yet others, particularly those from Saudi Arabia, Kuwait, and other regions of the Arabian Peninsula, were able to quietly return to their homelands.
Rather than assimilating back into Gulf society, these arriving extremists were quickly reorganized into new terrorist cells by a highly intricate and developed network of al Qaeda henchmen headquartered in the Arabian Peninsula. Before his death this past summer, Shaykh Yousef Al-Ayyiri (a.k.a. "the Cutting Edge") sat near the top of this network. Al-Ayyiri was a well-known and well-liked figure in al Qaeda who had reportedly first joined the anti-Soviet jihad in Afghanistan at the youthful age of 18. Impressed by his enthusiasm and skills as a combatant, al Qaeda gave Al-Ayyiri a position of high importance within the organization as the commander of a training camp in Afghanistan, and also as a personal bodyguard to Osama bin Laden. Knowledgeable sources say that Al-Ayyiri was handpicked in 1993 to travel to Somalia with al Qaeda's most senior military commander -- Abu Hafs Al-Masri -- in order to help instruct radical Islamic militias on how to shoot down U.S. helicopters with rocket-propelled grenades.
Al-Ayyiri returned to his home in Saudi Arabia, only to be allegedly imprisoned by Saudi authorities in connection with the 1995 bombing of a joint Saudi-U.S. military office in Riyadh. The bombing (which left five U.S. citizens dead) was later blamed on fanatic supporters of Osama bin Laden. Nevertheless, despite his close, personal connections to bin Laden, Al-Ayyiri was eventually freed by Saudi authorities. A harsh stint in prison apparently did nothing to temper Al-Ayyiri's gusto for violence and bloodshed. He remained in the Kingdom, raising money for the emerging Taliban movement in Afghanistan and offering strategic advice to various al Qaeda-linked military leaders around the world.
According to the reputed al Qaeda publication Sawt Al-Jihad (Voice of Jihad), Al-Ayyiri "was so joyous he nearly floated on air" when he learned of the "happy events" of September 11, 2001. As a firm proponent of the international jihad against America, he refocused his efforts primarily on two main causes: using the Internet as a vehicle to recruit and propagandize on behalf of al Qaeda, and setting up covert training camps for terror recruits inside Saudi Arabia, similar to the remote base that Ayyiri had once presided over in Afghanistan.
An authentic al Qaeda video released on the Internet in early December featured scenes of black-clad, hooded men carrying out indoor urban-warfare training exercises at a camp inside Saudi Arabia known as Al-Istirahat Al-Amana (the Guesthouse of Goodness). The footage was allegedly filmed during mid-2003, and at least one of the featured trainees was later killed during a confrontation with Saudi security forces. No matter how one chooses to characterize the Al-Istirahat facility, there can be no doubt as to the intentions of those who received terrorist "refresher" courses there. Following their recorded training exercises, the men gathered closely together, brandishing their automatic weapons and singing jihadist tunes. One of the men -- Abdallah Al-Utaibi -- goes on in the video to read a martyrdom will while sitting in the Al-Istirahat camp, begging God to "destroy" the United States.
The presence of these camps -- and Yousef Al-Ayyiri's key role in creating them -- was confirmed in an electronic communiqu? issued in late December by a group calling itself "al Qaeda's Military Committee in the Arabian Peninsula." The "Cutting Edge" manual was given its name "for the great efforts of Sheikh Yousef Al-Ayyiri... One of his last blessed deeds was to establish several training camps in [Saudi Arabia] which several of the hero mujahadeen have come from." The communiqu? contained articles from, among others, al Qaeda's reputed senior military commander Saif Al-Adel, lecturing to faithful supporters that "these are times of jihad and preparation for jihad." Finally, the manual suggests that those who are unable "travel to other lands" in order to "join the great camps" can instead covertly mimic their unique and demanding training regimen at home. The loyal soldiers of the late Al-Ayyiri continue to eagerly spread his message and teachings via the Internet, promising terrible revenge against the "crusaders" and the Saudi elite.
Undoubtedly, al Qaeda's assembly-line production of terrorist recruits has found a new headquarters in the heart of Arabia. Inside the Saudi capital, terrorist cells are regularly discovered plotting the assassinations of royal officials and the suicide bombings of foreign embassies and compounds. Others have targeted Western military and civilian aircraft in the Kingdom with mobile, surface-to-air missile launchers. Even the holiest city in Islam -- Mecca -- has come into the crosshairs of these merciless fanatics. Thus, it is highly discomforting that senior Saudi officials continue to deny the very existence of underground training camps like "The Guesthouse of Goodness." Al Qaeda has proven time and time again that it intends to overthrow the Saudi kingdom by means of violence and install a fundamentalist Islamic government in the Arabian Peninsula. The regime in Riyadh can pretend to ignore this potent threat only to our own shared peril.
-- Evan Kohlmann is a senior terrorism consultant for the Washington, D.C.-based Investigative Project and author of the upcoming book, Al Qaida's Jihad in Europe: the Afghan-Bosnian Network, to be released by Berg Publishers in June 2004.
Report: Saudis, Yemen May Erect a Fence
Feb 9, 3:00 PM (ET)
CAIRO, Egypt (AP) - In a bid to stop arms smuggling and terror attacks, Saudi and Yemeni officials will meet soon to review plans to build a fence along their frontier, a pan-Arab newspaper reported Monday.
Lt. Gen. Talal Anqawi, head of the Saudi border police, told the London-based al-Sharq al-Awsat that the concrete fence would be effective in preventing smuggling and infiltration, especially by car.
The newspaper said the meeting was being held to avoid an escalation of Yemeni objections to the fence.
Anqawi refused to call it a barrier, and said the fence was well within Saudi territory and should not be viewed as encroaching on common border areas.
The paper added that there was a similar fence on some parts of the Saudi-Kuwaiti border.
Both Saudi Arabia and Yemen are U.S. allies in the war against terror and have been hit by terrorist attacks at home.
After suicide bombings in Riyadh, the Saudi capital, in May and November, the Saudis stepped up security along their southern border with Yemen, a traditional route for drug and arms smuggling. In June, both states signed an agreement to upgrade border surveillance.
Saudi officials believe most of the weapons used in militant operations in Saudi Arabia - including the May suicide attacks - are smuggled in from Yemen, an impoverished country at the southern tip of the Arabian peninsula that has long been awash in small arms - an estimated 60 million, or three for each of its 20 million people, authorities say.
In December, Saudi authorities announced they had arrested 4,047 people and seized large quantities of weapons and drugs in the south along the border with Yemen.
Israeli Court Pledges Quick Ruling on Wall
Feb 9, 6:39 PM (ET)
(AP) Israeli border police stand guard as workers put concrete pieces into place during the construction...
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JERUSALEM (AP) - Israel's Supreme Court promised a speedy ruling on a petition to halt construction of Israel's separation barrier in the West Bank, a landmark case seen as a dress rehearsal for a world court hearing over the contentious project.
The court heard arguments in the case Monday, a day after the government said it would change the route to minimize hardship for Palestinians and gain Washington's support against the legal challenges.
The rights group behind the petition said the partially built network of walls, razor wire and trenches infringes on human rights and violates international law. The Center for the Defense of the Individual said that if Israel wants a barrier, it should be built on territory it held before seizing the West Bank in the 1967 Mideast war.
State attorney Michael Blass told the court the 440-mile barrier is necessary to keep out Palestinian suicide bombers, who have killed hundreds in three years of violence.
(AP) Palestinians carry the body of Shadi Jaradat, an Al Aqsa Martyrs' Brigades member, during his...
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"It is not we who unleashed the demon of terror," Blass said.
The planned route cuts deep into the West Bank in several places and encircles Palestinian towns and villages, cutting off tens of thousands of people. Palestinians say it is a land grab aimed at preventing them from creating a state.
Chief Justice Aharon Barak said the three-judge panel would rule "as soon as possible."
Barak didn't say whether the decision would come before the International Court of Justice in the Netherlands takes up the question of the barrier's legality. Those hearings are set to begin Feb. 23 at The Hague.
Any Israeli court decision could affect Israel's case before the world court, which is to issue an advisory ruling at the request of the U.N. General Assembly.
Israel challenges the world court's right to rule on the barrier, arguing that the issue is being manipulated by its opponents for political ends.
"We don't think the Hague court needs to debate this," Blass told the court. "We think the issue should be resolved between the sides."
The barrier plan is one of several unilateral steps being considered by Israeli Prime Minister Ariel Sharon. On Monday, senior Palestinian official Yasser Abed Rabbo said the Palestinians are considering a unilateral step of their own - declaration of an independent state that would include the West Bank, Gaza and east Jerusalem.
Several other groups also filed objections about aspects of the barrier project. Human rights lawyer Avigdor Feldman, representing one of the petitioners, said the world court case should be an incentive for the Israeli court to make an exhaustive examination of the facts.
"The Hague hearing is in the background," he told Barak.
Other lawyers said that a full-scale Israeli judicial review, generating responses by expert witnesses and written legal opinions, could provide useful ammunition to Israeli advocates at the Hague, while demonstrating the Israeli court's own competence.
Joining the case on the government side, a pro-barrier group called "Fence for Life" said it would save not only Israelis from attacks; but it would also spare Palestinians the almost automatic Israeli military retaliation.
"If we have the fence as fast as possible, casualties on both sides will cease," group chairman Ilan Tzion told reporters outside the courtroom.
On Sunday, Sharon adviser Zalman Shoval said Israel will change the route the barrier to cause less hardship for the Palestinians and foster U.S. support. Washington agrees with Israel that the international court is not the proper venue for the case but objects to the route of the barrier because of the disruption it causes Palestinians.
Israel wants to "make things as easy as possible for Palestinians who need to get to their fields (and) to have fewer checkpoints," Shoval said.
In another development, Palestinian officials said Palestinian Prime Minister Ahmed Qureia and Sharon would hold their first meeting on Feb. 21 or 22. Aides to the two premiers have met on and off for weeks to set up the summit, which is seen as a key for restarting stalled peace talks.
Qureia was in Dublin, Ireland, where he met with Prime Minister Bertie Ahern on Monday and said Israel must not build on "one single inch" of the West Bank. Ireland holds the rotating presidency of the 15-nation European Union, a major financial sponsor of the Palestinian Authority.
Meanwhile, a new poll found that Palestinian support for violence and suicide bombings against Israel has dropped sharply in more than three years of fighting.
Only 35 percent of respondents support continuing the violence, down from 43 percent in November and 73 percent in November 2000. The poll by the Palestinian Center for Public Opinion surveyed 500 Palestinian adults and had a margin of error of 4 percentage points.
But violence continued Monday, with two Palestinians killed in Gaza and another killed in the West Bank, Palestinians said.
One of the Palestinians killed in Gaza was identified as a member of Hamas, but Israel's army said it had no part in the man's death. The second was a 17-year-old youth, the Palestinians said. The military had no comment.
In the West Bank, a member of the Al-Aqsa Martyrs' Brigades was killed in a shootout with Israeli soldiers near the town of Jenin. The military said he was shooting at construction workers near an Israeli settlement, wounding a soldier, and was hit by soldiers' return fire.
Kuwait seeks probe of Halliburton fuel contract
KUWAIT CITY (APOnline) -- Kuwait's energy minister has asked the nation's top prosecutor to investigate allegations of profiteering in an Iraq fuel contract between the state-owned Kuwait Petroleum Corp. and the Kuwaiti supplier of a Halliburton (HAL) subsidiary.
"Press reports and talk on the street, some of which have cast suspicion on the honesty and integrity of others, have pushed me to refer this contract to the prosecutor-general for investigation," the minister, Sheik Ahmed Fahd Al Ahmed Al Sabah, told the official Kuwait News Agency.
He said the measure would give the judiciary the chance to "have the last word in the matter" because Kuwait wants to deal with the allegations "with full transparency" and put an end to rumors.
U.S. Department of Defense auditors have found that Kellogg Brown & Root, a Halliburton subsidiary, may have overcharged by $61 million for deliveries of gasoline from Kuwait to Iraq from May through September. Their investigation is in progress.
KBR's Kuwaiti supplier, Altanmia Marketing Co., was found to have charged more than twice what suppliers in Turkey did.
Both Halliburton, Vice President Dick Cheney's former company, and the Army Corp of Engineers, which oversaw the fuel contract, said the higher price was justified by the danger faced by fuel convoys in Iraq and the need to head off Iraqi anger over gasoline shortages.
Kuwait, a major U.S. ally in the Gulf, was the main staging ground for the war that ousted former Iraqi President Saddam Hussein in April.
Houston-based Halliburton has complained repeatedly that criticism of its work in Iraq is politically motivated, in part because of its past ties with the vice president, who was the company's chairman from 1995 to 2000.
Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Nigeria to Probe Halliburton Allegations
Feb 6, 5:14 PM (ET)
(AP) U.S. Vice President Dick Cheney during a speech to American troops at Aviano Air Base in Italy...
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ABUJA, Nigeria (AP) - Nigeria ordered an investigation Friday into allegations that a Halliburton Co. subsidiary paid $180 million in bribes to land a natural gas project contract in this West African nation. Vice President Dick Cheney was head of Halliburton at the time.
The allegations already are under scrutiny in the United States and France. A French magistrate has been investigating the payments for months. Probes by the U.S. Justice Department and U.S. Securities and Exchange Commission were disclosed this week.
President Olusegun Obasanjo has ordered a "high-level investigation" into the allegations, presidential spokeswoman Remi Oyo said in Abuja, the capital.
Oyo said the investigation is being led by the Economic and Financial Crimes Commission, a body Obasanjo set up to fight rampant breaches of financial law.
The $4 billion Nigerian Liquefied Natural Gas Plant was built in the 1990s by a consortium that included Kellogg, Brown & Root, a unit of Houston-based Halliburton.
Cathy Gist, a Halliburton spokeswoman, said the Nigerian government had not notified the company of the probe and Halliburton didn't have reason to assume any of its employees or those employed by the joint venture had violated the Foreign Corrupt Practices Act. The act bars U.S. businesses and individuals from bribing foreign officials.
Gist said the company would cooperate with the U.S. officials' probe.
Justice Department officials disclosed Wednesday that the department was reviewing documents voluntarily provided by Halliburton to determine whether to launch a full investigation.
Halliburton, already under fire for its alleged overcharges in contracts related to the war in Iraq, revealed the Justice Department request in a Jan. 21 filing with the Securities and Exchange Commission.
"Management made the decision to include these statements because of the politically charged environment in which we now operate," Gist said. "We are trying to keep the investment community informed of the accurate facts about the company's business."
According to Halliburton's filing, the illegal payment allegations involve a joint venture of which KBR was a 25 percent owner. The other partners were Technip SA of France, ENI SpA of Italy and Japan Gasoline Corp.
The filing says the Justice Department and Securities and Exchange Commission are reviewing the allegations. The payments for the gas plant contract were allegedly made to Nigerian officials.
The French magistrate looking into the accusations, Renaud Van Ruymbeke, has reportedly said in a memo that embezzlement charges could be filed against Cheney in Paris.
Cheney was Halliburton's chairman for five of the seven years in which the secret payments were allegedly made.
Cheney spokesman Kevin Kellems said Thursday that the vice president's office had no information about the matter. "We have not been contacted about it by anyone," Kellems said.
Nigeria is regularly rated by Berlin-based Transparency International as one of the world's two most corrupt nations; the other is Bangladesh. Payoffs are a frequent part of doing business here, from landing lucrative deals to having phones installed or electricity restored.
On the Net:
Libya Hands Over Chemical Weapons Summary
Feb 5, 4:11 PM (ET)
THE HAGUE, Netherlands (AP) - Libyan officials handed over an initial summary of the country's chemicals weapons stockpiles and programs to a team of international inspectors Thursday, the world's chemical weapons watchdog said.
The Organization for the Prohibition of Chemical Weapons gave no details on what Libya reported in a round of initial meetings Thursday, the day Libya officially joined the treaty banning the weapons.
After months of secret talks with the United States and Britain, Libyan leader Moammar Gadhafi announced in December his country would give up its weapons of mass destruction programs, including chemical weapons.
The OPCW oversees the 1993 Chemical Weapons Convention, which prohibits the production, storage and use of chemical weapons.
Pakistan May Prosecute Scientist If New Charges Emerge, AP Says
Feb. 10 (Bloomberg) -- Pakistan's government said it may prosecute its top nuclear scientist in the event he is found to have failed to provide full details about his involvement in selling atomic secrets, the Associated Press reported.
President Pervez Musharraf pardoned Abdul Qadeer Khan last week after he confessed to selling nuclear secrets to Iran, Libya and North Korea. The pardon was ``conditional'' on his admissions so far and the investigation into Khan and his associates continues, Foreign Ministry spokesman Masood Khan said at a news conference yesterday in Islamabad.
``The pardon is specific to the charges made so far, and about which Dr. A.Q. Khan has made a confessional statement,'' AP cited Masood Khan as saying. ``This is not a blanket pardon.''
Pakistani investigators questioned about a dozen scientists in the past two months after the International Atomic Energy Agency provided information about technology given to other nations. Khan acknowledged he transferred the technology and sought forgiveness from Musharraf, who maintained the government and the army weren't involved in the transfer at any level. Musharraf rejected international inspections of Pakistan's nuclear program while agreeing to share information from the investigation with the IAEA.
(Associated Press 2-10)
To contact the reporter on this story:
Nick Wells in Sydney
To contact the editor of this story:
Paul Tighe at
Last Updated: February 9, 2004 18:12 EST

AP Enterprise: Rogue Hunt Goes Worldwide
Feb 5, 3:15 PM (ET)
(AP) Abdul Qadeer Khan, founder of Pakistan's nuclear program, is seen in Islamabad in this July 2002...
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VIENNA, Austria (AP) - The hunt for middlemen who worked with the father of Pakistan's nuclear program to supply rogue regimes with weapons technology has widened to Japan and Africa, diplomats said Thursday.
Suspects in Germany and two other European countries are also being investigated in the growing probe of the clandestine black market apparently headed by Abdul Qadeer Khan of Pakistan, they said.
Also, Malaysia announced Thursday it would investigate a company controlled by the prime minister's son for its alleged role in supplying components to Libya's nuclear program. The company also has been linked to the international nuclear black market tied to Pakistan.
The chief U.N. nuclear inspector said Thursday that Khan was an "important part" of the clandestine supply chain, but he said long and painstaking investigations into who sold what and to whom lay ahead.
(AP) Mohamed ElBaradei, director general of the International Atomic Energy Agency arrives to an...
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"Dr. Khan was not working alone," said Mohamed ElBaradei, director general of the International Atomic Energy Agency. "There were items that were manufactured in other countries, items that were reassembled in different countries.
"Dr. Khan was the tip of an iceberg for us, but we still have a lot of work to do."
ElBaradei said middlemen in five countries supplied nuclear technology and expertise to Iran - which denies running a nuclear weapons program - and to Libya, which has owned up to having weapons of mass destruction or programs to make them. Pakistani officials have said Khan's network had supplied North Korea, too, but ElBaradei said he couldn't confirm that.
The five countries include Germany and Japan as well as two countries in Europe and one in Africa that the diplomats would not name.
In Washington, CIA Director George Tenet confirmed that Khan was at the center of the nuclear black market. He said U.S. and British intelligence had been tracking its movements for years.
"His network was shaving years off the nuclear weapons development timelines of several states, including Libya," Tenet said in a speech, adding that now "Khan and his network have been dealt a crushing blow."
Pakistan - and Khan - became the focus of international investigation on the basis of information Libya and Iran gave the IAEA about where they covertly bought nuclear technology that can be used to make weapons.
In Islamabad, President Pervez Musharraf said the IAEA was welcome to come and discuss the proliferation issue. "We are open and we will tell them everything," Musharraf said.
Still, Musharraf said Pakistan wouldn't submit to any U.N. supervision of its weapons program, and that no documents would be handed over to the IAEA. He also ruled out an independent investigation of the military's role in spreading nuclear technology.
Pakistan, which did not sign the Nuclear Nonproliferation Treaty, is not obliged to submit its nuclear weapons activity to outside scrutiny.
Musharraf also pardoned Khan, heading off any trial that could have uncovered revelations about government and military involvement.
In the nuclear procurement chain headed by Khan, hundreds of millions of dollars are thought to have changed hands over the past 15 years.
Among items bought by Libya were engineer's drawings of a nuclear weapon, now under IAEA seal in the United States.
One of the diplomats said that drawing appeared to be of Chinese design but cautioned against assuming it came directly from China.
"There are no fingerprints on the drawings which lead you to any specific country," he said.
China is widely assumed to have been Pakistan's key supplier of much of the clandestine nuclear technology that Khan used to publicly establish Pakistan as a nuclear power in 1998.
The revelations that nuclear know-how, and turnkey level equipment needed to enrich uranium to weapons grade was traded over the past two decades have escalated fears of similar clandestine programs elsewhere.
ElBaradei said he was not aware of covert weapons development in countries other than Libya, Iran and North Korea. But one diplomat said the success of the network - as measured by the nuclear weapons blueprint and high-tech enrichment equipment sold to Libya - were cause for alarm.
"Libya for the most part tried to buy its way into the nuclear club," he said. "It was on its way," to getting everything, he added.
In Malaysia, the company under investigation said it didn't know that some centrifuge components it made were headed for Libya.
The company, Scomi Precision Engineering, or SCOPE, accepted a contract from a Dubai-based company after negotiating with a middleman, identified as a Sri Lankan, B.S.A. Tahir, police said.
SCOPE's parent company, the Scomi group, confirmed it made "14 semifinished components" for Gulf Technical Industries and shipped them in four consignments between December 2002 and August 2003, under a deal negotiated by Tahir and worth $3.4 million.
U.S. and British intelligence said the deal between SCOPE and Tahir involved components that could be used for uranium enrichment.
Kamaluddin Abdullah, 35, the only son of Malaysian Prime Minister Abdullah Ahmad Badawi, is Scomi's largest shareholder, although he has no management role. He could not be reached for comment.

"Did I expect George Bush to fuck it up as badly as he did?
Senator John Kerry attackiert Au?enpolitik des Pr?sidenten
Berlin - Dass US-Senator John Kerry bei seiner Kandidatur als Pr?sidentschaftsbewerber zun?chst Anlaufschwierigkeiten hatte, mag nicht zuletzt an seiner widerspr?chlichen Haltung zum Irak-Krieg gelegen haben: W?hrend der Demokrat im Oktober 2002 noch f?r die Kongressentschlie?ung stimmte, die der Regierung von Pr?sident George W. Bush gr?nes Licht f?r den Feldzug gab, ?bte er seither immer wieder massive Kritik an der Irak-Politik Washingtons.
Er habe damals geglaubt, die Entscheidung zum Krieg sei das Beste f?r sein Land, verteidigte Kerry sein Votum in einem Interview mit der US-Zeitschrift "Rolling Stone" im Dezember. Und dann wurde er drastisch: "Konnte ich damit rechnen, dass George Bush so eine Schei?e bauen w?rde, wie er es dann tat? Ich glaube, niemand hat das getan", sagte er in dem Gespr?ch. ("Did I expect George Bush to fuck it up as badly as he did? I don't think anybody did.") Das Wei?e Haus zeigte sich ?ber Kerrys ?u?erung schockiert und deutete an, dass daf?r eine Entschuldigung f?llig sei.
Diese blieb der Senator allerdings schuldig - vielmehr legte er noch einmal nach: Die Bush-Regierung betreibe "die r?cksichtsloseste, arroganteste, ungeschickteste und ideologischste Au?enpolitik in der modernen Geschichte", sagte er am Abend seines ersten Wahltriumphs im US-Bundesstaat Iowa. Bei anderen Gelegenheiten betonte Kerry mehrfach, Bush h?tte sich vor dem Krieg um eine breitere internationale Unterst?tzung bem?hen sollen. Er habe Bush gewarnt, dass sich nur mit einer breiten Koalition "der Frieden gewinnen" lasse. (APA)
Palestinian Probe of U.S. Deaths Faulted
Feb 9, 5:46 PM (ET)
WASHINGTON (AP) - The State Department dismissed as inadequate Monday a Palestinian military inquiry into the deaths of three U.S. security officials killed in a roadside explosion last October in Gaza.
A department spokeswoman suggested the inquiry would not be the serious investigation needed to find and punish those responsible for the deaths.
Last Saturday, a Palestinian military court charged four suspects with planting explosives along a main road in Gaza. A prosecutor said the defendants targeted Israeli tanks, but one of their bombs may also have ripped apart a U.S. diplomatic vehicle Oct. 15 and killed three American security guards.
Rhonda Shore, spokeswoman for the State Department's Department of Near East Affairs, said the Palestinian proceedings would not meet the standards of justice sought by the United States.
Prosecutor Jamal Shamiyye said the four defendants admitted planting explosives on the main road in Gaza where the U.S. convoy was bombed, but they were targeting Israeli tanks.
That seemed to imply a defense contention that the Americans were not targeted.
However, Palestinian and U.S. investigators have found evidence that indicated the bomb was detonated by someone who watched from a hiding place as the clearly marked convoy passed.
U.S. officials have warned that U.S. aid programs to Palestinians could be reduced or canceled if there was no progress in the investigation.
FBI: al-Qaida Suspect Fought for Taliban
Feb 9, 11:02 PM (ET)
MINNEAPOLIS (AP) - A man accused of providing support to al-Qaida trained in martial arts and with weapons, taught English to al-Qaida members and joined the Taliban front lines, according to an FBI affidavit.
Terror suspect Mohammed Warsame, 30, twice saw combat with front line units of the Taliban while in Afghanistan and once sat next to Osama bin Laden at a meal, said the affidavit, which investigators said was based on interviews with Warsame.
"The defendant stated that bin Laden was very inspirational," according to the affidavit.
Prosecutors argued Monday that Warsame, a Somali with Canadian citizenship, is a flight risk and should remain in jail while his court case proceeds. U.S. Magistrate Judge Franklin Noel ordered him without bail pending trial.
Warsame pleaded innocent Monday to a single charge of providing support to a terrorist organization, but otherwise did not speak.
Investigators say he has acknowledged traveling to Pakistan and Afghanistan in 2000 and 2001. In early 2001, they say, Warsame asked al-Qaida for money to move his family to Afghanistan.
According to the affidavit, an al-Qaida leader instead paid for Warsame's airplane ticket back to North America, and gave him $1,700 in travel money. Warsame admitted he later wired money to people he had met in the training camps, investigators said.
Dan Scott, Warsame's public defender, argued that his client should be freed because he has strong ties to Minnesota through his wife and 5-year-old daughter and was not a risk to leave the country. Scott also rejected the idea that Warsame is an active al-Qaida member.
"At no point has he shown himself to be persistently active with a terrorist organization," Scott said.
Warsame has been living in Minnesota since 2002.

Whistleblower Slams EPA Sludge Data
Feb 4, 7:57 PM (ET)
WASHINGTON (AP) - A former government scientist accused the Environmental Protection Agency on Wednesday of knowingly using unreliable data when it denied a petition to halt the use of sewage sludge for fertilizer.
The microbiologist, David Lewis, testified at a House subcommittee hearing that the EPA used data about sludge quality at two Georgia dairy farms that had already been rejected by Georgia state officials as "completely unreliable, possibly even fraudulent."
He asked the House Resources Committee's subcommittee on energy and mineral resources to call on the EPA for an internal investigation of the moratorium and other matters.
Lewis, a former EPA employee who says he was fired in May after raising concerns about sludge standards, also said the panel should press the EPA for additional whistleblower protections.
"This whole process ... is nothing more than a scam," Lewis said in written testimony.
House Resources Committee spokeswoman Nicol Andrews said later that the committee's chairman, Rep. Richard Pombo, R-Calif., was open to Lewis' suggestions.
The EPA in December denied a petition from 73 labor, environment and farm groups for an immediate moratorium on land-based uses for sewage sludge. Such a moratorium would affect more than 3 million tons of sludge used each year as fertilizer.
In its decision, the EPA cited data showing levels of heavy metals in sludge at the dairy farms were within allowed limits.
In fact, Lewis said, studies by Georgia state agencies found the sludge was so corrosive that it dissolved fences and emitted toxic fumes that could sicken cows. Lewis said the faulty data was produced by local officials in Augusta, Ga., several years ago and knowingly used by the EPA in December, in spite of an audit by Georgia officials that found it unreliable.
"Mr. Lewis is entitled to his opinion. We stand by our December 2003 decision," said EPA spokeswoman Cynthia Bergman, noting the agency is in the process of revising its approach to sludge.
Lewis' departure from the EPA came after he worked 32 years there. It was protested by Republican Sens. Charles Grassley of Iowa and James Inhofe of Oklahoma. But the EPA said then that Lewis had signed an agreement specifying he was to step down.
Lewis is now an adjunct professor at the University of Georgia. His testimony came at a hearing on peer-review and "sound science" standards for writing federal regulations.

El Jefe del Gobierno de la Ciudad de M?xico en Apuros
?No se r?a! Lleg? el "ch?fergate"
El chofer del alcalde del Distrito Federal gana unos 6 mil d?lares mensuales. El funcionario defiende a su empleado y dice que trabaja mucho. Argumentan que el empleado es, en realidad, su jefe de log?stica.
Roberto Cienfuegos
Tiempos del Mundo
Hace s?lo cuatro meses se declar? "pol?ticamente indestructible" y aunque la frase son? demasiado petulante a o?dos de muchos, todas las encuestas han se?alado al jefe del gobierno de la Ciudad de M?xico, Andr?s Manuel L?pez Obrador, como el presidenciable favorito para suceder a Vicente Fox en el 2006.
Pero eso podr?a entrar en un camino de curvas peligrosas gracias al "ch?fergate".
La dicha de estar en el candelero pol?tico mexicano le dur? poco a L?pez Obrador. La realidad, siempre m?s terca e implacable, acaba de asestar un duro golpe a este gobernante hasta ahora identificado con las causas populares y con el ejercicio honesto y sencillo del poder.
Con una imagen de pol?tico modesto, que habita un departamento de clase media al sur de la capital, L?pez Obrador viaja en un autom?vil viejo y austero. El alcalde comienza a trabajar a las cinco de la ma?ana, como la mayor parte de los capitalinos. L?pez Obrador se fragu? su propia popularidad hasta el punto de convertirse en el precandidato presidencial n?mero uno para las elecciones del 2006.
Pero "el ch?fergate", un esc?ndalo que reci?n estall? y que involucra a su chofer personal como beneficiario de ingresos considerados excesivamente altos y casi id?nticos al del propio jefe del gobierno de la ciudad, amenaza con consecuencias que por lo menos mellar?n su condici?n de figura "pol?ticamente indestructible".
A esto se a?adi? el reconocimiento de que otros dos parientes de Mollinedo Bastar, el chofer m?s famoso y mejor pagado de Am?rica Latina, tambi?n figuran en la n?mina capitalina con sueldos de dos mil a seis mil d?lares.
Mas el primer "pelo en la sopa" sobrevino al conocerse que el chofer de L?pez Obrador, identificado como Nicol?s Mollinedo Bastar, devenga un salario mensual de unos 63 mil pesos, unos 6 mil d?lares, un ingreso que contrasta agudamente con los cien d?lares que aproximadamente gana cada mes un obrero mexicano promedio y a?n con los mil d?lares que obtiene un m?dico al servicio del gobierno de la ciudad. De hecho, la renta del chofer de L?pez Obrador bastar?a para cubrir los sueldos de 18 enfermeras y los de 11 ingenieros en la Secretar?a de Obras. Esos emolumentos resultan cuatro veces m?s altos que los que cubren al jefe del Departamento de Bomberos.
Oriundo, al igual que L?pez Obrador, del sure?o estado mexicano de Tabasco y cuya familia es cercana al hoy jefe del gobierno capitalino, Mollinedo Bastar es considerado "la sombra" del alcalde, una sombra que amenaza con oscurecer la credibilidad popular al gobernante capitalino.
En un esfuerzo por contrarrestar el esc?ndalo y desencanto que gener? el caso Mollinedo Bastar, L?pez Obrador dijo que "le pago eso porque se levanta a las cuatro y se acuesta a las doce" de la noche. "No es cualquier funcionario", argument? y a?adi? que para ?l "no hay s?bados, no hay domingos, por eso se le tiene que pagar m?s". En auxilio de L?pez Obrador vino el secretario de Gobierno, Alejandro Encinas, quien explic? que Mollinedo Bastar es en realidad el coordinador de la Unidad de Apoyo Log?stico del gobierno de la ciudad y no meramente el chofer de L?pez Obrador, como ?ste mismo dijo antes. Encinas neg? que el gobierno protegiera a Mollinedo Bastar. "Estamos dando la informaci?n oficial sobre un hecho concreto. Aqu? estamos haciendo una correcci?n de un error administrativo", adujo, pero ratific? que se seguir? pagando el salario de unos 6 mil d?lares a Mollinedo Bastar.
Ahora s?lo resta saber el verdadero impacto del "ch?fergate" en su potencialidad presidencial.


Gobierno Pide a Corte de La Haya que Rechace Objeciones Colombianas
Conflicto por territorio en el Mar Caribe
El Gobierno de Nicaragua espera que la Corte Internacional de Justicia de La Haya (CIJ) rechace las objeciones presentadas por Colombia a la demanda que present? el pa?s centroamericano sobre territorios mar?timos en el M ar Caribe.
Isidro L?pez
Tiempos del Mundo
MANAGUA. Nicaragua demand? en el 2001 a Colombia, despu?s de que este pa?s suramericano y Honduras ratificaran un tratado de delimitaci?n mar?tima que, seg?n los nicarag?enses, cercena unos 130 mil kil?metros cuadrados de su plataforma continental en el Mar Caribe. El juicio en La Haya entr? en una nueva etapa esta semana, despu?s de que Nicaragua respondiera a las objeciones preliminares presentadas en julio por Colombia. Colombia argumenta que La Haya no tiene jurisdicci?n para dictar una sentencia sobre la demanda nicarag?ense, cuyo objetivo central es la anulaci?n del tratado Ram?rez-L?pez, ratificado por los congresos colombiano y hondure?o en 1999.
En su demanda del 2001, Nicaragua solicit? al Tribunal Internacional declare su soberan?a y su derecho sobre la plataforma continental y zona econ?mica exclusiva que le corresponde en el Mar Caribe, as? como sobre el Archipi?lago San Andr?s y Providencia, adem?s de sobre los cayos Roncador, Quitasue?os, Serrana y otros. Los territorios que reclama Nicaragua est?n al Este del meridiano 82 en el Mar Caribe.
Los argumentos de Nicaragua para reclamar ese territorio en el Mar Caribe est?n sustentados en el an?lisis de documentos hist?ricos, en investigaciones y en la jurisprudencia acerca del tema, indic? el canciller Norman Caldera. Colombia ejerce posesi?n sobre el archipi?lago San Andr?s y Providencia, distante unas 200 millas de la costa caribe de Nicaragua, desde 1928, mediante un tratado firmado por los gobiernos de ambos pa?ses. Sin embargo, desde 1980 el Gobierno de Nicaragua declar? inv?lido el tratado B?rcenas-Meneses-Esguerra, alegando que al momento de su suscripci?n este pa?s estaba ocupado militarmente por los Estados Unidos.
Las autoridades nicarag?enses conf?an que La Haya se pronuncie sobre el caso y confirme su jurisdicci?n para conocer del diferendo lim?trofe. El experto Edmundo Castillo, que integra el equipo nicarag?ense para llevar el caso en La Haya, explic? que una vez quede resuelto el tema de la jurisprudencia, la Corte internacional deber? proceder al an?lisis de fondo de la causa.
Los nicarag?enses afirman tener los argumentos necesarios para demostrar en La Haya que el territorio en disputa pertenece a Nicaragua.
Castillo dijo que las excepciones procesales recurridas por Colombia buscan retrasar que la Corte internacional entre a la etapa del an?lisis de fondo de la demanda presentada por Nicaragua. Entretanto, el jurista Mauricio Herdocia record? que en 1937, Colombia acept? la jurisdicci?n de la Corte para mediar en los asuntos de l?mites. El territorio mar?timo en disputa y que reclama como suyo Nicaragua es considerado rico en yacimientos de petr?leo y como una reserva de mariscos muy importante en el Caribe centroamericano, principalmente de camar?n y langosta.


