www.guardian.co.uk Duncan Campbell in Los Angeles Friday March 21, 2003 The Guardian

Just as the war was starting in Iraq, President Bush lost a different kind of battle in the senate as his plans for drilling for oil in the Arctic National Wildlife Refuge in Alaska were defeated.

But supporters of the drilling plans were yesterday warning that this battle was far from over, and they would be returning with new plans.

By a vote of 52 to 48, the senate rejected President Bush's plan to open the refuge for drilling. Eight Republicans joined 43 Democrats and one independent to remove the drilling clause from a budget vote on Wednesday night. The outcome of the vote had been in doubt until the final moment.

The president believed the war in Iraq and the uncertain situation in Venezuela would convince waverers that the domestic oil supply should be expanded.

He has been opposed by environmental groups which warned that it would cause ecological damage to the area. The local Native American people, the Gwich'in, have also opposed the drilling and were present for the vote in Washington this week.

The vote in effect kills off drilling in the area for the year, conceded the chairman of the Senate energy committee, Pete Domenici, who had backed the plan. But its supporters believe a petrol-price hike due to the war in the Gulf would put senators under renewed pressure from their constituents.

The failure of last-minute attempts by vice president Dick Cheney to sway Republican senators who were opposed to drilling on the eve of war was significant. The White House criticised the senate vote, saying it was "unfortunate that the senate missed an opportunity to increase our energy independence at a time when that's critically important".

The California senator Barbara Boxer, a Democrat, was the most vocal opponent to the plan. She produced photos of the wilderness area where drilling would have taken place, showing caribou and polar bears. "Cast your eyes on this," said Ms Boxer. "One cannot paint anything quite as magnificent as what God has created."

Ms Boxer argued that the government should be concentrating instead on fuel economy measures. "We can do more for our troops if we just increase fuel economy," she said.

Senator Ted Stevens, a Republican from Alaska who has been a main supporter of drilling, attended the debate wearing an Incredible Hulk tie. Mr Stevens, who argued that drilling would bring much-needed employment to the state, said afterwards: "There will be another vote, another day."

Mr Stevens had argued that it would have been possible to have extracted oil with a minimum of ecological damage. He said that the issue had been taken over by "extreme environmental organisations" who had spread "propaganda". He told Californians that when their petrol prices went up, they should call Ms Boxer.

Supporters of the drilling mocked the photos produced by Ms Boxer, saying that the area concerned was just a frozen wasteland.

The other Alaska senator, Lisa Murkowski, also a Republican, attacked the opponents of the plan, saying: "The rest of the country would just as soon lock us up and say, 'nothing, nada, zip, you cannot do anything.'"

The US uses around 7bn barrels of oil a year, and the government had estimated that as many as 16bn barrels could have been found in Alaska. Opponents suggested that only around 3bn could have been recovered without causing major damage.

The Bush plan would have allowed for drilling over 600,000 hectares (1.5m acres) of the 8m-hectare (20m-acre) refuge.

sg.biz.yahoo.com Friday March 21, 1:12 AM By Maria Daly Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--European stocks ended mostly lower in thin volume Thursday as investors reacted with caution to news that the war in Iraq had begun.

At the close, London's FTSE-100 Share Index was up 0.01% at 3765.7, while Paris's CAC-40 Index fell 1.5% to 2794.83. At 1657 GMT Frankfurt's Xetra Dax Index was 1.4% lower at 2578.85.

David Buik at Cantor Index said market volume was negligible on the first day of war in comparison with previous sessions, as the market remained preoccupied with watching battle progress in the Gulf.

U.S. President George Bush's statement Wednesday evening that war may be drawn out also caused investors to be sidelined. Traders commented that hopes for short conflict gave way to fears of a protracted campaign.

Economist Neil Parker at Royal Bank of Scotland said market sentiment is likely to continue being fueled by the drip-feed of news on Iraq as traders look for evidence of a quick U.S. victory.

He added that concern over use of chemical weapons is likely to unsettle sentiment and as troops move closer to Basra and Baghdad there is likely to be a heightened sense of unease. "In the current environment, investors are loathe to increase their exposure to risk," he said.

The assumption of a short successful war with Iraq is now being tested, said strategists at ABN Amro.

Morgan Stanley Chief Global Economist Stephen Roach warned that investors shouldn't conclude that U.S. military supremacy will lead to the perfect victory in Iraq.

"Courtesy of global terrorism, the proliferation of weapons of mass destruction, and the breakdown of once steadfast alliances, today's world is a far more unstable and much scarier place than it was in the aftermath of the Gulf War of 1991," he said in a note published Thursday.

Russian President Vladimir Putin Thursday demanded a quick end to the U.S.-led attack on Iraq, saying it was in no way justified and calling it a "big political mistake."

