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News Supplement, 29/10-5/11/00

NEWS SUPPLEMENT, 29/10-5/11/00

*  Flights to Iraq Carry a Message to U.N. ‹ Sanctions: As more nations
challenge embargo imposed after Kuwait invasion, even the U.S. is rethinking
its stance. [Los Angeles Times ­ with URLs for similar reflections in The
Times and The Observer]
*  SAS top brass left us to die ­ Bravo Two Zero survivor blames
ex-commander [tales of the Gulf War]
*  US Troop Alert in S. Arabia, Kuwait [this is interesting on the need to
smuggle the USS Cole back without passing through the Suez canal, where
presumably, though this is not said in so many words, it would occasion much
jubilation among the Egyptian people]
*  Will US attack Afghanistan ? [From a Pakistani perspective, indicating
that it would not be easy]
*  Iraqi vendetta against dollar gives welcome boost to euro [Financial
*  A discreet way of doing business with Iraq [Financial Times. Largely on
US involvement in business with Iraq]
*  Cheney Broke His Word on Dealing With Iraq [an American Jewish comment on
the above story]
*  Addressing Iraqi Sanctions [editorial from the Hartford Courant on a
series of anti sanctions articles they have run. Links are given to help
find the articles in question]
*  Guessing game about future US set-up [Pakistani view on the foreign
policy personnel of each of the two candidates for the US presidency]

*  FLIGHTS TO IRAQ CARRY A MESSAGE TO U.N. ‹ Sanctions: As more nations
challenge embargo imposed after Kuwait invasion, even the U.S. is rethinking
its stance.
by Maggie Farley, Los Angeles Times, Monday, October 30, 2000

UNITED NATIONS--After a decade-long U.N. embargo on air travel to Iraq, the
Saddam International Airport has started to bustle again, with planes
carrying few passengers but packed with political significance.

On Sunday, a Palestinian Airlines flight became the 36th of a new breed of
arrival to touch down in Baghdad since a Russian Yak-42 carrying oil
executives first challenged the embargo in August. The flurry of flights
from European and Arab nations has followed to show support for the Iraqi
people, who these nations say have been unfairly hurt by the economic
sanctions imposed by the U.N. after Iraq invaded Kuwait in 1990.

"It is the beginning of the collapse of sanctions," Iraqi Deputy Prime
Minister Tarik Aziz told reporters in Baghdad after a few aircraft had
landed in the capital last month. "People all over the world are saying,
'Enough is enough.' "

The challenges have grown increasingly brazen and bizarre. While some
nations initially exploited a gray area of the sanctions by notifying the
U.N. that they would be sending humanitarian delegations, groups such as the
Palestine National Council are simply showing up in solidarity. And rather
than bringing aid, Sunday's Palestinian flight landed with a number of
Palestinians wounded in clashes with Israeli forces and took off again with
five tons of medical supplies donated by President Saddam Hussein--the very
provisions the Iraqi regime says its people are struggling without.

France and Russia were the first countries to test the boundaries of the
sanctions. Both are veto-wielding members of the U.N. Security Council who
have long argued that broad sanctions are hurting Iraq's people, not the
regime. And the effort has gotten off the ground at a time when looming
national elections and high oil prices have made the U.S., Iraq's staunchest
foe, reluctant to confront Baghdad.

While the ban on flights has been only a small part of sweeping sanctions
intended to isolate Iraq until Baghdad proves it has stopped making weapons
of mass destruction, the show of solidarity to defy it may hasten changes to
the sanctions, diplomats say. Even the hard-line U.S. is quietly moving
toward what have become known as "smarter sanctions," in a more pragmatic
approach to forcing change on the regime it once led a war against.

With the notable exception of Yugoslavia, the U.S. experience in Iraq and
elsewhere has provided evidence that broad, untargeted sanctions may be too
blunt an instrument to compel change. A case-by-case study of sanctions
released by the U.N. in April found that such restrictions are often ignored
but that when they do strike home, it is often innocents who are hurt, not
the rogue regimes the sanctions are aimed at.

"We don't have a grand policy decision reorienting sanctions," said James
Cunningham, who handles the Iraq issue for the U.S. mission at the United
Nations. "But in general, we agree with the other members. We want to make
sanctions as effective and targeted as possible."

The opportunity to do that may come in December, when Resolution 1284--which
mandated the sanctions--is up for its annual review. The time will be ripe
politically for the outgoing Clinton administration to quietly explore
different ways to compel change. The Security Council will have heard the
recommendations of a U.N. panel due to report in late November on how to
improve the effectiveness of sanctions while sparing civilians. That may
mean tightening clamps on Iraqi leaders' air travel and bank accounts.

Iraq, too, is anticipating change, with growing support from sympathizers
and perhaps an incoming American president who may want to move policy in a
new direction. Emboldened by an increasingly active black market and more
visits from executives preparing to do business with Baghdad once sanctions
are lifted, Aziz, the deputy prime minister, urged allies to break the
embargo and resume trading with his country while he was at U.N.
headquarters for the Millennium Summit in September.

France, Russia and China hold the most contracts under the current
oil-for-food program, which allows Iraq to buy nonmilitary supplies with oil
revenues through the U.N. While French Foreign Minister Hubert Vedrine
insists that his country's foreign policy is not swayed by commercial
considerations, France tops the list with $2.61 billion in contracts,
followed by Russia with $2.14 billion and China with $1.94 billion.

