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Greece seeking special enlarged EU meeting on Iraq

U.S. warns North Korea, welcomes U.N. review   Bush, Blair to meet at White House, not Camp David   Schroeder upholds U.S. right to use bases, airspace in Germany   U.N. arms experts search more suspect Iraq sites   Putin anxious about aggravated tensions in Iraq   Israel rejects Arafat's offer to move back to Gaza HQ   UK's Blair heads for crucial Iraq talks with Bush   Pakistan foreign minister campaigns against U.S. immigration laws   Iraq invites top U.N. arms inspectors to visit Iraq in February

www.nytimes.com By ENRIQUE KRAUZE

MEXICO CITY — Focused on its enemies, the Bush administration has forgotten its friends. Only one world region went entirely unmentioned in the State of the Union speech: Latin America. In another, far distant age — five days before terror struck New York and Washington — President Bush pledged a new alliance with President Vicente Fox of Mexico, on the grounds that a strong Mexico makes for a stronger United States. After 9/11, however, everything changed.

All of Latin America now seems aware that the United States has returned to an essentially reactive diplomacy that seems to come to life only when there are missiles pointing at its shores, Marxist guerrillas in the jungles, or revolutionary governments in the old banana republics. This is unfortunate because Latin America (with the exception of Cuba) has for a decade been abandoning its old grievances, drawing closer to the United States, opting for democracy and rejecting militarism, statism and Marxism. What is needed to make Washington take this Copernican shift seriously and support it in tangible ways?

Maybe what is needed is for the miracle to end. And it may indeed end, if, in the face of American neglect, Latin Americans turn toward the biggest specter of the past: populism, the age-old temptation to put power in the hands of a heaven-sent strongman — yesterday in Alberto Fujimori's Peru, today in Hugo Chávez's Venezuela, and tomorrow perhaps in a charismatic Mexican politician.

Unfortunately, populist sentiment has been reinforced by Washington's mistakes. It lost democratic credibility by not condemning the coup against the populist but democratically elected Mr. Chávez. There was the scolding of Brazil and Argentina by Paul H. O'Neill, the former Treasury secretary, which sent their currencies tumbling. And there is the supreme shortsightedness of the economic blockade of Cuba.

More worrisome still is the administration's attitude toward its neighbor. The shelving of the 2001 immigration agreement was a mistake that has been compounded by new subsidies for American farmers, which fly in the face of the reforms required of Mexican agriculture under Nafta. Mexico's rural regions are its most sensitive. It was peasants who fought the Mexican Revolution 90 years ago, and it is from rural Mexico that the next explosion would likely come.

I agree with Mr. Bush that if Saddam Hussein is not evil "then evil has no meaning." But to combat evil, one must find strength in friendship. In dealing with the south, George W. Bush should try a different doctrine: pre-emptive cooperation.

Enrique Krauze is author of "Mexico: Biography of Power." This was translated from the Spanish by Natasha Wimmer.

www.washingtonpost.com By Lynne Duke Washington Post Staff Writer Thursday, January 30, 2003; Page C01 UNITED NATIONS

"Our agenda is one of disarmament. And the U.N. is not in the business of overthrowing governments," says the secretary general and Nobel Peace medalist.

Kofi Annan virtually marches through the corridors, hands behind back, gray overcoat flapping, eyes cast down. Fred Eckhard, his chief spokesman, walks beside him, recounting the day's news. Burly security men shadow Annan, one of the world's most high-profile and respected diplomats, a man who's managed to bring new life to this once moribund and maligned organization.

Annan barely slows as he approaches a glass door. His protectors whip it open just in time. The same choreography of protocol unfolds upstairs in his sunny 38th-floor office. In a deft move as Annan enters the room, Victor, the scratchy-voiced valet, elegantly scoops the overcoat off Annan's shoulders.

It is a Wednesday, the day to meet with the cabinet. An effort to streamline U.N. policy, the cabinet is an Annan creation, one of his reforms. As he enters his conference room, members of the 33-person body are poring over a list of priorities for the year. It is a long list (three pages), an exhaustive one. Of course, Iraq is on that list. But so are scores of other issues and hot spots around the world.