Analysts also warned that even if it is a short sharp war, any resultant "victory rally" may stall on the less- than-sparkling prospects for global economic recovery.

Friday's session is likely to remain closely tied to reports of military progress from the war zone, but markets may also experience volatility due to the expiration of derivative contracts across the region.

Most European markets will experience "double witching," which occurs when the contracts for stocks index futures and stock index options expire on the same day. Traders expect Friday's expiration of derivatives contracts to be extremely volatile.

"Tomorrow's trade could be dramatic to say the least, but in the meantime sentiment remains undecided," commented one London trader.

Oil stocks were higher in late trade after unconfirmed reports that two Iraq oil fields were on fire. However, gains were tempered as both Saudi Arabia and Venezuela have pledged to keep the oil flowing during wartime. BP ended up 0.7% at 417.25 pence in London.

Insurance stocks - one of the strongest performing sectors in recent sessions - reversed course Thursday.

Europe's largest insurer, Allianz, said it would raise at least EUR5 billion in a bumper rights issue and bond sale. Shares fell 8.9% to EUR59 in late trade, leading decliners in Frankfurt.

The rights issue, the biggest ever in Germany and the largest one to be underwritten, will boost the number of outstanding Allianz shares by as much as 50% from the current 243 million.

Separately, Munich Re, the world's largest reinsurer, said it and Allianz will reduce their reciprocal shareholdings to around 15%. Munich Re also said it intends shortly to strengthen its capital base through the issue of subordinated bonds. Shares fell 6.7% to EUR76.59.

French insurer Axa came under pressure after credit ratings agency Moody's downgraded the company's senior debt rating, warning that volatile stock markets could continue to affect profitability. Shares fell 4.8% to EUR11.7, leading decliners in Paris.

Other notable decliners included Sage Group, the U.K.'s largest maker of accounting software. Shares fell 12.1%, to 123 pence after UBS Warburg cut its rating on the company to reduce from neutral.

At 1657 GMT, the Dow Jones Stoxx Index of shares in European companies was trading down 0.6% at 178.22, while the Dow Jones Euro Stoxx Index, which tracks companies in countries that joined the single currency, fell 1.3% to 170.20.

The Dow Jones Euro Stoxx 50 Index was down 1.6% at 2152.7 and the Dow Jones Stoxx 50 Index was down 0.6% at 2223.9.

-By Maria Daly, Dow Jones Newswires; +44-20-7842-9308; maria.daly@dowjones.com

www.kansascity.com Posted on Thu, Mar. 20, 2003 BRUCE STANLEY Associated Press

LONDON - Saddam Hussein may have organized a meticulous plan for sabotaging Iraq's oil fields in a scorched-earth tactic designed to cripple Iraqi production.

The oil industry has buzzed with reports in recent weeks that Iraqis are rigging their wells with explosives, hoping to slow a U.S.-led attack and making the country's oil wealth worthless for any new government.

"We can confirm reports that (Saddam) has taken measures to booby trap oil wells by wiring the wells so that one person can blow them up," said U.S. Defense Department spokeswoman Megan Fox.

"If the worst happens and he does detonate something that causes the oil wells to catch fire, we'll do everything we can. Those assets belong to the Iraqi people, and as much as possible we'd like to keep them intact," she said.

Already, those fears may have become reality. Defense Secretary Donald H. Rumsfeld said Thursday that three or four Iraqi oil wells may already have been set afire in southern Iraq. Witnesses in Kuwait heard explosions and saw orange flames in the sky across the border.

In 1991, Iraqi troops needed just a few days and some plastic explosives to destroy more than 700 well heads and turn Kuwait's occupied oil fields into a desert inferno.

A loss of oil from Iraq - home to the world's second-largest oil reserves - could crimp supplies for importing countries, including the United States, which depends on Iraq for 2 percent of all the crude it consumes.

However, both Saudi Arabia and Venezuela have pledged to keep the oil flowing in wartime.

Oil exports are also a major source of the money that would be needed to pay for Iraq's reconstruction after a war. Because of their strategic importance, the Defense Department says it will try to secure Iraq's oil fields quickly to prevent Iraqi forces from damaging the country's 1,685 wells.

When Iraqi troops retreated from Kuwait in February 1991, they attached plastic explosives to well heads and piled sandbags against them to direct the force of the explosions for maximum effect.

The result was geysers of burning crude at 603 wells, serious damage at more than 100 others and widespread environmental degradation. Teams of firefighters from the United States, Canada and eight other countries worked from April until November to put out the fires.

Most of the teams used sea water pumped through Kuwait's empty oil pipelines to battle the fires. The heat was so intense, at more than 2,000 degrees Fahrenheit, that water sometimes continued boiling on the ground for two days afterward, said Mark Badick of Safety Boss, Inc.

