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BULLETIN
Tuesday, 24 February 2004

CRS Report for Congress Received through the CRS Web
Order Code RS21391
Updated February 2, 2004

North Korea's Nuclear Weapons: How Soon an Arsenal?
Sharon A. Squassoni
Specialist in National Defense
Foreign Affairs, Defense and Trade Division
Summary
In December 2002, North Korea ended the 8-year-old freeze on its nuclear program by expelling inspectors and reopening its plutonium production facilities. The CIA assessed that North Korea could produce 5-6 weapons by mid-2003, to add to the 1 or possibly 2 weapons it might already have. In April 2003, North Korean officials claimed they had completed reprocessing all 8000 spent fuel rods (containing enough plutonium for 5-6 weapons), a claim which few believed. On January 8, 2004, North Korean officials showed an unofficial U.S. delegation an empty spent fuel pond, and some plutonium they claimed that had been reprocessed. However, the delegation could not verify North Korean claims. This report will be updated as warranted.
Background
In the early1980s, U.S. satellites tracked a growing indigenous nuclear program in North Korea. A small nuclear reactor at Yongbyon (5MWe), capable of producing about 6kg of plutonium per year, began operating in 1986.1 Later that year, U.S. satellites detected high explosives testing and a new plant to separate plutonium (a necessary step before turning the plutonium into metal for a warhead). In addition, the construction of two larger reactors (50MWe at Yongbyon and 200MWe at Taechon) added to the mounting evidence of a serious, clandestine effort. Although North Korea had joined the Nuclear Nonproliferation Treaty in 1985, nuclear safeguards inspections began only in 1992. Those inspections raised questions about how much plutonium North Korea had produced covertly that still have not been resolved. In 1994, North Korea pledged, under the Agreed Framework with the United States, to freeze its plutonium programs and eventually dismantle them in exchange for several kinds of assistance.2 At that time,
CRS-2
1 5MWe is a power rating for the reactor, indicating that it produces 5 million watts of electricity per day (very small). Reactors are also described in terms of million watts of heat (MW thermal).
2 See CRS Issue Brief IB91141, North Korea's Nuclear Weapons Program.
Congressional Research Service ~ The Library of Congress
3 Highly enriched uranium (HEU) has 20% or more U-235 isotope; weapons-grade uranium is 90% or more U-235.
4 While the physical principles of weaponization are well-known, producing a weapon with high reliability, effectiveness and efficiency without testing holds significant challenges.
5 Plutonium that stays in a reactor for a long time (reactor-grade, with high "burn-up") contains about 20% Pu-240; weapons-grade plutonium contains less than 7% Pu-240.
6 Hot cells are heavily shielded rooms with remote handling equipment for working with irradiated materials.
Western intelligence agencies estimated that North Korea had separated enough plutonium for one to two bombs; other sources claimed it was enough for 4-5 bombs.
Weapons Production Milestones
One of the key hurdles in making nuclear weapons is acquiring fissile material - plutonium-239 or highly enriched uranium (HEU).3 Producing these two materials is technically challenging; in comparison, many experts believe weaponization to be a relatively easy process.4 North Korea has industrial-scale uranium mining, and plants for milling, refining, and converting uranium; it also has a fuel fabrication plant, a nuclear reactor, and a reprocessing plant - in short, everything needed to produce Pu-239. In addition, North Korea may be constructing a uranium enrichment plant. In its nuclear reactor, North Korea uses magnox fuel -- natural uranium (>99%U-238) metal, wrapped in magnesium-alloy cladding. About 8000 fuel rods constitute a fuel core for the reactor. When irradiated in a reactor, natural uranium fuel absorbs a neutron and then decays into plutonium (Pu-239). The longer the fuel remains in the reactor, the more it is contaminated by the isotope Pu-240, which can "poison" the functioning of a nuclear weapon.5 Thus, a key consideration is how long the fuel must remain in the reactor to produce optimal plutonium for a weapon. Spent or irradiated fuel, which poses radiological hazards, must cool after removal from the reactor. The cooling phase, estimated by some at 5 months, is proportional to the fuel burn-up.
Reprocessing - or separating the plutonium from waste products and uranium - is the next step. North Korea uses a PUREX separation process, like the United States. After shearing off the fuel cladding, the fuel is dissolved in nitric acid. Components (plutonium, uranium, waste) of the fuel are separated into different streams using organic solvents. In small quantities, separation can be done in hot cells, but larger quantities require significant shielding to prevent deadly exposure to radiation.6 Many experts agree that North Korea has mastered the engineering requirements of plutonium production. Its 5MWe nuclear reactor operated from 1986 to 1994, restarting in January 2003. North Korean officials claimed to have separated plutonium in hot cells and tested the reprocessing plant in 1990, and to have separated all 8000 fuel rods from the 5 MWe reactor between January and June 2003. Some analysts have reported that the 5MWe reactor operated at low efficiencies. The January 2004 unofficial U.S. delegation reported that "All indications from the display in the control room are that the reactor is operating smoothly now...However, we have no way of assessing independently
CRS-3
7 Siegfried Hecker, January 21, 2004, testimony before Senate Foreign Relations Committee.
8 Don Oberdorfer, The Two Koreas, (MA: Addison-Wesley), 1997, p. 250.
9 David Albright, Frans Berkhout ,William Walker, Plutonium and Highly Enriched Uranium 1996: World Inventories, Capabilities and Policies, Oxford University Press, 1997, p. 307.
10 Hecker, January 21, 2004 testimony before SFRC.
how well the reactor has operated during the past year."7 The same delegation reported that the reprocessing "facility appeared in good repair;" this contrasts with a 1992 IAEA assessment of the reprocessing plant as "extremely primitive." In the end, however, North Korea's potential for developing a large nuclear arsenal depends on the completion of the two larger reactors and progress in the reported uranium enrichment program.
There is little information on whether North Korea has a workable nuclear weapons design. The simplest nuclear weapon design, a gun-type assembly, cannot use plutonium. Many believe North Korea is capable of manufacturing implosion-type devices, which require sophisticated lenses of high explosives to compress plutonium in the core. As long ago as 1986, U.S. satellites detected high explosives testing with the kind of compression patterns associated with implosion devices, although North Korea claimed the tests were for civilian purposes.8 There have been reports of Soviet scientists aiding North Korea, although CIA officials in the mid-1990s reportedly said that North Korean scientists did not receive training in nuclear weapon technologies from Russia or China.9 A key question is whether North Korea can develop a warhead for its ballistic missiles. Although states that developed nuclear weapons typically used relatively crude delivery methods at first, North Korea has concurrently produced ballistic missiles with sufficient range and payload to carry nuclear warheads. Nonetheless, such a warhead would need to be small and light enough to fit on a missile, and robust and sophisticated enough to tolerate the extreme conditions encountered through a ballistic trajectory.
In January 2004, North Korean officials showed an unofficial U.S. delegation what they claimed was "scrap" from a Pu casting operation; the officials stated that the metal was alloyed. Alloying plutonium with other materials, according to Dr. Siegfried Hecker of Los Alamos National Laboratory, is "common in plutonium metallurgy to retain the delta-phase of plutonium, which makes it easier to cast and shape," and casting plutonium is a step in weapons production.10 Hecker, as a delegation member, assessed that the stated density of the material (as well as the fact that it was not cracked) was consistent with plutonium alloyed with gallium or aluminum. If true, this could indicate a certain sophistication in North Korea's handling of Pu metal. Nonetheless, Hecker could not confirm that the metal was indeed plutonium, that it was alloyed, or that it was from the most recent reprocessing campaign, without conducting actual tests of the material.
Estimating Nuclear Material Production
Most estimates of nuclear weapon stockpiles are based on estimates of fissile material production. To determine how much plutonium is produced, one must know: the average power level of the reactor; days of operation; how much of the fuel is reprocessed and how quickly, and how much plutonium is lost in production processes. According to North Korea, the 5MWe reactor performed poorly in the early years, unevenly irradiating the rods. There is no available data on the reactor's current performance.
CRS-4
11 David Albright and Kevin O'Neill, editors, Solving the North Korean Nuclear Puzzle, ISIS Report, ISIS Press, 2000, p. 88.
12 Transcript of Dec. 29, 2002 "Meet the Press" see [http://www.msnbc.com/news/852714.asp]
13 CIA unclassified paper on North Korea dated November 19, 2002.
14 See Acquisition of Technology Relating to Weapons of Mass Destruction and Advanced Conventional Munitions,"[http:// www.cia.gov/cia/publications/bian/bian_jan_2003.htm]
15 "North Korea Shifts Tone on Nuclear Plan," International Herald Tribune, April 22, 2003. 16 "North Korea Says It Has Made Fuel For Atom Bombs," New York Times, July 15, 2003. Likewise, the reprocessing facility's efficiency is hard to judge. Before the reported 2003 reprocessing campaign, the reprocessing plant had not operated after the "hot test" in 1990. North Korea told the IAEA that during the 1990 test, it recovered 62 grams of plutonium, losing almost 30% in the waste streams.11 A key consideration is whether or not the reprocessing plant can successfully run continuously, since frequent shutdowns can lead to plutonium losses. According to North Korean officials in January 2004, the plant throughput is 110 tons of spent fuel annually, about twice the amount of fuel in the 5MWe reactor.
Finally, North Korea's technical sophistication will ultimately determine how much plutonium is needed per bomb. Although the international standard is 8kg of Pu per weapon (and 25kg for HEU), technical experts agree that it is possible to make nuclear weapons with less than half that amount. Not many technical experts, however, will speculate on North Korea's abilities in this area.
What Does North Korea Have Now?
More recent assessments emphasize that North Korea has assembled weapons. Secretary of State Powell stated in December 2002 that "We now believe they [North Koreans] have a couple of nuclear weapons and have had them for years."12 An unclassified CIA paper in November 2002 stated that the "North has one or possibly two weapons using plutonium it produced prior to 1992."13 However, the CIA paper stated that this was an assessment that has not changed since the 1990s. In that time, the CIA consistently reported that North Korea "has probably produced enough plutonium for at least, one, and possibly two, nuclear weapons."14 Those estimates were based on assumptions that North Korea had separated between 6 and 10kg of Pu in the late 1980s. In addition to this amount of material, analysts must consider the disposition of the fuel rods in the spent fuel pond. At present, there is no consensus on whether they have been reprocessed.
Has North Korea reprocessed the existing spent fuel?. On April 17, 2003, North Korean officials announced they were successfully reprocessing plutonium. One week later, officials softened that statement to "successfully going forward to reprocess work."15 On July 13, 2003, North Korean officials told U.S. officials in New York that they had completed reprocessing the 8000 fuel rods on June 30.16 On January 8, 2004, North Korean officials told the unofficial U.S. delegation that the reprocessing campaign began in mid-January 2003 and ended at the end of June 2003. In all, they reportedly
CRS-5
17 Hecker January 21, 2004 testimony before SRFC.
18 CIA unclassified point paper distributed to Congressional staff on November 19, 2002. reprocessed 50 tons of spent fuel in less than 6 months. This tracks with earlier estimates that if North Korea reprocessed about 11 tons/month, it might produce enough plutonium for 1 bomb per month.
The unofficial U.S. delegation visiting in January 2004 concluded that the spent fuel pond no longer held the 8000 fuel rods and surmised that those fuel rods could have been moved to a different storage location, but not without significant health and safety risks. The delegation was not allowed to visit the Dry Storage Building, where the fuel rods likely would have been stored before reprocessing. If the 8000 fuel rods from the 5 MWe reactor have been reprocessed, they would yield, according to one estimate, between 25 and 30kg of plutonium, enough for 5 or 6 weapons.
The exact amount of plutonium that might have been reprocessed is not known. The January 2004 U.S. visitors to the plant were not allowed to visit waste facilities, and North Korean officials did not reveal any operating difficulties with the plant, stating that the reprocessing campaign was conducted continuously (four 6-hr shifts). U.S. efforts to detect Krypton-85 (a by-product of reprocessing) reportedly suggested that some reprocessing had taken place, but were largely inconclusive.
Adding to the Arsenal
Make New Plutonium. On February 6, 2003, North Korean officials announced that the 5 Mwe reactor was operating, and commercial satellite photography confirmed activity in March. In January 2004, North Korean officials told the unofficial U.S. delegation that the reactor was now operating smoothly at 100% of its rated power. The U.S. visitors noted that the display in the reactor control room and steam plumes from the cooling towers confirmed operation, but that there was no way of knowing how it had operated over the last year.
A common estimate is that the reactor generates 6kg of Pu per year, roughly 1 bomb per year, but the reactor would likely be operated for several years before fuel is withdrawn. In 3 years, it could generate about 14-18kg of plutonium, enough for 2 to 3 weapons. Shorter cycles are possible, but would waste considerable fuel. Assuming a 6- month cooling period for plutonium, North Korea would be ready to reprocess by August 2006, and ready to convert into metal by February 2007.
Bring New Reactors On-Line. The reactors at Yongbyon (50MWe) and Taechon (200MWe) may be several years from completion. U.S. visitors in January 2004 saw no construction cranes, heavy corrosion, and cracks in concrete building structures at Yongbyon, reporting that the reactor building "looks in a terrible state of repair," but they did not visit the Taechon site.17 The CIA estimates that the two reactors could generate about 275kg of plutonium per year.18 In January 2004, North Korean officials told the unofficial U.S. delegation that they are evaluating what to do with both reactors.
CRS-6
19 Ibid.
20 "Reactor Restarted, North Korea Says," Washington Post, February 6, 2003.
21 "US Suspects North Korea Moved Ahead on Weapons," New York Times, May 6, 2003. Produce Highly Enriched Uranium for Weapons. In an unclassified working paper on North Korea's nuclear weapons and uranium enrichment distributed to Congressional staff on November 19, 2002, the CIA estimated that North Korea "is constructing a plant that could produce enough weapons-grade uranium for two or more nuclear weapons per year when fully operational - which could be as soon as middecade." 19 Such a plant would need to produce more than 50kg of HEU per year, which would require cascades of thousands of centrifuges. The CIA's unclassified paper noted only that in 2001, North Korea "began seeking centrifuge-related materials in large quantities." Little is known about the specifications of the North Korean centrifuges. An enrichment program, which the North Koreans alternately have admitted and denied having, offers at least three benefits. Such a program would be more difficult to locate and target than the Pu operations, if military strike options are considered. Second, HEU could give the North Koreans the option of producing either simpler weapons (gunassembly type) or more sophisticated weapons (using composite pits or boosted fission techniques. Third, it is another potential bargaining chip to use with the United States.
How to Verify North Korean Claims?
Information about North Korea's nuclear weapons production has depended largely on remote monitoring and defector information, with mixed results. Satellite images correctly indicated the start-up of the 5 MWe reactor, but no detailed information about its operations. Satellites detected truck movements at Yongbyon in late January, but could not confirm that the trucks were moving spent fuel to the reprocessing plant.20 And, satellite imagery could not peer into an empty spent fuel pond, which was shown to U.S. visitors in January 2004. Although satellite imagery reportedly detected some activity at the reprocessing plant in April 2003, U.S. officials could not confirm that large-scale reprocessing was taking place.21
The unofficial U.S. delegation in January 2004 could not confirm North Korean claims of having reprocessed the spent fuel. Specifically, it could not confirm that the material shown was in fact plutonium, or that all the spent fuel had been reprocessed. It may be possible for future delegations to carry out tests to verify such claims. At a minimum, it would be necessary to prove that the North Korean plutonium had been separated from fission products in the last year, by using isotopic measurement techniques. At most, it would be desirable to prove that 25-30kg of Pu had been separated (in 2003), which had been converted to metal and cast into weapon components. Absent an opportunity to measure a specific quantity of Pu (25-30kg), measuring waste products from the reprocessing plant could yield valuable information. Similarly, taking samples in glove boxes where conversion had taken place could be helpful. (Note that these types of activities were controversial in the past.) North Korean cooperation would be necessary for any of these measures. On HEU, North Korea appears not to want to prove its expertise, but if it did, providing a sample of enriched uranium that could be measured for certain qualities could help prove that it had been indigenously enriched.



>> BE FRANK?

Private accounts alone can't bail out Social Security
Tue Feb 24, 6:40 AM ET Add Op/Ed - USATODAY.com

After putting Social Security (news - web sites) reform on the back burner for several years, President Bush (news - web sites) is making a new push for a plan that would let workers divert part of their payroll taxes into personal savings accounts. Bush touted the proposal in his State of the Union address and again in his economic report to Congress this month.
From the way supporters describe it, the concept is simple and appealing. Workers would invest a portion of their Social Security taxes into stocks and bonds that typically yield higher returns than the current government-managed system. What's more, they say, the step is crucial in saving Social Security from insolvency as 75 million baby boomers retire during the coming years.
But much like a miracle weight-loss plan that promises stunning results without diet or exercise, the proposals to create private accounts avoid the difficult reforms required to ensure Social Security's long-term financial health: reduced benefits, higher taxes or a combination of the two.
Certainly, personal savings accounts can be part of a broader debate on reforming the national retirement system, particularly if young workers are willing to give up some traditional Social Security benefits in exchange for the opportunity to save on their own. Pretending, however, that the mere introduction of personal savings accounts will solve Social Security's problems is not only dishonest, it also misleads the public about the hard choices that will be required to put the nation's retirement program on sound financial footing.

Among the problems personal accounts don't address:

*Demographics. Social Security faces a financial crisis because the number of retirees collecting benefits in 20 years is expected to increase 60%, while the number of workers paying taxes to support those benefits is projected to increase a mere 14%. In addition, those retirees are likely to live and collect benefits longer than previous generations of retirees. Bush's own commission on Social Security reform concluded in 2001 that private accounts would not close the projected gap between taxes coming in and benefits going out.

*Costs. In the short term, personal accounts would worsen Social Security's financial condition. The reason: Some of the taxes now needed to guarantee traditional benefits to current retirees would be tapped to set up the accounts.

The Social Security Administration (news - web sites) estimates that, depending on how the new accounts are structured, the government could have to borrow roughly $1.5 trillion during the next decade to cover the loss of taxes diverted into private accounts. That would be the equivalent of charging $8,800 to every worker's credit card.
As recently as 2001, Congress and the administration promised to reserve the government's annual budget surpluses to repair Social Security or finance the transition costs of moving to a system of personal savings accounts. Since then, they have broken their pledge by going on a spending and tax-cutting spree that has squandered $475 billion in Social Security surpluses on other purposes and has put the nation $1.1 trillion deeper into debt.
Some proponents of personal savings accounts argue that the approach can fix Social Security without reducing benefits or increasing taxes. They contend that payroll levies deposited in the accounts would generate higher investment returns than if the government kept the money, providing retirees with more money than they would receive from traditional benefits.
But their argument glosses over the fact that while personal savings accounts hold promise as a way to structure Social Security benefits for today's younger workers, they aren't a realistic alternative for retirees or those nearing retirement.
Nor do supporters deal squarely with the cost and difficulty of converting Social Security from a retirement system in which today's workers fund retirees' benefits to one in which workers fund part of their own retirements through their personal savings accounts. They dismiss the huge costs of switching to a new system as an upfront expense that would be recouped many times over in decades to come.
A frank discussion about Social Security's repair requires acknowledging that personal savings accounts alone aren't a solution, as Bush's reform commission concluded. The administration tacitly has endorsed this view by not challenging the panel's findings, though the White House has been silent about the benefit cuts or tax increases that also would be necessary.
The sooner that discussion occurs, the more gradual the changes could be. A recent study from the Brookings Institution and the Massachusetts Institute of Technology (news - web sites) estimates that action now could fix Social Security with modest changes - for example, about a 4% increase in lifetime payroll taxes and an equal decrease in benefits for someone now 35 years old.
Just as regular exercise and sensible eating can keep the pounds off longer than a miracle diet, difficult reforms today can improve Social Security's health far into the future.
------------------------------------------------------------------------

No administrative detention for Vanunu
By ARIEH O'SULLIVAN AND MATHEW GUTMAN
Vanunu. Then and now.
Photo: Channel 2

Convicted nuclear whistle blower Mordechai Vanunu was keeping his future intentions close to his chest and that has Israel worried.
Prime Minister Ariel Sharon, Defense Minister Shaul Mofaz and Justice Minister Yosef Lapid met in Tel Aviv Tuesday night to discuss just what could be done to prevent Vanunu from becoming a threat to national security once his 18-year prison term is up on April 21.
They heard from Attorney General Menachem Mazuz, representatives from the Mossad and Shin Bet and a senior member of the Atomic Energy Commission.
On the agenda was the possibility to invoke an arcane regulation to prevent Vanunu from leaving the country or even the possibility of keeping him under administrative detention.
The Prime Minister's office announced after the meeting that it accepted the position of the Attorney General that appropriate legal supervision will be placed in order to prevent him from relaying further security breaches. The
statement said that the proposal to keep Vanunu under administrative detention was rejected.
Sources close to Sharon said Israel would use all means necessary to maintain state security, but they doubted whether it would involve administrative detention. Various options were examined including keeping Vanunu under semi house arrest and under constant guard.
Mofaz spoke of the need to find a balance between protecting state security and maintaining a citizen's civil rights.
"We need to keep the democratic essence of Israel. There is a need to take precautions but not such extreme steps," Lapid told Army Radio before the meeting.
Israel is keen on keeping Vanunu in the country under close supervision. According to Vanuu's adopted parents, he rejected an offer for early release in return for a deal for never leaving Israel and never speaking about nukes.
On Tuesday, Shin Bet agents again visited Shikma Prison in Ashkelon and spent three and a half hours trying to get a sense of Vanunu's intention following his released, said security sources. Apparently, he did not cooperate and ignored the questioners.
The meeting at the Prime Minister's office in Tel Aviv followed a Shin Bet "interview," with Vanunu in which security officials tried to gauge how dangerous Vanunu might be, if at all, upon his release.
In 1986 Vanunu severely damaged Israel's policy of nuclear ambiguity when he sold to The Sunday Times photographs of plutonium spheres used for triggers in Israeli nuclear warheads taken from inside the reactor at Dimona. His interview was widely used to determine that Israel then had an arsenal of some 200 nuclear bombs.
Vanunu, a Nobel Peace Prize nominee, was asked what he intends to do after his release and whether or not he intends to stay in Israel. Vanunu converted to Christianity in Australia, where his brother Meir lives, in 1986, and even then stated he does not intend to return to Israel.
But return he did. A few days before the expose of Israel's nuclear plant was to go to press Vanunu - who had provide the Times with documents and photos of the installation - met an American tourist in London. Cindy, a Mossad agent, reportedly lured him to a safe house in Rome. From there he was sedated and bundled off to Israel for trial.
Still there are doubts that any information that Vanunu might divulge are of any use, almost twenty years after he last worked in Dimona. Many of the personnel he knew, none of whose identities were included the his now infamous 1986 interview with the Sunday Times of London in, have since retired.
Furthermore Israel has upgraded security precautions at its most sensitive sites, making Vanunu's memories of security installations and precautions nearly irrelevant.
Following an interview with his brothers Meir and Asher Vanunu told them that he has no intention of leaking any more information. The Sunday Times never paid him for the world exclusive story that rocked Israel's intelligence community, the paper said.
However it has contributed to his legal campaign which has cost hundreds of thousands of dollars, stated the weekly.
He was convicted by the Jerusalem District Court on February 27, 1988, and sentenced to 18 years in jail from the day of his arrest.
Last year, a panel of three High Court Justices ruled that Vanunu remained a threat to national security and therefore did not have the same rights as regular prisoners. The only visitors he is allowed are first-degree relatives, his lawyer and a clergyman.

------------------------------------------------
New Book Chronicles Hillary's Political Ambitions
Lady MacBeth of the Ozarks
by Loredana Vuoto
Posted Feb 24, 2004
Hillary Clinton--or as authors R. Emmett Tyrrell, Jr. and Mark W. Davis like to call her, Lady MacBeth--is determined to return to the White House as a resident again--only this time not as first lady, but as President of the United States.
She will stop at nothing to obtain her objective. Lying, cheating and partisan politics are all par for the course, according to Tyrrell and Davis. The two men have joined forces in Madame Hillary (published by Regnery, a sister company of HUMAN EVENTS) to chronicle Hillary's ambitious road map to become the first female President.
Tyrrell, founder and renowned editor-in-chief of The American Spectator magazine, is not new to reporting the high crimes and misdemeanors of Bill and Hillary Clinton. In fact, it was The American Spectator's tough investigative reporting during Mr. Clinton's presidency that helped to expose numerous scandals--Filegate, Clinton's sexual escapades, the transfer of missile technology to Red China in exchange for illegal campaign contributions, and Monicagate.
Davis is also no newcomer to cataloguing Bill and Hillary's numerous misdeeds. A former White House speechwriter to George H. W. Bush who also formerly served on the Republican National Committee (RNC) during the Reagan years, Mr. Davis is the quintessential Washington insider who has witnessed the political machinations of the dynamic duo for years. Together, authors Davis and Tyrrell tell a chilling tale of Hillary's insatiable desire for power.
The authors argue that, despite Mrs. Clinton's efforts to repackage herself as a moderate Democrat, the senator from New York remains a hard-core left-wing elitist who is pro-Big Government, pro-affirmative action and pro-abortion.
Although Mrs. Clinton would have the public believe she is a woman of the people and for the people, Tyrrell and Davis dispel that notion. Rather, they explain Mrs. Clinton's true chameleon nature, describing her as "a Coat and Tie Radical--a phantasm who takes on the shape of respectability: wife, mother, first lady, senator from New York, all while harboring and insinuating the agenda of the radical left."
In particular, the authors cite the success of both Bill and Hillary in cementing their hold over the Democratic Party, transforming it into a ruthless political machine. The darling and hero of the liberal media, Mrs. Clinton can be coy and cunning when need be.
The authors explain how she and her husband have been bankrolling the Democratic Party for years, giving them complete control of its future. Tyrrell and Davis also note that the creation of HILLPAC was a strategic move designed to raise money for the Clintons as well as fund liberal causes such as women's rights and the environment.
Furthermore, the book powerfully displays the lengths Mrs. Clinton will go to become President of the United States. It discusses how Hillary and Bill encouraged Gen. Wesley Clark's failed bid for the Democratic presidential nomination, using him as a stalking horse to counter possible runs for the White House from other candidates.
Madame Hillary also exposes Mrs. Clinton's wily tactics of criticizing President Bush and his administration when it is convenient for her. She strategically supported the war against Iraq, while insinuating that President Bush had prior knowledge of the September 11 attacks--and therefore, could have prevented them.
Hillary has set her sights on the White House in 2008. She assiduously has been revamping her image in the media as a pragmatic Democrat who is an effective advocate for her constituents. She has championed the toppling of Saddam Hussein, fiscal responsibility and increased rural aid for farmers in more conservative upstate New York.
Her strategy is working.
This is why it is important for Republicans to remind voters of Hillary's liberal record and the destructive role she played during her husband's administration. It was Mrs. Clinton who led the failed efforts to establish a Canadian-style public health care system. She also was involved in much of the corruption that pervaded the Clinton presidency--Whitewater being the most obvious example.
Mrs. Clinton represents a new breed of Democrat, who, like her husband, combines radical social liberalism with ruthless pursuit of political power. She seeks to advance an anti-family, pro-gay rights agenda while simultaneously practicing a political cronyism and ceaseless fund-raising that puts old-style Democratic bosses to shame. Mrs. Clinton must be stopped.
Madame Hillary provides a much-needed blueprint.

To purchase Madame Hillary, click here.
Miss Vuoto is an assistant national editor at the Washington Times.
--------------------------------------------------------------------------
CIA BLEW 9/11 TIP IN 1999
February 24, 2004 -- WASHINGTON - The federal commission reviewing the Sept. 11 attacks is examining whether the United States failed to aggressively track one of the hijackers after obtaining his first name and phone number more than two years before the attacks.
The tip, received in March 1999, appears to be one of the earliest signs that U.S. officials had about one of the 2001 hijackers. It also may have represented a missed chance for U.S. intelligence to uncover a terror cell in Germany that was a key element of the hijacking plot.
"The commission has been actively investigating the issue for some time," Philip Zelikow, executive director of the commission, said yesterday.
"I'm not going to comment on the progress of our investigation, but the Hamburg cell and what was known about the plotters" is an important part of the review, he said.
The hijacker was identified as Marwan al-Shehhi by The New York Times, which reported German officials tipped off the CIA.
Al-Shehhi - who piloted the second World Trade Center jet - was a member of the al Qaeda cell in Hamburg, Germany, and a roommate of suspected 9/11 ringleader Mohammed Atta.
A U.S. official said that thousands of names of suspected terrorists come across the intelligence community's screens, making them hard to track.
AP
-------------------------------------------------------------------------

Posted by maximpost at 10:46 PM EST
Permalink


>> THE ADMIN...KELLY ET AL...

The Multilateral Mantra And North Korea
Peter Hayes, Nautilus Institute, February 20, 2004

Flying to Beijing for the second round of six-party talks on the North Korean nuclear issue, American diplomats are chanting a multilateral mantra "CVID CVID CVID" as if repeating it often enough will make it happen in North Korea.

CVID stands for Complete Verifiable Irreversible Disarmament. It is the formula that the State Department is bringing to the talks, saying that North Korea must commit to CVID and commence tangible dismantlement before the United States will outline its roadmap of reciprocal commitments to provide security and development assistance to North Korea.

On February 12, Administration officials confirmed that acceptable "tangible steps" might include a complete declaration by the DPRK of all nuclear activities, especially those related to enrichment activity, but would also have to include a dismantlement action that was not already part of the US-DPRK Agreed Framework before it collapsed in late 2002. Such a step might be to hand over separated plutonium to the United States or a designated third party. What officials insist is not on the table is a reciprocal up-front commitment to normalize political and economic relations with the DPRK if they should commit to CVID. "Payoffs" for North Korean capitulation, they say, come only after the DPRK commits to and implements CVID.

CVID is simply another way of stating that North Korea must fulfill its NPT and IAEA safeguards and non-nuclear obligations, as well as observe the 1992 inter-Korean Denuclearization Declaration. Given that the North has rejected this formula already and has stated its own conditions for returning to the non-nuclear fold, CVID is a non-starter in Pyongyang.

Conversely, CVID is an effective symbolic way of rejecting the past, both the Clintonian legacy of the Agreed Framework, and North Korea's nuclear machinations. But, putting it front-and-center as non-negotiable in these talks is like trying to drive down a high speed freeway while staring in one's rearview mirror the entire time. It's a recipe for catastrophic collision.

What then can US diplomats achieve in Beijing? At best, they hope to agree on holding future working level negotiations with the DPRK involving the six parties on a variety of issues, including the nuclear issue. If no working level talks are achieved, then we will know that the talks have failed completely and the nuclear stand-off in Korea will be complete-exactly what the hardliners in the Bush Administration predict and hope will occur. At worst, this could lead to a North Korean nuclear test and deployment, or some other ambush that the North Koreans dream up at the DMZ or elsewhere.

Why then are US diplomats engaging in faux-diplomacy, knowing that while they may not fail altogether in Beijing, they also cannot succeed in forcing the DPRK to capitulate on American terms to CVID?

The standard account is that the US government is grid-locked over how to handle the DPRK with pragmatic-engagement policy currents colliding with a hardline-regime change policy current. The result is an incoherent river of muddied waters.

However, this account underestimates the role that President Bush plays in formulating policy toward the North. Some attribute the current rigid negotiating stance to the Oval Office's desire to delay negotiations until after the November elections, partly because Bush is preoccupied with Iraq, and partly because it is better from an electoral angle to not be seen "dealing" with evil leaders unless they are dead or in prison, a tendency said to be reinforced by his personal worldview.

Yet another explanation is that Bush delegates authority to his seniors-as he reportedly did to Powell last summer on the North Korea issue at the same time that he told Rumsfeld to butt out--but fails to overrule challenges to this delegation during implementation. Put simply, Bush doesn't back his subordinates and is a weak president-a matter of his ruling style rather than ideology. Still others speculate that for all his post-911 security rhetoric, Bush simply doesn't comprehend how dangerous it is for the North Koreans to now have enough fissile material to make, test and even export nuclear weapons.

But American officials are crystal clear that the multilateral approach to North Korea comes from Bush himself; and that hardliners, especially VP Cheney, have intervened to block Powell from developing flexible negotiating policy options in the preparations for the Beijing talks after Bush put him in charge of dealing with North Korea.

Why Powell allows this to happen-as reportedly occurred in a crucial inter-agency meeting on December 19, 2003 when Cheney intervened personally to reverse the course set by State Department pragmatists in response to Chinese draft declaration at the pending talks-is anyone's guess. Some say he is waiting for the right time to fall on his sword and that the stakes are not yet high enough in the talks with the DPRK to take this ultimate step in confronting Bush.

For now, what this leadership failure means is that US diplomats are going into the Beijing talks with both hands tied behind their back.

This self-induced diplomatic disablement raises the broader question about the Administrations multilateral mantra. Are the Beijing talks actually multilateral negotiations at all? Or, are they just window-dressing for the unilateralist hardline wrapped up in diplomatic doubletalk?

One way to view the talks is through the realist lens of great power politics whereby states either ally with weaker parties to balance an aspiring hegemonic power or bandwagon with the most powerful state. Neither of these dynamics captures what is underway in Beijing. No-one is bandwagoning with tiny North Korea, with or without nuclear weapons. China, Russia, and South Korea do not perceive themselves to be threatened significantly by North Korea's nuclear weapons although they oppose such a capacity for other reasons. No-one is turning up in Beijing to bandwagon with the United States against the DPRK's nuclear threat, as it does not appear to be an important factor in the talks except possibly for Japan and bizarrely, distant Australia which is not even at the table.

At the talks, China, Russia and North Korea form one loose bloc of states that does not accept American hegemony and unilateral dominance of the region and world affairs. Conversely, the United States, Japan, and South Korea have coalesced into a tighter bloc of states insistent that the DPRK play by global rules. Backing this bloc are a rag-tag group of bit players on North Korea such as the EU and Australia who have signed up for the Proliferation Security Initiative. However, the talks themselves have exhibited fluid alignment and each party except for the host, China, has attempted to pick bones with North Korea over one or more issues of bilateral concern while uniformly declaring that the DPRK must remain non-nuclear.

In spite of the American hardline, therefore, the talks do not appear to reflect the exercise of raw power in pursuit of traditional realpolitik. Rather than an abuse or misuse of American power, from a realist perspective, the American stance is more like an abdication and refusal to exercise American power.

Another way to interpret the talks is as an evolving negotiation process in an effort to institutionalize a set of norms and procedures. Certainly this is an avowed hope of American diplomats at the talks although they have not settled on any particular strategy for building a regional security architecture that transcends the North Korea issue should a breakthrough occur.

But how serious is the American intention in this regard? Multilateral negotiations for arms control, trade, and environment over the last four decades, for example, have exhibited four general characteristics:

transactional difficulties arising from increasing the number of players from two to many states which have divergent interests at stake and a-symmetrical capabilities brought to bear on the problem;
the increasing role of non-state actors mobilized by international collective action problems;
a major role for international organizations in structuring the negotiating agenda and facilitating process-determined outcomes; and
the difficulty of sustaining preliminary commitments of states because multilateral negotiations tend to be protracted and outlast changes in leadership or staffing by states.
The six-party talks exhibit none of these characteristics except the first and cannot be regarded as a serious attempt to launch an inclusive security community in East Asia. American officials express hope that China may clarify its international interests as a new player on the global stage and step up to the plate in exerting decisive leverage on North Korea to comply with CVID. While China has indeed "come of age" in modern diplomacy in recent years, Beijing is more likely to view North Korea through the lens of traditional imperial diplomacy by exercising suzerainty aimed at avoiding wars on its borders[1] while keeping South Korea deeply invested in China's own economic transition and political stability. Not surprisingly, North Korea has refused to submit to this implied Chinese hegemony and has refused to accept the legitimacy of its convening role and its intermediary role for passing American "messages." These talks do not appear to be laying the foundation for a new regional security architecture in which all states are heavily vested.

Thus, the talks appear to reflect the triumph of ideology over pragmatism and to be driven by the White House's domestic concerns rather than any regional vision of negotiated d?tente with North Korea as a precursor to a security community. An authentic commitment to a negotiated solution requires much more time and dialogue than is available in transient diplomatic consultations that amount to muscular diplomacy and face saving meetings hosted by China.

Meanwhile, the Bush Administration is missing the main game in town: the vibrant North Korean economic recovery and the pressure points offered by participating in this irreversible transition. Over time, the leverage over its nuclear program afforded by exploiting North Korea's economic dilemmas will diminish as North Koreans bootstrap their economy and regional powers cut their own deals with the North.

North Korea will likely implement its own version of France's tous azimut or "aimed-in-all-directions" independent nuclear deterrent strategy. It will likely obtain sufficient resources to stabilize a low-level economy that supports the leadership's lifestyle and the system's stability. Regional states will adjust to this reality and the world will become that much more insecure with another nuclear weapons state in a volatile conflict zone involving American forces.

