www.sundayherald.com

Business desk leader

THE FACT that Scotland is now nearly three times bigger as a banking centre than Germany speaks volumes.

Not only does it tell us about the remarkable agility of the former Bank of Scotland and Royal Bank of Scotland, which have left their bloated European peers standing in the wake of their strategic focus and deft handling of mergers and acquisitions.

But it also highlights the dire performance of most European banks, especially of those in Germany, and more broadly of the German economy as a whole.

The one-time 'powerhouse' of the European economy was for most of the 1990s also a leading banking centre -- just look at the glitzy towers built in Frankfurt to house the headquarters of Commerzbank and Deutsche Bank.

But Germany, its economy in crisis, must now face the ignominity of having plummeted to the ninth-largest banking centre in Europe -- after much smaller economies such as Spain, Netherlands, Belgium and Scotland, for heavens's sake.

Commerzbank, Germany's third largest bank and a key lender to the Germany's 'mittelstand' of small and medium-sized businesses, last week posted a Û372m pre-tax loss, the first in the bank's history. A combination of high costs, soaring bad debts and paper-thin margins are conspiring to bring about Germany's worst banking crisis since the 1939-45 war.

It is not so long ago when the likes of the former Observer editor Will Hutton were wont to evangelise about the German business model. The way the nation's banks supported home-grown SME's with a mixture of large shareholdings and loans was seen by such liberal-leaning thinkers as a recipe for economic success. Our harder-nosed 'Anglo-Saxon' economic and business model was, by contrast, seen as driving short-termism and stunting productivity.

But today you don't hear many such claims for the superiority of Germany's system.

The critical problem facing the German financial services market is overcapacity. With its network of state owned landesbank's coupled with larger players such as Deutsche Bank and Commerz, Germany is massively over banked. As the economic tide floods out, the banks have been left stranded and vulnerable, with far too many staff and too many dodgy, unproductive loans. There are disturbing parallels with Japan.

Business failures in Germany are expected to continue soaring, with economists predicting 42,000 German businesses will go bust in 2003, up from 37,700 last year.

This is only going to exacerbate the trend of rising unemployment. Germany's Federal Labour Office said the unemployment rate rose to 10.3% in January from 10.1% a month earlier. Many of Germany's major companies have laid off thousands of staff in an attempt to cope with the prolonged economic downturn.

It all has serious ramifications for the banks, which directly finance German companies to far greater extent than their UK counterparts.

To the dismay of the rest of Europe, which risks being sucked into recession with Germany, the economic miracle seems to be turning into a chimera.

Manufacturers are shifting production to lower-cost economies in Asia, which has made it tough for economists to identify the bottom, as Germany's economy remains so heavily dependent on manufacturing. Sooner or later, the pain will become so acute that Germany will have to grasp the long-resisted nettle of structural reforms.

Oil players have vital role as war looms WORKING with black gold has never been easy. However, in the current economic and political environment even educated guesses on the oil sector's future embrace uncertainty.

The question of what will happen to oil prices before, during and after any war in Iraq is a hugely complex one. Oil giants such as BP will have spent a great deal of time and money working out possible scenarios, but no inter national player is prepared to comment on war or its possible aftermath.

Before the last Gulf War in 1991 the economic picture was very different and oil prices were around $15 a barrel. When the allied forces invaded Iraq prices spiked to $40 and then dropped back to $18 within weeks; a simplistic analysis of the situation in 2003 would offer up a similar series of events following a new conflict in the country.

Unfortunately, our thinking now must be more rigorous. Yes, a 'successful' war in Iraq would offer the US access -- eventually -- to oil reserves nearly as large as Saudi Arabia's, and thus weaken the status of the world's largest oil producer (a country already quietly suffering from political turmoil) and of the oil cartel, OPEC.

But once the effects of political and economic disruption in Venezuela, low levels of excess production capacity and small inventories are factored in, only a fool would attempt to predict which direction oil prices will head.

Looking at the picture closer to home the uncertainty that currently pervades the sector is bound to have consequences in the longer term.

