usinfo.state.gov 24 January 2003 State Department Briefing Transcript

(Statement/assets blocked of two designated terrorists, Iraq, Russia, Turkey, North Korea, Switzerland, Department/reaction to Rumsfeld's comments, Africa, Brazil, Pakistan, Colombia, China, Yugoslavia, Cote D'Ivoire, consular affairs, Israel/Palestinians) (5830) State Department Spokesman Richard Boucher briefed. Following is the transcript of the briefing:

(begin transcript)

U.S. DEPARTMENT OF STATE DAILY PRESS BRIEFING FRIDAY, JANUARY 24, 2003 BRIEFER: Richard Boucher, Spokesman (ON THE RECORD UNLESS OTHERWISE NOTED) 1:00 p.m. EST

Index

STATEMENT Assets Blocked of Two Designated Terrorists

IRAQ Inspectors' Report / Iraq Cooperation Iraqi Weapons of Mass Destruction Hidden in Syria? Foreign Secretary Straw and Secretary Powell's Discussions about the Security Council Iraq is Failing to Disarm Peacefully

RUSSIA Russia Set Against Security Council

TURKEY U.S. Reaction to Istanbul's Comments on Iraq

NORTH KOREA U.S. Supports Talks Between North and South Korea

SWITZERLAND Secretary Powell's Speech in Davos Richard Haass Comments in Davos

DEPARTMENT Reaction to Secretary Rumsfeld's Comments

AFRICA Article 98 Agreement / Secretary Powell's Meeting with President Guelleh of Djibouti

BRAZIL Secretary Powell's Meeting with Foreign Minister Amorim

PAKISTAN Ambassador Powell's Remarks

COLOMBIA Update on the Two Missing Journalists / Stopping Terrorist Groups

CHINA Tibetan Death Sentence / Bombings

YUGOSLAVIA Pierre Prosper's Urges Cooperation with the International Criminal Tribunal

COTE D'IVOIRE Peace Agreement Signed in Paris

CONSULAR AFFAIRS Visa Processing Backlog Affects Businesses

ISRAEL / PALESTINIANS U.S. Position on Elections

www.granma.cu Havana. January 24,  2003 BY OMAR PERDOMO -Special for Granma International -

WHAT makes the 12th International Book Fair of Havana (January 30 to February 9, in the San Carlos de la Cabaña complex) different from previous years, is its extension to 29 other Cuban towns, making it the only one of its kind in the world.

Taking the fair outside of the capital is nothing new as, at President Fidel Castro’s suggestion, last year’s event traveled to 19 towns up and down the country. This year a further 11 locations have been included and following its stint at the Morro-Cabaña complex, it will move onto Pinar del Río, followed by Consolación del Sur, San Antonio de los Baños, San José de las Lajas, Artemisa, Matanzas, Cárdenas, Cienfuegos, Cumanayagua, Santa Clara, Sagua de la Grande, Sancti Spíritus, Trinidad, Ciego de Avila, Morón, Camagüey, Nuevitas, Florida, Las Tunas, Puerto Padre, Holguín, Moa, Bayamo, Manzanillo, Santiago de Cuba (here, as in 2002, the fair will be brought to a close), Palma Soriano, Guantánamo, Baracoa, and Nueva Gerona, (capital of the Isle of Youth special municipality).

Together with the new locations, the number of foreign exhibitors, exhibition areas and foreign and Cuban publishing houses participating in the event has risen this year. Bolivia, Colombia, Ecuador, Peru and Venezuela (Andean Community members and guests of honor at this year’s event) as well as Mexico and Spain, have reserved display stands of up to 360 square meters. Likewise, our own Editorales Cubanas is enlarging its stand from last year’s 120 square meters to 180 square meters.

One of the special attractions of the International Book Fair of Havana & Cuba is the presence of authors from other nations. This year, two important U.S. intellectuals will attend: William Kennedy (Albany, New York, 1928), writer, scriptwriter, professor of literature and playwright who won the coveted Pulitzer Prize in 1983 for his novel Ironweed. The Arte y Literatura publishing house is launching his new novel Roscoe, one the Top Ten books of 2002, according to a survey by The New York Times Book Review; and Russell Banks (New Hampshire, 1940) whose novel Affliction, one of the most relevant works in the contemporary U.S. literary panorama, will also be presented at the fair.

