FBI denies link between terrorists, LNG tankers
By Shelley Murphy and Stephen Kurkjian, Globe Staff, 3/26/2004
FBI officials vehemently denied yesterday recent assertions by former White House terrorism czar Richard A. Clarke that the FBI learned in December 1999 that terrorists had been slipping into Boston on liquefied natural gas tankers from Algeria, yet failed to notify local authorities.
``We did thoroughly investigate that LNG tanker situation and came to the conclusion they were not being used to transport terrorists into our country,'' said Kenneth Kaiser, the special agentin-charge of the FBI's Boston office. ``We didn't brief the mayor that there was an Al Qaeda cell here, because there wasn't one.''
According to Kaiser, the FBI was investigating the thwarted 1999 ``millennium'' plot to blow up Los Angeles International Airport when it learned that several people being questioned in Boston had entered the country by stowing away on LNG tankers from Algeria.
The Joint Terrorism Task Force, which includes members from the Boston police and the Massachusetts State Police, conducted an intensive investigation and concluded that none of the stowaways were terrorists, Kaiser said.
``There were none that had any links to terrorism that we could find and none that committed any acts of terrorism,'' Kaiser said. Ultimately, the cases in Boston were turned over to the US Immigration andNaturalization Service to determine whether the men should be deported, he said. Kaiser said he did not know if anyone had been deported.
While one of the men who was later convicted in the millennium plot, Abdelghani Meskini, had arrived in Boston as a stowaway on an Algerian tanker, Kaiser said there was no evidence that Meskini, who is cooperating with authorities and denies being a terrorist, had any terrorist links when he arrived in Boston in January 1995. He was living in Brooklyn, N.Y., when he was arrested in December 1999 in connection with the millennium plot.
Clarke, who left his post with the White House last March, says in his new book, ``Against All Enemies,'' that the FBI learned in December 1999 that Al Qaeda suspects had entered the United States onLNGtankers that dock at the DistriGas port in Everett. Yesterday, he said that information should have been shared with State Police officials and the governor.
``The governor and his authorities should have been informed, and frankly I don't know why the FBI didn't make that happen,'' Clarke said yesterday in an interview on WRKO radio. ``The FBI has channels for notifying state and local law enforcement officials when it finds out things in their jurisdictions, and the FBI definitely should have told the State Police.''
Clarke's comments were his first public remarks on the issue of LNG safety in Boston Harbor. Local officials and the company that runs the LNG facility, Distrigas of Massachusetts, said they were unaware of possible terrorist infiltration of LNG tankers until Clarke's book was published.
But Kaiser said that Clarke's assertions were based on ``incomplete information,'' because he had received a briefing on the FBI's investigation into the LNG tankers when it was ongoing and he apparently didn't know that the FBI had concluded that terrorists weren't jumping ship in Boston.
Tom Powers, an assistant special-agent-in-charge who heads the FBI's counterterrorism efforts in Boston, said he personally gave Clarke a briefing on the case on June 23, 2000, when Clarke was traveling to FBI offices around the country for updates on their efforts to fight terrorism.
``I don't believe those tankers were ever used up to 9/11 as a deliberate attempt to seed terrorism in the United States,'' Powers said.
US Representative Edward J. Markey, whose district includes Everett, said he would continue to push for documentation that backs up the FBI's statements, noting that President Bush's aides are working hard to shoot down claims made by Clarke. He said he has been asking federal officials for information on terrorist threats to the LNG facility since shortly after Sept. 11, 2001. Mayor Thomas M. Menino said he doesn't believe the issue of possible terrorists arriving as stowaways on tankers was ever mentioned to Boston police officials.
Kaiser said Boston police officials were briefed on the LNG tanker investigation at the time, and said it's customary to brief the Boston police commissioner, rather than go directly to the mayor. Everett Police Chief Stephen A. Mazzie said he believes that ``dozens'' of Algerians arrived in Boston by stowing away on an LNG tanker, the Mostefa Ben Boulaid, which made monthly trips from Arzew, an Algerian port city in North Africa.
Mazzie said, however, that he investigated the backgrounds of many of the Algerians after they were charged with minor crimes, but that none were involved in violent crimes, guns, or bomb-making.
But because they were in the country illegally, Mazzie said he contacted the INS. ``What I got back was that there was nothing [the INS] could do unless it involved a felony or crime of violence,'' Mazzie said.
Mazzie and Chelsea Police Chief Frank Garvin said that the FBI and other federal agencies were so concerned about security at the Everett facility that they boarded vessels to check for illegal contraband and review the crew's identification papers.
``We thought we had any problems under control,'' Garvin said
Tuesday, ``which is why everyone was so surprised to read that there might have been a terrorist threat among the stowaways on the boat.''
A Distrigas statement said that the company stopped accepting Algerian vessels months before the attacks of 9/11.
Rick Klein of the Globe staff contributed to this report.

? Copyright 2004 Globe Newspaper Company.
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FBI chief talks of election-year terrorism risks
By Curt Anderson, Associated Press, 3/26/2004
WASHINGTON -- Terrorists could attempt to influence the outcome of this year's US presidential election by launching attacks in America and overseas, FBI Director Robert Mueller said yesterday.
In an interview, Mueller also said Islamic extremists have changed tactics and are focusing on recruiting local sympathizers who are less likely to arouse suspicion than outsiders sent into a country to conduct terrorist operations.
The March 11 train bombings in Madrid, which were a factor in the ouster of a pro-US Spanish government, could embolden Al Qaeda or other extremists to attack the United States during this summer's presidential nominating conventions in New York and Boston, Mueller said.
"In the wake of what happened in Madrid, we have to be concerned about the possibility of terrorists attempting to influence elections in the United States by committing a terrorist act," Mueller said.
Those conventions will book-end the Summer Olympics in Athens, another venue that could draw terrorist attacks. The United States has been concerned that security efforts in Athens may fall short of what is necessary to protect athletes and spectators.
"We understand that between now and the election, there is a window of time in which terrorists might try to influence events, whether it's here or overseas," Mueller said. The FBI and other US agencies are assisting the Greeks to identify and shore up potential weaknesses.
Regarding the new Al Qaeda recruiting tactics, Mueller said that the suicide bombers who took part in last May's attacks in Casablanca, Morocco, were local extremists, and he indicated that similar efforts are probably going on in the United States.
Mueller applauded the cooperation of Saudi Arabia and Pakistan in US antiterrorism efforts. Since the deadly May 12 bombings in Riyadh, Saudi Arabia has moved aggressively to root out Al Qaeda cells and discovered huge caches of explosives and weapons.
"Saudi Arabia has become a very inhospitable place for Al Qaeda," Mueller said. "That was not always the case."
Separately, the FBI yesterday said it had given Texas oil refiners a new warning about possible terror attacks coinciding with US elections in November, but reaction from the industry and world oil markets was muted. The advisory was based on "very raw intelligence" from overseas sources, said Bob Doguim, spokesman for the Houston FBI office.

? Copyright 2004 Globe Newspaper Company.
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Tax cut is part of Kerry plan
By Jim VandeHei, Washington Post, 3/26/2004
WASHINGTON -- John F. Kerry today will propose a 5 percent cut in the corporate tax rate as part of a new economic plan designed to create 10 million jobs by 2009 and discourage companies from sheltering taxable income overseas, his economic advisers said yesterday.
In essence, Kerry will offer a trade: If elected president, he would cut taxes on US corporations if they accept the elimination of tax benefits for those firms that move overseas.
The Massachusetts senator, fresh from a week's vacation, plans to use his first domestic policy address of the general election campaign to call for this carrot-and-stick approach to prod US companies to do more business and create more jobs in America. The speech is billed as the first of three presenting Kerry's detailed balanced budget plan, which will include several new tax cuts.
In doing so, Kerry is seeking to position himself as a moderate, probusiness Democrat similar to Bill Clinton in the 1990s and beat back charges he is a liberal tax-and-spend politician.
The Kerry offensive illustrates the centrality of economic issues in the 2004 election. As Kerry's economic team was rolling out the new plan, President Bush was airing a new TV ad, accusing Kerry of supporting tax hikes on Social Security recipients and gas and touting his own "optimistic" economic vision in a different ad and in New Hampshire.
In today's speech at Michigan's Wayne State University, Kerry will reiterate his call for the elimination of all tax breaks that encourage US companies to locate operations and jobs overseas and close all international tax loopholes. For the first time, he will target a popular tax incentive, known as "deferral," offered to most US companies that do business in lower-taxed foreign countries.
To soften the blow to corporations, Kerry will propose a one-time, one-year offer to tax at 10 percent any profits a company brings back to the United States and invests here; an expanded tax credit to companies that create domestic jobs and a reduction in the corporate tax rate to 33.25 percent from 35 percent.
"The most salient feature, or at least symbolic feature, is the corporate tax rate [cut]," said Roger Altman, a top economic adviser to Kerry. "When is the last time you saw a Democrat propose a corporate tax cut?"
Gene Sperling, another Kerry economic adviser, said the tax cuts for business will be fully funded by the international tax changes.
But Bruce Josten of the US Chamber of Commerce said the Kerry plan seems to ignore the complexity of the global economy. "There is a broader point he completely misses: there are companies that open up overseas" for reasons other than tax avoidance, he said.
By coupling new tax breaks with what amount to a new tax hike if loopholes are closed, Kerry is following Clinton's economic -- and political -- blueprint. In 1993, Clinton and congressional Democrats offered a mix of tax cuts and increases as the centerpiece of an economic plan that they say helped set the stage for the booming 1990s. Altman and Sperling worked for Clinton.

? Copyright 2004 Globe Newspaper Company.
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US details war plan's success and failings
By Bryan Bender, Globe Staff, 3/26/2004
WASHINGTON -- The American blitz into Baghdad was a stunning military success, but the war plan failed to adequately address the need to secure "sensitive sites" such as suspected weapons facilities, government archives, and possible terrorist hide-outs, according to a draft of the Pentagon's self-assessment of the military's performance in Iraq.
The draft report said that not enough properly trained units were available in the early weeks of the operation to take over sites where weapons of mass destruction were suspected, even though much of the war plan was predicated on the idea that Iraq might retaliate with unconventional weapons.
Overall, the unclassified version of the "lessons learned" report concluded that the successful US-led invasion proved the effectiveness of smaller, high-tech units deployed quickly over large expanses -- the prime thrust of Defense Secretary Donald H. Rumsfeld's efforts to "transform" the military.
No longer are large formations critical to victory when small, flexible units linked with precision weaponry and high-tech communications can overwhelm a conventional military enemy by attacking its political, military, economic, and social centers, according to the draft report, which was obtained by the Globe.
"The traditional view of military forces wearing similar uniforms, arrayed on a linear battlefield, fighting mass formations, began to give way [in Iraq] to a different style of war-fighting," the report said. "Smaller formations with fluid and flexible command-and-control relationships, using lethal and nonlethal capabilities, fought to directly influence political, military, social, economic, information, and infrastructure objectives."
The report, dated March 1, is the first comprehensive Pentagon assessment of the invasion. Its existence was first reported by Inside the Pentagon, a newsletter covering the US military and the defense industry. A final version is expected to be released to the public in the coming weeks. The draft warned that the campaign that toppled Saddam Hussein in three weeks should not be used as a model for all future wars: Iraq, which had been a heavy focus of US military and intelligence officers at least since the 1991 Persian Gulf War, provided unique advantages for the United States from the outset that are unlikely to recur.
The 128-page report, which covers the period from March 21 to May 1, 2003, when President Bush declared an end to "major combat operations," was commissioned by the Joint Chiefs of Staff before the war and compiled by 34 military officers and 23 civilians at the US Joint Forces Command in Norfolk, Va., who were dispatched to Iraq at the start of the war to track how the military branches coordinated operations.
The draft provides a highly technical assessment of the gamut of military activities, from prewar planning to intelligence and logistics. It highlights a series of deficiencies, including the inability of US and allied forces to identify each other on the battlefield and prevent friendly fire; difficulties in providing supplies to forces that were rapidly on the move; the limited ability to track Iraqi military forces as they dispersed; and inadequate preparations before the war to equip National Guard and other reserve forces to take on a significant role. The draft said the preparations for seizing weapons of mass destruction facilities and other sites in Iraq -- missions conducted by Sensitive Site Exploration Teams, or SSEs -- were inadequate.
"Multiple SSE organizations were created with overlapping missions," it said. "This caused unnecessary competition for limited resources and reduced the effectiveness of all the groups."
Commanders chose an artillery unit, the 75th Artillery Brigade, to take control of sites with suspected weapons of mass destruction, even though it had virtually no experience or training for the mission. The brigade's mission soon expanded to include searches for Iraqi archives, war crimes evidence, terrorist hide-outs, regime leaders, and prisons.
The brigade was improperly trained for these missions, which were "far from the one for which it was designed," said the report.
No weapons of mass destruction have been found in Iraq, even though the military created a special survey group to lead the search after the combat phase.
Other key findings in the report include:
The intense, hand-to-hand combat expected in urban areas never materialized, so "our ability to conduct this sort of fight is not yet proven."
Some Iraqi troops evaded intelligence gathering, exploited adverse weather such as sandstorms to disperse, and have not been caught yet.
The military did little since the Gulf War to improve coordination to prevent deaths from friendly fire. For instance, ground forces had seven different "combat identification systems" and no way to identify one another. A Patriot missile shot down a British fighter plane, killing its crew.
The report praised the policy of "embedding" media with American combat units: "Public access to the battlefield through media proved to be a significant and overall positive component."
Overall, the assessment depicts a highly successful effort that employed many of the advances in military science of the past decade. The United States used about half of troops it employed in the Gulf War to envelop all of Iraq, not merely evict Iraqi forces from Kuwait as US forces did in the Gulf War. It used 15 percent of the munitions it used in 1991, although both wars lasted about the same amount of time.
"The terms historically used for measuring success in conflict are now less meaningful," the report said. "Forces are moved, operated, and sustained in a way that focuses more on generating effects than quantifying space occupied."
Indeed, special forces, on the order of 10,000, were twice the number that served in the 1991 war and more than three times larger as a proportion of the whole force engaged in combat. The small, elite units were able to take control of half of Iraq and almost single-handedly bottled up 11 Iraqi divisions.
Still, the report cautioned that Operation Iraqi Freedom could be a poor model for future fights. Iraq had 30 percent of the ground forces and 25 percent of the aircraft that it had in 1991, along with 60 percent of the air defenses. US Central Command had more than a decade of "corporate memory" of Iraqi miltary capability to prepare for the onslaught.
"Before the beginning of major combat . . . the United States continued to enforce the no-fly zones in northern and southern Iraq," the report said. "Additionally, these operations had been used to shape the battle space for the upcoming conflict. This extensive shaping affected how much effort was needed during the combat phase."
In the future, it concluded, the military is "not likely to have the same levels of experience or the time during a crisis to build the types of cohesive teams that marked CENTCOM's success."

? Copyright 2004 Globe Newspaper Company.
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Syria seeks our help to woo US
By John Kerin
March 27, 2004
SYRIA has appealed to Australia to use its close ties with Washington to help the Arab nation shake off its reputation as a terrorist haven and repair its relations with the US.
Secret talks between the two nations have been under way for months but have become more urgent as rogue nations reconsider their role in allowing terrorists to thrive, in light of the US determination to take pre-emptive military action.
A Syrian embassy will be opened in Canberra in weeks and Australia is considering reopening its mission in Damascus.
Australia's close relationship with Washington, and its much higher profile in the Middle East, have prompted Syrian Foreign Minister Farouq al-Shara'a and parliamentary speaker Mahmoud Al-Ibrache to appeal to Canberra to help bring their country back in from a US-imposed diplomatic freeze.
Syria has sent a delegation to Australia and has hosted a series of visits by Australian parliamentarians.
Drawing on the British-sponsored return of Libya to the international fold, Australia is demanding that Syria take a tougher role against terrorists, particularly those using the nation as a base for operations into Iraq.
Australia also has called on the former Soviet client state to abandon any pursuit of weapons of mass destruction before it returns to the fold.
Syria has supported the war on terror but the Bush administration has been sceptical about its commitment, fearing Iraqi weapons of mass destruction were smuggled across the border before the US-led invasion last year.
In November, senior Syrian officials asked a bipartisan Australian delegation led by National Party senator Sandy Macdonald to use Australia's influence with the US to achieve a diplomatic rapprochement.
Senator Macdonald said yesterday: "Syria is a country that has been a bastard state for nearly 40 years. But the leaders we spoke to in Syria appear keen to make linkages with the West and it sees Australia as having influence in Washington."
The overtures to Syria are seen as a response to the West's determination to confront rogue nations that may either pose a threat themselves or pass on weapons to terrorists.
Foreign Minister Alexander Downer last night welcomed Syria's commitment to broadening dialogue with the international community.
"We would like to see Syria follow Libya's example in making a genuine return to the international community," he said through a spokesman.
"But Syria must abandon any effort to attain weapons of mass destruction, act to control the flow of terrorists across its border with Iraq and step up support for the war on terror."
He said Australia was considering reopening an embassy in the Syrian capital, Damascus. The embassy was closed in 1999 because of cost-cutting.
Syria's Melbourne-based honorary consul, Antonios Zyrabi, confirmed to The Weekend Australian last night that Syria wanted Australia to help it come in from the diplomatic cold.

? The Australian

>> WHAT ABOUT THOSE STILL IN POWER? WHERE IS SADDAM
? & SONS? WILL THE BANKS DISGORGE?


Press Release:
http://www.transparency.org/pressreleases_archive/2004/2004.03.25.gcr_relaunch.html
Plundering politicians and bribing multinationals undermine economic development, says TI

Transparency International's new Global Corruption Report 2004 charts the flow of stolen assets, recommends ways to recover money looted by despots, and sets out new Standards on Political Finance and Favours

London, 25 March 2004



Political corruption undermines the hopes for prosperity and stability of developing countries, and damages the global economy," said Peter Eigen, Chairman of Transparency International (TI), launching the TI Global Corruption Report 2004 (GCR 2004 ) today. "The abuse of political power for private gain deprives the most needy of vital public services, creating a level of despair that breeds conflict and violence. It also hits the pockets of taxpayers and shareholders worldwide. The problem must be tackled at the national and international level," he said.

"The GCR 2004 , with a special focus on political corruption," said Eigen, "is a call to action to bring integrity and accountability into governance, to stop bribery by multinational companies, and to curb the flow of stolen assets into secret bank accounts in the west." TI is the leading international non-governmental organisation combating corruption worldwide.

"Democracies can no longer tolerate bribery, fraud and dishonesty," states former US President Jimmy Carter in a foreword to the GCR 2004 , "especially as such practices disproportionately hurt the poor."

The GCR 2004 details funds allegedly embezzled by political leaders of the past two decades. During his misrule, Mohamed Suharto, President of Indonesia from 1967-98, is alleged to have stolen US$15-US$35 billion in a country where the GDP per capita hovers at around US$700. Suharto tops the table of corrupt politicians.



Where did the money go? - The top 10

Head of government Estimates of funds allegedly embezzled GDP per capita (2001)
1. Mohamed Suharto President of Indonesia, 1967-98 US$ 15 to 35 billion US$ 695
2. Ferdinand Marcos President of the Philippines, 1972-86 US$ 5 to 10 billion US$ 912
3. Mobutu Sese Seko President of Zaire, 1965-97 US$ 5 billion US$ 99
4. Sani Abacha President of Nigeria, 1993-98 US$ 2 to 5 billion US$ 319
5. Slobodan Milosevic President of Serbia/Yugoslavia, 1989-2000 US$ 1 billion n/a
6. Jean-Claude Duvalier President of Haiti, 1971-86 US$ 300 to 800 million US$ 460
7. Alberto Fujimori President of Peru, 1990-2000 US$ 600 million US$ 2,051
8. Pavlo Lazarenko Prime Minister of Ukraine, 1996-97 US$ 114 to 200 million US$ 766
9. Arnoldo Alem?n President of Nicaragua, 1997-2002 US$ 100 million US$ 490
10. Joseph Estrada President of the Philippines, 1998-2001 US$ 78 to 80 million US$ 912




Transparency International Standards on Political Finance and Favours

1. Donations to political parties and candidates to elected office must not be a means to gain personal or policy favours. Parties and candidates must practise transparency. Governments must implement adequate conflict-of-interest legislation.

2. Political parties, candidates and politicians should disclose detailed information about assets, donations, in-kind donations, loans and expenditure, on an annual basis as well as before and after elections, to an independent agency.

3. Independent public oversight bodies endowed with the necessary resources must effectively supervise the observance of regulatory laws and measures. Together with independent courts, they must ensure that offenders are held accountable and duly sanctioned. 4. Diversified funding should be sought through: state funding and subsidised access to the media; the encouragement of small donations and membership fees; and controls on corporate, foreign and large individual donations. Spending limits should be considered.

5. Candidates and parties must be given fair access to the media. The media should play an independent role, free from political interference, both in election campaigns and in the broader political process.

6. Civil society should have the opportunity to actively participate in promoting adequate legislation in the field of political finance and in the monitoring of political finance and its impact on political representation.

The full text of the TI Standards is available in the TI Global Corruption Report 2004






http://www.globalcorruptionreport.org/download.htm


Part one
Political corruption
TI 02 chap01 7/1/04 11:39 Page 9
TI 02 chap01 7/1/04 11:39 Page 10
1 Introduction
Robin Hodess1
What is political corruption?
Political corruption is the abuse of entrusted power by political leaders for private gain,
with the objective of increasing power or wealth.2 Political corruption need not involve
money changing hands; it may take the form of `trading in influence' or granting
favours that poison politics and threaten democracy.
Political corruption involves a wide range of crimes and illicit acts committed by
political leaders before, during and after leaving office. It is distinct from petty or
bureaucratic corruption in so far as it is perpetrated by political leaders or elected
officials who have been vested with public authority and who bear the responsibility
of representing the public interest. There is also a supply side to political corruption -
the bribes paid to politicians - that must be addressed.
Political corruption is an obstacle to transparency in public life. In established
democracies, the loss of faith in politics and lack of trust in politicians and parties
challenge democratic values, a trend that has deepened with the exposure of corruption
in the past decade.3 In transition and developing states, political corruption threatens
the very viability of democracy, as it makes the newer institutions of democracy
vulnerable.
Political corruption is a primary focus of Transparency International's work. Indeed,
one reason for selecting political corruption as the theme of this year's Global Corruption
Report is the priority of this issue in TI's network of national chapters around the world,
many of which hold political corruption to be a major concern in their country and
have made political corruption a focus of their advocacy efforts.
The impact of political corruption
The revelation of political corruption often sends shockwaves through a society. Yet,
despite strong demands for justice, prominent world leaders who are suspected of
corruption prove difficult to prosecute or convict. Many leaders are out of office or dead
before their crimes come to light. TI has put together a list of alleged embezzlers from
Sani Abacha to Mohamed Suharto (see Table 1.1, page 13), showing estimates of the
money they allegedly stole as compared with per capita income. This list is a powerful
reminder of just how massive and devastating the scale of abuse can be.
Introduction 11
TI 02 chap01 7/1/04 11:39 Page 11
The general public around the world has taken note of political corruption. TI's
Global Corruption Barometer (see `Global Corruption Barometer 2003', Chapter 11,
page 288), a new instrument that assesses the general public's experiences of and
attitudes towards corruption, finds that if citizens could wave a magic wand to eliminate
corruption from just one institution, more would choose to clean up political parties
than any other institution. For parties, which play a crucial role in public life in any
democracy, the message is clear: there must be absolute probity of party members and
officials, and parties themselves must clean up their internal practices.
Business people also sense the effects of political corruption. A survey by the World
Economic Forum shows that business people believe that legal donations have a high
impact on politics, that bribery does feature as a regular means of achieving policy
goals in about 20 per cent of countries surveyed, and that illegal political contributions
are standard practice in nearly half of all countries surveyed (see Box 2.4, `Political
corruption: a global comparison', page 30).
Political corruption points to a lack of transparency, but also to related concerns
about equity and justice: corruption feeds the wrongs that deny human rights and
prevent human needs from being met. Former UN High Commissioner for Human
Rights Mary Robinson argues that corruption hinders participation in political life and
proper access to justice (see box `Corruption and human rights', page 7).
Focus of the report
This year's Global Corruption Report focuses on corruption in the political process, and
on the insidious impact of corrupt politics on public life in societies across the globe.
It addresses the following areas in the context of political corruption:
* the regulation of political finance
* the disclosure of money flows in politics and the enforcement of political finance
laws
* elections - specifically vote buying
* the private sector - with a focus on the arms and oil sectors, and
* tackling the abuse of office - including reducing conflicts of interest, limiting
recourse to immunity, pursuing extradition and repatriating stolen wealth.
The report also evaluates various mechanisms that can curb corruption in politics,
from citizen action to the creation of new international norms and standards, such as
Transparency International's Standards on Political Finance and Favours (see below).
By focusing on the above topics, the Global Corruption Report addresses particular
weak spots in political life: the abuse of money in the political system by candidates
and political officials; the lack of transparency about money flows in politics; the
potential of the private sector to purchase influence, distorting both the marketplace
and the fair representation of the public interest; the corruption of the electoral process;
and the ways the legal system can affect the ability of states to pursue justice in major
corruption crimes.
Political corruption 12
TI 02 chap01 7/1/04 11:39 Page 12
We chose these areas for a number of reasons. First, the prominence we give to
political finance (whether campaign finance or political party finance) reflects the
fact that often political corruption starts here, with financing. There is a great deal of
concern about the cost of elections in both new and established democracies as well
Introduction 13
Box 1.1: Where did the money go?
Table 1.1 illustrates the scale of the problem of alleged political corruption through
estimates of the funds allegedly embezzled by some of the most notorious leaders of the
last 20 years. To put the figures in context, the right-hand column gives the GDP per capita
of each country.
The 10 leaders in the table are not necessarily the 10 most corrupt leaders of the period
and the estimates of funds allegedly embezzled are extremely approximate. The table is
drawn from respected and widely available sources. In general, very little is known about
the amounts allegedly embezzled by many leaders.
Table 1.1
Head of Estimates of funds GDP per
government allegedly embezzled capita
(2001)
Mohamed Suharto President of Indonesia, 1967-98 US $ 15 to 35 billion US $ 695
Ferdinand Marcos President of Philippines, 1972-86 US $ 5 to 10 billion US $ 912
Mobutu Sese Seko President of Zaire, 1965-97 US $ 5 billion US $ 99
Sani Abacha President of Nigeria, 1993-98 US $ 2 to 5 billion US $ 319
Slobodan Milosevic President of Serbia/Yugoslavia,
1989-2000 US $ 1 billion n/a
Jean-Claude Duvalier President of Haiti, 1971-86 US $ 300 to 800 million US $ 460
Alberto Fujimori President of Peru, 1990-2000 US $ 600 million US $ 2,051
Pavlo Lazarenko Prime Minister of Ukraine, 1996-97 US $ 114 to 200 million US $ 766
Arnoldo Alem?n President of Nicaragua, 1997-2002 US $ 100 million US $ 490
Joseph Estrada President of Philippines, 1998-2001 US $ 78 to 80 million US $ 912
Sources:
GDP figures: UN Human Development Report 2003 (New York: Oxford University Press, 2003); IMF Country Report
No. 02/269 (2002).
Suharto: Time Asia, 24 May 1999; Inter Press, 24 June 2003.
Marcos: CNN, February 1998; Time Asia, 24 May 1999; UN Office on Drugs and Crime (UNODC), Anti-Corruption
Toolkit, version 5, available at www.unodc.org/unodc/en/corruption_toolkit.html
Mobutu: UN General Assembly, `Global Study on the Transfer of Funds of Illicit Origin, Especially Funds Derived
from Acts of Corruption', November 2002; Time Asia, 24 May 1999.
Abacha: UNODC, Anti-Corruption Toolkit; BBC News (Britain), 4 September 2000; see also `Repatriation of looted
state assets', Chapter 6, page 100.
Milosevic: Associated Press, 2 December 2000.
Duvalier: Robert Heinl, Nancy Heinl and Michael Heinl, Written in Blood: The Story of the Haitian People 1492-1995
(Lanham: University Press of America, 1996); Time Asia, 24 May 1999; UNODC, Anti-Corruption Toolkit; L'Humanit?
(France), 11 May 1999.
Fujimori: Office of the Special State Attorney for the Montesinos/Fujimori case, Peru.
Lazarenko: Financial Times (Britain), 14 May 2003; Chicago Tribune (United States), 9 June 2003.
Alem?n: BBC News (Britain), 10 September 2002.
Estrada: CNN, 22 April 2001; Inter Press, 24 June 2003.
TI 02 chap01 7/1/04 11:39 Page 13
as about the influence of private money on political outcomes and the lack of public
information on the real sources of political funding.
In looking at corrupt forms of political finance, we demystify the topic (see Table
2.1, `Major types of political finance-related corruption', page 20) and expose the legal
and systemic obstacles to cleaning up political finance. Our report presents the pros
and cons of bans, limits, disclosure rules and public funding as remedies to corruption
in political finance - and provides evidence from a number of countries where these
measures are in place.
We then feature one remedy to corrupt political finance - disclosure - that is central
to the philosophy and approach of Transparency International. Disclosure of the flow
of money in politics, whether financing parties or candidates or spent on elections or
on public contracting, is critical. Political finance needs to be accounted for and, above
all, clean. There is very little justification for anything but maximum transparency
about political funds. This emphasis on disclosure tends to be a point of consensus for
politicians and activists alike. Yet the reality of disclosure rules, and their enforcement,
tells a different story - one in which there are numerous ways to limit disclosure.
Enforcement is the linchpin of a successful political finance regime: even the best
laws are valuable only if they are enforced. In nearly every country, enforcement has
proved perhaps the most difficult element to realise in a framework designed to stop
political corruption. Effective enforcement requires appropriate powers of investigation
on the part of the agencies involved, an independent and competent judiciary as well
as the necessary political will. We include reports that look at enforcement in practice,
via various types of sanctions, providing a sense of what works and why.
In addition to evaluating rules for candidates, parties and governments, we also assess
what role the private sector plays in political corruption. We feature experts on the
arms and oil sectors who evaluate recent revelations of political corruption with an eye
to what made corruption possible. We endeavour to analyse current reforms of business
practices, particularly those pursued as a result of civil society efforts.
Political corruption is not limited to political finance. We use this special section
to consider a form of political corruption that affects the election process the world
over: vote buying. Our contributors assess why and how vote buying occurs and how
it changes not only elections and their outcomes, but also the relationship between
elected officials and voters. As a number of other institutions are dedicated to the
assessment of practices such as the rigging of ballots, we decided to focus on vote
buying, a corrupt political practice that has received less systematic analysis.4
To complete this special section, we sought to capture how justice is often difficult
to pursue. Contributors reflect on the use (and abuse) of immunity and laws on conflict
of interest, obstacles to repatriation and the cumbersome process of returning stolen
public assets. In all of the above, contributions focus on the legal hurdles faced by
prosecutors and populations in many alleged crimes of political corruption. They also
detail the way forces of change are emerging at both the international and national levels.
Throughout the section on political corruption, we feature Transparency
International's 2003 Integrity Awards winners. Many of these individuals - some of whom
paid for their integrity with their lives - demonstrate that it is possible to fight the system,
Political corruption 14
TI 02 chap01 7/1/04 11:39 Page 14
to stand up to political corruption and to demand an end to the damage it causes to
all people.
`Corruption. Moral decay. Political parties. Opportunism.'
Rac, Panama
Transparency International: shining a spotlight on political corruption
Political corruption can elicit a number of responses. One is voter apathy, accompanied
by public disillusionment with democracy and its capacity to limit corruption. Another
response, the one we at Transparency International aim to capture in our report, is
the ignition of citizen action - and, in some cases, positive government and private
sector measures.
How can society address the issue of political corruption? One answer, which builds
on an idea presented in the Global Corruption Report 2001, is to set standards of probity
in political finance.5 This volume introduces Transparency International's own Standards
on Political Finance and Favours (see Box 1.2, page 16), which can serve as benchmarks
for policy-makers and activists, to be adapted to national (or local) settings. They provide
a normative framework. TI's Standards go further than many of those currently available,
as they include civil society's critical role in monitoring political transparency.6
Political leaders, elected by the public and vested with the power to shape public
life, owe it to citizens to set better standards regarding their use of money, and their
conduct, both in and out of office.
Transparency International will continue to speak out against political corruption
- and will remain resolute in its commitment to greater transparency in the political
process. TI's Standards on Political Finance and Favours are one aspect of our global
advocacy efforts, which also include the following aims:
* The ratification and enforcement of the UN Convention against Corruption.
TI will monitor the ratification and enforcement of the convention, encouraging each
signatory to adopt and apply national legislation that complies with the convention.
The convention requires ratification by 30 countries before coming into effect.
Introduction 15
TI 02 chap01 7/1/04 11:39 Page 15
Political corruption 16
Box 1.2: Transparency International's Standards on Political Finance and Favours
The TI Standards on Political Finance and Favours are based on the values of integrity, equity,
transparency and accountability. They arise out of concern about the influence of money and
favours in politics, which undermines democratic processes and the rule of law. They are
presented against the background of an international commitment to countering corruption
expressed in the UN Convention against Corruption, at this writing due to be adopted in
December 2003, and they are anchored in the global recognition of human rights endorsed
in the Universal Declaration and related conventions.
1. Curbing influence peddling and conflicts of interest
Donations to political parties, candidates and elected officials should not be a means
to gain personal or policy favours or buy access to politicians or civil servants. Parties
and candidates must themselves practise transparency and demonstrate commitment
to ethical standards in public life. Governments must implement adequate conflict of
interest legislation, including laws that regulate the circumstances under which an
elected official may hold a position in the private sector or a state-owned company.
2. Transparency through disclosure and publication
Political parties, candidates and politicians should disclose assets, income and
expenditure to an independent agency. Such information should be presented in a
timely fashion, on an annual basis, but particularly before and after elections. It should
list donors and the amount of their donations, including in-kind contributions and
loans, and should also list destinations of expenditure. The information should, subject
to consideration of demonstrable security risks to donors or recipients, be made
publicly available in a timely manner so that the public can take account of it prior to
elections.
Furthermore, publicly held companies should be required to list all donations to
political parties in any country in their annual reports to shareholders and consideration
should be given to requiring shareholder approval for such donations.
3. Effectiveness in the enforcement and supervision of regulatory measures
Public oversight bodies must effectively supervise the observance of regulatory laws
and measures. To this end, they must be endowed with the necessary resources, skills,
independence and powers of investigation. Together with independent courts, they
must ensure that offenders be held accountable and that they be duly sanctioned.
The funding of political parties with illegal sources should be criminalised.
4. Diversity of income and spending limits
Careful consideration should be given to the benefits of state funding of parties and
candidates and to the encouragement of citizens' participation through small donations
and membership fees. Consideration should also be given to limiting corporate and
foreign support, as well as large individual donations.
To control the demand for political financing, mechanisms such as spending limits
and subsidised access to the media should be considered.