Some industry analysts highlight the gains that could be made by small independent exploration firms as majors such as Shell and BP reduce their exposure to mature and costly assets such as the North Sea. On the back of this, oil service companies may also benefit from investment from other quarters. Nevertheless, it seems unlikely that such gains will outstrip the spend by the established operators.

The cut in the price of exploration licences proposed last week by energy minister Brian Wilson would also be a useful tool in stimulating new investment, although its effectiveness should not be over-estimated.

What should soften the blow of continuing uncertainty, in Scotland and internationally, is the natural confidence of virtually all oil players. In the months ahead, pessimism could do significant damage to already weakened markets. Tempered with common sense this confidence could yet prove vital in offering global stability.

What do you think? Have your say in the forum

www.arabnews.com By Hassan Tahsin

After Sept. 11, the United States added to its war on terrorism the disposing of weapons of mass destruction. First of all, what are weapons of mass destruction? Who possess them? Who has the ability to manufacture and use them? Which country has previously used them?

As for the first question, we all know the answer — all kinds of nuclear, biological and chemical weapons.

Who owns them? The five permanent members of the UN Security Council possess the whole range of weapons of mass destruction and are fully capable of using them. In addition, others with the weapons include Israel, India, Pakistan and possibly North Korea. Chemical and biological weapons are available to a large number of countries and are sometimes known as “the poor man’s bomb.” Most of these countries have signed nuclear non-proliferation treaties (including chemical and biological). None of these countries, however, make their capabilities public and I believe that these are well known to the American administration whose ability to gather information by a wide variety of means is very great.

When we come to the third question, we see that there is more than one country with advanced nuclear programs and they are only awaiting a political decision which will allow them to start producing them. In this group are Brazil and Argentina.

What remains now is the last question and we know very well that the only time a nuclear weapon has been used was by the US when it destroyed the two Japanese cities, Hiroshima and Nagasaki. This leads us logically to demand that Washington be the first nation to dispose of its own weapons of mass destruction.

As for chemical and biological weapons, these were used a number of times by various European powers from the beginning to the end of the 20th century. The US record of using these weapons can be summarized in the following way:

The US used biological weapons in 1966 during the Vietnam War. They were used against civilian populations and also to destroy both crops and forests.

In 1971, the CIA attempted to kill Fidel Castro by poisoning his food or cigars but failed in these attempts. The CIA also killed half-a-million pigs in Cuba by spreading plague.

Israel was another leader in the use of chemical and biological weapons; it began doing so by spreading dysentery among the Palestinians in 1948.

In 1925, confronted with the danger of these weapons, the Geneva Protocol was drafted to prevent the use of chemical and biological weapons in wars and was ratified by 29 countries. The United States was in fact the most prominent country which refused to ratify or take any part in the protocol.

Individual, bilateral or otherwise limited attempts are not sufficient to make real the dream of ridding the world of weapons of mass destruction. One reason for this is that personal interests normally come into play when dealing with the problem. This situation is unacceptable.

The obligation to disarm falls first on the countries that have already used these weapons and only then on those which merely possess them. Nonetheless, all countries should meet in a new expanded international conference and take a more positive stand aimed at disposing of all kinds of weapons of mass destruction without exception; otherwise the problem will never be solved.

Arab News Opinion 10 February 2003

www.gulf-news.com Dubai |By Duraid Al Baik, Bassam Za'za' and Jay B. Hilotin | 08-02-2003

Will there be another Gulf War soon? If so, how soon? If not, why?

These are some of the questions asked in every guessing game and coffee shop talk these days as the U.S.-British coalition engages in a cat-and-mouse game of brinkmanship against Iraqi President Saddam Hussain.

But a sinister design of U.S. policy hawks to force democracy to the Arab world via Baghdad is being done not out of deep conviction for America's founding principles but to humiliate Arab leaders.

Dr MaksoudDr Clovis Maksoud, a Western-trained lawyer who resigned his post as Arab League Chief Representative to the UN after Iraq invaded Kuwait in 1990, made this stinging remark during a roundtable discussion at Gulf News main office recently.

