>> TAHIR DOSSIER...

Alleged Malaysian Nuclear Dealer Missing
By PATRICK McDOWELL
ASSOCIATED PRESS
KUALA LUMPUR, Malaysia (AP) - The middleman in an alleged deal to supply Libya with nuclear components has disappeared from his Kuala Lumpur residence, and U.S. officials Thursday said Washington wants Malaysia to stiffen export controls to prevent such proliferation.
Malaysia summoned the top U.S. diplomat to protest what the government views as unfair attention on it as President Bush calls for a global crackdown on the international nuclear black market.
The allegations that a Malaysian company produced centrifuge components for Libya's nuclear weapons program has produced the first bump in U.S.-Malaysian relations since Prime Minister Abdullah Ahmamd Badawi took office nearly four months ago.
Malaysia's protest declared the country supports nuclear non-proliferation and was "offended" that Bush unfairly named the nation as a source of parts to Libya's program without specifying other nations, the New Straits Times newspaper reported.
Malaysia thoroughly investigated the origin of the parts and determined that the company involved - which is majority-controlled by the prime minister's son - did not know they were for nuclear use or would end up in Libya, the newspaper reported.
Meanwhile, the former company executive who brokered the Libya deal - Sri Lankan Buhary Syed Abu Tahir - has left his Kuala Lumpur apartment with his family, guards at the building said.
Deputy Prime Minister Najib Razak said Thursday he did not know the specifics of the diplomatic protest, but "probably it is to express our concern that Malaysia is singled out unfairly and we have been totally vindicated by the facts."
U.S. officials indicated Thursday that the key challenge in Malaysia and other countries was to put export controls in place to keep unwitting companies from being used.
"In keeping with its commitment to non-proliferation, we are encouraging Malaysia to take the steps necessary to bring its export control system in line with international standards, in hopes of preventing future proliferation activities," Embassy spokesman Frank Whitaker said.
The parts, seized en route to Libya last October, were produced by Scomi Precision Engineering, a subsidiary of the oil-and-gas company Scomi Group that is majority-controlled by the prime minister's son, Kamaluddin Abdullah.
The deal to make the parts for a Dubai-based company, Gulf Technical Industries, was brokered by Tahir, whom Bush labeled the "chief financial officer and money launderer" of the network led by Abdul Qadeer Khan, father of Pakistan's nuclear bomb.
The Tahir family left their luxury apartment in an exclusive Kuala Lumpur neighborhood on Wednesday, security guards at the complex said, a day after The Associated Press tracked them down and tried to seek comment. Their current whereabouts are unclear, though they are believed to be under close surveillance by Malaysian authorities.
A senior police official, speaking on condition of anonymity, told AP on Thursday that as far as he knew, Tahir, who has Malaysian permanent residency, was still in the country.
Tahir's Malaysian wife, Nazimah Syed Majid, said Tuesday evening that her husband was "away." She did not say where.
But a building security guard told the AP that Tahir had come and gone several times from the building Tuesday. The couple left Wednesday morning with their two young children, sending a driver back later to pay outstanding bills.
The telephone was not answered at the apartment Thursday.
Malaysian officials have said Tahir was cooperating with a police investigation into the Khan network, but have given no details. He is free and Najib has said he would remain so unless police determine that he committed a crime.

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>> DR. STRANGELOVE CONTINUED...