Portillo Pone de Nuevo al Parlamento Centroamericano en el Ojo del Hurac?n
Parlacen: ?cueva de corruptos?
La sorpresiva juramentaci?n que el actual presidente del Parlamento Centroamericano, Parlacen, con sede en Guatemala, hiciera al ex presidente Alfonso Portillo y al ex vicepresidente Francisco Reyes L?pez, levanta ampollas.
Marco Julio Ochoa
Tiempos del Mundo
CIUDAD DE GUATEMALA. Portillo y Reyes, quienes recientemente entregaron la presidencia y vicepresidencia a sus sucesores Oscar Berger y Eduardo Stein, son se?alados de lavado de dinero y de poseer varias cuentas bancarias nutridas en el ejercicio del poder.
Aun cuando el otrora mandatario guatemalteco criticara duramente a la que ahora es su instituci?n guarida, su sonrisa ante las c?maras es evidente se?al de reto y de cinismo, visto del lado de los opositores y detractores del mandatario, principalmente de los econ?micamente poderosos.
"Voy a esperar el resultado de las investigaciones, las cuales giran en torno a acusaciones falsas. A m? me siguen criticando y atacando, pero de este gobierno los medios de comunicaci?n escritos oficialistas no dicen nada. No dicen que subi? abrumadoramente el pollo, las gasolinas, las medicinas. Todo eso no es malo para los medios, porque est?n con el gobierno," dijo el ahora diputado centroamericano Alfonso Portillo a los reporteros nacionales e internacionales que cubrieron su juramentaci?n.
Durante la accidentada juramentaci?n, la parlamentaria Tain? Jotr?, de Rep?blica Dominicana, vociferaba que no quer?a compartir el espacio con corruptos, y dijo sentirse ofendida por lo sucedido ese d?a, recordando el caso de Arnoldo Alem?n, ex presidente de Nicaragua, y ahora un simple reo que purga una condena producto del mal manejo de fondos que hubo durante su administraci?n.
Seg?n la parlamentaria, que m?s adelante mejor opt? por abandonar el hemiciclo, Alem?n busc? refugio en esa entidad, la misma que lo desafor? en aras de limpiar el prestigio tanto del parlamento como de los centroamericanos. A la postura abierta de Jotr? tambi?n se sum? la diputada Elsy Mackay, de Panam?.
El prestigio del Parlamento Centroamericano ha venido de mal en peor. Su presidente, el hondure?o Mario Facuse? Nadal, es se?alado de apropiaci?n ilegal de una gran cantidad de predios urbanos y rurales, por lo que el gobierno aboga por la suspensi?n de la inmunidad para procesarlo. Otros eslabones de la negra cadena que perjudic? tambi?n el prestigio parlac?nico fueron la captura del diputado hondure?o C?sar D?az en suelo nicarag?ense portando 7 kilos de hero?na. En diciembre, la polic?a hondure?a tambi?n captur? al funcionario del Parlacen Jorge Alberto C?ceres Gal?n acus?ndolo de tr?fico de coca?na.
Revocatoria del tratado
Aunque no fueron electos popularmente para formar parte del Parlacen, los ahora diputados Portillo y Reyes, se?alados de corrupci?n en Guatemala, gozar?n de los derechos que ese foro concede a todos sus miembros, incluyendo la anhelada inmunidad, que les otorga ventajas para eludir acusaciones judiciales.
La soluci?n, que los detractores de Portillo y Reyes L?pez consideran como un acto sucio y deleznable, es que los presidentes de los estados miembros (no as? de los estados amigos) firmen una modificaci?n al tratado constitutivo, lo cual es posible, a criterio del presidente guatemalteco Berger, dada la voluntad pol?tica que encuentra en el resto de sus hom?logos.
Seg?n el presidente guatemalteco, el punto ser? agregado a la agenda que tratar? con sus hom?logos centroamericanos en una reuni?n en febrero. Con esta reforma, el presidente Berger busca que los ex mandatarios no ingresen al parlamento como una forma de protecci?n por la mala forma de gobernar que ejercieron. Con ello, s?lo quedar?an representantes electos popularmente y no por designaci?n.
Para Francisco Flores, presidente de El Salvador, la coyuntura actual es propicia para realizar cambios en dicho foro, con el fin de que se redireccione y sea funcional para los estados que lo conforman. Al respecto, el presidente de Honduras, Ricardo Maduro, asegura que los pa?ses pobres deben recortar las operaciones de una instituci?n que no est? dando resultados positivos para los centroamericanos. Adem?s de los presidentes de El Salvador y Honduras, Mireya Moscoso de Panam? tambi?n asegura que el Parlacen es una p?rdida de tiempo, por lo que estar?a dispuesta a eliminarlo. "Por inoperante, ni siquiera deber?a de existir," exhorta.
Mientras, el presidente de Nicaragua, Enrique Bola?os, expresa que se debe trabajar sin precipitaci?n. Bola?os es m?s sigiloso en sus intenciones y asegura que todo el sistema de integraci?n centroamericana debe sufrir una revisi?n y si es posible, una sustancial reingenier?a.
Historia parlamentaria
El Parlamento Centroamericano, Parlacen, fue creado hace 17 a?os en el contexto de los acuerdos de Esquipulas II, en donde los presidentes del ?rea coincidieron en la necesidad de avanzar en la integraci?n pol?tica, econ?mica y cultural.
El 28 de octubre de 1991, el Parlacen inici? oficialmente sus labores, con ausencia de Costa Rica, cuyo gobierno no ha ratificado el tratado constitutivo y en repetidas ocasiones ha manifestado sentirse satisfecho de no estar inmiscuido en un ?rgano que, lejos de darle algo positivo al pa?s, simplemente lo desprestigiar?a.
Este foro regional ha sido criticado porque sus propuestas y resoluciones no son de cumplimiento legal ni tienen mayores incidencias en las sociedades representadas.
Guatemala, El Salvador, Honduras, Nicaragua, Panam? y Rep?blica Dominicana est?n representados en el Parlacen, mientras que M?xico, Puerto Rico y Taiw?n participan como estados observadores.
Costa Rica sigue negando ser parte de este foro y se niega a enviar a sus veinte representantes.
Representantes del Parlamento Europeo, con sede en Bruselas, B?lgica, se han declarado en apoyo al Parlacen por considerarlo s?mbolo de la unidad de los pa?ses del ?rea centroamericana. M.J.O.


Aumenta Preocupaci?n con Ch?vez
Denuncian retraso de referendo revocatorio
Acusaci?n de irregularidades oficialistas provoca crisis en el Consejo Electoral. Exigen mayor supervisi?n internacional.
Carlos Coello
Tiempos del Mundo
CARACAS. La tormenta desatada por las acusaciones de irregularidades del Consejo Nacional Electoral (CNE) para retrasar el referendo de revocaci?n del mandato al presidente Hugo Ch?vez, amain? moment?neamente luego que el organismo acept? la participaci?n de observadores internacionales en todas las etapas del proceso. Con esta medida, Venezuela evitaba, adem?s, el riesgo de desembocar en la aplicaci?n de la Carta Interamericana Democr?tica. La indisimulada pugna entre el gobierno y la oposici?n para frenar o darle luz verde a la consulta plebiscitaria, se tranform? en esc?ndalo cuando Ezequiel Zamora, el ponderado vicepresidente del CNE, denunci? un "sabotaje" para favorecer al oficialismo. Zamora dijo que las maniobras est?n destinadas a impedir que los testigos de la oposici?n cumplan con sus funciones en el complejo proceso de verificaci?n de las firmas que solicitan el referendo.
Seg?n el matutino El Nacional, Zamora "puso el dedo en la llaga: el gobierno est? moviendo a sus partidarios para que, desde el interior del organismo comicial, procedan a sabotear la verificaci?n de las firmas que permitan autorizar la convocatoria del referendo revocatorio".
A fines del a?o pasado los adversarios de Ch?vez presentaron m?s de 3.4 millones de firmas solicitando la consulta, superando con creces los 2.4 millones de r?bricas que exige la ley. Representantes de los partidos de oposici?n han denunciado que el CNE, controlado por una mayor?a oficialista, ha retardado el proceso revocatorio en por lo menos tres meses e indicaron que los simpatizantes del gobierno controlan ?reas claves del ente comicial como inform?tica, transcripci?n y verificaci?n de firmas.
Seg?n los opositores, el gobierno busca impedir el revocatorio o retrasarlo de tal forma que no tendr?a sentido su realizaci?n. Se?alan que en el primer caso se persigue la anulaci?n de m?s del 40 por ciento de las firmas, con el argumento de que son "fraudulentas". Sin embargo, la Organizaci?n de Estados Americanos, el Centro Carter, la Uni?n Europea y el Grupo de Amigos de Venezuela (Brasil, Chile, Espa?a, Estados Unidos, M?xico y Portugal) han sostenido que la recolecci?n de firmas fue transparente.
El ex presidente Jimmy Carter reiter? que no hubo fraude con las r?bricas. La alternativa de retrasar el referendo consistir?a, seg?n los opositores, en que ?ste se efect?e despu?s del 19 de agosto, cuando ya no ser?a posible una elecci?n presidencial para sustituir a Ch?vez ya que, si es revocado, el resto del per?odo lo cumplir?a el vicepresidente y el revocado seguir?a gobernando tras bambalinas. Seg?n la ley, para que haya nuevas elecciones, el referendo debe efectuarse entre la mitad del per?odo (19 de agosto del 2002) y antes del cuarto a?o de mandato (18 de agosto pr?ximo). A pesar de que el presidente del CNE, Francisco Carrasquero, dijo que el proceso de verificaci?n de firmas concluir?a el 13 de febrero (y que 90 d?as despu?s se har?a el referendo) Carter estim? que ese anuncio se retrasar? "en unos d?as". Simult?neamente, la OEA y el Centro Carter presionaron por una participaci?n activa de sus observadores.
Oscar Battaglini, uno de los directores oficialistas del CNE, declar? que "los observadores internacionales tienen el derecho a participar, pero hay determinadas ?reas en las que, como poder aut?nomo y soberano, establecimos l?mites". El jefe parlamentario Nicol?s Maduro destac? que el poder electoral venezolano es soberano y no est? sometido a "tutelaje internacional". Sin embargo, al finalizar la visita de Carter, el CNE dio a conocer que los observadores de la OEA y el Centro Carter participar?n en todas las ?reas del proceso referendario.


Ofensiva Contra la Evasi?n de Impuestos
Gobierno asume como `gran hermano'
A partir de junio, la Dian registrar? en una sola central de informaci?n todas las transacciones comerciales de los ciudadanos.
Alexandra Farf?n
Tiempos del Mundo
La propuesta fue recibida con asombro. No obstante, la mayor?a intent? ponerse en los zapatos del gobierno para entender qu? razones llevaron a la Direcci?n de Impuestos y Aduanas Nacionales (Dian) a invertir otra millonaria suma de dinero en una central de informaci?n que registrar? todas y cada una de las transacciones comerciales de 20 millones de colombianos: Compras, ventas, traspasos, exportaciones, aportes, pagos...
La Dian asegura que Muisca, nombre del sistema que empezar? a operar en junio, servir? para reducir la evasi?n de impuestos del 30 por ciento (nivel que ha tenido en los ?ltimos diez a?os) al 20 por ciento, pues en sus archivos quedar?n escritos todos los datos necesarios para saber cu?les de las personas all? registradas le deben a la Naci?n tributos por sus bienes y transacciones. La adquisici?n de finca ra?z, la venta de un autom?vil o el manejo de las tarjetas de cr?dito y d?bito estar?n a la mano de la entidad recaudadora en el Modelo ?nico de Ingresos, Servicio y Control Automatizado.
El director de la DIAN, Mario Aranguren, indic? que con este sistema se controlar?n los impuestos, las aduanas y los asuntos cambiarios que son competencia de su entidad. "Esto nos da mucha eficiencia y una garant?a de hacer exactamente todos los cruces sobre los consumos e ingresos que tienen las personas para ver su responsabilidad fiscal y adicionalmente, todas sus acciones y actuaciones en el comercio exterior, cuando sea una importaci?n, una exportaci?n", dijo el funcionario tras anunciar oficialmente la medida. Aranguren advirti? que con la nueva central de informaci?n todos los colombianos quedar?n bajo la lupa del gobierno. Aclar? adem?s que conocer toda la informaci?n comercial y financiera de los colombianos, "no implica que se est? violando la reserva bancaria, pues para efectos tributarios no existe tal reserva".
El Vicepresidente Francisco Santos Calder?n dijo que el gobierno garantizar? que la inversi?n hecha en el sistema tenga buenos resultados. "Hasta el a?o 2003 se hab?an pedido 700 mil millones de pesos en las distintas entidades del Estado para gastar en sistemas de informaci?n", dijo al explicar que es responsabilidad de la Comisi?n Intersectorial de Pol?ticas y Gesti?n de la Informaci?n vigilar que "no sigamos gastando plata en sistemas que no se hablan entre s?".
Muisca ya tiene sus primeros detractores. Algunos de ellos avizoran ya una avalancha de quejas como las que actualmente enfrentan las principales centrales financieras de riesgo, las cuales reportan, entre otras cosas, atrasos en los pagos de obligaciones contra?das por los usuarios de cr?ditos y otros productos bancarios.


?C?mo Explicar el Potencial Nacional Minero Desaprovechado?
Con diamantes despierta fiebre mineral
A la espera de autorizaciones para hacer prospecciones que determinen el valor de los hallazgos mineros, buscadores de tesoros alientan la esperanza de encontrar fortuna.
Maria D?az de Vivar
Tiempos del Mundo
ASUNCI?N. "Los diamantes son para toda la vida," dice una frase popular. Lo que no se podr?a afirmar por estas latitudes es que la vida de los habitantes de las tierras supuestamente pre?adas de minerales valiosos sea igualmente preciada.
La tala indiscriminada de bosques sin una reforestaci?n adecuada sigue mermando las reservas vegetales. Sin embargo, las riquezas del suelo paraguayo han permanecido a salvo bajo el manto piadoso de la ignorancia o la falta de inter?s por explotarlas. A lo largo de la geograf?a de este pa?s mediterr?neo, ubicado en el coraz?n del Cono Sur, se han ido detectando canteras de yeso y piedra caliza, que bien podr?an suplir las importaciones de similares insumos que benefician s?lo a pa?ses vecinos que nos proveen. Hasta ahora es un misterio el hecho que a pocos kil?metros de las fronteras paraguayas con Bolivia y Argentina se hayan encontrado yacimientos rentables de gas natural y petr?leo, mientras que de Paraguay no sale ni una gota de hidrocarburos.
Hay quienes afirman que el m?rmol paraguayo es de una calidad superior, pero todos los intentos por desarrollar la industria han sido desalentados por las administraciones gubernamentales durante d?cadas. M?s grave a?n es que del recurso precioso, el Estado extrae apenas un producto a sabiendas de las diversas e interesante posibilidades que ofrece la materia prima contenida en los suelos norte?os.
"En Concepci?n hay yacimientos calc?reos para proveer cal agr?cola por los pr?ximos 500 a?os, aproximadamente, y es eso lo que nuestra econom?a, que es agr?cola y ganadera, necesita m?s. ?Por qu? nos vamos detr?s del oro o los diamantes en lugar de satisfacer necesidades actuales y reales?", cuestion? el doctor en Geolog?a, Fernando Wiens, al diario ?ltima Hora.
Actualmente se importa el total de la cal agr?cola utilizada en la Regi?n Oriental, por un valor total de 97 millones de d?lares. Tambi?n se?al? los casos del abundante yeso en Lagerenza y del gas natural en la regi?n denominada Chaco Paraguayo. Dijo que "son casos ya antiguos y 100% comprobados y nadie hace nada al respecto". Seg?n los datos, existe suficiente yeso para satisfacer la demanda interna e inclusive para exportar, pero actualmente la Industria Nacional del Cemento (INC) importa yeso de la Argentina por un valor anual de casi 3 millones de d?lares.
Expertos de todas las nacionalidades pululan desde hace meses por las zonas de inter?s investigando los recursos subterr?neos de Paraguay. Pero por ahora, la ?nica que cuenta con el permiso para la exploraci?n, prospecci?n y explotaci?n de minerales en la zona norte del pa?s es la Morrison Mining Company.
El Estado paraguayo garantiza la propiedad privada, si bien los recursos minerales son del fisco. De confirmarse un hallazgo, el que tiene la concesi?n para la explotaci?n debe negociar con el propietario, y si hay oposici?n debe solicitar una expropiaci?n al Congreso Nacional con fundadas razones.
El oro y los diamantes son los m?s llamativos hallazgos pero no los ?nicos minerales de gran valor encontrados en territorio paraguayo: plomo, hierro, n?quel y zinc podr?an hacer rentable la actividad minera a?n incipiente pero que ya ha atra?do la atenci?n de empresas multinacionales.
El viceministro de Minas y Energ?a, H?ctor Ru?z D?az, dijo a la prensa que hasta el momento no es oficial el hallazgo de diamantes en el norte, aunque confirm? la existencia de yacimientos de oro en el centro del pa?s.
Pero las expectativas levantadas entre ge?logos y medios de comunicaci?n tienen en vilo a los pobladores de un casi despoblado paraje de Concepci?n (a 580 kil?metros al norte de Asunci?n), una colonia denominada Sargento Jos? F?lix L?pez, que carece de los servicios m?s elementales, como la electricidad, el agua corriente, caminos, centros de salud o maestros de escuela.
Casi al borde del territorio brasile?o es donde se han hallado los m?s serios indicios de yacimientos de diamante, un recurso que puede transformar la actividad econ?mica de la zona, hasta ahora dedicada al cultivo de supervivencia y al desmonte indiscriminado.


Centroam?rica Recuper? al `Hijo Pr?digo'
?Qu? es eso que llaman TLC?
La escasa informaci?n sobre los pormenores del tratado hace dudar a los costarricenses sobre los alcances de la iniciativa. Para unos se trata de un negocio de pocos y para otros representa una ocasi?n propicia para incorporarse al primer mundo.
Jos? Antonio Pastor
Tiempos del Mundo
SAN JOS?. Luis Jim?nez es un zapatero que se levanta de lunes a s?bados apenas sale el sol, pues tiene que cruzar toda la ciudad en autob?s para abrir un peque?o local que tiene en el oeste de esta desordenada y cada vez m?s abandonada capital costarricense.
Hace unos d?as, Luis se enter? de la aprobaci?n del Tratado de Libre Comercio, TLC, entre Costa Rica y los Estados Unidos. Lleg? a su negocio y encendi? una peque?a radio. "Algo estaban comentando, pero en verdad, a m? no me afecta eso de tratados y firmas. Los que se ver?n beneficiados ser?n los de siempre. Los pobres seguiremos siendo pobres".
Un par de horas m?s tarde, un empresario dedicado a la producci?n de hongos comestibles se frotaba las manos mientras hac?a n?meros sobre lo que puede costarle una m?quina deshidratadora. "Con esto del TLC hay que estar un paso adelante, porque se trata de una oportunidad ?nica y quienes se pongan vivos, llevar?n las de ganar. Por eso mismo, mientras mi esposa analiza los tipos de hongos que podemos sembrar, yo estoy viendo la posibilidad de deshidratarlos para exportarlos a los Estados Unidos".
Ya sea como negocio de unos cuantos o como una oportunidad de oro para muchos, el final de las negociaciones con los Estados Unidos tiene a este pa?s de poco m?s de cuatro millones de personas en la mayor de las incertidumbres. La escasa informaci?n gubernamental, as? como los rumores sobre los peligros que conlleva un tratado de este tipo, han despertado las dudas.
"Ni siquiera los que creemos estar bien informados sabemos qu? pasar?. El gobierno ha manejado las negociaciones con un secretismo preocupante," afirma el analista pol?tico Francisco Barahona. "S?lo sabemos lo que los negociadores han querido que sepamos porque ni siquiera los diputados que deben ratificarlo tienen copia de todos los documentos".
Despu?s de un a?o de arduas negociaciones que incluso estuvieron cerca de dejar a los ticos al margen del acuerdo que hace unos meses firmaron los representantes de Nicaragua, Honduras, El Salvador y Guatemala, los grupos negociadores de ambos pa?ses llegaron a un consenso en cinco temas que hab?an quedado pendientes en las rondas con los dem?s pa?ses centroamericanos.
"Lo que se conoce es muy general, lo que hace muy sospechosa la letra menuda. Es cierto que habr? grandes beneficios, pero ?por qu? no ponen las cartas sobre la mesa para ver qu? m?s hay? La gente de la calle tiene su posici?n, pero la verdad es que ?sta responde a los medios de comunicaci?n, que la informa o desinforma. Los negociadores hablan de que el balance ser? muy positivo, pero tambi?n uno podr?a decir que la l?gica hace pensar que un pa?s tan peque?o como el nuestro no est? en condiciones de competir", coment? Barahona. El analista record? que muchas de las empresas que en alg?n momento se instalaron en M?xico, hoy se han trasladado a China en procura de mano de obra m?s barata.
"El gobierno deber?a de estar orgulloso de los resultados y exponerlos en una fuerte campa?a publicitaria para que la gente tenga m?s informaci?n y pueda formarse un criterio m?s s?lido, pero hasta el momento no hay nada," a?adi?.
Consultado sobre las posibilidades que tiene el tratado de ser ratificado por el Congreso antes de un a?o, Barahona explic? que no existen razones para que su tramitaci?n en el plenario tenga problemas.
"Parece que existe el apoyo necesario, pero ?qu? pasar? si la ciudadan?a no se conforma con lo aprobado? Tenemos antecedentes de dos proyectos que, ya aprobados, tuvieron que ser echados atr?s porque la gente se lanz? a las calles a protestar. Espero que la Administraci?n Pacheco entienda que debe empezar una fuerte campa?a de informaci?n que haga transparente todo el proceso que se avecina," concluy? el analista.
Alrededor del 53 por ciento de las exportaciones que realiza Costa Rica tienen por destino el pa?s del norte. Esto significa que aproximadamente la cuarta parte del empleo est? ligado de manera directa o indirecta con ese mercado.
Seg?n ha manifestado la jefa negociadora de la delegaci?n tica, Anabel Gonz?lez, eventualmente el TLC facilitar? aumentar las exportaciones y las importaciones, incrementar la inversi?n productiva y, sobre todo, generar buenos empleos. Pero tambi?n existen motivaciones de tipo pol?tico, como la contribuci?n que tendr? en consolidar la democracia con procedimientos que fomenten la transparencia, la no discriminaci?n y la certidumbre.
Salto comercial tico
Costa Rica es una econom?a peque?a de cerca de 4,1 millones de habitantes con un territorio de 51.900 kil?metros cuadrados y un Producto Interno Bruto cercano a los 16.886 millones de d?lares. El comercio exterior ha constituido un factor fundamental para su crecimiento y generar nuevas y mejores oportunidades econ?micas. En la actualidad, mantiene acuerdos bilaterales con M?xico, Chile, Rep?blica Dominicana y Canad?, as? como con los pa?ses del Caribe. La pol?tica de comercio exterior ha dado como resultado un crecimiento sustancial de las exportaciones, las cuales han aumentado a un ritmo del 11 por ciento anual durante los ?ltimos doce a?os. Las exportaciones tambi?n se han diversificado, pasando de una circunstancia en la que dos productos representaban un 65 por ciento del total exportado en 1985 (caf? y banano), a otra en la que ning?n producto exportado representa m?s del 17 por ciento. El crecimiento exportador ha constituido, por dos d?cadas, el factor m?s din?mico de la producci?n y el empleo costarricenses.u
Fuente: Ministerio de Comercio Exterior de Costa Rica.
Par?metros del Acuerdo
En agricultura, Costa Rica alcanz? cuotas que mejorar?n el ingreso de az?car, etanol y carne al mercado estadounidense.
En textiles, tambi?n se facilitaron las condiciones para exportar y conseguir telas de lana en otros pa?ses.
En los campos m?s sensibles, se acord? la apertura de los mercados de telecomunicaciones y seguros, en la actualidad monopolios muy cuestionados por los usuarios.
Finalmente, se decidi? establecer un nuevo r?gimen en lo referente a la legislaci?n sobre representantes de casas extranjeras y sus distribuidores.JAP


Ex Presidente Afirma ser V?ctima de Campa?a Difamatoria
Menem niega tener cuentas en Suiza
Especial para TDM
El ex presidente argentino Carlos Menem neg? tener cuentas bancarias fuera de su pa?s y anunci? que va a denunciar a los responsables de la "campa?a difamatoria" de la que dice ser v?ctima.
"No hay ninguna cuenta, no existe absolutamente nada y estoy esperando el informe de Suiza porque este culebr?n no puede continuar", dijo Menem.
El juez Norberto Oyarbide est? investigando el patrimonio de Menem en Suiza y le ha citado a declarar el 15 de marzo. El juez tambi?n ha enviado exhortos a otros pa?ses para pedir informaci?n sobre si el ex presidente posee activos all?. Menem, que reside en Santiago de Chile junto a su esposa Cecilia Bolocco y el hijo de ambos, M?ximo Sa?l, responsabiliz? al presidente N?stor Kirchner, al ex mandatario Eduardo Duhalde y al ministro de Justicia, Gustavo Beliz, de la "campa?a difamatoria" de la que dice ser v?ctima.
"Cuando yo regrese a Argentina voy a hacer una denuncia en contra de mis difamadores", se?al? a "La Naci?n" sin especificar cu?ndo tiene pensado viajar a su pa?s, que no ha pisado desde noviembre. El objetivo de la campa?a es "destruir la figura de uno de los presidentes que m?s hizo por la Rep?blica Argentina, al punto tal que este Gobierno (el de Kirchner) est? todav?a viviendo de lo que nosotros acumulamos durante diez a?os", agreg?.
El hombre que gobern? Argentina de 1989 a 1999 y que intent? volver a la presidencia en el 2003, se declara "un perseguido pol?tico" y cree que en la misma situaci?n est? el ex presidente Fernando de la R?a, quien se encuentra en la mira de la justicia por la represi?n de las manifestaciones que precedieron a su renuncia, a fines de 2001, y por un caso de soborno a senadores.
"Este gobierno, adem?s de ser autoritario, se ha dedicado a perseguir a muchos pol?ticos en Argentina. Por ejemplo, al ex presidente De la R?a", indic?. Adem?s de quejarse, Menem atac? a los actuales gobernantes y pidi? que se investiguen sus fondos y bienes, especialmente qu? fue del dinero de la provincia de Santa Cruz que Kirchner, entonces gobernador, llev? al extranjero para evitar que fuera afectado por las restricciones al movimiento de fondos conocidas como "corralito" y la conversi?n a pesos de los dep?sitos a comienzos de 2002. EFE


Desprestigio Preocupante del Estamento Militar
Ej?rcito sufre bumer?n de `mu?equeos' pol?ticos
En 10 a?os, las cifras de confianza institucional bajaron en forma ins?lita de 71 puntos a 20. Afect? la insubordinaci?n de los coroneles en el 2000 y actualmente las denuncias por tr?fico de armas y los costos en el Congreso por limpiar su imagen.
Christian Espinosa B.
Tiempos del Mundo
UITO. La Fuerzas Armadas (FF.AA.) en Ecuador est?n tan d?biles que sus esfuerzos por limpiar su imagen se han ido en su propia contra.
Una de las instituciones de mayor prestigio en el pa?s paga as? el precio de contaminarse pol?ticamente. En este terreno, se demostr? que la mejor defensa no es el ataque. La instituci?n militar, con el apoyo del Gobierno, enfil? vanamente sus armas contra el diputado de la oposici?n Guillermo Haro para tratar de levantar la inmunidad del legislador por sus denuncias de tr?fico de armas y la explosi?n de un polvor?n.
El supuesto remedio de que el legislador responda ante la justicia por atentar contra el honor de las FF.AA. fue peor que la enfermedad. La ciudadan?a ha visto con estupor c?mo la instituci?n se ha visto envuelta en pr?cticas completamente inusuales a su naturaleza por conseguir una mayor?a en el Congreso para desarmar a Haro.
"Las FF.AA., que antes eran relativamente aut?nomas, ahora se han visto afectadas por el desprestigio de las pr?cticas del clientelismo o prebendas t?picas de los pol?ticos civiles", explica el analista pol?tico, Adri?n Bonilla.
Es a partir del golpe a Abdal? Bucaram y luego de Jamil Mahuad que las FF.AA. se ven involucradas en temas pol?ticos. Parad?jicamente, en aquel entonces la instituci?n no tuvo ninguna intenci?n de entrometerse. Era la misma sociedad la que casi le rog? que fuera dirimente en la ca?da de Bucaram. As? de grande era la confianza de la ciudadan?a, sin imaginar el futuro desprestigio que se avecinaba. Poco a poco, la falta de claridad en la misi?n de las FF.AA. se hizo evidente.
"Tras el fin de los conflictos territoriales con Per?, las FF.AA. no han logrado redefinir bien esa misi?n", precisa Bonilla. "Una muestra de ello es c?mo la instituci?n est? superponiendo roles con la Polic?a", en la frontera Norte y por los efectos del Plan Colombia. La erosi?n de la institucionalidad militar se torn? inevitable. Eso sin contar los momentos graves de insubordinaci?n de los coroneles, entre ellos el hoy presidente Lucio Guti?rrez.
El resultado ha sido cierto grado de politizaci?n de los mandos, que comienza por arriba y tarde o temprano afecta a toda la instituci?n. Estos tejidos pol?ticos afectaron las capacidades de las FF.AA., que hoy ya no pueden procesar eficientemente su defensa. "Es un problema de debilidad pol?tica que se expresa en esta incapacidad para procesar el disenso", dice Bonilla. La incursi?n del Gobierno en el tema, ayudando en los cabildeos, dio m?s elementos para las dudas. ?Ser? que el presidente mira a las FF.AA. como su verdadero partido pol?tico, en la misma l?nea que lo hizo Alberto Fujimori?, se pregunta el editorialista del diario El Comercio, C?sar Mont?far.
Lo cierto, seg?n el general Jos? Gallardo, ex jefe del Comando Conjunto de las Fuerzas Armadas, es que cuando la instituci?n se aleja de sus deberes, entonces empieza la ola de desprestigios. "Lo fundamental es trabajar por la reconstrucci?n de los valores y principios ?ticos y morales", afirma. "Trabajar en cambios a la justicia militar para que se vuelva ?gil y completamente transparente en la investigaci?n", es otro de los retos. "Un mejor favor al honor institucional hubiera sido una pol?tica clara de transparencia e informaci?n en estos casos", confirma C?sar Mont?far.
"Reprofesionalizarse, replegarse a los cuarteles y dedicarse a sus tareas militares espec?ficas y aislarse del poder de los civiles y de las luchas cotidianas de la pol?tica", es la visi?n final del catedr?tico Adri?n Bonilla.


El Oficialismo en Desventaja
Alem?n, candidato de Moscoso
El ex canciller Jos? Miguel Alem?n no renuncia a su car?cter de candidato oficialista y se propone continuar la obra llevada a cabo por la presidenta Mireya Moscoso, que en agosto pr?ximo concluye su mandato de cinco a?os.
Rafael Candanedo
Tiempos del Mundo
C IUDAD DE PANAM?. Alem?n, de 47 a?os y con un doctorado otorgado por la Universidad de Tulane, EE.UU., presidi? una concentraci?n multitudinaria en la c?ntrica Plaza Porras, de la ciudad de Panam?. Seg?n los seguidores del ex canciller, se reunieron 150 mil simpatizantes. Antes de esa concentraci?n, los miembros de la Convenci?n Nacional del Partido Arnulfista (PA) en el poder, hab?an oficializado la n?mina presidencial que encabeza Alem?n y que integran, adem?s, Guillermo Ford, ex ministro y ex embajador en Washington, y el abogado An?bal Galindo.
Endilg? a su contrincante Mart?n Torrijos el mote de "privatista" y le acus? de tener en mente arrebatar de las manos del Estado el Idaan, a cargo de los servicios de alcantarillados y agua potable, y de la Caja de Seguro Social (CSS). Todos los candidatos niegan cualquier inter?s en privatizar esas dos entidades estatales.
La respuesta de Mart?n, de 40 a?os y que estudi? dos licenciaturas en la Universidad de Texas, no se hizo esperar. El candidato oficialista "se escuda detr?s de la falda" de Moscoso.
La presidenta Moscoso no hace nada para tomar distancia de Alem?n, sino todo lo contrario. "Voy a hacer campa?a" en favor de Alem?n y de los candidatos oficialistas para otros cargos, asegur? la gobernante.
Torrijos lidera las encuestas de intenci?n de voto con casi el 50 por ciento, mientras que Alem?n ronda el 12 por ciento. El candidato y ex presidente Guillermo Endara, de 66 a?os, supera el 30 por ciento.
Los analistas calculan que el candidato electo --ya sea Alem?n o Endara-- deber? mantener un duelo con Torrijos en la etapa final de la campa?a para las elecciones del 2 de mayo pr?ximo. Y Alem?n, por ser oficialista, est? en desventaja, pues debe cargar con el desgaste gubernamental.
Endara y Alem?n est?n enfrascados en esa disputa, al reclamar para sus campa?as la figura del ex presidente Arnulfo Arias, cuya segunda esposa fue Moscoso. La presidenta se aperson? ante el Tribunal Electoral para demandar el retiro de la figura de Arias de unos anuncios propagand?sticos de Endara.
"Endara debe utilizar en su publicidad la foto de su esposa, Ana Mae, y no la del doctor Arias," exhort? Moscoso.
Endara sali? en defensa de Ana Mae, y aunque se?al? que por respeto no le responder?a a la mandataria, s? record? la admiraci?n que le tuvo a la primera esposa de Arias, Ana Matilde Linares.
Derechos Reservados ? Noticias Panam?rica


Venezuela, en la hora de la verdad
El pr?ximo 13 de febrero, el Consejo Nacional Electoral de Venezuela dir? si la oposici?n alcanz? o no el n?mero de firmas exigidas constitucionalmente para convocar un referendo en que se pida la revocaci?n del mandato del presidente Hugo Ch?vez. Se juegan las ?ltimas cartas. La estrategia presidencial ha consistido en robustecer su apoyo al pueblo, ofreciendo el oro y el moro a trav?s de diversos programas de gasto p?blico. La de la oposici?n, en acrecentar la campa?a de desprestigio contra el gobierno argumentando el mayor caos social y deterioro econ?mico de su historia.
M?s que la oposici?n y el propio partido presidencial, juegan un papel determinante el Consejo Electoral y la comunidad internacional. Los rectores del Consejo deben estar conscientes de que el futuro pol?tico de Venezuela recae sobre sus hombros, y deben garantizar que no habr? trucos ni violaciones a la Constituci?n por parte de la oposici?n o del gobierno.
La comunidad internacional debe vigilar con lupa el desenlace de este proceso. El ex presidente estadounidense Jimmy Carter ha expresado su confianza en que Venezuela sortear? su crisis democr?ticamente, aunque alert? de divisiones entre los opositores al gobierno de Hugo Ch?vez en cuanto a una decisi?n electoral. La Organizaci?n de Estados Americanos, tras solicitar acceso al proceso de revisi?n de firmas, hizo un llamado a las dos partes para que se comprometan a aceptar lo acordado. A?n as?, el proceso no tiene la claridad que suger?a al comienzo. Crecen de nuevo los rumores sobre la permanencia en el poder de Ch?vez, aun cuando haya un resultado adverso en el referendo. Tambi?n se habla p?blicamente del temor de que algunos opositores desconozcan un fallo favorable a Ch?vez y llamen a una insurrecci?n, hecho que sumir?a al pa?s en una crisis de violencia y confusi?n mayor a la actual.
El ambiente se ha tornado tenso las ?ltimas semanas en que ambos bandos --seguidores y opositores del mandatario nacional-- se han lanzado de nuevo a las calles con arengas y mutuos insultos. Unos hablan de fraude; los otros de legitimidad. Lo cierto es que ha llegado la hora de la verdad y ambas partes deben respetar lo pactado. Esto es, acatar las determinaciones del Consejo Nacional Electoral y ajustarse a las normas vigentes de la constituci?n venezolana.


