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[casi] News, 12-19/4/02 (2)

News, 12-19/4/02 (2)

*  Crisscrosses hamper arms inspection in
by Walter Pincus & Colum Lynch
Dawn (from Washington Post), 16th April, 02
Safar 1423

WASHINGTON: In an unusual move, Deputy
Defence Secretary Paul Wolfowitz earlier this
year asked the CIA to investigate the
performance of Swedish diplomat Hans Blix,
chairman of the new United Nations team that
was formed to carry out inspections of Iraq’s
weapons programmes.

Wolfowitz’s request, involving Blix’s leadership
of the International Atomic Energy Agency,
illuminates the behind-the- scenes
skirmishing taking place in the Bush
administration over the prospect of renewed
UN weapons inspections in Iraq.


The inspection issue has become “a
surrogate for a debate about whether we go
after Saddam,” said Richard Perle, an adviser
to Defence Secretary Donald Rumsfeld.

Officials gave contradictory accounts of
Wolfowitz’s reaction to the CIA report, which
the agency returned in late January with the
conclusion that Blix had conducted
inspections of Iraq’s declared nuclear power
plants “fully within the parameters he could
operate” as chief of the Vienna-based agency
between 1981 and 1997.

A former State Department official familiar with
the report said Wolfowitz “hit the ceiling”
because it failed to provide sufficient
ammunition to undermine Blix and, by
association, the new UN weapons inspection

The request for a CIA investigation
underscored the degree of concern by
Wolfowitz and his civilian colleagues in the
Pentagon that new inspections could torpedo
their plans for military action to remove
Hussein from power.

A former member of the previous UN
inspection team said the Wolfowitz group is
“afraid Saddam will draw us in to a diplomatic

Secretary of State Colin Powell and his
associates at the State Department take a
different view. They “see the inspection issue
as a play that buys time to enlarge a coalition
for an eventual move against Saddam,”
according to a former White House foreign
policy specialist.

State Department officials argue that Hussein
will inevitably create conditions for the failure
of the UN inspections, by setting down
unacceptable terms or thwarting the
inspectors inside Iraq so they have to
withdraw.-Dawn/The Washington Post News

*  Rumsfeld: Iraq Checks Not Worthwhile
The Associated Press, 16th April

WASHINGTON: Defense Secretary Donald H.
Rumsfeld strongly doubts that sending new
U.N. weapons inspectors to Iraq would be
worth the effort — a view not officially shared
by the State Department.

Speaking to reporters Monday about the
prospect of resuming efforts to inspect for
evidence that Iraq is illicitly developing nuclear
weapons and means to deliver them,
Rumsfeld made clear that he thinks Iraq
inevitably would find ways to deny access or
deceive the inspectors.

To lift the veil of secrecy from Saddam’s work
on weapons of mass destruction would
require an inspection system that is
``enormously intrusive’’ — more so than
anything tried in the past, Rumsfeld said.

``I just can’t quite picture how intrusive
something would have to be that it could offset
the ease with which they have previously been
able to deny and deceive, and which today one
would think they would be vastly more skillful,
having had all this time without inspectors
there,’’ Rumsfeld said.

His remarks contrasted sharply with
comments made separately by State
Department spokesman Philip Reeker, who
told reporters it is the Bush administration’s
policy to insist that Iraq permit unfettered

``Iraq has to comply fully and unconditionally
with all applicable United Nations Security
Council resolutions, including the return of
U.N. weapons inspectors, and cooperate fully
with them,’’ Reeker said. He gave no
indication the State Department shares
Rumsfeld’s view that inspections cannot

Rumsfeld did not say what should be done if
effective inspections should prove impossible.
In the past he has endorsed the view that if the
goal is to stop Iraqi President Saddam
Hussein from threatening to use a weapon of
mass destruction, then military action would
be more effective than diplomacy.

In January 1998, Rumsfeld and Paul
Wolfowitz, who is now deputy secretary of
defense, signed an open letter to
then-President Clinton, stating it was nearly
impossible to adequately monitor Saddam’s
weapons programs. They said the only
acceptable strategy is to ``eliminate the
possibility’’ that Iraq could use or threaten to
use a weapon of mass destruction, and this
would require military action.