TI 02 chap01 7/1/04 11:39 Page 16
TI is particularly concerned that the convention's provisions on asset recovery be
realised. Stolen wealth must be returned to its rightful owners. This aim dovetails with
TI's campaign to trace laundered money, launched at Nyanga in March 2001.7
In addition to setting standards for its signatories to stop bribery, the UN itself must
be vigilant, targeting unfair practices (such as vote buying) within the UN system.
* The strengthening of the OECD Anti-Bribery Convention.
Not only must the Anti-Bribery Convention be better enforced, but it must also be
amended to include a ban on bribery of foreign political parties and their officials (see
`Will the OECD Convention stop foreign bribery?', Chapter 7, page 128).
* The establishment of political corruption on the donor agenda.
International financial institutions and bilateral donor agencies must consider more
carefully political corruption in countries to which they lend or grant money, yet
establish sensitive evaluation criteria regarding corruption levels (see `Governance,
corruption and the Millennium Challenge Account', Chapter 7, page 135). Recipients
of international aid need incentives to improve their records on transparency and
enforcement of political finance rules, conflict of interest legislation and the granting
of immunity.
* The enhancement of legislation at the national level on political funding, disclosure
and conflict of interest, and the strengthening of institutions in the area of enforcement.
TI will promote better legislation as well as its enforcement at both national and
international levels, in the hope that stonger and more comprehensive legal regimes
against political corruption will have a direct impact on the achievement of justice.
Transparency International demands that civil society actors around the world be
Introduction 17
5. Fairness and integrity in access to the media
Candidates and parties should have fair access to the media. Standards for achieving
balanced media coverage and media integrity must be established, applied and
maintained. The media should play an independent and critical role, both in election
campaigns and in the broader political process. Instruments such as conflict of interest
legislation should be used to prevent political control of public and private media
from creating a bias in the coverage of politics.
6. Civil society participation
Civil society should actively participate in promoting adequate legislation in the field
of political finance and in the monitoring of political finance and its impact on political
representation. The legal framework, both regulatory and institutional, must enable
civil society organisations, in conjunction with independent media, to undertake such
activities. This framework should also provide access to information, the opportunity
for civil society input on pending legislation, and legal remedies, among other measures.
TI 02 chap01 7/1/04 11:39 Page 17

>> GEORGETOWN ON PIPE DREAMS...

http://journal.georgetown.edu


Extracting Transparency

David L. Goldwyn

The construction of energy infrastructure in the developing world, from oil pipelines to power plants, is a lightning rod for international and domestic criticism. Critics fear that governments will steal natural resource wealth, disregard the environmental impact of pipelines or other extraction methods, destabilize neighbors with their new wealth, or stir domestic unrest over allocation of resource revenues.1 Although these problems are indeed real and recurrent, the true fault lies with bad governments and bad governance, not with the infrastructure itself. Nevertheless, the need to create wealth in the developing world and to deliver energy to the two billion people who lack access to electric power is greater than ever. Public policy should, therefore, be aimed at encouraging or obliging nations rich in non-renewable resources to commit to transparency in public finance.2 This would include publishing the sources and amounts of government revenue, disbursement, and borrowing practices.3

In this issue, our authors examine the impact of energy infrastructure on political stability. Aude Delescluse looks at the landmark Chad-Cameroon pipeline to assess whether the World Bank-monitored framework for channeling Chad's oil revenues into economic development can be a model for other nations. Toufiq Siddiqi examines the potential for new oil and gas pipelines across South Asia to forge integration in a region historically beset by deep distrust between neighbors. Fiona Hill looks to the Caspian region and the new oil and gas pipelines from Baku, Azerbaijan to Ceyhan, Turkey to assess whether new infrastructure built by Western companies will be a springboard for the development of these nations or a magnet for internal rivalry over the allocation of hydrocarbon revenues. Edward Chow examines Russia's rapid rise as an oil power and the evolving tensions between the government's monopoly on transportation infrastructure and the desire of Russian and international companies to ensure they can export the oil they produce.

In each case, new energy infrastructure is viewed as a potential financial cure for nations that need revenue to alleviate poverty. Yet, in each case, distrust of national governments or deep disagreements among the governed both challenge the ability of private actors to build and operate the infrastructure in question, and create potential for new wealth to become a source of conflict in itself. For any civil society to have informed views about the costs and benefits of energy infrastructure, and the wealth it can create, governments must be transparent about the wealth that can be obtained and how it will be spent. For this reason, this article addresses this fundamental concept of transparency.

David L. Goldwyn is President of Goldwyn International Strategies, LLC. He was Assistant Secretary of Energy for International Affairs in the second Clinton Administration.

Russian Pipelines:
Back to the Future?

Edward C. Chow

In Soviet mythology, the health of the country's economy, national power, and influence in the world are directly linked to the performance of its oil and gas industry. It is ironic, then, that peak oil and gas production in the U.S.S.R. was reached in the late 1980s just as economic collapse brought political disintegration. At the time, the Soviet Union was the biggest oil producer in the world, generating 12 million barrels per day, 11 million in Russia alone. Peak consumption at this time was over 8 million barrels per day in the Soviet Union and 5 million barrels per day in Russia. Considerable volumes of crude oil and petroleum products were exported by the Soviet Union, first to other countries in the Eastern Bloc, and then approximately 3 million barrels per day to those outside of the Comecon.1 Oil and gas were part of the important barter trade in the Communist block and provided economic leverage for Russia in maintaining cohesion of the sphere. Moreover, they served as principal sources of hard currency and geopolitical assets in the Soviet Union's relationship with the outside world.

Given the remote location of many Russian production fields, pipelines have always played a critical role in transporting oil and gas. The construction of a vast system of pipelines was often cited as a crowning achievement of the Soviet oil and gas industry. They were designed to move production primarily within the Soviet Union and Eastern Europe and secondarily for export to the West.

Today's Russia inherited from the U.S.S.R. 46,000 km of these crude oil pipelines, 15,000 km of petroleum product pipelines, and 152,000 km of natural gas pipelines, almost all of which are still owned and controlled by the state. By contrast, the United States, with only 55 percent of Russia's land mass, has over four times more oil pipelines and two times more natural gas pipelines, almost none of which are owned or controlled by the government.2

The Russian oil industry privatized and modernized throughout the mid-1990s. A more competitive cost structure after the ruble collapse of 1998, improved property rights protection leading to greater reinvestment, and the introduction of Western technology and business practice allowed Russian oil production to recover from a low of 6 million barrels per day to nearly 8 million barrels per day. This is still far below the level achieved in the peak production year of 1988. Nevertheless, domestic oil consumption has dropped to only about 2? million barrels per day with lower economic activity and better energy efficiency. As a result, much more oil is being exported today, and Russia has become the second largest oil exporter in the world after Saudi Arabia.3

Russian oil production is forecast to maintain this rapid growth while domestic consumption is expected to be relatively flat in spite of better economic performance. The existing pipeline system was, however, designed to move oil to now diminished domestic markets and less desirable markets in Eastern Europe. Thus, Russia is desperately in need of new export facilities-large-diameter pipelines and deep-water marine terminals-to transport increasing volumes of oil to higher-value world markets in the large ocean-going tankers favored in international trade.

Edward C. Chow is Visiting Scholar at the Carnegie Endowment for International Peace.

Chad-Cameroon:
A Model Pipeline?

Aude Delescluse

In early October, Chad joined the club of oil-exporting countries as a result of a unique agreement between its government, a consortium of oil companies, and the World Bank. This partnership, known as the Chad-Cameroon Petroleum Development and Pipeline Project, could change the destiny of Chad and its 7.5 million inhabitants. The project has generated debate regarding whether it could serve as a model for future projects: if successful, not only would it significantly reduce poverty in Chad, it could also encourage other mineral-rich developing countries, multinationals, and aid agencies to emulate it. Moreover, this unique pipeline could overcome the so-called "oil curse" that oil-exporting countries have traditionally suffered by ensuring that petroleum revenues are channeled towards national development. Perhaps due to the importance this project plays in an economy with few natural resource alternatives to oil, Chad has embarked on a path with the World Bank to minimize the risk to private investors. The country also committed to an ambitious program of reforms, including a broad-based consultative process to feed into project design, an oil revenue management plan, capacity building and structural reforms, and the creation of external controls. Nevertheless, the initiative is not without its challenges. Indeed, guaranteeing that oversight mechanisms and good governance standards are realized and enforced, as well as ensuring that political stability is maintained in a country with a history of political volatility are essential to the project's success. The future holds promise for the people of Chad and their government if, in partnership with the foreign entities, they prove able to reap the benefits of this lucrative opportunity. The lessons learned as a result may inform, and herald the onset of, a new generation of development projects.

Aude Delescluse works for the Agence Francaise de Developpement in Lebanon. Previously, she was an energy consultant for the World Bank.


Pipelines in the Caspian:
Catalyst or Cure-all?

Fiona Hill

With questions over future prospects for Iraqi oil-the world's second largest reserves after Saudi Arabia-at the forefront of attention, along with widespread instability in the Middle East, the Caspian Basin and its oil and natural gas resources are back on the agenda. The Caspian, along with Russia, West Africa, and Canada, where new discoveries in the tar sands have been made, are the great new potential sources of world energy. These regions are increasingly vital to addressing the need for new energy suppliers and bypassing OPEC members and Persian Gulf states. Although these regions pose significant difficulties in terms of production and export possibilities and would not necessarily be competitive with the Persian Gulf under a low oil price regime, current high crude oil prices combined with the fact that Iraq's production potential will not be restored any time soon make them major commercial contenders.

In the Caspian Basin, the difficulty has never been one of supply-the region contains 17 to 33 billion barrels of proven oil reserves and around 232 trillion cubic feet of natural gas.1 It has always been one of overcoming the fact that the Caspian is a landlocked sea and of transporting energy resources to world markets. With the collapse of the Soviet Union, the region's limited energy pipeline infrastructure extended only across Russia. The new independent states of the Caucasus and Central Asia were locked into a single set of transportation options to the Black Sea and Europe. Oil and gas exports from Azerbaijan, Kazakhstan, and Turkmenistan required building new pipelines. The Caspian region therefore became a focal point in the 1990s, when the first international oil contracts were signed. Because of the sheer size of Caspian energy reserves, and the evident importance of export revenues for the future development of faltering regional economies, Caspian governments transformed pipelines from merely transportation projects into means to achieve political and social objectives. In public debates about Caspian pipelines at both regional and international levels, the commercial interests of companies investing in the actual energy production were sidelined and often seemed strangely secondary or marginal to other considerations.

The Baku-Tbilisi-Ceyhan pipeline project (BTC) provides the best example of this transformation.

Fiona Hill is Senior Fellow in the Foreign Policy Studies program at the Brookings Institution.

India and Pakistan:
Pipe Dream or Pipeline of Peace?

Toufiq A. Siddiqi

In spite of steady economic progress and accelerating rate of growth in India and Pakistan in recent years, their per capita income is still less than a tenth of that in the developed world.1 Continued economic growth is the key to eliminating poverty and maintaining stability on the Subcontinent. This growth, however, is dependent on access to affordable and reliable energy sources that are not available domestically. Many have begun to look to a natural gas pipeline from the rich fields of the Persian Gulf and Central Asia to the Subcontinent as a potential solution.

Even though the economic benefits provided by a pipeline are clear, there are immense political obstacles to such a project. A pipeline from Central Asia would have to pass through politically unstable Afghanistan, as well as Pakistan, whereas one from Iran or the Emirates would have to pass through most of Iran and Pakistan before reaching India, whose leaders fear that the pipeline would give economic leverage to Pakistan in any future political crisis. Others believe that a pipeline could serve as an important confidence-building measure and facilitate the improvement of relations between the two countries-a veritable "pipeline of peace." This article argues that measures could be taken to largely depoliticize the pipeline, and enable it to be built for the economic benefit of India, Pakistan, and the rest of the region. It could then serve as a building block of peace between these two hostile neighbors.

Toufiq A. Siddiqi is President of Global Environment and Energy in the 21st Century, Adjunct Senior Fellow at the East-West Center, and affiliate graduate faculty member at the University of Hawaii. He has been Regional Advisor for Energy at the United Nations ESCAP, Senior Fellow at the East-West Center, and Associate Professor at Indiana University, Bloomington.

>> USEFUL SITE
http://www.iraqrevenuewatch.org/


Oil Revenue Accountability in Iraq: Breaking the Resource Curse OSISvetlana Tsalik, director of the Open Society Institute's Revenue Watch program, told the U.S. Institute of Peace on January 22 that Iraq's oil revenues are likely to become a source of instability if they are not managed in a transparent manner by a government that the Iraqi people see as legitimate. Tsalik, who has done extensive studies on oil revenue and transparency issues, described the current management of Iraqi's oil revenues as marked by confusion and having virtually no oversight. She said all oil revenue spending decisions are made by the U.S. installed Coalition Provisional Administration's (CPA) Program Review Board, which is composed almost entirely of CPA appointees. The Board's one Iraqi member, Iraq's Finance Minister Kamel al-Keilani has attended only two of the Board's twice weekly meetings, according to Board minutes. Meanwhile, the Board has spent over 2 billion dollars without any audits or oversight mechanisms in place.In addition to highlighting the current lack of transparency and accountability in Iraq, Tsalik pointed out that these problems are likely to be exacerbated by a combination of economic and political challenges known as the "resource curse." REVENUE WATCHBRIEFING NO. 5
2 REVENUE WATCH BRIEFING NO. 5The resource curse is a paradox faced by resource-rich countries like Iraq where the natural resource wealth that should propel development actually results in slower economic growth, increased poverty, higher levels of corruption, worse governance, and greater potential for violent conflict.Onereasonthatsomanycountriessufferfromtheresource curse is because natural resource revenues discourage good governance and the absence of good governance permits poor fiscalpolicy."The challenge of avoiding the resource curse in Iraq will be doubly difficult,"Tsalik said. "Even oil-rich places that look good today, like Norway and Alaska, struggled for years with inflation,unemployment,anderraticboom-bustcycles."Tsalik noted that in an oil-based economy like Iraq's, the resource curse can weaken the non-oil sector of the economy as foreign currency for oil floodsinandmakesdomestic goods more expensive than those produced abroad. Without proper planning, oil-based economies create non-labor intensive industries that generate only a small number of jobs that require high skills and training. In developing countries, these jobs are often filledbyforeigners. Meanwhile,othersectorsoftheeconomywitherandoverall unemployment increases. Finally, because oil prices are unsteady, any medium to long-term budget planning will be extremely difficultforanIraqieconomybasedlargely on oil.Beyond these economic effects, Tsalik explained that the resource curse can also create or reinforce significantpoliticalproblems.Havingnaturalresourcesexclusivelyinthe hands of undemocratic governments gives unaccountable leaders enormous power. Such governments do not have to compete in elections and are not accountable for choices about taxation, spending policies, and use of oil revenues. And, as Saddam-era Iraq and Saudi Arabia demonstrate, unaccountable governments can use their control of oil revenues to buy off influentialgroupstopreserveandentrenchtheirrule.Tsalikadded that the lack of good governance in oil-rich states like Iraq enables government to keep oil revenue information secret and pursue poor fiscalpoliciesthatprovidelittlepublic benefit.Tsalik then examined the potential problems of the resource curse given Iraq's history and its current situation. She said Iraq does not have a tradition of fiscaltransparencyoraccountability.During Saddam's long rule, government budgets were a state secret and any disclosure was punished with either imprisonment or death.Under tight UN sanctions and Saddam's reign, corruption flourished and continues to thrive after his fall. Iraq's Oil Ministry recently estimateds that 25 percent of Iraqi oil meant for domestic consumption is smuggled out of the country.
O I L R E V E N U E A C C O U N T A B I L I T Y I N I R A Q : B R E A K I N G T H E R E S O U R C E C U R S E 3The unemployment rate in Iraq continues to range from 60 to 70 percent. Narrow, oil-based development policies will do little to alleviate this massive joblessness. Most Iraqis who do have jobs work at one of 192 state-owned enterprises. Tsalik said that many of these businesses are likely to be privatized or restructured soon, thus further increasing unemployment.The International Advisory and Monitoring Board (IAMB) mandated by the UN in May, and comprised of representatives from the UN, the IMF, the World Bank, and the Arab Development Fund, finallyhasstartedtooperateaftermonthsofwranglingwiththeCPAoverhow much monitoring and enforcement power it should have. Yet Tsalik said it remains to be seen whether the IAMB will have the authority and the resources to be effective. Moreover, it is unclear what institution will continue the IAMB's watchdog function once it is dissolved with the establishment of an internationally recognized government in Iraq.In order to meet these challenges, Tsalik made several recommendations.The firstpriority,shesaid,istoestablishagovernmentthatisrecognizedbytheIraqipeople as legitimate and not an American puppet. Iraq's economic recovery will require a total overhaul of the economy, and a break with Saddam's patronage system that rewarded loyal families with lucrative contracts at public expense. These reforms will only be possible with a government that Iraqis consider to be their own and working in their interests. A second priority identifiedbyTsalikwastoavoidrushingeconomicreform.Ambassador Bremer has proposed the most liberal trade regime in the Middle East for Iraq, with provisions that far exceed anything found even in the United States. Bremer's plan would allow 100 percent foreign ownership of Iraqi state-owned enterprises, except in the oil sector; suspend tariffs and duties for imports and exports; permit unrestricted repatriation of profitsand assets--a policy believed to have contributed to the crises in Southeast Asia and Argentina; and a flattaxrateof15percent--agoallongsoughtbyconservativesintheUnitedStates.According to Tsalik, such an approach runs the risk of a Russia-style privatization in which property moves into private hands before a system of corporate governance and law exists, and creates incentives for asset stripping, not investing to build asset value. Moreover, in a rushed Iraqi privatization, the buyers most likely to have the resources to purchase state assets are those who prospered handsomely under Saddam Hussein's regime. A third priority should be to bring transparency to Iraq's rebuilding process. Procedures must be introduced to ensure that Iraqis are getting good value and an equal chance at employment in the reconstruction of their country. Tsalik said that many Iraq reconstruction contracts are going to well-connected Western and regional companies, while unemployed Iraqis experienced in rebuilding their war-torn country could do the job at a fraction of the cost. She pointed out that even Ambassador Bremer admitted in testimony to the U.S. Congress that Iraqi construction costs are about a tenth of those of U.S. companies. The CPA should announce the winners of tenders as well as provide the names of companies that have bid. It should also ensure that Iraqis are represented on all committees to evaluate tenders.
4 R E V E N U E W A T C H B R I E F I N G N O . 5
Finally, Tsalik said that the idea of establishing an Alaska-style public dividend fund based on oil revenues is gaining popularity in Iraq. Revenue Watch has produced an oil funds book with 10 case studies including the Alaska Permanent Fund. According to Tsalik, this research has shown that dividend style funds are most appropriate when there are large oil resources and a small population, strong fiscaltransparency,effectivecorruptioncontrols,andan efficientcivilservice.For Tsalik, such a dividend fund in Iraq is premature for two reasons. First, it is likely to be a long time before Iraq's oil resources generate enough revenue to start paying dividends to citizens. According to the 2004 Iraqi budget, Iraq's oil revenues are not even enough to sustain the government's operating costs, let alone fund the country's costly reconstruction. Iraq's budget for 2004 is estimated to close with a $600 million deficit.Second,distributingdividends to every eligible Iraqi requires a trustworthy civil service. Tsalik felt that Iraq's tattered civil service and the country's current, extreme levels of corruption could not guarantee that dividend payments get to the designated recipients.Tsalik urged those involved in the rebuilding of Iraq, particularly the United States and the CPA, to consider these recommendations. She concluded that effective oil revenue tracking, transparent budgeting, and independent auditing to monitor fiscalaccountabilitycan play a critical role in helping Iraq overcome its current problems and those posed by the resource curse.
Copyright ? 2003 Open Society Institute. All rights reserved.Anthony Richter, Director, Middle East Initiatives and Central Eurasia Project Svetlana Tsalik, Director, Revenue Watch Isam al Khafaji, Baghdad Director, Iraq Revenue Watch Julie McCarthy, Researcher Iraq Revenue Watch monitors Iraq's oil industry to ensure that it is managed with the highest standards of transparency and that the benefitsofnationaloilwealthflowtothepeopleofIraq.IraqRevenueWatchcomplements existing Open Society Institute initiatives that monitor revenues produced by the extractive industries. In many parts of the world, the lack of proper stewardship over oil resources has resulted in corruption, the continued impoverishment of populations, and abuses of political power. By prompting governments to tackle these problems early, the Open Society Institute hopes to help Iraq avoid this plight.The Open Society Institute currently supports a recently launched initiative, Caspian Revenue Watch, which monitors the development of oil production in the Caspian basin. The goal is to promote transparency, accountability, and public oversight in the management of oil and natural gas revenues. Iraq faces even greater challenges than the Caspian region. If Iraq is to become an open, democratic society it will need to develop transparent accountable institutions for ensuring honest management of oil revenues.There is an urgent need for Iraq Revenue Watch given the current occupied status of the country. The Coalition Provisional Authority and the Iraqi Governing Council should establish rules that ensure complete transparency regarding Iraqi oil revenues. So doing will foster a stable, democratic Iraq, and will protect the Coalition Provisional Authority from charges of misappropriation during this period of trusteeship over Iraq's reconstruction.The Open Society Institute, a private operating and grantmaking foundation based in New York City, implements a range of initiatives throughout the world to promote open society by shaping government policy and supporting education, media, public health, and human and women's rights, as well as social, legal, and economic reform.For more information, contact:Iraq Revenue Watch programOpen Society Institute400 West 59th StreetNew York, New York 10019USAE-mail: irw@sorosny.orghttp://www.iraqrevenuewatch.org/
OPEN SOCIETY INSTITUTEMiddle East and North Africa InitiativesCentral Eurasia Project
---------------------------------------