Pakistani Linked to Illegal Exports Has Ties to Military
By DAVID ROHDE
http://www.nytimes.com/2004/02/20/international/asia/20STAN.html?hp
Published: February 20, 2004
ISLAMABAD, Pakistan, Feb. 19 -- A Pakistani businessman who has been linked to the illegal export from the United States to Pakistan of high-speed switches has longstanding ties to the country's powerful military, according to documents filed in an American court and interviews here. The switches can be used as triggers for nuclear weapons.
Humayun Khan, the Pakistani businessman whose office address was the final destination for the shipment last fall of 66 triggers, confirmed in interviews that he and his father had been suppliers of equipment and technology to the Pakistani military for the last 20 years.
Mr. Khan insisted that he had not been involved in the effort to smuggle the American-made triggers to Pakistan.
"I know it's my address, and everything is pointing to me and my company," Mr. Khan said as he sat in the offices here of his company, Pakland P.M.E. "Frankly speaking, if I want to deal in these things, I would never be so stupid as to use my own company."
But documents Mr. Khan presented to bolster his argument as well as court papers filed in Washington provide evidence that he did business supplying the Pakistani military with restricted technology.
The court documents are part of the case against Asher Karni, an Israeli businessman living in South Africa who was arrested on Jan. 1 by federal agents in Denver and charged with illegally exporting the sophisticated switches to Pakistan by way of South Africa. Mr. Karni is now in custody awaiting trial in Washington, D.C.
Mr. Karni told the American manufacturer of the switches, PerkinElmer Optoelectronics of Salem, Mass., that they would be sent to hospitals for use in treating kidney stones.
American law enforcement officials said "voluminous" e-mails to Mr. Karni detail Mr. Khan's repeated requests between June and September 2003 for the trigger switches.
Before the switches were sent out of the United States to Mr. Karni's company in South Africa, they were disabled at the request of federal law enforcement officials, and became part of a sting operation.
In other e-mail messages in the court records, Mr. Khan wrote repeatedly to Mr. Karni between May 29 and June 16 of last year to inquire whether he could purchase infrared target detectors for Pakistani Air Force fighter missiles. The United States bars the sale of such equipment to Pakistan without American government approval.
Mr. Khan himself produced letters showing that he tried to buy oscilloscopes, magnetometers, telemetry systems and airplane guidance systems from American companies in 2002 and 2003. He said all the devices were for civilian companies.
American nonproliferation experts said the items Mr. Khan sought to buy also had military applications.
President Pervez Musharraf of Pakistan has spent the last month trying to quell a nuclear proliferation scandal involving Abdul Qadeer Khan, a scientist who is called the founder of the country's nuclear weapons program. On Feb. 4, Dr. Khan, who is no relation to Humayun Khan, confessed to providing nuclear technology to Iran, Libya and North Korea for more than a decade.
A day later, General Musharraf granted a full pardon to the scientist. He said no other military or government official had been involved in the proliferation. He later declared that his government had stopped all Pakistani nuclear hardware smuggling when it removed Dr. Khan from his post in March 2001.
Pakistani officials declined to comment on the Karni case and the trigger devices. Syed Anwar Mahmood, the government's information secretary, said Thursday that Pakistan had received no official notification of the investigation of Mr. Karni.
"The concerned people say they can't comment on it because they have not been approached officially on it," Mr. Mahmood said.
In interviews Humayun Khan said his company supplied civilian companies and equips college and high school chemistry, physics and television repair laboratories. He said he purchased equipment for the Pakistani military only occasionally.
Mr. Khan produced a letter from an Islamabad construction company asking that he purchase a sophisticated oscilloscope made by Tektronix, a Beaverton, Ore., company.
The Pakistani construction company said it had never issued such a letter.
Mr. Khan also provided a letter from a television company that he said had requested another Tektronix oscilloscope. An official from the television company said he could not remember placing such an order, and did not respond to subsequent requests for comment.
Mr. Khan said that his company employed only four people and that military supplies made up only a small part of his business. At different points he suggested that a former employee, smugglers or his brother, a bitter business rival, might have framed him.
In a telephone interview, his brother, Faisal Khan, denied any role in the case.
Mr. Khan said he knew Mr. Karni as a supplier of electronic equipment, and had made contact with him to buy several pieces of American-made equipment that were not dual-use items -- that is, that could be used to make nuclear weapons.
American investigators have said the high-speed switches were ordered for a group called AJKMC Lithography Aid Society. Mr. Khan showed a letter from the group dated Dec. 27, 2003, saying the switches had gone to hospitals in Pakistan and Sri Lanka. But the group's letterhead listed its address as Humayun Khan's office in Islamabad.
Mr. Khan said he could not explain why the group had used his office address. He said did not know who they were, and had had contact with the group only by e-mail. He said his e-mail records had been destroyed the day before by a computer virus.
Alisha Goff, a spokesperson for Tektronix, said that Mr. Khan was an independent distributor in Pakistan for the company and that all shipments made to his company had been approved by the Department of Commerce. She said most of the company's customers in Pakistan were schools and telecommunications companies.
She said all shipments to Mr. Khan's company had been stopped, pending the criminal investigation into the trigger case.
Eric Lichtblau contributed reporting from Washington for this article.
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>> UPDATE A MONTH LATER...


