Adamant: Hardest metal
Friday, March 7, 2003

Iraqi Australians: War splits a family

www.smh.com.au By Margo Kingston March 6 2003

Hi. No movement on the impasse, so we watch the growing turmoil around the world and wait until the war begins or our 'leaders' find another way.

On Monday in Unreal Reality, I asked if the Iraqi people really did want to be invaded to be free, and quoted Webdiary's only Iraqi contributor, Zainab Al-Badry, who wrote last September:

Like any Iraqi, nothing is dearer to my heart than to live long enough to witness the day my country and my people are set free from this dictator and his regime. However, can anyone blame us if we do not trust the US and back its efforts to oust Saddam? I have been in Iraq during the Gulf war and witnessed how the American troops abandoned my people and left them to the mercies of Saddam and his thugs. Why would I trust the US again? I have no doubt now that the US wants to get rid of Saddam - what I don't accept (and indeed I find it insulting to my intelligence) is someone telling me (or the whole world for that matter) that the US is doing so for all the good reasons in the world, or that oil is a "secondary factor". Would the US or any of its allies send their armies and incur all those heavy expenses if Iraq didn't happen to float on oil?(Saddam's will to power)

Zainab was inspired to reenter the debate, and detail a split in her family on the question:

I am still here and alive (God only knows how). I haven't stopped following the Webdiary, in fact I became addicted to it, however I chose not to write for more than one reason. First, what's the point? No matter how much we said and did, the 'super power' of the world had made its mind and there is no way back.

Second, I feel I am restricted by my 'limited English' - I can never put my thoughts in words the way I want them.

And third, to my deepest appreciation and relief , I often find that there are many many people who can and are expressing very similar opinions to mine on Webdiary.

However, I feel now that I have to say something as an Iraqi, views which are shared by everyone I know here except my husband!! But I will come to that later. I just want to remind everyone who is advocating war as the one and only solution that for decades the Iraqi people have suffered under this regime. Millions of Iraqi as well as non-Iraqi people have been tortured or died for one reason only, and that is to to keep Saddam in power because he served the West's and especially the US's interests. And now, just because he is not good enough for them any more, the Iraqi people have to pay the price again with their lives to get rid of him. Now how fair is that?

You wanted to know what the Iraqi people think of this coming war. For myself I believe that since I live here so far away from my country and enjoying the freedom and security of this wonderful society I have no right in imposing my views on them. Yes, I lived there for 31 years and all my family is still there but also I've been away for the last eight years. I haven't shared their miserable lives and harsh circumstance (things are only got worse since I left back in 1994).

I oppose this war because I cannot comprehend the outcome - for me the ends do not justify the means in this case. Saddam must be removed but I cannot accept the horrible price that my people have to pay for it. Mind you I am fairly sure that most if not all the Iraqi people there see this coming war as their only chance for freedom, but also bear in mind that a sinking person clings to any straw to save his life.

People in Iraq do not see any of the consequences of this coming war except it might give them their freedom. Their death and the destruction of their country is a side issue for them - they are used to wars, they've been living in a continuous war for the last 23 years. Ask any one of them and the most they would say is, 'What more could happen to us? If I die who cares, death is freedom?'

For us here it is different. We know the full story, we are exposed to the whole picture, we live in a democracy where, as you very rightly said, we elect our leaders to find solutions, not to demand them from us. If the only solution our leaders can come up with is war, then God help us.

I know many people will jump at me and say, 'What is the alternative if we don't go to war?' I don't know, but I do know that the masterminds who put Saddam in power and kept and fed him for all those years are surely capable, if they are willing, of coming up with a different solution to spare people's lives.

Lastly, it makes me really sad to see my husband as one of the people who thinks that war is the only solution, not because he accepts wars but because he sees no other way to get rid of this regime. And that's where we differ. As I said, I'm sure there is another solution. The problem is 'they' don't want it.


