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Wars and Empire

Sam Vaknin

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Title: Wars and Empire

Author: Sam Vaknin

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Wars and Empire

1st EDITION

Sam Vaknin, Ph.D.

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C O N T E N T S

I. The Author

II. About "After the Rain"

Containing the United States

I. Why is American Hated

ads:

II. Containing the United States

The War in Afghanistan

I. Afghan Myths

II. Pakistan's Nice Little War

III. The Afghan Trip

On the Road to Iraq - Central and East Europe

I. EU and NATO - The Competing Alliances

II. The Euro-Atlantic Divide

III. Russia Straddles the Divide

IV. Russia's Stealth Diplomacy

V. Losing the Iraq War

VI. Germany's Rebellious Colonies

VII. The Disunited Nations

The War in Iraq - Coalition Building

I. The Economies of the Middle East

II. The Costs of Coalition Building

III. Is It All about Oil?

IV. The Axis of Oil

V. Saddam's One Thousand Nights

VI. Turkey's Losing Streak

VII. Turkey's Jewish Friend

VIII. Israel - The Next Target

IX. Oil for Food Program

X. Iraq's Middle Class

XI. Iraq's Revenant Sons

XII. Forgiving Iraq's Debts

XIII. Kosovo's Iraqi Lessons

XIV. The Iraqi and the Madman

XV. Just War or Just a War?

Why is America Hated?

By: Dr. Sam Vaknin

Also Read

In God We Trust

Why America is Hated

The Iraqi and the Madman

God's Diplomacy and Human Conflicts

European intellectuals yearn for the mutually exclusive: an America

contained and a regime-changed Iraq. The Chinese are more pragmatic -

though, bound by what is left of their Marxism, they still ascribe

American behavior to the irreconcilable contradictions inherent in

capitalism.

The United States is impelled by its economy and values to world

dominion, claimed last week an analysis titled "American Empire Steps

Up Fourth Expansion" in the communist party's mouthpiece People's

Daily. Expansionism is an "eternal theme" in American history and a

"main line" running through its foreign policy.

The contemporary USA is actually a land-based empire, comprising the

territorial fruits of previous armed conflicts with its neighbors and

foes, often one and the same. The global spread of American influence

through its culture, political alliances, science and multinationals is

merely an extrapolation of a trend two centuries in the making.

How did a small country succeed to thus transform itself?

The paper attributes America's success to its political stability,

neglecting to mention its pluralism and multi-party system, the sources

of said endurance. But then, in an interesting departure from the

official party line, it praises US "scientific and technological

innovations and new achievements in economic development". Somewhat

tautologically, it also credits America's status as an empire to its

"external expansions".

The rest of the article is, alas, no better reasoned, nor better

informed. American pilgrims were forced westward because "they found

there was neither tile over their heads nor a speck of land under their

feet (in the East Coast)." But it is the emphases that are of interest,

not the shoddy workmanship.

The article clearly identifies America's (capitalistic) economy and its

(liberal, pluralistic, religious and democratic) values as its

competitive mainstays and founts of strength. "US unique commercial

expansion spirit (combined with the) the puritan's 'concept of mission'

(are its fortes)", gushes the anonymous author.

The paper distinguishes four phases of distension: "First, continental

expansion stage; second, overseas expansion stage; third, the stage of

global contention for hegemony; and fourth, the stage of world

domination." The second, third and fourth are mainly economic, cultural

and military.

In an echo of defunct Soviet and Euro-left conspiracy theories, the

paper insists that expansion was "triggered by commercial capital."

This capital - better known in the West as the military-industrial

complex - also determines US foreign policy. Thus, the American Empire

is closer to the commercially driven British Empire than to the

militarily propelled Roman one.

Actually, the author thinks aloud, isn't America's reign merely the

successor of Britain's? Wasn't it John Locke, a British philosopher,

who said that expansion - a "natural right" - responds to domestic

needs? Wasn't it Benjamin Franklin who claimed that the United States

must "constantly acquire new land to open up living space" (the

forerunner of the infamous German "Lebensraum")?

The author quotes James Jerome Hill, the American railway magnet, as

exclaiming, during the US-Spanish War, that "If you review the

commercial history, you will discover anyone who controls oriental

trade will get hold of global wealth." Thus, US expansion was concerned

mainly with "protecting American commercial monopoly or advantageous

position." America entered the first world war only when "its free

trade position was challenged," opines the red-top.

American moral values are designed to "serve commercial capital". This

blending of the spiritual with the pecuniary is very disorienting.

"Even the Americans themselves find it hard to distinguish which matter

is expanding national interests under the banner of 'enforcing justice

on behalf of Heaven' and which is propagating their ideology and

concept of value on the plea of national interests."

The paper mentions the conviction, held by most Americans, that their

system and values are the "best things in human society." Moreover,

Americans are missionaries with a "manifest destiny" and "the duty and

obligation to help other countries and nations" and to serve as the

"the beacon lighting up the way for the development of other countries

and nations." If all else fails, it feels justified to "force its best

things on other countries by the method of Crusades."

This is a patently non-Orthodox, non-Marxist interpretation of history

and of the role of the United States - the prime specimen of capitalism

- in it. Economy, admits the author, plays only one part in America's

ascendance. Tribute must be given to its values as well. This view of

the United States - at the height of an international crisis pitting

China against it - is nothing if not revolutionary.

American history is re-cast as an inevitable progression of concentric

circles. At first, the United States acted as a classic colonial power,

vying for real estate first with Spain in Latin America and later with

the Soviet Union all over the world. The Marshall Plan was a ploy to

make Europe dependent on US largesse. The Old Continent, sneers the

paper, is nothing more than "US little partner".

Now, with the demise of the USSR, bemoans the columnist, the United

States exhibits "rising hegemonic airs" and does "whatever it pleased",

concurrently twisting economic, cultural and military arms. Inevitably

and especially after September 11, calls for an American "new empire"

are on the rise. Iraq "was chosen as the first target for this new

round of expansion."

But the expansionist drive has become self-defeating: "Only when the

United States refrains from taking the road of pursuing global empire,

can it avoid terrorists' bombs or other forms of attacks befalling on

its own territory", concludes the opinion piece.

What is China up to? Is this article a signal encrypted in the best

Cold War tradition?

Another commentary published a few days later may contain the public

key. It is titled "The Paradox of American Power". The author quotes at

length from "The Paradox of American Power - Why the World's Only

Superpower Can't Go It Alone" written by Joseph Nye, the Dean of the

John F. Kennedy School of Government at Harvard and a former Assistant

Secretary of Defense:

"Hard power works through coercion, using military sticks and economic

carrots to get others to do our will. Soft power works through

attraction ... Our attractiveness rests on our culture, our political

values and our policies by taking into account the interests of others".

As it summarizes Nye's teachings, the tone of the piece is avuncular

and conciliatory, not enraged or patronizing:

"In today's world, the United States is no doubt in an advantageous

position with its hard power. But ... power politics always invite

resentment and the paradox of American power is that the stronger the

nation grows, the weaker its influence becomes. As the saying goes, a

danger to oneself results from an excess of power and an accumulation

of misfortunes stems from lavish of praises and favors. He, whose power

grows to such a swelling state that he strikes anybody he wants to and

turns a deaf ear to others' advice, will unavoidably put himself in a

straitened circumstance someday. When one indulges oneself in wars of

aggression under the pretext of 'self security' will possibly get, in

return, more factors of insecurity ... Military forces cannot

fundamentally solve problems and war benefits no one including the war

starter."

Nor are these views the preserve of the arthritic upper echelons of the

precariously balanced Chinese Communist party.

In an interview he granted to Xinhua, the Chinese news agency, last

week, Shen Jiru, chief of the Division of International Strategy of the

Institute of World Economics and Politics, Chinese Academy of Social

Sciences, reiterated his conviction that "the United States aims to

create a unipolar world through the Iraq issue."

Mirroring the People's Daily, he did not think that the looming Iraq

war can be entirely explained as a "dispute on oil or economic

interests." It was, he thought, about "the future model of

international order: a multipolar and democratic one, or the US

strategic goal of a unipolar world." China has been encouraged by

dissent in the West. It shows that the "multipolar international

community is an "inevitable" momentum of history."

Why this sudden flurry of historiosophic ruminations?

According to Stratfor, the strategic forecasting consultancy, "for

Beijing, the only way to stymie the fourth phase is through promoting

multilateralism; barring that, China must be prepared to confront the

United States in the future, and U.S. history can give some guidance

... Thus, Beijing continues to focus on the concept of multilateralism

and the legitimacy of the United Nations as the best ways to slow or

even disrupt U.S. expansionism. At the same time, Beijing is preparing

to face a future confrontation with the United States if necessary."

When its economy matures, China wants to become another United States.

It has started emulating America two decades ago - and never ceased.

Recent steps include painful privatization, restructuring of the

banking system, clamping down on corruption and bad governance, paring

down the central bureaucracy, revamping the military and security

apparatus and creating mechanisms for smooth political transitions.

China plans to send a man to the moon. It invests heavily in basic

science and research and development. It is moving gradually up the

manufacturing food chain to higher value added industries. It is the

quintessential leapfrogger, much of its cadre moving straight from the

rustic to the plastic - computers, cellular phones, wireless and the

like.

Ironically, it could never have made it even this far without its

ostensible foe. Thousands of bright Chinese students train in the

United states. American technologies, management, knowledge, capital

and marketing permeate Beijing's economic fabric. Bilateral trade is

flourishing. China enjoys the biggest share of the world's - in large

part American - foreign direct investment flows. Should the United

states disintegrate tomorrow - China would assuredly follow.

Afghan Myths

An Interview with Anssi Kullberg

By: Dr. Sam Vaknin

Anssi Kristian Kullberg is presently employed as a researcher for the

Legal and Country Intelligence Service, Western and Central Asia Desk,

at the Finnish Directorate of Immigration. This interview represents

his personal views only and not those of his employer. On Black

Tuesday, 11th September, he was in Kyrgyzstan, on his way to the

notorious Ferghana Valley, in a reconstruction of the late Finnish

Marshal C.G.E. Mannerheim's intelligence expedition to Turkistan and

China in 1906-1908.

Q: Was the Taliban the creation of Pakistan? Can you tell us about its

formation and how was Russia involved in it?

A: The Taliban was not a creation of Pakistan, although Pakistan was

among several states that contributed to the genesis and development of

this peculiar movement. It is true that the Taliban (which was

established only as late as in 1994 as a religious movement) had a

significant influx from Pakistani madrassas. But the Taliban is not

only an extreme religious movement, but also an ethnic Pashtun one. The

Pashtuns are a bit less than half of Afghanistan's population, but in

Pakistan there are 16 million resident Pashtuns plus 3 million as

refugees. There are more Pashtuns in Pakistan than in Afghanistan

nowadays. The "Pakistanis" involved in Afghanistan are in fact Afghans.

The role of the Pakistani Islamist opposition in the formation and

support of the Taliban is widely recorded. But more important are those

who made it a military power. This is where Russia enters the game,

too. In order to understand the Taliban, we must recall the background

situation in Afghanistan ever since the events in 1970s.

The Taliban is not monolithic. Even less so is the Northern Alliance.

Neither were the Afghan communists united. This was made evident by the

internal power struggles following the ousting of King Zahir Shah in

1973. Daoud was overthrown and killed by communists in 1978. But the

communists were divided into the Khalq faction, favored by China, and

the Parcham faction, favored by the Soviet Union. In 1978 it was the

Khalq faction that took over, but their more moderate leader Nur

Mohammed Taraki was overthrown and killed by the hardliner Khalq

communist Hafizullah Amin. In 1979, the Soviet Spetsnaz murdered Amin

and replaced him with the Parcham follower Babrak Karmal, who was close

to the KGB. Then the Soviet army invaded.

The communist secret service Khad (KhAD), whose leaders were Karmal and

Sayid Mohammed Najibullah, was actually an Afghan branch of the KGB. It

had been preceded by the communist secret services of Taraki and Amin

(AGSA, KAM), but from 1979 onwards this organization of terror was

instructed and trained by the KGB. The culture of terror and the

horrible persecution of the civil population continued without a pause

from the communist takeover up until the overthrowing of Najibullah's

regime in 1992 when Massoud liberated Kabul. Western minds seem to

implicitly suppose that when the Cold War was over, the communists and

the structures they had created just suddenly disappeared. This is a

recurrent fatal misperception especially of the Americans.

According to Professor Azmat Hayat Khan of the University of Peshawar,

when Ahmad Shah Massoud's mujaheddin liberated Kabul in 1992, and

Najibullah gave up power, the communist generals of the army and of

Khad agreed to prolong the Afghan civil war in order to discredit

President Burhanuddin Rabbani's mujahid government and prevent

Afghanistan from stabilizing. The Uzbek communist General Abdurrashid

Dostum continued the rebellion against Rabbani and Massoud in

Mazar-i-Sharif, massively backed by the Soviet Union and later by

Russia and Uzbekistan. Another rebellious general was Gulbuddin

Hekmatyar. Most of the ethnic Pashtun Khalq army generals as well as

those of the Khad defected to Hekmatyar's troops. A decisive role was

the one played by General Shahnawaz Tanai, the communist commander of

the artillery, who defected to Hekmatyar's side as early as in 1990.

Later in 1995, when Hekmatyar's rebellion was losing strength, Tanai

defected to the Taliban. So did many other communist army and Khad

officers.

It was Tanai's defection that provided the Taliban with Soviet

artillery, Soviet air force, Soviet intelligence and Soviet technical

and military knowledge. The American Anthony Arnold argued already then

that Tanai's moves were a KGB-inspired provocation. The former KGB

General Oleg Kalugin said that it was Moscow who trained most of the

terrorists the US is now chasing.

As regards the Taliban, it was nothing special when they took over

Kandahar in 1994. Kandahar was a Pashtun city and the strict

interpretation of Islam the Taliban propounds is not so much based on

the Qur'an but on the narrow-minded social norms of an agrarian Pashtun

village. Mullah Omar is often described as having the background of a

relatively simple-minded rustic mullah, although he was also

politically active in Mohammed Nabi Mohammadi's

Harakat-i-Inqilab-i-Islami (Revolutionary Islamic Movement), which

later opposed the Taliban.

But apart from Mullah Mohammed Omar and some other leaders who seem to

have truly religious backgrounds (and no other education), the

Taliban's military and intelligence are dominated by Soviet-trained

communists.

Besides Tanai, there is for example the late first Taliban military

commander and one of its founders, "Mullah Borjan", whose real name was

Turan Abdurrahman, a prominent communist military officer. Many Taliban

"mullahs" have no religious training at all. They are former communist

military and security agents who have grown up beards and adopted new

names and identities replete with the title "mullah". The Taliban

artillery commander was the former Soviet Army's Afghan military

intelligence officer Shah Sawar. The Taliban intelligence service chief

Mohammed Akbar used to head a department of the Khad. And the Taliban

air force commander Mohammed Gilani was a communist general, too.

Perhaps because of this immensely influential influx into the Taliban,

their interpretation of Islam is quite alien for most of the world's

Muslims, but closely resembles the interpretation of Islam that the

communists and Russia have traditionally espoused in their anti-Islamic

propaganda.

The decisive strengthening of the Taliban took place in 1995-1996, when

it was seen as a "stabilizing" force in Afghanistan. This was a great

fallacy based on the Taliban's success in Kandahar, which was indeed

their "home field". Anywhere else the Taliban did not bring about

stability, but quite the opposite. Among those with a rising interest

in the Taliban forces, were all the main players: Russia and its

satellite regimes in Central Asia, the US, Pakistan, and Saudi Arabia.

At the initiative of the Turkmen dictator Saparmurat Niyazov, the

Russian energy giant Gazprom, headed by the then Russian Prime Minister

Viktor Chernomyrdin, and the US firm Unocal, contracted to lay a

pipeline from Turkmenistan to Pakistan, circumventing Iran and crossing

the Afghan territory that the Taliban had supposedly "stabilized". For

Pakistan, it has been a traditional national interest to secure energy

supplies from Central Asia, since it is sandwiched between two

vehemently hostile great powers, India and Iran. For Russia, this was

seen as a way to control Central Asian energy resources and to extend

its influence towards the Indian Ocean. Two Saudi Arabian oil companies

were also involved.

During the same years, the Taliban received sizable armed support. It

did not come mainly from Pakistan. Financial succor came from Saudi

Arabia. But the most decisive increase in the Taliban's strength came

from Russia: the defections of the Khalq and Khad generals directly

into the Taliban's leadership, vast amounts of Russian weaponry in

several mysteriously "captured" stashes, including a very suspicious

"hijacking" and escape of a Russian jet loaded with weapons that ended

up in the hands of the Taliban's ex-communist leaders. With these new

weapons, the Taliban marched on Herat in 1995, and finally managed to

capture Kabul in 1996.

Najibullah was hanged, but Najibullah's hanging by his former

Taliban-turned prot‚g‚s seems to have camouflaged the actual

developments in the Afghan power struggle.

Russia had an interest to cut the strong ties between Massoud's

mujaheddin and the Tajik opposition that Russia had crushed since it

attacked Tajikistan in 1992 and backed the communists into power there.

The old provocateur Hekmatyar was by then defeated and had finally

given up his fight - after losing his men and arms by Tanai's defection

to the Taliban - and accepted a seat in the government in compensation.

Since Hekmatyar was finished, a new Pashtun force was needed in those

years. Taliban was a rising force that various external players tried

to exploit by infiltration, support and manipulation.

When the Cold War was declared over by the West, it did not stop

elsewhere. After 1989 the West really lost interest in Afghanistan and

until some months before his death Massoud was trying to appeal to it

in vain. The West was uninterested, but others were. Pakistan, of

course, was interested in the goings on in its unstable neighbor. Saudi

Arabia was financing and supporting dangerous Sunni fundamentalist

groups, and later the Taliban. The Saudis also provided them with their

own Saudi fanatics that had become troublesome at home. Iran was

supporting its own agents within Afghan Shia groups. And the Soviet

Union and later Russia continued to provide massive armed support to

the last communist dictator of Afghanistan, Najibullah, and later to

the notorious General Dostum.

The Russian principle was "divide and rule", with the basic idea of

keeping the West out and assuring that the region would not strengthen

so that the Soviet empire could return once it has regained its

military might. Because of this stratagem, Russia has supported the

Tajiks of the Northern Alliance through Tajikistan - only sufficiently

to form a buffer zone against the Taliban, but without being able to

gain substantial victories or to intervene in Tajikistan. Moreover,

Russia has been arming and supporting the Uzbeks under the command of

Dostum and General Malik who later defected to the Taliban's side. This

support has been directed through Uzbekistan and still continues -

ironically, with the West's full blessing. Less known has been the

Russian support directed through Turkmenistan to the Taliban, and to

the Islamic Movement of Uzbekistan that is said to threaten Karimov's

rule there.

Q: What was and is the role of the CIA in all this? Was Pakistan's ISI

the CIA's long arm? Was bin Laden a CIA agent?

A: A chronic feature of American intelligence policy seems to be

historical amnesia and inability to see the complex nature of conflicts

and local relationships. This was also manifested during the Soviet

occupation of Afghanistan. British intelligence and part of the

Pakistani intelligence community clashed with the US already during the

Cold War period, because they wanted to support Ahmad Shah Massoud, the

"Lion of Panjshir". It was Massoud and his mujaheddin who finally,

after getting Stingers from the British, managed to make the war too

expensive for the Soviets, forcing them to retreat in 1989.

Meanwhile, the CIA was incompetent enough to be dependent on the

Pakistani intelligence services that, especially in Zia ul-Haq's

period, favored Gulbuddin Hekmatyar, a pompous figure who claimed to

have extensive contacts throughout the Islamic world. He indeed had

some contacts, including with Osama bin Laden, but he was considered to

be a KGB provocateur by Massoud and many others, and was never of any

help in the Afghan independence struggle.

Instead of fighting the Soviet occupants, Hekmatyar preferred to fight

other Afghans, and to conspire with suspicious Arab circles imported by

his contact bin Laden to Peshawar. The Stingers that the CIA had

provided to Hekmatyar, were not used to liberate Afghanistan. Instead,

Hekmatyar sold them to Iran, and they were later used against the

Americans in a well-known incident.

When the Soviet troops moved out, Hekmatyar pursued a bloody rebellion

against the legal Afghan government, devastating the country along with

another rebel general, Dostum. (Though they were not aligned.) In 1993,

Hekmatyar supported the KGB general and spymaster Haidar Aliyev's coup

in Azerbaijan and, in 1994, Hekmatyar was involved in supporting

pro-Russian Lezghin terrorists in the Caucasus. Hekmatyar is still

active. He lives in Teheran, and has recently finally revealed his true

colors by siding with the Taliban.

As far as I know, Osama bin Laden was never a CIA agent. However, there

are relatively plausible claims that he was close to Saudi

intelligence, especially to the recently fired intelligence chief

Prince Turki bin Faizal, until they broke up.

Osama first appeared in the Afghan War theater either in 1979, or, at

the latest in 1984. But at the beginning he was first and foremost a

businessman. He served the interests of those who wished to construct

roads accessible for tanks to cross through Afghanistan to the Indian

Ocean. This might also explain his characteristic opportunism - quite

atypical for a self-proclaimed warrior of faith.

International jihadists surely want to portray him as a religious

fighter or Muslim hero, but this is not the true picture, but, mostly,

a myth created by the Western media. This is where Arab, Pakistani and

Indonesian teenagers learn that Osama is a fighter in a universal

struggle of Islam against its oppressors.

But bin Laden never fought the Soviets to liberate Afghanistan. For

most of this period, he was not even in Afghanistan. He was managing an

office in Peshawar, and the only credible claim about him being in a

battle has been made by the former CIA official Milton Bearden

concerning a minor skirmish that took place in spring 1987.

Bin Laden's first significant contact in Peshawar was the Palestinian

Professor Abdullah Azzam, whom bin Laden has later described as his

mentor. Azzam was an Arab idealist, who wanted to concentrate on the

liberation of Afghanistan, and who wanted to support Massoud, whom he

correctly regarded as being the right person to uphold. Bin Laden

disagreed. He wanted to support the disloyal Islamist fanatic

Hekmatyar. As a result, Azzam and his son were blown up in a car bomb

in 1989, and consequently, bin Laden took over his organization and

transformed it into Al-Qaida (the Base).

Already before these events, he started to transform the agency by

flooding it with his Arab contacts from the Middle East. These Arabs

were not interested in liberating Afghanistan as much as in hiding from

the law enforcement agencies of their own countries, most of all

Egypt's.

When Russia attacked Tajikistan, bin Laden and his folks were by no

means interested in liberating Tajikistan from a new communist yoke.

Instead, bin Laden left Afghanistan and dispersed his terrorist

network, directing it to act against the West.

It is bizarre that a man claiming to be an Islamic fundamentalist

supported the invasion by the Arab socialist (and thereby atheist) Iraq

against Kuwait and Saudi Arabia, both with conservative Islamic regimes.

Al-Qaida's supported all causes and activities against the West: the

US, Turkey, Israel, and any pro-Western Muslim regime like Pakistan.

Robbers on the island of Jolo in the Philippines qualified for

Al-Qaida's support although they hardly knew anything about the Qur'an.

They were immediately they were portrayed as "Islamic fighters". Even

the strictly atheist anti-Turkish terrorist organization PKK has been

welcomed. At the same time they definitely have not supported Muslims

advocating Turkish-modeled moderate independence, like the Chechens,

the original Tajik opposition or the Azeri government under President

Abulfaz Elchibey.

As concerning Pakistan's intelligence service, the ISI, I think it

would be gross underestimation of a potential regional great power and

its British colonial traditions of military and intelligence to

describe it just as an arm of the CIA or of the Islamists.

These are widespread myths. The ISI is neither the hero nor the villain

of this story. I think the ISI is interested simply in the national

interest of Pakistan, which consists of four main elements: security

against the hostile strong neighbors India and Iran, security against

the instability and uncontrolled forces ravaging Afghanistan and

infiltrating Pakistan through the large Pashtun population, the

conflict over Kashmir, and Pakistan's own international status.

Afghanistan is an historical buffer zone in the ancient Great Game of

Central Eurasia. It is the gateway through which Pakistan's enemies can

attack or destabilize it, and it is equally the buffer that stops these

enemies. Pakistan's is interested in regional stability while its

enemies seek to use any instability against it. There is a great divide

within Pakistan between Pakistani nationalists and internationalist

Islamists. Pakistan is relatively democratic compared with its

neighbors - even including India, considering its treatment of

minorities and the Kashmir issue. It, thus, has the problems of a

democracy. Pakistan has quite free and critical press, local

administration and intellectual opposition, the Islamists included. It

is not, and has never been, an Islamist dictatorship like Saudi Arabia.

Q: Can you chart the relationship between the ISI and the Taliban?

A: The policy of the ISI was strongly correlated with developments in

Pakistan's leadership. The main divide concerning the ISI's Afghanistan

policies did not concern religious issues as it did the ethnic

question related to the political and military aspirations of the

Pashtun people in both Pakistan and Afghanistan.

Actually one of the greatest dangers to Pakistan's national existence

would be the emergence of the idea of Greater Pashtunistan, splitting

Pakistan in two.

This was an idea favored and agitated by the pro-Soviet Pashtuns - many

of whom are now influential in the Taliban. The Pakistani researcher

Musa Khan Jalalzai noticed this and described these people as "enemies

of Pakistani interests".

India and Iran would like to split Pakistan and destroy it, and Russian

geopolitics is still based on a "final thrust to the South". Iran and

India equally fear that Baluchistan, Kashmir and Punjab would finally

be united under Pakistani rule. Incorporating Pashtunistan, Pakistan

has the potential to become a South Asian superpower with plausible

expansionist chances. Yet this has never really been an aspiration of

Pakistan. Like Turkey under Ataturk, Pakistan under such leaders as

Ayub Khan and now Pervez Musharraf has been introverted in its

nationalism and based on constitutional and national ideas similar to

those of present day Turkey and France.

During the military dictatorship of Zia ul-Haq the policy turned more

Islamist, and during this period the ISI strongly supported Hekmatyar.

Hekmatyar proved disloyal and finally defected to Iran. During Benazir

Bhutto's government, support has shifted to the Taliban. This was

decided by the Interior Minister Nasirullah Babar. It is history's

irony that the first female prime minister of Pakistan helped to

strengthen the misogynist Taliban regime.

The ISI started to get disillusioned and disappointed with the Taliban

during the thoroughly corrupt "democracy" continued under Nawaz Sharif.

There have been rumors that the ISI wished to influence the Taliban and

to empower "a third force" among the more moderate Taliban leaders to

take over it. It is in connection with this that Shahnawaz Tanai

actually defected to Pakistan, and the ISI was dealing with the former

communists who were so powerful within the Taliban.