``Everyone knows’’ Iraqi President Saddam
Hussein is pressing ahead with a nuclear
program and striving to improve and expand
his chemical and biological weapons arsenal,
Rumsfeld said on Monday.

Amid growing speculation that the United
States may launch a military offensive in Iraq
to oust Saddam, the Iraqi government is
negotiating with U.N. Secretary-General Kofi
Annan on a resumption of weapons
inspections, which ended in 1998 after
Saddam refused to cooperate with the
inspectors’ demands.

Rumsfeld said U.N. inspections in Iraq that
began after the 1991 Gulf War were

``For the most part,’’ he said, ``anything they
found was a result of having been cued to
something as a result of a defector giving
them a heads-up.’’

In the years since inspectors left Iraq in 1998,
the Iraqis have only increased their ability to
hide their work, he said. He cited an
``enormous amount’’ of equipment that Iraq
has acquired ``enabling them to become
more mobile, enabling them to go
underground to a greater extent than they had
been previously.’’

In a related matter, Rumsfeld denied a
Washington Post report that Wolfowitz had
asked the CIA to investigate the performance
of Swedish diplomat Hans Blix, chairman of a
U.N. team formed to resume weapons
inspections in Iraq. Blix previously headed the
International Atomic Energy Agency.

Rumsfeld would not say whether Wolfowitz
had asked the CIA for information on Blix but
said there was no request for an investigation.

A U.S. government official who discussed the
matter on condition of anonymity said
Wolfowitz asked the CIA to assess Blix’s
leadership of the International Atomic Energy
Agency. The agency is responsible for
monitoring atomic energy programs of
member countries, including Iraq.

In a response delivered in January, the CIA
told Wolfowitz that Blix performed as well as
he could within the rules governing
inspections of Iraqi nuclear power plants, the
official said.

At U.N. headquarters in New York,
spokesman Fred Eckhard said Annan was
concerned by the Post report.

``If it happened the way the article described, I
think it would be an attempt at intimidating an
international civil servant, and that, of course,
would be unacceptable,’’ Eckhard said.

Reeker said the State Department has full
confidence in Blix.,,59-268342

*  Legality of intervention against Iraq
>From Sir Brian Barder
The Times, 16th April

Sir, In the increasingly divisive argument about
military action against Iraq (leading article,
April 11), each side is turning a blind eye to a
different essential point.

Opponents are reluctant to acknowledge that
Saddam’s weapons of mass destruction, his
programme for further developing them
(including, at some stage, nuclear weapons)
and his record of willingness to use them,
pose a threat to his neighbours and to the
wider world; the argument that a refusal to
deal with the threat, or delay in dealing with it,
may well be more dangerous than early
pre-emptive action should not be dismissed.
George Bush’s and Tony Blair’s mantra that
“inaction is not an option” is a serious
argument that deserves a serious response
by dissenters.

Equally, advocates of early action are
worryingly reticent about the need to comply
with international law, and specifically with the
UN Charter. The possible difficulties for the
Americans of getting authority for the use of
force in a Security Council resolution are
obvious: it would entail convincing Russia,
China and France (as well as the UK) that no
less dangerous peaceful alternative is
available, and, most importantly, working out
with them and with other Council member
governments an acceptable definition of the
objectives of military action.

In practice, this would probably mean limiting
its aims to Iraq’s implementation of existing
Security Council resolutions: Washington
would have to give up the additional objective
of toppling Saddam. This would be a fair price
to pay for legality and international backing.

Yet those in London and Washington who are
evolving the new doctrine of the limited
sovereignty of failed or terrorist states, and the
right of stronger states to intervene in their
affairs, increasingly imply that such
interventions would be legal even if not
authorised by the Security Council.

