www.falkland-malvinas.com Wednesday, 19 February

Venezuela’s president Hugo Chavez administration and the opposition signed a non aggression pact aimed at defusing tensions, according to the Organisation of American States, OAS, that has been mediating in the increasingly violent and acrimonious conflict.

OAS Secretary General Cesar Gaviria who has been at the head of the negotiations, backed by a six nations group including United States and Spain said the document is a foundation for a confidence building process.

Venezuelan opposition, mainly middle class, have been demanding president Chavez’s resignation alleging the current administration is leading the country to a Cuban style authoritarian regime. Mr. Chavez, the father of the poor, as he’s called by supporters, and a close friend of Mr. Fidel Castro, was re-elected in 2000 and refuses to consider calling a referendum on his rule until next August, as constitutionally viable.

“With the declaration we hope to bring a climate of understanding between all Venezuelans”, said Mr. Gaviria.

The seven point declaration rejects “verbal intemperance, mutual recrimination, verbal attacks and any rhetoric aimed at confrontation”, and calls on all political and social factions “to create a climate of peace and calm in the country”.

Opponents call Mr. Chavez a “tyrant” and “monkey commander”, while the president describes opponents as “fascist coup-plotters”.

An ongoing national strike and a wave of demonstrations by both sides have paralyzed the country, led to killings and shootings, and endangered the country’s oil production, one of the main United States suppliers.

Mr. Chavez, who last April survived a two days coup, has used troops and foreign replacement crews to restart the oil sector after the unions of Petróleos de Venezuela, the government managed company, went on indefinite strike.

Oil represents 80% of the country’s exports and 60% of government revenue.

news.bbc.co.uk

The world's largest pension fund, US-based Calpers, has ruled out investing in some of the world's main emerging economies, citing worries over stability and business ethics.

Among the countries rejected by Calpers are China, India, Indonesia and Russia, and the fund also dashed hopes that it might begin putting money into Malaysia and Thailand.

Calpers, which manages the retirement funds of Californian public employees, has some $133bn in assets, including some $1.8bn in emerging markets.

It has traditionally taken a lead in ethical investments, and is highly influential within the US fund management industry.

In and out

In all, Calpers has rejected 12 major developing economies, also including Morocco, Sri Lanka, Egypt, Pakistan, Colombia and Venezuela.

Pakistan is off the list...

Last year, Calpers stunned investors in Malaysia, the Philippines and Thailand by deciding to pull out pending this latest decision.

Some had expected it to move cautiously back into south-east Asia, but the Calpers board has now voted to tighten its investment criteria.

At the same time, Calpers gave the green light to 14 countries, chiefly in Eastern Europe and Latin America.

Informed decisions

Calpers last year began to consider civil liberties, press freedom and political risk in making investments, after deciding that stable, liberal countries would yield better long-term returns.

To this end, it has hired California-based Wilshire Consulting to draw up a scoring system for target countries.

In this decision, the fund has actually exceeded the severity of Wilshire's recommendations.

Aside from pure moral criteria, Calpers is also especially interested in accounting transparency, traditionally a major headache for investors in countries such as Russia or China.

The policy has occasionally gone awry - after ruling out investment in the Philippines last year, Calpers had to backtrack, admitting the decision had been made on the basis of mistaken information.

Ups and downs

Nor is the policy yet proven in terms of investment success.

The 14 markets Calpers has cleared for investment have lost some 8% in dollar terms since end-2001, against an average gain of more than 13% from the countries excluded.

Pakistan and Russia, for example, have been especially strong performers in the past couple of years.

Among the countries given the green light, only the Czech Republic, with a 46% stock market gain since the end of 2001, has delivered really impressive returns.

Others, such as Brazil, Argentina and Turkey, have fared disastrously.

icnewcastle.icnetwork.co.uk Feb 19 2003 By The Journal   Tony Blair yesterday put his leadership on the line over Iraq by declaring he would do "what is right" irrespective of the political risk to himself.