Luckily for Western interests, General Pervez Musharraf took over. This

takeover was the best event in Pakistani history as far as the West is

concerned, although it was sadly ignored in the West during the Clinton

administration. Musharraf was portrayed as a military dictator and a

supporter of the causes of the Taliban and of an alliance with China

(all sins of his predecessors). Musharraf is profoundly pro-Western,

secular in mind and pragmatic in foreign policy. He in fact tried to

form constructive relationships with all the neighboring countries

(Iran, India and Afghanistan). His peace initiatives in Kashmir were

stalled by Indian arrogance, and the West turned a cold shoulder to its

old ally, which has been a source of great bitterness in Pakistan,

especially since the West has been very inconsistent in choosing when

to support Pakistan and when not to. But during the Musharraf reign,

human rights and the position of women in Pakistan have improved

considerably.

Constructive relations with whomever rules Afghanistan have been

Realpolitik for Pakistan.

Although Musharraf, immediately after seizing power, started to

undermine the support for the Taliban, he could not remove the

recognition given to the Taliban government, as there was no other

Afghan government - the Rabbani government having been ousted and

categorically hostile to Pakistan, partly for legitimate reasons.

Pakistan has been trying ever since to construct new anti-Taliban

alliances, as well as trying to find intra-Taliban frictions to

exploit. But the West should be very careful and measured in its

pressure on Pakistan. The Taliban is really not under Pakistan's thumb,

and never was.

I think the ISI first saw the Taliban as a potential instrument. Then

it saw it as a threat that had to be infiltrated and controlled. Then

they saw it as a burden. Surely the ISI wished to control and contain

the Taliban, but their success has been rather doubtful (as has been

others'). Many analysts have paid attention to the fact that Afghan as

well as non-Afghan adventurers like bin Laden, have always been very

talented at exploiting the surrounding states as well as both

superpowers.

Another distorted myth is propagated by India. It is that the Kashmiri

secessionism is terrorism and a Pakistani creation. This is very far

from reality. More than 80% of Kashmiris would probably prefer

independence, but at the same time they reject the Islamist model.

There are several small but media-visible Islamist groups operating in

Kashmir, or at least proclaiming the Kashmiri cause. But these people

are not really interested in Kashmiri independence. They are interested

in jihad. Such Islamists appear wherever there is a war (during

Bosnia's struggle for independence and in the Albanian civil war, in

Chechnya, Kashmir and so on).

Their "help" is usually just an added burden to the ones they purport

to help, since they are seldom fighting for any liberation. These

"professional" jihadists also seem to be more common in internet cafes

and among Arab diasporas in the West than in places where Muslim

nations face real oppression.

We must remember that Musharraf cannot possibly surrender to India in

the Kashmir dispute. This would not only be political suicide, but it

would not end the Kashmir conflict - quite the contrary. It would mean

importing the Kashmiri conflict into Pakistan, and against Pakistan.

What happened in Afghanistan, with millions of refugees flooding to

Pakistan, should not happen with Kashmir. This would be an outright

catastrophe for both Pakistan and India, let alone the Kashmiri people.

Therefore it is the most crucial interest of the West to prevent India

from escalating the Kashmir conflict and turning Kashmir into another

weapon against Pakistan's stability.

Q: The "Arab" fighters in Afghanistan - are they a state with a state,

or the long arm for covert operations (e.g., the assassination of

Massoud) for the Taliban? Who is the dog and who is the tail?

A: The dog and tail can get very entangled here. Everybody is

exploiting everybody, and finally all organizations and states are

tools which consist of individuals and used by them. The Arabs in

Afghanistan are indeed Arabs. There are also lots of "Pakistani"

volunteers on the Taliban side, but these are mainly Pashtuns, that is,

Afghans.

The mentioning of Chechens, Uighurs and so on is more designed to

satisfy the propaganda purposes of Russia and China. There are less

than one million Chechens and they have a very harsh war going on in

Chechnya. Chechens who choose to go to Afghanistan instead must be

quite unpatriotic.

The Arabs form the hard core of Al-Qaida. They are the Egyptian,

Syrian, Iraqi etc. professional revolutionaries and terrorists who have

gathered around the figurehead of Osama bin Laden.

Many of these share the same old background in Marxist-inspired

revolutionary movements in the Middle East. Ideology and facade have

changed when green replaced red, but their methods as well as foreign

contacts have mainly remained the same. This is why they are much more

interested in attacking the West and pro-Western Muslim regimes than in

supporting any true national liberation movements. Even if they try to

infiltrate and influence conflict outcomes in the Balkans, the

Caucasus, East Turkistan and Kashmir, they are set against the

nationalist and secular - and usually pro-Western - policies of the

legitimate leadership of these secessionist movements. So the people

whom Al-Qaida may support and try to infiltrate are usually exiled or

otherwise opposition forces acting in fact against the idea of

independence. This has been the case in Chechnya, Dagestan, Bosnia,

Kashmir and so on.

And this has been the case in Afghanistan as well. Osama bin Laden and

his Arabs never contributed to the actual Afghan national liberation

struggle. Instead they acted against it by infiltrating Afghan circles

and turning them against each other.

Their jihad is not intended to defend the Muslims against infidel

oppressors, but to cause chaos and destruction, in which they

apparently hope to overthrow Muslim regimes and replace them with the

utopia of Salafi rule. It is not hard to see how this set of mind was

inherited from the communist utopian terrorist movements that preceded

the present Islamist ones. They had the same structures, the same

cadres, the same leaders, the same sponsors and the same methods.

The Arabs in Afghanistan have feathered their nests, though. Osama bin

Laden and his closest associates have all married daughters of Afghan

elders - from different factions and tribes - and their sons and

daughters have, in turn, married the off-spring of eminent Afghan

leaders. This is how they secured their foothold in Afghan social

networks - something neither the West nor Pakistan succeeded to do.

When issues are reduced to family relationships, it is not to be

expected that the Afghans would hand over the Arabs to the West or to

Pakistan. Al-Qaida is not only fortifying itself physically, but also

socially. At the same time their cells and countless collaborating

agencies - some of whom are clearly non-Islamist, and some of which are

government agencies of certain hostile states - are hoping to escalate

this "war against terrorism" and to exploit it for their own purposes.

Q: Do you believe that the USA had long standing designs to conquer

Afghanistan and used the September 11 atrocities as a pretext?

A: I would rather say that somebody else had long standing designs for

a major conflict in which it was necessary to get the US involved.

Those who wiped out Mr. Massoud a couple of days before the terror

strikes in the US probably knew that the terrorists will be hunted in

Afghanistan.

It is clear that the US, among many others, has long desired to

overthrow the Taliban, and I see nothing wrong with it. Afghanistan was

the easiest target, because the Taliban was not internationally

recognized (except by three countries at the beginning of the war), and

because there was nobody strong enough to really side with the Taliban.

There was no special need to demonize them, as they seemed to have done

a good job demonizing themselves. The West was more concerned with the

blowing up a couple of Buddha statues than with the thousands of

victims of the Taliban's tyranny and of the civil war that continued to

rage in Afghanistan all this time totally ignored by the Western media

until the US got involved again. The US can, of course, be blamed for

hypocrisy, as always, but the truth is that getting the US involved has

greatly helped those in Afghanistan who had hoped for decades to

overthrow the Taliban.

It is also quite surprising that even Musharraf's Pakistan seems to

have actually benefited from the present course of affairs, since

terrorism has given Musharraf the pretext of openly siding with the

West, and abandoning all remnants of Pakistan's tolerance of the

Taliban.

Still I would be inclined against any conspiratorial depiction of the

recent events that would blame the US for all that happened. The US had

to react, and Afghanistan was a logical target. In this sense, the US

did what the terrorists wanted. But they did so in a much more moderate

way, and after much longer preparations than their enemies had probably

hoped for. One reason is that in the Bush administration there seems to

be significantly more foreign political expertise than in the Clinton

administration that hastily bombed a couple of targets, including a

factory in Sudan, but always failed to respond to the real challenge.

In the long run, the threat posed by terrorism will not be defeated by

military operations and not in Afghanistan. What can be done there is

just the removal of the Taliban regime and helping to construct a

stable and recognized Afghan government. It is important to give

security guarantees to Pakistan and to support the development that is

transforming Pakistan into a strong and relatively stable pro-Western

Muslim country that can play a similar role in Central and Southern

Asia as Turkey does in the West and Middle East. At best, this could

even encourage a Musharraf to rise in Iran, which would yield ultimate

benefits to Western interests in Asia.

But then, terrorism must be fought by other means.

This means that Western intelligence must rise to the level of the Cold

War to face challenges by terrorist organizations as well as by

colluding governments.

The West must also resist Huntington's vision coming true, since this

is exactly what the terrorists want: a clash of civilizations. And we

must keep in mind that there are also many others who would like to see

a worldwide conflagration between the West and Islam.

Q: What is the geostrategic and geopolitical importance of Afghanistan?

A: Afghanistan is not so significant in itself, if we only consider

economic interests. Of more importance are some countries situated near

Afghanistan, especially those in Central Asia and Azerbaijan.

Afghanistan is also a traditional buffer zone, since its landscape is

hard to penetrate for tanks and modern armies. It has prevented the

expansion of the Eurasian Heartland Empire towards Eurasia's southern

rim lands for centuries. It has protected the areas included in

Pakistan and India today, but on the other hand, turning Afghanistan

into a politically or militarily active area was used to destabilize

Pakistan, or Central Asia, in order to alter the status quo, whatever

it was.

Regarding oil, Afghanistan again forms a bridge or a barrier. As long

as Iran is regarded as a hostile country by the US, Afghanistan forms

an oil transport route from Central Asia to Pakistan. As long as there

is war in Afghanistan, it remains a barrier preventing the countries of

the Caspian Sea from benefiting from their oil. Wars in the Caucasus

have exactly the same outcome. While this is the case, only Russia and

perhaps China will have access to and hegemony over the energy

resources in the vast Eurasian heart-land.

I think this is the main geopolitical importance of both Afghanistan

and the Caucasus. It is the question of Russia monopolizing the

geopolitical heartland, first and foremost. Considering the colossal

weight of geopolitics and geopolitical thought in present Russian

security thinking, these implications cannot be overestimated.

Q: Can Turkey be drawn into the conflict and, if yes, what effect will

this have on Iran, Central Asia, and NATO?

A: It seems Turkey has been drawn into it already. Or rather, Turkey

has volunteered to be drawn into it. Iran and Russia, of course, share

a very hostile attitude towards any expansion of Turkish influence in

Central Asia and the Caucasus. Turkey and Pakistan, on the other hand,

may finally find each other after a long period of mutual hostility.

They both share a similar geopolitical importance as potential

guardians of the West. They are among the most important rim land

nations, to borrow a phrase from classical geopolitics. This means that

they are also the most important barriers on the way of a heartland

empire to aspire to sole Eurasian hegemony.

Turkey has sought to advocate its interests in Central Asia, where most

of the Turkistani nations are ethnically Turkic (that is, Uzbeks,

Turkmens, Kazakhs, Kyrgyz and Uighurs, while Tajiks are Persian). At

the beginning of the 1990's Turkey tried to play the ethnic and

linguistic cards and the Central Asians were quite enthusiastic to

embrace "the Turkish model" - that is, a Western orientation and

secular state. But the Central Asian states are still dominated by

communist nomenclatures with strong ties with Moscow.

Turkey's economic problems and generally overly cautious foreign policy

have greatly undermined its capacity to advocate its own and Western

interests in Central Asia. Moreover, the Central Asian dictators have

interpreted the "Turkish model" in most peculiar ways, being often

closer to the Chinese model than the Turkish one.

I think Turkey is again trying to prove how pro-Western it is and how

loyal it is to NATO. The West has usually been much less loyal to

Turkey. When it comes to NATO's influence in Central Eurasia, once

Afghanistan is pacified and US presence probably strengthened through

Uzbekistan (though it is one of the notoriously disloyal allies of any

Western interest, much resembling the role played by Saudi Arabia), it

is time to come to Georgia's rescue again. The West had better not be

too late in coming to the aid of Georgia and Azerbaijan, which are both

under serious Russian pressure right now. If the Baku-Ceyhan pipeline

can be completed, then it could be time for a major reform in Iran as

well.

Pakistan's Nice Little War

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Causing trouble is sometimes a profitable business. The Taliban is, to

a large extent, the creation of Pakistan. Yet, it stands to benefit

greatly, economically as well as politically, from the destruction of

the Taliban at the hands of the anti-terror coalition. In the process,

its autonomous and contumacious intelligence services keep supplying

the Taliban with food and weapons. The government denies either

knowledge or responsibility but the border remains porous, to the

economic benefit of many.

The self-appointed President of Pakistan, General Pervez Musharraf,

said a few months ago that Pakistan was "on the road to economic

recovery". This was incompatible with a simultaneous official reduction

in the economic growth target of country (from 4.5% to 3.8%). But, in

May, Pakistan's debt was being rescheduled with the blessings of the

IMF (which contributed 200 million US dollars to the effort) and the

World Bank (in the process of approving $700 million in soft loans).

Yet another Paris Club rescheduling seemed imminent.

Two months later, talk was in the air about a multinationally-managed

natural (non-liquefied) gas pipeline from Iran to India, through

Pakistani territory. "The Economist" (July 14, 2001) estimated that

"... the pipeline might yield Pakistan anything from $250m to $600m a

year in transit fees".

There was cause for this optimism.

To their credit, Musharraf's skilled economic team of technocrats went

where their predecessors feared to tread. They imposed a highly

unpopular and much protested against sales tax on all retail trade.

Musharraf threatened to imprison tax evaders and debt defaulters and

backed his threat with (constitutionally dubious) arrests. The

immediate result was that tax collection (by the outlandishly corrupt

tax authorities) increased by c. $800 million in the 12 months to June

30, 2001 (the end of the Pakistani fiscal year) - though mostly from

import inhibiting exorbitant customs and indirect taxes.

Funds, doled out by corrupt bank managers to defunct enterprises and

used to roll over bad loans - were suddenly recalled. The hitherto

symbolic prices of oft-wasted and oft-stolen oil, gas, and electricity

were gradually increased and subsidies to state-owned utilities (such

as cotton mills) decreased. This brought about a belated wave of

painful restructuring and Pakistan's shambolic and patronage-based

industries almost evaporated. Serious privatization is on the cards.

The phone company is up for grabs and all privatization proceeds

(optimists put them at $3 billion, realists at a billion dollars less)

are earmarked to pay off foreign debt. The budget deficit stabilized

around 5% of GDP (compared to 6.5% the year before), aided by a cut in

defence spending (which reached 6% in 1997 but deteriorated ever since

compared to India, whose defence spending increased by 40% in the same

period). Despite growing energy costs, inflation was tamed, down to 4%

(2000) from 8% (1999).

Yet, tax revenues are still less than 17% of GDP and less than 1.5% of

all taxpayers bother to file tax returns of any kind. In other words,

these largely cosmetic measures failed to tackle the systemic failure

that passes for Pakistan's economy. Reform - both economic and

political - was still sluggish and half-hearted, Pakistan's current

account deficits ballooned (to $3 billion in 1999), the geopolitical

neighbourhood roughened, and the world economy dived. Pakistan's

imminent economic collapse looked inevitable.

Then came September 11. Weeks later, US sanctions imposed on Pakistan

since 1990 and 1998 (following its nuclear tests) were waived by

President Bush and he rescheduled $400 million in Pakistani debt to

various agencies of the US administration. The predicted wave - which

has yet to materialize - of 1.5 million Afghan refugees - was worth to

Pakistan $600 million in US aid alone ($150 million of which were

already disbursed).

The IMF - ostensibly an independent organization bent on economic

reform and impervious to geopolitical concerns - swiftly switched from

tentative approval (the second tranche of the almost twentieth IMF loan

was approved in August, before the attacks) to unmitigated praise

regarding Pakistan's economic (mis)management. The $200 million it so

reluctantly promised in May and the $1 billion a year (for a period of

2-3 years) Pakistan was hoping to secure in August gleefully mushroomed

to $2.5-3.5 billion in October. The rupee shot up in response. Debt

forgiveness is discussed with Pakistan accorded a status of HIPC -

Highly Indebted Poor Country - which it, otherwise, doesn't deserve, on

pure macroeconomic grounds.

Consider this:

On September 10, each citizen of Pakistan, man, woman, and infant, owed

only $300 in external government debt. This represented a mere 60% of

GDP per capita (or 53% of GDP) in 1997. On that same year, Pakistan's

GDP per capita was 25% higher than India's, average GDP growth in the

two decades to 1997 was 5.7% p.a. (India - 5.8%), and it was rated 3.4

(India - 3.7) on the economic freedom index. After a dip in 1999 (3.1%)

- growth picked up again to 4.5% , fuelled by bumper cotton and wheat

crops in 2000. Pakistani citizens had as many durables as Indians.

Definitely not an HIPC, Pakistan is an emerging middle-class east Asian

country.

Admittedly, though, the picture is not entirely rosy.

Pakistan's external debt - mainly used to finance consumption and to

plug holes in its uninterrupted string of unsustainable government

budgets - was double India's (as proportion of GDP) and it had only 4%

of India's foreign exchange reserves (c. $1 billion, enough for three

weeks of imports). Per capita, it had 30% as much as India's foreign

exchange reserves. As default loomed, growth collapse to 2.6% in

1995-2000, barely enough to sustain the increase in population. The

usual IMF prescription (austerity) served only to depress consumption

and deter FDI. Foreign direct investment was identical in both 2000 and

1988 - a meager $180 million (less than FDI in Kosovo's neighbour,

Macedonia, with its 2 million citizens to Pakistan's 140 million).

Luckily for it, Pakistan has a (largely underground) vibrant though

impromptu private sector which fills the vacuum left by the nefarious

public sector.

Many ostensibly public goods - from bus services to schools, from

clinics to policing, from public toilettes to farming - are affordably

provided by domestic, small time, entrepreneurs often aided by NGO's.

Yet, an economy is more than the sum of its statistics. A failed,

feeble, passive-aggressive central government is largely supplanted in

Pakistan by criminally-tainted regional political networks of

patronage, venality, nepotism, and cronyism. More than 50% of all food

aid may be squandered, "taxed" by local functionaries. Teachers pay

schoolmasters a portion of salaries not to teach. Maintenance workers,

sanitary squads, telephone installers, medical doctors, surgeons,

professors in universities, policemen - all demand, and receive, bribes

to fulfill their duties, or, more often, to turn a blind eye. Pakistan

habitually trails the The UNDP's Human Development Index (which takes

into account the quality of life - things like life expectancy,

literacy, and gender and income inequalities). This dismal showing is

after Pakistan made strides in literacy, life expectancy and decreasing

infant mortality.

Since independence in 1947, Pakistan's GNP has quadrupled and income

per capita has doubled. But it still spends more on defence than on

health and education combined and less than most developing countries.

The botched experiments with "Islamic economy" did not help. Pakistan,

like certain belles, still survives on the kindness of others -

remittances by expatriates and other external capital flows account for

10% of GDP and 50% of domestic investment. And the main export of this

country is its skilled manpower - despite its surprisingly diverse

economy. Less than one third of Pakistanis bother to vote - a clear and

sad statement by abstention.

The Afghan Trip

The Economy of Afghanistan

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

I. The Poppy Fields

Conspiracy theorists in the Balkan have long speculated on the true

nature of the Albanian uprising in Macedonia. According to them,

Afghanistan was about to flood Europe with cheap opium through the

traditional Balkan routes. The KLA - denounced by the State Department

as late as 1998 as a drug trafficking organization - was, in the

current insurrection, in its new guise as the NLA, simply establishing

a lawless beachhead in Macedonia, went the rumours. The Taliban were

known to stock c. 3000 tonnes of raw opium. The Afghanis - Arab

fighters against the Soviet occupation of Afghanistan - another 2000

tonnes (their fee for providing military and security services to the

Taliban). Even at the current, depressed, prices, this would fetch well

over 2 billion US dollars in next door Pakistan. It also represents 5

years of total European consumption and a (current) street level value

in excess of 100 billion US dollars. The Taliban intends to offload

this quantity in the next few months and to convert it to weapons.

Destabilizing the societies of the West is another welcome side effect.

It is ironic that the Taliban collaboration with the United Nations

Office for Drug Control and Crime Prevention (UNODCCP) culminated this

year in the virtual eradication of all opium poppies in Afghanistan.

Only 18 months ago, Afghan opium production (c. 4600 tonnes a year)

accounted for 70% of world consumption (in the form of heroin). The

shift (partly forced on the Taliban by an unusual climate) from poppies

to cereals (that started in 1997) was thus completed successfully.

II. Agriculture

Afghanistan is not a monolithic entity. It is a mountainous and desert

territory (c. 251,000 sq. miles in size, less than 10% of it

cultivated). Administratively and politically, it is reminiscent of

Somalia. The Taliban government - now recognized only by Pakistan -

rules the majority of the country as a series of tribal fiefdoms. The

country - ruined by a decade of warfare between majority Pushtuns and

minority Tajiks and Uzbeks in the north - lacks all institutions, or

infrastructure. In an economy of subsistence agriculture and trading,

millions (up to one third of a population of 27 million) have been

internally displaced or rendered refugees. One third of all farms have

been vacated. Close to 70% of all villages are demolished. Unemployment

- in a mostly unskilled workforce of 11 million - may well exceed 50%.

Poverty is rampant, food scarce, population growth unsustainable. The

traditional social safety net - the family - has unraveled, leading to

widespread and recurrent famine and malnutrition. The mainstays of

grazing and cattle herding have been hampered by mines and

deforestation.

The Taliban regime has been good to the economy. It restored the

semblance of law and order. Agricultural production recovered to

pre-Soviet invasion (1978) levels. Friendly Pakistan provided 80% of

the shortfall in grain (international aid agencies provided the rest).

The number of heads of livestock - the only form of savings in

devastated Afghanistan - increased. Many refugees came back.

Urban workers - mostly rural labourers displaced by war - fared worse,

though. As industries and services vanished and army recruitment

stabilized with the Taliban's victories, salaries decreased by up to

40% while inflation picked up (to an annual average of 20-25%, as

reflected in the devaluation of the currency and in the price of

bread). More than 50% of the average $1 a day wage of the casual,

unskilled, worker, are spent on bread alone!

But this discrepancy between a recovering agricultural sector and the

dilapidated and depleted cities led to reverse migration back to the

villages. In the long term it was a healthy trend.

Paradoxically, the collapse of the central state led to the emergence

of a thriving and vibrant private sector engaged in both legal and

criminal activities. Foreign exchange dealing is conducted in thousands

of small, privately owned, exchange offices. Rich Afghani traders have

invested heavily in small scale and home industries (mainly in textiles

and agri-business).

III. Trade

In some respects, Afghanistan is an extension of Pakistan economically

and, until recently, ideologically. Food prices in Afghanistan, for

instance - the only reliable indicator of inflation - closely follow

Pakistan's. The Afghan currency (there are two - one issued by the

Taliban and another issued by the deposed government in Faizabad) is

closely linked to Pakistan's currency, though unofficially so. The

regions closest to Pakistan (Herat, Jalalabad, Kandahar) - where cross

border trading, drug trafficking, weapons smuggling, illegal

immigration (to Western Europe), and white slavery are brisk - are far

more prosperous than the northern, war-torn, ones (Badakhshan, Bamyan).

The Taliban uses economic sanctions in its on-going war against the

Northern Alliance. In 1998-9, it has blockaded the populous provinces

of Parwan and Kapisa.

Another increasingly important trade partner is Turkmenistan. It

supplies Afghanistan with petrol, diesel, LNG, and jet fuel (thus

reducing Afghani dependence on hostile Iranian supplies). Uzbekistan

and Tajikistan, its two other neighbours, are considered by the Taliban

to be enemies. This enmity results in much higher costs of

transportation which price out many Afghan products.

With Pakistan, Afghanistan has an agreement (the Afghan Transit Trade)

which provides the latter with access to the sea. Afghanistan imports

consumer goods and durables through this duty free corridor (and

promptly re-exports them illegally to Pakistan). Pakistani authorities

periodically react by unilaterally dropping duty free items off the ATT

list. The Afghans proceed to import the banned items (many of them

manufactured in Pakistan's archrival, India) via the Gulf states,

Russia, Ukraine (another important drug route) and into Pakistan.

IV. The Future

The current conflict can be a blessing in disguise. Western aid and

investment can help resuscitate the Soviet era mining (Copper, Zinc)

operations and finally tap Afghanistan's vast reserves of oil and

natural gas. With a GDP per capita of less than $800, there is room for

massive growth. Yet, such bright prospects are dimmed by inter-ethnic

rivalry, a moribund social system, decades of war and natural disaster

(such as the draught in 1998-9), and intense meddling and manipulation

by near and far. One thing is certain: opium production is likely to

increase dramatically. And Western users will be treated to ever

cheaper heroin and Hasish.

EU and NATO - The Competing Alliances

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Saturday's vote in Ireland was the second time in 18 months that its

increasingly disillusioned citizenry had to decide the fate of the

European Union by endorsing or rejecting the crucial Treaty of Nice.

The treaty seeks to revamp the union's administration and the hitherto

sacred balance between small and big states prior to the accession of

10 central and east European countries. Enlargement has been the

centerpiece of European thinking ever since the meltdown of the eastern

bloc.

Shifting geopolitical and geo-strategic realities in the wake of the

September 11 atrocities have rendered this project all the more urgent.

NATO - an erstwhile anti-Soviet military alliance is search of purpose

- is gradually acquiring more political hues. Its remit has swelled to

take in peacekeeping, regime change, and nation-building.

Led by the USA, it has expanded aggressively into central and northern

Europe. It has institutionalized its relationships with the countries

of the Balkan through the "Partnership for Peace" and with Russia

through a recently established joint council. The Czech Republic,

Poland, and Hungary - the eternal EU candidates - have full scale

members of NATO for 3 years now.

The EU responded by feebly attempting to counter this worrisome

imbalance of influence with a Common Foreign and Security Policy and a

rapid deployment force. Still, NATO's chances of replacing the EU as

the main continental political alliance are much higher than the EU's

chances of substituting for NATO as the pre-eminent European military

pact. the EU is hobbled by minuscule and decreasing defense spending by

its mostly pacifistic members and by the backwardness of their armed

forces.

That NATO, under America's thumb, and the vaguely anti-American EU are

at cross-purposes emerged during the recent spat over the International

Criminal Court. Countries, such as Romania, were asked to choose

between NATO's position - immunity for American soldiers on

international peacekeeping missions - and the EU's (no such thing).