Of course, I pray that America's diplomats will wrestle the North Koreans to the ground in Beijing and that they will agree to CVID on US terms in a miraculous act of nuclear redemption. Unfortunately, hope is a poor basis for securing nuclear non-proliferation in Korea.

President Bush needs to focus on North Korea and take the steps necessary to engage them in any negotiating format-bilateral or multilateral. These are not hard to understand, just different from what he is comfortable with. They are:

Step 1: Establish a high-level North Korea policy czar with authority to act on behalf of the president, with direct access to him.
Step 2: Declare a detailed US-DPRK roadmap of bilateral obligations
Step 3: Initiate a regional security framework based on common security principles and issue a US-DPRK mutual security assurance
Step 4: Insist on Immediate DPRK Unilateral Plutonium Re-Freeze, Enrichment Freeze and Declaration, Intrusive Inspections, and Missile Export Moratorium as Precondition for Implementing the Roadmap
Step 5: Take the DPRK off the US terrorist list when they roll up their narco-criminal networks
Step 6: Put the ROK front-and-center of implementation of the roadmap
Step 7: Increase US-ROK military readiness, and negotiate conventional cooperative security agenda with DPRK

[1] Zhang Lidong and Pan Yihe, "The Traditional Chinese Thoughts Resources of International Organization Construction,", in Wang Yizhou, Construction Within Contradiction, Multiple Perspectives on the Relationship between China and International Organizations," China Development Publishing House, Beijing, 2003, p. 273.

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Ensuring a Korean Peninsula Free of Nuclear Weapons
James Kelly, Asst. Secretary of State for East Asian and Pacific Affairs
Remarks to The Research Conference - North Korea: Towards a New International Engagement Framework, February 13, 2004.

Introduction

It is an honor and a pleasure to address the distinguished participants in the research conference on "North Korea: Towards a New International Framework." I thank the Korea Institute for International Economic Policy and the Korea Economic Institute for organizing it, and the American Enterprise Institute, the Chosun Ilbo, the Ford Foundation, and the Kookmin Bank for their support of the conference.

With a resumption of Six-Party Talks on ending North Korea's nuclear threat less than two weeks away, this conference is very timely. The United States, and the international community as a whole, can benefit from the wisdom of the scholars, analysts, and policymakers here today from the United States, the Republic of Korea, Japan, China, and Russia on the great and complicated challenge that North Korea poses to regional stability and the international nonproliferation regime.

For six decades, the threat of war on the Korean Peninsula has been one of the chief concerns of American foreign and security policy. While the Republic of Korea has, in recent decades, developed into a leading member of the international community, the Democratic People's Republic of Korea took a historic wrong turn from the very start of its existence. The result has been self-induced isolation resulting in insecurity for the regime and enormous suffering for the people of North Korea. In addition, the regime has become a source of global concern by its widely spread proliferation and illicit activities.

The net result is that the D.P.R.K. has fallen further and further behind the dynamic East Asian economy and the world. North Korea's best hope is to embrace the opportunity presented by the Six Party Talks and chart a new course. We and the other parties realize that moving away from isolation and estrangement toward openness and engagement will be a major undertaking and we are willing to help. Everyone knows that establishing the grounds for normalcy and peaceful co-existence will be difficult. However, we have no choice but to make every effort to try -- and that's why President Bush at the APEC meeting last October made clear our willingness to document multilateral assurances of security.

But, this process of transformation must begin with a fundamental decision inside the D.P.R.K. North Korea needs to make a strategic choice -- and make it clear to the world as Libya has done -- that it will abandon its nuclear weapons and programs in a complete, verifiable, and irreversible manner. Two days ago, President Bush -- in a most important speech -- called on other regimes to follow the example of Libya. As he put it, "Abandoning the pursuit of illegal weapons can lead to better relations with the United States, and other free nations. Continuing to seek those weapons will not bring security or international prestige, but only political isolation, economic hardship and other unwelcome consequences."

Moreover, as negotiator in our multilateral talks, I would offer that we also need a strong commitment to timely action. Given the history of broken and unsuccessful agreements with the D.P.R.K., we cannot afford to leave the hard work for the end of the implementation process.

North Korea's Nuclear Programs

North Korea nuclear ambitions go back at least to the 1970s and are deeply grounded in its policy of national independence. Several decades ago, a North Korean leadership fearful of its own people and of the challenge represented by the economically developing, democratized Korean republic to its south, set out on a path to acquire nuclear weapons. Over time, various justifications have been offered. But, whatever the regime's rationale, the United States believes that a decade or so ago North Korea probably managed to develop at least a couple nuclear weapons.

As we now see it, maintaining a nuclear arsenal apparently has become a core, not peripheral, element of North Korea's national defense strategy. Thus, the challenge of getting rid of nuclear weapons and capabilities, needs to be seen in the context of North Korea's willingness to dramatically alter its national strategy. With the changed environment of this new century, among the world's vibrant economies, there is such an opportunity for North Korea to seize.

A Partial "Solution"

Ten years ago, we believed we were on the road toward ending North Korea's nuclear weapons program, once and for all. In 1992, North Korea reached an agreement with South Korea to ensure a Korean Peninsula free of nuclear weapons, but North Korea almost immediately walked away from that arrangement. The U.S. stepped in and, with the U.S.-D.P.R.K. Agreed Framework of 1994, succeeded in freezing North Korea's known nuclear weapons program, a plutonium-based effort centered on a place called Yongbyon.

In exchange for North Korea's promises eventually to come clean about its nuclear past, dismantle its known facilities, and put its remaining nuclear activities under full IAEA safeguards, the United States organized under its leadership an international consortium -- the Korean Peninsula Energy Development Organization, or KEDO - to finance and supply the light water reactor project. The KEDO partners, primarily the Republic of Korea and Japan, have spent over $1.3 billion on the construction of two light water reactors. And the U.S provided North Korea with half a billion dollars worth of heavy fuel oil between 1994 and 2002, to replace the energy presumed to be foregone by the freeze of the North's nuclear program.

In the meantime, in response to a humanitarian crisis, the United States and many other countries came to the rescue of the North Korean people, who suffered a terrible famine in the mid-1990s due primarily to the leadership`s mismanagement of the economy. Between 1995 and 2003, the United States alone provided nearly 2,000,000 metric tons of food aid worth $654,000,000 to North Korea through the UN World Food Program. According to the World Food Program, the international community as a whole has provided an estimated average of 1.2 million metric tons of food aid each year to North Korea since 1999.

North Korea Pursues an HEU Program

In the summer of 2002, however, the United States discovered that North Korea had not kept its part of the bargain. We learned conclusively that it was pursuing a covert nuclear weapons program based not on plutonium but on uranium enrichment. This was a clear violation of North Korea's obligations to South Korea under the Joint Denuclearization Declaration of 1992 and to the international community under the Nuclear Nonproliferation Treaty and the D.P.R.K.'s Safeguards Agreement with the International Atomic Energy Agency.

It was also a fundamental breach of the U.S.-D.P.R.K. Agreed Framework, which aimed to "achieve peace and security on a nuclear-free Korean peninsula." By the way, our negotiator of the Agreed Framework, Ambassador Robert Gallucci, left the North Koreans in no doubt that any uranium enrichment program would break the Agreed Framework. As he testified to Congress in December, 1994, the Agreed Framework requires the D.P.R.K. to implement the North-South Joint Declaration on the Denuclearization of the Korean Peninsula, which precludes any reprocessing or enrichment capability. "If there were ever any move to enrich," Ambassador Gallucci told the Senate Foreign Relations Committee, "we would argue they were not in compliance with the Agreed Framework."

The matter was extremely serious. North Korea's goal appeared to be a plant that could produce enough weapons-grade uranium for two or more nuclear weapons per year when fully operational.

The President thus instructed me to lead an interagency U.S. team to Pyongyang in October 2002 to quietly inform the North Koreans that we knew about their secret nuclear arms program. I was to tell them that we had intended to propose bilateral negotiations on our entire range of concerns with North Korea, including missile proliferation, chemical and biological weapons, conventional forces, terrorism, and human rights. However, the North Koreans' violation of the Agreed Framework had put the nuclear issue again front and center. I was to call on North Korea to reverse its nuclear course, after which the United States would be prepared to consider bilateral negotiations on other matters.

The North Koreans Escalate

Surprisingly, the North Koreans acknowledged their uranium enrichment program to us and suggested that if we provided them with additional benefits, they would, at some point in the future, resolve our concerns about their nuclear programs -- how they would do so, they did not say. In other words, even though the North Koreans had violated the Agreed Framework, which had proven to be only a partial and thus unsatisfactory solution, they were proposing to us that we basically repeat the same formula. We weren't prepared to accept that. As Secretary Powell has said, we were not going to "buy the same horse" twice.

Instead of taking the opportunity we had afforded them to begin walking back their covert nuclear arms program, the North Koreans escalated the situation. In December 2002, they expelled IAEA inspectors and began to reactivate the 5 MW nuclear reactor at Yongbyon. In January, the D.P.R.K. announced its withdrawal from the NPT. And in October 2003, it declared it had finished reprocessing its 8,000-plus existing spent fuel rods. If that is indeed the case, it could have produced enough fissile material for an additional five or six nuclear weapons.

The North Korean Acknowledgement and Subsequent Denial

Let me digress here briefly to address the issue of the North Koreans' acknowledgement to me of their uranium enrichment program, because they later began to deny that they had done so, causing some confusion in the media.

The acknowledgement came over the entire course of a 40-minute-long meeting that my team and I had with North Korean First Vice Foreign Minister Kang Sok Ju, the number two man in the North Korean foreign ministry and said to be close to Kim Jong Il.

Kang's remarks were interpreted into English by his own interpreter, and his original Korean presentation was monitored by our side's experienced professional interpreter.

It was very clear to all members of my team that Kang was acknowledging the existence of a highly enriched uranium program and that North Korea was willing to negotiate about addressing our concerns about it if the United States first provided additional benefits to North Korea.

Thereafter, for nearly two months, even after we publicly stated that the North Koreans had acknowledged the uranium enrichment program to us, the D.P.R.K. did not deny the program or the acknowledgement. Instead, to the rest of the world, the D.P.R.K. essentially took an NCND position -- that is, to "neither confirm nor deny" the program. Only later, when it became clear that this was a major tactical error that was resulting in massive international criticism, did D.P.R.K. officials first begin to suggest that the United States had misunderstood its statements, and later still that the United States had lied about them. Only much later did the North Koreans actually begin to claim that they have no HEU program.

In any event, the key point in regard to this issue is that the steps taken by the United States subsequent to my mission to Pyongyang in October 2002 were in response not to the North Korean acknowledgement but to our knowledge, based on our own intelligence, of the North Korean uranium enrichment program. We are confident that our intelligence in this matter is well-founded. In fact, the recent confession of Pakistan's A.Q. Khan suggests that, if anything, the North Korean HEU program is of longer duration and more advanced than we had assessed.

U.S. Policy

So how are we to respond to this very serious situation in which North Korea has lifted the freeze on its plutonium-based nuclear arms program and is aggressively pursuing an enriched-uranium nuclear arms program?

The United States has adopted two basic principles for resolving this situation. First, we cannot accept anything less than the complete, verifiable, and irreversible dismantlement of the North's nuclear programs. Second, the diplomatic format for achieving that outcome must be a multiparty framework.

Complete, Verifiable and Irreversible Dismantlement

We insist on the complete, verifiable and irreversible dismantlement of all of North Korea's nuclear programs because we must not again allow a situation in which the North's dismantlement of its nuclear arms program is put off into the distant future, as it was under the Agreed Framework. That would permit North Korea, at any time, to resume its use of nuclear threats to blackmail the international community.

We will not be satisfied with a resolution that is not complete. North Korea must dismantle not only its plutonium program but also its uranium enrichment program and its existing nuclear weapons.

We will not be satisfied with a resolution that is not verifiable. In this regard, the burden is not on the international community but on North Korea to come clean. As the Libya cases illustrates, there are ways that North Korea can do this as a sovereign country. It is certainly in North Korea's interests, as it is in Libya's.

We will not be satisfied with a "reversible solution". This must be once and for all. North Korea's nuclear programs and facilities must be dismantled, and never reconstituted. Mechanisms can be found to do this that are reasonable. This will not be difficult to accomplish once North Korea has made a fundamental decision to abandon its nuclear programs.

The Advantages of a Multilateral Framework

To accomplish these ends, the United States has strongly supported a multilateral process. Some have criticized this, and urged that multilateral talks be replaced, or at least supplemented, by bilateral U.S.-D.P.R.K. negotiations on the nuclear issue. We don't intend to do that. Let me explain why.

First, and most important, the D.P.R.K.'s nuclear arms programs are not just a bilateral U.S.-North Korean issue. North Korea's pursuit of a nuclear arsenal is a serious threat to regional peace and security and a challenge to the global non-proliferation regime. The United States' bilateral effort to address the problem, resulting in the Agreed Framework of 1994, was less than successful. Other countries need to bring their interests, influence, and resources to bear, not only in persuading North Korea to end its nuclear arms program but to ensure that the program is never resumed and that broader conditions on the Korean Peninsula are conducive to lasting peace and security. I might add that South Korea and Japan have their own relations and problems with the D.P.R.K., and these are being addressed far more directly than was the case ten years ago.

Thus, in early 2003, the United States proposed multilateral talks to end North Korea's nuclear program. The P.R.C. made strenuous efforts with North Korea to realize such talks. The result was trilateral talks in Beijing in April, with participation by the P.R.C., North Korea, and the U.S., and Six-Party Talks in Beijing in August, which also included the Republic of Korea, Japan, and Russia.

The two rounds of multilateral talks in Beijing represented important first steps in achieving a fundamental solution of the North Korean nuclear problem. The North Koreans heard from all of the other parties present that a North Korean nuclear weapons capability is unacceptable and will not be tolerated. And the other parties heard first-hand North Korea's threats to expand its nuclear weapons program. This was very important, because, in the past, the North Koreans utilized the tactic of making such threats to the United States while denying them to others -- of taking a hardline position with us while telling others that it was the United States that was hardline.

But it isn't just the United States that the D.P.R.K. plays off against. During the decades of Sino-Soviet rivalry, North Korea became adept at playing one off against the other. With the end of the Cold War, North Korea has continued to focus on dealing bilaterally with all of its neighbors, playing them off against each other.

The six-party format helps to deny North Korea the opportunity to play its neighbors off, one against the other. The result is increased understanding and solidarity among the six-party participants about the nature and seriousness of the North Korean nuclear problem.

Preparing for Round Two of Six-Party Talks

As I noted, the second round of Six-Party Talks is less than two weeks away. We will meet in Beijing on February 25, and we expect that the round will result in further progress toward a permanent solution, even if the progress may not be readily apparent.

At the talks, as I have stressed, the aim of the United States will be the complete, verifiable, and irreversible dismantlement of North Korea's nuclear programs. That is our focus, but we are prepared to listen carefully and respond to all positions.

North Korea has said that its nuclear arms program is a defensive response to the hostility of the Bush Administration, and it has demanded, among other things, security assurances from the United States before it will, as it says, "consider resolving American concerns." I would note that the D.P.R.K.'s HEU program existed long before the Bush Administration was inaugurated. I would also note that President Bush stated as early as February 2002 that the United States has no intention of invading or attacking North Korea. Nevertheless, in an effort to move the process along, President Bush stated last October that the United States was willing to join other participants in the Six-Party Talks in providing security assurances to North Korea in the context of its complete, verifiable, and irreversible dismantlement of its nuclear program.

In preparing for the next round, we have consulted especially closely with our allies the Republic of Korea and Japan, both bilaterally and trilaterally. We have also had extensive bilateral consultations with both the P.R.C. and Russia.

President Bush is committed to a diplomatic solution and is convinced that multilateral talks are the appropriate diplomatic forum, for the reasons I have described. We are confident that the Six-Party Talks offer the best opportunity to persuade North Korea to end its nuclear arms program and thereby to open up brighter prospects for the entire region. That is not to say that we expect to resolve the nuclear problem in a matter of a few weeks or even a few months. It is a difficult issue and will take time. But we will take the time necessary to achieve a fundamental and permanent solution.

IAI and PSI to Continue on Their Merits

Meanwhile, the U.S. is currently working with many of North Korea's neighbors in East Asia to enhance law enforcement and judicial cooperation to address North Korea's illicit and criminal activities. North Korea is involved in activities such as counterfeiting, drug-running, and smuggling. We are also working towards implementing the President's Proliferation Security Initiative, a separate program to counter the proliferation of weapons of mass destruction and missiles. While not directed at North Korea, North Korea is affected because it is the world's leading proliferator. These initiatives will be continued on their merits.

Conclusion

North Korea has an opportunity to change its path. As some Americans might put it there is a chance for redemption. The examples of Libya, Ukraine, South Africa and others demonstrate that there is real reason for hope that North Korea will eventually respond. States, even those with existing nuclear arms, can decide that abandoning nuclear weapons is in their interests. Presumably, the intention of the D.P.R.K. leadership in embracing nuclear weapons was to enhance the regime's security and status. Clearly, the effect has been the opposite. With continued international solidarity, there is good reason to believe that North Korea will eventually rethink its assumptions and reverse course. The Six-Party Talks offer North Korea a path toward international responsibility and increased well being for its people. The United States sincerely hopes that the D.P.R.K. will take the opportunity.


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Pyongyang's Tightrope-Walker

Marcus Noland
Institute for International Economics

Op-ed in the Far Eastern Economic Review
February 17, 2004

? Institute for International Economics.

North Koreans are justly proud of their acrobats who entertain visiting dignitaries. After hesitating for nearly a decade, the Dear Leader himself, Kim Jong Il, has begun edging unsteadily onto the high wire. The questions are whether he will fall, and if he does, will there be anyone to catch him?

Economic reforms are enabling an upsurge in small-scale economic activity while at the same time deepening social differentiation and creating a new class of urban poor. A "military-first" ideological campaign, emphasizing modernization, has been introduced to legitimate these changes and justify abandoning traditional socialist practices. As government officials are laid off and the military is elevated above the proletariat in the political pantheon, entrepreneurs and officers have replaced bureaucrats and cadres as preferred sons-in-law.

These changes may ultimately prove destabilizing, though the regime can draw upon considerable assets: two generations of political indoctrination without parallel, a monopoly on social organization and a massive apparatus for internal control. Yet even if Kim is able to use these tools to maintain his balance, the reform initiative is unlikely to come to fruition as long as the country remains a pariah, subject to diplomatic sanctions. Recent statistical modelling work suggests that economic performance, and, by extension, North Korea's external relations, have a critical impact on regime stability. It's hard to imagine Kim successfully traversing the rope if foreigners are shaking it.

The six-party talks, scheduled to restart later this month, on the North's nuclear programme are central in this regard. In the short term, Pyongyang's brinkmanship and American election-year timidity could reduce the talks to theatrical sound and fury, signifying nothing. But even if the participants behave like angels, there are ample grounds for scepticism. North Korea regards its nuclear deterrent as critical to its survival and is unlikely to negotiate it away easily. Even recent pro-engagement visitors to Pyongyang have labelled the North Korean "words for resources" stance as a nonstarter. And having been burned once, America is likely to insist on a very rigorous verification regime.

Countries that have surrendered nuclear weapons or eliminated nuclear-weapon development programmes usually have done so in the context of a broader political regime change, often involving a newly empowered democratic regime asserting control over its own military. Libya's recent decision to terminate its nuclear programme is interesting precisely because it deviates from this pattern, instead highlighting its fears of external pressure and the country's own effort to come in from the cold, resolve outstanding diplomatic issues and gain international acceptance. Regrettably, in reaction to Moamar Qaddafi's call for North Korea to emulate Libya, Pyongyang responded that, "This is the folly of imbeciles . . . To expect any 'change' from the DPRK stand is as foolish as expecting a shower from the clear sky."

Yet even if one doubts the prospects of eliminating the North's nuclear programme through negotiation, earnest and sincere American participation in the talks is a necessary precursor for stiffer measures further down the line.

Coercive diplomacy can work only if Kim is deprived of his safety net, and the Bush administration has made little headway with those who hold it. There is no consensus in South Korea about what to do with respect to the North, and unless the electorate shifts strongly towards the opposition in the upcoming national assembly elections, Seoul will try to catch Kim if he falls.

China is weary of Kim's stalling, but is as yet unwilling to drop the net. It fears a flood of North Korean refugees upsetting the ethnic politics of its border provinces and the possibility of American troops north of the 38th parallel in a unified Korea. To secure Chinese cooperation, America will have to offer assurances about the disposition of its troops and a credible system of permanent refugee resettlement to mollify China's political concerns. Proposed legislation making it easier for North Koreans to gain asylum in the United States is a start, but to convince Beijing, it will take money for temporary refugee resettlement camps, not just minor immigration-law changes. Unfortunately, the Bush administration at its outset regarded China as a strategic competitor and was unwilling to pursue such cooperation, and now with Iraq on its hands, lacks the political capital to do so.

So as Washington sways the rope, Seoul and Beijing look apprehensively skyward as a short, tubby man dances through the air.
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Making Sense of the Korean Crisis
An Interview with Gavan McCormack
by Gavan McCormack
February 15, 2004

JAPAN


(Gavan McCormack is author of the just released Target North Korea: Pushing North Korea to the Brink of Nuclear Catastrophe, New York, Nation Books (available at Amazon.com for $11.16). He has published widely on aspects of modern and contemporary East Asia and his books have also been translated into Japanese, Chinese and Korean. A research professor at the Australian National University, he is currently also a visiting professor at International Christian University in Tokyo. He was interviewed via email by Stephen R. Shalom and Mark Selden.)


1. Could you summarize political and economic conditions in North Korea today?

Till the 1980s, North Korea was one of the more industrialized countries in Asia. Thereafter it has been reduced to penury and near-collapse by a combination of circumstances, some the consequence of its own choices, others beyond its control.

With the end of "socialism" in the 1990s, both Russia and China shifted from "friendly" to commercial terms of trade, which meant skyrocketing prices for North Korea's energy imports, especially oil. The country's heavily chemical and machine intensive agriculture suffered a severe blow, on the eve of a succession of unprecedented climatic disasters -- the country became chronically unable to feed its people, and many starved. People were urged to adopt a two-meals-a day regimen, when for many even one became too much to hope for.According to the UN Humanitarian Coordinator for North Korea, four out of ten North Korean children are now stunted by malnutrition. In February 2004, the World Food Program, its reserves rapidly diminishing as donor countries lost interest in North Korea, had to cut off supplies for four million aged people, women, and children (more than one sixth of the population).

Blocked by the US and Japan from participation in such multinational institutions as the International Monetary Fund and the World Bank, denied diplomatic relations with the US and Japan, and subject to sanctions as a "terror-exporting" state, North Korea is also caught on the horns of the dilemma of desiring to engage much more comprehensively with the global economy and fearing that such engagement might undermine its political and security system. The biggest change is in the rapidly burgeoning web of ties that link North Korea across the DMZ to its erstwhile bitterest enemy, booming South Korea.

The hostilities of the Korean War that ended more than fifty years ago are still suspended only by a temporary "cease-fire" and the economy remains distorted by the priority to military preparation. In 1987, soon after North Korea commenced operation of a gas graphite nuclear reactor for power generation, it seems to have begun diverting the plutonium-containing reactor wastes to a weapons program designed to produce its own deterrent, thereby to neutralize the semi-permanent US threat and to bring the US to the negotiating table.

A US attack on its installations was narrowly averted in 1994. North Korea then came close to normalization of relations with the US under the Clinton administration, trading its nuclear weapon and missile programs for economic and diplomatic normalization. The advent of the Bush administration plunged all this back to the starting-line.

For much of its history, since its foundation in 1948, North Korea was a Marxist-Leninist, communist party dictatorship, but since the late 1990s under its "Dear Leader" Kim Jong Il (after the death of his father Kim Il Sung in 1994) it abandoned communist theory and embraced the principle of "Army-first-ism," with Kim Jong Il supreme military and political ruler. In place of the dictatorship of the proletariat, the military dictatorship today resembles an absolute monarchy and justifies itself on purely nationalist grounds. Kim Jong Il's control is far reaching. Few other rulers could say as confidently as he: "L'?~t, c'est moi." Political criticism, let alone opposition, is not tolerated, and huge efforts are devoted to controlling people's thoughts from childhood. Dissenters, and their families, most likely numbering somewhere well over 100,000, are confined in harsh camps (gulags) in remote or mountain areas.

Centralized economic controls were largely abandoned in 2002 in favor of the market. Foreign businesses are encouraged to set up in enclaves in the North, and South Korea in particular has responded positively. In the hope of unlocking the doors to normalization with Japan and a flow of Japanese aid and technology, North Korea in September 2002 apologized over the abduction of Japanese citizens in the late 1970s and early 1980s and over "spy-ship" intrusions into Japanese waters, but the Japanese response has been harsh and the overtures thus far fruitless.

No other country faces such a raft of unresolved problems from history. North Korea is a fossilized encapsulation of the 20th century: the legacies of colonialism, imperialist interventions, externally imposed division of the country, and incorporation in the Cold War, all remain unresolved. Economic failures, especially the inability of the regime to feed the people, have gradually sapped the regime's credibility. A steady flow of refugees crosses the river frontier into China, and even some key figures close to the leadership have fled. Nothing so serves to justify and sustain the continued harsh regimen of dictatorship as the confrontation with huge, hostile, external adversaries.


2. At one time North Korea's economy seemed to be growing faster than South Korea's. What's happened?

When the CIA studied the two economies in the late 1960s, it found North Korea out-performing South Korea in almost every particular. From 1979 to 1990, the UN's FAO was reporting North Korea as an agricultural miracle, the world's No 1 in terms of rice yield per hectare. Both reports were dubious, and the accomplishments, such as they were, soon dissolved. Now the GDP gap is between twenty and thirty to one in the South's favor, and North Korea's agriculture has collapsed.

The more industrialized region of the peninsula prior to the Korean War, in the decades that followed liberation from Japan and the foundation (in 1948) of the Democratic People's Republic of Korea (DPRK), the North achieved dramatic growth rates fueled by the nationalization of seized Japanese colonial assets, the adoption of a comprehensive land-reform program and of Soviet-style central planning, and substantial aid flows from Soviet, East European and Chinese sources. After the initial high growth of the 1940s to 1960s (with the exception of the drastic setbacks of the war between 1950 and 1953), however, North Korea entered upon a slow decline. Plant rotted or became obsolescent, resources were monopolized by the military, or used to shore up the cult of the leader, and in the 1990s the country was buffeted by the natural disasters of the 1990s, even as the confrontation with the United States sharpened.

The contradiction between the cult and the plan deepened. In effect, the frenzied excesses and arbitrary interventions of the cult slowly strangled the plan; with the succession of Kim Jong Il, flunkeys replaced technocrats. The long US embargo, blocking not only bilateral economic links but also World Bank and International Monetary Fund ties, stymied repeated efforts to break out of isolation.

No country has "de-industrialized" at such a rate and for so long now as North Korea. As a black hole of hopelessness at the heart of booming Northeast Asia, its position is increasingly anomalous.


3. What has been the significance of the fact that the North Korean leadership has passed from Kim Il Sung to Kim Jong Il.

Kim Jong Il (b. 1942) was groomed for succession long before his father Kim Il Sung (b. 1912) actually passed the reins to him. When Kim Il Sung died in 1994, Kim Jong Il was already in effect running the country.

Kim Il Sung had the prestige associated with his role as an anti-Japanese partisan or guerrilla, an anti-fascist fighter. The cult that was built around him rested ultimately on nationalist and internationalist credentials. For Kim Jong Il, however, legitimacy stemmed only from being his father's son. A huge effort had to be launched to legitimize his succession. At his hands, the cult of his father, Kim Il Sung, was intensified and extended to the entire family: continuation of the revolution could only be entrusted to the blood-line. The entire country was turned into a family monument, and grandiose projects in honor of the Leader and his family were given priority over productive purposes.

Kim Jong Il's dilemma is how to reform his country while somehow retaining power. The more he "reforms" and opens the country, however, the less credible his dynastic and feudal rule becomes.


4. In 1994, the Clinton administration reached an agreement with North Korea designed to resolve the nuclear controversy. What happened to that agreement?

Under the 1994 agreement known as the "Agreed Framework," North Korea was to freeze its graphite nuclear reactor program, and to hold its 8,000-odd rods of plutonium-containing waste from the reactors in specially constructed ponds, under sealed IAEA camera scrutiny, in return for two electricity-generating light-water reactors to be built by 2003, and an interim annual supply of 3.3 million barrels of oil. The United States and North Korea agreed to "move towards full normalization of political and economic relations" while the US was to provide "formal assurances to the Democratic People's Republic of Korea against the threat or use of nuclear weapons."

Wrangling over the site and getting the agreement of others to pay for it (South Korea 70 per cent, Japan about 20 per cent) took several years, by which time North Korea was in the depths of economic crisis and famine so severe that Washington believed the regime might not survive and therefore the reactor construction need not go ahead. As control of Congress passed to the Republicans, who had opposed the deal from the start and never took seriously its commitment to political and economic normalization, the Agreed Framework was sidelined and criticized as misguided Democratic appeasement that should never have been entered into and should not be honored. It took the launch (albeit unsuccessful in achieving orbit) of the Taepodong satellite in 1998 to restore a sense of urgency to the North Korea question. In 2000, visits were exchanged by Madeleine Albright and North Korea's Marshall Jo Myong Rok and the two countries came to the brink of normalization and to fulfillment of the Framework's commitments. A Clinton presidential visit was anticipated, but time ran out before it could be realized.

Under President Bush, North Korea was labeled a "terror state" and evil, its leader the particular object of presidential hatred. The present crisis was initiated in October 2002 by US Assistant Secretary of State James Kelly's claim that North Korea had admitted to a secret program of uranium enrichment. Allegation and denial brought the Framework to collapse. What actually was said to Kelly, and whether he understood it correctly or not, remains controversial. Pyongyang denies any admission. China, Russia and South Korea doubt that North Korea has the kind of program it is supposed to have admitted. It is hard to imagine any possible motive for North Korea to have said what Kelly alleges was said.

From 2003, the uranium enrichment story was complicated by the admissions stemming from Abdul Qadeer Khan, the founder of Pakistan's nuclear program, to the provision of nuclear technology, including centrifuges, to Libya, Iran, North Korea and other countries in the 1990s. This breach of the non-proliferation regime is precisely what Washington says it most fears North Korea might commit. Committed by a US ally, and almost certainly known to US intelligence from the outset, however, it elicits little more than a reprimand.

The next round of "Six-Sided Talks" in Beijing, scheduled for late February 2004, will have to confront the issue of who said what, and what they meant, in Pyongyang in October 2002.

Whatever the outcome of the uranium enrichment story, it seems beyond doubt that, until the Kelly-initiated crisis and the ensuing breakdown of the Agreed Framework, North Korea had honored its commitment to freeze the graphite-moderated reactor works and waste storage ponds at Yongbyon. The 1994 Agreement covered the plutonium-based (Nagasaki-type) weapons program, not the uranium-based (Hiroshima-type) program that became the subject of the Kelly allegations in 2002 and the Khan revelations in 2003. US experts visiting Yongbyon in December 2003 found that one small (5 MW) experimental reactor had been turned on to provide the local town with power and heat, but the larger (50 MW) reactor works were in such a state of dilapidation and disrepair that they estimated it would take years to restore. The storage ponds were empty, however, suggesting that the plutonium had been processed and might be incorporated in a weapons program.


5. During the run-up to the Iraq war, many commentators noted that whether or not Saddam had weapons of mass destruction, he was rational and hence deterrable, and thus not a serious threat outside his own borders. Indeed, these commentators suggested that the only conceivable scenario in which Saddam might use WMD was in the event of a US attack. Does this same logic apply to North Korea?

No serious analyst has ever suggested that North Korea was preparing to attack or invade any of its neighbors or constituted any threat to regional peace except if faced with threats to its own survival. North Korea is best seen as a porcupine, stiffening its bristles and looking fierce to try to repel attack, rather than a tiger rapaciously seeking prey.

Although North Korea has neither threatened nor committed any act of aggression against any neighboring state, its relationship with South Korea is of course in a different category. Ever since the country was divided by external intervention in 1945, both North and South have committed themselves to restoring national unity, each claiming national legitimacy. The civil war of 1950 to 1953 arose out of that contest and fifty years on remains unresolved, but the momentum of reconciliation between the two has accelerated greatly since the shift from confrontation to "sunshine" under the previous South Korean presidency of Kim Dae Jung. South Korean people today are more fearful of the United States than of North Korea.


6. Are the North Koreans paranoid? And, if so, why?

If paranoia means unreasonable, groundless, or grossly exaggerated fear, then the word is inappropriate to describe North Korea, whose fears can hardly be described as unreasonable.

While in Washington the North Korean "nuclear threat" has been an issue for the past decade, Pyongyang has faced the US nuclear threat for the past half century. North Korea has lived under it for longer than any other nation. During the Korean War it escaped nuclear annihilation by the barest of margins. General MacArthur, his successor as Commander-in-Chief, General Ridgway, presidents Truman and Eisenhower, and the Joint Chiefs, all at one or other stage favored or recommended using nuclear weapons against North Korea. Britain and other allies opposed its use, but in the end it was only fear of Soviet retaliation, and following the death of Stalin the rapid progress in negotiations, that prevented it. Then, just four years after the Armistice and in obvious breach of it, the US introduced nuclear artillery shells, mines, and missiles into Korea, keeping them there, adjacent to the Demilitarized Zone, designed to intimidate the non-nuclear North, for 35 years till they were finally withdrawn at the insistence of the South Korean government. Even withdrawal did little to diminish the threat as perceived by Pyongyang since the rehearsals for a long-range nuclear strike on North Korea continued. Under the "Agreed Framework," however, Clinton finally lifted the threat, pledging no first-use of nuclear weapons against a non-nuclear state. That reprieve was in turn revoked under Bush and North Korea was specifically included on the "Nuclear Target List."

Watching its fellow "axis of evil" country Iraq being pulverized in 2003 although (as we now know) it had no weapons of mass destruction nor any immediate prospect of developing them, Pyongyang could be forgiven for concluding that its turn was likely to come next, and that its only hope of survival was actually to possess what Saddam Hussein had not. Without nuclear weapons North Korea was a poor and insignificant country; with them, perhaps only with them, it might not only deter American attack but actually induce it to enter negotiations on long-standing grievances.

North Korea's perception of its role in the 20th century (and the 21st to date) is that of victim, suffering from a series of colossal and uncompensated injustices at the hands of colonial Japan and the US. Its demands for lifting of the threat against it and for recognition and normalization may be voiced in strident tones, but that is best seen as a measure of its anxiety. What the world has never recognized is the core of legitimacy in Pyongyang's cry for settlement: of the bitter legacy of colonialism (from Japan) and of nuclear intimidation, economic embargo and diplomatic isolation (by the US).


7. What is the role and position of the key regional players in the current North Korea crisis: South Korea, Japan, and China?

The "Six-Sided Framework" set up during 2003 was designed to present North Korea with a united front of regional and global powers (US, Japan, China, Russia, South Korea) insisting on its nuclear disarmament. As the crisis has developed, however, the US position has steadily weakened and the Six-Sided frame has served to bring pressure, unexpectedly, to bear on Washington as much as on North Korea. Strangest of all, China, designated by the early Bush administration as the real strategic threat to the United States, moved to centre stage in the negotiations.

All six of the countries are committed to a non-nuclear peninsula, and, save for the US, all consider the idea of another war in Northeast Asia absolutely anathema. While none dare openly oppose the US, North Korea's four neighbor countries share the belief that its security problems are genuine and serious, and that North Korea should be entitled, without having to plead for it, to the guarantee of its right to exist. All express doubts about the US intelligence on North Korea's possession of nuclear weapons, and about the US version of the events that led to the collapse of the Agreed Framework in 2002.

South Korea: South Korea, which once fought a fratricidal war and has been locked in hostile military confrontation with the North ever since, now shows least fear and most understanding of its neighbor and has chosen a path of dialogue and cooperation, a policy styled by former President Kim Dae Jung as "Sunshine," stemming from a vein of Confucian wisdom in which human nature is seen as complex but never evil, and in which even the poor, desperate and friendless are entitled to respect. It chooses to believe that change is in the cards and any residual military threat is adequately contained, and shows no sympathy for the moralistic, fundamentalist frame within which North Korea is represented as "evil." Ultimately, as one critic put it, South and North Korea constitute a single "family business."

At any given moment now, hundreds of South Korean diplomats, bureaucrats, and business people are in Pyongyang, doing deals, talking to their opposite numbers, working out new links by road, rail, fiber-optic or pipeline between North and South, or framing investment projects in energy, tourism or manufacturing.

Japan: Korea was Japan's colony in the first half of the 20th century. Japanese dominance was followed by externally imposed division, civil and then international war, and then the Cold War. It took 20 years before Japan made any move to "normalize" its relations with South Korea, and to this day no relations exist with North Korea.