I received this from a friend today on the state of play in Turkey. The idea of American pressure to reverse a vote of Parliament is frightening. Surely it risks the Turkish people turning to a more fundamentalist Islamic party than the moderate regime now in power? I hope this isn't true:

The following is from a message from a Turkish colleague: You must have heard about the refusal of the Turkish Parliament to deploy US troops to attack Iraq. The usual mechanisms (bribery, threat, blackmail) are under way to revert the decision. This morning I received a message from a colleague who has attended a teleconference organised by Moody's Turkish banks. In the conference Moody's EXPLICITLY demanded the revert of the decision, OR ELSE the credit rating of Turkey would be decreased. They were also functional in triggering the 1994 crisis here. Stephen Little, Manchester.

Today, a report on how South America views the war from Australian journalist Miriam Taylor in Columbia. Then Brian Bahnisch's predicts the aftermath of war and Justin Bell argues that containment is the only 'solution'.

To begin, Scott Burchill sends this piece from today's The Guardian and asks: "Where is the federal government's legal advice?" He's referring to the government's constant claim that it has a "different view" to the vast majority of legal experts that a unilateral US invasion of Iraq would be illegal, and to the question of whether the US-sponsored second resolution would authorise war.

I've experienced the government's attitude to legal advice before, and it's rancid. During the Wik debate, the overwhelming majority of legal experts wrote opinions and gave evidence to committees that the Wik bill was racially discriminatory and in breach of the Racial Discrimination Act. The government said it had contrary advice but steadfastly refused to reveal it. Attorney-General Daryl Williams intervened in the Senate committee process to ban the Australian Law Reform Commission giving evidence on the matter. Finally, a scrap of the government's advice was leaked. It did not back the government line, but still Williams refused to release the advice. The government releases legal advice when it suits, refuses when it doesn't, and has no compunction in lying about the advice it has. On at least one matter of national importance, it refused to brief its top legal officer, then Solicitor-General Gavan Griffith QC, because it feared the advice it would get. On this, as in many matters, this government has proved itself utterly untrustworthy.

Fresh resolution 'gives no authority for war'

Matthew Tempest, political correspondent

Wednesday March 5, 2003

The Guardian

Tony Blair's political dilemmas over a possible military attack on Iraq increased today, with reports that the government's attorney general may resign if Britain goes to war without clear authorisation from the United Nations.

Legal opinion varies on the basis for war under resolution 1441, but yesterday Cherie Booth's own legal chambers, Matrix, advised there was no authority for war without an unambiguous fresh resolution.

Now it has emerged that there are fears within the government's legal service about the exact provisions of international law for a US-UK attack. The attorney general, Lord Goldsmith, has already flown to Washington on an unpublicised trip to discuss the legal ramifications with the US attorney general, John Ashcroft.

Lord Goldsmith's job is to advise ministers on the legality of all their actions, but his office has refused to divulge his opinion on a future war with Iraq. This morning he was forced to deny to the Financial Times rumours that he may resign if bombs are dropped without a second UN resolution.

His office is quoted as saying this scenario was "not something he recognises", but the FT quotes an unnamed mandarin as saying: "Civil servants are meant to respect the law. There will be lots of resignations from the government legal service. Lord Goldsmith could go."

The FT reported last year that the attorney general warned the cabinet any war designed primarily to remove Saddam Hussein would be illegal. However, the defence secretary, Geoff Hoon, said last week he was unworried by the legal debate.

He said: "As a lawyer myself, I have always taken the view that if the law was so clear, you wouldn't need my profession. So I accept there are going to be differences of legal opinion."

Yesterday the Green party, CND and the Campaign Against the Arms Trade obtained a ruling from Matrix chambers that the draft wording of the US-UK second resolution - that Iraq had "failed to take the final opportunity" of 1441 and the UN remained "seized of the matter" - was not sufficient authority for military action. It has already argued that resolution 1441 does not in itself constitute grounds for war...


Recommendations

Simon Mansfield recommends defenselink, a US department of defence briefing, with slides, on "U.S. military practices and procedures to minimize casualties to non-combatants and prevent collateral damage during military operations".

