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News, 30/3-6/4/02 Hi! Fellow windy wobblers (see 'Saddam land war is vital' below). Producing this without the luxury of my own computer has been such a nightmare that I've hardly any energy left for smart alecky comments. Another week has gone by in which Ariel Sharon has been doing what it might take to unite Arab opinion and, at least temporarily, give Iraq a little breathing space, or 'wiggle room' to use the preferred terminology of the New World Order. A lot of speculation as to whether there will be an oil embargo and, if so, if it will have much effect. And a whole series of entertaining Pepe Escobar articles on his visit to Iraq. IRAQI/UN RELATIONS * US lifts block on Russian contracts with Iran [And no-one seems to think that this blatant use of the holds on Iraqi trade for political purposes is in any way scandalous or even worthy of comment]. * U.N. releases $995 million for Iraqi invasion victims OIL POLITICS * Saddam, Iran threaten to play 'oil card' * Iraq lobbies Arab world to cut oil exports to US * Interview with J.Taylor, Cato Institute, on threat of oil embargo [He argues that it wouldn't really matter] * Pretoria, Iraq Oil Deal Shrouded in Controversy * Bush, Saddam and the shoot-out at the Opec corral IRAQI/MIDDLE EAST-ARAB WORLD RELATIONS * Detained Kuwaiti Returns Home * Iraq scoring series of diplomatic coups * Iraq Raises Suicide Bomber Payments * Iraqi Vice President Leaves for Syria, Lebanon * US's Richard Murphy discuss issues in roundtable meeting [in Damascus] AND, IN NEWS, 30/3-6/4/02 NORTHERN IRAQ/SOUTHERN KURDISTAN * Iraqi Kurdish leader evades assassins * Jude Wanniski's Genocide Denial ['Wherein the supply-side guru disputes, against all evidence, Saddam's gassing of the Kurds.'] * U.S. Envoy Visits Kurds in Iraq * Kurdish leader survives Saddam assassination bid FINGER POINTING AT IRAQ * Defector: I Bought Iraq Nukes [Yes, indeed, another one pops up just when he's needed.] * Gulf War POWs Accuse Iraq of Torture INSIDE IRAQ * IRAQ DIARY, Part 2: The vanishing middle class [Series by Pepe Escobar] * IRAQ DIARY, Part 3: Baghdad and Ramallah - the same struggle * IRAQ DIARY, Part 4: Sorry, your credit is no good [Interview with Iraqi minister of trade, Mohamed Mamdi Salim] * IRAQ DIARY, Part 5: What is terrorism? BRITISH/EUROPEAN OPINION * Teachers make a stand on Iraq sanctions * Short 'carpeted' over Iraq * Overthrow Saddam But don't Harm His People, Urge Protesters [Yasser Alaskary advocating the rather difficult trick of toppling Saddam without hurting anyone else]. * 'Saddam land war is vital' [In-depth analysis by SAS Major Peter Ratcliffe, writing in The Sun] IRAQI/UN RELATIONS http://news.ft.com/ft/gx.cgi/ftc? pagename=View&c=Article&cid=FT3PMM1GKZC&live=true& tagid=IX LMS1QTICC&subheading=global%20economy * US lifts block on Russian contracts with Iran by Carola Hoyos, United Nations correspondent Financial Times, 3rd April The US lifted blocks on more than $200m (£140.8m) worth of Russian contracts last week in an attempt to win Moscow's agreement to refocus United Nations' sanctions against Iraq, diplomats said. The release of the contracts, described as a sweetener, secured Russia's approval last week - after a year of protest - of a list of goods that countries could sell to Iraq without violating sanctions. Washington is expected to release additional Russian contracts in the next few weeks, lifting the total value of the deal to nearly $750m, according to one diplomat. The US had blocked many of the humanitarian contracts on the grounds that they could be misused by Iraq for military purposes. Others were delayed by a lack of information submitted by the seller. A US official, however, disputed that the release of the contracts was linked to last week's breakthrough with Russia, saying the US had been working to reduce the estimated $5bn of contracts that are currently on hold. The so-called "smart sanctions", which were one of the first Iraq policy initiatives taken by Colin Powell, US secretary of state, refocus current sanctions to ease the export to Iraq of humanitarian goods without increasing the amount of money covertly going to Iraq's regime. Iraq vehemently opposes them. The timing isn't totally coincidental," said one diplomat. Another was more blunt saying the decision marked the boldest move yet by the US to use the holds to buy political agreement. Last June, the US released more than $80m of Chinese contracts it had blocked in order to gain Beijing's support for an earlier resolution retooling UN sanctions. Last week, the US released a contract it had blocked last August. The contract was for $105m worth of electricity equipment for a thermal power station, to be sold to Iraq by Technopromexport of Russia. The second largest contract was for $58m of vehicles for the food-handling sector, to be sold by JSC Hydromash Service, also a Russian company. Other Russian contracts released in the past week included, $34m for the agricultural sector, $13.2m for telecommunications equipment, $7.1m for bulldozers, $3m for water sanitation equipment and $2m in the oil sector. Overall, Russian contracts released totalled $237.5m, diplomats said. The number of blocked contracts belonging to all countries fell 5 per cent or by $280m in the week ending March 29, the UN reported on Tuesday. The UN's oil-for-food programme allows Iraq to export its crude oil and buy humanitarian products. Any country on the UN's Security Council can block a contract for products going into Iraq. Russia has been under pressure from Baghdad not to go along with the new policy on sanctions. Russia is Iraq's biggest trading partner and its closest ally on the Security Council. http://www.cnn.com/2002/WORLD/meast/04/04/un.iraq. ap/index.html * U.N. releases $995 million for Iraqi invasion victims CNN, 4th April GENEVA, Switzerland (AP) -- The U.N. panel overseeing compensation to victims of Iraq's invasion of Kuwait released $995 million Thursday. The amount set aside for Kuwait in the periodic payment is $807 million, most of it for 1,058 individuals claiming more than $100,000 each for losses, said the U.N. Compensation Commission. Corporations and the Kuwait government also are receiving payments. The next largest payments are $82.6 million for Saudi Arabia and $44.9 million for Jordan. The payments bring to $14.8 billion the total that the commission has released to companies, governments and individuals who suffered losses from the 1990 invasion of Kuwait. The awards are funded through the U.N. oil-for- food program. The compensation fund currently receives 25 percent of the revenue Iraq earns through the sale of oil permitted by the U.N. Security Council. Iraq is allowed to use the rest for humanitarian goods for Iraqis suffering under U.N. sanctions. The commission is made up of representatives of the 15 Security Council members. OIL POLITICS http://www.nypost.com/news/worldnews/45060.htm * SADDAM, IRAN THREATEN TO PLAY ‘OIL CARD' New York Post, 3rd April April 3, 2002 -- BAGHDAD - Saddam Hussein is calling on Arab states to punish America and others who support Israel by slapping an embargo on oil shipments - in a rerun of the 1970s energy crisis. Use oil as a weapon in the battle with the enemy [Israel]," Saddam's ruling Baath Party said in a statement published by Iraq's media yesterday. Iraq, the world's No. 3 oil producer, and Iran (No. 2) issued a joint statement saying they are prepared to cut exports "immediately," even if other