www.nzherald.co.nz 03.02.2003 By PAUL G. BUCHANAN

Ye shall reap what ye have sown" goes the saying. In the case of United States foreign policy, there is a significant possibility that what is harvested will be bitter fruit.

The desire of the Bush Administration to recast the global political landscape in an image more favourable to the US, using the 9/11 terrorist attacks as the justification for unilateral military intervention against hostile states, has blinded it to some of the complexities of the current world scene.

Consider three areas of US foreign policy concern: Venezuela, North Korea and Iraq.

Clearly enough, the US has had its fill of Saddam Hussein and sees his removal as a priority.

Amid the bellicose bluster coming out of Washington, the justification for his forced ouster resides in the belief that the intersection of weapons of mass destruction (WMD) and terrorism is a matter of when, not if, and that it is most likely to occur sooner rather than later in Iraq if Saddam is not removed from power.

Hence, whether or not the UN weapons inspectors find evidence of WMD stockpiling in Iraq (and many believe that they will not, since intelligence analysts believe these were moved to Syria well in advance of recent UN security council resolutions), the US is determined to show Saddam the door at the point of a bayonet in order to install a pro-Western secular regime that will open up its oil reserves to the US and its allies.

That will allow the US to move troops from Saudi Arabia to Iraq to buffer against Iran while simultaneously reducing tensions over the infidels' presence near Islamic holy sites such as Mecca (as well as reducing Saudi control over Opec price-fixing). Whether or not this is a pipe dream, the pre-positioning of troops and materiel suggests that the assault on Iraq will begin in mid-February at the earliest.

But complications have risen as a result of US policy towards two other countries. In April the US supported an abortive coup against the democratically elected president of Venezuela, Hugo Chavez, whose major crime was to employ populist rhetoric and to rail against the petroleum oligarchy that controlled political power from 1958 until 1998. Although that coup failed and left the US embarrassed and exposed, the coup-plotters were encouraged by the US support and in early December 2002 began a general strike to force Chavez from office that is now into its sixth week.

This has crippled Venezuelan oil exports, of which 13 per cent go to the US market. Without that supply, US retail prices have increased sharply, and worse yet, the US may have to dip into its strategic oil reserves if it is to prosecute the war on Iraq while the Venezuelan crisis remains unresolved.

The irony is that it is a US-backed disloyal opposition that is complicating US strategic calculations, and its nemesis Chavez who would like to resume normal oil production and exports.

For its part, the timing of the North Korean decision to resume plutonium reprocessing and withdraw from the International Atomic Energy Association was brilliant. A year ago it was named part of the Axis of Evil even though it had no provable links to al Qaeda and in fact was engaged in a delicate rapprochement with South Korea on normalising relations between the two states.

Seeing that the US was using a variety of justifications to force regime change in Iraq over UN objections, the North Koreans undoubtedly calculated that they would be next on the US hit list.

Rather than wait for such an eventuality, the regime in Pyongyang took the opportunity of recent South Korean elections that saw a US critic elected to the presidency, as well as of the fact that the US was fully occupied with its war preparations in Iraq, to announce its renewed nuclear aspirations.

Caught off-guard, the US has seen its hypocrisy on weapons of mass destruction rendered transparent, since North Korea is a far worse weapons proliferator and nuclear menace than Saddam. (Recall that about a month ago a shipment of North Korean missiles destined for Yemen was intercepted by Spanish and US forces and then let go.)

Moreover, the US bluff was called to the point that it has been forced to negotiate a nuclear weapons for economic aid swap rather than threaten the North Korean regime with war. Since North Korea and Iraq are trading partners in weapons as well as other goods, the North Koreans may well have done Saddam a favour by complicating the picture.

More importantly, it exposes the lack of thought and contingency planning in post-September 11 US foreign policy planning.

The larger issue is that most of this mess is of the US' own making.

In not working through multilateral channels, in ignoring or bypassing the UN and the requisite diplomatic niceties of protocol and sovereignty, it has produced a backlash as well as worldwide unintended results.

In the meantime Osama bin Laden remains at large and al Qaeda is undefeated.

With the future of Iraq very much an open question even if Saddam is ousted (since both Iraqi Kurds and Sunnis have expressed desires for partition and independence, much to the dismay of Iraq's neighbours), the entire thrust of the US approach to international affairs needs a major review before, rather than after, the assault on Saddam is launched.

