SCMP.comThursday, March 27, 2003

US seizes northern Iraq airfield; civilians killed

US paratroopers took control of a key airfield in northern Iraq early on Thursday (HK time), and at least 15 Iraqi civilians were killed in a Baghdad street during another intense bombardment.

Iraqi armoured convoy pours south from Basra

American-led forces battled a column of Iraqi tanks and armoured personnel carriers south of the Iraq's second city of Basra early on Thursday (HK time), a British military spokesman said.

The first relief convoy gets through

The first major relief convoy arrived in Iraq during a sandstorm yesterday. It did so as coalition forces struggled to clear the way for more aid shipments, using dolphins to remove mines from waterways and hunting Iraqi fighters around the port of Umm Qasr.

Marines traverse a highway of death

Marines pushing north towards Baghdad left behind a trail of death yesterday as they fought off sporadic Iraqi attacks along the way.

Secrecy surrounds Basra's fate after uprising reported

The fate of Iraq's southern city of Basra was cloaked in secrecy last night amid conflicting claims of an uprising by dominant Shi'ites long oppressed by Iraqi President Saddam Hussein's regime, as British forces fought on the outskirts of the besieged city.

Rumsfeld fends off critics of battle plans

The Bush administration has defended itself against accusations that it underestimated the might and will of the Iraqi military, amid some of the fiercest fighting of the week-long war.

US television networks losing the fight against biased coverage

Media-watchers on both sides of the war have declared the Americans the losers. Embedded journalists and hi-tech equipment have so far not been able to deflect accusations that US television networks are presenting biased coverage.

Posted on Wed, Mar. 26, 2003 By ERIC PALMER The Kansas City Star

A Kansas City economist set out Tuesday to answer the pressing question: What will the war with Iraq mean for the region's economy?

His conclusion: It depends.

If the war with Iraq ends quickly, the Kansas City area can expect economic growth of just under 2 percent in the first half of this year, but double that by year's end.

If the war is prolonged and oil prices remain high, the rate of growth in gross regional product will be reduced by 2 percentage points over the next 12 months, economist Frank Lenk told about 300 people attending the midyear economic forecast of the Greater Kansas City Chamber of Commerce.

Instead of adding 26,000 jobs, as seen under a short-war scenario, a long war would mean the economy would add only 8,000 jobs between now and the first quarter of 2004. If the war persists, however, 6,000 of those new job gains would disappear by the end of 2004.

"Most people believe in the short-war scenario," said Lenk, director of research services for the Mid-America Regional Council. "But even a short war will incur real economic costs. The resilience of the economy, however, means a short war will delay the economic recovery, not derail it."

The economic forecast, held at the Hyatt Regency Crown Center hotel, updated economic projections for the year that had been made in September. The war with Iraq was not factored into the earlier forecast.

Assuming a short war, Lenk projected that all sectors of the local economy, except government, will add jobs. Services should add 13,000 jobs and retailers would add 5,000 jobs between the first quarters of 2003 and 2004. Even manufacturing is expected to gain close to 3,000 jobs, bringing it back to levels last seen in 2001, he said.

In addition to Lenk's projections, a panel discussed what the war will mean for the Kansas City economy.

Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, said he believed the war wouldn't be dragged out. He said he expects national economic growth of 2 percent to 2.5 percent in the current quarter and about 4 percent by 2004. The Kansas City area economy should closely follow the national economy, he said.

"Fiscal policy has been stimulative. We have had one tax cut, and another is on the table," Hoenig said. "That puts money into the pockets of consumers. Monetary policy has been accommodating, with short-term interest rates at 40-year lows."

The local economy's fundamentals are generally favorable for economic recovery, Hoenig said, with business inventories at historic lows, suggesting there is some pent-up demand for businesses to buy.

Consumers are pulling back somewhat on their spending and have a high debt level, Hoenig noted. But interest rates are so low that the cost of handling that debt is manageable.

Hoenig declined to predict whether the Federal Reserve will further cut interest rates in coming months.

As the war proceeds, it will be easier to sort out its effects on the economy from other factors, Hoenig said.

One of those other factors is the health of other economies with which the United States is intertwined, Hoenig said.

Japan's economy has been weak for a decade, Europe is having slow growth, and there are trouble spots in South America, like Venezuela, from which the U.S. gets a significant amount of its oil.

On balance, though, Hoenig said he sees a lot of opportunity for growth locally.

The current world risks create a greater need for vision and flexibility in U.S. business executives, said Bill Eckhardt, professor of law at the University of Missouri-Kansas City. Eckhardt is a retired colonel who taught military law and litigated in military courts for 30 years.

Executives, like their counterparts in many parts of the world, must learn to factor threat and risk into their economic planning, Eckhardt said. And as a country, we must not let such risks keep us from being a bold country.

"I don't know how we collectively face our fears, but we must not just hunker down," Eckhardt said.

To reach Eric Palmer, regional business editor, call (816) 234-4335 or send e-mail to epalmer@kcstar.com.

Business Briefs

Frankfurt, Germany-based -Deutsche Lufthansa AG, Europe's No. 3 airline, will reduce the long-haul fleet by seven aircraft and scale back flights as fewer passengers fly because of the war in Iraq.