Finally - and typically - the EU backed down. But it was a close call

and it cast in sharp relief the tensions inside the Atlantic

partnership.

As far as the sole superpower is concerned, the strategic importance of

western Europe has waned together with the threat posed by a

dilapidated Russia. Both south Europe and its northern regions are

emerging as pivotal. Airbases in Bulgaria are more useful in the fight

against Iraq than airbases in Germany.

The affairs of Bosnia - with its al-Qaida's presence - are more

pressing than those of France. Turkey and its borders with central Asia

and the middle east is of far more concern to the USA than

disintegrating Belgium. Russia, a potentially newfound ally, is more

mission-critical than grumpy Germany.

Thus, enlargement would serve to enhance the dwindling strategic

relevance of the EU and heal some of the multiple rifts with the USA -

on trade, international affairs (e.g., Israel), defense policy, and

international law. But this is not the only benefit the EU would derive

from its embrace of the former lands of communism.

Faced with an inexorably ageing populace and an unsustainable system of

social welfare and retirement benefits, the EU is in dire need of young

immigrants. According to the United Nations Population Division, the EU

would need to import 1.6 million migrant workers annually to maintain

its current level of working age population. But it would need to

absorb almost 14 million new, working age, immigrants per year just to

preserve a stable ratio of workers to pensioners.

Eastern Europe - and especially central Europe - is the EU's natural

reservoir of migrant labor. It is ironic that xenophobic and

anti-immigration parties hold the balance of power in a continent so

dependent on immigration for the survival of its way of life and

institutions.

The internal, common, market of the EU has matured. Its growth rate has

leveled off and it has developed a mild case of deflation. In previous

centuries, Europe exported its excess labor and surplus capacity to its

colonies - an economic system known as "mercantilism".

The markets of central, southern, and eastern Europe - West Europe's

hinterland - are replete with abundant raw materials and dirt-cheap,

though well-educated, labor. As indigenous purchasing power increases,

the demand for consumer goods and services will expand.

Thus, the enlargement candidates can act both as a sink for Europe's

production and the root of its competitive advantage.

Moreover, the sheer weight of their agricultural sectors and the

backwardness of their infrastructure can force a reluctant EU to reform

its inanely bloated farm and regional aid subsidies, notably the Common

Agricultural Policy. That the EU cannot afford to treat the candidates

to dollops of subventioary largesse as it does the likes of France,

Spain, Portugal, and Greece is indisputable. But even a much-debated

phase-in period of 10 years would burden the EU's budget - and the

patience of its member states and denizens - to an acrimonious breaking

point.

The countries of central and eastern Europe are new consumption and

investment markets. With a total of 300 million people (Russia

counted), they equal the EU's population - though not its much larger

purchasing clout. They are likely to while the next few decades on a

steep growth curve, catching up with the West. Their proximity to the

EU makes them ideal customers for its goods and services. They could

provide the impetus for a renewed golden age of European economic

expansion.

Central and eastern Europe also provide a natural land nexus between

west Europe and Asia and the Middle East. As China and India grow in

economic and geopolitical importance, an enlarged Europe will find

itself in the profitable role of an intermediary between east and west.

The wide-ranging benefits to the EU of enlargement are clear,

therefore. What do the candidate states stand to gain from their

accession? The answer is: surprisingly little. All of them already

enjoy, to varying degrees, unfettered, largely duty-free, access to the

EU. To belong, a few - like Estonia - would have to dismantle a much

admired edifice of economic liberalism.

Most of them would have to erect barriers to trade and the free

movement of labor and capital where none existed. All of them would be

forced to encumber their fragile economies with tens of thousands of

pages of prohibitively costly labor, intellectual property rights,

financial, and environmental regulation. None stands to enjoy the same

benefits as do the more veteran members - notably in agricultural and

regional development funds.

Joining the EU would deliver rude economic and political shocks to the

candidate countries. A brutal and rather sudden introduction of

competition in hitherto much-sheltered sectors of the economy, giving

up recently hard-won sovereignty, shouldering the debilitating cost of

the implementation of reams of guideline, statutes, laws, decrees, and

directives, and being largely powerless to influence policy outcomes.

Faced with such a predicament, some countries may even reconsider.

The Euro-Atlantic Divide

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

Russia Straddles the Euro-Atlantic Divide

Bulgaria - The Quiet American

The EU and NATO - The Competing Alliances

Europe's Four Speeds

Switching Empires

Eastern Advantages

The countries of central and east Europe - especially those slated to

join the European Union (EU) in May next year - are between the

American rock and the European hard place. The Czech republic, Hungary

and Poland, already NATO members, have joined Spain, Britain and other

EU veterans in signing the "letter of eight" in support of US policy in

the Gulf. NATO and EU aspirants - including most of the nations of the

Balkans - followed suit in a joint statement of the Vilnius Group.

The denizens of the region wonder what is meant by "democracy" when

their own governments so blithely ignore public opinion, resolutely set

against the looming conflict.

The heads of these newly independent polities counter by saying that

leaders are meant to mold common perceptions, not merely follow them

expediently. The mob opposed the war against Hitler, they remind us,

somewhat non-germanely.

But the political elite of Europe is, indeed, divided.

France is trying to reassert its waning authority over an increasingly

unruly and unmanageably expanding European Union. Yet, the new members

do not share its distaste for American hegemony. On the contrary, they

regard it as a guarantee of their own security. They still fear the

Russians, France's and Germany's new found allies in the "Axis of

Peace" (also known as the Axis of Weasels).

The Czechs, for instance, recall how France (and Britain) sacrificed

them to Nazi Germany in 1938 in the name of realpolitik and the

preservation of peace. They think that America is a far more reliable

sponsor of their long-term safety and prosperity than the fractured

European "Union".

Their dislike of what they regard as America's lightweight leadership

and overt - and suspect - belligerence notwithstanding, the central and

east Europeans are grateful to the United States for its unflinching -

and spectacularly successful - confrontation with communism.

France and Germany - entangled in entente and Ostpolitik, respectively

- cozied up to the Kremlin, partly driven by their Euro-communist

parties. So did Italy. While the Europeans were busy kowtowing to a

repressive USSR and castigating the USA for its warmongering, America

has liberated the Soviet satellites and bankrolled their painful and

protracted transition.

Historical debts aside, America is a suzerain and, as such, it is

irresistible. Succumbing to the will of a Big Power is the rule in east

and central Europe. The nations of the region have mentally substituted

the United States for the Soviet Union as far as geopolitics are

concerned. Brussels took the place of Moscow with regards to economic

issues. The Czechs, Poles, Hungarians, assorted Balkanians, even the

Balts - have merely switched empires.

There are other reasons for these countries' pro-Americanism. The

nations of central, east and southeast (Balkans) Europe have sizable

and economically crucial diasporas in the united States. They admire

and consume American technology and pop culture. Trade with the USA and

foreign direct investment are still small but both are growing fast.

Though the EU is the new and aspiring members' biggest trading partner

and foreign investor - it has, to borrow from Henry Kissinger, no

"single phone number". While France is enmeshed in its Byzantine

machinations, Spain and Britain are trying to obstruct the ominous

re-emergence of French-German dominance.

By catering to popular aversion of America's policies, Germany's

beleaguered Chancellor, Gerhard Schroeder, is attempting to score

points domestically even as the German economy is imploding.

The euro-Atlantic structures never looked worse. The European Union is

both disunited and losing its European character. NATO has long been a

dysfunctional alliance in search of a purpose. For a while, Balkan

skirmishes provided it with a new lease on life. But now the

Euro-Atlantic alliance has become the Euro-Atlantic divide.

The only clear, consistent and cohesive voice is America's. The new

members of NATO are trying to demonstrate their allegiance - nay,

obsequiousness - to the sole identifiable leader of the free world.

France's bid at European helmsmanship failed because both it and Russia

are biased in favor of the current regime in Iraq. French and Russian

firms have signed more than 1700 commercial contracts with Saddam's

murderous clique while their British and American competitors were

excluded by the policies of their governments.

When sanctions against Iraq are lifted - and providing Saddam or his

hand-picked successor are still in place - Russian energy behemoths are

poised to explore and extract billions of barrels of oil worth dozens

of billions of dollars. Iraq owes Russia $9 billion which Russia wants

repaid.

But the United States would be mistaken to indulge in Schadenfreude or

to gleefully assume that it has finally succeeded in isolating the

insolent French and the somnolent Germans. Public opinion - even where

it carries little weight, like in Britain, or in the Balkans - cannot

be ignored forever.

Furthermore, all the countries of Europe share real concerns about the

stability of the Middle East. A divided Iraq stands to unsettle

neighbours near and far. Turkey has a large Kurdish minority as does

Iran. Conservative regimes in the Gulf fear Iraq's newfound and

American-administered democracy. In the wake of an American attack on

Iraq, Islamic fundamentalism and militancy will surely surge and lead

to a wave of terror. Europe has vested historical, economic and

geopolitical interests in the region, unlike America.

Persistent, unmitigated support for the USA in spite of French-German

exhortations will jeopardize the new and aspiring members' position in

an enlarged EU. Accession is irreversible but they can find themselves

isolated and marginalized in decision making processes and dynamics

long after the Iraqi dust has settled. EU officials already gave public

warnings to this effect.

It is grave error to assume that France and Germany have lost their

pivotal role in the EU. Britain and Spain are second rank members -

Britain by Europhobic choice and Spain because it is too small to

really matter. Russia - a smooth operator - chose to side with France

and Germany, at least temporarily. The new and aspiring members would

have done well to follow suit.

Instead, they have misconstrued the signs of the gathering storm: the

emerging European rapid deployment force and common foreign policy; the

rapprochement between France and Germany at the expense of the

pro-American but far less influential Britain, Italy and Spain; the

constitutional crisis setting European federalists against traditional

nationalists; the growing rupture between "Old Europe" and the American

"hyperpower".

The new and aspiring members of NATO and the EU now face a moment of

truth and are being forced to reveal their hand. Are they pro-American,

or pro-German (read: pro federalist Europe)? Where and with whom do

they see a common, prosperous future? What is the extent of their

commitment to the European Union, its values and its agenda?

The proclamations of the European eight (including the three central

European candidates) and the Vilnius Ten must have greatly disappointed

Germany - the unwavering sponsor of EU enlargement. Any further

flagrant siding with the United States against the inner core of the EU

would merely compound those errors of judgment. The EU can punish the

revenant nations of the communist bloc with the same dedication and

effectiveness with which it has hitherto rewarded them.

Russia Straddles the Euro-Atlantic Divide

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

The Janus Look

Russia's Second Empire

Russian Roulette - The Security Apparatus

Russia as a Creditor

Let My People Go - The Jackson-Vanik Controversy

The Chechen Theatre Ticket

Russia's Israeli Oil Bond

Russia's Idled Spies

Russia in 2003

Russian President Vladimir Putin warned on Tuesday, in an interview he

granted to TF1, a French television channel, that unilateral

American-British military action against Iraq would be a "grave

mistake" and an "unreasonable use of force". Russia might veto it in

the Security Council, he averred.

In a joint declaration with France and Germany, issued the same day, he

called to enhance the number of arms inspectors in Iraq as an

alternative to war.

Only weeks ago Russia was written off, not least by myself, as a

satellite of the United States. This newfound assertiveness has

confounded analysts and experts everywhere. Yet, appearances aside, it

does not signal a fundamental shift in Russian policy or worldview.

Russia could not resist the temptation of playing once more the

Leninist game of "inter-imperialist contradictions". It has long

masterfully exploited chinks in NATO's armor to further its own

economic, if not geopolitical, goals. Its convenient geographic sprawl

- part Europe, part Asia - allows it to pose as both a continental

power and a global one with interests akin to those of the United

States. Hence the verve with which it delved into the war against

terrorism, recasting internal oppression and meddling abroad as its

elements.

As Vladimir Lukin, deputy speaker of the Duma observed recently,

Britain having swerved too far towards America - Russia may yet become

an intermediary between a bitterly disenchanted USA and an irked Europe

and between the rich, industrialized West and developing countries in

Asia. Publicly, the USA has only mildly disagreed with Russia's

reluctance to countenance a military endgame in Iraq - while showering

France and Germany with vitriol for saying, essentially, the same

things.

The United States knows that Russia will not jeopardize the relevance

of the Security Council - one of the few remaining hallmarks of past

Soviet grandeur - by vetoing an American-sponsored resolution. But

Russia cannot be seen to be abandoning a traditional ally and a major

customer (Iraq) and newfound friends (France and Germany) too

expediently.

Nor can Putin risk further antagonizing Moscow hardliners who already

regard his perceived "Gorbachev-like" obsequiousness and far reaching

concessions to the USA as treasonous. The scrapping of the Anti

Ballistic Missile treaty, the expansion of NATO to Russia's borders,

America's presence in central Asia and the Caucasus, Russia's "near

abroad" - are traumatic reversals of fortune.

An agreed consultative procedure with the crumbling NATO hardly

qualifies as ample compensation. There are troubling rumblings of

discontent in the army. A few weeks ago, a Russian general in Chechnya

refused Putin's orders publicly - and with impunity. Additionally,

according to numerous opinion polls, the vast majority of Russians

oppose an Iraqi campaign.

By aligning itself with the fickle France and the brooding and

somnolent Germany, Russia is warning the USA that it should not be

taken for granted and that there is a price to pay for its allegiance

and good services. But Putin is not Boris Yeltsin, his inebriated

predecessor who over-played his hand in opposing NATO's operation in

Kosovo in 1999 - only to be sidelined, ignored and humiliated in the

postwar arrangements.

Russia wants a free hand in Chechnya and to be heard on international

issues. It aspires to secure its oil contracts in Iraq - worth tens of

billions of dollars - and the repayment of $9 billion in old debts by

the postbellum government. It seeks pledges that the oil market will

not be flooded by a penurious Iraq. It desires a free hand in Ukraine,

Armenia and Uzbekistan, among others. Russia wants to continue to sell

$4 billion a year in arms to China, India, Iran, Syria and other

pariahs unhindered.

Only the United States, the sole superpower, can guarantee that these

demands are met. Moreover, with a major oil producer such as Iraq as a

US protectorate, Russia becomes a hostage to American goodwill. Yet,

hitherto, all Russia received were expression of sympathy, claimed

Valeri Fyodorov, director of Political Friends, an independent Russian

think-tank, in an interview in the Canadian daily, National Post.

These are not trivial concerns. Russia's is a primitive economy, based

on commodities - especially energy products - and an over-developed

weapons industry. Its fortunes fluctuate with the price of oil, of

agricultural produce and with the need for arms, driven by regional

conflicts.

Should the price of oil collapse, Russia may again be forced to resort

to multilateral financing, a virtual monopoly of the long arms of US

foreign policy, such as the International Monetary Fund (IMF). The USA

also has a decisive voice in the World Trade Organization (WTO),

membership thereof being a Russian strategic goal.

It was the United States which sponsored Russia's seat at table of the

G8 - the Group of Eight industrialized states - a much coveted

reassertion of the Russian Federation's global weight. According to

Rossiiskaya Gazeta, a Russian paper, the USA already announced a week

ago that it is considering cutting Russia off American financial aid -

probably to remind the former empire who is holding the purse strings.

But siding with America risks alienating the all-important core of

Europe: Germany and France. Europe - especially Germany - is Russia's

largest export destination and foreign investor. Russia is not

oblivious to that. It would like to be compensated generously by the

United States for assuming such a hazard.

Still, Europe is a captive of geography and history. It has few

feasible alternatives to Russian gas, for instance. As the recent $7

billion investment by British Petroleum proves, Russia - and, by

extension, central and east Europe - is Europe's growth zone and

natural economic hinterland.

Yet, it is America that captures the imagination of Russian oligarchs

and lesser businesses.

Russia aims to become the world's largest oil producer within the

decade. With this in mind, it is retooling its infrastructure and

investing in new pipelines and ports. The United States is aggressively

courted by Russian officials and "oiligarchs" - the energy tycoons.

With the Gulf states cast in the role of anti-American Islamic

militants, Russia emerges as a sane and safe - i.e., rationally driven

by self-interest - alternative supplier and a useful counterweight to

an increasingly assertive and federated Europe.

Russia's affinity with the United States runs deeper that the

confluence of commercial interests.

Russian capitalism is far more "Anglo-Saxon" than Old Europe's. The

Federation has an educated but cheap and abundant labor force, a patchy

welfare state, exportable natural endowments, a low tax burden and a

pressing need for unhindered inflows of foreign investment.

Russia's only hope of steady economic growth is the expansion of its

energy behemoths abroad. Last year it has become a net foreign direct

investor. It has a vested interest in globalization and world order

which coincide with America's. China, for instance, is as much Russia's

potential adversary as it is the United State's.

Russia welcomed the demise of the Taliban and is content with regime

changes in Iraq and North Korea - all American exploits. It can - and

does - contribute to America's global priorities. Collaboration between

the two countries' intelligence services has never been closer. Hence

also the thaw in Russia's relations with its erstwhile foe, Israel.

Russia's population is hungry and abrasively materialistic. Its robber

barons are more American in spirit than any British or French

entrepreneur. Russia's business ethos is reminiscent of 19th century

frontier America, not of 20th century staid Germany.

Russia is driven by kaleidoscopically shifting coalitions within a

narrow elite, not by its masses - and the elite wants money, a lot of

it and now. In Russia's unbreakable cycle, money yields power which

leads to more money. The country is a functioning democracy but

elections there do not revolve around the economy. Most taxes are

evaded by most taxpayers and half the gross national product is anyhow

underground. Ordinary people crave law and order - or, at least a

semblance thereof.

Hence Putin's rock idol popularity. He caters to the needs of the elite

by cozying up to the West and, in particular, to America - even as he

provides the lower classes with a sense of direction and security they

lacked since 1985. But Putin is a serendipitous president. He enjoys

the aftereffects of a sharply devalued, export-enhancing,

imports-depressing ruble and the vertiginous tripling of oil prices,

Russia's main foreign exchange generator.

The last years of Yeltsin have been so traumatic that the bickering

cogs and wheels of Russia's establishment united behind the only

vote-getter they could lay their hands on: Putin, an obscure politician

and former KGB officer. To a large extent, he proved to be an agreeable

puppet, concerned mostly with self-preservation and the imaginary

projection of illusory power.

Putin's great asset is his pragmatism and realistic assessment of the

shambles that Russia has become and of his own limitations. He has

turned himself into a kind of benevolent and enlightened arbiter among

feuding interests - and as the merciless and diligent executioner of

the decisions of the inner cabals of power.

Hitherto he kept everyone satisfied. But Iraq is his first real test.

Everyone demands commitments backed by actions. Both the Europeans and

the Americans want him to put his vote at the Security Council where

his mouth is. The armed services want him to oppose war in Iraq. The

intelligence services are divided. The Moslem population inside Russia

- and surrounding it on all sides - is restive and virulently

anti-American.

The oil industry is terrified of America' domination of the world's

second largest proven reserves - but also craves to do business in the

United States. Intellectuals and Russian diplomats worry about

America's apparent disregard for the world order spawned by the horrors

of World War II. The average Russian regards the Iraqi stalemate as an

internal American affair. "It is not our war", is a common refrain,

growing commoner.

Putin has played it admirably nimbly. Whether he ultimately succeeds in

this impossible act of balancing remains to be seen. The smart money

says he would. But if the last three years have taught us anything it

is that the smart money is often disastrously wrong.

Russia's Stealth Diplomacy

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

The Janus Look

Russia's Second Empire

Russia as a Creditor

The Chechen Theatre Ticket

Russia's Israeli Oil Bond

Russia's Idled Spies

Russia in 2003

Russia Straddles the Euro-Atlantic Divide

Russian Roulette - The Security Apparatus

Let My People Go - The Jackson-Vanik Controversy

Possibly irked by persistent American U-2 aerial spy missions above its

fringes, Russia fired yesterday, from a mobile launcher, a "Topol"

RS-12M Intercontinental Ballistic Missile (ICBM). On Wednesday,

Agriculture Minister Alexei Gordeyev, offered Iraq aid in the form of

wheat.

The Russian Grain Union, the industry lobby group, claims to have

already provided the besieged country with half a million tons of grain

under the oil-for-food program.

Russia linked with Syria in declining to approve the new oil-for-food

draft resolution as long as it implied a regime change in Iraq. The

Duma - having failed to ratify a key nuclear treaty with the USA -

called to increase defense spending by at least 3.5 percent of gross

domestic product, or about $4 billion this year.

Only 28 percent of Russians polled now view the United States

favorably, compared with 68 percent a mere few months ago. A majority

of 55 percent disapprove of the USA in a country that was, until very

recently, by far the most pro-American in Europe. A Russian telecom,

Excom, is offering unlimited free phone calls to the White House to

protest U.S. "aggression".

Washington, on its part, has accused the Russian firm, Aviaconversiya,

of helping Iraqi forces to jam global positioning system (GPS) signals.

Other firms - including anti-tank Kornet missile manufacturer, KBP Tula

- have also been fingered for supplying Iraq with sensitive military

technologies.

These allegations were vehemently denied by President Vladimir Putin in

a phone call to Bush - and ridiculed by the companies ostensibly

involved. Russia exported c. $5 billion of military hardware and

another $2.6 billion in nuclear equipment and expertise last year,

mostly to India and China - triple the 1994 figure.

Russia and the United States have continually exchanged barbs over the

sale of fission technology to Iran. In retaliation, Atomic Energy

Minister, Alexander Rumyantsev, exposed an Anglo-German-Dutch deal with

the Iranians, which, he said, included the sale of uranium enrichment

centrifuges.

Is Putin reviving the Cold War to regain his nationalist credentials,

tarnished by the positioning, unopposed, of American troops in central

Asia, the unilateral American withdrawal from the Anti-Ballistic

Missile (ABM) treaty and the expansion of NATO and the European Union

to Russia's borders?

Or, dependent as it is on energy exports, is Russia opposed to the war

because it fears an American monopoly on the second largest known

reserves of crude? Russia announced on Thursday that it would insist on

honoring all prewar contracts signed between Iraq and Russian oil

companies and worth of billions of dollars - and on the repayment of

$8-9 billion in Iraqi overdue debt to Russia.

According to Rosbalt, every drop of $1 in oil prices translates into

annual losses to the Russian treasury of $2 billion. Aggregate

corporate profits rose in January by one fifth year on year, mostly on

the strength of surging crude quotes. The Economist Intelligence Unit

expects this year's GDP to grow by 3.8 percent. Foreign exchange

reserves are stable at $54 billion.

The threat to Russia's prominence and market share is not imminent.

Iraqi oil is unlikely to hit world markets in the next few years, as

Iraq's dilapidated and outdated infrastructure is rebuilt.

Moreover, Russian oil is cheap compared to the North Sea or Alaskan

varieties and thus constitutes an attractive investment opportunity as

the recent takeover of Tyumen Oil by British Petroleum proves. Still,

the long-term risk of being unseated by a reconstructed Iraq as the

second largest oil producer in the world is tangible.

Russia has spent the last six months enhancing old alliances and

constructing new bridges. According to Interfax, the Russian news

agency, yesterday, Russia has made yet another payment of $27 million

to the International Monetary Fund. The Russian and Romanian prime

ministers met and signed bilateral agreements for the first time since

1989. This week, after 12 years of abortive contacts, the republics of

the former Yugoslavia agreed with the Russian Federation on a framework

for settling its $600 million in clearing debts.

Recent spats notwithstanding, the Anglo-Saxon alliance still regards

Russia as a strategically crucial ally. Last week, British police, in a

sudden display of unaccustomed efficacy, nabbed Russian oligarch and

mortal Putin-foe, Boris Berezovsky, charged by the Kremlin with

defrauding the Samara region of $13 million while he was director of

LogoVaz in 1994-5.

The Russian foreign minister, Igor Ivanov, did not remain oblivious to

these overtures. Russia and the USA remain partners, he asserted. RIA

Novosti, the Russian news agency, quoted him as saying: "If we settle

the Iraqi problem by political means and in an accord, the road will

open to teamwork on other, no less involved problems."

As Robert Kagan correctly observes in his essay "Of Paradise and Power:

America and Europe in the New World Order", the weaker a polity is

militarily, the stricter its adherence to international law, the only

protection, however feeble, from bullying. Putin, presiding over a

decrepit and bloated army, naturally insists that the world must be

governed by international regulation and not by the "rule of the fist".

But Kagan - and Putin - get it backwards as far as the European Union

is concerned. Its members are not compelled to uphold international

prescripts by their indisputable and overwhelming martial deficiency.

Rather, after centuries of futile bloodletting, they choose not to

resort to weapons and, instead, to settle their differences

juridically.

Thus, Putin is not a European in the full sense of the word. He

supports an international framework of dispute settlement because he

has no armed choice, not because it tallies with his deeply held

convictions and values. According to Kagan, Putin is, in essence, an

American: he believes that the world order ultimately rests on military

power and the ability to project it.

Russia aspires to be America, not France. Its business ethos, grasp of

realpolitik, nuclear arsenal and evolving values place it firmly in the

Anglo-Saxon camp. Its dalliance with France and Germany is hardly an

elopement. Had Russia been courted more aggressively by Secretary of

State, Colin Powell and its concerns shown more respect by the American

administration, it would have tilted differently. It is a lesson to be

memorized in Washington.

Losing the Iraq War

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

The Security Council just approved a tough resolution calling upon Iraq

to disarm or face military action. The decade-old sanctions regime has

provided countries such as Ukraine, Belarus and the Serb part of

Bosnia-Herzegovina with lucrative commercial opportunities. According

to international and Israeli media, they all illicitly sold arms and

materiel - from active carbon filters to uranium - to the Iraq's

thuggish rulers, though Ukraine still denies it vehemently.

The impending war and the lifting of sanctions likely to follow will

grind these activities to a halt. This would not be the first time the

countries of central and eastern Europe - from the Balkan to the

steppes of central Asia - bear the costs of Western policies against

Iraq.

In the wake of the Gulf War, Iraq defaulted on its debts to all and

sundry. The members of COMECON, the now-defunct communist trade bloc,

were hit hardest. According to Mikhail Margelov, chairman of the

International Affairs Committee of Russia's Federation Council (upper

house), Iraq still owes Russia alone c. $7-12 billion in pre-1990

principal, mainly for arms purchases.

Macedonian construction groups were active in Iraq between 1950-1990.

They are owed tens of millions of dollars - the equivalent of 5 percent

of GDP, say to sources in the government. Yugoslav, Czech, Polish, and

formerly East German firms are in the same predicament.