France, Russia and China, however, are careful to point out that they still
support the U.N.'s core demand: that Iraq must allow U.N. inspectors to
verify that the country has no weapons of mass destruction. The current
resolution requires Iraq to prove it has a clean slate before it can receive
a temporary suspension of sanctions. But Baghdad has barred inspectors from
returning since they left in December 1998 just before Western warplanes
bombed the country in retaliation for its alleged obstruction of the
inspections program.

The country's people are suffering because of the stalemate, opponents of
the sanctions say. Vedrine recently called them "cruel, outdated and
economically absurd" and is pushing for a partial easing of the embargo in
return for Iraq's gradual cooperation.

For the U.S. and Britain, though, it's all or nothing.

That's what led some members of the Security Council to begin chipping away
at the edges of the policy, hoping to cause the whole enterprise to crumble.
Last month, France, Russia and China pressured the U.S. and Britain to
reduce the share of U.N.-handled oil profits that Iraq pays to Persian Gulf
War victims, from 30% to 25%, so the country can spend more of that money on
its own people.

At the same time, the number of countries eager to send symbolic aid flights
to Iraq is taking off. Indonesia's president, Abdurrahman Wahid, has
scheduled a visit to Baghdad in November.

"The flights have a psychological effect," said Peter van Walsum, the Dutch
ambassador to the U.N. and chairman of the Sanctions Committee. "But they
also have an unfortunate effect of leading Iraq to think a revision of the
entire sanction regime is coming. The council is united on [Resolution]
1284. That is clear."

The ban on air travel is meant to politically isolate Baghdad and keep any
money, equipment or technology that could be used for weapons from being
smuggled into the country. The embargo has been so thorough that even Iraq's
top ministers and foreign diplomats must enter and leave the country by
traveling overland to the Jordanian capital, Amman, a 10-hour car ride from

There have been exceptions to the no-flight rule. U.N. Secretary-General
Kofi Annan landed at a military air base when he visited Hussein in 1998.
And the pope would have been allowed to fly directly to Baghdad had his
planned pilgrimage to holy sites in Iraq this year not been canceled.

It was preparations for the pope's trip that uncovered the gray area in the
resolution that the recent aid flights have exploited.

The rules allow humanitarian flights as long as the cargo is inspected for
contraband and the U.N. Sanctions Committee approves the journeys in
advance--in part to prevent the passenger planes from being mistakenly shot
at by U.S. and British military forces enforcing "no-fly" zones over Iraq.
France and Russia both flouted the rules by notifying the committee but
taking off before receiving its authorization. But as more flights arrive,
fewer countries are even bothering with notification.

As support for the continuing isolation of Iraq withers, the U.S. is trying
to avoid being left alone in its Iraq policy.

"Washington is losing the battle of public opinion, and people are beginning
to consider alternatives," said Henri Barkey, chairman of the International
Relations Department at Lehigh University in Pennsylvania and a former Iraq
analyst at the State Department.

"If the U.S. were to get out of the box, it would have to be part of a
bigger deal," Barkey said. "Each side must trade something. Now they are
exploring what are the parameters of that trade."


THE TIMES,,29084,00.html
*  Foreigners flock in as Saddam mocks sanctions
by Richard Beeston Diplomatic Editor, The Times, Thursday November 02 2000
*  How Iraq broke out of sanctions
The Times, Thursday November 02 2000

THE OBSERVER,6903,392899,00.html     
*  West treads a reckless path to embrace Saddam: Britain and America still
take a hard line against Iraq, but other countries and large corporations
can't keep away.
by Peter Beaumont, The Observer, Sunday November 5, 2000

Daily Record, Tuesday, October 31, 2000

BLUNDERS by SAS chiefs left three Bravo Two Zero heroes dead in the Iraqi
desert, a court heard yesterday.

It was claimed that the crack unit's top brass then mounted a cover-up of
the disastrous Gulf War mission - and even considered court-martialling the
five survivors.

The damning accusations were made by former SAS commando and patrol member
Mike Coburn.

Top of his list for criticism was the SAS commander at the time - who is now
Director of UK Special Forces.

Coburn took the stand on day five of his secrecy battle. The MoD want to
stop him publishing a book - Soldier 5 - telling the "true story" of the
ill-fated mission. He claimed:

l Poor intelligence had placed the patrol "right next to a significant
number of enemy forces when there should not have been any".

l Key signals and other equipment had failed and the patrol were sent into a
hostile area with the wrong radio frequencies.

l A search-and-rescue mission for the patrol was delayed after their calls
for help were deemed "premature".

l The patrol were told by their CO that Scuds were more important than men,
meaning they were expendable.

Ex-corporal Coburn, 36, told a New Zealand court: "The majority of the
reasons for Bravo Two Zero's failure lay not with the patrol but with the
regimental hierarchy."

The patrol were dropped 300 miles into Iraq to find and destroy Scud
missiles but had to flee troops in the freezing desert when their cover was

Troopers Bob Consiglio and Steven "Legs" Lane were killed in the ensuing
fire-fights and Sergeant Vince Phillips died of hypothermia.

Coburn said: "Part of the ethos of the SAS was that no matter how much
difficulty a patrol got into, the regiment would always take immediate,
urgent steps to come and get you.

"Sadly, this pillar of understanding was shattered with Bravo Two Zero."

