<a href=www.chinapost.com.tw>The China Post 2003/6/12 BEIJING, Agencies Mainland China has decided to eliminate 500,000 members of the People's Liberation Army °X about 20 percent of its force °X in an effort to turn the world's largest standing military into a streamlined, modern organization, Chinese and Western sources said.

The plan would cut the size of the army over the next five years to about 1.85 million troops, the sources said on condition of anonymity. The Chinese government spends up to US$60 billion a year on defense, comparable to Russian military expenditures, according to a report last month by the Council on Foreign Relations.

The military modernization is taking place as this country seeks to parlay its emerging economic power into greater geopolitical influence. China now has the sixth-largest economy in the world, according to the World Bank. Once confined to Asia, Chinese interests now span the seas. More than 50 percent of imported oil comes from the Middle East, and China's energy investments range from Sudan to Venezuela and Kazakhstan.

While there has been notable economic success here, military modernization has proved elusive. In late April, 70 sailors and officers died on board a submarine in the country's worst publicly acknowledged military accident. The Council on Foreign Relations report concluded that China is far from becoming a global military power and that it remains at least two decades behind the United States in military technology and ability.

Western and Chinese sources said the troop cuts were approved during the 16th Congress of the Communist Party in November and at a subsequent meeting of the Central Military Commission, the country's highest military body.

In a speech on May 23, President Hu Jintao hinted at the cuts, ordering the military to work on the development of reserve units and to find jobs for demobilized soldiers. In the speech at a meeting of the Communist Party's Politburo to study the "world's modern militaries" °X a clear reference to the United States °X Hu urged the army to carry out "developmental leaps in the modernization of national defense and the military."

Citing contacts in China's armed forces, a Western military officer said the cuts would focus on demobilizing a vast array of nonessential personnel.

Analysts liken the People's Liberation Army to a large state-owned corporation. It has its own hospitals, schools, movie studios, TV production centers, publishing houses, opera troupes, textile factories, farms and hotels. Many of these organizations are "an unnecessary drain on their resources," the Western military officer said.

Dozens of military hospitals will be put under the control of local civilian authorities, a decision that has been further influenced by the outbreak of SARS, severe acute respiratory syndrome, the sources said. During the initial phase of the disease's outbreak, military hospitals did not report their SARS statistics to the central government, sowing confusion about the extent of the problem. Command headquarters will be closed and military schools will be merged, the officer said.

Significantly, the demobilization, the second major troop cutback since 1997, when China also cut 500,000 soldiers, does not appear to be proceeding simultaneously with an overhaul of the military's command structure, two Chinese sources said. Newspapers in Hong Kong and Singapore have reported in recent weeks that the Chinese government was prepared to replace its Soviet-era continental command structure with a military more geared to projecting power toward Asia's sea lanes and Taiwan.

The Council on Foreign Relations report had listed that reform as a key way to gauge the pace of modernization.

However, the news reports appear to be premature, and China seems to be headed for a less ambitious tweaking of its current system, Chinese sources said. At most, China will cut the number of military regions from seven to six, merging the Jinan Military Region with the Nanjing Military Region, the sources said. The Nanjing Military Region is tasked with leading unification efforts with Taiwan, a focal point for military preparedness. The government continues to threaten Taiwan with attack if the island democracy of 23 million people declares independence.

Chinese military officers said they expect no broad structural changes in the PLA as long as former president Jiang Zemin retains control as chairman of the Central Military Commission.

But prospects for big new Iraqi supplies remain a wild card   Iraqi workers inspect equipment at the Basra oil refinery in mid-May. Almost all of the 2,600 Iraqi employees at the plant are now back at work.  