The softspoken former diplomat, however, acknowledged the need for reform in the Arab world. "There exists in the Arab world a long tradition of reform. Sometimes the reformists succeed, sometimes they fail," said the former Arab League Chief Representative to the UN. "But reform must be a self-generated function of the people."

Dr Maksoud is one of the intellectual fathers behind the landmark Arab Human Development Report commissioned by the United Nations which acknowledged the "poverty of opportunity" that has afflicted the Arab people.

Dr Maksoud, stressed: "Work on this report was done way before the September 11 attacks. It was about the Arabs, done by the Arabs and for the Arabs."

But Dr Maksoud pointed out that America has a spotty record in espousing transparency and democracy in other countries.

"You can't go around demanding transparency and democracy on others while turning a blind eye on your own backyard that is being 'Enronised' right under your nose," he said.

He was referring to the numbers-fudging by top auditing firms that hid corporate greed from the balance sheets which led to the collapse of energy giant Enron, WorldCom as well as accounting firms likes Andersen.

Dr Maksoud, with a doctorate in jurisprudence from the George Washington University and did post-graduate studies at Oxford University in Britain, is currently a Professor of International Relations and Director of the Centre for the Global South at the American University in Washington.

During his recent visit to the UAE, he was joined by two leading Arab-Americans: James Sams, an Arab-American lawyer and president and CEO of Maryland-based American Development Services Corp.; and Abul Huda Farouki, a businessman who represents the Financial Instrument and Investment Corporation, based in Virginia.

Their mission was to lay down the foundation to build more bridges of understanding between Americans and Arabs.

For his part, Sams thinks that the strike on Iraq won't occur because the economic, political and strategic damage would be overwhelming.

"I believe that when it's about to press the go-ahead bottom, the U.S. administration will come to recognise more that the strike on Iraq is evitable. The economic, political and strategic cost is cheaper than it would be in case of a military action."

All threats and aggressiveness of Saddam Hussain could be contained. Yet the Bush Administration won't be able to contain the political uncertainty as well as the economic damage specially that uncertainty it will bring to the oil market.

Farouki believes that the degree of anti-American sentiment that exists throughout the Arab world isn't really understood clearly by most Americans.

He stressed the need for a "dialogue of civilisations", which would enrich the Americans' understanding of Arabs, and vice versa.

Following are excerpts of the roundtable:

Why do you think there will be no war? Sams: The arguments against the war from the purely American national interest perspective are persuasive. The economic consequences will be so potentially damaging as well as the political and strategic consequences.

SamsI think that by the end of the day the people who will make that final decision to push the go-ahead button will come to recognise that and will not do it.

I also believe that the large-scale U.S. military movement towards the Gulf is being made to create an impression or a clear capacity to go to war. I think that the U.S. deems that unless they pursue up to the degree they have done, they will never be able to contain Saddam Hussain's aggressiveness.

The Americans had Saddam contained for the last 10 years but at a very high price paid by the Iraqi people. Also Hussain, in a sense humiliated the UN and U.S. when he expelled and kicked out the weapon inspectors.

With this new effort at inspection, the ultimate consequence, I think, is that he will be contained. He might not be removed, but whatever threat he represents will be contained.

All that is a conjecture. Recently, a friend, Michael Hudson, told me that definitely the U.S. have gone so far towards war and now, if they don't go (to Baghdad), then that would be backing down.

There is a strong element within the State Department and Defense Department that is opposed to war; and I just believe that they all in the end prevail which I hope they do.

How long do you think that the argument over war - or no war - would take before a decision is made? Sams: The argument would last for the next several months. Some people think that it should take place sometime in February because of the weather conditions and which is another reason why I believe that there is going to be no war. I think that this the inspection process under the UN and the opposition from some of our allies such as Germany, France, China and Russia will make it difficult.

How do you think that would affect the U.S. economically? Sams: The political uncertainty in itself is tremendously damaging right now to the businessmen. And there's the cliché that if there's one thing businessmen cannot stand, it is uncertainty. And the one thing that Bush policies had brought to the economy in the last years had been uncertainty. Thus as a consequence the decisions to invest aren't being made.