Max Phillips: "If the UN Security Council vetoes the US attack on Iraq and the US still makes its war, there is one measure that UN can still take - under a procedure called "Uniting for Peace" the UN General Assembly can demand an immediate ceasefire and withdrawal." There are no vetoes available to any country in this motion, just a straight vote by all members of the UN. Such a procedure has happened 10 times, notably in response to the 1956 Suez invasion of Egypt. See zmag."


Activism

The planned US invasion of Iraq has sparked what might be the world's biggest mobilisation of artists against the war - film and stage actors and directors, painters, documentary makers, you name it. Yesterday was the international day of poetry against the war. Brian McKinlay recommends poetsagainstthewar.

Lesley Pinson sends this request from the moveon group:

We've launched an emergency petition from citizens around the world to the U.N. Security Council. We'll be delivering the list of signers and your comments to the 15 member states of the Security Council on THURSDAY, MARCH 6. If hundreds of thousands of us sign, it could be an enormously important and powerful message - people from all over the world joining in a single call for a peaceful solution. But we really need your help, and soon. Please sign and ask your friends and colleagues to sign TODAY at moveonemergency.

We can stop this tragedy from unfolding. But we need to speak together, and we need to do so now. Please ask your friends, family, colleagues, acquaintances - anyone you know who shares this concern - to sign on today. As the New York Times put it, "There may still be two superpowers on the planet: the United States and world public opinion." The Bush Administration's been flexing its muscles. Now let's flex ours.

Denise Parkinson: "There's a WOMEN FOR PEACE march and rally on Sunday 9th March, an action endorsed by the Walk Against the War Coalition. If you can, bring an empty stroller to symbolise the Children of Iraq facing death and devastation in this catastrophic war. 2.00 pm: peaceful assembly of women of Sydney, including women with children and women with empty strollers, at the Parade Ground, Government House, Botanic Gardens. Enter by Garden Gates, immediate left of the Conservatorium, Macquarie St."


Oiled by Distance

by Miriam Taylor in Bogota, Columbia

Iraq is a long way from South America, both in distance and in culture. Yet, the link between many South American nations and the USA is the same as for Iraq. Oil.

Colombia and Venezuela have high oil production, and succour transnational oil companies. Venezuela competed with Arab nations in oil output until the Chavez Presidency induced massive strikes in the industry.

National and international oil companies pay substantial amounts of money to the large armed revolutionary groups in Colombia, Venezuela and Bolivia, to keep the oil lines free of bombs. The Canon Limon oil line of Occidental Petroleum in Colombia suffered 200 bomb attacks in 2001. The bribe dollars buy armaments to fight governments supported by the USA. Look at Iraq and Afghanistan.

Two Colombian television and radio networks blatantly calculate the financial benefit for the oil industries of South America should the USA attack Iraq and destroy their oil production. The oil industry is pragmatic. War on an oil nation is good news for them.

Many military and social aid dollars flow into South American nations, particularly Ecuador, Colombia, Peru, and Bolivia. The money comes from blocs which support intervention in Iraq - principally the USA and the European Union. You don't bite the hand that feeds.

The voices of these governments support any USA strategy, but it is a silent consent. The mainstream press of South American countries report the daily thrusts of the intervention plan as if through a veil, being mostly non-committal and if critical, then gently so. However, their enthusiastic reportage of the recent world-wide anti-war protests sparked many editorials in support of peace.

Venezuela is struggling to meet its promises to resume oil exports to the USA. Chavez, who sees himself as the second Bolivar, does not resile from condemning the imminent war on Iraq, seen by the Venezuelan press as a fait accompli.

The Bolivian government of President Sanchez de Lozada is beset by a different intervention, that of the International Monetary Fund. The Bolivian cabinet is falling apart under the weight of massive pressures, including that of increasing its oil exports to the USA. Its media are too obsessed by these concerns to be troubled by the parallels with Iraq.

The Argentinian President Duhalde is similarly beset, but this week he openly criticised the IMF's role in Bolivia's current hardships. Argentinian editorials call on the EU to take a stand for what is morally right, non-intervention. A tinge of the same sentiment runs through Brasilian newspapers.