• Paul G. Buchanan is a former US defence department analyst and consultant who lectures at the University of Auckland.

Herald feature: Iraq

Iraq links and resources

www.nzherald.co.nz 03.02.2003 By PAUL G. BUCHANAN

Ye shall reap what ye have sown" goes the saying. In the case of United States foreign policy, there is a significant possibility that what is harvested will be bitter fruit.

The desire of the Bush Administration to recast the global political landscape in an image more favourable to the US, using the 9/11 terrorist attacks as the justification for unilateral military intervention against hostile states, has blinded it to some of the complexities of the current world scene.

Consider three areas of US foreign policy concern: Venezuela, North Korea and Iraq.

Clearly enough, the US has had its fill of Saddam Hussein and sees his removal as a priority.

Amid the bellicose bluster coming out of Washington, the justification for his forced ouster resides in the belief that the intersection of weapons of mass destruction (WMD) and terrorism is a matter of when, not if, and that it is most likely to occur sooner rather than later in Iraq if Saddam is not removed from power.

Hence, whether or not the UN weapons inspectors find evidence of WMD stockpiling in Iraq (and many believe that they will not, since intelligence analysts believe these were moved to Syria well in advance of recent UN security council resolutions), the US is determined to show Saddam the door at the point of a bayonet in order to install a pro-Western secular regime that will open up its oil reserves to the US and its allies.

That will allow the US to move troops from Saudi Arabia to Iraq to buffer against Iran while simultaneously reducing tensions over the infidels' presence near Islamic holy sites such as Mecca (as well as reducing Saudi control over Opec price-fixing). Whether or not this is a pipe dream, the pre-positioning of troops and materiel suggests that the assault on Iraq will begin in mid-February at the earliest.

But complications have risen as a result of US policy towards two other countries. In April the US supported an abortive coup against the democratically elected president of Venezuela, Hugo Chavez, whose major crime was to employ populist rhetoric and to rail against the petroleum oligarchy that controlled political power from 1958 until 1998. Although that coup failed and left the US embarrassed and exposed, the coup-plotters were encouraged by the US support and in early December 2002 began a general strike to force Chavez from office that is now into its sixth week.

This has crippled Venezuelan oil exports, of which 13 per cent go to the US market. Without that supply, US retail prices have increased sharply, and worse yet, the US may have to dip into its strategic oil reserves if it is to prosecute the war on Iraq while the Venezuelan crisis remains unresolved.

The irony is that it is a US-backed disloyal opposition that is complicating US strategic calculations, and its nemesis Chavez who would like to resume normal oil production and exports.

For its part, the timing of the North Korean decision to resume plutonium reprocessing and withdraw from the International Atomic Energy Association was brilliant. A year ago it was named part of the Axis of Evil even though it had no provable links to al Qaeda and in fact was engaged in a delicate rapprochement with South Korea on normalising relations between the two states.

Seeing that the US was using a variety of justifications to force regime change in Iraq over UN objections, the North Koreans undoubtedly calculated that they would be next on the US hit list.

Rather than wait for such an eventuality, the regime in Pyongyang took the opportunity of recent South Korean elections that saw a US critic elected to the presidency, as well as of the fact that the US was fully occupied with its war preparations in Iraq, to announce its renewed nuclear aspirations.

Caught off-guard, the US has seen its hypocrisy on weapons of mass destruction rendered transparent, since North Korea is a far worse weapons proliferator and nuclear menace than Saddam. (Recall that about a month ago a shipment of North Korean missiles destined for Yemen was intercepted by Spanish and US forces and then let go.)

Moreover, the US bluff was called to the point that it has been forced to negotiate a nuclear weapons for economic aid swap rather than threaten the North Korean regime with war. Since North Korea and Iraq are trading partners in weapons as well as other goods, the North Koreans may well have done Saddam a favour by complicating the picture.

More importantly, it exposes the lack of thought and contingency planning in post-September 11 US foreign policy planning.

The larger issue is that most of this mess is of the US' own making.

In not working through multilateral channels, in ignoring or bypassing the UN and the requisite diplomatic niceties of protocol and sovereignty, it has produced a backlash as well as worldwide unintended results.