Coburn said it was the SAS's reluctance to admit, contemplate and learn from
their errors that prompted him to leave the Army five years later.

He claimed that when the Bravo Two Zero survivors returned to base after
almost two months of captivity and torture, they were summoned in front of
the CO who said he had decided not to order a court martial.

Coburn said: "The reference to a court martial seemed incredible."

He added: "As the commanding officer of the regiment during the Gulf is now
the current Director of Special Forces, it is not too difficult to see why
it is not in his interest for the details, as contained in the manuscript
Soldier 5, to be subjected to further scrutiny."

The hearing in Auckland continues.


WASHINGTON (AP, 31 Oct 2000) ‹ U.S. forces in Saudi Arabia and Kuwait are on
the highest state of alert following new indications of terrorist threats in
those Persian Gulf countries, U.S. officials said Tuesday.

Pentagon spokesman Kenneth Bacon cited ``credible threat information'' but
declined to be more specific.

U.S. officials also revealed that since the bombing of the USS Cole on Oct.
12 in Yemen, no American warships have used the Suez Canal ‹ the fastest,
and normal, route from the eastern United States to the Gulf.

The crippled Cole, with most of its crew still aboard in the Gulf of Aden,
will take the long way home to the United States ‹ around the Cape of Good
Hope on Africa's southern tip ‹ to avoid the Suez Canal, said defense
officials who discussed the matter Tuesday on condition of anonymity.

The defense officials said the Navy has been avoiding the Suez because of
security concerns in light of escalating terrorist threats in the region.
Bacon, however, denied there had been a decision to stop using the Suez.

Meantime, sources close to the Yemeni government's investigation into the
Cole bombing said the probe is focusing on four men believed to be the main
plotters and is exploring possible links to Muslim militants in Yemen.

The State Department's top anti-terrorism official, Michael A. Sheehan,
declined Tuesday to divulge what investigators into the Cole attack may have
found so far, saying, ``It's not clear what happened.'' But, he added, ``My
guess is that it (the attack) was not state-sponsored.''
Bacon said it likely will be several more days before the Cole begins its
journey home. The 505-foot destroyer was in the process of being secured
atop the main deck of the Blue Marlin, a Norwegian-owned heavy-lift ship. To
accomplish that, the Blue Marlin submerged its huge deck and positioned the
Cole on top before starting to fasten it in place.

The Navy originally had estimated this maneuver would take about 24 hours,
but Bacon said extra time will be taken to test the stability of the
destroyer on the Blue Marlin's deck. ``They just want to be very careful,''
Bacon said.

At a Pentagon briefing, Bacon displayed U.S. Navy photographs of the
operation, but none showed the Cole raised out of the water, where the full
dimensions of the bomb crater in its hull could be seen, and Bacon said such
photos might not be made public.

Bacon said the only U.S. ship that had been scheduled to transit the Suez
Canal since the Cole did so on Oct. 9 was the destroyer USS Donald Cook,
which instead will accompany the Cole on its voyage home. He said it would
be a matter of weeks before any other ships are scheduled to use the
101-mile canal that connects the Mediterranean Sea with the Red Sea, but he
denied that reflected a change in plans.

In the meantime, U.S. officials are consulting with the Egyptian government
‹ which operates the Suez Canal ‹ on security arrangements, Bacon said.

Although the Persian Gulf region is generally considered more dangerous than
many other parts of the world, concerns have escalated since the Cole
bombing, which American officials believe was the work of terrorists,
possibly with links to suspected terrorism mastermind Osama bin Laden.

Last week the Pentagon disclosed that American forces in Bahrain and Qatar ‹
tiny Gulf states with friendly U.S. ties ‹ were placed on the highest state
of alert, known as ``threat condition delta.'' This was in response to
terrorist threats of unknown credibility against specific targets ‹
including an airfield in Bahrain used by American aircraft.

Bacon said the roughly 5,000 U.S. forces in Saudi Arabia and 5,000 in Kuwait
were placed on ``threat condition delta'' on Monday in response to credible
threats against unspecified targets in those countries.

Along with a Navy carrier battle group in the Gulf, the troops in Saudi
Arabia and Kuwait form the bulk of the U.S. effort to contain Iraq's
military. They include a U.S. Air Force contingent at Prince Sultan Air Base
in central Saudi Arabia that helps patrol the ``no fly'' zone over southern
Iraq. The American forces in Kuwait are mainly Army units at Camp Doha and
include a Patriot air defense missile unit.

Placing the troops on ``threat condition delta'' does not interfere with
their normal operations but further restricts movements off the base and
requires more onerous security checks of people entering the base. Security
precautions in Saudi Arabia were increased in 1996 after a terrorist bomb
struck the Khobar Towers housing complex near Dhahran, killing 19 U.S. Air
Force members and injuring dozens.

Meantime, Sheehan, coordinator of the State Department's counterterrorism
office, urged Yemen to give U.S. investigators more access to witnesses,
suspects and evidence in the Cole bombing investigation.

While Yemen had the authority and responsibility to conduct the
investigation, ``we would like to be privy'' to more of it, he said.

State Department spokesman Richard Boucher said, ``We are working out the
modalities of this kind of cooperation and we think we are making

By Dr Ayesha Siddiqa, Dawn (Pakistan) 1st November

AS the threat of another US attack on Afghanistan grows, the Pakistan
foreign minister issued a statement aimed at discouraging American policy
makers from embarking upon such a course of action. A decision on whether
Afghanistan will be attacked depends on the outcome of the FBI
investigator's findings in Yemen on the bombing of the USS Cole and the
internal dynamics of policymaking in Washington. At this point it is
worthwhile to understand what is currently taking place in American policy
making circles.