Removing Iraqi leader Saddam Hussein may be at the top of Washington's agenda, but the United Nations' agenda is top-heavy with all kinds of grave and threatening situations. There is North Korea, Afghanistan, Venezuela, the Middle East, Ivory Coast, Cyprus, Congo, Zimbabwe, the HIV pandemic, looming famine in Africa, and terrorism cropping up everywhere, all over the globe, all over Annan's turf.

"President of the world," Hamid Karzai, the Afghan leader, once called Annan. It was just a joke, but 64-year-old Annan didn't like it. He knows well the limits of his office, and the dangers of presumption. He's got no power, anyway -- not like a head of state.

Known for the subtle push, the deft move, the calculated but gentle blow, Annan must rely on his strongest weapons, the U.N.'s moral suasion and its legitimacy. He can only nudge nations, cajole them, reason with them or shame them. He can only try, perhaps in vain, to slow down a drive toward war. But try he must. That's his job. No wonder some in Washington wish he'd just butt out.

Even before President Bush threw down the gauntlet on Iraq in his September speech to the United Nations and threatened unilateral action, there was Annan, striking one for the United Nations. Annan had his staff release his own speech in advance of Bush's. It warned that only the United Nations could provide legitimacy to the U.S. approach on Iraq, and it suggested that unilateral action was unacceptable. It was Annan's attempt to "put down the marker for multilateralism," says Edward Mortimer, Annan's chief speechwriter.

Then, in November, when Saddam Hussein accepted the return of weapons inspectors to Iraq, Annan released the acceptance letter to the media even before it had been reviewed by the U.N. Security Council. And he immediately urged the council to accept Hussein's assurances.

Through the fall and into winter, since U.N. weapons inspections in Iraq resumed, the Bush administration and the United Nations have had a strange way of contradicting each other, with sharp rhetoric from an angry Bush, followed by Annan's mellifluous pleadings.

On one day Bush is "sick and tired of [Iraqi] games and deception," while Annan is "convinced that peace is possible."

On Monday, the U.N. weapons inspectors, who report directly to the Security Council, presented a mixed interim report. One group of inspectors asked for more time, while the other accused Iraq of not genuinely accepting U.N. resolutions demanding Iraqi disarmament.

The Bush administration continued its tough talk, with even Secretary of State Colin L. Powell, the man considered an advocate for diplomacy in the Cabinet, warning that there was not much time left for Iraqi compliance.

And then there was Annan, appealing for more time. "I'm not saying forever," he said, but the inspectors "do need time to get the work done."

Yesterday, after Bush's State of the Union speech, he said through a spokesman that he "still has not given up hope for a peaceful solution."

Annan's various public statements on Iraq have mystified some Bush administration officials. While Annan has close relations with Powell, with whom he speaks several times a week, his relations with other members of the administration are simply cordial, sources say.

"I believe the Bush administration is divided on Kofi Annan," says Richard Holbrooke, former U.S. ambassador to the United Nations. "Some people think he's an obstacle to the consensus they're trying to build, and others understand that he's doing his job and he's the best secretary general we've ever had, but he doesn't work for the United States."

The tension, in a way, is natural. Annan must represent the will of the majority within the 191-member General Assembly, which means the developing countries that make up the bulk of the U.N.'s membership. But he must also tend to the interests of the United States and its powerful allies of the wealthier world, as represented on the 15-member Security Council.

"We do understand he has to balance our interests and those of other members of the international community," says a State Department official. "He knows the U.S. is an important player. The U.N. needs the United States. We pay the largest share of dues to the U.N. And he knows that our opinion counts, and he has to be careful not to say something that could complicate issues."

The Iraq crisis has made Annan's balancing act more tricky. He is faced with a seemingly decisive global superpower preparing for war, versus an always-cautious United Nations, where armed intervention is a last resort.