The dangers of giving carte blanche to any
strong state to intervene in another country by
force, without any form of international
approval, whenever it deems itself to be even
potentially threatened (or when it claims to
see the makings of a “humanitarian disaster”)
are, or should be, obvious. Bypassing the UN
Charter’s mandatory safeguards in this way
would mean returning to the law of the jungle.

The key to securing broad public support for
action against Saddam, and to gaining
general acceptance of the new interventionist
doctrine, is for the US and UK Governments
openly to acknowledge now that the use of
force in these circumstances always requires
the explicit authority of the Security Council,
and to start working for it when the time
comes, despite the compromises inevitably
entailed. We should not repeat the expensive
mistakes made in 1999 over Kosovo.

Yours sincerely,
(HM Diplomatic Service, 1965-91),
April 13

*  Mideast distracts US from Iraq
by Carol Giacomo
Dawn, 18th April, 04 Safar 1423


Judith Yaphe, a Mideast scholar with the
government's National Defence University,
said Bush faced serious problems going after
Saddam right from the start. But the recent
expansion of the intifada into a spiralling cycle
of Palestinian suicide bombings parried by
Israeli army thrusts into the West Bank has
become "a major stumbling block," she said
in a telephone interview.

Hostility toward the United States, Israel's top
ally, is high in Arab countries and to win the
support of Arab leaders for a US-led
anti-Saddam operation any time soon would
be harder than ever, she said.

As evidence, Yaphe cites a photograph from
the recent Arab summit in Beirut in which
Saudi Crown Prince Abdullah embraces the
envoy from the Iraqi leader. "For that picture to
be allowed (to be published) is stunning ...
and deliberate ... It says something about the
Arabs at this point ... It signals that they are
clearly against any move against Iraq," she

Judith Kipper of the Council on Foreign
Relations also considers a US-led
anti-Saddam operation to be "pushed off for
the foreseeable future." This has been
apparent since late last year when the
Afghanistan war stretched thin the US military,
their training and their equipment, she said.

AFGHAN ENGAGEMENT: Despite hopes of
wrapping up the Afghan operation quickly, US
forces remain fully engaged there. Meanwhile,
Kipper said it was estimated 200,000 US
troops and three aircraft carriers would be
needed in the Gulf to take on Saddam.

Fall out from the Mideast turmoil has grown.
David Mack, a former US diplomat now with
the Middle East Institute, said Israeli Prime
Minister Ariel Sharon's assault on Palestinian
leader Yasser Arafat had backfired, making
Bush, not Arafat look "irrelevant." "This is a
serious blow to US influence in the region,
and in the long term it is also bad for Israel,"
he added.

For all Bush's talk of targeting Iraq, James
Zogby of the Arab American Institute said: "I
never thought he'd do it. The more it was
talked about, the less they were going to do it."
Committing massive U.S. forces to the Gulf
could also endanger US allies Turkey and
Jordan.-Reuters , "This will foil all efforts by
the proreform government to improve Iran's
relations with the outside world."

News, 12-19/4/02 (2)


*  Oil is the reason America wants to be rid of
by Adrian Hamilton
Independent, 12th April 2002

One wouldn’t normally accuse Tony Blair of
naivety or the Labour left of missing a trick
when it comes to anti-Americanism. But it is
utterly astonishing that a week of discussion
of Iraq and the Middle East could fail to
connect them to the other big story of the week
– oil.

Oil has always been at the heart of Middle
East politics. Even more so now that prices
are on the rise and Saddam Hussein is using
the oil weapon. The US reach for secure oil
supplies is as much behind Washington’s
determination to overthrow Saddam Hussein
now as any question of Saddam’s danger to
the world.

This is not to accuse Washington of some
deeply nefarious international conspiracy with
the oil companies. It doesn’t need that. It is
simply to point out that a country as dependent
on imports as America is bound to take a
strategic view of its interests, all the more so
when it is headed by a president from an oil
state who has earned most of his personal
fortune from the commodity. It would be
astonishing if America didn’t plan to tie up oil
reserves for itself. It always has in the past,
which is why it (and the British and French)
supported Saddam Hussein for so long, when
he was using chemical weapons against his
own people.