In the meantime Osama bin Laden remains at large and al Qaeda is undefeated.

With the future of Iraq very much an open question even if Saddam is ousted (since both Iraqi Kurds and Sunnis have expressed desires for partition and independence, much to the dismay of Iraq's neighbours), the entire thrust of the US approach to international affairs needs a major review before, rather than after, the assault on Saddam is launched.

• Paul G. Buchanan is a former US defence department analyst and consultant who lectures at the University of Auckland.

Herald feature: Iraq

Iraq links and resources

www.time.com

Thinking a fast win in Iraq will fix what's wrong with the global economy? Don't get your hopes up. TIME's panel of economists sees plenty of gloom ahead — even if the war goes well

Feb. 10, 2003 Vol. 161, No. 6 By JAMES GRAFF

Davos 2003: Voices of a New Generation

As it pushes toward an attack on Iraq, the Bush Administration braves political sandstorms along with literal ones. But such courage, if that's what it is, seems to dissipate outside the Beltway. While Washington gears up, the world economy cowers in the shadows. Companies and individuals aren't in anything like a punchy mood, let alone a preemptive one. A "culture of caution" has taken stubborn hold almost everywhere, says Robert Hormats, vice chairman of Goldman Sachs International. He and the rest of Time's Board of Economists, meeting during a heavy snowfall at the close of the World Economic Forum's Annual Meeting in Davos, Switzerland, agreed that even a quick, clean victory in Iraq may not be enough to overcome the timidity, because the prospect of war is only one cause of the global economy's slough of despond. There are plenty more sources of uncertainty, some so acute that the coming year amounts to an "international economics laboratory," says Moisés Naím, editor of the Washington-based journal Foreign Policy. And since we're all guinea pigs, these lab tests are hardly academic. How can companies improve their debt-laden balance sheets when a bearish global stock market has gutted their worth? How will American consumers keep performing their role as the shaky prop of the world economy if their home values collapse? Who else besides that highly hocked group is confident or crazy enough to step in and create demand? And most ominously, are governments merely pushing wrongheaded economic policies as usual — or have they finally lost traction entirely against a world economy that's in serious danger of spiraling into greater debt and deflation?

The answer to many of those questions will come from Washington, but the Board fears that no one there is really minding the world economy's switches. "We're very prepared for war from a military point of view, but not from an economic one," says Hormats. The U.S. government, which quietly slipped from surplus to deficit last year, is heading into a period of "chronic deficits," he contends, even if the Bush Administration gets only part of its 10-year, $674 billion tax-cut proposal through a skeptical Congress. Hormats worries that the weak federal balance sheet makes no provision for unforeseen costs ahead. Yes, the active phase of the war is likely to go off without major hitches, but the U.S. will then face a long-term burden of years of costly peacekeeping and nation building in Iraq. If oil prices shoot up and further degrade consumer confidence and business investment, the U.S. government could find it has no fiscal reserves left to spend on stimulating the economy. Hormats argues that much of the cost of the U.S.'s ongoing war on terrorism — particularly increased security and policing — has to be borne by state and local governments, many of which have all but run out of money. For years the Time economists and others have warned that the U.S.'s insatiable hunger for imported products and capital has made its foreign exchange deficit balloon dangerously. Well, this year it is bigger than ever at 5% of GDP. "There is very little room for mistakes in U.S. economic policy," warns Kenneth Courtis, the Tokyo-based vice chairman of Goldman Sachs Asia. In other words, think hard before you push through those new tax cuts, Mr. President.

All of that is especially disturbing since the U.S. remains by default the world economy's prime driver. "There's been a lot of talk at this meeting about America as the world's military superpower," says Laura D'Andrea Tyson, dean of the London Business School and a former top economic official in the Clinton White House. "But there hasn't been enough talk about the world's excessive dependence on the U.S. as an economic superpower. The U.S. doesn't want this responsibility, and it's not healthy for the world." Instead of scolding U.S. consumers for supposed profligacy, Tyson thinks Japan and Europe should be working harder to fulfill their economic potential so they can comfortably increase consumer demand.