Chile's left-wing papers call for courage from the EU to stand against a USA-led war on Iraq. They state what the other national medias imply, that this is an oil war, nothing more, fueled by Bush.

Given the long histories of Spain and Portugal in this continent, South American media look to their former colonists for their stances on any international issue. The equivocations of the EU are seen as the last light of hope in preventing the war on Iraq.

As I write this, I am listening to one of the national Colombian talk-back radio shows. The last caller said, "La paz por toda la vida" or 'Peace for all living, all our lives'. Wearied by 40 years of war the people on my streets here in Bogota say leave Iraq in peace.


Brian Bahnisch in Brisbane

The invasion will happen - Bush and co won't pack up and go home and their troops apparently 'degrade' rapidly if left out in the desert. I'm told heat doesn't matter, as initially it will happen at night when there is no moon ie later this month. After the initial blitz the word is that medium force will be applied and it will take about 2 months.

Now here's the downside. Iraq may well prove ungovernable, terrorism will be greatly boosted and the risk of dispersal of WMDs into the hands of terrorists in the chaos after 'victory' will be overwhelmingly high.

Prior to all that, however, there is a fair bet that Saddam will actually kill a few hundred thousand Iraqis with WMDs either directed at the advancing enemy or actually directed at his own people. This is in addition to the civilian casualties, refugees and displaced people inside Iraq from the 'friendly' fire.

Saddam is likely to set the oil wells on fire. Each one needs to be put out separately and whereas in Kuwait each took about 2 or 3 days, in Iraq each could take about 2 to 3 weeks, according to the experts. If this happens the environment will be seriously fucked with oil entering the groundwater in the Mesopotanian basin.

Under these circumstances 'muscular containment' is the only ethically acceptable way to go. Therein lies a huge problem, because the Yanks are the only ones who scare Saddam, and if they don't attack they may just go home. That is why in the end they will attack.

Nevertheless, I should have a suggestion on what to do without the Yanks, but I really do have to go and cut grass. Old ladies are depending on me! Sorry!


Justin Bell

I am an Aussie graduate student living in Seattle. This is my go at tying together the emotional American cultural impetus behind Bush administration policy.

There are four general strands apparent in arguments about Iraq that cut across traditional left-right ideological lines.

The pro-war left argues that the war will liberate the oppressed peoples of Iraq and permit democracy. The anti-war left argument says the war will kill more people than Saddam and that war is primarily about liberating oil for the United States.

The pro war right argument as developed by the Bush administration started with the argument that after 9/11 it is too dangerous to leave the world's worst weapons in the hands of the world's worst dictator, and has since tacked on a sort of nouveau domino theory in reverse - that the implementation of democracy in Iraq will inevitably lead to a more stable Middle East.

The anti war right argument applies the tried and true economic rationalist cost benefit analysis to the problem and suggests that all but the most optimistic projection of war and its aftermath will mean a net downside for the US.

Both the left and right versions of the pro war implementation of democracy positions are flawed because there is insufficient weight given to the interconnectedness of church and state in all Arab nations. None are democracies in the secular, Western sense, but all harbour populations bristling with deep-seated distrust, jealousy, anger and religious intolerance toward the the US.

An overarching unilateralist democratic imperialism doctrine that propounds the imposition of democracy in Iraq has much in common with the thinking behind the discredited domino theory that saw the US send William Calley, Agent Orange and carpet bombing to Vietnam in a vain attempt to save that country and impose democracy.

Saddam has none of the romantic appeal of Uncle Ho, but the critical failure of both theories lies in the attempt to apply an overarching geopolitical theory to a particular nation and leader without adequate consideration of the appeal of nationalistic sentiment and each leader's capacity to harness such sentiment. Both the domino theory and the nouveau domino theory are drawn from US policy making that has a tendency to see issues in black and white terms; Communism v Democracy; Despotism v Democracy.