By John W. Schoen <a href=www.msnbc.com>MSNBC

June 11 —  OPEC ministers decided Wednesday to leave production quotas just where they are. With crude oil prices high, and world stockpiles at historic lows, the case for cutting output was too hard to make. But the cartel will be keeping a close eye on how quickly U.S. forces and Iraqi workers can increase Iraqi oil exports — and what impact those new supplies have on prices.         WITH OIL PRICES hovering above $31 a barrel, comfortably above OPEC’s price target of $22-$28, even the group’s most militant members had a hard time making the case for cutting the current quota of 25.4 million barrels a day. Still, the big worry for the Organization of Petroleum Exporting Countries is that a bigger-than-expected flow of Iraqi oil could send prices falling quickly.        So OPEC hedged its bets, calling for another meeting July 31.        “Then we will have some options — either to cut production or not. That is what we need to decide,” said OPEC President Abdullah bin Hamad al-Attiyah.        The group Wednesday also gave the usual warnings to member states to stop exceeding their quotas and comply with the production schedule. With prices above OPEC target price range, producers have been overpumping their quotas by about 1.5 million barrels a day, lifting overall output to 26.9 million barrels.        But the main threat to OPEC’s control of oil prices is the resumption of Iraqi output, now under the control of U.S.-led coalition forces. Iranian Oil Minister Bijan Namdar Zanganeh said earlier Wednesday that OPEC “must be very careful in handling Iraq’s return.”        Iraqi officials last week began accepting bids for about 10 million barrels of oil in storage that was produced before the U.S.-led invasion in March. But it’s a lot less clear how soon the country’s creaking oil infrastructure can be patched together well enough to begin exporting in significant volumes. Looting and sabotage since the war, on top of 12 years of decay under U.N. sanctions, have left Iraqi oil facilities badly crippled. Iraq, which was excluded from OPEC quotas while under U.N. sanctions, pumped about 2.5 million barrels a day, including crude for domestic consumption. Iraqi oil officials have said exports would reach a million barrels a day by July, and could reach 2 million barrels by the end of the year.        But some oil analysts say the current timetable for bringing Iraqi production back on line are too optimistic.        “I think the market has overestimated the ability or Iraq to start pumping oil,” said Phil Flynn at Alaron Trading.        OPEC members say they, too, have no idea how quickly Iraqi production will ramp up again.

       “The pace and the extent of the return of Iraqi crude to the market remain unclear,” said al-Attiyah, the OPEC president.        Iraq was not represented at the meeting.        Still, some OPEC ministers are concerned that they may overshoot production if they continue pumping at current levels — especially if a soft global economy continues to hold back demand. Since the cartel last set quotas, tight supplies have eased from two key members.        Venezuela, where a lingering strike cut earlier this year production to below 600,000 barrels per day, was producing an average of 2.1 million barrels a day in April, according to a Lehman Brothers report. And Nigeria’s output has likely risen after falling to below 2 million barrels a day in April. Those outages helped drain reserves to about 100 million barrels below the historical range for this time of year, the report said.

• Petroleum primer •  Oil and the markets All this means that OPEC has tried to hedge its bets. The group invited seven non-OPEC members to Wednesday meeting in Doha, including major producers Russia, Mexico and Norway, to coordinate another production cut if prices fall. OPEC is trying to head off another battle for market share between the two groups that sent prices sliding in late 2001.        Even if Iraqi production rises to pre-war levels quickly, oil prices may continue to draw support from extremely tight supplies.        Meanwhile, shortages of natural gas have sent the price of that fuel soaring. Federal Reserve Chairman Alan Greenspan in Congressional testimony Tuesday said it’s not likely that natural gas prices will fall soon. That helps support oil prices because it eliminates a cheaper alternative to crude for businesses, like power companies, that can switch fuels.

  High nat-gas prices seen into 2004

       The real worry is that, with U.S. forces in charge of Iraq’s oil production, OPEC now confronts a major new supplier under U.S. control. If Iraqi production rises quickly above pre-war levels, OPEC and other major oil producers will have to make a painful choice — either sharply cut production to maintain prices, or let prices fall and produce more oil to make up for lost revenues.        “They really don’t want to lose that market share,” said Robert Baer, a CIA veteran who now writes about the Middle East.        If OPEC members do comply with their quotas, an American national industry report has predicted that U.S. consumers may have to pay more per gallon as demand increases during the summer vacation months.

Scoop, Thursday, 12 June 2003, 12:54 pm Press Release: US State Department

Santiago

Press Briefing

Secretary Colin L. Powell Hyatt Regency Hotel Santiago, Chile June 9, 2003

SECRETARY POWELL: Good evening ladies and gentlemen. It is a great pleasure for me to be back in Santiago, Chile. It is my first visit in almost twelve years. Last time here I was Chairman of the Joint Chiefs of Staff and I am privileged to be back now as Secretary of State. I was especially pleased to join my OAS colleagues here in Santiago for the 2003 General Assembly Meeting of the Organization of American States. I want to congratulate President Lagos and Foreign Minister Alvear for their gracious hospitality and for hosting what has turned out to be an outstanding meeting.