What is extraordinary is that Tony Blair should
not recognise this as an integral part of
American motivation in its post-11 September
policies. For the single most important foreign
policy fact of the 11 September attacks is the
extent to which they have undermined
America’s traditional relationship with Saudi
Arabia. Three quarters of the hijackers
involved in the attacks were Saudi and most of
the financing of al-Qa’ida emanated from the
desert kingdom.

For the first time that anyone can remember,
officials of the State Department and White
House began openly to brief against the
regime there, suggesting both that the royal
family had had its day and that its importance
as a strategic ally was greatly exaggerated. It
was this implied threat that is in part
responsible for Saudi Arabia’s dash to lead a
moderate peace position in the Middle East
and to declare so promptly that it would make
up any oil that Iraq cut back.

But as an oil producer, Saudi Arabia has
nevertheless reached its peak. Its finances,
thanks to gross overspending and endemic
corruption, are in a mess. The balance of
power within the royal family has shifted to the
isolationists away from the pro-westerners.
The US must look to alternative sources at the
very least to secure its future increase in
imports and to keep a lid on prices which
threaten its economic recovery.

There are only two unexploited sources with
anything like the potential reserves of Saudi
Arabia. One is Iraq, held back by political
constraint for nearly 30 years, and the
Caspian, restrained by Russian self-interest
and incompetence. Washington is now going
determinedly for both. Even if Iraq were not
developing weapons of mass destruction and
Saddam Hussein were merely sitting in a
corner with his thumb in his mouth, it is
probable that the US would now be seeking
his removal.

In Central Asia, 11 September has also
accelerated policies which the US was
pursuing in any case. Development of the
Caspian could bring huge new supplies on to
the market. The question is whether they
would be pipelined via Russia and its
semi-satellites or Iran and the Middle East.
Washington wants it moved through
pro-Moscow territories. But this in turn has led
it to support, with the complicity of Moscow, the
nastier former communist regime of
Uzbekistan and to encourage the pro-Russian
and anti-Islamic elements in the surrounding

That is probably the last thing that Britain
should be lending its weight to. Our interest,
and Europe’s, has to be in bringing Iran into
the Middle Eastern regional fold and in
diversifying European energy sources.

Excessive reliance on Russia as the route of
provision cannot be good. So too with Iraq. In
a general sense a change in the Iraqi regime
and an easing in the current supply squeeze
would be a good thing. But the question is
what kind of regime would replace it.
America’s interest is in ensuring a central,
probably authoritarian, regime to keep the oil
supply flowing. That is, after all, why America
together with the Saudis did not ensure the
demise of Saddam Hussein after the Gulf War
or support the rebellions in north and south.
The last thing they wanted was an Iraq that
split up. So long as Saddam Hussein was
contained and the price of oil was falling (as it
was), why worry?

It’s the reverse in price trends that have
changed things. Europe cannot be said to
have the same interest. An independent
Kurdistan or even southern Shia Iraq should
not concern us so long as they are democratic
and peaceable.

Which is the most important point of all. The
demand for security of oil supplies almost
invariably leads to support for the more
unpleasant regimes of the world. There can
be few more unsavoury than our new ally
Uzbekistan, for example. Yet that is where
America is heading. Where oil is concerned,
Washington has its own interests. For Tony
Blair to think that he is only supporting a moral
crusade and the demands of friendship
without realising that he is also being used to
further America’s own commercial
self-interest is simply to act the chump.

*  If Military History Should Repeat Itself, Will
The Markets And Economy Follow Suit?
by Jim McTague
Free Real Time [whatever that is], 12th April

What would happen to the markets if the U.S.
attacks Iraq, as many politicalobservers at
home and abroad believe it will this year?

The immediate reaction probably would be a
global pullback in stocks. And theconflict
almost certainly would boost energy prices,
affect the value of thedollar and of gold, slow
the pace of the global economic recovery and
discouragethe Fed from boosting interest

Norbert Walter, chief economist for Deutsche
Bank Group, says markets worldwideremain
overpriced and are due for a major correction
that could be triggered byan invasion of Iraq.
Just how deep and how long any decline
might be depends onthe effectiveness of the
American campaign. As recent history shows,
the morequickly a war is brought to a
successful conclusion, the better.