The Prime Minister staged his monthly press conference yesterday in the wake of new polls showing 52pc of people opposed to war and his own personal ratings on the slide.

But he faced down mounting public pressure by insisting he was willing to take military action against Saddam Hussein even if it costs him his job.

Asked about the threat to his own leadership, he declared: "There are certain situations in which you've got to say to people this is what I believe and this is what is right." Mr Blair's defiant comments followed remarks by his Chief Whip, Durham North West MP Hilary Armstrong, that he was "aware of the risks" to his position.

Senior North-East MP and former armed forces minister Doug Henderson warned Mr Blair his stance on Iraq could cost him the premiership.

"I think he possibly is putting his leadership on the line but I think he is very wrong to do so," the Newcastle North MP told The Journal. "He has failed to take account of Labour Party opinion and the leader of the party should do that. If he does not, they won't support him," he added.

Mr Blair's speech came the morning after an inconclusive EU summit in which France demanded UN weapons inspectors be given more time.

In a careful performance he sought to keep up pressure on Saddam while still saying there was "no rush to war". But his attempt to reassure the public was last night undermined by news the US administration is drawing up a fresh UN resolution authorising military action.

Yesterday's polls showed only 35pc of the public is satisifed with Mr Blair's performance, compared to 49pc a month ago.

Celebrity support for the anti-war movement was further boosted by designer Katherine Hamnett, with t-shirts bearing the slogan "Stop War".

Mr Blair said anti-war protesters should listen to the testimony of Iraqi exiles on the horrors of life under Saddam.

In an attack on French leader Jacques Chirac Mr Blair warned a split between America and Europe would endanger world security. Mr Blair reaffirmed his backing for a UN resolution but refused to be drawn on a timetable for one.

Newcastle Central MP Jim Cousins last night praised Mr Blair's courage. "Whatever view I take of the Prime Minister's position, I recognise it as an honourable one he is prepared to see through, and I respect that," he said.

But Lib Dem leader Charles Kennedy said: "Mr Blair implies anyone not yet persuaded of the need for war is somehow less moral than he is. A lot of people will resent that."

Council set to oppose war

Tony Blair will this week face fresh opposition to his stance on Iraq from one of his own flagship North-East councils.

Labour members of Gateshead Council will be tabling a tough anti-war motion to Friday's council meeting.

It will say a pre-emptive attack on Iraq is "neither necessary or justified and would produce incalculable risks to international peace and stability".

And it will call on the Government not to commit British forces to a pre-emptive attack on Iraq unless proof of weapons of mass destruction exists and the full support of the United Nations and Nato is forthcoming.

Labour member of the council's ruling cabinet Peter Mole said: "Participation in such an attack would be likely to have serious damaging effects on Gateshead's social and economic welfare and endanger the safety of its citizens."

Energy 'vital strategic concern'

A conflict with Iraq was partly about oil supply, a leading industry figure suggested yesterday.

David O'Reilly, chairman and chief executive of Chevron Texaco, said there was a view among some sections of the public the conflict was about nothing but oil and that was not a good enough reason to go to war.

But he said the diversity and continuity of the world's energy supply were vital strategic concerns.

"National security and energy security are not one and the same thing but they are clearly intertwined.

"It's hardly surprising that current events have put our industry in the spotlight," he told the Institute of Petroleum annual lunch at the Dorchester Hotel in London.

It was not unexpected that the Iraq conflict should be used by some as a vehicle to attack the industry.

"I am talking about the protests that say `no blood for oil'," he said.

"The slogan rests on two assumptions, first that the conflict with Iraq is about nothing but oil and second that energy security is not a legitimate reason - even as one among many - to go to war."

Mr O'Reilly said a recent Gallup poll showed that almost two-thirds of Europeans saw Iraq as a threat to world peace, and a "shocking" 70pc believe that oil is the main reason the US wants to intervene in Iraq. "You saw the many millions of people who protested around the world this past weekend and some of them surely hold that view.