In any situation of potential conflict, Annan says during an interview in his office, "you have to exhaust all possibilities of political and diplomatic settlement. Of course I do not rule out that there may come a time when use of force may be necessary. But you have to really make a genuine effort to resolve it without placing innocent people at risk."

It sounds almost like an apologia as Annan describes this strain.

"The U.S. has tremendous power in the world today and quite a lot of influence. And there are lots of things that it can do and does do. And there are many instances when it believes that it can take action and would want to take action. And the U.N.'s approach is very deliberative. They [U.S. officials] may even find it ponderous. . . .

"Obviously it's much easier if one country was to decide alone. But we live in an interdependent world, in a world where what happens in one country has an impact on others. . . . With that enormous power and capacity to act, the slow deliberative nature of the U.N. can be sometimes frustrating for Washington, and I understand that.

"Our agendas are not always different, but it is different on this particular issue," Annan says of the United States and the Iraq crisis. "There are shades of difference on this particular issue, and emphasis.

"The U.N's agenda is one of disarmament."

He pauses, clearly crafting his words, which he delivers like a gentle blow, his voice soft and even.

"Our agenda is one of disarmament. And the U.N. is not in the business of overthrowing governments."

Could there possibly be two global figures whose styles are so different?

Hugo Chavez, the embattled president of Venezuela, burst into Annan's conference room for a meeting, virtually shouting greetings to the assembled press, attempting to shake any hand he can clutch. Though Annan had walked in with him, the secretary general stepped aside and left the voluble South American leader in the limelight to joke and joust with his audience.

And as Chavez prepared to depart and walked down the hall with his arm draped chummily about Annan's neck, the secretary general looked like a man caught in someone else's show.

Annan doesn't do bluster. He's not given to grandstanding. He isn't even a man to raise his voice -- not even to counter those infamous tirades when former U.S. secretary of state Madeleine Albright used to yell at him. And that old story that he once hung up on her?

"I don't go around hanging up on people," he says, amused. "That is not my style."

To observe Annan at work is to see the epitome of the U.N. system, of its brand of global diplomacy. The Ghanaian-born diplomat and career bureaucrat rose through the ranks of the protocol-driven labyrinth along the East River and was shaped by it for 30 years. He learned its glacial pace, its institutional history and ceremony.

He also learned to please many constituencies at once.

He is, in a sense, Washington's man. Despite the well-known failures that occurred on Annan's watch as chief of U.N. peacekeeping -- namely, "ethnic cleansing" in Rwanda and Bosnia -- the United States pressed his candidacy for secretary general back in 1996, when the Clinton administration had come to the end of its rope with Annan's predecessor, Boutros Boutros-Ghali.

Annan received the Nobel Peace Prize in 2001 for bringing new life to the organization, and the United Nations itself also was honored for being "the only negotiable road to global peace and cooperation."

Where once U.S. officials viewed the United Nations as merely a necessary evil, now the body is afforded a grudging respect, largely because of Annan. Now serving his second five-year term, with a personal style that could best be dubbed Brooks Brothers cool, Annan the quintessential "global man" is so much a part of the culture that he's even been featured, with his wife, Nane, in the February Vogue.

So imagine Kofi Annan as a farmer, tilling the soil, perhaps rolling up those tailored sleeves, even breaking a sweat on a usually unruffled brow. It's a stretch even to think it.

But ask him what he wants to do after the United Nations, and that's what he says: Farm the land.

He did not grow up on the land. Back in Kumasi, Ghana, his father was a businessman, and Annan's youth was preoccupied with politics and anticipation of Ghana's independence from British colonialism in 1957, as the first sub-Saharan African nation to gain its freedom. His adult life has been completely removed from rural work. He is a Swiss- and U.S.-educated management specialist, with a wife who's a Swedish lawyer and artist.

But his idea of farming is part of a mission.

"I would also want to do something in Africa to devote a bit of time to perhaps working with others, to ensure that we do have a green revolution in Africa, and Africa can feed itself."

Africa faces another season of looming famine, with many nations of the east and south relying increasingly on humanitarian relief. The United Nations will have to beg its members, especially the rich ones, to finance relief operations to save African lives. Donor fatigue never makes this an easy task when it comes to Africa.

