<a href=www.financialexpress.com>Read more.. Saumitra Chaudhuri

Estimating the cost of war has become a bit superfluous. Till some days back, the defining limits were thus: A short war of six to eight weeks, without adverse repercussions after the US occupation. Or a more drawn-out affair lasting many months, combined by terrorist strikes and simmering local discontent to the eventual occupation. Obviously, the first had much less of an associated bill of cost, than had the latter.

Three days into the war, and the Iraqi army seems to be melting on contact. Unless, that is, the Iraqi supreme command has taken a leaf out of Russian tactics in the Napoleonic wars. Like the Russians, Saddam is perhaps drawing US troops deep into Iraq, after which he will wait for winter. The empty bluster and singular intransigence of the Iraqi regime is matched only by its plain idiocy. The one route Iraq had to force a stalemate, was the ability to inflict pain to the invading force beyond its threshold to accept politically. Which always seemed to be a remote possibility, but the absurdity of even considering such an outcome is now evident. The 2003 Iraqi expedition might yet turn out swifter than that of Lt. Gen. Maude in February-March 1917.

So let us check out the three instruments by which adverse effects from this war could possibly bear on the Indian economy. First, West Asia accounts for 12% of our merchandise exports and this year it rose by 37%. The largest market is the UAE, followed at some distance by Saudi Arabia, Israel and Turkey. The fear was that if the conflict spilled over to other countries in the Persian Gulf, and if the dislocation were to last, our exports to this region could fall precipitately. We can safely rule this one out now. Our exports to Iraq of about Rs 1,000 crore are in jeopardy, but we will return to this later.

Second, there are the millions of our citizens who work in the region and who remitted a large part of Rs 64,000 crore over the last four quarters. In 1991 a big chunk of Indian workers were in Iraq and Kuwait and they had to be evacuated. This time round, there are none in Iraq and there is no cause for anyone to flee Kuwait. Of course, if sarkari flights are available, some in Kuwait will surely fly. And the powers that be in the civil aviation ministry must be looking forward to all those photo-ops. No, not much loss in remittances or re-location costs should be on the table.

Third, oil prices. Producers have reaped a bonanza ever since the Axis of Evil speech raised the possibility of conflict in Iraq. Oil prices defied the laws of gravity, that is, the cold logic of soggy economies across the developed world. By rights it should be in the low-20s, but they stayed in the band of $25 to $30 per barrel ever since mid-March 2002. The strike in Venezuela in December 2002, of course, worsened matters.

To understand why oil prices fell $10 per barrel since last week, reflect on the nature of the market. What we call spot prices are really contracts for delivery after one month. And contracts are written for 2,3,4 months and so on for over a year into the future. As the war became more imminent, forward contracts come under pressure, since everyone knows that the regime of gravity defying prices will end, once the war is over. Thus, with a date set for the beginning of war future prices collapsed with immediate consequences on spot. Also bear in mind that the nervousness in the oil market related not only to loss of Iraqi supplies, but to dislocation to Persian Gulf supplies in general. This nervousness has, of course, been fully diffused. Hence, we look at 2003-04 through a prism of oil prices that will be actually significantly lower than that which ruled in 2002-03. So scratch that item of cost, and substitute it with a benefit.

Thus, the costs of war in Iraq are minimal, and are likely to be outweighed by the benefits. Given the quality of Iraqi resistance, it is best if we turn to the aftermath. What are the things that can go wrong and how might they affect Indian economic interests. Restive Iraqi populations, making for the occupation to be a bloody business? Unlikely. The majority Shias will find political space in the new set-up. Knives will be out against the minority who ruled the roost with Saddam and they will have their hands more than full just to survive. Will the Turks try slaughtering the Kurds, or at least their present autonomy? The Turks would perhaps like to do just that, but it is unlikely that they will cross the Americans excessively, especially after Baghdad falls. But there is some potential for a mess. Will the jehadis strike, and with what success, for given the anger amongst Arab and other Muslim populations, it is an opportune moment? That remains a big unknown, as also what manner of tremors it will set off against the many unpopular regimes in West Asia and North Africa and the not so stable ones in our part of Asia.

