www.stltoday.com By Chern Yeh Kwok Of the Post-Dispatch 02/15/2003 04:00 PM

Federal Reserve Chairman Alan Greenspan testifies before a Joint House Economic Committee hearing about the state of the economy in November (File photo)

Federal Reserve Chairman Alan Greenspan, in testimony to Congress last week, pointed to nervousness over Iraq as the major factor slowing growth in the U.S. economy. But some private economists warn that resolving the uncertainty isn't the cure-all.

Oil prices would dip, but with the continued threat of terrorism, prices might not fall so sharply as previously thought, they say. The economy still must adjust to the overinvestment of the late 1990s and the bursting of the equity bubble.

If Iraq were no longer an issue, the uncertainty could shift to North Korea, where tensions with the United States have escalated in recent weeks.

"Right now, everyone is expecting, post-Iraq, everything is going to be peace and tranquillity," said Patrick Fearon, an economist at A.G. Edwards & Sons in St. Louis. But "some time after the Iraq situation, the administration could then start putting military pressure on North Korea."

As the nation appears to inch closer to war, a shortage of spare capacity in the commercial oil markets also is worrying analysts and economists. "Oil-price shocks have been associated with at least three of the last five recessions," Yale economist William Nordhaus said in a recent study of the economic effects of an Iraq war.

For months, businesses, investors and consumers have weighed spending decisions against the potential for a U.S. invasion of Iraq. The uncertainty has cast a pall on the economy, analysts say.

Fear that a conflict could spread to top oil-producing Middle Eastern countries has led to a more than 35 percent spike in the cost of crude oil, to about $37 a barrel, in the last three months. Along with the likelihood of swooning consumer confidence from a war, that and other factors have depressed stock prices. The Standard & Poor's 500 index closed Friday at 834.89, down more than 8 percent this year.

Certainly, spending on weapons would boost some sectors of the economy. Yet, such spending would have a largely negative economic effect, analysts say.

"If you spend on infrastructure, you've made a capital investment," said Sherman Katz, a fellow at the Center for Strategic and International Studies, a Washington think tank. "When you've spent on weapons, it's a depleting asset."

Unlike the Persian Gulf War in 1991, when several allies helped to pay the costs, the United States likely would foot most of the bill for another war. Nordhaus, in his study released in December, estimated that the cost of war could range from $50 billion to $140 billion; the first Persian Gulf War cost $80 billion.

Post-war occupation and Iraq's reconstruction could cost even more, Nordhaus said. Factoring in those costs, Nordhaus estimates that total spending would range from $99 billion to $1.9 trillion, depending on the outcome of the conflict.

"The impact on budget deficits and interest rates could be high," Sung Won Sohn, chief economist at Wells Fargo & Co. in Minneapolis, wrote in a research report released Thursday. Sohn estimates the cost of a "drawn-out war" at $650 billion.

But those effects are dwarfed by the implications for oil prices and the global economy, analysts say.

Greenspan, in his testimony last week, said uncertainty about the war has blurred the economic outlook. Until there's a resolution, it's unclear if the economy could grow more rapidly - "our most probable expectation" - or if the economy's problems are deeper, he said.

Some economists and military analysts, however, have tried to quantify the effects of the potential outcomes. They assume four scenarios: no war, a quick and decisive U.S. victory, a war with moderate complications and a war that drags on for up to six months.

The favorable outcomes would be no war or a short, decisive conflict, according to their analyses. Most economists assume a short and decisive war would be most likely.

If war is averted, crude-oil prices could fall below $25 a barrel by June and move slightly upward in coming years, according to analyses. If the war is swift and decisive, oil prices could spike higher early in the conflict and then decline sharply.

But if the conflict is prolonged, rising oil prices easily could tip the U.S. economy back into recession, economists say.

A three-month war could result in crude oil spiking above $40 a barrel. A war that stretches up to six months could push crude-oil prices to $100 a barrel, a scenario that would be similar to the 1979 oil shock, according to economists at Morgan Stanley Dean Witter. "Oil prices would be so high that a global recession would be unavoidable," two Morgan Stanley economists, Eric Chaney and Richard Berner, wrote in December.

Rising oil prices could hurt consumer spending, raise business costs, lead to inflation and further slow the economy's growth.