The suggestion that Iraqis will welcome American troops is misguided when you consider Saddam's capacity to appeal to nationalistic sentiment. Any leader able to launch and maintain an offensive war against a neighbour that lasted 10 years, incur horrendous casualties, and then persuade his military to take on 28 allied nations in 1990-91 is a leader with a proven ability to appeal to nationalistic sentiment.

While it is true that the Iraqi military was overrun in the first Gulf War, it is not true that Iraqi units refused to fight. Many elements of the Iraqi army fought very hard - and not just Republican Guard elements. In Gulf War Redux, we ought to expect nothing less - and neither ought we impute the stupidity to our foe that is implicit in suggestions that the military will be overrun again.

Saddam learnt from his mistakes in the war with Iran. He has had 12 years to ruminate about tactical mistakes made in the first Gulf War. This rematch will not be fought on battlefields that favor American technological superiority - it will be a bloody urban mess.

As for the 'worst weapons, worst dictator' argument, this is the foundation for a position that because Saddam or other dictators could possibly give weapons to terrorists, the US has no choice but to remove Saddam and his ilk from power. There are at least three responses:

  1. The logical extension of this strategy would see the global cop US busting down the doors of all countries that could possibly give weapons to terrorists. Countries such as Libya; Iraq; North Korea; Iran; Cuba, Somalia, Saudi Arabia, Pakistan etc would be on this list. If the criteria is any dictator that COULD give weapons to terrorists, then the list of countries to invade is very long indeed, as would be the casualty lists for the US military and the draft lists that would be needed for replacements.

  2. If the aim of the policy is to prevent WMD getting into the hands of terrorists, there is no reason to restrict the policy to dictators who may put WMD into terrorist hands. There would also need to be pre-emptive elimination of any person who could do so. This class of persons is wide indeed - members of the Russian military with questionable personal lives, religious Pakistani generals etc. The ramifications of implementing such a wide ranging global cop policy could include a withdrawal of international co-operation with broader US foreign policy or law enforcement, as the policy gives no quarter to namby-pamby considerations of respect for national sovereignty.

  3. The consequences of broad pre emptive invasions would be a terminal case of imperial overreach, bringing about the precipitous decline of an American empire bankrupted by loss of financial, human and political capital. No American ally (and the word has a looser meaning of late precisely because of the overreaching, impractical nature of proposed Bush administration policy) would go along with such a policy. As it stands, the US has a very isolated coalition of the willing that does not even include Canada, or a single nation with a population that is behind this war - and this is before it has invaded Iraq.

In a textbook world, with an assumption of unlimited US military resources and unlimited international goodwill for the US, the pre-emption policy might be worthwhile. The US has neither unlimited military resources, nor does it have an inexhaustible reservoir of international goodwill. The failure of the world's worst rationale for action is that it incorporates an simplistic and unrealistic view of American power - a belief that America can just invade the Middle East and not suffer blowback in terms of terrorist consequences and America's aspirations to world leadership.

However the anti-war left argument it is facile, though well meaning. This position is a sandwich of gullibility and pacifism, with a healthy pinch of conspiracy theory. It would be great if everyone decided that there would be no more wars, but outside the confines of the EU there are nasty little tinpot dictators like Saddam.

Given the militaristic history of humanity we can't cling to the hope that we will see an end to war in this millennium. The 'No blood for oil' mantra is just another way of saying no war, ever. Saddam has demonstrated no compunction in engaging in war for material gain, as he did in the invasions of Iran and Kuwait. The logical extension of the no blood for oil argument would be to allow Saddam take any of his neighbour's oil fields.

The close ties between the present administration and the oil industry are a matter of public record. Although its ham handed and incompetent foreign policy and playing domestic corporate favorites give us no reason to love the Bush administration, there are no grounds to see an overt conspiracy between the administration and the oil industry to divvy up Iraqi oil in the wake of an invasion, not least because they know there will be so many left leaning detectives looking for such a conspiracy.