Venezuela, in the hour of truth
On February 13, the National Electoral Council of Venezuela will determine whether or not the opposition has obtained the number of signatures required by the constitution to convoke a referendum for the recall of president Hugo Ch?vez. The last trump is played. The presidential strategy has sought to strengthen people's support by promising the moon and the stars through various public-expenditure programs. The opponents' strategy, meanwhile, has been to intensify its discrediting campaign against the government because of the ongoing social chaos and the worst economic deterioration in its history.
More than the opposition and the president's party itself, both the Electoral Council and the international community have a decisive role to play in this process. The Council officials should keep in mind that Venezuela's political future rests on their shoulders and therefore must guarantee against any trickery or constitutional violation by either the opposition or the government.
To that end, the international community must watch the outcome of this process through a magnifying glass. Former U.S. president Jimmy Carter has upheld his belief that Venezuela will sort out its crisis democratically, but has alerted to the split existing among Ch?vez' opponents over the electoral outcome. Besides requesting access to the signature-monitoring review, the Organization of American States has called upon the two sides to commit themselves to accepting the results.
Even so, the process is not as clear as it seemed in the beginning. Rumors are escalating about Ch?vez' remaining in power even if the referendum is adverse to him. There is also talk about the fear that some opponents might choose to ignore a decision favoring Ch?vez and trigger an insurrection, a recourse that would plunge the country into a crisis of violence and engender even greater confusion.
The atmosphere has become tense over the past few weeks as both sides --president's supporters and opponents alike-- have come out on the streets again hurl-ing harangues and insults at each other. Some talk of fraud; others of legitimacy. What is certain is that the hour of the truth has come and both parties should respect what they have agreed upon. That is: to abide by the National Electoral Council's determination and stick to the stipulations of the Venezuelan constitution in force.
Translated by: Mar?a Isabel Camacho

Venezuela Devalues Bolivar, Fines BellSouth on Taxes (Update5)
Feb. 9 (Bloomberg) -- Venezuelan President Hugo Chavez devalued the nation's currency 17 percent against the dollar and fined a BellSouth Corp. unit for failing to pay taxes, as he seeks to boost revenue to fund social spending.
The measures will assist Chavez in his bid to increase funds for farming, medicine and schools ahead of a recall vote that his opponents are demanding, said analysts such as George Grayson at the Center for Strategic and International Studies in Washington. Chavez's foes say the former lieutenant colonel should step down before his term expires in 2007 after driving the oil-exporting country into its deepest recession on record last year.
``It's political expediency and a demagogic act that is designed to get Chavez through a rough patch in his tenure,'' said Grayson, an adjunct fellow at the center.
The government set the bolivar's exchange rate at 1,918 against the dollar, a year after fixing it at 1,598 and limiting purchases of U.S. dollars to stem an outflow of foreign currency. By weakening the currency, the government will increase the amount of bolivars it raises from oil exports, which accounted for 48 percent of revenue last year. Venezuela is the world's fifth-largest supplier of crude.
In addition, the fine against TelCel CA, Venezuela's largest cellular telephone company, is a ``warning sign'' against other companies as Chavez pursues his so-called Zero Evasion Plan announced last year, said Irene Costa, an analyst at Banco Mercantil CA in Caracas.
Budget Gap
Chavez is trying to boost spending without swelling the budget deficit, which Costa expects will total 4.2 percent of gross domestic product this year after ending 2003 at 5.1 percent. That compares with a budgeted deficit in Mexico this year of 0.3 percent of GDP and 2.5 percent of GDP in neighboring Colombia.
A 25 percent surge in the international price of oil has also helped fund Chavez's spending. The 2004 budget calls for a 21 percent increase in spending to 49.9 trillion bolivars as Chavez seeks to quicken the recovery from recession.
The government announced the devaluation in the Official Gazette. Finance Minister Tobias Nobrega didn't return a phone call seeking comment on the decision.
The devaluation will enable the government to purchase more bolivars for every dollar. Street sellers are buying dollars at an even weaker exchange rate in Venezuela -- about 3,000 bolivars per dollar.
Faster Inflation
Venezuela's benchmark 9 1/4 percent bond due 2027 fell 0.85 cent on the dollar to 89.5, boosting the yield to 10.46 percent at 4:05 p.m. in New York, according to J.P. Morgan Chase & Co.
The devaluation may quicken inflation -- which was 26.6 percent in the 12 months through January -- by driving up the cost of imported products, said Christian Stracke, head of emerging-market research at New York-based CreditSights Inc. The effect may be limited as many companies already pay street exchange rates because they don't have access to dollars at the official exchange rate, Stracke said.
AES Corp. Chief Financial Officer Barry Sharp said in an interview last week that AES's local unit, CA La Electricidad de Caracas, which is Venezuela's largest publicly-traded power company, has bought dollars in the street market.
The government is allowing companies to buy dollars only through approval from the nation's foreign exchange commission. The government said last week it sold less than half the dollars authorized by the foreign exchange commission last year.
Bond Sale
The government had indicated last year it planned to devalue the currency, saying it based its 2004 budget on an average exchange rate of 1,920 bolivars per dollar.
``This improves their capacity to pay their domestic debt because it reduces the overall value of that debt'' in dollar- terms, said Juan Pablo Chavez, an analyst with BBVA Securities in New York. ``This also improves the revenue side of their budget.''
BBVA's Chavez said he expects the government will sell a dollar-denominated bond to local investors to help meet demand for dollar-based assets and prevent the bolivar from weakening further in the street market. The government sold $2.5 billion of dollar-denominated bonds to local investors last year.
The government last year unveiled a plan to boost tax collection and reduce evasion. Venezuela's tax agency in November closed 324 companies for as long as 72 days.
30 Days
TelCel has 30 days to pay a fine of 38 billion bolivars for failing to pay 20 billion bolivars or appeal the ruling, Conatel said in a statement.
In a statement, TelCel denied it's evading its tax obligations and said its legal department is weighing its options.
``This is because of a difference in criteria and has nothing to do with evasion,'' TelCel Vice President Haydee Cisneros said in the statement.
To contact the reporter on this story:
Alex Kennedy in Caracas,
To contact the editor of this story:
Laura Zelenko at
Last Updated: February 9, 2004 16:04 EST

Plaza? Louvre? Boca Accord Never Had a Chance: Caroline Baum
Feb. 9 (Bloomberg) -- We'll always have Paris. New York is one helluva town. But Boca?
Memorable moments in the history of the Group of Seven industrialized nations occurred at the Plaza Hotel in 1985, when the participants decided the dollar was too strong, and in the great halls of the Louvre Museum in 1987, when they decided the dollar was weak enough.
Can you imagine, 20 years from now, economic historians referencing the outcome at Boca Raton -- a city whose name translates literally from the Spanish as ``mouth mouse'' -- with the same degree of gravitas?
Finance ministers and central bankers from the G-7 descended on the Boca Town Resort and Club last weekend with different agendas. The slow-growth Europeans, unhappy about the impact of the euro on their export-dependent economies, were hoping for some help from the U.S. in stalling the rise in the euro.
The euro is up 18 percent against the dollar in the past 12 months and 46 percent in the past two years.
The Bush administration, faced with tepid job growth more than two years after the recession ended and less than nine months before voters go to the polls, is happy for any help it can get from a weaker dollar, via increased demand for exports. Real exports rose 19 percent in the fourth quarter following a 9.9 percent third-quarter gain.
Coordinated Mush
While there's always much ado about the choice of words in the G-7 communique -- almost as much as the fuss over the Federal Reserve's use of ``considerable period'' versus ``patience'' -- it's hard to infer any action from the statement released on Saturday.
After reaffirming that ``exchange rates should reflect economic fundamentals,'' surely a statement of the obvious, the G-7 said ``excess volatility and disorderly movements in exchange rates are undesirable for economic growth.''
Aha! This was interpreted in some quarters as some kind of major breakthrough instead of a bone to keep the Europeans happy so they don't have to address high structural unemployment and dismal growth through real policy changes.
In terms of the reinsertion of a warning against ``excess volatility,'' which has been MIA in the G-7 communique since April 1999, few traders and investors would describe the dollar's almost uninterrupted slide over the past two years that way.
They might call it a one-way trade, a long-overdue correction or the beginning of a multiyear currency adjustment. They would not call it volatile.
Option Pricing
And as for a disorderly decline, there's not much evidence of it reflected in the price investors are willing to pay for insurance, according to Daniel Katzive, a foreign-exchange strategist at UBS Warburg.
The price of options on the euro-U.S. dollar exchange rate ``has climbed, but it's nowhere near the extremes of 2000, when the European Central Bank was intervening to support the euro,'' Katzive said. ``The level of daily changes implied by the price of insurance is not consistent with a disorderly market.''
There are other ways to measure volatility, such as the effect currency movements have on other asset markets, Katzive said. Looking at the performance of U.S. stock and bond markets, ``it's just not happening,'' he said.
In other words, the statement was much ado about words and little to do about action. The ECB may choose to intervene if the euro breaks through $1.30, Katzive said, but it will probably be acting without the U.S.
To avoid any confusion created by the communique, finance ministers were available for instant analysis, interpretation and disclaimers following the meeting.
U.S. Treasury Secretary John Snow reaffirmed the U.S. strong- dollar policy. Japanese Finance Minister Sadakazu Tanigaki said the call for more flexibility wasn't aimed at Japan. German Finance Minister Hans Eichel said currency traders should note the G-7's ``unanimity.''
Unanimity? ``The word `agree' does not appear even once in the entire communique,'' said Carl Weinberg, chief economist at High Frequency Economics in Valhalla, New York. ``You cannot have an agreement unless everyone agrees.''
To make his point, Weinberg resuscitated the language from the 1985 Plaza Accord, where the participating finance ministers and central bankers agreed to something -- to implement policy actions so that exchange rates ``better reflect fundamental economic conditions'' -- and agreed to do something to foster it.
Real Language
Instead of talking in meaningless code, the participants determined that ``some further orderly appreciation of the main non-dollar currencies against the dollar is desirable.'' And they stood ready ``to cooperate more closely to encourage this.''
``Where were the big words this time?'' Weinberg wondered. ``Where was the statement that the U.S. current-account deficit is a problem, that the dollar needs to weaken, and rates need to fall in Europe in order to achieve it?''
I'm never sure why everyone makes such a big deal over these G-7 gatherings. Countries act in their own self-interest. Often those interests are mutual, which creates the impression of coordinated decision-making and action.
Right now they're not. Nothing changed at Boca. The dollar will continue to fall. The Japanese will continue to intervene. The Europeans will continue to worry. And the U.S. will continue to quietly condone the dollar's slide.
If the G-7 wanted a serious outcome, they should have picked a serious city.
To contact the writer on this column:
Caroline Baum in New York at
To contact the editor of this story:
Bill Ahearn at
Last Updated: February 9, 2004 11:50 EST
Eggs, Cars, Paintings -- The Rich Smell Inflation: Matthew Lynn
Feb. 9 (Bloomberg) -- It doesn't matter how bedecked in jewels they might be. Nor how much history is contained within their shells. A hundred million dollars would be a lot to pay for some eggs.
Unless, that is, you happen to be a Russian billionaire.
Last week, Viktor Vekselberg, one of Russia's richest men, bought the world's largest private collection of Faberge Imperial Easter Eggs from the family of Malcolm S. Forbes. The nine eggs were scheduled for auction at Sotheby's Holdings Inc. and were expected to fetch $70 million to $100 million. The actual sale price wasn't disclosed, but there were more likely to be nine, not eight, digits on the check. Even for buying in bulk, the Forbes family probably didn't want to give Vekselberg a discount.
An isolated individual with an exaggerated sense of national pride? That would be one plausible explanation. But it's also possible to see that purchase as part of a global trend that has been gathering force over the past 12 months.
Right around the world, luxury alternative investments are going through a boom.
Eggs are just one example. The art business is going crazy. Vintage-car prices are rising. Diamonds are getting more expensive. Football clubs -- a rougher, but equally precious, item -- are turning into playthings for men whose egos are even bigger than their wallets.
There are some clues there to what the rich are up to with their money. And there are some lessons as well about the state of the global economy.
Art Auctions
Art and antiquities are leading the way. For the last year, auction records have been set and broken. In November, Sotheby's sold a Willem de Kooning abstract painting owned by billionaire Mitchell Rales for $11.2 million, and a Gustav Klimt piece sold for $29.1 million, during a record-setting sales period.
Overall, an index of the most expensive contemporary artists including Robert Rauschenberg and Damien Hirst climbed 54 percent during the past four years, according to Art Market Research, a London-based data firm.
Music is in demand as well. In December, a handwritten manuscript of one of Ludwig van Beethoven's last string quartets fetched 1.18 million pounds ($2.19 million) at an auction in London, while earlier last year a working version of his Ninth Symphony sold for 2.13 million pounds.
Vintage Cars
Prices of vintage cars are picking up as well. In February last year, Christie's International Plc secured a price of 1.68 million euros ($2.14 million) for a 1932 Bugatti T55 sports car. The latest Barrett-Jackson Classic Car Auction in the U.S. broke all records, surpassing the previous best year, 1990. The sales included a 1938 Lincoln Zephyr V-12 Coupe, which cost its new owner a tidy $432,000.
True, car prices have a long way to go. According to Christie's Web site, the highest price ever paid for a car was for a 1931 Bugatti Type 41 Royale by Kellner, which sold for 5.5 million pounds in November 1987. But the trend is up.
Meanwhile, in London, another Russian billionaire, Roman Abramovich, has been creating a stir with his lavish spending on football. He paid almost 60 million pounds to get control of Chelsea football club, and has spent about 111 million pounds to sign up 11 players for the club, Bloomberg data shows.
And diamond prices rose 10 percent last year, according to De Beers, the world's biggest diamond company, with prices still going up. ZAO Alrosa, which produces a fifth of the world's uncut diamonds, said sales surged 22 percent in 2003.
Luxury Investments
What the rich are doing with their cash is always interesting, and not just for voyeurs of conspicuous consumption. The rich, pretty obviously, are smarter with money than most of us. Where they're investing now, the rest of the world may well be investing soon.
The boom in luxury investments tells us two things.
The first is that there is a lot of spare cash floating around. Interest rates are low around the world, the global economy is recovering, and stock markets have been rallying. The rich are on a roll.
But they may also be nervous about traditional, mainstream investments.
No doubt, a lot of their money is still going into stocks, bonds, hedge funds and private-equity deals. But a significant chunk of it is clearly being diverted to investments that are more entertaining, and may be more profitable as well.
A trend of investing in luxury collectibles is a sign of nervous, not optimistic, times.
Inflation Fears
It suggests a fear that inflation may make a sudden return. If prices start surging globally, an oil painting may well be the best place to keep your cash parked.
And it suggests that investors are worried that the returns from productive companies may turn out to be dismal. Luxury, trophy assets have a scarcity factor that make them valuable. The world is awash with mass-produced goods -- and the rich may be signaling that there isn't much money to be made from such products.
A Faberge egg may not hold its value more than any other asset you buy. But at least it looks nice when you put it in a glass case, and you'll know that you took home a national treasure.
And if the world heads for a period of high inflation and low growth -- which is what this boom in luxury assets implies -- it might turn out to be a good investment as well.
To contact the writer of this column:
Matthew Lynn in London, or
To contact the editor of this column:
William Ahearn, or
Last Updated: February 9, 2004 03:35 EST
Pensions Bill on Hold As Dems Demand Say
Feb 6, 2:33 PM (ET)
(AP) The Senate, acting with rare election-year concord, passed a bill Wednesday, Jan. 28, to reduce by...
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WASHINGTON (AP) - Legislation that promises companies billions of dollars in pension relief has sailed through both the House and Senate but is now caught up in a separate dispute - what Democrats say is an assault on their congressional minority rights.
The Senate last week passed a bill that would reduce by $80 billion the money that employers have to pay into their defined benefit pension plans this year and next. The Senate bill also would provide $16 billion in relief over the two years to airlines and others required to make catch-up payments to underfunded plans.
Since the House passed a somewhat different version last fall, commonly the next step would be a House-Senate conference to work out a compromise that both chambers would then approve and send to the president. But Senate Democrats have blocked Senate Majority Leader Bill Frist from naming conferees, protesting what they say is a pattern of being shut out of the negotiating process.
"I have no desire to hold the pension bill," Senate Democratic leader Tom Daschle said this week. "There is an urgency to this legislation, but we will not, on any legislation this year, tolerate the unacceptable experience we had on several occasions in the first session of this Congress."
Daschle was responding to GOP charges that he was obstructing legislation direly needed by companies facing financial ruin because of the high cost of pension plans.
"Senator Daschle's refusal to move forward on this bipartisan pension proposal raises serious concerns about his commitment to protecting the retirement security of American workers," said Rep. John Boehner, R-Ohio, chairman of the House Education and the Workforce Committee.
Democrats are particularly angered by two huge bills that House and Senate Republicans wrote last year with little or no input from Democrats.
Only two moderate Senate Democrats, and no House Democrats, took part in lengthy negotiations on the Medicare prescription drug bill that passed, and Democrats said they were completely locked out of talks on the energy bill that eventually failed in the Senate.
Rep. Steny Hoyer of Maryland, the House's second-ranked Democrat, has repeatedly pressed Republicans for what he says is the undermining of the democratic process. "I simply observe that that is shutting out the representatives of 130 million Americans on our side of the aisle to give their perspective."
But House Majority Leader Tom DeLay, R-Texas, in a floor exchange with Hoyer, said Republicans were equally frustrated when they were the minority. He said the process was open to those willing to work with the majority, but "you do not waste a lot of time with people that do not want a bill."
House-Senate conferences, a tradition since the 18th century, have often been a source of contention. During the New Deal, for example, liberal Democrats sought to exclude conservatives, including Democrats, from the list of conferees named by House and Senate leaders.
"It often backfires when either one side or the other perceives a conference as being held unfavorably to them," Senate historian Donald Ritchie said.
That happened last year when the House and Senate both passed an aviation bill that barred the privatization of air traffic controller jobs but Republican conferees, under pressure from the White House, rewrote it to include some shifts to the private sector.
Angry Democrats, joined by some Republicans, forced the bill back into conference and eventually the administration gave ground, agreeing to a one-year moratorium on privatization.
Daschle argued that the pensions bill could still go forward without a conference: The Senate could send its bill to the House, allowing it to either accept the Senate version or further amend it. Or there could be "pre-conferencing," informal talks among staff and members to iron out differences before a formal conference is held.
How to Sink the Tech Comeback
By Lawrence B. Lindsey
Posted: Monday, February 9, 2004
Wall Street Journal
Publication Date: February 9, 2004
Now that the Nasdaq has closed consistently back above 2000 it appears that much of the healing process from the collapse of the 1990s technology bubble is finally behind us. Sound macroeconomic policy prevented the resulting wealth destruction from producing a downward economic spiral like that of the '30s.
Going forward we must adhere to sound microeconomic policy as well if America is to retain its global leadership in technology. After the initial speculative frenzy and its collapse, the successful financing of new industries over the longer term requires a more stable environment. Clearly, competitive pressures are intense both within the existing market and from even newer technologies. But an equally important risk comes from public policy that is subject to a variety of political pressures to control the emerging market environment.
As a result, bad public-policy choices, especially in antitrust, can easily destabilize the new financial arrangements in the market. Today, there are four key factors that policy makers must take into consideration if we wish to preserve the newly found stability of our capital markets.
First, public policy should respect the underlying franchise value of the recently created firms and industries. Although the Nasdaq bubble would have burst in any event, the actual timing of its collapse coincided with two public policy events that cast doubt on these franchise values. First, the antitrust division of the Justice Department announced its Microsoft suit and suggested remedies that many felt threatened its business model. Although some of Microsoft's competitors would supposedly have benefited from the suit, they soon found that their stock values plummeted as well as the viability of the industry was questioned.
Several weeks later, President Clinton joined Prime Minister Blair in declaring the human genome to be the common heritage of mankind. The biotech sector soon saw its equity values collapse too. If the human genome belongs to all of mankind, what is the value of patents on products developed from human-genome research?
Today, regulators must show more forbearance regarding policies that would harm the market value of the technology industry. As the economy continues to strengthen, more mergers will take place as the natural process of creative destruction continues. We have seen consolidation occur in a number of technology fields, including computer hardware and media players, and there is more consolidation planned in fields like business application software. The prospect of buyouts, in fact, is part of the market value of all technology firms. But if this route for business development is closed, the market value of technology firms will drop.
Of course, regulators must vigorously enforce laws that prohibit anticompetitive conduct. But whether emerging market structures will allow anticompetitive conduct in the future based on established rules of market concentration is a purely hypothetical exercise. It is far more important to focus on the reality of performance than the theoretical possibilities of what might happen based on structure.
Second, market pricing is underpinned by the development of effective shareholder control. The regulatory environment should defer to shareholder decisions as much as possible regarding corporate control. The shareholders of an industry that has just seen its market value decimated are primarily focused on preserving what value is left and finding a way to rebuild. Both sustained economic growth and the long-term competitiveness of our high-tech industries requires that these shareholders succeed.
In the beginning, high-tech companies are owned chiefly by founders and a few key sponsors. As the market value rises, the shares are distributed more widely to a public that buys the shares because they like the concept the firm presents or the momentum of its stock price. These shareholders often back the founders in establishing poison pills that limit the possibility of a buyout because they believe they are betting on a winner and don't want to be part of some other organization.
After the market collapses and these shareholders liquidate, professional financial managers take over seeking value in stocks that have been knocked down too far. These value-oriented investors have no particular attachment to the original business model or its founders and are simply seeking to make a profit by acquiring undervalued assets and restructuring them in a way that will allow their resale to higher bidders. This process is key to rationalizing an industry and making it viable in the long term. Public-policy actions that inhibit this process--by blocking mergers and takeovers on allegedly competitive grounds or by overly protecting the poison pill arrangements of the initial founders--can do substantial damage to the long-term viability of the high-tech marketplace.
Third, public-policy must recognize that the competitive threats to the high-tech industry are numerous and by themselves sharply limit the scope for anticompetitive conduct. This is particularly true in our highly globalized market. A famous historical example from the late 1960s and early '70s was the antitrust position that General Motors could not exceed a 60 percent market share of U.S. auto production. This position was quickly made ridiculous by the invasion of Japanese cars. Similarly, the once dominant positions of IBM and Xerox quickly eroded. The reality is that the extreme amount of competition in the global market is the best check to anticompetitive business practices.
Finally, mergers can also be a way to increase competition. If two medium-size firms merge, they may end up better positioned to challenge the largest firm in the market. Leveraging new economies of scale is a way for smaller firms to reclaim market share lost to the largest firms.
It is somewhat ironic that, after all the high-tech equity market has been through, one of the greater threats to its overall valuation is not technological or even competitive, it is public policy. The months ahead will determine whether the recent rise in the Nasdaq reflects a new level of maturity for these emerging industries, or whether it will disappear because public-policy makers are unwilling to allow time for these industries to fully recover from the excesses of the '90s.

Lawrence B. Lindsey served as assistant to the president for economic policy under President George W. Bush and is a visiting scholar at AEI.
AEI Print Index No. 16326

Enabling Institutional Investors to Play a More Effective Role in Corporate Governance Print Mail

Posted: Monday, February 9, 2004

Shadow Financial Regulatory Committee briefing (Washington)
Publication Date: February 9, 2004
Statement No. 204
For Information Contact:
Charles W. Calomiris
(202) 862-7151
Randall S. Kroszner
(202) 862-5878
The SEC's recent proposals on "Shareholder Access" have generated an unusually large number of comments. As detailed in Statement No. 199, the Shadow Financial Regulatory Committee believes that the current SEC proposals would produce few, if any, benefits and have potential downside risks. Those proposals concern the ability of significant shareholders, under certain narrow circumstances, to include their candidates for directors in the proxy materials distributed to shareholders by a company. Rather than proposing a new set of complex regulations, the SEC, together with Congress and the Administration, should focus reform efforts on reducing barriers for the involvement of significant shareholders in the corporate governance of publicly traded firms.
The objective of any reforms of the corporate governance system should be to improve shareholder value. Re-examining the role that significant shareholders (institutional investors) can play in the governance process under current rules is important. In many cases, large institutional investors, such as index funds with large holdings in portfolio firms, do not have the option simply to "vote with their feet" by selling their holdings of firms that are underperforming. Particularly in these circumstances, it is valuable to investigate whether the current legal and regulatory system discourages useful involvement of institutional shareholders in monitoring and disciplining management.
When designing regulatory reforms to achieve meaningful and constructive engagement of institutional investors in the corporate governance of their portfolio firms, the SEC should begin by asking why institutions have not been more active in the past. If active involvement by blockholding institutions in corporate decision making is such a good idea, why haven't institutional investors pursued it more?
The Committee has identified several possible explanations, each of which points in a different direction for reformers seeking to increase institutional involvement in corporate governance.
First, it may be that regulatory limitations on the amount of stock in any one corporation that an institution is permitted to hold may reduce the incentive of an institutional investor to incur the costs of exercising a voice over corporate governance. These limitations apply to classes of institutional investors under various statutes, including state laws governing insurance companies, the Investment Company Act of 1940, banking laws, and financial holding company regulations.
Second, institutional investors may hesitate to play a role in corporate governance due to either regulatory limitations on their actions with respect to portfolio firms or legal risks that reduce their incentive to play an active role. Banks, for example, can face equitable subordination or lender liability when they are actively involved in corporate governance of debtor firms encountering distress. Also, any institution that places one of its own employees on the board of a company faces potential liability for insider trading or suits brought against that director. If these legal and regulatory impediments exert an important chilling effect on corporate governance by institutional investors, it might be appropriate to remove or reduce some of these limitations, or encourage market-oriented reductions of legal risks through mutual insurance of those risks by institutional investors.
Third, it may be that involvement by institutional investors in corporate governance has been hampered by difficulties in coordinating the behavior of several blockholding institutions holding shares in the same firm. A coordinated effort of many institutional investors, who together have a significant stake in a firm, might be much more effective as a means of exerting influence than the actions of one institution acting alone. Coordination, however, can be costly for two reasons: physical coordination costs and legal impediments or risks to coordination. It is possible that some beneficial coordination is avoided out of fear that this would result in potential legal problems for institutional investors (e.g., through antitrust laws or section 16(b) rules governing short swing trades).
Fourth, it may be that the Williams Act and anti-takeover devices have weakened the incentive for institutional investors to play an active role in corporate governance. After all, the primary roles of institutional investors in corporate governance are occasional interventions to support a hostile takeover or to replace a dysfunctional board of directors, rather than to play an ongoing role in supervising day-to-day management decisions. If anti-takeover devices insulate management from the threat of such discipline, then institutional investors may conclude that there is little point to taking an active role in corporate governance. Here, the policy solution would focus largely on changes in law and regulation that would facilitate market discipline through takeovers.
Finally, it is possible that the lack of involvement in corporate governance by institutional investors is the result of agency problems between ultimate stockholders and the institutional investors that manage their shares. If pension fund and mutual fund managers face weak incentives to maximize the value of the portfolios they manage, they may choose not to be as diligent as they should be in improving corporate governance in portfolio firms. To the extent that agency problems in money management are an important problem, policy makers should consider ways to improve money managers' incentives.
The Committee believes that rather than attempt to enhance shareholder democracy by tinkering with shareholder voting rules, policymakers should focus on enhancing the ability of institutional investors to affect corporate governance.

Toward a Single Transatlantic Market in Financial Services
Posted: Monday, February 9, 2004
Shadow Financial Regulatory Committee briefing (Washington)
Publication Date: February 9, 2004
Statement No. 203
For Information Contact:
Kenneth Dam
(773) 702-0216
Richard Herring
(215) 898-5613
Hal Scott
(617) 495-4590
For several years the U.S. government has carried on an Informal Financial Markets Dialogue with the European Commission in order to narrow the differences between the different financial regulatory systems. The Shadow Financial Regulatory Committee believes that the time has come to consider the issues in a broader context: what would be required for the development of a single Trans-Atlantic market in financial services. Further, it is time to consider whether the present regulatory approaches make sense in a 21st century economy.
On the U.S. side, the Treasury has taken the lead in cooperation with the Securities and Exchange Commission (SEC) and the Federal Reserve, even though some of the issues involve other regulators. On the European side, the Commission has carried on the Dialogue without participation by member country regulatory authorities. As the name implies, the Dialogue is informal, with public disclosure limited to occasional speeches and fact sheets. Similarly, consultation with and advice from the private financial sector have also been informal.
Although the individual issues are well known to the private firms directly involved, the public policy dialogue has necessarily been limited. The Committee believes that the issues being discussed in this Dialogue are of importance not just to the financial services industry, but also to the U.S. and European economies more broadly. Although the governmental institutions and individuals involved are well informed and well motivated, we believe that the visibility of the issues under discussion needs to be raised but also to the U.S. and European economies more broadly. Although the governmental institutions and individuals involved are well informed and well motivated, we believe that the visibility of the issues under discussion should be raised.
The present Dialogue takes the substance of the existing regulatory schemes as given without conducting any cost-benefit analysis to determine whether particular regulations, either on the U.S. or the EU side, make sense in a 21st century economy. We believe that higher goals and broader economic examination of the underlying issues would be desirable.
From the standpoint of goals, the vision of a single Trans-Atlantic market in financial services will help to raise our sights and thereby the quality of the results. The economic benefits of recent financial innovation and transformation have been limited by outmoded regulation. And the costs of complying with the divergences among jurisdictions have been borne by private firms with predictable consequences for economic efficiency. We believe that the goal of a single Trans-Atlantic market in financial services, as well as the adoption of principles to resolve differences, would provide a framework for faster progress and greater achievement.
What follows is a summary of some of the key regulatory issues that confront the Dialogue, as well as a consideration of some principles that might guide agreement, and questions of process.
Some Regulatory Issues
First is the 2002 Sarbanes-Oxley Act, which extended new rules of governance to foreign firms whose securities trade in public markets in the United States. While SEC implementation of these rules has accommodated the principal concerns of European issuers, particularly in the area of the need for independent directors on the audit committee, certain issues remain. There is the question as to how the registration and inspection standards of the Public Company Accounting Oversight Board (PCAOB) will be applied to foreign auditing firms. In addition, Europeans are concerned with the "no exit" feature of U.S. regulation that requires all companies with more than $10 million in assets and more than 300 shareholders to comply with Sarbanes-Oxley even if they were to drop their exchange listings and discourage trading of their securities in the U.S.
Second is the scheduled adoption of International Accounting Standards (IAS) by the EU in 2005, which may prohibit U.S. companies from continuing to issue securities in the EU under U.S. GAAP. It is not even clear whether countries currently trading under U.S. GAAP in Europe will be grandfathered. There is particular concern that the EU may not accommodate U.S. GAAP in the EU if the SEC fails to allow foreign firms to use IAS in issuing securities in the United States. While the Convergence Project undertaken by the Financial Accounting Standards Board and the International Accounting Standards Board is seeking to bring about convergence in the two sets of rules, it is far from certain that this effort will be complete by 2005. Complicating this exercise are important issues concerning which rules are adopted when they differ substantially and the balance between rules and principles.
Third is the divergence of views on the implementation of the Basel II Accord in 2007. The U.S. has indicated that it will apply only these standards to "internationally active" banks. The EU, on the other hand, envisions applying all of the standards to all banks and securities firms in the EU.
Fourth is the question of the effect of the EU's proposed Financial Conglomerates Directive on U.S. securities firms that are currently unregulated at the holding company level. The EU Directive would subject these firms to EU conglomerate regulation unless these firms are subject to "equivalent" U.S. regulation. The SEC has proposed a new form of holding company regulation, which it hopes will satisfy the equivalence test, but this has yet to be decided by the EU.
In addition, there are other areas of concern: different standards for data protection and privacy, the inability of EU stock exchanges to set up trading screens in the United States without being fully subject to U.S. regulation, differences in approaches to electronic trading systems, particularly those involving internalization, and differences in takeover rules.
If, contrary to our suggestions above, the Dialogue proceeds along its current narrower path, it would be useful to reach agreement on general principles to guide negotiations. Traditionally, the United States has followed the national treatment approach under which foreign firms operating in the United States are fully subject to U.S. rules, such as the requirement that foreign firms file reports using U.S. GAAP and comply with the CEO/CFO financial statement certification requirement of Sarbanes-Oxley. There have also been attempts to harmonize rules in formal ways, Basel II serving as a major example. To a great extent, the EU has adopted still another approach, mutual recognition, within its internal financial market. Mutual recognition requires the host state to recognize the validity of the home state's rules, assuming some minimum level of harmonization. The United States has generally been unwilling to accept mutual recognition principles in dealing with the EU, although it has adopted a mutual recognition system (with some important exceptions) with respect to Canadian firms issuing securities in the United States and to U.S. firms issuing securities in Canada. In addition, the United States has generally accepted home country regulation, albeit as a necessity, with respect to the regulation of foreign banks operating in the U.S. through branches.
Two other principles have been put forward more recently. First, the EU Commission has advocated an equivalence approach, whereby it would accept U.S. regulation that was equivalent to its own, even though the details might be quite different. Indeed, the Financial Conglomerates Directive adopts an equivalence approach. The United States has used the test as well in some areas. For example, foreign mutual funds registering in the United States are exempted from certain features of the Investment Company Act of 1940 if they are subject to equivalent rules abroad. Second, the SEC has advocated a convergence approach, indicating its willingness to accept EU regulation that has converged with but may not be identical to the U.S. rules. How these principles would actually be applied to the issues now under discussion has yet to be determined.
As noted above, the Treasury, the SEC and the Federal Reserve represent the United States, while the European Commission represents the EU, even though other regulators may be consulted. At some stage there will need to be additional, more structured governmental participation on both sides, that would include the CFTC and state insurance commissioners on the U.S. side and key national regulators on the EU side, as well as self-regulatory organizations on both sides of the Atlantic. It will also be necessary to take into account non-EU countries in Europe, principally Switzerland. Discussions among government officials and regulators can result in more regulation as a "compromise". But less regulation should also be an option in many areas and thus the views of private sector observers as well as the financial community should weigh heavily in the ultimate conclusions of the Dialogue.
The Shadow Committee applauds the efforts of the U.S.-EU Informal Financial Markets Dialogue to narrow the differences between the two financial regulatory systems. At the same time, however, we urge the participants in the Dialogue to raise their sights to achieve the more ambitious goal of developing a single Trans-Atlantic market in financial services. This approach should involve not simply an ad hoc resolution of current regulatory differences, but should involve a careful cost-benefit analysis of each aspect of regulation to ensure that we achieve a financial system that serves the real economy in the most efficient way.

Posted by maximpost at 12:11 AM EST
Monday, 9 February 2004

Pakistan's Dr. Strangelove
Why did Musharraf pardon Abdul Qadeer Khan?
Sunday, February 8, 2004 12:01 a.m. EST
Gen. Pervez Musharraf is caught between a rock and a hard place following the recent televised confession by Abdul Qadeer Khan, Pakistan's former chief nuclear scientist, of his role in illegally disclosing weapons secrets to Iran, Libya and North Korea.
The beleaguered Pakistani president--who recently survived two assassination attempts--has to balance international concern about Khan's actions with the wrath of religious groups and nationalists of every stripe within Pakistan, where the nuclear program enjoys widespread support. That explains, in part, his decision last week to pardon the errant scientist. Even Mr. Khan's unprecedented confession has not reduced his iconic stature in the eyes of ordinary Pakistanis. Many believe that he is being made a scapegoat for successive governments and army administrations that have been party to the export of nuclear technology.
Pressure on Gen. Musharraf came from Qazi Hussain Ahmed--the head of the largest religious party, Jamaat-e-Islami, a key part of the coalition that recently gave the president a crucial vote of confidence in the National Assembly--who has demanded that no action be taken against Khan "irrespective of anything he might have done." Mr. Ahmed has threatened to launch a nationwide movement against the government if Khan is further "humiliated." That sentiment has been widely echoed in newspaper editorials throughout Pakistan in recent days.
Gen. Musharraf's hands are also tied by other considerations. Most observers dismiss official claims of the army being unaware of Khan's free-lance marketing of nuclear secrets. That means if the scientist were put on trial, he could well take down some major military figures with him. There are already unconfirmed reports that Khan has taken out insurance against being forced to stand trial by sending documents detailing the army's involvement in illicit nuclear trafficking to his daughter in London.
Pakistan's journey to its present nuclear status has been long and arduous. After India exploded what it called a "peaceful nuclear device" in 1974, Zulfiqar Ali Bhutto, then Pakistan's prime minister, vowed that his nation would also develop a bomb, even if it meant Pakistanis "had to eat grass" in order to do so. And he turned to Khan, then a metallurgist at Urenco, a consortium of European nations involved in atomic research based in Holland, to head the task.
Khan brought with him stolen designs for centrifuges used to enrich uranium and began work at the Kahuta laboratories 12 miles outside Islamabad. These facilities were later renamed the Khan Research Laboratories in honor of the man who had become known as the "father of the Pakistani bomb." And when Pakistan tested five atomic devices in May 1998, in response to Indian tests a fortnight earlier, Khan and his colleagues became national heroes.
Khan's aura of invincibility only began to crack in late 2002, in the run-up to the Gulf War. A dossier of documents--supplied by Baghdad to the U.N. in response to Security Council resolution No. 1441--included a memo from an Iraqi secret agent in Dubai reporting that he had been approached by a person purporting to represent Khan, and offering to sell nuclear secrets. However the Pakistan government dismissed this with its usual knee-jerk denial.
Then last year, Khan's secret contacts with North Korea began to emerge, including a report that he visited Pyongyang 19 times between 1997 and 2002. And matters were brought to a head over the past few months when both Libya and Iran informed the International Atomic Energy Authority that their embryonic nuclear programs had been helped by Pakistani scientists. Faced with these embarrassing facts, Gen. Musharraf had no choice but to order an investigation.
At least two of Khan's colleagues are reported also to have confessed to having parted with nuclear secrets to foreign governments. That would seem to make it an open-and-shut case. But in Pakistan, things are seldom as they appear, especially when it comes to a program in which the military has been so heavily involved, right from its inception. So strong was the military control that civilian prime ministers, such as Benazir Bhutto and Nawaz Sharif, were kept out of the loop and even denied access to the facilities at Kahuta.
That makes it almost certain that Gen. Musharraf will opt for a way out that allows him to appear to have punished the erring scientists, while not being forced to make the army's involvement public. Khan's presidential pardon indicates the pursuit of that option. There will be next, one might predict, a move to strip the scientists of their ill-gained assets and to keep them under loose house arrest--so restricting, also, their access to the press. That would enable him to tell Khan's many supporters that, in view of the scientist's contribution to Pakistan's security, he has resisted the international community's demand for a public trial that would demean him and the nation.
Gen. Musharraf is in a daunting position as he tries to balance domestic fury with legitimate international concerns. But since the West needs his help in its war against terror--not to mention getting to the bottom of all nuclear proliferation of Pakistani origin--the chances remain high that both he and Khan will save face and walk away from this sordid drama.
Mr. Husain, a former civil servant in Pakistan, is a columnist for two Pakistani newspapers, Dawn and the Daily Times.
At Least 7 Nations Tied To Pakistani Nuclear Ring
By Peter Slevin, John Lancaster and Kamran Khan
Washington Post Staff Writers
Sunday, February 8, 2004; Page A01
VIENNA, Feb. 7 -- The rapidly expanding probe into a Pakistani-led nuclear trafficking network extended to at least seven nations Saturday as investigators said they had traced businesses from Africa, Asia and Europe to the smuggling ring controlled by Pakistani scientist Abdul Qadeer Khan.
Three days after Khan confessed on television to selling his country's nuclear secrets, Western diplomats and intelligence officials said they were just beginning to understand the scale of the network, a global enterprise that supplied nuclear technology and parts to Libya, Iran, North Korea and possibly others.
"Dr. Khan was not working alone. Dr. Khan was part of a process," said Mohamed ElBaradei, director of the International Atomic Energy Agency, the Vienna-based U.N. agency that is conducting the probe along with U.S. and other Western intelligence agencies. "There were items that were manufactured in other countries. There were items that were assembled in a different country."
Meanwhile, Pakistani officials disclosed that they had launched their own probe of Khan's activities in October after the Bush administration presented what one senior official described as "mind-boggling" evidence that Khan was peddling nuclear technology and expertise to Iran, Libya and North Korea, and had attempted to do the same with Iraq and Syria.
The evidence included detailed records of Khan's travels to Libya, Iran, North Korea and other nations, along with intercepted phone conversations, financial documents and accounts of meetings with foreign businessmen involved in illicit nuclear sales, the Pakistani officials said.
Pakistan's president, Gen. Pervez Musharraf, was personally briefed on the evidence on Oct. 6 by a U.S. delegation led by Deputy Secretary of State Richard L. Armitage. Gen. John Abizaid, the head of U.S. Central Command, made a similar presentation to Pakistani political and military leaders, the officials said.
"This was the most important development for us since 9/11," one of the Pakistani officials said. "One more time, the ball was in the court of General Pervez Musharraf."
Khan, known in Pakistan as the creator of the country's atomic bomb, acknowledged in the televised statement Wednesday that he had passed nuclear secrets to others, saying that he acted without authorization from his government. A day later, Musharraf pardoned Khan.
U.S. and U.N. investigators say Khan's nuclear trading network represents one of the most egregious cases of nuclear proliferation ever discovered. Using suppliers and middlemen scattered across three continents, the network delivered a variety of machines and technology for enriching uranium, a key ingredient in nuclear weapons. In the case of Libya, at least, it provided blueprints for the bombs themselves.
Khan's network provided "one-stop shopping" for nuclear technology and parts, said a senior U.S. official, who described how supply met demand in what amounted to a centralized ordering system.
"If I want to buy an IBM computer, I don't have to go to every single element of IBM," the official said, by way of analogy. "I can go to their salesman, and he fixes me up just fine."
Diplomats familiar with the Pakistan operation say Khan and his closest associates were the "salesmen" who filled orders for Libya and other customers. In the case of Libya, representatives of Libyan leader Moammar Gaddafi contacted the Pakistanis, who relayed the requests to middlemen.
The middlemen, in turn, found suppliers to produce the necessary components. Finished parts were then shipped to a firm in the Persian Gulf emirate of Dubai, which arranged for delivery to Libya. The interception of a significant shipment of components in Italy last fall led to Gaddafi's decision to eliminate his nonconventional weapons programs, U.S. officials contend.
Companies or individuals in at least seven countries, including Pakistan, were involved, knowledgeable officials said. Among the countries known to be involved are Malaysia, South Africa, Japan, the United Arab Emirates and Germany. A company in another European country was also involved, two diplomats said.
The commodities produced for Libya ranged from electronics and vacuum systems to high-strength metals used in manufacturing gas centrifuges, which are used in making enriched uranium.
"It was a remarkable network that was able in the end to provide a turn-key gas centrifuge facility and the wherewithal to make more centrifuges," said former IAEA inspector David Albright, a physicist who has studied the nuclear procurement networks of Iran and Libya. "The technology holder was always Khan. Suppliers came and went, but Khan was always there."
Libya and Iran have already given investigators the names of many of the companies and middlemen involved, and are continuing to offer more, according to Western diplomats familiar with the investigation.
Two German businessmen identified by Libya as alleged suppliers of centrifuge technology -- Otto Heilingbrunner and Gotthard Lerch -- have been interviewed by IAEA investigators but not charged with any crimes, according to two officials close to the investigation. A third German named by Libya, Heinz Mebus, is now deceased. All were formerly employed by companies that manufacture equipment used in gas centrifuges.
Heilingbrunner, reached by phone at his home in southern Germany, said he tried to sell aircraft parts to Iran in the 1980s, but said he never sold nuclear technology to anyone.
"I never did business with this junk," said Heilingbrunner. "I do not know how they came up with me." A senior Bush administration official said the Khan connection may have provided everything Libya acquired for its nascent nuclear program, including weapons designs. The designs were later handed to U.S., British and IAEA officials in Tripoli and are now being studied in the United States.
The disclosure of Armitage's October visit by Pakistani officials provides new details of a claim made this week in a speech by CIA Director George J. Tenet. Tenet said the intelligence agency had successfully penetrated Khan's network long before the IAEA went to Pakistan in November with evidence of illicit technology transfers to Iran.
Two Pakistani officials said Armitage presented the case against Khan and several other associates during a meeting with Musharraf at his official army residence in the city of Rawalpindi. The Americans asked Pakistan to verify the information independently and to take action against those involved, the officials said.
"We were told that Pakistan's failure to take action will most certainly jeopardize its ties with the United States and other important nations," one of the Pakistani officials said. The U.S. officials warned Pakistan that failure to act on the information could lead to sanctions by the United States and the United Nations.
Musharraf was said to be stunned by the detailed evidence against Khan and his associates. "It seemed that the Americans had a tracker planted on Khan's body," a Pakistani official said. "They know much more than us about Dr. Khan's wealth spread all over the globe."
Among other things, he added, the U.S. officials presented evidence of Khan's alleged attempts to sell nuclear secrets to Saddam Hussein when he was president of Iraq and reported that Khan had traveled to Beirut for a clandestine meeting with a top Syrian official in the mid-1990s.
During the second week in November, an Iranian delegation led by a deputy foreign minister, Gholam Ali Khoshru, arrived in Islamabad, according to a third senior Pakistani official.
"They used a very careful formulation," the official recalled of the visit. "They said they had acquired components and designs in '87 from the black market -- they mentioned Dubai -- and said two of the individuals involved were of South Asian origin, though not from the same country. They hinted they were under scrutiny from the IAEA and would have to make these declarations" about who had supplied the technology.
Shortly afterward, the IAEA delivered its findings on Iran in a two-page letter, and Pakistan's investigation began in earnest. Musharraf ordered the Inter-Services Intelligence agency (ISI) and Strategic Planning and Development Cell to check out the evidence that had been provided by the United States and the U.N. agency, the officials said.
ISI officials traveled to Malaysia, Dubai, Iran and Libya and "found that evidence against Dr. Khan was accurate," one of the officials said.
Staff writer Joby Warrick in Washington and researcher Shannon Smiley in Berlin contributed to this report. Lancaster reported from Islamabad and Khan from Karachi.
? 2004 The Washington Post Company