During the Persian Gulf War, the price of crude oil topped out at $47 a barrel.

What's different this time is the lack of spare capacity in the global oil markets, said Larry Goldstein, president of the Petroleum Industry Research Foundation, a New York-based trade group.

Iraq exports about 1.5 million to 2 million barrels of oil a day; daily global demand is 75 million barrels. So, seemingly, Iraq exports an "irrelevant" amount, he said.

But strikes by oil workers in Venezuela have led to low global oil inventories, Goldstein said. The South American country is producing at only about 40 percent of its capacity.

"Even if all the oil producers produce at capacity, you'd be just barely short of having enough production" in case of war, he said. "There would be no cushion for the next surprise."

Reporter Chern Yeh Kwok: E-mail: cykwok@post-dispatch.com Phone: 314-340-8206

www.sundayherald.com By John Phelps

DIAGEO, Scotland's biggest whisky producer, is set to disclose a sharp drop in business in major export markets when chief executive Paul Walsh rolls out its latest figures on Thursday.

'Apart from the USA, Diageo can normally take comfort from the fact that it has about 14 other markets each capable of producing profits of more than £15 million,' said analyst Nigel Popham at Teather & Greenwood. 'That won't be the case this time round.

'The situation in Latin American has deteriorated -- sales in Venezuela will be dire -- while I am also expecting poor news on Spain and to a lesser extent on France and Japan.'

He is also braced for news of a significant downturn in the £100m-plus Taiwanese market after a spectacular own-goal when the company's advertising agency J Walter Thompson briefly ran an 'amusing' advert questioning the quality of Taiwanese goods.

Diageo employs 4000 people in Scotland where its 29 company-owned distilleries produce top-selling brands such as Johnnie Walker, Bell's, and Smirnoff. They are overseen by Allan Burns, Diageo Scotland director, who in December culminated a £25m investment programme with the opening of the world's fastest whisky bottling line in Shieldhall, Glasgow.

But more than 85% of Scotch whisky production is sent overseas and the current downturn in exports is likely to be shared by others in the industry.

The Scotch Whisky Association is still compiling its 2002 figures but said it expected to see a downturn on the £2.3 billion export sales achieved the previous year.

'We still hope to see sales above £2bn for the 10th successive year,' said a spokesman.

However, there are fears that this is unlikely unless the global economy improves. Diageo shares were testing new lows ahead of Thursday's announcement and slipped to 572p last week, down from 940.5p in the past year.

Analysts say the results will be clouded by a number of special factors following last year's acquisition of the Seagram business, which means that Diageo now owns 18 of the world's top 100 selling drinks brands which also include Captain Morgan, Guinness, Baileys and Tanqueray.

These exceptional items include a possible write-off of as much as £1bn following the disappointing price obtained for Burger King last December and analysts expect the company to also confirm its pension funds were in actuarial deficit to the tune of another £1bn at the end of last year.

But on a straight-trading basis analysts expect the group to announce half-year profits of around £1.25bn and have pencilled in an increase in full- year figures from £2.04bn to around £2.2bn following the Seagram acquisition.

These forecasts are dependent on no further deterioration in the global economy as a result of the Middle East situation and the relative stability in foreign exchange markets -- Diageo 'hedges' its exposure to the US dollar and other important currencies but it is understood that a number of these protective contracts come up for renewal in the summer.

Analysts will also be scrutinising the performance of the group's range of ready-to-drink products among signs that Smirnoff Ice has been feeling the heat of increasing competition from newcomers and adverse publicity in the USA.

RTDs are now an important aspect of Diageo's portfolio with sales jumping from £470m to £814m during the year to the end of last June but the company warned in October that growth had slowed.

The situation has been complicated in the USA where the group has avoided higher taxes by using a malt base for its RTDs rather than spirits.

This has led regulators to carry out a review to see whether consumers are being misled by the branding of Smirnoff Ice in the USA, where it contains no vodka .

Diageo insists it is relaxed because the alcohol content is the same as stated on the label, even though regulators could insist on changes that would lead to a relaunch or higher prices. Diageo had to withdraw its rum-flavouredCaptain Morgan Gold after poor sales, resulting in a £42m write-off.