In both places, that's easier said than done. Pascal Blanqué, chief economist for Crédit Agricole, sees little chance of new demand coming from Europe, where he thinks the economy will grow by a meager 1.5% this year. "The determinants of growth for the next three quarters are already known: it's the lagged impact of previous shocks," he says. The most recent of those are the daunting cost of German unification and the valuation implosion of the most promising U.S. corporations. Both are still rippling through a European economy that may not have the dramatic short-term imbalances of the U.S., but has considerably less verve during boom times.

Germany's spectacularly troubled economy, Blanqué points out, is especially weighed down by the eastern part of the nation. Creating jobs there remains a struggle since labor costs — especially nonwage expenses like payroll taxes — have helped make German manufacturing costs among the highest in the world. Both Blanqué and Tyson believe that part of the problem is that the German mark was overvalued in the exchange rate agreed upon for the euro's launch, further hampering Germany's competitiveness. Since that poor start, though, Blanqué thinks the European Central Bank has taken more knocks than it deserves for Germany's sick state. "You can't expect monetary policy to fix Germany's structural problems," says the French economist. And so far, Germany shows no sign of fixing them, either.

While they differed in their assessments of the newcomer among the world's central banks, none of the Time economists expected the U.K. to jump into the euro zone anytime soon. "Everything that's happened in the euro zone is a compelling reason for the U.K. not to join," says Tyson. "An average inflation rate of 2% or less in an enlarged European marketplace, where you have countries with different growth and inflation rates — that's deflationary for Germany. The British look at that and say the ecb can't run a monetary policy — even if it's run well for the group — that works for an anchor player."

The British economy, warns Blanqué, is still in a bubble of inflated asset prices, one that is bound to burst; he sees a similar threat in the Netherlands and Spain. In the core Continental economies, household balance sheets remain sound. That doesn't have much effect, though, if Europeans sit on their savings, as the Japanese have been doing for years. European consumption is likely to be less buoyant in 2003 than last year. European businesses are no more disposed to invest than consumers are to spend, and their balance sheets are not as healthy. Many firms idly hoped last year to piggyback on a U.S. recovery this year, so they stayed overstaffed for too long and only began cutting jobs in the autumn, says Blanqué.

"When the cycle runs out of steam, we're left with structure," says Blanqué. If Continental Europe were to tackle labor-cost problems and the onus of untenable pension systems, maybe it could begin pulling its weight toward healing the world economy. "Europe has some easy wins if they remove impediments to growth," Tyson agrees. "But they're easy only in economic terms, not politically." Indeed, the German government has jawed on about making its labor market more flexible, but hasn't done much. And the French government is tackling pension reform as gingerly as possible, since public outrage over that issue is what brought down the last conservative government in 1997.

The Time economists generally greeted the fall of the dollar against the euro as a "win-win" for both sides. Blanqué says Europe can take advantage of dampening inflationary pressures (due to cheaper U.S. imports), and that a lower dollar encourages European investors to look more closely at opportunities at home instead of in the U.S. Washington likes the new exchange rate, too, Hormats says. Not only does it improve the U.S. trade position, but it pressures Europe to face the music of internal reform rather than cheat by letting its exports ride on a cheap euro.

But if the dollar's slide becomes a free fall, everyone could end up a loser. Foreign investors could stop funding the U.S.'s massive external debt, choking off the already sputtering engine of American consumption. Europe's strong showing in exports, vital to its health, would suffer from higher prices. "Remember," says Tyson, "Germany had the highest manufacturing costs in the world before the rising euro."

How bad is Germany's growth? Well, along with Italy, it's doing worse than deflationary Japan, says Courtis. Not that anyone should take any solace from that, since it took a massive fiscal stimulus from the Bank of Japan to get the world's second-largest economy to show a pulse at all — a stimulus that it cannot continually administer. Taking government, corporate and personal debt together, he says Japan's red ink amounts to five or six times the country's GDP — "a Himalaya of debt" twice the size of the one suffered by a bombed and exhausted Britain in 1945. "A lot of that debt is bad debt, so we could have a write-off of $3.5 trillion still ahead of us," Courtis says. He acknowledges that Prime Minister Junichiro Koizumi and Finance Minister Heizo Takenaka have "started saying the right things," but he's far from confident they can pull off the reforms needed to undergird an economy that remains, he says, "the biggest zone of risk" in the world.