Lebanon to Return More Than $15M to Iraq
ASSOCIATED PRESS
Lebanon to Return More Than $15M to Iraq BEIRUT, Lebanon (AP) - Lebanon will return to Baghdad more than $15 million in Iraqi money seized on a plane that landed in Beirut, Lebanon's top legal official said Thursday.
Lebanese authorities confiscated 19.5 billion new Iraqi dinars from a private, Lebanese-owned plane that flew from Baghdad on Jan. 14.
They also arrested two Lebanese businessmen on the plane and a third who met them at the airport. All have been released on bail.
Lebanon's Prosecutor General Adnan Addoum said he decided to return the money after the Iraqi Foreign Ministry had sent a letter Feb. 14 demanding the dinars.
The confiscation of the new money came as Iraq's old bank notes - bearing former Iraqi President Saddam Hussein's portrait - became obsolete following a three-month period to exchange them for the new currency.
One of the arrested businessmen reportedly told police that most of the money was to pay for armored cars to protect Iraqi officials.
The Iraqi Interior Ministry said in a letter published in Beirut last month that the money was intended to pay for Iraqi government purchases.
Iraqi Governing Council members have visited Beirut and asked Lebanese officials to release the money, plus other Iraqi dinars held in Lebanese banks.

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Qatar Holds Suspects in Yandarbiyev Death
ASSOCIATED PRESS
DOHA, Qatar (AP) - Qatar said Thursday it has arrested two suspects in the assassination of former Chechen President Zelimkhan Yandarbiyev.
Yandarbiyev, 51, was killed Feb. 13 when a bomb ripped through his car. His teenage son was wounded.
The Interior Ministry said two suspects are being questioned in his death. No further details were available in the ministry statement, carried by the Gulf state's national news agency, QNA.
Yandarbiyev, Chechnya's acting president in 1996-1997, had lived in Qatar since 2000 and was wanted by Russian authorities for suspected terrorism and links to al-Qaida. Moscow had been seeking his extradition.
His assassination occurred one week after a bombing in a Moscow subway killed 41 people and wounded more than 100. President Vladimir Putin blamed Chechen rebels for the bombing.
An aide to Yandarbiyev, Ibrahim Gabi, has blamed the Kremlin for Yandarbiyev's killing, a pro-rebel Web site reported.
Last year, the United Nations put Yandarbiyev on a list of people with alleged links to al-Qaida. Washington also put him on a list of international terrorists subject to financial sanctions.
Yandarbiyev became one of the most prominent proponents of radical Islam among the Chechen rebels. During the hard-line Islamic rule of the Taliban in Afghanistan, Yandarbiyev opened a Chechen Embassy in the Afghan capital, and a consulate in the southern city of Kandahar.
Qatar hosts a variety of Muslim politicians and militants, including Palestinian Hamas leaders, Algerian Muslim fundamentalists and officials of Saddam Hussein's regime. The Qataris say they are adhering to Arab traditions of providing hospitality to guests and of offering sanctuary to refugees.
The practice also serves to defuse anger at Qatar for allowing the United States to establish military bases in the Gulf sheikdom.

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Saudi authorities kill wanted suspect in clash south of Riyadh
A fugitive was shot dead in the course of an armed clash with ?Saudi ?security forces in the residential area of Al-Aziziah south of Riyadh Wednesday.?

In its Thursday edition, Okaz reported the wanted man opened fire in the direction of the security forces, that ?were rushed to the region after receiving a tip about his presence in the area.

They reportedly retaliated the shooting, killing the suspect on the spot.? (Albawaba.com)





Saudi FM stresses need to reform
Prince Saud Al-Faisal, the Saudi Foreign Minister, on Thursday stressed the need to reform. Lecturing in Belgium in response to an invitation from Brussels-based Center of European Political Studies, Prince Saud said efforts
should be exerted to facilitate the process of re-formulating the economic system and improving management, adding that Islam could play a crucial role as regards coherence of the society.