"I would argue that `no blood for oil' has caught on partly because our industry's reputation is so impaired that the protesters can discredit action in Iraq simply by associating it with us."

He urged oil companies to boost their reputations and said the challenge would be with them regardless of whether there was a peaceful outcome to events in Iraq, crisis-wracked Venezuela or North Korea.

"If we don't act together to address this challenge our prformance will be impaired and our basic mission imperilled," he added.

www.charlotte.com Posted on Wed, Feb. 19, 2003 MICHAEL DOBBS Washington Post

Enough oil is stored in the deep, cone-shaped salt caverns along the Gulf of Mexico -- most of them large enough to accommodate the towers of the World Trade Center -- to replace a year's worth of imports from Saudi Arabia.

Originally conceived as a response to the oil crises of the 1970s, the Strategic Petroleum Reserve has become as much a part of the United States' strategic arsenal as the aircraft carriers, airborne divisions and spy planes converging on the Persian Gulf region.

According to the Energy Department, the 599 million barrel reserve constitutes the nation's first line of defense against disruptions in energy supplies.

As President Bush prepares for war with Iraq, he has come under pressure to use the reserve to calm an increasingly jittery market. In addition to the uncertainty caused by the Iraqi crisis, a general strike in Venezuela has helped push oil prices to new highs, and slashed inventories in many parts of the world to critically low levels.

If the past is a guide, and Bush follows the precedent set by his father in the Persian Gulf War in 1991, he probably will resist the temptation to tap into the underground storage sites in Texas and Louisiana until the onset of any hostilities.

If the attack on Iraq begins, he will order the release of some of the oil in the reserve, a move designed to signal the United States' ability to ride out any temporary panic over the oil market.

If the war went badly, and Iraqi President Saddam Hussein succeeded in torching Iraqi oil fields or hitting oil facilities in neighboring Kuwait or Saudi Arabia, the reserves would assume huge strategic importance.

The 50 or so caverns in Louisiana and Texas contain enough oil to replace 53 days of lost imports. In practice, officials say, supplies should last considerably longer, as the United States buys much of its oil from such countries as Canada and Mexico, which would unlikely be interrupted by a crisis in the Middle East.

The Strategic Petroleum Reserve is "a powerful instrument," said John Shages, one of the Energy Department officials responsible for managing the network of storage sites, pipelines and loading facilities strung out along the Gulf of Mexico coast. "It gives the president a tremendous tool to use in the event of a severe disruption to the market, from an act of God to a political-military event."

Because of the tightness of the international oil market, said Edward Porter, an economist at the American Petroleum Institute, the Strategic Petroleum Reserve might end up playing "a much more central role" in a new gulf war than it did in 1991. A decade ago, there was plenty of excess capacity in the oil market. After the war broke out in January 1991, prices quickly tumbled from more than $30 a barrel to about $20.

Today, by contrast, it is much more difficult to offset a likely loss of Middle Eastern oil, if the region became embroiled in war. Iraq alone sells 2 1/2 million barrels a day to foreign countries, including the United States, through oil for food arrangements approved by the United Nations and through smuggling. Although Venezuelan oil is slowly coming back on stream, as a general strike against populist President Hugo Chavez winds down, exports are no more than half of pre-strike levels.

According to oil analysts, the only country in the world that can significantly increase production levels practically overnight is Saudi Arabia, which has 1 million barrels a day of excess capacity.

In recent weeks, the Saudi government has boosted production to offset losses from Venezuela. But the Bush administration does not want to be held hostage to a potentially unstable Arab country rife with anti-Americanism that has previously used oil as a weapon against the United States.

worldnetdaily.com

Posted: February 19, 2003 1:00 a.m. Eastern

Editor's note: WorldNetDaily is pleased to have a content-sharing agreement with Insight magazine, the bold Washington publication not afraid to ruffle establishment feathers. Subscribe to Insight at WorldNetDaily's online store and save 71 percent off the cover price.