Under Cold war conditions, it was more-or-less impossible even to imagine reconciliation between Japan and North Korea. After it, North Korea's demand for apology and compensation for colonialism was the major sticking point. Only when enfeebled to the point of desperation by economic crisis in the 1990s did it agree to set that demand aside. North Korea also showed its eagerness for change when it offered visiting Japanese Prime Minister Koizumi in September 2002 a dramatic apology for having abducted thirteen Japanese citizens during the late 1970s and early 1980s and for the "spy ships" that intruded into Japanese waters in the 1990s. It then returned to Japan the five it said were the survivors of the thirteen people abducted. These indications of desire for change came to naught, however. Instead, a huge Japanese wave of anger over the abductions overshadowed all else.

The abductions of two and a half decades ago, at the height of the Cold War, were a form of state terrorism, and outrage was understandable. However, the Japanese response was itself strange, in that it followed the North Korean apology and promise not to commit such acts again. Furthermore, both sides were well aware that Japan had undertaken state terror in the not so distant past on a much larger scale, including the mobilization of large numbers of Korean young women into sexual slavery, and that it took Japan more than half a century before it began, grudgingly, to admit and to make reparation (indirectly and inadequately).

The question of the six children of the former abductees became central. Now in all cases adults (the youngest aged 18), brought up entirely in North Korea, knowing no language but Korean and in some cases ignorant even of the Japanese identity of their parents, the Japanese government nevertheless insisted that they be handed over, "returned" to Japan. North Korea, for its part, protested that Japan was in breach of an October 2002 understanding to the effect that the parents would return to North Korea after a one or two week stay in Japan to determine the future of their families. It argued that the children were not "things" to be simply shifted around, but human beings with their own sense of identity; it should be up to them to decide, after discussion with their parents, where they want to live.

The North Korean government continued in 2003 and 2004 to reiterate essentially the same position. To a visiting Japanese government delegation in February 2004 it said that if the parents would only fly to Pyongyang, thus fulfilling the terms of the bargain, the family members could, if they wished, then depart with them. That was not enough to satisfy the Japanese authorities, who remained bent on unconditional handover of the family members, regardless of what the individuals in question might think. The long-term solution in human rights terms would be the creation of a relationship in which these young people would be able to move freely between North Korea and Japan, between their own (should they so choose) and their parents' homes in a future "normalized" relationship, but such a position has very few supporters in contemporary Japan.

The continuing showdown with North Korea constituted a major axis of political and institutional change in Japan. With fear and hatred of North Korea a shared social consensus, Japan has taken a series of recent steps towards "normalizing" its military ("Self-Defense") forces and strengthening its support for the US military in its global operations. Prime Minister Koizumi specifically linked the Self-Defense Force detachment sent to Iraq to the expectation that the US would defend Japan in the event of a North Korean attack. Japan has also committed itself to purchase of a massively expensive and unproven (US) missile defense system to ward off any North Korean missiles, tightened the rules governing the entry of North Korean ships into Japanese waters, and passed legislation to authorize unilateral economic sanctions on North Korea if it judged the situation to warrant it.

China: China has the closest of historic ties with North Korea and is today both the source of most of the supplies of food and energy on which North Korea depends and the most likely possible model of how it might develop in the future; in the North Korean present, Chinese see their own past. The Chinese role in brokering a resolution of the problem of North Korea has steadily grown, at the US request. The Chinese "bottom line" is that there must not be any resort to force. China was bold enough to say, from its position as convener and chair of the Beijing August 2003 talks, that it was the US that was the major obstacle to the negotiations. Steady Chinese pressure since then has been instrumental in bringing the US to soften its position. From absolute refusal to negotiate until North Korea agreed unilaterally to a complete, verifiable, irreversible end to its nuclear programs (at the three meetings that took place in 2002 and 2003), the US in late 2003 indicated it was ready to offer some kind of security guarantee and to consider graduated steps to resolution. China has also been instrumental in persuading North Korea to come to the table again without the draft document it sought in advance and to agree to a freeze (and ultimately destruction) of all its nuclear programs, not only weapons-related ones.

China has long disputed US intelligence estimates about North Korea and has stated in advance of the February meeting that it is not persuaded of the central American claim about North Korea's possession of a uranium enrichment program. On this, given the record of US intelligence and its manipulation on Iraq, Washington will have a hard time persuading its negotiating partners in Beijing. Any successful resolution of the current problem is likely to enhance China's role as the lynchpin of a future East or Northeast Asian order, with the "Six" constituting the core of a future community.


8. Does anyone know what the status is of North Korea's weapons programs? Can you summarize what we do know.

American intelligence first estimated back in 1993 (possibly earlier) that North Korea had "one, or possibly two" nuclear weapons. Like the intelligence on which the US in 2003 went to war against Iraq, it seems to have been false and/or subject to political manipulation. By 2003, the US had shifted to adopt the South Korean, Russian and Chinese view that North Korea actually did not have any nuclear weapons. It then argued that it had the ingredients (plutonium and uranium), and the will and intent, to develop them.

It is almost certainly true that North Korea would like to have nuclear weapons, its own "deterrent," but also that it suspended its efforts to produce them when it felt its security needs were satisfactorily met by the Agreed Framework in 1994, only changing course when the US itself changed course from Clinton to Bush. North Korea today almost certainly has plutonium, and may be in the process of extracting more of it from the waste rods removed from the Yongbyon ponds, but it seems highly unlikely that it has achieved "weaponization." As for delivery system, the Nodong missile has been test fired only once, in 1993; the longer-range Taepodong likewise once, when it failed to achieve orbit and crashed into the ocean in 1998; and the supposedly improved model, Taepodong 2, also once, when it blew up on the launching pad in 2002 (according to South Korean intelligence). It is hardly a scintillating record.

Objective assessment is complicated by the fact that both US intelligence and Pyongyang share an interest, for different reasons, in having the world think North Korea possesses both nuclear weapons and a delivery system, the US in order to justify its hegemonic role in East Asia, and North Korea in order to deter US attack.


9. What is the Bush administration currently trying to achieve with respect to North Korea?

The use of the singular begs a major question: does the Bush administration have a policy or is North Korea the axis of contest between rival factions within it. Jack Pritchard, till his resignation in August 2003 a Senior North Korean specialist at the State Department, says of American policy (New York Times, 21 January 2004): "At best it could be described only as amateurish. At worst, it is a failed attempt to lure American allies down a path that is not designed to solve the crisis diplomatically but to lead to the failure and ultimate isolation of North Korea in hopes that its government will collapse." No outside critic could match the severity of this assessment by someone who has been deeply involved in policy implementation.

For the neo-conservative group within the Bush regime, whether in the 1990s or today, history and politics are less important than the moral frame. North Korea is evil and should be liberated. Where political, economic and historical differences can be negotiated, evil can only be stamped out. Bush himself has made no secret of his loathing for North Korean leader Kim Jong Il, in terms similar to those he used for Saddam Hussein. He has, however, also intimated, in quite contrary mode, that a peaceful, negotiated solution in Korea is possible and even expressed optimism about the prospects. As the mire in Iraq deepens, a more conventional diplomatic view of the North Korean problem again comes to the fore in Washington. In very crude terms, while the neoconservatives around Cheney and Rumsfeld prefer ultimatum, backed by the readiness to use force, and the president himself is disinclined for compromise, the State Department favors negotiation and cooperation with regional powers.

The current US position -- readiness to meet North Korea's security concerns by some form of document and to offer economic aid in return for complete, verifiable and irreversible abandonment of its nuclear programs -- is a big step forward from that enunciated by James Kelly in 2002 and 2003. Indeed on the face of it this is close to what North Korea seeks (though it fudges the key issue of full diplomatic normalization). However, the 25 February Beijing meet will face some major obstacles:
1. How to arrive at a mutually satisfactory text to guarantee North Korea's security;

2. How to establish the truth about the claims and counter-claims concerning an enriched uranium program;

3. How to address the North Korean demand for deletion from the list of terror-supporting countries;

4. How to persuade the US to accept the North Korean "freeze" as sufficient warrant of good faith to justify the resumption of shipments of heavy oil in the short term, and an end to the virtual economic embargo of North Korea in the long term;

5. How in the longer term, to persuade all sides that the issue to be settled is not merely a putative North Korean weapons program but normalization of relations on all sides;

6. How to incorporate in that normalization a permanent peace agreement to settle the Korean war of 1950-53;

7. How to resolve the issue of North Korean abductions of Japanese, and simultaneously the issues of Japanese abductions and abuse of Koreans during the long colonial period.

It is the agenda not just of nuclear weapons on the peninsula but of the accumulated problems of a century, and therefore almost certainly too much to be settled in a few late February days. Pyongyang may be calculating to survive until November by stringing out the negotiations in the hope of facing a more amenable US government following the November elections, while the US, weakened by events in Iraq, will not find it easy to persuade the world to adopt its intelligence estimates and is in no position to resort to force in the short term.


10. How would you assess the Bush administration's strategy?

Two major contradictions affect US North Korea policy, nuclear on the one hand, strategic on the other.

The US wants to maintain nuclear-based hegemony over the earth, and indeed over the universe, while blocking any new countries from joining the existing nuclear club. The non-proliferation regime to which it signed up in 1968 was a deal by which those countries that did not possess nuclear weapons pledged not to take steps to get them, while those with weapons pledged not to threaten non-possessors and to take steps to eliminate their existing arsenals and move to comprehensive nuclear disarmament. Until the nuclear club powers take seriously those obligations, their insistence on others fulfilling their obligations is mere hypocrisy. If security can indeed only be guaranteed by possession of nuclear weapons, then there can be no complaint at North Korea. If that is not the case, then the possessing powers must take steps towards elimination of all nuclear weapons.

The second contradiction is between short and long-term US objectives. Regime change in North Korea would remove a thorn in the US side, but at the same time it might serve to undermine US regional hegemony. George W. Bush and Kim Jong Il stand in a paradoxically symbiotic relationship. Bush's loathing for Kim, and his nuclear threat, maintains the isolation and siege conditions that allow Kim to legitimize his rule, mobilize nationalist support, and crush opposition. Bush, for his part, rules and reigns over Northeast Asia because Japan and South Korea feel compelled by the North Korean threat to seek American protection and to shelter under Washington's "nuclear umbrella."

The framework of US military presence in East Asia is justified in Seoul and Tokyo by the threat from Pyongyang. Without the "North Korean threat" -- whether resolved peacefully or otherwise -- Washington strategists would have to think of some new justification for the bases in Japan and South Korea, and for the massively expensive anti-missile system soon to be constructed in the region. Some might want to declare China the real enemy, but a military alliance with the United States whose orientation was containment and hostility towards China would find little support in contemporary South Korea and Japan. Paradoxically, if the US does accomplish what it wants in North Korea -- regime change -- it could find that its own domination of the region is undermined.

It is time for the US to grow beyond the Cold War assumptions of Asia as a threatening and yet economically crucial area that must be maintained under tight control. In time, Asia, especially East and Northeast Asia, most likely in close cooperation with Southeast Asia, will emerge as an autonomous global centre of power and wealth. The process is, indeed, already advanced. The security reliance on the chain of US bases and on Washington's priorities becomes increasingly anomalous.

North Korea is a tiny country that has successively been colonized, invaded and abandoned. Its neighbors are the booming core of the world economy. Incorporated into "normal' relations with them, North Korea could be expected to become increasingly like them. North Korea's neighbors have their reasons for wanting to incorporate North Korea into the emerging Asian community and should be encouraged to take the key role in doing so on their own terms. To accomplish this, the price North Korea seeks for abandoning its nuclear weapons program is not unreasonable: an end to nuclear intimidation, diplomatic normalization and removal of economic sanctions.

It would be sensible for the US, while maintaining the existing security guarantees to both South Korea and Japan, to give North Korea the chance to show if it really does wish to change. Kim Jong Il's avowed desire for opening and normalization should be tested. He should be invited to talks in Washington or Tokyo or anywhere else and his willingness to denuclearize put to the test. Attempts to enforce change by issuing demands and refusing negotiation simply will not work. North Korean "face" is an important part of the security equation and a sympathy for the pain and the sense of justice that drive it, however perverted, will be needed for security goals to be met. Kim Jong Il's rule feeds off the current tension and he would not long survive the process of whittling it away, the normalization of economic and political relations with Japan and the US, and the steady flow of Japanese and other capital into the country.

Above all, a resolution of the problem will depend on seeing it not in the narrow frame of North Korean threat but in the broad context of history. That will require taking Seoul seriously and with respect, rather than as a recalcitrant and scarcely reliable ally because it no longer follows Washington uncritically. North Korea is essentially a Korean problem, and South Korea must assume a central role in negotiations and plans for the future because its people must after all live with their northern compatriots.


11. How does the U.S.-NK impasse impact on issues of peace and security in Northeast Asia? Are there regional approaches to any of the issues that could prove fruitful in resolving the issues both of U.S.-NK conflict and moving toward a reduction of regional tensions?

North Korea is a structural pivot of contemporary US hegemony in East Asia. Washington's post-Cold War vision asks Japan and Korea, in effect, to accept a future world predicated on continued fear and hostility to North Korea, such as to require their continuing military, political, and economic dependence on the United States. For Japan, the role of the "Britain" of East Asia is on offer, and its actions in Iraq suggest that Koiziumi's Japan is keen to take up the offer. For South Korea, or a united Korea, no clear role has yet been articulated, but one thing is clear: it is expected to remain secondary to Japan, perhaps as a kind of East Asian Northern Ireland. However, while US regional and global policy offers negative priorities -- anti-terror, anti-"evil," security against North Korea -- from East Asia there are tentative signs of the emergence of an alternative, non-imperial vision. Beyond the gloom, anger, and rising tension of the "North Korean crisis" may be detected a process of evolution in a "European" type direction. Like Europe, however, East Asia has its own rhythms and its own dynamics, and its tectonic plates are moving towards greater mutual cooperation and community. People begin to ask why it is that East Asia in the twentieth century failed to evolve a concert of states other than the Japanese-dominated "Greater East Asia Co-Prosperity Sphere" in the first half and then the US-dominated "free world" in the latter half, the former disastrous, the latter originally a Cold War product, and increasingly anomalous as the conditions that gave it birth disappear. Offered ongoing dependency on the US, structured around bilateral treaty arrangements and trade flows rather than any regional consensus, and marked by a base structure meant to last till well into the century ahead, the peoples and states of East Asia are likely at some point to reply: no thank you. Permanent East Asian dependence on American markets and security guarantees looks more and more anachronistic. Looking at the evolution of postwar Europe, people ask why Asia should not follow a similar path.

The Kim Jong Il regime in North Korea is indefensible, but violent intervention to change it is more likely to lead to the sort of chaos that engulfs Iraq and Afghanistan than to a resolution of problems that, in the last resort, only the Korean people, north and south, can solve. The necessary condition for them to do this is the "normalization" of the Korean peninsula, with problems ignored for far too long finally addressed: the lack of any peace treaty to settle the Korean War, the absence of diplomatic relations between North Korea and the world's two most important countries, the US and Japan. Only then will it be possible to liquidate the militarized tension that has blighted the lives of North Korea's people for half a century and created the conditions within which the dictatorship sustains itself.
http://www.zmag.org/content/showarticle.cfm?SectionID=17&ItemID=4992
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Posted by maximpost at 8:11 PM EST
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Guess who's in the driver's seat? Not the US
By Larry Niksch
(Used by permission of Pacific Forum CSIS)
See also: Round 2: In search of a US policy
As the second round of the six-party North Korea talks opens on Wednesday in Beijing, guess who's in the driver's seat? It's not Washington - not by a long shot.
A look back to February 2003 can leave one astounded over the diplomatic fortunes of the two chief antagonists. A year ago, North Korea appeared headed toward the status of an isolated international pariah through its brazen actions and threats, self-destructive to the impoverished nation and genuinely menacing and destabilizing to its neighbors and the region.
The United States had seemed to be ascendant. It issued communiques with other concerned neighbors and nations criticizing North Korea's actions. It succeeded in securing six-party talks. At the first six-party meeting in Beijing last August, a US official declared: "We're letting them dig their own grave." The administration of US President George W Bush said North Korea was self-destructing and was alienating the other participants. US officials spoke confidently of securing China's support. Today, US administration officials remain emboldened, citing Libya's decision to give up weapons of mass destruction (WMD) as the example for North Korea to follow.
However, a broader look does not appear to support the Bush administration's optimistic analysis. North Korean diplomacy has placed key items of Pyongyang's agenda at the top of the negotiating agenda: North Korea's proposal for a formal non-aggression security guarantee from the US, and Pyongyang's proposed freeze of its plutonium program. China, South Korea and Russia speak positively of these proposals and declare that the United States must address North Korea's concerns. Japan alone seconds the US position that North Korea must commit first to a "complete, irreversible, verifiable" dismantling of its nuclear programs and take concrete measures toward that end.
Expressions of skepticism about US claims of a secret North Korean highly enriched uranium (HEU) program now come from Chinese, Russian and South Korean officials. North Korea is receiving cash (US$50 million in October) and increased fuel and food from China, economic aid from South Korea, and further economic aid from Russia. Even the Bush administration has offered North Korea "security assurances", which would be more concessionary than the nuclear-security guarantee offered in the 1994 Agreed Framework.
North Korea's successes are the result of a negotiating strategy that plays on the psychological fears of the other parties coupled with a concerted propaganda strategy to advance Pyongyang's agenda.
Pyongyang's skillful negotiating strategy
After each of the Beijing meetings, North Korea criticized the sessions and the US position, warning that it saw no usefulness in the meetings and probably would not participate again. Then after repeated warnings, North Korea made "new" proposals. After the April meeting, North Korea hammered away on its proposal for a formal US-North Korean non-aggression pact. After the August meeting, North Korea proposed a "freeze" of its plutonium nuclear program, while asserting that a non-aggression guarantee was necessary to prevent the Bush administration from staging an "Iraq-like" unilateral attack.
Pyongyang contended that a freeze was a logical "first stage", employing enticing slogans such as "simultaneous actions", "action vs action", "simultaneous package deal", "bold concession" and "non-interference in our economic development". While promoting these proposals, North Korea steadily escalated the denials of any uranium-enrichment program.
Other governments, apprehensive over North Korea's threat to abandon the talks, sought to react positively in order to persuade Pyongyang to agree to future meetings. President Bush acceded to China's overtures to offer multilateral security assurances. China began to press for a freeze as an integral part of any agreement. Public and elite opinions in China and South Korea reacted favorably to North Korea's proposals, clearly influenced by Pyongyang's propaganda. These positive reactions inevitably have led others to question US positions, including the claim of a secret North Korean uranium-enrichment program.
North Korea has been able to exploit weaknesses in US strategy. The Bush administration's unwillingness to offer detailed, comprehensive settlement proposals has given Pyongyang an open playing field to advance its proposals into a dominant position in the talks. Other governments have nothing to respond to - other than Pyongyang's proposals. North Korea is not pressured to make a fundamental policy choice.
The US administration's reliance on China as a partner also has contributed to North Korea's successes. China has worked hard to organize the talks and has urged the United States to issue comprehensive settlement proposals. However, China has tilted toward North Korea on substantive issues. The question of what China wants as an outcome remains unanswered. Is it a complete termination of North Korea's nuclear program or an agreement with more limited obligations? Without a credible answer to this question, the US reliance on China has proved to be an unstable foundation.
Lack of US response strengthens North Korea
The absence of a US response to North Korea's propaganda strategy also has contributed significantly to Pyongyang's strengthened position. The Bush administration rejected North Korea's non-aggression pact and nuclear-freeze proposals but did not challenge their substance so as to bring into the open their negative features and hidden agenda. The administration's response to the non-aggression-pact proposal was to contend that the Senate would not ratify it. Its response to North Korea's denials of an HEU program was that North Korea admitted to it in October 2002.
This creates at best the perception of a "he said she said" dispute. The administration hopes that the alleged confession of Pakistan's Abdul Qadeer Khan will contain the growing skepticism. However, North Korea already charges that Khan's confession was coerced, and the administration offers no evidence of its own of North Korea's alleged HEU program.
North Korea's strengthened position in the six-party talks puts two related outcomes within reach of Pyongyang - continued talks with pressure on the US to accept a nuclear freeze or the eventual collapse of the talks altogether.
One outcome would be an agenda in future meetings that emphasizes pressure from the other governments on the United States to accept an agreement for a limited nuclear freeze - that would be designated as a "first phase" but in reality would stand alone, with other phases to be determined through an undefined diplomatic process. The Bush administration likely would reject such pressure, but the result probably would be an erosion and eventual end of the six-party talks. Public opinion likely would blame the US for the collapse or would perceive "moral equivalency" between the US and North Korea.
This second outcome - collapse of the talks - would free North Korea from the threat of international sanctions, assure continued economic support from China and South Korea, and give North Korea more options in advancing its nuclear and missile programs - including an open demonstration of nuclear capabilities with reduced risk of punitive measures from neighboring states. If growing North Korean confidence transformed itself into overconfidence, North Korea might be tempted to proliferate WMD in high-risk ways.
The big question in the Wednesday meeting is whether the Bush administration can regain a dominant position for the US over the negotiating agenda or whether North Korea will make further progress toward these outcomes.

Larry Niksch (lniksch@crs.loc.gov) is a specialist in Asian Affairs at the US Congressional Research Service. The opinions expressed are his own. This article is used by permission of Pacific Forum CSIS.)

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Six-party talks, Round 2: In search of a US policy
By Alan D Romberg
(Used by permission of Pacific Forum CSIS)
See also:Guess who's in the driver's seat? Not the US
On the eve of the second round of six-party talks on North Korea's nuclear weapons program, reports indicate the the United States will "barely sweeten" the position it took at the first round last August. and it will repeat its mantra: "no rewards for bad behavior" - but it won't do much more.
Senior foreign-policy advisers to President George W Bush reportedly have decided to reject Pyongyang's offer of a freeze on plutonium-related facilities as "woefully inadequate". They point to North Korea's refusal so far to acknowledge, much less commit to eliminate, an alternative highly enriched uranium (HEU) program to produce fissile material.
If accurate, this demonstrates once again that the Bush administration lacks a serious policy for moving the North Korean nuclear issue from its current sorry - and increasingly dangerous - state toward resolution. The administration seems unable to get past the rhetoric of "complete, verifiable, and irreversible dismantlement" of North Korea's nuclear-weapons program so as to develop a workable strategy to achieve that important goal. Rather, as one official recently put it, the objective of the coming talks is simply to tread water, keeping North Korea at the table. "The motto is ' Do no harm,'" he said.
South Korea's ambassador to the United States has taken a more sensible - and potentially productive - approach. He has observed that "the second round of talks can make progress even if North Korea does not admit the existence of a highly enriched uranium program, as long as the North does not bar discussion of that issue". In other words, rather than forcing confession or denial, the next round should leave the door open to progress through negotiation - while the Bush administration seems to view real negotiation without a prior confession by the Democratic People's Republic of Korea (DPRK) and the role of "diplomacy", therefore, as one official put it, merely as "a placeholder to get us through the [November US presidential] election".
The "father" of Pakistan's nuclear program, Abdul Qadeer Khan, has reportedly confessed to providing elements of a uranium-enrichment program to North Korea. After presenting this evidence to others in the negotiations, it is perfectly reasonable for the United States to confront North Korea with that same information - and insist that inconsistencies between North Korea's denials and Khan's information be cleared up.
US policy simplistic, lacks understanding
But while it may be a good debating point to argue that Pyongyang should simply follow Libya's example (which - in Bush's own words - came only after nine months of intense negotiation) and unilaterally announce a policy reversal, reliance on that line demonstrates once again the lack of any deep understanding of North Korea or a seriousness of purpose about actually resolving the problem.
US officials will reportedly be explicit in their demands of Pyongyang, but far less concrete about what North Korea can expect in return. Why? In part because some believe the DPRK is under unbearable economic stress from sanctions and on the verge of collapse and will have to capitulate. They also argue for US vagueness because even if the uranium-enrichment program is acknowledged, there is disagreement within the US government about what to offer Pyongyang, in what order, on what timetable.
Beyond insistence on "not rewarding bad behavior", some officials argue, for example, that it is not sensible to grant the DPRK's request for security assurances - which takes but a moment - in exchange merely for a commitment to dismantle the nuclear program - by necessity a long-term process. Others note, however, that Pyongyang can argue that once it dismantles its program, it cannot quickly - if ever - reconstitute it, whereas a security assurance can be withdrawn in an instant, so offering such an assurance would cost the US little and yet be a useful inducement.
While Washington dithers, North Korea is proceeding with its nuclear-weapons program at a pace probably slower than Pyongyang claims but perhaps faster than Washington perceives. Recent visitors to the DPRK saw evidence that, at the least, spent fuel previously in safe storage is no longer there - fuel judged sufficient for five or six nuclear weapons. Moreover, the status of the HEU program is totally unknown.
The question is not whether the US is right to seek the total abolition of North Korea's nuclear program, including both its plutonium- and uranium-based components. Obviously it is. The issue is whether Washington has a coherent policy realistically designed to achieve that goal. So far the evidence is not encouraging.

Alan D Romberg is senior associate and director of the East Asia Program at the Henry L Stimson Center in Washington, DC. He can be reached at aromberg@earthlink.net. This article is used by permission of Pacific Forum CSIS.
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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.

http://www.pyongyangsquare.com/

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


>> kcna...
KCNA Blasts U.S. Smear Campaign against DPRK
Pyongyang, February 21 (KCNA) -- The United States is persistently spreading a false rumor about the "transfer of nuclear technology" to the DPRK by a Pakistani scientist in a bid to make the story about Pyongyang's "enriched uranium program" sound plausible. The February 12 issue of the New York Times again carried misinformation that a Pakistani nuclear expert visited the DPRK more than 10 times at the end of the 1990s to help it in the technology of developing nuclear weapons based on enriched uranium. The story about the "enriched uranium program" much touted by the U.S. is nothing but a whopping lie. The US ultra- neo-conservatives fabricated it after having a confab for more than 10 days in the wake of U.S. presidential envoy Kelly's Pyongyang visit in October 2002.
The story is nothing but a poor burlesque orchestrated against this backdrop.
What matters is why the U.S. styling itself "the world's only superpower" has worked so desperately for years to paint the non-existent and unverifiable "enriched uranium program" as truth.
Lurking behind it is an ulterior intention to make the international community believe it, scour the interior of the DPRK on the basis of legitimate mandate in a bid to disarm it just as the U.S. did in Iraq and justify its brigandish demand that Pyongyang scrap its nuclear program first at the upcoming six-way talks.
It is a trite method of the Bush administration to fabricate false information and violate the sovereignty of independent states under that pretext. The U.S. can not exist without plot-breeding and conspiracy. It is clearly proved by the Iraqi war.
It is by no means fortuitous that foreign news reports quoted the parties concerned as saying they have never transferred nuclear technology to the DPRK. According to the British Financial Times, the Pakistani president officially stated that Pakistan purchased missiles, not nuclear technology from the DPRK.
The DPRK's self-reliant nuclear power industry and its nuclear deterrent force for self-defense were indigenously developed and perfected by scientists and technicians of the DPRK.
The DPRK was compelled to change the purpose of its nuclear power industry based on graphite-moderated reactors and possess a nuclear deterrent force for self-defence with a firm determination because the U.S. nuclear threat increased as the days went by and the outbreak of a dangerous war of aggression became imminent.
The U.S. smear campaign once again forced the army and the people of the DPRK to keenly realize what a just measure it took to build a nuclear deterrent force for self-defence by its own efforts.

>> KCNA 5026...
U.S. Moves to Ignite War of Aggression against DPRK Denounced
Pyongyang, February 14 (KCNA) -- The United States worked out the "new operation plan 5026", which indicates that it is making the start of a war of aggression against the DPRK an established fact and frantically pushing forward its preparations, says Rodong Sinmun today in a signed commentary. The plan is a very dangerous war scenario to realize the bellicose Bush forces' reckless strategy to stifle the DPRK and their brigandish attempt to mount a preemptive nuclear attack as it means a perfect version of their earlier plans for a war against the DPRK, the commentary notes, and goes on: What should not be overlooked is that the U.S. military has already examined the possibility of putting the plan into practice.
The new war scenario suggests that the outcries of the U.S. imperialists that north Korea is the next target after Iraq are not a mere threat but a preliminary declaration of war against the DPRK.
The reality clearly shows what a reckless and dangerous phase the U.S. moves for a war of aggression against the DPRK have reached.
The DPRK has so far made every sincere effort to peacefully settle the nuclear issue between the DPRK and the U.S. However, the U.S. imperialists are hatching a plot to start a war of aggression behind the curtain of a "peaceful solution" to the nuclear issue between the DPRK and the U.S., a challenge to the DPRK.
The developments confirm once again that warning is not enough for those lunatics shaking their fists.
The U.S. imperialists must stop acting rashly and drop their reckless plan for aggression against the DPRK at once, properly understanding the determination of the army and people of the DPRK to repel any aggression and defend peace on the Korean peninsula and the security of the nation, pursuant to the invincible Songun policy.
All the Koreans should more valiantly wage the anti-U.S. patriotic sacred struggle to achieve national independence, peace and reunification through national cooperation.
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And in Iran, the winner is ... Rafsanjani
By Safa Haeri

PARIS - As expected, given their pre-poll maneuvers to tilt the playing field their way, conservatives dominated the seventh legislative elections in Iran, putting an end to four years of endless, futile disputes more on semantics than the real problems at the heart of the majority of Iran's 70 million people, like jobs and security, that the victors now promise to address promptly.

According to the latest figures released by the Interior Ministry, a little over half of the country's 46 million eligible voters went to the polls on Friday, the lowest level in all elections held in the past 25 years, and candidates considered loyal to the Islamic rulers took at least 149 places in the 290-seat majlis, or parliament, which had been controlled by pro-reform lawmakers since their landslide win four years ago.

In that four years, reformist parliamentary bills were consistently blocked by the Guardians Council (GC), the conservative 12-man watchdog that supervises both legislation and elections. In the run-up to the election, the GC disqualified some 2,500 candidates, mostly reformists, including all the top vote-winners from the 2000 election.

A key result in the polling gives the Coalition of Builders of Islamic Iran, a new grouping comprising lesser-known politicians, scholars, civil servants and Revolutionary Guard officers close to former president Ayatollah Ali Akbar Hashemi Rafsanjani all the 30 seats of the majlis allocated to the capital Tehran, the reformists' traditional bastion. Current majlis Speaker Mehdi Karroubi, a reformer closely aligned with President Mohammad Khatami, trailed in 31st place. The Speaker had broken ranks with other reformists by taking part in the ballots. Top of the 30 is Haddad Adel, a scholar and husband of the daughter of Supreme Leader Ayatollah Ali Khamenei.

Rafsanjani, who as the chairman of the powerful Assembly for Discerning the Interests of the State (ADIS, or the Expediency Council) sits between a Supreme Leader who has been harmed by the election wrangling and a president who has lost virtually all his popularity and charisma, is considered the real winner of the electoral crisis.

According to most Iranian political analysts, the next majlis will be controlled by "moderate, non-political" candidates "united" under the umbrella of the pragmatic Rafsanjani, who before the elections had predicted that the new parliament would be "more docile and balanced" than the outgoing one that was controlled overwhelmingly by the noisy but ultimately impotent reformists.

In sharp contrast to both Khamenei and Khatami, former president Rafsanjani (1989-97) has expressed regret that the "tragic events before the elections" had created a "sour atmosphere" in bringing the people to "turn their backs" (to the elections), blaming indirectly the GC for the situation. The new parliament is now likely to be a struggle between the more pragmatic conservatives and the more hardline ones, with Rafsanjani playing the role of chief mediator.

Offering an olive branch to the badly lamed president Khatami, Adel, who is head of the minority in the outgoing majlis - and who if confirmed as Tehran's No 1 candidate might become the majlis' first-ever non-turbaned Speaker - said that if Khatami came "back into line" and worked for the betterment of needy people, he would certainly be helped by the next parliament. This should appease those who predict a "difficult" period for Khatami in his relations with a majlis controlled by conservatives in the last months of his presidency. This position is up for re-election in the middle of next year.

Khatami, though, has sided with the Supreme Leader every time the regime has been challenged by people in the streets, as in the student uprisings of July 1999 and 2003. He also had a good working relationship with a legislative controlled by hardliners in the period between his first election to the presidency in 1997 until the parliamentary elections of 2000, when the reformists swept the majority of the majlis' 290 seats

"The best message the voters sent was that there will no longer be a majority or a minority [in the next parliament], but representatives at the service of the people, dedicated to solving their problems," said Ahmad Tavakkoli, a conservative candidate who secured second place in Tehran.

Commented Mohammad Mohsen Sazegara, a former "Islamist revolutionary" now struggling for a "radical change" of the theocracy into a secular democracy based on the power of parliament: "The conservatives blamed their reformist rivals for the situation [political unrest], but in fact the population had made up its mind much before, realizing that under the present political system, there is no way to bring any major or real reform. When Khatami was elected to the presidency thanks to a massive vote from the younger generation, Iranians were happy with the limited reforms he promised. But the system is such that neither he, nor the majlis he controlled, were able to advance one single item of their reforms. As a result, what people are asking now is no more reforms in the constitution, like limiting the powers of the Guardians Council or giving the president some of his constitutional responsibilities, but fundamental structural changes," Sazegara said.

Meanwhile, the conservatives will have to deliver where the reformists failed, especially in the economic arena. Their pre-election slogans all stressed the need to put factional struggles aside to get the nation back to work, especially the thousands of young people pouring onto the job market. This will entail large investment, especially form abroad. For this reason if no other, Iran and its politics cannot remain isolated from the outside world.

Shaky international support
"It's plain for everybody to see that these were from the start flawed elections in which in at least half the constituencies, reformist candidates were not on offer to the electorate," said British Foreign Secretary Jack Straw, a close contact between Iran and the United States, as he arrived for a meeting of European Union foreign ministers in Brussels earlier in the week.

A draft statement by the ministers called the election a "setback for democracy" in the Islamic republic and in Washington, the State Department's senior spokesman, Richard Boucher, said: "It was not an electoral process that met international standards and I think you've seen other members of the international community say that."

"The death of illusions in Iran also means the death of the European policy of 'constructive dialogue' first proposed by the Germans in the 1980s and now most actively pursued by the British. That policy was based on the assumption that the regime can reform itself, peacefully and speedily. It is now clear that it cannot," wrote veteran Iranian journalist Amir Taheri in the Saudi Arabian English-language newspaper Arab News. "They [EU] can decide to, holding their noses, continue dealing with the Iranian regime because they need its cooperation on a number of issues, notably nuclear non-proliferation, Iraq and Afghanistan. Or they can orchestrate a set of new diplomatic, economic and even military pressures on the regime as a means of encouraging the emergence of a genuinely democratic internal opposition."

The administration of US President George W Bush, for its part, needs to develop a coherent analysis of the Iranian situation. It must decide whether or not Iran is, in the words of the State Department's No 2 Richard Armitage, a "sort of democracy" or a "despotic regime", Taheri added.

Therein lies the dilemma for the West. Although the EU is likely to continue its so-called "critical dialogue" that was coined by Germany, Iran's main trade partner and political supporter, analysts warn that in the event that the "monopolists" really try to set the clocks back, especially on the social scene, the EU will move closer to the United States in taking a tougher attitude toward Tehran, mostly on the sensitive and controversial issue of Iran's nuclear programs. The conservatives struck a deal with Britain, France and Germany last November to open Iran's nuclear facilities to inspection, much to the concern of the US, which wanted tough sanctions on the suspected rogue nuclear nation.