Libya's A-Bomb Blueprints Reveal New Tie to Pakistani
Published: February 9, 2004
Investigators have determined that the nuclear weapon blueprints found in Libya from the Pakistani scientist Abdul Qadeer Khan were of his own relatively crude type of bomb -- not the more advanced models that Pakistan developed and successfully tested, American and European arms experts have said in interviews.
The analysis of the blueprints, which establish a new link between Dr. Khan and the underground nuclear black market now under global scrutiny, has heartened investigators in Europe and the United States because his design is seen as less threatening in terms of the spread of nuclear weapons.
"If you had to have a design circulating around the world, we'd be worse off if it was a design other than Khan's," said an American weapons expert who is familiar with the Libyan case.
However, European and American investigators said they feared that Dr. Khan and his network of shadowy middlemen might have peddled the weapon blueprints to other nations in deals that have not yet come to light. They also said the Libyan findings gave new credence to what was apparently an attempt by Dr. Khan more than a decade ago to sell a nuclear weapon design to Iraq.
Pakistani officials have focused their recent disclosures on Dr. Khan's illicit spread of equipment to enrich uranium to produce nuclear fuel, and have said little or nothing of the blueprints for a nuclear warhead that went to Libya, which are considered more sensitive. To the amazement of inspectors, the blueprints discovered in Libya were wrapped in plastic bags from an Islamabad dry cleaner.
"The Libyans said they got it as a bonus," an official said of the plans.
The centrifuge equipment and warhead designs from Dr. Khan's laboratories in Pakistan were discovered in Libya after the country's leader, Col. Muammar el-Qaddafi, agreed to dismantle his secret nuclear program, opening it to United States and United Nations nuclear officials.
Late last month, a 747 aircraft was chartered by the United States government for the sole purpose of carrying the small box with the warhead designs from Libya to Dulles airport near Washington. They are now undergoing analysis.
The American weapons expert said Western analysts, while relieved to find that the blueprint was of Dr. Khan's design, were not overjoyed. "A bad bomb is still a nuke," he said. "It can still do pretty terrible things to your city."
Dr. Khan is known in Pakistan as the father of the Pakistani bomb or the founder of its nuclear weapons program, but Western experts say the credit is not all his. A metallurgist, he is an expert at building centrifuges -- hollow metal tubes that spin very fast to enrich natural uranium in its rare U-235 isotope, which is an excellent bomb fuel. His mastery of the difficult art proved vital to Pakistan's acquiring a nuclear arsenal.
But other Pakistani scientists, Western experts said, had far greater success in turning the enriched uranium into nuclear warheads.
To develop the armaments, the American expert said, Pakistan ran "two parallel weapons programs, one good and one bad; Khan ran the bad one." Dr. Khan's weapon was inferior in terms of such as things as size, power and efficiency. The Pakistan Atomic Energy Commission, the nation's official authority for nuclear development, ran the more successful program.
All Pakistan's atom bombs resemble designs that China tested in the late 1960's and passed on to Pakistan decades ago, European and American experts said.
So too, Pakistan's atom bombs all use a relatively advanced means to detonate bomb fuel known as implosion.
The weapon that destroyed Hiroshima in 1945 used a simpler detonation method known as a "gun-type system," in which conventional explosives sped a uranium projectile through a cannon barrel into a uranium target, creating a critical mass and a gargantuan blast.
By contrast, experts said, Pakistan's designs used the more advanced principle of implosion, as did the bomb dropped on Nagasaki. It works by having a sphere of conventional explosives squeeze inward to crush a ball of bomb fuel, creating the critical mass. Implosion uses much less fuel than detonations from the gun-type system, making the bombs far cheaper and lighter.
Even so, Dr. Khan's design is "vanilla flavored and very old in concept," a European weapons expert said.
Analysts said the Libyan episode gave new life to the case of a middleman claiming to represent Dr. Khan who in 1990, on the eve of the Persian Gulf war, offered to have the Pakistani help Iraq build its own nuclear weapon.
The case came to light in the mid- 1990's when United Nations inspectors came across documents relating to the middleman's offer. "He is prepared to give us project designs for a nuclear bomb," an Iraqi memo said of Dr. Khan. "The motive behind this proposal is gaining profits for him and the intermediary." But the investigators made little headway, largely because Pakistan furiously denied there had been any aid to Iraq and refused to allow Dr. Khan to be questioned.
Now, those denials have collapsed, bringing new interest. David Albright, president of the Institute for Science and International Security in Washington, said Iraqi documents, coupled with the Libyan developments, raised the possibility that Dr. Khan's network operated for more than a decade to offer atomic blueprints not only to Libya and Iraq but to countries like Iran, Syria and North Korea. Global investigators must now carefully examine that possibility, he said.
As Palestinians slide into anarchy,
calls mount for better leadership
By Gil Sedan
JERUSALEM, Feb. 2 (JTA) -- "Yes, we are in a state of anarchy."
That is how Zayyad Abu-Zayyad, member of the Palestinian Legislative Council and a former Palestinian Authority Cabinet minister, describes life today in the areas ruled by the Palestinian Authority.
"Certainly when a Palestinian policeman cannot walk around freely wearing his uniform, this creates a vacuum in which everyone does whatever one pleases," he said.
The situation is becoming grave, Abu-Zayyad told JTA.
"We have people selling land that is not theirs, and our courts are unable to enforce the law. Everyone who has money can purchase as many arms as he wants and can do with them whatever he wants. There is strong collaboration between our mafia and the Israeli mafia," he said.
"I am surprised at the level of mutual tolerance within the Palestinian society that still exists," he added. "Other societies would have been at a much worse state."
However, Abu-Zayyad distinguishes between a state of anarchy and the possibility that the Palestinian Authority is on the verge of disintegration.
"The P.A. is not collapsing," he said. "Should it happen to collapse, it would certainly not be in Israel's interest; all extremists would go on a rampage. I know that there are a number of Palestinian intellectuals who feel that the P.A. should give up and let Israel take over -- I am not among them."
A resident of the Jerusalem suburb of al-Azariyya, Abu-Zayyad is a close associate of P.A. Prime Minister Ahmed Qurei. Accordingly, he relieves Qurei of any responsibility for the deterioration of affairs.
"No one helps him, neither" P.A. President Yasser "Arafat, nor the Israelis nor the Americans. He still stays put, but I am not sure for how long," Abu-Zayyad said.
Israeli and American officials reportedly consider Qurei a tremendous disappointment. Perhaps because he witnessed the fate of his predecessor Mahmoud Abbas -- who tried to wrest real power from Arafat and was forced to resign within three months -- Qurei has demonstrated virtually no leadership since taking office last fall, Israeli and American officials say.
There is a high probability that he soon will resign or be forced to resign, Israeli officials believe.
Maj. Gen. Aharon Ze'evi (Farkash), the head of intelligence for the Israel Defense Forces, told the Cabinet this week that Arafat understands that the present state of affairs weakens the hegemony of his ruling Fatah Party and further strengthens the political stock of fundamentalist groups like Hamas.
As a result, Ze'evi said, Arafat recently instructed uniformed P.A. police officers to return to the streets of Palestinian cities to demonstrate a political presence. However, the lack of discipline in the force is such that the suicide bomber who killed 11 civilians on an Israeli bus in Jerusalem last week was a P.A. policeman from Bethlehem.
Arafat finds himself under heavy pressure from Egypt to cope with the anarchy and create conditions that would enable a meeting between Qurei and Israeli Prime Minister Ariel Sharon. Qurei has kept his distance from Sharon, demanding that Israel suspend construction of its West Bank security fence as a condition for meeting.
Sharon, who believes the fence will dramatically change the strategic relations between Israel and the Palestinians in Israel's favor, refused.
"He wants to succeed, but this is not enough," Abu-Zayyad said of Qurei. "He has learned the lesson from Abu-Mazen," he said, using Abbas' nom de guerre.
Abbas "annihilated himself politically," Abu-Zayyad said, "after having met Sharon and receiving nothing from him."
Sharon released hundreds of Palestinian prisoners, relaxed anti-terrorist restrictions in the West Bank and turned over several cities to P.A. rule in an effort to bolster Abbas' prestige. The Bush administration, which has shunned Arafat because of his ties to terrorism, warmly embraced Abbas, inviting him to the White House and relaxing restrictions on U.S. aid to the Palestinians to show that Abbas could win gains for his people.
Palestinians say the Israeli and American gestures were not enough.
Abu-Zayyad draws a picture in which the Palestinian Authority has absolutely no power to stabilize the situation. But that's not an accurate description, according to some Israeli experts.
Col. (Res.) Shalom Harari, an expert on Palestinian affairs at the Interdisciplinary Center in Herzliya, told JTA that this is yet another show staged by Arafat, who throughout his career has carefully cultivated chaos and disorder to garner international sympathy and blur his responsibility for events.
"The story repeats itself every few months: Internal unrest in the Palestinian Authority reaches a heating point, Arafat makes a few moves to prove that he is in control but then lets go and allows the instability to continue," Harari said.
According to Harari, Arafat still thrives on a situation of "divide and rule," regardless of the consequences for his people.
However, Harari said, the one difference is the fact that now Palestinians dare to speak of "fawda," an Arabic word that denotes a state of anarchy.
The watershed was the attempt last fall on the life of Ghassan Shaka, mayor of Nablus. Shaka's brother, Ahmad, was shot dead in Nablus by bullets apparently aimed at Shaka, one of the most prominent figures in the Palestinian areas.
Following the murder, Shaka wrote a sharply worded letter to Arafat that was published in all Palestinian newspapers.
"The continuation of this threatening and painful situation, and the impotence of the Palestinian law authorities, will force us to take our rights into our hands," he wrote. "My family and I expect immediate measures of sovereignty that will return the respect of law."
Once Shaka spoke out, others followed suit. In an article in the London-based Al-Sharq al-Awsat newspaper, former Arafat adviser Imad Shakur demanded that Arafat take immediate and dramatic steps to return law and order to the Palestinian streets.
First, Shakur wrote, all factions -- most of which maintain terrorist militias -- should be transformed into legitimate political parties; the militias should be dismantled and integrated into the legitimate P.A. security forces; and the Qurei government should resign and an emergency government be created.
In fact, the first two suggestions are very close to obligations the Palestinians accepted under the "road map" peace plan, but then said they could not be expected to carry out.
Recent opinion polls show public Palestinian support for Shakur's demands. A poll conducted two months ago by the Palestinian Center for Policy and Survey Research in the West Bank and Gaza Strip showed that only 37 percent of Palestinian respondents had confidence in Qurei's government.
A record high of 81 percent said P.A. institutions are riddled with corruption. Two-thirds of those people believe corruption will remain the same or even increase in the future.
Indeed, Abu-Zayyad said Monday that he, too, believed nothing much would change -- unless Israel takes the initiative and renews peace talks with the Palestinian Authority.
He was unimpressed by an interview Sharon gave this week to the Ha'aretz newspaper, in which he claimed to have given instructions to begin preparing for the removal of 17 Israeli settlements in the Gaza Strip.
"I think that every unilateral step will not bring about a solution, not even dismantling settlements," Abu-Zayyad said, repeating the official Palestinian position. "I am sure that if Sharon dismantles settlements in the Gaza Strip, he will try and compensate the settlers in the West Bank -- which would, in turn, further complicate the situation."
? JTA. Reproduction of material without written permission is strictly prohibited.

David DeRosa , president of DeRosa Research & Trading, is an adjunct finance professor at the Yale School of Management and the author of "In Defense of Free Capital Markets." The opinions expressed are his own.
Japan's Quantitative Easing Policy Dwindles: David DeRosa
Feb. 8 (Bloomberg) -- In March 2001, the Bank of Japan altered its basic monetary policy approach, targeting the base of the money supply instead of short-term interest rates. That made Japan the only major country to adopt what central bankers call ``quantitative easing.''
Since then, there have been some signs that Japan's troubled economy is on the mend. Whether quantitative easing did the trick or not, is something economists will undoubtedly debate for a long time.
The discussion should start with how much quantitative easing Japan actually has done since March 2001. The bulk of the easing occurred during the final quarter of 2001 and the first quarter of 2002.
The rate of growth of the monetary base during that period at times exceeded 25 percent at its peak in first quarter 2002. The growth rate subsequently plunged and is now in the vicinity of 15 percent.
The monetary base consists of currency in the hands of the public plus commercial bank reserves kept at the central bank. In Japan, the later is referred to as the ``current accounts,'' though there is no connection to the balance of trade.
Rate Falls
Central banks directly control the monetary base but not the broader monetary aggregates, such as the famous M2 + CDs. That consists of currency plus checking accounts, savings accounts, and certificates of deposits.
The rate of change of M2 + CDs rose from 2.5 percent in March 2001 to peak at over 3.5 percent in the first quarter of 2002. It's noteworthy that now the rate has fallen to 1.5 percent.
The point is that though quantitative easing is still going on in Japan, the rate at which money is being created has fallen back to the dangerous level of the pre-quantitative easing era.
In January, the Bank of Japan raised its the upper target for growth in current account balances to 35 trillion yen from 32 trillion yen ($333 billion to $304 billion). Yet that was needed ``simply to avoid a de facto tightening in monetary policy,'' wrote Anne Mills, a senior foreign exchange economist for Brown Brothers Harriman & Co. on Jan. 20.
Hayami's Ghost
How committed then is the BOJ to quantitative easing?
History would suggest that the BOJ was never truly comfortable with quantitative easing. In fact, it fought quantitative easing tooth and nail before finally surrendering to the concept during the term of BOJ Governor Masaru Hayami, who served from 1998 to March 2003. For most of his time at the BOJ, Hayami seemed dead-set opposed to a monetary base policy target.
Hayami preferred to exercise monetary policy by establishing a target for the short-term interest rate. This target would be enforced by the BOJ conducting easing and tightening operations, wherein the monetary base would be expanded or contracted.
A number of economists complained that Hayami's BOJ had succeeded in holding the short-term interest rate either close to zero or actually at zero, but hadn't prevented the price of goods and services from falling.
Faster Money Growth
This later phenomenon is deflation, meaning a sustained fall in the price level. Deflation can be destructive to an economy because it implies high real rates of interest. The real rate of interest is the observed market rate adjusted for inflationary or deflationary expectations.
Moreover, the culprit was easy to identify. The money supply, measured narrowly as the monetary base, or broadly as the sum of currency, checking accounts, and savings accounts, was growing at dangerously low rates.
The cure was at hand: The BOJ needed to create a faster rate of money growth. Practically speaking, this had to work, or at least it always had worked before, though it was a prescription that few economists would ever advocate except in extreme situations such as the one Japan was experiencing.
What's Next?
The basis for this was the quantity theory of money, something that economists have known for hundreds of years. Rising price levels, inflation, or falling price levels, deflation, are always linked to the rate of growth of money creation.
In the end, Hayami came on board with the quantity theorists. In March 2001, he announced he was switching to target the rate of expansion of the monetary base.
Now Toshihiko Fukui, Hayami's successor as governor, has publicly endorsed quantitative easing. Yet given the plunge in the rate of increase of the monetary base and the broad-based monetary aggregates, one has to wonder what the BOJ really has in mind.
To contact the writer of this column:
David DeRosa in New Canaan, Connecticut, or
To contact the editor of this column:
Bill Ahearn, or bahearn@bloomberg
Last Updated: February 8, 2004 09:49 EST
Executive Pay, Hiding Behind Small Print
Published: February 8, 2004
INVESTORS have been understandably irate over executive pay recently. But because disclosure in the area is so woeful, they don't know the half of it.
Summary pay tables, required by the Securities and Exchange Commission since 1992, help investors see where their hard-earned money goes. But three areas cry out for reform by regulators: deferred compensation, supplemental executive retirement plans and executive payouts when a company undergoes a change in control.
As Brian Foley, a compensation expert in White Plains, put it, "The big print giveth but the small print giveth even more." And, sometimes, there is no print at all.
Consider deferred compensation, the career-ender for Richard A. Grasso, former chairman of the New York Stock Exchange. The only thing companies must reveal about deferred compensation is the difference between the market rate of interest and the rate earned by the executives on the amounts they have collected. That is the only clue to how mountainous deferred compensation can be.
At Wyeth, a drug maker, executives can earn an astonishing 10 percent interest rate annually. The 2003 proxy reported that John R. Stafford, Wyeth's former chairman who is a consultant, earned $1.6 million in above-market interest alone on deferred compensation. A Wyeth spokesman declined to say how much Mr. Stafford has in total.
Robert J. Ulrich, chief executive of the Target Corporation, a retailer, earned $688,218 based on deferred pay in 2002, the most recent year for which data is available; four top colleagues there made a total of $470,000.
Supplemental executive retirement plans are also annoyingly opaque. Actual amounts in executives' plans are undisclosed; tables outline only what executives may receive based on years of service, salary and bonus.
Such plans can loom large. Last month, Hercules Inc., a chemical maker, restated third-quarter 2003 results to account for a $4.7 million pension benefit paid to William Joyce, former chief executive. Hercules' net income was cut by $2.9 million or 14 cents a share.
Tim Ranzetta, president of Equilar, a compensation analysis firm, said: "The disclosure of the myriad executive compensation plans - pension, supplemental executive retirement plans, deferred compensation, split dollar life insurance - is not adequate in answering a fundamental question: What is the projected value of these plans to the executive upon his retirement?''
Finally, there are the potentially huge payouts to executives in a merger, a matter of consternation among shareholders at MONY, the insurance concern weighing a bid from AXA, the French insurance giant.
If the deal goes through, MONY executives will receive $98.2 million - more than 6 percent of the $1.5 billion transaction.
Executives' take in a merger is rarely detailed in routine filings. In last year's proxy, MONY discusses only broadly what executives could get: a lump sum of three times an executive's salary, bonus, long-term performance pay and other things. Such disclosure, or lack of it, is typical at companies.
Jesse M. Brill, a securities and compensation lawyer and chairman of the National Association of Stock Plan Professionals, is urging lawyers to disclose all compensation received by chief executives this year, not just adhere to outdated requirements. His disclosure advice is at
Shareholders are paying these bills. They have a right to know the costs in plain, shocking English.
IDF to pay big time to fix reservist call-up system
By Haaretz Staff
The Israel Defense Forces is expected to pay tens of millions of shekels in the upcoming months to fix a computerized call-up system for reservists. The system was installed just two years ago, and was meant to call reservists to their units as part of a "quiet call-up."
The original system contained a 9-digit field for reservists' mobile telephone numbers. In a few months, however, all cellular telephone numbers are to be changed to 10-digit numbers, and therefore, the system has to be updated accordingly.
The financial daily Globes reported yesterday that the IDF has appointed a special committee to look into the impact of this move. Various sources said that the repercussions could cost tens of millions of shekels.
The IDF took much pride when it inaugurated the new computerized dialing system two years ago. Instead of dispatching special reserve soldiers, the system automatically calls the reservists' cell phone, home, and place of work to pass on messages concerning his unit. The reservist needs to punch in his personal number and confirm that he has received the message.
The system, developed by a civilian company, proved to be very successful in trials and exercises. The planners, however, did not take one factor into consideration, namely that additional digits may be added to the cell phone numbers. The army will also look into expanding the fields for personal and other telephone numbers to prevent future problems.

More money needed `to minimize fence's harm to Palestinians'
By Amnon Barzilai
The defense establishment is asking the government to add hundreds of millions of shekels to the budget for the construction of the separation fence, to finance measures to ease the disruptions that the barrier has created in the daily lives of Palestinians who live west of it.
If the addition is approved, the total budget for building the fence this year would come to over NIS 3 billion. This figure is predicated on the construction of 265 kilometers of fencing this year, at an average cost of NIS 10.5 million per kilometer.
In response to the international criticism of the way the fence's route interferes with Palestinians' daily lives, the Israel Defense Forces' deputy chief of staff, Major General Gabi Ashkenazi, set up a task force to draft proposals for improving the situation. The task force proposed a number of recommendations, including the following:
l Dozens of alternative roads, tunnels and gates in the fence should be built to connect Palestinian villages to major urban centers in the West Bank, or to other nearby villages, in cases where existing transit routes have been disrupted by the fence. Work on the first underground road, between the village of Habla and Qalqilyah, began last week.
l Israel should fund organized transportation for schoolchildren whose homes are separated from schools in another village by the fence. The IDF has already allocated NIS 160,000 to bus children in Hirbat Shabra.
l Israel should finance the establishment of a dialysis unit at Makassed Hospital in East Jerusalem to ease the problems currently encountered at roadblocks by Palestinians trying to reach Jerusalem's Hadassah Hospital for this purpose. In addition, five Palestinian ambulances should be placed under close IDF supervision, and these ambulances should then be allowed to pass through roadblocks swiftly, without the lengthy security checks to which ordinary Palestinian ambulances are subjected for fear that they might be smuggling explosives.
At a meeting with Defense Minister Shaul Mofaz last Thursday, officials in charge of the fence's construction said that the work was currently on schedule, meaning that by the end of the year, stage three of the construction will be completed and work will have begun on stage four. To date, almost 200 kilometers of fencing have been completed; if this year's timetable is met, there will be 461 kilometers of finished fence by the end of the year.
In total, the fence is slated to be 705 kilometers long; of this, 151 kilometers is the Ariel salient, which is slated to be built only in 2005.
The officials also told Mofaz that the 20-kilometer section of the fence from Har Avner to Tirat Zvi would be completed by July 2004.
One problematic section of the fence is the area around Baka al-Sharkiyeh. The fence was originally slated to pass east of this town, but the army later reconsidered and decided instead to raze 40 illegal buildings located between Baka al-Sharkiyeh and the Israeli town of Baka al-Garbiyeh, thereby enabling the fence to be built on the Green Line, west of Baka al-Sharkiyeh. This 8.5-kilometer section of the barrier, of which 800 meters will be an eight-meter-high wall, is slated to be completed by the end of this month.
In the meantime, however, the army has already wasted NIS 140 million on the abandoned route east of Baka al-Sharkiyeh; it is now considering razing these portions of the fence.
Completion of both the Baka al-Sharkiyeh and the Har Avner-Tirat Zvi segments will produce a continuous 196-kilometer stretch of fence running from the Jordan River to Elkana.
David Horovitz: A Baffling Exchange, or Worse
I have lost count of the number of people abroad who have called or written to me these past few days, baffled by the lopsided Israel-Hizballah prisoner deal, assuming that distance is fueling their incomprehension, and seeking enlightenment. The trouble is, from here too, there has been plenty to be baffled about.
The numbers, for a start: more than 400 Palestinian security prisoners, 30 or so Lebanese and other Arab nationals, and 60 exhumed bodies of Lebanese gunmen, in return for three Israeli soldiers' corpses and a single live businessman? If that's what Israeli leaders consider "an exchange," they would appear to be long overdue for a refresher course in Middle East bargaining.
Then there is the very issue of dealing with Hizballah in the first place -- breaching the principle of refusing to negotiate with terrorists, a principle Israel has urged the rest of the international community to enshrine. Moreover, the exchange constitutes an unmistakable incentive for Hizballah to repeat the whole process, as the movement's sickeningly savvy leader Sheikh Hassan Nasrallah has gleefully observed: Kidnap some more soldiers at the border, and again demand extortionate terms for their return, dead or alive, confident that Israel, as it has now, will again go to any and all lengths to "bring its boys back home." Prime Minister Sharon's threat to use force rather than German mediators to resolve any future kidnappings sounded empty, even pathetic, given that it was issued before the very coffins he had just paid so heavily to return.
And finally, there is the further reinforcement of the perceived benefits of terrorism in the minds of hostile Palestinians. If the unilateral departure from Lebanon in 2000 provided encouragement for the terrorists' claim that Israel buckles under relentless attack, and Sharon's recent talk of a limited withdrawal in the West Bank has been interpreted as further proof of the bombers' wisdom, then this exchange would seem to constitute absolute confirmation.
Short-term Palestinian Authority prime minister Mahmud Abbas, telling his own people to put down the guns, stop dispatching the bombers, end the armed intifada, and restart serious peace negotiations, was rebuffed by Sharon when he pleaded for a mass release of Palestinian prisoners to boost his domestic standing. Hassan Nasrallah, pledging his assistance to the Palestinians in liberating their captured land from the Zionists, as he has liberated his, secured that same mass prisoner release by the simple expedient of seizing three soldiers at the border and kidnapping Elhanan Tannenbaum.
What message does that send about the relative advantages of negotiation and terrorism? Is it any wonder that Hamas, which hadn't bothered that much about trying to kidnap soldiers since Israel refused to knuckle under when Nahshon Wachsman was abducted in 1994 (and murdered by his captors, who were killed themselves as commandos vainly attempted his rescue), is now vowing to return to the practice.
Set against all this is the covenant the State of Israel makes with its people when it calls them into the army -- the commitment, come what may, not to abandon them in the field or if they're taken prisoner. There is the hope that a second phase of the deal may resolve the fate of missing airman Ron Arad. There is the return of Tennenbaum. And there is the end, the most bitter end, to the uncertainty endured by the families of those three soldiers, Adi Avitan, Benny Avraham and Omar Sawaid, now laid honorably to rest.
With, truly, the greatest sympathy for all the families, the equation doesn't add up. The sacred covenant to bring the boys back home simply doesn't apply in the cases of the returned trio; these were soldiers the army had already confirmed were dead. As for Tennenbaum, though a reserve colonel, he was most certainly not captured while on Israeli government or defense establishment business. And whatever the future hopes for Arad, the fact is that he did not come home under this exchange.
A friend this weekend posited a psychological explanation for the otherwise inexplicable. She noted how Sharon, in his address before those three flag-covered coffins, spoke of those in our neighborhood who sanctioned "murder and evil," and contrasted them with the Jewish state, "which sanctifies life." The chief of staff, in similar vein, insisted the deal was not weakness but a victory for Israel's higher "values." Isn't that what this has all been about, she mused? Israel agreeing to an inconceivable arrangement so that it could confirm to itself, and most particularly so that its prime minister could confirm to himself, how humane we are, how elevated our morals, and the unthinkable lengths we will go to preserve them.
I fear there may be some truth in this. And I say "fear" because it is such rank hypocrisy. It cannot square with an army that didn't provide the necessary supervision to prevent the trio being kidnapped in the first place, an army moreover that had abandoned a soldier to his fate six days before the trio were attacked at the Lebanon border -- Cpl. Madhat Yusuf, who bled to death hours after being hit by Palestinian gunfire at Joseph's Tomb on the edge of Nablus.
And most damningly, it cannot square with a prime minister who procrastinated for so long over building a security fence that, if completed earlier, could have saved so many non-combatant Israeli lives, is still delaying some sections so that it will not be completed for an intolerable two more years, and has routed parts of it deep inside the West Bank for narrow political reasons, bringing numerous Palestinians onto the "safe" side of the barrier in the process and thus heightening our vulnerability.
That the Hizballah exchange was carried out on the very day that yet another bomber exploited the absence of a full barrier to cross from the West Bank and murder 11 more Israelis in Jerusalem, and maim dozens more, searingly underlines the disconnect. Sharon has championed a deal that delights our enemies, in order to bring home our dead. Can he put his hand on his heart and say he is going to the ends of the earth, too, for the sake of the living?
The Jerusalem Report wishes our friend Erik Schechter, a former intern and reporter here, and now a military affairs reporter at The Jerusalem Post, a speedy recovery from the injuries he sustained in the January 29 bus bombing. Erik was at the center of the bus; the bomber was toward the back. With what must count as good fortune, he was moderately injured, mainly in his legs, and doctors expect him to make a full recovery.
February 23, 2004
Homegrown Terror
A potent poison. A Senate mail room. Echoes of the unsolved anthrax attacks--with a dash of angry truckers
After anthrax-tainted letters began showing up in the wake of 9/11, authorities quickly suggested that this was probably a case of homegrown terrorism rather than Round 2 of al-Qaeda's assault on the U.S. The likely perpetrator, many still believe, was a malevolent nerd with chemistry-lab expertise and a grudge against the government. But when traces of the biological toxin ricin showed up in Senator Bill Frist's mail room last week, the FBI and other agencies declared there was no evidence pointing to either a foreign culprit or a mad scientist. One possibility under examination: a good ole boy who knows his way around 18-wheelers, weigh stations and CB radios.
That would be consistent with two unsolved ricin-in-the-mail incidents that occurred last fall. They didn't create much of a panic, and despite the evacuation of three Senate office buildings last week, neither did the ricin found under a mail-opening machine on Capitol Hill. Ricin is a potent enough poison, and terrorist groups from al-Qaeda to the Iraq-based Ansar al-Islam have reportedly produced it for use as a biological weapon. So, evidently, did Saddam Hussein before the first Gulf War.
But ricin isn't especially good as a weapon of mass destruction. It's easy to make, using a recipe you can get off the Internet. It comes from the castor bean, which is used around the world in products ranging from laxatives to brake fluid to nylon, and also grows wild in the southwestern U.S., so there's no shortage of raw material. But unlike anthrax, ricin is tough to aerosolize and inhale; the easiest way to deliver a fatal dose is injection or ingestion, and you need a lot for the latter. Ricin is powerful, but it's a retail, not a wholesale, poison.
That's why ricin once enjoyed a certain cachet among international men of mystery. Every spywatcher knows about Bulgarian defector Georgi Markov, who was assassinated in London in 1978 in a ploy that James Bond or Austin Powers would appreciate: a shadowy stalker jabbed Markov in the leg with an umbrella rigged to inject a pellet of ricin under his skin (the killer was never found, but the KGB and the Bulgarian secret service were prime suspects).
More recently, the handful of ricin cases pursued by the FBI have involved domestic hotheads, not international spies. In 1995, for example, two Minnesota men associated with a tax-protest group called the Patriots Council were convicted for possessing ricin with the intent of using it as a weapon. And in 1993, Canadian customs agents found ricin along with four guns, 20,000 rounds of ammunition and some neo-Nazi literature in the car of an Arkansas survivalist crossing into Canada.
Then last October someone hand-delivered a package to a mail-sorting center near Greenville-Spartanburg International Airport in South Carolina. Inside the package, which was addressed to the U.S. Department of Transportation (DOT), was a metal vial filled with ricin. A label read, "Caution ricin poison enclosed in sealed container. Do not open without proper protection," and a letter demanded repeal of federal rules mandating 10 hours of rest in every 24 for long-haul truckers. Otherwise the sender, who signed the letter "Fallen Angel" and claimed to be "a fleet owner of a tanker company," would pour ricin into the local water supply. "Keep at eight [hours] or I will start dumping," said the note.
The FBI gave polygraph tests to the mail facility's 36 employees and to local truck drivers, and in early November asked the American Trucking Association to notify members to look out for anyone acting aggressively or suspiciously. But even as the word was going out, another letter containing a vial of ricin turned up on Nov. 6 at a White House mail-handling facility at Bolling Air Force Base in Washington. Postmarked Chattanooga, Tenn., it too was addressed to the DOT, via the White House. And like the first letter, it carried a warning label and a demand from Fallen Angel to ease trucking rules. That incident was never made public. Nearly a week passed before the Secret Service, which had intercepted the letter, notified the FBI, the U.S. Postal Service and the Department of Homeland Security--a delay that rankled those agencies. The Secret Service has promised to revise its protocols. But it's also important to remember, says a law-enforcement source, that "ricin is not a living, flesh-eating bacteria, like anthrax, so our response is much different."
Beyond that, investigators tell TIME that the powder found in Frist's mail room was mostly paper dust, with traces of ricin so minute, they can't even be evaluated for particle size or purity. No envelope or note has been found, and no other piece of mail from the Senate has even a trace of ricin on it. Neither do any door sills, doorknobs, railings or surfaces anywhere in the building. Same goes for air filters, which should catch floating particles.
That leads to a couple of theories. Perhaps an envelope in Frist's mail room contained a letter that was forwarded to the DOT, where Fallen Angel's grudge is aimed. Or maybe the letter was simply sent by someone who had previously handled ricin. "Let's say he didn't send us any product," says an investigator. "He's just sloppy. It's on his fingers, on his hands, or he's using the same envelopes, same paper. That may be why we don't have anything."
Still, it's worrisome to know that anyone is sending lethal substances through the U.S. mail--and getting away with it. The FBI has spent 251,000 man-hours on the anthrax case, conducted 15 searches, interviewed 5,000 people and served 4,000 subpoenas--without an arrest. (Steven Hatfill, a former government bioweapons expert once described by Attorney General John Ashcroft as a "person of interest" in the case, is suing the U.S. government for violating both his constitutional rights and internal Justice Department rules against leaks. He has strongly denied accusations that he is behind the mailings.)
Now officials have another bioweapons correspondent to worry about--or maybe more than one. Without a note or an envelope, it's unclear whether this is related to the Fallen Angel incidents. If there was what the media are calling a "smoking letter," it may have long since gone out with the trash. Without even that much of a clue, the best that authorities can do is look for forwarded letters, reinterview Frist staff members, examine suspicious mail the Senator has got over the years--and hope that a tip or a slipup puts the latest mad mailer out of circulation.
Reported by Elisabeth Kauffman/Nashville and Viveca Novak and Elaine Shannon/Washington
Copyright ? 2004 Time Inc. All rights reserved.
DNA Analysis of Ricin Could Track Source
By Marilyn W. Thompson
Washington Post Staff Writer
Sunday, February 8, 2004; Page A11
Using DNA analysis, federal authorities are trying to glean important clues about the source of ricin found last week in a Senate mailroom and in two earlier letter mailings, including where castor plants used to make the poisons were grown.
"The U.S. government has this well in hand," said Lee Browning, a researcher with a Texas seed company who has consulted with the FBI about ricin production and was interviewed by agents from the Lubbock field office about recent developments involving use of the poison. "They will read this DNA, analyze the soil and the water content, and be able to say if it's coming from South Carolina, Georgia, Florida or Texas. There's a team of people hard at work on it."
Authorities have not determined the source of ricin discovered in the office of Senate Majority Leader Bill Frist (R-Tenn.), or of samples found last October and November in postal facilities serving a Greenville, S.C., airport and the White House. The two found by postal workers arrived in envelopes with letters signed by "Fallen Angel," who protested new regulations that change the number of hours per day that truckers may spend sleeping in their berths.
Genetic analysis also has been an important FBI focus in the investigation of the unsolved 2001 anthrax mailings to Capitol Hill and to media outlets in New York and Florida, which left five people dead and 17 ill as the lethal microbes were spread. Those tests, some of which have been specially developed for the FBI, are incomplete, but the FBI said recently that it expects definitive results on the source of the anthrax bacteria within six months.
Browning said federal agencies have geared up in recent years to handle the use of the toxin ricin, a protein found in castor seeds, as a terrorist tool. Samples of numerous varieties of castor plants have been collected by federal officials for use in forensic and scientific analysis, he said.
After ricin was found on a mail sorting machine in the Dirksen Senate Office Building, officials of the Department of Homeland Security said that the poison could be easily made by an amateur with access to castor plants. In a letter found in the Greenville case and at a White House mail facility, "Fallen Angel" claimed to have "easy access to castor pulp" and to be "capable of making ricin."
Browning, however, questioned the assessment that ricin is an "active" or highly potent powder. He does not believe it could be the work of an amateur using homegrown formulas and simple equipment. Extracting ricin is a dangerous process, he said, that requires chemistry knowledge and advanced scientific equipment.
"There is currently no U.S. production of castor," he said, partly because of the dangers associated with it. Browning's firm, Castor Oil Inc. of Plainview, Tex., last year cultivated 40 acres of castor plants to generate seed that could be used for research. It is the only company in the United States that cultivates the castor plant, he said.
Tom McKuen, a ricin expert at the Department of Agriculture's Western Regional Research Center in Albany, Calif., declined to say whether he or other USDA specialists have been working with the FBI on recent cases. He said his team has focused since 2001 on research to "genetically eliminate" the ricin toxin from castor seeds so that they can be handled more safely.
The most common use of castor is in the production of castor oil, a lubricant widely used in commercial products, including lipsticks, sunblocks, paint, plastic foam, electrical wiring and sealants. The United States imports the majority of its castor oil from India, he said, but the shipments pose no terrorism threat because ricin cannot be extracted from the processed oil.
Castor plants grow profusely in the wild in many warm climates in the United States, and to extract ricin, the plants must be cooked into a pulp, McKuen said.
Medical researchers, including a team in Texas, are experimenting with the use of ricin in cancer treatment. Browning's company, in partnership with Dow Chemical Co., received $5 million from the Department of Energy in 2001 to work with USDA on research to use plant-based oils such as castor oil to make plastics and chemicals. The project includes work to eliminate the ricin protein from castor seeds.
Browning said he has worked closely with the FBI over the years and turned over any seed variation he has developed to federal authorities. "I want them to know everything that I know," he said.
? 2004 The Washington Post Company
U.S.-Russian Plan to Destroy Atom-Arms Plutonium Is Delayed
WASHINGTON, Feb. 8 -- A project to destroy the plutonium from thousands of retired Russian and American nuclear weapons has been delayed, and some experts say they fear that the work may never be done.
The plan was to have both countries build factories that could mix uranium with plutonium, the material at the heart of nuclear bombs, to be burned as fuel for civilian reactors. It was conceived in the mid-1990's at a time of intense concern over the security of weapons materials in the former Soviet Union; Russia agreed to it in 2000.
The point was to ensure that weapons being disassembled by mutual agreement would never be rebuilt, and that the weapons plutonium, the hardest part of a nuclear bomb to make, could not be sold or stolen.
But the Bush administration's budget plan for the Energy Department, released last week, said groundbreaking for a conversion factory planned for South Carolina had been delayed from July of this year until May 2005.
The immediate reason is that the United States and Russia are deadlocked on the liability rules for American workers and contractors that would help build the plant in Russia, and the United States will not break ground first. Each plant is to dispose of about 34 tons of weapons plutonium.
Administration officials want to use terms written for early nuclear agreements that protect American contractors from almost all liability in case of accidents involving the release of radioactive material; the Russians have refused those terms.
But another problem is that after years of effort, Western nations have not raised the approximately $2 billion that the Russians say they need to build and operate their conversion plant. The British said recently that they were withholding any pledge until the liability issue was resolved.
In 1997, when President Bill Clinton's energy secretary, Hazel R. O'Leary, announced that the United States would rid itself of weapons plutonium, she said burning it as fuel in civilian reactors might begin by 2002. But even before the delay made clear in the Bush budget, the American plant, estimated to cost nearly $4 billion, was expected to begin producing fuel only in 2008. The Energy Department's eventual plan is to pay the Duke Power company to use the plutonium in its reactors.
The issue is particularly delicate in South Carolina, because the Energy Department has already been shipping plutonium from its other weapons factories to its Savannah River Site, near Aiken.
In 2002, South Carolina sued the Energy Department in an unsuccessful effort to prevent shipments. The governor at the time, Jim Hodges, said he wanted a binding agreement that the weapons plutonium would be disposed of elsewhere if the plant was not built. The new delay, Mr. Hodges said, "leads me to believe there's no serious commitment from the Bush administration."
But administration officials say the plan is alive. "I'm absolutely confident we're going to resolve this," said Linton F. Brooks, the under secretary of energy for nuclear security. But he could not say when. "Nobody who tells you he can predict how long it will take is worth listening to," he said.
He described the impasse on liability as "a speed bump as opposed to a death blow." The money, he said, would follow quickly once an agreement on that issue was reached.
But a State Department official acknowledged that "between the liability and details of financing, there's a lot of things to iron out."
Some environmentalists oppose turning weapons plutonium into reactor fuel. Dr. Ed Lyman, a senior nuclear physicist with the Union of Concerned Scientists, has argued that a reactor accident would be more serious if the fuel was a plutonium mix rather than simply uranium, because the fuel's constituents are more dangerous if released.
A Greenpeace nuclear expert, Tom Clements, said the plan would leave Russia with a factory that -- after the weapons plutonium is processed -- could turn additional plutonium into reactor fuel, encouraging the creation and circulation of material that could be diverted into weapons production, or be stolen by a terrorist or militant group.
In Europe, some plutonium is recovered from spent fuel for reuse, and the Russians would like to do the same. In contrast, the Energy Department plans to bury American spent fuel, including the plutonium.
The plan for the South Carolina factory also faces its own hurdles.
The consortium of contractors the Energy Department chose to build it -- an affiliate of the Duke Power company; the Stone and Webster engineering firm; and Cogema, a French nuclear company -- proposed to meet the limits for radiation releases at the plant by pushing the measurement boundary about five miles from the factory.
The Energy Department insisted that the boundary be the factory site perimeter, requiring changes to the safety analysis the consortium must submit to the Nuclear Regulatory Commission to win a license.
Copyright 2004 The New York Times Company