major oil producers refuse to join them. They said their goal was to pressure Israel's supporters into forcing the Jewish state to call off its crackdown on terrorism in the West Bank. The world understands the language of economy, so why do not Arabs use this language?" Saddam told Iraqi dignitaries. Iran and Iraq account for about 10 percent of the world's oil exports. The United States is the biggest oil importer. Saudi Arabia and other major OPEC members say they will not support an embargo, although the Saudis have been sharply critical of Israel. In Albany, federal Interior Secretary Gail Norton refused to say what an embargo would mean in terms of gas prices and availability, but pointed out that America depends far more on foreign oil today than it did during the 1970s crisis. She urged Senate adoption of President Bush's energy plan, including a controversial provision allowing oil drilling in the Alaska's Arctic National Wildlife Refuge. http://news.independent.co.uk/world/politics/story .jsp?story=281706 * Iraq lobbies Arab world to cut oil exports to US by Patrick Cockburn The Indepednent, 5th April 2002 Iraq is once again presenting itself as the patriotic bastion of the Arab world by sending a draft resolution to the Arab League asking oil producers to cut off supplies to America inresponse to the military campaign being orchestrated by George Bush to topple Saddam Hussein. Saudi Arabia and the Gulf states are unlikely to join any embargo, but the sense that the Middle East crisis is spiralling out of control is keeping oil prices at a six-month high despite weak consumption and high oil stocks. Adam Sieminski, of Deutsche Bank Securities, said: "First Iraq and nowIsrael/Palestine have added a $6 [£4] a barrel to oil pricesbeyond what we think supply, demand and inventories warrant." North Sea Brent hit a six-month high of $27.68 a barrel on Tuesday, having risen from $20 at the beginning of March. Paul Horsnell, of the investment bank JP Morgan, said: "The combination of fundamental, macroeconomic, political and military factors is rapidly creating an oil market version of the perfect storm. Strap in tightly, this could get rough." Ali Rodriguez, the secretary general of Opec, the association of oil-producing states, said yesterday it had no plans for now to increase crude output. He echoed fears that the recent price rises were the result of speculation and "political uncertainties" rather than any change in supply or demand. Earlier an Iraqi minister said Baghdad was ready to cut its oil supplies to America if Iran would join it – unlikely given the traditional hostility between the two countries. Iraq has already made important gains from the crisis in Gaza and the West Bank, which is hampering Washington's efforts to garner support, internationally and in the Middle East, for the overthrow of Saddam Hussein. Repeated crises because of the actions of Iraq and the Israeli-Palestinian question have affected the price of oil over the past 30 years, but the degree of instability in the region now appears greater than before because of the military focus of American foreign policy since 11 September. And in the present jumpy atmosphere militant Iraqi rhetoric has greater impact than a few months ago. Crude futures – financial instruments based on the future price of crude oil – rose spectacularly on Tuesday when Naji Sabri, the Iraqi Foreign Minister, said in Kuala Lumpur that the oil producing countries had the right to co- ordinate their policies to put pressure on Israel. Iran, which has not exported oil to America since 1995, appeared cautious about the Iraqi proposal. Kamal Kharrazi, the Iranian Foreign Minister, said: "This is not a decision that one country alone can make for itself. It has to be a collective decision for it to be effective." Loyola de Palacio, the European Union energy commissioner, said Opec officials had assured her they would not seek to use the threat of an oil boycott to pressure Israel and its allies. "They do not want oil to be used as a weapon in Israeli- Palestinian conflict." http://www.foxnews.com/story/0,2933,49537,00.html * Interview with J.Taylor, Cato Institute, on threat of oil embargo Fox News, 4th April This partial transcript of Special Report with Brit Hume, April 3, 2002 was provided by the Federal Document Clearing House. BRIT HUME, HOST: Iraq has called for a cutoff of oil sales to the United States by Muslim countries as way of pressuring the U.S. to back off its support for Israel in the struggle with the Palestinians. This has conjured up visions of an Arab oil embargo that would send fuel prices soaring, gas pump lines around the block. But is this realistic? For answers, we turn to Jerry Taylor, director of natural resources studies at the Cato Institute here in Washington. Jerry, welcome back. JERRY TAYLOR, DIRECTOR OF NATURAL RESOURCES STUDIES, CATO INSTITUTE: Thank you, Brit. HUME: Now, let's assume that Iraq did this on its own and cut off oil supply to the United States. How much difference would that make? TAYLOR: It wouldn't make any difference. There is enough oil sloshing around in the global economy that if we didn't buy oil from Iraq we would buy it from Canada or Mexico or someplace else. The fact is that Iraq cannot unilaterally embargo the United States to any good effect, nor can the rest of OPEC. HUME: Because all the oil that it produces is dumped into the world market, and whether it goes directly to the United States, it f it doesn't, it would be made up for elsewhere. TAYLOR: We'll, that's exactly right. In 1973, all that happened during the oil embargo is that the United States stopped buying oil directly from OPEC. We bought oil from people who bought oil from OPEC. Or we increased our purchases from non- OPEC suppliers who had been supplying Europe, and then they supplied the United States, and Europe decided to buy more from OPEC. And there was a reshuffling of supply lines. But the OPEC oil embargo of '73 did not reduce oil imports to the United States one bit. HUME: But it did cause a lot of trouble here. TAYLOR: It did cause a reshuffling of supply lines. But it didn't cause the gasoline lines at the service stations that we remember. And it didn't cause the bulk of the price increase. HUME: What did? TAYLOR: Price controls in the United States did. It's a somewhat complicated story. But the short end of it is that the United States imposed price controls on the amount that major oil companies could charge for imported oil. It was so steep, these price controls, that major oil companies quit buying oil from abroad because they would lose money on the sale at home. So, when we reduced the imports, that reduced the amount of supply to the United States, and that caused the gas lines. HUME: Let's talk a little bit about where the United States gets the oil it gets from foreign sources. It gets it from a bunch of different countries. I think we even have a graphic that shows that. Canada, number one. Go ahead, lay that out for us. TAYLOR: Well, Canada is a major oil producer, 15.4 percent. And it is also a relatively cheap source because transportation costs are pretty low. HUME: Right. Saudi Arabia? TAYLOR: Right, 14.3 percent. It is a major supplier. It's a major supplier in the global market. But, actually, what most people don't realize is that Saudi Arabia, while it's the largest exporter of oil, is actually only the second largest producer. The Soviets are the largest producer right now. HUME: Now, I don't see the Soviets