When Kofi Annan asks the United Nations for peacekeepers, he can never get enough. When he asks for humanitarian relief commitments, they fall short. When he asks for funding for medicines for HIV and AIDS, the funds only trickle in.

"It's depressing. It's difficult," he says of the U.N.'s attempts to narrow global inequalities. "But it's not hopeless." People do care and will act, he says, provided they are made to see the world as a "small global village" where we're all interconnected.

"What I think we need to do is encourage governments to think in broader terms and to have a broader view of what their national interest means, particularly in this borderless and interdependent world. Because if we moved away from the narrow, selfish definition of national interests, we would see that the issues we are dealing with are global and they're going to affect all of us, whether it's AIDS, the environment, whatever. And if we have that broader view, maybe we will reach out a bit more. How you get governments and people to develop that broader view is a challenge."

Just last week Annan discussed the HIV-AIDS crisis with Bush during a private dinner at the White House. Yesterday, he "congratulated" the president "on his pledge to provide stronger U.S. leadership in combating the devastating impact of the global AIDS epidemic."

Last weekend, while the tension over Iraq reached a new pitch, Annan flew off to Paris to attempt to mediate in yet another crisis -- this time, the civil war in Ivory Coast.

But he was back at U.N. headquarters Monday in time enough to ply his quiet diplomacy. As the U.N. weapons inspectors were about to deliver their reports to the Security Council, Annan invited them in for a meeting. Neither Hans Blix, the chief weapons inspector, nor Mohamed ElBaradei, director general of the International Atomic Energy Agency, reports to Annan, but Annan has had periodic sit-downs with them, as he does with any senior official.

Annan was not attempting to influence them, says Fred Eckhard, his spokesman, but merely to offer some delicate advice on dealing with the Security Council and its political environment.

He knows the stakes. The shades of difference between the United States and the United Nations could be the difference between war and peace in Iraq. It may come to war, and Annan knows it. But it is his job to find a different way.

www.upi.com From the Business & Economics Desk Published 1/29/2003 6:47 AM

Here is a look at more of Wednesday's top business stories:

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Arthritis drugs 'examined for cancer risk'

WASHINGTON, Jan. 29 (UPI) -- Federal regulators and medical experts are reportedly re-evaluating a new generation of arthritis drugs to find out if they increase the risk for cancer.

The review, according to marketwatch.com, a financial Web site, "could shake up the multibillion-dollar market for treating millions of rheumatoid arthritis patients." It said it has learned that the Food and Drug Administration has scheduled a review meeting for March 4-5.

It said FDA officials wouldn't say much about the meeting and refused to disclose what the review of drugs from Abbott Labs, Amgen and Johnson & Johnson would cover. But analysts -- and Amgen's head of research and development, who spoke about the issue in the company's fourth-quarter conference call -- said the agency "is looking at a possible link between the rheumatoid arthritis therapies and a form of cancer called lymphoma."

Agency officials, the site said, "declined to talk about what data they have regarding a potential link between the arthritis drugs and cancer."

The drugs involved are Amgen's product, Enbrel: J&J's drug, Remicade, and Abbott's medication, Humira. If they're found to pose equal risks, according to marketwatch.com, sales might not be affected even if the FDA orders strong lymphoma warnings on their labels. Pharmaceutical analysts said doctors would still prescribe them because there are no real alternative treatments for rheumatoid arthritis.

But things would be different if only some of the drugs carry a risk. "Any perceived safety advantage could shake up the balance of power in the high-stakes battle for rheumatoid arthritis patients. Enbrel and Remicade have been available since the late '90s, and both drugs hold significant market share," said the site. "The newest entrant is Humira, approved by the FDA on the last day of 2002."

It added: "All three drugs are considered crucial to the future profits of their makers."

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Kmart job cuts larger than indicated

DETROIT, Jan. 29 (UPI) -- Kmart Corp. has won approval from a court in Chicago to close more than 300 stores, and new documents in its bankruptcy case show that its financial collapse will cost 67,000 employees their jobs.

