Tuesday, January 28, 2003; Page E04

AES Corp. in Arlington said it will report a $3.5 billion loss for 2002, reflecting steep write-downs on major energy facilities in Britain and Brazil, and decisions to halt construction on two U.S. power projects, in California and Florida.

The company said the charges do not jeopardize its December agreement with investors and lenders to refinance $2.1 billion in bonds and bank debt until 2005, an extension AES required to stay solvent. "This is reflecting history," said Chief Financial Officer Barry J. Sharp. "There is no impact on our existing financing arrangements."

The fourth-quarter write-downs will total $2.7 billion ($4.96 a share), leaving AES with an annual loss of $6.51 a share for 2002. Excluding the charges, the company said it expects to report a profit from recurring operations of about $550 million (78 cents).

Analysts were not surprised by the news. For more than a year, the global energy company has battled to overcome losses from power operations in drought-plagued Brazil, and from its Drax power plant in Britain, where a long-term power sales contract was canceled last year because of falling electricity prices. The collapse of currencies in Argentina, Venezuela and Brazil, where AES was heavily invested, caused its debt payments to soar.

"It's not good, but it doesn't really add to their plight," said Christopher R. Ellinghaus, a financial analyst at Williams Capital Group. "Cash is the story."

AES said the parent company's operating cash flow last year totaled $1.1 billion, slightly higher than anticipated.

www.timesdispatch.com FROM WIRE REPORTS Jan 28, 2003

CARACAS, Venezuela - A two-month strike against President Hugo Chavez showed signs of waning yesterday as oil production rose and some businesses and schools prepared to reopen.

Crude oil output reached 966,000 barrels a day yesterday, according to striking executives at the state oil monopoly, Petroleos de Venezuela S.A.

That's just under a third of Venezuela's prestrike production but well up from a low of 200,000 during the strike.

El Nacional newspaper reported that the Wendy's International Inc.'s chain of fast-food restaurants will open its 56 locations in Venezuela this week.

An end to the strike, which has curtailed oil shipments from what was the world's fifth-largest supplier, would help bring down oil prices that have climbed to two-year highs.

Trading resumed on the Caracas Stock Exchange for the first time since the strike began Dec. 2.

Shutters at the Centro Lido shopping mall in the nation's capital went up, and owners of many malls, franchises and retailers said they would meet tomorrow to decide whether to open.

As the strike entered its ninth week, Chavez was preparing to impose currency exchange controls this week to limit the amount of foreign currencies Venezuelans can buy and stem a run on the bolivar, which lost a quarter of its value this year.

www.washingtonpost.com By Dana Milbank Washington Post Staff Writer Tuesday, January 28, 2003; Page A19

White House spokesman Ari Fleischer routinely condemns the use of "background" quotes but also speaks on background.

As President Bush flew to St. Louis on Air Force One last week, press secretary Ari Fleischer, giving his usual on-the-record briefing, was asked about popular support for Bush. "If you're interested, I'll be happy to go on background and discuss more data with you," he said.

Huh? Bush aides such as Fleischer routinely condemn the practice of quoting White House officials on a "background," or unnamed, basis. Fleischer has said he tells Bush's top aides they are free to speak to the media as long as they use their names, and he often challenges background attributions in news briefings to discredit reports on sensitive subjects.

But in the use of unnamed sources, the White House is on record for having it both ways -- not unlike previous White Houses. More often than not, the anonymous "senior administration officials" in stories are the same spokesmen and spin doctors -- Fleischer among them -- who normally speak on the record. They routinely speak unnamed, or "on background," with the full knowledge and blessing of the White House.

Sometimes there are genuinely unauthorized "background" quotations, often identifiable by their negative tone. Using broad definitions, there are perhaps 100 "senior administration officials" in the White House and many more throughout the bureaucracy -- a few of whom object to their boss's policies. Generally, though, the unnamed officials are speaking anonymously with the knowledge of their colleagues, to float a trial balloon or to convey an informal message or nuance -- sometimes political dirty work -- that they don't want on the record.

After Fleischer asked to go "on background" on Air Force One last week, the White House sent out two transcripts, one of Fleischer's briefing and one by an unnamed "senior administration official" who went deep into the political nitty-gritty. "I'm happy to talk to you about polls," the official said, "but White House policy is background."