on that list. TAYLOR: Or the Russians, I should say. HUME: The Russians. I'm sorry. The Russians are not on that list. I see, looking at that group of countries, only Iraq and Saudi Arabia are nominally at least Muslim countries. Would Russian supplies be able to make up — let's assume that our major Muslim country suppliers tried to shut us out or shut down altogether. Would Russia be able to make up the difference? TAYLOR: Not tomorrow, but soon. Right now, the major problem Russia has in delivering its oil to market is that its transportation infrastructure needs some investment. They don't have the port capacity or the pipeline capacity to get all the oil to the global market that they would like. Now, most of it, analysts think that will change in a few years and expect the Russians actually to be the number one oil producer and the number one oil exporter, which is bad news for OPEC. I think OPEC in a sense as we know it is living on somewhat borrowed time because I think the Russian entrance into the oil market is going to really change things. HUME: Now, the kind of cutoff that Iraq is talking about is a cutoff of direct sales to the United States. TAYLOR: Right. HUME: That's presumably what it is calling for Iran and for other Islamic countries to do. TAYLOR: Yes. HUME: Your view of that is that that by itself wouldn't do anything because the oil would simply flow to other countries, and then that would slacken the demand from those countries for other oil. And we would get it anyway. TAYLOR: Absolutely. HUME: But if they cut off oil altogether, is that a possibility? TAYLOR: If they shut down oil production completely... HUME: Right. TAYLOR: ... If Saudi Arabia, and Iraq, and Kuwait, and the rest of OPEC just stopped producing oil, they would probably cause a revolution within their own borders within a matter of weeks... HUME: Because? TAYLOR: ... because oil revenue is the only thing that separates that economy from, say, a Zimbabwean or Ugandan economy. It's the only thing they have to sell on the world market. And one of the major reasons for instability, say, in Saudi Arabia, is that the oil dole, the checks that the Saudis got from the government for their oil revenues, have been cut by two-thirds over the past 20 years. Without oil revenue, that economy implodes. And that's one of the main reasons why there is instability. The oil revenues are not what they used to be in these countries. HUME: Now, what about this recent spike that we've seen in oil prices on the market that have been attributed, at least in newspaper accounts that I've read, to uncertainties about what Iraq or Iran might do? TAYLOR: Yes. Oil markets really hate instability. They don't like uncertainty. Right now, whenever military tensions rise in the Middle East, oil prices are going to rise along with them. But you can overstate this really. Oil prices always go up in the spring because we're building up inventory for the summer driving seasons. So you always see gasoline prices going up at that time. You also see a global economy recovering right now. The United States is coming out of a recession. That increases oil demand. And that's playing a factor as well. And now, of course, saber rattling in the Middle East is also going to panic some buyers into signing contracts for longer-term supply. HUME: And that ups the prices, at least in the short term? TAYLOR: Absolutely in the short term. But in the long run, you originally asked what would happen if OPEC just stopped producing oil. Even in the short run, it would bring us back to a world in which oil prices where, after adjusting for inflation, where they were in 1981. Prices would go up to around $65 a barrel in the short term. After adjusting for inflation, we've been there before. It's not a pleasant thing. Nobody has fond memories of the economy circa- 1991, but it wasn't the end of the world. HUME: Right. Well, Jerry Taylor, glad to have you. Thank you very much. TAYLOR: Thank you. http://allafrica.com/stories/200204040532.html * Pretoria, Iraq Oil Deal Shrouded in Controversy by Stefaans Brümmer Mail & Guardian (Johannesburg), 5th April In a first for the state oil sector, South Africa is buying R1-billion worth of crude oil from Iraq to replenish strategic stocks. But some industry sources question the deal, saying it "smells" of another oil scandal. Iraq has been under international embargo since the 1990 Gulf War. Oil transactions with Iraq have to be individually approved by the United Nations in terms of the world body's "food-for- oil" programme, which intends to ameliorate the humanitarian impact of the sanctions. Industry sources ask why the Strategic Fuel Fund (SFF), the South African state body responsible for maintaining emergency fuel stocks, specifically called for Iraqi "Basrah Light" crude - a grade of oil they claim is not regularly used by local refineries. The contract, announced this week by SFF chief executive Renosi Mokate, was awarded last month to a inexperienced black empowerment company, Imvume Resources, in partnership with a Swiss- based trading company, Glencore International. The government in the mid-1990s sold off large parts of South Africa's strategic oil stocks held at Saldanha. In 1999 the government decided to relocate more stocks stored in mine shafts at Ogies, east of Johannesburg, to Saldanha, where it would be more accessible. The idea was to sell the Ogies stocks and acquire fresh stocks for Saldanha. That decision led to perhaps the greatest scandal yet in a series afflicting the state oil sector, when SFF outsourced the deal to a local and international joint venture without Minister of Minerals and Energy Phumzile Mlambo-Ngcuka's approval. Mlambo-Ngcuka fired the entire SFF board in December 2000 and repudiated that contract amid confessions from some officials involved that they had each accepted $20 000 cash bribes. That matter is still in the courts, but the SFF, under a newly appointed board, completed the Ogies sell-off. Mokate said in a statement this week that the SFF identified two types of oil - Nigerian Bonny Light and Iraqi Basrah Light - to replenish stocks at Saldanha. The SFF briefing documents said an SFF subcommittee recommended the two types of oil based on the needs of local refineries and the range of oil products that could be produced by them. Mokate said UN guidelines were that a country should hold 35 days of consumption in stocks - 14,75- million barrels in South Africa's case. In November SFF bought two cargoes, or four million barrels, of Bonny Light on the open or "spot" market. A decision was taken to issue a tender - rather than another spot market transaction or a government-to- government transaction - to buy four million more barrels, this time Basrah Light. "The decision to issue the tender was taken prudently in order to facilitate entry by new players, particularly black-empowerment companies, while at the same time ensuring the best deal for the country." The SFF issued the tender on December 5, with a closing date only nine days later, on December 14. The tender asked for delivery of two cargoes of two million barrels each during January and February - a short time considering that the successful bidder would have had to arrange shipping and UN clearance. The SFF briefing documents deny the initial tender period was "unrealistic", but say it was extended as "we needed to ensure we received all the information from bidders to enable us to reach a fair and valid decision the adjudication process