That's far more than the discount retailer had indicated until now, the Detroit Free Press reports Wednesday. Previously, the article says, Kmart said that 22,000 employees were pushed out of work when the company closed 283 stores shortly after declaring the largest retail bankruptcy in history a year ago.

In court records filed in Chicago, it said, Kmart indicated that as of Jan. 21, 32,000 workers had lost their jobs with the Troy, Mich.-based discounter in the first year of its bankruptcy. Another 35,000 will be unemployed when Kmart closes as many as 318 more stores by March.

U.S. Bankruptcy Judge Susan Pierson Sonderby approved Kmart's latest store closing plan on Tuesday, as well as a $2 billion revolving loan fund to provide the cash it needs as it seeks to emerge from bankruptcy by April 30, it said.

Going-out-of-business sales will begin Thursday as Kmart sells off as much as $1.8 billion in inventory at the 318 stores on its list, the Free Press said.

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Rural wireless operators to restructure

NEW YORK, Jan. 29 (UPI) -- Almost a dozen companies in the regional and rural wireless communications sector, which took on nearly $13 billion in debt when their revenues and valuations were much higher, might soon need fiscal restructuring.

Bankers say that this is likely for more than one reason -- but mainly because of rising leverage multiples as these companies' revenue plummets. Many of these firms' debt securities are trading at deep discounts -- 60 cents on the dollar or less, in some cases, according to Corporate Finance Week.

It said bankers cited "American Wireless, Centennial Communications, Dobson Communications, Leap Wireless, NTELOS, Rural Cellular Corp. and Sprint affiliates Airgate PCS, Alamosa PCS, Horizon, UbiquiTel and US Unwired as companies they expect to see involved in restructuring either out of court or following bankruptcy filings."

CFW said the 11 companies' revenue, by some measures, was down as much as 25 percent to 30 percent over the past two years.

CFW is published by the Institutional Investor group.

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Sell-off makes many oil shares attractive

NEW YORK, Jan. 29 (UPI) -- They got something of a respite on Tuesday, but up till then, big oil stocks were headed lower.

Shares in some of the so-called "supermajors" are trading at levels not seen since 1999, when oil was heading toward $10 a barrel. But now oil is $32 and natural gas is at nearly $5.50. The sell-off has been "straight out of the Big Portfolio Manager Playbook," the Wall Street Journal says Wednesday.

"Most investors think oil prices have nowhere to go but down." Most seem to think that problems in Venezuela will be resolved and that the United States will "go into Iraq on a Friday night, be in Baghdad on Monday and pumping Iraqi oil to the world by Tuesday," the newspaper says.

If that's what really happens, oil prices will fall, just like after the Gulf War, perhaps to the low 20s or below. And if world economies continue to stall, oil will plummet further. "Believing that scenario, you sell big oil now to be ahead of your peers. Except that the sell-off in the stocks already has taken place," the newspaper said.

The implication for investors: Big Oil stocks look attractive, such as BP or Royal Dutch Petroleum. Exxon Mobil is expensive. And "some of the mini-supermajors, such as ChevronTexaco, are worth a look, as is ConocoPhillips, which reports Wednesday."

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SEC finds 1,600 securities crimes since 1998

NEW YORK, Jan. 29 (UPI) -- Almost 1,600 brokers, dealers, investment advisers, bankers, attorneys and accountants were caught violating U.S. securities laws from 1998 to 2001, according to the Securities and Exchange Commission.

Most of the violations were committed by individuals associated with broker-dealers, but companies and investment advisers were also frequently involved, the Financial Times reports Wednesday.

It said that the most common offenses involved equity and debt offerings. Next came fraud against broker-dealer clients. There were also many cases of poor disclosure and market manipulation.

The SEC issued 782 permanent injunctions and 730 civil penalties that totaled $226 million. But only $78 million of that has so far been collected.