Keeping Secrets:America and Iraq's Public FinancesOSIAs the Bush Administration seeks billions more for reconstruction in Iraq the management of Iraqi oil revenue deserves more attention. As the primary repository for Iraqi oil and gas revenue, the Development Fund for Iraq (DFI) plays a crucial role in fostering public confidence about how the occupying powers manage the country. Yet hopes that the Fund would be an example of transparency,
good governance, and civic participation have been disappointed. Almost five months after establishment of the DFI and following some $1 billion in expenditures there is minimal information about these financial flows and no mechanisms have been established allowing the international community to monitor the Fund. With international
donors gathering for an Iraq reconstruction meeting in Madrid on October 24 the operations of the DFI must become a priority.On May 22 the UN Security Council Resolution 1483 acknowledged the DFI's establishment
to meet the humanitarian needs of the Iraqi people and finance the reconstruction of Iraq's infrastructure. The DFI is the sole repository for Iraq's oil revenues, and its remaining revenue streams come from the transfer of frozen assets from abroad, and funds remaining from the UN oil-for-food program. The terms establishing the DFI require it to be "managed in a transparent manner for and on behalf of the Iraqi people."1 Provisions in Resolution 1483 hold the DFI to high standards of transparency and accountability and these clauses are mirrored in the DFI's founding regulations under the U.S.-U.K. led Coalition Provisional Authority (CPA).2REVENUE WATCHREPORT NO. 3OCTOBER 2003
2 REVENUE WATCH REPORT NO. 3The CPA's initial emphasis on high standards of transparency and accountability
for the DFI was a necessary and positive step toward institutionalizing democratic governance and civic participation in Iraq. Unfortunately, the CPA has done little to implement these standards.The International Advisory and Monitoring Board (IAMB), an international body intended to oversee DFI disbursements, has yet to be established. Administrator Bremer has so far opposed an IAMB mandate that would grant the Board expansive, independent auditing powers.3 Instead, DFI expenditures have been managed by a Program Review Board (PRB) designed by and comprised of CPA appointees, only one of whom is Iraqi.It is critical to Iraq's economic and political development that the DFI emerge as an efficient, transparent, and accountable funding mechanism. To ensure the effectiveness
and credibility of Iraq's public funds, this report calls upon the relevant authorities to do the following:A Establish the IAMB, as mandated by the UN, and afford it full auditing authority; A Improve the transparency of both the DFI and the Program Review Board (PRB); and A Empower Iraqis to participate in the fiscal oversight of their country.This report also explains the structures for collecting and overseeing Iraq's oil revenues,
and provides recommendations to improve the transparency, inclusiveness, and accountability of these institutions.Failure to improve the management of Iraq's public finances and reconstruction
effort risks prolonging the cost to all involved in terms of dollars and lives. Without change, U.S. authorities in Iraq likely will find themselves increasingly isolated as international
donors lose confidence in the CPA's efforts to stabilize and rebuild Iraq. The world community must take advantage of this unique opportunity to institutionalize the highest standards of resource management in Iraq, and prevent one more country from succumbing to the poverty and corruption that plague so many resource-rich countries.
K E E P I N G S E C R E T S : A M E R I C A A N D I R A Q ' S P U B L I C F I N A N C E S 3Development Fund Structure and BoardsDevelopment Fund for IraqThe DFI is maintained on the books of the Central Bank of Iraq, but held by the U.S. Federal Reserve Bank of New York.4 The Fund is the repository for Iraqi oil revenues and formerly frozen Iraqi assets from abroad.5 The DFI receives 95 percent of the proceeds from the sale of Iraqi oil and natural gas, with 5 percent going to the UN's Gulf War Compensation Fund.6 The DFI is supplemented by the remaining funds from the UN Oil-for-Food Programs account.7 The Fund also receives transferred financial assets from overseas that were removed from Iraq by Saddam and his officials during his regime. This month an international donors' conference
in Madrid, Spain, will decide whether non-coalition foreign aid will go into the DFI, or a separate multi-donor Iraq trust fund.The two main oversight structures for the DFI are the Program Review Board and the International Advisory and Monitoring Board. Currently, the PRB manages the Fund under the supervision of the American-British-led CPA headed by Administrator Bremer. The IAMB is still being established, and at present, its responsibilities are limited to auditing the collection and use of DFI funds.As of August 12, the DFI account held a current balance of (US) $1.4 billion.8 To date, DFI funds have been used to pay Iraqi public sector salaries, to compensate families for the loss of members by actions of Coalition Forces, and the day-to-day functioning of the Iraq Governing Council and Ministries.9The Program Review BoardThe PRB recommends specific DFI expenditures for the CPA administrator to approve. The Board works within the CPA's Office of Management and Budget and reports directly to Administrator Paul Bremer through his appointed acting PRB chair, Sherri Kraham.10 After the PRB approves funds, they are disbursed to the Ministry of Finance, which is then responsible for distributing money to all other ministries.11 Other key bodies related to economic policymaking
are the Planning Ministry and the Oil Ministry, which is run by a returning exile.12The PRB has 11 voting members representing the CPA, and 10 non-voting members (see Appendix 1 for full list). According to the PRB's founding regulations, the PRB must operate transparently and is required to: 1) publish and broadly disseminate funding plans in Arabic, and 2) publish the minutes of all formal sessions of the PRB.
4 R E V E N U E W A T C H R E P O R T N O . 3 The International Advisory and Monitoring BoardUN Resolution 1483 set up the IAMB to address relations between the United Nations and the U.S. and British-led occupying forces. It is the primary vehicle for guaranteeing the transparency
of the DFI and for ensuring that DFI funds are used properly.Although mandated nearly five months ago by the UN, the IAMB has yet to be established
and begin operating. Much of the delay is due to negotiations between the IAMB's potential members and the CPA over the extent of the body's mandate.13 Disagreements between the coalition and international institutions have centered specifically on proposals for a system of "special audits," which would allow the monitoring board independent powers to look at any expenditure in depth.14 IAMB members have agreed on revised terms that include this special auditing power, and these were sent to Administrator Bremer by the Secretary General
in late September 2003. As of early October, Administrator Bremer has still not approved the terms of reference for the board. According to UN Security Council officials interviewed, he is seeking veto power over IAMB special audits--a demand that international institutions view as an unacceptable check on their independence.15The IAMB is comprised of four members representing the UN, the International Monetary Fund, the World Bank, and the Arab Fund for Social and Economic Development.Council for International CoordinationThe Council for International Coordination (CIC) advises the PRB on matters relating to international efforts to assist Iraq's recovery and development of its economy. CIC activities include raising funds from the international community, proposing specific projects for funding
consideration, and, as requested by the PRB, making recommendations with regard to disbursements from the DFI.The CIC is made up of representatives from CPA countries participating in the Coalition
and other individuals hand-picked by Ambassador Bremer.16 The CIC is charged with reviewing and reconciling needs information and assessments from various ministry budgets, the UN, the World Bank, and NGOs.17
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Areas of ConcernThe funds and various boards created to rebuild Iraq have significant shortcomings. Given public doubts within Iraq and internationally about the motives of the U.S. intervention, and the increasing costs of the occupation and reconstruction, it is high time that urgent solutions
that can accommodate the interests of the Iraqi people, the mounting concerns of the American people, and the legitimate questions raised by the international community be put in place. If the areas of concern described below are not addressed quickly, the reluctance of many potential contributors to Iraq's reconstruction will continue to grow, and Iraqi faith in the CPA's management of its finances will falter.Development Fund for IraqContracts and expendituresBidding processes for reconstruction contracts have taken place behind closed doors, and then publicly reported by the CPA only after award decisions have been made.Anwar Diab, an Iraqi businessman recently returned from Baghdad, believes there is a fundamental lack of transparency in CPA contracting practices at present. This, coupled with a lack of Iraqi Ministry participation, means that it is difficult, if not impossible for Iraqi vendors to compete with their American counterparts. Mr. Diab says that "often American products are asked for specifically by name, and it appears that bids are written to legitimize offers that have already been received." Moreover, "contractors are asked to submit bids... then they hear that the first part of a contract has been cancelled...and the second part is being split among four favorites- how were these favorites decided, on what merits? No one knows."18The French UN Mission's First Secretary Damien Loras notes that it is nearly impossible
for the international community to determine how DFI funds have been disbursed. "Spending should not have happened without the IAMB in place," says Loras. "We don't know if spending is being done consistent with Resolution 1483. Moreover, what does it signal that the DFI account of the Iraqi central bank is being kept in a Federal Reserve Bank in New York?"Access to informationThe Department of Defense, the Office of Management and Budget, and other agencies within the Bush Administration
have refused to disclose basic information about large purchase contracts and DFI expenditures in Iraq.19A Government Reform Committee staffer, who spoke on condition of anonymity, said getting information on contracting in Iraq has been "maddening, like running up against a brick wall."20 The staffer noted that agencies under the Administration's control had thwarted efforts by the United States Army Corps of Engineers to provide information.
6 R E V E N U E W A T C H R E P O R T N O . 3 According to a Security Council diplomat, who asked to remain anonymous, "The international community knows absolutely nothing about the Fund's management; we know that $1 billion went into it from the UN Oil-for-Food program in May. Since then, that money has disappeared, and there are rumors that the current balance is zero."Program Review BoardOversight and inclusionThe PRB allows only one voting Iraqi on its 11-member board. Minister of Finance Kamal al-Kilani, the current Iraqi board member, is considered by many Iraqis as a pro-U.S. outsider.21 According to the PRB meeting minutes made public so far, al-Kilani was not in attendance. Beyond al-Kilani, Iraqi participation in the PRB is limited to public outreach meetings with Iraqi specialists.22One former Iraqi advisor to the CPA who asked to remain anonymous told Iraq Revenue
Watch that the CPA Economic Policy Office operates behind closed doors without Iraqi involvement to determine what is presented to the PRB for consideration. The Iraqi Planning and Oil Ministries are supposed to be involved in economic policy making, but do not have representation on the PRB. It is unclear how the CPA intends for them to participate in decision
making, particularly regarding contract decisions and oil production and sales.In terms of international consultation, a UN legal expert working closely on Iraq, who also request anonymity, told IRW that, "The UN is given 24 hours to comment on a 360 page document, and then the next day the document is published as law with a preambular paragraph claiming to have consulted with the UN."Access to informationThe PRB has met twice a week since July 2003.23 Yet by mid-September 2003, the CPA had only produced minutes for one August meeting. Finally, on September 24 the CPA published eight sets of PRB minutes, documenting the approval of approximately $1 billion in expenditures between August 12 and September 2, 2003. There is no current balance for the DFI in the last minutes published by the CPA. Overall, the PRB minutes do not encompass all DFI funded projects (information, which, to date, is not available anywhere); they do not disclose the DFI's current balance; and they do not always make clear whether DFI funds or U.S. appropriated funds are at stake in expenditure decisions. On September 26, the CPA responded to IRW inquiries and said that although the PRB is committed to transparent operations, it lacks the "resources, staff and time" to maintain the level of transparency it aspires to.There is no regular reporting about the PRB's activities on the CPA website. Likewise, there is no information about the CPA's Office of Management and Budget within which the
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PRB functions, although the site does provide links to every other CPA office. The PRB has also not published its minutes in Arabic as of this report, which it is required to do by its founding regulation.International Advisory and Monitoring BoardOversight and inclusionReflecting the language of UN Resolution 1483, UN member states expected the IAMB to function
as the Security Council's "eyes and ears" on the DFI. Yet Security Council members and UNDP officials say that Administrator Bremer and the Bush Administration strongly opposed ceding substantive authority to the IAMB.France, Germany, and Russia found the first U.S. proposed draft of the IAMB's terms of reference unacceptable because they limited the IAMB's role to simply confirming the appointment of U.S. picked accountants and checking whether accounting reports were consistent with international standards. Essentially, under these terms the IAMB's only function
would have been to audit the auditors.Revised terms agreed to by IAMB members give the board broad powers to audit oil exports as well as DFI receipts and expenditures. The board, however, still has no authority over DFI spending, and hence is limited to a backward looking audit function after spending decisions
have been made. As previously noted, these terms are pending approval by Administrator Bremer, who opposes the "special audit" authority requested by IAMB members.24Despite the revisions, the draft terms of reference offer only a possible role for Iraqi participation, and have no actual requirements for the inclusion of Iraqi board members. The terms also lack specific reporting and procedural requirements. Many countries with frozen Iraqi assets are reluctant to release them until the IAMB is formed.25International SkepticismThe United States' administration of Iraqi development funds and its efforts to limit the power of the IAMB have created a growing sense of frustration among members of the international community.One Security Council diplomat interviewed for this report predicts that absolutely no money will flow into the DFI from the international community, unless there is a sudden change in CPA attitudes and practices regarding transparent management. Moreover, he said, "We will not donate money to the DFI unless we can be sure that it will not go straight to the Halliburtons, Bechtels, etc., and that there is Iraqi ownership and participation in the budgetary
and contracting processes."The international community's skepticism toward U.S. reconstruction plans has prompted calls for the upcoming international donors' conference in Madrid to channel contributions
into a separate international Iraqi reconstruction fund. France and Germany are
8 R E V E N U E W A T C H R E P O R T N O . 3 among the countries pushing for such a fund, which would be managed by the UN, the World Bank, and possibly the IMF.Gunter Pleuger, Germany's ambassador to the United Nations, says "We believe that the necessary international support will only be forthcoming if full transparency and international
participation in the decision making process are assured. The creation of a separate international fund could dispel some concerns, expressed by some members of the United Nations, with regards to the (US-controlled) Development Fund for Iraq."26The international community's frustration with the lack of transparency and cooperation
is justifiable. However, the possible splintering of Iraq's resources is a disappointing development, which could have been avoided by applying international best practices in transparent
management to the DFI from the beginning.Two separate funds could conceivably create significant complications for any eventual interim Iraqi administration attempting to make already difficult financial decisions.
Potentially substantial oil revenues and American aid to Iraq would flow through the DFI, while significant European and UN aid would be disbursed under a different spending umbrella with priorities and accountability mechanisms potentially at odds with that of the CPA-controlled DFI.It is critical that Iraqi funds are held to the same standards of inclusion, transparency, and efficiency as the donations of their international counterparts. By fully and promptly living
up to the CPA's obligations regarding transparency and accountability for the DFI, U.S. authorities in Iraq can restore public confidence and avoid forcing Iraqis to mitigate political differences over the management of their finances between donors and funds.RecommendationsTo address the concerns highlighted above, this report provides the following recommendations
on improving fiscal transparency in Iraq:Development Fund for Iraq and the Program Review BoardA Make DFI information accessible and easy to find. Currently, PRB information regarding contracts, tenders, trade developments, currency decisions, and oil activities in Iraq is published sporadically and across a broad range of US Government and Coalition related websites. Information about Iraq's public finances should be published in one central location, updated as frequently as possible and available in both English and Arabic. Reporting should include a record of all flows to and from the DFI. Contracts for selling Iraq's oil and gas as well as all payments that Iraq receives for these exports should be reported, as called for by the G8 and the Extractive Industries Transparency Initiative.
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A Publish all PRB activities. Current levels of PRB/DFI disclosure are inadequate, and are in violation of the regulations establishing these bodies. All minutes of PRB meetings to date should be published, available in Arabic and English, and should appear in one central forum (such as the CPA website) in a timely and consistent manner.A Expand voting and transfer more financial control to Iraqis. Substantive and incrementally
greater Iraqi control of DFI funds through the PRB is critical to restoring international
and Iraqi public trust in the CPA's management of Iraq's financial assets and resources. A stage-based timeline for this hand-over should be established and disseminated as soon as practicable. Iraqi representatives from all ministries should be present at all PRB meetings, and included as voting members in all decisions that affect their ministry's budget and operations.A Transfer the Chairmanship of the PRB to an Iraqi The Chair of the PRB should be an Iraqi, perhaps from the Governing Council, instead of the current American chair; this is the person who sets the agenda for meetings and interfaces with Administrator
Bremer on the Board's decisions. It is critical that given these responsibilities, the Chair is an authentic platform for Iraqi priorities, and represents an Iraqi perspective to the Administrator.International Advisory and Monitoring BoardA Establish the IAMB and give it a significant role in Iraq's reconstruction. The IAMB's terms of reference should be completed, these terms should include a tender auditing role, and the Board should begin operating as soon as possible. It must have substantive
involvement and influence with the DFI in order to restore donor confidence. A credible and effective Board is critical to preventing the need for multiple reconstruction
aid funds and the administrative and political complications they can create.A Encourage the IAMB to pro-actively monitor transparency compliance. The IAMB should work with the PRB to increase compliance with the Fund's fundamental rules on governance and transparency.A Clarify whose interests the IAMB members represent. Although IAMB members are representatives
of international institutions, the terms of reference should clarify that board members act as fiduciaries on behalf of the people of Iraq and that its monitoring
and advisory activities must always prioritize the interests of the Iraqi people. These fiduciary responsibilities include ensuring efficient administration, securing the best available services and goods for Iraq, and supporting the development of Iraqi businesses and the nation's public institutions.
1 0 R E V E N U E W A T C H R E P O R T N O . 3 A Plan for a smooth transition. The IAMB is a temporary body that will be dissolved once an internationally recognized representative government is formed in Iraq. To ensure a smooth transition, it is essential to include Iraqi representatives who will eventually take over the IAMB's role. Board membership or observer status must be extended to Iraq's supreme audit board and to representatives from the Iraqi Finance Ministry.A Clarify selection of new IAMB members. The terms of reference for the IAMB allow for five additional IAMB members. While the document stipulates that the list of potential candidates should include Iraqis nominated by the Governing Council; the terms do not require that Iraqis be chosen. To ensure greater Iraqi inclusion, mandatory
levels of Iraqi participation in the IAMB should be stipulated and required in the IAMB terms of reference.A Give the IAMB a tender audit role. To help IAMB monitoring ensure that DFI assets are used for the benefit of the Iraqi people, the board's mandate should include audit of contracting procedures, with World Bank or U.S. government contracting standards
as appropriate guideposts. This should include the authority to conduct audits to determine whether contracts are awarded on a competitive basis, and mandatory consultation between the CPA and IAMB when the CPA wants to award large, no-bid contracts. The IAMB should also be mandated to conduct independent cost estimates for large purchase and non-bid contracts before they are awarded. If audits completed by the IAMB reveal discrepancies in tendering procedures, in expenditure allocations,
or other areas within the IAMB's mandate, the IAMB should be authorized to subpoena documents and witnesses to clarify the discrepancy. All such proceedings should be documented and reported.A Specify reporting requirements. The inclusion of a reporting requirement is an important step in ensuring the transparency of the IAMB. Disclosure should be strengthened with a clause specifying how soon reports must be made available after the completion
of audits. Disclosure requirements should also mandate that that IAMB reports are "easily accessible" to the public. Such requirements will prevent the problems of availability and access that mark the PRB's disclosure of meeting minutes.
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Appendix 1: Members of the Program Review BoardVoting Members*1. PRB Chair2. Director, Economic Policy3. Director, Civil Affairs Policy4. Director, Agency for International Development, Iraq mission- Lewis Lucke5. Director, Operations6. Director, Security Affairs7. Commander of Coalition Forces8. Iraqi Ministry of Finance9. United Kingdom10. Australia11. Chairman, Council for International CoordinationNon-Voting Members1. CPA Comptroller2. CPA General Counsel3. Program Coordinator of the Board4. Chairman, Council for International Coordination5. U.S. Office of Management and Budget6. U.S. Office of the Secretary of Defense7. International Monetary Fund8. World Bank9. U .N. Special Representative of the Secretary General for Iraq10. International Advisory and Monitoring Board*Members of the PRB are not named here specifically, because their representationhas varied from meeting to meeting. Meeting attendance records can be found on theCPA website within the PRB minutes at http://www.cpa-iraq.org/budget/program_review_board.html.
1 2 R E V E N U E W A T C H R E P O R T N O . 3 Notes1. See UN Security Council Resolution 1483, http://news.bbc.co.uk/1/hi/world/middle_east/3012847.stm.2. See CPA website, DFI and PRB founding Regulations 2 and 3, http://www.cpa-iraq.org/regulations/REG2.pdf and http://www.cpa-iraq.org/regulations/REG3.pdf.3. Interviews with numerous UN officials, also see Alan Beattie, Charles Clover, Guy Dinmore and MarkTurner, "Annan Deals a Blow to US Draft Resolution on Iraq Reconstruction", Financial Times, October 3,2003.4. See http://www.cpa-iraq.org/regulations/REG2.pdf.5. See UN Resolution 1483, as well as founding DFI Regulation, http://ods-dds-ny.un.org/doc/UNDOC/GEN/N03/368/53/PDF/N0336853.pdf?OpenElement and http://www.cpa-iraq.org/regulations/REG2.pdf6. See UN Resolution 1483, as well as founding DFI Regulation, http://ods-dds-ny.un.org/doc/UNDOC/GEN/N03/368/53/PDF/N0336853.pdf?OpenElement and http://www.cpa-iraq.org/regulations/REG2.pdf.7. See UN Resolution 1483, as well as founding DFI Regulation, http://ods-dds-ny.un.org/doc/UNDOC/GEN/N03/368/53/PDF/N0336853.pdf?OpenElement and http://www.cpa-iraq.org/regulations/REG2.pdf.8. www.cap-iraq.org, see August 12 PRB minutes, under Budget section.9. Coalition Provisional Authority Website, Ministry of Finance section, http://www.cpa-iraq.org/ministries/cpa_Aug_salaries_Eng.pdf, also, see Iraq's Public Budget for 2003 at http://www.cpa-iraq.org/ministries/Final2003Budget.xls.10. For a chart of the CPA's organization structure, see http://www.cpa-iraq.org/CPAorgchart.pdf.11. See CPA website, Ministry of Finance section, http://www.cpa-iraq.org/ministries/finance.html, and CPA Memorandum
4 on PRB Regulation 3, http://www.cpa-iraq.org/regulations/CPAMEM04_AND_APPENDICES.pdf.12. Ferry Biederman, Mostly Outsiders Appointed Ministers, Inter Press Service News Agency, September 4, 2003.13. Gathered from discussions with various UN officials and SC diplomats.14. Beattie, Charles Clover, Guy Dinmore and Mark Turner, "Annan Deals a Blow to US Draft Resolution on Iraq Reconstruction", Financial Times, October 3, 2003.15. Gathered from discussions with various UN officials and SC diplomats.16. The following are represented on the CIC: Poland, Australia, Italy, Denmark, the Czech Republic, the United States, South Korea, Japan, Spain, the United Kingdom, Singapore, Jordan and Romania as well as an observer from the United Nations Office of the Humanitarian Coordinator for Iraq.17. L. Paul Bremer, Remarks, Opening of the Council for International Coordination, 17 August 2003.18. Interview with Anwar Diab, October 8, 2003.19. Gathered from conversations with Government Reform Committee staffer and SC diplomats, also see Rep. Waxman's article Evidence Of Waste Of US Taxpayers' Dollars In Iraq Contracts. http://www.mees.com/postedarticles/oped/a46n40d02.htm.20. Because of the sensitivities surrounding questions of financing Iraqi reconstruction, many sources agreed to speak only on condition of anonymity.21. Ferry Biederman, "Mostly Outsiders Appointed Ministers", Inter Press Service News Agency, September 4, 2003.22. Anonymous Iraqi former CPA advisor.23. Interview with senior IMF official, September 2003.24. Interview with UN Security Council permanent member, September 200325. "No Board yet for Iraq Development Fund -US Treasury", Reuters via Forbes online, 8.25.03, http://www.forbes.com/markets/newswire/2003/08/25/rtr1065940.html.26. Mark Turner, "Separate fund for donations is urged", Financial Times, July 23, 2003
K E E P I N G S E C R E T S : A M E R I C A A N D I R A Q ' S P U B L I C F I N A N C E S 1 3
Copyright ? 2003 Open Society Institute. All rights reserved.Anthony Richter, Director, Middle East Initiatives and Central Eurasia Project Svetlana Tsalik, Director, Revenue Watch Isam al Khafaji, Baghdad Director, Iraq Revenue Watch Julie McCarthy, Researcher Iraq Revenue Watch monitors Iraq's oil industry to ensure that it is managed with the highest standards of transparency and that the benefits of national oil wealth flow to the people of Iraq. Iraq Revenue Watch complements
existing Open Society Institute initiatives that monitor revenues produced by the extractive industries. In many parts of the world, the lack of proper stewardship over oil resources has resulted in corruption,
the continued impoverishment of populations, and abuses of political power. By prompting governments to tackle these problems early, the Open Society Institute hopes to help Iraq avoid this plight.The Open Society Institute currently supports a recently launched initiative, Caspian Revenue Watch, which monitors the development of oil production in the Caspian basin. The goal is to promote transparency, accountability, and public oversight in the management of oil and natural gas revenues. Iraq faces even greater challenges than the Caspian region. If Iraq is to become an open, democratic society it will need to develop transparent accountable institutions for ensuring honest management of oil revenues.There is an urgent need for Iraq Revenue Watch given the current occupied status of the country. The Coalition Provisional Authority and the Iraqi Governing Council should establish rules that ensure complete transparency regarding Iraqi oil revenues. So doing will foster a stable, democratic Iraq, and will protect the Coalition Provisional Authority from charges of misappropriation during this period of trusteeship over Iraq's reconstruction.The Open Society Institute, a private operating and grantmaking foundation based in New York City, implements
a range of initiatives throughout the world to promote open society by shaping government policy and supporting education, media, public health, and human and women's rights, as well as social, legal, and economic reform.For more information, contact:Iraq Revenue Watch programOpen Society Institute400 West 59th StreetNew York, New York 10019USAE-mail: irw@sorosny.orghttp://www.iraqrevenuewatch.org/Designed by Jeanne Criscola|Criscola Design
OPEN SOCIETY INSTITUTEMiddle East and North Africa InitiativesCentral Eurasia Project

Reform of the Constitutional Process

Project Director: Prof. Mordechai Kremnitzer
Research Team: Dr. Yotam Benziman Dr. Margit Cohn Adv. Hilli Mudrik Even Chen Dr. Khalid Ghanayim Adv. Efrat Rahaf Adv. Ram Rivlin Mr. Amir Weizenbluth Mr. Guy Wertheim

At the beginning of the 1990s, with the entry into force of two Basic Laws in the field of human rights (the Basic Law on Human Dignity and Freedom and the Basic Law on Freedom of Occupation), Israel entered a new constitutional era. At present, various issues related to human rights are on the Knesset's legislative agenda. These developments have had a profound effect on Israel's legal system and have required the amendment of dozens of existing laws, including the Penal Code and the Laws on Criminal Procedure, Prisons and the Granting of Business Licenses. In recent years, at the request of the Minister of Justice, the Israel Democracy Institute has been involved in the drafting of the necessary amendments. The real significance of the new legislation lies in its educational value: it helps to justify the existence of liberalism within Israeli society and compels legislators and government institutions to closely examine the Basic Laws, in order to ensure that the norms contained therein are also expressed in existing legislation. The Government and the Knesset are expected to carry out a similar examination, particularly in relation to the Basic Law on Human Dignity and Freedom. This is a enormous task, since a large proportion of existing legislation dates back to the period of the Mandate, when democratic values and human rights were not a constitutional priority. The Israel Democracy Institute, in consultation with the Ministry of Justice, is involved in a sweeping process of constitutional reform, which includes the analysis of hundreds of laws in an attempt to harmonize them with the new Basic Laws. In fact, it appears that this multi-year project will lead to a
genuine constitutional revolution in Israel.

Prof. Kremnitzer's research team will seek to enrich discourse on basic concepts of constitutional law and international public law. Developments in legislation and applications of laws and norms which affect the democratic nature of the state, mainly in a negative way, will be monitored. This project will also strive to improve the penal law, adapting it to a modern democratic state. Similarly, developments relating to the judiciary and the attorney general's office will be monitored and proposals prepared regarding criteria for their effective functioning. Additionally, in cooperation with Dan Meridor, the complex relationship between state security and democracy will be researched.

Focus in 2004
Emphasis will be on the issues of human dignity, balancing, proportionality, judicial activism, media ethics, and extortion. Proposals for legislation will be prepared on offences against the democratic regime; offences against property; and homicide. Together with Dan Meridor, a forum of experts will be convened for the purpose of discussing democracy and terror. Prof. Kremnitzer and his team will also collaborate with the Constitution by Consensus educational project in order to generate materials for civics teachers on freedom of speech, as well as with Prof. David Nachmias towards finalizing work on political corruption and accountability.

Publications in Preparation during 2004
Seven position papers:
"The International Criminal Court and Israel"
"Nullification of Citizenship"
"Official Secrets"
"Terrorism and Democracy" (together with Dan Meridor)
"Judicial Activism"
"Media Ethics"
"Extortion"
Two books on the issues of Harassment and Libel.

Conferences Planned for 2004
Two conferences on Media and Democracy
Two conferences on Proposals for Legislations of Offences
A conference on Corruption and Accountability



Previous Publications:
1. The (Emergency) Defense Regulations, 1945
2. The General Security Services Bill: A Comparative Study
3. Incitement, not Sedition (English publication)
4. The Proposed Reform of the Court System: Advantages and Dangers
5. Pornography: Morality, Freedom, Equality
6. Religion and the High Court of Justice: Image and Reality
7. Religious Sensitivities, Freedom of Expression and Criminal Law
8. Affirmative Action in Israel: Defining the Policy and Legislative Recommendations
9. Freedom of Occupation - When Should the Government Regulate Entry into Professions?
10.Freedom of Expression against Government Authorities
11. Sub Judice: Freedom of Expression in Matters under Adjudication

Legal Seminar Publications (Hebrew, with English abstracts)

1. Protection of Free Speech in a Democratic Regime
2. The Rule of Law in a Polarized Society
3. Judicial Performance - Critique and Evaluation
4. Freedom of Speech




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Social Rights - Should they be included in the Constitution?

Prof. Avi Ben-Bassat and Dr. Momi Dahan, March 2004

Social Rights in the Constitution and Economic Policy
Avi Ben-Bassat and Momi Dahan
English Abstract

Since the founding of the State of Israel there has been considerable public debate concerning the need for a constitution. The Basic Laws passed since 1992 are important milestones in the development of the constitution, but do not include aspects that are customarily included in other constitutions. The "Constitution by Consensus" team established by the Israel Democracy Institute is working to develop a comprehensive proposal for a constitution. This volume provides the infrastructure for considering whether social rights should be included in the constitution, and if so, what should be the desirable level of commitment.

The inclusion of social rights in a constitution is a controversial issue, both in Israel and around the world. For two decades countries with constitutions have debated whether social rights should be afforded constitutional protection or left in the realm of ordinary law. In Israel several proposals have been drafted regarding the inclusion of social rights in a future constitution. The first of these was prepared in 1948 by the Constitution Committee of the Provisional Council of State, and included a broad spectrum of social rights. Most of the subsequent versions were less detailed and committed than the first proposal.

Renewed discussion of the place of social rights in the constitution requires clarification of the grounds in principle and practice; it is also appropriate to draw on the experience of other countries with constitutions. The first chapter of this book reviews the international landscape regarding the inclusion of social rights in the constitution, and presents quantitative indices of constitutional commitment to social rights in 68 countries. The large sample of countries makes it possible to address two questions: first, can groups of countries be characterized according to their constitutional model regarding social rights? Second, to what extent is the constitutional commitment to social rights translated into practice?

A constitution is not the only arrangement by which a system of government can influence social rights. Reinforcing the democratic process by providing due representation for the underprivileged may also serve to protect such rights. While the political power of the underprivileged may prevent excessive inequality in the long term, the opposite also applies. A low level of inequality tends to reduce social tensions, increase political stability, and stimulate economic growth.

It was once assumed that income equality may harm economic growth. The evidence of recent years has shown, however, that in most cases inequality hinders growth. Income equality, growth, and democracy thus go hand in hand. The second chapter of this book analyzes these interrelations as part of the infrastructure for examining whether social rights should be included in the constitution, and what the level of commitment should be.

The need for a constitutional commitment to social rights also depends on the level of inequality in society. Those advocating the inclusion of social rights in the constitution see this as part of the protective net of basic human rights, and one of the safeguards against excessive inequality. The need for such a safeguard is greater in a society characterized by profound gaps in wealth and opportunities. The third chapter examines the sources of inequality in Israeli society.

It is also important to ascertain the sources of inequality in Israel in order to adopt a stand regarding the level of constitutional commitment to social rights. Determining a scale for this depends on considerations of principle as well as on the access accorded under current arrangements in the absence of a constitution. The stand taken will depend on whether these arrangements ensure a high level of access to health services but relatively proscribed rights to education, for example.

The final chapter presents the various considerations presented, and concludes with the recommendation that a clear-cut commitment to social rights be included in the constitution of the State of Israel.

The main conclusions of each chapter are as follows:

Chapter A: Social rights in the constitution and in practice- the main findings

In this chapter, we construct an index of the constitutional commitment to five social rights in 68 countries: the right to education, health, housing, social insurance, and workers' rights.

The frequency with which rights are mentioned in a constitution varies. The right to social security, for example, appears in the constitutions of 47 countries, albeit with a relatively low level of commitment. Only 21 countries commit themselves to the right to housing, however.

Is there such a thing as a typical constitution as regards social rights? Two clear groups emerge among the countries examined. The first provides a high level of constitutional commitment to social rights, and this is typical of countries whose constitutional history derives from the tradition of French civil law. The second group, in which social rights are limited, includes countries whose constitutional history is based on the Common law legal tradition. The constitutional commitment to social rights in countries with a socialist past is closer to that of countries whose tradition is that of French civil law, while countries with a German or Scandinavian tradition are closer to the common law pattern.

We also examined whether the constitutional commitment, reflecting a society's basic preferences, was translated into government policy, accounting for the effect of per capita income, demographic composition, and the strength of democracy. We found that a constitutional commitment to social security does in fact have a positive and significant impact on transfer payments. There is also a positive correlation, though not a statistically significant one, between a constitutional commitment to health and government spending on it. A constitutional commitment to health also has a significant impact on policy performance, as measured by life expectancy or infant mortality. However, a constitutional commitment to the right to education does not influence educational policy, as represented by the extent of participation of relevant age groups in elementary education, and is even negatively correlated with government spending on education.

Chapter B: Equality, democracy, and growth-the main findings

Democracy, economic equality, and the growth of per capita income are important objectives in western countries. In the past it was assumed that these goals were mutually contradictory, and hence it was considered necessary to distinguish between them. Studies undertaken in the 1990s of the relations between these variables have shown that in many countries they actually reinforce one another, while in others they coexist peacefully.

The resilience of democracy, as reflected in the electoral process and civil liberties, increased as standards of living and levels of education improved. Reducing disparities by providing the underprivileged population with a higher standard of living and better education serves to strengthen democracy.

The stronger the democratic foundation of a society, the greater the role of the underprivileged in the election process. This serves to increase government spending, including that on education. The shift in the allocation of resources helps to reduce inequality in income allocation, both in cash and in kind.

The influence of democracy on economic growth is complex, since this is evinced through several channels that have opposing effects. The more democratic a regime, the lower the level of economic inequality, the greater the extent of political and social stability; and the higher the level of human capital. All these channels increase economic growth. However, democratic countries also display a higher level of government spending, as well as lower incentives to invest in the means of production, thus impacting negatively on growth.

The various effects of the strength of democracy on growth neutralize one another. Whenever democratic rights are limited, however, an increase in democracy serves to accelerate economic growth.

All the studies but one show that reducing income inequality does not hamper economic growth, and in fact stimulates it. The correlation between equality and growth is reflected in three channels: (1) Greater equality enhances political and social stability, thus increasing the motivation to invest in the means of production; (2) Greater equality serves to increase investment in education for the population as a whole; note that investment in the means of production and human capital are the two key factors underlying growth; (3) A lower level of inequality dampens the incentive to adopt a policy aimed at changing income distribution by increasing taxation and expanding transfer payments and other social expenditure. While this fiscal policy may hamper GDP growth, no empirical evidence was found to support this view.

Chapter C: The sources of inequality in Israel- the main findings

Income inequality in Israel has risen over the past three decades, and Israel is now one of the countries with the widest economic disparities. This development is the result of factors that apply to all sections of Israeli society as well as to elements that are unique to specific populations: Arabs, new immigrants, and the ultra-orthodox.

The inequality in education is higher than in many other countries, despite the relatively large share of government expenditure on education.

The dire economic plight of the Arab population is one of the main sources of income inequality. This stems partly from discrimination against this population in education and the labor market. Inequality between Jews and non-Jews contributes approximately 16 percent to total income inequality.

The parlous economic condition of the elderly is another key factor behind the high level of income inequality in Israel. Many of the elderly came to Israel at a relatively advanced age, and had no pension rights from their countries of origin.

The government's declining commitment to full employment, as evinced by the flow of migrant workers in recent years, is another cause of income inequality.

Although the ultra-orthodox do not contribute notably to income inequality in the sample, this segment nonetheless accounts for a higher poverty incidence

The disincentive to work inherent in welfare payments causes part of the population to remain outside the work force, leading to a very low level of income. While income inequality among employed persons is lower than for those who do not participate in the work force, the distinction is limited.

Alongside its high level of income inequality, Israel suffers from inequality in net income. Although this is somewhat greater than in most European countries, it is only slightly above its level thirty years ago.

The level of inequality in net income reflects the government's intervention via taxes (income tax, health tax, and National Insurance contributions) and the system of welfare payments (particularly National Insurance payments). While the lower level of inequality in net income than in gross income reflects the government's efforts to reduce this disparity, its contribution is purely technical. To date, no study has been undertaken to examine the government's contribution incorporating the negative impact of welfare policy on the incentive to work.

Over the past two decades there has been a real increase in transfer payments, making a direct (technical) contribution to reducing inequality.

Alongside the expansion of transfer payments, in the last twenty years there has also been a substantial increase in the share of indirect taxes in total taxation, and a sharp reduction in subsidies. The low-income population bears a heavier burden of indirect taxes, but this has not been directly reflected in calculations of net income inequality.

Government intervention is also evident in education and health services, which influence both current and future income. Central Bureau of Statistics estimates indicate that these services are provided progressively. Given the findings regarding the achievements of the education system, however, further studies are needed in order to examine whether this is in fact the case.

Income inequality has increased in western countries, particularly the United States. Three main factors appear to explain this: skiled-bias tecnological change, globalization, and the decline of the labor unions. These factors are also evident in Israel, in addition to those specified above.