(Copyright 2004 Asia Times Online Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)
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NEWS ANALYSIS
Two bombings in three weeks:
Will the Jerusalem fence help?
By Leslie Susser
JERUSALEM, Feb. 23 (JTA) -- The burnt-out hulk of an Israeli bus destroyed by a Palestinian suicide bomber had just arrived at The Hague on Sunday when a second bus blew up at a busy intersection in Jerusalem.
The first bus -- the remains of a Palestinian bomber?s work in Jerusalem on Jan. 29 -- was meant to protest this week?s International Court of Justice hearings on the legality of the security barrier Israel is building to stop the bombers.
The images of the two mangled buses made Israel?s case against terrorism better than words ever could.
But they also raised serious issues for Israel.
The two bombings, which killed 19 Israelis and injured more than 100, occurred in densely populated residential sections of the city within three weeks of each other.
Their proximity raised two key questions: How effective is Israel?s barrier likely to be against would-be Palestinian bombers? And if it is effective everywhere else, will Jerusalem -- with its patchwork of Arab and Jewish neighborhoods -- become the soft underbelly of the system and the main target of Palestinian terrorism?
The barrier, for most of its planned 450 mile-route, is a sophisticated network of wire mesh fences built with electronic sensors, patrol roads, ditches, cameras and watchtowers. In some short spans, the barrier is a concrete wall.
In both bombing cases, the attackers came from the Bethlehem area.
According to Israel?s Shin Bet security services, the bombers infiltrated Jerusalem though gaps in the fence south of the city. Work on the fence there has been held up for weeks in Israeli courts.
Had that southern portion of the barrier been complete, Israeli advocates of the fence system say, the bombings probably would have been prevented. Indeed, they say, the fact that the bombings occurred is a strong argument for speedy completion of the barrier separating Israelis from Palestinians -- in Jerusalem and everywhere else.
The problem with that argument is that the fence in Jerusalem is unlike the fence anywhere else.
Between Israel proper and the West Bank, the fence separates Israelis from Palestinians and serves as a security barrier between would-be suicide bombers and their targets in Israel, even if it does not offer protection for Jewish settlers on the Palestinian side of the fence.
In Jerusalem, however, the fence runs along the city?s outer perimeter, separating it from the West Bank but leaving on the Israeli side most of the city?s 200,000 Palestinians. There is no barrier between them and the city?s buses. They could provide a huge fount of Arab terror against Israel.
Danny Seidemann, an U.S.-born lawyer who has studied the Jerusalem fence and knows virtually every inch of its convoluted route, is convinced that that is precisely what will happen.
Seidemann argues that besides leaving nearly 200,000 Palestinians in the capital city, the fence cuts arbitrarily through Palestinian suburbs, cuts off Palestinians from their natural hinterland in the West Bank and cuts off others from Jerusalem itself.
Given the mixture of Jewish and Arab neighborhoods, he maintains that a rational division of Jews and Arabs simply is not possible.
"In Jerusalem," Seidemann told JTA, "Israelis should defend themselves against terror by other, more sophisticated means."
Seidemann contends that the fence in Jerusalem is counterproductive. He argues that the main reason Jerusalem Arabs have not taken any significant part in terrorist activities until now is because of their relatively high standard of living.
Per capita income for Jerusalem Arabs, Seidemann says, is about $3,500 per year, more than four times as much as in the rest of the West Bank. Until now, Jerusalem Arabs have been unwilling to risk their standard of living by provoking Israeli reprisals and defensive measures that could strangle economic life, Seidemann says.
But the fence threatens to put an end to all that.
Cut off from the West Bank, prices in Arab neighborhoods of eastern Jerusalem will rise and standards of living will decrease.
The humanitarian and economic problems created by the fence, Seidemann argues, will increase terror, not reduce it.
Moreover, Palestinians in Jerusalem who decide to turn to terrorism will not be impeded by a barrier, since the fence runs mainly outside the city, not inside it.
Jerusalem could become the prime focus of the terrorists because of its symbolic resonance in both Israeli and Palestinian narratives, and because of the relative ease with which its targets can be reached. That would create a new security problem for Israel?s armed forces and its police, possibly entailing a stronger presence in the eastern part of the city.
Already, there have been 25 suicide bombings in Jerusalem during the three years of intifada, nearly all by bombers from outside the city. These attacks have claimed more than 180 lives, nearly 20 percent of all Israeli casualties of the intifada.
Jerusalem Arabs joining the ranks of the terrorists could have horrific consequences for both sides, Seidemann says.
Blowing up the second bus in Jerusalem seemed to play into Israel?s hands in the public-relations campaign against the proceedings at The Hague, which Israel officially is boycotting on the grounds that the court lacks jurisdiction in the matter.
On the day the proceedings began this week, Israel?s daily Yediot Achronot led its front-page preview of the court?s hearings with a letter to the 15-judge panel from a woman who was turned into a widow by Sunday?s bombing.
"You are sitting in judgment," wrote Fanny Haim, "and I am burying my husband."
Though the Palestinian Authority condemned the latest bombing, Palestinian spokesmen seemed more concerned about the bad timing of the attack than the bombing itself.
A branch of the Al-Aksa Brigade affiliated with P.A. President Yasser Arafat?s Fatah organization claimed responsibility for the attack. Some Israeli analysts saw this as evidence of chaos on the Palestinian side, since the bombing does not seem to serve the Palestinian Authority?s interests.
Meanwhile, P.A. leaders reportedly have sent messages to terrorist commanders urging them to exercise restraint for the time being.
But whether controlled from above or the result of grass-roots efforts, the attacks against Israeli civilians show few signs of abating soon.
And if the judges at The Hague rule against Israel?s fence -- ignoring the terrorism that prompted its construction -- their ruling could encourage terrorists further.
The bottom line is that whatever happens at The Hague, Israel will go on building its security fence. In Jerusalem, however, that may not be enough.
Leslie Susser is the diplomatic correspondent for the Jerusalem Report.


? JTA. Reproduction of material without written permission is strictly prohibited.
------------------------------------------------------------------------

Les menaces terroristes prennent de l'ampleur
Ben Laden menace George W. Bush
Oussama Ben Laden choisit le jour m?me o? les forces pakistanaises, appuy?es par un commando am?ricain, l'unit? 121 - celui-l? m?me qui a arr?t? Saddam Hussein - lancent une vaste op?ration pr?s de la ville de Wana (300 km au sud-ouest d'Islamabad) contre les talibans et une cinquantaine des membres de son r?seau Al Qa?da, o? ces derniers auraient ?t? localis?s, pour menacer George W. Bush de nouvelles attaques et sommer Jacques Chirac de revenir sur la loi fran?aise sur le voile. Dans un enregistrement diffus? hier par la cha?ne de t?l?vision Al Djazira, Ayman Al Zaouahari, l'Egyptien, invite le pr?sident am?ricain ? renforcer la s?curit? des Etats-Unis en pr?vision de nouveaux attentats.
? Bush, renforce tes d?fenses et tes mesures de s?curit? parce que la nation musulmane qui t'a envoy? les l?gions de New York et de Washington est d?termin?e ? t'envoyer l?gion sur l?gion, r?solues ? mourir et ? atteindre le paradis ?, d?clare le bras droit du terroriste le plus recherch? au monde, accusant le pr?sident am?ricain de ? raconter ? des mensonges ? ses concitoyens.
? Les all?gations de George Bush selon lesquelles ses soldats ont arr?t? les deux tiers des membres d'Al Qa?da sont enti?rement fausses ?, dit- il. Le pr?sident am?ricain avait estim? dans un entretien, le 8 f?vrier ? la cha?ne de t?l?vision am?ricaine NBC, que les Etats-Unis faisaient ? un tr?s bon travail ? pour ? d?manteler Al Qa?da ?, dont ? les deux tiers des chefs ont ?t? captur?s ou tu?s ?. Al Zaouahari a ?galement r?fut? ? trois autres all?gations de Bush ?. La premi?re : ? ses forces r?pandent la paix et la libert? dans le monde ?. La deuxi?me : ? L'Irak a acc?d? ? la libert? gr?ce aux forces de la coalition ?. La troisi?me : ? La situation en Afghanistan est stable ?. ? Tes forces ne r?pandent pas la paix et la libert?, mais la peur et la d?solation et placent les gouvernants corrompus ?, ajoute-t-il. ? L'Irak ne jouit pas de la libert? et de la s?curit?, mais est pass? de la tyrannie d'un dictateur la?c et ennemi de l'islam () ? celle d'un occupant crois? hostile ?
l'islam, qui tue, torture et vole ce qu'il veut tout en pr?tendant que les forces am?ricaines cherchent des armes de destruction massive illusoires ?, poursuit-il avant d'interpeller Bush sur l'Afghanistan. ? D'o? menons-nous des attaques contre vos forces et vos agents ? D'o? vous envoyons-nous nos messages qui vous d?fient et d?voilent vos mensonges et vos all?gations ? ? lui demande-t-il. Dans un autre document audio diffus? sur la cha?ne Al Arabia, Al Zaouahri fustige la loi fran?aise sur l'interdiction des signes religieux ostensibles ? l'?cole et dans des lieux publics. Le lieutenant de Ben Laden prend le relais des protestations des pays arabes et musulmans, d?clench?es juste apr?s l'adoption de ce texte en premi?re lecture par l'Assembl?e fran?aise le 10 f?vrier dernier, par les islamistes qui l'ont qualifi? d'? islamophobe ?. Il assimile la loi fran?aise ? ? de nouvelles croisades des pays de l'Ouest contre les musulmans ?. Pour lui, ? la d?cision du pr?sident fran?ais de faire voter une loi pour emp?cher les filles musulmanes de recouvrir leur t?te dans les ?coles est un autre exemple de la jalousie des crois?s que nourrissent les Occidentaux ? l'?gard des musulmans ?. ? M?me s'ils se vantent de libert?s, de d?mocratie et de droits de l'homme ?, ajoute-t-il. Pour Al Qa?da, ? l'interdiction du voile en France s'inscrit dans le m?me cadre que l'incendie des villages en Afghanistan, la destruction des maisons sur les t?tes de leurs occupants en Palestine, le massacre des enfants et le vol du p?trole en Irak ?. En d?cidant de ? reprendre ? son b?ton de chef terroriste Ben Laden chercherait-il ? desserrer l'?tau qui se resserre autour de lui et de ses membres ? Probablement. Trois informations au moins le confirment. La premi?re : le communiqu? d'un
? centre d'information taliban ? selon lequel les chefs de l'organisation Al Qa?da, Ben Laden et Al Zaouahiri, sont ? en vie ? et se trouvent ? en Afghanistan occup?s ? planifier des op?rations antiam?ricaines ?. La deuxi?me, les informations des services am?ricains rapportant que des commandos terroristes libanais, membres de ? Ossbat al Anssar ?, une organisation dont le si?ge se trouve au Liban et qui est inf?od? ? Ben Laden, envisagent de frapper les int?r?ts am?ricains et juifs dans plusieurs pays arabes, dont le Maroc. Selon Rabat, ? les autorit?s marocaines ont re?u des informations pr?cises de la part des services secrets concernant l'intention de certains terroristes () d'A?n
El Helweh de frapper les int?r?ts am?ricains et juifs au Maroc et en Tunisie ?. La troisi?me : la mise en uvre par le d?partement d'Etat du ? Plan Sahel Initiative ?, annonc? en octobre 2002. D?sormais, les forces sp?ciales de Mauritanie, du Mali, du Niger et du Tchad seront form?es par les Am?ricains. Ben Laden, qu'un Am?ricain sur cinq se dit pr?t ? payer pour voir en direct sa mise ? mort, r?ussira-t-il avec un coup de pouce des services iraniens de l'exportation de la r?volution islamique ? allumer plusieurs feux ? la fois dans le monde arabe et musulman ?
Djamel Boukrine

Djamel Boukrine
24-02-2004
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Le num?ro deux d'Al-Qaida s'en prend ? la France sur la question du voile islamique
LEMONDE.FR | 24.02.04 | 20h31
Av?r?e ou pas, la d?claration attribu?e mardi au num?ro deux d'Al-Qaida, Ayman Al-Zawahiri, tente de faire d'un dossier int?rieur controvers? en France une nouvelle cause de djihad, selon des experts.
Deux semaines apr?s l'adoption de sa loi contre le port de signes religieux ? l'?cole, la France s'est retrouv?e, mardi 24 f?vrier, au c?ur des diatribes d'Al-Qaida. Dans un document sonore diffus? mardi par la t?l?vision satellitaire Al-Arabiya, Ayman Al-Zawahiri, consid?r? comme le bras droit d'Oussama Ben Laden, accuse Paris de participer ? la "croisade" des Occidentaux contre l'islam en interdisant aux jeunes musulmanes de porter leur voile en classe.

La grande majorit? des messages attribu?s ? Al-Qaida se concentraient jusqu'alors sur les pays ayant particip? ?, ou soutenu l'op?ration am?ricaine en Irak, ? laquelle Jacques Chirac s'est fermement oppos? l'hiver dernier. "La France est le pays de la libert? qui d?fend la libert? d'exposer son corps, d'?tre immoral et d?prav?", peut-on entendre sur l'enregistrement, dont la voix et le style sont facilement identifiables.

"En France, on est libre de s'exhiber, mais pas de se v?tir avec modestie (...). Il s'agit l? d'un nouveau signe de la croisade haineuse que les Occidentaux m?nent contre les musulmans tout en se gargarisant de libert?, de d?mocratie et de droits de l'homme", d?plore l'auteur de la diatribe. Si l'authenticit? de la cassette n'a pas pu ?tre ?tablie dans l'imm?diat, la voix ressemble ? celle des pr?c?dents messages d?livr?s par Ayman Al-Zawahiri. Chef de file du mouvement ?gyptien des Fr?res musulmans, il aurait trouv? refuge, de m?me qu'Oussama Ben Laden, dans les "zones tribales" entre l'Afghanistan et le Pakistan.

Aux yeux de l'organisation terroriste, la loi fran?aise interdisant les signes religieux "ostensibles" dans l'enceinte des ?coles ne serait qu'une illustration suppl?mentaire du foss? se creusant entre l'islam et l'Occident.

Les d?put?s fran?ais ont adopt? le projet de loi le 10 f?vrier et le S?nat doit examiner le texte les 2 et 3 mars. Pour le gouvernement fran?ais, qui doit composer avec les plus grandes communaut?s juive et musulmane d'Europe, il s'agit de pr?server l'?cole de tout pros?lytisme religieux. Pour nombre de pays musulmans, la loi vise en fait seulement l'islam et ses prescriptions.

"Il fallait s'attendre ? un retour de b?ton politique", estime Jonathan Stevenson, sp?cialiste de l'antiterrorisme au International Institute for Strategic Studies de Londres. "Al-Qaida a tout le loisir d'interpr?ter (la loi) comme la suppression d'une libert? religieuse. Il est certain que (cette cassette) peut remotiver les terroristes potentiels en France", ajoute-t-il.

CAUSE DE DJIHAD

Av?r?e ou pas, la d?claration attribu?e au num?ro deux d'Al-Qaida tente de faire d'un dossier int?rieur controvers? une nouvelle cause de djihad, selon des experts. S'il ne prononce pas le mot "djihad", celui qui est consid?r? comme le penseur d'Al-Qaida souligne que "l'interdiction du voile en France s'inscrit dans le m?me cadre que l'incendie des villages en Afghanistan, la destruction des maisons sur les t?tes de leurs occupants en Palestine, le massacre des enfants et le vol du p?trole en Irak".

Officiellement, la France refuse de commenter cette d?claration. Au sein des services de renseignement, on estime que le document "replace les Fran?ais dans le camp des crois?s", alors que la France, qui n'a pas particip? ? la guerre en Irak, avait pu sembler m?nag?e lors des derni?res d?clarations attribu?es ? Al-Qaida.

A l'attention exclusive de la France, cette d?claration porte sur le front panislamiste une affaire int?rieure, incitant ? l'action ou la l?gitimant ? l'avance, selon des experts. "C'est en tout cas une incitation ? une action terroriste. Al-Zawahiri, v?ritable cerveau d'Al-Qaida, consid?re que la loi est un moyen de faire des relations publiques vis-?-vis des communaut?s musulmanes en France et en Europe car il a vu que cela int?ressait beaucoup", estime Antoine Sfeir, directeur de la revue Les Cahiers de l'Orient.

L'?laboration du texte sur le port de signes religieux ostensibles ? l'?cole, dont le voile islamique, a suscit? de tr?s vifs d?bats en France. Plusieurs milliers de manifestants ont d?fil? ? plusieurs reprises en France mais aussi ? l'?tranger contre "l'islamophobie" et le projet de loi.

"En proposant cette loi, on a pris ? bras le corps le probl?me de l'id?ologie sectaire dans une soci?t? d?mocratique, ce qui conduit ? un ph?nom?ne de radicalisation. La d?claration d'Ayman Al-Zawahiri est coh?rente : il fallait bien qu'? un moment donn? on aille ? la confrontation", estime Fran?ois G?r?, directeur de l'institut Diplomatie et d?fense.

"Il y a ? travers le voile une volont? d'internationaliser les contradictions et oppositions entre un certain islam et l'Occident : c'est une fa?on d'enfoncer un coin au sein des communaut?s musulmanes des pays occidentaux", poursuit M. G?r? qui parle aussi d'un "appel ? l'action".

La notion de djihad contient l'id?e que l'islam est attaqu? et qu'il faut d?s lors le d?fendre, rappelle un sp?cialiste de la lutte antiterroriste. "Cette loi peut ?tre comprise par des militants islamistes radicaux comme une nouvelle attaque. On peut se demander si la d?claration de Zawahiri n'est pas une justification a priori d'?ventuelles actions".

L'Union des organisations islamiques de France (UOIF), mouvement proche des Fr?res musulmans, tr?s oppos? ? la loi, a qualifi? cette d?claration "d'irresponsable". "L'UOIF refuse cat?goriquement l'internationalisation de la question du foulard et sa r?cup?ration politique ou politico-religieuse", a d?clar? son pr?sident, Lhaj Thami Breze.

Le pr?sident du Conseil fran?ais du culte musulman (CFCM), Dalil Boubakeur, parle lui de "provocation" ? laquelle "il ne faut pas r?pondre".

MENACES CONTRE LES AM?RICAINS

Quelques heures apr?s la violente diatribe contre la France, la cha?ne Al-Jazira a diffus? un autre enregistrement attribu? ? Ayman Al-Zawahiri dans lequel il conseille aux Etats-Unis de renforcer leur s?curit? en pr?vision de nouveaux attentats. "Al-Qaida m?ne toujours le djihad et brandit la banni?re de l'islam face ? la campagne sioniste-crois?e", d?clare l'auteur de ce message.

"Bush, renforce tes mesures de s?curit? (...), la nation islamique, qui vous a envoy? les brigades de New York et de Washington (r?f?rence aux attentats du 11 septembre 2001), a pris la ferme d?cision de vous envoyer des brigades successives semant la mort et aspirant au paradis", ajoute, ? l'attention du pr?sident am?ricain, la voix du message.

L'enregistrement semble r?pondre ? M. Bush, qui avait estim? d?but f?vrier sur une cha?ne am?ricaine que Washington faisait "un tr?s bon travail" pour "d?manteler Al-Qaida", ajoutant que "les deux tiers" de ses chefs avaient "?t? captur?s ou tu?s".

La voix r?fute ?galement "trois autres all?gations de Bush" selon lesquelles, "ses forces r?pandent la paix et la libert? dans le monde, que l'Irak a acc?d? ? la libert? gr?ce aux forces de la coalition et que la situation en Afghanistan est stable". "Tes forces ne r?pandent pas la paix et la libert?, mais la peur et la d?solation", ajoute la voix, "l'Irak ne jouit pas de la libert? et de la s?curit?, mais est pass? de la tyrannie d'un dictateur la?que et ennemi de l'islam (...), ? celle d'un occupant crois? hostile ? l'islam, qui tue, torture et vole ce qu'il veut".

"Quant ? la situation en Afghanistan, elle ne s'est pas stabilis?e (...). Autrement, d'o? menons-nous des attaques contre vos forces et vos agents ? d'o? vous envoyons-nous nos messages qui (...) d?voilent vos mensonges et vos all?gations ?" demande la voix.

Pour deux activistes islamistes, ce message et ces menaces sont ? prendre au s?rieux. "La menace de nouvelles attaques aux Etats-Unis, qui co?ncide avec des informations de presse sur l'encerclement d'Oussama Ben Laden, est ? prendre au s?rieux", affirme Omar Bakri, le chef du mouvement islamiste Al-Mouhadjiroun, mouvement salafiste bas? ? Londres.

"Jusqu'? pr?sent, Al-Qaida a mis ? ex?cution ses menaces, m?me si la plupart des op?rations men?es depuis le 11 septembre, en Turquie, en Arabie saoudite, en Irak et ailleurs ?taient l'?uvre de groupes locaux qui s'inspirent d'Al-Qaida et partagent son id?ologie", dit-il.

"M?me si Ben Laden ou Zawahiri sont captur?s ou tu?s, d'autres op?rations d'envergure sont attendues", ajoute M. Bakri dont le mouvement pr?ne la cr?ation d'Etats musulmans partout dans le monde, y compris au Royaume-Uni.

Avec AFP et Reuters
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El Baradei unterst?tzt Libyens Wunsch nach ziviler Atomnutzu
24.02.2004 08:58
Tripolis (dpa) - Der Generaldirektor der Internationalen Atomenergieorganisation, Mohammed el Baradei, unterst?tzt den Wunsch Libyens nach ziviler Atomforschung.
Das sei legitim, sagte er nach einem Treffen mit Au?enminister Abderrahman Schalkam in der Hauptstadt Tripolis. Zugleich lobte Baradei die ?hervorragende Zusammenarbeit? mit der Regierung. Libyen hatte im Dezember den Stopp aller Programme zur Entwicklung von Massenvernichtungswaffen angek?ndigt.
----------------------------------------------------------

SPIEGEL ONLINE - 24. Februar 2004, 17:28
URL: http://www.spiegel.de/politik/ausland/0,1518,287831,00.html
9/11-Untersuchung

CIA in Erkl?rungsnot

Von Matthias Gebauer

Die US-Kommission, die Fehler im Vorfeld des 11. Septembers aufkl?ren soll, recherchiert derzeit in Deutschland. Von dort wurden Informationen ?ber die Todes-Piloten bereits 1999 in die USA gekabelt, blieben aber unbeachtet. Auch der missgl?ckte Anwerbeversuch bei Freunden von Atta und Co. wird die CIA in Erkl?rungsnot bringen.



AP
US-Pr?sident Bush mit CIA-Chef Tenet: Anwerbeversuche auf deutschem Boden
Berlin - Die Schlagzeile der "New York Times" vom Dienstag klingt viel versprechend. "CIA bekam Daten ?ber Todes-Piloten weit vor dem 11. September", titelt das angesehene Blatt. Weiter schreibt die Zeitung unter Berufung auf ihre Quellen, die US-Beh?rden h?tten von den deutschen Geheimdiensten bereits 1999 konkrete Informationen ?ber den 9/11-Entf?hrer Marwan al-Schehhi bekommen, der das zweite Flugzeug in das World Trade Center steuerte und vorher lange mit den anderen Terroristen in Hamburg wohnte. Konkret seien der Vorname des sp?teren Todes-Piloten und dessen in den Vereinigten Arabischen Emiraten registrierte Telefonnummer aus Hamburg zur CIA gekabelt worden.
Laut dem Bericht sind die angeblich neuen Erkenntnisse bei den Recherchen der unabh?ngigen Untersuchungskommission ?ber m?gliche Fehler im Vorfeld des 11. Septembers aufgetaucht. Besonders heikel sei, dass die US-Beh?rden die Daten offenbar ignoriert hatten und al-Schehhi sp?ter zur Flugausbildung in die USA einreisen konnte. "Die Vereinigten Staaten scheinen bei der aggressiven Verfolgung dieses Hinweises versagt zu haben", folgern die beiden Washington-Korrespondenten. Laut Aussagen anonymer Offizieller h?tten die US-Beh?rden zwar angenommen, al-Schehhi sei ein "Vertrauter Osama Bin Ladens", ihn jedoch nie gesucht oder weiter recherchiert.

"Bruder Haydar" und sein "Djihad-Reiseb?ro"



SPIEGEL ONLINE
Anwerbebogen von Marwan al-Schehhi: "Komm bald nach Hamburg"
Deutsche Experten reagierten mit Kopfsch?tteln auf die angeblich neuen Erkenntnisse. Innenminister Otto Schily, derzeit in den USA auf Dienstreise, nutzte am Dienstag ein Reporter-Briefing, um einem der beiden "Times"-Autoren seine Sicht der Dinge darzustellen. "Ihr Artikel ist ein bisschen irref?hrend", sagte Schily. Kurz darauf betonte der Minister, zum Zeitpunkt der Informationsweitergabe sei den deutschen Beh?rden die Relevanz der Daten nicht bewusst gewesen. Der Austausch solcher Erkenntnisse sei "reine Routine".
Hierzulande ist die Informations-Weitergabe in die USA seit langem bekannt. So hatten die deutschen Verfassungssch?tzer im Jahr 1999 den Deutsch-Syrer Mohammed Zammar im Visier, der als Rekrutierer der Qaida in Deutschland galt. Tag und Nacht hingen sie an seinem Telefon, um mehr ?ber "Bruder Haydar" und sein "Djihad-Reiseb?ro" herauszufinden. Damals vermuteten die Fahnder, dass Zammar kampfwillige Muslime nach Afghanistan schleuste und sie dort in den Trainings-Camps der Qaida zu Gotteskriegern ausbilden lie?.

Es war am 31. Januar 1999, als die deutschen Beh?rden bei ihren ?berwachungen das erste Mal den Namen "Marwan" h?rten. Der Mann mit der jungenhaften Stimme rief mit einem in den Vereinigten Arabischen Emiraten registrierten Funktelefon bei Zammar an und erkundigte sich nach dessen Wohlbefinden. Zammar beriet dem Anrufer in einigen Studienfragen und bat ihn, schon bald von seinem damaligen Studienort Bonn nach Hamburg zu kommen. Der Anrufer versicherte, dies im Mai 1999 zu tun und legte mit besten W?nschen auf.

Per Kabelbericht direkt nach Langley

Die deutschen Ermittler hatten die potentielle Wichtigkeit des Anrufs durchaus registriert. Obwohl sie bei ihren eigenen Recherchen nicht viel weiter kamen, kabelten sie ihre Erkenntnisse umgehend an die CIA und baten um Sch?tzenhilfe. Bis nach dem 11. September aber h?ren sie nie wieder etwas. Erst Tage nach den Terror-Attacken in den USA kam die von den Ermittlern fast liebevoll genannte "Operation Zartheit" wieder auf den Tisch und interessierte nun auch die US-Fahnder. Still haben wohl auch sie sich eingestanden, dass sie den Tipp aus Hamburg nicht ernst genug genommen haben. Die gleiche Erkenntnis plagt seit den Terror-Attacken auch so manchen deutschen Fahnder.



AP
Verd?chtiger Zammar: Pauschal-Reisen zum Terror-Training
So bitter die sp?te Erkenntnis f?r deutsche und US-Ermittler auch ist, so nah waren sie den sp?teren Todes-Piloten zu diesem Zeitpunkt. Der beobachtete Zammar stand bis zuletzt mit allen Hamburger Terroristen in engem Kontakt. Der bei der ?berwachung aufgefallene Marwan al-Schehhi zog schon kurz nach dem Telefonat an die Elbe, wohnte gemeinsam mit den anderen in der ber?chtigten Terror-WG in der Marienstra?e 54, wo die Endphase der 9/11-Planung lief. Mit einer weiteren ?berwachung, so die d?stere Einsicht der Ermittler heute, h?tte man den 9/11-Plot vielleicht sogar verhindern k?nnen.
Was wusste die CIA ?ber die Hamburger Verd?chtigen?

Selbst wenn die deutsche Beteiligung an der Ermittlungs-Schlappe nicht neu ist, k?nnte die Untersuchung die Pannen in den USA endlich aufkl?ren. Die US-Fahnder m?ssen sich fragen lassen, warum der deutsche Hinweis nicht bearbeitet, "Marwan" nicht identifiziert wurde. Auch warum die CIA die deutschen Daten nicht an das FBI oder die Einreisebeh?rde weiter reichte, d?rfte von Interesse sein. So h?tte die Einreise von al-Schehhi verhindert, vielleicht sogar alle Mitglieder der "Hamburger Zelle" ermitteln werden k?nnen.

Auch der Blick ins Zeitungs-Archiv k?nnte f?r die Kommission hilfreich sein. Interessant, dass sowohl Zammar als auch der ebenfalls verd?chtige Hamburger Gesch?ftsmann Mamoun Darkazanli von der CIA im Jahr 1999 angesprochen wurden. Der CIA-Resident Thomas Volz versuchte damals mehrmals, Darkazanli als Spitzel anzuwerben, da er offenbar als Statthalter f?r einen anderen Verd?chtigen aus den USA agierte. Volz wollte den Verd?chtigen als CIA-Informanten gewinnen, der Einblick in die Strukturen der Qaida geben sollte. Wie bei Zammar aber blitzte er auch bei Darkazanli ab.

"Rambo aus einem Spionage-Thriller"



AFP
CIA-Chef Tenet: Unangenehme Fragen
Ganz offenbar also besa?en die US-Beh?rden konkrete Hinweise ?ber das Umfeld der "Hamburger Zelle". Bisher aber blieb stets unklar - auch f?r die deutschen Ermittler - warum diese nicht weiter recherchiert wurden. Damals, so berichten deutsche Verfassungssch?tzer, sei die Zusammenarbeit mit dem US-Residenten schlecht gewesen. Die Deutschen hielten den CIA-Mann f?r einen "Rambo aus einem Spionage-Thriller", w?hrend der US-Geheimdienstler die Deutschen nicht ganz ernst nahm. Gleichwohl bleibt f?r die Kommission die Frage, was der CIA damals bekannt war und warum den Spuren nicht gefolgt wurde.
Die Aktionen der Kommission gehen jetzt genau in diese Richtung. Vergangene Woche waren mehrere Mitglieder zu einem Geheim-Besuch in Deutschland. Bei mehreren Terminen mit Beh?rden und Beobachtern der Terror-Ermittlungen informierten sie sich ?ber die deutsche Sicht der Dinge. Die Beteiligten der beiden deutschen Terror-Verfahren wurden in die US-Botschaft zu einem Plausch eingeladen. Immer wieder fragten die Kommissions-Mitglieder nach den Vorl?ufen der 9/11-Ermittlung in Deutschland. Die Aktionen der landeseigenen CIA auf deutschem Boden k?nnte ihnen reichlich Stoff f?r unangenehme Fragen liefern.

? SPIEGEL ONLINE 2004
Alle Rechte vorbehalten
Vervielf?ltigung nur mit Genehmigung der SPIEGELnet GmbH

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AL-QAIDA-H?FTLINGE

Erste Guantanamo-Insassen angeklagt

Ibrahim Ahmed Mahmoud al Qosi und Ali Hamza Ahmed Sulayman al Bahlul sind die ersten beiden Terrorverd?chtigen von Guantanamo Bay, gegen die das neue US Milit?rtribunal Anklage erstattet. Beide sollen Vertraute Osama Bin Ladens sein.

Washington - Die USA haben die ersten Terrorgefangenen im US-Lager Guant?namo Bay auf Kuba angeklagt. Sie sollen sich wegen Verschw?rung zu Kriegsverbrechen vor einem Milit?rtribunal verantworten, wie das Pentagon mitteilte. Danach handelt es sich um einen Mann aus dem Jemen und einen Sudanesen, die beide im Verdacht stehen, enge Verbindung zum al-Qaida-Terroristenf?hrer Osama Bin Laden gehabt zu haben.
Die M?nner geh?ren zu rund 650 Gefangenen, die zum Teil schon seit ?ber zwei Jahren auf dem US-St?tzpunkt festgehalten werden, ohne dass ihnen bisher der Prozess gemacht wurde oder ihnen Zugang zu einem Anwalt gew?hrt wurde. Bisher sind neben den beiden Angeklagten nur vier weitere Gefangene f?r sp?tere Milit?rverfahren ausgew?hlt worden. Das Vorgehen der USA hat wiederholt Proteste von Menschenrechtsorganisationen und ausl?ndischen Regierungen ausgel?st.

In einer Pentagon-Erkl?rung hie? es, Ali Hamza Ahmed Sulayman al Bahlul aus dem Jemen werde verd?chtigt, als "f?hrender al Qaida-Propagandist" Videos produziert zu haben, in denen die Ermordung von Amerikanern verherrlicht worden sei. Ziel des fr?heren Leibw?chters Bin Ladens sei es gewesen, Mitglieder der Terrororganisation zu rekrutieren und zu Anschl?gen gegen die USA und andere L?nder anzuspornen.

Ibrahim Ahmed Mahmud al Kosi aus dem Sudan stehe im Verdacht, Finanzgesch?fte der al Qaida abgewickelt und Waffen geschmuggelt zu haben. Nach US-Erkenntnissen sei er seit langem mit Bin Laden verbunden. Beide Angeklagten h?tten sich freiwillig einem kriminellen Unternehmen angeschlossen, dessen Ziel die Ermordung von Menschen und insgesamt Terrorismus sei.