Disgorgement, under which "ill-gotten gains" are ordered to be returned, involved 673 cases and amounted to $799 million.

business-times.asia1.com.sg By R SIVANITHY

SINGAPORE - ASKED why she was so wrong about equities in 2002, Goldman Sachs strategist Abby Joseph Cohen said in a Barron's Jan 13 report: 'I misjudged two things. One concerned the extent of the malfeasance on corporate data. Our valuation models are driven by earnings and cash flow. In 2002, we learned that previous earnings had been dramatically overstated.'

'Secondly, we did not properly gauge the extent of the geopolitical situation in Iraq, North Korea and Venezuela, which feeds into the risk premium for stocks.'

It appears that even today, analysts are still over-optimistic about earnings - particularly in the patchy technology sector - and have under-estimated the impact that war fears can have on weak, illiquid and jittery equity markets everywhere.

In the case of Wall Street, stocks may have risen slightly on Tuesday, but a rapid slide thereafter in the futures market meant that sellers were out in force in the local market today.

'Short-sellers' would perhaps be a more accurate description than mere 'sellers'. As OCBC Securities said on its website today: 'Without some shorts in your portfolio you cannot insulate yourself in a structural bear market. The bottom line is that you cannot just buy equities and hope for the best. The degree of uncertainty affecting company business prospects and business models is as challenging as trying to predict a terrorist attack, or waging a war without sending the US Budget deficit to unsustainable levels.'

In line with pressure throughout the region - and in response to a 100-point collapse in the Dow Jones Industrial Average futures contract - the Straits Times Index plunged 30 points by lunchtime and spent the rest of the day bobbing around, supported mainly by the shorts covering themselves.

Pressure intensified when Europe opened in the late afternoon, and the end-result was a net loss of 36.84 points or 2.7 per cent at 1,302.85.

It was lowest close so far this year, surpassing the previous level of 1,318 reached on Jan 7. Perhaps disconcertingly, today's fall was on elevated volume. Excluding foreign currency issues, 249 million units worth $342 million were traded - 61 per cent more than Tuesday's $212 million.

As always, banks provided the biggest drag. The combined losses posted by UOB, DBS and OCBC sliced 23 points off the index, while SPH's 50-cent slide to $18.40 accounted for another 2.7 points.

Tech stocks continued to suffer a torrid time, Venture Corp being the best relative performer with only a 10-cent drop to $13. Datacraft Asia suffered most, losing six US cents to 68.5 US cents on volume of 14.4 million units.

Creative Technology, meanwhile, dropped 40 cents to $12 with 466 lots traded after it announced a net profit of US$18.9 million for its second quarter and dropped a bombshell by saying it is delisting from Nasdaq.

In a 'sell' call, Kim Eng-Ong Asia described Creative's results as better than expected, since the market consensus had been a figure of US$13.9 million. But the local broker said it finds it hard to get excited about the counter because revenue continues to decline with no sight of a turnaround.

'Although it has done a good job in controlling cost, there is a limit as to how much more savings it can extract,' Kim Eng-Ong Asia said. 'Gross profit is already at record levels and is unlikely to rise significantly. We have cut our full-year sales and profit forecasts by 4 and 6 per cent respectively ... At current levels, the stock is trading at 24 times FY03 earnings and is not cheap.'

Similarly, GK Goh called a 'market perform' on Creative, recommending clients 'short on strength' as there is 'no catalyst for performance'.

Elsewhere, Keppel Corp dropped 10 cents to $3.74 after it announced a 33 per cent increase in earnings to $356 million for last year.

OCBC Securities rated the counter a 'market perform', saying that although profit was within expectations, momentum is likely to slow for FY03 and earnings will probably only rise a modest 6 per cent.

'Downside will be limited by its attractive dividend policy, relatively inexpensive valuations, 20 per cent discount to revalued net asset value as well as the anticipation of further capital payments on the successful disposal of a non-core asset,' OCBC Securities said.

On the outlook for equities, BCA Research said: 'The worsening global energy crunch, rising anxiety about war and the halting nature of the business cycle recovery are spawning a renewed sense of pessimism. Market psychology has become fragile and sentimental. Fear is the dominant emotion and additional losses in global share prices are possible.'