If the Forum's Annual Meeting had taken place just west of Japan, the Board of Economists agreed, the level of optimism would have been far higher, because China's emergence as an economic power, says Courtis, "is the kind of phenomenon the world sees once every 300 years." The Chinese economy is now the size of Italy's; in a matter of years, it will be the size of Germany's; in a decade or so, it could rival all of Europe. And recently, Beijing hasn't been making many mistakes. "Good year, bad year, the [Chinese] government continues to engage in the most aggressive, politically difficult and complex reforms," says Courtis. Those policies have assured not only that China's labor force can work for the market, they have also assured that they can read — 94% of them — giving the country a "huge capacity to absorb new technology," says Courtis. Thanks to booming factories, China is now a formidable exporter, as well as the major importer from all of Southeast Asia.

Managing explosive growth by decree is easier than husbanding mature wealth in a democracy. Perhaps that's partly why China is the only major country whose economic policies didn't come in for a degree of harsh criticism by the Board of Economists. But there are still questions about the governability of the world's most populous country. "China will have an accident, whether financial or political," warns Naím. "The question is, will it be a 1990s-style accident, where a country crashes and recovers? Or will it be a 1960s-style accident, like the Cultural Revolution, that could last a decade?"

China has already started actively raiding the maquilas along the Mexican border with the U.S., posing a stark challenge to that country and the rest of the developing world. Courtis points out that 25% of all foreign direct investment into emerging markets currently goes to China; India, by comparison, gets 1%. That concentration is one reason why Latin America is slipping deeper into poverty after showing signs of improvement until 1997, suggests Naím, who once served as Trade and Industry Minister for Venezuela. When he looks to his former homeland, he sees "a new vintage" of oil disruption that could show up elsewhere: "Venezuela could be the first of several oil-producing countries to disrupt supplies not because the government decides, but because there's a mess in the country." Naím sees a positive though vulnerable development in the professional economic team and determined policies of the new Brazilian President, Luiz Inácio Lula da Silva. But what matters is whether "financial markets give him the benefit of the doubt and restore the financing his country desperately needs." The worry for Brazil and much of the developing world, Naím says, is that "the world will be too busy."

Tyson, the top economic advisor in the first Clinton Administration, already senses distraction in Washington. "When we listed our reasons for deficit reduction back in 1993, at the top of the list was the need for the U.S. to have credibility, because it was so dependent on the rest of the world for capital," she says. It's now dependent on the world for more than that. With bigger U.S. deficits now "baked into the cake," Hormats says, "we could find fighting terrorism from a base of a $300 billion-plus deficit harder." Yet Bush could fairly marshal the same basic arguments for an economic stimulus from Washington as he has for the war on Iraq: If not the U.S., who? If not now, when?

A quick end to any war in Iraq would be a big help to the world economy, especially if Iraq's oil assets remain largely intact. But Naím warns that the war's full impact won't be felt until 2004. And global economic courage could be even more sensitive to another major terror attack. "At the end of the day, governments don't know how to change confidence," says Naím. Terrorists do. That well-established fact reminds us, as if we needed reminding, how much harder it is to build than destroy.

www.brudirect.com

Washington - U.K. Prime Minister Tony Blair said the Bush administration should seek another resolution at the United Nations to approve any military action against Iraq, in a shift toward European demands in the confrontation.

It's right that we go for a second resolution,'' Blair said in an interview on Cable News Network. That's the way of saying this is an issue the international community isn't going to duck.''

President George W. Bush, who is holding talks today with Blair at the White House, has said the U.S. would be prepared within weeks to use force to disarm Iraq of weapons of mass destruction. Bush has also said a new resolution isn't needed to justify an attack.

Blair is Bush's strongest ally against Iraq and was one of eight European leaders, including Spanish Prime Minister Jose Maria Aznar, who wrote a letter this week calling for unity with the U.S. against Saddam Hussein. That statement was aimed at France and Germany, which have opposed Bush's policy.

The U.K. has joined the U.S. in a military buildup in the Gulf region, and the two countries will have about 215,000 troops in the area ready for a military strike by mid-February.

Blair had urged Bush to seek the first UN resolution against Iraq that cleared the way for weapons inspections and demanded that the country disarm. The Security Council unanimously passed that resolution on Nov. 8.