You can tell just from the perspective of the stock market. It isn't the best gage of economic activity in the U.S., but nonetheless whenever there is a sense that war isn't eminent, the market shoots up.

But whenever there is a sense that war is eminent, the market goes down. It is, to a certain degree, fixed by the fear of rising energy prices that was mitigated when the Opec made a decision to say they'll match whatever they're loosing from Venezuela or whatever they would lose from Iran.

That's not enough! I think that the market recognises the damage of uncertainty is probably more than anything else."

FaroukiDo you think that the Americans are aware of the political price that they have to pay if they go to war? Farouki: I believe that the degree of anti-American sentiment that exists throughout the Arab world isn't really understood clearly by most Americans.

I've had the opportunity to travel to most of the Arab countries in the past two years, and since the September 11 crisis, I detected a growing anti-American sentiment on the part of a wide range of people, not just the street but at almost any level; academic, political, business and government."

The reason for the misunderstanding of anti-American sentiment in the US is the great deal of lack of understanding of Islam, the Arab world and Arab individuals and what motivates them to have such feelings.

How would the U.S. media or politicians explain to the American society the recent ambush attack on American troops in Kuwait or any similar acts?  Farouki: These acts don't play out well at all in the U.S. media. Any action directed against any American interest or individual obviously doesn't play well as far as the public is concerned.

It actually brings about or fosters an atmosphere of greater misunderstanding. It creates more negative feelings of the part of the Americans towards the Arab world. Those negative feelings exist and are growing.

Do you think that the American masses would rise up against war? Farouki: There is a growing feeling among the American people opposed to war. An evidence of this is the growing protests taking place.

I think that those protests are going to snowball and the number of people would also increase. I believe that it has to do with the fact that in general, Americans don't want to be part of the war effort.

There are a lot of negative experiences that occurred in the past with respect to going to war which are coming back into play right now. There is a very good chance that the anti-war protests will increase in size.

What is the main reason behind not going to war? Is it the political price, economic price or the opposition of people in the U.S.? Sams: I think it is a combination of all reasons, especially the recognition of the political and economical price that the U.S. will have to pay. Then there is the basic concern, which is the disruption to their lives or the number of casualties.

That is why there is such a strong emphasis by advocates of war that it will not produce many casualties because the strikes will be "surgical", the Iraqi people will erupt in joy when the war starts and welcome the liberators. They really emphasise that.

A lot of Americans believe that. Yet the closer we get (to war), the more they will come to recognise that the price will be heavy.

How do you explain the mounting mobilisation of U.S. and British troops in the area? Sams: They want to create the real potential for war. I don't want to call it a bluff. But there has to be this real potential, by mobilising the troops. If they weren't doing that, then there will be no movement on the part of Saddam Hussein.

The Americans want to make it very clear that in the absence of Saddam Hussein's compliance to the UN resolutions, he will have to face the consequences. If they didn't have this deployment then, it wouldn't take place. This is brinkmanship at its ultimate.

The ultimate decision makers will have enough good judgment to avoid war. I think the Americans have pulled back on the "regime change" as a primary objective. I haven't heard that rhetoric for quite some time. They are stressing now on disarming Saddam of his mass destructive weapons.

The real defined goal by the UN is the destruction of weapons of mass destruction, and it's very hard to determine precisely when they will have achieved that goal.

Clearly there is a process at work which is again one of the reasons why I don't believe that there is going to be war - because that process is strengthening and not weakening.

Now there is more support for the process of inspection and probably expanding it. Thus, I don't think there is a realistic prospect for a new UN resolution within the next several weeks. I think that the US would find it extremely unethical to launch a war in the base of all this UN activity taking place.

After the current period of uncertainty, do you think that the moderate Arab nations would be affected by calls for democracy and women's empowerment. Or would the U.S. forget about it later on or maybe help those nations to develop that sort of approach? Farouki: In the last couple of years, the U.S. media has really latched onto the business of introducing change in the Arab countries. They latched onto the main issues like lack of democracy, empowerment of women, transparency and corruption.