"We are in need of a comprehensive reform program characterized with political, legal, administrative, economic and educational components", Saudi Arabia's top diplomat said, adding "despite the need of the Arab world to a such reform, yet the reform can never be imposed from outside."

According to SPA, he pointed out that the settlement of the Arab-Israeli dispute on the base of establishment of two countries constitutes a practical and realistic solution.






The Rediff Special/ Swaran Singh

A dangerous place
As reports about the possible failure of some of Pakistan's nuclear devices begin to trickle in -- thereby confirming that Islamabad's nuclear adventure does not really obtain for it the benefits of having 'equalled' India -- previews of its forthcoming budget have already begun projecting the severe costs that Pakistan will have to bear in the months ahead.
Government officials have indicated that the 1998-99 budget -- to be announced on June 13 -- will contain as much as 50 per cent cut in all non-developmental expenditure and provide for other measures to promote industrial growth along with stricter financial discipline. As part of the austerity measures Prime Minister Nawaz Sharief is reported to have decided to shift from his present secretariat to a more modest building.

According to initial estimates, the current account deficit in the first nine months of fiscal 1997-98 was $ 1.13 billion. The budgetary deficit is likely to reach $ 3.4 billion by the end of this year. Pakistan's National Economic Council, the country's top economic planning body, has said it will also review the salaries and allowances of government servants.

The United States, which has already announced sanctions, can halt the rollover of an estimated $ 700 million to $ 1 billion in commercial loans and credit lines for items like food and oil imports which are provided for by American banks. Finance Minister Sartaj Aziz has announced plans to launch three major campaigns to counter the sanctions. These include increasing exports, raising revenue and expanding agricultural production. He hopes to recover an estimated Rs 140 million of bad or overdue debt and to recover taxes paid only by one per cent of 140 million Pakistanis. All these projections look fairly ambitious, to say the least.

More optimistic analysts believe that since over 90 per cent of foreign assistance flows into Pakistan from multilateral donors, the reduced inflow of US aid may not really result in a complete economic collapse. Although the US and Japan have considerable influence over these agencies, not always have their opinions resulted in suspension of grants by the World Bank or the International Monetary Fund. The World Bank funds some 40 ongoing projects in Pakistan and is committed to funding capital market and banking sector reforms.

However, can Pakistan keep on track of the targets and the reforms it had promised? As per mutually agreed norms for these loans, Pakistan is required to meet certain targets for budget deficit, revenue collection, growth rate of gross domestic product and inflation in order to qualify for the $ 1.1 billion left in the IMF's $ 1.56 billion structural adjustment programme signed last October.

Pakistan's foreign debt repayment is likely to emerge as one major crisis. Some commentators fear that Pakistan may default on its foreign debt obligations as it faces spiralling inflation and cuts in development spending, resulting in an economic slowdown. According to World Bank officials, Pakistan needs $ 5.3 billion annually to service and repay its estimated $ 32 billion foreign debt, of which as much as 20 per cent is short-term.

Already, fearing a run on foreign currency bank deposits of about $ 10 billion, against official cash reserves of only $ 1.3 billion, the State (central) Bank of Pakistan shut commercial banks the day after the first nuclear tests on May 28 and froze all foreign currency deposits and budgetary transactions. It partially lifted the freeze the next day and allowed people to draw their foreign currency in rupees at the rate of Rs 46 per dollar against the official rate of Rs 44.05. According to experts, all this has caused irreparable damage to investor confidence. There will be very few commercial lenders and investors interested in taking an exposure in Pakistan even at a higher rate of return.

But apart from these purely economic costs, the implications of these tests for regional geo-strategic equations also portend an equally difficult future. There are a variety of reasons why Pakistan's weaponisation has made Pakistan anathema not only for this region but for all other proponents of non-proliferation. This is especially so because of its inherent linkage with Chinese supplies about which the US remains very concerned.

Secondly, it has linkages with Islamic countries like Saudi Arabia, Iran and Syria, and this threatens to spill over into the extremely sensitive energy epicentre of West Asia. This region remains critical to Washington's foreign policy formulations. There is no dearth of evidence to prove that right from its inception, Pakistan's nuclear capabilities have been visualised in terms of technology and training from China while the funding allegedly came from its Islamic friends. Some of these friends might one day pressurise Pakistan to share this nuclear technology.