A typical case: the Belarus news agency Belapan reported recently how

Leonid Kozik, leader of the Federation of Trade Unions of Belarus,

co-chairman of the Belarusian-Iraqi Joint Commission on Trade and

Economic Cooperation and a close aide to Belarusian President

Aleksander Lukashenka, traveled to Iraq in an effort to recoup

millions of dollars owed to the Belarusian metals and energy concern

Belmetalenerga. The unfortunate company - the country's exclusive

export channel to Iraq - sold to it a range of goods, including 500

tractors worth more than $5 million back in 1999.

The chances of recovering these debts diminish by the day. East-West

Debt, an international financial company specializing in purchasing and

recovery of overdue trade or bank debt in high-risk countries,

published this advisory recently: "Many enterprises, banks and

insurance companies are still holding uninsured trade debts on Iraq,

due to exports or loans originating from before 1990. Please be aware

that these claims on Iraq may become time-barred."

Russia reasonably claims to have sustained $30 billion in lost business

with Iraq since 1991. Even now, dilapidated as it is, Iraq is a large

trade partner. According to the United Nations, bilateral trade under

the oil-for-food program since 1996 amounted to $4.3 billion. The real

figure is higher. Russia's oil industry is private and keeps much of

its revenues off the books.

Tens of thousands of Russians used to purchase Iraqi goods in Turkey

and sell them back home - a practice known as the "shuttle trade".

Russia and Iraq have confirmed in August that they are negotiating

$40-60 billion worth of cooperation agreements in the oil, agriculture,

chemical products, pharmaceuticals, fertilizers, irrigation,

transportation, railroads and energy sectors. According to the

Washington Post, some of the 67 10-year accords relate to oil

exploration in Iraq's western desert. An Iraqi delegation, headed by

the minister of military industry, visited Belarus last month in an

effort to conclude a similar economic package. But such contracts are

unlikely to be materialized as long as the sanctions remain intact.

Radio Free Europe/Radio Liberty reports that Russian firms already

control two fifths of sales of Iraqi oil in world markets. Even

American companies use Russian fronts to trade with the embargoed

country, claim sources in the energy sector. The Financial Times

exposed two years ago similar arrangements between United States based

suppliers, oil and service companies and west European entities.

According to the New York Times, a Russian consortium, led by Lukoil,

signed a 23-year, $3.5 billion agreement with Baghdad to rehabilitate

some of its crumbling oil fields. According to the BBC, Lukoil also

inked unusually favorable production-sharing agreements with the

desperate Iraqi government.

Whether these $20 billion dollar concessions will be honored by

Baghdad's post-war new rulers is questionable. Even the current regime

is incensed that Lukoil hasn't started implementing the contracts due

to UN sanctions. According to Asia Times, the Iraqi government has

recently excluded the Russian firm from its list of accredited

suppliers under the oil-for-food program.

A Russian state-owned oil company, Zarubezhneft, is said by the London

Observer to have signed a $90 billion contract to develop the bin-Umar

oilfield. It subcontracted some drilling rights in the West Qurna

fields to Tatneft, another Russian outfit. The Washington Post reported

a $52 million service contract signed last October between Slavneft and

the Iraqi authorities.

The International Energy Agency's World Energy Outlook 2001 claims that

the Iraqis have awarded foreign oil contracts worth a staggering $1.1

trillion, much of it to Russian, French, and Chinese firms. Russia is

well-placed to enjoy Iraq's graces while Saddam is in power. It is

scrambling to secure similar access in an American-sponsored

post-conflict reign. According to the Observer, hence much of the

haggling in the United Nations over language and America's freedom of

action.

Even more crucially, Russia's aspirations to replace Saudi Arabia as

the world's largest and swing producer and to become America's primary

source of oil may be dashed by United States control of Iraq's enormous

proven reserves.

The rising tensions in the Gulf may be providing Russia and its

extractive behemoths with a serendipitous windfall - but, in the long

run, Russia's rising oil star is threatened by a permanent American

stranglehold over Iraq's 112 billion barrels.

A successful American campaign not only jeopardizes Russia's future

interests - but its present income as well. A drop in oil prices - more

than likely as Iraq is pacified and its oil production surges - will

hurt Russia. Below a certain price for crude, Russia's domestic fields

are not worth developing.

Between the rock of contract-freezing sanctions and the hard place of

American dominance, Russia was forced to vote in favor of the United

States sponsored resolution in the Security Council. It may signal a

new period of cohabitation - or, more likely, the beginning of a long

tussle over commercial interests and economic benefits.

Germany's Rebellious Colonies

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

The EU and NATO - The Competing Alliances

The Skoda Model

The Czechs' Indian Gambit

Europe's Four Speeds

Switching Empires

Eastern Advantages

Invited by a grateful United States, the Czech Republic on Saturday

sent a representative to meet with Iraqi opposition in Kurdish north

Iraq. The country was one of the eight signatories on a letter,

co-signed by Britain, Italy, Spain and the two other European Union

central European candidate-members, Poland and Hungary, in support of

US policy in the Gulf.

According to The Observer and the New York Times, American troops in

Germany - and the billions of dollars in goods and services they

consume locally - will be moved further east to the Czech Republic,

Poland and the Baltic states. This shift may have come regardless of

the German "betrayal".

The Pentagon has long been contemplating the futility of stationing

tens of thousands of soldiers in the world's most peaceful and

pacifistic country.

The letter is a slap in the face of Germany, a member of the "Axis of

Peace", together with France and Belgium and the champion of EU

enlargement to the east. Its own economic difficulties aside, Germany

is the region's largest foreign investor and trading partner. Why the

curious rebuff by its ostensible prot‚g‚s?

The Czech Republic encapsulates many of the economic and political

trends in the erstwhile communist swathe of Europe.

The country's economic performance still appears impressive. Figures

released yesterday reveal a surge of 6.6 percent in industrial

production, to yield an annual increase of 4.8 percent. Retail sales,

though way below expectations, were still up 2.7 percent last year. The

Czech National Bank (CNB) upgraded its gross domestic product growth

forecast on Jan 30 to 2.2-3.5 percent.

But the country is in the throes of a deflationary cycle. The producer

price index was down 0.8 percent last year. Year on year, it decreased

by 0.4 percent in January. Export prices are down 6.7 percent, though

import prices fell by even more thus improving the country's terms of

trade.

The Czech koruna is unhealthily overvalued against the euro thus

jeopardizing any export-led recovery. The CNB was forced to intervene

in the foreign exchange market and buy in excess of 2 billion euros

last year - four times the amount it did in 2001.

It also cut its interest rates last month to their nadir since

independence. This did little to dent the country's burgeoning current

account deficit, now at over 5 percent of GDP.

Unemployment in January broke through the psychologically crucial

barrier of 10 percent of the workforce. More than 540,000 bread earners

(in a country of 10 million inhabitants) are out of a job. In some

regions every fifth laborer is laid off. There are more than 13 - and

in the worst hit parts, more than 100 - applicants per every position

open .

Additionally, the country is bracing itself for another bout of floods,

more devastating than last year's and the ones in 1997. Each of the

previous inundations caused in excess of $2 billion in damages. The

government's budget is already strained to a breaking point with a

projected deficit of 6.3 percent this year, stabilizing at between 4

and 6.6 percent in 2006. The situation hasn't been this dire since the

toppling of communism in the Velvet Revolution of 1989.

Ironically, these bad tidings are mostly the inevitable outcomes of

much delayed reforms, notably privatization. Four fifths of the

country's economy is alleged to be in private hands - a rate similar to

the free markets of Estonia, Slovakia and Hungary. In reality, though,

the state still maintains intrusive involvement in many industrial

assets. It is the reluctant unwinding of these holdings that leads to

mass layoffs.

Yet, the long term outlook is indisputably bright.

The ministry of finance forecasts a rise in the country's GDP from 59

percent to 70 percent of the European Union's output in 2005 -

comparable to Slovenia and far above Poland with a mere 40 percent. The

Czech Republic is preparing itself to join the eurozone shortly after

it becomes a member of the EU in May 2004.

Foreign investors are gung ho. The country is now the prime investment

destination among the countries in transition. In a typical daily

occurrence, bucking a global trend, Matsushita intends to expand its

television factory in Plzen. Its investment of $8 million will enhance

the plant's payroll by one tenth to 1900 workers. Siemens - a German

multinational - is ploughing $50 million into its Czech unit. Siemens

Elektromotory's 3000 employees export $130 million worth of electrical

engines annually.

None of this would have been possible without Germany's vote of

confidence and overwhelming economic presence in the Czech Republic.

The deteriorating fortunes of the Czech economy are, indeed, intimately

linked to the economic stagnation of its northern neighbor, as many an

economist bemoan. But this only serves to prove that the former's

recovery is dependent on the latter's resurrection.

Either way, to have so overtly and blatantly abandoned Germany in its

time of need would surely prove to be a costly miscalculation. The

Czechs - like other central and east European countries - mistook a

transatlantic tiff for a geopolitical divorce and tried to implausibly

capitalize on the yawning rift that opened between the erstwhile allies.

Yet, Germany is one of the largest trading partners of the United

States. American firms sell $24 billion worth of goods annually there -

compared to $600 million in Poland. Germany's economy is five to six

times the aggregated output of the EU's central European new members

plus Slovakia.

According to the New York Times, there are 1800 American firms on

German soil, with combined sales of $583 billion and a workforce of

800,000 people. Due to its collapsing competitiveness and rigid labor

laws, Germany's multinationals relocate many of their operations to

central and east Europe, Asia and north and Latin America. Even with

its current malaise, Germany invested in 2001 $43 billion abroad and

attracted $32 billion in fresh foreign capital.

Indeed, supporting the United States was seen by the smaller countries

of the EU as a neat way to counterbalance Germany's worrisome economic

might and France's often self-delusional aspirations at helmsmanship. A

string of unilateral dictates by the French-German duo to the rest of

the EU - regarding farm subsidies and Europe's constitution, for

instance - made EU veterans and newcomers alike edgy. Hence the

deliberate public snub.

Still, grandstanding apart, the nations of central Europe know how

ill-informed are recent claims in various American media that their

region is bound to become the new European locomotive in lieu of an

aging and self preoccupied Germany. The harsh truth is that there is no

central European economy without Germany. And, at this stage, there is

no east European economy, period.

Consider central Europe's most advanced post-communist economy.

One third of Hungary's GDP, one half of its industrial production,

three quarters of industrial sales and nine tenths of its exports are

generated by multinationals. Three quarters of the industrial sector is

foreign-owned. One third of all foreign direct investment is German.

France is the third largest investor. The situation is not much

different in the Czech Republic where the overseas sales of the

German-owned Skoda alone account for one tenth the country's exports.

The relationship between Germany and central Europe is mercantilistic.

Germany leverages the region's cheap labor and abundant raw materials

to manufacture and export its finished products. Central Europe

conforms, therefore, to the definition of a colony and an economic

hinterland. From a low base, growth there - driven by frenzied

consumerism - is bound to outstrip the northern giant's for a long time

to come. But Germans stands to benefit from such prosperity no less

than the indigenous population.

Aware of this encroaching "economic imperialism", privatization deals

with German firms are being voted down throughout the region. In

November, the sale of a majority stake in Cesky Telecom to a consortium

led by Deutsche Bank collapsed. In Poland, a plan to sell Stoen,

Warsaw's power utility, to Germany's RWE was scrapped.

But these are temporary - and often reversible - setbacks. Germany and

its colonies share other interests. As The Economist noted correctly

recently:

"The Poles may differ with the French over security but they will be

with them in the battle to preserve farm subsidies. The Czechs and

Hungarians are less wary of military force than the Germans but

sympathize with their approach to the EU's constitutional reform. In

truth, there are no more fixed and reliable alliances in the EU.

Countries will team up with each other, depending on issue and

circumstances."

Thus, the partners, Germany and central Europe, scarred and embittered,

will survive the one's haughty conduct and the other's backstabbing.

That the countries of Europe currently react with accommodation to

what, only six decades ago, would have triggered war among them, may be

the greatest achievement of the Euro-Atlantic enterprise.

The Disunited Nations

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

The Washington Consensus - I. The IMF

The Self-Appointed Altruists

Arab nations plan to table a resolution at the United Nations General

Assembly condemning the U.S.-British led "invasion" and "occupation" of

Iraq and calling for immediate troop withdrawal. A similar effort at

the Security Council last week failed, doomed by the veto powers of

both alleged aggressors.

This is not likely to endear the organization to the Bush

administration whose hawks regard it as a superfluous leftover from the

Cold War era. Rep. Ron Paul (R-Texas) even introduced legislation to

withdraw from the organization altogether. Nile Gardiner, a visiting

fellow at the Heritage Foundation, summed up these sentiments in

Insight Magazine thus

"I think the U.N. has been in gradual decline for many years. It failed

to act spectacularly in Rwanda and did nothing about Slobodan

Milosevic's brutal regime. Iraq is the latest in a long line of

failures."

Admittedly, like any bureaucracy, the organization is

self-perpetuating, self-serving and self-absorbed. But it - and its

raft of specialized offshoots - still give back far more than they

receive. In recognition of the U.N.'s crucial role, several liberal

Democrats have entered legislation to create a "permanent U.N. security

force" and to "voluntarily contribute" to the U.N. Population Fund.

Consider peacekeeping operations. At a total annual cost of c. $5

billion last year, U.N. peacekeeping missions employ close to 40,000

police and military and another 11,000 civilians from 89 countries. The

budget is shoestring and more than half the pledged contributions are

still outstanding. The U.N. consumes less than 0.001 percent of the

world's gross domestic product. As James Paul, Executive Director of

Global Policy Forum, observes:

"All UN staff, including the specialized agencies and funds, are fewer

than the civil service of the City of Stockholm or the staff of

McDonalds. The core UN budget is one half of one percent of the US

military budget and far less than the cost of one B-2 bomber aircraft."

Even the United States Mission to the United Nations, on its Web site,

seeks to debunk a few myths. Despite a massive increase in remit and

operations, the organization's budget, at $2.6 billion, has remained

constant since 1995. The workforce was cut by 11 percent, to 9000

employees, since 1997:

"The UN has done a great deal to increase efficiency and overall

accountability. In 1994, the UN created the Office of Internal

Oversight Services (OIOS) to serve as the inspector general and promote

efficient management and reduce waste, fraud and abuse. During the year

ended June 30, 2001, OIOS recommended $58 million in savings and

recoveries for the UN and persuaded UN program managers to implement

hundreds of recommendations for improving management and internal

controls. OIOS investigations also led to successful convictions of UN

staff and others for fraud and stealing UN funds."

Yet, bad - and expensive - habits die hard. Budget discipline is lax

with no clear order of priorities. The United Nations suffers from an

abundance of obsolete relics of past programs, inertly and futilely

maintained by beneficiary bureaucrats. Follow-up U.N. conferences - and

they tend to proliferate incontrollably - are still being held in

exotic resorts, or shopping-friendly megalopolises. United Nations

entities at the country level duplicate efforts and studiously avoid

joint programming, common databases and pooling of resources.

The aforementioned OIOS has hitherto identified more than $200 million

in waste and fraud and issued 5000 recommendations to improve

efficiency, transparency and accountability. Disgusted by the flagrant

squandering of scarce resources, the United States - which covers one

fifth of the august establishment's pecuniary needs - accumulated more

than $1.2 billion in arrears by 1999, double the debts of all other

members combined.

It has since repaid the bulk of these even as it reduced its share of

the United Nations' finances. It now contributes 22 percent of the

regular budget, down from 25 percent and 25-27 percent of the costs of

the U.N. peacekeeping forces, down from 30-31 percent.

But a row is brewing in the corridors of power with regards to the

proposed budget for 2004-5. Ambassador Patrick Kennedy, United States

Representative for United Nations Management and Reform, called it "a

step backwards". The European Union, predictably, "fully concurred"

with it and urged members to increase the budget in line with the

U.N.'s enhanced responsibilities.

Kofi Annan, the U.N. General Secretary since 1997, is promoting the

nation-building and humanitarian credentials of his reformed outfit for

the postwar reconstruction of Iraq. American President George Bush is

less than keen and Prime Minister Tony Blair of Britain has moderated

his pro-multilateralist rhetoric following his meeting with Bush last

week.

Even erstwhile keen supporters of the United Nations, such as Japan, a

surprising member of the "coalition of the willing", are hesitant.

Japan contributes close to one fifth of the international body's

regular budget. Yet, disillusioned by its inability to gain permanent

membership of the Security Council despite its economic clout, Japan

announced, in January, its intention to cut its participation by 5

percent.

The United States seems to wish to consign the organization to the

humanitarian aspects of Iraq's restoration. Last Friday, the U.S.

Agency for International Development (USAID) granted $8 million to the

U.N.'s Children's Fund (UNICEF) to pay for sanitation, healthcare and

potable water schemes in Iraq as well as for micronutrients, vitamins

and medicines for its malnourished and disease-stricken populace.

Succumbing to its niche typecasting, the United Nations has launched an

unprecedented $2.2 billion "emergency appeal for immediate humanitarian

assistance for the people of Iraq over the next six months, with $1.3

billion devoted to a massive food aid operation ... to help the

displaced, refugees, children, the elderly and other especially

vulnerable groups." The donor funds will augment the proceeds of the

revamped oil-for-food program, now entirely under the control of the

General Secretary.

So, is the United Nations really "just a farce" and its members mostly

"petty despots" as Conrad Black, The Canadian media mogul, has it in

recent interviews? Or, paradoxically, has this international body been

strengthened by its faithful depiction of resistant world opinion in

the face of perceived Anglo-Saxon bullying? The global assembly's

future largely depends on an incensed and disenchanted United States.

Unable to rely on the kindness of strangers, Annan is reaching out to

new constituencies.

At the 1999 World Economic Forum in Davos, he challenged the global

business community to enter a "Global Compact" with the U.N. to uphold

"human rights, labour standards and environmental practices." The

International Chamber of Commerce, representing 7,000 business

organizations in 137 countries, picked up the gauntlet and published a

joint statement at a July 1999 meeting with United Nations bigwigs.

This uneasy partnership drew severe criticisms from non-governmental

organizations the world over. Corpwatch, a California-based NGO,

observed acidly that "in the first 18 months of the Global Compact, we

have seen a growing but secret membership, heavy influence by the

International Chamber of Commerce, and a failure to publish even a

single case study of sustainable practices. The Global Compact logo has

been used without attribution by DaimlerChrysler, even as Global

Compact officials insist that use of the general UN logo is strictly

controlled. The Global Compact represents a smuggling of a business

agenda into the United Nations. It should not be considered a

contribution to or framework for the Johannesburg Summit."

The United Nations - like NATO and other Cold War critters - is an

organization in search of a purpose. The demise of the USSR constituted

a tectonic shift in international affairs. The U.N.'s inability to

accommodate its institutions to the supremacy of the United States, the

demography of China, the decline of Britain and France and the economic

clout of Germany and Japan are symptoms of denial and delusion that are

detrimental to the future of this otherwise benign and useful

establishment. The war in Iraq is merely a rude wake-up call. And about

time, too.

The Economies of the Middle East

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

Iran between Reform and Mayhem

Turkey's Troubled Water

Israel's Hi, Tech - Bye, Tech

Syria's Sunshine Policy

Israel's Economic Intifada

Saddam's Thousand Nights

The Iraqi and the Madman

God's Diplomacy and Human Conflicts

Yesterday, in the Islamic Financial Forum in Dubai, Brad Bourland,

chief economist for the Saudi American Bank (SAMBA), breached the

embarrassed silence that invariably enshrouds speakers in Middle

Eastern get-togethers. He reminded the assembled that despite the

decades-long fortuity of opulent oil revenues, the nations of the

region - excluding Turkey and Israel - failed to reform their

economies, let alone prosper.

Structural weaknesses, imperceptible growth, crippling unemployment and

deteriorating government financing confined Arab states to the role of

oil-addicted minions. At $540 billion, said Bourland, quoted by Middle

East Online, the combined gross domestic product of all the Arab

countries is smaller than Mexico's (or Spain's, adds The Economist).

According to the Arab League, the gross national product of all its

members amounted to $712 billion or 2 percent of the world's GNP in

2001 - merely double sub-Saharan Africa's.

Even the recent tripling of the price of oil - their main export

commodity - did not generate sustained growth equal to the burgeoning

population and labor force. Algeria's official unemployment rate is

26.4 percent, Oman's 17.2 percent, Tunisia's 15.6 percent, Jordan's

14.4 percent, Saudi Arabia's 13 percent and Kuwait sports an unhealthy

7.1 percent. Even with 8 percent out of work, Egypt needs to grow by 6

percent annually just to stay put, estimates the World Bank.

But the real figures are way higher. At least one fifth of the Saudi

and Egyptian labor forces go unemployed. Only one tenth of Saudi women

have ever worked. The region's population has almost doubled in the

last quarter century, to 300 million people. Close to two fifths of the

denizens of the Arab world are minors.

According to the Iranian news agency, IRNA, the European Commission on

the Mediterranean Region estimates that the purchasing power parity

income per head in the area is a mere 39 percent of the EU's 2001

average, comparable to many post-communist countries in transition. In

nominal terms the figure is 28 percent. These statistics include Israel

whose income per capita equals 84 percent of the EU's and the

Palestinian Authority where GDP fell by 10 percent in 2000 and by

another 15 percent the year after.

Faced with ominously surging social unrest, the Arab regimes - all of

them lacking in democratic legitimacy - resort to ever more desperate

measures. "Saudisation", for instance, amounts to the expulsion of 3

million foreign laborers to make room for indigenous idlers reluctant

to take on these vacated - mostly menial - jobs. About one million,

typically Western, expat experts remain untouched.

The national accounts of Arab polities are in tatters. Saudi Arabia

managed to produce a budget surplus only once since 1982. Per capita

income in the kingdom plunged from $26,000 in 1981 to $7000 today.

Higher oil prices may well continue throughout 2003, further masking

the calamitous state of the region's economies. But this would amount

to merely postponing the inevitable.

Arab countries are not integrated into the world economy. It is

possibly the only part of the globe, bar Africa, to have entirely

missed the trains of globalization and technological progress. Charlene

Barshefsky was United States Trade Representative from 1997 to 2001. In

a recent column published by the New York Times, she noted that:

"Muslim countries in the region trade less with one another than do

African countries, and much less than do Asian, Latin American or

European countries. This reflects both high trade barriers ... and the

deep isolation Iran, Iraq and Libya have brought on themselves through

violence and support for terrorist groups ... The Middle East still

depends on oil. Today, the United States imports slightly more than $5

billion worth of manufactured goods and farm products from the 22

members of the Arab League, Afghanistan and Iran combined - or about

half our value-added imports from Hong Kong alone."

Indeed, Jewish Israel and secular Turkey aside, 8 of the 11 largest

economies of the Middle East have yet to join the World Trade

Organization. Only two decades ago, one of every seven dollars in

global export revenues and one twentieth of the world's foreign direct

investment flowed to Arab pockets.

Today, the Middle East's share of international trade and FDI is less

than 1.5 percent - half of it with the European Union. Medium size

economies such as Sweden's attract more capital than the entire Middle

Eastern Moslem world put together.

Some Arab countries periodically go through spastic reforms only to

submerge once more in backwardness and venality. Oil-producers

attempted some structural economic adjustments in the 1990s. Jordan and

Syria privatized a few marginal state-owned enterprises. Iran and Iraq

cut subsidies.

Almost everyone - especially Lebanon, Egypt, Iran and Jordan -

increased their unhealthy reliance on multilateral loans and foreign

aid.

Young King Abdullah II of Jordan, for instance, dabbles in

deregulation, liberalization, tax reform, cutting red tape and tariff

reductions. Aided by a free trade agreement with America passed by

Congress in 2001, Jordan's exports to the United States last year

soared from $16 million in 1998 to $400 million.

A similar nostrum is being administered to Morocco, partly to spite the

European Union and its glacial "Barcelona Process" Euro-Mediterranean

Partnership. But, as everyone realizes, the region's problems run

deeper than any tweaking of the customs code.

The "Arab Human Development Report 2002", published in June last year

by the United Nations Development Program (UNDP), was composed entirely

by Arab scholars. It charts the predictably dismal landscape: one in

five inhabitants survives on less than $2 a day; annual growth in

income per capita over the last 20 years, at 0.5 percent, exceeded only

sub-Saharan Africa's; one in six is unemployed.

The region's three "deficits", laments the report, are freedom,

knowledge and manpower. Arab polities and societies are autocratic and

intolerant. Illiteracy is still rampant and education poor. Women -

half the workforce - are ill-treated and excluded. Pervasive

Islamization replaced earlier militant ideologies in stifling

creativity and growth.

In an article titled "Middle East Economies: A Survey of Current

Problems and Issues", published in the September 1999 issue of the

Middle East Review of International Affairs, Ali Abootalebi, assistant

professor of political science at the University of Wisconsin, Eau

Claire, concluded:

"The Middle East is second only to Africa as the least developed region

in the world. It has already lost much of its strategic importance

since the Soviet Union's demise ... Most Middle Eastern states ...

probably do, possess the necessary technocratic and professional

personnel to run state affairs in an efficient and modern manner ....

(but not) the willingness or ability of the elites in charge to

disengage the old coalitional interests that dominate governments in

these countries."

The looming war with Iraq will change all that. This is the fervent

hope of intellectuals throughout the region, even those viscerally

opposed to America's high-handed hegemony. But this may well be only

another false dawn in many. The inevitable massive postwar damage to

the area's fragile economies will spawn added oppression rather than

enhance democracy.

According to The Economist, the military buildup has already injected

$2 billion into Kuwait's economy, equal to 6 percent of its GDP. Prices

of everything - from real estate to cars - are rising fast. The stock

exchange index has soared by one third. American largesse extends to

Turkey - the recipient of $5 billion in grants, $1 billion in oil and

$10 billion in loan guarantees. Egypt and Jordan will reap $1 billion

apiece and, possibly, subsidized Saudi oil as well. Israel will abscond

with $8 billion in collateral and billions in cash.

But the party may be short-lived, especially if the war proves to be as

decisive and nippy as the Americans foresee.

Stratfor, the strategic forecasting consultancy, correctly observes

that the United States is likely to encourage American oil companies to

boost Iraq's postbellum production. With Venezuela back on line and

global tensions eased, deteriorating crude prices may adversely affect

oil-dependent countries from Iran to Algeria.

The resulting social and political unrest - coupled with violent,

though typically impotent, protests against the war, America and the

political leadership - is unlikely to convince panicky tottering

regimes to offer greater political openness and participatory democracy.

War will traumatize tourism, another major regional foreign exchange

earner. Egypt alone collects $4 billion a year from eager

pyramid-gazers - about one ninth of its GDP. Add to that the effects of

armed conflict on traffic in the Suez Canal, on investments and on

expat remittances - and the country could well become the war's

greatest victim.