Soon after the terrorist attack on the American naval ship there was talk of
Osama bin Laden's possible linkage with the incident. Indeed, certain Yemeni
sources have also indicated that the bombing was instigated by bin Laden.
The US government has pledged that in case a linkage is found,it would not
spare the 'culprit' and will punish the aggressor. This means another attack
on Afghanistan. There is also an understanding that another attack may be as
fruitless as the first one, however, this is a course of action that may as
well be considered.

According to one State Department official, despite the fact that there will
be no military gains in attacking Afghanistan, it will at least be good for
the morale of the US armed forces and the people. All of this is happening
with elections in the US round the corner. This is a time when nerves are
raw and each candidate tries to appear more strong and robust than the

The mood is not likely to change even after the elections when the report on
the bombing will become available. A decision is likely after January when
the next president takes over. There are a number of experts in the State
Department who can see the futility of attacking Afghanistan. However, the
paranoia of threat posed by terrorism against the US, which is the only
superpower in the world, and the fear of Islamic fundamentalism are
currently far more overpowering factors. There will not be a substantial
difference in the positions taken by either George W. Bush or Al Gore. Bush
has made several statements regarding allocating more resources to defence
and strengthening America militarily. His recipe is to acquire more hardware
for the military. Bush will try to recreate the days of Ronald Reagan known
for a set of policies that led to the defeat of the Soviet Union in
Afghanistan and its final breakup. This formula does not take into account
the fact that more military units would mean more targets.

Would Gore be able to make a different decision? Probably not because going
soft on US security is what his rival has accused him of. It is noteworthy
that despite a better political and diplomatic acumen,President Clinton was
always forthcoming in using military force wherever it was required. One
cannot ignore the impact of public opinion on American policymaking.

Besides the wrong technology that was used in Vietnam and Korea, what made
America lose in these two countries was the opinion at home. The American
people were not willing to let their boys die in foreign lands. Vietnam and
Korea were a disappointment to the Americans who had been made to believe
that with US's superior military technology and prowess,any war could be won
without major human loss. This lesson was repeated during the Gulf War.The
coalition of forces and modern military technology allowed the allies to
overpower the rag-tag armed forces of Iraq most of whom did not even come
out to fight.

Unfortunately, what the American public is not being informed about is that
insurgency operation or low-intensity conflict is a different ball game.
People in the US policymaking circles realize the difference,nonetheless,
this understanding has not been communicated to the people who will demand a
strong action against whoever engineered the attack against the USS Cole.
The only option left to whoever will be in the White House will be to use
cruise missiles and bombers to launch an attack on Afghanistan. In the words
of a State Department official: "at least it will make us feel better." This
is not just a random cynical remark. It is also indicative of the failure of
American policy as far as using its allies in fighting Washington's wars.
There is the realization that Pakistan is not cooperating with the US in
apprehending bin Laden. The standard response from Islamabad is that the
Taliban are not under our control. It was, therefore, that Islamabad had
arranged a direct meeting between the Talibaan and the US officials. The
Taliban are eager to cooperate and project a positive image, but short of
handing over bin Laden. The strategic relationship that has recently been
struck between Bin Laden and Mullah Omar has changed the dynamics of the
Taliban's response to the issue. It would be against the Afghan tribal code
of honor to hand over or push out their son-in-law irrespective of whatever
he may be costing them financially or diplomatically. The apparent campaign
at rooting out poppy cultivation and burning narcotics manufacturing
laboratories are some of the measures to project an image of being
responsible actors. Nevertheless, they will not go beyond this.

There is also sufficient realization in certain circles in Washington that
another attack on Afghanistan will tend to convert more neutral people in
Pakistan against the US and towards religious fundamentalism.

Such an attack will also not help Islamabad's relations with the Taliban and
the number of non-state actors in Afghanistan who are a crucial part of
Pakistan's current military operational plans. Hence, no time was lost in
communicating to the Americans that Islamabad will not allow any further
attack on Afghanistan using Pakistani territory. It must be noted that, in
case of an attack, Pakistan presents the only viable option.

Equally noteworthy is that fact that the Pakistani military was not very
pleased with the use of Pakistan's territorial waters by the US ships to
launch the first attack. It was indeed a flagrant disregard of another
nation's sovereignty. The action angered a military that was already
irritated by the way Islamabad was dumped by Washington soon after the
withdrawal of the Soviet troops from Afghanistan. The first attack took
place under a civil government in Pakistan that made it easy for every one
to accuse the political leadership for compromising the nation's sovereignty
and interests. This could be used to convince the Taliban too of the
military's innocence of any involvement in the affair.