Looking at Pakistan's extensive involvement in hosting and sponsoring insurgencies in Afghanistan and India during the last 15 years these fundamentalist organisations have obtained tremendous access and influence over Pakistan's power elite. It cannot be ruled out that these nuclear weapons are now far more likely to be slipped into the hands of terrorists. Even if such a formal transfer does not take place, there is still great potential for other complications. This is because, unlike the other six nuclear weapons states where the final control on nuclear weapons remains in the hands of a popularly elected civilian leadership, in Pakistan's case it is the military that controls not only the nuclear button but the entire polity of Pakistan, thus making it far more an instrument of militaristic thinking and far less accountable to Pakistan's public.

These internal pressures are now going to become more and more assertive. Having tested these nuclear devices, the Pakistan government will now be expected to make further allocations for building its overall nuclear deterrent -- warheads and delivery systems. According to a former army chief, General Mirza Aslam Beg, Pakistan spent $ 250 million on its nuclear programme during 1979 to 1992. Considering that this was during the inception of its nuclear programme, the expenditure is sure to be multiplied by Pakistan's post-Chagai requirements.

Moreover, this has to be seen against the backdrop of the steep fall in the value of Pakistan's rupee which was devalued by as much as 50 per cent in 1993 and has continued to slide following the nuclear tests. It is a well known fact that beginning in the early 1980s, Pakistan had continued to allocate vast funds for military purposes at the cost of economic security. During the decade 1986 to 1995, Pakistan's defence expenditure stayed at about 7 per cent of GDP and at about 30 per cent of its annual budget.

Such consistently high allocations have had an adverse impact on Pakistan's economic development. This has to be seen along with Pakistan's unusually high rate of annual debt repayment which is generally over 60 per cent of the total estimated revenue. During 1995, for which figures are available, defence expenditure (Rs 115 billion) and debt repayment (Rs 157 billion) together exceeded Pakistan's total revenue of Rs 265 billion. This trend has more or less sustained itself all these years.

There has been some decline in Pakistan's defence allocations these last two or three years, but this is understandable in terms of its push to its nuclear and missile programmes.

Pakistan's nuclear tests have further complicated India's policies, both towards Pakistan and China. This is because Pakistan's nuclear programme has inherent linkages with China's actions and policies towards India. Though it was widely expected, the visit to Beijing by Pakistan Foreign Secretary Shamshad Ahmed, followed by the nuclear tests on May 28 and 30, added to India's suspicions about China's motives and contribution towards Pakistan's nuclear tests.

To make this Sino-Pak linkage obvious, in his address to the nation on May 28, Nawaz Sharief sounded grateful when describing Pakistan's 'time-tested' relations with Beijing, saying, "Our friendship has been further strengthened." In India this is bound to be interpreted in the context of China's alleged involvement in promoting Pakistan's nuclear and missiles programmes.

The wildest speculation making the rounds have described the Pakistani tests as actually conducted by China which, it is said, decided to please its ally and also circumvent the CTBT. However, the failure of some of these devices does not lend credence to such speculation.

At a more serious level, since the late 1980s, there has been a well established, sustained correlation in China's development projects on various missiles and their arrival and announcement by the Pakistani leadership which proves how Islamabad owes most of its nuclear and missile arsenals to Beijing.

Finally, what makes Pakistan's nuclear tests particularly dangerous is that the Chinese have continued to ignore all these signals and play soft vis-a-vis Pakistan. China is now trying to gang up with the United States in declaring India as the culprit and protectiing Pakistan from the consequences of its nuclear response to New Delhi.

What is worse is that these nuclear weapons may not have to be actually used to unleash death and destruction. From the Indian point of view, looking at the immediate reaction within Pakistan, where the tests were followed by a declaration of a state of emergency and all transactions in foreign exchange halted, the most dangerous prospect of economic sanctions may be one where it results in Pakistan's internal instability and political disorder. This may be the most dangerous threat to India's security and peace.

Dr Swaran Singh, author of Limited War, is a Research Fellow at the Institute for Defence Studies & Analyses, New Delhi, where he specialises on China's defence and foreign affairs.

The Rediff Specials