There has been so much publicity on those issues and I don't think that's going to stop. It will continue. War or no war, I think there will be more of that. I further believe that the American media had adopted this. Certain forces have actually made this an issue that the media will continue to focus on."      

· Bush tells UN to make up its mind · U.S. presence worse than Iraqi arms · Bahrainis stage demonstration · Gunmen fire at Briton working in Saudi firm · Democracy in Iraq `could reshape region' · Airborne troops, fifth carrier sent to Gulf · Reforms must come from people · Powell briefed former top officials · Step down or face war, Jordanians tell Saddam · Pentagon planning overseas funerals · Dinar first casualty in battle against U.S. · Woman held for stealing newborn · Analysis: Riyadh plans to rectify demographic imbalance · Project to build town in Hamraa area of Oman · Khimji felicitated in Oman  

allafrica.com OPINION February 7, 2003 Posted to the web February 9, 2003 Adrian Njau

TANZANIA has the most abundant natural wealth in the world, and yet is among the poorest nations of the world. Among the natural resources it has are arable land, excellent tourist attractions, a variety of minerals, geographical position and inexpensive labour.

All these offer tremendous investment opportunities; yet the country has failed to attract significant investments to ease the abject poverty in which its people live. Join allAfrica's Discussion: How to Wage the War on AIDS >>

The incidence of poverty is worsening with the relentless march of globalisation that entails stiff competition all round. This is a definite threat that is making Tanzanians even more marginalised.

While the country has shown commitment in fighting poverty under the Government's Poverty Reduction Strategy (PRS), the most important thing now is how the country can become competitive in the new global dispensation. On paper, at least, the Government targets to reduce poverty by 50 per cent by the year 2025!

Reduction of poverty under the PRS can be attained if, and only if, the country would record a higher broader-based annual economic growth of between 8 and 15 per cent for the remaining 22 years to 2025.

To attain such an economic growth, Tanzania has two options to focus on: either to continue expanding primary exports, or to rely on expansion of the manufacturing sector.

As it is evident now, Tanzania has opted for the former strategy: expansion of primary exports, leaving the manufacturing sector out of its priority sectors needed to fight poverty.

Although the Government has not specifically formulated a Primary Export Strategy (PES), it is nevertheless clear from its Poverty Reduction Strategy Paper (PRSP) that the agriculture sector has been singled out as priority in its poverty reduction efforts.

The manufacturing sector is not considered as a priority sector toward poverty reduction under the PRS.

There is a wide consensus among Tanzanian economists and business analysts on the rationale of taking agriculture as the priority sector in the crusade against poverty.

They argue that Tanzania can easily become a successful exporter of primary goods than of manufactured goods. This is because the country has an abundance of natural resources such as fertile land, livestock, fish, minerals - and, more important, cheap labour.

Another rationale for choosing agriculture as a priority sector in poverty reduction is because agriculture is the mainstay of Tanzanias' economy. Over 80 per cent of Tanzania's labour force is employed in the agriculture sector, which alone contributes over 50 per cent of the Gross Domestic Product (GDP).

However, efforts in the past to fight poverty through primary exports has had very negligible or no fruits at all. This is due to the fact that, unlike many other countries, Tanzania's agriculture is geared on exports of unprocessed goods.

The best primary export strategy that has sustainable impact on national development is the one that concentrates on exporting processed products and not unprocessed exports.

Unprocessed primary resources face an unpredictable future in the world market due to its price instability and inelastic demand. Over the years, primary agricultural products such as sisal, coffee, cotton and tea have been experiencing continued decline in prices in the world market.

For Tanzania at least to gain from agriculture, it needs to shift from exporting unprocessed agricultural products to processed ones after adding some value to them.

Success in poverty reduction depends heavily on how best Tanzania can shift from a country of comparative advantages to one of competitive advantages.

While during the old days of comparative advantage, countries were relying on abundant natural resources and cheap labour, countries have today embraced new paradigms of competitive advantage where countries are making strategic choices in global markets.