However, the Christian fundamentalist background of the president and of his administration, combined with ties to the oil industry have led the President and the US into the error of seeing the Iraq issue in stark black and white, good v evil terms, and has caused Bush to overestimate the relative benefit to the US of freeing up Iraqi oil compared to the costs of invasion.

That leaves us with the economic rationalist anti war argument that, after weighing the potential costs and possible benefits, it's just not worth it. Projections for the pure money cost of the war vary between $60b and $400b. The human cost will likely be far greater than the toll exacted on 9/11. Unless we imbue Iraqi soldiers with a hitherto unknown passion for democracy, and their leaders with the stupidity that would be a necessary concomitant of again taking defensive positions in the desert, we are about to enter into a bloody, dirty urban warfare scenario. This means American, British and Aussie soldiers dying in Baghdad - not hundreds, but thousands of body bags. This will occur unless the US decides to impose democracy in Iraq by razing Baghdad to the ground.

The costs to America's capacity to lead world opinion will start with the complete dismantling of a Western accord with Europe and with serious, even permanent damage to the US alliance with the UK. President Sheriff Bush has sidled up to the international poker table and, calmly trusting in his faith, has risked all of America's political capital and alliance chips in a game where the potential payoff will be to the elimination of the two-bit player Saddam Hussein.

Other costs will be the unintended consequences of striking the invasion match in the powder keg of the Middle East, including the facilitation of the very consequences the US hopes to avoid - use of WMD by Saddam, the sparking of a wider Arab-Israeli war, or dissemination of WMD to terrorists by, for example, religious fundamentalists within the Pakistani government.

Faced with what religious fanatics will no doubt perceive as unholy American intermeddling in Arab lands, is it not logical to expect such fanatics in positions of power to aid terrorist organisations to strike back at America? This scenario is at least as likely as the domino theory in reverse situation where the Middle East would become a terrestrial sea of tranquillity in the aftermath of a US invasion.

What would be the benefits? The only real benefit that one could point to would be the removal of Saddam from power. Chances are his successor would be a more polite international citizen. The administration regularly cites Saddam's support for Palestinian terrorists, and this would be eliminated after Saddam were removed from power. However, most Arabs do not see Palestinians as terrorists, they see them as freedom fighters.

That leaves us with what to do with Saddam - deterrence or containment. Neither option is particularly appealing. Both options are better alternatives than a unilateral US/UK/Australian invasion.

For cultural reasons, Americans have been sold by the can do attitude of the Bush administration, because an American believes it unpatriotic to do nothing in response to a threat. Unfortunately, the costs of doing this something will be much worse than the continued attempt to contain Saddam within the framework of a loose international coalition.

This invasion is the ultimate in fuzzy foreign policy - a policy driven by emotions of fear, anger and exasperation at having been smoked out of an isolationist stance by 9/11. Unilateral invasion of Iraq is a policy that would never have been seriously considered pre- 9/11, and since there is no credible link between al-Qaeda terrorists and Iraq, there ought not to be an invasion now.

Democrats Assail Bush Oil Policy - Adding to Reserve in 2002 Raised Prices, Senate Staffers Say

www.washingtonpost.com By Peter Behr Washington Post Staff Writer Thursday, March 6, 2003; Page E02

The Bush administration's decision to buy oil for the nation's strategic petroleum reserve last year, as oil prices were climbing, raised U.S. energy costs without significantly improving the nation's energy security, a report by Senate Democrats said yesterday.

Although the administration last year added 41 million barrels of oil to the reserve, kept in salt domes along the Gulf of Mexico, U.S. energy companies cut back comparably on their own oil inventories, resulting in no net increase in nationwide oil supplies, said the report by the Democratic staff of the Senate Permanent Subcommittee on Investigations.

The strategy "appears to have backfired," said Sen. Carl M. Levin (D-Mich.), the subcommittee's top-ranking Democrat. His staff's 268-page report on the strategic oil reserve follows a year-long inquiry, most of it done while Levin was the subcommittee's chairman.

Energy Secretary Spencer Abraham rejected the report's conclusions, saying he did not believe the U.S. strategy affected prices.