was delayed because we required additional information." The Mail & Guardian understands, however, that the delay could have stemmed partially from infighting or complaints over the initial tender period and other aspects of the deal that had raised suspicion that a preferred bidder could already have been at the starting blocks. One source, well placed in the local and international oil industry, disputed that local refineries preferred Bonny and Basrah Light as asserted by the SFF. And he questioned why, even if local refineries needed that grade of oil, SFF's tender had specifically asked for the Iraqi Basrah Light. If the SFF had specified a grade of oil with the same quality as Basrah Light, rather than insisting on the Iraqi product, a wider range of potential suppliers would have qualified and a more competitive bid would have resulted. Another oil expert pointed out that quite a few countries produced oil with specifications similar to Basrah Light, and speculated that the tender would have "excluded" certain suppliers. In the event, the contract, worth about R1- billion according to Mokate, went to Imvume - which the SFF says it chose because of its "competitive price, black-empowerment credentials and capacity to deliver" - a capacity "enhanced by their partnership with Glencore International". Imvume is a company with no expertise in the field. It was registered about a year ago and directors Sandi Majali, Elliot Mashile, Mphumzi Mhatu and Phila Venkile were appointed last May. Nomdakazana Mbina was another director mentioned by Mokate. None seems to have a high business profile. Mokate acknowledged that Imvume did not have oil trading experience, but said that ability would come "partly through Glencore, and partly though one of the [Imvume] partners, who has traded before". http://portal.telegraph.co.uk/money/main.jhtml? xml=/money/2002/04/06/ccoil06.xml&sSheet=/money/20 0 2/04/06/ixcoms.html * Bush, Saddam and the shoot-out at the Opec corral Daily Telegraph, 6th April History tells us that fears of another oil crisis are ill-founded, says George Trefgarne YOU have to hand it to the Arabs. They are pretty useless at many things - like democracy, for instance - but they have an impish talent for propaganda. This week was a case in point as Iraq called on its fellow Gulf States to use "the oil weapon" against the West in retaliation for supporting Israel. That old outlaw Saddam Hussein is trying to position himself as saviour of the Arab people in general and the Palestinians in particular. He was also indulging his favourite pastime: goading the Americans. As a soundbite, "the oil weapon" is pretty good. At one point this week, traders on the International Petroleum Exchange in London, concerned that an oil embargo is a far greater threat than Saddam's rusty Scud missiles, drove the benchmark price for a barrel of crude for delivery in May through $28 a barrel to its highest for six months. There are distant echoes here of 1973, when Arab countries announced an oil embargo to punish the West for supporting Israel in the Yom Kippur War. Egypt and Syria had attacked when Israeli citizens were in the synagogue, and the move precipitated the first oil crisis (the second was in 1978 when the fundamentalist revolution began against the Shah of Iran). The oil price quadrupled and there were queues for petrol across America and Europe. This provided the backdrop to the shambles of 1970s Britain: power cuts, miners' strikes, Ted Heath, inflation and currency crises. There is now a "war premium" for oil. Analysts say that without all the scimitar-rattling in the Middle East, the price would be close to $20. Petrol in the UK has followed oil upwards, although most of the cost is taxation. Prices have risen by 3p in the last month, and there is about 2p still to come. Gordon Brown has signalled that this will not put him off adding still more to his tax take the week after next. All this comes at a difficult time for President Bush, whose finger is itching on the trigger of his six-gun. It is just over two months since he dubbed North Korea, Iran and Iraq the "axis of evil". He stopped short of actually announcing he was going to attack them, but warned: "I will not stand by as perils draw closer and closer." The message was clear: they better co-operate, or it's High Noon. Oil is one of the many strands which link the Israeli-Palestinian conflict to the war on terror. So far, the connection is a political one. The oil market is hypersensitive to any sign of tension in the Middle East, even though the black stuff nearly always continues to flow. Speculators, like Saddam Hussein, are gamblers. They recognise that oil is the ace for Arab states against the US. As the old saw has it, the American Republic is built not so much on the Constitution, but Gas, God and Guns. The US itself produces 7m barrels a day - about 10pc of the world total and nearly as much as Saudi Arabia - but it consumes even more, and must import 11m barrels a day. It is the world's biggest oil importer by far, absorbing 25pc of world imports. It is not surprising that since the President's speech, the oil price has risen by $8 a barrel, to the point where higher petrol prices might impact on the fragile economic recovery underway in America. Expensive oil also worries central banks, which have cut interest rates to their lowest level for a generation. Any sign of inflation and rates will rise quickly, as happened when there was a jump in the oil price in 2000. More expensive borrowing helped prick the dotcom bubble and, by September, the fuel protests were underway in France and Britain. It is too early yet to man the barricades, block motorways and start hoarding petrol. Another oil crisis looks improbable. There are three reasons the price could soon fall back. First, it is by no means certain the US will attack Iraq. The American military build-up in the Gulf is so far limited to about 20,000 personnel and a couple of carrier battle groups. That is about one tenth the size of the coalition assembled in the Gulf War. Even if it does attack, and Iraqi supplies are temporarily lost, there is little chance that the oil price will rise above $40 a barrel, the level it hit in the Gulf War, far less the inflation- adjusted $60 of the 1970s. Once an attack had begun, one of the first objectives would, presumably, be to secure Iraq's oil fields, which would then be in much safer and more efficient hands than they are now. Second, Iraq is probably bluffing. It would not be the first time Saddam Hussein fired his Kalashnikov into the air to no great effect. Saudi Arabia, the most powerful member of the Opec exporters' cartel, has so far said an oil embargo would be inappropriate. In 2000, Opec adopted a resolution saying that oil should not be used as a political instrument. Only Iraq failed to agree to the resolution. Arab nations are heavily dependent on oil and could not afford to withhold supplies for long. With the exception of a bit of tourism, they have failed to develop any other industry. Saud al- Faisal, the Saudi foreign minister, recognised this earlier in the week when he said: "If they [Arab countries] want to strengthen themselves against Israeli aggression, they have no alternative but to continue to exploit oil and gas." The Saudi Arabian government is already running a budget defict, while Iran is depressingly poor. According to the World Bank, income per capita is only about £1,700 a year, and it has over $100 billion of debts run