White House policy is not always in favor of "background." In April of last year, when an unnamed official suggested in a report that the administration might support a coup in Venezuela, Fleischer challenged: "What's the name of the official? . . . The person obviously doesn't have enough confidence in what he said to say it on the record." And two months ago, when an unnamed official said Bush would issue an ultimatum to Saudi Arabia, Fleischer dismissed the "anonymous quote from somebody who didn't even put their name behind it."

In a meeting with reporters last week, Bush political adviser Karl Rove said Bush's plan to abolish the dividend tax was evidence that he's "a populist. Give him a choice between Wall Street and Main Street and he'll choose Main Street every time."

As evidence, Rove argued that "45 percent of all of the dividend income goes to people with $50,000-or-less incomes, family incomes. Nearly three-quarters of it goes to families with $100,000 or less family income."

Not exactly. It is true that 43.8 percent of tax returns with dividend income are from households with less than $50,000 in income and 73.8 percent of such returns are from households with less than $100,000. But that doesn't mean the little guy earning less than $50,000 gets "45 percent of all the income" or that the Main Street earners below $100,000 get "three-quarters" of dividend income.

In fact, those earning less than $50,000 get 14.7 percent of dividend income, and those earning less than $100,000 get 32.7 percent, according to a Brookings Institution/Urban Institute analysis. The former would get 6.8 percent of the benefit of Bush's dividend plan, while the latter would get 20.9 percent.

"The United Nations resolution did not put the burden of proof on the United States or the U.N. to prove that Iraq has these weapons," Defense Secretary Donald H. Rumsfeld said last week. "The U.N. resolution put the burden directly on Iraq to prove that it is disarming and that it does not have these weapons."

In other words, Iraq must prove a negative, and is refusing to do so. Almost a year to the day before Rumsfeld's remark, Fleischer was asked why the administration would not release details about meetings with energy companies such as Enron Corp. to prove that nothing untoward occurred. Fleischer replied: "You're asking us to prove a negative, and that's a road that we're not traveling."

During the Q&A last week, a reporter noted to Rove that "depending on the day your boss may refer to you as 'boy genius' or 'a flower that grows in cow patties.' "

Replied Rove: "More the latter than the former."

From a press pool report describing Bush's appearance last Wednesday at a roundtable meeting in St. Louis: "Bush asked Kathie Zuroweste, who runs a restaurant with her husband, 'What's your biggest problem?' She replied: 'Keeping people. They know they can make more on welfare than from working.' Bush then talked about the need to make the elimination of the death tax permanent."

www.nytimes.com By DAVID KOEPPEL

An American telecommunications executive on business in Venezuela is involved in an automobile accident that severely injures the other driver. Even though he is not at fault, he is arrested.

A businessman traveling in the Middle East is arrested at the airport for possessing a pornographic magazine.

A Connecticut dealer in meteorites is jailed in Brazil, accused of stealing a meteorite.

While the vast majority of business conducted by Americans abroad is relatively problem-free, security specialists, lawyers and diplomats all recommend taking great care in countries where navigating an array of obscure and often byzantine laws can be perilous. The State Department estimates that about 3,000 Americans are arrested in foreign countries every year, and most experts say the true figure is probably higher. In many cases, guilt or innocence is irrelevant.

"When you're traveling abroad for business or pleasure you need to understand something about the country's legal and cultural background," said Alexander Tabb, the associate managing director of the Security Services Group of Kroll Inc. "Just because you're an American doesn't make you safe, and it doesn't mean some cop won't beat the living daylights out of you."

Even innocent gestures like taking photographs can court trouble. And reckless driving or possession of even a small amount of drugs can land you in jail for years. Prison conditions in most developing nations are at best squalid and at worst extremely dangerous.

Ronald Farrell, 48, a buyer and seller of meteorites in Bethany, Conn., discovered how dangerous. Mr. Farrell spent 75 days in a Brazilian federal prison in 1997 after he and an associate were accused of stealing a meteorite from a museum, a charge he said was baseless.