In the course of the day, in addition to my OAS activities, I had a very productive meeting with President Lagos and with Foreign Minister Alvear. We reaffirmed our common interest in reestablishing Security Council unity in New York, and expressed our mutual support for President Uribe s efforts in Colombia to bring peace and security to that troubled country which is under assault from narco-traffickers and terrorists.

In my meetings with President Lagos, we reviewed our work together in the Group of Friends for the OAS Secretary General in Venezuela and shared our satisfaction over the signing last Friday of the US Chile Free Trade Agreement.

Also, in the course of the day, I had the opportunity to meet with other friends in the region, including Brazilian Foreign Minister Amorim, Colombian Foreign Minister Barco, Peruvian Foreign Minister Wagner, Canadian Foreign Minister Bill Graham, and Bahamian Foreign Minister Mitchell. I am impressed by the depth of the determination of our hemispheric neighbors to strengthen democracy and prosperity throughout the Americas. As President Bush has said, this hemisphere is on the path of reform and our nations travel it together. We share a vision, a partnership of strong, equal and prosperous countries living and trading in freedom.

I commend the government of Chile for its leadership in promoting the virtuous circle of good governance, the rule of law, democratic values and sustained economic development. The idea of democratic opportunity also underlies President Bush s groundbreaking Millennium Challenge Account initiative. The Account will support dozens of countries that do govern justly, that do invest in their people, and which encourage economic freedom. Despite some tough times in the region, the level of commitment is very high to an agenda of good government, growth, and free trade. I heard that throughout all of the interventions that were made during the course of the day.

Indeed, one of our key objectives that flows from all of that is the establishment of a Free Trade Area of the Americas by January 2005. The bilateral free trade agreement that the United States and Chile signed on June sixth is an important way station on the road toward hemispheric free trade.

We also reviewed the role that regional cooperation can play in promoting and defending democracy and how the OAS has responded to democratic crises in Haiti and Venezuela.

The Cuban regime s appalling repression of human rights and civil liberties ensures that it will have no place--such activities will have no place--in Cuba s future and we hope that future is not difficult to achieve on the horizon that we see in front of us. Sooner or later the people of Cuba should enjoy the kind of freedom and democracy that is sweeping the rest of the hemisphere.

Meeting the expectations of our citizens is what the Declaration of Santiago and Democracy and the Public Trust, the declaration that we passed today, is all about. We promised our people that democracy and free markets would work, and here in Chile we can see the truth of that promise.

We come here to say that democracy can deliver. Good governance can make the fruits of democracy and free markets available to all the people. The United States will continue to be an active and determined partner at the OAS and within the inter-American system to realize the hopes of all the people of the Americas for a better future.

Thank you very much and I would be pleased to take your questions.

QUESTION: Mr. Secretary, you re going to Argentina tomorrow. Yesterday you said that the US is ready to help the new administration. Could you elaborate on that?

SECRETARY POWELL: I didn t have any specific programs that I was referring to. I look forward to meeting President Kirchner and describing to him what happened here at the OAS meeting. I will be anxious to learn from President Kirchner about his programs and some of the steps he has already taken since he has been in office, but I m not going with any specific new initiatives or programs in mind.

QUESTION (as translated): Now that we know that it is probable that weapons of mass destruction will not be found in Iraq, do you still think that Chile acted disloyally on the United Nations Security Council when it did not support the conflict and how to you evaluate the relations? Is Chile only a commercial partner or is it also a strategic partner on the Council? Thank you.

SECRETARY POWELL: I would never use the term disloyal, nor did I use it at the time of the debate, nor did President Bush ever use such a term. We were disappointed that Chile was not able to support us when we worked on that second resolution and we expressed our disappointment to President Lagos and to Foreign Minister Alvear at the time.

Since then, though, we have come back together to achieve unity on the Security Council on the most recent resolution that lifted sanctions from Iraq and there will be other actions coming before the Security Council that I hope that Chile will agree with the United States on.

Chile is a democracy. It is free to make its own choices. In this case we would have preferred it had made a different choice. But we were disappointed, we take that disappointment and we move on. And the President and I spoke--not about the past, except for just a few moments. We spent most of our time today talking about the future and what we are going to do together in the future. And not just on trade issues, but on strategic issues that affect all aspects of our relations here in the hemisphere: security, democracy, trade, human rights, narco-trafficking all of the issues that we have a common interest in.

With respect to weapons of mass destruction, in Iraq, we are quite confident of the information that we have been presenting to the world in recent years. I am very confident of the presentation that I made on the fifth of February.

