Caracas, June 18 (<a href=quote.bloomberg.com>Bloomberg) - Venezuela promised to pay $55 million owed to 43 Colombian companies within two weeks, part of a program to speed up late payments to the neighboring country's exporters, El Nacional reported.

Venezuelan Foreign Minister Roy Chaderton said that the payments will be completed, fulfilling an April 23 promise by President Hugo Chavez.

Colombian companies say they are owed as much as $300 million by Venezuelan customers, with 50 Venezuelan companies accounting for 80 percent of the money owed.

Colombian companies have complained that their payments have been frozen because of Venezuela's system of foreign exchange restrictions, which have choked off sales of dollars to Venezuelan importers. Venezuela imposed currency restrictions in January to arrest a decline in international reserves.

(EN 6/18 B1) To see El Nacional's Web site, click on {NCNL}

SourceBy Thalif Deen STOCKHOLM - The "war on terrorism" has triggered a dramatic increase in US military spending, according to a report by the Stockholm International Peace Research Institute (SIPRI) released on Tuesday. The world spent US$784 billion on arms last year, a sharp acceleration from $741 billion the previous year, the SIPRI report says. The United States accounted for almost three-quarters of that increase. SIPRI attributes this increase primarily to the US response to the terrorist attacks of September 11, 2001. But US military spending had been rising earlier too. The figures show that US military spending climbed from about $296 billion in 1997 to $335.7 billion last year. "Our figures show clearly that the bulk of the rapid increase in spending in 2002 is accounted for by the United States alone," SIPRI director Alyson J K Bailes said. The US Department of Defense has estimated US military spending for 2004 at about $390 billion, rising to $400 billion in 2005. The recent war on Iraq is expected to cost the United States more than $150 billion; by contrast, the 1991 Gulf War cost about $61 billion. Japan, the world's second-largest military spender, is far behind the United States with an annual defense budget of $49 billion, followed by the United Kingdom with $36 billion. The top five spenders - the US, Japan, the UK, France and China - account for about 62 percent of total world military expenditure. According to the SIPRI Yearbook, the United States now accounts for 43 percent of world military expenditure. China, Russia and Brazil have all increased defense budgets significantly. The countries with the sharpest reductions in military spending in 2002 were Argentina, Guatemala and Venezuela in Latin America and Belarus and the Former Yugoslav Republic of Macedonia in Europe. The European Union shows no sign of following the United States in raising defense budgets, Bailes said. And while the Russian budget has risen, its possibilities are limited, she added. "A review of global expenditure trends shows that the rest of the world is not prepared, or cannot afford, to follow the US example," SIPRI says in the yearbook. Among the poorer nations the signs are mixed, said Bailes. "Some nations are able to cut spending voluntarily because of the ending of local conflicts, or they are being forced to do so by economic problems. As the security sector reform becomes a serious focus both of international aid policy and of local security cooperation, we may also see improvements in what could be called the quality (rationality, transparency, and proper targeting) of defense spending, which can often be combined with quantitative cuts," she said. Some former defense funds are not being cut so much and are being diverted to internal and non-traditional security aims such as counter-terrorism, she added. But there is pressure also to increase defense budgets because of factors such as keeping up with the latest technological advances, and the interest of developing states in peacekeeping and other interventions, Bailes said. The impact of increased military aid that the United States in particular is offering is also a factor, she said. The SIPRI Yearbook notes marked regional disparities in military expenditure. In 2001 the Middle East spent 6.3 percent of gross domestic product (GDP) on the military compared with a global average of 2.3 percent. Latin America spent only 1.3 percent. Africa (2.1 percent), Asia (1.6 percent) and Western Europe (1.9 percent) spent less than the world average while North America with 3.0 percent and Central and Eastern Europe with 2.7 percent spent somewhat more. The Middle East is the largest single market for US weapons systems. The 1990 Iraqi invasion of Kuwait prompted sharp increases in arms purchases by the six Persian Gulf nations - Bahrain, Oman, Qatar, Kuwait, Saudi Arabia and the United Arab Emirates. Asked whether arms purchases would decline after the ouster of Iraq's Saddam Hussein regime by US military forces, Bailes said, "Whatever uncertainties may still remain over aspects of Iraq's future and its future regime, it seems clear that for a long while at least we shall not see another belligerent Iraq with the power and the wish to threaten its neighbors." An international stabilizing force on Iraq's soil for some time could allow other states to reduce their level of military preparedness, Bailes said. But the results could be different if outside powers build new military "clients" to compete with others, she added. Jayantha Dhanapala, former United Nations undersecretary general for disarmament affairs, said the rising global military expenditure is not just diverting precious financial, material and human resources from productive to non-productive pursuits, but also jeopardizing the environment and the prospects for social and economic development. Sixteen years ago the world community gathered at the United Nations for the International Conference on the Relationship between Disarmament and Development. Yet today military expenditure is rising, he said.

18 Jun 2003 Source: <a href=www.just-auto.com>just-auto.com editorial team   Article Summary: The head of Ford's Latin American business on Tuesday said the car maker may have to close its Venezuelan operations for a week every month to offset the impact of foreign exchange controls on production, Reuters said.

By Simon Romero THE NEW YORK TIMES Wednesday, June 18, 2003

HOUSTON -- The economy has been cool, and so has the spring in much of the country. Nonetheless, the United States is facing its most severe shortage of natural gas in a quarter century.