Will we be able to sell our sub-standard (everyone else think so) wheat stocks to Iraq after the dust has settled? American and Australian producers expect to be given the opportunity to provide the liberated people of Iraq better quality wheat. And whoever can argue against that? Will Indian companies get back pre-1991 Iraqi debts? Maybe. Will they get a slice of the Rebuilding Iraq project? Sub-contracts from American companies are possible, for all these are reasonable people and the bottom line matters. How about the contracts that ONGC (and the Russians and the French and the Chinese) had with the deposed regime? Best to forget it.

Is Iraq the last pre-emptive strike? More likely not, and it would serve us well to work out what the next act in this play might be.

The writer is economic advisor, ICRA

<a href=www.tuscaloosanews.com>Read more By GARRY MITCHELL Associated Press Writer March 23, 2003

Alabama's farm economy could grow at a moderate rate this year, thanks to better prices and higher productivity in some crops, agriculture experts say.

With spring planting picking up, there are factors that could alter that forecast: fuel costs, foul weather and drought threats and, as always, fluctuations in the U.S. economy.

Despite the unpredictable pressures, poultry growers in the state's largest farm industry produced more than 1 billion broilers in 2000 for the first time and have kept up that production pace, says Auburn University poultry expert Eugene Simpson.

He says the actual buyers' price to growers has not changed much, but poultry growers are improving their finances by refinancing mortgages using the record low interest rates.

Lisa Lake and husband Steve run S & L Farms in Cullman. She said they refinanced their mortgage on their four hen houses last year.

"We got a really good rate. We keep the same payment, but paid down the principal," she said.

Still, they must budget for higher fuel prices driven up by political upheavals in Iraq and Venezuela.

The Lakes have about 35,000 birds and run into high electricity bills keeping them cool in Alabama's summer heat.

"It's a little bit of a scary time for growers," she said, because the market is flooded with poultry.

Alabama's total farm receipts for 2001 totaled $4.25 billion, the most recent figures available from the government. That jumps to $4.83 billion when forestry is included.

"I think we will see moderate growth, say 2 to 4 percent," said agriculture economist Walt Prevatt at Auburn University, giving an outlook for the 2003 crop.

He noted that all of the top five commodities have some potential to improve in price and productivity this year. Broilers are 41.5 percent of total farm and forestry receipts; forestry is 14.9 percent; cattle and calves 7.5 percent; eggs 5.5 percent; and greenhouse and nursery crops 4.6 percent.

Cotton is number six at about 4.5 percent.

Cotton expert Bob Goodman, another Auburn economist, believes a U.S. war with Iraq will probably not have a lasting impact on cotton exports, "but we will see some drag on the cotton market until the situation stabilizes."

The outlook for cotton exports is improving, with the decline in the dollar, he said, because a weak dollar makes U.S. exports cheaper on the world market.

"We need to sell about two-thirds of our cotton overseas now, since most of the domestic market is out of business due to the lower labor costs of overseas competitors," he said. "I am positive about the farmer's chances for a profitable crop in 2003, for cotton and peanuts."

And he expects gains in peanut production in southwest Alabama.

"With the demise of the quota system, a large increase in peanut production has occurred in Baldwin, Escambia, Monroe and Mobile counties," he said.

Goodman expects this trend will continue for several reasons.

"There are some soybean producers there as well, and if the weather cooperates they should do OK, but there will not be a return to large acres of soybean production in Alabama for a very long time," he said.

Soybean prices are low right now, and will not sustain profitable production in most of the state.

Nationally, net farm income is expected to rebound this year, after a dramatic one-year, $13 billion decline in 2002, according to an economic report by the University of Missouri's Food and Agricultural Policy Research Institute, or FAPRI.