Chapter D: The inclusion of social rights in the constitution- pros and cons


The pros
1. Social rights are a precondition for maintaining human dignity. Civil and political rights can only be realized if social rights exist. The right to life is meaningless without a minimum income and access to health services.

2. Most countries include social rights in the constitution, albeit with a relatively low level of commitment. Our study shows that the right to education is the most common, featuring in the constitutions of 51 countries out of 68. The level of commitment to this right also seems to be the highest. The right to social security appears in the constitutions of 47 countries, though with a relatively low level of commitment. Workers' rights (29 countries) and the right to housing (21 countries) are the rarest.

3. protecting social rights in the constitution may provide a safeguard against the excessive growth of inequality in the allocation of income and national wealth, as this inequality embodies social, political and economic dangers. Income inequality in Israel has risen over the past three decades, and Israel now has one of the highest levels of income inequality.

4. The inclusion of social rights in the constitution may provide a safety net for minorities and augment their sense of security. The inferior economic situation of the Arab population in Israel is partly responsible for the high level of income inequality, and is due in part to discrimination against this population in education and the labor market. Income disparity between Jews and non-Jews accounts for approximately 16 percent of total inequality.

5. The greater the level of income inequality, the greater the social upheavals, and hence the graver the threat to the stability of the democratic system. Social unrest may also assume violent forms, at both individual and social levels. At the individual level, economic gaps may generate crime, particularly against property. A milder manifestation of instability occurs when groups organize to secure benefits at the expense of others. Particularly great disparities may lead to demonstrations and even riots. Maintaining social stability in Israel is particularly important given the many schisms within society.

6. Numerous studies have shown that the greater the level of inequality, the greater is social and political instability, thus impairing economic growth.

7. Studies show that a more equal society has a faster growth rate, since the investment in education per child is greater.

8. Alongside the high level of income inequality, the inequality in net income is only slightly higher in Israel than a typical European country. One of the main reasons for the high level of inequality is the disparity in education between different sections of the population. Accordingly, it is important to develop a scale of social rights that prioritizes education. Investment in education is the most effective way of enabling individuals to escape from the cycle of poverty, reducing reliance on government support in generations to come.

9. The inclusion of social rights in the constitution will create an educational and political tool that limits the tendency of the legislature to harm groups that are too weak to exert direct political power.

10. Many of the arguments against the inclusion of these rights in the constitution may be neutralized or diminished by restricting judicial review, as well as by enacting legislation that accords the legislature and government extensive discretion alongside binding constraints.

11. All the comparative studies show that the courts are extremely reluctant to extend judicial protection to issues that require the allocation of substantial resources.

12. Israel's constitution should mention social rights, since the Basic Laws passed in 1992 provide constitutional status for property rights and the freedom of vocation, thus creating a clear imbalance regarding the legal status of social rights.

The cons
1. While reflecting the preferences of society, the realization of social rights, but must be subject to the limited resources available to the economy and the desired extent of government expenditure. Protecting social rights is important, but may ultimately impair social welfare by harming other values, such as the right to property or the ability of the individual to realize his or her full potential. In certain circumstances, awarding far-reaching social rights is liable to act as a disincentive to work, thus depressing economic growth and preventing a rise in standard of living.

2. Priorities change from time to time, and this may also require changes in the rights granted by the state. Tying the hands of the policy-makers will make it difficult to adjust policies to meet changing conditions. For example, a commitment to a particular level of pension is liable to prove difficult to maintain if the share of the elderly in the population increases significantly, as has been the case in Europe over the past 50 years. Realizing this right will place an unreasonable burden of taxation on the working population.

3. To a large extent, the constitution grants the Supreme Court authority in all matters relating to controversial social rights. The legal arena is not the appropriate forum for expressing changes in public preferences or understanding the needs that arise from changing economic circumstances. Ensuring that a decision of this kind is supported by all citizens, and in a democratic system by their elected representatives, will make a response to changing economic circumstances and public preferences possible.

4. Such civil rights as freedom of speech or religion are absolute and inalienable. Social rights, by contrast, are more quantitative in nature. This is difficult to phrase in the verbal form customary in a constitution, however clearly worded. Civil rights also have a quantitative dimension, but to a much lesser extent. Thus, in order to realize the right to vote, an election budget is required, although its scope is relatively insignificant. Social rights, on the other hand, should find expression in the extent of government expenditure on various services and transfer payments to those in need. Even if the way a particular social right is formulated in the constitution is sharp and binding, its practical application may still vary widely. An examination of the effect of a reference to social rights in the constitution on total government expenditure yielded mixed results. Our study shows that some countries succeeded in formulating their constitutional commitment to social security in a manner that was manifested in practical terms. However, our findings also indicate that a high level of commitment to education, as manifested in the explicit declaration that this will be provided gratis, does not ensure its practical implementation, since it may be expressed via fewer or more study hours, a lower or higher quality of teachers, and a larger or smaller number of students per class.

The first three chapters of this book do not yield a clear conclusion on whether social rights should be included in the constitution, although they argue both for and against the inclusion of social rights in the constitution. The ultimate conclusion must be based on weighting and summarizing these arguments, as well as on value judgments.

The decision for or against the inclusion of social rights in the constitution will be the outcome of the relative weight attributed to each of the various contentions. We believe that the sum total of arguments tends in favor of including social rights in the constitution, first and foremost the right to education and social security, however without judicial review of primary legislation.


All rights reserved to the Israel Democracy Institute

http://www.idi.org.il/english/article.php?id=d870466cc1ad4d1bd777b0122f4b4cf4
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"Rabin, in my opinion, is not a particularistic myth for the Israeli left - he is a myth for all of Israel, and if this is the case then the "sanctity" of this site is the sanctity of Israeli-ness and it should be protected."



Haim Zisovich: We are continuing to deal with the rally in memory of Rabin and the graffiti that was found on his memorials in other locations. Good-day to Prof. Yedidya Stern from the Law Faculty at Bar Ilan University and the Israel Democracy Institute.

Prof. Yedidya Stern: Good Afternoon.

Haim Zisovich: Earlier I was talking Commander Sedbon, Commissioner of Police. They are investigating, in an attempt to discover who wrote those slogans, but the laws for which they will be arrested or the investigation is being conducted because they are suspected of breaking laws such as destruction of property or unsuitable behavior in a public place. Should the law deal with negative behavior of this kind with methods other than those already in use?

Prof. Yedidya Stern: Look, there is certainly a degree of tension between freedom of expression and the need to protect key values of society and culture so that they are not trampled by individuals. I would look at Rabin Square as a place that, for significant portions of Israeli society, represents something of an Israeli holy site. We have religious holy sites, we have historic holy sites, but we have almost no contemporary Israeli holy sites. Perhaps Ammunition Hill is one such site, perhaps the Knesset Building was once such a site, before its status declined. Rabin Square is such a site, at least as we approach the anniversary of Rabin's death. And if Israeli law thinks it is important to prohibit by law the desecration of any type of holy site, we should think about other sites that are important enough that their desecration would constitute a criminal offense.

Haim Zisovich: Because of their symbolism, not because of where it is located. Because in reality, when we relate to a monument as property so that, let's say, causing damage to it is similar to destroying a fence or a tree, then the site is diminished to some degree, as is the memory it is supposed to engender.

Prof. Yedidya Stern: Certainly. The sanctity of a physical thing is, naturally, not sanctity in a religious sense, and sanctity - in the sense that it unites us - is our own myth. Rabin, in my opinion, is not a particularistic myth for the Israeli left, he is a general Israeli myth. And if this is the case, then the sanctity of this place is the sanctity of Israeli-ness, and it needs to be protected.

Haim Zisovich: And damage at such a place is not only damage to the memory of Rabin the man, it goes beyond that. It is, perhaps, a demonstration of the fact that objecting to political assassination or using a murder weapon against a political enemy has not penetrated Israel society.

Prof. Yedidya Stern: Whoever destroyed the monument said, Not only am I not part of the political camp of the late Yitzhak Rabin but, first of all, I am not part of the broader Israeli national consensus represented by this myth of Rabin. Second of all and more importantly, he is actually kicking sand in the eyes of all of us and saying, Look, this happened eight years ago and I'm doing it again. I don't want to but, essentially, I am doing the exact same thing. I'm taking what all you Israelis think is a major part of your perspective in the right place and at the right time so that really, the way you do it is justifiable. [Reshet Bet will devote almost all the rest of its news programs to this topic.] Because I say, gentlemen, I am opposed to all this togetherness. I have a different system of values. This system of values is valid for Israel society.

Haim Zisovich: And is this, in your opinion, a case where this display of tasteless and vulgar radical nationalism is, allegedly, the memory rather than the feeling of those who remember Rabin or who remember the assassination? Is this a case where these displays are being carried out in society's hotbeds of religion, or some of them?

Prof. Yedidya Stern: Look, I think that there are two elements here, and each of them is important and we cannot address only one of them. On the one hand, certainly there are portions of the religious public who are committed to other, extra-democratic systems, which they believe contradict democracy or, to be more precise, that democracy contradicts these systems. Such people have a Messianic approach to history and the facts don't necessarily interest them because they have their own plan with which they are very familiar, and it leads them to draw the necessary conclusions and, therefore, the facts don't matter so much. This is one type of problem. But it is important to recall that at the same time there is another type of problem, of a broader nature, and this is that the general Israeli commitment, the internal Jewish commitment and the Jewish-Arab commitment to democracy is very much on the wane. Perhaps those same ones who spray graffiti and desecrate monuments are doing us a favor by reminding us over, and over, and over again that we are in deep trouble. In terms of our commitment to democracy, it is shocking to learn that out of 32 countries where an index of democracy exists, we are in last place together - with only one other country - regarding the subject of whether a democratic regime is even desirable.

Haim Zisovich: Then again, with regard to opposition - not opposition to democracy, on the one hand people abuse the name of democracy, everyone talks about democracy. On the other hand, there is a willingness to break the law in order to promote a political idea, and this can be found on the fringes of the political right, but also on the fringes of the left.

Prof. Yedidya Stern: Certainly, I can quote you the figures regarding the position that a strong leader is better for a country than all the discussions and laws, that is, the rule of law - no less than 56% of Israel's residents agree with this. Every other person listening to us now agrees with that statement, certainly not only the religious or the left, and certainly not only the right - it's Israel.

Haim Zisovich: The ultimate question is, apart from our hurt feelings and apart from the desecration of the man's memory, is today's atmosphere preparing us once again for a radical act such as political assassination?
Prof. Yedidya Stern: I don't know how to answer that question because it is clear that the preparation does not exist, but the possibility almost certainly does exist. Perhaps we should relate this to what I heard you say at the beginning of the program, when you talked about the verses from this week's Torah portion. I want to remind listeners that in the portion of Noah, God promises us that he will never bring another flood upon the world; human existence is assured. From a religious perspective, this promise is connected to the rainbow. What is a rainbow, and what is the internal connection between the rainbow and the promise of existence? The rainbow is composed of different colors, and although each one is different from the other they all blend into the other. If we were to place all of the colors one on top of the other, that is, if we wanted uniform ideas, the result would be black. The fact that we actually don't agree with one another and can still be part of the same rainbow is the essential promise for our continued existence. If someone comes along and thinks differently he allows himself to perform violent acts whose most dramatic outcome is to jeopardize Israel's sovereignty via political assassination or killing the prime minister. Is this possible? Yes, very possible. Have we done enough to prevent it? Certainly not. Can the answer be found through the rule of law? Certainly not. The answer lies within the education system, and on the religious level, the public level. The resources we allocate for teaching democracy are much lower than we would want them to be, lower than what they should be given our serous situation. Our national security is in jeopardy because of such allocations.

Haim Zisovich: Prof. Yedidya Stern, I thank you very much and Shabbat Shalom.

Prof. Yedidya Stern: Shabbat Shalom.

Haim Zisovich: We here at Reshet Bet of the Voice of Israel want to remind you that tomorrow, beginning at eight o'clock, we will be broadcasting live the gathering at Rabin Square in memory of our late prime minister who was assassinated.
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Constitution by Consensus and the Israel Democracy Institute
Launch New Campaign:
NIS 4,500,000,000
That's the price of three election campaigns in five years!
That's the price of unstable government!!



Tuesday, December 10, 2002

This evening, Constitution by Consensus and the Israel Democracy Institute (IDI) are launching a new campaign to put promoting the drafting of a constitution agreed on by all of Israeli society's various sectors and strata on the political agenda during the election period.

Constitution by Consensus calls on the candidates running for Knesset to adopt the issue of a constitution and to help promote the constitutional move being led by Constitution by Consensus. In doing so, they would be placing at the disposal of the Israeli public a tool that would stabilize government (by regulating the method of elections and the way in which the elected institutions work), would determine agreed upon rules of the game that would constitute a basis for dialogue and would bridge the gaps and rifts that threaten to tear Israeli society apart.

The campaign will begin this evening with television spots, under the heading,
"NIS 4,500,000,000 - That's the price of three election campaigns in five years; that's the price of unstable government." At the same time, the campaign's ads will appear in newspapers and on various Web sites. The Constitution by Consensus campaign was created by the Bauman-Bar-Rivnai advertising firm, which undertook to promote this issue pro bono.

The campaign is another phase in a process that began nearly three years ago: We believe that in the reality that currently exists in Israeli society a constitution cannot be drafted without dialogue between the various parties and without a process of discussing and formulating agreements. Toward that end, about two and a half years ago the IDI established the Public Council for Drafting a Constitution, headed by retired Supreme Court President Meir Shamgar. The Council's composition was determined such that it would faithfully reflect the range of opinions and attitudes in Israeli society. It includes about 100 public figures, including politicians from all parties, judges, academics, heads of authorities, public servants and businesspeople, who represent all of society's sectors (Jews, Arabs, secular, religious, ultra-Orthodox, veteran Israelis, immigrants, etc.).

Council members include the following politicians: Tzipi Livni, Dan Meridor, Haim Oron, Michael Eitan, Talab al-Sana, Moshe Arens, Yossi Beilin, Muhammad Barakeh, Uzi Baram, Rabbi Moshe Gafni, Yitzhak Herzog, Matan Vilnai, Eliezer Sandberg, Naomi Chazan, Ahmad Tibi, Shaul Yahalom, Meshulam Nahari, Ofir Pines, Meir Sheetrit and Natan Sharansky.

At conferences held by the Public Council since its establishment, the various sections of the constitution taking shape were discussed. During the discussions, we saw that the gaps are not as wide as it may seem, and that it is possible to achieve consensus even on issues that appear to be impossible to bridge: for example, on issues of religion and state - between religious and secular, or on issues of religion and nationality - between Arabs and Jews.

We call on the 16th Knesset to adopt Constitution by Consensus and during its term to complete the process of legislating a constitution, which began with the founding of the state.

For further details and to see a preview of the campaign's ad spots:

Orit Reuveni, IDI Spokeswoman, 02-530-0864 or 051-545-425 (mobile)
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Army & Society
The Army and Society Forum
Project Head: Prof. Baruch Nevo

Research Assistant: Sigal Sasson

The Army and Society project, established in November
2000, brings together the Chief of Staff and other high-ranking IDF officers with leading academics, individuals from the public sector and the media to examine the delicate relationship between the armed forces and the Israeli polity and explore new ways of achieving more sound and effective interaction.

The forum meets several times a year dealing with issues which are of mutual interest to the army and to society. The proceedings of each conference are published in book form.

Publications:
Eight conferences that have thus far taken place, have resulted in three English books and six Hebrew ones:

English:
1. Women in the Israel Defense Forces
5. The Army and the Press during Hostilities
6. Morality, Ethics and Law in Wartime

Additional Hebrew books:
2. Human Dignity in the IDF
3. The People's Army? The Reserves in Israel
4. The Contract between the IDF and the Israeli Society:
Compulsory Service
7. The IDF and the Israeli Economy (Forthcoming)
8. The IDF and Israeli Society Fighting Terror (Forthcoming)

Project Focus for 2004
Possible topics to be studied in 2004 include: ethical and legal issues in times of war against terror; the impact of three years of Intifada on Israeli society and on the IDF; socio-economic gaps in Israeli society and their implications on the army; a professional versus volunteer army; and the involvement of parents in their children's service.

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Structural Reforms in the Israeli Economy

Head: Prof. Avi Ben-Bassat

Three-year Work Plan for 2004-2006

This new project focuses on three main topics: structure of supervision of the capital market, the national budget process and economic policy, and reform of monopolistic fields. After completion of the work on the first two topics, a central branch of non-competitive market structure (such as local media, ports, electricity, refineries, banking, insurance, etc.) will be evaluated.

Focus in 2004
The structure of supervision of the capital market: Five different authorities supervise the capital market in Israel, resulting in several problems which need to be discussed and resolved (e.g.: double supervision in some areas; an imbalance of supervision among similar activities and lack of unity in the means of supervision among authorities). Each authority's tasks and responsibilities will be compared to those of their counterparts in western democracies, and alternative models will be examined for their appropriateness to Israel.

The national budget process and economic policy: Israel's budgeting process incorporates input from many different authorities and bodies. The existing process will be analyzed and its advantages and shortcomings considered and compared with the situation in other countries.

Publications in Preparation during 2004
A report on "Capital Market Supervision."

Conferences Planned for 2004
Two conferences on Capital Market Supervision (Dec. 2004).
A conference on a topic and date yet to be announced.
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Religion & State


Project Directors:
Prof. Aviezer Ravitzky and Prof. Yedidya Z. Stern
Research Team:
Dr. Yitzhak Brand
Mr. Yossi David
Mr. Shuki Friedman
Mr. Yohai Ofran
Dr. Amihai Radzyner
Mr. Yair Sheleg

Project Description
The relationship between religion and state is one of the most crucial issues in the cultural and political life of Israeli society. It creates political parties, topples governments and takes center stage at any public debate on the constitution, law or civil rights. In addition, it is at the core of the argument concerning Israel's national identity and culture and puts a decisive stamp on its relations with the Diaspora, in the shape of the Law of Return and the Conversion Law. It can safely be assumed that the relationship between religion and state will continue to present a source of problems and controversy - at the communal, legal, ideological and existential level - in the future. The Israel Democracy Institute is therefore examining alternative approaches and models with relation to this issue, on the basis of Jewish and Western sources, with the aim of offering new solutions and perceptions. At the same time, the Institute is also examining the social and ideological tensions that arise from Israel's constitutional character as a state that is both Jewish and democratic.

The issues to be tackled in the upcoming period are separation of religion and state, which is a continuation of previous years' efforts; separation of nation and state and separation of nation and religion, which are new dimensions of the previous issue.

Prof. Ravitzky's topics include:

* The question of Jews and non-Jews in the State of Israel: The problem of a nation-state in the 21st century has become particularly acute in Israel, whose population includes Arabs, foreign workers, new Jewish and non-Jewish immigrants, and ultra-orthodox Jews who are against the idea of a Jewish nation-state. The theoretical, historical and Halakhic aspects of various scenarios of possible models of co-existence or multi-existence in a sovereign state will be researched.

* Religion and state in contemporary Jewish thought: This project, which is meant to deepen social discourse about religions and state and offer a variety of models from traditional sources, will continue.

Prof. Ravitzky and Prof. Stern jointly address:

* Penetration of Halakha into Israeli law. An in-depth examination of this topic will be carried out. What are the differences between this phenomenon and religious law; between traditional content and traditional language; between cultural influence and religious coercion?
Separation of religion and state: In addition to the question of the separation of religion and state, two questions have recently been included in the public discourse: separation of nation and state and separation of nation and religion. These three questions deal with the fundamentals of identity and culture and the project will conduct in-depth research on these topics, from their historic and cultural aspects, and will offer possible models for an independent Jewish society in modern times.

Prof. Stern's topics include:

* Law and Halakha: The cultural disputes that exist in Israel become dangerous when they are translated into normative disputes between the law and Halakha and this struggle poses harsh consequences for democracy and Judaism alike. The role of Halakha and religious legislation will be examined and analyzed on the basis of liberal philosophy.

* Secularism and Halakha: One of the main points of tension in Israeli society is the non-acceptance by religion of secularism. Research in this field will propose a fresh Halakhic attitude towards secularism that may facilitate a major breakthrough in religious-secular relations.
State and Halakha: A secular Jewish state is a new phenomenon and Halakhic authorities are thus hard-put to formulate Halakhic positions on the implications of a secular state and its institutions, and often take a critical and antagonistic stance towards the state. This creates dissonance for the religious polity on the one hand, who are committed to Halakha as interpreted by the Halakhic authorities, and the state on the other hand, which is dominated by a secular majority.

Law and Halakha. The project will explore, analytically, historically and socially, the role that Halakha could and should play in times of religious and state crises. Two alternative models to the current model of coercion through religious legislation will be presented. Each will be analyzed from a democratic, religious and social standpoint.
Secularism and Halakha. Religion's attitude towards the secular individual is expressed in religious legal terms that carry grave normative ramifications. The project offers a new Halakhic attitude towards secularism that could transform religious-secular relations.

State and Halakha. The project hopes to reveal the penetration of religious-Halakhic concepts into various governmental institutions - the courts, the Knesset, various entities of the executive branch, etc.

Publications in Preparation during 2004
Seven position papers:
"The Tension Between Religion and State: The Role of Halakha"
"Religious Legislation: the Dream, its Shattering and its Future"
"Halakha and Secularism: History and the Present."
"Non-Jewish Immigrants in Israel"
"The Paradox of Jewish Theocracy"
"Jewish Religion and World Religions"
"Language and Religious Law"

Books:
"Theology and Politics" by Joseph E. David.
"Rabbis and their Attitudes to Democracy and Liberalism" by Yair Sheleg.
A compendium of articles on "Judaism and Democracy and Democracy: Culture, Society, and State," edited jointly by Prof. Stern and Prof. Ravitzky.
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How to Get Here

The Israel Democracy Institute is located in the neighborhood of Talbieh, at 4 Pinsker Street, Jerusalem 92228. Mailing address: POB 4702, Jerusalem 91046.

Telephone: 02-530-0888 Fax: 02-530-0837

The Publications Department and the Project for a Constitution by Consensus are located at 2 Sokolov Street, corner of Keren Hayesod, Jerusalem 92144. Mailing address: POB 4482
Jerusalem 91040.

Telephone: 02-566-7989, 1-800-20-2222
Fax: 02-563-1122

Steely-Eyed Recovery
The Fed should get on board with this economy.
A story in the Wall Street Journal this week said that GM finally decided to pay higher steel costs to its suppliers instead of hauling them off to court. The story is apocryphal. Suing steel makers is a really stupid idea. And what's a raw-material supplier to do anyway?
Plentiful liquidity at home and the China boom abroad have worked to raise all raw-material prices and costs. The Commodity Research Bureau's spot index of raw materials has gained about 25 percent over the past year, recouping about 90 percent of its losses since the mid-1990s peak. As for the case above, hot-rolled steel has nearly doubled in price this year, from $330 to about $600. Steel, as with other basic materials, is booming.
Steel-using manufacturers like GM really have only two choices: They can pass the cost increases along to consumers in the form of higher car prices, or they can internalize these costs by accepting lower profit margins. The auto business is brutally competitive, so it's doubtful consumers will eat the full price increase. Foreign carmakers, especially Toyota and Honda, are picking up market share by keeping quality high and costs low.
So, how is GM to stay competitive? The same way everyone else is.
U.S. manufacturers across the entire spectrum are using big productivity gains of nearly 6 percent to reduce costs and raise profits. The spread, or difference, between unit prices and unit costs is therefore unusually wide -- and profitable. This profit spread, as much as any other variable, has driven the stock market higher over the past year. Once the current market correction has run its course, share prices should continue to rise as a result of unexpectedly strong profit gains (and steady low interest rates).
If only the Federal Reserve got all of this.
The central bank's latest policy statement equated deflation and inflation pressures, which is false and misleading. Deflationary pressures are gone and raw-material price increases are showing up everywhere. But that doesn't mean a big inflationary rise is imminent.
After roughly two years during which the value of the dollar declined relative to domestic commodity prices and foreign-exchange currencies, deflation is a thing of the past. In all likelihood, future core inflation will gradually creep upward, from less than 1 percent today to something less than 2 percent. The Fed should acknowledge the likelihood of this outcome by writing it into their policy statements.
By the same token the central bank should inform the public that the risk assessment between recession (a thing of the past) and recovery (the business at hand) is no longer balanced. Recent increases in industrial production and factory shipments show clearly that a business boom is in the cards. Lower taxes and higher mortgage refis will continue to propel consumer spending. Gains in gross domestic product between 4 and 6 percent will also be sustained.
Clearly, the Fed has reverted back to a Phillips-curve trade-off between unemployment and inflation as their guiding lodestar in policy setting. This worthless model ignores the powerful price effects of money supplied by the government bank relative to money demands from the economy. Even though lower tax rates, record productivity, and strong economic growth are absorbing liquidity, rising commodity prices suggest that excess money is around.
The economic power of money has been increasing as the rate at which money changes hands inside the economy -- commonly referred to as velocity -- continues to pick up. This recovery of monetary turnover is also an important signal that the threat of deflation has passed.
Financial markets know full well that a 1 percent fed funds policy rate is completely out of line with a rapidly recovering economy. The Fed is playing cat and mouse with respect to the timing of future interest-rate hikes. The longer this duplicitous game continues, the greater the chance the central bank's poorly baited trap will ensnare traders and investors into large losses.
It's not going to happen, but a far better approach would be a ? percent rise in the fed funds rate this spring, followed by another in the summer. That would still leave a miniscule 1? percent policy rate, something that would not interfere with either stock market or economic recovery. But it would better inform investors, businesses, and consumers about the value and price of their money.
The wise heads at the Fed are always talking about the need for greater policy transparency in emerging economies around the world. Honesty is a virtue. How about starting right here at home?
-- Larry Kudlow, NRO's Economics Editor, is CEO of Kudlow & Co. and host with Jim Cramer of CNBC's Kudlow & Cramer.

http://www.nationalreview.com/kudlow/kudlow200403240806.asp
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>> WHY - OH WHY?

Postwar rebuilding falters over contracts
By Anne Barnard and Stephen J. Glain, Globe Staff, 3/24/2004
BAGHDAD -- Colonel David Teeples, commander of the Third Armored Cavalry Regiment in Iraq, can't figure it out. If he can recruit and train members of Iraq's new security force, why can't the Coalition Provisional Authority -- the US-led administration that is running postwar Iraq -- provide them with the uniforms, radios, weapons, and vehicles they need to do their job?
His frustration is common in postwar Iraq -- among Iraqis as much as US forces. More than a year after the US government secretly divvied up the first contracts for postwar reconstruction, much of the subcontracting process remains confusing, overcentralized, and fertile ground for corruption, say watchdog agencies and Iraqi contractors. The equipment so important to Teeples and his recruits, for example, was supposed to be provided under a $327 million contract that was issued in January but was canceled two weeks ago over what the Army said was errors made by contracting officers.
The list of reconstruction contracts and licenses either delayed or under investigation is growing due to what watchdog agencies say is an ad hoc and underregulated selection process. And analysts say it is likely to become more prone to abuse if the United States transfers control over Iraq to an interim government without a strong oversight agency.
"They're still far from an open bidding process," said William Hartung, who recently testified to Congress about postwar reconstruction as a director at the World Policy Institute, a New York-based research center. "The contracting has been chaotic and there are still a relatively small number of companies in a position to benefit."
Pentagon officials acknowledge confusion over the way some subcontracts have been awarded, but say they are working to make the process transparent. "We're putting all the information out there," said Steven Susens, spokesman for the CPA, adding that all applicants meet US standards, with sealed bids. The United States says it will by June 30 transfer sovereignty over Iraq to a local government. With the deadline approaching, charges of cronyism are proliferating as links emerge between winning bidders and Iraqi officials. While allegations of overcharging related to work done by US oil-giant Halliburton Co. have drawn media attention, other less publicized deals and alleged conflicts of interest are raising eyebrows in the United States and Iraq.If coalition efforts to win Iraqi hearts and minds hinge on the integrity of the rebuilding process, the Americans have already lost ground, say Iraqi contractors. Frustration over the country's high unemployment and the slow pace of reconstruction has intensified, they say, because of the perception that foreign companies and a cabal of Iraqi exiles are snatching the best deals. So exasperated are many Iraqis with the contract awards process that many compare it unfavorably with the abusive business practices that flourished under Saddam Hussein's regime. At least back then, Iraqis say, it was clear whom to bribe.
"In the Saddam regime, there was one family, the Tikritis, and you could deal with them," said Kadhim Mohammed al Janabi, who runs a contracting and oil transport company. "Now there are more than 120 parties, plus the people who came from abroad."
Iraqi contractors lament what they say is a bias that favors foreign companies and well-connected Iraqis who spent years living abroad before returning after Hussein's removal. Many members of the Iraqi Federation of Contractors say the winning bids for subcontracting work often go unannounced, which only fuels suspicions of abuse.
"People who have no relation to the coalition or didn't come from abroad don't get any contracts," said Janabi. "It's not clean work."
Those Iraqis who have landed subcontracts say they were helped by their English-speaking skills or personal contact with coalition officials and their translators. Basem Salim and Sami Abdullah say they were awarded a subcontract, finished the contract job quickly, and were rewarded with a larger order to rebuild a police station. But the bidding process is arduous, they say, requiring long trips to a web of contracting offices at military bases or inside the Green Zone -- the coalition's closely guarded headquarters based in Hussein's old Republican Palace.
The Pentagon has opened a central contracting authority in Baghdad, called the Program Management Office, to better manage the rebuilding process. Officials there will oversee how the $18.4 billion approved in October by Congress to fund Iraqi reconstruction will be spent. Last week, the office awarded contracts worth $108 million to companies that will monitor and coordinate design and construction projects.
While government contracts will be handled by Iraqi ministers after June 30, it is not clear what kind of anticorruption safeguards they might adopt. The office will manage US-funded projects for about two years after the hand-over, according to US officials.
Enhanced oversight, say analysts and contractors, is vital to prevent the kind of setbacks dealt by the canceled military supply contract for Colonel Teeples's trainees, which was originally awarded to a Virginia-based company with close ties to Ahmed Chalabi, a prominent member of Iraq's interim ruling council.
The company, Nour USA Ltd., was formed last year specifically to bid on Iraqi reconstruction work and had no previous experience in military provisioning. It beat out 18 other companies for the contract, including Poland's Bumar Group, a state-run arms company, as well as US defense giants Raytheon Co. and General Dynamics Corp.
Nour's president, A. Huda Farouki, has acknowledged that he is a friend of Chalabi's, but he has denied such associations played a role in the award, and he dismissed criticism as sour grapes by competitors.
A new tender for the contract has been scheduled, according to the Defense Department, and could take months to process.
"What is frustrating to me is that a lot of the CPA's resources were tied up in contracts" that were controlled centrally from Baghdad, Teeples said in a recent telephone interview. "What they need is a budgetary process to decentralize and get funds out to the provinces."
In late November, according to the Financial Times newspaper of London, the Pentagon froze licenses worth hundreds of millions of dollars issued to build three cellphone grids in Iraq. The paper said the ensuing probe, which held up cellphone service for months in a country with few working land lines, followed allegations of corruption involving Iraqi government officials and the three Arab consortia that won the licenses. Iraqi Minister of Communications Haider Jawad al-Ebadi denied in an interview last week that the cellphone networks were stalled by a corruption probe, and instead blamed the coalition for failing to provide his ministry with timely assistance in the tender process.
Last month, a watchdog group reported that Iraq's interim government sold much of the country's air industry to a Jordanian firm and a prominent Iraqi family that had little experience in commercial aviation. The New York-based Iraq Revenue Watch said Iraq's transport minister secretly awarded a license for the creation of a new airline and related industries without the knowledge of US officials. A senior coalition official, speaking on condition of anonymity, said he was aware of the Iraq Revenue Watch report and the contract on which it was based. "We'll get to this matter in due course," the official said by email, "or when the mainstream press makes news of it, whichever comes first."