"We've had fire helmets melt on our heads," said Badick, whose Calgary-based firm put out 180 of the Kuwaiti well fires.

Firefighters from Hungary had a different technique, using two jet engines mounted horizontally on a tank chassis - a homemade vehicle they called "Big Wind" - to blast flame-retardant foam at the fires.

It took Kuwait more than two years and $50 billion to restore its oil output to prewar levels. If Iraq sabotaged its oil fields, any cleanup could take far longer and cost much more.

Iraq's fields and pipelines are badly run-down after 12 years of U.N. economic sanctions. Its fields are also much farther from the sea than those in Kuwait, meaning a ready source of water might not be so easily available.

Destruction could be especially bad if Iraqis set off explosives underground, deep within the well shafts themselves. If that happened, firefighters would have to drill a new "relief well" and pump a mixture of sand, gel and mud into each damaged shaft to try to plug it up and stop the blowout.

"It's a long, arduous process," Badick said. Whereas he and his crews put out as many as five fires a day in Kuwait, cleaning up after a single underground explosion can take two months.

Even if the Iraqis did booby-trap their oil fields, Manouchehr Takin, an analyst at the Center for Global Energy Studies, said Saudi Arabia, Venezuela and other OPEC member countries could increase production to offset Iraq's 2 million barrels a day in exports.

Saudi Arabia, which has the world's largest crude reserves, repeatedly has suggested it would boost its output to keep supplies flowing. Also, the United States and other oil importing nations could tap their 4 billion barrels in strategic petroleum reserves, if necessary, to cover a shortfall.

Brown & Root Services of Houston has drawn up a plan for the Defense Department for containing and assessing any damage to Iraqi oil installations, but the Pentagon so far has awarded no contracts.

The challenge for such companies would multiply if Iraq used chemical, biological or radioactive material to sabotage its oil fields.

Special suits designed to protect a wearer against biological or chemical agents would disintegrate in the heat of a burning well. Firefighters might have no choice but to wait until the fires burn themselves out.

"That's a whole new ball game," said Peter Gignoux, head of the oil desk at Salomon Smith Barney.

By Gerver Torres gerver@liderazgoyvision.org

La frase “destrucción creadora” la acuñó el economista Joseph Shumpeter para referirse a situaciones en las cuales, nuevos procesos, productos y tecnologías, destruyen los existentes, generando al final más bienestar: destrucción de un viejo orden para crear uno mejor. De allí el término se ha extendido para aplicarse también a situaciones como las que se crean cuando un desastre natural –un terremoto, por ejemplo- afecta una región: entonces se abre la oportunidad de reconstruirlo todo de nuevo.

El concepto lo podemos usar para pensar los profundos cambios que ha vivido Venezuela durante los últimos años y sacar el mejor partido de ello. Por ejemplo, la destrucción de PDVSA, puede ser una excelente oportunidad para construir un nuevo modelo de industria petrolera, en el cual la organización del Estado y la sociedad alrededor del recurso sea totalmente distinta a la actual. Un modelo que supere la visión volumétrica de la industria -en la cual la única variable importante es el volumen y el precio de los barriles producidos- para ocuparse también de la forma como podemos industrializar la materia prima. Un modelo en el cual la industria pueda contribuir al desarrollo del mercado de capitales, esto es que empresas que operen en el sector se coticen en la bolsa y los venezolanos puedan invertir sus ahorros allí; un modelo en el cual, nuestras ventajas energéticas nos sirvan para negociar la integración al mercado común americano. Un modelo en el cual desarrollemos un vigoroso sector privado petrolero venezolano que pueda expandirse por el mundo sobre la base de la experiencia ganada en el país. En síntesis, un modelo en el cual, con mayor participación y competencia, progresemos más.

De la misma manera, el colapso fiscal nos abre la oportunidad para crear nuevas reglas de gasto y endeudamiento que aseguren el equilibrio en las cuentas públicas. Reglas que impidan al Ejecutivo financiarse con subterfugios contables en el Banco Central; reglas que le impidan tomar créditos aquí y allá, sin que nadie pueda saber exactamente el monto total del presupuesto al final del año. Lo que hasta ayer lucía imposible de lograr, puede hacerse factible ahora en esta tierra arrasada del tesoro público.

Estando cerca la solución política a la grave crisis que vive el país, el gran reto que tenemos ahora los venezolanos es convertir la destrucción masiva de empresas, organizaciones e instituciones que se ha producido, en una oportunidad para replantear todo de nuevo, para liberar nuestros sueños y construir el mejor país que podamos imaginarnos; convertir la destrucción habida en una suerte de destrucción creadora. Entonces le habremos sacado el mejor provecho a la experiencia vivida.

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