Prices for pork and beef are expected to rise until 2005, when reverses in the regular livestock cycles will bring price declines. Both hog and cattle prices are expected to end the decade at above current levels.

In Alabama, Prevatt said farm production costs will rise this year.

"I am hopeful they won't rise faster than gross revenue," he said. "When higher production costs are factored in, net farm income will probably be flat to a slight improvement. Now add in the farm bill payments to farmers and net farm income should show some improvement."

However, in comparison with other major farming states Alabama does not receive large levels of government payments, he said.

Also, if broiler production increases and improvements are realized for cattle and calf prices this year, this will likely give a boost to total farm receipts and net farm income, assuming production costs do not outpace improvements in revenue, according to Prevatt.

The USDA collects information from growers on their income each spring. Those surveys are currently being done. The report on planting intentions will come out March 31, giving the first hint of the 2003 crop size.

U.S. price projections for 2002-03 row crop marketing season are all improved over 2001-02, according to Herb Vanderberry of the Alabama Agricultural Statistics Service. Cattle, broiler, and egg prices are also projected higher for this year, he said.

"But until we have some idea of crop sizes and livestock production during '03, it would be anybody's guess on net farm income," he said.

www.vheadline.com Posted: Sunday, March 23, 2003 By: Patrick J. O'Donoghue

President Hugo Chavez Frias has announced that saboteurs have attacked the Carabobo Plant Centro electricity plant, which supplies the important central States.

Admitting an electric breakdown at Planta Centro more than two weeks ago, the President claims that saboteurs are playing on the fact that waters levels at Guri reservoir in Bolivar are at a critically low level to create chaos through electrical breakdowns. “It’s an electrical coup d’etat aimed at creating chaos … pure terrorism.”

No names of persons or groups have been mentioned but Chavez Frias suggests that there has been complicity from inside one or several electricity companies.

“By sabotaging Planta Centro and while we are doing repair works, they are forcing us to ask Guri for more electricity … they know water levels are critical and they want us to start rationing electricity.”

The President maintains that the same tactics were used during the December-January oil sector stoppage and says he has ordered the Armed Force (FAN) and state intelligence agencies to nip the electrical coup in the bud. Last month, Quinto Dia columnist Miguel Salazar warned that opposition sectors would attempt to disrupt electricity services.

www.vheadline.com Posted: Sunday, March 23, 2003 By: Patrick J. O'Donoghue

That is how historian and political activist, Domingo Alberto Rangel brands the leaders of the failed national stoppage.

Venezuelan Confederation of Trade Unions (CTV) president, Carlos Ortega and Federation of Chambers of Industry & Commerce (Fedecamaras), president Carlos Fernandez looked like and talked like two Napoleonic Field Marshals up till January 31.

"Every afternoon at the same time they used to issue a victorious proclamation ... they or the organizations they headed decreed the stoppage on December 2 ... less than 10% of mercantile establishments complied ... the most powerful international monopolies hardly stopped activities ... because they chose to undertake the stoppage at the worst moment and methods."

Rangel goes on: "the two Napoleons did not consult anyone ... December was the worst month economically and above all, they relied on the TV as if it could produce miracles ... the stoppage was a failure from the very start ... there was no stoppage in the street and no coup in the barracks."

Rangel maintains that there has always been a combative tradition in Venezuela banning cowardice in the political arena and points to students, known in Venezuela as the generation of 28, who fought the government in 1928 and were placed in forced labor camps and those who own struggle against Perez Jimenez (1953-1958).

"Now the two Marshals .. one with tears in his eyes is begging them NOT to change his comfortable house arrest to a common prison cell ... the other, Ortega running to the Costa Rican Embassy for asylum ... the two gentlemen are not only cowards but are politically as blind as bats."

The Chavez Frias regime is a farce, Rangel insists, full of thievery as Chavez Frias preaches administrative honesty ..."loaded with pickpockets that pose as heroes, quislings as never seen before,who fancy themselves ant-imperialists."