? Copyright 2004 Globe Newspaper Company.

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At Iraqi Port, Progress Is Matter of Perception
U.S. Role Disappoints Dockworkers
By Ariana Eunjung Cha
Washington Post Staff Writer
Thursday, March 25, 2004; Page A01
UMM QASR, Iraq -- A year ago, the capture of this port by U.S. and British troops was celebrated as the first victory of the Iraq war. Today, the U.S.-led occupation authority points to Umm Qasr's $98 million rehabilitation into a bustling center of commerce as one of the first victories of the reconstruction.
Tanker ships unload colorful containers full of cigarettes, powdered baby milk and television sets in quantities unseen in Iraq in decades. Grizzled sailors from all over the world share stories over pots of tea. Businessmen and tourists struggling with suitcases spill out of passenger ferries.
But ask an Iraqi and chances are you'll get a different view.
"Nothing's changed," maintained Hamdi Abdul Rahim, a senior engineer at the grain processing plant next to the port. "There has been no improvement," said Saddam Abdul Karim, an accountant for an import-export company. "Just maintenance. That's all they did," said Falah Habsi, a director general at the Iraqi Transportation Ministry who is charge of reconstruction projects.
After billions of dollars of Iraqi money and foreign aid have been spent and thousands of consultants brought in, the Coalition Provisional Authority can point to a long list of tangible accomplishments. But occupation officials say one of the biggest challenges they have had to confront is convincing Iraqis that the right things are being done for their country -- and for the right reasons.
According to occupation and Iraqi ministry officials, telephone access is now 20 percent greater than before the war, thanks to a new cellular network. For the first time in years, schoolchildren have received new math and science textbooks, about 60 million of them. Water and sewage treatment plants that in the recent past have done little to contain the spread of disease are being repaired. Provincial cities that were once without power 24 hours a day are now receiving some electricity. Wages have increased tenfold or more for some government workers. And a in poll released this week by ABC News, most Iraqis interviewed said their lives had improved since before the war.
Yet Peter Bingham, the Coalition Provisional Authority's senior adviser on maritime issues, said it may take years before the full value of the work that has been done becomes clear to Iraqis. He said an overhaul was necessary to rid the country of the favoritism, corruption and dependence on the state that dominated life during President Saddam Hussein's rule.
"We are just finishing the foundation," Bingham said, "and the bricks are just starting to become visible."
Ideals and Reality
When the U.S.-led Coalition Provisional Authority arrived in Iraq last spring, it had all sorts of ideas about the principles the country should embrace. Some were as technical as environmental protection, worker safety and open accounting practices, others as philosophical as equality, integration, women's rights and capitalism. Hiring consultants and advisers to spread those values to the Iraqi people, the occupiers sought not only to rebuild, but to remake.
The immediate effect, at least in part, has been to slow the progress of the reconstruction. Power struggles, both small and large, have erupted, pitting foreign advisers and some Iraqi government officials against other Iraqis who have their own ideas about the shape of the new Iraq.
The occupation authority made sure electricity was distributed fairly around the country, gaining the support of those in the countryside but angering many Baghdad residents who were used to getting more than their share. It tried to integrate Arabs and Kurds in the army, pleasing those who want to mend Iraq's ethnic divisions but creating more tensions among those who prefer separation. It elevated women to positions of power, drawing applause from women's rights groups but spurring protests from some influential Islamic clerics. It sought to scale back food subsidies, winning the support of those who wanted to move away from a socialist economic model but provoking the ire of some Iraqis who felt the situation was too dire for such a move.
At Umm Qasr, the tension has been over the role of the state-owned Iraqi Port Authority in what occupation officials envision as a capitalist Iraq. Should the government continue to manage it? Should an outside company should take over its management? Should it be privatized and sold to the highest bidder?
As debate continues over how to spend the next round of $18.6 billion that Congress has allocated to the reconstruction, a key question is whether the ideological overhaul is the best strategy or whether the occupation instead should focus on quick, high-impact fixes. Occupation officials acknowledge they may have overestimated their ability to change Iraq's culture, just as they underestimated the deterioration of its infrastructure and the impact that security concerns would have on the pace of reconstruction. But they say they will not retreat from their ideals.
The battle for Umm Qasr, located on a canal that opens onto the Persian Gulf a few miles from the Kuwaiti border, was one of the iconic moments of the war. Invasion forces arrived March 20, the first day of the war, planted an American flag and declared the town would fall within hours. Days later, they were still fighting.
On March 27, the port was declared secure -- for the fourth and final time -- and a reconstruction survey team was dispatched immediately. Analysts from the Pentagon and the U.S. Agency for International Development had determined that the port should be among their highest priorities for repair. The three-mile strip, by far the largest of five ports in Iraq, would be critical for transporting military, humanitarian, reconstruction and commercial supplies.
The assessors found Umm Qasr badly damaged. Administration buildings had been looted after the invasion, but the rest of the facility showed years of neglect. No fewer than 40 wrecked ships bobbed in the waters, and silt had gotten so high that it was impossible for large ships to dock. The port's finances were a mess, and employees were lazing around confused about what to do. No one was manning the cranes, and docks were devoid of ships.
Fergus Moran, the project manager for Stevedoring Services of America (SSA) remembered, "It looked like a port, smelled like a port, but it didn't operate like a port."
The occupation adopted a two-pronged approach for rehabilitating Umm Qasr. It hired Bechtel Corp. for the technical work of dredging, removing wrecks and fixing equipment and buildings. SSA would manage the port and teach and mentor the Iraqi Port Authority.
SSA said it would need $162 million to fix the port; Bechtel estimated its costs at $400 million. The companies got $14 million and $38 million, respectively, and were told to do what they could. The U.N. Development Program assisted in emergency dredging and shipwreck removal with a $2.5 million donation from the Japanese government and $43.5 million from the Iraqi oil-for-food program. The port was up and running by June 16, and emergency dredging and wreckage removal was finished by the fall.
Much of the work since then has focused on making the state-owned port company run like a modern business rather than the sluggish socialist entity it was, with an eye toward the day when it might be privatized in a newly capitalist Iraq. The U.S.-paid companies helping port managers have imposed new controls on finances to better track the money going in and out. They have trained workers in leadership and business practices. And they have cracked down on corruption, which under the Hussein government held up shipments for weeks or months.
A Relative Peace
On a recent weekday at Umm Qasr, the achievements and challenges of the reconstruction were sitting, walking and talking.
Muhammed Diyab, a security guard at the port, was at the main gate, scanning the lines of truckers who had just awakened and were preparing for the long trip to Baghdad, which they no longer make at night for fear of kidnappings and hijackings. A few days earlier, Diyab had caught some men running away with stolen bags of sugar, and he was worried others might be eyeing the rows of white pickup trucks being prepared for delivery to some ministry.
In all, more than 240 Iraqi Port Authority police patrol the area, showing off the dozens of AK-47s they recently acquired after sharing four guns among themselves for months. In addition to smuggling, the port has had five fires, and security patrols have found 17 bodies around the complex since the war. Even so, the port is safer than other parts of Iraq. Foreign officials with the occupation authority and contractors roamed around without flak jackets or escorts.
The relative peace has allowed commerce to flourish. A renovated processing facility has received 200,000 tons of wheat and other grains, critical to feeding the country as its agriculture industry continues to struggle.
At the passenger terminal, about 500 Shiite Muslims from India and other pilgrims coming to visit Iraq's shrines were leaving their cruise ship and passing through an immigration check to the luggage pickup area.
After 40 hours at sea, they had been confined to the ship for 24 extra hours until dockworkers could be found to let them off. Now they were stuck waiting another four hours for their luggage.
"We went to ship manager and asked who is in charge. He said he didn't know. I asked someone else at the dock and he didn't know either," said Ali Shamary, 37, an Iraqi American who was visiting with six other members of his family from Seattle.
At the old port where smaller ships dock, Saad Hanesh, 26, and four other truck drivers were preparing wads of cash to hand out as bribes. They said they used to pay about $220 for each trip they would make to Baghdad. Now they say they pay less than $20.
"It's normal," Hanesh said with a shrug. "We have paid bribes since Saddam's time. Before, we knew the bribes went to Saddam. Now everyone's working for himself."
Salaries Delayed Again
Nearby, dock employees milled about in small groups, whispering about whether they should launch another strike. In January, after their salaries were delayed for two successive months because of an administrative glitch, the workers briefly refused to work and threatened to close the port. After some pleading and promises from managers, they returned to their jobs. Now their salaries were late again.
Najm Abid Sakr, 44, a finance manager for Umm Qasr, said he appreciated the freedoms of the new Iraq but said that under Hussein's government at least he was paid on time. He said he worries about the occupation's plans -- if the port were privatized and the owners could not make money, what would happen to him and the other workers? "We were hoping for good things, but after a year we are already disappointed," he said.
With the salary problems, the management overhaul, a threat by the provincial governor to take over the port, the accumulation of bids from companies that want to privatize Umm Qasr and the imminent end of SSA's contract, rumors were swirling about the future of the port. Workers were uneasy.
They knew that SSA's financial review showed the port was profitable: It had $1 million a month in revenue and $800,000 in operating expenses. But further investigation revealed more layers of corruption than anyone imagined. Auditors were going through employee rolls and finding names of people who weren't showing up for work, people who had died years ago and people who didn't exist. In all, they estimated that as many as 1,000 of the 3,600 people on the payroll were not doing any work.
Meanwhile, the main administration building was full of local dignitaries discussing how Umm Qasr should be run in the coming months. The port manager, Capt. Adel Khalaf, who has spent 27 years in maritime work and was trained in Yugoslavia, met with occupation officials and said he told everyone that he enjoyed a good relationship with the SSA team and was grateful for its manpower. But he also said he felt its value to the port had been "providing us with moral support and self-trust" at a critical time. The port authority, he said, was ready to work on its own.
"We know our work very well. What we need is new technology and new information," Khalaf said. "Then we can be independent and do the work ourselves."
Over the next year, the port has been promised $5 million for management services and $40 million for infrastructure from the U.S. government, plus about $7 million from the British government for dredging. Khalaf said the money earmarked for administrative support would be better spent on physical improvements.
Occupation officials disagreed, saying they would like an outside company to continue managing the port until the June 30 handoff to a sovereign Iraqi government. Craig Hautamaki, a USAID official who oversees the port, said foreign advisers are necessary because they teach such things as fiduciary responsibility, capital investment, contractual practices, human resources planning and international standards for checks and balances.
By the end of the day, Khalaf and the occupation officials were still deadlocked. But the Coalition Provisional Authority concluded it knew what was best for Iraq. The foreign officials made plans for Stevedoring Services of America to continue its work at the port.



? 2004 The Washington Post Company
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Pentagon Faults Supervision Of Contracts

By Jackie Spinner
Washington Post Staff Writer
Thursday, March 25, 2004; Page A19
The Pentagon's inspector general has criticized the management of some contracts awarded by the Defense Department immediately following the U.S.-led invasion of Iraq last year.
In a report dated last Thursday, the inspector general found that procurement officers "circumvented procedures" by not following established federal guidelines and did not provide proper oversight once the contracts were awarded.
The report found that one contractor -- San Diego-based Science Applications International Corp. (SAIC), which has offices in McLean -- chartered a cargo jet to fly an H2 Hummer and a Ford C350 pickup truck to Iraq after its plan was turned down by a contracting officer. SAIC, which was under contract to provide media support to the Pentagon's reconstruction office, "went around the authority of this acquisition specialist to a different office . . . to gain approval and succeeded," according to the report, which recommended that the company repay the government $634,834 for unsubstantiated costs.
Ronald M. Zollars, a spokesman for SAIC, said the company had not seen the report.
"SAIC has worked very diligently to ensure hat we are performing to the customer's satisfaction," he said. "When unanticipated events occur, we immediately respond to address and resolve any issues."
The inspector general reviewed 24 contracts valued at $122.5 million awarded by the Defense Department on behalf of the U.S.-led occupation authority in Iraq.
"DOD cannot be assured that it was either provided the best contracting solution or paid fair and reasonable prices for the goods and services purchased" for 22 of the 24 contracts, the report said.
Thirteen of the 24 contracts were not competitively awarded, according to the report, including eight to SAIC valued at up to $108.2 million.




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Bremer Forms Boards to Aid Iraq Transfer
By DANIEL COONEY
Associated Press Writer
BAGHDAD, Iraq (AP) -- With fewer than 100 days until power is handed over to Iraqis, the top U.S. administrator said Wednesday he was establishing several Western-style institutions that are expected to put a moderating influence on the fledgling government that takes over June 30.
Guerrillas in Fallujah, west of Baghdad, ambushed an American patrol, and three civilians were killed and two soldiers were wounded, in the latest sign that security could remain a problem in Iraq for months to come.
The fighting came a day after attacks on Iraqi police and recruits left a dozen dead.
Top administrator L. Paul Bremer said significant steps had been taken to rebuild the country since the U.S.-led invasion toppled Saddam Hussein a year ago.
"One hundred days from now, Iraqis will be sovereign in their own land and responsible for their own future," Bremer said in an outdoor speech in the Green Zone, the heavily protected area housing coalition headquarters in central Baghdad.
Bremer said he would set up an Iraqi Defense Ministry and a national security Cabinet later this week.
He said he was in the midst of appointing inspectors general to each of Iraq's 25 government ministries, while also creating a government auditing board and an anti-corruption commission. Bremer said work was under way to establish a public broadcasting service and an independent panel to regulate it.
Bremer has already appointed most Iraqi ministers, many of whom are expected to keep their jobs after the handover. He is sorting through the ministers' choices for deputies.
U.S. troops came under attack in Fallujah a day after assailants killed nine police recruits south of Baghdad, while gunmen killed two policemen in the north.
On Wednesday, in the southern province of Babil, a district police chief was shot and killed on his way to work. The slayings were the latest to target police and other Iraqis who work with the U.S.-led occupation.
On the eastern outskirts of Baghdad, three civilians - a 3-year-old boy, his grandmother and a male relative - were killed when a mine exploded and destroyed the car they were riding in, according to relatives. Six other people were wounded in the blast.
North of Baghdad on Tuesday, a U.S. military vehicle in a convoy fatally struck an Iraqi girl near Balad, and four American soldiers and two Iraqi civilians were injured in a separate accident involving two military vehicles near Tikrit, the U.S. military said. The soldiers were in stable condition, and the condition of the Iraqis was unknown.
U.S. and Iraqi officials expect Iraqi guerrillas and foreign fighters to step up attacks in coming weeks, to try to disrupt the handover process and demonstrate that a fledgling government cannot control Iraq.
"The security issue cannot be overemphasized," said Mouwaffak al-Rubaie, a Shiite Muslim member of the Governing Council. He said newly trained Iraqi police would do their best to stabilize Iraq alongside 110,000 U.S. troops.
Enormous tasks remain. The biggest involves anointing an Iraqi transitional government that will take power June 30 - but the Governing Council and U.S.-led occupation figures have yet to agree upon a plan to name those who will govern.
"We're moving at rocket speed," al-Rubaie said. "The counting down has started."
Al-Rubaie said a U.N. team would arrive Thursday to look at technical issues surrounding the transfer of sovereignty. A second U.N. delegation, headed by top negotiator Lakhdar Brahimi, is expected in about 10 days, al-Rubaie said.
Bremer, who often says he was tapped to run Iraq on two weeks' notice last spring, is clearly glad to be handing off his responsibilities.
"It will be a happy moment for all Iraqis - and an even happier moment for my family," Bremer told a few dozen Iraqi dignitaries, seated in the shade of rustling date palms. As he spoke, Bremer's heavily armed security guards scanned the crowd and nearby buildings, as surveillance helicopters circled overhead.
Bremer cited the signing of an interim constitution as a key step toward the June 30 handover of power from the coalition to Iraqis.
He acknowledged some Iraqi leaders were not fully satisfied, but praised members of the U.S.-appointed Governing Council for making compromises on a document that he said enshrines religious freedom and other basic rights.
"Iraq is now on the path to full democracy in a united state at peace with its neighbors," he said.
U.S. troops are fighting a deadly insurgency that sprang up shortly after Saddam was toppled, and the American military is expected to remain long after June 30. Nearly 600 American troops have died during the war and occupation.
Copyright 2004 Associated Press. All rights reserved.
Purchase this AP story for Reprint


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Bush chided for oil prices
By Patrice Hill
THE WASHINGTON TIMES
The Bush administration was criticized yesterday for not acting to curb escalating oil prices even as the price of gasoline at the pump rose to a record high nationwide.
At a hearing of the Senate Armed Services Committee, Energy Secretary Spencer Abraham said the administration would not temporarily stop filling the Strategic Petroleum Reserve to help lower oil prices and it would not publicly call on OPEC to roll back production cuts scheduled for April 1.
"We've ... made clear we're not going to beg for oil," said Mr. Abraham, although he later told reporters that the administration has been working behind the scenes to try to bring prices down.
"We have had a lot of contacts at a lot of levels," he said.
"We're not begging," said Sen. Edward M. Kennedy, Massachusetts Democrat. "We have men and women over there" in Iraq.
Iraq has the world's second-largest oil reserves after Saudi Arabia. The slow revival of exports from Iraq, despite U.S. control of the country, has been a factor driving up oil prices.
Mr. Kennedy and other committee Democrats said they were outraged that the administration is not doing everything in its power to alleviate the strain on drivers, consumers and businesses.
AAA announced yesterday that the price of regular-grade gasoline hit a record at about $1.74 a gallon, though the country is still months away from the peak summer-driving season, when gas prices normally are highest.
Average gas prices in California and some other states already are well above $2. The record gas prices reflect sharp increases in the price of crude oil, which hit a 13-year high of $38.15 a barrel last week in New York trading.
Many analysts expect both gasoline and oil prices to establish records in the months ahead, in a trend that economists say poses trouble for the still-uncertain economic recovery.
"It's an intolerable position," Mr. Kennedy said. "No one can understand it ... why the president of the United States isn't jawboning OPEC."
Some ministers in the Organization of the Petroleum Exporting Countries recently have suggested they may defer next week's 4 percent production cut because of unexpectedly strong growth in demand for oil in the United States and China. Other ministers, enjoying the boom in oil revenue, are resisting any change.
In announcing the cuts last month, OPEC -- which controls about one-third of the world's oil -- said it was expecting consumption to wane in the spring, as it has in the past, between the high-consumption winter-heating and summer-driving seasons.
Energy analysts say it is extraordinary that gas is hitting a record high during the customary spring lull in the oil cycle, and it does not bode well for the summer.
That is when vacationing families drive consumption to peak levels in the United States and pressure on gas prices escalates because of the need for super-refined and clean fuels mandated by federal and state pollution-control laws.
California, New York and some other states have imposed stringent new requirements for summer-grade gasoline this year that will drive the already-high prices in those states to unprecedented levels -- some say near $3 a gallon.
As a partial remedy, many in Congress have suggested a temporary halt in the government's program of filling the Strategic Petroleum Reserve, which is 93 percent full. The Senate passed a resolution calling on the administration to do so in its budget earlier this month.
In a sign that the move could help alleviate the pressure on oil prices, crude prices dipped about $2 the day the Senate passed the resolution, but resumed their climb in the next trading session when the administration made clear it would not heed the suggestion.
"We have placed the national-security factor at the top of the list of considerations," Mr. Abraham said yesterday, explaining the administration's position. He added that the Bush administration believes the reserve "is not to be used to manipulate prices."
But Sen. Carl Levin questioned whether the diversion of 150,000 barrels a day into the reserve is appropriate at a time when private oil inventories -- at 281 million barrels, less than half the level of the 645 million-barrel reserve -- are substantially below normal. Low inventories have been a major factor driving oil prices sky-high.
"Of course this is a national-security issue," the Michigan Democrat said.
"Our economic security is important, too," he said, noting that high oil prices are acting as "a drag" on growth. He said oil prices could drop as much as $8 a barrel if the administration stopped stockpiling.
Mr. Abraham countered that a study by the independent Energy Information Administration found that the price effect of the government's oil diversion is "negligible."
Sen. Jeff Sessions, Alabama Republican, said Democrats complaining about high gas prices should stop blocking drilling in the Arctic National Wildlife Refuge and other domestic reserves.
"The Alaska reserves, which are substantial, ought to be brought on line," he said. The House has passed energy legislation authorizing drilling in the Alaskan reserve, but the Senate has not.
President Bush repeated his call yesterday for Congress to complete action on the energy legislation.

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Five CJD deaths in north N.J. in 15 months
By Steve Mitchell
United Press International
Published 3/24/2004 1:14 PM
WASHINGTON, March 24 (UPI) -- A 62-year old man in Northern New Jersey has died from a brain disorder that appears to be Creutzfeldt-Jakob disease, which, if confirmed, would be the fifth case of the rare disease in a little over a year in a two-county area, United Press International has learned.
The death last Friday of Ronald Swartz, of Denville, also would be the second CJD case in 2004 in New Jersey, where federal and state health authorities are investigating a potential cluster of cases of the rare brain disorder in the southern region of the state.
UPI also has learned that officials have reopened the case of a Philadelphia woman who died in 2000 and that case also is included among those in the possible cluster. Carrie Mahan, 29, died from a brain disorder that was never identified, but which physicians initially suspected of being the nation's first case of variant CJD, the form of the disease linked to mad cow disease.
The possible CJD cluster is associated with the Garden State Race Track in Cherry Hill, where as many as 13 CJD deaths might have occurred among employees and patrons who ate at the now defunct track. Both variant CJD and the spontaneously occurring form of the disease -- called sporadic CJD or simply CJD -- are incurable conditions that degenerate the brain and ultimately cause death.
Swartz's case does not appear linked to the racetrack, but if his death turns out to be due to CJD, it would make five confirmed or probable cases of the disease in the adjoining area of Somerset and Morris counties within a span of only 15 months.
Somerset already had recorded a probable CJD death this year, as well as two confirmed cases last year, according to data from the New Jersey Department of Health and Senior Services. Morris county, where Swartz resided, recorded a probable case in 2003.
This would be an unusually high number for a uncommon disorder that is thought to occur at the rate of only one case per 1 million population per year.
The combined population of the two counties is approximately 789,000, so they would expect to see no more than one case of sporadic CJD in that time frame. According to DHSS figures, which go back to 1979, the two counties have never experienced two CJD cases in the same year -- let alone five.
Asked about the seemingly high rate, DHSS spokeswoman Jennifer Sciortino said, "New Jersey's incident rate (for the entire state) is approximately 8 per year and thus there is no indication that we are exceeding the average case count per year." Sciortino added, "In fact, over the last 25 years there have been instances where the total number of cases topped out at around 14 per year."
DHSS officials, who are looking into the racetrack cluster, might be investigating Swartz's case.
Carolyn Swartz, Ronald's wife, said through his brother Wayne that infectious disease specialists from the New Jersey Health Department had contacted her about the case while Ronald was in St. Clare's Hospital in Sussex, the facility where he initially received treatment prior to being transferred to New York-Presbyterian Hospital in New York City.
Wayne Swartz said he was uncertain what information the New Jersey officials were seeking, and the DHSS declined to comment on the case, citing federal regulations that prohibit such disclosure.
"We do not comment on individual CJD cases because federal HIPAA (Health Insurance Portability and Accountability Act) laws prevent us from disclosing any information that might help in ascertaining a patient's identity," Sciortino told UPI.
The Centers for Disease Control and Prevention in Atlanta, which is assisting the DHSS in the investigation into the potential cluster, also declined to comment on the Swartz case. CDC spokesman Tom Skinner said last week he would look into it but did not return UPI's phone call and an e-mail.
In an interview prior to Ronald Swartz's death, Wayne told UPI, neurologists at Presbyterian had informed the family they were nearly certain Ronald was suffering from CJD.
"They are 100 percent certain that's what it is," Wayne said. The only way to conclusively diagnose the disease, however, is via an autopsy, which Wayne said the family plans to have done on Ronald, who would have turned 63 on Wednesday.
Concerns about vCJD have been heightened since the discovery of a case of mad cow disease in Washington last December. There have been no confirmed cases of vCJD in the United States, except for a 22-year old woman in Florida in 2002 who was a United Kingdom citizen and was thought to have contracted the disease while in England.
Ronald Swartz's age makes him an unlikely candidate for vCJD because the disease typically strikes those under age 55. But vCJD is a possibility because it previously has been detected in elderly people in the United Kingdom -- including a 74-year-old man and a recently discovered case of a 62-year-old man, who appears to have contracted the disease via an infected blood transfusion.
Janet Skarbek, a private citizen in Cinnaminson, N.J., who identified the CJD cases tied to the Garden State Race Track, thinks they are due to the consumption of beef contaminated with mad cow disease that might have been served at the track.
Both the DHSS and the CDC doubt Skarbek's hypothesis and downplay the possibility of a cluster related to either the racetrack or mad-cow-tainted beef.
Carrie Mahan, the subject of the newly reopened case, worked at the racetrack and is included in the list of potential cluster victims compiled by Skarbek.
Mahan's physicians at the University of Pennsylvania Medical Center in Philadelphia initially suspected she was suffering from variant CJD due to her young age. Subsequent tests at the National Prion Disease Pathology Surveillance Center at Case Western Reserve University in Cleveland -- an institute set up by the CDC to autopsy possible vCJD cases -- ruled out both vCJD and CJD.
The case has baffled neurologists, such as Dr. Pierluigi Gambetti, director of the Surveillance Center, because Mahan's condition was never identified conclusively. However, many experts, including Dr. Nicholas Gonatas -- the pathologist who performed the autopsy on Mahan -- thought it was CJD.
Now Gambetti plans to determine if newer, more sensitive tests developed since 2000 can detect the presence of prions, the agents thought to be responsible for both CJD and vCJD, in Mahan's brain tissue.
Allen Mahan, Carrie's brother, said Gambetti requested permission from him last week to retest Carrie's brain tissue.
"Gambetti said they've developed new testing methods and they want to try them out on her case," Allen told UPI.
Gambetti declined to comment on the case due to patient confidentiality restrictions, but he said CJD tests are now more sensitive and offer "better detection ability" than in 2000.
Another factor driving the decision to re-examine Mahan's diagnosis could be the opinions of neurologists who observed the slides of her brain when Gambetti recently presented them anonymously at a neurology meeting. Allen said Gambetti told him most neurologists there had agreed the condition looked like CJD.
He added Gambetti said he expects to have the updated results in about three months.
Steve Mitchell is UPI's Medical Correspondent. E-mail sciencemail@upi.com

Copyright ? 2001-2004 United Press International
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Analysis: EU tackles terror threat
By Roland Flamini
Chief International Correspondent
Published 3/24/2004 5:46 PM
WASHINGTON, March 24 (UPI) -- In the NATO treaty, it's the famous Article 5: An attack against one member of the Atlantic alliance "shall be considered an attack against them all." By Friday, the European Union will get its own Article 5 in a declaration expressing Europe's determination to act in concert in the fight against terrorism.
Drafted last week in the aftermath of the March 11 bombings in Madrid, the declaration is expected to be signed by the EU's foreign ministers at their March 25-26 meeting in Brussels, and its aim is to take anti-terrorist cooperation between the member states to more determined levels.
Echoing the NATO document, the draft EU declaration says that in the event of a terrorist attack against one state, the EU members will "act jointly ... with all the instruments at their disposal, including military resources." But as British Foreign Secretary Jack Straw put it, "Words are not enough to fight terrorism." EU ministers and officials have spent the past week discussing ways of tightening up security to prevent a repetition of the Madrid outrage, and of countering it effectively when, despite their best efforts, it happens anyway.
This was the purpose of Tuesday's meeting in Madrid of intelligence and counter-terrorism chiefs of the five largest EU countries -- France, Spain, Britain, Germany and Italy. The Madrid bombings were the first full-scale terrorist attack by al-Qaida -- or in this case its apparent Moroccan affiliate -- in Europe. For the first time, Europeans had to focus on the real danger at home, and not the Sept. 11, 2001, terrorist attacks on New York and Washington, or the threat of another attack in the United States.
Islamist terrorism was no longer a problem at a distance, with U.S. intelligence taking the lead and Europeans providing support. In fact, neither the CIA nor the FBI were listed as participants in the Madrid meeting. And the EU's high official for international affairs, Javier Solana, went out of his way to emphasize differences in attitude from the Bush administration.
Unlike President Bush's characterization of the United States, Solana stressed that Europe was not in a state of war. "Europe must oppose terrorism energetically, but we must not change our way of life," Solana said.
But things will change in Europe: They are already doing so, and the first casualty of a more robust approach to the terrorism threat is likely to be the Schengen agreement. Named after the Luxembourg town where it was originally launched, the Schengen agreement established open borders between 15 EU member countries. After the euro, it is probably the most important symbol of European unity, establishing freedom of movement throughout most of the continent. Since 1995, it has given EU citizens free access to each other's countries without border checks.
But European governments are finding that open borders are a luxury their security can't afford. Following the Madrid bombings, the Portuguese government decided to suspend the agreement in June while the concluding rounds of the European soccer cup are being played in Portugal. Last week, Spain announced that it was temporarily re-establishing passport formalities for anyone, regardless of nationality, entering or leaving the country in the week prior to the wedding of Prince Felipe, the heir to the Spanish throne, and TV news anchor Letizia Ortiz.
Observers said Greece was likely to follow suit and suspend Schengen privileges for the period of the Summer Olympics, starting Aug. 10. While this does not spell the end of Schengen, observers argued that the whole principle would be undermined when Europe introduced another proposed anti-terrorist measure -- fingerprinting and photographing at airports and border crossings.
The Europe-wide arrest warrant signed last year to make it easier to extradite terrorist suspects will also be enforced E.U.-wide. Initially, Italian Prime Minister Silvio Berlusconi had put up a vigorous resistance to it, and Italy has been slow to implement it. But that was then. Last week, the proposal to enforce the warrant more vigorously came from the Italians, reflecting the level of alarm in Europe over the post-Madrid Islamist threat.
The Italians were also lobbying for wider powers to deport terror suspects. The Italians have a point. With large populations of Muslim immigrants already living in the country (4.1 million Muslims in France, or 7 percent of the total population) and providing ready-made support groups for militants, tightening border controls may have been too late in coming.
EU states are also close to appointing a Brussels-based anti-terrorism coordinator and European sources said Wednesday that former Netherlands Interior Minister Klaas de Vries was likely to get the job. But a proposal to form "a European CIA" that had been doing the rounds of the EU capitals has gained little support.
Some observers find it hard to see how Europe's apparent decision to launch an anti-terrorist mechanism independent of Washington is going to help either side. At the root of the Europe's independent approach is the split over the Iraq war. Bush believes -- at least publicly -- that the Iraq conflict was essential in combating Islamist terrorism. The Europeans, for the most part, don't. This difference has already helped bring down one government. The others would prefer to remain in office.
Copyright ? 2001-2004 United Press International
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Al Qaeda supporters strike back in Pakistan
By Owais Tohid | Correspondent of The Christian Science Monitor
WANA, PAKISTAN - After the Pakistani military's week-long offensive here inside the country's semiautonomous tribal belt, Al Qaeda supporters have launched a series of counterstrikes.
On Tuesday evening, guerrillas attacked the headquarters of Pakistani paramilitary troops as well as government establishments in the Northwest Frontier Province's capital, Peshawar. In the nearby town of Bannu, a bomb exploded moments before a military convoy was to pass a bridge, killing three policemen and a civilian. In the tribal region of Korram Agency, masked men attacked a military camp, killing three troops. Villagers in South Waziristan have reported a series of explosions, mostly in the evenings.
Significantly, these attacks have taken place well outside the 30-square mile area cordoned off by the Pakistani military in its roundup operation against Al Qaeda fighters. This broadening of the fight suggests that Pakistan could be facing a wider guerrilla war from Al Qaeda and their local supporters.
"They are trying to hit back by adopting guerrilla tactics in an attempt to hurt Pakistani security forces," says Mohammad Noor, a local journalist. "By attacking in other cities and towns, they want to engage [Pakistani] forces beyond the troubled region and want to demonstrate their strength."
The authorities have imposed a ban on riding motorbikes in South Waziristan as militants using bikes are believed to launch rocket attacks on kiosks and military bases. "They operate after sunset in small numbers, mostly two or three, and run away after carrying out attacks," says a local intelligence source.
"Once the darkness covers the mountains, we could see the movements of a few suspicious men carrying rockets over their shoulders, their bodies and faces covered with blankets. They disappeared and we could see only their shadows," says a tribesman in South Waziristan.
The counteroffensive started Monday when a group of guerrillas attacked a military convoy 25 miles outside Wana in Sarwaki village. Ten military and three paramilitary troops were killed. Several convoy vehicles carrying troop supplies into South Waziristan were damaged.
The militants are "feeling the heat, as they fear being uprooted from the region that has provided them shelter and given them a hope of survival. But now it has become a death trap, so they seem to be desperate and will fight a battle for their survival," says Sailab Mehsud, sociologist and a writer in South Waziristan.
Meanwhile, Pakistani authorities are still trying to secure the release of 14 paramilitary troops and administration officials held hostage by Al Qaeda militants and local men. The hostages are believed to have been captured when the fighting began March 16 between paramilitary troops and "foreign terrorists," as Pakistani authorities describe them.
Officials are trying to force cooperation from the Zalikhel tribe, which is accused of harboring Al Qaeda militants. Several tribesmen's houses have been demolished and their businesses shut.
Around 10,000 well-armed and equipped military and paramilitary troops, backed by gunship helicopters, are engaged in fighting with 400 to 500 Al Qaeda militants and their local supporters, known as Men of Al Qaeda, in South Waziristan. Pakistan says that its security forces have struck "solid blows" to foreign terrorists who had been hiding here after crossing the border from Afghanistan into this tribal belt following the ouster of the Taliban by the US and allied forces in 2001.
Several foreign and local militants, said to be mostly Chechens and Uzbeks, were killed during the operation launched on March 16, while around 125 have been arrested. The security forces have cordoned off several towns and villages spread over 30 square miles. Troops are conducting search operations in two of the towns, Schin Warsak and Kallu Shah, which are located some 10 miles west of Wana.
"Pakistan wants to control this region and to cleanse it from Al Qaeda and the Taliban militants. By doing so they will try to finish this problem once and for all and strengthen their presence along the western border [with Afghanistan] as well," says Mr. Mehsud.
Pakistani military troops have entered semiautonomous South Waziristan for the first time since Pakistan was founded in 1947. Most of the tribesmen are enraged as they believe the presence of security forces might take away their independence.
"We are against the operation because of the miseries of innocent tribesmen. Not every tribesman is involved with Al Qaeda and cannot be punished for a sin or crime committed by a few tribesmen," says a tribal elder. "The tribesmen are ready to cooperate and will fully cooperate if the security forces pledge to withdraw from towns and villages after the operation."