Some industry analysts challenged the report's conclusion, saying the escalating tensions over Iraq created a strong reason for increasing the oil stockpile.

"If things go horribly wrong in the [Persian] Gulf, it means they have a bit more of an insurance policy," said George Beranek, manager of market analysis with PFC Energy in the District.

"With the current Iraqi situation, the value of the strategic petroleum reserve is priceless," said Adam Sieminski, an energy analyst with Deutsche Bank in London.

Once a decision has been made to buy oil for the reserve, it's hard to know what is the "right" price, Sieminski said. The administration's error is in failing to use the oil stockpiles now, he said, to increase supplies and lower current oil prices, which have risen by more than 60 percent over the past year. "They keep waiting for some sign from heaven," he said.

In November 2001, President Bush set a goal of increasing the reserve from about 550 million barrels to its full capacity of 700 million barrels, about a 45-day supply. Before that, the Energy Department had deferred purchases for the reserve when prices were moving higher.

Abraham said yesterday the administration is monitoring the oil supply situation "very closely" but does not intend to use the reserve to restrain price increases. It would be used if a war with Iraq cut seriously into oil supplies.

The administration has been postponing purchases for the reserve since mid-December, a move that Levin's staff said supports its claim that the old Energy Department policy was correct.

Beranek said the subcommittee was wrong in concluding that oil companies refrained from increasing their crude oil inventories because the Bush administration was filling the petroleum reserve.

As oil prices rose in 2002, energy company executives were feeling pressure to cut operating costs, and that led to their shrinking inventories, he said. The committee's analysis also underestimates the impact on inventories of production cutbacks early in 2002 by the Organization of Petroleum Exporting Countries, and the sharp drop in oil imports late last year when Venezuela's oil fields were closed by a national strike, he added.

"I don't think somebody at Exxon is saying, 'DOE has more oil, so we need less,' " Beranek said.

Levin's report also said it looked into the possibility that prices of North Sea oil purchased for the reserve were manipulated, but could not prove it, because of the large volumes of oil traded on unregulated over-the-counter energy markets.

The risk was disputed by Neal L. Wolkoff, executive vice president of the New York Mercantile Exchange, the primary regulated market for energy trades.

"I'm not saying that a market absolutely can't be manipulated," Wolkoff said. "But if anyone does try to manipulate the [oil] market, we have the power to investigate and punish it." The exchange "takes that responsibility seriously."

Wolkoff said that despite the oil market's volatility there are many competing traders. "I don't see anything unusual. I don't see any dominant positions."

U.S. Hopes for U.N. "Understanding" if War Is Necessary Against Iraq

usinfo.state.gov 05 March 2003 (Powell interview with CNBC March 4) (2760)

Secretary of State Colin Powell says he hopes that, in the event that military force is needed to disarm Iraq, the United Nations will pass a resolution expressing its "understanding" for the necessity of such a course of action.

"[We] are going to deal with Saddam Hussein. We'll deal with him peacefully through the United Nations, and if conflict does become necessary, I hope the United Nations will understand that and pass a resolution that will express that understanding," Powell said in an interview with the CNBC television channel March 4.

Powell said that, while time is running out, war can still be avoided if Iraqi leader Saddam Hussein demonstrates that he is totally committed to complying with U.N. resolutions that he eliminate Iraq's weapons of mass destruction. Powell added it would be good for the Iraqi people if Saddam Hussein stepped down.

Powell said that longer inspections and more inspectors would not solve the problem. The inspectors are in Iraq "to verify that he is complying with the resolution and not to be detectives running all over the countryside looking for prohibited materials," he said.

Commenting on the problem of North Korea's nuclear program, Powell said the United States is sending the message to North Korea through various channels that it would not be wise to start uranium reprocessing while the search for a political solution to the problem is under way.

Powell said the United States wants to deal with North Korea through a multilateral forum that would involve all the countries affected by North Korea's nuclear program.