In a recent economic conference of the Arab League, Egyptian Minister

of State for Foreign Affairs, Faiza Abu el-Naga, pegged the immediate

losses to her country at $6-8 billion. More than 200,000 jobs will be

lost in tourism alone. Egypt's Information and Decision Support Centre

(IDSC) distributed a study predicting $900 million in damages to the

Jordanian economy and billions more to be incurred by oil-rich Saudi

Arabia.

The Arab Bank Federation foresees banking losses of up to $60 billion

due to contraction in economic activity both during the war and in its

aftermath. This may be too pessimistic. But even the optimists talk

about $30 billion in foregone revenues. The reconstruction of Iraq

could revitalize the sector - but American and European banks will

probably monopolize the lucrative opportunity.

War is likely to have a stultifying effect on the investment climate.

Saudi Arabia and Egypt each attract around $1 billion a year in foreign

direct investment - double Iran's rising rate. But global FDI was

halved in the last two years. This years, flows will revert to 1998

levels. This implosion is likely to affect even increasingly attractive

or resurgent destinations such as Israel, Turkey, Iraq and Iran.

Foreign investors will be deterred not only by the fighting but also by

a mounting wave of virulent - and increasingly violent - xenophobia.

Consumer boycotts are a traditional weapon in the Arab political

arsenal. Coca-Cola's sales in these parched lands have plummeted by 10

percent last year. Pepsi's overseas sales flattened due to Arabs

shunning its elixirs. American-franchised fast food outlets saw their

business halved. McDonald's had to close some of its restaurants in

Jordan.

Foreign business premises have been vandalized even in the Gulf

countries. According to The Economist "in the past year overall

business at western fast-food and drinks firms has dropped by 40% in

Arab countries. Trade in American branded goods has shrunk by a

quarter."

These are bad news. Multinationals are sizable employers. Coca-Cola

alone is responsible for 220,000 jobs in the Middle East. Procter &

Gamble invested $100 million in Egypt. Foreign enterprises pay well and

transfer technology and management skills to their local joint venture

partners.

Nor is foreign involvement confined to retail. The $35 billion Middle

Eastern petrochemicals sector is reliant on the kindness of strangers:

Indian, Canadian, South Korean and, lately, Chinese. Singapore and

Malaysia are eyeing the tourism industry, especially in the Gulf. Their

withdrawal from the indigenous economies might prove disastrous.

Nor will these battered nations be saved by geopolitical benefactors.

The economies of the Middle East are off the radar screen of the Bush

administration, accuses Edward Gresser of the Progressive Policy

Institute in a recently published report titled "Blank Spot on the Map:

How Trade Policy is Working Against

the War on Terror".

Egypt and most other Moslem countries are heavily dependent on their

textile and agricultural exports to the West. But, by 2015, they will

face tough competition from nations with contractual trade advantages

granted them by the United States, goes the author.

Still, the fault is shared by entrenched economic interest groups in

the Middle East . Petrified by the daunting prospect of reforms and the

ensuing competitive environment, they block free trade, liberalization

and deregulation.

Consider the Persian Gulf, a corner of the world which subsists on

trading with partners overseas.

Not surprisingly, most of the members of the Arab Gulf Cooperation

Council have joined the World Trade Organization a while back. But

their citizens are unlikely to enjoy the benefits at least until 2010

due to obstruction by the club's all-powerful and tentacular business

families, international bankers and economists told the Times of Oman.

The rigidity and malignant self-centeredness of the political and

economic elite and the confluence of oppression and profiteering are

the crux of the region's problems. No external shock - not even war in

Iraq - comes close to having the same pernicious and prolonged effects.

The Costs of Coalition Building

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

Trading from a Suitcase - The Case of Shuttle Trade

Trade Imbalances and the Health of the Economy - a Dialogue

God's Diplomacy - International Trade

The Agenda of International Trade - Interview with Dan Horovitz

Foreign aid, foreign trade and foreign direct investment (FDI) have

become weapons of mass persuasion, deployed in the building of both the

pro-war, pro-American coalition of the willing and the French-led

counter "coalition of the squealing".

By now it is clear that the United States will have to bear the bulk of

the direct costs of the actual fighting, optimistically pegged at c.

$40-50 billion. The previous skirmish in Iraq in 1991 consumed $80

billion in 2002 terms - nine tenths of which were shelled out by

grateful allies, such as Saudi Arabia and Japan.

Even so, the USA had to forgive $7 billion of Egyptian debt. According

to the General Accounting Office, another $3 billion were parceled at

the time among Turkey, Israel and other collaborators, partly in the

form of donations of surplus materiel and partly in subsidized military

sales.

This time around, old and newfound friends - such as Jordan, an

erstwhile staunch supporter of Saddam Hussein - are likely to carve up

c. $10 billion between them, says the Atlanta Journal-Constitution.

Jordan alone is demanding $1 billion.

According to the Knight Ridder Newspapers, an Israeli delegation,

currently in Washington, has requested an extra $4-5 billion in

military aid over the next 2-3 years plus $8 billion in loan

guarantees. Israel, the largest American foreign and military aid

recipient, is already collecting c. $3 billion annually. It is followed

by Egypt with $1.3 billion a year - another rumored beneficiary of $1

billion in American largesse.

Turkey stands to receive c. $6 billion for making itself available as

staging grounds for the forces attacking Iraq. Another $20 billion in

loan guarantees and $1 billion in Saudi and Kuwaiti oil have been

mooted. In the thick of the tough bargaining, the International

Monetary Fund - thought by many to be the long arm of US foreign policy

- suddenly halted the disbursement of money under a two years old

standby arrangement with the impoverished country.

It implausibly claimed to have just unearthed breaches of the agreement

by the Turkish authorities. This systemic non-compliance was being

meticulously chronicled - and scrupulously ignored by the IMF - for

well over a year now by both indigenous and foreign media alike.

Days after a common statement in support of the American stance, the

IMF clinched a standby arrangement with Macedonia, the first in two

turbulent years. On the same day, Bulgaria received glowing - and

counterfactual - reviews from yet another IMF mission, clearing the way

for the release of a tranche of $36 million out of a loan of $330

million. Bulgaria has also received $130 million in direct US aid since

2001, mainly through the Support for East European Democracy (SEED)

program.

But the IMF is only one tool in the administration's shed. President

Bush seeks to increase America's foreign aid by an unprecedented 50

percent over the next three years to $15 billion. A similar amount will

be made available over in the forthcoming five years to tackle AIDS,

mainly in Africa.

Half this increase will be ploughed into a Millennium Challenge

Account. It will benefit countries committed to democracy, free trade,

good governance, purging corruption and nurturing the private sector.

By 2005, the Account will contain up to $5 billion and will be

replenished annually to maintain this level.

This expensive charm offensive is intended to lure and neutralize the

natural constituencies of the pacifistic camp: non government

organizations, activists, development experts, developing countries and

international organizations.

The E10 - the elected members of the Security Council - are also

cashing in their chips.

The United States has softened its position on trade tariffs in its

negotiations of a free trade agreement with Chile. Immigration

regulations will be relaxed to allow in more Mexican seasonal workers.

Chile receives $2 million in military aid and Mexico $44 million in

development finance.

US companies will cooperate with Angola on the development of offshore

oilfields in the politically contentious exclave of Cabinda. Guinea and

Cameroon will absorb dollops of development aid. Currently, Angola

receives c. $19 million in development assistance.

Cameroon already benefits from military training and surplus US arms

under the Excess Defense Articles (EDA) program as well as enjoying

trade benefits in the framework of the Africa Growth and Opportunity

Act. Guinea gets c. $26 million in economic aid annually plus $3

million in military grants and trade concessions.

The United States has also pledged to cause Iraq to pay its outstanding

debts, mainly to countries in Central and East Europe, notably to

Russia and Bulgaria. Iraq owes the Russian Federation alone close to $9

billion. Some of the Russian contracts with the Iraqi oil industry,

thought to be worth dozens of billions of dollars, may even be honored

by the victors.

Thus, the outlays on warfare will likely be dwarfed by the price tag of

the avaricious constituents of president Bush's ramshackle coalition.

New York Times columnist Paul Krugman aptly christened this mass

bribery, "The Martial Plan". Quoting "some observers", he wrote:

"The administration has turned the regular foreign aid budget into a

tool of war diplomacy. Small countries that currently have seats on the

U.N. Security Council have suddenly received favorable treatment for

aid requests, in an obvious attempt to influence their votes. Cynics

say that the 'coalition of the willing' President Bush spoke of turns

out to be a 'coalition of the bought off' instead."

But this is nothing new. When Yemen cast its vote against a November

1990 United Nations Security Council resolution authorizing the use of

force to evict Iraq from Kuwait - the United states scratched $700

million in aid to the renegade country over the following decade.

Nor is the United States famous for keeping its antebellum promises.

Turkey complains that the USA has still to honor its aid commitments

made prior to the first Gulf War. Hence its insistence on written

guarantees, signed by the president himself. Similarly, vigorous

pledges to the contrary aside, the Bush administration has allocated a

pittance to the reconstruction of Afghanistan in this year's budget -

and only after it was prompted to by an astounded Congress.

Macedonia hasn't been paid in full for NATO's presence on its soil

during the Kosovo conflict in 1999. Though it enjoyed $1 billion in

forgiven debt and some cash, Pakistan is still waiting for quotas on

its textiles to be eased, based on an agreement it reached with the

Bush administration prior to the campaign to oust the Taliban.

Congress is a convenient scapegoat. Asked whether Turkey could rely on

a further dose of American undertakings, Richard Boucher, a State

Department spokesman, responded truthfully: "I think everybody is

familiar with our congressional process."

Yet, the USA, despite all its shortcomings, is the only game in town.

The European Union cannot be thought of as an alternative benefactor.

Even when it promotes the rare coherent foreign policy regarding the

Middle East, the European Union is no match to America's pecuniary

determination and well-honed pragmatism. Last year, EU spending within

the Euro-Mediterranean Partnership amounted to a meager $700 million.

The EU signed association agreements with some countries in the region

and in North Africa. The "Barcelona Process", launched in 1995, is

supposed to culminate by 2010 in a free trade zone incorporating the

European Union, Algeria, Morocco, Tunisia, Egypt, Israel, Jordan,

Lebanon, the Palestinian Authority, Syria and Turkey. Libya has an

observer status and Cyprus and Malta have joined the EU in the meantime.

According to the International Trade Monitor, published by the Theodore

Goddard law firm, the Agadir Agreement, the first intra-Mediterranean

free trade compact, was concluded last month between Egypt, Jordan,

Morocco and Tunisia. It will be signed next month and is a clear

achievement of the EU.

The European Union signed a Cooperation Agreement with Yemen and, in

1989, with the Gulf Cooperation Council, comprising Saudi Arabia,

Kuwait, Bahrain, Qatar, United Arab Emirates and Oman. A more

comprehensive free trade agreement covering goods, services, government

procurement and intellectual property rights is in the works. The GCC

has recently established a customs union as well.

A similar set of treaties may soon be inked with Iran with which the EU

has a balanced trade position - c. $7 billion of imports versus a

little less in exports.

The EU's annual imports from Iraq - at c. $4 billion - are more than 50

percent higher than they were prior to Iraq's invasion of Kuwait in

1990. It purchases more than one quarter of Iraq's exports. The EU

exports to Iraq close to $2 billion worth of goods, far less than it

did in the 1980s, but still a considerable value and one fifth of the

pariah country's imports. EU aid to Iraq since 1991 exceeds $300

million.

But Europe's emphasis on trade and regional integration as foreign

policy instruments in the Mediterranean is largely impracticable.

America's cash is far more effective. Charlene Barshefsky, the former

United States trade representative from 1997 to 2001, explained why in

an opinion piece in the New York Times:

"The Middle East ... has more trade barriers than any other part of the

world. Muslim countries in the region trade less with one another than

do African countries, and much less than do Asian, Latin American or

European countries.

This reflects both high trade barriers ... and the deep isolation Iran,

Iraq and Libya have brought on themselves through violence and support

for terrorist groups ... 8 of (the region's) 11 largest economies

remain outside the WTO"

Moreover, in typical EU fashion, the Europeans benefit from their

relationships in the region disproportionately.

Bilateral EU-GCC trade, for instance, amounts to a respectable $50

billion annually - but European investment in the regions declined

precipitously from $3 billion in 1999 to half that in 2000. The GCC, on

its part, has been consistently investing $4-5 billion annually in the

EU economies.

It also runs an annual trade deficit of c. $9 billion with the EU.

Destitute Yemen alone imports $600 million from the EU and exports a

meager $100 million to it. The imbalance is partly attributable to

European non-tariff trade barriers such as sanitary regulations and to

EU-wide export subsidies.

Nor does European development aid compensate for the EU's egregious

trade protectionism. Since 1978, the EU has ploughed only $210 million

into Yemen's economy, for instance. A third of this amount was in the

form of food support. The EU is providing only one fifth of the total

donor assistance to the country.

In the meantime, the USA is busy signing trade agreements with all and

sundry, subverting what little leverage the EU could have possessed. In

the footsteps of a free trade agreement with Israel, America has Having

concluded one with Jordan in 2000.

The kingdom's exports to the United States responded by soaring from

$16 million in 1998 to c. $400 million last year. Washington is

negotiating a similar deal with Morocco. It is usurping the EU's role

on its own turf. Who can blame French president Jacques Chirac for

blowing his lid?

Is It All About Oil?

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

Saddam's Thousand Nights

The Iraqi and the Madman

God's Diplomacy and Human Conflicts

The Economies of the Middle East

If the looming war was all about oil, Iraq would be invaded by the

European Union, or Japan - whose dependence on Middle Eastern oil is

far greater than the United States'. The USA would have, probably,

taken over Venezuela, a much larger and proximate supplier with its own

emerging tyrant to boot.

At any rate, the USA refrained from occupying Iraq when it easily could

have, in 1991. Why the current American determination to conquer the

desert country and subject it to direct rule, at least initially?

There is another explanation, insist keen-eyed analysts.

September 11 shredded the American sense of invulnerability. That the

hijackers were all citizens of ostensible allies - such as Egypt and

Saudi Arabia - exposed the tenuous and ephemeral status of US forces in

the Gulf.

So, is the war about transporting American military presence from

increasingly hostile Saudis to soon-to-be subjugated Iraqis?

But this is a tautology. If America's reliance on Middle Eastern oil is

non-existent - why would it want to risk lives and squander resources

in the region at all? Why would it drive up the price of oil it

consumes with its belligerent talk and coalition-building? Why would it

fritter away the unprecedented upswell of goodwill that followed the

atrocities in September 2001?

Back to oil. According to British Petroleum's Statistical Review of

World Energy 2002, the United States voraciously - and wastefully -

consumes one of every four barrels extracted worldwide. It imports

about three fifths of its needs. In less than eleven years' time, its

reserves depleted, it will be forced to import all of its soaring

requirements.

Middle Eastern oil accounts for one quarter of America's imports. Iraqi

crude for less than one tenth. A back of the envelope calculation

reveals that Iraq quenches less than 6 percent of America's Black Gold

cravings. Compared to Canada (15 percent of American oil imports), or

Mexico (12 percent) - Iraq is a negligible supplier. Furthermore, the

current oil production of the USA is merely 23 percent of its 1985 peak

- about 2.4 million barrels per day, a 50-years nadir.

During the first eleven months of 2002, the United States imported an

average of 449,000 barrels per day (bbl/d) from Iraq. In January 2003,

with Venezuela in disarray, approximately 1.2 million bbl/d of Iraqi

oil went to the Americas (up from 910,000 bbl/d in December 2002 and

515,000 bbl/d in November).

It would seem that $200 billion - the costs of war and postbellum

reconstruction - would be better spent on America's domestic oil

industry. Securing the flow of Iraqi crude is simply too insignificant

to warrant such an exertion.

Much is made of Iraq's known oil reserves, pegged by the Department of

Energy at 112 billion barrels, or five times the United States' - not

to mention its 110 trillion cubic feet of natural gas. Even at 3

million barrels per day - said to be the realistically immediate target

of the occupying forces and almost 50 percent above the current level -

this subterranean stash stands to last for more than a century.

Add to that the proven reserves of its neighbors - Kuwait, Saudi

Arabia, the United Arab Emirates - and there is no question that the

oil industry of these countries will far outlive their competitors'.

Couldn't this be what the rapacious Americans are after? - wonder

genteel French and Russian oilmen. After all, British and American

companies controlled three quarters of Iraq's mineral wealth until 1972

when nationalization denuded them.

Alas, this "explanation" equally deflates upon closer inspection. Known

- or imagined - reserves require investments in exploration,

development and drilling. Nine tenths of Iraq's soil are unexplored,

including up to 100 billion barrels of deep oil-bearing formations

located mainly in the vast Western Desert. Of the 73 fields discovered

- only 15 have been developed. Iraq's Oil Minister, Amir Rashid,

admitted in early 2002 that only 24 Iraqi oil fields were producing.

The country has almost no deep wells, preponderant in Iran, for

instance. Though the cost of production is around $1-1.5 per barrel,

one tenth the cost elsewhere - while Texas boasts 1,000,000 drilled

wells, Iraq barely sports 2000. The Department of Energy's report about

Iraq concludes:

"Iraq generally has not had access to the latest, state-of-the-art oil

industry technology (i.e., 3D seismic), sufficient spare parts, and

investment in general throughout most of the 1990s, but has instead

reportedly been utilizing questionable engineering techniques (i.e.,

overpumping, water injection/"flooding") and old technology to maintain

production."

The quality of Iraqi oil deteriorated considerably in the recent

decade. Its average API gravity declined by more than 10 percent, its

water cut (intrusion of water into oil reservoirs) increased and its

sulfur content shot up by one third. The fields date back to the 1920s

and 1930s and were subjected to abusive methods of extraction. Thus, if

torched during a Gotterdammerung - they may well be abandoned

altogether.

According to a report published by the United Nations two years ago,

Iraqi oil production is poised to fall off a cliff unless billions are

invested in addressing technical and infrastructural problems. Even

destitute Iraq forks out $1.2 billion annually on repairing oil

facilities.

The Council of Foreign Relations and the Baker Institute estimated, in

December last year, that the "costs of repairing existing oil export

installations alone would be around $5 billion, while restoring Iraqi

oil production to pre-1990 levels would cost an additional $5 billion,

plus $3 billion per year in annual operating costs."

Not to mention the legal quagmire created by the plethora of agreements

signed by the soon to be deposed regime with European, Indian, Turkish

and Chinese oil behemoths. It would be years before Iraqi crude in

meaningful quantities hits the markets and then only after tens of

billions of dollars have been literally sunk into the ground. Not a

very convincing business plan.

Conspiracy theorists dismiss such contravening facts impatiently. While

the costs, they expound wearily, will accrue to the American taxpayer,

the benefits will be reaped by the oil giants, the true sponsors of

president Bush, his father, his vice-president and his secretary of

defense. In short, the battle in Iraq has been spun by a cabal of

sinister white males out to attain self-enrichment through the spoils

of war.

The case for the prosecution is that, cornered by plummeting prices,

the oil industry in America had spent the last ten years defensively

merging and acquiring in a frantic pace. America's twenty-two major

energy companies reported overall net income of a mere $7 billion on

revenues of $141 billion during the second quarter of last year. Only

forty five percent of their profits resulted from domestic upstream oil

and natural gas production operations.

Tellingly, foreign upstream oil and natural gas production operations

yielded two fifths of net income and worldwide downstream natural gas

and power operations made up the rest. Stagnant domestic refining

capacity forces US firms to joint venture with outsiders to refine and

market products.

Moreover, according to the energy consultancy, John S. Herold,

replacement costs - of finding new reserves - have soared in 2001 to

above $5 per barrel. Except in the Gulf where oil is sometimes just 600

meters deep and swathes of land are immersed in it. In short: American

oil majors are looking abroad for their long-term survival. Iraq always

featured high on their list.

This stratagem was subverted by the affaire between Saddam Hussein and

non-American oil companies. American players shudder at the thought of

being excluded from Iraq by Saddam and his semipternal dynasty and thus

rendered second-tier participants.

According to the conspiracy minded, they coaxed the White House first

to apply sanctions to the country in order to freeze its growing amity

with foreign competitors - and, now, to retake by force that which was

confiscated from them by law. Development and production contracts with

Russian and French companies, signed by Saddam Hussein's regime, are

likely to be "reviewed" - i.e., scrapped altogether - by whomever rules

over Baghdad next.

An added bonus: the demise of OPEC. A USA in control of the Iraqi

spigot can break the back of any oil cartel and hold sway over

impertinent and obdurate polities such as France. How would the ensuing

plunge in prices help the alleged instigators of the war - the oil

mafia - remains unclear. Still, James Paul propounded the following

exercise in the Global Policy Forum this past December:

"(Assuming) the level of Iraqi reserves at 250 billion barrels and

recovery rates at 50% (both very conservative estimates). Under those

conditions, recoverable Iraqi oil would be worth altogether about

$3.125 trillion. Assuming production costs of $1.50 a barrel (a

high-end figure), total costs would be $188 billion, leaving a balance

of $2.937 trillion as the difference between costs and sales revenues.

Assuming a 50/50 split with the government and further assuming a

production period of 50 years, the company profits per year would run

to $29 billion. That huge sum is two-thirds of the $44 billion total

profits earned by the world's five major oil companies combined in

2001. If higher assumptions are used, annual profits might soar to as

much as $50 billion per year."

The energy behemoths on both sides of the pond are not oblivious to

this bonanza. The Financial Times reported a flurry of meetings in

recent days between British Petroleum and Shell and Downing Street and

Whitehall functionaries. Senior figures in the ramshackle exile Iraqi

National Congress opposition have been openly consorting with American

oil leviathans and expressly promising to hand postwar production

exclusively to them.

But the question is: even if true, so what? What war in human history

was not partly motivated by a desire for plunder? What occupier did not

seek to commercially leverage its temporary monopoly on power? When

were moral causes utterly divorced from realpolitik?

Granted, there is a thin line separating investment from exploitation,

order from tyranny, vision from fantasy. The United States should -

having disposed of the murderous Saddam Hussein and his coterie -

establish a level playing field and refrain from giving Iraq a raw

deal.

It should use this tormented country's natural endowments to

reconstruct it and make it flourish. It should encourage good

governance, including transparent procurement and international

tendering and invite the United Nations to oversee Iraq's

reconstruction. It should induce other countries of the world to view

Iraq as a preferred destination of foreign direct investment and trade.

If, in the process, reasonable profits accrue to business - all for the

better. Only the global private sector can guarantee the long-term

prosperity of Iraq. Many judge the future conduct of the USA on the

basis of speculative scenarios and fears that it is on the verge of

attaining global dominance by way of ruthlessly applying its military

might. This may well be so. But to judge it on this flimsy basis alone

is to render verdict both prematurely and unjustly.

The Axis of Oil

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

The Janus Look

Russia's Second Empire

Russia as a Creditor

Russia's Israeli Oil Bond

Russia in 2003

Russia Straddles the Euro-Atlantic Divide

Russian Roulette - The Security Apparatus

Russia's Stealth Diplomacy

Success is the best proselytizer. Faced with the imminent demise of

Saddam Hussein's regime, both Russia and Germany - erstwhile champions

of peace and the sanctity of international law - expressed their hope

yesterday for a swift victory of the hitherto much-decried coalition

forces.

But this may be too little and way too late, as far as the United

States is concerned. The two prostrates are firmly included in the

victors' grey list - if not yet in their black one. The friction is not

merely the outcome of sanctimonious hectoring about human rights from

the Chechen-bashing Russians. It runs deeper and it turns on more than

a dime.

Another German-Russian collaboration may shortly attain the limelight:

the $800 million, 1000 megawatt light water reactor in Bushehr, an

Iranian Persian Gulf port facing southern Iraq. Abandoned by West

Germany in 1979, following the Iranian revolution, it was adopted by

the Russians in the 1990s. A second reactor is in the offing. More than

2000 Russians are employed in the site.

Following the discovery by the International Atomic Energy Agency

(IAEA) of a uranium enrichment facility near the city of Natanz and an

Iranian admission that they are mining their own ore, Alexander

Rumyantsev, the Russian Atomic Energy Minister, acknowledged that his

country lost control over Iran's nuclear program.

Iran, like Iraq, is a celebrated member of the "Axis of Evil". Thus,

the atomic complex, though protected by at least 10 SAM batteries, may

well be the target of an attack, Israeli and Russian officials told the

Bellona Foundation, a Norwegian environmental group. This will not be

without precedent: in a daring air operation, Israeli jets pulverized

an Iraqi nuclear power plant in Osirak in 1981.

Ironically, it is America's aggressive stance towards Iraq that drives

the likes of Iran and North Korea back into the arms - and nuclear

technologies - of the Russian Federation. Russia is positioning itself

to become an indispensable channel of communication and intermediary

between the USA and what the State Department calls "rogue states".

On March 17, Russia's State Property Minister, Farid Gazizulin, met

Iran's Defense Minister, Ali Shamkhani, during a session of the

Iran-Russia Economic Commission in Tehran. The host's message was

unequivocal: "Cooperation between Iran and Russia is to contribute to

sustaining peace and prevent conflicts in the region."

According to Asia Times, in an earlier visit to Tehran, Russia's

Foreign Minister, Igor Ivanov, pledged to continue to collaborate with

Iran on nuclear energy projects. "Iran has no plans to produce nuclear

military projects, this is a fundamental truth." - he insisted.

Nor is the teamwork limited to commercial goods and services. An

October 2001 bilateral framework agreement has since fostered more than

$400 million in Russian annual military exports to Iran, including air

defense systems and fighter jets.

Russia is also increasingly involved in the crisis in the Korean

Peninsula. South Korean President Roh Moo-hyun's security adviser, Ra

Jong-il, have held talks earlier this week with their counterparts in

Moscow and Beijing. Russia, like the United States, opposes the

military nuclear efforts of North Korea.

Though vehemently denied by all parties, South Korea floated last week,

in an interview Ra granted to the Financial Times, the idea of

supplying Pyongyang with Russian natural gas from Siberia or Sakhalin

through a dedicated pipeline, as a way to solve the wayward regime's

energy problems.

According to the Korean daily, The Chosun Ilbo, Russian Ambassador to

Seoul, Teymuraz Ramishvili, revealed that discussions have been held on

posting Russian or South Korean troops in the North to protect such a

pipeline

North Korea insists that its atomic reactors are intended merely to

forestall severe power shortages, now that the 1994 Agreed Framework,

to provide it with fuel and two proliferation-resistant reactors

financed by the West, is effectively annulled. Even Beijing, hitherto

an unflinching supporter of the Dear Leader, halted oil supplies to the

North last month.