Posted by maximpost at 12:09 AM EST
Sunday, 8 February 2004

Saudi suicide bombers say more 'martyrs' follow
RIYADH (Reuters) -- In taped testimony filmed before they attacked a Riyadh housing compound last year, two young Saudi suicide bombers said they were fighting for a true Islamic state and vowed that more "martyrs" would follow them.
The tape, parts of which were broadcast on Friday by the Arab television channel Al Jazeera, appeared to show the first detailed video footage of preparations for the suspected Al Qaeda attack which killed 18 people three months ago.
The bombing was the second deadly strike last year in the Saudi capital on compounds housing foreigners. Both were blamed on Saudi-born militant Osama Ben Laden's Al Qaeda network. At least 23 top militants are still on the run and security forces remain on high alert across the kingdom.
The tape also showed armed men in balaclavas training to storm a house at a camp allegedly inside Saudi Arabia, and a celebration of the imminent death of Ali Ben Hamed Al Maabadi Al Harbi and Nasser Ben Abdullah Al Sayyari Al Khalidi, two bearded young men who appeared to be in their 20s.
The names matched those issued by Saudi authorities after they carried out DNA tests on the bombers' bodies at Muhaya, a compound which housed mainly Arab and Muslim families.
"We offer ourselves to establish an Islamic state and lift the oppression from Muslims everywhere," Harbi said in the tape. "Many young men are eager to carry out such martyrdom attacks. They are the destructive weapon to fight the enemies," said Khalidi.
The video appeared to show meticulous preparations for the attack, including the spray-painting of a pick-up truck in the colours of a security force vehicle and reconnaissance footage of the Muhaya compound by night.
It also showed what Al Jazeera said was film from a car on the night of the attack, with bursts of gunfire interrupting the driver's repeated murmur, "Allahu Akbar" (God is greatest).
The truck had a number plate marked 314, representing the number of Muslims killed in the battle of Badr, a clash between the first Muslims and their "infidel" enemies. The Muhaya bombing itself had been named "Operation Badr" by the militants, Al Jazeera said.
'Death is life'
Khalidi, a large man with straggly black hair, waved a machinegun cheerfully at a farewell ceremony before his suicide mission. Around 20 men, mostly masked in red kefiyeh head-dresses, chanted and waved rifles.
Both men declared their eagerness for death.
"Death is life, it is not death. Whoever doesn't die for the sake of jihad will die in other ways," said Khalidi.
"This is a worthless life. This life won't last even for kings, so what about us, the poor?" Harbi said.
Another extract showed a militant carrying what appeared to be a shoulder-held missile launcher. In the last year Saudi authorities say they have seized nearly 24 tonnes of explosives and large numbers of rifles, hand grenades and explosive vests.
Khalidi denied that their aim was to hurt Saudis and said they went to great lengths to hit foreigners instead of soft targets in the world's biggest oil exporter.
"If we wanted to destroy the state we could have hit the interests that people benefit from. This would have been much easier than killing a single American, and killing our citizens is much easier," he said.
Most victims of the Muhaya attack were Arabs and Muslims, a fact which destroyed much lingering support for Al Qaeda in the deeply conservative kingdom. Western critics have accused Saudi Arabia of fostering a permissive environment for militancy.

SPIEGEL ONLINE - 07. Februar 2004, 15:00
Interview zum Mzoudi-Freispruch
"Es ist selbstm?rderisch"
Die US-Nebenkl?gerin und Schwester eines Opfers des 11. September, Debra Burlingame, bedauert den Freispruch des in Hamburg angeklagten Abdelghani Mzoudi: "Er w?nscht Ungl?ubigen den Tod."
Mzoudi: Freispruch in Hamburg
SPIEGEL ONLINE: Frau Burlingame, sicher h?tten Sie Abdelghani Mzoudi gern f?r lange Zeit hinter Gitter gesehen. Halten Sie den Freispruch f?r einen Fehler des deutschen Rechtssystems?
Burlingame: Ich will das Rechtssystem nicht kritisieren, aber hat dieses Urteil Bestand, kann Mzoudi nie wieder in Deutschland wegen des 11. September angeklagt werden, selbst wenn sich neue Beweise finden. Das ist furchtbar. Ich bin ?berzeugt, dass die deutschen Richter das, was sie f?r rechtm??ig halten, umsetzen, aber ich stimme nicht mit ihren Schl?ssen ?berein: Mzoudis Freunde haben die weltoffene Stadt Hamburg ausgew?hlt, um ihre Tat zu planen. Und jetzt k?nnen sich solche Leute immer noch hinter dem Gesetz verstecken.
SPIEGEL ONLINE: Das Gericht hat versucht, Aussagen des mutma?lichen 11. September-Planers Ramzi Binalshibh zu bekommen, der mit Mzoudi in Hamburg lebte und von den USA festgenommen wurde. Die Richter erhielten aber nur einen knappen Vermerk, demzufolge Binalshibh Mzoudi entlastet habe. Sind sie ver?rgert ?ber die US-Regierung, die weitere Protokolle gesperrt und die Aufkl?rung damit behindert hat?
Burlingame: Es verwundert mich, dass die Aussagen Binalshibhs eine solche Bedeutung bekommen haben. Er hat allen Grund zu l?gen, warum um Himmels willen sollte er Mzoudi beschuldigen? Die Terroristen wurden darin trainiert, wie sie nach einer Festnahme t?uschen und tricksen m?ssen. Wenn die Regierung Binalshibh dem Gericht ?berlassen h?tten, h?tte er neue Operationen verraten oder berichten k?nnen, wonach er von den Vernehmern gefragt wurde und was er geantwortet hat. Noch sind gesuchte Mitverschw?rer des 11. September auf der Flucht, und man kann davon ausgehen, dass es neue Terrorpl?ne gibt. Eine Aussage von Binalshibh h?tte die Ermittlungen gef?hrdet. Aber so oder so - was w?re sie schon wert?
SPIEGEL ONLINE: Finden Sie es so verwunderlich, dass ein Gericht das lieber selbst beurteilen w?rde?
Burlingame: Ich w?rde die Aufregung verstehen, wenn Binalshibh ein neutraler Zeuge w?re. Stattdessen lassen die Richter Mzoudi auf Grund der Aussagen eines Komplizen frei. Es f?llt mir schwer, das zu verstehen.
SPIEGEL ONLINE: Auch das amerikanische Gericht, das sich mit dem 11. September-Verd?chtigen Zacarias Moussaoui befasst, will Binalshibh als Zeugen h?ren.
Burlingame: Stimmt, aber wenn es Moussaoui frei l?sst, gibt es immer noch die M?glichkeit, ihn als feindlichen K?mpfer zu behandeln.
SPIEGEL ONLINE: Wollen Sie damit sagen, dass die US-Regierung ihn dann vor ein Milit?rtribunal stellt? Eine seltsame Rechtsauffassung.
Burlingame: Sie wird ihn nicht gehen lassen. Wir alle befinden uns in einem langen Krieg gegen den Terrorismus. Die demokratischen Staaten m?ssen endlich erkennen, dass Terroristen Vorteile aus unserem menschlichen Umgang mit ihnen ziehen.
SPIEGEL ONLINE: Die Antwort der US-Regierung darauf sind Milit?rtribunale und die Zellen von Guantanamo. Gibt sie nicht gerade die freiheitlichen Prinzipien auf, die zu verteidigen sie f?r sich in Anspruch nimmt?
Burlingame: Es ist verst?ndlich, dass die Vereinigten Staaten nach einer solchen Attacke so reagieren. Bedenken Sie: 3000 Leute wurden umgebracht, und vermutlich waren die Terroristen entt?uscht, dass es nicht mehr waren. Die allermeisten Leute sind in Guantanamo, weil es Hinweise gibt, dass sie das Gesetz gebrochen haben. Ich glaube nicht, dass gesetzestreue B?rger etwas f?rchten m?ssen, und ich sehe nicht, dass Freiheitsrechte zur?ck gedr?ngt werden. Wenn ich Leute frage: Wo sind Sie pers?nlich eingeschr?nkt, kann mir niemand ein Beispiel nennen. Das ist ein rein akademisches Problem.
SPIEGEL ONLINE: Da Sie sicher nicht mit Terrorverd?chtigen gesprochen haben, unterstelle ich mal, dass Sie B?rgerrechte f?r sie nicht uneingeschr?nkt gelten lassen wollen.
Burlingame: Das w?re aus meiner Sicht auch falsch. Denken Sie an Mzoudi: Der bestreitet zwar, mit dem 11. September etwas zu tun zu haben, andererseits w?nscht er Ungl?ubigen den Tod. Damit geh?rt er f?r mich in die Kategorie: Ist er kein Terrorist, w?re er einer. Vergessen sie nicht, dass diese Leute uns zerst?ren wollen. Es ist selbstm?rderisch, sie zu sch?tzen.
SPIEGEL ONLINE: Was hoffen sie jetzt, da er frei ist?
Burlingame: Dass er nicht noch in Deutschland sein Studium beenden darf, wie er es plant. Mzoudi sa? mit den sp?teren Todespiloten zusammen und diskutierte den Hass auf die Welt, auf Amerika, die Juden. Und diese Typen will die deutsche Regierung willkommen hei?en?
SPIEGEL ONLINE: Ganz so ist es nicht. Er soll in seine Heimat Marokko ausgewiesen werden.
Burlingame: Und ich hoffe, dass Marokko ihn an die USA ?bergibt. Dann k?nnen wir ihn hier vor Gericht stellen.
Das Interview f?hrte Dominik Cziesche
Alle Rechte vorbehalten
Vervielf?ltigung nur mit Genehmigung der SPIEGELnet GmbH


German chancellor faces call for elections
Bertrand Benoit in Berlin
Published: February 8 2004 18:57 | Last Updated: February 8 2004 18:57
German opposition leaders called for fresh elections on Sunday as senior Social Democrats stepped up their attacks on Gerhard Schr?der, the chancellor, after his resignation as Social Democratic party chairman.
The attacks showed Mr Schr?der's resignation - a rare admission of defeat for a politician used to prevailing over critics - had profoundly shaken his authority. They also underlined how little of the chancellor's modernising ardour had percolated through the party in his five years as chairman.
In an unprecedented move by a chancellor, Mr Schr?der said on Friday he would hand over the chair to Franz M?ntefering, parliamentary floor leader. The party's executive endorsed the decision on Saturday ahead of an extraordinary congress on March 21, when it will be ratified.
Instead of silencing critics who had grown louder in recent weeks, the move prompted several SPD officials to suggest that Mr Schr?der had reached the end of his political career or that the government should roll back some of his reforms.
Heiko Maas, SPD leader in the state of Saarland, said the chancellor's decision, made last summer, to lead the party into a general election for the third time in 2006 should not be taken for granted. "Who runs will depend on the course of the next two years," Mr Maas told the Bild am Sonntag newspaper, later denying it amounted to a call for a different candidate.
Harald Schartau, party chief in North-Rhine Westphalia, said the government should reconsider planned or recent measures resulting in additional costs for pensioners and medical patients. Wolfgang Thierse, deputy SPD chairman, said there could be "adjustments" to recent healthcare and tax reforms.
Meanwhile, Angela Merkel, leader of the opposition Christian Democratic Union (CDU), told Welt am Sonntag that Mr Schr?der's resignation as SPD chairman was "the beginning of the end . . . The best solution would be early elections as soon as possible."
The CDU and the CSU, its Bavarian sister party, enjoy a strong lead in opinion polls but their leaders are deeply divided over policy issues. It is also unclear which of Ms Merkel or Edmund Stoiber, the CSU leader and Bavarian premier, would lead the parties into an early poll.
A Forsa opinion survey showed 59 per cent of respondents against fresh elections, suggesting Mr Schr?der's move was seen as a matter for the SPD and not for the nation. Yet Sunday's attacks testified to the difficulty of the task facing Mr M?ntefering in restoring order in the party.
SPD officials have blamed Agenda 2010, Mr Schr?der's package of social security and labour market reforms adopted shortly before Christmas, for the largest exodus of members since the war and a string of electoral defeats last year. "We are forging ahead with the reforms," Mr M?ntefering countered on Sunday. "Agenda 2010 was ratified by two party congresses. We must all accept this. We are not going into reverse gear."
The collapse of the SPD's popularity has been of particular concern in the L?nder, where regional SPD organisations and governments will be on the electoral front line with 14 elections due this year.
Gerhard Schr?der abandonne la pr?sidence d'un SPD traumatis?
LE MONDE | 07.02.04 | 14h28
Le chancelier allemand, Gerhard Schr?der, a annonc?, vendredi 6 f?vrier, sa d?mission de la pr?sidence du SPD, mettant en avant les "difficult?s de communication" pour expliquer au Parti social d?mocrate la n?cessit? des r?formes engag?es depuis quinze mois. M.Schr?der tire ainsi les le?ons d'une opposition grandissante ? sa politique au sein m?me de sa formation. L'Agenda 2010 pr?voit de profonds changements dans les principaux secteurs de l'emploi, de la protection sociale et de la fiscalit?. En chute libre dans les sondages, le SPD doit ?galement subir une v?ritable h?morragie de militants. Cette ann?e, plusieurs ?lections r?gionales et locales importantes sont pr?vues cette ann?e. Franz M?ntefering, actuel pr?sident du groupe SPD au Bundestag, succ?dera ? Gerhard Schr?der ? la t?te du parti.
Berlin de notre correspondant
Tirant les le?ons de l'impopularit? croissante de son programme de r?formes aupr?s de la base du Parti social-d?mocrate (SPD), le chancelier Gerhard Schr?der en a abandonn? spectaculairement la pr?sidence, vendredi 6 f?vrier.
Il a aussit?t proposer de la confier ? un de ses fid?les, le pr?sident du groupe parlementaire du SPD au Bundestag, Franz M?ntefering.
Cette grogne ?tait mont?e d'un cran, ces derniers jours, apr?s plusieurs cafouillages au niveau du gouvernement et la proposition de cr?er des universit?s d'?lite en Allemagne. Les sondages sont catastrophiques pour le SPD, cr?dit? par l'un d'eux de seulement 24 % des intentions de vote, et ce avant de nombreux rendez-vous ?lectoraux pr?vus cette ann?e aux niveaux local et r?gional.
La rumeur d'une d?mission a commenc? ? courir vendredi vers midi, lorsque le service de presse du SPD a annonc? de fa?on inattendue que Gerhard Schr?der, flanqu? de Franz M?ntefering, donnerait une conf?rence de presse ? 13 h 30. C'?tait bien d'une d?mission qu'il s'agissait, mais de celle de la pr?sidence du parti, fonction que le chancelier occupait depuis avril 1999, lorsqu'il avait remplac? Oskar Lafontaine, son ministre des finances, qui, en d?saccord avec une politique gouvernementale trop lib?rale ? son go?t, avait claqu? la porte du gouvernement.
Il n'a fallu que quelques minutes ? un chancelier ? la mine sombre pour annoncer aux dizaines de journalistes accourus en h?te sa d?cision de "se licencier", comme l'indique la cruelle manchette du Berliner Zeitung. Le chancelier a justifi? sa d?marche par les "difficult?s de communication" pour expliquer ? la base du parti les r?formes en cours, d?licat euph?misme d?signant la v?ritable fronde qui agite des f?d?rations enti?res du SPD.
Pris par ses obligations gouvernementales et internationales, le chancelier a ajout? qu'il manquait de temps pour s'investir dans le travail de persuasion que n?cessite la mise en ?uvre de "r?formes objectivement n?cessaires". Franz M?ntefering, fid?le parmi les fid?les, s'en chargera. "D?sormais je vais me consacrer enti?rement ? mon travail de chef de gouvernement", a ajout? le chancelier en soulignant que s'il quittait sans plaisir la direction du parti, au moins pouvait-il compter sur le nouveau pr?sident.
Evoquant les prises de position et les pol?miques publiques dans sa formation, M. M?ntefering a soulign? que "les querelles internes devaient cesser". D?s samedi, les instances dirigeantes du SPD devaient se r?unir pour ratifier la passation de pouvoir et enregistrer la d?mission concomitante d'Olaf Scholz, secr?taire g?n?ral du SPD, s?v?rement critiqu? par son parti qui le juge peu performant. Un congr?s va ?tre convoqu? ? la fin du mois de mars 2004 pour ent?riner ces changements.
De nombreux sc?narios avaient, ces derni?res semaines, ?t? esquiss?s pour ?valuer ce que pourrait ?tre la r?ponse du chancelier ? la crise de plus en plus d?vastatrice qui frappe son parti. Mais personne n'avait apparemment envisag? qu'il d?missionnerait de son poste de pr?sident. M?me si ce n'est pas une obligation constitutionnelle, c'est en effet le plus souvent au chef du parti majoritaire qu'?choit la chancellerie.
Le c?t? spectaculaire de cette d?mission est en tout cas ? la mesure de la crise en cours. Volant de congr?s en assembl?es g?n?rales, Gerhard Schr?der, en 2003, avait r?ussi ? imposer ? un parti sceptique, voire r?ticent, ses douloureuses r?formes sociales. Mais il ne semble pas avoir eu le m?me succ?s aupr?s d'une population qui, depuis le 1er janvier, subit les premiers effets d?sagr?ables des r?formes de la sant?, du march? du travail, des retraites.
Les derniers sondages indiquent que si les ?lecteurs ?taient demain appel?s ? d?signer leurs d?put?s, ? peine un quart d'entre eux glisseraient dans l'urne un bulletin SPD. Cinquante pour cent, en revanche, voteraient pour les chr?tiens-d?mocrates.
Depuis 1990, le SPD a perdu de fa?on r?guli?re quelque 300 000 adh?rents, sur 950 000. Mais l'inexorable descente, qui va de pair avec une d?syndicalistation significative, s'est acc?l?r?e en 2003, ann?e au cours de laquelle le parti a perdu 40 000 membres.
Ces chiffres sont inqui?tants, alors que cette ann?e, quatorze L?nder et grandes villes renouvelleront leurs d?put?s r?gionaux et leurs conseils municipaux, promettant aux sociaux-d?mocrates de nouvelles d?faites et de nouvelles crises. Les responsables du parti ne parlaient que de cela ces derni?res semaines, haussant de jour en jour le ton de leurs critiques ? l'?gard de la politique comme de la personnalit? du chancelier.
"Le parti doit savoir que l'opposition fait partie de la d?mocratie, mais cette opposition doit venir des autres, pas sortir de nos propres rangs", a d?clar? M. M?ntefering lors de la conf?rence de presse, soulignant bien qu'il s'agissait d?sormais de serrer les rangs. Les m?mes causes produisant les m?mes effets, on voit mal pourtant comment les changements ? la t?te du parti, sans changement de politique susceptible de redonner une cr?dibilit? ?lectorale au SPD, suffiront ? ramener le calme.
Georges Marion
Brussels reforms too slow, says Gordon Brown
By Ben Hall, Political Correspondent
Published: February 8 2004 21:54 | Last Updated: February 8 2004 21:54
Europe has been too slow in delivering economic reform and faces a struggle if it is to meet its target of becoming the world's most dynamic economy by 2010, Gordon Brown says in a report on Monday.
The report comes just weeks ahead of next month's Budget in which the chancellor is expected to rule out holding a new set of assessments on joining the euro. Mr Brown has always linked economic reform to British membership so the report will be a further blow to prospects for early British entry.
In its submission to next month's summit on economic reform in the European Union - the third such meeting since the process was launched in Lisbon in 2000 - the Treasury praises other governments for taking "tough decisions" to implement domestic reforms aimed at making their economies more flexible.
But the Treasury sounds a gloomy note about the EU's ability to raise its overall rate of employment to 70 per cent, perhaps the most important and challenging target set by prime ministers four years ago.
"The stark reality facing the Union is that these targets will not be met without a substantial increase in future rates of employment growth," the report says.
"Even in a more favourable global economic climate, job creation of this magnitude will be hard to deliver."
Amid recent optimism about prospects for the UK and global economies, Mr Brown believes the one dark spot is the slow pace of economic reform in Europe.
"Europe's recovery from the recent global slowdown highlights the nature of the challenge," the report says. "Compared with the US, the European economy has failed to recover as strongly, several member states experiencing recession. This cannot be explained by reference to cyclical factors alone."
The chancellor urges political leaders to do more to explain why Europe needs to liberalise its markets in products and services, make labour markets more flexible and restructure tax and benefit systems to promote employment. "Too often the underlying aim of the Lisbon agenda is not clear enough."
Mr Brown wants the European Commission to appoint a vice-president to take charge of reform so Brussels can give more leadership and impetus to the process.
The report also underlines Britain's determination - shared by France, Germany and other governments - to keep EU spending at the current level of 1 per cent of EU gross national income. The Commission will this week present plans to lift spending to 1.24 per cent of EU GNI in 2007-2013.
The government believes that a string of presidencies led by reform-minded governments - Ireland, the Netherlands, Luxembourg and Britain - provide an opportunity to renew the commitment to the competitiveness agenda.
Among Britain's priorities are measures to cut red tape and extend the single market in services, a more proactive approach to competition policy and a crackdown on the most "distortive" state aid while allowing flexibility to deal with "market failure".
IDF to pay big time to fix reservist call-up system
By Haaretz Staff
The Israel Defense Forces is expected to pay tens of millions of shekels in the upcoming months to fix a computerized call-up system for reservists. The system was installed just two years ago, and was meant to call reservists to their units as part of a "quiet call-up."
The original system contained a 9-digit field for reservists' mobile telephone numbers. In a few months, however, all cellular telephone numbers are to be changed to 10-digit numbers, and therefore, the system has to be updated accordingly.
The financial daily Globes reported yesterday that the IDF has appointed a special committee to look into the impact of this move. Various sources said that the repercussions could cost tens of millions of shekels.
The IDF took much pride when it inaugurated the new computerized dialing system two years ago. Instead of dispatching special reserve soldiers, the system automatically calls the reservists' cell phone, home, and place of work to pass on messages concerning his unit. The reservist needs to punch in his personal number and confirm that he has received the message.
The system, developed by a civilian company, proved to be very successful in trials and exercises. The planners, however, did not take one factor into consideration, namely that additional digits may be added to the cell phone numbers. The army will also look into expanding the fields for personal and other telephone numbers to prevent future problems.

More money needed `to minimize fence's harm to Palestinians'
By Amnon Barzilai
The defense establishment is asking the government to add hundreds of millions of shekels to the budget for the construction of the separation fence, to finance measures to ease the disruptions that the barrier has created in the daily lives of Palestinians who live west of it.
If the addition is approved, the total budget for building the fence this year would come to over NIS 3 billion. This figure is predicated on the construction of 265 kilometers of fencing this year, at an average cost of NIS 10.5 million per kilometer.
In response to the international criticism of the way the fence's route interferes with Palestinians' daily lives, the Israel Defense Forces' deputy chief of staff, Major General Gabi Ashkenazi, set up a task force to draft proposals for improving the situation. The task force proposed a number of recommendations, including the following:
l Dozens of alternative roads, tunnels and gates in the fence should be built to connect Palestinian villages to major urban centers in the West Bank, or to other nearby villages, in cases where existing transit routes have been disrupted by the fence. Work on the first underground road, between the village of Habla and Qalqilyah, began last week.
l Israel should fund organized transportation for schoolchildren whose homes are separated from schools in another village by the fence. The IDF has already allocated NIS 160,000 to bus children in Hirbat Shabra.
l Israel should finance the establishment of a dialysis unit at Makassed Hospital in East Jerusalem to ease the problems currently encountered at roadblocks by Palestinians trying to reach Jerusalem's Hadassah Hospital for this purpose. In addition, five Palestinian ambulances should be placed under close IDF supervision, and these ambulances should then be allowed to pass through roadblocks swiftly, without the lengthy security checks to which ordinary Palestinian ambulances are subjected for fear that they might be smuggling explosives.
At a meeting with Defense Minister Shaul Mofaz last Thursday, officials in charge of the fence's construction said that the work was currently on schedule, meaning that by the end of the year, stage three of the construction will be completed and work will have begun on stage four. To date, almost 200 kilometers of fencing have been completed; if this year's timetable is met, there will be 461 kilometers of finished fence by the end of the year.
In total, the fence is slated to be 705 kilometers long; of this, 151 kilometers is the Ariel salient, which is slated to be built only in 2005.
The officials also told Mofaz that the 20-kilometer section of the fence from Har Avner to Tirat Zvi would be completed by July 2004.
One problematic section of the fence is the area around Baka al-Sharkiyeh. The fence was originally slated to pass east of this town, but the army later reconsidered and decided instead to raze 40 illegal buildings located between Baka al-Sharkiyeh and the Israeli town of Baka al-Garbiyeh, thereby enabling the fence to be built on the Green Line, west of Baka al-Sharkiyeh. This 8.5-kilometer section of the barrier, of which 800 meters will be an eight-meter-high wall, is slated to be completed by the end of this month.
In the meantime, however, the army has already wasted NIS 140 million on the abandoned route east of Baka al-Sharkiyeh; it is now considering razing these portions of the fence.
Completion of both the Baka al-Sharkiyeh and the Har Avner-Tirat Zvi segments will produce a continuous 196-kilometer stretch of fence running from the Jordan River to Elkana.

Posted by maximpost at 10:36 PM EST

>> GROAN...

Fusion power
Bouillabaisse sushi
Feb 5th 2004
From The Economist print edition
A site will soon be chosen for a new international fusion reactor. This is a pity
IF AVANT-GARDE cuisine is any guide, Japanese-French fusion does not work all that well. And the interminable discussions over the International Thermonuclear Experimental Reactor (ITER) suggest that what is true of cooking is true of physics. Japan and France (along with much of the rest of Europe, under the banner of an organisation called Euratom) are supposed to be joining America, China, Russia and South Korea in a project called ITER, which aims to build a fusion reactor.
Such a reactor would generate power by merging the nuclei of hydrogen atoms, and thus liberating the so-called binding energy whose absence, paradoxically, helps to hold complicated atomic nuclei together. This is a process similar to the one that powers the sun. Moreover, unlike previous attempts to do so, ITER would produce more energy than it consumed in getting the hydrogen nuclei hot enough to fuse in the first place.
The current imbroglio is over who gets the reactor, and with it the economic boost of a multibillion-dollar construction project. The two sites remaining in the competition are Cadarache in France and Rokkasho in Japan.
America is siding with Japan, while the French have the backing of the Chinese and the Russians. The South Koreans seem to be sitting on the fence, although leaning--if that is not stretching the metaphor too far--towards Europe. Meetings of ministers in December failed to resolve the issue (indeed, Canada withdrew from the project entirely) and the date for a decision keeps getting pushed back. According to spokesmen from the Japanese embassy in London, early March is now the target.
It is unusual for ministers to be discussing scientific projects of this nature, even ones as expensive as ITER. But the reason for all the attention is not that politicians have suddenly developed a particular interest in physics, but that the question of where to put ITER has become--so observers believe--another proxy for the debate over the war on Iraq. America is commonly thought to be supporting Rokkasho in return for Japan's support in Iraq. Meanwhile, the Russians and Chinese may be trying to spite the Americans by siding with the French. Nor are the French helping the situation by threatening (unlike the Japanese) to pull out of the project entirely if they do not get their way.
One ludicrous compromise would place the reactor in Japan and the data and control centre in France, or vice versa. Such gerrymandering recalls the worst of the International Space Station, a collaborative effort which is a scientific boondoggle, and contrasts badly with collaborations such as CERN, the European centre for particle physics, which is a model for international co-operation on big science projects. So, given ITER's price tag (about $5 billion to build, and another $5 billion in running costs for a 20-year operational lifespan and a ten-year decommissioning period), it might not be a bad outcome if the whole thing did go belly up. Although visionaries have long been lured to the idea of fusion because the fuel, being a constituent of water, is unlikely ever to run out, the economics of the process are dubious.
Boon or boondoggle?
Sceptics (including this newspaper) have pointed out that workable fusion power has seemed perpetually 30 years away since the first experiments were done in the 1950s. Even if the 30-year horizon were actually true on this occasion, the discount rate over three decades, and the opportunity cost of all those billions, would probably make it uneconomic. Nor is the world in obvious need of another way to generate electricity.
There are, of course, arguments on the other side. On the 30-year-horizon question Robert Goldston, the head of the Princeton Plasma Physics Laboratory (PPPL), America's premier fusion laboratory, points out that, although a forecast made in 1980 that an ITER-like project would be finished by now has obviously not come true, that projection relied on America's fusion budget increasing three-fold. Instead, he says, the budget was slashed by a factor of three.
In addition, Gia Tuong Hoang and Jean Jacquinot of Euratom point out in an article in the January issue of Physics Today that the performance of fusion reactors like those at PPPL and ITER has been doubling every 1.8 years. This, they observe, beats Moore's law, the famous observation that the number of transistors on a computer chip doubles every two years.
On the face of it, that sounds impressive. But even if this trend continues, it will take, according to a report compiled last year by Britain's Parliamentary Office of Science and Technology, until 2043 for fusion to become commercially viable. This forecast is even worse than the traditional 30-year horizon. A doubling every 1.8 years would lead to something like a 4m-fold improvement in performance over four decades. That sounds impressive but, in fact, it shows just how primitive existing fusion technology is. And the analogy with Moore's law is specious for another reason. Even the most primitive computer chips were useful, and found a market. Commercially, fusion is just money down the drain until a reactor that is powerful and reliable enough can be built.
And so fusion advocates are reduced to the last refuge of the desperate engineer--spin-offs. No doubt these would come. Reactors of the ITER design, known as tokamaks (from the Russian for "toroidal magnetic chamber"), look like giant, hollow doughnuts. They work by heating special isotopes of hydrogen contained in the hollow of the doughnut to the point where the electrons and atomic nuclei in the gas part company to create an electrically conducting mixture called a plasma. Further heating speeds the nuclei up to the point where, if they collide, they merge and release the binding energy that will eventually, so the plan goes, be harnessed to make electricity.
Some spin-offs may come from a better understanding of high-temperature plasmas, though they are hard to predict. More plausible spin-offs would be in the field of superconductivity. The electromagnets needed to "confine" the hydrogen while it is heated to fusion temperatures will rely on superconducting wire to feed electricity to them. Superconductivity (which employs a combination of special materials and low temperatures to achieve resistance-free electrical transmission) is another "nearly" technology which has been promising more than it has delivered for many decades. But it is a lot more "nearly" than fusion, and a concerted, technically demanding push in this area might, just, bring it to the point where it could break out of the specialist applications to which it is now confined and contribute to, say, long-distance power transmission.
Whether these spin-offs would justify the price-tag, though, is questionable. If they are worth pursuing, it would surely be better to invest in projects focused on them, rather than hoping they will magically emerge from something else. All in all, ITER seems more boondoggle than boon. Governments should spend their research money on other things.
Copyright ? 2004 The Economist Newspaper and The Economist Group. All rights reserved.