Following is the transcript of Powell's interview with CNBC:

(begin transcript)

U.S. DEPARTMENT OF STATE Office of the Spokesman

March 4, 2003

INTERVIEW

Secretary of State Colin L. Powell By Alan Murray and Gloria Borger CNBC's Capital Report Washington, D.C.

(As aired at 9 p.m. EST)................

Awash in Oil Dollars, Russia Tries to Steady Economy

www.nytimes.com By SABRINA TAVERNISE

MOSCOW, March 5 — While many countries are beginning to feel the pinch of high oil prices, Russia, the world's No. 2 oil producer, is suffering from a very different problem — too much money.

Russia's economy is awash in oil dollars. The combination of rising proceeds from exports and the heavy borrowing that Russian oil companies have done abroad has cash flowing into the country faster than the economy can absorb it. The central bank's currency reserves have risen by $4.8 billion, or more than 10 percent, since mid-January.

At the same time, the flow of cash out of the country is slower than it has been in years. Russians' faith in their currency, the ruble, has been rising, and they are not as quick to stash cash aboard.

The abundance of dollars is an enviable problem, and it contrasts sharply with fears about the state of Russia's infrastructure and its debt load that many thought would grip the country this year when its loan repayment obligations are scheduled to reach a peak.

Still, the situation is a headache for policy makers who are trying to steady the economy and minimize the zigzags of boom and bust.

"The oil price is responsible," Oleg V. Vyugin, first deputy chairman of the central bank, said in an interview. "No one counted on it being so high. We thought a decision on the war in Iraq would come sooner."

Russia's financial system, in many ways, is poorly equipped to handle such inflows of cash. Banks generally lack critical mass. Because the banks are too small to make loans on the scale that Russian companies require, the companies generally turn to foreign lenders, depriving Russian banks of the business they need to grow. The domestic banking industry has been adrift since the financial collapse in 1998.

A big concern is that the ruble will rise sharply against the dollar, making Russian goods less competitive with those made abroad. Many manufacturers, including the country's biggest carmaker, Avtovaz, reported a sharp improvement in business after the ruble was devalued in 1998; now the carmaker is cutting production and asking the government for trade protection.

Russia is in its fifth year of economic growth, with a national budget cushioned by a sizable surplus. Oil output continues to rise, up 11 percent in January and February in contrast to the first two months of 2002. Wages are rising, and company profits are soaring. And a stronger ruble makes imported goods more affordable for consumers.

The other big fear is inflation. Higher wages are translating into more spending and greater consumer demand, and the Russian central bank has been pumping even more money into the economy by buying dollars, an effort to keep the ruble from strengthening too much.

Russian policy makers are aware that the incoming tide of dollars is temporary, and that oil prices may fall later in the year. In the meanwhile, Mr. Vyugin said, the central bank is not going to make any sharp moves; rather, it is hoping that the government will mop up some of the additional money by running a large budget surplus.

"The situation — with Iraq and high oil prices, low interest rates in the U.S. and the weakening of the dollar — is temporary," Mr. Vyugin said. "By the end of the year the situation will be cleared up. We will try to make it through this period and not make big adjustments in the exchange rate."

The Russian federal government, which receives a third of its revenue from oil and gas, calculated its 2003 budget based on an average oil price of $21.50 a barrel. Lately, turmoil in the Middle East and in Venezuela, another major producer, has pushed crude oil prices up to nearly $40 a barrel.

"The government has an enormous windfall, and that should be saved fully," said Poul Thomsen, director of the International Monetary Fund office in Russia. "Otherwise the high oil prices will be associated with stronger pressures for a ruble appreciation, and that could choke the output recovery."

While Russia's oil is a boon, in the long run it is also a burden. Policy makers here are concerned about depending too much on such a volatile commodity, and are looking for ways of strengthening other parts of the economy. Crucial to that, they say, will be an upgrading of Russia's inefficient economic institutions — its weak legal system, bloated state apparatus and sagging Soviet-era utilities.

"It is important for growth outside the energy sector to prevent a sharp ruble appreciation by saving the oil revenue windfall," Mr. Thomsen said. "But over the long run, structural reforms are much more important."

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