Unfortunately, with a military government in the seat of power such an
excuse would not wash down well in convincing the forces in Afghanistan
again. Also, with the relative strengthening of the jihadi forces in
Pakistan, Islamabad seems to have closed all other option but to keep on the
better side of the Taliban. For the present Pakistani government the comfort
is that its nuclear capability and Washington's willingness to engage
Pakistan in dealing with the problem of terrorism would stop the US from
taking any drastic action like more sanctions against Pakistan. Furthermore,
it is believed that Washington cannot afford to marginalize Islamabad. The
question is how far can Pakistan depend on maintaining this status quo? For
the moment, the US stands relatively alone in pursuing an aggressive policy
against Afghanistan. Its allies in Europe appear more interested in talking
to the Taliban in order to grab the financial opportunities that the country
offers in terms of reaching the resources in Central Asia. France, for
instance, has begun discussions with the Taliban. The French have always
insisted on having a policy independent of US interests and this should not
be taken as an indication of breaking away from Washington. However, the
fact is that Afghanistan is not another Iraq. A consensus on a joint
military venture would be difficult to come about.

The other options for Washington are not encouraging either. Although
uncomfortable with Afghanistan's bid to fan religious fundamentalism in
their countries, states like Uzbekistan, Turkmanistan, and Tajikistan are
not in a position to assist an American sponsored military operation. Iran
is another party interested in containing the Taliban,but cooperation with
Washington is not currently on the cards. A joint operation with Iranian
forces would require re-educating American people regarding Iran and
carrying major changes in US's foreign policy. The US could also try to work
out a secret alliance with Tehran in using Iran's assistance to carry out a
massive commando operation in Afghanistan. This will be a reminder of the
Iran-Contra scandal. Military experts in the US, in fact, consider a
commando operation as a better option. It will indeed be a high-risk

The issue is: who will be the likely partner in such a venture: Iran or
Pakistan? Aiding American commandos in such an operation would not be a
favourite option with Pakistan's military government that cannot afford to
lose its legitimacy. The Aimal Kansi case has not been completely forgotten.
However, that case happened during the days of a political government that
was sacked on the basis of its inability to guard the country's financial
and strategic interests. Today, the jihadi groups and religious
fundamentalist parties have gotten stronger and are capable of brewing
unrest in the country against the present regime.

Also worth considering is the question whether Pakistani military is in a
position or has the will to challenge American ships. Making holes in
American ships using American technology transferred to Pakistan in the
1980s is a possibility, but with serious ramifications. It may as well open
a two-front situation for Islamabad that the Indians will probably love.

Notwithstanding a final decision, Islamabad may even want to consider
negotiating favourable terms for Pakistan. Politics is really a game of
trade-off. It only depends on what the state's ultimate objective is.

by Christopher Swann, Financial Times, 1st November

The unloved euro has found an unlikely friend in the Iraqi leader Saddam

Late on Monday the United Nations agreed to Iraqi demands that it be paid
for its oil in euros, as part of Mr Saddam's long-running campaign to
undermine the global hegemony of the US dollar.

Iraq had threatened to stop selling oil if the UN failed to agree to its
demand by Wednesday.

Dealers in the foreign exchange market have so far tended to view Iraq's
vendetta against the dollar - a symbol of America's economic dominance - as
an amusing sideshow.

"The euro's fan club is growing by the day," said Michael Lewis, senior
economist at Deutsche Bank in London. "It'll be Kim Jong-il next," he added,
referring to the North Korean leader, another ideological foe of the US,
despite a recent signs of a thaw in relations.

But the effect on the euro is not to be sneezed at.

The sixth largest oil producer in the world, Iraq pumps out about 2.3m
barrels a day. With Brent crude trading at more than $30 a barrel, the Iraqi
move means monthly demand for euros will increase by around E2bn ($1.7bn).

This is equivalent to a reasonably sized merger and acquisition inflow into
the euro-zone every month - helping to offset the haemorrhage of direct
investment outflows that has undermined the euro since its inception last

Mr Saddam could provide an even bigger boost to the euro by converting the
revenues from previous oil sales into the European currency.

Currently, the escrow account held in New York on Iraq's behalf is thought
to contain around $10bn. Much is already committed to pay for contracts
agreed as part of the oil-for-food programme after the 1991 Gulf war.

No official request has yet been lodged but Iraq is thought to be keen to
convert the rest into euros.

Even if only half were to be converted, this would amount to roughly the
same sum spent by the world's main central banks when they intervened to
support the euro in September.

On Monday, speculation that Iraq planned to convert the account helped the
euro climb over a cent to above $0.85 for the first time in two weeks.

"It is hilarious that Saddam Hussein appeared to have been almost as helpful
to the euro as G7 intervention," said one foreign exchange analyst.

But the significance of the Iraqi move, says Jim O'Neill, head of currency
research at Goldman Sachs, goes beyond simply raising the demand for euros
on the market. "Iraq's decision is a gentle reminder of the euro's
potential," he said. "If others follow this will be very important."

By Carola Hoyos, United Nations correspondent
Financial Times, 3rd November

Millions of dollars of US oil business with Iraq are being channelled
discreetly through European and other companies, in a practice that has
highlighted the double standards now dominating relations between Baghdad
and Washington after a decade of crippling sanctions.

Though legal, leading US oil service companies such as Halliburton, Baker
Hughes, Schlumberger, Flowserve, Fisher-Rosemount and others, have used
subsidiaries and joint venture companies for this lucrative business, so as
to avoid straining relations with Washington and jeopardising their ties
with President Saddam Hussein's government in Baghdad.

By submitting their contracts to the UN via mainly French subsidiaries, many
of which do little more than lend their name to the transaction, the
companies are treated as European, rather than US or Japanese, applicants.

In 1998 the UN passed a resolution allowing Iraq, the world's sixth largest
oil producer, to buy spare parts for its dilapidated oil industry.