Posted by maximpost at 8:10 PM EST
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>>

How sovereignty will be returned to a shattered nation
By James Drummond
Published: February 24 2004 4:00 | Last Updated: February 24 2004 4:00
When is the coalition due to return sovereignty to Iraq? June 30, under an agreement reached on November 15 between the coalition and the US-appointed Iraq Governing Council. None of the parties wants that date postponed, though almost everything else about the transition remains uncertain.
When does the plan have to be finalised? The November 15 agreement is supposed to be final, and envisages a "fundamental law" to be signed by February 28. This would set a timetable for writing a permanent constitution and sketch elements such as a bill of rights, federal arrangements and guarantees of judicial independence. Once agreed, the law is supposed not to be tampered with.
Will this deadline be met? Maybe. But some serious negotiating still needs to be done on the constitutional process and issues such as federalism, where Iraq's Kurdish minority has particularly strong feelings.
What sort of government will be handed over to? The November 15 agreement envisaged a transitional national assembly, to be chosen by a series of regional caucuses made up of appointed members. Iraq's Shia clerics have been demanding full general elections by June 30. Both options have now been ruled out, on advice from the United Nations, which says elections cannot be held before the end of this year or early next.
So what happens next? The UN has deliberately not made recommendations on how to choose a transitional government, throwing the issue back to the coalition and Governing Council. Whatever they decide, Grand Ayatollah Ali Sistani, Iraq's most senior Shia cleric, holds an effective veto.
What are the options? One would be to hand sovereignty to the Governing Council, which had been due to disappear on June 30, and/or to expand its 25-strong membership to include more interest groups. A quota system, reflecting Iraq's religious and ethnic groupings, would stay. If the council is expanded, a three- or four-person leadership council might be instituted. Another option is to hold elections in the north and south of Iraq, which have been relatively calm.
What will happen to the Coalition Provisional Authority after June 30? It will be dissolved. Paul Bremer, its chief, said last week it would transform itself into "the world's largest embassy . . . [with] thousands of American government officials from all of our major departments".
And coalition troops? The November 15 plan envisages that they will stay under agreements due to be negotiated between the CPA and the Governing Council by the end of March.
Any doubts over the legitimacy of the transitional government could, however, open this process to question.
James Drummond
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1075982764522

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Bush aide urges overhaul of Fannie and Freddie
By Stephen Schurr in New York
Published: February 23 2004 22:05 | Last Updated: February 23 2004 22:05
A senior Bush administration adviser is urging a sweeping overhaul of Fannie Mae and other government-backed home mortgage entities.
Writing in Tuesday's Financial Times, Greg Mankiw, chairman of president George W. Bush's council of economic advisers, warns of the systemic financial risks posed by the fast-growing federal-backed entities and calls for the creation of "a world-class regulator".
His comments come as Alan Greenspan, chairman of the Federal Reserve, testifies on Tuesday at Senate banking committee hearings on regulating Fannie Mae, Freddie Mac and the Federal Home Loan Bank System. Mr Greenspan has argued for reform of the three government-sponsored entities (GSEs). But legislation may prove difficult, given the time constraints and political sensitivities of reform in a presidential election year.
Foreign ownership of GSE and other federal agency securities totals $234bn, according to government data. Overseas investors regard the GSEs' investment worthiness on a par with US Treasuries, because of their perceived implicit backing of the federal government. But, in his article, Mr Mankiw says this impression is "inaccurate".
He calls for a regulator with broad authority over the GSEs, including the ability to set risk-based and minimum-capital standards. The regulator should also "re-evaluate" the privileges granted to the GSEs as publicly traded companies operating under federal charter. These include exemption from state and local incomes taxes and from certain disclosure requirements with the Securities and Exchange Commission.
Citing a Federal Reserve study, Mr Mankiw notes that "the interest rate on the debt of Fannie and Freddie averaged 40 basis points below that on comparable securities", yet most of the subsidy goes to executive compensation and shareholder profits. While the subsidy raises issues of fairness, it more importantly "creates a source of systemic risk for our financial system".
Some observers say the Fed study may hint at Mr Greenspan's views. Burt Ely, an independent consultant, said Mr Greenspan wanted the Fed to "be a player in the new oversight". At the least, this would include having a Fed official sit on the board of any new regulator.
Critics of Fannie Mae and Freddie Mac have long argued that the GSEs' current regulator, the Office of Federal Housing Enterprise Oversight (Ofheo), lacks the clout and funding to do its job properly. The reform movement gained momentum last year when Freddie Mac was forced to revise upward its 2000-2003 earnings by $5bn and pay a $125m fine following accounting irregularities. Ofheo has commissioned a probe into Fannie Mae's accounting.
Among the questions hanging over regulatory overhaul are whether one regulator would oversee all three GSEs; whether the regulator controls minimum capital requirements; and whether it should have the power to put a GSE into receivership.
According to a spokesman, Fannie Mae's chief executive will testify on Wednesday that "Fannie is in favour of an independent well-funded regulator".
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1075982752818&p=1012571727088
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Day of rage turns to apathy and recrimination
By Sa'id Ghazali in Ramallah and Eric Silver in Jerusalem
24 February 2004
It was meant to be a day of rage, but the Palestinians' frustration was turned as much on their own leaders as on the Israelis and their intrusive wall. In Ramallah, the town where Yasser Arafat has his headquarters, yesterday's protest exposed deep divisions over the failure of the Palestinian Authority to galvanize the 2.2 million West Bank Palestinians whose lives the barrier has disrupted.
"I want you to make your voice heard to the International Court of Justice and the entire world," Mr Arafat said in a televised speech. But shopkeepers ignored calls for a one-hour strike and kept their shops open. Many pupils released from school to take part in the rallies went home instead. The roar of vehicles and the hustle and bustle of the market were louder than the sirens sounded for the occasion.
"People are asking themselves why the authority has waited so long to protest," said Ahmed Ibrahim, 31, who runs a restaurant near al Manara Square, where the demonstrators gathered. "It is too late." Ibrahim Khalayleh, a 19-year-old student, complained: "This rally cannot destroy the wall. We should have started fighting it when Israel laid down the first stone."
A human rights activist, who asked not to be named, said: "There is mistrust between the people and the PA. How can people believe that the PA will lead the protests, while at the same time there are rumors that some officials have been selling cement used for the wall's construction?"
Fatema Ilian, a village woman in a traditional embroidered red dress, lost 2.5 hectares when the wall was built on her land. She came to take part in what she believed would be a massive demonstration. Only a few hundred turned out for the march, with a few hundred more watching from the sidelines. "I feel frustrated now," she said. "I want to go home. Nobody is helping us." Somebody put on a recording of "Where are the Millions?" a popular Arabic song by the Lebanese singer Julia Botros.
As if to pre-empt criticism, Sakher Habash, a loyal member of the Fatah central committee, took the microphone with him when he finished his speech. Undeterred, Mohammed Mokbel, a dissident Palestinian legislator, brought his own microphone. "We cannot cover the sun with our sieve," he bellowed. "Marches and demonstrations are not enough. Go and destroy the wall with your stones, and your bombs."
Elsewhere on the West Bank, Israeli troops fired tear gas in a clash with anti-wall demonstrators near Tulkarm. Stone-throwing Palestinians injured six border policemen at Abu Dis, the home of Ahmed Qureia, the Palestinian Prime Minister, east of Jerusalem.
Israeli counter-demonstrations were coloured by Sunday's Jerusalem suicide bombing. The charred and buckled No. 14 bus, in which Mohammed Zeoul killed himself and eight Israelis, was parked beside the 26-foot Abu Dis wall.
Fanny Haim, the widow of one of Sunday's victims, wrote in an open letter to the International Court in The Hague: "Today you are judging, and I am burying my husband. Don't judge my country, don't bar it from preventing further victims."
23 February 2004 23:21

? 2004 Independent Digital (UK) Ltd
----------------------------------------------------------------------

>> THE SOUTH AFRICAN QUESTION CONTINUED...
Oil links with Saddam's regime may have funded ANC campaign
By Basildon Peta, Southern Africa Correspondent
24 February 2004
South Africa's main opposition party called for an inquiry yesterday into allegations that the ruling African National Congress may have used kickbacks from Saddam Hussein's regime to fund its current election campaign.
Two of the ANC's most powerful officials - the secretary-general Kgalame Motlanthe and the party's treasurer-general Mendi Msimang - have close links to a Johannesburg businessman on a "black list" published by an Iraqi paper.
The newspaper, al-Mada, last month published a list of 270 companies and businessmen accused of buying millions of barrels of Iraqi oil at a lower rate than the market price, via the UN's oil-for-food programme.
The South African Sunday Times reported that the two ANC officials flew to Iraq with the businessman Sandi Majali, ostensibly to strike an oil deal, just weeks before the businessman was awarded a multi million-pound South African government oil tender in December 2001.
Mr Majali's company, Imvume, paid for a #10,000 dinner hosted by the ANC for the Iraqi deputy prime minister Tariq Aziz in July 2002 when he visited South Africa as a special guest of the Deputy President Jacob Zuma. Mr Msimang told the newspaper that Mr Majali has also made contributions to the ANC.
But Mr Msimang and Mr Motlanthe have denied that they helped facilitate any oil deals, although they admitted visiting Iraq with the businessman.
Raenette Taljaard, a spokeswoman for the Democratic Alliance, said the ruling ANC party needed to set the record straight on the "possible benefits flowing to the ANC from the former Baathist regime in Iraq in a global oil-for-diplomatic-patronage scandal".
Mr Majali was not available for comment last night.
? 2004 Independent Digital (UK) Ltd
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The Collapse of New Russia
By Boris Kagarlitsky
Russia is entering a period of man-made disasters. Aging Soviet-era machinery, infrastructure and buildings that went up mostly in the 1960s and early 1970s are now so worn out that they probably won't last more than a few more years. The fire at Ostankino television tower in 2000 was just a sign of things to come.
Experts close to the government dismissed such gloomy forecasts as unfounded, insisting that economic growth and the market will take care of the problem on their own.
But no one expected that the buildings thrown up in recent years would begin to crumble even before the country's vintage Soviet infrastructure finally gives out. Transvaal Park, which collapsed in southern Moscow over the weekend, was hardly the only new building with fatal flaws, but it struck a nerve. Not just because so many people were killed and injured, but also because the water park had been touted as a symbol of the "successful" new Russia.
City Hall proudly announced the opening of the "largest water park in Europe" when it opened in time for City Day back in 2002. The project was entirely financed by Russian investors -- built without city funds, the park was hailed as a triumph of private enterprise. Mayor Yury Luzhkov attended the grand opening, and the city awarded Transvaal an award for "best realized project" of 2002 in the category of sports, health and leisure facilities. Scenes of smiling middle-class families splashing and sliding soon began to flood the airwaves and the pages of glossy magazines.
Too late we learned about the seamy reality behind the idyll. After Saturday's tragedy, builders and architects associated with the project began trading accusations of shoddy work. The water park wasn't even a financial success.
In November 2003, the owners, despairing of ever bringing in the sort of profit they had banked on initially, sold Transvaal Park to a group reportedly linked to Luzhkov's wife, Yelena Baturina, and her company Inteko. The new management vowed to turn the venture around "by cutting maintenance costs."
Inteko denies any connection to the water park, and Luzhkov has carefully skirted the maintenance issue in discussing the possible causes of the collapse. The press doesn't put much stock in Baturina's denials. But the real problem is bigger than individual businessmen, and bigger even than corruption in city government.
Among the victims of Saturday's disaster was the myth of the self-sufficiency of the market. The gaudy new buildings in Luzhkov's Moscow, a product of the building boom and the sky-rocketing value of real estate, are not so much evidence of Moscow's prosperity as a danger to the environment. By impeding the flow of ground water, they are gradually washing the city away. Not to mention that they are poorly built.
The buildings and facilities left over from the Soviet era are for the most part monstrously ugly. Many have never been repaired or renovated, and have outlived their planned life span by as much 20 years. But by some miracle they're still standing. That's not something we'll be able to say about the new generation of monsters in 10 years' time.
The safety, ecology and appearance of Moscow have suffered from the unbridled pursuit of profit. Rather than restore historic buildings, developers prefer to tear them down.
Rather than invest in unprofitable infrastructure, they erect extravagant buildings that either fail to turn a profit or collapse.
This is the case not just in Moscow but across the country. We have no money to fix broken water pipes, and in 10 years we won't be able to support our pensioners, but millions of dollars are thrown away all the time to satisfy the greed and vanity of the super-rich.
The fact that Russia's profligacy and corporate irresponsibility are hardly unique offers cold comfort, though we do engage in both with characteristic brio.
When the concrete cracks and the "elite" skyscrapers tumble, the price of real estate will fall along with them. Then we will understand the real cost of the current real estate boom. On the ruins of the old world we will begin to build the new.
We can only hope that it will be an improvement.
Boris Kagarlitsky is director of the Institute of Globalization Studies.
? Copyright 2002, The Moscow Times. All Rights Reserved.


>> YOU DON'T SAY...

Strengthening America's Southern Flank Requires a Better Effort
by James Jay Carafano, Ph.D., and Stephen Johnson
Backgrounder #1727

February 20, 2004 | |

In the global war on terrorism, the United States is paying too little attention to its southern flank. People, goods, and services flowing within the Western Hemisphere--both legal and illicit--have become potential conduits for carrying terrorist money, agents, and weapons. Attacks on countries such as Colombia by narco-guerrillas and on the United States by Middle Eastern extremists have already had cascading affects, disrupting markets and economies. Moreover, many Latin American countries remain unable to confront terrorism and transnational criminality, constrained by scarce resources and, in some cases, lack of political will.

While these threats appear to be growing, the U.S. military component charged with protecting American interests in the region faces an uncertain future. Responsibilities for coordinating bilateral actions against emerging threats such as terrorism and international crime have fallen to agencies with little subject-matter expertise. Current U.S. laws block more effective support for training civilian law enforcement in democratically governed countries. And a Cold War-era treaty that narrowly addresses aggression by states outside the hemisphere encumbers more effective multilateral cooperation.

President George W. Bush's National Security Strategy acknowledges that the global war on terrorism cannot be won by the United States alone.1 America's neighbors cannot meet that challenge and still confront a host of other threats.

To better secure the United States and the hemisphere, the Bush Administration and Congress should review missions and responsibilities and reallocate efforts to develop a more cooperative partnership with hemispheric neighbors. Key elements of reform should be to:1

Revitalize the U.S. Southern Command to make it a more effective partner in promoting security in the Latin American region;
Shift management of security missions to agencies with the subject-matter expertise to deal with them;
Develop subregional partnerships to promote routine military-to-military, civilian agency-to-civilian agency cooperation that incorporates common standards and operating procedures;
Amend the Foreign Assistance Act of 1961 to allow more targeted and flexible support for civilian law enforcement in democratically governed countries; and
Promote revision of the 1947 Inter-American (Rio) Treaty of Reciprocal Assistance to address modern security needs.
What is at Stake
For the United States
In the wake of the Cold War, Latin America has been peripheral to U.S. national security concerns. Soviet support for armed insurgencies no longer exists, and with the exception of Cuba, almost all of the region's countries are at least electoral democracies as opposed to dictatorships. There are good reasons, however, why the U.S. should pay greater attention to threats from the South.

At least seven major terrorist organizations have an active presence in the region, including three with ties to transnational Islamic terrorist groups.2 In 2002, the Brazilian government arrested Hesham al-Tarabili, a suspected agent of al-Gama'a al-Islamiyya, who is believed to have been involved in the 1997 attack on tourists in Luxor, Egypt.3 Although Latin America has not been used to launch attacks directly at the United States, it serves as a support base for criminals, illegal armies, and terrorist groups.

According to Ambassador Cofer Black, U.S. Department of State Coordinator for Counterterrorism:

Terrorists in this hemisphere are becoming more active in illicit transnational activities, principally the drug trade, but also arms trafficking, money laundering, contraband smuggling, and document and currency fraud. Not only do these provide sources of income, but terrorists also take advantage of their well-established underground supply routes to move funds, people and arms across borders.4
Other security interests include the future peace and economic success of a region that comprises 800 million people. Mexico is America's second largest trading partner behind Canada. Although the rest of Latin America accounts for less than 6 percent of U.S. world trade, there is potential for much more. Nearly 30 percent of America's crude oil imports, more than the United States receives from the Persian Gulf, come from Latin America.5

Regrettably, however, an estimated 300 metric tons of illegal drugs also reach the United States through its southern border, contributing to about 20,000 deaths every year, not to mention an estimated $160 billion in related costs.6

For Latin America
The flowering of democracy and economic growth portended peace, stability, and broad-based prosperity. Yet gains over the past 20 years are in danger of unraveling into rising unemployment and the re-emergence of autocratic regimes.7

For one thing, regional troublemakers like Venezuelan President Hugo Chavez have reportedly been fanning flames of social unrest by encouraging indigenous activists in Bolivia and Ecuador to rise up against elected leaders. Chavez's own security forces have allegedly given safe haven and material support to Colombia's FARC guerrillas, and his government is supporting the Castro regime by selling oil to Cuba at concessionary prices on generous credit terms even though Cuba has been unable to pay most of the bill. In exchange, Fidel Castro has sent more than 10,000 doctors, teachers, and intelligence specialists to Venezuela and advises Chavez on domestic and foreign policy.8

While free trade agreements have provided opportunities for growth, lagging economic reforms have blocked the rise of living standards in such countries as Argentina, Bolivia, Ecuador, Guatemala, Haiti, Venezuela, and even, to some degree, in Mexico.9 Nearly half of the region's inhabitants live in poverty. To help support them, relatives living in the United States send back about $32 billion in remittances each year, but that does not compensate for the absence of a broad middle class--or its destruction, as happened in Argentina following its 2000 financial collapse. Large populations living on the margin are an inadequate tax-base to support public institutions.

As a result, poorly supported security forces such as those in Bolivia and Ecuador are unable to project state authority throughout national territory, leaving vast rural areas at the mercy of criminals, subversives, and terrorists. In some countries, security forces involved in civil wars in the 1980s have been reduced in strength and reorganized to separate the police from the military in order to follow the U.S. model; but new civilian law enforcement was not established in time to counter the spread of gangs, as well as narcotics and arms traffickers, particularly in El Salvador and Honduras.

Scant disaster preparedness and health infrastructure is another problem. A virulent, biological attack on the United States might easily work its way south, with potentially devastating consequences on countries with limited health facilities.10 Drug trafficking that once was focused on the lucrative North American market is shifting south where narcotics use is now greater than in the United States. Arms smuggling and human trafficking are increasing as well. The U.S.-Mexico border is the focal point for firearms trafficking into Mexico and the smuggling of persons into the United States.

Post-September 11 measures taken by the United States have affected Latin America as well. U.S. demands for added security at overseas ports and screening of agricultural products have drawn complaints that Washington is foisting its own cost of self-protection onto governments that can ill afford the expense. Latin American leaders say the United States is making it difficult for developing countries to compete in the global economy by "pushing out" its borders with new security restrictions.

Washington's Eroded Security Strategy
Military Command Quandary
Since 1941, what be-came the U.S. Southern Co-mmand (SOUTHCOM) has overseen and coordinated U.S. military operations in the Caribbean and south of Mexico to the Straits of Magellan. Formerly headquartered in Panama along with two Air Force bases and extensive army and navy facilities, it moved to Miami, Florida, with the handoff of the Panama Canal to Panama in 1999. By then, the U.S. Department of Defense (DOD) had turned over the bases and other military property to Panama, and the U.S. Army South (USARSO) and other components had relocated to various sites in the United States and the Caribbean. Panamanian leaders wanted the United States to pay in order to stay. Senior U.S. policymakers decided that retaining assets like Howard Air Force base, useful for launching counterdrug surveillance flights, was not worth it.

Through the 1980s, SOUTHCOM not only collaborated with DOD security assistance agencies, but also funded and coordinated military exercises, personnel exchanges, deployment of training teams, and guided military actions on the ground. Since the early 1990s, when security assistance took on a counternarcotics character, civilian agencies like the Department of State and the U.S. Drug Enforcement Agency assumed some of SOUTHCOM's responsibilities. Thus, since moving to a suburban office park in Miami, it has played less of a direct role in security assistance and more of a supporting one.

Now the Pentagon is contemplating abolishing SOUTHCOM and making the entire Western Hemisphere the responsibility of a new unified command.11 After the September 11 attacks on the United States, the DOD created the Northern Command (NORTHCOM) under the unified command plan (UCP), which prescribes the geographic boundaries and functions of the combatant commands charged with conducting U.S. military operations worldwide.12 NORTHCOM is mostly a coordinating structure with no resources or command elements for conducting exercises, foreign liaison, international intelligence gathering, or collaborating in security assistance to foreign nations. For now, SOUTHCOM's demise would remove what focus there is for regional engagement on security matters.

Confused Lines of Authority
Over the past decades, judicious military engagement led by SOUTHCOM has assisted in building military capacity, but now the command lacks adequate resources to continue that function as well as prosecute the global war on terrorism. Meanwhile, the effectiveness of the interagency process, the means by which federal agencies determine how to work together, is declining. The Department of State's International Narcotics and Law Enforcement Affairs Bureau (INL) has assumed greater authority over police and military assistance programs, creating an overly complicated multi-agency assistance chain that blocks the timely delivery of support and training.

Today, counternarcotics and counterterrorism are the major security concerns in the region, and the Department of State--with a sluggish internal financial system and without the support resources, training, doctrine, standardized procedures, and evaluation mechanisms characteristic of the U.S. military--is the lead agency. Assisting either directly or through contractors is a proliferating array of government entities, including the U.S. Coast Guard, the Central Intelligence Agency, and the Bureau of Alcohol, Tobacco, and Firearms among others. Throughout the Andean region, contractors substituting for U.S. military and police personnel have lost crews and aircraft in accidents that could have been prevented through more unified supervision and by prioritizing safety and mission success over expediency.13

While federal and local law enforcement and military agencies have been learning to cooperate on countering terrorism in the United States since September 11, U.S. diplomats and military representatives in Latin America are still encouraging the region's new democracies to sever once-close ties between their armed forces and police. Such changes may have resulted in better civilian oversight and improved respect for human rights, but the spread of stateless criminal organizations has taxed their capabilities before new forces, procedures, and lines of communication have had time to gel. Meanwhile, the U.S. Department of Justice (DOJ), which used to cooperate with the State Department and U.S. Agency for International Development on justice system reform and law enforcement training--critical elements in curbing terrorism in Latin America--has refocused its foreign programs on Eastern Europe.

Tutorial Relations.
Military-to-military relations still manifest an assistance-focused mindset--what Jay Cope, fellow at the Institute for National Strategic Studies, calls a "deep belief that the United states must tutor, supply, and in many ways aid, or manipulate the region's institutions."14 This approach is a holdover from the Cold War, and even earlier, when Latin American armies were largely unprofessional and served to enforce loyalty to dictators and powerful political groups. A combination of assistance and pressure to abandon politics leveraged existing local efforts into transforming most Latin American armies into more modern public institutions at the service of elected leaders.

Nonetheless, the Pentagon still keeps Latin American militaries at arm's length, leading mostly to one-way exchanges based on equipment donations, training exercises, personnel exchanges, and ship visits. There is little U.S. consultation with the region's elected leaders over security matters unless it involves fighting drug trafficking--something in which the United States has been keenly interested. More comprehensive relationships between the U.S. and Latin American militaries are more the exception than the rule, depending on the U.S. ambassador in country and the U.S. Military Group commander.

U.S. development assistance is even less effective. Where used to construct infrastructure, it focuses on turnkey operations with little follow-up. U.S. aid has funded road-building in Latin America since the 1960s, but local governments often fail to maintain what has been built. This practice overlooked the region's military engineers and medical practitioners, who share a command structure that could do these jobs and respond to threats such as terrorism and natural disasters in ways that the private sector will not and fledgling civilian bureaucracies cannot. The United States could take advantage of this synergy more effectively through the strategic use of military road-building exercises such as Nuevos Horizontes, yet budgets for these programs have been declining.

Roadblocks to Productive Engagement
Section 660 of the Foreign Assistance Act of 1961 prohibits advising and training foreign police except as exempted by legislation--a policy based on the 1878 Posse Comitatus Act, which correctly sought to limit Army abuses against civilians during Reconstruction following the U.S. Civil War. Section 660 specifically addresses concerns over U.S. training given to foreign police that subsequently committed human rights abuses.

As sensible as Section 660 appeared when enacted, however, it now distorts U.S. security assistance programs. Three-quarters of SOUTHCOM's funding is earmarked for counternarcotics use--mostly a law enforcement function--which means that SOUTHCOM cannot easily use those funds. For instance, U.S. Army units may not directly provide human rights training to foreign police units without enabling legislation. Transfer of surplus equipment from military inventories and by military means is similarly restricted, while U.S. assistance to foreign police is limited by the fact that American law enforcement is largely community-based and has no foreign operations component.

Outdated Accord
The 1947 Inter-American Treaty of Reciprocal Assistance was meant to invoke a collective response against a threat from outside the hemisphere. That made sense when the Soviet Union was arming subversives to install communist governments in Latin America, but with the failure of such movements in the 1990s and the collapse of the Soviet Union, the threat of extra-hemispheric aggression receded.

Just prior to September 11, Mexican President Vicente Fox suggested simply scrapping the Rio Treaty. Today, an agreement to provide cooperative assistance to neighbors facing terrorism, transnational crime, or natural disasters seems more appropriate.

In the background, the Organization of American States has passed more than 90 resolutions on various aspects of security since 1995, from non-proliferation to clearing land mines; but without money to pay for specific measures and the political will to persuade voters at home to adopt them, such resolutions are little more than promises. A treaty requires local legislative approval and action, and thus could form the basis for common procedures and support mechanisms.

However, a NATO-like pact is unlikely in the near term. For one thing, there is the problem of asymmetry. For many Latin American leaders, the economically and militarily powerful United States seems like a gorilla in the sandbox. These leaders see U.S. attempts to forge an Inter-American security system as a precursor to violations of their sovereignty--a concept many Latin American countries are only now attempting to define.15 For another, some countries are attempting to define their mutual security relations, such as Argentina with Brazil and Venezuela with Cuba.

Furthermore, broad agreement on security is lacking. Some, like Mexico, define it as defending internal order.16 Others, like Argentina, view it as protecting borders. Some, like El Salvador, try to guard against a range of threats, from external aggression to natural disasters. Recently, representatives to the Organization of American States (OAS) made progress by agreeing on a declaration listing eight threats at the OAS's Special Conference on Security in Mexico City on October 27-28, 2003.17

Finally, multilateral bodies like the OAS-affiliated Inter-American Defense Board and the OAS Commission on Hemispheric Security serve mainly as forums, not action focal points. The OAS does not often coordinate with the military-dominated Defense Board, reflecting a lingering lack of trust between civilians and soldiers. Moreover, the OAS Permanent Council handles all urgent security issues.

Toward Shared Responsibility
The United States and its hemispheric neighbors bear mutual responsibility for strengthening security without creating impediments that might strangle legitimate trade and travel. One component of this challenge is to reduce internal threats to stability. Healthy political institutions and sound economies are key to defeating such threats; hence, the United States should encourage Latin America to go beyond elections to establish deeper democratic reforms and further open semi-market economies to remove sources of discontent and social conflict. To his credit, President Bush made that point at the Special Summit of the Americas on January 12-13 in Monterrey, Mexico.18

Successfully meeting the threats of terrorism, subversion, and transnational crime depends on developing a common capacity to assert control over national territory and strengthening justice systems to prosecute perpetrators. Because terrorist groups and transnational crime organizations have characteristics of both military organizations and domestic criminals, cooperation between military and civilian law enforcement agencies at the various levels is key--as U.S. policymakers are discovering in the development of U.S. homeland security capability.

However, working with other governments in this hemisphere to improve these capabilities depends on respecting their evolving democracies and trying to work within their constraints. This means both pursuing a more collaborative approach that puts sustained cooperation on an equal footing with training and developing a more organized framework to promote hemispheric
security.

To this end, the Bush Administration and Congress should:

Revitalize the U.S. Southern Command to make it a more effective partner in promoting hemispheric security. Northcom's primary focus is protecting the U.S. homeland and providing support to U.S. civil authorities. Eventually, that charge should be expanded to overseeing U.S. military relations with Canada and Mexico as partners in North American continental defense.
Closing down Southcom would throw U.S. military programs and goals in the region south of Mexico into disarray. Southcom could play a larger role in supporting U.S. military operations in Latin America by preparing to assume operational responsibility for military aspects of counternarcotics and counterterrorism missions. It must complement the U.S. Departments of Homeland Security and State in developing routine collaborative relations instead of relying on tutorial ties.

Congress should restore funding for engineering and medical training and assist host country armed forces in building infrastructure and health systems to fight natural disasters and guard against biological warfare. Further improvements should include:

Solidifying SOUTHCOM's role in the Caribbean. While authority over parts of the Caribbean region was recently shifted to NORTHCOM, allowing it to oversee maritime security along the southern border, SOUTHCOM continues to supervise security cooperation programs, humanitarian assistance, and migration issues with the Caribbean island nations by mutual agreement. This arrangement makes sense and should remain part of the UCP.
Enhancing SOUTHCOM's role in drug and arms interdiction. Commanded by SOUTHCOM, Joint Interagency Task Force (JIATF) South includes operational and intelligence assets from the Departments of Defense and Homeland Security and other federal agencies that detect, monitor, and interdict air and maritime smuggling activities. JIATF South is the ideal instrument for ensuring that there are no gaps between the drug interdiction efforts of NORTHCOM and SOUTHCOM in the Caribbean area. JIATF South's mission should also include counterterrorism responsibilities.
Providing SOUTHCOM with greater flexibility in employing its resources. Traditionally, the lion's share of funding has been for counternarcotics operations and cannot be used for other activities, including counterterrorism. SOUTHCOM should be given greater flexibility in applying its available resources so that it can address security concerns in a more holistic manner.
Develop a comprehensive security relationship and shift management of security missions to experts. While drug trafficking and now terrorism are the main U.S. security priorities in Latin America, they should not be the only dimension of U.S. security relations as was the case between America and Colombia during the Clinton Administration. Such intense focus ignores support elements vital to sustaining counternarcotics and counterterrorism missions. Accordingly, U.S. decision makers should seek comprehensive relations that liaison with all elements of military, police, and civilian law enforcement agencies, not just counternarcotics units.
Congress and the Administration should also review whether the routine management of operational assets (e.g., aircraft, troops, and trainers) deployed in Andean countries should be moved from the Department of State to military or civilian agencies that have applicable doctrine, training, and procedures for combat and law enforcement activities--while also maintaining State's role as a coordinating agency through its Bureau of International Narcotics and Law Enforcement Affairs. Even though contractors may continue to be useful in some temporary roles, security assistance to Andean nations should have added value in helping to build the local capacity of military and civilian law enforcement agencies to combat drug trafficking and terrorism. If support for counternarcotics and counterterrorism could be funded over a longer period to avoid frequent shutdowns, reliance on contractors might not be so necessary.

Improve intelligence collection. President Bush should direct America's intelligence agencies to cast a wider net. Although collection on Middle Eastern operatives in the border region between Argentina, Brazil, and Paraguay has increased, U.S. agencies failed to anticipate the April 11, 2001, uprising in Venezuela and have since been blind to changes occurring within President Chavez's inner circle and armed forces. Intelligence gathering on the Castro regime has yet to provide details concerning Cuba's reported coordination of leftist movements in Latin America or the support given by Colombian proxies to violent groups in Bolivia.19
Develop bilateral and subregional partnerships. Periodic training exercises and ship visits still serve a purpose, but the United States should move beyond them to promote routine military-to-military, civilian agency-to-civilian agency cooperation that will help develop common standards and operating procedures in security matters among willing states. U.S. embassy country teams should promote security assistance/cooperation in a more holistic way, encouraging cooperation among U.S. military representatives and civilian law enforcement attaches under the rubric of homeland security instead of counternarcotics. Perhaps approaching Latin American allies through less stove-piped channels will make them more likely to share and act on common goals in securing the hemisphere, such as eliminating disparities in border security, legal and financial regulatory regimes, and intelligence sharing.20
Amend Section 660 of the Foreign Assistance Act of 1961 to allow more targeted and flexible support for training and assisting the police of foreign democratic governments to ensure their inclusion in a broad range of programs from surplus equipment delivery to human rights seminars for civilian law enforcement in democratically governed countries. Current broad restrictions keep U.S. military units from providing any kind of training or assistance to foreign police units without enabling legislation, while American law enforcement, which is largely community-based, cannot deal effectively with foreign counterparts. Restrictions should be fine-tuned to permit U.S. military cooperation where useful.
Promote revision of the 1947 Rio Treaty to address modern security needs. Leader summits, defense ministerial conferences, and OAS resolutions have served to highlight security needs without requiring action to do anything about them. The Rio Treaty should be rewritten to provide a flexible framework for mutual cooperation beyond extra-hemispheric aggression to include protocols for mutual assistance on emerging threats such as terrorism, organized crime, drug and arms trafficking, and the smuggling of humans. Through its Permanent Representative and military mission to the Inter-American Defense Board, the Bush Administration can urge the OAS to take up this important work. Subsequently, those countries wishing to broaden cooperation can have their congresses ratify a new document.
Conclusion
The United States is closely tied to its hemispheric neighbors through geography, shared history, and trade. The security of the neighborhood in which America exists cannot be ignored. To defend the U.S. homeland and help hemispheric allies meet similar challenges, the United States needs a new strategy that treats nascent democracies differently from the dictatorships they once were, meets the new threats from within the region, and moves beyond current tutorial and assistance relations toward sustained collaboration.

SOUTHCOM plays an important role in securing the U.S. southern flank from a multitude of transnational threats. To address the dangers facing America in the 21st century, the command's organization and operation need to be revitalized and better integrated with other national activities. While the United States has spent 20 years encouraging the separation of military and police functions in Latin America, it should rethink how it will work with each country's unique security architecture.

U.S. policymakers must sort out and clarify America's approach to hemispheric threats while persuading multinational forums on regional security to develop a new basis for achieving that goal. Failure to move forward on such an agenda will give terrorists and criminals the upper hand.

James Jay Carafano, Ph.D., is Senior Research Fellow for National Security and Homeland Security, and Stephen Johnson is Senior Policy Analyst for Latin America, in the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation.
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1. The Administration's security strategy states: "While our focus is protecting America, we know that to defeat terrorism in today's globalized world we need support from our allies and friends. Wherever possible, the United States will rely on regional organizations and state powers to meet their obligations to fight terrorism. Where governments find the fight against terrorism beyond their capacities, we will match their willpower and their resources with whatever help we and our allies can provide." National Security Strategy of the United States of America, September 2002, at www.whitehouse.gov/nsc/nss.html.

2. The National Liberation Army (Colombia), Revolutionary Armed Forces of Colombia, and United Self-Defense Forces of Colombia, the Shining Path (Peru), HAMAS (transnational Middle East), Hezballah (transnational Middle East), and the Egyptian Islamic Group (Al-Gama'at al-Islamiyya, affiliated with Osama bin Laden). See U.S. Department of State, Patterns of Global Terrorism, 2002, pp. 65-74.

3. Ibid., p. 72.

4. Ambassador Cofer Black, "Remarks to the OAS Inter-American Committee Against Terrorism (CICTE)," 4th Regular Session, Montevideo, Uruguay, January 29, 2004.

5. U.S. Department of Energy, Petroleum Supply Monthly, December 2003.

6. U.S. Department of State, Bureau for International Narcotics and Law Enforcement Affairs, International Narcotics Control and Strategy Report, 2002, March 2003, at www.state.gov/g/inl/rls/nrcrpt/2002/html (January 23, 2004), and Office of National Drug Control Policy, "Drug Data Summary," fact sheet, March 2003, p. 2.

7. For an interesting analysis, see Cresencio Arcos and Caesar Sereseres, "Managing or Shaping U.S.-Latin American Relations," Colleagues for the Americas Seminar Series, Institute for National Strategic Studies, National Defense University, Washington, D.C., March 28, 2003, at www.ndu.edu/inss/Repository/INSS_Proceedings/Colleagues_of_the_
Americas/CA_Apr03/CA_Report_Apr03.html (February 12, 2004).

8. Alexei Barrionuevo and Jose de Cordoba, "For Aging Castro, Chavez Emerges As a Vital Crutch," The Wall Street Journal,
February 2, 2004, p. 1.

9. Despite 10 years of economic expansion under the North American Free Trade Agreement, living standards and job growth have failed to increase without attendant reforms to curb corruption, open state monopolies to private investment, and establish the rule of law. See Stephen Johnson and Sara J. Fitzgerald, "The United States and Mexico: Partners in Reform," Heritage Foundation Backgrounder No. 1715, December 18, 2003, at www.heritage.org/Research/LatinAmerica/BG1715.cfm .

10. Even without the application of bioweapons, pathogens could present more significant problems as the potential for diseases to spread rapidly is increasing. A number of factors are driving this trend, including the growth in global trade helping to spread diseases, growing resistance to antibiotics and other antimicrobial drugs, demographic changes, population growth and migration, and deteriorating public health infrastructure worldwide. See Executive Office of the President, Office of Science and Technology, National Science and Technology Council, Global Microbial Threats in the 1990s, September 13, 2000, p. 2, at www.ostp.gov/CISET/html/3.html. See also George Fidas, remarks before the International Disease Surveillance and Global Security Conference, Stanford University, Stanford, California, May 11-12, 2001, p. 8, and David F. Gordon et al., The Global Infectious Disease Threat and Its Implications for the United States (Washington, D.C.: National Intelligence Council, 2000), passim.

11. James Jay Carafano, "Shaping the Future of Northern Command," Center for Strategic and Budgetary Assessments Backgrounder, April 29, 2003, p. 3, at www.csbaonline.org/4Publications/Archive/B.20030429.NORTHCOM/B.20030429.
NORTHCOM.pdf.

12. W. Spencer Johnson, "New Challenges for the Unified Command Plan," Joint Force Quarterly, Summer 2002, p. 63.

13. Two single-engine Cessna aircraft operated by U.S. contractors gathering intelligence were lost in rugged territory in Colombia under guerrilla control on February 14 and March 25, 2003. Neither plane was suitable for combat operations in mountains. See Scott Wilson, "Three Americans Are Killed in Plane Crash in Colombia," The Washington Post, March 27, 2003, p. A18. On April 20, 2001, a Peruvian Air Force A-37 fighter, guided by a CIA-contracted surveillance aircraft, mistakenly shot down a light plane carrying a U.S. missionary and family members. As a result, the Peruvian air bridge denial program was shut down for more than two years. See Karen DeYoung, "Senate Committee Looking into Drug Interdiction Pact with Peru," The Washington Post, April 26, 2001, p. A21.

14. John A. Cope, "Hemispheric Security Relations: Remodeling the U.S. Framework for the Americas," National Defense University Institute for Strategic Studies, Strategic Forum, No. 147 (September 1998), p. 2.

15. Marcela Donadio, "Comentarios sobre la Conferencia Especial sobre Seguridad," Boletin RESDAL, Vol. 2, No. 13 (November/December 2003), p. 7.

16. At the OAS Special Conference on Hemispheric Security, October 28-29, 2003, in Mexico City, President Fox said: "Of course, our security depends on how well we tackle such scourges as drug trafficking, illegal trafficking in weapons and people, terrorism and organized transnational crime in general...but it depends, mostly, on our ability to reverse the serious inequity, poverty and underdevelopment that beset our nations. These are the main threats to stability and governance in our countries and our communities." Press release, "Mexican President Stresses Importance of `Comprehensive Security,'" Organization of American States, Mexico City, October 29, 2003.

17. These eight threats are terrorism, conflict between states, proliferation of weapons of mass destruction, transnational crime, arms trafficking, natural disasters, attacks on health, and poverty. U.S. Department of State, Bureau of Political-Military Affairs, "Results of the OAS Special Conference on Security," fact sheet, October 29, 2003.

18. George W. Bush, "Remarks at Summit of the Americas Ceremony," The White House, Office of the Press Secretary, Monterrey, Mexico, January 12, 2004, at www.whitehouse.gov/news/releases/2004/01/20040112-9.html (February 5, 2004).

19. "Police Arrest a Colombian, Four Bolivians for Alleged Subversive Plot," BBC Worldwide Monitoring, April 13, 2003, from the Bolivian Information Ministry, April 10, 2003.

20. As a start toward that objective, at the 2002 Defense Ministerial meeting in Santiago, Chile, Secretary of Defense Donald Rumsfeld proposed an initiative to foster regional naval cooperation. The initiative would study ways to strengthen planning, upgrade command and control systems, and improve information sharing among the region's navies, coast guards, customs services, and police forces. Donald H. Rumsfeld, "Statement by Secretary of Defense Donald H. Rumsfeld, Santiago, Chile, November 19, 2002," Office of the Secretary of Defense, Public Affairs, November 19, 2002. For more concrete recommendations on how relations can be improved, see Max G. Manwaring, Wendy Fontela, Mary Grizzard, and Dennis Rempe, "Building Regional Security Cooperation in the Western Hemisphere: Issues and Recommendations," Special Series: Shaping the Regional Security Environment in Latin America, U.S. Army War College, Strategic Studies Institute, North-South Center, October 2003.



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Monday, 23 February 2004


>> SAUDI PROOF PORTFOLIOS?

