straitstimes.asia1.com.sg By Leon Hadar

WASHINGTON - While the buildup of American forces in the Persian Gulf may bolster reports of an attack on Iraq by the middle of next month, the Bush administration is finding that recent developments in Asia, Europe and South America are beginning to hamper its ambitions for war.

First, North Korea's decision to withdraw from the Nuclear Non-Proliferation Treaty (NPT) and rising tensions with the United States over moves to revive its stalled nuclear programme have ignited an international crisis in North-east Asia.

President George W. Bush and his aides have refrained from describing the tensions between Washington and Pyongyang as a 'crisis' and have insisted it could be resolved through peaceful diplomatic efforts, involving US allies in North-east Asia, South Korea and Japan, as well as two of North Korea's partners, China and Russia.

In fact, under pressure from South Korea and Japan, the Bush administration agreed last week that it was ready to negotiate with North Korea regarding its nuclear weapons programme.

'President Bush has apparently decided to go to war against Iraqi President Saddam Hussein and negotiate with North Korean leader Kim Jong Il, although it's clear that the North Koreans have taken bolder steps than Iraq to challenge US nuclear non-proliferation policy,' notes Professor Ian Lustick, a foreign policy specialist at the University of Pennsylvania.

Indeed, North Korea has not only withdrawn from the NPT, but has also expelled all international weapons monitors from its territory. Most experts have concluded that Pyongyang has enough plutonium for one or two nuclear bombs and would be able to build them within a year.

Iraq, in contrast, has provided full access to United Nations weapons inspectors, and is probably not in a position to develop nuclear weapons any time soon. Chief UN inspector Hans Blix said last week that his weapons teams had not found any 'smoking gun' during their search for dangerous weapons.

'The message from the Bush administration is that the US doctrine of pre-emption doesn't apply to those governments that have already pre-empted us,' Prof Lustick says, referring to the new doctrine empowering Washington to launch attacks against hostile nations suspected of acquiring or developing mass-destruction weapons.

This new 'pre-emption' strategy could lose credibility if Washington does not apply it in a consistent manner - for example, by negotiating with North Korea, a country flagrantly flaunting its nuclear capability, while threatening to attack the seemingly less bellicose Iraq.

Bush officials respond to this criticism by arguing that it is necessary to invade Iraq, precisely to prevent it from arriving at North Korea's position, when its nuclear capacity has progressed to such a stage that deterrence becomes difficult, if not impossible.

The crisis in North-east Asia complicates the planned Iraq attack by raising major doubts about the coherence of the administration's strategy. The possibility that the crisis on the Korean peninsula could escalate into a full-blown war also poses obvious logistical problems.

While US Secretary of Defence Donald Rumsfeld has stressed that US troops could fight, if necessary, on two fronts, conventional wisdom in Washington does not accept this as a realistic option.

Mr Bush also faces other obstacles to ousting Mr Saddam. Over the past week, key US allies, including Britain, have urged the US to give UN weapons inspectors more time to complete their work, even if it means postponing the attack on Iraq for several months.

According to several news reports, British Prime Minister Tony Blair, Mr Bush's most loyal international ally, has argued against setting a firm deadline for Mr Saddam to give up his weapons.

Senior Bush officials also told the New York Times last week that Turkey, a key US ally in the Middle East, seems reluctant to allow US the use of its territorial bases from which to attack Iraq.

The Turks are concerned that a US invasion of Iraq could have disastrous effects on its security and economic interests, especially if the collapse of the central government in Baghdad led to the creation of a separate Kurdish state in the north which ended up providing aid to Kurdish secessionist groups inside Turkey. The US military would like to use Turkey to open a northern front as a staging area for a land offensive against Iraq. But the newly-elected Islamist government in Ankara has resisted American pressure and is lobbying other Middle East governments to press Washington not to attack Iraq.

There are also indications that the political crisis in Venezuela, including a strike in its oil sector, may also be complicating Washington's plan to attack Iraq. The crisis, which shut down Venezuela's oil industry, the fifth largest in the world, is creating energy shortages and pushing international oil prices upwards, according to chief economist Fareed Mohamedi at the Petroleum Finance Company.

The North Korean crisis, pressure from US allies, Turkish reluctance, and the Venezuelan oil strike are grist to the mill of those in the Bush administration who want to slow the inexorable roll towards war. But the final decision still lies with Mr Bush, whose rhetoric on Iraq continues to be as tough as ever.

www.austin360.com

MEXICO CITY (AP)--Mexico will raise its crude oil exports an expected 7 percent as of Feb. 1 as part of efforts by international producers to counter supply concerns in the market, the energy department said Monday.

The department said in a news release that measures taken in late 2002 haven't had the expected effect ``because of the increasing instability in world supply, with a consequent volatility in prices.''

Mexico plans to raise crude oil exports to 1.88 million barrels a day, compared with the target of 1.76 million barrels daily for January.

Monday's decision follows a meeting of the Organization of Petroleum Exporting Countries, in which members agreed to raise output quotas by 1.5 million barrels a day to 24.5 million barrels daily.

The OPEC meeting was aimed at addressing high crude prices, which have been pressured by the general strike in Venezuela and expectations of a U.S. attack on Iraq.

Mexico's energy department said the decision to raise exports complements the OPEC move, and will ``contribute to stabilizing the world oil market and guarantee a continuous and secure supply.''