Since then, only two of the 3,058 contracts for oil industry parts that have
been submitted to the UN have officially come from US companies. But the
facts behind these figures tell a very different story.

US companies have in fact submitted contracts worth at least $100m to the UN
for approval to supply Iraq with oil industry spare parts, through their
foreign subsidiaries. Some informed estimates put that value as high as

They have used, or allowed, associated companies, mainly in France, but also
in Belgium, Germany, India, Switzerland, Bahrain, Egypt and the Netherlands,
to put the contracts through.

"It is a wonderful example of how ludicrous sanctions have become," says
Raad Alkadiri, analyst at the Petroleum Finance Company, a Washington-based
consulting firm.

"On the one hand you have the Americans, who do not want to be seen trading
with Iraq, despite the fact that it is above board and legitimate, because
that would contradict their image of being tough towards Iraq. On the other
hand you have the Iraqis, who on the technocratic level would like to buy
the best stuff on the market - in many cases that comes from the US - but
politically have to be able to say they are refusing to deal with US
companies," he said.

Halliburton, the largest US oil services company, is among a significant
number of US companies that have sold oil industry equipment to Iraq since
the UN relaxed sanctions two years ago.

>From 1995 until August this year Halliburton's chief executive officer was
Dick Cheney, US secretary of defence during the Gulf war and now Republican
vice-presidential running mate of George W.Bush.

>From September 1998 until it sold its stake last February, Halliburton owned
51 per cent of Dresser-Rand. It also owned 49 per cent of Ingersoll-Dresser
Pump, until its sale in December 1999. During the time of the joint
ventures, Dresser-Rand and Ingersoll-Dresser Pump submitted more than $23.8m
worth of contracts for the sale of oil industry parts and equipment to Iraq.
Their combined total amounted to more than any other US company; the vast
majority was approved by the sanctions committee.

Mr Cheney is not the only Washington heavyweight to have been affiliated
with a company trading with Iraq. John Deutch, a former director of the
Central Intelligence Agency, is a member of the board of Schlumberger, the
second largest US oil services company.

Schlumberger has submitted at least three contracts for well-logging
equipment and geological software via a French subsidiary, Services
Petroliers Schlumberger, and through Schlumberger Gulf Services of Bahrain.

Some of the companies, such as General Electric and Dresser-Rand, say that
not only political considerations shape their decision to do business
through their European offices.

"It is customary for GE to do its business for the Middle East out of its
European offices," says Louise Binns, a GE spokeswoman, who acknowledged
that GE does business with Iraq. Other companies the FT contacted admitted
doing business with Iraq, either directly or through their subsidiaries.

US companies that use foreign associates can also reduce the risk of their
contracts being blocked by France and Russia in retaliation for blocks by
the US.

The US is behind nearly all the $289m of contracts delayed by the sanctions
committee, which has received $1.7bn of contracts. These delays were
ostensibly intended to prevent transfer to Iraq of dual-use technology that
could be adapted for military purposes.

"Washington doesn't want to enable the Iraqi economy to recover, therefore
it keeps the infrastructure very weak," a UN diplomat said.

However, Iraq is the US's second biggest Middle Eastern oil supplier after
Saudi Arabia, making Washington uneasily dependent on Iraq's steady oil
flow. Using this influence as an oil provider, as well as the ties it has
developed with US business, Iraq has tried to acquire lobbying power in the

Despite the US business ties to Iraq, however, fear of official US
disapproval of contacts with Baghdad has also prompted one US ally - Japan -
to do its trade through third parties.

Tomen, the Japanese company supplying industrial transport equipment to
Iraq, submits its contracts through its French subsidiary, Tomen France.

US companies have themselves been among those which have suffered from the
US practice of blocking contracts. But they have an edge when it comes to
arguing for the approval of their contracts, diplomats say.

By temporarily dropping their guise as European companies, they have managed
to reverse the blocks by going directly to US officials, rather than having
their case argued by the European mission on behalf of their subsidiary.

At least two US companies have recently managed to reverse Washington's
objections over their contracts. In an exchange of letters between company
officials and one UN mission, seen by the FT, it became clear the US
companies had resolved its case directly with Washington. Few non-US
companies have been able to exercise similar influence.



WASHINGTON, Nov. 3 /PRNewswire/ -- An article appearing yesterday on the
Financial Times Internet site indicates that between September 1998 and last
winter, GOP Vice Presidential candidate Dick Cheney -- as CEO of
Halliburton, a leading oil service company -- oversaw $23.8 million of
business contracts that were submitted for United Nations approval for the
sale of parts and equipment to Iraq through two Halliburton subsidiaries,
Dresser-Rand and Ingersoll-Dresser Pump. The article reports that the value
of the contracts with Iraq by Halliburton's subsidiaries totaled more than
any other US company, and that the ``vast majority'' of the contracts were
approved by the UN sanctions committee. Although Halliburton sold its stake
in Dresser-Rand in February 2000 and in Ingersoll Dresser Pump in December
1999, Mr. Cheney told ABC's This Week program in August that his company had
no dealings with Iraq during this period, through subsidiaries or otherwise.
On Sunday, August 6th, 2000, Mr. Cheney had the following exchange with
ABC's Sam Donaldson:

    Donaldson: I'm told and correct me if I'm wrong, that Halliburton,
    subsidiary companies, was actually trying to do business with Iraq?