But it is not just what President Bush and his Administration have been saying, the issue of weapons of mass destruction is a well-documented issue, to the extent that UN inspectors have verified that Iraq had weapons of mass destruction. They have used weapons of mass destruction in the past. I have no reason to believe they did not have weapons of mass destruction at the time that we took a decision to undertake military operations. We are still looking for elements of their programs and weapons from their program. The mobile biological labs that were recently discovered, in our judgment--and in the best judgment of our intelligence analysts--is that it has no other purpose but to serve as a facility to develop biological weapons.

The fact that we have not found any evidence that it actually had developed biological weapons in no means excuses it. It is something Iraq was not supposed to have, it did not declare it to the UN inspectors and they were in violation of their obligations. The Administration before ours--President Clinton and his Administration--held the same view with respect to Iraq. Many intelligence organizations outside of the United States have the same view.

And so we are sending in a more extensively equipped team of experts to continue to examine sites; to look at all of the documents that are now coming forward, that we have captured; and to interview a number of officials who are now in our custody. And I am quite confident that as we continue that work we will find more evidence of the presence of weapons of mass destruction and programs for weapons of mass destruction.

QUESTION: Mr. Secretary, Israeli soldiers dismantled some outposts today and some Israeli civilians came out and tried to stop them. Do you have any concern that if there is more such resistance, it could be a serious impediment to the roadmap?

SECRETARY POWELL: There are strong views about this issue and I am pleased that Israel is now discharging the commitment it made to the international community at the Aqaba Summit last week, and I hope that in discharging this commitment they will be able to remove these unauthorized outposts in a peaceful way, without there being any violence whatsoever, although we know that there will be demonstrations.

There are those who object to this. But, I think what we discovered in our meetings last week--both in Sharm al Sheikh and Aqaba--is that it is time for both sides to move forward. We have a road map, which gives them a way to go forward. Both Prime Ministers--Prime Minister Sharon and Prime Minister Abbas--are committed to moving forward, and I think that both Prime Ministers realize that, what is the alternative? We cannot stay where we are, and now that the international community has rallied behind the roadmap, both parties have accepted the roadmap.

President Bush has indicated that this will be a very high priority for him and he will be committed and he has charged me and Dr. Rice to make it a high priority for our staffs. We have to keep moving forward, even in the presence of violence, of the terrible kind we saw over the weekend, on the part of Palestinian terrorists, and even in the presence of demonstrations. Will it be difficult for Prime Minister Sharon? Yes, but I think he realized that when he made the commitment to remove these unauthorized outposts.

JOURNALIST (as translated): Good afternoon, Mr. Powell.

SECRETARY POWELL: Good afternoon.

QUESTION: The United States has set January of 2005 as the date that the Free Trade Area of the Americas will become effective. Taking into consideration that the negotiations with Chile took close to ten years, although its economy was the soundest of the continent, isn t it overly optimistic to think that in less than two years the agreement becomes effective, taking into account that there are certain obstacles? I d like to know what you feel are those main obstacles. For example, Brazil and Mercosur have not shown themselves very positive with respect to this agreement.

SECRETARY POWELL: It is a very ambitious objective. It is less than, or just two years away now. But nevertheless, we want to leave that timeline out there. We want to leave that achievement date out there so that people don t start leaning back. Even though it took a long time to finish the Chile Free Trade Agreement with the United States, that does not mean we can t move faster. There are issues with Mercosur, as you say, but when I return to Washington later this week, I plan to sit down with Ambassador Zoellick, our Trade Negotiator and get his best assessment. He is hard at work on it. I will come from this conference reinvigorated in the determination of my colleagues here to try to see if it can be achieved by 2005. It will be difficult, but I do not think that there is any need now--any reason now--to call off that date and not try to achieve it.

QUESTION: Sir, your reports today regarding al-Qaeda in Iraq, the interrogations of two top senior al-Qaeda members, apparently al Qaida and Saddam Hussein s regime. How do you respond to these reports and do you have any new information that al Qaida was involved with Saddam Hussein s regime, and is it possible that these leaders were simply playing mind games with the interrogators?