The company last week undertook to market its products responsibly in meetings with the World Health Organisation in Geneva. Walsh said: 'We are proud of our brands. We want Diageo's promotional activities to be recognised as the best in the world. That means delivering great results for our brands in a way that sets the industry standards for responsible marketing.'

What do you think? Have your say in the forum

www.stltoday.com By Chern Yeh Kwok Of the Post-Dispatch 02/15/2003 04:00 PM

Federal Reserve Chairman Alan Greenspan testifies before a Joint House Economic Committee hearing about the state of the economy in November (File photo)

Federal Reserve Chairman Alan Greenspan, in testimony to Congress last week, pointed to nervousness over Iraq as the major factor slowing growth in the U.S. economy. But some private economists warn that resolving the uncertainty isn't the cure-all.

Oil prices would dip, but with the continued threat of terrorism, prices might not fall so sharply as previously thought, they say. The economy still must adjust to the overinvestment of the late 1990s and the bursting of the equity bubble.

If Iraq were no longer an issue, the uncertainty could shift to North Korea, where tensions with the United States have escalated in recent weeks.

"Right now, everyone is expecting, post-Iraq, everything is going to be peace and tranquillity," said Patrick Fearon, an economist at A.G. Edwards & Sons in St. Louis. But "some time after the Iraq situation, the administration could then start putting military pressure on North Korea."

As the nation appears to inch closer to war, a shortage of spare capacity in the commercial oil markets also is worrying analysts and economists. "Oil-price shocks have been associated with at least three of the last five recessions," Yale economist William Nordhaus said in a recent study of the economic effects of an Iraq war.

For months, businesses, investors and consumers have weighed spending decisions against the potential for a U.S. invasion of Iraq. The uncertainty has cast a pall on the economy, analysts say.

Fear that a conflict could spread to top oil-producing Middle Eastern countries has led to a more than 35 percent spike in the cost of crude oil, to about $37 a barrel, in the last three months. Along with the likelihood of swooning consumer confidence from a war, that and other factors have depressed stock prices. The Standard & Poor's 500 index closed Friday at 834.89, down more than 8 percent this year.

Certainly, spending on weapons would boost some sectors of the economy. Yet, such spending would have a largely negative economic effect, analysts say.

"If you spend on infrastructure, you've made a capital investment," said Sherman Katz, a fellow at the Center for Strategic and International Studies, a Washington think tank. "When you've spent on weapons, it's a depleting asset."

Unlike the Persian Gulf War in 1991, when several allies helped to pay the costs, the United States likely would foot most of the bill for another war. Nordhaus, in his study released in December, estimated that the cost of war could range from $50 billion to $140 billion; the first Persian Gulf War cost $80 billion.

Post-war occupation and Iraq's reconstruction could cost even more, Nordhaus said. Factoring in those costs, Nordhaus estimates that total spending would range from $99 billion to $1.9 trillion, depending on the outcome of the conflict.

"The impact on budget deficits and interest rates could be high," Sung Won Sohn, chief economist at Wells Fargo & Co. in Minneapolis, wrote in a research report released Thursday. Sohn estimates the cost of a "drawn-out war" at $650 billion.

But those effects are dwarfed by the implications for oil prices and the global economy, analysts say.

Greenspan, in his testimony last week, said uncertainty about the war has blurred the economic outlook. Until there's a resolution, it's unclear if the economy could grow more rapidly - "our most probable expectation" - or if the economy's problems are deeper, he said.

Some economists and military analysts, however, have tried to quantify the effects of the potential outcomes. They assume four scenarios: no war, a quick and decisive U.S. victory, a war with moderate complications and a war that drags on for up to six months.

The favorable outcomes would be no war or a short, decisive conflict, according to their analyses. Most economists assume a short and decisive war would be most likely.

If war is averted, crude-oil prices could fall below $25 a barrel by June and move slightly upward in coming years, according to analyses. If the war is swift and decisive, oil prices could spike higher early in the conflict and then decline sharply.

But if the conflict is prolonged, rising oil prices easily could tip the U.S. economy back into recession, economists say.

A three-month war could result in crude oil spiking above $40 a barrel. A war that stretches up to six months could push crude-oil prices to $100 a barrel, a scenario that would be similar to the 1979 oil shock, according to economists at Morgan Stanley Dean Witter. "Oil prices would be so high that a global recession would be unavoidable," two Morgan Stanley economists, Eric Chaney and Richard Berner, wrote in December.