The scheme is not new. In February 2002, Russian Deputy Energy Minister

Valentin Shelepov declared in Moscow at a

meeting of the Russian-South Korean Committee for Cooperation in the

Sphere of Energy and Natural Resources that Russia seeks South Korean

investments in the coal industry and in oil and gas extraction in

Eastern Siberia and the Far Eastern regions.

The Russian daily, Nezavisimaya Gazeta, notes that, together with

China, South Korea is already involved in LNG ventures in Irkutsk and

the Yurubcheno-Tokhomskaya oblast.

According to Stratfor, the strategic forecasting consultancy, Russia

offered in the past to construct nuclear power stations on its side of

the border and supply North Korea with electricity.

Russia is close to North Korea. In its previous incarnation as the

Soviet Union, in 1965, it built North Korea's infamous Yongbyon

facilities. Russia was also instrumental in convincing the North to

agree to reactivate a railway line connecting it to South Korea. Kim

Jong-il, the North's enigmatic leader, celebrated his 61st birthday, in

February, in the Russian embassy in Pyongyang.

The mooted pipeline may be nothing but a pipe dream. Even optimists

admit that it would require 4 years to construct - more likely 8 to 10

years. But Russia is in no hurry. Russian gas to the pariah state could

yet prove to be a key ingredient in any settlement. Russia intends to

drive a hard bargain. It is likely to try to swap gas supplies to the

Koreans for the preservation of Iraqi oil contracts signed by Saddam's

regime with Russian energy behemoths.

Regardless of geopolitical vicissitudes, Russia views Asia - mainly

China, Japan and South Korea - as growth markets for its energy

products. By 2008 or 2010, Russia plans to sell 20-30 billion cubic

meters a year of gas from the Kovykta field, co-developed by Interros,

the Tyumen oil company and British Petroleum, to China, South Korea

and, possibly, Mongolia.

According to Asia Times:

"Russia is looking at two competing plans. One, backed by Russia's top

oil firm Yukos and China, is a $2.5 billion, 2,400- kilometer extension

of the existing network from near Irkutsk to Daqing, China. The other,

backed by Rosneft and Japan, would cost $5.2 billion and circumvent

China, running 3,800 kilometers to the Russian Far East city of

Nakhodka on the Sea of

Japan ... The Russian Energy Ministry eventually recommended that the

Japanese and Chinese proposals be combined into one project, a third

option to build the (1.6 million barrel a day) pipeline to Daqing and

then extend it to Nakhodka."

Extending the network eastward is by no means the consensus. Prime

Minister Mikhail Kasyanov opened a cabinet meeting last month with the

confident - but speculative - declaration that there is enough oil in

Siberia to justify a pipeline. Russia's Energy Minister, Igor Yusufov,

observed correctly that, in the absence of sufficient exploration, oil

and gas reserves in Siberia and the Far East, pegged at 1 billion tons,

are, at best, guesstimates. If these are smaller than projected, the

eastern thrust would prove to be a costly error.

More than $12 billion are needed in order to explore the vast swathe

and to develop it to a profitable level of production - about 100

million tons a year by 2020. The pipelines will funnel 70-80 million

tons of crude and 30 billion cubic meters of natural gas a year to

Asian buyers.

Still, Russia cannot ignore the Asian markets, nor can it wait a decade

or two to avoid commercial risks. Last week, Russia's Energy Ministry

concluded the negotiation of a 10-year collaborative effort with Japan

involving the construction of oil and gas pipelines, the development of

hydrocarbon fuel reserves in Siberia and other projects.

Yesterday, Russian Ambassador to China, Igor Rogachev, told Interfax,

the Russian news agency, that "in the past three years, the dynamic

growth of merchandise turnover (between Russia and China led to a)

volume (of) close to $12 billion last year. This year the volume of

bilateral trade grew 37 percent for the first two months and exceeded

$2 billion."

Russian exports to China since the beginning of the year soared by 27

percent and Russian imports by 62 percent. China is an avid consumer of

Russian electricity generation, aviation, space, laser, and nuclear

technologies. Russian firms made inroads into the construction of

Chinese hydroelectric plants and railways.

The two countries have "plans for the construction of the Russia-China

oil pipeline, and delivering up to 30 million tons of oil a year in it,

and a gas pipeline from eastern Siberia to the northeast of (North

Korea), and to consumers in third countries." Russia is constructing "a

number of major, modern facilities ... in China, (including) the first

and second (generating) units at the Tianwan nuclear power plant."

China has also signed a contract to buy Russian Tu-204 civil aircraft.

Nor is the cooperation limited to heavy or military industry, explained

the Ambassador:

"Agreements between Chinese and Russian companies that provide for the

assembly in Russia color televisions and household air conditioners are

being successfully implemented."

Twelve years after the demise of communism, Russia is regrouping. It is

patching the torn fabric of its diplomacy. In the best American

tradition, it is leveraging its growing pecuniary clout - now that it

is poised to become the world's leading energy producer. It is

reorienting itself - emphasizing Asia over Europe. It is building new

bridges and forming new alliances, both commercial and strategic.

As long as these serve the interests of the sole superpower - as may be

the case with North Korea - Russia's revival as an important regional

player is tolerated. But, following its sudden swing to the

Franco-German camp in the run-up to the Iraqi campaign, it is on

probation. Should it engage in anti-American activities, it may find

that American patience and tolerance are rather strained.

Saddam's One Thousand Nights

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Iraq is preparing for yet another war and yet another seemingly mortal

blow to its eerily resilient economy. According to Fred Horan of

Cornell University, Iraq's GNP per capita contracted by one third in

the aftermath of its protracted and bloodied war with Iran.

Similar drops in gross national consumption and government spending

were recorded by Dr. Kamil Mahdi of the Center for Arab Gulf Studies in

Exeter University. The CIA pegs the cost of the Iran-Iraq conflict at

$100 billion. This was three years before the Gulf War and the decade

of debilitating sanctions that followed it.

Mahdi provides an overview of the devastation:

"A decade of war followed by a major air campaign against Iraq's

infrastructure and eight years of severe and comprehensive sanctions

have devastated the country's economy. Lost production and diversion of

resources to military activities are far from being the only economic

costs. Accumulated effects on society include the loss of life,

physical impairment, breakdown of societal institutions, declining

morale, emigration, and all the associated hemorrhage of skills and

intellectual capabilities. The effects of induced technological

backwardness, of destruction and accelerated degradation of the

infrastructure, and of the increased environmental damage of short-term

palliative solutions need also be mentioned."

Still, the Wall Street Journal, Time Magazine, and the BBC have all

reported recently that the streets of Baghdad are teeming with new cars

and Chinese double-decker buses, its bustling markets replete with

luxury products, restaurants are making a brisk business, and dozens of

art galleries are prospering where two languished only 4 years ago.

The razed bridges and airport have been rebuilt. Electricity has been

mostly restored. Sumptuous mosques have sprouted everywhere. Almost $2

billion were devoted to new palatial mansions for Saddam and his

family, wrote the "Washington Post" on February 27, 2001. Kurdish media

related how 250 kilograms of gold were applied by imported Indian and

Moroccan craftsmen in two of the palaces. Iraqi state television

reported in June that Saddam exhorted his ministers to avoid corruption

and nepotism.

Reconstruction reached the much-neglected Kurdish north as well. The

year 2001 report of the "Ministry" of Reconstruction and Development

(MORAD) in Irbil lists thousands of housing units, dormitories,

schools, and guest houses built this year with an investment of $70

million hitherto.

The "Kurdistan Regional Government" announced proudly the $6 million

completed restoration of the landmark Sheraton. It joins half a dozen

other luxury hotels constructed with allocations from the oil-for-food

program administered by the UN on behalf of the Iraqi government and

money from Turkish investors.

But not all is rosy in the "safe zones". Irrigation projects,

electricity, the telephone system, schools, teacher training, health

provision, hospitals, clinics, roads, and public transport - are all in

dire need of cash infusions. UPI reported that Arab employees of the UN

are pressured by Saddam Hussein "to do his bidding" in the north. Iraq

refuses to collaborate with UN authorities to release from its

warehouses heavy equipment destined for the Kurdish parts, reports

Radio Free Europe.

Iraq also continues to pursue it program of weapons of mass

destruction. It is in the market for components and materials for

nuclear bombs, warned the "Washington Times". Iraqi defectors confirmed

the information and delineated a blood-curdling - and expensive -

effort to reinstate the country's capacity to produce nuclear,

chemical, and biological armaments.

According to Stratfor, "Iraq is procuring weapons systems - such as

advanced conventional weapons rather than nuclear capabilities - that

would more immediately affect the outcome of a war with the United

States. It is specifically seeking to enhance its air-defense

capabilities, improve its ground-to-ground missiles and upgrade major

battlefield weapons systems for ground forces."

Iraq felt sufficiently affluent to declare a one month oil embargo in

April at a cost of $1.2 billion, to protest US partiality towards

Israel. It also generously supports the families of Palestinian

"martyr" suicide bombers with grants of $25,000 plus another $25,000

per each house demolished in the Jenin refugee camp by the Israelis.

Smaller amounts are distributed as disability and recuperation

benefits, mostly through the "Arab Liberation Front", reports the

"Daily Telegraph".

Family members of the "heroes" get free enrollment in Iraqi

institutions of higher education. Iraq recently donated 10 million

euros to the Intifada. Radio Free Europe/Radio Liberty estimates that

this display of Arab solidarity has hitherto cost Iraq $1 billion.

This hoary bravado masks a dilapidated infrastructure, decrepit

hospitals and schools, spiraling prices, malnourished and diseased

children, and a middle class reduced to penury. According to the World

Bank, Iraq's population grows by 2.9 percent annually, from a base of

23 million citizens.

Infant mortality is 61-93 per thousand live births, depending on the

source. Of those who survive, another 121 children perish by the age of

5. UNICEF estimates that at least 500,000 children died that shouldn't

have under normal circumstances. The Iraqi Mission to the United

Nations put the number at 713,000 plus a million adults. The CNN

describes an ominous shortage of clean water. Inflation hovers around

100 percent.

But none of these data is reliable. Estimates vary widely. The CIA says

that the trade deficit in 2000 was $1 billion and the external debt

amounted to a whopping $139 billion. Not so, countered the Economist

Intelligence Unit (EIU) - external debt was a mere $53 billion last

year. The EIU also forecasts a 2 percent drop in GDP this year - but a

growth of 6 percent next year commensurate with a recovery in oil

production.

Still, things are not as bad as relentless Iraqi propaganda makes them

out to be. Infant mortality figures are suspect as are most other Iraqi

statistics. The BBC interviewed an Iraqi defector whose two year old

daughter was maimed by interrogators. He claimed to have participated

in fake "baby funerals". There is no telling if this is true or a part

of the propaganda war waged by the would-be combatants.

According to the BBC, Iraqi life expectancy for men is 66 years. Women

outlive them by 2 years on average. Annual income per capita is c.

$600. GDP per capita is $715, down from $3000 only a decade ago - or

maybe double that per the Economist Intelligence Unit.

But these figures are misleading. According to the CIA 2001 World

Factbook, Iraq's GDP per capita in terms of purchasing power is a more

respectable $2500. GDP has grown by 15 percent in 2000 - or 4 percent

according to The Economist Intelligence Unit - though admittedly from a

dismally low base.

An efficient rationing system keeps Iraqis well fed at 2200-2500

calories per day, according to the UN. A thriving black market

facilitates the smuggling of cigarettes, software, home appliances,

video films, weaponry, food, carpets - and virtually every other

necessity or luxury - into Iraq from Syria, Jordan, Turkey, Iran,

Cyprus, and the West Bank.

UN reports consistently accuse Iraq of under-utilizing the funds at its

disposal.

Between June and December 2000 - as the US State Department gleefully

announced - Iraq disposed of only 13 percent of the money allocated to

health supplies, 6 percent of the allotment for education, and 3

percent of the cash available for spare parts for its crumbling oil

industry.

It neglected to mention, though, that, during the same period, more

than 1150 contracts were still pending approval in a nightmarish

bureaucratic battleground between the US and the UK and other members

of the Sanctions Committee. This was before the introduction of "smart

sanctions" earlier this year. The new scheme allows Iraq to import all

things civilian not itemized in a 332-page dual use "Goods Review" list.

Iraq receives over $4.5 billion of food and medicines a year through

the UN-administered oil for food and medicines program. Another $13

billion are in the pipeline. According to the UN, Iraq has sold more

than $56 billion of oil since 1996. Iraq's export income cannot be used

to defray the costs of local goods and services or to pay salaries. The

UN dispensed with $15 billion in Iraqi oil proceeds since 1991 to

compensate countries and individuals affected by Iraq's aggression.

Another unsupervised source of income is the surcharges Iraq levies on

its oil. Middlemen and trading companies pay the official - bargain -

price into a UN account and hidden commissions to Saddam's regime. The

UN told the "Wall Street Journal" that between 20 and 70 cents per

barrel have accrued in these illicit accounts since December 1, 2000.

The Congressional General Accounting Office stated that "conservatively

... Iraq has illegally earned at least $6.6 billion since 1997 - $4.3

billion from smuggling and $2.3 billion in illegal surcharges on oil

and commissions from its commodities contracts."

This translates to c. $1 billion per year. Yet, it may be a wild

over-estimate. The typical surcharge has long been more like 15 cents a

barrel. Moreover, downward pressure on oil prices coupled with renewed

UN vigilance may soon put a stop to this lucrative arrangement.

Retroactive pricing of Iraq's oil by the UN has already considerably

damaged Iraq's exports to Russian and other amenable lifters of its

oil. There is a "substantial shortfall in the funds available for

programme implementation", as the UN puts it.

The UN Secretary General himself criticized the program last June:

"The programme has continued to suffer because of a number of factors,

including: the cumbersome procedures involved in formulating the

distribution plan, and the late submission of the plan which has seem

subjected to thousands of amendments; slow contracting for essential

supplies by the Iraqi Government and the United Nations agencies and

programmes; and the inordinate delays and irregularities in the

submission of applications for such contacts to the Secretariat by both

the suppliers and the agencies and programmes concerned."

In a letter addressed to the Acting Chairman of the Security Council's

661 sanctions committee on 1 August 2002, the Executive Director of the

Iraq Programme, Benon Sevan, expressed "grave concern" regarding the

cumulative shortfall in funds and warned of "very serious consequences

on the humanitarian situation in Iraq".

Mr. Sevan appealed to the members of the Committee and the Government

of Iraq to "take all necessary measures to resolve the difficulties

encountered in improving the critical funding situation, including, in

particular, the long outstanding question of the pricing mechanism for

Iraqi crude oil exports ... The cooperation of all concerned is

essential".

The UN registers the outcomes:

"As at 2 August, the revenue shortfall had left 1,051 approved

humanitarian supply contracts, worth over $2.25 billion, without

available funds. The sectors affected by the lack of funds were: food

with $356 million; electricity with $353 million; food handling with

$325 million; agriculture with $297 million; housing with $286 million;

water and sanitation with $216 million; health with $159 million;

telecommunication and transportation with $152 million and; education

with $111 million."

Iraq bribes countries near and far with cheap oil. It recently signed

nine free trade or customs agreements with, among others, Lebanon,

Oman, and the United Arab Emirates as well as with Syria, an erstwhile

irreconcilable foe. According to the "Washington Post", 200,000 barrels

a day flow through the re-opened pipeline to the Syrian port of Banias

- in breach of UN Resolution 986 (i.e., the oil for food program).

Syria sells Iraq goods worth at least $100 million a month, including,

according to the "Times" of London, tanks and other weaponry. The two

countries agreed to establish a joint telephone company and to abolish

capital controls. Syria and Jordan are the only two countries with air

links to Baghdad and other Iraqi destinations.

Iraq also pledged to construct an oil refinery in Lebanon and re-open a

defunct pipeline running to Lebanon's ports. It inked $100 million

worth of import contracts with Algeria and removed 14 Jordanian

enterprises from its blacklist of companies which trade with Israel.

Iraq caters to Jordan's energy needs by supplying it with heavily

discounted oil carried by trucks across the border. A 100,000

barrels-per-day pipeline is slated to become operational by October

2004. A free trade agreement is being negotiated.

Not surprisingly, the Jordanians protested vocally against renewed

inspections of freight in the porous Red Sea port of Aqaba. Even Iraq's

mortal enemies are mellowing. A border crossing between Saudi Arabia

and Iraq was recently inaugurated with great pan-Arabic fanfare. It was

inundated by more than $1 billion in bilateral trade, according to the

London-based Arabic daily, "al-Hayat".

The list of renegades continues. Iraq and Sudan vowed to establish a

free trade zone. Until it clamped down on the practice recently, Turkey

turned a blind eye to a $1 billion annual diesel-against-everything

market on its border with the rogue state. Egypt allowed more than 90

of its companies to participate in a commercial fair in Baghdad in

April.

Egyptian business concluded contracts worth $350 million with Iraq

between December last year and May, trumpeted the Egyptian news agency,

MENA. This on top of more than $4 billion of contracts signed since

1996. Residential and commercial projects with Egyptian construction

groups are on track.

Russia peddled to Iraq more than $5 billion of goods since 1997,

confirmed Middle East and North Africa department head in the Russian

Foreign Ministry, Mikhail Bogdanov. The Iraqis put the figure higher,

at $30 billion in bilateral trade. Even American companies were able to

hawk $230 million worth of food and pharmaceuticals, according to the

Wall Street Journal. Iraq sold $90 million of oil to South Africa's

Strategic Field Fund, charged the South African opposition Democratic

Alliance.

The Ukrainian UNIAN news agency reported the purchase of technical

equipment by Baghdad even as the "Financial Times" aired the

allegations of a former Ukrainian presidential security guard that his

country sold a sophisticated $100 million radar system to the outcast

regime.

Iraqi largesse comes with strings attached. ITAR-TASS reports that the

"Ural" auto works ships 400 trucks to Iraq every month. Interfax said

in April that a Russian oil company, Zarubezhneft, was invited to

develop an oil field in southern Iraq with proven reserves of more than

3 billion barrels.

According to Stratfor, Iraq still owes Russia $10-12 billion for Soviet

era materiel. But Iraq is open about its conditioning of future orders

on Russian anti-American assertiveness. Similarly, it has cut wheat

imports from Australia by half due to the latter's unequivocal support

of American policies.

Iraqi business, both current and prospective, is alluring. The country

is vast, mineral-rich, and with a well-educated and sinfully cheap

workforce. Hence the decision by 185 multinationals, recounted by the

"Wall Street Journal", to forgo almost $3 billion in Gulf War related

reparations claims - in return for aid contracts under the oil-for-food

program.

Still, Iraq's financial clout is constrained by the rundown state of

its oil fields. Lacking spare parts and investments in exploration and

development, it produces c. 2 million barrels per day - about two

thirds its capacity. According to the US government, one third of this

quantity is smuggled, in contravention of the oil-for-food program.

Iraq's pipelines lead to Turkey and to the south of the ravaged

country. This makes it vulnerable to Turkish or Saudi-Arabian and

Kuwaiti collusion in in a US-led campaign against its regime.

Moreover, U.S. oil companies, such ExxonMobil, ChevronTexaco, and

Valero Energy purchase nearly half of Iraq's oil exports. Iraq is

trying to diversify but its interlocutors are currently confined to the

likes of Belarus with whom it recently held talks about revamping its

oilfields and petrochemicals industry. With 100 billion barrels in

proven reserves, Iraq is bound to attract the attentions of Western oil

companies following a regime change brought on by either war or nature.

Iraqi citizens must be holding their breath.

Turkey's Losing Streak

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

Turkey's Troubled Water

God's Diplomacy and Human Conflicts

The Economies of the Middle East

Turkey's Jewish Friend

In emphasizing its "special relationship" with Turkey, the United

States conveniently overlooked the fact - confirmed yet again by a

recent Pew Global Attitudes Project survey - that 84 percent of Turks

view America "unfavorably".

According to the Anadolu news agency, the Chairman of the Union of

Chambers and Commodity Exchanges in Turkey, Rifat Hisarciklioglu,

cajoled his countrymen on Monday to rid themselves of their dependence

on "foreign" assistance - common euphemism for handouts from America

and, as the Turks firmly believe, its long arm, the International

Monetary Fund.

A country's foreign policy stature, he averred, is conferred by its

domestic product. Somewhat implausibly, he pegged Turkey's war-related

damages this year at $16.2 billion and between $70-150 in the following

decade. It will have to resort to more expensive alternative sources of

oil. Tourism, its second largest foreign exchange earner, will wither.

If true, Turkish refusal to be used by U.S. troops as a launching pad

for a second, northern, Iraqi front - was nothing short of suicidal.

Turkey could have ended up with $30 billion in sorely needed aid and

loan guarantees - now reduced, perhaps, to a mere $8.5 billion in

commercial debt in return for overflight rights. Moreover, future IMF

aid and even disbursements from an existing standby agreement are in

jeopardy.

Last year, at the behest of the United States, Turkey received another

dollop of $17 billion in multilateral funds to shore up its ailing

economy. According to the Washington Post, it already owes the Fund

five times the ordinary borrowing limit under the lending agency's

rules.

The country's finances are in dire straits. Its foreign debt catapulted

from $50 billion in the wake of the first Gulf war - to more than $130

billion in the run-up to the second. The government's economic policies

are still founded on the defunct assumption that U.S. aid will be

allotted, despite Turkey's denial of service.

Inflation, at more than 25 percent, is rising as are real interest

rates - at 30 percent above inflation - and an already unsustainable

$95 billion in domestic public debt, a sizable chunk of it extremely

short term. Financial markets and the currency are plummeting. The

yield on Turkish bonds is a stratospheric 70-80 percent. An incredible

three quarters of the budget are earmarked for debt repayments.

The country should service $80 billion in obligations in the remainder

of this year. Not surprisingly, Standard and Poor's is contemplating a

lowering of Turkey's country rating, currently below investment grade

at B1. Fitch went ahead and reduced Turkey's rank to B minus with a

negative outlook to boot - akin to destitute and near-default Moldova.

According to Stratfor, the strategic forecasting consultancy, risk

premiums on Turkish treasuries leaped 90-122 basis points on March 17

alone - to 9.5 percent above comparable U.S. bonds. This spread

narrowed by 0.85 percent the following day when Turkey came up with the

offer to allow U.S. planes to make use of its air space.

Closer integration with the European Union, warned EU enlargement

commissioner, Gnter Verheugen, will be adversely affected by any

unilateral Turkish move in north Iraq. The acrimonious breakdown of

reunification talks between the Greek and Turkish-sponsored parties in

Cyprus did not help either.

Turkey has been allocated $1.1 billion by the EU as pre-accession aid.

Unruly behavior on its part may endanger this carrot as well. To

complicate matters further, America may drop its staunch political and

pecuniary support for the Baku-Ceyhan Main Export oil Pipeline (MEP).

Nor is the domestic situation less ominous.

The new, hitherto popular, prime minister, Recep Tayyip Erdogan, vowed

on Sunday to "carefully and diligently" implement the IMF's agonizing

austerity program which calls for spending cuts of $2 billion by the

end of the month, the privatization of the tobacco and alcohol

monopolies and tax reform. The 2003 budget envisages a primary surplus

of 6.5 percent of gross national product. It aims to raise revenues by

$5 billion and cut expenditure by $3 billion.

Such prescriptions ill-fit with promises to help the poor and fiscally

boost growth. But a mid-April loan tranche of $1.6 billion - of the

$3.5 billion left to be disbursed - is dependent on strict adherence.

Nor is a new agreement with the IMF in the offing without considerable

U.S. pressure or its implicit guarantee, both now unlikely.

The threat of dispatching troops to northern Iraq is Turkey's last,

desperate, card in a depleted deck. To avoid this cataclysmic scenario,

the United States may yet, teeth gnashing, revive the moribund economic

aid package it has seethingly withdrawn. The alternative is an

Argentina-style default with a shock wave cruising through a volatile

and ignitable Middle East - or a military dictatorship in Ankara.

Turkey's Jewish Friend

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

Iran between Reform and Mayhem

Turkey's Troubled Water

Israel's Hi, Tech - Bye, Tech

Syria's Sunshine Policy

Israel's Economic Intifada

Saddam's Thousand Nights

The Iraqi and the Madman

God's Diplomacy and Human Conflicts

The Economies of the Middle East

It is ironic that relations between Turkey and Israel have never been

better. The former is ruled by yet another Islamic government - though

constrained by secular-minded generals. The latter is increasingly

nationalistic-Messianic and theocratic - though its newly elected Prime

Minister, a former army general, Ariel Sharon, has just put together a

largely secular coalition government.

Each year, more than 300,000 Israelis spend their vacation - and more

than a quarter of a billion dollars - in scenic and affordable Turkish

resorts. A drought-stricken Israel revived a decade-old plan to buy

from Turkey up to 400 million cubic meters a year, instead of

expensively desalinating sea water.

Israeli land use, hydrological and agricultural experts roam the

Texas-sized country. The parties - with a combined gross domestic

product of $300 billion - have inked close to thirty agreements and

protocols since 1991. Everything, from double taxation to joint

development and manufacturing of missiles, has been covered.

Buoyed by a free trade agreement in force since 1997, bilateral trade

exceeded $1.5 billion last year, excluding clandestine sales of arms

and weapons technologies. According to the Turkish Ambassador to the

United States, "Turkish exports to Israel consist mainly of

manufactured goods, foodstuffs and grain, while Israel's main export

items to Turkey are chemical products, plastics, computers and

irrigation and telecommunications systems technologies."

A sizable portion of Turkey's $3-5 billion in annual spending on the

modernization of its armed forces is rumored to end in Israeli pockets.

This is part of a 25-year plan launched in 1997 and estimated to be

worth a total of $150 billion. Israeli contractors are refurbishing

ageing Turkish fighter planes and other weapons systems at a total cost

exceeding $2 billion hitherto.

Last May, the Israeli Military Industries and Elbit secured a $688

million contract to upgrade 170 M-60A1 tanks. There are at least

another 800 pieces in the pipeline. Small arms, unmanned aerial

vehicles and rockets originating in Israel make only part of a long

shopping list. Israeli pilots regularly train in Turkey. Joint military

exercises and intelligence sharing are frequent. The Israeli backdoor

allows friendly American administrations to circumvent a rarely

Turkophile Congress.

The American-Israel Public Action Committee (AIPAC), the Jewish

Institute for National Security Affairs (JINSA) and, more generally,

the almighty Jewish lobby in Washington, often support Turkish causes

on the Hill. Three years ago, for example, Jews helped quash a

resolution commemorating the Armenian genocide perpetrated by Turkish

forces during the first world war.