SECRETARY POWELL: I cannot answer the last part of your question, and it is hard to answer the first part as well. There will be a lot of interrogations over a long period of time and it would be well not to focus on two particular individuals and occasional reports of what happened in those interrogations as being definitive. In my presentation on the fifth of February before the UN, I used some rather well defined examples of al- Zaqawi and other connections that traced back to al-Qaeda. And so I think that it s best at this time for us to continue these interrogations and not respond to occasional reports that come out of those interrogations. This is going to take a long time, and I don t want to make an assessment now as to what might or might not develop from the interrogations.

QUESTION: Good afternoon, Mr. Powell. The United States recently went to war against Saddam Hussein s regime that was classified by your own government as a tyrant. What stops the White House from attacking Fidel Castro s regime, which you yourself today classified as the only dictatorship existing in the hemisphere? Is a preventive attack justified? And also, I would appreciate your clarifying you spoke today of the role that the OAS should play in what you defined as a democratic transition in Cuba. What does that mean in concrete terms, considering that this country, Cuba, is suspended by the OAS?

SECRETARY POWELL: No, we have there are no plans to take preventive or pre-emptive action with respect to Cuba. But the fact of the matter is, Cuba is the remaining totalitarian dictatorship in this hemisphere. And even though Cuba is not - does not have membership in the OAS, there is no reason that the Community of Democracies of the OAS should not speak out strongly for the Cuban people.

The Cuban people are not allowed to speak out for themselves. The Cuban people who desire to express a political view or to organize politically are thrown in jail, and not just thrown in jail for a day or two. They are being given sentences for fifteen to twenty to twenty-five years. How could we, as a Community of Democracies who has seen what we have been able to achieve in this hemisphere over the last fifteen or twenty years fail to speak out with respect to what Castro is doing to his people? And I think it is the responsibility of every nation that believes in democracy--when faced with this kind of a lack of respect for democracy, lack of respect for human rights, unwillingness to allow people to decide what kind of leadership they should have--I think if we would call ourselves a Community of Democracies that it is our obligation to speak out, and that is what I did today, and that is what the United States will continue to do. And I hope that all members of the OAS, either collectively as the OAS, or in their individual capacities, will speak out against this kind of behavior in the year 2003 in the western hemisphere. We have come too far not to continue the journey and help the people of Cuba ultimately to achieve a democratic system where they can decide who their leaders will be through a free, open democratic process.

QUESTION: Mr. Secretary, what did you make of the North Korean statement in which they go public on their intention to develop nuclear weapons? What effect will that have on the US strategy for dealing with North Korea?

SECRETARY POWELL: Well, they have said things like this before. They have said they have nuclear weapons and today they seem to be saying they would develop nuclear weapons. We believe that they have some small number of nuclear weapons. They certainly have the potential to have developed and produced some small number of nuclear weapons one or two. And they say that they are reprocessing, so they have been making these claims for some time.

They introduced a new element into their logic today when they said that they would also do this as a cost-saving measure to save money from their conventional forces. I ll have to reflect on that for a while before I give you a judgment as to what that means. It will not change our strategy. We believe that what North Korea is doing threatens the region. And we believe the region should come together and make sure North Korea knows that this will not be tolerated. And the region--along with the United States--has been coming together. Japan has spoken out strongly. South Korea has make it clear that they do not wish to see nuclear weapons in the peninsula. It is the policy of the Chinese government that the Korean peninsula should be de-nuclearized. Russia has joined in. Australia has joined in. The IAEA has spoken clearly on this. The issue is before the United Nations, and so we are all coming together to make it clear to North Korea that we will not accept a nuclearized peninsula.

This does not mean we are on our way to war. We are not. The President continues to believe that there is an opportunity for a diplomatic solution, a political solution, but it is a solution that must come in a multilateral forum. We cannot allow North Korea to dictate to us who they will speak to on this issue because too many nations are affected. They all have to be able to speak to this issue, and that is why we are continuing to press for a multilateral forum.

We started that with the Meeting of Three in Beijing not too long ago. Even though only three were in the meeting--the United States, North Korea, and China--South Korea and Japan were certainly represented by the United States in that meeting because we briefed them on everything that happened, everything that was going to happen before we went into the meeting, and everything that happened at the meeting was briefed to them after we came out. So we hope North Korea will come to the understanding that it must be multilateral and it must include Japan and South Korea at a minimum.

I hope North Korea will come to the realization that it is in their interest ultimately to include those other nations. Those nations come to help North Korea get rid of these terrible weapons and, at the same time, to help North Korea to deal with the problems that that country is having, that that society is experiencing. The multilateral forum will give North Korea an opportunity to engage with its neighbors and with the United States in a way that deals with this crisis and could benefit North Korea and the people of North Korea, especially, in the long term.