State oil monopoly Petroleos Mexicanos, also known as Pemex, exported an average of 1.69 million barrels a day of crude oil in the second half of 2002, out of a production of around 3.2 million barrels daily.

Pemex plans to raise its crude production to 3.5 million barrels a day this year.

Mexico isn't a member of OPEC, but in recent years has cooperated on output levels with OPEC and with other independent producers, including Russia and Norway.

www.forbes.com Reuters, 01.13.03, 4:21 PM ET

WASHINGTON (Reuters) - A top leader of the Venezuelan opposition said Monday he opposed a move to include Brazil as part of a multinational effort to end a strike that has crippled the vital Venezuelan oil industry.

Political opponents of Venezuelan President Hugo Chavez have been striking for a month and a half, trying to force the populist leader to resign and call new elections. The shutdown has slashed Venezuela's oil exports and caused widespread food and fuel shortages, but Chavez insists he will not step down.

Brazil, a key trading partner with Venezuela, has been widely mentioned as a possible participant in the Group of Friends, a new diplomatic effort that aims to find a negotiated settlement to the crisis.

But congressman Timoteo Zambrano, a member of the Venezuelan opposition, said Monday that Colombia and Brazil should be excluded because they share borders with Venezuela. "By defining who takes part (in the mediation), a basic prerequisite, which has been the doctrine of the United Nations, is that territorial neighbors not participate in the Group of Friends," said Zambrano, who is in the United States to argue the opposition's point of view at the State Department and the United Nations.

That rule has "given good results so far. I don't think we should change it," Zambrano said, adding bordering nations share "geopolitical interests" that could "complicate decisions that need to be made."

The opposition veto would be a major blow to efforts by Brazil's new president, Luiz Inacio Lula da Silva, to mediate in the crisis, which has practically halted exports by the world's fifth largest oil exporter.

In December, Brazil dispatched a tanker with much-needed gasoline supplies to Venezuela, a move the opposition dubbed as "unfriendly."

Zambrano mentioned Mexico, Peru and Canada as nations that would be acceptable to the opposition as mediators, although he warned that the Group of Friends would have to act within the framework of a December resolution by the Organization of American States. That resolution backed the mediation of OAS Secretary-General Cesar Gaviria.

The Group of Friends is the latest initiative to jump-start talks that have so far been mediated by the OAS.

Richard Boucher, the spokesman for the State Department, said Monday the United States had not "tried to specify the countries that would be participants in this friends' group to support (the) secretary-general."

The OAS, the United States and others have been working toward finding an "electoral solution" to the Venezuelan problem but the opposition and the government have been deadlocked on the issue of early elections.

Zambrano, who is accompanied by union boss Carlos Ortega, a key figure behind the strike, said that they would also urge the United States to convoke a meeting of the hemisphere's foreign ministers.

Both are scheduled to meet with top State Department officials Monday afternoon.

www.forbes.com Reuters, 01.13.03, 3:50 PM ET

SANTIAGO, Chile, Jan 13 (Reuters) - Chile's peso <CLP=> firmed slightly on Monday, following the strengthening Brazilian real currency and Brazilian bonds, traders said.

The currency closed at 711.20/711.70 per U.S. dollar, an appreciation of 0.31 percent compared to 713.40/713.90 on Friday. The real held firm at 3.3 per dollar in early trade. The Brazilian currency is closely watched in Chile.

"Brazilian bonds have gained, which combined with stable markets has led to a strengthening in the peso," said Rodrigo Videla, finance manager of Tanner brokerage.

Brazilian bonds have strengthened since leftist President Luiz Inacio Lula da Silva took office on Jan. 1, buttressed by his pledges to stick to tight fiscal policy.

However traders said the peso's rise was somewhat curtailed by ongoing fears of rising oil prices due to the tense situation in the Middle East and the strike in the world's fifth oil-producing nation, Venezuela. Chile imports more than 80 percent of its crude.

"The markets of Brazil, Argentina and the United States are stable. What is still pressuring (the peso) is the tension over Iraq," said Videla.

Videla predicted that the currency would continue fluctuating between 710 and 715 pesos per dollar as long as there was tension over Iraq.

www.forbes.com Reuters, 01.13.03, 3:50 PM ET

SANTIAGO, Chile, Jan 13 (Reuters) - Chile's peso <CLP=> firmed slightly on Monday, following the strengthening Brazilian real currency and Brazilian bonds, traders said.

The currency closed at 711.20/711.70 per U.S. dollar, an appreciation of 0.31 percent compared to 713.40/713.90 on Friday. The real held firm at 3.3 per dollar in early trade. The Brazilian currency is closely watched in Chile.

"Brazilian bonds have gained, which combined with stable markets has led to a strengthening in the peso," said Rodrigo Videla, finance manager of Tanner brokerage.

Brazilian bonds have strengthened since leftist President Luiz Inacio Lula da Silva took office on Jan. 1, buttressed by his pledges to stick to tight fiscal policy.

However traders said the peso's rise was somewhat curtailed by ongoing fears of rising oil prices due to the tense situation in the Middle East and the strike in the world's fifth oil-producing nation, Venezuela. Chile imports more than 80 percent of its crude.

"The markets of Brazil, Argentina and the United States are stable. What is still pressuring (the peso) is the tension over Iraq," said Videla.

Videla predicted that the currency would continue fluctuating between 710 and 715 pesos per dollar as long as there was tension over Iraq.