Other authors invited to the event include Justo Jorge Padrón and Fernando Aínsa (Spain), Ecuadorian Jorge Enrique Adoum (with his novel De cerca y de memoria (Close Up and From Memory) and whose first work was also launched by Arte y Literatura), Luis Britto García (Venezuela), William Ospina (Colombia), Miguel Bonasso (Argentina), Hildebrando Pérez (Peru), Luis Suárez (Mexico) and Rigoberta Menchú, Guatemalan Nobel Peace Prize winner.

The literary program also includes a variety of new Cuban publications including works by Nicolás Guillén, Cintio Vitier, Pablo Armando Fernández (to whom this year’s Fair is dedicated), Lisandro Otero (National Literary Award winner of 2002), Fina García-Marruz and Nancy Morejón.

asia.reuters.com Fri January 24, 2003 07:49 PM ET By Arshad Mohammed and Pascal Fletcher

WASHINGTON/CARACAS, Venezuela (Reuters) - The newly formed six-nation "Group of Friends" agreed on Friday to send a high-level team to Caracas next week to try to find a solution to the political crisis that has crippled Venezuela's economy.

Brazilian Foreign Minister Celso Amorim, speaking for the group that includes the United States, Brazil, Mexico, Chile, Spain and Portugal, urged Venezuela's opposition and government to curb violence in the world's fifth-largest oil exporter.

Opponents of Venezuelan President Hugo Chavez have staged a 54-day strike, slashing Venezuela's oil exports, in an effort to pressure the populist president to resign and hold early elections. Chavez has refused to step down.

"The mission is going to discuss concrete measures like, for example, how to diminish the risk of violence ... and the process of moderating the rhetoric," Amorim told reporters after the group's first meeting, held at the Organization of American States headquarters in Washington.

He said the team, likely to arrive on Thursday, will also explore options proposed by former U.S. President Jimmy Carter: one for an amendment to Venezuela's constitution to trigger early elections and the other for an Aug. 19 referendum.

The "Group of Friends" was formed last week to support OAS Secretary-General Cesar Gaviria's more than two-month effort to broker a deal between the two sides, which appear far apart.

The polarized positions and increasing outbreaks of violence have added urgency to international peace efforts.

'WORSE BY THE DAY'

"Tragically ... the situation in Venezuela grows worse by the day," Secretary of State Colin Powell told the group according to a text of his prepared remarks.

Venezuelan opposition negotiators told reporters in Washington that any accord on elections must also include an agreement to restore to their jobs striking executives and employees of the state oil company PDVSA. Otherwise, they said, the grueling strike could not be lifted.

Chavez announced Thursday his government had sacked 3,000 PDVSA employees involved in the shutdown and said he was not prepared to negotiate with "terrorists."

"There can be no way out of this crisis based solely on elections. It has to include a solution to the oil issue," Timoteo Zambrano, a leader of the Coordinadora Democratica opposition coalition, told a news conference in Washington.

The opposition negotiators had earlier met with foreign ministers of the "friends" group.

The opposition shutdown has throttled oil output by South America's largest oil producer, pushing up world prices. It has also triggered a fiscal crisis for the Venezuelan government, forcing it to suspend foreign exchange trading and cut back budget spending by 10 percent.

But, in a sign that Chavez is making some headway in his efforts to break the strike, oil production and exports have been rising again.

Still, oil exports, the country's economic lifeblood, were only a quarter of normal levels and striking state oil executives voted Friday to maintain the stoppage.

Venezuelan oil supplies to the United States, normally more than 13 percent of total U.S. oil imports, have been disrupted by the strike, just when the United States is preparing for a possible war on Iraq.

Opposition negotiators said they hoped the "Group of Friends" could pressure Chavez to accept a negotiated electoral solution to end the crisis, which has raised fears of a violent, uncontrollable internal conflict in Venezuela.

Chavez, a former paratrooper who survived a brief coup last year, is resisting calls for early elections and has vowed to beat the strike. He accuses his opponents of trying to topple him from power by wrecking the economy.

His opponents say the president, who Thursday threatened to close hostile private television channels and take over banks which joined the strike, is ruling like a dictator. They accuse him of trying to install Cuba-style communism in Venezuela.