up during the war with Iraq in the 1980s. Since 1996, the United Nations has allowed Iraq to export about 2.5m barrels of oil a day in order to buy food. The UN said on Wednesday that, in the last two weeks, Iraq has actually increased its exports rather than cut them. It relies on oil completely for foreign exchange. Without it Saddam is skint. Third, we are far less dependent on Arabian oil than we used to be. President Putin of Russia, spying his opportunity to cuddle up to the West, has urged his country's producers to accelerate. The West has turned a blind eye to his war in Chechnya, and he returned the favour by refusing Opec's requests to cut production. Russia is the new oil superpower, with an output which should overtake Saudia Arabia's this year. Opec supplies only around a third of the world's oil now, down from a half in the 1970s. As it stands, there is plenty of oil washing around, and the world economy isn't guzzling it fast enough to cause any serious problems. The oil market recognises this. It is in what is known as 'contango', where futures prices are higher than spot prices (ie for immediate delivery) by about 40 cents a barrel. The latest figures from the American Petroleum Institute on US commercial stocks show there are more than 820m barrels of oil at refineries, which is above average. The rise in the futures price for crude is not, therefore, based on a physical shortage, merely on a bet by speculators that there may be a shortage later in the year. The bet is political, not economic. In June, Opec will meet to discuss whether to continue the production cuts it began two years ago. Then, the oil price was less than $10, and the organisation has learned that engineering an oil shortage also produces a glut in its wake. Any sustained price over $25 would encourage new supplies from the former Soviet Republics, Nigeria and Alaska. A re-run of 1973 is still unlikely. A crisis would require genuine shortages. But as a weapon, oil is like a blunderbuss: rather old fashioned and liable to blow up in the user's face. We should be far more worried about the other, more modern, armaments Saddam may have in his locker. IRAQI/MIDDLE EAST-ARAB WORLD RELATIONS http://www.lasvegassun.com/sunbin/stories/w- me/2002/mar/30/033002058.html * Detained Kuwaiti Returns Home Las Vegas Sun, 30th March KUWAIT (AP) - A Kuwaiti who was detained in Iraq for two weeks after he inadvertently crossed the border with a Venezuelan delegation returned home Saturday. U.N. observers, who have patrolled the closed border since the 1991 Gulf War, said Jassem al- Randi was handed over by representatives of the International Committee of the Red Cross to Kuwaiti Interior Ministry officials at the Kuwaiti-Iraqi border. He was released into the care of the International Red Cross in Baghdad on Wednesday. Al-Randi, who works for Kuwait Municipality, was accompanying the Venezuelan ambassador on March 15 when their U.N. escort inadvertently took them across the border. News of Baghdad's decision to free the Kuwaiti was announced Wednesday at an Arab League summit in Beirut, Lebanon, where Iraq affirmed its respect for Kuwait's independence and pledged to avoid "all that could repeat what happened in 1990." Kuwait was invaded by Iraq in 1990, and liberated by a U.S.-led coalition seven months later. On Friday, Iraqi Foreign Minister Naji Sabri told the Kuwaiti newspaper Al-Rai Al-Amm in a landmark interview that Baghdad wants to resume relations with its small neighbor. Kuwait responded that it was still too early and that it wanted to see Baghdad implement all relevant U.N. Security Council resolutions, including the one that requires Iraq to account for the fate of more than 600 missing Kuwaitis and other nationals since the 1990 invasion. Baghdad says it holds no prisoners of war. But Sabri told the newspaper his country was willing to look for any "missing" people. http://www.dawn.com/2002/04/03/int13.htm * Iraq scoring series of diplomatic coups by N Janardhan Dawn, 3rd April, 19 Muharram 1423 DUBAI: Notwithstanding the deterioration of the Middle East crisis in recent days, last week's Arab summit in Beirut proved to be a success at least on one count - Iraq. While the summit's final statement "categorically" rejected a military strike against Baghdad, bigger gains came by way of a well-orchestrated series of diplomatic coups that President Saddam Hussein's regime unfolded in the presence of 22 countries in Beirut. First, in the face of US threats, Iraq sought to consolidate reconciliation efforts with its Gulf neighbours by pledging in writing, for the first time, never to repeat its 1990 invasion of Kuwait. Second, and equally if not more significant in the immediate context, Iraq's presidential envoy Izzat Ibrahim and Saudi Arabia Crown Prince Abdullah bin Abdul Aziz hugged and kissed - again the first such high- level public contact since the 1990 Gulf crisis, when Iraq had threatened to oust all "illegitimate Gulf monarchies" and Riyadh had allowed the United States to use its base to raid Baghdad. The breakthrough came after Iraq and Kuwait reached a landmark rapprochement agreement and Ibrahim and the head of the Kuwaiti delegation, First Deputy Premier and Foreign Minister Sheikh Sabah al Ahmad al Sabah, nodded at each other and shook hands. Hailing mediation efforts by Oman and Qatar, the agreement said Arab leaders "welcomed Iraq's confirmation to respect the independence, sovereignty and security of the state of Kuwait and guarantee its safety and unity to avoid anything that might cause a repetition of what happened in 1990." Kuwait had long insisted that Iraq admit that its invasion was in violation of all international charters and norms. The US-led Gulf War ended the Iraqi occupation in 1991. Later, the Kuwait foreign minister said that the handshake was merely a "protocol" courtesy but admitted that he was "100 per cent satisfied" with the agreement. He also hinted that Kuwait no longer demanded an apology from Iraq for the 1990 invasion. Under the declaration, Iraq was urged "to cooperate in order to find a prompt and final solution to the issue of the Kuwaiti prisoners and missing persons and for its restitution of properties in line with the relevant international resolutions". But the prospect of the agreement sticking rests on how Kuwait and Iraq resolve the prisoners of war issue. Kuwait maintains that more than 600 of its and other countries' nationals disappeared during the Iraqi occupation and charges that the missing are still being held in Iraq. Baghdad has admitted taking prisoners but said it lost track of them during a Shia uprising in southern Iraq that followed its eviction from Kuwait in 1991. Iraq also says around 1,140 of its own nationals are still missing since the conflict. Obviously, the process of reconciliation, coupled with the summit's rejection of use of force against an Arab country, has to be seen against what is widely seen as US determination to launch military strikes against Iraq as part of Washington's 'war against terrorism'. Even though Ibrahim stressed that Iraq was holding out its olive branch as a sign of goodwill, not "out of fear of the United States, Britain or any other enemy," there is little doubt that Iraq carried out a third diplomatic win with its move at the Arab League summit - by inserting "another thorn in Washington's hegemonic designs". In Baghdad, Salim al Kubaisi, head of the Iraqi parliament's foreign and Arab relations committee, hailed the agreement as "a big step towards foiling (American) hostile schemes against Iraq". Mustafa Alani, an Iraqi analyst, said Baghdad has finally woken up to George W Bush administration's avowed intention to topple Saddam Hussein and is trying to internationalise its standoff with Washington. "Iraq may have been able to add Arab backing to European opposition to a US attack on the grounds that it would throw the Middle East into turmoil, but Washington feels that ousting Saddam is a goal worth defying world opinion for," he explained. "Seen in its entirety, the summit's rejection of any attack on Iraq and call for the lifting of UN sanctions imposed against that country in 1990 should serve as the strongest-yet message that the Arab world is united in rejecting the US approach to Iraq," says PV Vivekanand, editor of a Gulf daily. What facilitated that approach was "adopting of the moves to settle differences and burying the hatchet in the Iraq-Kuwait and Iraq-Saudi standoffs," he adds. Vivekanand also says that it was clear that the Arab summit was in no mood for any horse-trading over Iraq, like linking American efforts to resolving the Israeli-Palestinian crisis with Arab support for anti-Iraq US action. "The summit sent an unambiguous message to Washington that the crisis in Palestine and any military action against Iraq are two different issues and could not be linked together in whatever context except for the cause of stability and security in the region," he argued. The US said it was "profoundly sceptical" of the Iraqi-Kuwaiti non-aggression pact. US State Department spokesman Richard Boucher said Baghdad has "a deplorable record of flouting its international obligations and UN security resolutions." In trying to build on the new camaraderie, Kuwait said it was toning down its media rhetoric against Iraq. Kuwaiti editors held a meeting with the foreign minister and took note of the sudden changes in Iraq's state- controlled media, with references being made to "brotherly ties" between the neighbouring countries. The latent message in the rapprochement is that the Arabs, including the immediate region around Iraq, do not feel any threat from Iraq. It also has an unasked question - why the United States insists on seeing such a threat when the potential targets of that "threat" fail to see it. All eyes are now on how Washington would respond to the message that the Arabs see the worsening situation in Palestine and the repercussions of possible military attacks against Iraq as equally destabilising to the region. -Dawn/InterPress Service. http://www.baghdad.com/? action=display&article=12838921&template=baghdad/i ndex.txt&index=recent * Iraq Raises Suicide Bomber Payments The Associated Press, 3rd April NABLUS, West Bank: Saddam Hussein has increased money for the relatives of suicide bombers from $10,000 to $25,000, drawing sharp criticism from Washington. But Palestinians say the bombers are driven by a priceless thirst for revenge, religious zeal and dreams of glory — not greed. Since Iraq upped its payments last month, 12 suicide bombers have successfully struck inside Israel, including one man who killed 25 Israelis, many of them elderly, as they sat down to a meal at a hotel to celebrate the Jewish holiday of Passover. The families of three suicide bombers said they have recently received payments of $25,000. The devout Muslims among the bombers, a majority, believe they will go to heaven as martyrs and spend eternity in the company of 72 virgins. In grainy farewell home videos, they often read passages from the Muslim holy book, the Quran, and praise God. Secular attackers know that after the deed, their families will win the adulation of friends, neighbors and strangers. The other motive seems to be a strong yearning for revenge. Relatives of many of the bombers recall how many of the young men's formative years were spent in Israeli jails. The mother of one bomber said her son once watched Israeli soldiers beating his father. Mahmoud Safi, leader of a pro-Iraqi Palestinian group, the Arab Liberation Front, acknowledged that the support payments for relatives make it easier for some potential bombers to make up their minds. ``Some people stop me on the street, saying if you increase the payment to $50,000 I'll do it immediately,'' Safi said. He also suggested such remarks were made mostly in jest. Saddam has said the Palestinians need weapons and money instead of peace proposals and has provided payments throughout a year and a half of Israeli- Palestinian battles. ``I saw on Iraqi TV President Saddam saying he will continue supporting the (uprising) even if it means selling his own clothes,'' said Safi. Defense Secretary Donald Rumsfeld said Saddam's payments inspire a ``culture of political murder.'' ``Here is an individual who is the head of a country, Iraq, who has proudly, publicly made a decision to go out and actively promote and finance human sacrifice for families that will have their youngsters kill innocent men, women and children,'' Rumsfeld said Wednesday. But Saddam is not the only one giving money. Charities from Saudi Arabia and Qatar — both U.S. allies — pay money to families of Palestinians killed in the fighting, including suicide bombers. The mother of Jamal Nasser, a 23-year-old architecture student who died trying to ram an explosives-laden car into a bus carrying Jewish settlers, said she received a check for $10,000 from Iraq and another for $5,000 from Saudi Arabia. She said she plans to put the money toward buying an apartment. She wants to move her family from the small place they've been renting for more than 20 years. The money she received is about half the cost of a small apartment in Nablus. Fifty-five Palestinians have blown themselves up in attacks on Israeli civilians in the past 18 months of fighting. Under the new Iraqi payscale, decided on March 12 during an Arab conference in Baghdad, the families of gunmen and others who die fighting the Israelis will still receive $10,000, while the relatives of suicide bombers will get $25,000. http://english.peopledaily.com.cn/200204/05/eng200 20405_93518.shtml * Iraqi Vice President Leaves for Syria, Lebanon People's Daily, 5th April Iraqi Vice President Taha Yassin Ramadan on Thursday left for Syrian and Lebanon to enhance relations with the two Arab countries. Iraqi Vice President Taha Yassin Ramadan on Thursday left for Syrian and Lebanon to enhance relations with the two Arab countries. Before departure, Ramadan told the official Iraqi News Agency (INA) that he will discuss with the presidents of the two " brotherly countries" the current situation in the Palestinian territories as well as issues of common concern. Ramadan said he will also discuss with Lebanese officials the possibility of boosting bilateral cooperation and signing a free trade agreement. [.....] http://www.arabicnews.com/ansub/Daily/Day/020405/2 002040517.html * US's Richard Murphy discuss issues in roundtable meeting Arabic News, 5th April Herewith is the full text of the roundtable meeting former US ambassador in Damascus, former US under secretary of state for the near East and of the foreign affairs council Mr. Richard Murphy held with correspondents of Arab and foreign media in Damascus. Here follows the Question and Answer session: Murphy: I have been travelling in the area for the past three weeks, first attending a conference on "Islam and the Dialogue of Civilizations" that the National Library sponsored under the auspices of Crown Prince Abdullah in Riyadh, then