Oil Falls

Oil fell for the first time in four days on expectations that Blair will press Bush to give weapons inspectors more time to find chemical, biological and nuclear arms or development efforts.

Crude oil for March delivery was down 23 cents, or 0.7 percent, at $33.62 a barrel as of 12:20 p.m. on the New York Mercantile Exchange.

War concern, and a strike in Venezuela, have spurred a 24 percent rally in oil prices since early December.

Blair, said if the Iraqis ``carry on as they are now, they're in breach'' of UN mandates. At the same time, the British leader said UN weapons inspectors, now numbering more than 100 on the ground in Iraq, should be given more time to finish their work.

Not Cooperating

``It's absolutely clear'' the Iraqis are not giving full cooperation to UN weapons inspectors, Blair said, echoing a contention made to the Security Council this week by the top arms inspector, Hans Blix.

Blair's comments came after UN Secretary General Kofi Annan said a majority of Security Council members want arms inspections to continue before considering military action.

Annan, answering a reporter's question, acknowledged yesterday that ``the sense of'' a Security Council meeting was that at least 11 of the 15 governments want the search for any banned Iraqi weapons to continue before they will approve the use of military force.

The question of how to proceed against Iraq has produced a rift in Europe, with France and Germany against using military force, and Russia skeptical of Bush's stance.

Bush said he prefers to work with allies and through the UN.

Greek Prime Minister Costas Simitis, holder of the European Union's rotating presidency, denounced the published letter backing Bush written by the eight European leaders, saying it ``creates problems because it happened without the necessary communication.''

Summit Call

Simitis said he is prepared to call a special European Union summit to take up the Iraq issue. The European Parliament yesterday passed a resolution opposing military action. The body said a ``a pre-emptive strike would not be in accordance with international law'' and may lead to a deeper Middle East crisis.

U.S. Secretary of State Colin Powell will address the Security Council Feb. 5 to provide intelligence that the U.S. says shows Hussein is hiding weapons of mass destruction.

An extension of diplomacy on Iraq is also sought by Blair's critics at home, including members of his own Labour Party.

Support for Blair's Labour government fell three points this month, to 36 percent, the lowest in more than two years, a YouGov poll published in the U.K.'s Daily Telegraph newspaper showed.

Blair didn't explicitly back Bush's declaration in his State of the Union address that Hussein ``aids and protects'' al-Qaeda terrorists and may secretly supply them with a mass-destruction weapon. The British leader said he would wait for Powell to disclose evidence at the UN.

``I certainly have no doubt, on a broad level, these issues of international terrorism and weapons of mass destruction are linked,'' Blair told CNN. -- Bloomberg News

www.canada.com Jack Fairweather The Telegraph; With files from Reuters Friday, January 31, 2003 CREDIT: Herald Archive, Associated Press

If President George W. Bush orders crude withdrawn from the U.S. strategic reserve, oil could begin to flow within 10 days.

Kuwait will turn off its oil taps, among the most productive in the world, if full-scale war breaks out against Iraq, said officials Thursday, threatening to sharply increase petroleum prices.

Kuwaiti officials have prepared an evacuation of the country's oilfields, many of which are near the border with Iraq where 110,000 U.S. troops are gathering for military action. An official at the state-owned oil company, Kuwait Petroleum Company, speaking on condition of anonymity, said: "Iraq still has its short-range missile capacity intact and may use them against Kuwait.

"We cannot put our employees' lives in danger and will have to leave the oilfields if a war between America and Iraq escalates."

A missile strike on the oilfields of Kuwait, one of the largest producers with three per cent of the world market, would have huge effects on the price of oil.

During the first Gulf War, oil prices more than doubled, and claims have been made that should Iraq target the regional oil industry this time round, prices could leap as high as $80 US per barrel.

Insurance companies are also threatening to declare the Gulf area a "no-go area" in the event of war, meaning that many tankers will not travel to the region for fear of being attacked, further reducing supplies.

Saudi Arabia has promised to make up shortfalls if Iraqi oil production ceases. But if Kuwait stops pumping, and with Venezuela's oil industry still not back to full output after a strike, the Saudis might struggle to do so.