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Canada's new plan for generic-drug sales
Thursday, Canada crafts legislation that would allow its generic drugmakers to sell medicine to developing countries.
By Doug Alexander | Contributor to The Christian Science Monitor
VANCOUVER, BRITISH COLUMBIA - Canada is on the verge of becoming the first country to allow drug companies to legally make and export cheap, generic medicines for needy nations.
Thursday, a parliamentary committee in Ottawa will review draft legislation that would let drugmakers seek licenses to make generic versions of patented medicines to fight AIDS, tuberculosis, and malaria in developing nations. The legislation could become a template for other countries to follow.
But what should be good news for poor countries is being overshadowed by a looming battle in Canada's Parliament. The battle pits pharmaceutical companies that have poured billions of dollars and countless research hours into developing these medicines against the generic-drug industry and nongovernmental organizations (NGOs) that say the world should "do the right thing." Canada's challenge is trying to strike the right balance between the two sides.
"The question is whether Canada gets it right," Richard Elliott of the Canadian HIV/AIDS Legal Network, the group spear- heading NGO lobbying efforts. "Will it be a good precedent or a bad one?"
Canada is the first country to act on the World Trade Organization's Aug. 30, 2003, decision to revise international patent rules to let developing nations import copies of brand-name drugs in cases where they can't make their own medicine. Strict rules prevent drugs from being diverted to wealthy countries.
The WTO's decision aimed to soothe the controversy sparked by Brazil and India, which have been exporting AIDS knock-off drugs to Africa, but in violation of WTO rules. Brazilian and Indian generic-drug firms must implement the WTO's patent rules by next year, which means they'll be following Canada's lead.
Flawed legislation
But not everyone is happy with Canada's prescription to tackle the world's health woes. Critics say the proposal undermines efforts to deliver affordable drugs to nations needing them most.
"The existing legislation is flawed because it includes the opportunity for brand-name companies who hold the patents on medicines to block or undermine potential competition in the marketplace," Mr. Elliott says.
The Canadian Generic Pharmaceutical Association (CGPA), which represents 22 companies, says generic drugmakers aren't interested in making medicine under these conditions.
"The government's intention is laudable, but it is unlikely that any generic pharmaceutical company in Canada will use it unless substantial amendments are made," says Jim Keon, CGPA president.
The chief concern has been a clause offering patent holders the "right of first refusal" - an option to take over a contract negotiated by a generic-drug company. Critics say this removes the incentive for a generic company to negotiate a deal, which take months and hundreds of thousands of dollars to pursue.
Canada's Research-Based Pharmaceutical Companies (Rx&D), which represents 55 multinationals, has countered with a proposal dubbed "equal opportunity to supply."
"This clause itself ensures that the research-based pharmaceutical companies are made aware of any discussions out there of any need for a developing country for the new medication," Rx&D spokesman Jacques Lefebvre says.
Rx&D says such measures are necessary to ensure that life-saving drugs get to a country in need as quickly as possible.
Mr. Lefebvre says pharmaceutical companies may be better equipped to supply drugs more quickly than generic firms, which may need three to five years to produce a generic drug.
"As long as affordable medicines are made available - whether it's the generic drugmakers or the research-based pharmaceutical companies - that's the priority," Lefebvre says. "Under the alternative we put forward, it does ensure that either one of us will be in a position to provide those medicines. This is an opportunity for both industries to put their traditional rivalries aside and work together."
Balance needed
Canada's minister of industry, Lucienne Robillard, has stressed the need for balance between aid and patents. "We must be true to the humanitarian nature of this initiative," she commented last month. "At the same time we must never forget the importance of intellectual property rights such as those embodied by patents. After all, such protection supports the continued advancement in medical science upon which we all depend."
The future of the bill lies with a parliamentary standing committee, which will review the draft legislation Thursday and suggest changes to break the deadlock before handing it over to Canada's lower House of Commons for approval.
"They have a tough job, there's no doubt about it," says Eric Dagenais, patent policy director at Industry Canada, the government ministry behind this bill. "They have three groups of stakeholders - the NGOs, the brands, and the generics - and all three have their own interests."
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South Korea Reports N. Koreans on Hunger Strike in China
VOA News
24 Mar 2004, 17:39 UTC
Published reports in South Korea say about 100 North Korean asylum-seekers detained in China have gone on a hunger strike.
The reports quote various sources who say the would-be refugees are being detained at a camp in northern Jilin province, which borders North Korea. The sources also say that some of the detainees are in poor condition.
South Korea's government is trying to confirm the reports. A Foreign Ministry official says if the reports are true, the government will ask China to allow the asylum-seekers to go to a third country.
As many as 300,000 North Koreans are believed to have fled across the border into China in recent years, to escape starvation and repression in their country. Some of the asylum-seekers reported on the hunger strike in Jilin are said to have begun their action some three weeks ago.
These reports come as China issued a statement Wednesday saying it had repatriated more than 16,000 foreigners who entered the country illegally since October of last year.
Although China is obligated by treaty to send illegal North Korean asylum-seekers back home, Beijing has allowed some of them to leave for South Korea in cases that attracted international media attention.
Some information for this report provided by Reuters.

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Israel terms Arafat as block to peace
www.chinaview.cn 2004-03-25 03:58:47
UNITED NATIONS, March 24 (Xinhuanet) -- Israeli Foreign Minister Silvan Shalom said here Wednesday that Palestinian leader Yasser Arafat remains a block to the peace in the Middle East region, but his government so far has no plan to remove it.
"Our cabinet hasn't taken any decision about Yasser Arafat. The only decision that was taken, a few months ago, was to consider to expel him," Shalom told reporters after a private talk with UN Secretary-General Kofi Annan.
The meeting was held just hours after a swarm of speakers, at an open debate of the Security Council, slashed the Israeli "extrajudicial" killing of Sheikh Ahmad Yassin, the spiritual leader of the Palestinian militant group of Hamas.
It is reported that after Yassin's killing, Arafat has expressed concern that he might be the next target.
The minister recalled that after the decision was made to expel the Palestinian leader, he received many calls from his colleagues urging "not to do it."
"They believe that Arafat is an obstacle to the peace, but he can cause more damages while he is outside than he is inside (the occupied territory)," he explained.
"While Arafat is there, there is no way that the moderate new Palestinian leadership will emerge," he said, "because (the new leadership) is very much afraid of him and not willing to confront him."
He noted that the only choice for Arafat is to give up authority and transfer powers to the Palestinian prime minister. Enditem
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Book Reviews
Covering Clinton: The President and the Press in the 1990s by Joseph Hayden. Westport, CT, Greenwood Publishing Group. 168 pp. $55.00.
If you find it fascinating to learn how Houdini managed to get himself into impossible situations and then magically managed to extract himself and escape to his next entanglement, this is your book. Joseph Hayden, a freelance writer and former journalist, tells the William Jefferson Clinton sequel. He starts with Clinton's 1992 run for the presidency and ends with the rainbow of speculations about the expresident's place in history.
The most astounding Houdini-like trick happened in 1992, when a badly flawed, obscure governor from a smallish southern state, who lacked support from his party's power structure, managed to propel himself into the presidency. How did he do it? How could he overcome the blemishes of rumors of corrupt real-estate dealings, evidence that he weaseled out of serving in Vietnam, and proof that he lied about engaging in repeated extramarital escapades and about using marijuana? Novel uses of peripheral media were at the heart of the trick. Hayden chronicles how a young team of inexperienced yet savvy advisers steered Clinton into new media venues like MTV, Phil Donahue, Arsenio Hall, and Larry King Live, as well as multiple town hall meetings. In these settings, his personal charm and uncanny ability to connect with people allowed him to win a large, loyal following.
By using these new media, Clinton traded the prosecutorial interrogations of traditional reporters for mostly respectful questions by young, star-struck audiences. What is more, these audiences gave him a chance to air his ideas about politics and policies in his own words, showing his impressive mastery of the field, rather than having his proposals paraphrased and often interpreted and even distorted by hostile, suspicious, cynical reporters.
Many mainstream commentators sneered at this soft, Oprah-style news that pulled at people's heartstrings and forged personal ties between the speaker and the audience, rather than inviting listeners to find faults with his policy proposals.Yet it gave Clinton the core of unwavering supporters that the wouldbe president so badly needed in 1992 and on many later occasions. The likes of James Carville, George Stephanopoulos, and Mandy Grunwald had invented an effective new style of political campaigning that would last beyond the 1990s.
Political Science Quarterly Volume 118 Number 2 2003 315
316 | political science quarterly
While the title of the book suggests that media coverage of Clinton is the main focus, this is not the case. Rather, this is a smoothly-written general account, laced with quotes from journalists and pundits, that targets the largely self-inflicted political troubles plaguing the Clinton presidency. Hayden records the boyish charm and political deftness with which Clinton extricated himself again and again from near-fatal political disasters. He also notes the president's good fortune of often benefiting from inept opponents. In the latter category, the 1996 election was a cakewalk, because Clinton faced a lackluster Republican opponent and because he was blessed with a robust economy, thanks largely to forces beyond his control. Newt Gingrich, the Republican Senate leader, who rode into power propelled by Clinton gaffes, in the end selfdestructed thanks to Clintonesque flaws like political arrogance and politically damaging moves.
In most of these instances, the press, which Clinton feared and detested and often tried to manipulate, played a relatively minor role. This became especially clear during the 1996 election and during the Lewinsky scandal and subsequent impeachment procedures. A major reason for press impotence was Clinton's success in personalizing his relationship with the public and in persuading majorities to accept his framing of political events. Images based on stronglyfelt personal reactions to a politician invariably override contrary images featured in news reports. Still, when Clinton and his publics pass on, the warmth of human relations will dissipate and the final verdict about the Clinton presidency will be rendered in the cold light of dispassionate scholarship. If that light focuses on Hayden's text, it will show a presidency marked by superb style and acrobatic political flexibility but short on principled actions and sorely lacking in lasting substantive political achievements.
Doris A. Graber
University of Illinois at Chicago
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Al-Jazeera: How the Free Arab News Network Scooped the World and Changed the Middle East by Mohammed el-Nawawy and Adel Iskandar. Boulder, CO, Westview, 2002. 228 pp. $24.00.
For decades, the Arab world was forced to rely on national presses that were often monitored or controlled by authoritarian regimes or Western media, BBC, CNN, etc. In recent years, there has been a proliferation of Arab newspapers and satellite television stations. None has been more successful nor more controversial than al Jazeera. As Americans post-September 11 struggled with the questions, "Why do they hate us?" and "Why is anti-Americanism so widespread?" few realized that a powerful source of al Jazeera's success was its graphic coverage of the second intifada or Palestinian uprising. Arabs and Muslims across the world could have their morning cup of coffee or evening dinner and see live reports from Israel-Palestine or other parts of the Muslim world, often conveying a news coverage absent in the American media.
Americans discovered al Jazeera during the invasion of the Taliban's Afghanistan, as it provided live coverage to the world. In the ensuing days and weeks American officials like Candoleeza Rice, head of the National Security Council, and Ambassador Christopher Ross, a longtime Middle East hand fluent in Arabic, went before al Jazeera's cameras in an attempt to explain American policy to the Arab and Muslim world. In Al-Jazeera: How the Free Arab News Network Scooped the World and Changed the Middle East, Mohammed el-Nawawy and Adel Iskandar attempt to explain the Arab world's most independent and most controversial media.
The Qatar-based satellite station is a testimony to the globalization of communications and the ability of an outlet located in a small Gulf state to attract a global audience and enjoy a global impact. The authors' analysis of the origins, influential forces, and voices of al Jazeera and the nature of its programming goes a long way toward effectively addressing the question of whether it broadcasts independent journalism or is a platform for extremists. They emphasize the diversity of its founders and staff as well as the financial support and surprising independence the station has enjoyed from their patron, the emir of Qatar. The signs of al Jazeera's most important diversity and independence come from its programming, which has included interviews with not only Arab and Muslim voices but also with Israeli, American, and European guests. Its hard-hitting journalism has targeted Arab regimes as well as the Israeli and American governments. The station has addressed political, social, and religious issues that would never have been permitted by most Arab and Muslim governments: from Jordan's King Hussein's secret relations with Israeli leaders and exposes on Egypt's Anwar Sadat and Hosni Mubarak, to debates between secularists and fundamentalists on politics, sex, and polygamy. As a result, al Jazeera has been praised for its free and open journalism, accused of being a mouthpiece for fundamentalists and extremists' pandering to anti-Semitism as well as anti-Islamism, and being influenced by the Mossad and the CIA. While the U.S. government had often praised al Jazeera as a rare and important example of the development of a free and critical media, its coverage and criticism of American foreign policy in Israel-Palestine and the conduct of the American-led war against global terrorism has drawn public and private complaints to al Jazeera's patron, Qatar, from the Bush administration. El-Nawawy and Iskandar provide rich description and detail, enabling readers, especially those that have not watched or are unable to follow itsArabic programming to see the accomplishments and pitfalls, the positives and negatives, of al Jazeera's phenomenal success. That situation will change as al Jazeera begins its English programming. While celebrating its successand global impact, the authors do not shrink from addressing hard issues and criticisms, from al Jazeera's failure to cover Qatari politics to its bias and provocative politicized coverage. In particular, they provide substantial coverage and nuanced analysis of al Jazeera's controversial role in airing Osama bin Laden and al Qaeda taped interviews. However, too often al Jazeera's
318 | political science quarterly
critics forget that similar questions have been raised over the years regarding the exposure Eastern media have given to hijackers and murderers. Moreover, they gloss over the serious questions raised post-September 11 of the stark differences between the more independent European and increasingly passive American media as well as their ideological biases--from liberal to neoconservative-- of American newspapers and media such as the New York Post, Wall St. Journal, New York Times, The Nation, New Republic, Weekly Standard, Fox News, and CNN.
One of the lessons of post-September 11 is the importance of the media as a communicator and interpreter of news as well as a formative influence on public opinion. The failures and dangers of a lack of a free press are obvious in many Arab and Muslim countries as well as the need for governments in America and Europe to communicate their message more effectively to the Muslim world. The increased talk of the need for democratization in the Arab and Muslim worlds and attempts of some governments to proceed along a path to democratization will underscore both the importance of the media and continue to draw attention to the example and track record of al Jazeera. Al-Jazeera: How the Free Arab News Network Scooped the World and Changed the Middle East provides an excellent starting point for understanding the changes and challenges that are underway.
John L. Esposito
Georgetown University
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You Call This an Election? America's Peculiar Democracy by Steven
E. Schier. Washington, DC, Georgetown University Press, 2003, 176
pp. $24.95.
In an especially compelling metaphor, Steven Schier compares an electoral system to a calendar: as the calendar structures our lives, the electoral system structures our political process. His evaluation of electoral systems is based on four cogent goals: stability--political, governmental, and regime; accountability; high voter turnout; and deliberation of public policy. He offers an analysis that is at once rich and lucid, arising from a distillation of the research results and the conclusions of an amazing number of experts in the field. He discusses the characteristics and consequences of electoral systems beginning with the theories of John Locke and James Madison and extending to the practices of the world's other constitutional democracies. It soon becomes clear that the goals of electoral systems, including his own four, are not necessarily compatible in practice. As a result, readers are forced to rank order their own goals and to confront their own personal tradeoffs. Which is more important: stability or accountability? What kind of accountability-- party or individual official--is most desirable? Is a swift and decisive election more or less important than achieving the most humanly accurate
book reviews | 679
vote count? Is direct democracy superior to representative democracy? Is a plurality system less legitimate than a majority one? Is a locally-based constituency more functional than an ideologically-based one? Is the more representative multi-party system preferable to a stable two-party system? Like the rest of us, Schier makes choices. Of the evaluative four criteria, only voter turnout merits its own chapter. At times it appears to be his paramount concern, shaping more of his recommended reforms than the other three and explaining his endorsement of the instant runoff system in a single member district with a majority requirement. Under this system, used in Australia, voters must rank their preferences, and if no candidate receives a majority in the first round, the second choice ballots of the lowest candidates are counted. Such counting continues until one candidate achieves a majority. Although this system appears to increase turnout, it is a curious choice because it might very well create a multi-party system which would undermine both stability and accountability. At the very least, it would give influence and appointive offices to extremist candidates. The average citizen's response to this voting mechanism usually is that it gives some voters two votes. Further, it is very complex, though endorsed by a theorist who wants "to make America's electoral system simple and user friendly" (p. 143).
Schier's analysis of the Populist-Progressive reforms and their consequences for the political process is quite devastating. He points out that these reforms undermined party-based elections and made ballots too complicated for most voters. Favoring legislative democracy over direct democracy, he finds the referendum, the recall, and most particularly, the initiative promising, but they do not provide accountability. Instead, they are disruptive of the deliberative Madisonian system because they ask too much of voters and empower the special interests. As for campaign finance, he concludes it is an antiparty reform that helps interest groups and incumbents and harms parties and challengers. Other topics examined are the electoral college, redistricting, and racial gerrymandering.
This book is a keeper, not only as a stimulus to sorting and ranking personal political values, but also as a useful reference work--it is chock full of information. The bibliography is extensive, the text provides easy source and page references, the organization is excellent, and the argument flows smoothly. His students must love his classes.
Judith A. Best
State University of New York
College at Cortland

Kansas City Kerry
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By Paul Beston
Published 3/24/2004 12:08:38 AM


Over the past week, the New York Sun and the Kansas City Star have been reporting another unsavory story about John Kerry's antiwar past. Witnesses and FBI meeting minutes conclusively place Kerry at an event he has always denied attending: The November 1971 meeting of Vietnam Veterans Against the War (VVAW) in Kansas City, in which a plan to assassinate pro-war senators was discussed. How seriously the plan was debated is in dispute; some veterans say it was nothing more than "guys ticked off and talking big at midnight," while others remember a bitter confrontation over the idea. All agree, however, that Kerry was not involved in the discussions and would never have approved of such a plan.

Nevertheless, the Kerry campaign is eager to distance itself from one of VVAW's most notorious episodes. Now that the evidence of his attendance is overwhelming, the campaign is trying to chalk up its earlier denials to faulty memory. Late last week Kerry spokesman David Wade conceded that Kerry had been there, but clung to the contention that the senator simply didn't remember the meeting. Wade's description of the Kansas City meeting as a "historical footnote" was too clever by half -- if the meeting and Kerry's attendance really were footnotes, the campaign would never have cared about the story in the first place.

On Monday, the Sun reported on a former VVAW member who claims Kerry operatives urged him to change his story about Kerry's presence in Kansas City. John Musgrave, a Marine who earned three Purple Hearts in Vietnam, claims that John Hurley, head of Veterans for Kerry, asked him to call back the Star reporter he had spoken with and "tell him you were wrong." Hurley insists he only asked Musgrave "to be very sure of his recollection." Apparently this simple instruction required two phone calls to impart.

The Kansas City story has emerged at the same time that the FBI has revealed it conducted surveillance on Kerry during 1971 and 1972, when he was rising to fame as an antiwar spokesman. The FBI monitored the Kansas City meeting as well, though it's not clear if it picked up the chatter about assassination plots. When informed of the FBI story recently, Kerry unleashed his practiced moral indignation, harumphing about civil liberties and the sad abuses of power of the Hoover-era FBI: "I'm surprised by [the] extent of it. I'm offended by the intrusiveness of it. And I'm disturbed that it was all conducted absent of some showing of any legitimate probable cause [italics mine]. It's an offense to the Constitution. It's out of order." Then the Kerry campaign trotted out more of its defiant, desperate macho, claiming that the FBI revelation was "a badge of honor."

Kerry has not explained why the FBI was wrong to spy on meetings where political assassinations were being discussed. If that isn't "legitimate probable cause," what is? The senator likes to bluster about President Bush's supposed failures on homeland security, and perhaps he is worth heeding on that score. After all he, not our hopelessly provincial president, has real-world experience with groups threatening violent action. He should make the most of it. Perhaps a line can be worked into his stump speeches, right after the line about aircraft carriers: "I know something about assassination plots, too."

ANOTHER QUESTION THAT COMES to mind is whether Kerry felt any obligation to report the plot to authorities. Under certain conditions, knowing about such a plan -- even a plan that was probably half-baked at best -- and not reporting it could be a crime in itself. Gerald Nicosia, the author of Home to War, a largely positive treatment of the VVAW, absolves Kerry of any responsibility: "I think if the thing ever got off the ground, Kerry would do something to stop it." Still, it would be worthwhile for someone to ask Kerry directly, if only because Kerry would provide at least two answers to choose from.

For those opposed to Kerry's presidential ambitions or troubled by his conduct after returning home from Vietnam, the Kansas City story shines a welcome light. It may even do the senator some damage. But it is unlikely that Kerry's disgraceful behavior as a member of VVAW -- slandering American soldiers, spreading fictitious atrocity stories, theatrically discarding someone else's war medals -- will be a major factor in the campaign. The Vietnam records of Kerry and Bush have been given a going over, almost as if they are preludes to the real campaign, when the two candidates can tackle real issues like prescription drugs, gay marriage, and outsourcing.

Our political culture has been irrevocably altered by the Clinton ethos of "moving on." There is a widely held sentiment among the media, and perhaps even the public at large, to let sleeping Vietnam dogs lie. Let's just agree to disagree, the thinking goes. Besides, George Bush is hardly an articulate advocate for the merits of the Vietnam War. In his February interview with Tim Russert, he denounced the war because "we had politicians making military decisions," as if this is not a feature of every war.

Kerry has little to fear from the Kansas City story. Even if there is a bombshell revelation yet to come, the story is already playing out on the familiar terrain of "gotcha" personal campaigning, devoid of genuine historical context. Kerry faces an opponent who has no desire to discuss Vietnam-era politics and a public that has long-since accepted the liberal narrative of Vietnam as a wrongful war. And he operates in a political culture in which a Democrat's sins are easily forgiven, if in fact they are viewed as sins in the first place.

All of this is to be regretted, because the election of 2004 offered one of the last chances to have a meaningful national debate about the merits of the Vietnam War. Unless I was out of the room the last 30 years, I don't think we've had it yet. As an interested non-expert who grew up in Vietnam's aftermath, it seems to me that Vietnam in the context of the Cold War and Iraq in the context of the Terror War have many points of comparison.

Chief among them is the concept of the Twilight Struggle against an implacable global adversary, where the rules of engagement cannot preclude elective interventions that are part of a long-term strategy. But the only discussion about Vietnam we tend to get is of the quagmire variety whenever an American soldier dies in Iraq; only then is the war in Iraq said to be "like Vietnam."

The Right lacks confidence in its Vietnam arguments and the Left has no moral authority, so the two sides have agreed to a silent truce on the matter. But it's not a truce that serves the interests of the country, any more than VVAW did then or John Kerry does now.


Paul Beston if a writer in New York.
http://www.spectator.org/dsp_article.asp?art_id=6331

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FBI Shadowed Kerry During Activist Era
Mon Mar 22, 7:55 AM ET Add Top Stories - Los Angeles Times to My Yahoo!
By John M. Glionna Times Staff Writer

As a high-profile activist who crossed the country criticizing the Nixon administration's role in the Vietnam War, John F. Kerry was closely monitored by FBI (news - web sites) agents for more than a year, according to intelligence documents reviewed by The Times

In 1971, in the months after the Navy veteran and decorated war hero argued before Congress against continued U.S. involvement in the conflict, the FBI stepped up its infiltration of Vietnam Veterans Against the War, the protest group Kerry helped direct, the files show.

The FBI documents indicate that wherever Kerry went, agents and informants were following -- including appearances at VVAW-sponsored antiwar events in Washington; Kansas City, Mo.; Oklahoma City; and Urbana, Ill. The FBI recorded the content of his speeches and took photographs of him and fellow activists, and the dispatches were filed to FBI Director J. Edgar Hoover and President Nixon.

The files contain no information or suggestion that Kerry broke any laws. And a 1972 memorandum on the FBI's decision to end its surveillance of him said the agency had discovered "nothing whatsoever to link the subject with any violent activity."

Kerry, now the presumed Democratic presidential nominee, has long known he was a target of FBI surveillance, but only last week learned the extent of the scrutiny, he told The Times. The information was provided by Gerald Nicosia, a Bay Area author who obtained thousands of pages of FBI intelligence files and who gave copies of some documents to The Times.

The FBI files shed new light on an early chapter in Kerry's public life and are another example of the extent to which the U.S. intelligence apparatus monitored and investigated groups opposed to government policies during the Vietnam era, especially the Hoover-run FBI.

FBI harassment of some activists and leaders in the antiwar and civil rights movements -- including the Rev. Martin Luther King Jr. -- was exposed after Hoover's death in 1972, and reforms were mandated in the bureau to prevent such abuses and restore public confidence.

The files reviewed by The Times on Kerry do not show that the FBI engaged in any illegal actions in its surveillance of him. But the documents also show the lengths the government went to investigate not only Kerry, but the VVAW and other antiwar groups.

Intelligence officials referred to the VVAW in their reports as the "New Left." "Due to abundant indications of subversive influence, we are actively investigating VVAW," read one FBI report from 1971.

The documents could become an important resource for historians because they show the extent of U.S. government surveillance directed against an individual who, three decades later, may become president.

They also suggest that Kerry's memories of some of his antiwar activities, including the date he left his position on the VVAW national steering committee, were inaccurate. Kerry has stated that he left the group in the summer of 1971, but the files show that he did not quit until the late fall of that year.

Kerry said he was troubled by the scope of the monitoring documented in the papers.

"I'm surprised by [the] extent of it," he said in an interview. "I'm offended by the intrusiveness of it. And I'm disturbed that it was all conducted absent of some showing of any legitimate probable cause. It's an offense to the Constitution. It's out of order."

Kerry told The Times that knowing the scope of the government surveillance against him had made him more conscious of selecting the right people to run intelligence agencies. If elected president, he said, he would appoint an attorney general "who knows how to enforce laws in a way that balances law enforcement with our tradition of civil liberties."

"Today's FBI isn't the FBI of J. Edgar Hoover. The FBI of today is on the front lines of the war on terror, and it's critical that they be effective," he said. "But the experience of having been spied on for the act of engaging in peaceful patriotic protest makes you respect the civil liberties and the Constitution even more."

Kerry said that in 1987, two years after assuming office as a senator from Massachusetts, he requested and received an FBI dossier on himself. He later told aides it was "boring," and mostly included news clippings. The senator was apparently unaware that a much larger file existed that included reports on his activities as a VVAW leader.

Kerry said he was disturbed by "this extensive component of spying" on him that wasn't in his file. "If I was the subject of individual surveillance and individual tape recordings, I'd have thought it would have been released to me," he said.

Fourteen boxes of FBI files standing 12 feet high have been sitting for five years at Nicosia's home in Corte Madera.

Many of the files include mention of Kerry, who became the VVAW's most widely recognized figure after he sought to make the case against the Vietnam War in testimony to the Senate Foreign Relations Committee in April 1971. His appearance was widely reported because of his stature as a veteran who had been awarded a Silver Star and three Purple Hearts. As a lieutenant, Kerry had commanded swift boats patrolling the sniper-filled rivers across the Mekong Delta.

"The Nixon people viewed antiwar protesters as anti-American subversives," said Douglas Brinkley, author of "Tour of Duty," a book that details Kerry's Vietnam-era exploits. "Because of his record as a war hero, they feared Kerry's influence with the public."

Many FBI reports on Kerry relied on informants who had infiltrated the VVAW. One report, filed after a gathering in Oklahoma City on Nov. 8, 1971, described how 22 veterans gathered to talk about "alleged war atrocities in which they participated in Vietnam."

The file added: "From four p.m. to five p.m., John Kerry (news - web sites), featured convention speaker and national spokesman for VVAW, spoke to one hundred to two hundred people, followed by brief question and answer period. Kerry spoke against the war and encouraged young people to vote for candidates who will end the war. He said VVAW members will continue to be active in activities to end the war, but indicated that VVAW members are against any type of violence."

Other former VVAW members recalled their suspicion that their telephones were being tapped and their concern that informants had infiltrated their ranks.

"Once, our national office in Washington called the phone company to say they couldn't pay the bill," said Bill Crandell, a writer who lives in Silver Spring, Md. "They were told, 'Don't worry, it's being paid.' "

Crandell said he and others assumed that intelligence agents made sure that the phone lines remained active, though the FBI files reviewed by The Times contain no mention of wiretapping.

Ann Barnes, who worked with the VVAW and who now lives in Milwaukee, said the protesters took the surveillance seriously. "Wherever you went, there'd be people taking your picture, writing down your license plate, doing what they did," she said. "At demonstrations, we'd spot the guys tailing us and say, 'Hey, there's our guys over there.' But we weren't really laughing."