QUESTION (as translated): Mr. Secretary, the concept of hemispheric security that is under discussion currently in the OAS in the inter-Americansystem, isn t this very similar to the concept that existed during the Cold War in the region, and can t this be confused with the concept of the security of the United States?

SECRETARY POWELL: I think the issue of hemispheric security in the year 2003 is quite different than the concept of hemispheric security that was embedded in the Rio Treaty or that existed for the period of the Cold War when we were worried about Communist intrusions into the region from the Soviet Union or from its agents, principally Cuba. Now security has a new meaning. The global war on terrorism is the principal security threat. Narco-trafficking, criminal activities generated by narco-trafficking, those are the security threats we face, and these are the security threats we have to come together and deal with. One can ask, Well, don t those exist in singular countries and why does the whole Organization of American States have to come together? And the answer to that is that even though the activities may take place in one country or might be indigenous, it affects other countries. It spills over if it deals with narco-trafficking. Terrorism is a threat to every country in the region and therefore we should deal with it on a regional basis. So it is not just US national security that we are talking about--dealing with and talking about here it is the security of the hemisphere. And it is security that pulls us together to deal with these new kinds of threats. Narco-trafficking not that new a threat but we can deal with it on a better, a more informed, and a more effective basis if we see it as a regional problem. And similarly with the global war on terrorism, which I think affects each and every nation in the hemisphere.

Thank you. [End]

Released on June 10, 2003

Interview with Scoop-CNN en Español Thursday, 12 June 2003, 12:45 pm Press Release: US State Department

Secretary Colin L. Powell Santiago, Chile June 9, 2003

QUESTION: Buenas tardes, Sr. Secretario. Do you want to say something in Spanish?

SECRETARY POWELL: No, thank you.

QUESTION: What should be the North Americans role in the new conflict of global terrorism?

SECRETARY POWELL: I think Latin America has an important role to play. Terrorism is a worldwide threat that affects every country. No country is free of terrorism, and there are many countries in Latin America that have been seriously affected by terrorism. In the case of Colombia, terrorism is a threat not only to individuals, in terms of loss of life; it is a threat to democratic institutions. It is a threat to the viability of Colombia as a democratic country. So for this reason we all have to come together and do everything we can to help those countries that are under serious threat such as Colombia. But other countries that could be under threat because of the worldwide spread of terrorist organizations that will try to get at not just U.S. interests, but also the interests of democratic nations. So I think the global war against terrorism really becomes a major security challenge for our hemisphere. When you take terrorism and you mix it up with narco-trafficking, you have a very volatile combination that affects all of us.

QUESTION: How should the guerrilla conflict in Colombia be solved?

SECRETARY POWELL: I think that President Uribe has put together and is now implementing a very effective plan to go after the guerrillas and go after the leadership of guerrilla organizations. Will there come a time when dialogue is also necessary and perhaps we can bring them to the peace table? Perhaps, but it didn t work very well under President Pastrana. So I think it is quite appropriate for President Uribe to be aggressive in defending his people, in defending his country and defending his system of democracy.

QUESTION: Talking about the war against terrorism, the United States had very little political and popular support in Latin America for the war against Iraq. How does this affect U.S. beliefs and priorities in the region?

SECRETARY POWELL: I think that, over time, people in Latin America will realize that the United States took the correct action in dealing with Iraq. Aterrible dictator who poisoned his own people with gas, who suppressed his people, who wasted their money on weapons and on threatening neighbors and on creating huge armies--a huge army and military force--is no longer there. I hope the people of Latin America will watch these pictures we are now seeing of mass graves--tens upon tens of thousands who were murdered by Saddam Hussein--and they will come perhaps to a different judgment as to whether the United States and its Coalition partners acted correctly. I think we did act correctly. One, to get rid of weapons of mass destruction--and they are there--and as we continue to unroll the documentation, as we continue to examine the sites there, I am quite sure we will find more evidence of weapons of mass destruction. And so we got rid of that. We got rid of the dictator. We will now be using the oil of Iraq to benefit the people of Iraq. And we will now have brought to justice of a regime that is no longer there, that killed people by the tens upon tens of thousands. I hope that over time the actions that the United States took will be seen throughout the hemisphere as being quite justifiable actions.