Under the current situation in the global markets, abundant natural resources, inexpensive labour and fertile soil - which are the basis for comparative advantage argument -are no longer sufficient as an engine of growth.

For example, Venezuela and Nigeria, even with abundant natural resources of oil reserves, have failed to fight poverty altogether through using their oil. Starting commercial drilling in 1914, Venezuela became the world's No 1 oil exporter in 1928 - and the fastest growing economy in the world between 1920 and 1980. Oil still accounts for a third of the country GDP; yet Venezuela remains among the poorest countries in the world!

It is beyond doubt that excess dependence on natural resources prevents diversification. The fluctuations of unprocessed agricultural product prices in the world market has resulted in huge exchange rate fluctuations in those countries - including Tanzania - that heavily rely on exporting unprocessed exports.

Large exchange fluctuations make investment unpredictable, pushing up interest rates to a point at which no legitimate business can afford to borrow.

The average lending rate in Tanzania is above 20 per cent, while the deposit rate is average below four per cent - too wide a gap!

Exchange rate fluctuations are even worse, with the Tanzania shilling depreciating year after year. While the shilling was traded at Tsh917 per US dollar in January last year, it depreciated to Tsh1000 per dollar on May 20, 2002. It now averages out at Tsh985 per dollar.

This situation teaches us that Tanzania has to move away from the old world of comparative advantage and embrace the new world of competitive advantages. We should not be exporting today what we were exactly exporting in the early 1960s. We need to diversify our exports over time, regardless of how much we are earning from it. This should not only be the practice in agriculture, but also in other sectors such as mining and tourism.

What we are earning from mining now (especially in gold exports) can be reinvested in other sub-sectors because we know for sure mining (of gold and other minerals) is not sustainable.

We can learn from what is happening to Zambia now after its earnings from copper started to decline. The same happened to Ghana with its gold. Currently, gold accounts for about 50 per cent of Tanzania non-traditional export earnings. But, despite heavy investments in the mining sector, many Tanzanians do not receive any significant benefits from the sector!

We must also turn our comparative advantage in agriculture into a competitive one. It is high time we focused on exporting processed agricultural products and not raw produce. Adding value to agricultural produce will make our goods more competitive rather than just exporting them in raw form.

www.techcentralstation.com Saturday, 08 February, 2003 07:18:03 PM By James Pinkerton 02/04/2003

In the wake of the Columbia tragedy, the arguments of the pro-space constituency are strong, but not strong enough. If space advocates can't bring themselves to make the most powerful arguments of all—that space is vital to human freedom, even to human survival—then their cause will falter as the soaring spirit of heroism and martyrdom fades, and as the counter-arguments of the cost-benefiting, bean-counting critics gain footing.

To be sure, the weekend was a time for both paying tribute to lost astronauts and offering exhortation for future astronautics. Space, said Sen. Bill Nelson (D-Fla.) on "Meet the Press" on Sunday, is "important to us as Americans and as adventurers." Declared Sally Ride, the first American woman in space, to Fox News, "We must push back the frontiers of knowledge." And, most poignantly, first-American-to-orbit-the-earth John Glenn told CNN, "I'd go back tomorrow if I could." For the time being, those pro-space affirmations—oftentimes couched in such solemn language as, "The greatest tribute to the men and women of Columbia would be to carry on their work"—will dominate the debate.

But already, the skeptics and faultfinders are being heard. Here, for example, is a report from Sunday's Manchester Guardian: "Fears of a catastrophic shuttle accident were raised last summer with the White House by a former NASA engineer who pleaded for a presidential order to halt all further shuttle flights until safety issues had been addressed." And here's a headline atop a cutting article in the new Time magazine: "The Space Shuttle Must Be Stopped: It's costly, outmoded, impractical and, as we've learned again, deadly." Soon enough, more details and anecdotes—true or not—will come dribbling out, depicting reckless errors and fatal mistakes. Indeed, one can half-expect a report from France to proclaim that the "accident" was staged by the Pentagon at the direct order of President George W. Bush.