Rising oil prices could hurt consumer spending, raise business costs, lead to inflation and further slow the economy's growth.

During the Persian Gulf War, the price of crude oil topped out at $47 a barrel.

What's different this time is the lack of spare capacity in the global oil markets, said Larry Goldstein, president of the Petroleum Industry Research Foundation, a New York-based trade group.

Iraq exports about 1.5 million to 2 million barrels of oil a day; daily global demand is 75 million barrels. So, seemingly, Iraq exports an "irrelevant" amount, he said.

But strikes by oil workers in Venezuela have led to low global oil inventories, Goldstein said. The South American country is producing at only about 40 percent of its capacity.

"Even if all the oil producers produce at capacity, you'd be just barely short of having enough production" in case of war, he said. "There would be no cushion for the next surprise."

Reporter Chern Yeh Kwok: E-mail: cykwok@post-dispatch.com Phone: 314-340-8206

sf.indymedia.org by indep Saturday February 15, 2003 at 04:39 PM

Groundswell of dissent encircles the globe From Auckland to Amsterdam, from Rio to Rome, millions of citizens poured on to the streets to make their voices heard

By David Randall in London, Peter Popham in Rome and Ruth Elkins in Berlin 16 February 2003

Millions of people around the world poured on to the streets of their towns and cities yesterday to protest against the prospect of a US-led war on Iraq.

The worldwide tidal wave of protest began in New Zealand and rolled around the globe, gathering, as it went, momentum, enthusiasm and a sense of being part of a universal movement. The largest turnout was in Rome, where organisers claimed an attendance of three million. By the end of the weekend, demonstrations will have been held in more than 600 places from Auckland to Iceland, and San Francisco to South Korea.

In Auckland, marchers cheered as a plane flew overhead trailing a giant banner which read: "No War, Peace Now". In Australia, where 150,000 had demonstrated in Melbourne the day before, 16,000 activists marched in Canberra, 10,000 in Perth, and 15,000 in Newcastle, north of Sydney.

There were further marches in Indonesia, Malaysia, Thailand, India, East Timor, Pakistan, Taipei, Hong Kong, Kazakhstan, Singapore, South Korea and Japan. Some of those involved were experienced veterans of protest, but many were taking their first uncertain steps on a protest march. Mariko Aoyama, who described herself as a Tokyo housewife, said: "What the United States is doing now is wrong. We are on the brink of World War Three."

The only trouble was in Athens, where several hundred anarchist protesters broke away from the tens of thousands on the main rally, smashed windows, threw a gasoline bomb at a news office and overturned a car. Riot police cordoned off the city's US embassy.

In South Africa, thousands marched in Cape Town and Johannesburg, where Ivan Abrahams, a Methodist minister, said: "We are saying to Bush, you are not the saviour of the world, and we will not bow down to you."

In the Middle East the protests were more muted, but even so, in Damascus 200,000 marched through the streets. In Baghdad, the crowds were strongly encouraged by the extensive military presence around the demonstration. "At times the fervour was almost messianic: as if in a kind of ritualistic tribal worship," Independent on Sunday reporter James McGowan observed.

Europe's demonstrations began in sub-zero temperatures in Russia and in Kiev in the Ukraine, and spread, via Berlin, to dozens of cities across the continent, including Amsterdam, Budapest, Lyon, Marseilles, Sofia, Brussels, Stuttgart, Toulouse, Thessaloniki, Warsaw, Bern, Paris and Copenhagen.

In Mostar, Bosnia, Muslims and Croats united for an anti-war protest, the first such cross-community action in seven years in a place where ethnic divisions still remain strong. And in Cyprus, Turks and Greeks marched together, briefly blocking a runway at a British airbase. In Tel Aviv, too, usual conflicts were forgotten as Israelis and Palestinians marched side by side against a war.

In Rome, a vast, dazzlingly colourful tide of people estimated by the organisers to number three million swamped the city yesterday afternoon, practically encircling the ancient heart and uniting monks and nuns, communists and anarchists and hundreds of thousands of ordinary Italians in protest against the policies of Bush and Blair.