Chavez has already said he is willing to abide by the result of a binding referendum on his rule which the constitution foresees after Aug. 19, half way through his current term due to end in early 2007.

www.accessatlanta.com [The Atlanta Journal-Constitution: 01/26/03] By DONALD RATAJCZAK For the Atlanta Journal-Constitution

Amid reviewing last year's forecast, discussing President Bush's stimulus package and assessing the problems in Georgia at the beginning of Gov. Sonny Perdue's tenure, I forgot to discuss my own outlook for 2003. How can I be graded if I do not hand in my homework?

Of course, I probably was trying to avoid a very difficult task. Three major "geopolitical" uncertainties cloud the horizon. Venezuelan oil has been unavailable for about eight weeks, and the promised additional oil from the Middle East is nearly a month away. With cold weather descending, relief from higher energy prices will not happen before we begin to see dogwoods.

An Iraq conflict probably will lead to oil field destruction in that country (see Kuwait 12 years ago) as well as immeasurable economic and human costs. Even that Venezuela makeup oil from the Middle East could stop if the conflict turns nasty.

Then, there is North Korea and what must be done in that part of the world to maintain stability but register firmness. At a minimum, some diplomatic magic is needed there.

To add to the uncertainties, tax policy will be changed but portions of the proposal, such as the dividend exclusion, are in serious jeopardy. Even the president is ignoring dividend exclusions as he attempts to sell the package as a small-business aid.

Unfortunately, these uncertainties are restraining the decision-making of corporations. Three years ago, Intel's capital spending was $7.1 billion. Projection capital spending for 2003 is only $3.5 billion.

Parked planes, unfinished wireless networks, abandoned power plants and rapidly emptying office space attest to a serious glut of resources. Profits are up about 9 percent in the fourth quarter, but from a 21 percent decline in the previous year.

To further dampen spirits, auto sales are losing their responsiveness to new incentives; the average worker's raise is being spent at the gasoline pump and with the fuel oil deliverer; the strong housing market already is ahead of household growth; and imports are overwhelming local producers. As we see in Georgia, local economies face higher taxes, lower government pay and reduced services.

The outlook for the next six months is unusually cloudy, but I do see the sun shining before year's end. With no more hedging, here is my U.S. forecast for the next 12 months:

Consumer spending, housing and inventory-building will sustain activity through the spring. By then, more clarity will surface on the geopolitical issues. Also, capacity no longer is growing. If jobs begin to grow by summer, as I expect they will, corporate spending will begin to rebound.

Furthermore, the drastic slide in the dollar against European currencies will lead to American goods being sold there. Asia will be more difficult, but our trade balances should begin improving later in the year. And some tax stimulus will be forthcoming. (Given the uncertainties, stimulus is needed and ought to happen sooner rather than later.)

After less than 1 percent real growth last fall, I expect GDP to slowly gain momentum through a 2 percent growth rate in the winter and spring to more than 3 percent in the summer and almost 4 percent as the year ends.

Inflation will remain muted except for oil and some meat products. Consumer prices grew only 2 percent at annual rates in the past three months but should spurt to nearly 4 percent in the winter. Gains of 2 percent to 2.5 percent should be the norm for the remainder of the year, with the possibility of slightly less than 2 percent gains as gasoline prices subside during the summer.

Until the fourth quarter, employment growth will not be enough for the Federal Reserve to even think about raising interest-rate targets. If the current uncertainties prove too constraining, they may even lower rates this winter. Long-term rates will remain near current levels (4 percent yield on the 10-year government note) until activity begins to hum late in the year. Mortgage rates should remain under 7 percent into 2004.

Uncertainty is not the friend of stock investors. Although seasonal factors currently favor equity holdings, the "geopolitical" issues are canceling out those positive money flows. That 9,000 Dow hurdle may not be breached until summer and then only briefly. A more sustained rally to challenge 10,000 is likely late in the fall.

Unemployment rates should rise to 6.5 percent before beginning to subside late in the year. Wage gains will remain anemic, at 3 percent in most shops and under 4 percent in most offices.

Despite this less-than-robust economic recovery, some healing will be accomplished. Households will be saving about 6 percent of their incomes after the next reduction in tax liabilities. Their balance sheets also will continue the improvement that started last fall. American industry will be competitive in Europe and will be fighting back against competitive pressures in Asia.

Indeed, the weak dollar may aid healing in South America, although much more than economics is needed in Venezuela and Colombia.

New capital will displace older systems, especially as corporate profits approach their 2000 levels by the end of 2003.