Forecast of Rising Oil Demand Challenges Tired Saudi Fields
By JEFF GERTH
When visitors tour the headquarters of Saudi Arabia's oil empire -- a sleek glass building rising from the desert in Dhahran near the Persian Gulf -- they are reminded of its mission in a film projected on a giant screen. "We supply what the world demands every day," it declares.
For decades, that has largely been true. Ever since its rich reserves were discovered more than a half-century ago, Saudi Arabia has pumped the oil needed to keep pace with rising needs, becoming the mainstay of the global energy markets.
But the country's oil fields now are in decline, prompting industry and government officials to raise serious questions about whether the kingdom will be able to satisfy the world's thirst for oil in coming years.
Energy forecasts call for Saudi Arabia to almost double its output in the next decade and after. Oil executives and government officials in the United States and Saudi Arabia, however, say capacity will probably stall near current levels, potentially creating a significant gap in the global energy supply.
Outsiders have not had access to detailed production data from Saudi Aramco, the state-owned oil company, for more than 20 years. But interviews in recent months with experts on Saudi oil fields provided a rare look inside the business and suggested looming problems.
An internal Saudi Aramco plan, the experts said, estimates total production capacity in 2011 at 10.15 million barrels a day, about the current capacity. But to meet expected world demand, the United States Department of Energy's research arm says Saudi Arabia will need to produce 13.6 million barrels a day by 2010 and 19.5 million barrels a day by 2020.
"In the past, the world has counted on Saudi Arabia," one senior Saudi oil executive said. "Now I don't see how long it can be maintained."
Saudi Arabia, the leading exporter for three decades, is not running out of oil. Industry officials are finding, however, that it is becoming more difficult or expensive to extract it. Today, the country produces about eight million barrels a day, roughly one-tenth of the world's needs. It is the top foreign supplier to the United States, the world's leading energy consumer.
Fears of a future energy gap could, of course, turn out to be unfounded. Predictions of oil market behavior have often proved wrong.
But if Saudi production falls short, industry experts say the consequences could be significant. Other large producers, like Russia and Iraq, do not have Saudi Aramco's huge reserves or excess oil capacity to export, and promising new fields elsewhere are not expected to deliver enough oil to make up the difference.
As a result, supplies could tighten and oil prices could increase. The global economy could feel the ripples; previous spikes in oil prices have helped cause recessions, though high oil prices in the last year or so have not slowed strong growth.
Saudi Aramco says its dominance in world oil markets will grow because, "if required," it can expand its capacity to 12 million barrels a day or more by "making necessary investments," according to written responses to questions submitted by The New York Times.
But some experts are skeptical. Edward O. Price Jr., a former top Saudi Aramco and Chevron executive and a leading United States government adviser, says he believes that Saudi Arabia can pump up to 12 million barrels a day "for a few years." But "the world should not expect more from the Saudis," he said. He expects global oil markets to be in short supply by 2015.
Fatih Birol, the chief economist for the International Energy Agency, said the Saudis would not be able to increase production enough for future needs without large-scale foreign investment.
The I.E.A., an independent agency founded by energy-consuming nations, and Washington see investment in energy exploration and field maintenance as vital, but such proposals face strong opposition inside Saudi Arabia. Tensions with the West, particularly the United States, make such investment politically difficult for Saudi society. For example, an effort by Crown Prince Abdullah, the kingdom's de facto ruler, to encourage Western companies to invest $25 billion in his country's natural gas industry essentially collapsed last year.
"Access to Persian Gulf oil reserves, especially Saudi Arabia's, is the key question for the whole world," Dr. Birol said.
President Bush has said he wants to make the United States less reliant on oil-producing countries that "don't like America" by diversifying suppliers and financing research into hydrogen fuel cells, but achieving that remains far off.
His administration backs foreign investment initiatives in the gulf region, including Saudi Arabia, and his energy policies rely on Energy Department projections showing the world even more dependent on Arabian oil in 20 years. That may be enough time for governments to find alternatives, but oil field development requires years of planning and work.
Publicly, Saudi oil executives express optimism about the future of their industry. Some economists are equally optimistic that if oil prices rise high enough, advanced recovery techniques will be applied, averting supply problems.
But privately, some Saudi oil officials are less sanguine.
"We don't see us as the ones making sure the oil is there for the rest of the world," one senior executive said in an interview. A Saudi Aramco official cautioned that even the attempt to get up to 12 million barrels a day would "wreak havoc within a decade," by causing damage to the oil fields.
In an unusual public statement, Sadad al-Husseini, Saudi Aramco's second-ranking executive and its leading geologist, warned at an oil conference in Jakarta in 2002 that global "natural declines in existing capacity are real and must be replaced."
Dr. al-Husseini, one Western oil expert said, has been "the brains of Saudi Aramco's exploration and production." But he has told associates that he plans to resign soon, and his departure, government oil experts in the United States and Saudi Arabia say, could hinder Saudi efforts to bolster production or entice foreign investment.
Saudi Arabia's reported proven reserves, more than 250 billion barrels, are one-fourth of the world's total. The most significant is Ghawar. Discovered in 1948, the 300-mile-long sliver near the Persian Gulf is the world's largest oil field and accounts for more than half of the kingdom's production.
The company told The New York Times that its field production practices, including those at Ghawar, were "at optimum levels" and the risk of steep declines was negligible. But Mr. Price, the former vice president for exploration and production at Saudi Aramco, says that North Ghawar, the most valuable section of the field, was pushed too hard in the past.
"Instead of spreading the production to other fields or areas," Mr. Price said, the Saudis concentrated on North Ghawar. That "accelerated the depletion rate and the time to uncontrolled decline," or the point where the field's production drops dramatically, he said.
In Saudi Arabia, seawater is injected into the giant fields to help move the oil toward the top of the reservoir. But over time, the volume of water that is lifted along with the oil increases, and the volume of oil declines proportionally. Eventually, it becomes uneconomical to extract the oil. There is also a risk that the field can become unstable and collapse.
Ghawar is still far too productive to abandon. But because of increasing problems with managing the water, one Saudi oil executive said, "Ghawar is becoming very costly to maintain."
The average decline rate in Saudi Aramco's mature fields -- Ghawar and a few others -- "is in the range of 8 percent per year," without additional remediation, according to the company's statement. This means several hundred thousand barrels of daily oil production would have to be added every year just to make up for the diminished output.
Every oil field is unique, and experts cannot predict how long each might last. For its part, Saudi Aramco is counting on Ghawar for years to come.
The company projects that Ghawar will continue to produce more than half its oil. One internal company estimate from 2002 puts Ghawar's production at 5.25 million barrels a day in 2011, more than half the total expected crude oil capacity of 10.15 million, according to United States government officials and oil executives.
"The big risk in Saudi Arabia is that Ghawar's rate of decline increases to an alarming point," said Ali Morteza Samsam Bakhtiari, a senior official with the National Iranian Oil Company. "That will set bells ringing all over the oil world because Ghawar underpins Saudi output and Saudi undergirds worldwide production."
The I.E.A. warned in November that huge investments would be needed to offset the decline rates in mature Middle Eastern oil fields -- it put the average at 5 percent -- and the increasing costs of oil and gas production. The agency, based in Paris, forecasts that Saudi production will need to reach 20 million barrels a day by 2020. (I.E.A. and other research estimates say that more than 90 percent of that would be crude oil; the rest would be liquid products like natural gas liquids that result from the processing of crude oil.)
In his speech in Jakarta, Dr. al-Husseini noted the need for exploration, pointing out that colleagues at Exxon Mobil predict that more than 50 percent of oil and gas consumption in 2010 must come from new fields and reservoirs.
Harry A. Longwell, the executive vice president of Exxon Mobil, says finding new sources of oil is crucial. Mr. Longwell, in an interview, said that increasing demand and declining production were not new problems, but they were "much larger now because of the world's demand for energy and the magnitude of the numbers now are much larger."
To offset its declines, Saudi Aramco is bringing back into production one idle field, Qatif, and is enhancing production at a nearby offshore field, Abu Safah. The company says that with expert management, these fields will produce about 800,000 barrels a day.
But current and former Saudi Aramco executives question those expectations, contending that the goal of 500,000 barrels a day for Qatif is unrealistic and that development costs are higher than anticipated.
Qatif poses real difficulties. It is near housing for Saudi Arabia's minority Shiite population and contains high concentrations of hydrogen sulfide, a highly toxic gas. Its development is "particularly challenging," according to a technical paper by Saudi Aramco engineers presented last year in Bahrain, which said that 45 percent of potential drilling sites "were rejected due to safety concerns."
At Abu Safah, Saudi Aramco has experienced increasing water problems as it has turned to submersible pumps to extract oil. Experts, including American and Saudi government officials, say the technique is ill advised. Saudi Aramco, in its written response to questions, defended the use of the pumps at Abu Safah and its ability to manage the water after 37 years of production.
One United Sates government energy expert noted that "submersible pumps is what the Soviets went to on an indiscriminate basis in West Siberia and it went south." Samotlor, a huge field in Siberia, once produced more than three million barrels a day, but it declined sharply in the 1980's after the Soviets pushed it too hard. Today it produces only a few hundred thousand barrels a day.
Copyright 2004 The New York Times Company

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15 drillers to fuel your portfolio

Natural-gas exploration is still a crapshoot, but the stakes have grown tantalizingly higher. Back the right stock and both of you emerge big winners.

By Jon D. Markman

For investors interested in intellectually-advantaged speculation seasoned with a dash of geopolitical gaming, it may be time to step on the gas.

The broad-brush reasons for taking positions in small-cap North American energy exploration companies has been in place for some time, as China has emerged as a voracious devourer of energy, Saudi Arabian turmoil has intensified (See "Saud's royal house of cards"), U.S. state governments have demanded wider use of clean-burning fuels by power plants and environmental laws have tightened supplies.

Early-bird speculators have therefore pushed up prices of some of the best little explorers, such as Ultra Petroleum (UPL, news, msgs) and Callon Petroleum (CPE, news, msgs) by as much as 100% over the past 10 months. But most of these stocks have cooled recently, providing a new entry point for a second wave of investors and traders seeking a hedge against overseas uncertainty.

To be sure, drillers defile the landscape of some of the most gorgeous places on earth like filthy rows of steel stinkbugs. Yet they are a necessary evil, angels disguised as devils, and their ugliness masks opportunity.

Natural gas' increasing value
Big picture first: Back in the 1940s, natural gas was worth virtually nothing. Drillers burned it off in the process of exploring for petroleum. As new uses were discovered, it became increasingly valuable, rising from $2 per 1,000 cubic feet on average during the 1990s to $10 in 2000. The price collapsed in 2001 back to $2, but it has steadily risen since -- spiking above $10 at the start of last year's war in Iraq before settling back to around $5.25, where it is now.Your money, fast.

The price of natural gas always jumps during winter cold snaps, which accounted for its most recent foray above $5.75, but it's unlikely to collapse below its current trading range again because there's not enough drilling being done to satisfy demand due to tough environment laws. Federal Reserve Chairman Alan Greenspan told Congress back in June that tight supply threatened the U.S. economy.

An `all or nothing' world
All gas drillers are not equal, and it pays to understand the industry's superstructure, risks and leverage points. Just as technology investors are accustomed to learning about the varied makers of semiconductors, disk drives and switches that make components for popular consumer electronics devices and determining which offer the most oomph at various points in the economic cycle, energy investors must learn about the complex, high-risk way gas is discovered and distributed.

Lesson No. 1, though, is how truly speculative some of these guys are. The companies are usually run by cagy industry veterans -- some with checkered pasts -- who suspect they can use new high-tech 3-D seismic imaging tools to find gas formations in properties abandoned by much larger drillers, such as Exxon Mobil (XOM, news, msgs) or ChevronTexaco (CVX, news, msgs). At the start of new projects, observers are skeptical that the driller will even find financing to start the project. Then, they're skeptical they'll persuade an oil-services company to lease them a drilling rig. Then, they're skeptical that drilling will ever actually start. Then, they're skeptical that the project will ever be completed. And then -- and lastly, they wait anxiously to learn whether gas is discovered or not.

Drilling is thus a crapshoot of probability distributions, and as each critical hurdle is cleared, energy speculators become more interested, adding to their positions and pushing up stock prices. The big moment comes when the company announces whether it has hit pay dirt or come up dry. The final press release announcing the success or failure of a new well is like the one that is published when a biotech company tells the world whether the U.S. Food and Drug Administration has approved its cure for cancer. It's all or nothing, hero or goat.

Canadian Superior Energy
Canadian Superior Energy (SNG, news, msgs) is typical of this high-risk/high-reward world. The company, which already owned leases to drill in Trinidad and western Canada, obtained four offshore exploration licenses totaling 933,000 acres in relatively shallow water off Nova Scotia a few years ago. In April last year, it announced it had teamed with gas pipeline giant El Paso (EP, news, msgs) to drill an extremely deep well -- about 18,000 feet -- in a property off Halifax known as Mariner Prospect. In June, Canadian Superior cleared a big hurdle by announcing that El Paso would provide half the project's $30 million cost for half the profits, and in November it cleared further hurdles by completing a $14 million private placement, securing a drilling rig from Rowan (RDC, news, msgs) and started to drill. The stock over this period went from 80 cents to $3.03; it's now around $2.65.

The largest institutional shareholder of the stock, at 6.5% of the outstanding shares, is Palo Alto Investors (PAI), a private, value-oriented hedge fund in Northern California. David Anderson, the analyst on the hook for the investment at PAI, says he believes the value of the company's other properties in Western Canada provide the bedrock for the share price today, and the Nova Scotia project could add $5 to $8 if the company meets its goal of drilling into the middle of a formation with 1 trillion cubic feet of gas. "As a value player, we see a lot of optionality," he said, meaning that the stock is like a call option on the Mariner project.

Two weeks ago, Anderson flew out to the rig on a helicopter in 60 mph winds and hung around for a while despite 30-foot seas. He said he learned Canadian had 4,000 more feet to drill, that the drilling personnel were "fantastic" and that there have been "gas shows" along the way. But he said that neither he, the crew bosses nor company executives had any idea yet whether the project would be successful. "It's sort of like the swordsman who lives to fight another day," he said. "Every day they drill without doing anything wrong removes a little uncertainty, but until they get to 18,000 feet and do some expensive tests there, it's still just a speculation."

Cheap, strong explorers
The day of truth will come in about three weeks. In the meantime, Anderson, whose hedge fund was up 90% last year and has compounded returns of 25% over the past 14 years, has been quietly investing in several other exploration ventures that he declined to reveal. He primarily buys drillers with high "recycle ratios." It's a simple concept: Find companies with proven ability to replace the oil or gas they're extracting from the ground for much less than the production costs and the expected future commodity price. If you can sell gas for $5.50 that costs $1.50 to find and make, you can use some of the profits to explore for more. "The key thing is to replace your depleted asset at low costs, and if you can provably do that repeatedly -- fantastic," Anderson said. And, he added, all the information necessary to make such judgments can be found in the footnotes of explorers' annual 10K filings with the U.S. Securities and Exchange Commission.

Not including the ones he's currently buying, Anderson said he believes the strongest, least expensive explorers at this time are small caps PetroQuest Energy (PQUE, news, msgs), Patina Oil & Gas (POG, news, msgs), Wiser Oil (WZR, news, msgs), Harvest Natural Resources (HNR, news, msgs), Callon Petroleum and Meridian Resources (TMR, news, msgs); and midcaps Ultra Petroleum, XTO Energy (XTO, news, msgs), Evergreen Resources (EVG, news, msgs), Newfield Exploration (NFX, news, msgs) and Pogo Producing (PPP, news, msgs).

Ultra Petroleum is a good example. Although it has properties in Pennsylvania and China, Ultra's main asset is in the Pinedale Anticline of Wyoming, located southeast of Jackson Hole. A company typically does great if it hits oil in half the wells it sinks, but Ultra is virtually 100 for 100 in Wyoming and has more than 700 drilling prospects left. That makes it a "reserves growth" story that Anderson believes is worth $30 to $40 -- about 50% more than the current price. (His firm owns 1 million shares.) Likewise, Harvest Natural Resources is a low-cost producer off the coast of Venezuela that might be undervalued because of political risk stemming from the unstable regime of President Hugo Chavez. Anderson considers Chief Executive Peter Hill one of the industry's best.
Side bets abound. Consider drilling technology provider Carbo Ceramics (CRR, news, msgs), a small-cap maker of little clay balls that are used to prop open fractured rock underground, increasing oilfield yield. Or Golar LNG (GLNG, news, msgs) a fast-growing, profitable but inexpensive Norwegian shipping company that specializes in transporting liquefied natural gas. For returns less subject to the whims of commodity prices, check out large-caps Halliburton (HAL, news, msgs) and Schlumberger (SLB, news, msgs), without whose oilfield management and services expertise worldwide drilling would come to a standstill.
Over the rest of the year, I'll explore the industry further and visit some rigs for a more personal account. Initial ideas are listed in the table below.

Natural gas exploration picks
Company Market cap Chg. 2003 Scouter rating 2/17 price
PetroQuest Energy (PQUE, news, msgs) $114 million -13.8% 4 $2.84
Canadian Superior Energy (SNG, news, msgs) $233 million 149.5% 5 $2.56
Meridian Resource (TMR, news, msgs) $333 million 318.5% 4 $5.58
Wiser Oil (WZR, news, msgs) $126 million 141.1% 6 $8.17
Harvest Natural Resources (HNR, news, msgs) $393 million 73.7% 5 $11.58
Golar LNG (GLNG, news, msgs) $977 million 188.4% NA $16.19
Ultra Petroleum (UPL, news, msgs) $1.7 billion 140.2% 6 $25.84
XTO Energy (XTO, news, msgs) $4.8 billion 43.4% 9 $28.53
Halliburton (HAL, news, msgs) $13 billion 57.0% 10 $31.79
Evergreen Resources (EVG, news, msgs). $1.2 billion 49.4% 8 $35.10
Pogo Producing (PPP, news, msgs) $2.6 billion 12.7% 8 $44.83
Patina Oil & Gas (POG, news, msgs) $1.5 billion 68.6% 8 $49.46
Newfield Exploration (NFX, news, msgs) $2.6 billion 42.4% 8 $46.38
Carbo Ceramics (CRR, news, msgs) $911 million 77.1% 7 $59.55
Schlumberger (SLB, news, msgs) $35 billion 63.2% 8 $64.07



Jon D. Markman is publisher of StockTactics Advisor, an independent weekly investment newsletter, as well as senior strategist and portfolio manager at Pinnacle Investment Advisors. While he cannot provide personalized investment advice or recommendations, he welcomes column critiques and comments at jdm68@lycos.com. At the time of publication, Markman did not have positions in any securities mentioned in this column. His newsletter described Canadian Superior in its Dec. 3, 2003 issue.



Posted by maximpost at 10:41 PM EST
Permalink


17 Arrested for Smuggling North Korean Drug
By Byun Duk-kun
Staff Reporter
The police on Monday arrested 17 people suspected of smuggling more than 5 kilograms of drugs that originated in North Korea.
The Mapo Police Station in Seoul announced the 17 arrests included a 57-year-old drug trafficker, known as Lee. Officers arrested Lee on charges of smuggling and distributing 5.4 kilograms of methamphetamine, more commonly called ``philopon'' in South Korea, and booked nine others without detention.
The police booked nine people, including a 40-year-old head of a distribution company, identified by his surname Uhm, on charges of circulating and using the North Korean drug. The police confiscated 2.5 kilograms of philopon worth more than 12.5 billion won ($10.4 million) in market price.
The South Korean drug dealer, Lee, allegedly bought 5.4 kilograms of the illegal drug from a 40-year-old Korean-Chinese man, identified by his surname Lee, in China on three different occasions from February to September last year, according to the police.
The suspected South Korea drug dealer allegedly smuggled the illegal substance by hiding it among Chinese gems being imported to the country, according to the police.
The police said 5.4 kilograms of methamphetamine is enough to inject 180,000 people and is worth more than 25 billion won in market price.
The police also said it has secured a testimony from one of the arrested drug traffickers, identified by his surname Park, that the drug was from a large Chinese crime ring called ``Samhaphoi,'' and that its origin was North Korea.
The suspected South Korean drug dealer, Lee, is still on the loose in China. The South Korean police asked the Chinese police for cooperation in bringing down the suspected drug dealer.
benjamine@koreatimes.co.kr
02-23-2004 17:36

----------------------------------------------------------------------

Former Spy Agency Official Dismisses Ex-President's Role in Fund Scheme
By Na Jeong-ju
Staff Reporter
Former state agency official Kim Ki-sup on Mondayday dismissed former President Kim Young-sam's involvement in a 1996 illegal fund scheme, saying the man who gave 94 billion won ($80 million) in secret funds to then-ruling party lawmaker for the party's election campaign was not the former president, but himself.
He made the point clear in an affidavit he has submitted to the Seoul High Court, which is handling the case.
Kim's claims contradict an earlier testimony by the lawmaker Kang Sam-jae of the Grand National Party, who claimed during an appeal court hearing that he took the money in person from former president Kim at his office in Chong Wa Dae.
Kim and Kang are on a trial for their involvement in the high-profile scheme. It had been said the money originated from the state budget set for the National Security Planning, now the National Intelligence Agency, until Kang dropped the bombshell earlier this month.
Now speculations are rampant over the origin of the money. A rumor suggests the 94 billion won was part of the illegal election funds the former president secretly collected from businesses before 1996.
However, the former spy catcher dismissed all the rumors surrounding the ex-president, claiming that he directly gave the money over three occasions to Kang. He also made it clear that the money was from the budget of the spy agency.
``I ordered my subordinate to prepare the money all in 100 million-won checks in 1996,'' Kim said. ``I met Kang three times at three hotels in Seoul and delivered the money.''
Kang's lawyers dismissed Kim's claims as a show of loyalty for the former president.
The former president has yet to respond to the claims made in the affidavit. The appeal court plans to have former president Kim stand as a witness for a testimony in the next hearing set for March 12.
jj@koreatimes.co.kr
02-23-2004 21:52

-------------------------------------------------------------------------

Bhutto alleges nuclear 'cover-up'
Pakistan's disgraced nuclear scientist AQ Khan could not have leaked nuclear secrets on his own, former prime minister Benazir Bhutto says.
Ms Bhutto said she believed senior government or military figures must have known what was going on.
"We believe there's a cover-up... there are certainly others involved," she told the BBC's Asia Today programme.
A government spokesman rejected the allegations and said the scientist had acted independently throughout.
Dr Khan, the so-called father of Pakistan's nuclear bomb, was pardoned in January after admitting leaking nuclear secrets to Iran, Libya and North Korea.
Many observers are sceptical that he could have done what he says he did without the powerful military knowing.
'Real culprits'
Ms Bhutto said she wanted the matter investigated further - but she doubted any light would be shed on the role of President Pervez Musharraf, whom she accused of being "reckless".
"General Musharraf would like the world to believe that Dr Khan is responsible for the export of nuclear technology, but nobody in Pakistan buys that," she told the BBC.
I'd like to know whether the president or the prime minister changed that policy [of no nuclear exports] or whether the army acted in defiance
Former Pakistan PM Benazir Bhutto
The scientist was a scapegoat who people thought had been carrying out orders, she said.
The fact he had been pardoned sent the wrong message to would-be exporters of weapons of mass destruction.
"We want the real culprits identified so that this can never happen again."
Ms Bhutto said she had run a policy of "no exports of nuclear technology" when she had been in power.
"I'd like to know whether the president or the prime minister changed that policy or whether the army acted in defiance of the president or prime minister, or whether intelligence acted as an independent operator."
Ms Bhutto, one of President Musharraf's bitterest critics, has been living in self-imposed exile in Britain and the United Arab Emirates since 1999. She faces a string of corruption cases if she returns to Pakistan.
'Dishonest"
The Pakistani government has said throughout the scandal that Dr Khan and other scientists acted entirely of their own accord.
Speaking to the same programme, Information Minister Sheikh Rashid Ahmed denied any cover-up.
"Not a single government was involved in this nuclear proliferation - that was a personal act of these two or three scientists."
He accused Ms Bhutto of being corrupt, dishonest and power-hungry, and of manipulating the media.
Pakistan had launched investigations when it had been informed of possible wrongdoing by the International Atomic Energy Agency, the minister said.
Meanwhile, a court in Pakistan has rejected petitions filed by the families of six detained scientists and officials accused of leaking nuclear technology.
The Lahore High Court judges made their decision after the government showed them classified information relating to the investigation under way.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/south_asia/3515167.stm
Published: 2004/02/23 20:01:26 GMT
? BBC MMIV
-----------------------------------------------------------------

>> HORSE TRADE WATCH CONTINUED...

CIA Chief, Pakistan Discussed Bin Laden
By MUNIR AHMAD
ASSOCIATED PRESS
ISLAMABAD, Pakistan (AP) -
The head of the CIA discussed the hunt for Osama bin Laden as well as ways to fight nuclear proliferation during a visit to Pakistan this month, senior government officials said Monday.
"Both sides shared views and information," an intelligence official, familiar with the talks between CIA Director George Tenet and Pakistani intelligence officials, told The Associated Press. He spoke on condition of anonymity.
The U.S. Embassy in Islamabad declined to comment and the Foreign Ministry refused to confirm that Tenet had visited.
The meetings came just days after the father of Pakistan's nuclear program, Abdul Qadeer Khan, acknowledged leaking nuclear technology to Libya, North Korea and Iran. News of the scope of Khan's activities has caused worldwide alarm and embarrassed this South Asian country.
Tenet discussed the implications of the nuclear black market with Pakistani intelligence officials, the official said.
President Gen. Pervez Musharraf pardoned Khan on Feb. 5, following his confession. Washington has said the pardon was an internal Pakistani decision, and that it was most concerned with shutting down Khan's network.
Tenet's visit came more than a week before Pakistan began pouring troops into its remote tribal regions in an operation to round up al-Qaida suspects. Bin Laden is believed to be hiding in the region along Pakistan's border with Afghanistan.
Paramilitary forces in recent days have boosted security in the lawless border region, in Pakistan's ultra-conservative North West Frontier Province. But authorities insist bin Laden is not the military's immediate target.
Still, troops have stepped up patrols in the rugged area, placing heavy guns on key roads and taking positions in sandbagged bunkers in the key town of Wana in tribal South Waziristan.
"I cannot tell you about the exact timing or place of the operation, but it will start very soon," said Mohammed Azam Khan, a local government official.
Khan said that all those suspected of being "foreign terrorists" will be arrested.
"Tribal elders have given us an assurances that no foreign national is now living in their areas, but still we want to satisfy ourselves," he said. "A house-to-house search will be conducted."
The operation is the fourth of its kind since the Sept. 11, 2001 terror attacks in the United States. It will center on suspected Taliban and al-Qaida men who authorities believe have married Pakistani women and are living in the tribal areas.
Pakistan has been a key ally of the United States in its war on terror, and Pakistani security forces have captured more than 500 suspected al-Qaida and Taliban fugitives since the attacks on the World Trade Center and the Pentagon. Among the captured are key figures in bin Laden's terrorist network.
Musharraf escaped two assassination attempts in December which he blamed on al-Qaida. The government has provided no evidence to support his claim.

--

Posted by maximpost at 9:38 PM EST
Permalink


>> NEXT LIFE - ATOL?

N Korea: Dr Evil's chance for redemption
By Tom Tobback
BEIJING - "North Korea has an opportunity to change its path. As some Americans might put it, there is a chance for redemption," according to James Kelly, US assistant secretary of state for East Asian and Pacific affairs, speaking about the forthcoming six-party talks this week aimed at defusing the North Korean nuclear crisis.
The second round of talks opens here on Wednesday, involving North and South Korea, China, Japan, Russia and the United States. Expectations are low, but after North Korea's balking and calling the first round a waste of time, just the fact of the meeting is seen as significant. The stated positions of Washington and Pyongyang are far apart and appear inflexible, so maybe just sitting down is important.
One of the hoped-for results of this round is the formation of lower-level working groups, but these could hardly be called progress if the major parties fail to move any closer on the core issues. The US wants eradication of North Korea's nuclear-weapons programs; North Korea wants the lifting of sanctions, economic assistance, and US security guarantees that Washington won't attack.
The administration of US President George W Bush obviously sees the upcoming talks as the last way out for Pyongyang's "Dr Evil" - the nickname for North Korean leader Kim Jong-il, head of what Bush calls part of the "axis of evil", along with Iraq and Iran.
In the safe conservative company of the American Enterprise Institute (AEI) and the South Korean newspaper Chosun Ilbo in Washington, Kelly stated the US view of Korean history: "While the Republic of Korea has, in recent decades, developed into a leading member of the international community, the Democratic People's Republic of Korea [DPRK] took a historic wrong turn from the very start of its existence."
Kelly referred to Bush's anti-nuclear-proliferation speech of February 11: "Abandoning the pursuit of illegal weapons can lead to better relations with the United States and other free nations. Continuing to seek those weapons will not bring security or international prestige, but only political isolation, economic hardship and other unwelcome consequences."
Pyongyang - isolated, hungry, declining
No wonder the DPRK, already politically isolated and scraping the bottom of the barrel for sustenance after years of famine and economic decline, has a clear idea of what those "unwelcome consequences" could mean. United Nations Security Council Resolution 1441 of November 2002 warned of "grave consequences" if Iraq would not comply with inspections to uncover weapons of mass destruction (WMD).
The Bush administration keeps up the tradition of not being willing to recognize what Professor Gavan McCormack of the Australian National University calls "the core of legitimacy in Pyongyang's cry for settlement": its bitter legacy of Japanese colonialism, and the continuing nuclear intimidation, economic embargo and diplomatic isolation by the US.
The basic mechanism of the 1968 Treaty on the Non-Proliferation of Nuclear Weapons (NPT), recently highlighted again by Mohammed ElBaradei, head of the International Atomic Energy Agency, was that non-nuclear countries would agree not to seek nuclear weapons in exchange for nuclear disarmament by the states possessing nuclear weapons. On February 12, ElBaradei called not only for stronger action against nuclear proliferation, but also for "accelerated efforts towards nuclear disarmament".
As much as Washington is urging Kim Jong-il to grab this "chance for redemption", Pyongyang also is demanding that a U-turn be taken by the Bush administration. Ambassador Li Gun, a member of the DPRK negotiating delegation, said: "Unless the US changes its hostile policy toward North Korea, we absolutely cannot give up nuclear weapons."
This comment illustrates that the two positions are so far apart that substantial progress at the upcoming talks is unlikely. Washington has said it wants to examine the DPRK proposal of a re-freeze of its plutonium-based facilities in Yongbyon, but admits that the US goal is nothing less than CVID - the new buzz-word of the Bush administration - Complete (read: including the alleged uranium-enrichment program), Verifiable (read: intrusive inspections after a Libya-style admission of weapons programs and "surrender"), Irreversible (read: a freeze is not enough) and Dismantlement (read: dismantlement of the DPRK nuclear programs).
A second basic principle cited by Kelly to resolve the crisis is the multilateral framework the US has been insisting on from the start, including South Korea, Japan, Russia and China in the negotiations. Not that Washington appears to seek a genuine diversity of views that might differ from its own. On Sunday Kelly arrived in Seoul to coordinate the US, South Korean and Japanese strategies for the six-way talks.
DPRK claims Chinese support for its plan
On the other side, Pyongyang claims the support of its host country, China. DPRK Vice Foreign Minister Kim Gye-gwan met Chinese officials in Beijing two weeks ago and announced that China had agreed "to take joint actions to make substantial progress in the next round of the six-way talks". Pyongyang also stated that Beijing "admitted the reasonability of the package proposal of simultaneous actions for the solution of the nuclear issue and the DPRK-proposed 'reward in return for freeze'".
China reportedly has urged the US not to focus on the uranium-enrichment question, which entered the spotlight after the revelations by Pakistan's top nuclear scientist, Abdul Qadeer Khan, that he passed nuclear technology to North Korea in the 1990s. Kelly said, "The recent confession of Pakistan's [ Abdul Qadeer] Khan suggests that, if anything, the North Korean HEU [highly enriched uranium] program is of longer duration and more advanced than we had assessed." He added that North Korea is "aggressively pursuing an enriched-uranium nuclear arms program".
Pyongyang, in an official statement on February 10, called the US accusations "mean and groundless propaganda", arguing that the US is "setting afloat such unverifiable fiction about the DPRK's 'enriched uranium program' in order to scour the interior of the DPRK on the basis of a legitimate mandate and attack it just as what it did in Iraq". The rhetoric alone illustrates how difficult it will be to design an acceptable inspection mechanism.
Last week a South Korean official, speaking on condition of anonymity, claimed that the DPRK recently told a third country it was willing to consult on the issue of its alleged uranium enrichment program with the US. However, the Chinese Foreign Ministry - closer to North Korea than any other country, and host of the talks - said that it could not confirm this information.
Reacting to a suggestion by John Lewis, leader of the recent private US delegation to Pyongyang, that there could have been a mistranslation, Kelly said it was very clear to all members of his team that his DPRK counterpart, First Vice Foreign Minister Kang Sok-ju, acknowledged the existence of a highly enriched uranium program back in October 2002.
The uranium issue seems to guarantee a deadlock, as neither side can afford to go back on its previous statements. Hence China's suggestion - just to leave it off the table.
South Korean official predicts 'positive' outcome
Chinese and South Korean officials, in their sensitive role of mediators, are trying to put a positive spin on the developments. Chinese Vice Foreign Minister Wang Yi visited Seoul and said the talks will have "substantial content" and will hopefully result in tangible steps to defuse the crisis. South Korean Foreign Minister Ban Ki-moon stated that considerable progress has already been made and said he expects a "visible and positive outcome".
South Korean President Roh Moo-hyun did his part by announcing that he would invite Kim Jong-il to visit Seoul after significant progress was made in the six-party talks. He did not mention that Kim Jong-il still has a standing invitation from Kim Dae-jung, Roh's predecessor, who visited Kim in Pyongyang in 2000.
Japan had bilateral contacts with the DPRK earlier this month to discuss the issue of North Korea's abduction of Japanese citizens in the 1970s, but Pyongyang has threatened it will oppose Japan's participation in the six-party talks if it wants to put the abduction issue on the agenda. The Japanese parliament's recent decision to enable unilateral economic sanctions against the DPRK has further soured their relationship.
Analysts have argued that the Agreed Framework of 1994, which solved a similar nuclear crisis between the US and the DPRK, was never taken seriously by Washington because the US expected the DPRK to collapse soon after the sudden death of Kim Il-sung, the father of current leader, Kim Jong-il.
With a re-freeze of its plutonium-based nuclear facilities, the DPRK is seeking to return to the conditions similar to those under the Agreed Framework, which also included agreement on eventual full dismantlement. Kelly says that this time the US wants a "fundamental and permanent solution" for North Korea and that he does not expect to resolve the nuclear problem in a matter of a few weeks or even a few months.
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 content@atimes.com for information on our sales and syndication policies.)
--------------------------------------------------------
>> YEAH RIGHT - SHOW ME CASE?

Bin Laden between a hammer and a hard place
By Syed Saleem Shahzad
KARACHI - After taking a dramatic, and suspect, deviation into Iraq, the United States' "war on terror" is right back where it began, in Afghanistan, once again in hot pursuit of Osama bin Laden.
"The hunt has been intense," said US General Richard Myers, the chairman of the Joint Chiefs of Staff. "There are areas where we think it is most likely he is, and they remain the same. They haven't changed in months."
"The sand in their hourglass is running out. The troops are re-energized," confirmed the US commanding officer in Afghanistan, Lieutenant-General David Barno. "Their day has ended and this year will decisively sound the death knell of their movements in Afghanistan," Barno was quoted as telling journalists in Kabul about bin Laden and Taliban leader Mullah Omar. "We have unfinished business in this part of the world."
This part of the world, in the latest US initiative to hunt down the al-Qaeda leader - code-named Hammer and Anvil - is the rugged, inhospitable territory on both sides of the border between Afghanistan and Pakistan. On the Pakistan side, the area includes the semi-autonomous tribal areas, particularly South and North Waziristan.
"On the one side of the border are US and NATO [North Atlantic Treaty Organization] troops, on the other side are Pakistani troops," commented a source familiar with military developments to Asia Times Online. "This time it will be a big, long operation."
Another crucial side to the operation is an overhaul within the Pakistani army "to purge the elements allegedly sexed up with al-Qaeda and the Taliban", the source said, referring to those elements in the army and the intelligence services with sympathies for these groups.
The shakeup follows the recent arrest of several militants of Uzbek origin, as well as an Arab named Waleed bin Azmi, in a raid in the eastern district of the Pakistani port city of Karachi. About a dozen militants managed to escape, while the captured ones were handed over to agents of the US Federal Bureau of Investigation, who found during their interrogations that the operators had been besieged near Wana, South Waziristan, but they were given an escape route, allegedly by officers of the Pakistan armed forces. The operators fled to Karachi, but were rounded up thanks to the local police's intelligence network.
The US presented these facts to Pakistani President General Pervez Musharraf - not the first time such incidents have been reported, but this time with the demands that the officers be taken to task and that US officials be allowed to take part in the inquiries to understand better the nexus between Islamists and officers in the Pakistani army.
Several officers are now expected to be arrested. A similar incident occurred last year when Lieutenant-Colonel Khalid Abbassi and one Major Atta were seized, among others. Asia Times Online broke the story of these arrests (Musharraf's army breaking ranks ), causing a stir in the country.
Hammer poised
The ongoing operations on the border are expected to last for some time. The Pakistani military has begun to confront tribal leaders, threatening them with home demolitions and other punishment if they harbor al-Qaeda fighters. This is a highly sensitive matter in an area that is virtually beyond the writ of the administration in Islamabad.
"The Pakistani troops are confronting the tribal elders and making them be accountable for the behavior in their area. That's a traditional approach that has not been used till now in that particular part of Pakistan," said General Barno.
Of course, this area has been the focus of attention ever since the Taliban were driven from Afghanistan in late 2001. Its rugged territory and the close ethnic ties with the Pashtun of Afghanistan make it a natural safe haven, which it has undoubtedly become over the past two years as the Taliban, aided by al-Qaeda, have regrouped.
The starting point for the new US-led operation is Khost in Afghanistan as part of a preemptive plan to curb mujahideen leader Jalaluddin Haqqani, whose belt of influence spreads all the way from Khost to Pakistan's North Waziristan Agency. Another belt travels from North Waziristan to the Kunar Valley in Afghanistan, where Gulbuddin Hekmatyar, leader of the Hebz-i-Islami Afghanistan and de facto leader of the Afghan resistance, is directing operations.
Unlike in the past, though, when operations have focused on limited targets and been of short duration, the current offensive is all-embracing and has as its ultimate goal the destruction of the Afghan resistance (with the cherry on the top being bin Laden's capture). NATO forces have already occupied key places in Afghanistan in an attempt to block off the border and to wait for fugitives flushed out from Pakistan. The anvil is almost in place on one side of the border. Now it is up to the Pakistanis to do their bit on the other side.
And the United States is not taking any chances. US Central Intelligence Agency director George Tenet visited Islamabad recently on an unofficial trip. His team stayed in a local hotel, while Tenet was accommodated at the US Embassy. He secretly met with several high-profile Pakistani officials, including his counterpart, the director general of the Inter-Services Intelligence. Sources familiar with the meetings told Asia Times Online that a roadmap was sketched for the region, including a "full-scale war" if necessary to smoke out bin Laden and Mullah Omar. Pakistan's commitment in this was sought.
At a time when the United States is keen to leave Afghanistan - elections are due in June but likely to be delayed - this full-scale commitment holds the inherent danger that it might fail, and the US be drawn even deeper into the country's morass. This in turn could trigger a chain of events culminating in another terror attack on the US along the lines of that of September 11, 2001, for example on the Rockefeller Center in New York. The wheel in the "war on terror" in such an event really would have turned full circle.