QUESTION: International opinion studies show that anti-American feeling has grown since the war in Iraq. Do you predict that this feeling will grow even more if you can t prove that Baghdad has weapons of mass destruction?

SECRETARY POWELL: No, I don t think so. I think that now that the conflict is behind us and international opinion sees that the United States is helping the people of Iraq to build a better society, a democratic society, and when people--especially people in Muslim countries--see that the United States is engaged in the peace process in the Middle East trying to help the Israelis and the Palestinians move forward, then I think that attitude will change and it will start to be realized around the world that the United States does not come to invade you, the United States is not threatening you. The United States only wants to make friends and partners around the world, not enemies. The wars we have had to fight in recent years--whether it was Gulf War I, Gulf War II, whether it was Kosovo, or whether it was what we did in Afghanistan--all of these were for the purpose of either putting down an enemy that was destroying innocent life, in the case of Al Qaida in Afghanistan, or we were saving Muslim nations or Muslim populations from assault from other Muslim nations, in some cases, and we were coming to the rescue of Muslims. I hope over time this message will get through and that people have a better view of America than is reflected in the poll that you are making a reference to.

QUESTION: Beginning on Latin America. Is the triple border between Argentina, Brazil and Paraguay a current Islamic terrorism risk zone? What should be done?

SECRETARY POWELL: I don t know how serious it is. It is something we keep an eye on, but I would not believe--I would not suggest right now--that it has become that huge a problem, but it is some something that we have to keep our eyes on and work with the parties in the region.

QUESTION: In general in the last elections of the countries in the region, including Brazil and Argentina, have been a left wing turn even closer to Cuba. What class of relationship does the United States want to establish with these governments?

SECRETARY POWELL: We will have good relations with Brazil, with Argentina. People chose what kind of leader they wanted to have. Sometimes it will be to the left, sometimes it will be to the right. But I don t think anymore that it will be to the far left or to the far right. People understand that, in order to be successful in this century and in order to have good relations with your neighbors and frankly I think it is in the interest of nations in Latin America to have good relations with the United States--it is best to elect a leadership and to elect congresses that understand the role of democracy in modern society; that will support democracy and will support transparency in government, and the rule of law; and will support open trading systems and market economic activity. Because that s how you generate investment, that s how you get people to want to invest in your country, invest to make a profit, but more importantly, by making that profit you create jobs and you provide a better life for people in those countries. And whether they are left of center or right of center, the only thing people want to know is Are you going to make my life better? I m not terribly worried about Cuba. Cuba is such an anachronism, and when I say worried about Cuba, I m not worried about new governments coming in being so friendly to Cuba, or so supportive of Cuba, that Cuba somehow becomes a threat to us again. Cuba is not a threat. Cuba is a historical relic. It is an anachronism. It is a country that in this century, in this hemisphere, still puts people in jail for 15, 20, to 25 years. For a crime? For murder? No, for speaking out, for demanding their political rights, for demanding the political rights that the countries you just made reference to have given to their people. So I hope that all the leaders of the hemisphere will ask that the Cuban people have the right to elect a left-of-center government or a right-of-center government. They have no right to elect any government, except Castro, and he is there without the freedom of his people to make a different choice.

QUESTION: How do you define the relationship between Mercosur and AFTA, as enemy or complementary systems?

SECRETARY POWELL: No, they are not enemies, but we are going through quite a transformation in trading relations in our hemisphere. We just recently signed a free trade agreement with Chile and we are moving as aggressively and rapidly as we can toward a Free Trade Area of the Americas and we still have a goal of seeing if we can accomplish this by 2005. So all the issues related to AFTA, CAFTA, and Mercosur will have to be worked through as we move forward. But I don t find these to be enemy systems as much as systems that exist and transition systems as we move toward a Free Trade Area of the Americas.

QUESTION: Is Brazilian President Lula da Silva an obstacle to FTAA, and will FTAA be reached on your time schedule?

SECRETARY POWELL: I don t know, we will have to see. I think it is achievable, but I don t want to make predictions that belong to my colleague, Ambassador Bob Zoellick, our Trade Representative.

QUESTION: Speaking about governments, as you were doing in that summary, what is your opinion about the recent agreement that the opposition and the government of Venezuela reached?

SECRETARY POWELL: We support the agreement. In my intervention--my speech at the OAS today--I expressed the support of my government for the May twenty-ninth agreement.

QUESTION: Is it enough?