Thus, I see the glass as half full with a water source nearby. But we need to hold firmly onto that glass as we plow through geopolitical problems in the first half of this year.

Donald Ratajczak is a regents professor of economics emeritus at Georgia State University.

www.sfgate.com Friday, January 24, 2003

(01-24) 15:07 PST MEXICO CITY (AP) --

Mexican stocks closed lower Friday in line with U.S. declines as investors pulled out of the market ahead of expectations of an American attack on Iraq.

Mexico's key IPC index closed down 41.88 points or 0.7 percent to 6,012.56. Volume totaled a thin 45.6 million shares worth 585.2 million pesos.

The peso tapped a new historical closing low Friday on the war jitters. Mexico depends on U.S. consumers to purchase almost 90 percent of its exports. Attacks in the Middle East would likely further bruise the U.S. economy and consumer spending.

Equity decliners included brewer Grupo Modelo's C shares, which lost 2.5 percent to 23.78 pesos, and financial group BBVA-Bancomer's B shares, which dropped 1.6 percent to 8.11 pesos.

SAO PAULO, Brazil (AP) -- Brazil's main stocks index slumped to its lowest level since mid-December, as investors fled local equities on fears an American-led invasion of Iraq is drawing ever closer.

The Sao Paulo stock Exchange's leading Ibovespa index tumbled 3.3 percent to end at 10,783, its lowest close since Dec. 16.

The submission of a report on the state of Iraq's weaponry -- to be submitted by U.N. inspectors Monday -- could be a watershed moment in the standoff between Iraq and the United States.

Markets, worried that a war in Iraq could further feed risk aversion among equities investors, were anxious ahead of the report's release, traders said.

War in Iraq could also endanger Brazil's economy. The local currency has already depreciated significantly, falling Friday to its weakest level in more than a month. And an extended spike in crude prices could feed into inflation for net oil importers like Brazil.

Oil giant Petrobras, which could be hurt by the cost of importing more expensive crude, fell 4.9 percent to 45.11 reals.

Utilities Eletrobras and Eletropaulo also declined, shedding 5.9 percent and 3.4 percent to finish at 20.13 reals and 28.10 reals, respectively.

BUENOS AIRES, Argentina (AP) -- Argentine stocks closed down Friday, despite the decision by the International Monetary Fund's executive board to approve a debt rollover accord for the South American nation.

Thee IMF approved a deal that will roll over of some US$6.8 billion in debt payments the South American nation owes the international lender between January and August.

The deal could open the way to similar rollover accords for Argentina with the World Bank and the Inter-American Development Bank.

Analysts said the negative reaction of blue chips came because traders had already discounted the IMF accord at the turn of the year and were now looking to other themes.

In particular traders were concerned by the battle within the Peronist party over whether to hold a primary vote.

On Friday, a Peronist Congress organized by President Eduardo Duhalde decided to scrap the ballot, as the head of state wants.

But on Thursday, a federal judge ordered the Peronists to hold the primary, responding to a legal claim demanding primaries go ahead by Duhalde's party rival, former President Carlos Menem, who is seeking a third term in office.

The blue chip Merval Index closed down 10.34 points, or 1.81 percent, to 557.82 points. The broader General Index was down 355.95 points, or 1.31 percent, to 26,685.00 points. Volume was a modest ARS44.94 million.

Dragging the Merval down once again was energy giant Perez Companc. The share, which accounts for around one quarter of the market, was 4.16 percent lower at 2.30 pesos. The company continues to be negatively affected by the crisis in Venezuela, where the company produces much of its oil.

Carmaker Renault was one of the few blue chips heading higher. It closed up 1.61 percent to 1.26 pesos.

SANTIAGO, Chile (AP) -- Chilean share prices fell across the board Friday in response to the steep decline in U.S. share prices.

The blue-chip IPSA index ended down 1 percent at 993.97 points, from 1,003.95 points, and erasing all gains made in the three weeks of trading since the beginning of the year.

The narrower Inter-10 index of more liquid, internationally traded Chilean shares fell more steeply, dropping 1.4 percent to 100.26, setting the index back almost to where it stood Jan. 2. The broader-based IGPA index slipped to 4,985.22 from 5,000.97, backtracking 0.3 percent. Volume was low at 5.47 billion pesos.

Telecommunications company CTC lost 1.8 percent.