Kerry also recalls the shadow of surveillance. "I wasn't doing anything that I was worried about," he said. "That was the nature of the FBI and the dialogue of the times.... People used to joke about it more than anything, but it was frustrating."

He added: "I remember coming out of a meeting and seeing one of their unmarked cruisers sitting there. Somebody had left a firearm on the seat, as a form of intimidation. In Washington, when I walked the streets ... I knew there were surveillance cars. But never to the depth I know about now."

When Nicosia began researching his book "Home to War," a history of the Vietnam veterans movement, he sent a Freedom of Information request in 1988 to the FBI seeking its VVAW surveillance files.

Eleven years later, in 1999, he received 14 boxes of largely redacted files. But the release came too late for any significant inclusion in his look at the VVAW, which was founded in 1967 and drew 10,000 members nationwide.

He had not read the files before allowing The Times to view a portion of them last week. After a call from Nicosia, Kerry aides came to his home to collect the same 50 pages of documents copied by The Times.

The files show that Kerry and his activities within VVAW were a subject of FBI surveillance throughout the summer of 1971, during a time he had said he had already left the organization.

The documents include evidence that Kerry did not resign from the VVAW's national steering committee until November 1971, during four days of meetings in Kansas City. Several Vietnam-era histories -- and Kerry himself -- had said his resignation occurred at a VVAW gathering in St. Louis in July.

Previously, Kerry had denied being at the Kansas City gathering. But the FBI files, along with interviews with former VVAW members, indicate that he attended at least some portion of the meetings, using the occasion to resign his post as one of the group's national coordinators.

"I still have no memory of a Kansas City meeting.

"I have this stark memory of the humidity that day [I resigned from VVAW].... I just remember forever a dark storm brewing, with these huge thunderhead clouds."

But his recollection was that he resigned at the St. Louis meeting. "And every reminder we have since then has put it there, including Nicosia's book," he said.

But the files include a "priority" memorandum dated Nov. 16, 1971 -- the day after the VVAW's Kansas City meeting ended -- from Hoover to Nixon and other high-ranking administration officials. Quoting a "confidential source," the report said Kerry was there and had resigned from the VVAW for personal reasons.

"It's just weird," Kerry said, when asked about the discrepancy. He attributed his previous assertions to a faulty memory.

For example, he said, "there was a day in where I gave two speeches in Norman, Okla. I remember the first speech. I don't remember the second. It's just the nature of memory."

Several VVAW members also distinctly remember Kerry's presence in Kansas City.

"I remember the Kansas City meeting like it was last week," said Barnes. She said Kerry read an emotional resignation letter while scores of VVAW members sat around long tables in a church classroom.

"He said he was going into public service, that he was going to run for office," said Barnes. "It was a short speech, but it was emotional. Everybody cheered."

Afterward, Barnes recalled, Kerry and others stepped outside the church for a break, only to see FBI agents taking pictures of them from across the street. Barnes recalled saying to Kerry: "You've been thinking about this a long time."

And Barnes recalled Kerry saying: "Yeah, since high school."

The files document other Kerry appearances in 1971.

One report from Oklahoma said, "The entire conference lacked coordination and appeared to be a platform for John Kerry, national leader of VVAW rather than for VVAW."

Another concluded that a speech he gave at George Washington University was "a clear indication that Kerry is an opportunist with personal political aspirations."

But the reports were not always accurate. In one, an informant reported that Kerry planned to accompany VVAW co-director Al Hubbard to Paris to meet with North Vietnamese representatives to negotiate a POW prisoner of war release.

But another FBI file and other historical accounts report that Kerry was critical of Hubbard for making the trip and for exaggerating aspects of his military record. "John Kerry again attempted to have Al Hubbard voted off the executive committee as Kerry stated he did not think Hubbard ever served in Vietnam or was ever in service," reported one Kansas City informant on the tension that existed between Kerry and Hubbard.

Kerry recalled his opposition to VVAW leaders meeting with North Vietnamese officials. "I thought that would be disastrous to the credibility of the organization," he said, "to the people we were trying to convince about the war."

Kerry soon left VVAW, which he thought had lost its focus.

"The group achieved a lot of good, but it eventually splintered and diversified into these various things," he said. "It started to broaden into this diverse tug of war."

On Friday, the Kerry campaign released pages from the senator's personal FBI file, including a May, 24, 1972, memorandum in which the agency decided to end its information- gathering on Kerry's activities.

"It should be noted that a review of the subject's file reveals nothing whatsoever to link subject with any violent type activity," the report said. "Thus, considering the subject's apparently legitimate involvement in politics, it is recommended that no further investigation be conducted regarding subject until such time as it is warranted."


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Energy Bill Too Weighted Down to Power the Country
by Charli E. Coon, J.D.
Backgrounder #1736

March 17, 2004 | |

The good news is that U.S. Senate leaders have drafted a scaled-back energy bill: the Energy Policy Act of 2003 (S. 2095). The Senate bill would slash about $17 billion from the conference report, the Energy Policy Act of 2003 (H.R. 6), making the 10-year price tag for this package around $14 billion instead of $31.1 billion.

The bad news is that the new, leaner bill "achieves the same goals the old bill did."1 In other words, special interests would still receive substantial taxpayer subsidies--just not as quickly and as much--due in part to budget gimmicks that delay implementation of most of the provisions until later in 2004.2

For example, large agribusinesses would still be enriched through an ethanol mandate; the coal industry would still receive over $2 billion in subsidies; and uneconomical renewable resources would still be given preferential tax treatment. Moreover, unnecessary programs, studies, and grants would still be authorized--such as a $6.2 million study on the feasibility of converting motor vehicle trips to bicycle trips and $50 million to fund a five-year transit bus demonstration program.

Likewise, under the new Senate energy bill, federal spending would continue to increase, and Congress would still interfere with the marketplace.

The Senate has just replaced one misguided, billion-dollar, pork-laden bill with another.

Regrettably, the new Senate bill still fails to meet the nation's future energy needs. Total energy consumption is expected to increase more rapidly than domestic energy supply through 2025.3 As a result, net energy imports are projected to increase from 26 percent of total U.S. consumption in 2002 to 36 percent in 2025.4 Yet the Senate proposal would do little to narrow the growing gap between supply and demand.

Given the major policy flaws in both the conference report and the Senate bill, Congress needs to scrap both pork-laden proposals, go back to the drawing board, and draft a sensible bill that would enhance the nation's energy security and ensure adequate, reliable, and affordable supplies of energy to consumers. A responsible plan would:

Authorize access to domestic energy supplies that are currently off-limits, such as the Rocky Mountains and offshore;
End taxpayer handouts to special-interest groups representing a wide array of large and small businesses, industries, and companies in the energy sector;
Strengthen the country's energy infrastructure by:
Enhancing the nation's electric reliability standards to ensure transmission grid reliability,
Granting the Federal Energy Regulatory Commission (FERC) limited "backstop" authority to issue permits for interstate electricity lines in bottleneck areas,
Repealing the antiquated Public Utility Holding Company Act,
Reforming the convoluted federal lands permitting process, and
Delaying the FERC plan to create a "standard market design" for the sale of electricity on the wholesale market.
Allow Indian tribes, acting as sovereign nations, to set up their own regulatory systems for energy projects;
Privatize federal power and eliminate the preferences that federal and municipal utilities and electric cooperatives enjoy; and
Allow the market--not Congress--to determine the nation's energy winners and losers.
Moreover, the Senate energy bill would set back movements toward a reformed tax code. Not only does the bill contain enough tax arcana to keep many tax lawyers fully employed--thus, moving the Bush Administration away from its goal of simplifying the tax code--but it would also stand as a monument to using the tax code for economic engineering.

Quite apart from the need for more energy supplies, it is grossly unfair to ordinary taxpayers--both businesses and individuals--for Congress to use the tax code to benefit a few at the expense of everyone else.

Both bills would use the tax code to modify economic behavior, distorting the economic signaling of the marketplace and making the energy sector and the economy more inefficient. For example, if the energy marketplace is signaling that petroleum supplies are currently sufficient, then an effort by Congress to create greater supplies through tax in-centives would drive down spot petroleum prices, distort returns on equity and assets used in exploration, and dislodge plans by companies to heighten their exploration activity when the price of oil justifies it.

Cost of Energy Plans
A closer look at the conference report and the Senate's new--and purportedly leaner--bill shows just how costly, pork-laden, and irresponsible both proposals are. The Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) estimate that the conference report would increase direct spending by as much as $5.4 billion over the 2004-2013 period5 for such activities as research on ultra-deep wells, coastal restoration in the Gulf Coast, and development of rural electric projects in distressed communities in Alaska.

More alarming, however, are the "incentives" purportedly needed to enhance the nation's energy supplies. In fact, these incentives are nothing more than giveaways to special-interest groups to buy their support for the bill. The CBO and the JCT estimate that the tax giveaways would total over $25 billion between 2004 and 2013, making the total price tag about $31 billion over 10 years.

The conference report, however, has even more giveaways and needless federal spending than are reflected in the CBO and JCT estimates--including a minimum of $46 billion in new spending authorizations over five years, subject to appropriation action. This figure does not even include other provisions in the bill that authorize "such sums as are necessary." Given the rapid growth in federal spending over the past several sessions of Congress, these new authorizations understandably call into question "promises" for fiscal restraint this year.

While less costly than the conference report (the Congressional Budget Office has not yet published an official estimate of S. 2095), the scaled-back Senate bill still uses the federal tax code to load the proposal with giveaways to special interests totaling about $14 billion. For example, the bill would still subsidize production of oil, gas, bio-diesel, and other types of fuels; give generous subsidies to large agribusinesses through a new ethanol mandate; and provide an $18 billion loan guarantee for construction of a natural gas pipeline in Alaska.

Giveaways to Special Interests
The generous handouts to special interests come in a variety of forms, such as tax credits, tax deductions, tweaks to the tax code, and other changes in existing laws. The tax titles (Title XIII) of both energy bills contain a number of subsidies, including the following:

Tax Credit for "Favored" Fuels--Production Tax Credit (PTC)
Both the conference report and the Senate bill include a production tax credit (PTC). This market-distorting provision extends preferential tax treatment for uneconomical renewable resources used to produce electricity--including wind, closed-loop biomass, and poultry facilities. The conference report would expand this subsidy to include new resources: open-loop biomass, geothermal energy, solar energy, small irrigation power, and municipal solid waste (the Senate bill would also include bio-solids and sludge). This special-interest handout alone would cost $3 billion over 10 years (2004-2013).

Yet, despite two decades of taxpayer subsidies, grid-connected generators that use renewable fuels are projected to remain minor contributors to U.S. electricity supply--increasing from 9.0 percent of generation in 2002 to only 9.1 percent by 2025.6 Generation from non-hydroelectric renewables is projected to increase from a mere 2.2 percent in 2002 to only 3.7 percent in 2025.7

Instead of subsidizing these uneconomical energy sources, Congress should enact legislation that would permit exploration of areas that are currently off limits, such as the Rocky Mountains, offshore, and the Outer Continental Shelf. This legislation--not taxpayer subsidies--is the responsible way to enhance the nation's energy supplies and provide consumers with abundant, affordable, and reliable energy.

Tax Breaks for Congressionally "Privileged" Fuels and Alternative Motor Vehicles
Both bills also include a variety of provisions that interfere with the marketplace for fuels and the vehicle industry at a cost of $4 billion over 10 years.

One scheme creates an artificial market for four select vehicles (so far rejected by the marketplace) by providing a new tax credit for the purchase of hybrid motor vehicles, lean-burn diesel vehicles, alternative-fuel motor vehicles, and fuel motor vehicles. The conference report would also repeal (the Senate bill would modify) the current-law phase-out for the credit for electric motor vehicles. The free marketplace--not Congress--should determine whether consumers want these particular vehicles.

Select fuels, such as bio-diesel and certain bio-diesel mixtures, would also receive special treatment by means of a new tax credit. Additionally, the eligibility for the small-producer ethanol credit would double from a production capacity of 30 million gallons per year to 60 million gallons, and cooperatives would be allowed to pass through this credit to their patrons.

Taxpayer Subsidies for Specific
Residential and Business Property
Likewise, the conference report and the new Senate bill include a variety of market-distorting, energy efficiency measures--including tax credits, deductions, and provisions to entice the purchase of specific products; the manufacture of particular appliances; the construction of certain homes; and specified improvements to existing property--at a price tag of $2 billion over 10 years. While conservation and energy efficiency are important components of a responsible energy policy, accurate price signals from the market--not congressional meddling with the market--should determine which energy efficiency measures consumers take and which products they purchase.

Subsidies for the Coal Industry
Coal-fired electricity generation is expected to continue growing in 2004 and 2005, driven by increasing demand for electricity.8 While coal is essential to electricity production and the national economy, the costs of new, innovative, clean coal technologies should be borne by the industry--not the taxpayers. Both proposals include over $2 billion in handouts to the coal industry over 10 years.

Handouts for Oil and Gas Industries
Proponents of the generous tax breaks for the oil and gas industries--such as a tax credit for oil and gas production from marginal wells (wells that produce fewer than 15 barrels of oil a day and less than 90 thousand cubic feet of natural gas per day)--argue that these subsidies are not handouts, but merely incentives needed to increase domestic energy supplies. In the conference report, these subsidies would enrich the oil and gas industry by about $7 billion over 10 years. The Senate bill would delay some of these subsidies to make the proposal appear less costly in hopes of garnering votes from fiscal conservatives.

However, these incentives are needed only because Members of Congress do not have the political will to ensure that U.S. consumers have adequate, affordable, and reliable supplies of energy. If this were their goal--not special-interest handouts--they would have authorized oil and gas exploration in Alaska, in the Rocky Mountains, and on the Outer Continental Shelf. The tax breaks for the oil and gas industries would likely increase domestic supplies to some degree, but this is the wrong way to do it.

Tax Breaks for Reliability
The tax tweaks in this category are intended to enhance the delivery of the nation's energy supplies. For example, these provisions shorten the class life and recovery periods for natural gas gathering lines, distribution lines, and electric transmission property. They permit small-business refiners to claim an immediate deduction for up to 75 percent of the costs of complying with environmental regulations on sulfur emissions, and they also modify special rules for nuclear decommissioning costs. The Joint Committee on Taxation estimated that these handouts would cost taxpayers about $4.3 billion if Congress adopted the conference report.

The new Senate bill contains similar provisions. While well-intended, these tax tweaks favor certain investments rather than allowing market signals to determine where those investment dollars should go.

Additional Special-Interest Giveaways
The conference report also includes miscellaneous tax breaks for a variety of special interests. In fact, one of these taxpayer subsidies even gives a two-year suspension of tariffs on imported ceiling fans. According to The Wall Street Journal, this provision was added as a favor to Atlanta-based Home Depot, Inc.9 While still too costly, the new Senate bill strikes this industry-specific handout from the energy bill.

Loan Guarantees
Regrettably, Congress's largesse is not limited to the tax title. Buried in both bills are various loan guarantees for specific projects. For example, the report authorizes a loan guarantee of up to $18 billion to support the construction of an Alaska natural gas pipeline from the North Slope to the lower 48 states--a project that industry has considered too economically risky to attract private investments.

Likewise, the bills authorize the Secretary of Energy to make loan guarantees (amounts to be determined by the Secretary) for a variety of clean coal projects around the country--including coal gasification, integrated gasification combined cycle technology, and petroleum coke gasification. While advancing clean power is commendable, the private sector should finance these projects without taxpayer subsidies.

The bills also authorize the Secretary of Energy to provide loan guarantees (no amounts given) for the construction of facilities to produce Fischer-Tropsch diesel fuel10 and its commercial byproducts. Likewise, both bills authorize the Secretary of Energy to provide loan guarantees (no amounts given) for construction of facilities to process and convert municipal solid waste and cellulosic bio-mass into fuel ethanol and other commercial byproducts. If these facilities really merit construction, the marketplace will attract the private capital needed without the generous "assistance" of taxpayer dollars.

More Excessive Spending
Lest any special interest connected to the energy sector be left out of these generous taxpayer subsidies, Congress also created a host of unnecessary programs, studies, and grants. Under the conference report, these new spending authorizations would cost taxpayers tens of billions of dollars over the 10-year period.

The new Senate bill also includes costly and unwarranted new authorizations, such as $1.1 billion to restore the coastal impact of offshore oil and gas drilling, and $500 million for the development of rural electric projects in Alaska.

More Favors for Special Interests
Among the major beneficiaries of these handouts are corn farmers and big agribusinesses. One company alone, Archer-Daniels-Midland (ADM), produces over 40 percent of the nation's ethanol. Under the Clean Air Act of 1990, the federal government mandated reformulated gasoline (RFG) to improve air quality in smoggy cities. RFG requires either methyl tertiary butyl ether (MTBE) or ethanol to make gasoline supposedly burn cleaner.11 Both bills create an artificial market for ethanol by mandating a doubling of its use by 2012. Consumers will pay for ethanol's special treatment with increased prices at the pump. Consumer demand--not congressional favors for special interests--should determine whether there is a viable market for ethanol.

Further, due to concerns about ground water contamination, both the conference report and the Senate bill ban the use of MTBE by December 31, 2014, and provide $2 billion in grants to assist producers of MTBE in converting to production of other fuel additives.

Given that the federal government established a fuel oxygenate standard that encouraged the use of MTBE, the conference report includes liability protection for producers and users of MTBE during the industry's 10-year phase-out. This safe harbor provision became one of the most contentious provisions in that report. The House approved the conference report on November 18, 2003, by a bipartisan vote of 246 to 180.

Due in large part to this MTBE liability protection, however, Senate proponents of the report have been unable to garner the votes necessary to break a filibuster. Senate leaders recently negotiated an agreement on a new energy bill (S. 2095) that deletes the safe harbor provision, and the Senate is expected to vote on the new bill in the near future. Nonetheless, the House and Senate versions will still need to be reconciled before either energy plan can become law.

Other generous handouts for ethanol and motor fuels programs in these bills include $12 million for a resource center to further develop bioconversion technology using low-cost biomass for the production of ethanol at the Center for Biomass-Based Energy at the University of Mississippi and the University of Oklahoma; $125 million for research grants and development of renewable fuel production technologies; and $750,000 in grants to producers of cellulosic biomass ethanol and waste-derived ethanol in the U.S.

Moreover, in both bills, Congress would continue to meddle with the market by authorizing spending for research and development in specific areas of the energy sector. For example, the conference report authorizes $2 billion over five years for a hydrogen research program and almost $38 billion over five years for other select categories of energy research and development. These include commercial application activities such as $3.9 billion for energy efficiency; $3 billion for renewable energy; $2 billion for nuclear energy; $2.9 billion for fossil energy; and almost $24 billion for science projects.

The list of new spending authorizations for unnecessary taxpayer-funded programs, grants, and projects in these bills goes on and on. Congress needs to stop trying to micromanage the energy sector and allow the marketplace do what it does best--choose the nation's energy winners and losers.

Conclusion
Congress needs to remember that the primary purpose of a comprehensive energy plan is to provide consumers with sufficient, affordable, and reliable energy supplies. Regrettably, neither the conference report on H.R. 6 nor the new, slimmed-down S. 2095 achieves this objective. Instead, both bills simply enrich a wide range of special interests at the expense of taxpayers and consumers. Consumers would be better off without an energy bill than with either of these seriously flawed energy plans.

Charli E. Coon, J.D., is Senior Policy Analyst for Energy and the Environment in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation. Erin Hymel, Research Assistant in the Roe Institute, contributed to this paper.


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1. Press release, "Domenici Introduces Lean Energy Bill in Wake of Frist-Daschle Agreement for Swift Consideration," Committee on Energy and Natural Resources, U.S. Senate, February 13, 2004, at www.energy.senate.gov/news/rep_release.cfm?id=218069 (February 17, 2004).

2. Update for Tuesday a.m., Environment & Energy Daily, February 17, 2004, at www.eenews.net/EEDaily/Backissues/021704/021704d.htm.

3. U.S. Department of Energy, Energy Information Administration, Annual Energy Outlook 2004 with Projections to 2025, DOE/EIA-0383 (2004), January 2004, p. 6, at www.eia.doe.gov/oiaf/aeo.

4. Ibid., pp. 6-7.

5. Congressional Budget Office, Conference Agreement for H.R. 6, the Energy Policy Act of 2003, letter to Representative Billy Tauzin (R-LA), chairman of the House Committee on Energy and Commerce, November 18, 2003, at www.cbo.gov/showdoc.cfm?index=4800&sequence=0.

6. U.S. Department of Energy, Energy Information Administration, Annual Energy Outlook with Projections to 2025, DOE/EIA-0383 (2003), January 2004, p. 85.

7. Ibid.

8. U.S. Department of Energy, Energy Information Administration, Short-Term Energy Outlook--January 2004, released January 7, 2004, at www.eia.doe.gov/emeu/steo/pub/steo.html.

9. Shailagh Murray and John J. Fialka, "Energy Bill Is Laden with Tax Breaks," The Wall Street Journal, November 18, 2003.

10. Fischer-Tropsch diesel fuel contains less than 10 parts per million of sulfur and is produced from coal or coal waste through liquification.

11. Ben Lieberman, "NY's New Gas Crunch," Competitive Enterprise Institute, November 16, 2003, at www.cei.org/utils/printer.cfm?AID=3751 (February 6, 2004).

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? 1995 - 2004 The Heritage Foundation
All Rights Reserved.

U.N. STALLING IRAQ GOV'T PROBE OF $ECRET OIL ACCT.
By NILES LATHEM
March 24, 2004 -- WASHINGTON - U.N. bureaucrats are stonewalling requests from Iraq's new government for records from the scandal-plagued oil-for-food account set up in Saddam Hussein's handpicked French bank, officials said yesterday.
The mysterious activities over the handling of the U.N. account at the French banking giant BNP Paribas, where $100 billion worth of oil-for-food transactions flowed until the war, has emerged as a central focus of several investigations in the wake of the massive bribery-kickback scandal that has rocked the world body at its highest levels.
United Nations custody of the account was so secretive and unusual that even Saddam, who stole $10.1 billion from the program and bribed sympathetic pols with some of the proceeds, pressed unsuccessfully to have the account transferred out of the bank he originally insisted handle the program, said Claude Hankes-Drielsma, the British businessman advising Iraq's Governing Council on the issue.
"The key question in this investigation is, what was the relationship between the U.N. and this French bank?" Hankes-Drielsma added.
Hankes-Drielsma said serious questions arose shortly after the war ended, when files were found in Iraq's Oil Ministry indicating that four earlier audits of the account unearthed "discrepancies" in some of the oil transactions.
Saddam's Central Bank of Iraq was asking questions that the United Nations refused to answer, he said.
After the war, the U.S.-run coalition provisional authority and Iraq's new government began making similar inquiries of the United Nations, not only about the earlier audits, but also about issues like interest payments and whether any funds were transferred to other banks.
A spokesman for the United Nations said records had been turned over the coalition authority, although he was not sure whether the bank statements were included.
A spokesman for BNP Paribas could not be reached for comment, but the company said in a previous statement: "We believe we were appointed by the United Nations for this contract, because they were looking for a large European institution, and we are the largest bank in Continental Europe."
U.N. Secretary-General Kofi Annan last week said he wants an independent investigation to look into allegations of widespread graft within the program.
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WHY SHARON DID IT
By AMIR TAHERI
March 24, 2004 -- 'IN my prayers, I always beg the God Almighty to bless me with the honor of martyrdom." This is how Sheik Ahmed Yassin often expressed his deepest desire.
Despite such pronouncements, the sheik was extra careful not to be caught in a situation in which he would meet martyrdom. Yet the other day the Hamas leader had his wish fulfilled at the hands of an Israeli commando dispatched to eliminate him on the orders of his most determined foe, Prime Minister Ariel Sharon.
But why would Sharon want the sheik out of the way - and why now?
Yassin's "targeted killing" could be seen as part of Sharon's broader plan to withdraw Israeli forces from Gaza and to dismantle Jewish settlements there.
Sharon does not want his withdrawal from Gaza to look like Ehud Barak's retreat from southern Lebanon, which Hezbollah translated into a great triumph for itself. Sharon wants to leave Gaza from a position of strength. So he needs to dismantle as much of the Hamas infrastructure as he can.
Before leaving, Sharon must find someone to assume control of Gaza. Secret negotiations have been going on with Egypt for months. Egypt, which administered Gaza between 1947 and 1967, had indicated interest in returning in an interim role - on two conditions:
* It should not face radical armed groups that could turn their guns and suicide bombers against Egyptian forces after the Israelis are gone.
* The Western world must provide a package of urgent aid to revive Gaza's economy and provide jobs for at least part of the working population - which, shut out of the Israeli labor market, would be in total despair.
Sharon's hope is to revive the "Gaza first" plan first worked out by Shimon Peres in 1993. The idea is to let Gaza shape its own destiny as best as it can. But Gaza could easily become another southern Lebanon, which means another Damocles' sword hanging above Israel's head.
This is why Sharon wants all Palestinian groups in Gaza disarmed before the enclave is put under the control of Egypt, one of only two Arab states that have signed a peace treaty with Israel.
Sharon also believes that by decapitating Hamas - and in this context one must expect more "targeted killings" - he could bring the current Intifada (uprising) to a quick end. A similar tactic was used when the first Intifada was brought to an end with the elimination of its principal leaders, notably Khalil al-Wazir (Abu Jihad), Yasser Arafat's No. 2 and closest associate.
The timing of Yassin's killing may also be linked to two other facts:
* It came just days before the Arab summit at Tunis - where Syria, backed by its client state of Lebanon, plans to promote a new version of the "rejection front" both against Israel and the American initiative for a new Middle East.
* Sharon is scheduled to visit Washington soon to discourage moves to take Hamas off the State Department's list of international terrorist organizations.
BUT possibly the most important reason why Sharon believes he can hit Hamas at the highest level of its leadership is the Israeli belief that the Palestinian radical movement is losing momentum. In 2003, the number of Israelis killed by Hamas and other radical groups such as Islamic Jihad for the Liberation of Palestine was down by almost 50 percent compared to 2002. Although this was partly due to more effective prevention work, there has also been a sharp decline in the total number of planned attacks.
Hamas and virtually all other Palestinian radical groups have been experiencing growing difficulties in attracting new recruits, especially for suicide operations. Hamas is also facing financial difficulties.
The fall of Saddam Hussein closed what had become the single biggest source of funds for Hamas in the past five years. Several other Arab countries have been forced to close channels through which funds were collected for and directed to Hamas.
Both the United States and the European Union have also plugged sources of finance for Hamas. (Until 2001 nearly half of all foreign contributions to Hamas came from front organizations in the United States.)
Talks between Hamas and Iran, held in Tehran in February, failed to produce a massive increase in Iranian contributions. Since last November, the cash prize offered to the families of "suicide-martyrs" has been reduced from $25,000 to just over $11,000.
SHARON'S Gaza gamble may look like a daring tactical move. What is needed, however, is a strategy aimed at enabling a new Palestinian leadership to emerge. Caught between "suicide" leaders like Yassin and corrupt despots like Arafat, the Palestinians have no opportunity to put together a moderate and clean political leadership to lead the nation out of the current impasse and onto the path of peace based on the two-states principle.
Most Palestinians know that suicide attacks have never secured freedom and independence for any nation. They also know that the Arafat coterie is unable, if not actually unwilling, to lead the nation at this juncture. Yet the combination of Arafat, with his financial clout, and Yassin, with his suicide squads, has left little space for an alternative leadership to emerge.
And without such a Palestinian leadership, prospects for a durable end to violence shall remain dim.
In the 1980s, Israel helped create Hamas as a counterweight to the Palestine Liberation Organization. In the 1990s, Israel brought Arafat back from his political tomb in order to outflank the moderate Palestinian leadership that had emerged under people like Faisal al-Hussaini and Heidar Abdul-Shafi.
That leadership had made a strategic choice of accepting Israel as a reality, something that neither Yassin nor Arafat were able to make. The result is that the majority of Palestinians are excluded from any meaningful role in shaping their future.
Yassin's demise may provoke a final bouquet of suicide attacks. But once that is over, we shall still be left with the real issue: how to help Palestinians and Israelis to emerge from the impasse of violence and terror.

Amir Taheri will be speaking in New York tomorrow night. For information and registration, go to www.benadorassociates.com.

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ISRAEL'S HIT LIST REVEALED
By URI DAN
March 24, 2004 -- JERUSALEM - A fiery Palestinian hard-liner claimed the leadership of Hamas yesterday and vowed to increase attacks on Israel - even as Israel put him and other members of the terrorist group at the top of its new hit list.
New Hamas chieftain Abdel Aziz Rantisi told tens of thousands of cheering supporters at a Gaza City soccer stadium that he would avenge Monday's slaying of Hamas founder Sheik Ahmed Yassin.
"We will fight them everywhere. We will hit them everywhere," Rantisi vowed.
He rejected even the temporary truce that Hamas considered last year when Israel first tried - and failed - to kill him and Yassin.
Rantisi, formerly chief spokesman for the radical Muslim group, told the crowd that he was the designated heir to Yassin and would assume his authority.
But there was no word on whether Rantisi's leadership would be challenged by Khaled Mashal, the Damascus-based radical who had been Hamas' treasurer and leader outside the Palestinian territories.
Israeli officials, meeting for five hours Monday night, agreed to target the entire Hamas leadership.
"Everyone is in our sights," Israeli Internal Security Minister Tsachi Hanegbi told reporters.
Armed Forces Commander Moshe Ya'alon hinted that Palestinian President Yasser Arafat and Hezbollah guerrilla chief Sheik Nasrallah may be targets.
Arafat, holed up in his headquarters in Ramallah, responded to the news of Yassin's death by telling aides, "I could be next."
Yassin was killed by three helicopter-launched missiles on Monday, eight days after the latest Hamas bomb attack, which killed 10 Israelis in Ashdod.
The Israeli Cabinet marked him for death after debating last week.
It was disclosed yesterday that secret-service chief Avi Dichter opposed the decision during the Cabinet meeting - but only because he wanted to wait for an opportunity to kill all the band of top Hamas figures in one strike when they were together.
Officials in Jerusalem acknowledged that retaliation from Hamas was virtually certain but that crippling the radical group's leadership was more important.
"There is no doubt that, in the short run, we will have to cope with some outburst of violence . . . but [eliminating Yassin] will turn the situation into a positive one later on," Ya'alon said.
Polls indicated most Israelis agreed.
One survey, reported in the newspaper Maariv yesterday, showed a majority expected some revenge attack - yet 61 percent supported Yassin's killing, while only 21 percent opposed.
In other developments yesterday:
* Israeli jets killed two Hezbollah guerrillas as they prepared to launch rockets from southern Lebanon into Israel.
Hezbollah fired rockets at Israel for more than three hours Monday as a sign of solidarity with Hamas.
* A senior Hamas official said Yassin had once refused a U.S. offer of immunity in return for a halt in terrorist attacks.
The offer was extended only to Hamas' political wing, not to its armed militants, and Yassin rejected it by saying, "The blood of Hamas leaders is no dearer than that of a Palestinian child," Sheik Said Siam told Maariv.
* More than 100 people carrying Palestinian flags marched outside the Israeli Consulate in Manhattan to protest Yassin's killing.
"I'm here to demonstrate as an American that I'm so tired of Israel and their crimes and I'm disgusted in our government," said Rajee Mustafa, a 51-year-old electrical engineer from Jersey City, N.J.