Then will come war on Iraq, and the whole controversy—naysayer and yeasayer alike—will be swept out of the headlines for months, if not forever. And what will emerge at the other end of the investigation, after the bombs stop dropping down on Baghdad—and after the reportorial bombshells stop bursting at NASA headquarters? Most likely, a discredited and shriveled piloted space program. Why? Because the glory of the Columbia crew will have to be shared with a new cohort of battlefield heroes, and the budget for future space missions will have been reallocated to other needs, from the Pentagon to prescription drugs. Yes, space will always have its advocates. But just as during the Vietnam War, today, during the Terror/Iraq War, the immediate demand for guns abroad and butter at home will surely crowd out the more abstract claims of the spacefaring future.

To be sure, space will not be entirely neglected. The U.S. military will surely continue its exo-atmospheric expansion. And a good thing, too; much of America's dominance depends on satellite communication and surveillance. And someday, maybe sooner than we think, America will put heavy weapons into orbit. But generals and admirals can do their war-work in space without putting men and women into space.

So what's the real case for space—space for people?

It's two-fold. First, in the long run, we will need space to be free. Second, we will need space to survive as a species. Freedom and survival: that's putting the hay down where the horse can get it. And that's what needs to be said, sooner rather than later—sooner, before it's too late.

Freedom? We need space for freedom? Aren't we fighting a war for freedom right now? Aren't we sure to win against Saddam Hussein and, one way or another, Osama Bin Laden? Most likely, we will prevail, big time. But that doesn't mean that the bad guys won't get off a lucky shot—a lucky weapon-of-mass-destruction shot. And if they do, then homeland security, from national ID cards to computer snoopers, will come down upon us and our civil liberties like an iron fist. And few will protest. To be sure, the crisis mode might ease up after awhile, but the lesson of big government is that once it gets big, it stays big.

Moreover, the world itself is getting smaller, and that's not good for the don't-tread-on-me ethos. President Bush came in as the sworn enemy of Clinton-era world-government projects, such as the International Criminal Court and the Kyoto agreement, but now, two years later, there's less discontinuity and more continuity between the presidencies than many Republicans might like to admit. Confronted with the need to maintain and strengthen his anti-terror/anti-"axis of evil" alliances, the President announced last year that he would rejoin the United Nations Educational, Scientific and Cultural Organization. And he, or at least his administration, seems committed to an emerging "Kyoto Lite" system. And of course, building and rebuilding other countries—and curing them of AIDS—is not only expensive, but inherently multilateral. In the meantime, even organizations that most TechCentralStationeers probably endorse, such as the North American Free Trade Agreement and the World Trade Organization, all chip away a bit at American sovereignty.

And this is a Republican president we're talking about. What will happen under a future Democratic president? In the same way that the elder and younger Bush are known as "41" and "43," what if former president Bill Clinton is someday remembered as "42," and Hillary Rodham Clinton is known as "44"? Maybe we'll be spared that particular political fate. But just as government gets bigger here at home, no matter who's in charge, so government around the world will get bigger, too. Eventually, inevitably, superstates at home and abroad will start crowding us. And yet the physical world we live in stays the same size, offering no escape. A few years ago, many libertarians thought that the Internet would be a kind of Ayn-Randian refuge, but the regulators and tax collectors are now corralling that freezone. Here's a prediction: every year for the rest of our lives, the world will be knitted together a bit more closely, by this or that international agreement. Worrisome? Sure. Preventable? Probably not. It seems self-evident that if the earth is of a fixed size and the government is equally fixed in its Parkinson's Law-like growth pattern, then freedom will be crowded out.

So what's the answer? One word: space. In the past, Europeans could find freedom by coming to America, and Americans could find freedom by heading out west. But that frontier is long closed. And from now until the end of time, the feds will be closing in, looking for more things to regulate and red-tape. Freedom-lovers will resist, but if the past is any guide, the freedom-dislikers—most politicians and all bureaucrats, environmentalists, and egalitarians—will win more fights than they lose. That doesn't mean that America is destined to become another Maoist China; most likely, America in a globalized world will drift toward the global mean—which is to say, a condition of considerably less freedom than we have now.