This exercise in hypocrisy did not endear the Jewish community or

Israel to either Armenians or to European Union cardholding Greeks who

have long permitted Palestinian terrorists to operate from the Greek

part of Cyprus with impunity. The friend of my enemy is my enemy and

Israel is clearly Turkey's Jewish friend.

But Israeli hopes that Turkey will reciprocate by serving as a conduit

to Arab regimes in the Middle East proved to be ill-founded. Only one

tenth of Turkish trade is with its neighbors near and far. Turkey's

leverage is further limited by its chronic economic distress and its

offensive designs to monopolize waterways shared by adjacent countries.

Though Moslem, like the Iranians, Turkey is not an Arab nation. It

counts Syria, Iraq and Iran as potential enemies and competitors for

scarce water resources - as does Israel. The recent rebuff by its

parliament of America's request to station troops on Turkish soil

notwithstanding, the country is defiantly pro-American against a

backdrop of anti-Western virulence.

Turkey aspires to join the European Union because it regards itself as

an island of civilization in an ocean of backwardness and destitution.

This counter-regional orientation is another thing it has in common

with the Jewish state. In an effort to differentiate themselves, both

polities were early adopters of economic trends such as deregulation,

equities, venture capital, entrepreneurship, privatization and hi-tech.

Turkey was the first Moslem state to recognize an ominously isolated

Israel in 1949. Both Israel and Turkey are democracies though they are

implicated in systemic human rights violations on a massive scale. The

political class of both is incestuously enmeshed with the military.

The two countries face terrorism on a daily basis and feel threatened

by the rise of militant Islam, by the spread of weapons of mass

destruction - though Israel is hitherto the only regional nuclear power

- and by global networks like al-Qaida.

In his travelogue, "Eastward to Tartary", published in 2001, Robert

Kaplan notes:

"Turkey's more friendly position toward Israel was the result of

several factors. (Turkey) became tired of diplomatic initiatives that

failed to induce the Arabs to end their support of the Kurdish Workers'

party, which was responsible for the insurgency in southeastern Turkey.

The Turks felt, too, that the Jews could help them with their Greek

problem (via the Jewish lobby) ... (The Turks realized) they might

never gain full admittance to the European Union. Thus, they required

another alliance."

This confluence of interests and predicaments does not render Israel

the darling of the Turkish street, though. Turks, addicted to

conspiracy theories, fully believe that the second Iraq war is being

instigated by the Israelis. They also decry the way Israel manhandles

the Palestinian uprising. Flag-burning demonstrations are common

occurrences in Ankara and Istanbul. Suleyman Demirel, Turkey's former

president, nearly paid with his life for the entente cordiale when a

deranged pharmacist tried to assassinate him in 1996.

Turkey's power behind the throne and future prime minister, Recep

Tayyip Erdogan, called Israel's Ariel Sharon a terrorist. The previous

prime minister called Israel's behavior in the occupied territories

"genocide" - hastening to reverse himself when faced with the possible

consequences of his Freudian slip.

Indeed, the looming conflict in Iraq may well be the watershed of the

Turkish-Israeli love fest. Turkey is growing increasingly religious and

more pro-Arab by the year. The further the United States - Israel's

sponsor and unwavering ally - pushes into the region, the less aligned

are its interests with Turkey's.

Consider the Kurdish question. Turkey is committed to preventing, if

need be by force of arms, the emergence of independent Kurdish polity

in Iraq. It would also wish to secure oil-rich northern Iraq as a

Turkish protectorate. But the Kurds - America's long-standing and

long-suffering collaborators - are the United States' "Northern

Alliance" in Iraq. It cannot abandon them for both military and moral

considerations.

But even in the absence of such blatant conflicts of interests,

Turkey's shift is inevitable, a matter of geography as destiny.

Turkey continues to ignore the Arab world at its peril. Regional

conflicts fail to respect international borders - as the country is

discovering, faced with the damaging Iraqi spillover. Until 1998,

Syria, another restive neighbor, actively aided and abetted the

rebellious Kurds. It may yet resume its meddling if Israel, its bitter

enemy, is neutered through a peace accord. The dispute over precious

water sources is embedded in Turkish-Syrian topography and is,

therefore, permanent.

It may have been in recognition of these facts that Abdullah Gul,

Turkey's prime minister, embarked on a tour of Arab capitals in

January. Simultaneously, the Turkish Trade Minister, Korsad Touzman,

led a delegation of 150 businessmen in a two day visit to Baghdad to

discuss trade issues. Turkey claims to have sustained damages in excess

of $30 billion in the 1991 Gulf War - a measure of its regional

integration.

Turkey has also recently begun considering the sale of water in the

framework of the "Manavgat Project for Peace" to Egypt, Jordan and even

Libya. Turkey's foreign minister, Bashar Yakis, is a Turkish diplomat

who knows Arabic and had served in Damascus, Riyadh and Cairo.

Turkey's Occidental orientation has proven to be counterproductive. As

the European Union grows more fractured and indecisive and the United

States more overweening and unilaterally belligerent, Turkey will have

to give up its fantasies - bred by the country's post-Ottoman founding

father, Kemal Ataturk - of becoming an inalienable part of Western

civilization.

Both Turkey and Israel will, in due time, be forced to accept - however

reluctantly - that they are barely mid-sized, mostly Asiatic, regional

powers and that their future - geopolitical and military, if not

economic - lies in the Middle East, not in the Midwest. Turkey could

then serve as a goodwill mediator between erstwhile enemies and Israel

as a regional engine of growth.

Until they do, both countries are major founts of regional instability,

often deliberately and gleefully so.

Israeli engineering firms, for instance, are heavily involved in the

design and implementation of the regionally controversial Southeast

Anatolian Project (GAP), intended to block Turkish water from reaching

Syria and Iraq. Additionally, protestations to the contrary aside, the

thrust of Israel's burgeoning military cooperation with Turkey is,

plausibly, anti-Arab.

Turkish security officials confirmed to the English-language daily,

Turkish Daily News, in March last year, that Turkey worked with Israel

to counter the Hezbollah in Lebanon. As early as 1998, Turkey

threatened war with Syria - and mobilized troops to back up its

warnings - explicitly relying on the always-present Israeli "second

front". The Egyptian government's mouthpiece, the daily al-Ahram,

called this emerging de-facto alliance "the true axis of evil".

Israel's massive army, its nuclear weapons, its policies in the West

Bank and Gaza, its influence on right-wing American decision-makers and

legislators - provoke the very same threats they are intended to

forestall, including terrorism, the coalescence of hostile axes and

alliances and the pursuit of weapons of mass destruction by regional

thugs.

Turkey's disdain for everything Arab, its diversion of the Tigris, Asi

and Euphrates rivers, its arms race, its suppression of the Kurds and

its military-tainted democracy have led it, more than once, to the

verge of open warfare. Such a conflict may not be containable. In 1995,

Syria granted Greece the right to use its air bases and air space, thus

explicitly dragging NATO and the European Union into the fray.

It is, therefore, the interest of the West to disabuse Turkey of its

grandiosity and to convince Israel to choose peace. As September 11 and

its aftermath have painfully demonstrated, no conflict in the Middle

East is merely regional.

Israel - The Next Target

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

Israel's Hi, Tech - Bye, Tech

Israel's Economic Intifada

God's Diplomacy and Human Conflicts

The Economies of the Middle East

Turkey's Jewish Friend

Its leader seems more comfortable in battle fatigues than in civil

suits. He has been long pursuing a policy of bloody oppression and

annexation. The regime is often castigated due to rampant human rights

violations. The country possesses weapons of mass destruction, though

it repeatedly denies the allegations. It refuses to honor numerous

Security Council resolutions. President Bush senior once subjected it

to sanctions. The United States has already trained its sights on this

next target: Israel.

The chieftains of the New World Order have made it abundantly clear

that Iraq's capitulation will be closely followed by the official

release of a much-leaked "road map" for peace in the Middle East

propounded by the "Quartet" - the USA, UK, United Nations and Russia.

A series of disclosures in the Israeli media made it equally evident

that prime minister Ariel Sharon's crew beg to differ from substantial

portions of the foursome's vision.

To demonstrate to skeptic and embittered Muslims everywhere that its

motives in waging war on Iraq were more altruistic than ulterior, the

Administration will impose an even-handed peace on a reluctant Israel.

Should it resist, the Jewish state will find itself subjected to the

kind of treatment hitherto reserved for the founding members of the

axis of evil - economic sanctions to the fore.

Can it withstand such treatment?

Institutional Investor has just downgraded Israel's 2002 country credit

rating to 45th place - seven rungs lower than in early 2000. It is

ranked behind Kuwait, Cyprus, Qatar, and Oman. Moody's, Fitch and

Standard and Poor's (S&P) has refrained from a further rating action,

following a series of demotions in the past two years.

The country's economy - especially its dynamic construction, tourism

and agricultural segments - has been weakened by three years of civil

strife both within the green line and throughout the occupied

territories. This has been reflected in the shekel's and the stock

exchange's precipitous declines, by one fifth each. Profits in the

banking sector slumped by more than three quarters due to augmented

loan loss provisions.

A global recession and the bursting of the hi-tech bubble have not

helped. Gross domestic product growth in 2000 was a spectacular 7

percent. In the next two years, however, the economy has contracted.

The calling up of reservists to active duty, the dwindling of

immigration - from 78,400 in 1999 down to 31,491 three years later -

and the disappearance of the Palestinian shopper depressed consumption,

services and retail sales.

Uriel Lynn, chairman of the Israeli Chamber of Commerce, told BBC News

Online, that the country has lost about $2.5 billion "in terms of

business product". Defense spending spiked at 10 percent of the budget,

double the American ratio and triple the military outlays of the

typical EU member.

Social solidarity is fraying. The Histadrut (General Federation of

Labor in Israel) - run by members of the shriveled opposition Labor

party - declared a labor dispute on Sunday, heralding a general strike.

This in response to reforms promulgated by the Ministry of Finance, now

headed by a hardliner, the former prime minister Benjamin Netanyahu.

The private sector accounts for 70 percent of GDP in Israel and is

already stretched to the limit. Instead, the hard-pressed ministry

wants to sack thousands in the bloated public services and cut the

salaries and pension rights of the remaining civil servants by 8

percent. Government consumption amounts to one third of GDP and public

debt exceeds it.

In a reversal of decades of tradition, collective wage agreements will

be abolished. The finance ministry is trying to reduce the spiraling

budget deficit - now pegged at more than 6 percent of GDP - by $2

billion to c. 3.5-4.5 percent of GDP, depending on one's propensity for

optimism.

Netanyahu also pledged to trim down the top marginal tax rate from a

whopping 60 to 49 percent and to aggressively privatize state holdings

in companies such as El Al, Bezeq Telecommunications, Oil Refineries

and Israel Electric Company. He told the Israeli daily Ha'aretz that

the fate of an American package comprising $1 billion in extra military

aid and $9 billion in loan guarantees depends on such "proper

economics".

Trying to balance fiscal profligacy, David Klein, the governor of the

Bank of Israel, kept real interest rates high, cutting them by a mere

0.2 percent yesterday to 8.7 percent. Inflation last year, at 5.7

percent, was way above the 1998-2002 average of 3.7 percent.

Partly due to this contractionary bias, more than 50,000 small

businesses closed their doors in 2002. According to the CNN, another

60,000 will follow suit by yearend. The number of tourists plunged by a

staggering three fifths. Foreign investment crumbled from $11 billion

in 2000 to $4 billion last year.

Unemployment is stubbornly stuck above 10 percent - and double this

figure in the Arab street. The State of the Economy Index, published by

the central bank, fell for the 30th consecutive month in February. Of

1.6 million employees in the business sector, 61,000 were fired since

January 2001.

It is the third year of recession: the economy contracted by 1 percent

last year and by 0.9 percent in 2001. Nor is it over yet. Business Data

Israel (BDI), a forecasting consultancy, reckons that the damage to

Israel's economy of a short war in Iraq would amount to $1 billion, or

1 percent of GDP.

One fifth of the population survives under the poverty line. Strains

between well to do newcomers, mainly from the former Soviet republics,

and impoverished veterans are growing - as do tensions between

destitute immigrants and their adopted homeland. Many emigrate from

Israel back to the Commonwealth of Independent States, to Germany,

Australia and New Zealand.

American aid - some $2.7 billion a year - largely goes to repay past

debts. U.S. Secretary of State Colin Powell has announced in January

the U.S.-Middle East Partnership Initiative. Local groups will be

encouraged to invest in the private sectors of their countries. But the

Partnership is geared to tackle the needy Arab polities rather than the

far-advanced and sated Israel.

Consider next door Palestine, now severed from its main market employer

next door.

A World Bank report released in early March stated that half the 3.5

million denizens of the Palestinian Authority live under an impossibly

depleted $2 a day poverty line. One in two employees in the private

sector lost their jobs and GDP declined by two fifths in the first two

years of the intifada.

The UN Conference on Trade and Development (UNCTAD) warned last

September that the economy of the West Bank and the Gaza Strip was

drained of up to $2.4bn due to closures, mass unemployment, and damages

to infrastructure. "The profound changes that have taken place in the

functioning of the economy ... are unlikely to be easily reversed even

if stability is attained," the report concluded gloomily.

Israel withholds more than $400 million in back taxes it had collected

on behalf of the Palestinian Authority. Business Week predicts that

donor aid - more than $1 billion annually at current levels - will dry

up in the wake of the Iraq conflict with resources diverted to

reconstruct a nascent and oil-rich democracy on the Euphrates.

Hence Blair's sense of urgency. Come victory in Iraq, Israel will face

a united "land-for-peace" front, encompassing ostensible adversaries

such as France and the United States. Unity on the Palestinian question

will salve the wounds self-inflicted on the Euro-Atlantic coalition on

the road to Baghdad.

Few place bets on Israel's ability to resist such concerted action, led

by the sole superpower. The Economist Intelligence Unit foresee the

imminent collapse of Sharon's narrow right-wing government - this

despite a modest economic revival.

The current account deficit, prognosticates the EIU, should fall to 1.7

percent of a GDP growing, in real terms, by 3.1 percent in 2004

(compared to a rosy scenario of 0.3 percent this year). This may be

unrealistic. Exports have sharply plunged to less than $28 billion in

2002, two fifths of it to the USA and a similar proportion to the

European Union.

Still, with a GDP per head of about $16,000 (or $20,000 in purchasing

power parity terms), Israel is one of the richest countries in the

world - particularly if its thriving informal economy is considered and

if the global hi-tech sector recovers which is widely tipped to happen.

According to Jane's Defense Weekly, Israel is the third largest

exporter of armaments, materiel and military services, ahead of Russia.

The country's foreign exchange reserves per capita, at $3500, are

higher than Japan's. Its external debt - c. $27 billion - is puny and

almost entirely guaranteed by the United States. Only one tenth of it

is held by ordinary foreign investors. Israel can withstand years of

economic sanctions unaffected - as it has done well into the 1970s. The

Jewish state also enjoys the support of a virulently nationalistic

diaspora, willing to dip into bulging pocketbook in times of need.

Another scenario, however unlikely, would see the European Union siding

with Israel against a bullying United States and its sidekick, the

United Kingdom. Last week, Italy's outspoken prime minister, Silvio

Berlusconi, normally a staunch supporter of president George Bush,

floated the idea of further enlarging the EU to incorporate Russia,

Turkey and Israel.

But visionaries like Stef Wertheimer, an Israeli industrial tycoon,

talk wistfully of a regional "mini" Marshall Plan. It calls for massive

infusions of aid and credit, overseen by the International Monetary

Fund (IMF) and the World Bank, into the eastern Mediterranean - Jordan,

Turkey, the Palestinian Authority and Israel's minorities - at least

until GDP per capita throughout the region surges fivefold, to $6,000

per year.

Such misguided development nostrums are alluring. They cater to the

Western misconception that terrorism is born of poverty and ignorance.

Removing these alleged causes of violence, goes the refrain, will end

all aggression. Throwing money at problems is an inveterate American

and European reflex. Prosperity and democracy are keys to stability and

moderation, they preach.

But the unpalatable truth is that Israel is the haughty outpost of

Western civilization in an area distinctly un-Western and anti-Western.

Terrorism is about clashing values and opposing worldviews, not about

the allocation of scarce jobs and the benefits of technology parks.

People like Osama bin-Laden are rich and well-educated. Muslim

fundamentalists - in between atrocities - provide health, welfare

benefits and schooling to millions of the poor and the deprived. They

don't seem to think, like Wertheimer and his patronizing ilk, that

higher standards of living negate their mission to oppose American

culture, ethos and hegemony by all means, fair or foul.

Oil for Food Revisited

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

Saddam's Thousand Nights

Is It All About Oil?

The Iraqi and the Madman

God's Diplomacy and Human Conflicts

The Economies of the Middle East

It is payback time. The United States has every intention of sidelining

France, Germany and Russia in the lucrative reconstruction of a

war-ravaged Iraq. U.S. Ambassador to the United Nations, John

Negroponte, said, last Wednesday, that Washington is bent on

"streamlining" the 8 years old U.N. oil-for-food program, now on hold

since last Monday.

Money from Iraqi oil sales currently flows to an escrow account,

co-managed by the Security Council's Office of the Iraq Program (OIP)

and the Iraqi government. More than $42 billion worth of contracts for

humanitarian supplies and equipment have been signed since December

1996.

The U.N. states that "supplies and equipment worth almost $26 billion

have been delivered to Iraq, while another $11.2 billion worth of

humanitarian supplies and equipment are in the production and delivery

pipeline." Of these, reports the Washington Post, $8.9 billion in

humanitarian goods, including $2.4 billion worth of food, are "ready to

be imported into Iraq". The program's budget is c. $10 billion a year.

America and Britain wish to make Kofi Annan, the Secretary General of

the United Nations, the sole custodian of the program, exclusively

empowered to approve applications and disburse funds - as he has

hitherto been doing in north Iraq. According to their proposals and the

Secretary General's 8-page letter, the program's remit will be extended

to cover war refugees as well.

Other novelties: Annan would be authorized to renegotiate contracts -

for instance, with Russian, French and Chinese energy behemoths - and

prioritize purchases. Additional routes and sites - both inside and

outside the besieged country - would be approved for Iraq's energy

exports and for the delivery and inspection of humanitarian supplies.

Stratfor, the strategic forecasting consultancy, explains why this

stratagem is anti-Russian and, more so, anti-French:

"The process would greatly speed up the aid disbursement process and

cut out the middlemen who profit from the contractual go-betweens ...

(which) have been almost exclusively French and Russian companies ...

French and Russian banks usually have channeled the funds to the

appropriate places ... The contracts were bribes to Paris and Moscow to

secure French and Russian support for Iraq within the United Nations."

The non-disbursed portion of the fund has now ballooned to equal 2-3

years of Iraqi oil revenues, or more than $40 billion. Iraqi Vice

President, Taha Yassin Ramadan, scathingly criticized Annan yesterday

for seeking to expand the exclusive role of the U.N. in administering

the oil-for-food program. He said the proposal was "based on a

colonialist, racist and despicable illusion that pushes the despot

oppressors in Washington and London towards eliminating the state of

Iraq from existence."

The increasingly cantankerous Mohammed Al-Douri, Iraq's disheveled

Ambassador to the U.N., invoked the inevitable conspiracy theory. Iraq,

he seethed, is to be eliminated and transformed "into colonies under

the control of the world American and Zionist oil mafia". It is "a

great insult to the United Nations." Annan's scheme "calls for the

forfeiting of the oil of the Iraqi state and implementing the colonial

illusion of the removal of the State of Iraq." - he thundered.

The Washington Post quotes a "confidential U.N. paper" as saying that

"the U.N. image is already tarnished among the Iraqi people. It will be

further damaged if the question of Iraq's oil resources is not managed

in a transparent manner that clearly brings benefit to the Iraqi

people."

The stalemate costs the under-nourished and disease-plagued people of

Iraq dearly. More than three fifths of them - some 14 million souls -

rely on the program for daily necessities. Over the weekend, experts

from the 15 members of the Council, presided over by Germany, met to

iron out the details. They were aided by Deputy Secretary-General

Louise Fr‚chette, Benon Sevan, Executive Director of the OIP, UN Legal

Counsel Hans Corell and Under-Secretary-General for Humanitarian

Affairs Kenzo Oshima.

Negroponte reiterated Washington's mantra that the United States "will

ensure that Iraq's natural resources, including its oil, are used

entirely for the benefit of the Iraqi people". But Annan did not sound

convinced when he exhorted the USA and the United Kingdom in the letter

he delivered last week to the Security Council:

"The primary responsibility for ensuring that the Iraqi population is

provided with adequate medicine, health supplies, foodstuffs and

materials and supplies for essential civilian needs will rest with the

authority exercising effective control in the country ... (But) without

in any way assuming or diminishing that ultimate responsibility, we, in

the United Nations, will do whatever we can to help."

Thus, continues Annan's missive, money in the U.N. account, originally

earmarked for equipment and infrastructure, would be diverted to

purchase food and medicine "on a reimbursable basis". Who would

reimburse the fund he left unsaid. Nor did he limit the newfangled

"interim" oil-for-food regime in time.

Whatever the outcome of the recent tussle, the U.N. would still have to

rely on the Iraqi government to distribute goods and provide services

in the southern and central parts of this California-sized polity. The

United Nations' own staff has been withdrawn upon the commencement of

hostilities. Annan already conceded that "the Iraqi State Oil Marketing

Organization should be allowed to continue to retain ... the authority

to conclude oil contracts with national purchasers."

But Saddam Hussein's regime fails to see the urgency. Baghdad said last

Monday that it had distributed food to the populace to last them

through August. Even non-governmental organizations in the field claim

that no shortages are to be expected until May. So, what's the hurry? -

wonder the authorities aloud, as they cower in their offices, awaiting

the next, inevitable, blast.

Iraq's Middle Class

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Iraq had no middle class to speak of until the oil boom of the

1960s-1970s. At the turn of the previous century, Baghdad sprawled

across a mere tenth of its current area. However, since then and as

late as 1987, the Iraqi capital was renowned throughout the Arab realm

for its superior infrastructure, functioning services, splendor,

conspicuous consumption and educated populace. "Baghdadi" in many Arab

dialects meant "big spender".

Two thirds of all Iraqi children attended secondary school, thousands

studied abroad, women actively participated in the workforce. The oil

wealth attracted hundreds of thousands of menial laborers from Africa

and Asia. It was Saddam Hussein, the country's tyrant, who rattled the

moribund and tradition-bound entrenched interests and ratcheted up

living standards by imposing land reform, increasing the minimum wage

and expanding healthcare.

Even the Iran-Iraq war which decimated tens of thousands of

intellectuals and professionals barely dented this existence. Rather,

the - mostly Sunni - middle class was done in by the sanctions imposed

on Iraq, the aggressor in the first Gulf War, after 1991.

Iraq's relatively affluent and well-traveled urban denizens had access

to all the amenities and consumer goods - now proffered by the

impoverished owners in improvised curb markets. As wages and the dinar

plummeted, once-proud Iraqis were reduced to agonizing, humiliating and

sometimes life-threatening penury.

Prostitution, street kids and homelessness have flourished. Divorce and

crime rates are sharply up. Young couples cannot afford to marry, so

promiscuity and abortions are in vogue. On the other extreme, Islam -

both moderate and fundamentalist - is making headway into a hitherto

devoutly secular society. Headscarved women are not a rarity anymore.

Official unemployment is c. 20 percent but, in reality, it is at least

double that. Polyglot professionals with impressive resumes drive

taxis, moonlight as waiters, or sell vegetables from rickety stalls.

According to Humam Al Shamaa, professor of economy and finance at

Baghdad University, quoted by the Asia Times, one in every two Iraqis

are currently employed in agriculture - most of it subsistence farming,

raising cattle and poultry. Many an urbane urbanite now tend to tiny

plots, trying to eke a living out of the fertile banks of the Two

Rivers - the Euphrates and the Tigris. Industry - cement,

petrochemicals - is at a standstill due to the dearth of raw materials

oft-proscribed by the ponderous sanctions committee.

The Boston Globe recounts the tale of an Iraqi Airlines pilot whose

monthly earnings plunged from $1500 to $2.50. Malnutrition and disease

prey on the traumatized and destitute remnants of the bourgeoisie, the

erstwhile nobility of the Arab world. The virtual elimination of the

purchasing power of one of the richest Middle Eastern countries has had

a profound impact on neighbors and trade partners across the region.

The UN Human Development Index has chronicled the precipitous decline

of Iraq's ranking to its 127th rung. The New York-based Centre for

Economic and Social Rights says that "Iraqis have been extremely

isolated from the outside world for 12 years. The mental, physical and

educational development of an entire generation has been affected

adversely by the extraordinary trauma of war and sanctions."

Public services - from primary healthcare through electricity

generation to drinking water - were roughly halved in the past 12

years. Quality has also suffered. Iraq's gross domestic product plunged

by four fifths. With infectious diseases on the rampage and a

debilitating stress load, life expectancy dropped - men now survive to

the ripe old age of 57.

Infant mortality, at 93 in 1000 live births, soared. Three fifths of

the population depend on an efficient system of government handouts. An

exit tax of more than $350 virtually fenced in all but the most

well-heeled Iraqis.

The American administration, in the throes of preparations for the

reconstruction of a postbellum Iraq, acknowledges that the

rehabilitation of the war-torn country's middle class is the

cornerstone of any hoped-for economic revival.

But income inequality and a criminalized regime led to huge wealth

disparities. The tiny, fabulously rich elite beholden to Saddam (the

"war rats") are removed from the indigent masses. They make the bulk of

their ill-gotten gains by maintaining Saddam-blessed import monopolies

on every manner of contraband from building materials and machine spare

parts to cars, televisions and beauty products. The United States

estimates that the dictator and his close, clannish circle have

secreted away more than $6 billion in illicit commissions on oil sales

alone.

But the proceeds of smuggling and intellectual property piracy have

trickled down to a growing circle of traders and merchants. So has the

$30 billion influx from the oil-for-food scheme, now in its eighth year

- though, as Hans von Sponeck, head of the program between 1998-2000,

observed in the Toronto Globe and Mail:

"Until May of 2002, the total value of all food, medicines, education,

sanitation, agricultural and infrastructure supplies that have arrived

in Iraq has amounted to $175 per person a year, or less than 49 cents a

day ... This has made postwar reconstruction impossible, and ensured

mass unemployment and continuing deterioration of schools, health

centers and transportation. 'Smuggled' oil revenues represent only a

small fraction of oil-for-food funds. Even here, an estimated

three-quarters of these funds have been directed to social services."

Still, Iraq's economy has been partly remonetized and is less insulated

than it was in 1996. Even the stock exchange has revived.

Whatever the length of the war, its outcome is said to be guaranteed -

the ignominious demise of the hideous terror regime of Saddam Hussein.