"Stop the war" read a huge banner on the stage at march's conclusion on Piazza San Giovanni above a blow-up of Picasso's Guernica. Air-raid sirens wailed above Rome's streets in a reminder of the war fears agitating this country which today has a Muslim population approaching one million.

One reason for the massive numbers was the strong support given by the Prime Minister, Silvio Berlusconi, to the American line. But the Vatican's outspoken opposition to the war has sent tremors through Berlusconi's Forza Italia party.

In Berlin, the biggest peace demonstration seen by Germany for 20 years brought much of the capital to a standstill. More than 350,000 people – more than three times as many as organisers had expected – took part in an event which culminated in a mass rally at Berlin's victory column, near the Brandenburg Gate.

In France up to 400,000 people, many carrying posters denouncing US President Bush as a "warmonger" and chanting anti-American slogans, marched through Paris and 50 other cities. Gerald Lenoir, 41, of Berkley, California, said he came to Paris, where 100,000 marched, specifically to demonstrate alongside the French. "I am here to protest my government's aggression against Iraq," he said. "Iraq does not pose a security threat to the States and there are no links with al-Qa'ida."

As night fell in London, no fewer than 15 marches were underway in Brazil, nearly a million were demonstrating in Madrid, and an expected 100,000-plus were beginning to assemble in New York.

news.independent.co.uk

cnews.canoe.ca

A South Korean child peacefully makes bubbles during an anti-war rally in Seoul, Saturday. (AP/Ahn Young-joon)

LONDON (CP) - Millions of protesters - many of them marching in the capitals of traditional allies of the United States - demonstrated Saturday against U.S. plans to attack Iraq.

In a global outpouring of anti-war sentiment, Rome claimed the biggest turnout - one million police estimated, while organizers claimed three times that figure. In London, at least 750,000 people joined the city's biggest demonstration ever, police said.

About 660,000 people protested in the Spanish capital Madrid, police said, while organizers said three times that number gathered.

Berlin had up to a half-million people on the streets and Paris was estimated to have had about 100,000.

Peace activists hoped to draw 100,000 demonstrators in New York City for a protest near the United Nations.

"Peace! Peace! Peace!" Archbishop Desmond Tutu of South Africa said while leading an ecumenical service near UN headquarters.

"Let America listen to the rest of the world - and the rest of the world is saying: 'Give the inspectors time."'

Bitter temperatures didn't cool the tempers of more than 100,000 peace activists in Montreal, who flocked to the city's core to get their message across.

The huge march wound from Dorchester Square to Complexe Guy Favreau, the city's main federal building.

In Toronto, about 10,000 people hit the pavement in a peaceful march that snarled Saturday afternoon traffic.

The call for peace was echoed in about 70 other Canadian cities.

In Ottawa, some demonstrators wore costumes and carried signs ranging from the curious to the comical. They started in Gatineau, marching across the Ottawa River to the capital.

Carrying signs with messages such as Morons Make War and Terrorists Wear Suits, the initial crowd of 2,000 began to swell as marchers chanted, drummed and danced their way through the downtown streets, stopping twice at the U.S. Embassy before making their way to Parliament Hill.

A march in Quebec City attracted approximately 3,000 people, police said.

In Halifax, where temperatures dipped to -30C with wind chill, about 1,000 people marched through the city's downtown, chanting "This war is not for missiles, it's for oil" as they stamped their feet to anti-globalization rap songs sung by a man on a makeshift bike cart.

London's marchers hoped - in the words of keynote speaker Rev. Jesse Jackson - to "turn up the heat" on Prime Minister Tony Blair, President George W. Bush's staunchest European ally for his tough Iraq policy.

Rome protesters showed their disagreement with Prime Minister Silvio Berlusconi's support for Bush, while demonstrators in Paris and Berlin backed the skeptical stances of their governments.

"What I would say to Mr. Blair is stop toadying up to the Americans and listen to your own people, us, for once," said Elsie Hinks, 77, who marched in London with her husband, Sidney, a retired Anglican priest.

Tommaso Palladini, 56, who travelled from Milan to Rome, said: "You don't fight terrorism with a preventive war. You fight terrorism by creating more justice in the world."

Several dozen marchers from Genoa held up pictures of Iraqi artists.

"We're carrying these photos to show the other face of the Iraqi people that the TV doesn't show," said Giovanna Marenzana, 38.