Things fall apart
Feb 5th 2004
From The Economist print edition
What if the dark energy and dark matter essential to modern explanations of the universe don't really exist?
IT WAS beautiful, complex and wrong. In 150AD, Ptolemy of Alexandria published his theory of epicycles--the idea that the moon, the sun and the planets moved in circles which were moving in circles which were moving in circles around the Earth. This theory explained the motion of celestial objects to an astonishing degree of precision. It was, however, what computer programmers call a kludge: a dirty, inelegant solution. Some 1,500 years later, Johannes Kepler, a German astronomer, replaced the whole complex edifice with three simple laws.
Some people think modern astronomy is based on a kludge similar to Ptolemy's. At the moment, the received wisdom is that the obvious stuff in the universe--stars, planets, gas clouds and so on--is actually only 4% of its total content. About another quarter is so-called cold, dark matter, which is made of different particles from the familiar sort of matter, and can interact with the latter only via gravity. The remaining 70% is even stranger. It is known as dark energy, and acts to push the universe apart. However, the existence of cold, dark matter and dark energy has to be inferred from their effects on the visible, familiar stuff. If something else is actually causing those effects, the whole theoretical edifice would come crashing down.
According to a paper just published in the Monthly Notices of the Royal Astronomical Society by Tom Shanks and his colleagues at the University of Durham, in England, that might be about to happen. Many of the inferences about dark matter and dark energy come from detailed observations of the cosmic microwave background (CMB). This is radiation that pervades space, and is the earliest remnant of the Big Bang which is thought to have started it all. Small irregularities in the CMB have been used to deduce what the early universe looked like, and thus how much cold, dark matter and dark energy there is around.
Dr Shanks thinks these irregularities may have been misinterpreted. He and his colleagues have been analysing data on the CMB that were collected by WMAP, a satellite launched in 2001 by NASA, America's space agency. They have compared these data with those from telescopic surveys of galaxy clusters, and have found correlations between the two which, they say, indicate that the clusters are adding to the energy of the CMB by a process called inverse Compton scattering, in which hot gas boosts the energy of the microwaves. That, they say, might be enough to explain the irregularities without resorting to ghostly dark matter and energy.
Dr Shanks is not the only person questioning the status quo. In a pair of papers published in a December issue of Astronomy and Astrophysics, Sebastien Vauclair of the Astrophysics Laboratory of the Midi-Pyr?n?es, in Toulouse, and his colleagues also report the use of galaxy clusters to question the existence of dark energy. But their method uses the clusters in a completely different way from Dr Shanks, and thus opens a second flank against the conventional wisdom.
Cosmological theory says that the relationship between the mass of a galaxy cluster and its age is a test of the value of the "density parameter" of the universe. The density parameter is, in turn, a measure of just how much normal matter, dark matter and dark energy there is. But because the mass of a cluster is difficult to measure directly, astronomers have to infer it from computer models which tell them how the temperature of the gas in a cluster depends on that cluster's mass.
Even measuring the temperature of a cluster is difficult, though. What is easy to measure is its luminosity. And that should be enough, since luminosity and temperature are related. All you need to know are the details of the relationship, and by measuring luminosity you can backtrack to temperature and then to mass.
That has been done for nearby clusters, but not for distant ones which, because of the time light has taken to travel from them to Earth, provide a snapshot of earlier times. So Dr Vauclair and his colleagues used XMM-Newton, a European X-ray-observation satellite that was launched in 1999, to measure the X-ray luminosities and the temperatures of eight distant clusters of galaxies. They then compared the results with those from closer (and therefore apparently older) clusters.
The upshot was that the relationship between mass and age did not match the predictions of conventional theory. It did, however, match an alternative model with a much higher density of "ordinary" matter in it.
That does not mean conventional theory is yet dead. The Newton observations are at the limits of accuracy, so a mistake could have crept in. Or it could be that astronomers have misunderstood how galaxy clusters evolve. Changing that understanding would be uncomfortable, but not nearly as uncomfortable as throwing out cold, dark matter and dark energy.
On the other hand, a universe that requires three completely different sorts of stuff to explain its essence does have a whiff of epicycles about it. As Albert Einstein supposedly said, "Physics should be made as simple as possible, but not simpler." Put Dr Shanks's and Dr Vauclair's observations together, and one cannot help but wonder whether Ptolemy might soon have some company in the annals of convoluted, discarded theories.
Copyright ? 2004 The Economist Newspaper and The Economist Group. All rights reserved.

Big Brother in Britain: Does more surveillance work?
By Mark Rice-Oxley | Correspondent of The Christian Science Monitor
KINGSTON, ENGLAND - It was all over in 54 seconds. One moment the four friends were strolling home after a night out, the next they were nursing injuries inflicted by a knife-wielding assailant.
Another sad tale of crime and impunity in modern Britain? Not quite, for the incident last April in this town in southeast England was filmed from start to finish on surveillance cameras. Police were rapidly alerted; a suspect was quickly identified, apprehended, convicted, and sentenced. Case closed.
It's successes like these that are giving CCTV, or closed-circuit television, a good name in Britain. The technology has become popular and widespread, with the result that Britons are by far the most watched people on earth, with one camera for every 14 people, according to recent estimates.
More than 4 million cameras observe all aspects of life, from town centers to transport systems, office towers to banks, commercial zones to residential areas, restaurants, bars, and even churches.
In 1990, just three towns had systems. Now some 500 do, after a decade in which more than ?250 million ($460 million) of public money was funneled into CCTV systems.
"The British public seem to like it," says Martin Gill, professor of criminology at Leicester University. "One of the great problems of our lives is crime and disorder, and people feel it can be tackled by having cameras on the wall."
But serious question marks hang over the technology and its dark Orwellian implications. Many cameras are hidden or not signposted, in breach of regulations. Several cases of abuse have been documented, raising fears of snooping or worse.
Civil liberty groups complain that the intrusive lens scanning for suspicious characters contravenes that pillar of civil society - the presumption of innocence.
Research meanwhile suggests that the camera systems may not actually deter criminals.
"One of the concerns about CCTV is that it can give a false sense of security," says Barry Hugill of Liberty, a civil liberties and human rights group based in London. "I suspect that the reason why people are happy with CCTV is that they say it makes us safer and stops crime. But we don't think there's evidence that that is the case."
Indeed, research has yet to support the case for CCTV.
A government review 18 months ago found that security cameras were effective in tackling vehicle crime but had limited effect on other crimes. Improved streetlighting recorded better results.
A new report being drawn up by Professor Gill for the government promises to be no more favorable in its assessment of CCTV as a crime-fighting tool.
"I have talked to offenders about this," says Gill. "They say they are not concerned by security cameras, unless they were actually caught by one."
Britain is a case apart from Europe, where most countries embraced the technology only in the late 1990s - and then with caution. According to researchers now preparing a report on comparative systems, France tends to limit coverage to high-risk locations and public buildings, while in Spain, surveillance is tightly controlled. In Austria, it is used primarily for traffic and transport systems. In Germany, it was severely restricted in public spaces until recently.
But in Britain, the public has had a soft spot for CCTV ever since it was used to dramatic effect to solve a wretched crime more than 11 years ago.
Most people can still picture the grainy footage of two juveniles leading 2-year-old Jamie Bulger by the hand out of a shopping mall in Liverpool. He was found dead days later. Without those images, experts say, police would have been looking for a culprit with an entirely different profile from the 11-year-old offenders.
"Since Jamie Bulger's case over here, the public see CCTV not as Big Brother but as a benevolent father," says Peter Fry, director of the CCTV user group, a 600-member association of organizations who use the technology.
"If you ask the public what they would like to do about crime, No. 1 is more police on the street and No. 2 is more CCTV," he adds.
The trend coincides with a growing culture of snooping in Britain, where speed cameras rule the highway, residents post their own cameras to spy on trespassers, and the favorite TV shows revolve around hidden cameras observing bland people lounging around.
But not everyone is reassured by the idea of lenses capable of reading a car license plate from half a mile away. Anecdotal evidence suggests the technology can be used for voyeurism, and concerns remain about who gets access to the tapes, which are typically held for a month before being erased.
In one case, a man's attempted suicide was caught on camera and passed on to television. Mr Lazell says he sometimes gets individuals calling on him to use the technology to spy on partners.
Prof. Clive Norris, deputy director of the center for criminological research at Sheffield University, told a recent conference that the technology "enables people to be tracked and monitored and harassed and socially excluded on the basis that they do not fit into the category of people that a council or shopping center wants to see in a public space."
Legislation requires authorities to clearly signal where cameras are in operation, yet as many as 80 percent are thought to break this rule.
Some cameras are being developed with face-recognition technology that raises further alarms.
"There are privacy concerns," says Mr Hugill of Liberty. "There are people who believe that we have fundamental human right to go about our business without being spied on. CCTV is spying. It's monitoring your every move."
Naturally, surveillance enthusiasts scoff at such logic, saying that operators will not be focusing on the average member of the public, but on anyone acting out of the ordinary.
For Mr. Lazell, it's a trade-off: a little liberty for greater security.
"All progress offers compromise," he comments. "Would you be prepared to take down all cameras in the Underground and let terrorists move about without being seen?"
from the February 06, 2004 edition -


Britain's latest security bid: a national ID card
Blair's cabinet announced this week that it will phase in cards that will ultimately become mandatory.
By Mark Rice-Oxley | Correspondent of The Christian Science Monitor
LONDON - Britain's growing preoccupation with Big Brother surveillance is set to be transformed by government plans to issue identity cards.
In a clear sign of a continuing post-9/11 concern for security, Prime Minister Tony Blair's cabinet served notice this week of its intention to introduce the high-tech cards, which will contain personal details and biometric data about individuals.
The cards will be linked to a national database that will be able to authenticate identities. The system is to be phased in over several years, but the government ultimately expects it to be compulsory.
Police have welcomed the move, saying it will help combat terrorism and illegal immigration. The government also hopes to wield the technology to fight employment and benefit fraud.
But opponents argue that the move will do little to hamper real criminals or terrorists, and mutter darkly about Orwellian tendencies and assaults on personal freedoms.
There is also concern about the scheme's steep cost, evaluated at about ?3 billion ($5 billion), not to mention the untried technology, which includes iris scanning and possibly fingerprinting for 60 million people.
"We think it's unnecessary, expensive, and will almost certainly lead to infringement of basic civil liberties," says Barry Hugill of the human rights group Liberty. "It is stated that an ID card would help in the battle against terrorism. I have never seen any evidence to back this up."
The ID program will enhance a growing surveillance culture in a country that often is extremely touchy on issues such as asylum, immigration, terrorism and street crime.
It also puts Britain out in front of five English-speaking countries that have mulled the idea - though only Canada is actively examining a national card.
Mindful of the controversy, the British plan involves a gradual approach. The national database will be built over the next three years, and the card will be tested on a trial group and then offered as a voluntary piece of ID.
But it will be compulsory for anyone replacing an expiring passport or applying for a new driver's license.
The country's 4.6 million foreign nationals will also be required to have the card. Individuals will have to bear the cost - as much as ?77 ($130) - and police and security services will be able to access the data.
The government says that within 10 years, participation will be at 80 percent, paving the way for compulsory, universal cards, which would be needed for everything from job interviews to health checkups and benefit claims. It claims a 60 percent public approval rating in its own surveys.
"It is important to move towards a system where we are able to minimize the risks of fraud and abuse and, indeed, minimize the threats to our security," Mr. Blair said as the plans were unveiled this week.
The counterterrorism argument is a powerful one in Britain at the moment. Earlier this week, a survey by the Control Risks Group consultancy found London to be the preeminent terrorist target in Western Europe.
Police chief Sir John Stevens said that it was "absolutely essential" to have proper means of identification given the "dangerous world we live in."
But critics note that the perpetrators of the Sept. 11 atrocities in New York were all in possession of forged papers.
"The concept that the card will tackle benefit fraud or terrorism is flawed," says Mark Oaten, a member of parliament for the opposition Liberal Democrats. "It could create a false sense of security. The determined terrorist will get through anyway."
Continental Europe's record provides little encouragement. France was no safer from Algerian terrorists in the 1990s because of its ID card. Russian paperwork today appears useless in the face of Chechen suicide bombers.
And police tendencies in these and other countries to target ethnic minorities in ID checks merely fosters resentment. "Anyone dark-skinned is more likely to be targeted," says Mr. Hugill, insisting that this will be the case in Britain, where the police have been accused of being institutionally racist. "The fear remains that cards would lead to the targeting of nonwhite citizens, especially in the current climate of near hysteria surrounding asylum seekers."
"The minute you start valuing security more than liberty, you will create ... problems of resentment and alienation among minority groups," he adds. "This could create an atmosphere in which it is easier for fundamentalists to recruit."
Questions have also been raised about the formidable task of collating - and safeguarding - information. Liberty and other rights groups argue that the cards are a further affront to personal freedom and privacy in a society already bristling with closed-circuit systems and road-traffic cameras.
Not everyone buys theories of a burgeoning Big Brother society. "Anyone who has worked in government thinks it laughable that the state can be watching you 24 hours a day," says Nick Pearce, acting director of the Institute for Public Policy Research. "The Anglo-Saxon world is addressing this debate from a new perspective," he says. "No one pretends ID cards are the answer to terrorism. But they are starting to ask what we need to do to secure our identity in the world and manage migration better."

from the November 14, 2003 edition -

Posted by maximpost at 9:41 PM EST

Report: Al-Qaida has nukes Staff Feb. 8, 2004
Ukraine sold al-Qaida an unknown number of tactical nuclear weapons in 1998, al-Hayat reported, and the terror organization is storing them for possible use.
After the Soviet Union broke up, Ukraine agreed to send 1,900 nuclear warheads back to Russia and sign up to the Nuclear Non-Proliferation Treaty, but up to 100 portable suitcase-sized bombs were unaccounted for, Former Russian National Security Adviser Alexander Lebed said. Each bomb was equivalent to 1,000 tons of TNT, he said.
Moscow has denied such weapons existed.
The deal between al Qaida and the Ukranian source was put into effect when Ukraine scientists visited Kandahar in Afghanistan at the height of the Taliban rule, according to Ynet.
In 1994, under US and Russian pressure, Ukraine removed 1900 nuclear warheads to Moscow and signed the anti-nuclear proliferation agreement. However, three years earlier, former USSR National Security Adviser Alexander Lebed already warned of the missing suitcase bombs.
According to Al Hayat, the weapons are not meant to be used except as a last resort, if the movement itself is in danger or attacked by weapons of mass destruction.
This article can also be read at

Al-Qaida Has Nukes?
CAIRO, Egypt (Reuters) -- A pan-Arab newspaper said Sunday that al- Qaida bought tactical nuclear weapons from Ukraine in 1998 and is storing them in safe places for possible use.
There was no independent corroboration of the report, which appeared in Al-Hayat under an Islamabad dateline and cited sources close to al-Qaida, which the United States blames for the attacks of Sept. 11, 2001.
The newspaper said al-Qaida bought the weapons in suitcases in a deal arranged when Ukrainian scientists visited the Afghan city of Kandahar in 1998.
Report: Al-Qaida has obtained tactical nuclear explosives
By Haaretz Service
Al-Qaida has obtained tactical nuclear explosive devices that can fit inside a suitcase, Israel Radio reported Sunday night citing the Al-Hayat newspaper.
According to the Arabic daily based in London, the devices are not intended for use, except in the event that the existence of the organization is threatened.
The report said that members of Osama bin Laden's group purchased the devices from Ukrainian scientists who sell them to anyone willing to pay the price.


Pakistan Says Europeans Involved in Nuke Scandals
Feb 8, 9:58 AM (ET)
By Philip Blenkinsop
MUNICH, Germany (Reuters) - Pakistan's foreign minister said Sunday he knew the names of "lots of Europeans" involved in the illicit transfer of secrets to countries seeking to develop nuclear weapons.
"Why is there this unhealthy focus on Pakistan? What about others?" Khursheed Mehmood Kasuri told delegates at a security conference in the German city of Munich.
"I know the names. I don't want to spill them... names given to us by the IAEA (International Atomic Energy Agency), by Iran. There are lots of Europeans involved, but there seems to be a focus on Pakistan," he said.
In a televised confession, Pakistan's top nuclear scientist Abdul Qadeer Khan said Wednesday he had acted independently in leaking secrets as head of the country's nuclear program from the 1970s.
The next day, the country's military president, Pervez Musharraf, pardoned the man revered as the father of Pakistan's atomic bomb, while rebuffing calls for an independent inquiry into the military's role.
Many analysts say Khan could not have acted without the knowledge of the military.
Kasuri said it was important to stress that the leaks had not been recent and were mainly during Pakistan's early days of nuclear development when few people were aware of the project.
"Yes our program was covert. Because it was covert there was a danger of this sort of thing," he said.
Khan had been removed when initial intelligence reports indicated smoke even if "fire had not been discovered." Moreover, while Pakistan had not joined the Nuclear Non-Proliferation Treaty, it was committed to fulfilling the non-proliferation requirements, Kasuri said.
It was, he said, not in Pakistan's interests to share its nuclear secrets with others.
Many Pakistanis nevertheless believe Musharraf and top military officers were complicit in the illicit nuclear transfers to Iran, Libya and North Korea.
"It is not something that is in our interests... There has to be a motive, but there was none whatsoever," Kasuri said.
He also said the uranium enrichment technology which Khan appeared to have provided was only part of the know-how required to make nuclear weapons.
"Our nuclear experts tell me you need about 24 different technologies or processes to make nuclear weapons and then to deliver them. Only one of them is the uranium-enrichment process," Kasuri said.

Pakistani to keep nuke riches
By Victoria Schofield
ISLAMABAD, Pakistan -- President Pervez Musharraf has pledged that the disgraced founder of Pakistan's nuclear-weapons program can keep the vast wealth he accumulated selling atom bomb-making technology to rogue states around the world.
Gen. Musharraf, just days after provoking worldwide consternation by pardoning Abdul Qadeer Khan for supplying nuclear expertise to Libya, Iran and North Korea, said in an interview with the London Sunday Telegraph that the scientist's property or assets also would be spared.
"He can keep his money," Gen. Musharraf said, adding that there had been good reason not to investigate the origin of Mr. Khan's suspicious wealth before 1998, when Pakistan successfully tested its first nuclear weapon.
"We wanted the bomb in the national interest, and so you have to ask yourself whether you act against the person who enabled you to get the bomb."
Mr. Khan is believed to have earned millions of dollars from his sale of nuclear know-how, beginning in the late 1980s. Much of the money was funneled through bank accounts in the Middle East.
His assets include four houses in Islamabad worth an estimated $2.8 million, a villa on the Caspian Sea, a luxury hotel in Mali and a valuable collection of vintage cars.
Gen. Musharraf said he understood the need for Pakistani scientists to develop a secret overseas network when building their first nuclear weapon.
"Obviously, we made our nuclear strength from the underworld," he said. "We did not buy openly. Every single atomic power has come through the underworld, even India."
Mr. Khan, 69, last week made a televised confession of his wrongdoing after government investigators confronted him.
Despite being granted a pardon, he is under house arrest and forbidden to give interviews.
"He should not talk for some time," Gen. Musharraf told the Sunday Telegraph.
The Bush administration termed Mr. Khan's legal plight "a matter for Pakistan to decide," but publicly praised Gen. Musharraf for shutting down Mr. Khan's nuclear sales network.
Within Pakistan, criticism has been directed at the government for its treatment of a man nationally revered as the "father of the bomb."
Mr. Khan's supporters filed a habeas corpus petition to be heard tomorrow by the Lahore High Court, asking it to end the "media trial" of a "national hero."
Opposition parties, meanwhile, took advantage of the growing groundswell of support for Mr. Khan to renew their attacks on Gen. Musharraf, who came to power in a military coup four years ago.
The Pakistan People's Party, led from exile by former Prime Minister Benazir Bhutto, says it doubts the authenticity of Mr. Khan's admission, which it claims was made "under duress."
Mr. Khan initially was reported to have told government investigators that he did nothing without the knowledge of Pakistan's military chiefs, including Gen. Musharraf. In his televised confession, however, he said he had no authorization from the government.
Imran Khan, who leads the Pakistan Tehrik-e-Insaaf (PTI) party, contends that Gen. Musharraf pressured Mr. Khan to safeguard his own reputation.
"It could not be possible that nuclear technology was transferred without the knowledge of top military officials," the party leader said.
Mr. Khan's evolution into national hero began soon after India shocked its neighbor with its first nuclear bomb test in 1974. He promised Pakistan's then-president, Zulfikar Ali Bhutto, Mrs. Bhutto's father, that he could match India's weapon and finally did so in 1998, when Pakistan successfully tested its first nuclear weapon. He became an icon, and his image appeared on billboards and bumper stickers.
Mr. Khan sold nuclear technology almost as fast as Pakistan devised it, offering Saddam Hussein a design for a nuclear weapon in 1990, according to a document seized by U.N. weapons inspectors. The Iraqi leader suspected a trap and declined.
Mr. Khan then sold his designs to Libya, Iran and North Korea.

Defector: N. Korea Has Uranium Program
TOKYO (AP) -- A top-ranking North Korean defector said the North launched a uranium-based nuclear weapons program in 1996 with the help of Pakistan, a Japanese newspaper reported Sunday.
Hwang Jang Yop, a former mentor to North Korean leader Kim Jong Il, told the Tokyo Shimbun in an interview that a top military official told him eight years ago about an agreement with Pakistan to develop an enriched uranium weapons program.
Since 2002, the United States has contended that North Korea has been developing uranium-based nuclear weapons as a supplement to its long-standing plutonium-based nuclear capability.
While there is no dispute about the plutonium program, North Korea has persistently denied U.S. allegations about the uranium-based project.
"Jon Pyong Ho came to me, as the person responsible for international affairs, asking 'Can we buy some more plutonium from Russia or somewhere? I want to make a few more nuclear bombs,'" the newspaper quoted Hwang as saying.
"But then, before the fall of 1996, he said 'We've solved a big problem. We don't need plutonium this time. Due to an agreement with Pakistan, we will use uranium.'"
Jon is a member of North Korea's National Defense Committee and a secretary of the country's ruling Workers' Party. Hwang, who defected to South Korea in 1997, was a former chief of North Korea's Parliament.
According to Pakistani government and intelligence sources, equipment including centrifuges for enriching uranium were trafficked from Pakistan from 1989 until the late 1990s. Pakistani officials last week said Abdul Qadeer Khan, founder of the country's nuclear program, had confessed to sending sensitive nuclear technology to North Korea.
The United States and its allies Japan and South Korea are demanding that North Korea eliminate its nuclear weapons program. The countries, together with China and Russia, are to hold a second round of six-nation talks on the North's nuclear program from Feb. 25 in Beijing.
A Bush administration official said Friday, however, that China refuses to accept the U.S. contention that North Korea is developing nuclear weapons based on highly enriched uranium. The administration official, speaking on condition of anonymity, said U.S. diplomats have told Beijing its position is not helpful.
Copyright 2004 Associated Press. All rights reserved.

Bin Laden met nuke scientists
'Nuclear bazaar' story out of Pakistan gets more bizarre with new disclosure
Posted: February 8, 2004
12:12 p.m. Eastern
? 2004
WASHINGTON - As the Pakistani nuclear proliferation story widens, U.S. intelligence officials say top atomic scientists from that country met with Osama bin Laden and Mullah Omar in Afghanistan.
Osama bin Laden
Two former senior Pakistani nuclear scientists who were based in the Afghan town of Kandahar met Mullah Omar and Osama bin Laden several times before the fall of the Taliban. They were later detained and questioned on their return to Pakistan.
Last week, after it became clear that Pakistan was the center of what has become known internationally as the "nuclear bazaar," President Pervez Musharraf agreed to pardon nuclear scientist Abdul Qadeer Khan for selling the country's nuclear secrets to Libya, North Korea and Iran.
Because Pakistan is perceived to be central to the U.S. war on terror, the reaction in Washington has been low-key.
"This is a matter between Dr. Khan, who is a Pakistani citizen, and his government," said Secretary of State Colin Powell to reporters outside the United Nations. "But it is a matter also that I'll be talking to President Musharraf about."
Bush administration officials have expressed satisfaction with Musharraf's guarantees that the country's nuclear proliferation will now come to an end.
A top defector from North Korea says that country's uranium-based nuclear weapons program was launched in 1996 under a deal with Pakistan. In addition, Pakistan stationed other nuclear scientists in Iran to help that country develop its nuclear weapons program.
Pakistan says the presidential pardon to the top nuclear scientist over his admission to have proliferated nuclear technology to three foreign countries is subject to set of a "comprehensive conditions" - but those conditions have not been revealed publicly.
The pardon even allows Khan to keep the vast wealth he accumulated by developing Pakistan's nuclear weapons and from selling the technology to other countries - including several rogue nations. Khan is believed to have earned millions of dollars from his sale of nuclear know-how, beginning in the late 1980s. Much of the money was funneled through bank accounts in the Middle East. His assets include four houses in Islamabad worth an estimated $2.8 million, a villa on the Caspian Sea, a luxury hotel in Mali and a valuable collection of vintage cars.
Khan, 69, last week made a televised confession of his wrongdoing after government investigators confronted him. Despite being granted a pardon, he is under house arrest and forbidden to give interviews.
In addition to selling nuclear technology to Iran and North Korea, Khan also offered Saddam Hussein a design for a nuclear weapon in 1990, according to a document seized by U.N. weapons inspectors. Later he made a deal with Libya.


WND probe documents unthinkable plans of terror groups, pariah nations
Posted: January 19, 2004
1:00 a.m. Eastern
? 2004
Fear of a nuclear attack on American soil is back - and with good reason - as WND documents conclusively in its newest issue of Whistleblower magazine, titled "RETURN OF THE NUCLEAR THREAT."
The signs are everywhere:
Congressional hearings on "dirty bombs" and "suitcase nukes."
Reports of stolen "radioactive warheads" and Osama bin Laden purchasing Soviet-era nuclear weapons on the black market.
Recent deployments of "Nuclear Incident Response Teams" to scour Las Vegas, Los Angeles, New York, Washington, D.C., and other cities for nuclear terror weapons.
The Department of Homeland Security's distribution of radiation detectors to police in Chicago, Detroit, Houston, San Diego, San Francisco and Seattle - as well as to Bureau of Customs and Border Protection agents nationwide - to screen for terrorist activity, whether a dirty bomb, suitcase nuke, or other source of radiation.
Vice President Dick Cheney's chilling assessment that nuclear terror is "the major threat" facing America: Calling a WMD attack on the U.S. "one of the most important problems we face today," Cheney added: "To contemplate the possibility of them unleashing that kind of capability - of that kind of weapon, if you will, in the midst of one of our cities - that's a scary proposition."
And that's just the terror threat. Across the oceans loom other gorgon's-heads of the nuclear monster - perhaps even more threatening.
Where once the nuclear club was very elite - comprising the U.S., U.S.S.R., China, France and just a few others - today, laments International Atomic Energy Agency chief Mohamed ElBaradei, the number of nations now believed by the IAEA to be able to create nuclear weapons "is estimated at 35 or 40."
And among the furthest along, unfortunately, are the world's most notorious terror-sponsor and pariah states - Iran, North Korea, Syria, Saudi Arabia, and Pakistan among them. All of this far-flung reality comes crashing home with stunning precision in "RETURN OF THE NUCLEAR THREAT."
"There is an air of unreality in many people's minds when it comes to nuclear weapons," said WND and Whistleblower Editor Joseph Farah. "After all, a nuclear weapon hasn't been deployed in war since World War II, when the U.S. dropped atomic bombs on Hiroshima and Nagasaki. Add to that the failure so far of coalition forces to find any nuclear weapons in Iraq. Such factors, combined with the inherent difficulty in facing up to a subject so horrific, and you can understand people's tendency to bury their heads with respect to the looming nuclear threat of 2004."
This special Whistleblower edition is more than a wake-up call. It's a crash course in the current, growing - and very real - nuclear threat facing America.
"This issue of Whistleblower will provide a strong dose of reality by presenting the known facts about the nuclear genie, and about the furious quest for the ultimate weapon of mass destruction by the world's madmen," said Farah.
Contents include:
"The major threat," by Joseph Farah, who clearly lays out an overview of the threats Americans face in 2004.
"The terror ahead" - an authoritative, in-depth and spine-straightening look at the world's nuclear scene, aptly subtitled "A nuclear attack? Be very afraid" - by Gabriel Schoenfeld.
"35 or 40 countries can make nuclear arms," in which the U.N.'s chief nuclear inspector Mohamed ElBaradei confides that the situation is way out of control.
"Nukes in the Mideast" by Joseph Farah, where the Middle East expert shows why, despite recent apparent concessions by Libya, Iran and others, the nuclear threat is greater than ever.
"The Libya ruse," an eye-opening page-turner in which Joseph Farah unmasks the developing campaign to pressure Israel to give up nuclear weapons.
"Nuclear weapons production in Iran," Kenneth R. Timmerman's mind-boggling look at how the Iranians have bamboozled international arms inspectors for the past 18 years while building up stunning nuclear capability.
"Nuclear terrorism - how real?" David Kupelian's in-depth primer on "suitcase nukes," "dirty bombs" and other terror tools, the real prospects of their use on U.S. soil, and what can and must be done to defend America.
Suitcase nuke
"Dozens of 'dirty-bomb' warheads missing," documenting the recent discovery that dozens of Cold-War-era radioactive Soviet warheads have been lost, stolen or purchased.
"Does al-Qaida have 20 suitcase nukes?" in which an FBI terror consultant confirms our worst fears, claiming Osama bin Laden purchased the weapons - each with an explosive potential equivalent to the Hiroshima A-bomb - from ex-KGB agents for $30 million.
"In a few short years," warns Farah, "today's terror-sponsoring nations may not need to send terrorists with backpack nukes to wreak devastation on the West because they will be capable of hitting New York or Los Angeles with warheads mounted on ICBMs.
"The Cold War is long over. It's a new world with new enemies for America - and they have, or are soon going to have, nuclear weapons. If we're going to defend America, we need to start by facing up to the return of the nuclear threat."


AP: Found $300M Could Be Saddam's Money
Associated Press Writer
BERN, Switzerland (AP) -- The United States believes it has found at least $300 million Saddam Hussein hid in banks, yet doesn't have enough evidence to get countries such as Syria and Switzerland to hand over the money, U.S. and European officials told The Associated Press.
The funds at stake could go to the Iraq insurgency or the country's reconstruction - depending on who gets to them first. What troubles investigators more is that much of Saddam's cash may already be gone.
The weak U.S. intelligence and the slow-moving investigation, now in its 11th month, have given suspects more than enough time to empty accounts and possibly transfer some funds to Iraq's insurgency, which has cost hundreds of American lives, officials involved in the search said.
Treasury investigators have been quick to identify leads in the hunt but have been scrambling to come up with solid evidence that could hold up in a court or get the approval of a U.N. sanctions committee.
Much to the frustration of the Bush administration, countries that acted quickly on relatively weak evidence involving al-Qaida funds have been unwilling to do the same on Iraq, partly because of growing doubts about the quality of U.S. intelligence.
For months, Swiss officials have asked Washington to provide more information on an account belonging to a Panamanian-registered front company that U.S. officials believe is tied to the former Iraqi regime. The account contains the equivalent of $80 million and U.S. officials are still trying to gather enough information for the Swiss to act.
Were the account held in a U.S. bank, federal authorities wouldn't need any more evidence than they already have because the Patriot Act, passed after Sept. 11, 2001, gives them expanded powers of search and seizure.
"We know a lot of countries cannot use intelligence information the way we can use it now after Sept. 11," said Juan Zarate, the Treasury Department's deputy assistant secretary for terrorist financing and financial crimes. "It's not a complete hindrance but we have to provide the right information."
Swiss officials put a temporary hold on the Montana Management account but won't hand over the money to an Iraqi reconstruction fund, as the Bush administration wants, unless it gets more details - and none were forthcoming during a recent meeting between U.S. and Swiss treasury officials in Washington.
Zarate told AP his office would target new individuals "in the next few weeks," and submit the names to the U.N. sanctions committee, where approval is assured, giving European countries a legal basis to act.
"The reality is, we want to be sure about cases when we go to the U.N. since we're basically marking an individual or a company or an entity. We do have to present some sort of basis for it," Zarate said.
But he said, "when you work bilaterally, things don't necessarily have to be that formal or that definitive."
So far, Zarate's office has given the United Nations the names of five Iraqi entities - the Central Bank of Iraq, Iraq Reinsurance Company, Rafidain Bank, Rasheed Bank and Iraqi Airways Company - plus the list of the 55 Most-Wanted Iraqis that the military presented as a deck of cards in the early days of last year's war.
European and Middle Eastern officials, who spoke on condition of anonymity, said they had peeked into accounts held by children of the 55 and found almost no money. Saddam's daughters, who are living comfortably in Jordan, remain under scrutiny, officials said.
The investigation relies solely on interrogations and information U.S. officials are getting in Iraq. Zarate wouldn't say whether Saddam was cooperating.
No other countries - not even coalition partners - have offered names to the U.N. list.
"The onus falls mostly on us to produce lists and to produce leads," Zarate said. The interagency investigation has been "overwhelmed" by documents and CD ROMs collected in Iraq, he said.
So far, the amount of money identified by U.S. investigators is nowhere near prewar estimates of $40 billion stashed away by Saddam.
"We don't know where it is," said Pierre de Bousquet de Florian, the head of France's domestic intelligence agency.
The largest sums uncovered so far are in Middle East banks. U.S. officials are hoping Syrian officials will be encouraged to hand over money once the Swiss do. But there are also concerns that pressuring the Syrians, without sufficient evidence, could hamper important cooperation on Iraq and the war on terrorism.
In October, U.S. investigators went to the Syrian capital, Damascus, and Amman, Jordan, looking for hidden Iraqi accounts. Syria has frozen about $250 million but won't give the money to the Iraq fund because it can't be sure it belonged to the regime.
The Swiss face similar issues.
In some cases, Swiss investigators have been unable to find evidence that would corroborate the information the United States has provided on accounts. In others, they are having trouble establishing whether a crime has been committed by bank clients. The largest accounts may already be emptied out, according to European, Middle Eastern and American officials.
One Swiss official noted that in 1992, Libya managed to pull 425 million Swiss Francs - or about $300 million then - from Switzerland after it was given two weeks to cooperate with the United Nations or face sanctions for its role in the bombing of a Pan Am flight.
For U.S. investigators tracing Saddam's money, early efforts focused on retrieving close to $1 billion stolen from the Iraqi Central Bank, including money taken by Saddam's sons. More than $100 million is still missing and some is thought to be in the hands of insurgents.
The interagency investigation, which includes Treasury, the FBI, the CIA and Immigration and Customs Enforcement, is still tracing the serial numbers on $750,000 cash found in Saddam's possession when he was captured nearly two months ago.
Hundreds of millions of Iraqi dollars that were in accounts before the 1991 Gulf War are being turned over to the reconstruction fund. The United States also has asked countries owed money by Iraq to forgive the debt. Most have agreed to forgive most, but not all, of the billions Iraq owes.
Associated Press Writers Jeannine Aversa in Washington and John Leicester in Paris contributed to this report.
On the Net:
U.N. sanctions list:
U.S. Treasury list:
Copyright 2004 Associated Press. All rights reserved.

>> HMM...

Saudi Man May Have Mad Cow Disease
JIDDAH, Saudi Arabia (AP) - Saudi medical authorities believe a man hospitalized last month and now in a coma is suffering from the kingdom's first case of the human form of mad cow disease.
Official medical records shown to The Associated Press on Friday by the patient's family said test findings a day after Abdul Karim Eskandar was admitted to the hospital "were suggestive of Creutzfeldt-Jakob disease."
Abdul Karim Eskandar, 64, was admitted to Jiddah's King Faisal Specialist Hospital Jan. 20, and lost his memory, eyesight and speech before falling into a coma.
It was not clear how the Quran teacher had contracted the disease, since he had never eaten beef, according to his son, Abdul Moneim Abdul Karim.
Abdul Karim said doctors told him a handful of other patients had also been diagnosed with the disease.
AP was not immediately able to contact any of the other patients or their families.
Abdul Karim said Eskandar started complaining of feebleness and blurred vision in November. Doctors initially suspected that he had suffered a stroke.
After the diagnosis - tests had been sent to Mayo Medical Laboratories in the United States for confirmation - doctors said Eskandar may have unwittingly consumed beef during a trip to England in 1999, at the height of the spread of variant CJD there.
One doctor told Abdul Karim that his father could have contracted the disease without eating contaminated beef, the son said.
Attempts to reach Eskandar's doctor were not successful and it was not immediately possible to reach health officials because of a two-week Muslim holiday.
"We will not give up on him because we are not convinced with the doctors' diagnosis here," Abdul Karim said. The family plans to take Eskandar to the University of Vienna Medical School, which has agreed to carry out further tests.
A letter from a professor of internal medicine at the Austrian school said Eskandar seems to be suffering from a "neurological disorder of unknown origin."
The causes of classic CJD, a fatal human dementia known for 80 years, are unknown. The disease, which is neither bacteria nor fungus, could be inherited, spread through infected surgical equipment, tissue transplants or hormones. Variant CJD is linked to the consumption of tainted beef.

Study Says Donors May Be Passing Mad Cow
LONDON (AP) - British scientists studying how the human form of mad cow disease is transmitted say some people could be passing the illness through blood donations.
Although it has not been proven that the brain-wasting variant Creutzfeldt-Jakob Disease can be transmitted through transfusion, the scientists did find a case in which a blood donor and the recipient died of it.
In that case, the donor gave blood more than three years before he developed symptoms, the scientists said in their report in Friday's Lancet medical journal.
The researchers, led by Professor Robert Will at the National CJD Surveillance Center in Edinburgh, wrote that "although the epidemic of vCJD presently seems to be in decline, a proportion of the U.K. population could be incubating vCJD and acting as blood donors."
The scientists based their study on records from United Kingdom blood services and the national CJD surveillance unit.
The report said 48 people had been identified as having received blood from 15 donors who later developed the variant disease.
By December 2003, all but 17 of the recipients had died but vCJD was the cause of death in only one case. The disease can only be confirmed during an autopsy by examining brain tissue.
"Our findings raise the possibility that this infection was transfusion transmitted," the report says, adding that infection also "could have been due to past dietary exposure" to BSE.
Scientists already believe people can get variant CJD from eating products from cows infected with a similar illness, bovine spongiform encephalopathy - BSE - or mad cow disease.
Statistical analysis indicated that the odds of the man not being infected by his blood transfusion were between one in 15,000 and one in 30,000.
In an accompanying independent commentary, Dr. Adriano Aguzzi and Dr. Markus Glatzel from the University Hospital of Zurich in Switzerland, said, "the chance that this case is not transfusion-related is very small."
"Shocking as it may be," they wrote, "the finding that vCJD can be transmitted via blood transfusion is not surprising. Stringent studies in sheep show that prion diseases" - such as CJD - "can be transmitted via blood, even if blood is collected in preclinical stages of prion disease."
Besides the transfusions, 20 units of plasma from people who later developed variant CJD were used to make blood products before 1998, when Britain stopped using British blood, the Lancet report said.
The scientists said that before 1998, "many thousands of individuals may have been exposed" to blood products "derived from pools containing a donation from an individual incubating vCJD."
So far, they said, no case of variant CJD has been identified as connected to exposure to such plasma products. The risks from plasma products are probably less than from transfusion, they added.
All blood products for use in operations in Britain are now based on plasma imported from the United States, where there have been no cases of human mad cow disease blamed on American beef. The human form of mad cow disease so far has claimed 143 victims in Britain and 10 elsewhere.