Mr. Farrell said he was locked in an 18-by-20-foot foot cell with 16 other prisoners, including convicted murderers, given inedible meals and threatened by guards with beatings. In his second month of captivity, he said, he managed to bribe officials into giving him better food and letting him make cellphone calls to his wife back home. After his lawyers bought his freedom for $25,000, he said, he was forced to remain in Brazil for two months. He said that throughout the ordeal the American consulate offered little assistance.

"I still suffer from trauma when I travel," he said. "I can wake up in a strange hotel and think I'm still back in that Brazilian cell."

Kelly Shannon, a State Department spokeswoman, declined to comment on Mr. Farrell's case, but said that the help that consular officers could give to jailed Americans was limited. The officers generally visit the prisoners and can bring food, medication and reading material; make legal recommendations; insist on proper treatment; notify the prisoners' families; and file protests about prison conditions. But, she said, they cannot demand a detainee's release or provide a lawyer.

The State Department recommends that travelers check its Web site (www.travel.state.gov) for specific warnings and advisories.

While most business travelers are smart enough not to bring illegal drugs or firearms into foreign countries, they can be caught unaware by some local regulations. Many countries prohibit taking photos of government buildings and airports, for example; Ms. Shannon said a woman was detained in Zimbabwe for photographing a government mansion last year. And Japan bans such commonplace over-the-counter medications as Tylenol Cold Medicine and Nyquil.

Bruce McIndoe, chief executive of iJet, a Maryland company that provides legal, cultural and security information about 182 countries to mostly corporate and government clients, urges travelers to be alert to local mores, like whether police will seek a bribe or bristle at one. In Thailand, he said, it is not unheard-of for drugs to be planted in a traveler's suitcase.

About the worst thing that can happen is to be arrested for drug possession. Scores of Americans have been imprisoned in Thailand on drug charges in recent years, for example, most of them claiming they were coerced or duped.

In one highly publicized case, Stephen Roye, an American journalist, was arrested in 1994 at the Bangkok airport and charged with possessing about six pounds of heroin. Mr. Roye, now 57, said he had been doing research for an article on the drug trade and was forced into concealing the contraband in his luggage by heroin smugglers who threatened to kill his mother and son. He received a life sentence that was later commuted to 40 years; last month, he was allowed to return home and complete his sentence in the United States.

Richard Atkins, the vice president of International Recoveries, a Philadelphia organization that works with Americans arrested abroad, says a more common risk is being detained in car accidents, especially if there are serious injuries. Drivers and passengers alike can "wind up in a hellhole of a prison cell," Mr. Atkins said.

"Investigations can sometimes last several months," he added.

He strongly recommends carrying a charged cellphone and having adequate travel insurance that includes a 24-hour legal-consultations service. He recalled a client who was arrested several years ago in Venezuela after his car was struck in the rear by another driver, who was seriously injured. The client, an American telecommunications executive, grabbed his cellphone and called his travel-assistance company's hot line even as he was being taken away by police, Mr. Atkins said. The company then called International Recoveries with his insurance information, the name of co-workers and Venezuelan officials to contact immediately, he said. The client was released from custody within several hours.

Other experts recommend finding a reliable and licensed car service in unfamiliar countries. Gladson I. Nwanna, a finance professor at Morgan State University in Baltimore and author of "Americans Traveling Abroad: What you Should Know Before You Go" (World Travel Institute, 1996), says that in any third world country it is a good idea to check in with the American consulate and with the country's tourism ministry on potential pitfalls.

"Bribery is a common way of doing business in many parts of the world," Dr. Nwanna said. "But if you give money to the wrong person, it can get you into trouble."

Giving it to the right person does not have to be expensive, though. John Briley, the senior managing editor for Ijet and a freelance writer, said $5 freed him from a speeding charge in Panama and $10 bought off a border guard when he wandered into Costa Rica by mistake.

Mr. Tabb, the Kroll official, advises Americans who think they are about to be arrested abroad to keep a cool head — and a soft voice. "Let them know you're an American citizen and ask to speak to the consulate," he said. "Don't be demanding or arrogant. The squeaky wheel will not get the grease."

www.malaysiakini.com Analysis Ash Pulcifer 11:48am Tue Jan 28th, 2003

Most people are aware that oil will play a role in the Bush administration's possible invasion of Iraq, but many do not quite understand how. The common assumption is that the US military will somehow "steal" Iraq's oil. This is simply not the case.