Basic industries, such as fertilizer and ammonia makers, that use gas to produce their goods are already laying off workers. And experts warn that a warming trend -- in the economy or the weather -- could cause a spike in prices for the electricity that cools homes and runs every sort of business.

"You would have thought that the last big upsurge in prices a couple of years ago was a tremendous wake-up call," said Gwyn Morgan, chief executive of EnCana Corp., a Canadian company that is North America's largest independent natural gas producer. "But for most people it was not."

The market manipulation by companies such as Enron has gotten much of the blame for the price surge of 2000 and 2001. But now -- like then, most analysts agree -- the basic law of supply and demand is at work.

With natural gas promoted as a cleaner-burning fuel than oil or coal, nearly all of the electric plants built since 1998 are designed to be fired mainly by gas. So demand is up. Although drilling has increased about 25 percent in the past year, much of it has been confined to old, overworked basins that are not as productive as they once were. So supplies have not kept up.

Moreover, analysts say, a failure to accurately gauge supply needs in an up-and-down economy has added to the squeeze.

Prices for natural gas have almost doubled in the last year, peaking at more than $6 per million British thermal units, versus about $3.65 a year ago. Stored supplies have fallen to their lowest level since the government began keeping records in 1976. Utilities, including Austin Energy, are raising their rates as a result.

The cascading effects of the price surge have led to renewed calls from the gas industry for loosening environmental restrictions on drilling and pipeline construction. Energy Secretary Spencer Abraham and the National Petroleum Council are convening a summit later this month to discuss the shortage and solutions.

Last week, Federal Reserve Chairman Alan Greenspan made a rare appearance before the House Energy and Commerce Committee to warn that short supplies of natural gas could contribute to "erosion" in the economy. Greenspan emphasized the potentially important role that liquefied natural gas, in particular, could play in U.S. energy imports.

Yet with the richest overseas stores of gas in regions like West Africa and Southeast Asia, and the energy industry under tough technical and financial constraints, increasing imports is difficult.

With few immediate answers, industry executives and analysts see the prospect of elevated prices for years to come.

"We're already facing the prospect of higher utility bills for consumers and higher energy costs for many businesses," said Robert Allison, chief executive of Houston-based Anadarko Petroleum Corp. "The shortage is going to become a matter of exporting jobs to countries with cheaper natural gas."

Overall, the nation gets about 23 percent of its energy needs from natural gas. The United States is second only to Russia as a producer, and 85 percent of the gas used here comes from domestic wells. But many parts of the country remain off-limits for drilling for environmental reasons.

Gaining access to those areas is one of the energy industry's top priorities, foreshadowing a more intense dispute with conservationists.

Canada provides more than 90 percent of U.S. natural gas imports. But Canadian imports are slowing. That leaves the United States with one major alternative: importing liquefied natural gas. Such gas, condensed into a liquid, is transported by ship and accounts for 1 percent of the nation's gas imports.

Yet even doubling or tripling imports to 3 percent of the total is not expected anytime soon because only a handful of U.S. terminals are capable of processing liquefied natural gas.

The costs involved in building the terminals and the reluctance in many coastal areas to have large gasification installations have kept many projects from getting off the ground.

Exxon Corp., however, said Tuesday that it will spend up to $1 billion to build a liquefied natural gas terminal in Texas or elsewhere to receive imports. A spokesman said the company is already in discussions with some cities. Other companies are considering reopening mothballed terminals.

Several other terminals could be built and functioning within five years. Then, America will face the prospect of increasing its dependence on potentially large but politically problematic exporters such as Nigeria, Venezuela and Indonesia.

"We're on the verge of discovering that natural gas is almost as important as oil for our energy supplies," said Amy Jaffe, associate director of Rice University's energy program. "Once we wake up to this, we'll have to deal with the geopolitical implications of importing natural gas from some of the more unsavory parts of the world."

malaysiakini.comYamin Zakaria 5:51pm Wed Jun 18th, 2003

The recent move by the Venezuelan president Hugo Chavez to replace the US dollar with the euro has generated as much anger as when former Iraqi President Saddam Hussein chose to exchange oil for the Euro last November, thereby sealing his fate.

Current resentment is caused by Venezuela’s decision to barter its oil with thirteen other Latin American countries, denting the ongoing ‘Dollarisation’ of South America.

Unlike Iraq, Venezuela cannot be invaded, as the political pretext would require time to build up. Instead, CIA has been engaged in various covert operations including the recent failed military-led coup in April last year.

As the US dollar has already been devaluing against the euro, other significant countries like Russia, China, North Korea, Malaysia have started to hold euro as part of their foreign exchange reserves.

Under such climate, a move by the Organisation of Petroleum Exporting Countries (Opec) to switch to the euro would cause massive devaluation, and consequently initiate a domino effect.

Other wealthy rich Arab businesses would follow, and push other investors to do the same, leading to the unthinkable - a run on the dollar. The US cannot afford further devaluation due to its massive budget deficit. More significantly, this would incapacitate her ability to wage further illegal wars (state-sponsored terrorism) around the world.

Therefore, we can expect a prolonged US occupation of Iraq under various pretexts until the oil revenues are switched back to the dollar - preferably by taking it out of Opec. So no surprise over the ‘absence’ of Iraq at the recent Opec meeting.

Iran is also contemplating switching to the euro and is, naturally, receiving covert threats. We may witness future ‘liberation’ wars and destabilisation, leading to the dismantling of the Opec cartel - not in the name democracy or freedom but to maintain the dollar as a global transaction currency.