Prosecutors Investigating Abbott Laboratories' Price Hike on AIDS Medicine
The Associated Press
Published: Feb 8, 2004
CHICAGO (AP) - Investigators in Illinois and New York are trying to determine if Abbott Laboratories broke the law when it increased the cost of a commonly used AIDS medicine by nearly 400 percent.
Illinois Attorney General Lisa Madigan's office is investigating whether the North Chicago-based drug maker engaged in deceptive or unfair pricing practices when it raised the cost of Norvir, a treatment for the HIV virus, the Chicago Tribune reported in Sunday's editions.
Abbott increased the wholesale price of Norvir in December to $8.57 a day, or $257.10 a month, from $1.75 a day, or $52.50 for a 30-day supply, according to company records.
"Norvir is not like a hay fever medication that people take to lessen symptoms to be more comfortable," Madigan told the newspaper. "It is a drug they take to survive. This investigation is aimed at determining the real reason for the price increase and whether it violates Illinois law."
New York Attorney General Eliot Spitzer is trying to determine if the company violated antitrust law, Abbott confirmed. A spokesman for Spitzer's office would neither confirm nor deny an investigation.
Both investigations center on whether the increase was designed to make AIDS drug cocktails cost-prohibitive and steer patients to Abbott's newer drug, Kaletra, which is more expensive and has a longer patent life.
Abbott said Norvir was priced lower than its rivals for years and denies any wrongdoing.
"Many companies have known the value of Norvir to their drugs and priced their drugs at a premium despite this," said Abbott spokeswoman Melissa Brotz. "Competitors need to price their drugs based on their clinical value. Perhaps those concerned about the cost of therapy should look at the highest cost component of HIV regimens."
Prescriptions for some AIDS drugs cost several thousand dollars a year.
AP-ES-02-08-04 1914EST

Challenger to Putin for Russian Presidency Is Missing
MOSCOW, Feb. 8 -- One of Vladimir V. Putin's challengers in next month's presidential election is missing, and the police and security services announced today that they had begun a search for him.
Ivan P. Rybkin, a former Parliament speaker and national security adviser under Boris N. Yeltsin, has not been seen or heard from since Thursday evening, raising fears among his family and campaign aides that something dire had happened to him.
"We are trying not to let such ideas come to mind," said Aleksandr V. Tukayev, a campaign official and the deputy chairman of Mr. Rybkin's party, Liberal Russia, "but it is hard not to think about it."
Mr. Rybkin's whereabouts have added a bizarre drama to a torpid presidential campaign that is universally expected to end with Mr. Putin's re-election on March 14.
Mr. Rybkin, 57, has been one of the most unabashed critics of Mr. Putin and his policies, but like Mr. Putin's five other challengers he has struggled to build political support and get his message heard, especially on state television. In polls, he has fared even worse than the others, receiving the support of fewer than 1 percent of voters.
Mr. Rybkin's Liberal Russia has been at the center of political intrigue and violence ever since it was created in 2002.
Its patron is Boris A. Berezovksy, a businessman and former Kremlin insider, who has become one of Mr. Putin's fiercest critics after moving to London in self-exile to escape fraud charges he says are politically motivated. Mr. Berezovsky first raised concerns about Mr. Rybkin's whereabouts in an interview on Friday.
Mr. Rybkin did not appear at a scheduled news conference on Friday, his aides said. Nor did he surface to make any statement on Saturday, as would be expected, when the country's election commission officially registered his candidacy in the election.
A spokesman for the Moscow police said that Mr. Rybkin's wife, Albina, submitted an official statement today about his disappearance. She told the police that her husband had not been seen since he arrived at their apartment sometime after 7 P.M. on Thursday and let his bodyguards go home. He was not there when his wife arrived after 11, she said.
Under Russian law, a person is not considered missing until three days have passed. Mr. Tukayev said that given Mr. Rybkin's prominence, the authorities should have begun a search immediately.
"In any civilized country, all the security services would be on their feet," he said.
In the last 18 months, two of the members of Mr. Rybkin's party in the Parliament, Sergei N. Yushenkov, and Vladimir I. Golovlyov, have been shot to death on the streets of Moscow in murky circumstances.
Shortly before he was killed, Mr. Yushenkov split with Mr. Berezovksy and another party leader, Mikhail N. Kodanev, has since been charged with the murder. Party officials say he has been falsely accused.
While the election commission refused to let the party participate in last December's parliamentary elections, Mr. Rybkin's supporters collected enough signatures to qualify him for a spot on the presidential ballot.
On Saturday, however, the chairman of the election commission, Aleskandr A. Veshnyakov, said the commission had provided prosecutors with what he said was evidence that some of his qualifying petitions were fraudulent. If that is proven, prosecutors could still disqualify him as a candidate.
Two other presidential challengers -- Sergei Y. Glazyev, a leader of the nationalist Motherland Party, and Irina M. Khakamada of the liberal party Union of Right Forces -- were also cleared today to run. But they too now face investigations into the veracity of some of the signatures they collected, election officials told the Interfax news agency.
Kseniya Y. Ponomaryova, Mr. Rybkin's campaign chairman, said in an interview tonight that another party official had spoken with him by telephone at 8:40 p.m. on Thursday. By 10 P.M., he was not answering his mobile telephone. Albina Rybkin said today that when she arrived home on Friday night, she found that her husband had taken off a shirt and left dishes in the kitchen, but there were no signs of a struggle or violence. His cars were still in the garage.
She discounted the possibility he was aboard the subway train struck by a bomb on Friday morning, killing at least 39, since he does not routinely use the subway. She also discounted the possibility that he had left on his own. "It is absolutely not like him," she said.
Mr. Rybkin, an agriculture specialist and former Communist Party member, has been a prominent political figure since the collapse of the Soviet Union, first as an opponent of Mr. Yeltsin and later as a security adviser to him. Mr. Rybkin participated in the peace talks that end the first war in Chechnya in 1996 and remains an advocate of efforts to end the second Chechen war, now in its fifth year.
As a candidate, he has criticized Mr. Putin, saying he was an authoritarian who is closely linked to the wealthy businessmen who wield disproportionate control of the country's economy, so long as they remain in the Kremlin's good graces. In an interview last month, Mr. Rybkin said he was concerned about the erosion of democratic freedoms in Russia and the continued economic hardship of ordinary Russians.
"Russia," he said then, "is turning a new and very shameful leaf."
Copyright 2004 The New York Times Company

Rybkin Missing for 3 Days, Police Start Search
By Valeria Korchagina
Staff Writer
Two days after being registered to run as a candidate against President Vladimir Putin in the March 14 election, Ivan Rybkin was officially declared missing Sunday.
But Boris Berezovsky, the politician's financial backer and the former gray cardinal of the Kremlin, said late Sunday that Rybkin would reappear Monday, four days after going missing.
Rybkin disappeared a few days after running a full-page advertisement in Kommersant newspaper, in which he described Putin as Russia's "biggest oligarch."
"One can only guess about the circumstances of my husband's disappearance," Rybkin's wife, Albina, said Sunday, Interfax reported. "It is known precisely that at about 8 p.m. [Thursday] he returned home and dismissed the driver and the guard. When I returned home later he wasn't there and nothing is known about him since that time."
Rybkina filed a missing persons report with police Sunday, the earliest possible time by law, which considers people missing after no contact has been made for at least three days.
A presidential press service official declined to comment Sunday on whether the letter and Rybkin's disappearance were linked in any way.
"You should talk to the relevant law enforcement agencies about it," he said.
Berezovsky, when reached for comment late Sunday, said that Rybkin would reappear Monday. "I'm pretty certain he is alive and well," he said. He added that Rybkin's family had information, obtained from the Security Council and special services, that Rybkin was safe and well. He refused to elaborate.
Rybkin was officially registered as a presidential candidate Friday, but failed to show up at the Central Elections Commission to receive his official candidate's identity card.
Both the Moscow police criminal investigation department and the Federal Security Service are reported to be looking for Rybkin. But his wife said Sunday afternoon there had been no significant progress in the search.
A former head of the Security Council under President Boris Yeltsin, Rybkin has maintained close links with Berezovsky, who has lived in Britain since 2000 and has said he is funding Rybkin's campaign. Berezovsky has been trying to rally support for a challenge to Putin since shortly after his election in 2000. He won political asylum in Britain last year, after the Prosecutor General's Office sought his extradition to Russia on theft and corruption charges.
Rybkin is also an advocate of negotiations with Chechen separatists over the conflict in the republic.
The full-page advertisement in Kommersant, a Berezovsky-owned newspaper, took the form of an open letter from Rybkin, accusing Putin of grabbing control of a vast share of Russian business.
Among the companies Rybkin alleged were controlled by businessmen close to Putin were television companies NTV and Channel One, and oil major Surgutneftegaz.
"I assert: Now it is Putin who is the biggest oligarch in Russia," Rybkin said in the letter. "I am convinced Putin has no right to power in Russia. And we have no right to be silent about it."
The letter claimed that Sibneft majority shareholder Roman Abramovich, as well as businessmen Gennady Timchenko, Mikhail Kovalchuk and his brother Yury were close to Putin.
In an interview in Moskovskiye Novosti weekly on Friday, Rybkin claimed that revenues from various industries, including those collected by the Railways Ministry and the Nuclear Energy Ministry, were controlled by businessmen close to Putin.
But little is publicly known about the business interests of the men Rybkin said were Putin's associates.
Timchenko apparently controls two oil export firms, and has known Putin since he worked in St. Petersburg Mayor Anatoly Sobchak's office in the 1990s, Moskovskiye Novosti reported.
There is no information available on Mikhail Kovalchuk, while Yury Kovalchuk served as one of Putin's subordinates at St. Petersburg City Hall. Yury Kovalchuk controls 41 percent in Severstal shareholder Rossia Bank and is board chairman of the Center for Strategic Development Northwest, the paper said.
? Copyright 2002, The Moscow Times. All Rights Reserved.

Posted by maximpost at 8:27 PM EST
Updated: Sunday, 8 February 2004 10:00 PM EST


Judges keep quiet about conflicts
State Supreme Court justices rule on scores
of cases in which they have a financial stake
The Supreme Court building in Manhattan.
Justice Herman Cahn
Justice Carla Moskowitz
Justice Helen Freedman
One-third of state Supreme Court justices who hear Manhattan's big-money civil lawsuits have failed to disclose their personal conflicts of interest in recent cases, a Daily News investigation has found.
A dozen judges ruled in favor of companies in which they, or their families, owned stock.
Others did not disclose connections to former law partners, expert witnesses, or their own personal lawyers appearing before them -- all possible violations of state law and judicial ethics.
The News findings are based on financial disclosures from 2000 through 2002 for New York County judges compared with computer records for all 46,826 civil cases they heard.
The News tracked down parties in 101 cases to confirm that 16 out of 47 judges who hear commercial civil disputes had not disclosed a potential conflict.
Told what The News had learned, state Chief Administrative Judge Jonathan Lippman said jurists are obligated to avoid anything that might cast doubt on their impartiality.
But he said, "Despite their huge case-loads, judges in New York County are overwhelmingly adhering to among the most stringent ethics rules in the country."
Informed that a judge's personal interest could have tainted their case, most lawyers shied away from denouncing the judges involved. But a few were shocked.
"Aren't we assuming that the people making these decisions are totally unbiased?" asked lawyer Daniel Solin, who filed suit against the Salomon Smith Barney brokerage before Justice Herman Cahn.
"That's what we assume -- that's the foundation of our judicial system," said Solin.
Cahn maintained a Salomon Smith Barney margin loan while ruling in three lawsuits involving the firm.
In a 2002 case, he rejected a suit filed by Solin on behalf of a 60-year-old Manhattan woman, who charged Salomon misled her into investing $75,000 in Worldcom just as its value plummeted in an accounting scandal.
Cahn ordered her to take her claim to arbitration, which Solin argued was biased in favor of Wall Street firms. He charged that the arbitration clause in the investment contract had been breached.
Cahn never mentioned his margin loan account, which enables him to borrow $60,000 to $100,000 from the firm for investments.
The case is on appeal. Cahn was unapologetic.
"Most of my cases are fact-based and I follow the law," he said. "If I'm wrong, the Appellate Division lets me know." Similarly, Justice Edward Lehner defended his handling of a 2001 case involving American Express, though he did not reveal his wife owned 200 shares in the firm.
"I can't believe anybody may want me to recuse because I own a couple of hundred shares of a company," said Lehner, who ruled in favor of Amex. "Maybe they would."
While Lehner's wife's Amex shares represent a minuscule interest in the firm, the public has no way of knowing the extent of a judge's holdings. Disclosure forms available to the public censor the number of stock shares and their value.
Some judges acknowledged their mistakes and vowed to change.
"It has not been at the forefront of my attention," said Justice Paula Omansky, who failed to disclose conflicts in 20 cases cited by The News. "Certainly, disclosure is a legitimate and valid requirement for judges."
Of the 20 cases in which Omansky admitted she failed to disclose relevant stock investments, some were settled before she played a significant role and some were dismissed.
In nine cases she ruled in favor of a party in which she owned stock.
In 2000, for example, Salomon Smith Barney sued a stockbroker who took a job at a competitor after handling $16 million worth of Salomon accounts.
Omansky issued a temporary restraining order that prevented the broker from working with former clients.
Omansky owned stock in Salomon Smith Barney.
In 2001, a man sued Johnson & Johnson claiming Propulsid, a drug used to treat heartburn, contributed to the sudden death of his college-age daughter from heart failure.
The case is pending before Omansky, who owns stock in Johnson & Johnson.
"The next time that case comes before me," Omansky said, "I'm definitely going to disclose it."
Justice Shirley Kornreich, facing election to her second 10-year term on the bench this year, said she may have missed such conflicts in 11 cases.
Kornreich vowed that she and her husband will sell all their stock and buy mutual funds, which are exempt from conflict-of-interest rules.
"My reputation is more important," she said. "I have chosen to sell my small amounts of stock rather than have to deal with the onus of following what stock I own on each and every case."
Judge Karla Moskowitz recalled that lawyers in a Citibank case years ago advised her the bank had no connection to Citigroup, in which her husband owned stock.
For years she heard Citibank cases. Citigroup is a holding company that owns Citibank.
"I have since learned that that advice was incorrect, and I am troubled by any appearance of conflict," she said. "No one has questioned my impartiality.
"My husband has divested himself of the Citigroup stock so I can avoid any possible issues of conflict in the future," said Moskowitz, who is president of the National Association of Women Judges.
New York's court rules say judges must excuse themselves from cases if they have any financial interest, "however small."
That includes relationships with lawyers, especially if they are former law partners or personal counsel.
Justice Charles Ramos named his high school chum, attorney Michael Miller, to a foreclosure on a luxury condo. Miller collected rent -- and took a percentage of interest and fees. Through November 1997, Ramos okayed $176,000 in payments to his friend.
Two years later, Miller provided the judge with free legal representation when Ramos and his wife obtained three parking spaces in a garage near their upper Manhattan apartment. A Dec. 21, 1999, deed lists Miller as their attorney.
When the arrangement came to light, Miller told a court inspector general he could not recall charging Ramos a fee.
Ramos is now on the board of directors of the New York County Lawyers Association, of which Miller is president.
Miller did not return calls seeking comment. Ramos said he told the buyer in the real estate transaction to pay Miller and that he no longer awards Miller court appointments.
Other potential conflicts were uncovered in The News investigation.
Judge Alice Schlesinger accepted a slip-and-fall case where a doctor sued a Chinese restaurant renting the ground floor of the judge's midtown co-op building.
Schlesinger, a stockholder in the co-op like any other resident, benefits from the rent the co-op collects. In this case both the restaurant and the co-op owners were sued. One issue was how much of each's insurance covered the mishap.
Schlesinger's assistant said the judge herself never met with the attorneys. A law clerk handled all preliminary business. Lawyers say they settled before any issue reached the judge.
Their defense
Justice Paula Omansky
Case: Alexis Garraway vs. Verizon Wireless, 2002
An actor who can't afford his own lawyer claims Verizon Wireless failed to pay him for his work as an extra in a TV commercial filmed in Washington Square. Omansky dismisses the actor's do-it-yourself complaint for failing to properly cite the law.
Conflict of interest: Omansky's husband owns shares of Verizon Communications, but the judge fails to disclose his stock ownership in court.
Comment: "I think your inquiry has put us on notice that there is or could be a problem," Omansky said.
Justice Karla Moskowitz
Case: DeMicco Brothers Inc., vs. Consolidated Edison and Empire City Subway Co. Ltd. a Verizon company, 2002
A Queens contractor sues Verizon and other utilities, saying he could not finish a street repair on time because utility cables blocked his equipment. Moskowitz shoots down the suit, citing a "legitimate business reason" not to move the wires. "It was as if we were intruders in this matter rather than legitimate litigants, as in, 'How dare we bother these big people,'" said attorney Frederick Levine. An appeal is pending.
Conflict of interest: Moskowitz's husband owned shares in Verizon, but the judge failed to disclose his ownership in court.
Comment: "Over the last five years, I have heard over 1,500 multiparty cases," Moskowitz said. "No one has questioned my impartiality."
Justice Herman Cahn
Case: Salomon Smith Barney vs. Mendel Kaff, 2001
A private broker fails to repay his $22,000 margin loan from Salomon Smith Barney and the brokerage firm sues. They ultimately settle the case.
Conflict of interest: Cahn has a margin loan with Salomon himself but does not disclose this in court.
Comment: Cahn said he does not believe he violated any ethical rules.
Justice Shirley Kornreich
Case: Brian Coke vs. Citibank, 2001
A Jamaican developer with an office in Brooklyn, acting without an attorney, sues Citibank, alleging the bank has mangled numerous charges to his account processed through an ATM in Kingston, Jamaica, that he uses to pay his workers. The developer settles his case after an unfavorable ruling from Kornreich.
Conflict of interest: Kornreich owns shares of Citigroup but fails to disclose her stock ownership in court.
Comment: Kornreich said she does not believe she violated any ethical rules. "The volume of work is crushing," she said.
Justice Helen Freedman
Case: Joseph Maira vs. Dr. Lance Austen, 2001
A local couple sues a doctor and drug distributor Merck-Medco, a pharmacy chain owned by Merck Corp., over the diabetes drug Rezulin. Freedman dismisses the case against Merck-Medco, ruling that "the pharmacy that sold the drug or filled the prescription cannot be held liable."
Conflict of interest: Freedman owned shares of Merck Corp. but failed to disclose her stock ownership in court.
Comment: "I must have missed it," Freedman said, explaining she did not notice Merck was a defendant. Months later, she sold all her stock. "It makes my life easier," she said.

February 8, 2004 -- Several Manhattan Supreme Court judges have dumped their stocks after conflict-of-interest questions were raised amid an FBI corruption probe, courthouse sources said.
The federal investigation, which focuses on embattled Justice Marylin Diamond, but includes other jurists, is looking into whether judges doled out favorable rulings to friends and firms in which they owned a stake.
Diamond and her husband, former Supreme Court Justice Franklin Weissberg, have owned more than 40 stocks and bonds -- in companies including JP Morgan Chase, Verizon, Time Warner and other firms whose cases she's ruled on, according to Diamond's financial disclosure forms.
But she and other judges have been selling their holdings in the wake of stories about the matter, sources said.
The Post reported last month that the FBI has pored over records and interviewed at least 30 litigants to determine if undisclosed personal interests swayed the judges' decisions.
Under state court rules, judges must disclose all their personal holdings worth more than $1,000 -- including stocks, real estate and retirement accounts -- along with the financial interests of their spouses and minor children.
They are required to be fully informed about their finances and disclose in court any ties they have to the parties appearing before them, the rules say.
Manhattan Supreme Court Judge Shirley Kornreich, who in an interview with The Post denied being aware of the stocks she had listed on her disclosure forms, said she was going to unload her holdings.
"I told my broker to sell it all and put everything in a mutual fund," she said.
One of Diamond's lawyers, Harold Tyler, told The Post last year that her stocks weren't selected by her but by a broker -- and that the judge wasn't aware of which stocks he'd picked.
Chief Judge Judith Kaye will address the issue of corruption in the courts in her state-of-the-judiciary speech tomorrow, one court source said.

Posted by maximpost at 7:37 PM EST
Saturday, 7 February 2004


Democrat Attacks on Contractors
Posted Feb. 2, 2004
By John Berlau
Published: Tuesday, February 17, 2004

Critics protest that to be big-time government contractors, companies must operate a revolving door between themselves and the bureaucracies with which they work, effectively freezing out their smaller competitors.

Henry Waxman is outraged. Outraged. The Democrat from California who, as ranking minority member of the House Government Reform Committee, did his best to block investigations into Clinton scandals such as Chinagate is demanding investigations into what he calls irregular contracting of the Bush administration for reconstructing Iraq. Specifically, Waxman and Rep. John Dingell (D-Mich.) charge in a letter to the Iraq Program Management Office that "these contracts have created two massive fiefdoms" for Halliburton Co. on oil services and Bechtel in electricity and other public works.

The letter criticizes the Iraq reconstruction program for its plans to award more indefinite delivery/indefinite quantity (ID/IQ) contracts - those "in which the total amount of work and specific projects to be completed are unknown at the time and bid of the award. When an ID/IQ contact is put out to bid, there is no real opportunity for price competition because the projects under the contract have yet to be defined." Waxman and Dingell conclude that these practices are "deliberately precluding meaningful price competition" and "in effect doling out monopolies." They also claim that "taxpayers will pay a high price for this imprudent approach."

Criticisms of contracts such as these are common from left-wing activists. Many have pounced on the Halliburton contract, noting that Dick Cheney was the company's chief executive officer before he was vice president, despite the fact that Cheney divested himself of interest in the company. Meanwhile there are some on the right, and some independent observers, who also take issue with the federal-contracting process. But they say the outrage expressed by Waxman and other partisan Democrats is very selective; for while Halliburton's long-term contract may be problematic, it is typical of the new world of federal contracting that began in the 1990s. Clinton-era reforms have, according to critics, led to a lack of oversight, to cost overruns and other abuses. And taken together with long-standing barriers to competition, such as favoritism for unionized firms, the Clinton changes have prevented competition from innovative firms and small businesses.

The Project on Government Oversight, a watchdog group strongly critical of the postwar contracts awarded to Halliburton and others, says the problems result from the Clinton-Gore changes. "In recent months, many policymakers have inquired about Iraq reconstruction contracts," says a report from the group. "What most people do not realize is that those contracts are not anomalies - in fact, they simply reflect the flawed federal-contracting system that exists today. Favoritism, waste, abuse and even fraud are far more likely today because of the systemic reduction of oversight and transparency in government contracting over the past decade."

Some conservatives are even calling Waxman's bluff and asking for a congressional investigation. A recent Army investigation found that Halliburton did not overcharge for gasoline from Kuwait, although the company announced in January that it had fired two employees for taking kickbacks from Kuwaiti subcontractors. A Halliburton spokeswoman told the Wall Street Journal that this was unrelated to the gasoline issues, and that the company told the Pentagon promptly about the employee impropriety.

Says David Williams, vice president for policy at the right-leaning Citizens Against Government Waste, "Maybe Halliburton's innocent - we're not making that determination. What we're saying is investigate it, because that's the least that you can give the taxpayers." But, he adds, don't just stop at Halliburton and Iraq reconstruction. "Every dollar needs to be scrutinized, and if there is any question whether there are misdoings, it needs to be investigated."

Not only are the types of contracts Halliburton now has in Iraq a direct result of procurement "reforms" pushed through under Vice President Al Gore's program to "reinvent government" but, according to the Website of the General Services Administration (GSA), the ID/IQ contracts of the type being used in Iraq and in many civilian agencies "were initiated in large part by the National Performance Review" under Gore.

Many Republicans signed on too with legislation such as the Federal Acquisition Reform Act of 1996. These new proposals came, in part, in response to reports of the Pentagon paying ridiculously high prices for ordinary commercial items such as hammers. If agencies were given more flexibility to negotiate in the commercial marketplace, it was said, they could save the government bundles of money. The new philosophy was reflected in the Clinton administration's Federal Acquisition Regulation, which states that government buyers "may assume if a specific strategy, practice, policy or procedure is in the best interests of the government and is not ... prohibited by law, executive order or other regulation, that the strategy, practice, policy or procedure is a permissible exercise of authority."

It was in this new era that Halliburton's controversial contracts developed. In the 1990s the Army created its Logistic Civil Augmentation Program (LOGCAP), which designs multiyear ID/IQ contracts, the initial process being competitive. Companies submit proposals and bids, but after a bid is taken the Army can buy a number of services, such as electricity and food preparation, from the winning company for a specified number of years without going through another bid process. And these winning contractors are on call to the Army anywhere in the world. In 1997, Halliburton lost out on a bid for the LOGCAP contract to the Reston, Va.-based DynCorp, a company that derived almost its entire income from government contracts. But the Army still gave Halliburton a no-bid contract to set up some bases in the Balkans. And Halliburton so impressed government leaders that Gore gave it a "Hammer" award for efficiency.

Meanwhile DynCorp, as Insight's Kelly Patricia O'Meara has reported [see "DynCorp Disgrace," Feb. 4, 2002], became mired in scandal after some of its employees were accused of raping Bosnian girls as young as 14. Although Halliburton had paid a $2 million fine in the late 1990s based on fraud allegations involving its work on a California base, something which Waxman has made much of, given its overall record as compared to that of DynCorp it hardly was surprising or unusual to contract watchers that Halliburton won the LOGCAP contract when it was up for bid again in 2001. And it was under the terms of this pre-war contract that the Army chose Halliburton to put out oil fires in Iraq in the spring of 2003 without going through an additional bidding process.

The Army had an arguable justification for this because of the urgency of the war. "Suppose the wells had been torched and the Army, following Waxman's advice, had begun a long, complicated, competitive-bidding process to find a company to put out the fires," writes Byron York in National Review. The Democrats assuredly would not have patted the Bush administration on the back for letting the oil wells burn.

ID/IQ contracts such as Halliburton's seem to have the most justification when the military is concerned because of the emergency conditions under which it sometimes must work. But such contracts are now extremely common in domestic agencies as well, Insight has found. The National Park Service alone lists 237 of these contracts in a database. It signed a five-year contract, for instance, with McLean, Va.-based Science Applications International Corp. for unspecified "transportation and implementation tasks at various National Park Services areas throughout the United States, District of Columbia, Guam, Puerto Rico and the Virgin Islands."

As the Project on Government Oversight report explains, ID/IQs such as this "are not actual contracts for specific work. Rather, they are agreements by the government to award an unspecified amount of future work to approved contractors - the federal-acquisition equivalent of a hunting license. Requirements for competition on such awards are extremely weak, effectively allowing billions of dollars worth of noncompetitive contracts." The contracts have a guaranteed minimum the government must pay for initial services along with a maximum the government might pay for add-ons. The National Park Service contract cited above has a minimum of $25,000, but a maximum of $2 million.

The 1990s were boom years for contracting. The Clinton administration was fond of claiming it had shrunk the number of federal employees to a total lower than when John F. Kennedy was president. But counting contracted employees the number of full-time workers getting their checks for the civilian side of government grew sharply. Brooking Institution scholar Paul Light estimated the size of the contractor workforce, or as he calls it the "shadow government," to be 5.6 million in 1999. But, as he wrote in The True Size of Government, no one really knows the actual size. "The government knows virtually nothing about its shadow - the ever-expanding number of politically well-connected contractors who are taking more and more work from federal employees," Light wrote. "Neither the Office of Personnel Management nor the Office of Management and Budget has ever counted the full-time equivalent nonfederal workforce, let alone analyzed its appropriateness."

This increase in contractors still could be justified as helping the taxpayer because the government would not be responsible for the health care or pensions of the contract workers. But contracting also has its own costs that can mushroom out of control if not watched carefully, experts warn.

Certainly such contracting is very big business and watched on Wall Street. In late 1998, Computer Sciences Corp. (CSC), an information-technology firm based in El Segundo, Calif., put itself on the proverbial map by winning what was called "the Super Bowl of government contracts" - a 15-year megacontract to modernize the computer systems of the IRS with a maximum price tag of $7 billion. Acquiring this contract and beating out competitor Lockheed Martin was reported in the Los Angeles Business Journal as "the corporate equivalent of hitting a ball clear out of the park."

But it seems to have struck out in actual performance. The Treasury De-partment's IRS Oversight Board recently documented delays and huge cost overruns and recommended removing CSC as the contractor if improvements aren't made soon. The problems have highlighted the questionable circumstances under which CSC received the contract.

The contract was awarded by IRS Commissioner Charles Rossotti, whose administration of the bureau was ethically troubled. As Insight has detailed, Rossotti held on to millions of dollars of stock in American Management Systems (AMS), the company he cofounded and ran before going to the IRS, despite the fact that AMS had ongoing contracts with the agency.

Indeed, CSC's modernization contract also came under fire in 2000 when the company hired Karla Pierce, the Kansas secretary of revenue, since Kansas was a major client of AMS and now it looked to some as though Rossotti was giving a quid pro quo. Pierce had defended Rossotti's firm at a time when its overhaul of the Kansas tax system was being criticized by Kansas legislators and the company was being sued by the state of Mississippi for negligent work in a lawsuit that turned out to be successful. CSC, after hiring Pierce, sent a statement to Insight saying it was "impressed by [Pierce's] significant accomplishments," but nowhere did the statement deny that Rossotti used influence to get Pierce the job [see "A Taxing Dilemma," April 23, 2001, and "IRS Boss Snagged Clinton Waiver," May 7, 2001].

After media scrutiny resulting from Insight's stories, Rossotti finally sold most of his AMS stock about a year before he left the IRS in 2002. He now works at the Carlyle Group, a private investment-equity firm staffed with influential Democrats and Republicans that, Washington Technology magazine says, also is one of the 40 biggest government contractors in information technology.

Meanwhile, in late 2003, the oversight board blasted CSC's work. The board wrote in a report that "virtually all of the projects with a major impact on improving customer service and IRS' internal operations and productivity were experiencing serious delays and cost overruns." CSC, the board reported, "did not demonstrate that it had the depth of leadership and experience to carry out its responsibilities" and "did not supply the important thought and program leadership it was engaged to deliver." InfoWorld quoted a CSC spokesman who said the company was "making considerable progress" on the modernization.

Regardless of the board's scathing critique, thanks largely to the IRS contract, CSC now is one of the largest government contractors in the United States. It ranked fifth on Washington Technology's top 100 federal contractors in information technology, with government contracts worth almost $2 billion for the year covered. And CSC used its new fortune to buy the troubled DynCorp in 2003 and likely will be a presence in military contracting as well.

Because the jobs of many contracting officers were cut from federal agencies in the 1990s as part of Gore's "reinventing government," increasingly one of the giants is designated the "prime contractor," leading a team of other large and small contractors. Such is the case with CSC and the IRS. This "bundling" of tasks into one megacontract has made it particularly hard on small businesses to get bids unless they partner with the giants. In the spring of 2002, President George W. Bush told a conference of women entrepreneurs that he would work sharply to reduce contract bundling. "Wherever possible, we're going to insist that we break down large federal contracts so that small-business owners have got a fair shot at federal contracting," he said. But small-business owners say the bureaucrats still are moving slowly on this presidential priority.

And what really irks many small businesses is that the new procurement policies can benefit large foreign firms more than U.S. small business. Democrats in Congress have tried to ban contractors that establish subsidiaries or move their headquarters to foreign locales such as the Caymans to escape high U.S. taxes. Yet when Bush tried to limit some Iraqi postwar work to the firms from countries in the coalition forces, Democrats such as Waxman and Dingell cried foul. In their letter, these congressmen said they were miffed at the policy because "Canada, Germany and France do have contractors that could compete effectively for these contracts, with a lower cost to taxpayers." But given the fact that, according to the London Independent newspaper, captured documents show that Saddam Hussein managed to bribe French government officials, it would seem obvious that there may be good reason to keep French firms an arm's length away, say national-security experts.

Although big contracts are hard to get, giant contractors can be even harder to get rid of, placing further barriers to many other U.S. firms that want to compete [see "What Does It Take to Lose a Contract?" March 18, 2002]. The GSA lifted a suspension that barred MCI, formerly WorldCom, from seeking new contracts. This ban had been established because of that company's bankruptcy and deception of shareholders, yet now GSA awarded it a contract for new phone lines in Iraq. In a January press release, Citizens Against Government Waste names GSA as its "Porker of the Month" and says MCI's contracts "put taxpayer dollars at risk and amounted to a hidden government bailout of the company." According to Williams of the watchdog group, "The fact that they kept on getting government contracts really sounded an alarm to us as to why. Why was this not being competitively bid? Why isn't there an open competition for this, because there obviously wasn't."

To be big-time government contractors, companies almost have to mirror the bureaucracies with which they work - and operate a revolving door between themselves and those bureaucracies. The government freezes out competition by giving contractors mandates that have nothing to do with efficiency for taxpayers, such as racial quotas and "green practices." And there also is a bias toward unionized firms, says Stefan Gleason, vice president of the National Right to Work Legal Defense Fund. "Federal-government power and resources are being marshaled effectively to drive people into unions," he says.

While Bush issued an executive order getting rid of "project-labor" requirements on federally funded projects that forced unionization of workers, he hasn't touched the Davis-Bacon Act, a law requiring workers on federal construction projects to be paid "prevailing wages" determined by unions, or the alleged union shenanigans that go along with it. Determining the prevailing wage is a process fraught with fraud, Gleason says. "The unions get together with the companies that are unionized, and they fix the price at an artificially high rate, and that becomes the prevailing wage, and then nonunion firms can't bid on those projects," he says. "Small businesses, women, minorities and, often, the most-productive companies are deprived of the opportunity to work." In fact the sponsors of Davis-Bacon in the 1930s had clear racist motivations, publicly saying the law was to keep "colored labor" out of federal contracts.

The Bush administration has said it wants to outsource as many as 800,000 federal jobs to save money for taxpayers. But Gleason warns that the savings may not be achieved with laws such as Davis-Bacon that price out small firms. Similarly, others warn that savings will evaporate without restoring some oversight. "Full and open bidding" must be restored, says the Project on Government Oversight report.

The report recommends: "Establish a bidding process that is open to large and small contractors. Strict oversight should ensure that the lack of full and open competition was necessary under the circumstances, including instances when an agency awards a sole-source, limited bid, or classified contract or acquisition. ... Restore 1980's-era procurement laws [as under Reagan-Bush] that ensured as many contracts as possible were fully competed and therefore the government received the best deals."

John Berlau is a writer for Insight magazine.


Here, according to Government Executive magazine, are the top 10 private contractors to the federal government in terms of the dollar value of contract awards in fiscal 2002:

1. Lockheed Martin Corp. -- $22,868,969

2. Boeing Co. -- $19,569,810

3. Northrop Grumman Corp. -- $10,231,037

4. Raytheon Co. -- $7,522,196

5. General Dynamics Corp. -- $7,264,308

6. United Technologies Corp. -- $4,117,346

7. Computer Sciences Corp. -- $4,090,770

8. Bechtel Group Inc. -- $3,603,148

9. SAIC -- $3,466,739

10. Carlyle Group -- $2,166,233


DynCorp Disgrace
Posted Jan. 14, 2002
By Kelly Patricia O Meara
Published: Monday, February 4, 2002

Americans were seen in Bosnia as defenders of the children, as shown here, until U.S. contractors began buying children as personal sex slaves.

Middle-aged men having sex with 12- to 15-year-olds was too much for Ben Johnston, a hulking 6-foot-5-inch Texan, and more than a year ago he blew the whistle on his employer, DynCorp, a U.S. contracting company doing business in Bosnia.

According to the Racketeer Influenced Corrupt Organization Act (RICO) lawsuit filed in Texas on behalf of the former DynCorp aircraft mechanic, "in the latter part of 1999 Johnston learned that employees and supervisors from DynCorp were engaging in perverse, illegal and inhumane behavior [and] were purchasing illegal weapons, women, forged passports and [participating in] other immoral acts. Johnston witnessed coworkers and supervisors literally buying and selling women for their own personal enjoyment, and employees would brag about the various ages and talents of the individual slaves they had purchased."

Rather than acknowledge and reward Johnston's effort to get this behavior stopped, DynCorp fired him, forcing him into protective custody by the U.S. Army Criminal Investigation Division (CID) until the investigators could get him safely out of Kosovo and returned to the United States. That departure from the war-torn country was a far cry from what Johnston imagined a year earlier when he arrived in Bosnia to begin a three-year U.S. Air Force contract with DynCorp as an aircraft-maintenance technician for Apache and Blackhawk helicopters.

For more than 50 years DynCorp, based in Reston, Va., has been a worldwide force providing maintenance support to the U.S. military through contract field teams (CFTs). As one of the federal government's top 25 contractors, DynCorp has received nearly $1 billion since 1995 for these services and has deployed 181 personnel to Bosnia during the last six years. Although DynCorp long has been respected for such work, according to Johnston and internal DynCorp communications it appears that extracurricular sexcapades on the part of its employees were tolerated by some as part of its business in Bosnia.

But DynCorp was nervous. For instance, an internal e-mail from DynCorp employee Darrin Mills, who apparently was sent to Bosnia to look into reported problems, said, "I met with Col. Braun [a base supervisor] yesterday. He is very concerned about the CID investigation; however, he views it mostly as a DynCorp problem. What he wanted to talk about most was how I am going to fix the maintenance problems here and how the investigation is going to impact our ability to fix his airplanes." The Mills e-mail continued: "The first thing he told me is that 'they are tired of having smoke blown up their ass.' They don't want anymore empty promises."

An e-mail from Dyncorp's Bosnia site supervisor, John Hirtz (later fired for alleged sexual indiscretions), explains DynCorp's position in Bosnia. "The bottom line is that DynCorp has taken what used to be a real positive program that has very high visibility with every Army unit in the world and turned it into a bag of worms. Poor quality was the major issue."