The reason that oil plays a part in any future conflict with Iraq has to do with the amount of oil available oún the free market. oún the free market, whenever there is an increase in supply of a product, the price of that product generally decreases. Such is the hope of the Bush administration with regard to the price of oil should they remove Saddam Hussein from power.

Currently, Iraq is allowed to export some two million barrels of oil per day (bpd), which finds its way into the global marketplace; shortly after the Gulf War, Iraq's oil exports were restricted as part of the United Nations oil-for-food programme. Before the Gulf War began, Iraq was exporting 3.5 million bpd, meaning at least another 1.5 million barrels of oil were being released into the global marketplace each day as compared with two million bpd now. If Iraq were to oúnce again rise to that level of exports, there would be more oil supply in the global market and this would cause a drop in oil prices.

The oúnly way for Iraq to oúnce again export 3.5 million bpd will be for the United Nations sanctions to end. oúnce the sanctions end, Iraq will be able to export oil at their full capacity as they did before the Gulf War. However, because the United States and Britain believe strongly that the sanctions should remain in place until Saddam Hussein is removed from power, they have looked for other solutions to solve this problem of high oil prices. The Bush administration decided the sanctions were not succeeding in removing Hussein and it was time they just removed him themselves, putting their own friendly government into power and thus putting an end to the need for sanctions. Oil-savvy administration

This is oúne of the central ideas behind the Bush administration's wish for "regime change". High oil prices damage the economies of countries that are dependent oún foreign oil, such as the United States. If oil prices were to drop dramatically, it would be as if a great weight had been lifted off the chest of the US economy, possibly leading to a global economic upturn. The positive result of "regime change" in Iraq to the US economy cannot be underestimated.

See, the Bush administration has far loftier goals in mind when it comes to Iraq. Maybe it's because the central thinkers in the administration were at oúne time involved in the oil industry: President George W Bush was a senior executive in Arbusto Energy/Bush Exploration oil company from 1978-1984, and the senior executive of the Harken oil company from 1986-1990; Vice President Dick B Cheney was the chief executive of the Halliburton oil company from 1995-2000; and National Security Advisor Condoleezza Rice was a senior executive with the Chevron oil company from 1991-2000. So this administration knows its oil. And because of that, they quite ambitiously say, "Why not increase Iraq's oil capacity to a level higher than ever before, thus adding even more supply to the oil market?"

And that is what they intend to do. The new government that the US installs will want to increase production because that will result in more exports and thus more money for the Iraqi economy. But the oúnly way to increase production is to incorporate western technology into oil drilling practices.

Good for US economy

That's where the American oil companies come in. The American oil companies will be needed to rebuild and update Iraq's oil infrastructure in order to increase their oil output. This is why American oil companies are hoping that the war in Iraq will materialise. As we have seen, they have well-placed friends in the administration and just might get what they want.

It is estimated by energy analysts that with the assistance of US oil technology, Iraq will be able to increase production to five million bpd. That is at least three million more barrels per day than they are exporting now. This will provide more supply to the oil market depressing oil prices, thus providing a relief to the US economy.

There's no need to take my word for it. Bush's former top economic adviser, Larry Lindsey, stated last fall: "When there is regime change in Iraq, you could add three million to five million barrels [per day] of production to world supply. The successful prosecution of the war would be good for the economy."

Couldn't be put simpler than that. Economists predict that after a successful Iraq invasion, the price of oil will drop from the current US$30-US$34 a barrel to US$15-US$20 a barrel; possibly a 50 percent decrease. The effects of this oún the US economy, which is heavily dependent oún oil, will be dramatic.

Of course, all of this will oúnly become possible should the war in Iraq be a successful military and political operation. There are plenty of problems that can arise in the prosecution of the war that could cause an opposite effect, drastically increasing oil prices due to any instability in oil output from the Middle East. With the current crisis in Venezuela, a major exporter of oil to the United States, the Bush administration won't have that much leeway in avoiding an economic disaster should their plans backfire. – YellowTimes.org

ASH PULCIFER, a lifelong activist for international human rights, lives in the United States. Ash finds it unacceptable that the world often turns its back to those less fortunate members of our species who are forced to endure poverty and civil strife.