On August 2, 1990, when Iraq invaded Kuwait,
beginning a half-year stretch inwhich
Washington and Baghdad exchanged threats
but not blows, the stock market,as measured
by the Standard and Poor’s 500, stood at
351.48. Within two months,it fell 10%, to

On Jan. 16, 1991, the day the U.S. and its
allies launched the assault thatquickly would
rout Iraqi troops, the benchmark average was
at 316.17. On Feb.25, the first trading day after
the allied ground offensive that sent
Iraqitroops fleeing, the S&P 500 opened at
365.65. On March 1, the day of thecease-fire,
when the war had been decisively won, it
closed up 17% from thewar’s start, at 370.47.
(The dates of the war, from the Department of
DefenseWebsite, are in Eastern Standard
Time.) The S&P closed 1991 at 417.09.

Memories of that happy outcome may figure in
the stock market’s apparent lack ofconcern
about rumors of a coming rematch with

Last month, Rep. Lindsey Graham, a South
Carolina Republican who is privy
tointelligence briefings, predicted the U.S.
would attack Iraq before the summerends.
American intelligence experts believe Iraq is
harboring terrorists andbuilding weapons of
mass destruction.

When the first wire stories on Graham’s
remarks moved, shortly after 10 a.m. onMarch
27, the Dow Industrials were at 10351.28.
They then moved upward, closingat 10426.91.
At the time, Michael Murphy, a managing
partner and chief equitiestrader at Wachovia
Securities in Baltimore, told Barron’s: “There’s
no panic. Noone is running for the doors.”

It wasn’t until after Good Friday, March 29,
when Israel invaded a Palestiniancompound
in the West Bank that the stock market began
what had been a mildslump, until last week’s

Deutsche Bank’s Walter finds the market’s
indifference to the possibility of awar with Iraq
puzzling, especially because he believes the
American and Europeaneconomies will be
less robust than generally anticipated, owing
to tradedisputes, weak export growth and
capital spending, and
disappointingproductivity gains in Europe. So
fragile is the current case for stocks, hesays,
that any negative surprise — say, the unlikely
event of Saddam Husseinproving less of a
pushover this time — could precipitate the big

An extended campaign could lead to calls
among Arab states to support Iraq bycutting oil
production, causing a spike in energy prices
more severe than theone we’ve seen recently,
even if the threat proves hollow. Coupled with
theheightened fears of terrorism that a war
would engender, this would hurtairlines and
tourism worldwide. The U.S.
balance-of-payments deficit would runup,
owing to the expense of the campaign, which,
this time, wouldn’t besubstantially financed by
America’s allies.

That could weaken the dollar, raising inflation
fears. But the need to keep aneconomic
recovery going could constrain the Fed from
boosting rates to pre-emptinflation.

And what about the price of gold? Historically,
it has been a refuge fromuncertainty. In recent
years, however, it hasn’t benefited much from
globalcrises. When Iraq invaded Kuwait, gold
was trading at $380.70 an ounce. By thetime
Operation Desert Storm ended, on March 1, it
had fallen to $366.90. So, itis uncertain
whether a war would push the metal up from
its recent level ofabout $300 an ounce.

A conflict with Iraq, like the current war on
terrorism, would boost stocks ofdefense
contractors and security specialists. And any
threat to the oil supplyand consequent jump in
prices would benefit many energy companies
and Russia —the biggest non-OPEC
petroleum producer.

Walter’s own strategy is to wait for the right
buying opportunity: “I’m sittingon mountains”
of cash, he says. “It’s not a matter of when the
market willcorrect itself, but when.”

History suggests the markets always swoon
at the onset of a war, but quicklyrecover if it
becomes apparent that the U.S. will win.