"It's an ideal regime that could be destroyed by a political trial ... turning a trial into a constant accusation against Chavez Frias for his double-speak, contradictions, slyness, hero-posturing would be ideal for any opponent."

The two marshals have let the opportunity slip away.

So why, then, are they scared in a country which has a proud tradition of warlords of risking their lives and people spending 14 years in prison under Gomez (1908-1931) and others, such as Rangel himself, spending 8 years in prison during Perez Jimenez (1953-1958) and Betancourt (1959-1964)?

Ortega and Fernandez' fear is based on class ... "they represent the moneyed oligarchy in the political arena ... they are front men."

Our oligarchy is coward ... other oligarchies are not."

Rangel compares Venezuela to Colombia where he was columnist in 1949 at El Tiempo broadsheet and virtual editor of the Revista de America owned by former Colombian President, Eduardo Santos. Rangel was 29 at the time.

Santos refused to leave Colombia despite an onslaught against members of the Liberal Party, saying the newspaper and his personal fortune were obtained thanks to Liberal activists and supporters, who were being murdered in the streets and villages.

Rangel ends his weekly column repeating that "Chavez Frias' regime is fragile because it is a farce ... the regime is full of thieves that talk with Catonian rigor and cites the example of an Energy & Mines (MEM) Minister flying to New York and Washington to shamelessly offer (unlike Gomez' ministers) Venezuela's oil resources.

Petroleos de Venezuela (PDVSA) president, Ali Rodriguez, "supposedly a champion of nationalism ... is an traveling salesman of the national wealth share-out ... a regime in which abandoned children and beggars grow with manifest speed where there is no coherent policy or tangible undertakings."

Conclusion: Ideal for a fighting and lucid opposition and not an opposition of deserters. "Chavez Frias can be beaten because he is a hypocrite and irresponsible but one must stay here with a quiver full of arrows."

"Alarm clock has gone off" By Michael Weir

THE war in Iraq has increased the urgency to introduce tax incentives to boost the level of oil and gas exploration in Australia, according to the industry's peak lobby group.

The Australian Petroleum Production and Exploration Association said on the eve of its annual conference in Melbourne that hundreds of millions of dollars would be required to rebuild Iraq and investment funds would be directed away from Australia unless there was more incentive to invest.

APPEA chief executive Barry Jones said if exploration expenditure in Australia did not double to more than $2 billion a year, the country's level of petroleum self-sufficiency would plunge.

Australia imports about 60 per cent of its petroleum needs each year and the Federal Government has now slashed its forecast of how long current reserves can last to 2008 from 2014.

If Australia's reliance on imported petroleum increases, it would cause a massive blow-out in the country's balance of payments.

"Iraq is going to need to be rebuilt and so is Venezuela after the oil strikes and that is going to take hundreds of millions of dollars," Mr Jones said.

"There is going to be a capital shortage in oil and gas and we need to find $14 billion for exploration just to stay at the same level of self-sufficiency that we are now."

Mr Jones said the Federal Government's energy policy "alarm clock has gone off".

"Sadly after promises, promises and more promises, Australia's frail efforts to develop a meaningful energy policy are in tatters," he said."We are running out of time to install an energy policy that will produce long-term benefits for all Australians."

Mr Jones said it was a laudable objective for governments to say they want affordable, clean and secure energy supplies."What they don't understand is that they won't achieve such objectives by tinkering with the structure of petroleum product taxes, putting ethanol into petrol, focusing primarily on retail and wholesale energy market competitiveness and subsidising industry development for renewables," he said.

If the parameters for exploration were wrong, development would not occur, but equally the parameters for development needed to be right to encourage exploration.

He said taxation policy could not be set in stone if Australia wanted to stay as an internationally attractive destination for capital.

He also said small to medium business, a critical part of the oil and gas industry, was being driven out of business or forced offshore by the higher regulatory approval hurdles and costly, complex and overlapping approvals process.