With Post wire services
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FRENCH CONSULTANT TELLS KERRY: BE LESS GAULING
By DEBORAH ORIN
JOHN KERRY
He's "off-code."
March 24, 2004 -- WASHINGTON - A French-born marketing guru has a pointed warning for Democratic wannabe John Kerry: You come off as way too French, mon ami.
"The whole French connection is 'off-code,' " said psychologist Clotaire Rapaille, who helps Fortune 100 companies sell everything from shampoo to the PT Cruiser car by psychoanalyzing cultures. He calls it decoding cultural archetypes.
"The French are thinkers - 'I think, therefore I am.' Americans want somebody that is going to take action . . . All this association [of Kerry] with thinking too much and nuance and five-sentence answers is off-code," he told The Post.
Rapaille's upcoming book, "Archetypes of the Presidency," will analyze politicians' behavior as "on-code" or "off-code" - what meshes or clashes with American culture and what people unconsciously yearn for.
But Rapaille also lunched with Kerry's brother, Cam, to offer advice directly to Team Kerry, said Kerry spokeswoman Stephanie Cutter.
For starters, Rapaille, who stresses that he's now a "very proud" U.S. citizen, says Kerry's fancy ski vacation is a big boo-boo and won't help create a macho image.
"We Americans want to know 'What are you going to do tomorrow to change my life?' and if you say right away, 'I'm going on vacation,' it's going off-code," Rapaille said.
"I think [Kerry] has to buy some cowboy boots and get his hands dirty," adds Rapaille.
He sees Bush in marketing terms as a kind of "Marlboro man - the notion that this is the archetypal guy who doesn't think too much, but acts."
In other words, the "cowboy" epithet that Democrats love to hurl at Bush is exactly why he's more on-code (at least for now) than Kerry, says Rapaille.
He also believes that Bush's actions in Iraq were very much on-code - the perfect proof being how angry they made the French - but the follow-through was off-code because America didn't seem ready to deal with the postwar.

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North Korean leader meets China diplomats
By HANS GREIMEL
ASSOCIATED PRESS WRITER
North Korean leader Kim Jong Il, right, shakes hands with Chinese Foreign Minister Li Zhaoxing at the State Guesthouse in Pyongyang, North Korea's capital, on Wednesday March 24, 2004. Reclusive North Korean leader Kim Jong Il granted a rare meeting Wednesday with China's visiting foreign minister as the communist allies discussed the North Korean nuclear weapons crisis in a visit Beijing has described as a "very important contact." (AP Photo/Xinhua, Ren Li Bo)
SEOUL, South Korea -- Reclusive North Korean leader Kim Jong Il held a rare meeting Wednesday with China's foreign minister as the communist allies discussed the region's nuclear dispute.
Beijing said the session was a "very important contact."
Chinese Foreign Minister Li Zhaoxing, who arrived Tuesday, is the first foreign minister from Beijing to visit the North in five years. The visit is seen as bolstering the push for a third round of six-nation talks on the North's nuclear programs as efforts to organize working level groups hang in limbo.
As Pyongyang's last major ally, China has taken on the role of host and coordinator of the meetings.
The Chinese diplomat and North Korean officials are expected to discuss a date for the crucial working group meetings, which will seek to nail down details before the next full round of six-nation talks, sometime before July, according to South Korea's Foreign Minister Ban Ki-moon.
South Korea has accused the North of dragging its feet on the working groups.
In Hong Kong, a North Korea expert said Pyongyang may skip the next round of nuclear talks because of the uncertainty caused by November's presidential election in the United States.
"What are they going to do there? Now, is anybody going to strike a deal?" said Charles Pritchard, a former U.S. State Department official.
It is unlikely that President Bush will offer a deal before the election, while his Democratic rival, Sen. John Kerry of Massachusetts, likely would start a direct dialogue with Pyongyang if he wins, Pritchard said.
In Pyongyang, Li's delegation toured a street market, laid flowers at a statue of national founder Kim Il Sung and met various North Korean dignitaries in a "warm atmosphere," according to the North Korea's official KCNA news agency.
Li also met Kim Jong Il, who assumed control from his father after Kim Il Sung's death in 1994.
Li presented greetings from Chinese President Hu Jintao, KCNA reported. Before Li departed for Pyongyang, Chinese Foreign Ministry spokeswoman Kong Quan described the trip as a "very important contact between our two sides."
Earlier in Seoul, South Korea's Foreign Minister Ban said North Korea likely will attend the next six-nation nuclear talks despite its recent rhetoric over U.S.-South Korean military exercises and the impeachment of South Korea's president.
A recent rupture in inter-Korean relations has fanned concern that the communist North might use the joint war games or South's leadership upheaval as grounds for postponing nuclear negotiations.
The U.S. military describes the annual U.S.-South Korean war games, which began earlier this week, as defensive. But North Korea routinely criticizes them as preparation for an invasion.
The United States, two Koreas, China, Russia and Japan have agreed to convene a third round of talks on North Korea's nuclear program by July. A second round ended in Beijing last month without a major breakthrough.
In the meantime, participants are trying to form a "working group" to nail down details. Ban is scheduled to meet Li in Beijing next week.
The United States insists that the North dismantle its nuclear weapons programs completely and verifiably. North Korea says it will only do so if the United States provides economic aid and security guarantees.
North Korea threatened Friday to boost its nuclear arsenal in "quality and quantity," blaming the United States for the lack of progress in nuclear talks.

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>> RUSSIA WATCH...


Russian ship ordered home

The Russian navy's commander finds a nuclear-powered cruiser so poorly maintained that he orders it back to port.
BY MARK MCDONALD
Knight Ridder News Service
MOSCOW - In another blow to Russia's beleaguered military, the navy's commanding admiral ordered a nuclear-powered battle cruiser to return to port Tuesday for fear that ''it could explode at any moment,'' a statement he retracted hours later.
Adm. Vladimir Kuroyedov said the Peter the Great, the flagship of the Northern Fleet, had become unseaworthy and dangerous. During a recent inspection he found the cruiser to be poorly maintained, including ``the contents of the [on-board] nuclear reactor.''
But three hours later, he backtracked, saying that the ship's safety is ''in line with existing norms,'' according to The Associated Press. The issue, however, points up problems in the Russian navy, both in hardware and leadership.
The admiral had told the news agency Interfax that the only parts on the boat that passed muster were ``the areas where visiting admirals walk around.''
REPAIRS, TRAINING
His order for all repairs to be finished within three weeks apparently still stands. He also said the crew would have to take another training course before putting out to sea again.
The Peter the Great is worthy of the adjective: It displaces 28,000 tons, stretches the length of three football fields and carries a crew of 610. It reportedly can carry 20 nuclear-tipped cruise missiles.
But the ship has had a troubled history. During testing in 1996, an explosion in a steam pipeline killed five sailors. The vessel was commissioned in March 1998 -- 12 years after construction started -- but by that June it was back in port for repairs.
Military analysts in Moscow said Kuroyedov's unexpected docking of the cruiser could be part of a personal feud with the ship's commander, Vladimir Kasatonov. The two officers are said not to like each other, and the admiral blamed Kasatonov personally Tuesday for the shoddy conditions.
The Russian military has been in steep decline since the Soviet Union broke up a dozen years ago.
President Vladimir Putin has made military reform and modernization a priority, although little has improved. Putin's own military chief of staff has called the situation ``beyond critical.''
POOR PAY, MORALE
Army troops remain poorly paid and provisioned, and morale is abysmal. Air Force pilots get only a fraction of the necessary flight training because of a shortage of jet fuel and spare parts. Russian firms are manufacturing sophisticated weapons systems, but the impoverished military can't afford them.
The rust on the navy has been particularly dramatic.
The lone aircraft carrier, the Admiral Kuzentsov, is undergoing a four-year overhaul. Most of the ships in the Baltic fleet have been sold off or cut into scrap metal. Last winter, the fleet was so far behind in paying its bills that its electricity was cut off.
Andrei Nikolayev, a retired general and the former head of the Parliament's defense committee, said recently that only 1 in 4 of Russia's surface warships was seaworthy.
Putin was embarrassed last month when he attended the launch of two ballistic missiles from a Northern Fleet submarine. The missiles never got out of their tubes.
Kuroyedov said Tuesday that the expiration date on the missiles had been exceeded by nearly a decade.
----------------------------------------------------------------

Navy Chief Makes Explosive Remark

By Simon Saradzhyan
Staff Writer

Dmitry Lovetsky / AP

The Pyotr Veliky, the flagship of the Northern Fleet, seen off Severomorsk in 2001.
The commander of the Navy, Admiral Vladimir Kuroyedov, sent international news agencies scrambling Tuesday morning when he said the Pyotr Veliky, the nuclear-powered flagship of the Northern Fleet, was in such bad shape it could explode "at any moment."
A few hours later, he retracted his statement, which appeared aimed at shifting blame for a series of accidents in the Northern Fleet ahead of a meeting with President Vladimir Putin.
"Everything is in order in those parts of the ship where admirals walk, but as to places where they don't walk, everything is in such a condition that it could blow up into the air. I mean the contents of the nuclear reactor, among other things," Russian news outlets quoted Kuroyedov as saying in the morning.
The 19,000-ton cruiser, which was designed to battle U.S. aircraft carrier groups and was commissioned in 1998, has two nuclear reactors and 10 Granit cruise missiles that could be equipped with nuclear warheads.
Kuroyedov said he personally discovered the "faults" when on board the ship in open sea last Wednesday to witness a ballistic missile launch from a submarine, and he ordered the ship docked for three weeks so the crew could fix the problems.
The Navy chief blamed the ship's commander, Vladimir Kasatonov, and the commander of the Northern Fleet, Gennady Suchkov, for the condition of the Pyotr Veliky, Gazeta.ru reported. Last year, the cruiser was declared the best-maintained and readiest of all the Northern Fleet's vessels.
As international news agencies moved urgent news items with Kuroyedov's statement and reporters bombarded the Navy press service with calls, he retracted his statement, saying the nuclear power unit of the Pyotr Veliky cruiser was safe and that he was unhappy only with "the living quarters and noncombat sections."
When reached by phone Tuesday, a Navy spokesman said the press should focus only on Kuroyedov's afternoon statement, as the one from the morning was "made on the sidelines" and "was not meant for the press." He would not elaborate.
Kuroyedov had made his explosive remarks while taking questions from reporters in a smoking room at the Defense Ministry's downtown headquarters ahead of a meeting of the top brass, attended by Putin, to discuss housing issues, Gazeta.ru reported.
In reality, however, Kuroyedov did not discover any glaring hazards during his inspection of the Pyotr Veliky last week, according to Gazeta.ru, which said it had obtained a list of the problems uncovered during the inspection. These included fire extinguishers that were not checked and poorly equipped crew's quarters. The Navy chief was outraged by overfilled ashtrays, Gazeta.ru said, citing sources in the Northern Fleet. He also was unhappy that paintings were badly hung in the crew's quarters, NTV reported Tuesday evening.
Kuroyedov's alarmist remarks were aimed at discrediting his former deputy, retired Admiral Igor Kasatonov, the uncle of the cruiser's commander, and also Suchkov, according to Gazeta.ru and NTV.
At a recent closed-door hearing on the sinking of the K-159 submarine, Kuroyedov testified that Suchkov was responsible for the accident, which took the lives of nine crew members. Igor Kasatonov testified at the same hearing that Kuroyedov was to blame. The submarine sank in the Barents Sea last August while being towed to a scrap yard.
Now the Navy chief may be trying to settle scores with his former deputy through his nephew and shift the blame for the K-159 sinking onto Suchkov, also a longtime rival, Gazeta.ru speculated.
Calls to the Northern Fleet's press service went unanswered Tuesday afternoon, but the shipyard that built the cruiser was adamant that its nuclear reactors were safe and the ship itself combat-ready.
"The nuclear units are in absolutely fine, safe condition ... and the ship is technically ready for any mission," said Oleg Shulyakovsky, director general of the Baltiisky shipyard in St. Petersburg. He told Interfax that the shipyard's engineers regularly inspect the warship and that the reactors, which were designed in Nizhny Novgorod and built in Khabarovsk, could serve at least for 12 years.
Tuesday's controversy came one month after Kuroyedov was roasted in the press for publicly denying a missile launch failure.
The Northern Fleet's Novomoskovsk nuclear-powered submarine was to launch an RSM-54 ballistic missile during a strategic war game on Feb. 17 attended by Putin. The launch failed.
Later that evening, however, Kuroyedov made a television appearance to assert that no actual launch had been planned. He claimed that only simulations were planned and thus no failure could have occurred, even though the Defense Ministry's Red Star daily had reported that the war game's "official scenario" called for an RSM-54 ballistic missile to be launched from the Novomoskovsk and fly across Russia to the Kamchatka Peninsula.
Under Kuroyedov's command, the Northern Fleet has suffered from a series of accidents, including the sinking of the Kursk nuclear submarine in 2000, which killed all 118 men on board. Shortly after the Kursk sank, the Northern Fleet command told Russian news agencies that the crew was in no danger and that air was being pumped into the submarine.
Kuroyedov's statements Tuesday were clearly a PR blunder and, given the submarine sinkings and his awkward attempts to hush up the February missile launch failure, he is not likely to be promoted, despite recent speculation in the press, and may be forced to retire, said Ivan Safranchuk, head of the Moscow office of the Center for Defense Information.
Kuroyedov, who has commanded the Navy for five years, reportedly has maintained good relations with Putin and was once tipped to become either defense minister or chief of the General Staff. Now, however, he may have to step down after he turns 60 in September, the mandatory retirement age for senior commanders.
He can ask Putin to extend his active service, but the commander-in-chief may now choose not to do so, Safranchuk said.

? Copyright 2002, The Moscow Times. All Rights Reserved.

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Naval chief 'should shoot himself'
March 24, 2004 Posted: 15:08 Moscow time (11:08 GMT)
MOSCOW - Russia's naval commander, Admiral Vladimir Kuroyedov, said on Tuesday that the Russian fleet's flagship, the nuclear-powered missile cruiser `Peter the Great', had been sent for repairs because of fears "it could blow up at any moment". Later in the day he officially retracted his remarks made in an informal conversation in a smoking room at the Defense Ministry ahead of a meeting of the top brass, attended by Putin.
However, some suggested Kuroyedov's dramatic remarks were aimed at discrediting his potential rivals, in particular, the cruiser's commander Vladimir Kasatonov, his uncle, retired Admiral Igor Kasatonov, and the Northern Fleet commander Gennady Suchkov. Gazeta.Ru has asked Ruslan Pukhov, director of the Centre for the Analysis of Strategies and Technology, to comment on the situation.

Gazeta.Ru: Ruslan Nikolayevich, what, in your opinion, has prompted the head of the navy, Vladimir Kuroyedov, to make such a harsh statement on the state of the Russian fleet, in particular, of its flagship, `Peter the Great'?

This problem has two aspects. The first one is connected with the situation in the Russian fleet proper. Everyone knows that along with the Soviet Union our fleet has experienced a national catastrophe by losing one of its bases and one-third of its numerical strength. The only aircraft carrier is out of service and can only take part in naval exercises under tow, as was the case during the latest strategic war games in February.
The `Peter the Great' has long had problems with its power generator, which has failed to operate at its full capacity since it was serviced by conscripts.
Those are routine problems, just as the roads in Moscow are not very good despite the all-powerful Luzhkov being the city's mayor. Over the past three to four years measures have been taken to solve those problems as the general situation in the country has been improving, with oil prices soaring and the military budget increasing.
And the fleet has always received the best financing. That is why, let's say, over the past four years, and especially last year, the situation became better than it used to be. It is just that earlier no tests were held, no test launches and so on. But now it has become clear that there are problems with servicing, though they are routine problems.
Besides, there is Admiral Kuroyedov himself, who turns sixty this year, which is retirement age for military servicemen. He can only continue his service if his contract is extended. It may be extended for a year, three years, but it cannot be extended indefinitely. The one to decide on an extension is the president, or, in certain cases, the prime minister.
Kuroyedov did everything he could to have his contract extended for another year, but following the failure [of the test-firing of a ballistic missile] during February's exercises, other candidacies have been proposed. As that became obvious, he began drowning everyone who could possibly replace him
I am not a big fan of the fleet, rather its opponent, and when the chief commander makes a downright moronic statement that the cruiser is about to explode into the air... After all, its nuclear power-plant is not a nuclear bomb. It cannot just explode into the air. It might die quietly, but nothing there can ever blow up.
And when he makes such statements, it means that he is either an incompetent fool, or he is pursuing some definite purpose. Kuroyedov has commanded the fleet that is "about to explode into the air" for the past four years, but for some reason the one who is to blame for the situation now is the ship's commander [Vladimir] Kasatonov. I think Kuroyedov is keeping his rivals down.
The point is that by tradition when the government resigns and the defence minister turns acting defence minister, all the commanders of fleets, troops and departments tender their resignations.
Then those resignations are either accepted or the military personnel are asked to continue their service. So it is quite possible that when Kuroyedov handed in his resignation he knew his prospects were good and it was a mere formality, but then the situation changed and he found himself on a hook.
Apparently, other candidacies have been proposed, though earlier Kuroyedov was believed to be the only candidate for the post. And that is why Kuroyedov arranged a news conference where he blasts everyone. And I regard his "may-explode-at-any-moment" remark as nonsense unworthy of an officer.

And what about Kuroyedov's order to remove the ship's standard?

That's also just another cheap publicity stunt. In that case then, Kuroyedov should have shot himself in the middle of that news conference - remove the flag, comb his hair and blow out his brains.

But were there technical problems on board the `Peter the Great'?

Maintaining the fleet is a very expensive affair, especially when it is projecting its strength, i.e. not merely drifting within 100 km of the coast, guarding the coastline and seeing off foreign fishermen, but setting a course for somewhere to show off the flag, threatening with missiles, doing some shooting. That is all very expensive.

And it is absolutely clear that, until recently, we could not afford that. That is why we should have given up some of the ships to preserve the others. But we tried to preserve everything and everything is now in a deplorable condition. Iron has some margin of safety but even iron wears out.

Kuroyedov took the job at a time when funding had already begun to improve and the fleet was faced with new tasks. It became clear that there were problems. But instead of frankly admitting: yes, we have problems, so we will work towards solving them, he began by lying, saying that no actual launches had been planned, only simulations, though earlier the military made it clear that the president himself would observe those launches. In other words, Kuroyedov seems to be a very weak man and does not suit the position he occupies. GAZETA.RU

Source URL: http://www.russiajournal.com/news/cnews-article.shtml?nd=43079

Fukuyama in Tel Aviv
Benjamin Netanyahu, Shimon Peres, and Francis Fukuyama come together to discuss the end of history in Israel.
by Peter Berkowitz
03/19/2004 12:00:00 AM





Tel Aviv
FAMOUSLY, Zionism founding father Theodor Herzl proclaimed that the aim of the Jewish state should be to permit Jews to live as a nation like other all other nations. A century later, contradicting his hopes in ways that might have made Herzl proud, Israel continues to distinguish itself. Witness the remarkable gathering of 1,200 Israelis at Tel Aviv University last Monday evening, along with foreign diplomats, from, among other countries, Switzerland, South Africa, Guyana, and Egypt. Under the auspices of the university's new School of Government, the audience had come to hear Johns Hopkins University professor Francis Fukuyama discuss with former prime ministers and current Knesset members Shimon Peres and Benjamin Netanyahu "The End of History 15 Years Later" (disclosure: as a co-director of the Jerusalem Program on Constitutional Government, I shared responsibility for bringing Fukuyama to Israel for separate seminars).

Indeed, it was in the late summer of 1989 in the National Interest that Fukuyama maintained that evidence had reached a critical threshold suggesting liberal democracy was establishing itself around the world as the regime most consistent with the desires for freedom and equal recognition built into human nature. Almost before the ink had dried on his article, the Berlin Wall came tumbling down and communism in Eastern Europe and the Soviet Union silently disintegrated. The provocation of his thesis, the acuteness of his analysis, and the prescience of his timing helped transform Fukuyama, at the time a policy analyst at the Rand Corporation, into a public intellectual of world stature.

His writings on the end of history remain mandatory reading in political science classes throughout Israel. Of course, following the outbreak of the second Intifada in October 2000, which unleashed three and a half years (and counting) of suicide bombers and which dashed dreams among a wide swath of the Israeli public for a stable and lasting peace with the Palestinians, the end of history seems much further off than it did in the heady 1990s when globalization was on everybody's lips and the Oslo Accords were full of promise.

It was the anticipation of how Fukuyama would relate his thesis to the persistence of the Arab-Israeli conflict, and the excitement of watching two former prime ministers display their intellectual prowess by going head to head with an internationally acclaimed scholar that accounted for the rock concert like atmosphere in the hall.


THE PROTAGONISTS DID NOT DISAPPOINT. Because of a crucial no-confidence vote in the Knesset, Peres and Netanyahu were delayed. But the show went on, and Fukuyama rose to the occasion. Under the bright lights on the large auditorium stage, the diminutive professor held forth for 40 minutes. With his characteristic calm cogence, Fukuyama rehearsed the key elements of his argument: history displays a broad pattern of human progress; bourgeois civilization will not be transcended; history will terminate not in a socialist utopia but in liberal democracy and market capitalism; this conclusion is fortified by the empirical evidence of people around the world who have voted with their feet for freedom, democracy, and modernization; and it is further fortified by theoretical reflection on human nature which discloses the rationality of economic and political systems based on individual rights and the consent of the governed.

The key question thus far posed by the 21st century, Fukuyama observed, is whether there is a Muslim exception to the end of history. Fukuyama doubts it. He pointed out that the real democracy deficit is not in Muslim or predominantly Muslim countries but in Muslim Arab countries of the Middle East. And there the problem, he suggested, was not Islam, though he indicated it still awaits its Luther, but bad government and dismal economic prospects that produce an angry alienation on which purveyors of radical Islam prey. What is necessary on the part of the liberal democracies of the world, according to Fukuyama, is the right kind of politics, one that knows that individual freedom is the long term goal but which takes careful account of, and learns to work with, the distinctive culture of Arab and Muslim societies.


BEFORE FUKUYAMA COULD FIELD MANY QUESTIONS, Peres and Netanyahu, briefed by phone on Fukuyama's handling of the first hour during their ride from the Knesset in Jerusalem, walked onstage to warm applause. Both were funny, smart, and well-spoken. It would be an exaggeration to say that either former prime minister addressed Fukuyama's thesis. But it would be peevish to deny that the stump speech each used the opportunity to deliver about his signature theme connected, or could be connected to, Fukuyama's big ideas.

Peres spoke first. We stand, he said, not at the end of history but at the end of a certain history and the beginning of a new one. Never mind that the new history which Peres evoked, and which he urged his listeners to promote, one in which science and democracy work hand in hand to produce unparalleled peace and prosperity, corresponded roughly to Fukuyama's characterization of the end of history.

Netanyahu began by explaining that he rejected the descriptive part of Fukuyama's thesis but embraced the prescriptive part. Never mind that the descriptive and prescriptive parts of Fukuyama's thesis--liberal democracy was in fact and appropriately triumphing around the world because it satisfied genuine and powerful human wants, needs, and desires--were inseparably connected. What Netanyahu really wanted to dwell upon was that terrorism is a monumental threat to liberal democracy, and while inflamed by poverty and oppression, it "is a product of the totalitarian mindset." In concluding that the issue in connection to Fukuyama is not whether he is right about the end of history but rather how we can insure that he is right, Netanyahu agreed with Fukuyama as well as Peres that the world's liberal democracies have a moral and strategic interest in the spread of liberal democracy.

With the hour growing late, Fukuyama was invited to respond to the prime ministers. Again, he rose to the occasion. No professorial qualifications or quibbles or corrections from him. Instead, looking first at the former prime ministers and then turning to face the crowd he brought the evening to a close by remarking with awe that it says a great deal about Israel that two former prime ministers and current members of Knesset would take time from their busy schedules to discuss ideas with a professor and that 1,200 people would fill an auditorium to watch and listen.

So it does.


Peter Berkowitz teaches at George Mason University School of Law and is a fellow at Stanford's Hoover Institution.




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Live from Baghdad
Watching the anti-American foreign press in action, fixing hotel toilets, and dining out in Kurdistan.
by Fred Barnes
03/24/2004 12:00:00 AM





Baghdad
THE IRAQI PRESS CORPS routinely peppers spokesmen for the American military and the Coalition Provisional Authority with loaded questions about why U.S. soldiers are picking on innocent Iraqi citizens. The Spanish reporters here make it clear they're not sympathetic to America's role in Iraq. But nobody in the media covering postwar Iraq can top the Brits for injecting anti-American themes in their questions.

Examples? At a press briefing last Friday, CPA administrator Paul Bremer offered his assessment of progress in Iraq since Saddam Hussein was toppled a year ago. Then a "senior coalition official" took "questions," including three from British reporters.

The fellow from the Guardian in Manchester began this way: "You mentioned the protest today by the journalists being an expression of democracy. But that was an expression of great anger because they feel those men were shot by American troops at a checkpoint. There is widespread resentment and hatred for American troops."

Thanks for that statement of opinion, but what's the question? "How do you explain the fact that there is much less attacks on coalition forces in Basra, Nasaria, and so on where there are non-American troops?" he asked. You can see what he was getting at--that American troops alone are detested by Iraqis and thus attacked more. Of course, the scribbler had to know the truth: American troops are stationed in the most dangerous areas where attacks are far more likely.

Then there was the lady from Reuters. She stated that "resentment" of American soldiers by Iraqis "is coming from civilians being randomly shot at by U.S. soldiers." Another statement without a question. But she did have two queries. "Is there something you'd like to see the military do differently to gain the confidence of the civilians?" The answer was no. "And why has the CPA been resistant to give the amount of civilian casualties?" This is a frequent question that always gets the same answer: The CPA doesn't keep track of civilian casualties.

Just because a Brit works for the American media, he doesn't need to shrink from sticking a hostile statement in a question. So the Brit working for ABC News here declared, "There was no terrorism in Iraq before the United States and the coalition came to Iraq." Really? The official flared at this one, noting Saddam's Iraq was the home of state terrorism. If you're doubtful, the official said, just check out the mass graves at Hilla and Halabja.


* * *

THE FIRST THING I LEARNED when I got to Baghdad was that the Sheraton, where I'm staying, is not the Ritz. It's not even a Sheraton. The hotel was cut loose from the American chain at the time of the Gulf War in 1991, and it shows. My reservation had been made, confirmed and reconfirmed, but when I arrived the desk said it had never heard of me. I got a room, thanks to friends here, but no points on my Sheraton frequent-stay card.

A common problem in the hotel is that the toilet seat is disconnected from the toilet. One journalist here asked to hotel to fix it, and the hotel said it would do so quickly. When the journalist got back to his room, he found that the seat had been carefully put back in place on the toilet. But fastened to it in any way? Nope.

But the Sheraton has one great selling point. It's safe. As many as eight American tanks are parked around the hotel, plus a few armed Humvees. Moreover, there's a well-guarded perimeter that's guarded aggressively by armed civilians. Safety trumps an attached toilet seat.


* * *

MOST AMERICANS will never go to Kurdistan in northern Iraq. I never thought I would, given that it's in a remote part of the world near the borders of Turkey, Iran, and Syria. Yet it's one of the most beautiful places I've ever been--mountains, rolling green hills, lovely lakes, scenic valleys. Offered a chance to travel to Kurdistan by helicopter with Paul Bremer, the American viceroy in Iraq, I jumped at the opportunity. Also on the trip was the Washington Post correspondent in Iraq, Rajiv Chandrasekaran.

The single most beautiful spot is the internationally known town of Halabja. It looks like a Swiss skiing village. But Halabja is famous for another reason. Sixteen years ago, 5,000 women and children were gassed there by Saddam Hussein's operatives, led by Chemical Ali. An excellent museum commemorates the atrocity. It has a re-creation of what was found after the gas attacks: men and women lying dead and holding their children tightly to try to protect. It is a wrenching experience to tour the museum, a kind of Holocaust Museum for the Kurds.

The Kurds are quite pro-American and would be happy for American troops to stay permanently to protect them. Bremer is popular too. He and Robert Blackwill, the former ambassador to India and now a top National Security Council official in Washington, dined at the guest house of Kurdish leader Massoud Barzani. Barzani laid out a spread of about 25 Kurdish dishes and Chandrasekaran and I were invited. It was as good as any food I've ever had. I couldn't name the dishes, but I tried 10 or so of them.


Fred Barnes is executive editor of The Weekly Standard.




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Selling the Rough and Tumble of Democracy
How Dan Senor gets the word out for Paul Bremer and the Coalition Provisional Authority.
by Fred Barnes
03/23/2004 12:00:00 AM



Baghdad
DAN SENOR'S WORST DAY was Friday, March 5. Senor is the chief spokesman for Paul Bremer and the Coalition Provisional Authority. Members of the Iraqi Governing Council and their families had gathered for the signing of the new Iraqi constitution. The Baghdad press corps was assembled in full force for the ceremony, having waited restlessly for hours. And Senor had to tell the families, the media, and the world that the constitution was, well, still being worked out.

Senor never made it to the podium in the briefing room of what was once Iraq's convention center under Saddam Hussein's regime. He was swarmed by reporters who had concluded that the whole process of drafting a constitution agreeable to the full 25-member governing council had gone awry. Senor's explanation: democracy isn't neat but includes a lot of rough and tumble. If you want neat, Senor said, Saddam provided that. But there would be a constitution, he said.

The writing of a constitution had indeed experienced a serious glitch. Some Shiite members of the council balked at a provision allowing 3 of Iraq's 18 provinces to veto the constitution if voters decided against it by a two-thirds margin or better. The Shiites said this would let the Kurds alone block the constitution.

Over the weekend, the Shiites backed down under pressure from Bremer, the CPA chief. And the new constitution, which will stay in effect until a new government elected by January 30 takes office, was signed with much fanfare. It represented an historic moment in Iraq's evolution towards democracy.


SENOR, 32, was a year out of Harvard Business School and working for an investment company in Washington, the Carlyle Group, when he was tapped to come to Iraq. He'd had political experience as an aide to Republican senator Spence Abraham of Michigan during3 the 1990s, but not in dealing with the press. Abraham is now President Bush's energy secretary.

When the White House first called, Senor was asked to go to Qatar during the war in Iraq as a press official. "I was a strong supporter of the war," he said. "I said if I had any skill set they could use, I'd do it. I was just helping out." Less than two weeks after the April 9, 2003, fall of Saddam, he rode with the first convoy of civilians into Iraq from Kuwait. Upon arrival at the presidential palace of Saddam designated as the coalition headquarters, he found it had no electricity, no phones, no water, no bathrooms, and no air conditioning. He and his colleagues--seven in all--slept on the floor.

Bremer showed up a few weeks later, but it appeared Senor would not be his press secretary. On a trip with Bremer to Washington in July, Senor was officially announced as the new deputy press secretary at the White House. He never spent a day in that job. It was decided he was needed more critically in Baghdad than in Washington.

In Iraq, Senor and others found there was no manual to work from. "There was no substitute for being there," says Senor. The Bush administration had a plan for Iraqi democracy, but it didn't include mundane details such as how to repair the crumbling electricity grid. The administration had figured on serious problems in Iraq, but not all of the ones that actually emerged (such as rampant looting).

Once the CPA got established, Senor began daily briefings, with simultaneous translations for Arabic-speaking reporters. Now, he and Gen. Mark Kimmitt, the military spokesman, brief and answer questions together. Like Bremer, Senor wears sand-colored soft Army boots with a suit and tie. Nearly everyone else in the CPA is tieless. When Bremer travels, Senor is invariably by his side.


SENOR GREW UP in the United States and Canada and went to the University of Western Ontario before getting his undergraduate degree at Hebrew University in Jerusalem. He keeps to a kosher diet, which is difficult in Iraq.

Senor's plan is to return to the States with Bremer after the handover of sovereignty to the Iraqis on June 30. But officials here tease Senor about signing up for another year in Iraq, working for the new U.S. embassy. That's not likely, but it's not inconceivable either. Senor says a big reason for his coming to Iraq was that he "was drawn to the historic moment." In Iraq, that moment will continue after June 30.


Fred Barnes is executive editor of The Weekly Standard.




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