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

>> TEMPEST IN A STRAIT?

China-Taiwan arms race quickens
By Stephen Blank
The rising military tensions in and around Taiwan - and recent Chinese military exercises to intimidate Taiwan independence forces - have not been widely reported, but there is no doubt that the arms race is heating up on both sides of the Taiwan Strait. Western military analysts see enormous and growing danger of military pressure from China, if not direct coercion, even conflict, in the strait.
Analysts do not rule out the possibility that if provoked, or if it believes it could lose Taiwan irrevocably, China would attack what it considers its renegade province in order to reunify it with the mainland.
Douglas Feith, US under secretary for defense, meeting with Xiong Guangkai, deputy chief of general staff of the People's Liberation Army, on February 10-11 in Beijing, urged China to reduce the nearly 500 missiles targeted at Taiwan. Taipei considers these missiles a direct threat and a provocation. On March 20 Taiwan voters will be asked in a referendum whether the island should acquire new defensive missiles systems if China refuses to redirect its missiles. On the same day they will be asked to choose a president, incumbent Chen Shui-bian having staked his career on the "defensive" anti-missile referendum.
Those Chinese missiles have been a major precipitating factor in the current crisis.
On February 12, the US Knight-Ridder News Service reported that China's arms acquisitions and development are tipping the military balance in Beijing's favor - thus heightening Pentagon concerns about an attack against Taiwan.
It also reported that Pentagon officials told Taiwan that by 2006 China might be able to deter US counterattacks and intervention and that more limited action might happen sooner. According to these reports, China is adding not only 75 short-range missiles against Taiwan each year but also an inventory of amphibious carriers and light tanks, cruise missiles, unmanned aerial vehicles, and a network of surveillance satellites.
The purposes of the missile deployments and the qualitative and quantitative improvements to Chinese forces deployed around Taiwan are clear. First, they are intended to deter any US intervention on behalf of Taiwan by threatening the United States with unacceptable losses in such a war. Though many analysts assume that China is not going to invade Taiwan because to do so would be immensely counterproductive, others consider such complacency to be misplaced.
China would attack if sufficiently provoked
First, many Chinese think the United States will not fight wars that involve high casualties to its forces. Therefore the issue is how many casualties China must suffer to occupy the island, not whether an invasion is a sensible policy.
Second, for China, the Taiwan issue is so bound up with the legitimacy of the government that any successful breakaway by Taiwan could lead to the downfall of the Beijing regime. This contingency, or the fear of it, could lead a Chinese government to fight, even from a position of inferiority. And there should be no illusions about China's reluctance to fight, because its military doctrine clearly talks of winning wars based on the inferior fighting the superior power. China has demonstrated that before. Therefore China would fight if sufficiently provoked.
The arms race, however, goes beyond Beijing's annual addition of 50-75 short- and medium-range missiles on its south coast opposite the "renegade" island to encompass its general qualitative and quantitative military buildup - and Taiwan's own response to acquire more advanced weapons systems.
Beyond the missiles being deployed against Taiwan, China is also qualitatively and quantitatively augmenting its capabilities to strike at Taiwan using the range of its conventional forces.
China is carrying out a major military reform by reducing the numbers of its military but simultaneously improving the quality of technology, weapons systems and training. This is taking place at a time of publicly announced increases in defense spending of about 18 percent a year. Given the well-known opacity of Chinese figures and statistics, especially with regard to defense, it is likely that this announced spending reveals only the tip of a vast and growing iceberg of military expenditure.
Because of this secrecy, which is based not only on communist habits but also on the received wisdom of Chinese military thinking, dating back to Sun Zi (Sun Tzu), it is all but impossible to gain an accurate or objective impression of China's real capabilities.
Taiwan fears China could attack in five to 10 years
While most US analysts say the Chinese military is still afflicted with multiple shortcomings and is not a major threat to the United States or to other Asian countries, Taiwanese officials clearly fear that within five to 10 years, the tide of Chinese superiority will be such that China could well attack Taiwan if Beijing decides the circumstances warrant military action.
Nor is it only Taiwan that is concerned.
China's military reforms also clearly encompass planning for contingencies in Xinjiang and Tibet to suppress separatism and dissent there and to conduct operations in Central Asia with the co-signers of the Shanghai Treaty that formed the Shanghai Cooperative Organization (SCO). That treaty represented the first time China ever promised to come to another state's aid, except in the case of North Korea. It was the first time since 1950 that China had projected its military forces beyond its borders, in bilateral exercises with Kyrgyzstan in Central Asia and joint exercises with all the members of the SCO.
Another major issue regarding the Chinese military buildup is its linkage with Russia. At China's request, details about which Russian systems and technologies are being acquired and the extent of cooperation since 2000 have been highly classified. It is known that there were joint talks on military cooperation, strategy and preparedness training of Chinese military personnel in Russian institutions, and joint research projects on high-technology with military applications - but not much more.
The systems China purchased earlier - the Su-27 Flanker fighter, the Sovremennyi destroyer with Sunburn anti-ship missiles, the S-300 anti-aircraft missile and the Kilo-class submarines - have been described in Jane's Intelligence Review by a Chinese source as stopgap acquisitions, but one can tell from Russian sources as well that China is purchasing more technologies for production from Russia than weapons systems.
The purpose of this is to develop an indigenous capacity for producing advanced weapons. Thus it is acquiring, according to most estimates, US$2 billion worth annually from the Russian defense industry, which is still desperate to sell to someone lest it be forced to go out of business as a result of the general Russian economic plague. Russian experts are also talking about selling China even more advanced systems to keep up with its demands and remain technologically competitive.
China builds arms with Russian tech
Meanwhile China has utilized the technologies acquired from Russia to build its own indigenous weapon systems: the new 052-class air-defense destroyers now under construction, the J-10 fighter aircraft, and the Song-class submarines, two of which have been completed, with the rest under construction.
Despite China's well-known difficulties coping with advanced systems and integrating them, these programs bespeak its enormous ambitions in all fields of military development, including the nuclear arena. The fact that China now also is receiving France's enthusiastic endorsement for lifting the European Union's embargo on weapons sales - an embargo that Washington wants preserved, in another instance of Franco-American rivalry - also speaks volumes for its extensive military plans. The embargo was imposed after China's brutal suppression of peaceful pro-democracy activists in Tiananmen Square in June 1989.
Taiwan, for its part, has not been inactive. It clearly has intensified cooperation with the Pentagon, which is helping the island develop its own "critical needs" in order to survive a Chinese missile barrage before US forces can get there. It has advised Taiwan to beef up its anti-submarine capabilities and to create a command structure to function in the event of missile attacks, since Taiwan's anti-missile defenses are weak or non-existent.
Since Taiwan's leadership expects China to gain qualitative superiority during this decade, it also is turning increasingly to high-tech solutions, such as improved command and control, communications, computers, intelligence, space and reconnaissance capabilities (C4ISR), increased bilateral contacts with US military forces, acquisition of Patriot anti-missile missiles, and greater access to US defensive systems.
However, it is not at all clear if this would deter China or if US forces would be able to overcome China's efforts to obtain both a local superiority in a Taiwanese theater or prevent Beijing's winning a first-strike attack against Taiwan - thus keeping any future war there short.
China is not bluffing and blustering
Within a few years, China might well be able to challenge Taiwan - beyond the holding of exercises and blustering during the current campaign for a referendum and elections. The issue of missile defenses in Asia generally and near Taiwan in particular will increase in importance.
Despite the current weight accorded the Middle East, terrorism and Iraq, the China-Taiwan situation is an urgent issue that will not go away. Moreover, it has enormous repercussions for China and all Asia, as well as for the United States' position in Asia.
China has been issuing not-so-veiled threats to Taiwan as it prepares for its elections and referendum on Chinese missiles. It would be foolishly complacent to believe that Chinese capabilities will not be more fully engaged against Taiwan if China feels that it can win safely or if it feels sufficiently provoked to do so. But if Taiwan provokes China, it will most likely do so because of its rising sense of fear and threat from the mainland - a threat that China itself has generated.
This international arms race, encouraged by Moscow and by Washington, each in pursuit of their own perceived vital interests, could soon get out of control and expand to include not only conventional weapons but also space-based systems and nuclear missiles, if not defenses against those missiles.
This arms race, focused on the Taiwan Strait in the short term, will create regional ripples, if not waves, and it is the last thing Asia needs now, in the near future, or ever.
Stephen Blank is an analyst of international security affairs residing in Harrisburg, Pennsylvania.
(Copyright 2004 Asia Times Online Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)


Posted by maximpost at 9:37 PM EST
Updated: Monday, 23 February 2004 10:00 PM EST
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>> WHERE IS INTERPOL WHEN YOU NEED IT?


Query Europeans and Turks, nuke agency told
BY LOURDES CHARLES
KUALA LUMPUR: Malaysia wants the International Atomic Energy Agency (IAEA) to investigate five Europeans and two Turks over their roles in the black marketeering of components for nuclear weapons.
The police, which made public its report yesterday on the investigation into allegations of a Malaysian company being involved in the manufacturing of such components, will submit its findings to the Atomic Energy Licensing Board (AELB) here which would then forward the report to the IAEA, a body under the United Nations
Inspector General of Police Datuk Seri Mohd Bakri Omar said investigations revealed that the foreigners, from Germany, Turkey, Switzerland and Britain, were allegedly involved in the proliferation of nuclear weapons.
He said the link was established after questioning Sri Lankan businessman B.S.A Tahir, who allegedly worked with a top Pakistani nuclear expert in supplying centrifuge components to Libya's uranium enrichment programme
Prime Minister Datuk Seri Abdullah Ahmad Badawi, who was briefed last Nov 13 on the allegations, had ordered the police to investigate.
The investigations also showed that the Malaysian company, Scomi Precision Engineering Sdn Bhd, was unaware that the equipment it was tooling could be used for such a purpose.
-------------------------------------------------------------

>> PHOTO OF TINNER
http://thestar.com.my/news/story.asp?file=/2004/2/21/nation/7365568&sec=nation



Loose network of seven plotters
BY LOURDES CHARLES
KUALA LUMPUR: The loose black marketeering network that planned to supply Libya with components for nuclear weapons consisted of two Swiss, two Turks, two Germans and a Briton.
Police investigations made public yesterday revealed that the network had supplied or tried to buy various components for a nuclear centrifuge for Libya's uranium enrichment programme.
Inspector-General of Police Datuk Seri Mohd Bakri Omar said the detailed probe showed that Malaysian company, SCOMI Precision Engineering Sdn Bhd (SCOPE), was only one of many firms which were duped into making parts of the various components.
He pointed out that even after awarding a contract to SCOPE, Sri Lankan businessman B.S.A. Tahir engaged a Swiss consultant to oversee the tooling of the component at the firm's plant in Shah Alam.
Tahir: Middleman involved in the trafficking
The consultant, Urs Friedrich Tinner, not only chose the machinery required but also designed the tooling process of the components which could be used for a centrifuge unit.
Mohd Bakri said Tinner was always cautious when working at the plant and took away the drawings of the component design when the contract was completed.
Just before he left the country in October, the Swiss engineer also erased all technical information which were kept in the computer that was set aside for his use by SCOPE at the Shah Alam factory.
He even removed the hard disk of the computer so that there was no trace of the technical specifications of the work done.
Tinner told the staff this was to protect trade secrets.
Mohd Bakri said that as a consultant, Tinner was responsible for the purchasing and setting up of the machines and one of the machines purchased and installed by him was the same one recommended by Griffin - a Cincinnati Hawk 150 Machining Centre.
Mohd Bakri said that 39-year-old Tinner resigned from SCOPE at about the same time a ship named BBC China was searched in Port Taranto, Italy, where five Libya-bound containers were confiscated as they allegedly contained components for certain parts of a centrifuge unit.
"Tahir and Tinner did not declare the use of the components or the true nature of the business. Moreover the components which were confiscated cannot be used as one complete unit of a centrifuge," he said, adding that SCOPE was misled into manufacturing the components after being told that the components were for the petroleum and gas industry.
Tinner's father Friedrich was also named in the report as being responsible for preparing certain centrifuge components and sourced many of the materials which were made by several companies in Europe. He is also alleged to have arranged for the materials to go to Libya via Dubai.
Tinner: Designed the tooling process of components
Another man named in the report was Peter Griffin, a British national based in Dubai.
It is learnt that Special Branch officers investigating the case were handed a document by SCOMI in the form of a brief note allegedly signed by Griffin himself dated March 10, 2001 recommending the purchase of that machine.
He said Griffin was hired by Tahir to carry out a feasibility study including recommending, among others, the type of machinery needed for the tooling job.
"However, after presenting his findings including the type of machinery needed, Tahir decided not to hire Griffin as he was said to be unsuitable for the job.
"Instead Tahir had in April 2002 hired the younger Tinner as consultant," the IGP said.
Mohd Bakri said Tahir revealed under questioning that it was the top Pakistani nuclear expert who developed the network of middlemen that not only involved Tahir but also several people and companies from Europe.
However, the IGP said it was a loose network, without a rigid hierarchy, or a head..
According to Tahir, some of the middlemen appeared to have known the nuclear expert for a long while and some of them got to know him when he was in the Netherlands.
The two Turks named in the report were Gunas Jireh and Selim Alguadis.
Jireh is alleged to have supplied aluminium casting and a dynamo to Libya while Alguadis, an engineer, is supposed to have supplied electrical cabinets and a power supplier-voltage regulator to Libya.
Another middleman, Heinz Mebus, a German engineer, is alleged to have been involved in discussions between the nuclear arms expert and Iran to supply centrifuge designs. He has since died.
The seventh man in the network is Gotthard Lerch, another German citizen residing in Switzerland who is alleged to have produced vacuum technology equipment.
Mohd Bakri said police conducted an open and transparent investigation in line with the country's policy of recognising and adopting a multi-lateral approach in conjunction with the IAEA while rejecting a unilateral approach where investigations are monopolised by only certain countries.
He said police here were willing and ready to co-operate with the IAEA.
Mohd Bakri stressed that although the individuals above were alleged to have been involved, the governments of the countries concerned and some of the companies involved were unaware of the real use of the components.

-------------------------------------------------------------------------


IGP: Agency can quiz Tahir
JOHOR BARU: Sri Lankan businessman B.S.A.Tahir is still in Malaysia and the International Atomic Energy Agency (IAEA) is free to question him, Inspector-General of Police Datuk Seri Mohd Bakri Omar said yesterday.
He said that police were more than willing to assist IAEA with regard to Tahir, who allegedly worked with a top Pakistani nuclear expert in supplying centrifuge components for Libya's uranium enrichment programme.
Mohd Bakri confirmed that the Dubai-based businessman, whose whereabouts had been unknown, was not under arrest.
"We are more than willing to assist IAEA (on Tahir's activities) and they can interview him if they want to," Bakri told reporters after a rugby match between the Malaysian police and its Thai counterpart for the Rujirawongse Cup yesterday.
Mohd Bakri said that police had not imposed restrictions on Tahir's movements or barred the businessman from leaving the country.
"He has not been arrested, that much I can say. Neither is he prevented from leaving the country. Where is the law to restrict (his movement)? His passport has not been impounded," he added.
Police investigations into allegations that Malaysian company, Scomi Precision Engineering Sdn Bhd (Scope), was involved in manufacturing the component, revealed that the company was unaware the equipment it was tooling could be used for uranium enrichment.
The investigations, which were made public on Friday, showed that Scope was unaware the exported components were for a certain centrifuge unit in Libya and it had considered the deal as a business deal.
Mohd Bakri said it was up to Scope to take action against Tahir for "misleading" it in the business deal.
"As a result of police investigations, we are of the opinion that Tahir had misled the company.
"However, it is up to Scope and not us to take action from here on," he added.
To a question, Bakri said that Malaysian police were not obliged to inform the US Federal Bureau of Investigations (FBI) on its findings.
"I don't see why we should inform the FBI. We are not obliged to them," he said.
In Kuala Lumpur, Deputy Prime Minister Datuk Seri Najib Tun Razak said the police report on the alleged production of component parts for the "nuclear black market" in Malaysia had cleared the Government of any implications.
Najib, who is also Defence Minister, said the Government had all along asserted that it did not have the know-how or the intention to make nuclear weapons
"We hope we can put the matter to rest," he told reporters after opening a dialogue on trade, biotechnology and sustainable development at Legend Hotel here yesterday.
Yesterday, Malaysian Institute for Technology Research (Mint) and Atomic Energy Licensing Board (AELB) said in a joint statement that they would write to IAEA on Malaysia's stand concerning the issue.
This follows a request by IAEA for specific information to help the agency in investigations in countries suspected to have violated the United Nations-backed Non-Proliferation Treaty, which controls the production, use, import and export of materials used in nuclear production.
Mint and AELB said that Malaysia would voluntarily submit a full report on the case to IAEA "in due course" and hoped IAEA would use the information to probe all individuals and companies involved in the alleged "nuclear black market", irrespective of which country the parties were operating in.
The statement reiterated that Malaysia was not under investigation by IAEA.
It also said that Malaysia had not signed an additional protocol to the Safeguard Agreement listing equipment and non-nuclear materials that must be reported to IAEA.
It said that even if Malaysia had signed the protocol, there was no legal requirement for Malaysia to report the alleged centrifuge components made by Scope to IAEA as they were found to be made of materials of quality and strength below that specified in the protocol.


Posted by maximpost at 2:56 PM EST
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Economics focus

Wirtschaftsblunder

http://www.economist.com/finance/displayStory.cfm?story_id=2441670#footnote1


Feb 19th 2004
From The Economist print edition
Why has the German economy performed so much worse than the rest of Europe?
Over the past ten years, Germany's GDP has grown by an annual average of only 1.4%, barely half as fast as growth in the rest of the European Union, and roughly the same pace as Japan, which has been a byword for slow growth over the past few years. The most popular explanations for Germany's dismal performance are the costs of reunifying East and West Germany, and the arthritic state of the united country's labour markets. However, a new study* by Goldman Sachs, an investment bank, makes an intriguing claim: that it is an artificially low cost of capital, which has encouraged excessive investment, that has been most to blame. A rising cost of capital in recent years can explain much of Germany's weaker growth--and could continue to depress it for several more years.
The study starts with Germany's extraordinarily low return on capital. Goldman Sachs estimates that German firms have earned an average pre-tax rate of return on their capital of only 5% since 1991. In contrast, the average return in the rest of the EU has been 12% which, as the chart shows, is even higher than the 10% earned by American companies. Reunification has been partly to blame: the inclusion of firms in former East Germany and the massive boom in capital investment after unification both depressed average returns. But eastern Germany is only 11% of total GDP--too small to explain the unusually low overall average rate of return. In any case, firms in West Germany already had a low return on capital before reunification.
Some argue that Germany's powerful trade unions have raised wages and so reduced the return on capital. But unions are as strong and labour markets as rigid in other EU countries where returns are higher. Moreover, if trade unions had increased workers' total income, the consequent lower return on capital should have reduced investment. Yet quite the opposite has been true: since 1991 business investment has averaged 21% of GDP in Germany, 18% in the rest of the EU and 15% in America.
The combination of high investment and low returns, says the bank, suggests that the cost of capital has been much lower in Germany than elsewhere. Firms invest up to the point at which the extra return covers the cost of capital plus a profit margin. If capital costs are held down, the result is high investment and low returns. It is Germany's capital market, not its labour market, that sets it apart from other European economies. But in important (and worrying) respects this makes the country similar to Japan, where investment as a proportion of GDP is also very high, and returns on capital are correspondingly low.
Germany's financial system is distinctive in two important ways. First, firms rely much more on banks than financial markets. Bank debt accounts for half of the liabilities of non-financial firms, twice the share in the rest of Europe. Second, state-owned financial institutions (Landesbanks and savings banks) account for a big chunk of corporate borrowing. Debt issued by state-owned banks is guaranteed by the government, reducing their financing costs and hence their lending rates. Moreover, they were set up explicitly to assist the expansion of local business, so their objective has been to support investment not maximise returns. Small wonder that German banks' average return on equity is half that of banks in the rest of the EU.
Capital crunch
With borrowing cheap--their cost of capital was at least two percentage points lower than in the rest of Europe in the late 1990s--German firms invested more. But private-sector banks are now under pressure from shareholders to boost profits and in 2001 the European Commission ruled that public guarantees for state-owned banks were anti-competitive and must be phased out. The result is that firms' risk-adjusted cost of capital will rise to more normal levels. Indeed, the interest rates paid by many German firms have already risen in recent years, even as official rates have fallen.
According to Goldman Sachs, it is this rising capital cost that is largely to blame for Germany's weak investment and slow growth in GDP in recent years. Investment as a share of GDP has fallen from 24% in 1991 to 16% in 2003. It may well fall further, because corporate borrowing costs are still lower than in the rest of Europe, and it will take a long while for firms to adapt to paying more for their money. In Japan, where a low cost of capital similarly caused over-investment in the past, investment and growth have been depressed for more than a decade.
Making various assumptions, Goldman Sachs estimates that, if the average cost of capital in Germany rises to the European average, this could eventually reduce Germany's GDP by 5%. In other words, it could knock half a percentage point off its annual growth rate over ten years. And the country, reckons the bank, is only half way through that process.
In the long run, capital-market reform will lead to a more efficient use of capital, and hence higher rates of return. Indeed, total national income (including foreign income), in contrast to GDP, should increase. As the capital subsidy is eliminated, more money will be invested abroad as firms seek higher returns, making Germans as a whole better off. But for the economy to benefit, the labour market will need to adjust quickly because the shift of capital overseas will otherwise result in job losses.
So even if capital costs are the main source of Germany's sluggish growth, labour-market reform is still important because it would reduce the short-run loss of output as firms adjust to higher borrowing costs. Indeed, if labour costs can be squeezed by reforms, firms can adjust without having to cut investment as much. The snag is that, even if Germany pushes ahead with labour reform, rising capital costs will continue to constrain investment and growth. And with no immediate benefits, public resistance to reform in general is likely to grow.

* "No gain without pain--Germany's adjustment to a higher cost of capital", by Ben Broadbent, Dirk Schumacher and Sabine Schels. Global Economics Paper No. 103
------------------------------------------------------------


The reserve army
Feb 12th 2004
From The Economist print edition
The unemployment rate is only the beginning of the problem
RARELY does an economic indicator provide as much fodder for politicians and pundits as the unemployment rate. Far more than, say, current accounts or capacity utilisation, unemployment is something everyone can understand: you are either in work, not in work, or looking for work. As such, it is easily seized upon as an indicator of the broader health of an economy, or even of workers' eagerness to revolt.
The issue of unemployment has loomed especially large in America in recent months. That is partly because there are presidential elections in November, and much will hinge on whether George Bush can convince voters that an apparently booming economy is producing jobs. A glance at the unemployment rate would seem to give him the answer he wants. The unemployment rate has fallen from a post-recession peak of 6.3% in June to 5.6% last month, though that is still higher than the 5.0% that many economists consider to be the "natural rate" of unemployment--one that results merely from the normal or "frictional" patterns of job gains and losses at any one time.
But the unemployment rate is, in fact, a poor measure of economic health. It is defined as the fraction of the people in the labour force--those who are actively seeking work and available for it--who cannot find a job. And it relies on surveys to determine who is, in fact, actively seeking work rather than enjoying a spot of leisure. It is that subjectivity that makes the unemployment rate such a flawed statistic. A better question by far is how many people are employed--ie, are being paid by someone for doing something, since this should be less subject to doubt.
Or so you might have thought. Yet there has been a fierce debate in America recently over even this humble statistic. That is because the number employed in America is also still measured using surveys, and the two that are widely used tell different stories. One is taken of over 400,000 firms with formal payrolls. Another asks 60,000 households whether people in them are working. But both are hostage to the usual limitations of using small samples to estimate employment for the whole economy, though obviously to different degrees. They are, moreover, subject to big revisions. And both have their advantages.
The payroll survey uses a bigger, more easily verifiable sample. On the other hand, the household survey may better capture a rise in jobs among new small businesses and the self-employed, both of which seem to have accounted for a lot of new employment in the recent recovery. According to the household measure, nearly 139m Americans were in work in January, even more than had jobs at the height of the boom in March 2000. By the payroll measure, some 130m were in work--a fall of nearly 2% since employment peaked.
Left-leaning pundits naturally prefer the payroll survey. The Bush administration and its friends prefer the household version. Still, even the latter's figures would make job growth in the current economic recovery anaemic by historical standards.
Concerns over employment data are not just an American problem. According to a recent report from Barclays Capital, Germany's employment statistics may be overstating the numbers of self-employed because of a government initiative to subsidise previously unemployed workers in starting their own business. Combined with other shenanigans, this may produce an army of "hidden unemployed" of 1.4m, estimates the report, some 30% more than the number of officially unemployed. In Japan, the unemployment rate has never risen above 5.5% in recent years, despite a decade-long economic funk. That is in part because firms are reluctant to sack workers for social reasons.
Flawed though they may be, the employment numbers are of fundamental importance. Two crucial questions for economic output and for the suffering caused by unemployment are: what portion of the working-age population does not work and how many of those that do not work want to do so?
The international brigade
Regardless of which survey you believe, more people of working age are at work in America than in Europe. America's employment rate is just over 70%--almost ten percentage points higher than Europe's. In other words, less than a third of working-age Americans are not in work, whereas in Europe the figure is closer to 40%, though the gap between the two economies has been closing in recent years, as America's employment rate has fallen and Europe's has risen.
Many of those that do not work would almost certainly like to. By the OECD's reckoning, the ranks of those who could be mobilised are thus far bigger than those that are formally classed as unemployed. Indeed, in most countries, according to the OECD, there are far more gains to be had in bringing inactive workers into work than in reducing unemployment to its "natural" rate. In Italy, for example, the OECD reckons that more than a fifth of the working-age population could be brought into work, and some 17% in Spain and Greece.
In the euro area, the relatively lower employment rate explains much of the region's lower GDP per person. And low employment is often the fault of misguided policies that discourage people from working, such as high payroll taxes; marginal income taxes that penalise the work of a lower-paid spouse; rules that make sacking workers expensive; and generous benefits that encourage the work-shy to be classed as disabled, to name but a few.
Such structural problems play a huge role in the differences in the wealth of nations. The trouble is that fixing them can be politically fraught. Just ask Gerhard Schr?der, Germany's chancellor, who resigned this month as head of his party, because of resistance to a package of modest reforms. Having jobs is one thing; working quite another.
Copyright ? 2004 The Economist Newspaper and The Economist Group. All rights reserved.
-----------------------------------------------------------------------------------
Face value
After Parmalat
Feb 19th 2004
From The Economist print edition
Matteo Arpe and the noble pursuit of better banking in Italy
ONCE upon a time in Italy top bankers learned to play a delicate game. As they did their normal bankerly things, they knew that at any moment they might receive a phone call requesting help: could they use their influence with a longstanding client in trouble, or perhaps a smaller bank that needed a friendly rescue? Even the cleverest of the bankers sometimes struggled with the complex politics of the business. When did a favour turn from the sensible into the corrupt? Many a banker was compromised once he had agreed to do something "convenient". This rottenness lay at the core of Italian banking.
Today a new mood is evident. Consider, for instance, a stricture laid down by Matteo Arpe, boss since July 2003 of Capitalia, Italy's fourth-largest banking group, embracing three banks: Banca di Roma, Banco di Sicilia and Bipop Carire. Italian banking must change, he says. There are things that are legal and others that are illegal, things that sound good and those that sound bad. Illegal deals by definition are unacceptable. But Mr Arpe wants to go further: deals must be both legal and sweet-sounding.
Hang on a minute. Is not Capitalia hugely exposed to Parmalat, the bankrupt and scandal-ridden food group that may have defrauded investors of more than ?10 billion ($13 billion)? And was it not the house bank for Cirio, another food group that controversially went bust in late 2002 and whose former chairman, Sergio Cragnotti, was accused of fraud and arrested on February 11th? Capitalia does not seem the most obvious place to foster the modernisation of Italian banking. Indeed, if anything, it seems to exemplify the flaws of the old system.
Look again, however, and Mr Arpe appears less out of touch with reality. True, Capitalia's peak exposure to Parmalat was some ?394m (today it is ?40m less). But a good chunk of its lending was covered by collateral and stands a reasonable chance of being recovered. Moreover, Capitalia lent to Parmalat's operating companies, not to the financial arm where the fraud was orchestrated. Capitalia had no derivatives exposure. Nor, after Mr Arpe's arrival, did it underwrite any of Parmalat's bond issues.
The Cirio case is more awkward, if equally revealing. Mr Cragnotti had longstanding relations with Cesare Geronzi, Capitalia's chairman, who hand-picked Mr Arpe to run his banks. Mr Geronzi is one of the great survivors of Italian banking, but arguably he let Mr Cragnotti go too far. By the time Cirio went bust, Mr Cragnotti personally owed the bank around ?500m, and his company owed much more. Mr Arpe courageously called time on the lending to his (disbelieving) client. When loans are non-performing, he says, clients become counterparties. That was a shock to Mr Cragnotti, who to this day vituperatively blames Capitalia for the failure of his group.
Mr Arpe is as modern as the banking code he endorses. Since he arrived, aged 37, as general manager of Banca di Roma in May 2002 he has made a huge impact. He cut his banking teeth during 12 years at Mediobanca, a Milanese investment bank that dominated post-1945 Italian finance. He was a prot?g? of Enrico Cuccia, for decades Mediobanca's famously powerful boss. Mr Arpe made his name working on big privatisations, such as that of Telecom Italia. Along the way his talent inspired jealousy, and he abruptly quit Mediobanca in 1999, resurfacing at Banca di Roma after a spell in London with Lehman Brothers.
It was not an obvious role for him. He had no commercial banking experience. He was very young--at least by Italian standards--to be put in charge. Moreover, Banca di Roma, in particular, was in dire trouble after years of slack lending. But Mr Arpe relished the chance to show that he could manage people and turn the group around. Mr Geronzi promised that he would not meet interference, even if proposed reforms were tough.
Looking good
The numbers--Parmalat apart--since his arrival are certainly impressive. Operating costs have been slashed. Capitalia has lifted its core capital ratio from a weak 5.3% to a respectable 6.9%, partly by shedding ?30 billion of financial risks, such as derivatives and off-balance-sheet exposures, and partly by rigorously tackling a huge ?13 billion portfolio of non-performing loans. Archon, a joint-venture with Goldman Sachs, is managing more than ?6 billion of bad loans with incentives to recover money quickly. Provisions of ?3.2 billion, equivalent to two-thirds of Capitalia's market value, have been squirreled away. All this, as Mr Arpe says, without recourse to shareholders.
Mr Arpe has also reshaped Capitalia's governance, not least by focusing on curbing bad lending. He now spends one-third of his time chairing a central credit committee, and has veto power over every loan. Managers of Capitalia's loan portfolio are wholly independent of the bankers who make the loans.
Finally, Mr Arpe has overseen a cultural shake-up. More than 200 new managers have joined the group. Almost everyone else has been moved to a new position. One new hire is an ex-banking analyst who a few years ago had refused to cover Banca di Roma on the grounds that its reported numbers were too unreliable. Now, he says, perhaps not wholly surprisingly, Capitalia is the bank of choice for ambitious young graduates.
Much remains to be done. Though out of intensive care, Capitalia remains in the recovery ward. Though pleased by its progress, investors remain somewhat sceptical. There continues to be talk of Capitalia having to merge, sooner or later, with another big Italian bank--though none seems noticeably keen to take on its bad debts. Mr Arpe will need luck as well as skill to complete his job. But he has a certain flair. Amid the bad publicity due to Cirio and Parmalat, he decided to reimburse retail customers for worthless bonds in those firms that they had been sold by Capitalia's salesforce. The cost will be ?41m. The goodwill it generates should be worth far more than that.
Copyright ? 2004 The Economist Newspaper and The Economist Group. All rights reserved.
-----------------------------------------------------------

Corruption in South-East Asia
Who will watch the watchdogs?
Feb 19th 2004 | JAKARTA
From The Economist print edition
Despite a few encouraging signs, South-East Asia's record on fighting corruption at the top is still mostly lamentable
MALAYSIA is agog with speculation. The government, which charged a sitting minister and a prominent businessman with corruption earlier this month, says it has a list of 18 other high-profile suspects due for similar treatment. Opposition politicians say that Rafidah Aziz, the minister of trade, should be among them. She denies any wrong-doing and says she will sue her critics for defamation--a threat they claim to welcome as a chance to prove their accusations in court. Is the pervasiveness of corruption, a problem common to most countries in South-East Asia, at last getting a proper airing?
The region is certainly awash with celebrated corruption cases. Joseph Estrada, the deposed president of the Philippines, is currently on trial for "economic plunder". On February 12th, Indonesia's supreme court finally ruled on a long-running embezzlement case against Akbar Tandjung, the speaker of parliament. In 2001, Thailand's constitutional court heard charges that Thaksin Shinawatra, the prime minister, had concealed some assets during an earlier stint as minister. Last October, it sentenced a former health minister, Rakkiat Sukthana, to 15 years in jail for colluding with pharmaceutical firms.
But there is less to this flurry of righteousness than meets the eye. For starters, prosecutors have not had much success against grand defendants like Messrs Thaksin and Tandjung. Both persuaded higher courts to overturn earlier rulings against them. Mr Estrada, too, managed to evade impeachment while in office, and prosecutors are making heavy weather of their current case against him. Even the convicted Mr Rakkiat has not yet begun his prison term, since he jumped bail and went into hiding. What is more, all the countries in the region save Singapore and Malaysia still rank in the bottom half of the most recent "Corruption Perceptions Index" compiled by Transparency International, an anti-graft watchdog. Vietnam ranked 100 out of 133 countries, Indonesia 122 and Myanmar a dismal 129.
This poor showing stems in part from a lack of laws, personnel and money to combat corruption. But the resource in shortest supply is political will to tackle the problem. All countries in South-East Asia have at least one anti-corruption agency. But the ones that work best, argues Jon Quah, a professor at the National University of Singapore, are centralised, independent agencies such as Thailand's National Counter Corruption Commission. By contrast, Malaysia's Anti-Corruption Agency reports to the government, and so is subject to political control. The Philippines, meanwhile, has adopted no fewer than seven anti-corruption laws in the past 50 years, and created 13 anti-graft agencies, according to Mr Quah's count. Dramatic but disputed corruption allegations, such as the claim that the president's husband is managing multiple slush finds, simply get lost in all this bureaucracy.
Even theoretically independent agencies, of course, are still subject to political interference, most obviously through appointments. The governing coalition in Thailand has learned how to maximise its say on the panels that select members of the country's various watchdog agencies--which have become much less meddlesome as a result. Indonesia's parliament, which just set up a similar agency called the Corruption Eradication Commission, declined to appoint the most crusading candidates as commissioners.
The courts can also undermine counter-corruption efforts. In the Philippines, cases can be drawn out for so long, through so many appeals, that the risk of prosecution does not provide an effective deterrent to corruption. In Indonesia, all courts are for sale, according to one supreme-court justice. At any rate, they often return quixotic rulings. The supreme court, for example, accepted Mr Tandjung's argument that he should not be punished for misappropriating funds as a minister, since he apparently did so on the orders of the president of the day, his administrative superior. At the very least, argues Harkristuti Harkrisnowo, a law professor at the University of Indonesia, the court should have considered Mr Tandjung an accessory to corruption. Instead, she worries, the new precedent paves the way for the court to dismiss several other pending corruption cases. And only a handful of cases have made it to court at all, despite Indonesia's many multi-million dollar corruption scandals in recent years.
That is where political will comes in. Indonesian politicians often speak of the need to combat corruption, but dragged their feet over the creation of the Corruption Eradication Commission. Members of parliament freely admit that they are on the take, so were naturally reluctant to put themselves under scrutiny. Gloria Arroyo, the president of the Philippines, also pays lip-service to anti-graft efforts. But when corrupt tax collectors rebelled against a reforming new boss last year, she backed down and accepted his resignation. In Thailand, Mr Thaksin implied during his own corruption trial that scrutiny of ministers was an unwarranted intrusion into the workings of government. Since becoming prime minister, he has stacked his cabinet with former businessmen, yet has not instituted any formal system to prevent them taking decisions that might affect their families' firms.
The counter-corruption mechanisms in Malaysia have not changed at all since Abdullah Badawi became prime minister last year. Yet instead of prosecuting a whistle-blower for releasing details of corruption investigations, as his predecessor did, Mr Badawi has hauled a minister into court. True, an election is imminent, and the minister in question is scarcely a heavyweight. But Mr Badawi is also taking serious steps to reduce corruption in the long term, such as awarding government contracts by open tender. If Malaysia had only instituted such a policy a decade ago, there might not have been any secret list of suspects to argue about.
Copyright ? 2004 The Economist Newspaper and The Economist Group. All rights reserved.