But if Americans could travel, physically and permanently, to space—even if just to the moon, as in Robert Heinlein's libertarian classic, The Moon is a Harsh Mistress—then prospects for the survival of maximum human freedom would be greatly enhanced. Those who don't mind being niggled and nitpicked by the state could stay right here, but the mere existence of an exit-option for freedom-ophiles would serve as a check on the checkers.

Historically, the only way that the slow bureaucratic creep of government is reversed is through revolution or war. And that could happen. But there's a problem: the next American revolution won't be fought with muskets. It could well be waged with proliferated wonder-weapons. That is, about the time that American yeopersons decide to resist the encroachment of the United Nations, or the European Union—or the United States government—the level of destructive power in a future conflict could remove the choice expressed by Patrick Henry in his ringing cry, "Give me liberty, or give me death." The next big war could kill everybody, free and unfree alike.

Which leads to the second argument. Spaceship earth may not be as fragile as a space shuttle, but it's still fragile. By all means, let's have homeland defense and missile defense. But let's also get real. If the weapons get bigger, and the planet stays the same size, then prospects for human survival shrink accordingly. For the time being, North Korea seems to have gotten away with breaking out of the nuclear Non-Proliferation Treaty. Kim Jong Il's arsenal could be eliminated in the future, of course, but in the meantime, the atomic cat is out of the nuclear bag.

Writing in the February 3 Weekly Standard, Henry Sokolski, director of the Nonproliferation Policy Education Center in Washington D.C., offers up scenarios for the spread of nuclear weapons that are much more compelling than the scenarios for their unspreading. Countries such as Iran, Syria, Egypt, Turkey, Algeria, Taiwan, South Korea, and Japan, he writes, have all flirted with the idea of building atomic weapons. And one could add to Sokolski's list other countries, such as Brazil, where the new president, Lula da Silva, seems to be forming an axis of anti-Americanism with the likes of Venezuela and Cuba.

Meanwhile, every one of those potential proliferators could be brought into line, and we'd still face the problem of "super-empowered individuals." Yup, the prospect of Moore's Law—computer power doubles every 18 months—affects cyber-geek and terror-creep alike. Such computational capacity is inherently "dual use" —the ultimate double-edged sword, hanging over all of us, to be wielded by some of us. As technofuturist Ray Kurzweil predicts, "We'll see 1,000 times more technological progress in the 21st century than we saw in the 20th." Most of that progress will be to the good, but not all. What could a hacker-terrorist alliance come up with, weapon-wise? There's only one way to find out.

Sooner or later, Moore's Law will meet Murphy's Law, and we'll realize just how vulnerable we all are, six billion souls, crowded into a narrow band of soil, stone, air and water, hugging the flimsy, filmy, easy-to-rub-off surface of the earth. Let's hope that before we have that rendezvous with deathly destiny, we've had the foresight to build an escape ladder for ourselves.

Some pro-space pragmatists will say that the American public, preoccupied with shuttle heroes, Saddam Hussein, and the stock market, is not going to be interested in long-term arguments about the future of freedom—even the future of human survival. Better, those alleged pragmatists will assert, to simply make once again the traditional arguments about the positive scientific and psychic spinoffs of space travel.

Those arguments are fine, as far as they go. But they don't go far, at least not far enough. That is, the "Tang and Teflon" argument, which lost much of its force three decades ago, is not going to recreate a strong pro-space constituency simply because it is repeated with renewed fervor. The ghosts of seven dead space-heroes may summon spaceniks back into space, but more risk-averse Americans will question the cost.

The people of this country—and of the world—need to be told the truth. And here's the truth: if we don't create an off-earth option in the relatively near future, we risk not only our liberty, but also our lives. The sooner the United States declares its independence from these 50 geographic states, proclaiming instead that our sacred honor should flourish everywhere, on and off the earth, the better for all earthlings. America may be the last best hope for mankind, but the emphasis should always be on the "best," not the "last."