Lufthansa will cut a daily flight from Frankfurt to New York, Boston and Los Angeles as of Sunday as well as some services linking Frankfurt with Phoenix and Dallas.

It will use smaller planes to Philadelphia; Seoul, South Korea; and Osaka, Japan, and reduce the number of flights to Caracas, Venezuela, to three times a week from six times weekly.

<a href=www.socceramerica.com>Source3/26/2003 12:19:00 AM

Venezuela coach Richard Paez has named four foreign-based players to his 17-man roster for Saturday's friendly against the USA (4 pm ET/1 pm PT in Seattle, live on ESPN2).

Three foreign-based players -- Alejandro Cichero (Cerro/Uruguay), Juan Arango (Pachuca/Mexico), Hector Gonzalez (Olimpo/Argentina) -- will not travel to Seattle but will join Venezuela for its April 2 home game against Jamaica in Caracas.

Also not in the squad is Ruberth Moran, Venezuela's leading scoring during its unsuccessful qualifying campaign for the 2002 World Cup with four goals.

The four foreign-based players on the roster are defenders Jose Manuel Rey and Jorge Rojas of Emelec (Ecuador), goalkeeper Manuel Sanhouse (Club Espoli/Ecuador) and Gabriel Urdaneta (Lugano/Switzerland).

GOALKEEPERS Gilberto Angelucci (Deportivo Tachira) Manuel Sanhouse (Club Espoli/Ecuador)

DEFENDERS Wilfredo Alvarado (ItalChacao) Luis Vallenilla Pacheco (Caracas FC) Jose Manuel Rey (Emelec/Ecuador) Jorge Rojas (Emelec/Ecuador) Leonel Vielma (Maracaibo) Javier Villafraz (Estudiantes)

MIDFIELDERS Leopoldo Jimenez (ItalChacao) Ricardo David Paez (Caracas FC) Giovanny Perez (Estudiantes) Gabriel Urdaneta (Lugano/Switzerland) Luis Vera (Caracas FC)

FORWARDS Cristian Casseres (Deportivo ItalChacao) Juan Garcia (Mineros) Wilfredo Moreno (Mineros) Daniel Noriega (Deportivo ItalChacao)

BLOOMBERG Wednesday, Mar 26, 2003,Page 12

Crude conflicts

• Nigeria is the fifth-biggest oil exporter to the US.
• Shell, ChevronTexaco and Total Fina Elf SA of France have reduced output by 817,500 barrels a day, or 37 percent of Nigeria's production, last month.
• Crude oil rose, adding to its biggest gain in 15 months yesterday.Royal Dutch/Shell Group and ChevronTexaco Corp shut down more than a third of Nigeria's oil production because of clashes between soldiers and Ijaw militants, adding to investor concern about world supplies.

Shell, Europe's largest oil company, ChevronTexaco, the second-largest US oil company, and Total Fina Elf SA of France have reduced output by 817,500 barrels a day, or 37 percent of Nigeria's production, last month. Nigeria is the fifth-biggest oil exporter to the US.

The violence, sparked by demands from the Ijaw minority for greater political representation, adds to pressure on oil supplies threatened by the US-led attack on Iraq, the Middle East's third-largest producer, and reduced shipments from Venezuela after a nationwide strike.

Crude oil in London rose as much as 6.2 percent, its biggest gain since April 2002.

"We would not count Nigerian production as being a secure supply source for a while to come," said Paul Horsnell, head of energy research at JP Morgan Chase & Co.

Crude oil rose, adding to its biggest gain in 15 months yesterday, as resistance to a US-led invasion of Iraq raised concern that its oil will be kept off the market longer than expected.

Crude oil for May delivery rose as much as US$0.39, or 1.4 percent, to US$29.05 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Oil traded at US$29 a barrel at 12:50pm Singapore time.

Shell has evacuated workers from the southern swamps of the western Niger River delta and shut down about 320,000 barrels a day in its western division, spokesman Simon Buerk said. An additional 50,000 barrels of production was stopped in the eastern division.

On Friday, Shell declared force majeure, a legal principle that allows it to miss contractual obligations because of circumstances beyond its control, on exports from its Bonny and Forcados terminals, partly because of the unrest.

Shell Petroleum Development Co, a joint venture with Nigeria's state-run oil company, normally produces about 800,000 barrels a day of low-sulfur crude, a type of oil that is easily converted into fuels such as gasoline. The government owns 55 percent of the venture, Shell 30 percent, Total 10 percent and Eni SpA 5 percent.

ChevronTexaco has shut down daily production of 440,000 barrels, the company said in a statement. Relocating workers from the Escravos terminal and related offshore platforms also stopped daily production of 87 million cubic meters of natural gas.

Two soldiers and three Nigerian workers were killed as Total evacuated staff from oil installations Friday and Saturday, said Paul Floren, a spokesman for Europe's third-largest oil company.

Total has reduced production by 7,500 barrels a day.

Total pumped the equivalent of 174,000 barrels of oil a day in Nigeria in 2001.

Exxon Mobil Corp, the world's largest publicly traded oil company, said its Nigerian oil and gas output hasn't been affected, spokeswoman Marcia Zelinsky. All of the Irving, Texas-based company's Nigerian production is offshore, she said.