Kuwaiti fears of an attack by Iraq seemed to be confirmed by Tariq Aziz, the Iraqi deputy prime minister. Kuwait would be part of any "battlefield" created by a U.S.-led invasion, he said.

The U.S. Energy Department is already poised to move oil into the market in as little as 10 days should President George W. Bush order a drawdown of emergency oil reserves in the event of a war with Iraq, officials say.

A withdrawal of millions of barrels of oil by the United States and other industrialized countries is expected in order to calm energy markets and ensure adequate supplies following the announcement of any U.S.-led military action against Iraq.

When that happens, the U.S. Energy Department has a set of procedures in place that will quickly enable it to notify major oil firms that the government wants to sell crude, schedule pickup of the oil and transport it to refineries.

Such a drawdown of reserve oil may not be necessary, as Saudi Arabia has said it will pump more oil to make up for a cutoff in Iraq's crude exports in a war.

The U.S. Strategic Petroleum Reserve now holds 599 million barrels of crude, worth about two months of U.S. oil imports. It can be drawn at a rate of 4.3 million barrels a day for 90 days, then the rate drops as storage caverns are emptied.

Other industrialized countries that are members of the International Energy Agency, which would co-ordinate a global release of oil reserves, have a total of 700 million barrels in emergency oil. Most of that is held by Germany and Japan.

Some IEA member countries, such as Britain, do not have government-controlled oil reserves. Instead, oil companies are required to maintain excess crude inventories.

Department officials would not say whether IEA members had made a decision to release emergency oil if Iraq is attacked, or what would be the United States' share.

The scenario on how IEA members would release oil has already been worked out, but the amount for each country is a last-minute decision that can be settled among the IEA's governing board, department officials said.

During the 1991 Gulf War, the United States accounted for half the oil that was released among IEA members.

"It wouldn't necessarily be that this time around. That's not a standard understanding," one department official said.

The department has a list of companies it believes would be interested in buying oil from the stockpile, and these can be notified within several hours within Bush's order.

Oil companies, and the public, will then be able to view the terms of an oil solicitation on the department's Web site. Offers for how much companies are willing to pay for each barrel of reserve oil would be due electronically several days after the president's announcement.

Energy Department officials said it would take about a day to select the winning firms. The department has planned for the entire process -- announcement of an oil release to delivering to energy firms -- to take 15 days.

However, department officials said the oil could be put into the market as soon as 10 days if firms had space immediately available on pipelines or empty tankers waiting nearby to transport the crude.

The oil could then be shipped to refineries for processing in a few hours, depending on the location of the reserve site.

A barrel of crude yields about 86 litres of gasoline, 43 litres of diesel fuel and heating oil and 18 litres of jet fuel, according to the Energy Department.

The government stores its oil in underground salt caverns at four sites in Texas and Louisiana. The typical cavern holds 10 million barrels and is cylindrical, with a diameter of 65 metres and a depth of 650 metres -- large enough for Chicago's Sears Tower with 55 metres to spare to spare.

The four reserve sites are connected to major commercial pipelines with easy access to refineries. "Our sites in total are connected by pipeline to almost 50 per cent of the country's refining capacity," the official said.

Oil sold at the reserve's West Hackberry site in Louisiana would have to travel only a few hours by 16 kilometres of pipeline to huge refineries owned by Citgo and Conoco that together could process about 560,000 barrels of crude oil a day.

At the other extreme, shipments to Illinois refineries that serve Chicago and the Midwest would take more than a week.

The Energy Department has been running the reserve's four sites to receive oil to meet the Bush administration's goal of filling the stockpile though those shipments have been suspended to keep more oil in the market. The operation could be reversed quickly, department officials said.

"To reconfigure our sites to go out (with oil), rather than in, is not a big deal. It would be ready before day 10 (after a drawdown order) to pump oil out," a department official said.

The delivery process could take longer if pipelines are bottlenecked with prior shipments, as the government does not have the authority to override private delivery contracts.

Separately, department officials downplayed the possibility of a pipeline owner not making space on its system for reserve deliveries in order to drive up crude or product prices.

In California's energy crisis two years ago, the state accused pipeline owners of clogging up their systems to raise the price of natural gas shipped to power plants.

Department officials said that was not likely to happen with oil because, unlike natural gas, oil can be transported by both pipeline and competing tankers.