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Cornering the "Biggest Evil"
Papers predict the imminent capture of Osama Bin Laden.
By Michael Young
Posted Monday, Feb. 23, 2004, at 9:13 AM PT


A day after yet another suicide attack in Israel, many newspapers predictably led with the hearings that began today at the International Court of Justice in The Hague on the legality of Israel's separation wall in the occupied Palestinian territories. However, another weekend story was developing, despite the absence of any confirmation, namely a report that Osama Bin Laden had been spotted and surrounded in tribal portions of Pakistan.

The first newspaper to highlight the Bin Laden story was Britain's Sunday Express, which reported that the al-Qaida leader had been found and surrounded by U.S. forces in a border area between Afghanistan and Pakistan. According to a report on the Express story by Australia's Sunday Telegraph, the British tabloid, "known for its sometimes colorful scoops," claimed Bin Laden "is in a mountainous area to the north of the Pakistani city of Quetta. The region is said to be peopled with bin Laden supporters and the terrorist leader is estimated to also have 50 of his fanatical bodyguards with him. ... The claim is attributed to 'a well-placed intelligence source' in Washington, who is quoted as saying: '[Bin Laden] is boxed in.' " A subsequent story on the Express Web site qualified the initial report. The paper noted:

New operations aimed at cornering al-Qaeda and Taliban holdouts sheltering in the Pakistani tribal belt where Osama bin Laden may be hiding are soon to get under way. ... Bin Laden was not the immediate target of the operation, said one senior Pakistani intelligence official. But he said the hope was that the operation would net clues that would ultimately lead to the "biggest evil."

The Arabic press also picked up on the story. On Monday, the London-based Saudi newspaper Al-Sharq al-Awsat put a story on its front page under this neutral headline, "There Are Reports of Al-Qaida Leaders Being Surrounded." The story cited a U.S. Defense Department spokesman neither confirming nor denying Bin Laden's "location and whether he had been surrounded." The paper went on to say, much like the Express, that reports suggested "thousands of Pakistani troops" were preparing to attack border areas in Waziristan, near Afghanistan, "in the event of a refusal by the tribes [living in the areas] to hand over members of al-Qaida." Al-Hayat, another London-based Saudi newspaper, put the same story on its front page, noting that 8,000 Pakistani troops would join 4,000 others already in Waziristan, with the aim of capturing Bin Laden and former Taliban leader Mullah Omar.

Pakistan's Dawn quoted the country's information and broadcasting minister, Shaikh Rashid Ahmed, denying the Express story. According to the story, "[Ahmad] said the army had not started any operation. It [had] only strengthened its force to secure the borders of the country." However, it was fairly clear from the article that the minister was keen to avoid a sense that Pakistan was collaborating with foreign forces against his country's tribesmen: "Neither [Pakistani forces] will join any other country's force nor any other country's force will join them," he said.

In the more sedate surroundings of The Hague, the U. N. International Court of Justice was set to begin hearings on the legality of Israel's West Bank separation wall. Israel has protested the hearings, arguing that the wall is necessary for Israeli security, and will not be participating in the ICJ hearings in an official capacity.

The start of the hearings came a day after a suicide bombing killed eight people in a bus in Jerusalem. Reporting on the attack, the Israeli daily Ha'aretz noted that two guards had entered the bus but had been unable to spot the attacker, a 23-year-old man from a village near Bethlehem. Several officials linked the bombing to the ICJ proceedings, and the Jerusalem police chief, Maj. Gen. Mickey Levy, recognized this when he said, "There were no specific warnings about [the attack]; but because of the trial about the fence, this is a problematic week, and the preparations were in keeping with this."

As the ICJ hearings got underway, the Palestinian delegate was the first witness. According to the English-language Web site of Israel's Maariv: "Palestinian UN representative, Nasser al-Kidwa, was the first the address the court. In a scathing attack on Israel, al-Kidwa said: 'The wall will render the two-state solution to the Israeli-Palestinian conflict impossible.' " Kidwa was referring to the fact that Palestinians, and indeed many others, see the wall as an Israeli instrument for the de facto annexation of large swathes of Palestinian land in the West Bank. To get a sense of just what is at stake in terms of size, Al-Hayat published an almost-page-sized map of the West Bank showing the contours of the wall in its Monday's edition. Whatever the wall's final path, many people, even Palestinians, will agree the bus attack did little to advance Palestinian arguments on the need to tear down the barrier.


Michael Young is opinion editor at the Daily Star newspaper in Beirut and a contributing editor at Reason magazine.

-----------------------------------
Unhip, Unhip Al Hurra
The Middle East hates its new TV station.
By Ed Finn
Posted Friday, Feb. 20, 2004, at 9:18 AM PT


In its first week of broadcasting to the Middle East, U.S.-funded satellite station Al Hurra has earned little praise from its target audience. Al Hurra (which means "the free one" in Arabic) started broadcasting Valentine's Day as a none-too-subtle answer to Al Jazeera and other regional media's unfavorable reporting on U.S. foreign policy.

Al Hurra is just the latest in a string of Middle Eastern public diplomacy efforts for the United States--previous highlights include the Arab-language Radio Sawa and Hi magazine. The station kicked off its programming with an exclusive interview with President Bush and offers a mix of international news, documentaries, and talk shows.

Many Arab commentators were quick to condemn Al Hurra, some even before it aired. Writing last week, Rami Khouri of Lebanon's Daily Star threw down the gauntlet: Al Hurra "will be an entertaining, expensive and irrelevant hoax. Where do they get this stuff from? Why do they keep insulting us like this?" Syria's Tishrin skipped bafflement and moved directly to outrage: "This station is part of a project to recolonize the Arab homeland that the United States seeks to implement through a carrot-and-stick policy." (Translation courtesy of BBC Monitoring.)

A few contrarians did speak up to defend the network's arrival, though they did so out of principle rather than any love of its message. Britain's Guardian quoted an Egyptian news executive arguing: "Everyone is entitled to express his or her opinion. This is an open sky and nobody should be afraid of that." The London-based Arab paper Al-Sharq al-Awsat pooh-poohed those who saw the channel as "an American plot to 'brainwash' the Arabs" and argued that "a nation scared of a satellite station, regardless of its source or color, is a shy and timid nation."

The problem, everyone agreed, was not the station's programming but rather U.S. policies, especially regarding Israel. The Guardian interviewed Cairo natives about the new show, and reported: "[M]ost Cairenes said they simply do not trust Bush. If he cared about human rights, then he would help the Palestinians, they say." Al-Khaleej of the United Arab Emirates noted, "If U.S. policy in the region was sound and convincing, they would not resort to cosmetic means to improve their image" (Arabic translation in the last two paragraphs courtesy of BBC Monitoring.)

Middle Eastern papers were nearly unanimous in arguing that American support of Israel and its occupation of Iraq are the issues that fuel anti-American sentiment--and Al Hurra can do little to disguise this. The Jordan Times put it in terms even an American could understand:

No amount of sweet words and pretty pictures will change the reality of an Israeli occupation, soon in its 37th year, or the chaos in Iraq, both of which can be directly attributed to American policy. No one here is going to be convinced of America's benign intentions as long as these issues remain unresolved. It all seems so obvious, at least to most of the people of this region, that, to borrow the phrase of an American cultural icon, "doh!"

Ed Finn is a writer in New York. You can e-mail him at ed@edfinn.net.

Article URL: http://slate.msn.com/id/2095806/

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>> TNR...
THE RIGHT'S PHONY OUTRAGE OVER DEFICITS.
Crocodile Tears
by Jonathan Chait


Printer friendly
Post date 02.23.04 | Issue date 03.01.04 E-mail this article

o trace the Republican Party's evolving view of the deficit during the Bush years, one need only turn to the editorials of The Wall Street Journal. In the spring of 2001, before the enactment of President Bush's first tax cut, the Journal editors were still floating in the Pollyannaish world of ever-growing surpluses. "Even if Congress passes Mr. Bush's entire tax cut," an April editorial pronounced, "federal debt will fall to an estimated 14.4% of GDP by fiscal 2006. In other words, federal debt is not even remotely a problem." A month earlier, when Senate Minority Leader Tom Daschle warned that Bush's tax cuts would "consume nearly all the surplus," the Journal replied, "The truth is that if instead of $5.6 trillion, the surplus were $56 trillion, Senator Daschle and the like would still be yammering about 'irresponsible' tax cuts."

Even after the surplus disappeared, the Journal remained sanguine. In February 2002, the editors observed, "Another Beltway lament is that the Bush tax cuts have sent the budget into deficit. ... But total revenues are projected to rebound smartly in 2003." When, rather than rebound, revenue fell again in 2003, the Journal was still undeterred. "The new antitax argument is to lament 'a decade of deficits' to come," insisted a March 2003 editorial. "This ignores the fact that the U.S. debt in public hands remains about 36% of GDP." Nine days later, another editorial sneered, "Yes, we know, there is the 'deficit.'" (The sarcastic quotation marks are a particularly amusing touch, as if to say, "Oh, riiight, the budget's in 'deficit.' Whatever you say, Daschle.")

In the last few weeks, however, Journal readers may have detected a faint note of concern. Tucked into one of its perennial jeremiads against congressional profligacy, a January 20 editorial worried that "the ostensibly small-government GOP seems totally oblivious to the fact that all this spending puts its future economic agenda in jeopardy. Appropriations do mean taxes, after all, even if they're deferred taxes." For those who don't follow this debate closely, "deferred taxes" is a euphemism for deficits. The Journal is finally acknowledging that, with the budget a half-trillion dollars in the red, the baby-boomers about to retire, and no sign of relief on the horizon, the country may have a wee fiscal problem on its hands.

The Journal lays the blame for this state of affairs on out-of-control domestic spending. Recent editorials have denounced "drunken GOP sailors" and threatened "a conservative revolt over runaway spending." And, indeed, these sentiments reflect pretty well the position of the conservative movement more generally. "As 2003 closes, the nation finds itself burdened by runaway federal spending and massive looming structural budget deficits," argued an oft-cited paper by the Heritage Foundation released last December. "Republicans are swiftly forfeiting the perception that they are especially responsible stewards of government finances," complained columnist George Will. Indeed, in the last few weeks, all the arms of the conservative intellectual apparatus--National Review, The Washington Times, Rush Limbaugh, the Cato Institute, the Club for Growth, and sundry right-wing talk-show hosts--have flayed the administration and congressional Republicans for their profligacy. Meanwhile, conservatives in Congress have vowed to slash Bush's latest budget request.

And so, in a relatively short span of time, the conservative view of the deficit has gone from myopic denial to borderline hysteria. It is a sign of genuine progress that Bush's allies finally admit that vast, structural deficits pose a threat to the continued health of the U.S. economy. Unfortunately, they have misdiagnosed the nature of that threat, which is posed by tax cuts and national security spending, which they support, not by domestic spending. The conservative uprising may seem like bracing intellectual honesty, but in fact it's an attempt to deflect attention away from the fact that the policies they champion have failed even on their own terms.



he anti-spending backlash has gained such traction--even some liberals are buying into it--because it contains a few grains of truth. First, spending has risen noticeably. The catch is that it has risen from historically low levels. In each of the last three fiscal years of the Clinton administration, federal spending as a percentage of the gross domestic product (GDP) reached no higher than 18.6 percent--lower than at any point since 1966. Today, at just over 20 percent of GDP, outlays are higher, but they're still not terribly high by post-Great Society standards. In fact, in 2004, Washington will still consume a lower share of the economy than it did during any year between 1975 and 1996.

Second, it's also true that Republicans have embraced spending programs that would make Milton Friedman turn over in his University of Chicago office. According to Congressional Quarterly, after Republicans took control of Congress, they "embraced the practice of earmarking"--the term of art for circumventing the normal appropriations practice to slip in hometown projects--"taking it to a degree unimagined when the Republican revolutionaries of 1994 prepared to storm the capitol." But, while pork-barrel spending may be a powerful symbol of GOP hypocrisy, it's not a terribly large part of the $2.4 trillion federal budget. Likewise, some of Bush's spending initiatives have attracted attention disproportionate to their size. Bush made an enormous fuss over his commitment to increase education spending, but education still accounts for a mere 2.76 percent of the budget. Conservatives are rightly upset about his funding increase for the National Endowment for the Arts, but, however shaky arts subsidies may be in principle, their $18 million cost is peanuts. Even the farm bill, at $180 billion over ten years, is, again, notable more for its hypocritical pandering--Bush revived an archaic and unjustifiable subsidy that Bill Clinton had phased out--than its scale.



ather, the most expensive spending programs under Bush have been for defense, homeland security, and international aid. None of these areas has grown fat. To the contrary, the military is overstretched, homeland security underfunded, and aid programs to build strong governments and civil societies that can resist radical Islam woefully inadequate. Still, if you add up the cost of all the legislation enacted since Bush took office--as the Center on Budget and Policy Priorities did--these three areas account for 30 percent of that cost. New entitlements account for 13 percent, and, with the Medicare benefit projected to grow, that share will increase over time. But, rather than tackle these areas of spending--or address the elephant in the living room, the president's tax cuts, which account for 55 percent of the "cost" of legislation under Bush (more on this later)--conservatives have focused the brunt of their fiscal wrath upon a relatively small and innocuous slice of the federal budget called domestic discretionary spending.

Discretionary spending includes everything the government does other than entitlements, defense, and interest on the national debt. All of this--from national highways to scientific research to public housing--accounts for a mere 17 percent of the overall budget. It makes up a still smaller 3 percent of the total cost of legislation passed under Bush, and its impact on the budget pales beside the tax cuts. But, because many of these programs lack strong political constituencies--at least when compared with heavyweights like Medicare--they are taking the brunt of the conservative attack. Heritage paints the growth in discretionary spending as insidious: "[N]on-defense discretionary spending," argues its December backgrounder, "has reached 3.9 percent of GDP ($3,900 per household) for the first time in nearly 20 years." But most of that increase has come from homeland security. The Center for American Progress found that, over the last decade, domestic programs unrelated to security have grown from 3.3 percent of GDP to--da-dum!--3.4 percent of GDP.

Trying to balance the budget by squeezing domestic discretionary spending is like trying to lose weight by giving up that slice of tomato on your cheeseburger. Not that Republicans aren't trying anyway: GOP leaders have proposed a total freeze on discretionary spending this year. Doing so would save $2 billion. To grasp the absurdity of that effort, keep in mind that this year's deficit is expected to top $500 billion. Even if Congress persuaded Bush to completely eliminate all discretionary programs including homeland security, that would still leave Washington with $137 billion in red ink.

The big picture, then, is this: Overall spending has crept up a bit, now taking up 1.6 percent more of the economy than it did when Bush took office, but it remains modest by modern standards. The really spectacular change is in tax revenue, which has fallen from 20.9 percent to 15.8 percent of GDP since Bush took office. The collapse in revenue, in other words, has been more than three times the growth in spending. This year, revenue will account for a smaller share of the economy than in any year since 1950. Now, it's true that much of that revenue loss stems from broader economic factors, not just tax cuts. But, even if you look only at deficit increases caused directly by legislative action, the cost of the tax cuts is still nearly five times the size of all the non-security spending increases and accounts for more than all new spending (defense, homeland security, and domestic) put together.



hy, then, do conservatives fixate on the role of spending in producing the deficit? For one thing, doing so allows them to pressure the Bush administration and Congress to squeeze spending, which is what they want to do anyway. More important, it allows them to avoid acknowledging that they were (and continue to be) spectacularly wrong about the fiscal impact of the Bush tax cuts.

Recall for a moment that, when asked why it made sense to address a temporary economic slowdown by opening a permanent drain on federal revenue, conservatives offered up two fiscal defenses. The first was the basic supply-side claim that, by unleashing new incentives, the tax cuts would permanently raise economic growth, which in turn would create additional tax revenue. Therefore, they concluded, the tax cut would cost the government far less than official projections suggested. Heritage fellow Daniel Mitchell asserted in 2001 that "tax cuts will not result in nearly as much foregone revenue as static forecasts suggests [sic]." That same year, Journal editorials touted claims by the American Enterprise Institute's John Makin and Harvard University's Martin Feldstein that Bush's tax cuts would in fact "yield a net revenue loss of only 65% of the officially estimated $1.6 trillion costs." So far, of course, revenue has dropped far, far more than official estimates forecasted. (Which should not come as a surprise: In 1993, those same supply-siders argued that Clinton's tax hike would cause revenue to grow far less than official projections held, or perhaps even to decline, and instead they skyrocketed. It's as if the economic gods delight in humiliating the supply-siders.)

The second, and more popular, justification for tax cuts was that, by draining revenue from Washington, they would keep a lid on spending. Curiously enough, some of the people who endorsed this argument were the same ones who insisted tax cuts wouldn't actually drain much revenue. (As the Journal editorialized in January 2001, "[T]here is also a devastating political argument against using the surplus to pay down the debt. There won't be any. Congress has demonstrated, again and again, it cannot control itself when there is money to be spent.") But this argument had its greatest appeal to those conservatives not inclined to accept supply-side fantasies. Writing in these pages three years ago, my colleague Andrew Sullivan argued, "[I]f there is one thing we have learned in the past 20 years, it's that controlling government spending is simply impossible without deficits" ("Downsize," May 14, 2001). He also predicted, "One of the tax cut's effects will surely be that the United States won't be able to afford a vastly expanded Medicare drug benefit." Oops.

Today, the very same conservatives who insisted tax cuts were necessary to hold down spending now concede that Bush has increased spending at a faster rate than Clinton. None of them have admitted it, but their theory has failed. Though Republicans control all branches of government, there is still no political will for significant spending cuts. (Remember, the most draconian proposal by House conservatives would reduce the half-trillion-dollar deficit by $2 billion, or 0.4 percent.) The only question, then, is whether we should pay for the current level of spending or make future generations pay for it, with interest.



he great fallacy of the starve-the-beast theory of tax cuts is that it assumes Washington will spend whatever it can afford, and no more. There is no empirical evidence to support his claim. The best study of this, in fact, suggests just the opposite. In 2002, Richard Kogan, an analyst at the Center on Budget and Policy Priorities, examined federal budgets since 1976. He found that when revenue rises, spending tends to fall, and, when revenue falls, spending tends to rise. (Economy geeks take note: He also found that this strong correlation held even if you control for the state of the economy.)

Just look at recent history. Washington tends to restrain spending when there is bipartisan agreement on the need for fiscal responsibility. When you remove the restraints on one side of the equation--taxes or spending--you tend to lose the restraints on the other side, too. Since Bush only got his initial tax cuts by dismissing debt reduction and then pooh-poohing deficits as small and temporary, no wonder there wasn't any public demand for taking a chainsaw to the federal budget. It's true that Congress cut back on domestic spending during Ronald Reagan's presidency, but it did so only after Reagan canceled some of his own tax cuts and raised other taxes in 1982 and 1983. Two of the most successful efforts to restrain spending--in 1990 under George H. W. Bush and in 1993 under Clinton--both combined tax hikes with limits on spending. These two episodes, plus the 1995 showdown with Newt Gingrich, all proved the same thing: You can get voters to accept spending restraint for the purpose of shared goals like restoring national solvency, but not for partisan goals like giving the rich a tax cut.

If you really want to reduce the size of government, you have to reduce entitlement spending. Conservatives may hope that, if they drive the country close enough to insolvency, they will one day force the public to swallow otherwise unacceptable cuts in Medicare and Social Security. But this is a pipe dream. Public support for these entitlement programs is so strong that voters will always find alternatives. If it comes down to a choice between slashing Social Security and raising taxes, polls have always shown, voters prefer to raise taxes. Indeed, the only way Republicans ever get tax cuts enacted is by insisting that popular entitlements won't be touched and dismissing any suggestion to the contrary as partisan demagoguery.

Ultimately, conservatives may have been seduced by the success of Bush's dishonesty. Bush won approval for his tax cut by convincing Americans it wouldn't come at the expense of priorities they valued more. As Sullivan bluntly confessed in his 2001 column endorsing the tax cut, "The fact that Bush has to obfuscate his real goals of reducing spending with the smoke screen of 'compassionate conservatism' shows how uphill the struggle is. Yes, some of the time he is full of it on his economic policies. But a certain amount of B.S. is necessary for any vaguely successful retrenchment of government power in an insatiable entitlement state." The public, in other words, needed to be fooled into supporting the tax cuts. The first round of fooling, about the extent to which the tax cuts would go to the wealthy at the expense of more popular priorities, went well enough--but, then, most voters don't know how much money their boss saved on taxes. They do know, however, how much their mothers' Social Security checks are worth, which is why the second round of fooling--i.e., getting them to sign off on substantial spending cuts--isn't likely to go anywhere. The simple fact is that, in the long run, conservatives can't affect their hoped-for "retrenchment of government power" without obtaining the consent of the public. What they can do is dig the country into a deep fiscal hole trying.

Jonathan Chait is a senior editor at TNR.

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>> ECONOMIST...

Trade and employment

The new jobs migration

Feb 19th 2004
From The Economist print edition


Foreign competition now affects services as well as manufacturing. Good






FOR the past 250 years, politicians and hard-headed men of business have diligently ignored what economics has to say about the gains from trade--much as they may pretend, or in some cases even believe, that they are paying close attention. Except for those on the hard left, politicians of every ideological stripe these days swear their allegiance to the basic principle of free trade. Businessmen say the same. So when either group issues its calls for barriers against foreign competition, it is never because free trade is wrong in principle, it is because foreigners are cheating somehow, rendering the principles void. Or else it is because something about the way the world works has changed, so that the basic principles, ever valid in themselves, need to be adjusted. And those adjustments, of course, then oblige these staunch defenders of free-trade-in-principle to call for all manner of restrictions on trade.

In this way, protectionism is periodically refreshed and reinvented. Anti-trade sentiment, especially in the United States, is currently having one of its strongest revivals in years. Earlier bogus "new conditions" that were deemed to undermine the orthodox case for liberal trade included the growth of cross-border capital flows, the recognition that some industries exposed to foreign competition may have strategic or network significance for the wider economy, and concerns over exploitation of workers in developing countries. Today's bogus new condition, which is proving far more potent in political terms than any of these others, is the fact that international competition is now impinging on industries previously sheltered from it by the constraints of technology and geography.
The new protectionism
It is no longer just manufacturing that is feeling the pressure of foreign competition. It is no longer just dirty blue-collar jobs that are moving offshore. Jobs in services are now migrating as well, some of them requiring advanced skills, notably in computer programming. Services constitute much the larger part of every advanced economy. At the end of this process, what will be left? Gosh, Adam Smith never thought of this. Trade policy needs to be completely rethought.

Well, actually, no. Gregory Mankiw, chairman of the president's Council of Economic Advisers, pointed out recently that if services can be sourced more cheaply overseas than at home, it is to America's advantage to seize that opportunity. This simple restatement of the logic of liberal trade brought derision down on Mr Mankiw's head--and the supposedly pro-trade administration he works for conspicuously failed to defend the plain truth he had advanced. That was disturbing.

John Kerry, who leads the race for the Democratic presidential nomination, is at best a tepid and fluctuating proponent of trade, given to calling bosses who invest overseas "Benedict Arnolds". His main competitor, the beguiling John Edwards, who did unexpectedly well in the Wisconsin primary this week, has fastened on trade as his winning issue: he is for clenching his jaw and keeping American jobs in America, etc. And the media are simply lapping it up. CNN's flagship business-news programme, Lou Dobbs Tonight, which you might expect to strive for economic literacy, has embarked on a rabidly anti-trade editorial agenda, with its host greeting every announcement of lost jobs as akin to a terrorist assault.

The fact that foreign competition now impinges on services as well as manufacturing raises no new issues of principle whatever. If a car can be made more cheaply in Mexico, it should be. If a telephone enquiry can be processed more cheaply in India, it should be. All such transactions raise real incomes on both sides, as resources are advantageously redeployed, with added investment and growth in the exporting country, and lower prices in the importing country. Yes, trade is a positive-sum game. (Adam Smith did think of that.)



How disruptive?
The movement of jobs to the developing countries does not alter the overall level of employment in the advanced economies; however, the pattern of employment, to be sure, does change. In the aggregate, this is desirable, just as it is desirable that labour-saving technological progress should change the pattern of employment. (By the way, does anyone still believe that labour-saving technology destroys jobs overall?) So far as the effects on individuals are concerned, this process does have consequences that need to be examined and, in some cases, softened. Adequate private and public investment in skills and lifelong education is paramount in this new world, and is where attention should be focusing. But the image conjured up by the self-interested purveyors of alarm, of a hollowed-out America with relentlessly rising unemployment, is not just false but absurd.

The new jobs migration, while raising no new issues of principle, may indeed involve bigger political and economic strains than earlier bursts of expanding trade. Workers in manufacturing had long understood that they were exposed to the challenge of competition from overseas. Workers in services hitherto believed they were not: it is unsettling to be disabused. Also, it is true that the sheer scale of service-sector employment within an advanced economy arouses anxiety, unwarranted though it may be, about how disruptive the new forces of competition will be.

At the moment, the likely disruption to patterns of employment is surely being exaggerated. The actual and prospective migration of service-sector jobs is small, and likely to remain so, compared with the background level of job creation and destruction in an economy with as much vitality as America's. And technological and geographical constraints will continue to keep many service-sector jobs close to the customer. In some ways, in fact, this is a pity: the greater the disruption, the greater the benefits. As competition forces some jobs in services abroad, it will call forth the creation of new jobs in services in their place. And on average they will be better, higher-paying jobs than the ones that migrate. The evidence shows this is happening (see article). In practice as well as in principle, the fusty old idea of comparative advantage still works.
----------------------------------------------------
Terror's Friend in Court
Injustice in progress.



This week, the International Court of Justice (ICJ), popularly known as the World Court, is holding hearings that could result in an advisory opinion concerning the security fence now under construction by Israel. The immediate object of the exercise is to provide Arab and other opponents of the fence a new stick with which to pummel the Israelis. It is predictable, however, that the nation that stands to lose the most, ultimately, from the court's verdict -- that is, its decision to interfere with the steps sovereign nations take concerning their security needs and how to satisfy them -- will be the United States.



The court has been drawn into this precedent-establishing case by the United Nations' General Assembly, in which every member nation gets one vote, and the lowest common denominator of anti-Western and, most especially, anti-Israeli sentiment usually enjoys overwhelming majorities. Ninety nations in the General Assembly voted to approve a resolution put forward by Israel's enemies to portray the security barrier as an illegal and inhumane device, not least because of its location, in parts, on territory claimed by Palestinians.

Despite the opposition of the United States and some two dozen of the world's other leading nations, the ICJ is poised to do just that. After what will likely be perfunctory hearings starting Monday in the Hague, the Court is expected to render a conclusion that will legitimate a new torrent of invective against Israel. Worse, it may well precipitate demands that the U.N.'s Security Council give force to the Court's findings by imposing sanctions on Israel if it fails to halt construction of the fence. The Bush administration would be under intense pressure not to veto such sanctions, given its own stated opposition to the fence's construction (a position not seen as inconsistent with its view on the procedural question of whether the ICJ should be addressing this issue).

This process will penalize Israel, or at least further contribute to its pariah status in the United Nations, for doing nothing more than trying to protect its people from murderous suicide bombers and other terrorists in the most passive and nonviolent manner imaginable. Those much given to castigating the Jewish state for engaging in the sorts of counterterrorism operations that have resulted in the destruction of Palestinian terror cells, their leaders and bomb makers, and, on occasion, the unintended deaths of innocent bystanders, should commend Israel for adopting such a humane alternative.

To be sure, some of those now opposing Israel's security barrier might be willing to mute their criticism if only Israel would have the fence follow a different course; specifically, if it were to fence off the West Bank in much the same way Israel has protected itself from terrorists based in the Gaza Strip, namely along the so-called "Green Line" demarcating the territory Israel controlled prior to the 1967 Six-Day War from the areas it conquered during that conflict.

Doing so, however, would deny the fence's anti-terror protection to many tens of thousands of Israelis living in the West Bank. It would also effectively constitute a status quo ante boundary that would reward the Palestinians for their refusal to make peace with Israel. The upshot can only be further to intensify the confidence Yasser Arafat and his ilk already enjoy. Continued intransigence will eventually result in the realization of their ultimate and unchanging aspiration -- the destruction of the State of Israel.

Unfortunately, the United States has an even bigger stake in this ICJ proceeding than the injury that will befall its most reliable and valuable -- and only democratic -- ally in the Middle East. As Ruth Wedgwood, one of the nation's most eminent and highly regarded experts on international law, recently put it:

The U.S. has no veto in the General Assembly, and we need to be concerned about the evasion of consent-based rules for international adjudication. The next request for an Advisory Opinion could ask the court, without U.S. consent, to pronounce on the legality of the war in Iraq or American attempts to stop the proliferation of nuclear material. Such opinions -- even though non-binding under the U.N. Charter -- are dangerous, because they are seen by the "victors" as conferring legitimacy on their position.
Indeed, one can only imagine the measures the United States would otherwise have taken to protect its citizens that it might now feel pressured to avoid, for fear of being subjected to General Assembly requests for World Court intervention and adverse opinions. Our conduct of the war on terror, including legal steps intended to secure the homeland -- e.g., perhaps, our own security fence along the Mexican border -- could conceivably be denounced by the ICJ and, thereafter, be viewed as illegitimate by the international community.

No good can come of any of this. While John Kerry clearly fancies the idea of expanding the power of the United Nations and subordinating American sovereignty to its dictates, most Americans appreciate that that would be a formula for disaster.

The United States should make clear to the United Nations that, as a matter of principle, it would be injurious to this country's future relationship with and funding for the International Court of Justice and its parent organization, the U.N., for the Court to issue an advisory opinion on the Israeli security fence. As Professor Wedgwood notes, the World Court has the right to decline to do so "in compelling circumstances." This certainly fits the bill.

-- Frank J. Gaffney Jr. is the president of the Center for Security Policy and an NRO contributing editor.
--------------------------------------------------

The Great Iranian Election Fiasco
What actually happened; what we must do.



Even for a regime that excels in deception, the announcement by the Iranian government that nearly half the eligible voters cast their ballots in Friday's election is an extraordinary bit of effrontery. And even those Western "news" outlets that decided to pronounce the turnout "low" (the BBC, of course, echoed the party line by talking about a large turnout), did so by comparing the official numbers with those of the last parliamentary election, when more than 60 percent voted for the toothless "reformers."



The real numbers are a tiny fragment of the official ones. The overall turnout came in at about twelve percent, with Tehran a bit lower, and places like Isfahan and Qom (of all places, the headquarters of the Shiite religious elite) closer to five percent. The only major city with a substantially higher turnout was Kerman, due to a local factor: A widely hated hardliner was running, and many people judged it more important to demonstrate their contempt for him personally by voting for others than to show their rejection of the regime en bloc by abstaining.

It shouldn't have been hard to get this story right, at least in its broad outlines. A leading member of the old parliament, Mehdi Karoubi, was asked why he did badly, and he replied, publicly: "because the people boycotted the election."

Keep in mind that the reporters knew full well that all but a handful of polling sites in Tehran -- the only place they were able to observe, thanks to the usual clampdown on information -- were virtually dead. They knew, or should have known, that the regime had trotted out more than 10,000 "mobile voting booths," that is to say, trucks driving around inviting people to vote. They surely heard the stories -- widely repeated on Iranian web sites -- of thousands of phony ballots, and of citizens being forced to turn over their identity cards, thus making it possible for others to pose as legitimate voters. They must also have heard that high-school students were warned that if they did not vote they would never get into the universities.

But they did not report any of this. The Washington Post's Karl Vick wrote an upbeat report, as if the hardliners had won a normal election, and CNN's legendary Ms. Amanpour stressed that Iran was changing for the better since the dress code for women had loosened a bit in the past few years. Neither seemed to know that there were violent protests throughout the country, that several people had been killed and scores wounded by the regime's thugs, and that highways were blocked because the regime was afraid the protests would spread. There was enough electoral fraud to fill any Western news report, had the correspondents wished to do so. As the website www.iranvajahan.net reported, "In Firoozabad, Fars, people clashed with the Law Enforcement Forces when a cleric by the name of Yunesi-Sarcheshmeyi was declared the winner. In Miando-ab, West Azerbijan, some of the cheaters have publicly confessed how they were taught by a cleric to remove the voting stamp from their ID cards and vote again. In Malekan in East Azerbijan, people were told that 45,000 are eligible to vote, yet the number of declared votes for candidates totaled 50,000! Everyone including children and old people have poured into the streets of Malekan and there is non-stop running battles with the Law Enforcement Forces." The Student Movement Coordinating Committee for Democracy in Iran recorded violent clashes in Izeh, a southern city where a local politician was murdered by security forces when he protested his exclusion from the electoral list. Other protests were reported from Khorram-Abad, Firoozabad, and Dehdasht in the south, in Isfahan, and near the Afghan border in Mashad, Sabze-war, Nelshaboor, and Tchenaran.

Instead of this important information, we get the usual election-day analysis, as if a real election had been conducted, and one could understand something important about Iranian public opinion from the official numbers.

Oddly, the wild distortion of the real results does show something that the mullahs do not want us to know. They fear the Iranian people, knowing how deeply the people hate them, and they believe they must continue to tell a big lie about popular support for the regime. But the people know better. Thus, the demonstrations.

The regime clearly intends to clamp down even harder in the immediate future. Hints of this were seen in the run-up to the election, when Internet sites and foreign broadcasts were jammed, the few remaining opposition newspapers shut down, and thousands of security forces poured into the major cities. One wonders whether any Western government is prepared to speak the truth about Iran, or whether they are so determined to arrive at make-believe deals -- for terrorists that are never delivered, for promises to stop the nuclear program, that are broken within minutes of their announcement, or for help fighting terrorism while the regime does everything in its power to support the terrorists -- that they will play along and pretend, as Deputy Secretary of State Richard Armitage has put it, that "Iran is a democracy."

For those interested in exposing hypocrisy, it is hard to find a better example than all those noble souls who denounced Operation Iraqi Freedom as a callous operation to gain control over Iraqi oil, but who remain silent as country after country, from Europe to Japan, appeases the Iranian tyrants precisely in order to win oil concessions.

Meanwhile, the only Western leader who consistently speaks the truth about Iran is President George W. Bush, and the phony intellectuals of the West continue to call him a fool and a fascist. Meanwhile, his most likely Democrat opponent, Senator John Kerry, sends an e-mail to Tehran Times, Iran's official English-language newspaper, promising that relations between the United States and Iran would improve enormously if Kerry were to be elected next November.

Finally, perhaps our enterprising journalists could ask the administration how it can be, three years after inauguration, that we still have no Iran policy. Yes, Virginia, there is still no National Security Presidential Directive (NSPD) on Iran, even though Iran is the world's leading sponsor of terrorism, and we claim to be in a war against the terror masters.

Faster, please.
http://www.nationalreview.com/ledeen/ledeen200402231057.asp





Posted by maximpost at 1:28 PM EST
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