    Mr. CHENEY: No. No. I had a firm policy that I wouldn't do anything in
    Iraq even -- even arrangements that were supposedly legal. What we do
    respect with Iran and Libya is done through foreign subsidiaries totally
    in compliance with US law.

    DONALDSON: It's a way around US law.

    Mr. CHENEY: No. No. It's provided for us specifically with respect to
    and Libya. Iraq's different, but we've not done any business in Iraq
    the sanctions were imposed and - and I had a standing policy that I
    wouldn't do that.

On August 27th, Mr. Donaldson again asked Mr. Cheney on This Week, ``All
right. So you -- you continue to say that you had not dealt with Iraq while
you were CEO of Halliburton, is that correct?'' Mr. Cheney replied, ``That's
correct,'' but then added to the contrary, ``When we took over Dresser, we
inherited two joint ventures with Ingersoll-Rand that were selling some
parts into Iraq ...''

``The Financial Times article indicates that Mr. Cheney was either lying to
ABC on August 6th about doing business with Iraq, or the burden is on him to
make the difficult argument that he was unaware that he was doing major
business with Iraq,'' said Ira N. Forman, Executive Director of the National
Jewish Democratic Council. ``Either way, it is unthinkable that Mr. Cheney
would have been profiting from doing business with a pariah nation like
Iraq, which repeatedly hurled Scud missiles at Israel. It makes a damning
statement about either Mr. Cheney's veracity or his character that when it
comes to doing business with Iraq, he would just proceed with business as
usual. This entire episode raises serious questions about Mr. Cheney's
priorities and his truthfulness.''

SOURCE: National Jewish Democratic Council

Hartford Courant Editorial  , November 03, 2000

At the very least, The Hartford Courant's recent four-part report examining
the impact of economic sanctions on different facets of Iraqi life provided
a disquieting picture.

The series presented a tableau of destitution, disease and death. Its
horrifying images of children, women and men caught in the tragic trap of
sanctions cannot be easily ignored.

Sanctions have not had the desired effect, which is to undermine Mr.
Hussein's regime by making the suffering Iraqi people rise up against him.
To the contrary, the tyrant has used the sanctions, as has Fidel Castro in
Cuba, to convince compatriots that America is the cause of their suffering.

Various international organizations have long argued that Iraqi citizens,
especially women, children and the elderly, are bearing the brunt of the
sanctions. Malnutrition and disease are having a devastating impact.
Infant-mortality rates have soared.

Economic and diplomatic sanctions imposed by the United Nations work only if
governments abide by them. This is no longer the case with the U.N. embargo
of Iraq.

Government after government has been bypassing the sanctions, the latest
being Aeroflot, the Russian airline, which will soon resume flights to
Baghdad. So will airlines from European countries and many Arab and Muslim
countries. Before long, trade links are likely to be established as well.
After all, the United States already buys about $1 billion of Iraqi oil a
year. Saddam Hussein's regime is allowed to export a limited amount of
petroleum. The regime is supposed to use the income to buy food and medicine
for Iraqis.

Given the unintended tragic effects of the sanctions, the case for
maintaining the status quo is difficult to make.

The Clinton administration has championed retaining the embargo, which
started a decade ago. Whoever wins the presidential election Tuesday is
likely to stick with the same old policy, even while the rest of the world
continues to open links with Iraq.

Recognizing reality does not mean that the United States has reversed its
dislike of Mr. Hussein's policies. But there is more than one way to pursue
a policy of persuading Iraqis to liberate themselves from Mr. Hussein.

Intelligence agencies have myriad ways to monitor Iraq's arms production,
stockpiling and deployment. Keeping a careful eye on Mr. Hussein should not
hinge on having inspectors on the ground looking into every building and
under every rock.

Unless Mr. Clinton and his successor are willing to remove Mr. Hussein by
force, they should stop punishing the Iraqi people for the transgressions of
the despotic leader.

Sooner or later Mr. Hussein will get his comeuppance, as most dictators do.
The sooner the embargo ends, the sooner Iraqis will feel the liberating
winds of trade and commerce, and give Mr. Hussein the Milosevic treatment.

Iraq Resource Information Site

American Intifada

Here are some further details:


A four-part series that looks at the showdown between the United States and
Iraq, its disastrous effect on the Iraqi people, and where the escalating
tensions may lead.

*  The Iraq Timebomb  - 10/25/00
As he rides out his final months in office, President Clinton appears ready
to leave Iraq much as he found it: with its people suffering, its neighbors
fearful and its leadership defiant. The next president will inherit one of
Clinton's most vexing foreign policy dilemmas.

*  U.N. Realizing Sanctions Not So Humane After All  - 10/25/00
When the founding delegates to the United Nations met after World War II to
draw up rules for the new international body, they envisioned economic
sanctions as a humane alternative to military intervention for encouraging
better behavior from recalcitrant governments.

*  Standoff Over Inspections Leaves Revamped U.N. Team In Limbo  - 10/25/00
The United Nations team of disarmament experts is ready to resume
inspections of Iraq's weapons programs, the destruction of which is a
condition for the end of the U.N. embargo. But the government of Iraq, which
says it no longer has nuclear, chemical or biological weapons or prohibited
missiles, has barred inspectors from entering the country.

*  Stray Missiles, Shattered Lives  - 10/24/00
Abdul-Rezak Jasim was sorting through the tomatoes, onions and potatoes, the
only food available that day at the small market in this dusty desert hamlet
20 miles south of Basra, when he heard the sky rip open and felt the thud of
the impact 100 yards away.