SECRETARY POWELL: It is an agreement. It s a beginning. The agreement in itself is not enough. It is executing that agreement and making sure that the referendum takes place in a way that is satisfactory to the terms of the agreement is what now has to happen.

CNN: Thank you very much.

SECRETARY POWELL: Thank you very much. [End]

June 11 (<a href=quote.bloomberg.com>Bloomberg) -- Brazil's currency closed at its strongest level since July after the central bank sold $762 million of contracts used to guard against declines in the real, reducing demand for dollars from traders.

The real rose 0.6 percent to 2.8515 per dollar after falling as low as 2.8835 in Sao Paulo. The real's 24 percent gain in 2003 is the best performance of the 16 most widely traded currencies. Mexico's peso rose.

The central bank's swap sale should help the currency by giving traders insurance against future declines, easing the need to buy dollars in the swap market. The bank sold 72.9 percent of the contracts, known as interest rate swaps, that mature June 18, prompting some investors to anticipate another sale.

The central bank will come back and roll over the rest,'' said Carlos Gandolfo, a partner at Pioneer Corretora de Cambio Ltda., a Sao Paulo currency brokerage that handles about a third of trading in Brazil's spot market. It was the bank's decision, had nothing to do with demand and was absolutely within expectations.''

Brazil has about $58 billion reais of outstanding swaps and dollar-indexed national Treasury notes. Most were sold to bolster the real against the dollar amid Argentina's 2001 default and investor concern Brazilian President Luiz Inacio Lula da Silva, elected in October, might default on $400 billion of public debt. The real last closed at a stronger level than 2.8515 on July 18.

Balance

Government officials want to cut the dollar-risk of selling the swaps, which oblige the central bank to pay investors for declines in the value of the real. Companies that need to pay for imports or foreign debts have bought the swaps as a hedge against a weakening in Brazil's currency before buying dollars.

At the same time, investors can buy the swaps instead of buying dollars, and so reduce demand for dollars and prevent a weakening of the real. Some Lula administration officials and exporters have voiced concern that the real's gains in 2003 might undercut a surge in exports that has been a motor of growth.

To be sure, with consumer prices accelerating at their fastest pace in seven years after the real's 35 percent decline in 2002, many investors expect the bank to slowly reduce the amount of swaps outstanding to head off another bout of currency weakness and inflation. A renewed pick-up in inflation might delay cutting lending rates that are now at four-year highs and are weighing on the economy.

``It's possible the central bank will start reducing gradually the amount of rollover,'' said Marco Antonio Azevedor, foreign exchange manager at Banco Brascan in Rio de Janeiro.

Brazil's benchmark 8 percent bond that matures in 2014 rose .13 cent to 91.63 cents on the dollar, reducing the yield to 10.05 percent, according to J.P. Morgan Chase & Co.

Mexico, Chile

Mexico's currency gained after the yields on government debt rose at yesterday's government debt auction, damping concern that the central bank will cut interest rates this Friday.

The peso rose for the second day in three, gaining 0.8 percent to 10.5730 per dollar from 10.6590 yesterday in Mexico City and U.S. trading, paring its loss in 2003 to 1.9 percent.

``You have a bit of a recovery in interest rates, which is helping the peso a bit,'' said Guillermo Estebanez, a currency strategist at Banc of America Securities Inc. in San Francisco.

Last week's four-day, 4.1 percent peso decline threatened to revive inflation and boosted the odds the central bank would move to cut interest rates, said Edgar Amador, an economist at Stone & McCarthy in Mexico City. Yesterday, the 28-day government yield rose to 5.64 percent from a record low of 4.72 percent.

Record-low government yields, falling consumer prices in May and remarks by central bank officials that the Mexican economy is growing less than expected, last week triggered sales of peso future contracts on the Chicago Mercantile Exchange. Investors had built up a record high level of contracts betting on the peso's appreciation in May, accumulated during the currency's 10 percent rise from March 5 to May 13.

Chile's peso rose for the first day in three, gaining 0.4 percent to 714.35 per dollar from 717.25 yesterday.

Colombia, Argentina

Colombia's peso weakened 0.4 percent to 2,827.50 per dollar and Argentina's peso weakened 0.5 percent to 2.8225 per dollar. Argentina's peso is the second-best performing currency against the dollar in 2003 among 59 tracked by Bloomberg, rising 19 percent.

Peru's new sol strengthened 0.2 percent to 3.4828 per dollar. Venezuela fixed its bolivar at 1,598 per dollar this year.