visiting a number of the GCC states. I arrived in Beirut just after the Summit, and in Damascus the day before yesterday. It's a great pleasure to be back in Damascus. My wife and I first came to your country in 1960, before at least two of you were born, and served in Aleppo when we had a Consulate there, until 1963. Then I came back as Ambassador in 1974 and stayed until mid-1978. "I've been able to visit Syria since then as Assistant Secretary and now in my capacity at the Council on Foreign Relations which is a private institute. It does not accept any federal government funding or support. It carries out a program of independent studies; foreign policy is the core of its activities, but it includes work on international trade and technology transfer, refugee issues. It tries to cover a wide variety of programs with an international aspect, and make recommendations to improve American foreign policy. But, I emphasize again, it is not an organ, not a part of the U.S. Government at all, and our advice, if asked for, is not always followed. Thank you. [.....] On Iraq, I can only tell you that the determination in Washington appears to be very firm that the Iraqi people, this region of the world, and the broader international community would be much better off were there to be a change of regime in Baghdad. And we can discuss that further, but I see no flexibility in the American position that the Iraq regime is one which has caused great damage to the Iraqi people and the region, and is pursuing a program of weapons of mass destruction, weapons which it has used in the past against its people and against Iranian neighbors. But exactly how that change of regime will come, again, I can't predict. I did want to make it clear; I think that the change in rhetoric by the American Secretary of State, Colin Powell, last November in describing the situation in the West Bank and Gaza as one of "occupation," which may strike readers in this part of the world as a normal phrase, had never been used by a senior American official before. Q: Yesterday (Tuesday), Secretary of Defense Rumsfeld made a statement in which he accused, or actually, warned Syria, Iraq and Iran about their support to what he called "terrorist groups." These groups are considered terrorist by Mr. Rumsfeld while they are considered liberation movements by these countries. What are your comments on that A: I don't know what prompted Mr. Rumsfeld's comments the other day. The American authorities have talked for some years about the activities of the Hizbullah militia in Lebanon, which they have described as terrorist. I think without getting into the debate of what is liberation, what is national resistance and what is terrorism, we should remember the experience of the Americans in the 1980's when the American Embassy was blown up twice, when the Marine barracks were blown up in Beirut, when the hostages were taken, and where the hand of Hizbollah was clear behind all of those events. So, any support for any activity of Hizbollah has been considered supporting terrorism. Now, when Hizbollah redirected its activities to focus on Israeli soldiers in southern Lebanon, there's ground to argue that that was not terrorism. But American officials, and Mr. Rumsfeld was, as you know, in the first Bush Administration, has very dark memories of those times. And, to the extent that the organization (Hizbollah) has been assisted over the years by other parties, I think that may explain his view. However, I repeat, I don't know what brought him to make that particular statement about Syria, Iraq, and Iran. Iraq and Iran were labelled part of the "axis of evil" as the President used the term last January. But, I think this may be the first senior-level statement to include Syria. Just to clarify again, some say that the shift in focus of Hizbollah, that that was not terrorism. (Question interjected: who are the "some?" Is it the leadership?) I don't think it's the top leadership, no. The top leadership tends to use the word terrorism as a very general charge, almost equating it with violence. I think there is an essential difference between violence and terrorism, but the prevailing view in the Administration is that is for intellectuals to say. Q: Mr. Murphy, as a strategist, and following the September 11 attacks in New York and Washington, everybody thought that the intellectuals, the decision-makers, the U.S. Administration, would take new considerations into their policy making vis-a-vis the Middle East. Everybody thought that reaching a peaceful resolution to this conflict was imminent. Now, what we see is contrary, especially over the last week. I would like to have your comment in general. And, in your opinion, what criteria does the U.S. Administration adopt when classifying Syria as a member of the "axis of evil." Thank you. A: The wound of September 11 is still very fresh in American minds. The anger is very strong. For a period of several weeks, to discuss anything but the horror of the attack and to ask why it had happened was considered as trying to justify the attack -- even to explain was to justify. You remember the incident of Prince Walid bin Talal presenting a check to Mayor Guiliani and having the check rejected because his press officer had distributed a statement at that moment that America should re-examine its Middle East policy. In September, that was considered an insult by the mayor, by many Americans who felt as I say that to ask such a question, make such a suggestion was to be party to approving what had happened. That has changed. There are many asking the question, "why are we hated as Americans?" There is a much broader debate on that subject today than I can remember in many years. Americans are accustomed to seeing their country, my country as well-meaning, benevolent, helpful, all of the nice words and not the opposite. But, September 11 never promised, and I don't think any in the Administration or those of us following American policy from outside, forecast a major change, a quick major change, in American policy towards the Middle East. The policy was to try to find a way to bring the level of violence down, start the process that would get the parties back to negotiations, Israelis and Palestinians, and that hasn't changed. That is a constant. The American government has not classified Syria as the axis of evil. The Secretary of Defense made a comment the other day; I cannot explain his comment. The President of the United States is the ultimate shaper of American policy; I have not heard any such comment from the President or from the Secretary of State. But there is an uneasiness, there's deep uneasiness in Washington about the current level of violence, concern that it might spread, spill-over, that's why you've heard the statements of the last 24 hours about the worries concerning southern Lebanon once again. The Israeli Prime Minister made one of his stern statements about no-one being immune to Israeli retaliation. Is he serious? Do his words mean action? Not necessarily leading to a specific reaction, but it's a worrisome time. [.....] Yes, it took 54 years (sic) to use the word "occupation." That's a long time. It reflects the complexities of American policy- making. We have an expression in English that if something looks like a duck, walks like a duck and quacks like a duck; then it's a duck. And, I think we're now fortunately able to use that word, "occupation. [.....] Q: First of all, you said that the Council is