By Martin Edwin Andersen © 2003 News World Communications Inc.

Yellow police tape sealed off a sixth-floor office in the exquisite headquarters of the Inter-American Development Bank, or IDB, just two blocks from the White House. The tape barred entry to the room, but it could not contain the horror within, where a former official of an IDB Central American office, reportedly distraught over misconduct at the multilateral development bank, had slashed throat and wrists. While doing so, say IDB insiders, the former official wrote in blood on an office wall: "The bank is corrupt!"

The tragedy is reported to have occurred after the official blew the whistle to superiors concerning alleged abuse of power affecting IDB projects in the field. In response, the official had been transferred back to Washington. According to a former IDB officer familiar with the case, the official's "grade [job rank] was lowered" and the whistleblower "was assigned to a small windowless office – something very important to bank staff – and given no responsibility." Then the "silent treatment" began.

Four other sources, including a highly placed bank official, have confirmed part or all of the story. Contacted at home by Insight, the recovering bank officer had been on leave since the July 18, 2002, incident and continued to be under a physician's care. The officer would not comment on what had happened, nor would the IDB.

The incident offers emblematic and tragic evidence of what some officials at the multilateral development banks, or MDBs, tell Insight are the risks they face in speaking out against wrongdoing at these institutions supported by U.S. taxpayers. Not only can doing the right thing lead to losing one's job, but foreign hires dependent on bank-sponsored work visas face additional risks.

"Everybody is afraid," a well-placed IDB source tells Insight. "Of course, they fear losing their jobs, but another way [the bank] keeps them in line is by threatening to take away their visas. If they lose their visas, they have to go home."

Similar concerns, say advocates for bank reform, are heard from inside the World Bank, the Asian Development Bank and the African Development Bank. "Experts I work with at the World Bank say that if they make comments critical of the bank's position, they do so at what they have described as 'great risk,' and they end up not being listened to anyway," says Korinna Horta, a senior economist at Environmental Defense, a citizen watchdog group. "I have firsthand knowledge that this happened in the case of the Chad-Cameroon oil-pipeline project."

According to a recent study by Northwestern University political scientist Jeffrey Winters, in the last five decades corrupt officials from Third World countries have skimmed an estimated $100 billion from World Bank loans. Not until 1996 did the World Bank institutionalize a strategy and mechanism for combating the corruption inside the institution, which next to the federal government is the largest employer in Washington. The years passed. In 2000, the bank shifted the chairs on the deck of what seemed to some like the Titanic, merging its corruption-and-fraud-investigations unit and its office of business ethics into a department of institutional integrity. That same year the General Accounting Office, the U.S. congressional watchdog, issued a report calling on the World Bank to make greater efforts to control corruption.

But the U.S. Treasury Department is the executive-branch overseer of the development banks. And in November 2000 it successfully killed recommendations to Congress proposed by the U.S. Agency for International Development that greater public disclosure of the banks' operations be mandated and a better process of external and internal review be established to prevent potentially illegal loans from being approved.

More recently, the International Financial Institution Advisory Commission, a congressionally mandated 11-member panel on the role and effectiveness of several international institutions, was created. Known as the Meltzer Commission, it was created amid growing bipartisan discomfort about the slowness of these banks to reform. Those demanding action ranged from the late Sen. Paul Wellstone, D-Minn., to former House Majority Leader Richard Armey, R-Texas. Few were surprised when the commission called for major reform to ensure a more efficient use of U.S. funds – such as the more than $1 billion provided in the fiscal 2003 foreign-operations bill.

Within the last year, allegations of endemic corruption at the IDB have been accompanied by complaints heard at sister institutions alleging gross mismanagement and violations of U.S. law. In addition, U.S. watchdog groups have charged that all the banks still are reluctant to heed calls for greater transparency and public disclosure concerning the use of public funds for development objectives such as poverty reduction.