Some leaders in German Chancellor Gerhard Schroeder's government participated in the Berlin protest, which turned the tree-lined boulevard between the Brandenburg Gate and the 19th-century Victory Column into a sea of banners, balloons emblazoned with "No war in Iraq" and demonstrators swaying to live music. Police estimated the crowd at between 300,000 and 500,000.

"We Germans, in particular, have a duty to do everything to ensure that war - above all a war of aggression - never again becomes a legitimate means of policy," shouted Friedrich Schorlemmer, a Lutheran pastor and former East German pro-democracy activist.

In the Paris crowd at the Place Denfert-Rochereau, a large U.S. flag bore the black inscription: "Leave us alone."

Gerald Lenoir, 41, of Berkeley, Calif., went to Paris specifically to support the French demonstrators.

"I am here to protest my government's aggression against Iraq," he said.

"Iraq does not pose a security threat to the United States and there are no links with al-Qaida."

In southern France, about 10,000 people demonstrated in Toulouse against the United States, chanting: "They bomb, they exploit, they pollute, enough of this barbarity."

Police estimated 60,000 turned out in Oslo, capital of Norway; 50,000 in bitter cold in Brussels, Belgium and about 35,000 gathered peacefully in frigid Stockholm, Sweden.

About 80,000 marched in Dublin, Irish police said. More than 70,000 marched in Amsterdam in the largest demonstration in the Netherlands since the anti-nuclear movement of the 1980s.

Crowds were estimated at 60,000 in Seville, Spain; 40,000 in Bern, Switzerland; 30,000 in Glasgow, Scotland; 25,000 in Copenhagen, Denmark; 15,000 in Vienna, Austria; 5,000 in Cape Town and 4,000 in Johannesburg in South Africa; 5,000 in Tokyo; and 2,000 in Dhaka, Bangladesh.

"War is not a solution, war is a problem," Czech philosopher Erazim Kohak told about 500 people in Prague, the Czech Republic.

In Baghdad, tens of thousands of Iraqis, many carrying Kalashnikov assault rifles, demonstrated to support President Saddam Hussein and denounce the United States.

"Our swords are out of their sheaths, ready for battle," read one of hundreds of banners carried by marchers along Palestine Street, a broad Baghdad avenue.

In Damascus, the capital of neighbouring Syria, an estimated 200,000 protesters chanted anti-U.S. and anti-Israeli slogans while marching to the People's Assembly.

Najjah Attar, a former Syrian cabinet minister, accused Washington of attempting to change the region's map.

"The U.S. wants to encroach upon our own norms, concepts and principles," she said in Damascus.

"They are reminding us of the Nazi and fascist times."

An estimated 2,000 Israelis and Palestinians marched together against war in Tel Aviv on Saturday night.

In Ukraine, some 2,000 people rallied in snowy Kyiv's central square. Anti-globalists led a peaceful Rock Against War protest joined by communists, socialists, Kurds and pacifists.

In the Bosnian city Mostar, about 100 Muslims and Croats united for an anti-war protest - the first such cross-community action in seven years in a place where ethnic divisions remain tense despite a 1995 peace agreement.

"We want to say that war is evil and that we who survived one know that better than anyone," said Majda Hadzic, 54.

In divided Cyprus, about 500 Greeks and Turks braved heavy rain to briefly block a British air base runway.

Several thousand protesters in Athens, capital of Greece, unfurled a giant banner across the wall of the Acropolis - NATO, U.S. and EU Equals War - before heading toward the U.S. Embassy.

U.S. Ambassador Thomas Miller said the Greek protesters' indignation was misplaced.

"They should be demonstrating outside the Iraqi Embassy," he said before the march.

Police fired tear gas in clashes with several hundred anarchists wearing hoods and crash helmets, who smashed store windows and threw a gasoline bomb at a newspaper office. Thirteen youths were arrested, while five policemen and two protesters were injured.

About 900 Puerto Ricans chanted anti-war slogans against the possible invasion of Iraq. One man waved a U.S. flag on which the stars were replaced with skulls.

In Brazil, President Luiz Inacio Lula da Silva began efforts to unite South American countries against a possible U.S.-led attack on Iraq. Police estimated 1,500 marchers.