independent from the government. Are there Jewish groups which support this Council? And, what's the size of their contributions, and are there pro-Arab groups which support this council? And, back to the situation in the region, the situation is potentially explosive with a green light from the U.S. Administration. Would the United States exploit the tension in the region and take advantage of this opportunity to launch military action against states in the region? Iraq or any other? Especially given the statements made by Rumsfeld and Sharon. A: The financial support for the Council on Foreign Relations comes from basically three sources. One is the annual membership dues of some 3,500 members in the United States with a few of those living outside the country. And from corporations; we have about 200 corporations that pay a higher fee for membership and it gives them the opportunity to attend our sessions. The third source of funding are foundations such as Rockefeller, Ford Foundation to which we go when there's a project we want to carry out, and it cannot be funded from the endowment that has been accumulated by the Council's membership fees and from donations. I'm not aware of any donations, to use your term, by Jewish groups or Arab groups. We have perhaps a dozen chairs: one is named after David Rockefeller, one is named after Paul Volcker the economist, so it's not a question of being a mouthpiece for any particular political party, ethnic group, or any particular point of view. As I said, the Council does not have a point of view; it's a forum. I think the private funding is something that is not common outside of the United States, private philanthropy. And people are used to assuming, and correctly assuming that many research institutes in Europe, for instance, enjoy a healthy measure of government support. We use the term about our senior staff; we described them as holding a chair. This is a term taken from universities, a chair endowed by, funded by someone. My own is known as the Hasib J. Sabbagh chair, you may know his name from his work as a major Palestinian businessman whose been very active in trying to advance peace in the region over the years. The question about the United States Government exploiting tension in the region shows that the conspiracy theory of international politics remains alive and well in your mind. No, is the short answer. I don't think there's any evidence that Washington intends to exploit this tension. Washington was extremely concerned about the Iraqi regime for years before the present tension, at a time when the peace process, Arab- Israeli, Palestinian-Israeli, was in far healthier condition, when there was a very promising dialogue. That concern is not new. And a terribly long period of time has passed since the war in '91 and the imposition of sanctions which were imposed, very tough sanctions, through the United Nations Security Council on the assumption they need only last until the regime collapsed, was overthrown presumably from within, and that was predicted publicly by any number of commentators, experts, specialists. It would take about six months. Then the revulsion against the leadership would be so strong that it would be put aside. It didn't happen for reasons that you are all familiar with. But I don't think Washington is looking for an excuse to launch a military operation. The term that the President has used, "War on Terrorism," is a very aggressive statement of intentions, yet those are not necessarily involving military action. It's a war which can be a war of persuasion. A "campaign" might be a less emotional word; a campaign against terrorism. As I understand it, the Al Qaeda network may be present, may have cells in some 60 different countries. The President has said it's going to be a long war. And, he has felt the anger of the American people about September 11, and the threat to modern civilization, and we all hope it will be preserved. And terrorism is described - this is my definition but I think it is one generally acceptable - as an act against innocent civilians to achieve or to advance a political cause. This is something that the President intends to fight against. But it need not be a question of American military force. President Bush is seen through many eyes as a cowboy, prone to take violent, impulsive action, but just remember how he tried to get Mullah Omar, as leader of the Taliban government to deliver the leaders of Al Qaeda. Some in Afghanistan wanted that to happen. There was a meeting of the senior clerics who said perhaps the sooner that Osama bin Laden would leave the country, the better. But the political leadership of the Taliban could not bring itself to deliver Al-Qaeda, which we have been convinced from the beginning was behind September 11th. And it was only then that military action was undertaken. There was an effort to handle it politically and there will be further such political efforts. Q: I'll start from the place where my colleague ended. Do American institutes try to offer an answer to the American people about why they are hated. There is a general belief that the American people are good people, but it seems that American officials arrive at the truth when they leave their positions, as seen in the statements made by former Secretary Albright and former President Bill Clinton. Another question about the situation in the region. Are American efforts sufficient now to stop the violence? And, how can we understand the American Secretary of State when he justifies what the Israeli Prime Minister, Ariel Sharon, is doing. Yasser Arafat is besieged, he is a Palestinian citizen and perhaps what's happening to the Palestinian people is more important than what's happening to the Palestinian leader. A: The debate in America on this topic, why do they hate us, isn't confined to institutes or think tanks. You'll find it discussed in the main pages of our newspapers, by our columnists and on our TV talk shows. It's a very open debate, a very general debate. Forty different nationalities died in the World Trade Towers. It was an attack on an American symbol, the economic power of the United States. It killed nearly 3,000 innocents, unless one is fanatic enough to accept Osama bin Laden's definition that every American should be killed wherever he is because all Americans pay taxes and therefore are responsible for their government's policy. But it's only the fanatic that would try to explain the world in those terms. But Americans are very proud of being the host to the world. It's made us great. We are all immigrants to America; including the American Indians who came from Asia. But we're all immigrants. And we've tried to make everyone welcome who chooses to come to our country. So, it's puzzling to be wounded in that way, to be attacked in that way as it occurred in September. I've often heard the statement that our officials arrive at truth only when they leave office. It's not that. Being in office does impose a certain discipline. There is always debate within an Administration, there's always discussion about different ways to proceed. But, at the end of the day, there's a President, and he expresses the policy for the Executive. We have only one President at a time. It's like the debate, I assume, that may go on in some news offices when you have an editor, and occasionally you may write an article that doesn't get published for reasons best known to the editor. 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