In response, there have been increasing calls for greater congressional oversight of the banks. Proposals range from requiring the State Department and the Justice Department to review more actively MDB-funded activities and report to Congress every year, to holding the MDBs' feet to the fire by authorizing their budget only on a yearly basis, at least for the next year or two, rather than on the current three-year schedule. As one congressional source observes, "The banks come up for their money every three years, make a lot of promises, then basically thumb their noses at us until the next appropriations cycle is near."

Rep. Steve Israel, D-N.Y., a member of the House Financial Services Committee, tells Insight: "The multilateral development banks are critical instruments for reducing poverty around the world and making life better for billions of people. The U.S. makes significant contributions to these banks, and it is essential that the Congress finds out if we are getting what we pay for. These banks shouldn't be making people rich. They shouldn't be used as personal fiefdoms. They are a public trust, and the people who run them must remember that. If they don't, the Congress should remind them, in the strongest possible terms." And, according to Israel, "We must put their very existence at risk if we are going to get any results."

Senate Finance Committee Chairman Charles Grassley, R-Iowa, emphasizes: "We need to make certain that these development banks are being operated for the common good and are not above the law. Just as the banks require loan recipients to be forthcoming about information, so Congress expects the banks to be responsive and candid to requests for information."

Oversight of operations at the World Bank, says John Ruthrauff, senior policy adviser for Oxfam, is still a hit-and-miss proposition, despite improvements instituted during the 1990s by current bank president James Wolfensohn. Ruthrauff notes that the bank's directors do not see their oversight responsibilities extending to operational issues and, even if they did, they are hamstrung by small staffs and a system of rotation in which most directors last only a few years because 26 executive directors and a similar number of alternates represent 180 countries.

"They just don't have the time to look into issues themselves – there are just too many projects," Ruthrauff adds. "So oversight, where it exists, is left to the staff."

The situation is even worse at the regional development banks, insiders say. "While at the World Bank you might have a Pakistani in charge of programs in Venezuela, in the regional banks it pretty much boils down to an elite group that works with its friends," says one insider. "It is tougher to have an arms-length relationship between borrowers and bank staff, or among the latter, because the regions are smaller and there is a lot of opportunity to develop networks and special friendships."

Most observers agree that, of the international financial institutions, the World Bank appears to have the best internal-review policies, an image carefully bolstered by a first-rate press office. "The World Bank takes its fiduciary and audit responsibilities very seriously," bank spokeswoman Caroline Anstey, says. "To this end, we encourage anyone with a complaint of fraud or corruption involving a World Bank financed project to come forward and report these allegations to our fraud and corruption investigations unit. ... Our experience over the years has shown that a transparent management of public funds represents a key element of good governance, and this, in turn, is indispensable for sustained growth, poverty reduction and a country's overall development."

Treasury's role in the oversight process continues to be controversial. Sources on the IDB board tell Insight that U.S. Executive Director José Fourquet has not provided leadership needed to curb alleged corruption at that bank. Fourquet has not responded to several requests for comment.

On Feb. 3, Rep. Barney Frank, D-Mass., a longtime proponent of greater oversight of the banks and a supporter of their development mission, wrote to Rep. Jim Kolbe, R-Ariz., chairman of the House Appropriations subcommittee on Foreign Operations, complaining about Treasury's resistance to outside oversight.

"I was very disturbed to learn recently that the Treasury Department reproached some officials at the World Bank for engaging in some detailed, high-level discussions with my office about [funding issues] without Treasury's approval," Frank said. "I think these actions speak to the need for continued, assertive congressional oversight."

Critics contend that without conditions placed on the banks, passage of the omnibus appropriations bill by Congress will result in continued abdication of responsibilities in monitoring institutions that lend tens of billions of dollars each year. Not only are U.S. taxpayer dollars in danger of being squandered, they warn, but less-developed nations continue to be saddled with unwanted debt that all too often ends up in the hands of greedy local politicians or is spent on projects that exacerbate economic and environmental problems.

Martin Edwin Andersen is a reporter for Insight. He worked as an international consultant for the IDB from 1997-2001.