Johnston was on the ground and saw firsthand what the military was complaining about. "My main problem," he explains, "was [sexual misbehavior] with the kids, but I wasn't too happy with them ripping off the government, either. DynCorp is just as immoral and elite as possible, and any rule they can break they do. There was this one guy who would hide parts so we would have to wait for parts and, when the military would question why it was taking so long, he'd pull out the part and say 'Hey, you need to install this.' They'd have us replace windows in helicopters that weren't bad just to get paid. They had one kid, James Harlin, over there who was right out of high school and he didn't even know the names and purposes of the basic tools. Soldiers that are paid $18,000 a year know more than this kid, but this is the way they [DynCorp] grease their pockets. What they say in Bosnia is that DynCorp just needs a warm body -- that's the DynCorp slogan. Even if you don't do an eight-hour day, they'll sign you in for it because that's how they bill the government. It's a total fraud."

Remember, Johnston was fired by this company. He laughs bitterly recalling the work habits of a DynCorp employee in Bosnia who "weighed 400 pounds and would stick cheeseburgers in his pockets and eat them while he worked. The problem was he would literally fall asleep every five minutes. One time he fell asleep with a torch in his hand and burned a hole through the plastic on an aircraft." This same man, according to Johnston, "owned a girl who couldn't have been more than 14 years old. It's a sick sight anyway to see any grown man [having sex] with a child, but to see some 45-year-old man who weighs 400 pounds with a little girl, it just makes you sick." It is precisely these allegations that Johnston believes got him fired.

Johnston reports that he had been in Bosnia only a few days when he became aware of misbehavior in which many of his DynCorp colleagues were involved. He tells INSIGHT, "I noticed there were problems as soon as I got there, and I tried to be covert because I knew it was a rougher crowd than I'd ever dealt with. It's not like I don't drink or anything, but DynCorp employees would come to work drunk. A DynCorp van would pick us up every morning and you could smell the alcohol on them. There were big-time drinking issues. I always told these guys what I thought of what they were doing, and I guess they just thought I was a self-righteous fool or something, but I didn't care what they thought."

The mix of drunkenness and working on multimillion-dollar aircraft upon which the lives of U.S. military personnel depended was a serious enough issue, but Johnston drew the line when it came to buying young girls and women as sex slaves. "I heard talk about the prostitution right away, but it took some time before I understood that they were buying these girls. I'd tell them that it was wrong and that it was no different than slavery -- that you can't buy women. But they'd buy the women's passports and they [then] owned them and would sell them to each other."

"At first," explains Johnston, "I just told the guys it was wrong. Then I went to my supervisors, including John Hirtz, although at the time I didn't realize how deep into it he was. Later I learned that he had videotaped himself having sex with two girls and CID has that video as evidence. Hirtz is the guy who would take new employees to the brothels and set them up so he got his women free. The Serbian mafia would give Hirtz the women free and, when one of the guys was leaving the country, Hirtz would go to the mafia and make sure that the guys didn't owe them any money."

"None of the girls," continues Johnston, "were from Bosnia. They were from Russia, Romania and other places, and they were imported in by DynCorp and the Serbian mafia. These guys would say 'I gotta go to Serbia this weekend to pick up three girls.' They talk about it and brag about how much they pay for them -- usually between $600 and $800. In fact, there was this one guy who had to be 60 years old who had a girl who couldn't have been 14. DynCorp leadership was 100 percent in bed with the mafia over there. I didn't get any results from talking to DynCorp officials, so I went to Army CID and I drove around with them, pointing out everyone's houses who owned women and weapons."

That's when Johnston's life took a dramatic turn.

On June 2, 2000, members of the 48th Military Police Detachment conducted a sting on the DynCorp hangar at Comanche Base Camp, one of two U.S. bases in Bosnia, and all DynCorp personnel were detained for questioning. CID spent several weeks working the investigation and the results appear to support Johnston's allegations. For example, according to DynCorp employee Kevin Werner's sworn statement to CID, "during my last six months I have come to know a man we call 'Debeli,' which is Bosnian for fat boy. He is the operator of a nightclub by the name of Harley's that offers prostitution. Women are sold hourly, nightly or permanently."

Werner admitted to having purchased a woman to get her out of prostitution and named other DynCorp employees who also had paid to own women. He further admitted to having purchased weapons (against the law in Bosnia) and it was Werner who turned over to CID the videotape made by Hirtz. Werner apparently intended to use the video as leverage in the event that Hirtz decided to fire him. Werner tells CID, "I told him [Hirtz] I had a copy and that all I wanted was to be treated fairly. If I was going to be fired or laid off, I wanted it to be because of my work performance and not because he was not happy with me."

According to Hirtz's own sworn statement to CID, there appears to be little doubt that he did indeed rape one of the girls with whom he is shown having sexual intercourse in his homemade video.

CID: Did you have sexual intercourse with the second woman on the tape?

Hirtz: Yes

CID: Did you have intercourse with the second woman after she said "no" to you?

Hirtz: I don't recall her saying that. I don't think it was her saying "no."

CID: Who do you think said "no"?

Hirtz: I don't know.

CID: According to what you witnessed on the videotape played for you in which you were having sexual intercourse with the second woman, did you have sexual intercourse with the second woman after she said "no" to you?

Hirtz: Yes.

CID: Did you know you were being videotaped?

Hirtz: Yes. I set it up.

CID: Did you know it is wrong to force yourself upon someone without their consent?

Hirtz: Yes.

The CID agents did not ask any of the men involved what the ages of the "women" were who had been purchased or used for prostitution. According to CID, which sought guidance from the Office of the Staff Judge Advocate in Bosnia, "under the Dayton Peace Accord, the contractors were protected from Bosnian law which did not apply to them. They knew of no [U.S.] federal laws that would apply to these individuals at this time."

However, CID took another look and, according to the investigation report, under Paragraph 5 of the NATO Agreement Between the Republic of Bosnia-Herzegovina and Croatia regarding the status of NATO and its personnel, contractors "were not immune from local prosecution if the acts were committed outside the scope of their official duties."

Incredibly, the CID case was closed in June 2000 and turned over to the Bosnian authorities. DynCorp says it conducted its own investigation, and Hirtz and Werner were fired by DynCorp and returned to the United States but were not prosecuted. Experts in slave trafficking aren't buying the CID's interpretation of the law.

Widney Brown, an advocate for Human Rights Watch, tells INSIGHT "our government has an obligation to tell these companies that this behavior is wrong and they will be held accountable. They should be sending a clear message that it won't be tolerated. One would hope that these people wouldn't need to be told that they can't buy women, but you have to start off by laying the ground rules. Rape is a crime in any jurisdiction and there should not be impunity for anyone. Firing someone is not sufficient punishment. This is a very distressing story -- especially when you think that these people and organizations are going into these countries to try and make it better, to restore a rule of law and some civility."

Christine Dolan, founder of the International Humanitarian Campaign Against the Exploitation of Children, a Washington-based nonprofit organization, tells Insight: "What is surprising to me is that Dyncorp has kept this contract. The U.S. says it wants to eradicate trafficking of people, has established an office in the State Department for this purpose, and yet neither State nor the government-contracting authorities have stepped in and done an investigation of this matter."

Dolan says, "It's not just Americans who are participating in these illegal acts. But what makes this more egregious for the U.S. is that our purpose in those regions is to restore some sense of civility. Now you've got employees of U.S. contractors in bed with the local mafia and buying kids for sex! That these guys have some kind of immunity from prosecution is morally outrageous. How can men be allowed to get away with rape simply because of location? Rape is a crime no matter where it occurs and it's important to remember that even prostitution is against the law in Bosnia. The message we're sending to kids is that it's okay for America's representatives to rape children. We talk about the future of the children, helping to build economies, democracy, the rule of law, and at the same time we fail to prosecute cases like this. That is immoral and hypocritical, and if DynCorp is involved in this in any way it should forfeit its contract and pay restitution in the form of training about trafficking."

Charlene Wheeless, a spokeswoman for DynCorp, vehemently denies any culpability on the part of the company, According to Wheeless, "The notion that a company such as DynCorp would turn a blind eye to illegal behavior by our employees is incomprehensible. DynCorp adheres to a core set of values that has served as the backbone of our corporation for the last 55 years, helping us become one of the largest and most respected professional-services and outsourcing companies in the world. We can't stress strongly enough that, as an employee-owned corporation, we take ethics very seriously. DynCorp stands by its decision to terminate [whistle-blower] Ben Johnston, who was terminated for cause."

What was the "cause" for which Johnston was fired? He received his only reprimand from DynCorp one day prior to the sting on the DynCorp hangar when Johnston was working with CID. A week later he received a letter of discharge for bringing "discredit to the company and the U.S. Army while working in Tuzla, Bosnia-Herzegovina." The discharge notice did not say how Johnston "brought discredit to the company."

It soon developed conveniently, according to Johnston's attorneys, that he was implicated by a DynCorp employee for illegal activity in Bosnia. Harlin, the young high-school graduate Johnston complained had no experience in aircraft maintenance and didn't even know the purposes of the basic tools, provided a sworn statement to CID about Johnston. Asked if anyone ever had offered to sell him a weapon, Harlin fingered Johnston and DynCorp employee Tom Oliver, who also had disapproved of the behavior of DynCorp employees.

Harlin even alleged that Johnston was "hanging out with Kevin Werner." Although Werner had no problem revealing the names and illegal activities of other DynCorp employees, Werner did not mention Johnston's name in his sworn statement.

Kevin Glasheen, Johnston's attorney, says flatly of this: "It's DynCorp's effort to undermine Ben's credibility. But I think once the jury hears this case, that accusation is only going to make them more angry at DynCorp. In order to make our claim, we have to show that DynCorp was retaliating against Ben, and that fits under racketeering. There is a lot of evidence that shows this was what they were doing and that it went all the way up the management chain."

According to Glasheen, "DynCorp says that whatever these guys were doing isn't corporate activity and they're not responsible for it. But this problem permeated their business and management and they made business decisions to further the scheme and to cover it up. We have to show that there was a causal connection between Ben's whistle-blowing about the sex trade and his being fired. We can do that. We're here to prove a retaliation case, not convict DynCorp of participating in the sex-slave trade.

"What you have here is a Lord of the Flies mentality. Basically you've got a bunch of strong men who are raping and manipulating young girls who have been kidnapped from their homes. Who's the bad guy? Is it the guy who buys the girl to give her freedom, the one who kidnaps her and sells her or the one who liberates her and ends up having sex with her? And what does it mean when the U.S. steps up and says, 'We don't have any jurisdiction'? That's absurd."

The outraged attorney pauses for breath. "This is more than one twisted mind. There was a real corporate culture with a deep commitment to a cover-up. And it's outrageous that DynCorp still is being paid by the government on this contract. The worst thing I've seen is a DynCorp e-mail after this first came up where they're saying how they have turned this thing into a marketing success, that they have convinced the government that they could handle something like this."

Johnston is not the only DynCorp employee to blow the whistle and sue the billion-dollar government contractor. Kathryn Bolkovac, a U.N. International Police Force monitor hired by the U.S. company on another U.N.-related contract, has filed a lawsuit in Great Britain against DynCorp for wrongful termination. DynCorp had a $15 million contract to hire and train police officers for duty in Bosnia at the time she reported such officers were paying for prostitutes and participating in sex-trafficking. Many of these were forced to resign under suspicion of illegal activity, but none have been prosecuted, as they also enjoy immunity from prosecution in Bosnia.

DynCorp has admitted it fired five employees for similar illegal activities prior to Johnston's charges.

But Johnston worries about what this company's culture does to the reputation of the United States. "The Bosnians think we're all trash. It's a shame. When I was there as a soldier they loved us, but DynCorp employees have changed how they think about us. I tried to tell them that this is not how all Americans act, but it's hard to convince them when you see what they're seeing. The fact is, DynCorp is the worst diplomat you could possibly have over there."

Johnston's attorney looks to the outcome. "How this all ends," says Glasheen, "will say a lot about what we stand for and what we won't stand for."

Kelly Patricia O'Meara is an investigative reporter for Insight.

A Taxing Dilemma
By John Berlau
Published: Monday, April 23, 2001
When it was revealed that Dick Cheney would be running for vice president on the GOP ticket with George W. Bush, Cheney was pummeled with questions about potential conflicts of interest that might result from his holdings in Halliburton Corp., the oil-services company Cheney headed before he was tapped as Bush's running mate. Cheney sold the stock and turned over his unvested options to an independent administrator to give the proceeds to charity.

When Treasury Secretary Paul O'Neill announced he was going to keep his $100 million in stock and options in Alcoa Corp., where he had been chairman and chief executive officer, he was subjected to intense scrutiny in the media, including Insight (see "The $100 Million Misunderstanding," April 2-9). O'Neill did an about-face and announced on ABC's This Week that he would divest.

In sharp contrast, hardly a peep has been uttered, even from Republicans, about a Clinton-administration holdover who owns millions of dollars of stock in a company that has millions of dollars of contracts with the very agency he heads.

Charles O. Rossotti was appointed by Bill Clinton to head the IRS in 1997. His background in technology and business won praise at the time from both Republicans and Democrats. Rossotti had been chairman of American Management Systems (AMS), a Fairfax, Va.-based information-technology consulting firm that he cofounded after a stint as one of Robert McNamara's famed "Whiz Kids" at the Defense Department's Office of Systems Analysis. With the IRS computer systems in disarray and gross abuses of taxpayer rights unearthed during congressional hearings, members of Congress were eager to have a "manager" at the helm of IRS rather than another political tax attorney.

So eager, apparently, that the Senate Finance Committee agreed to let Rossotti keep his stock in AMS, even though the company was providing computer software and data-processing services to the IRS. At his confirmation hearing Rossotti promised Sen. William Roth of Delaware, then-chairman of the Senate Finance Committee, that he would divest "if AMS decides to bid for more work from the IRS beyond existing GSA contracts, or successor contracts of similar scope." He also said he would do his best to avoid even the appearance of a conflict of interest. "No one has, I do not think, a greater interest than I do in ensuring that no one believes, at this stage in my life, that I have taken on this job in order to further any particular interest of my own," Rossotti said.

Yet in a press release dated Nov. 7, 1997 - just four days after he was confirmed as IRS commissioner on a Senate vote of 92-0, but in a convenient interlude before he was sworn - Rossotti praised the achievements of AMS in a company press release announcing his IRS confirmation and AMS resignation. "This is an exciting time for AMS," Rossotti said, sounding like the major shareholder he is, in this release distributed to the business press by the PR Newswire service. "Within the next year, AMS is expected to reach $1 billion in revenues. The company will have nearly 9,000 employees working with leading organizations around the world, including the largest banks, telecommunications firms, government organizations, health-care providers and utilities. The outlook for the business is excellent, and I am confident that AMS' management team will continue the company's successful track record."

This statement, and other questionable actions such as putting state tax chiefs whose agencies contracted with AMS in top IRS positions, has raised questions among critics about how independent Rossotti really is of his former company.

"I think that in this case the line between public interest and his private interests is, at a minimum, blurred," says Mark Levin, president of Landmark Legal Foundation, a conservative public-interest legal group. "All the more reason to follow the lead of Mr. O'Neill and Mr. Cheney and so many other officials" who have divested themselves of large holdings in companies where they were executives.

According to his most recent financial-disclosure forms (filed in May 2000), at the end of 1999 Rossotti and his wife, Barbara, owned between $16 million and $80 million in AMS stock. In 1998, the New York Times reported that he was the largest individual shareholder in AMS, a company that last year had revenues of $1.28 billion.

At press time Rossotti had not responded to Insight's request for an interview. But Rossotti's spokesman, Frank Keith, tells Insight that his boss has no plans to divest: "He's done an incredible job of running the Internal Revenue Service, which is as large as most corporations. And he's done it successfully within the ethical constraints of his executed recusal statements."

Levin says there must not be a double standard in ethics for Bush appointees and Clinton holdovers such as Rossotti. "What Treasury Secretary O'Neill did stands in stark contrast to what Rossotti hasn't done and still refuses to do, which is divest himself of interest in a business that raises at least the appearance of a conflict," Levin says. "I think this is a snapshot of the difference between the Clinton and Bush administrations."

Former senator Roth tells Insight Rossotti's decision not to divest is still fine with him. "In today's world, it's almost impossible to avoid any perception of conflict of interest and you've got to get people that are qualified," Roth says. "I think we also have to have a little more confidence that a typical person is going to do what's right. i We're extraordinarily fortunate to have a man of his caliber." Sen. Charles Grassley, R-Iowa, who replaced Roth as chairman of the Senate Finance Committee after the Delaware Republican was defeated last November, has praised Rossotti for improving customer service by putting more IRS personnel on the taxpayer hot lines. He gave Rossotti an "A" for managing the agency in a recent Wall Street Journal article. But Grassley is a stickler for ethics, and a Senate Finance Committee staffer tells Insight the chairman is likely to review the issue, particularly if AMS is bidding for more IRS business than was under contract when Rossotti was confirmed.

"Grassley's good government," the staffer says. "I think you could certainly say that it's something that the Finance Committee is going to want to understand better."

And the scrupulous Grassley may have a lot to investigate. The IRS' Keith says that the agency signed three new contracts with AMS in 2000 that will pay the company more than $17 million this year. Keith stressed that the new contracts were "add-ons" to an existing contract with the IRS to provide financial-management systems. This means Grassley may be asking Rossotti whether the add-ons violate his pledge to the Senate Finance Committee in 1997 to divest if his old company did additional business with the agency.

Keith claims Rossotti recused himself "on matters relative to that financial-management system and the financial reports we must issue each year." But a Senate aide also tells Insight that there has been tension between the IRS and its parent agency, the Treasury Department, concerning whether Rossotti should recuse himself from dealings with these financial-management contracts. "The IRS is arguing that the conflict should be waived," the aide says. "Treasury is having problems with that. I believe it's still an ongoing issue between the two staffs."

Critics say that even if Rossotti were recusing himself he still would not be able to perform his duties without ethical question as long as he owned all that stock. And if he were to recuse himself from every issue that may affect AMS, he would be taking himself out of important agency decisions that he was appointed to manage. "The problem is that, particularly with an agency like the Internal Revenue Service or the Federal Bureau of Investigation or the Drug Enforcement Administration, you're talking about serious, powerful enforcement agencies," says Levin. "There must be absolute certainty in the public's mind that there is no conflict of interest and no appearance of a conflict of interest. The problem here is that it's hard to say with a straight face that there wasn't at least an appearance problem."

AMS contracts with the IRS are not Rossotti's only problem with conflicts, say critics. In the early 1990s, AMS began modernizing and integrating tax systems for state revenue departments. State tax collectors always have had an important relationship with the IRS. They frequently share data and cooperate on investigations. In addition, the IRS Restructuring and Reform Act, passed by Congress in 1998, gave state officials and certain private-sector specialists an incentive to come to work for the IRS.

Previously, top-paying IRS posts other than the commissioner had to be filled by career IRS employees. But the new law gave the commissioner the authority to hire executives for 40 positions from outside the agency and pay all the way up to the vice president's then salary level of $175,000 - still less than what many private-sector firms pay professionals, but a substantial pay raise for state officials.

In 1998, soon after the law was passed, Rossotti hired two state tax chiefs. He named Kansas Secretary of Revenue John LaFaver as the IRS deputy commissioner for modernization. Val Oveson, chairman of the Utah State Tax Commission, was made national taxpayer advocate. Both officials since have left the IRS: LaFaver now is director of the Treasury Department's Tax Advisory Program; Oveson is a senior director in the Salt Lake City office of Pricewaterhouse Coopers. Neither returned phone calls from Insight.

The rub is that, coincidentally or not, both officials oversaw agencies that had hired AMS to overhaul the tax computer systems of their respective states. The contracts together totaled almost $100 million, according to a 1999 Wichita Eagle article that noted the connections of these men to Rossotti's old firm. An IRS spokesman told Investor's Business Daily (IBD) that Oveson was found by an executive search firm and that both men passed ethical checks within the Treasury Department.

But the arrangement still seems odd to Mississippi Commissioner of Revenue Ed Buelow, who successfully sued AMS for breach of a contract to overhaul Mississippi's tax system. "It may not be technically wrong, but to me it's not proper," Buelow tells Insight. "To me the impropriety of it would be somewhat apparent. It's just too much of a coincidence: Out of 50 commissioners, why did those two get picked. Why wasn't it one of the other 47 that didn't have a contract. i If I had been in the position that Mr. Rossotti's in, I would have been somewhat reluctant to consider someone to whom I had a contract in the private sector for a top job with the IRS."

Another state official who found the hirings suspicious was Kansas Senate Minority Leader Anthony Hensley. A staunch Democrat, Hensley often criticized the governor and his appointees such as LaFaver. But in 1999 he also launched a volley against Rossotti, an appointee of his own party's president. "It looks almost like a pipeline," Hensley told IBD in 1999. "You cooperate with AMS, and you can move on to the IRS."

LaFaver responded by saying that Hensley's charge was "absolutely preposterous" because there was no way LaFaver could have known when he signed the contract with AMS that Rossotti would be IRS commissioner more than two years later. The question, say critics, is whether Rossotti was rewarding key state officials whose states gave AMS huge contracts. And AMS did use LaFaver's status in its marketing. In a sales brochure, as well as on its Website, AMS featured this quote: "The real results of this partnership will be the creation of the best tax incentives for any firm to locate and prosper in Kansas." The author of that commercial endorsement then was identified as "former Kansas Secretary of Revenue and current Deputy Commissioner of Modernization, U.S. Internal Revenue Service."

Tom Morgan, a professor of law who teaches legal ethics at George Washington University, sees nothing wrong per se with Rossotti hiring officials who happened to have steered big contracts to AMS. At the same time, he criticizes AMS' use of LaFaver's IRS status as a sales tool. "An implication of saying that you're going to withdraw from involvement is also a kind of representation that your company, from which you're currently benefiting, should not trade on the fact that you are IRS commissioner or that your deputy is a customer of the company," says Morgan. "That implies something that you've warranted is not true - namely, that there's some connection between the commissioner and the company."

AMS did not return Insight's repeated phone calls requesting comment.

Questions again surfaced last November when LaFaver's successor as Kansas secretary of revenue, Karla Pierce, announced she was leaving Kansas to go to work on the IRS computer-systems modernization project as an employee of Computer Sciences Corp., the lead contractor. In speaking to Insight, Hensley alleged, "There's a quid pro quo here." Pierce, a longtime employee of the Kansas Department of Revenue, had been project manager when the AMS overhaul began. She and LaFaver would meet with Rossotti when he came to Kansas as AMS chairman for quarterly status reports, according to IBD. Pierce defended AMS when the company's work was under attack by Kansas lawmakers of both parties after a rash of late refunds. Mississippi officials also say she tried to thwart their efforts to get information about the AMS problems in Kansas.

"I don't question that there's a connection and that he helped her get that job," says Armin Moeller, a partner at the Jackson, Miss., office of Phelps Dunbar, LLP, who represented Mississippi in the lawsuit. "Karla Pierce was a key player in defending AMS to the hilt. Karla Pierce was a key player in not cooperating with us."

Mississippi Commissioner Buelow agrees. "In my dealings with Miss Pierce, she conducted herself more as an employee of AMS than she did as a commissioner of revenue of a sister state," he says. "She was totally uncooperative as far as trying to help us, quite contrary to other states. [Other states and Mississippi] always shared information and tried to help each other find out how your project's doing. She wouldn't cooperate, she wouldn't return telephone calls. When I filed suit, she called me and told me if that would require her to do any testifying she wasn't going to do it, and she wasn't going to do anything at all to help us."

A Computer Sciences Corp. public-affairs officer did not return Insight's telephone calls and an e-mail inquiring about these matters. The IRS' Keith said he had "no information" concerning whether Rossotti had any input or influence over the company in the hiring of Pierce. Insight tried to reach Pierce directly at the company's Federal Sector Division at Falls Church, Va. An operator said no one with the name Karla Pierce was in the employee database.

Although Mississippi had contracted with AMS in 1993 to modernize and integrate the state's entire system of various taxes, by "April 1999 not a single tax-collection software program was operational," the lawsuit said. Buelow charged that AMS had misrepresented its work and diverted resources to other states. A jury found AMS guilty of breach of contract and, because the state had included lost revenue in its damages, ordered AMS to pay the state $475 million - one of the largest jury verdicts in the country last year. The state and AMS eventually settled for $185 million, $32 million of which - plus nearly $4 million in litigation costs - had to be charged against quarterly earnings. AMS currently is suing one of it insurers for not paying a settlement to the state before trial.

Some in Kansas think that Pierce may have saved AMS from a similar fate there and claim to see a connection to her new job. The Kansas tax system that AMS modernized seems to be running well now and received an award from the Federation of Tax Administrators. But, in 1999, refunds took nearly twice as long, on average, to be processed as the year before, according to a state legislative audit. Delinquent notices were sent out erroneously and lawmakers were flooded with calls from angry taxpayers.

Pierce defended AMS at the time, blaming the problem on legislative changes and the difficulty of finding temporary employees. But many lawmakers put much of the blame on AMS, saying that a multimillion-dollar system should have been able to handle the changes in tax law. Some wanted to follow Mississippi's lead and sue.

"When there was a lawsuit in Mississippi, that was the same time we were having lots of problems and many of us were suggesting that maybe we ought to be doing the same thing," recalls Kansas state Rep. Tony Powell, R-Wichita, a member of the House Tax Committee. "Even though things have improved at the department now, I'm not convinced it's because of this new tax system. i I still have questions as to whether this contract was a good deal."

But AMS touted Kansas in promotional materials as an example of its success with favorable quotes from LaFaver and Pierce. "Our vision will be achieved when we put the customer first every time," Pierce was quoted as saying in a brochure next to her picture. In news stories about the Mississippi case, AMS officials also cited the Kansas project as proof of their competence.

Another connection Rossotti still has to AMS is through his wife, Barbara. Barbara Rossotti, a partner at the Washington law firm of Shaw Pittman, which represented AMS, attended the trial in Mississippi and participated in the mediation and settlement conferences between the state and AMS, according to Buelow and Moeller. The latter recalls Barbara Rossotti giving very specific instructions about terms of the settlement. "She was acting almost as inside and outside counsel," Moeller says. "It was clear to me that when you speak to her, you're speaking to a real player. It seemed to be a bit different than your typical lawyer-client relationship."

Moeller says he was surprised to see her playing such an active role in the case, given that her husband was supposed to be distancing himself from the company. "It seemed clear to us she was there as his [IRS Commissioner Rossotti's] proxy," Moeller says. "As a partner at Shaw Pittman, she could work on all kinds of things. The bottom line was she was working on this."

Barbara Rossotti did not return Insight's repeated phone calls. The IRS' Keith insists her representation of AMS posed no problems. "Why, if the commissioner has executed a viable and rigorous recusal process to separate himself from any dealings with AMS in his capacity as the commissioner of the Internal Revenue Service, would his wife's employment have an impact?" Keith asks.

Moeller concludes, "All indications are that Charles Rossotti is a major influence, if not the primary influence, on AMS."

These are serious matters. The 1998 IRS Restructuring and Reform Act gave Rossotti a five-year term that will not end until November 2001, but it also provides that "the commissioner may be removed at the will of the president." Tom Fitton, president of the conservative ethics watchdog group Judicial Watch, thinks Rossotti's ties to AMS, as well as the allegedly politicized audits of many conservative groups critical of the Clinton administration that continued during his tenure (see sidebar, p. 12), justify his removal. The IRS commissioner's actions "raise the appearance that Rossotti and his family are working for AMS rather than the American people," Fitton says. "The taxpayer should have full faith and confidence that the IRS is not acting on behalf of any special interest, whether it be politicians like Bill Clinton or big businesses like AMS."


During the mid-nineties, a long list of conservative groups and Clinton critics were subjected to audits by the IRS. It seemed to many that every time someone on the right - from the Western Journalism Center to Paula Jones - criticized the president, they would be visited by the IRS and put through the turmoil and fear of a government audit.

Many traced these allegedly politicized audits to IRS Commissioner Margaret Milner Richardson, who President Clinton appointed in 1993. Richardson was an accomplished Democratic fund-raiser and a close friend of Hillary Rodham Clinton. She was a determined partisan who served on the president's transition team and, while boss of the IRS, even attended the 1996 Democratic National Convention.

So it was hoped that when Charles Rossotti, an information-technology executive with good managerial skills and no apparent ties to the Clinton administration, came aboard in 1997 the rash of audits would stop.

But as long as Clinton was in power the suspicious audits continued. In May 2000, less than two months after a report from the Joint Committee on Taxation found "no credible evidence" of politically motivated audits during Clinton's tenure, the nursing home owned by Juanita Broaddrick - who alleged that Clinton raped her while he was Arkansas attorney general - was subjected to an audit from the IRS. Then, in August, Katherine Prudhomme, a woman who grilled Al Gore in New Hampshire about the Broaddrick case, found out from the IRS that she owed $1,500 in back taxes just hours before she spoke at a rally in front of Hillary Rodham Clinton's New York campaign headquarters. (The IRS has resolved Prudhomme's case in her favor, but Broaddrick's case continues, according to Larry Klayman of Judicial Watch, the public-interest law firm now representing both women.)

The National Center for Public Policy Research, a group critical of the Clinton administration's environmental policies, received a new audit in 2000 after getting a clean bill of health from an earlier audit in 1996. Bill O'Reilly, who ripped into Clinton every weeknight on Fox News, was audited three years in a row after he began hosting The O'Reilly Factor. And the Heritage Foundation and Citizens Against Government Waste, two nonprofit organizations audited in 1996 for sending out fund-raising letters signed by presidential candidate Bob Dole that the IRS deemed too political, did not get closure on their cases until after the November 2000 elections.

But according to Rossotti, a former Robert McNamara "Whiz Kid," politicized audits never were a problem during the Clinton years. Upon release of the Joint Committee report, Rossotti issued the following statement: "With this report, I think we can safely lay to rest concerns that the resources of the IRS have been diverted for political purposes." His spokesman, Frank Keith, tells Insight that Rossotti stands by that statement today.

At least one member of the congressionally created National Commission on Restructuring the IRS finds Rossotti's comments very disturbing. "It suggests he's part of a cover-up rather than getting to the bottom of this," says Grover Norquist, president of Americans for Tax Reform and an informal adviser to the Bush administration. "Those obviously targeted political audits are a scandal, and if Rossotti doesn't get them stopped and uncovered - if Rossotti's not capable of doing that, if he continues to cover up - he should resign or be asked to leave." - JB

GOVERNMENT ETHICS - IRS Boss Snagged Clinton Waiver
By John Berlau
Published: Monday, May 7, 2001
Two weeks ago when Insight was reporting potential conflicts of interest involving IRS Commissioner Charles O. Rossotti's large holdings in a company that does millions of dollars' worth of business with his own agency (see "A Taxing Dilemma," April 23), the IRS said not to worry. Rossotti is recused from dealing with the huge government contracts of American Management Systems (AMS), the company that he cofounded and of which he remains the major shareholder, said Frank Keith, the IRS' national director of communications. "The commissioner has executed a viable and rigorous recusal pro-cess to separate himself from any dealings with AMS," Keith insisted.

Now Insight has learned that in December 2000 the Clinton administration blew a very large hole in the wall that is supposed to separate Rossotti, whom Clinton appointed as commissioner in 1997, from dealing with his old company. Along with the last-minute pardons and "midnight regulations" that the administration rushed through in its last two months, it also issued a waiver of conflict-of-interest rules that allows Rossotti to participate in decisions that directly could affect the AMS bottom line. Insight has obtained a copy of that waiver.

Signed on Dec. 11, 2000, by Clinton's deputy Treasury secretary, Stuart Eizenstat, the waiver allows Rossotti to join in discussions and decisions about the IRS' Custodial Accounting Project, which uses an automated financial-management system and software provided by AMS. "I have determined that your disqualifying financial interest in the Custodial Accounting Project [CAP], which arises from your ownership interest in American Management Systems Inc. [AMS], is not so substantial as to be deemed likely to affect the integrity of the services that the government may expect to receive from you with respect to the CAP," Eizenstat wrote. Clinton's man noted that, without this waiver, federal law "would preclude [Rossotti] from participating in the CAP because certain decisions would have a direct and predictable effect on your financial interest in AMS."

Eizenstat, now a partner at the hugely powerful Washington law firm of Covington & Burling, did not return Insight's telephone calls asking why the waiver was necessary.

The conflict-of-interest waiver allows Rossotti to participate in "budget and resource-allocation issues, the prioritization of the CAP and high-level design and architecture issues." It gives him the power to decide how much money will go to the project and, indirectly, to AMS, say experts.

At press time, the IRS had not returned Insight's telephone calls for comment about the newly revealed waiver and other issues that have surfaced.

And this is no minor matter, say ethics specialists. Rossotti called the Custodial Accounting Project "critical" to IRS' ongoing computer-system modernization in testimony to a House subcommittee on April 4. The IRS has asked Congress for $50 million for the project in fiscal 2002 alone. Overall, the Bush administration's budget gives the IRS an 8 percent funding increase in 2002, double the 4 percent average re-quested for all agencies. The additional funds reflect the computer modernization.

Because so much of this money could flow to AMS - scheduled to be paid more than $17 million this year by the IRS, according to IRS spokesman Keith - some have expressed concern. "I always want to be certain that government officials are avoiding conflicts of interests, but I won't jump to any conclusions," Rep. Ernest Istook Jr., R-Okla., chairman of the House Appropriations subcommittee that oversees IRS funding, tells Insight through a spokeswoman.

Officials of some of the watchdog groups that insisted Treasury Secretary Paul O'Neill divest his $100 million worth of Alcoa stock (see "The $100 Million Misunderstanding," April 2-9) now say that Rossotti's situation is more serious than O'Neill's would have been had he not agreed to sell the stock. "The point there [with Alcoa] was that there was very little the Treasury Department could do that would not impact Alcoa, and I think eventually Secretary O'Neill came around to that conclusion," says Larry Noble, executive director of the Washington-based Center for Responsive Politics. "I think the same principles apply [to Rossotti], a little bit more directly here in the sense that the IRS is doing business with AMS."

Charles Lewis, the executive director and founder of the Center for Public Integrity who called strongly for O'Neill to divest, says Rossotti should follow O'Neill's lead. "If O'Neill should have divested, then clearly this guy should divest," Lewis tells Insight. "The O'Neill stuff that came up about Alcoa was really speculative about things that might involve Alcoa. This is an instance with Rossotti where the company has direct dealings with the government [agency], and it's headed by their former chairman. ... This is much more specific, much more real, because this is a direct vendor with the agency, and he's not taken any of the various steps one would take to create an arms-length distance."

Lewis also is disturbed that the Clinton-Eizenstat waiver could make the potential for conflict even greater. "Rossotti has gotten a waiver and can in fact be involved in conversations about his old company," he says. "He clearly has a problem."

The founder of the Center for Public Integrity worries that "there could be the perception that this company is flourishing because their former chairman is the head of the IRS and that they're getting favorable treatment inside the IRS." Lewis also is concerned that Rossotti's large holdings might tilt IRS employees to favor AMS. "They all know about his association and substantial source of his personal wealth, and that's not a fact lost on bureaucrats whose job it is to survive and know these things."

And apparently AMS hasn't hesitated to throw its weight around the agency. According to Tax Notes, a well-respected weekly journal that covers tax policy, AMS Chairman and then-CEO Paul Brands and other AMS executives met with IRS officials in May and "expressed concern that the IRS was reluctant to procure upgrades and new releases of AMS' financial software." The AMS executives accused the IRS officials of being slow to make decisions about purchases of AMS products because Rossotti was commissioner, but did not "provide any specific instances of such actions by IRS personnel," according to the article written by veteran tax reporter George Guttman.

AMS has not returned Insight's many phone calls about the Tax Notes article or other matters related to potential or alleged conflicts of interest in these matters.

Lewis admits it's possible that AMS actually could be getting less-favorable treatment than other IRS vendors because of Rossotti's millions of dollars worth of holdings, but he thinks that's unlikely. "I don't have any evidence of heartrending hardships brought on companies whose executives joined the administration of whichever party," Lewis says.

Some see the extensions AMS keeps getting to a contract from the late 1980s to provide the IRS with an automated financial system as evidence that it may have been getting special treatment from the agency. The IRS had stressed that the $17 million in one-year contracts the agency signed with AMS last year were "add-ons" to the existing contract and did not violate Rossotti's pledge to divest if AMS pursued new business with the IRS. But insiders wonder why the IRS keeps buying these add-ons without taking new bids or offers from AMS' competitors.

"It could be that what they're doing is extending contracts as a way to get around the problem of issuing new contracts or going out for bids," says Noble of the Center for Responsive Politics.

Meredith McGehee, senior vice-president of the government-ethics advocacy group Common Cause, says these appearance issues will continue to haunt Rossotti as long as he refuses to divest. "When you have the commissioner of a very high-profile agency holding stock in a company that's doing business with that agency, obviously it raises concerns," McGehee tells Insight. Mentioning the allegations of IRS' hiring of state tax chiefs as a reward for steering business to AMS, McGehee says, "I would not ever be able to tell what the truth is. But the point is the questions are being raised, and having the questions raised is part of what damages the public confidence here."

Insight meanwhile has learned that John LaFaver, the Kansas secretary of revenue who contracted with AMS and then was hired by Rossotti as the IRS' deputy commissioner of modernization, has left for the private sector. He recently became vice president for state and local solutions at AMS, which had used his favorable comments about the company in a marketing brochure while noting his status at the IRS. Reached at AMS headquarters in Fairfax, Va., LaFaver tells Insight, "I don't think I'm going to comment." He says he doesn't remember whether he made the endorsement of AMS as Kansas revenue secretary or IRS deputy commissioner.

As Insight previously reported, Karla Pierce, LaFaver's successor who defended AMS when lawmakers were blaming the company for a rash of late tax refunds and erroneous delinquent notices, recently was hired as director of organizational transformation for the IRS' modernization project by the agency's lead contractor, Computer Science Corp. (CSC). After the deadline for Insight's first article, CSC sent a statement saying that "CSC was impressed by her significant accomplishments as secretary" of revenue in Kansas. But nowhere did the statement deny allegations that Rossotti used input or influence to get Pierce the job.

Posted by maximpost at 10:53 PM EST

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