>From 1939 until after Pearl Harbor, for
example, the S&P 500 declined 40% to7.47.
After Jimmy Doolittle’s daring 1942 raid on
Tokyo, investors becamebullish. Stocks
ended up rising 73% from Pearl Harbor to the
end of 1945, to17.36. And stocks were
clobbered in the first few days after the market
reopenedfollowing last year’s terrorist attacks,
but finished the year strongly, rising19% from
the low point reached on September 21.

Still, history doesn’t always repeat itself.

“Iraq certainly is on my radar,” says Tom
McManus, chief investment strategistfor Banc
of America Securities, a subsidiary of Bank of
America. “We’ve beenmore defensive,
suggesting that people keep just 50% of their
investments inequities, versus a normal
weighting of 65%.” Like Walter, he’s skeptical
thatthe recovery will be robust.

Regarding Iraq, he cautions, “If you take into
account additional resources thegovernment
will require to mount a military campaign, then
it gives furtherweight to the argument that
people should be somewhat wary of stocks at
currentprices.” He suggests adding in a risk
premium when calculating a stock’searnings
yield, which he defines as the amount of
earnings from continuingoperations, divided
by the price of the stock.

“The average publicly traded U.S. company
should offer a risk premium of 3% to4%, in
real terms,” says McManus. “Over the past 10
to 15 years, it has rangedbetween 2% and
5%. Today, it is near 2%, which I believe is too
low.” McManuscalculates a stock’s risk
premium by comparing its forward earnings
yield to theyield on a 10-year bond.

For stocks to quickly rebound from any
Iraq-related military action, of course,the U.S.
must score a decisive victory in a relatively
short period.

One reason investors may not be fretting
about Iraq is that George W. Bush sofar hasn’t
pulled his punches. They also have seen
America’s military in action.,11581,6
839 10,00.html

*  Will the euro be a casualty of Blair’s Iraq
by Mark Leonard
The Observer, 14th April

Every war in history has had unintended
consequences. As Tony Blair returns from his
Texan hoe-down having firmed up British
support  for “regime-change” in Baghdad, a
regional war in  the Middle East and a political
war inside the  Labour Party are being widely
predicted. But  there may be another
unexpected casualty of an  Iraq war: British
membership of the euro. For Blair to convince
his country and party of  the need to help take
out Saddam, he will need to  prove that the
Iraqi dictator poses the gravest  threat to
global and western security. But, for a  Prime
Minister pledged to “focus like a laser  beam”
on the problems of the public services to  also
resolve Britain’s long history of  ambivalence
towards continental Europe would mean
fighting a political “war on three fronts”. This
may not be impossible - but it would take a
feat  of political leadership unparalleled in
Britain  since 1945.


The most important issue is that of timing. For
all of the heated media debate about Saddam
now,  there will need to be a long diplomatic
and  military build-up to any offensive, most
likely  to occur this autumn or next spring. Yet
the  autumn has also long been seen as the
key moment  for a major, public pro-European
push. As much of  the British public return
from continental  holidays having experienced
the tangible reality  of the shiny, new currency,
the pro-euro  arguments could expect a better
hearing than ever  before. Pro-Europeans
hope that the Queen’s  Speech will include a
Bill paving the way for a  referendum. The late
autumn is also exactly the  time when Gordon
Brown is due to start his  official assessment
of the economic tests.

But it is at precisely this time that Tony Blair
will have an intensive role as international
cheerleader for the War Against Terrorism
Phase  2 - rallying opinion, smoothing egos
and  painstakingly constructing global
coalitions. Any  modern war is a battle for
public opinion.  Western nations do not risk
losing wars like  those in Kosovo, Afghanistan
or even Iraq on the  battlefield: it is the
“wobbles” at home and on  the international
diplomatic scene which are the  primary
threats to the success of prolonged  military
missions. Can Blair win the public  argument
for the war and at the same time make  the
argument for the euro? High summits in
Damascus won’t leave much time for the kind
of  Town Hall Meetings in Dagenham that will
turn  public opinion on the euro around. And a
media  distracted by war will work in favour of
the euro- sceptics who have an interest in
closing down  debate and keeping public
opinion where it is.


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