*  A Cat-And-Mouse Game, With Deadly Serious Rules  - 10/24/00
Navy Lt. William Burns sits strapped into the cockpit of his F/A-18 Hornet,
latched to the hydraulic shuttle that runs the length of the flight deck,
and waits for the signal from the shooter.

*  Without Medicine And Supplies, The Children Die  - 10/23/00
The cranky ring of the old telephone startles Dr. Faris Abdul Abbas awake.
He glances at his watch. It's just past midnight, the dark beginning to a
new day at Basra Maternity and Pediatrics Hospital.

*  After Desert Storm: Cancer In The Garden Of Eden  - 10/23/00
Athel Ahmed Ali was playing soccer for her middle school team here in the
Garden of Eden when she first felt the soreness in her legs.

*  A Society Savaged  - 10/22/00
The wide-ranging economic embargo intended to force Iraqi President Saddam
Hussein to comply with weapons inspections has reduced a once-vibrant nation
of 24 million to a daily struggle to survive. While the United Nations and
Saddam exchange blame, sanctions are bleeding the life from Iraq.

*  'Butcher of Baghdad' Gets Richer, Stronger  - 10/22/00
More than a decade after the United States began working to oust him, Saddam
is still standing, still defiant, still threatening his neighbors.

*  Not Enough To Halt Malnutrition, Disease And Death  - 10/22/00
The U.N. oil-for-food program is a lifeline for millions of families in
Iraq, where more than half the population has dropped below the poverty
line, but it's still not enough to prevent widespread malnutrition, disease
and death.

by Tahir Mirza, Dawn (Pakistan), 04 November 2000

WASHINGTON, Nov 3: A guessing game is going in Washington's diplomatic
community as to the possible US foreign policy and security council set-up,
in the next US administration.

Republican candidate, Texas Governor George Bush, already has a fairly
identifiable foreign policy team-in-waiting, but his Democratic opponent,
Vice-President Gore, has been relying so far on his own experience in
foreign affairs, with advisers largely kept in the background.

The key foreign policy figures in a future Bush administration are not in
doubt; speculation is largely centred on who will be what. The betting is
strongly in favour of retired General Colin Powell as Bush's Secretary of
State with another African-American, Dr Condolezza Rice, a former Stanford
University academic, as the National Security Adviser.

However, it is doubtful if Mr Bush will want two African-Americans occupying
the two critical foreign policy slots, and if elected president, he may,
therefore, fill in one of the posts from among his other advisers. Among
these are said to be Paul Wolfowitz, a former assistant secretary of state,
Richard Armitage, former secretary of defence, and Steve Hadley, a former
assistant secretary of defence, one of whom may also become defence
secretary in a Bush administration. Mr Hadley was in defence when Mr Bush's
running mate, Mr Richard Cheney, was defence secretary, and the latter
himself will no doubt figure prominently in foreign affairs and defence in a
Bush administration.

Mr Bush has also been getting advice from such heavyweights as Henry
Kissinger and George P. Shultz.

The Gore campaign has reportedly been drawing heavily upon input from the
present US ambassador to the UN, Richard Holbrooke, who could easily become
secretary of state if the vice-president gets elected. Mr Gore has also been
getting regular briefings from an array of academics and think-tankers.

Among the names mentioned in this context are those of former senator George
Mitchell, former senator Sam Nunn, former Congressman Lee Hamilton, ex-US
envoy to China James Sasser and Laura Tyson, previously head of the National
Economic Council.

But the person to watch may be Leon Fuerth, the present national security
adviser to the vice-president, who has been close to Mr Gore for over two

Mr Fuerth is described as a non-proliferation-wallah, a low-profile career
civil service official. Mr Holbrook, on the other hand, has often sought to
hog the limelight and has never been averse to seeking or getting publicity.

For his secretary of defence, Mr Gore may select former secretary of the
navy Richard Danzig, current deputy secretary of defence Rudy DeLeon or
Representative Norman Dicks.

Several persons advising the Gore and Bush campaigns have experience of
working with Pakistan and have a close understanding of South Asian issues.
But it will be wrong to put too much emphasis on a change of course if Mr
Bush wins: the United States has a history of consistency and continuity in
its foreign policy in major areas of American strategic doctrine.

However, nuances can and do change. For instance, the Republicans have been
advocating a less-interventionist role abroad and may be less concerned with
the domestic politics of other countries. Mr Gore, on the other hand, is a
keen advocate of "nation-building" and linking foreign policy to human
rights and democracy.

The Republicans have been opposed to signing the CTBT, and if they win the
White House, the pressure on this account on Pakistan (and India) may ease
or the issue may, for the time being, become an irrelevant factor in
US-South Asia ties. A bemused diplomat points out that on the CTBT, there is
an apparent convergence of views between the Republican right wing and
Pakistani rightists.

Arab diplomatic circles recall that Governor Bush's father, the senior Bush,
had close ties with "moderate" Arab states, and this policy may be continued
in a second Bush presidency. Mr Gore could follow the recent example of
President Clinton and might be more openly on the side of Israel.

However, it is often conveniently forgotten here that it was the senior Mr
Bush who had first helped President Saddam Hussein during Iraq's war of
attrition against Iran, and then later ordered US troops into battle against
the same Iraqi leader.

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