Then, the scenario goes, the American and British "liberators" will

switch from regime-change mode to the nation-building phase. Iraq will

once again become the economic locomotive of the entire region,

prosperous and secure.

But the bombed and starved denizens of Iraq may be holding a different

viewpoint. Quoted in The Californian, Terry Burke and Alan Richards,

professors at the University of California, Santa Cruz, noted that "the

invasion and air attacks are forging intense hatred against the United

States that will undermine any hope of gracefully replacing Saddam

Hussein's dictatorship."

It would be instructive to remember that the 1958 overthrow of the

monarchy by the Free Officers, followed by the Ba'ath party in 1968

and, later on, by Saddam Hussein, represented the interests of the

lower middle class and the petty bourgeoisie: shopkeepers, low and

mid-ranking officials and graduates of training schools, law schools,

and military academies.

The most important economic policies in the past four decades - the

agrarian reform and the nationalization of oil - catered to the needs

and aspirations of these socio-economic strata. The backbone of Saddam

Hussein's regime is comprised of bureaucrats and technocrats - not of

raving rapists and torture-hungry sadists, as Western propaganda has it.

Saddam's days may well be numbered. But the levers of power, based on

tribal affiliation, regional location, religious denomination and

sectarian interests - will survive intact. If the West really aspires

to resuscitate a stable Iraq - it has no choice but to collaborate with

the social structures spawned by the country's long and erratic

history. The Ottomans did, the British did - the Americans will do to.

Iraq's Revenant Sons

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Iraqi Jews - a quarter of a million strong - are known in Israel for

their haughtiness and broad education, the latter often the cause of

the former. They were forced to flee Arab-nationalist Iraq in

1941-1951, following the rise of Nazism and, later, the establishment

of the State of Israel.

Yet, though they have left Baghdad physically after 2600 years of

continuous presence - many of them are still there emotionally. This

holds true for numerous other Iraqi exiles, expatriates and immigrants

in the far-flung diaspora. There are 90,000 Iraqis in the USA alone,

according to the latest data from the Census Bureau.

But nostalgia may be the only common denominator. Exile groups jostle

aggressively for the spoils of war: political leadership, sinecures,

economic concessions, commercial monopolies and access to funds. The

Washington Times reported yesterday that the Pentagon and the State

Department back different cliques. It quoted one Republican

congressional aide as saying: "There's a deep and messy war in the

administration, and it's in the weeds".

Arab countries are promoting Sunni future leaders. Pro-democracy souls

support representatives of the hitherto oppressed Shiite majority. Most

exiles oppose a prolonged postwar U.S. presence or even an interim

administration. They opt for a government of Iraqi technocrats with a

clear United Nations mandate. The fractious Iraqi opposition and the

two main Kurdish factions set up an Iraqi Interim Authority, a

government-in-waiting with 14 ministries and a military command.

The Brussels-based International Crisis Group warned last Tuesday

against a provisional administration composed substantially of exiles

and expatriates:

``It would be a mistake to short-circuit the domestic political contest

by prematurely picking a winner. Under either of these scenarios, the

bulk of Iraqis inside Iraq, Sunni and Shiite, Arab, Kurd and others,

who have been brutally disenfranchised for over three decades, would

remain voiceless.''

The exile groups are out of touch with local realities and, as the

Washington Times notes, compromised in the eyes of the Iraqis by their

extensive contacts with the CIA and the USA, their political amateurism

and their all-pervasive venality.

The finances of such self-rule could come from the $3.6 billion in

Iraqi assets in the United States - about half of which have been

recently re-frozen. The coffers of the United Nations administered

oil-for-food program bulge with $40 billion in undistributed funds -

enough to bankroll the entire reconstruction effort.

Saddam and his clan are thought to have stashed at least $6 billion

abroad. Everyone, though, tiptoes around the sensitive issue of

reimbursing the war expenses of the coalition of the willing.

The Pentagon has other ideas in mind. It has recently formed the Office

of Reconstruction and Humanitarian Assistance, headed by a retired

general, Jay Garner. A few exiles, worried by this "colonial" tendency,

have infiltrated Iraq, at great personal risk, to ensure that an Iraqi

alternative is in place when Operation Iraqi Freedom achieves its

eponymous goal.

Iraqi immigrants are fiercely nationalistic. Though few love Saddam

Hussein and his interminable reign of terror - fewer are willing to

countenance the occupation of their homeland by invading forces,

regardless of their provenance. Many bitterly recall the Shiite

rebellion in 1991 when a policy reversal of the United States allowed

the dictator to bloodily suppress the uprising.

According to officials in Amman, more than 6500 Iraqis - out of 200 to

300 thousand - left Jordan in Iraqi-arranged free transportation to

fight the "aggressors", as suicide bombers if need be. Others are

streaming in from Lebanon, Syria, Yemen and North Africa.

Iraqi exiles in Iran - mostly Shiites and invariably mortal foes of the

tyrant from Baghdad - have nonetheless denounced the invasion and

called it, ominously, a "war on Islam". Aware of this duality, Donald

Rumsfeld, the American Defense Secretary, recently warned that Shiite

combatants "will be taken as a potential threat to coalition forces.

This includes the Badr Corps, the military wing of the Supreme Council

on Islamic Revolution in Iraq."

But other Iraqis, Kurds included, are training, in U.S.-sponsored camps

in east and central Europe, to liaise with the local population to help

non-governmental organizations and the coalition forces deliver

humanitarian aid. The program - now suspended - is financed with money

allocated from the $97 million 1998 Iraq Liberation Act.

According to the Boston Globe:

"During the four-week course, the volunteers learn battlefield survival

skills including navigation, nuclear and biological weapons defense,

marksmanship, first aid, and the laws of war and human rights. They

also study civil-military operations such as processing refugees,

distributing humanitarian aid, and rebuilding infrastructure."

Iraqi professionals abroad with vital skills in administration,

agriculture, oil extraction, finance, economics, law, medicine and

education are preparing to return. Draft reconstruction plans call for

tax incentives and soft loans for homebound entrepreneurs, investors

and skilled manpower. There are many of these. Arabs say that Egyptians

write, Lebanese publish and Iraqis read.

Aware of this untapped wealth of talent and experience, the American

have belatedly started recruiting dozens of expats and immigrants for

the future administration of the war-torn country. Some 40 lawyers from

Europe and North America will complete tomorrow a fortnight of training

provided courtesy of the Justice Department.

The Pentagon and the State Department are running similar programs with

100 and 240 participants, respectively. According to the Knight-Ridder

Newspapers, "the ('Future of Iraq') working groups deal with such

topics as defense policy, civil society, public health, transitional

justice, news media, national security, public finance and

anti-corruption efforts."

According to the Washington Post, there is even an Iraqi military

contingent of up to 3000 exiles underwritten by the Pentagon and

training in Hungary. Some of them are slated to serve as guides and

translators for the coalition forces in their homeland. The program is

suspended now but the camp in Hungary remains open and it is tipped to

be renewed.

And then there is the hoped-for reversal of the last four decades of

capital flight. Iraqi merchants, traders, military officers, members of

the security services, politicians, bureaucrats and professionals are

thought to have secreted away, out of the reach of the rapacious

regime, some $20-30 billion. Some of it is bound to come back and

inject the dilapidated economy with much needed liquidity and impetus.

Last August, a group of Iraqi-born economists gathered at the

Department of State in Washington. One of the participants, Dr. Salah

Al-Sheikhly, a former Governor of Iraq's Central Bank, outlined to

Washington File his vision of the future contribution of the diaspora

to a liberated Iraq:

"People talk of the Iraqi Diaspora as if we have been idle. On the

contrary, economists like myself have been working within the agencies

of the United Nations and other international institutions. We have

been consultants in many Arab countries. And many of us gathered around

the table (in Washington) have extensive experience within the kinds of

financial institutions that can assist Iraq enter the new world

economy."

Forgiving Iraq's Debts

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

The French were at it again last Friday. Any reduction in Iraq's

mountainous $120 billion external debt should be negotiated within the

Paris Club of creditor nations, they insisted. It ought not - indeed,

cannot - be tackled bilaterally. And what about another $200 billion in

war reparations and contractual obligations? This, said French Foreign

Ministry spokesman Francois Rivasseau, is to be discussed.

A day earlier, Paul Wolfowitz, the American Deputy Defense Secretary,

prompted the French, Russian and German governments to write off Iraq's

debts to them, so as to facilitate the recovery of the debtor's $15 to

25 billion a year economy. He echoed U.S. Treasury Secretary John Snow

who suggested, in an interview to Fox News Channel, that Iraq's debts

should be discarded even as was the dictator who ran them up.

At first, Putin made conciliatory noises upon exiting a gloomy meeting

with the two other co-founders of the discredited "peace camp". Russia,

he reminded the media, is number one in erasing debts owed it by poor

countries.

But he was swiftly contradicted by the Chairman of the Duma's Committee

on the State Debt and Foreign Assets Vladimir Nikitin, who called the

American proposals "more than bizarre". Iraq's debt to Russia - some

"well verified and grounded" $8 billion - is not negotiable.

Contradicting his own contradiction, he then added that discussions on

debts have to be held bilaterally.

Gennady Seleznyov, the Chairman of the lower house of the Russian

parliament, concurred. For good measure, he also demanded $2 billion

from the USA for contractual losses due to the war. The Russian

government and especially Finance Minister and Deputy Prime Minister,

Alexei Kudrin, cautioned Wolfowitz that applying his proposal

consistently would lead to the scrapping of the debts of another

departed evil regime - the U.S.S.R.

Russia needs Iraq's money - especially if oil prices were to tumble.

According to Russia's Central Bank, the Federation's foreign debt was

up $2.7 billion in 2002 and reached $153.5 billion, of which $55.3

billion is in Soviet-era debt, $48.4 billion were accrued in

post-Soviet times and the rest is comprised of various bonds and

obligations.

But the U.S. is unfazed. US Ambassador to Russia Alexander Vershbow

reiterated to the Russian news agency, Rosbalt, his government's

position thus: "We intend to organize a conference of creditors in

order to discuss ways of finding a balance between the rights of the

creditors and the rights of the Iraqi people to develop their economy.

In my opinion, it would be unwise to immediately demand large sums of

money from the new Iraqi government."

In this debate, everyone is right.

Iraq's only hope of qualifying for the status of a Highly Indebted Poor

Country (HIPC) is by reaching iron-clad debt rescheduling agreements

with both the Paris and the London Clubs. Still, as the Americans

envision, creditors can unilaterally forgive Iraqi debt - especially

one arising from Saddam Hussein's misdeeds - without hampering the

process with the World Bank and without hindering future access to

global or internal capital markets.

This is especially true when it comes to the United Nations

Compensation Commission which administers Iraqi reparations to victims

of Iraq's aggression against Kuwait in 1990-1.

Signs of utter confusion abound. The International Monetary and

Financial Committee of the International Monetary Fund, headed by

Gordon Brown, Britain's Chancellor, is committed to the Paris Club

multilateral route. Yet, James Wolfensohn, the President of the World

Bank, a twin institution, plumps for a bilateral resolution of this

novel controversy.

Anticipating a beneficent outcome, $2 billion in traded Iraqi sovereign

and commercial loans, harking back to the 1980s, have recently doubled

in value to c. 20 cents to the dollar. According to The Economist,

brokers are betting on a 70 to 90 percent reduction of Iraq's debt.

This is way too exuberant. Moreover, not all creditors are created

equal.

Iraq owes the IMF and the World Bank a mere $1.1 billion. But there is

an abundance of unpaid high priority trade credits and bilateral loans.

Private banks and commercial firms come a dismal third. Moreover,

following Nigeria's example, Iraq may choose to ignore Paris Club

creditors and deploy its scarce resources to curry favor with those

willing and able to extend new financing - namely, private financial

intermediaries.

Trading Iraqi debt - sovereign notes, letters of credit and papers

issued by the central bank and two other financial institutions,

Rafidain Bank and Rashid Bank, is onerous. The Economist describes it

thus:

"Trading, or even holding, Iraqi paper is loaded with traps. Its

validity can expire every few years, according to the statute of

limitations in various jurisdictions. Renewing it requires some

acknowledgment from the borrower, and that was difficult even before

the war. Assigning the debt from buyer to seller requires the

borrower's assent, and the Iraqi banks have been unco-operative since

1988. The trick is to apply during public holidays, or when

communications are down (as they are now), because the borrower's

failure to respond within ten working days can be taken as agreement."

No one has a clear idea of how much Iraq owes and to whom.

According to Exotix, a sovereign debt brokerage, Iraq owes commercial

creditors $4.8 billion and other Gulf states $55 billion -regarded by

Iraq as grants to cover the costs of its war with Iran in the 1980s. It

owes Paris Club members - excluding Russia and France ($8 billion

apiece) - $9.5 billion, the countries of Central Europe, mainly Germany

- $4 billion and others - about $26 billion, including $5 billion to

the U.S. government and American businesses.

The tortured country's foreign debt alone amounts to $5000 per every

denizen. With reparations and commercial obligation, Iraq's destitute

inhabitants are saddled with more than $16,000 in debt per capita - or

15-20 times the country's gross national product. Iraq hasn't serviced

its loans for well over a decade now.

Others dispute these figures. Frederick Barton compiled, together with

Bathsheba Crocker, an inventory of Iraq's outstanding financial

obligations for the Center for Strategic and International Studies in

Washington.

According to Barton-Crocker, quoted by the Gulf satellite channel,

al-Jazeera and by the Christian Science Monitor, Iraq owes $199 billion

in compensation claims to more than a dozen nations, another $127

billion in foreign debts and $57 billion in pending foreign contracts -

public and private. Iraq owes Russia $12 billion, Kuwait $17 billion,

the Gulf States $30 billion and less than $2 billion each to Turkey,

Jordan, Morocco, Hungary, India, Bulgaria, Poland, and Egypt.

Most of the pending contracts are with Russian firms ($52 billion) but

the French, Chinese, Dutch, United Arab Emirates and Egyptians have

also inked agreements with Hussein's regime. The United states and

American firms are owed little if anything, concludes al-Jazeera. Debt

forgiveness would allow a more sizable portion of Iraq's oil revenues

to be ploughed into the American-led reconstruction effort, to the

delight of U.S. and British firms.

Russia and France are not alone in their reluctance to bin Iraqi

credits. Austrian Minister of Finance, Karl-Heinz Grasser, was

unambiguous on Tuesday: "We see no reason why we should waive 300

million Euros of Iraqi debts". He noted that Iraq - with the second

largest proven oil reserves in the world - is, in the long run, a rich

country.

In the build-up to the coalition, the United States promised to buy the

debt Iraqis owe to countries like Bulgaria ($1.7 billion) and Romania.

In Macedonia, Dimitar Culev of the pro-government daily "Utrinski

Vesnik", openly confirms that his country's participation in the

coalition of the willing had to do, among other, longer-term

considerations, with its hopes to recover Iraqi debts and to

participate in the postwar bonanza.

Poland's Deputy Labor and Economy Minister, Jacek Piechota, on Tuesday,

affirmed that Poland intends to recover the $560 million owed it by

Iraq by taking over Iraqi assets in a forthcoming "privatization".

Another option, he suggested, was payment in oil.

Nor are such designs unique to sovereign polities. According to Dow

Jones, Hyundai hopes to recover $1.1 billion through a combination of

crude oil and reconstruction projects. During the Clinton

administration, American creditors almost helped themselves to between

$1.3 and $1.7 billion of frozen Iraqi funds with the assistance of the

U.S. Foreign Claims Settlement Commission. Luckily for the looming new

Iraqi government, the legislation languished in acrimony.

The debt question is not academic. As the London Times observes: "As

things stand, no one can write a single cheque on Iraq's behalf until

the question of its towering debts is sorted out. Not a single barrel

of oil can be sold until it is clear who has first claim to the money;

no reputable oil company would touch it without clear title."

According to Pravda, to add mayhem to upheaval, the Iraqi opposition

indignantly denies that it had broached the subject with the USA. Iraq,

they vow, will honor its obligations and negotiate with each creditor

separately. But, some add ominously, members of the "friends of Saddam"

fan club - alluding to Russia, Ukraine and Belarus among others - are

unlikely to get paid.

The Iraqi opposition is as fractured as the Western alliance. Some

exiles - like Salah al-Shaikhly from the London-based Iraqi National

Accord - promote the idea of a big write-off cum grace period akin to

the 66 percent reduction in the stock of Yugoslav obligations. Debt for

equity swaps are also touted.

The trio of creditors - especially France and Russia - might have

considered debt reduction against a guaranteed participation in the

lucrative reconstruction effort. But a fortnight ago the House of

Representatives approved a non-binding amendment to the supplementary

budget law calling upon the administration to exclude French, Russian,

German and Syrian companies from reconstruction contracts and to bar

their access to information about projects in postbellum Iraq.

Kosovo's Iraqi Lessons

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

Also Read

The Disunited Nations

Washington and Sarajevo

Should the United Nations administer Iraq? Is it - as Kofi Annan, its

General Secretary, insists, the best-qualified to build nations? Or

will it act as a bureaucracy out to perpetuate itself by preventing

true transformation and indigenous rule? Kosovo is a lucrative post for

more than 10,000 exorbitantly overpaid international administrators and

perked consultants as well as 40,000 itinerant peacekeepers.

The U.N. has been reasonably successful elsewhere both in peacekeeping

and administration - notably in East Timor, Afghanistan and Sierra

Leone. It widely thought to have dismally failed in Bosnia-Herzegovina.

But the lessons of its involvement in Kosovo - the second longest and

least reserved - may be of particular relevance.

In the wake of NATO's Operation Allied Force in 1999, Kosovo was

practically severed from Yugoslavia and rendered a U.N.-protectorate

under resolution 1244 of the Security Council. UNMIK (United Nations

Mission in Kosovo) was formed to serve as the province's interim

administrator. It was charged with institutions-building and a

transition to self-governance by the now overwhelmingly Albanian

populace.

Its mission was divided to four "pillars": Police and Justice, Civil

Administration, Democratization and Institution Building (overseen by

the Organization for Security and Cooperation in Europe) and

Reconstruction and Economic Development (managed by the European

Union). Four years later, Kosovo has its own government, installed last

month - and a viable police force.

UNMIK had to spent the first 18 months of its mandate re-establishing

basic services in a land scorched by 78 days of massive bombardment. It

also put in place the rudiments of a municipal administration. A

parliament and presidency followed. Surprisingly resilient, they

survived two - bloodied - elections. The U.N. is planning to transfer,

over the next few months, many of its "competencies" to the three-party

broad coalition in power. Last month, a transfer council was

established to manage the transition.

But Kosovo is an unsettled place. Its status is unresolved. Is it to be

independent, as its legislators demand - or an inseparable part of

Serbia, as the late assassinated Serbian prime minister, Zoran Djindjic

claimed? UNMIK's travel documents and its license plates, for instance,

are still not recognized by many countries.

Investors - including wealthy diaspora Kosovars - are deterred by this

uncertainty and the social and civil unrest it fosters. Had it not been

for KFOR, the 35,000-strong NATO-commanded military detachment, Kosovo

might well have reverted to civil war, or crime-infested anarchy. That,

astoundingly, Kosovo has no law to deal with foreign investment does

not help.

Partly because of that, Kosovo's economy is still a shambles. The

United Nations - and the acronym soup of multilateral development

banks, aid agencies and non-governmental organizations that descended

on the region - failed to come up with a coherent plan for endowing

Kosovo with a sustainable economy.

Where UNMIK, with European Union assistance, did intervene - in setting

up institutions and abetting economic legislation - it has done more

harm than good. The establishment of workers' councils, for instance,

inhibited the proper management of socially owned enterprises and

rigidified the budding labor market with dire consequences.

One in two Kosovars is unemployed. Whatever activity there is, is

confined to trading (read: smuggling), retail and petty services. The

wild construction or reconstruction of 250,000 houses wrecked by the

war is fizzling out and the absence of both mortgage financing and a

sizable domestic industry of construction materials are detrimental to

the sector's viability.

Tenders for complex infrastructure jobs are usually snatched by foreign

competitors. Reputable Kosovar-owned construction multinationals hint

at discrimination and worse. But the business segment of the economy is

illusive and dilapidated. Of 861 socially-owned firms identified by the

International Crisis Group, only 330 are viable, according to UNMIK.

Kosovo has no private sector to speak of - though it has registered

50,000 small and medium, mostly paper, typically ad-hoc, enterprises.

Of 2774 members of the Kosovo Chamber of Commerce - 1667 were

fly-by-night construction outfits.

The majority of economic assets are still in public or "social" hands.

In an interview granted to the Far Eastern Review last year, Ali

Jakupi, Minister of Trade and Industry of Kosovo, diplomatically

pointed the finger at UNMIK's glacial pace of reform.

Land ownership is a contentious issue. The privatization of utilities

is a distant dream, despite the creation of the Kosovo Trust Agency, a

convoluted attempt to dispense of certain assets while skirting the

legal no man's land which is Kosovo.

Despite all efforts, commercial law is scant and poorly enforced. No

one understands why the number of commercial bank licenses is limited,

why, until recently, UNMIK worked only through one bank and why

establishing an insurance company is such a harrowing - and

outlandishly expensive - ordeal. Kosovo is the only place on earth

where price cartels (for instance, in the assurance sector) are not

only legal - but mandatory.

Kosovar banks still keep most of their clients' deposits abroad for

lack of an indigenous legal framework of collateral and bankruptcy.

Interest rates are prohibitively high and repayment terms onerous. The

only ray of light in a decrepit financial system is the euro, Kosovo's

official currency and a source of monetary stability and trust.

The new Ministry of Finance and Economy has introduced customs duties

and a few taxes with modest success. But the government's revenue base

is pitiful and a Byzantine, import-biased, tax law makes

export-oriented manufacturing a losing proposition. Kosovo's trade

deficit is almost equal to its gross domestic product. Had it not been

for generous remittances from Kosovar expats and immigrants - pegged at

$1 to 1.5 billion a year, the province's economy would have crumbled

long ago.

Nor has Kosovo's infrastructure been rehabilitated despite the $5

billion poured into the province hitherto. Electricity, for instance,

is intermittent and unpredictable. The roads are potholed and few, the

railways derelict. Fixed line penetration is low, though mobile

telephony is booming. This sorry state was avoidable.

Kosovo is not as poor as it is made out to be by interested parties. It

has enormous lead reserves, coal and lignite veins and loads of zinc,

silver, gold, nickel, cobalt and other minerals, including rumored

mines of uranium. The territory actually used to export electricity to

both Macedonia and Montenegro.

Official statistics ignore a thriving informal economy, encompassing

both the illicit and the merely unreported. Kosovo is a critical node

in human trafficking, cigarette and oil derivatives smuggling, car

theft and, to a lesser, extent, drugs and weapons trading networks.

Revenues in service businesses - cafes, restaurants, gambling

institutions, prostitution - go unreported. Kosovo is one of the global

centers of piracy of intellectual property, notably software and movies.

The Central Fiscal Authority of Kosovo estimated that, in 2001, duties

and taxes were paid only on $590 million worth of imports (at the time,

c. $540 million euros) - only about 30 percent of the total. These

figures are proof of the entrepreneurial vitality of the Kosovars and

their aversion to state interference.

USAID chief Dale Pfeiffer praised Kosovo, in an interview granted to

the daily paper, Koha Ditore:

'There is bureaucracy, there is a corruption, but if we compare with

neighboring countries, it seems to be at a lower level. Since 1999,

Kosovo is building its own new governmental structures. Mainly, your

government is more modern than government in Serbia, Macedonia or even

Bosnia. I think that corruption is not even same at the level as

neighboring countries. Although corruption is something that can grow

very easily, currently it doesn't seem to be a big obstacle for

businesses."

Still, he reverted to typical counterfactual condescension. Federal

Yugoslavia, of which Kosovo was a part, was a modern state, more

advanced than many EU members. Yet, Pfieffer professed to be worried.

"Day by day, more competencies are being given to the Kosovo

Government. My concern is, does the Government have the ability to

manage its own competencies. I think there should be a balance; you

must gain competencies which can be applied."

Many observers think that had it not been hobbled by the indecision and

overbearing officialdom of the international community, Kosovo would

have fared better. Even evident economic assets - such as nature parks,

vineyards and ski slopes - were left undeveloped. Because it hasn't met

EU regulations - Kosovo is unable to export its wines, juices and

agricultural produce.

But to hold this view is to ignore UNMIK's contribution to the

containment of organized crime - mostly imported from Albania and

Macedonia. Admittedly, though, UNMIK failed to defend minority rights.

Kosovo has been ethnically cleansed of its Serbs. The UN High

Commissioner for Refugees (UNHCR) and OSCE warned last month that

minorities "continue to face security problems and lack access to basic

services (such as) education, health services and equitable employment."

Kosovo teaches us lessons which should be diligently applied in Iraq.

The involvement of a long-term active military component intended to

guarantee basic law and order is crucial. U.N. administrations are good

at reconstruction, rehabilitation - including humanitarian aid - and

institution-building.

But they are utterly incompetent when it comes to the economy and to

protecting minorities from the majority's wrath. Pecuniary matters are

best left to private sector firms and consultants while helpless

minorities better start praying.

Worse still, as opposed to an occupying army, whose top priority is to

depart - U.N. bureaucracies fast gravitate towards colonialism. The

U.N.-paid and U.N.-sanctioned rulers of both Kosovo and

Bosnia-Herzegovina exercise powers akin to erstwhile British viceroys.

Nor do they have any incentive to terminate their position - gratifying

as it is to both their egos and their wallets.

UNMIK is the reification of the concept of conflict-of-interest. If it

succeeds to render the natives economically and politically independent

- it is no longer needed. If it fails - it survives on a bloated

budget. To be an international official in Kosovo is to endure the

constant clashes between one's professional conscience and one's

propensity to live the good life. Only saints win such battles.

Whatever UNMIK is - it is decidedly not saintly.

But, as Augustin Palokaj, Brussels correspondent for Koha Ditore,

notes, comparing Kosovo to Iraq can go too far:

"Kosovo has no oil and one-third of the population of Baghdad, and it

is not interesting for investments ... Iraq will have an easier time

when it comes to political status. Iraq is, and will remain, a state.

It is still not known what Kosovo's fate will be. Unlike in Kosovo,

there will be both aid and investment in Iraq. The Iraqi people will

decide on the status of their country, whereas the Security Council,

that is to say China and Russia, will decide about Kosovo."

And does he think the United Nations should administer a postwar Iraq?

"The UN would only complicate things, but the Americans will give it a

role, just for the sake of it, which will satisfy the bureaucrats that

must get their huge salaries. Americans are also aware of the danger

that if the UN takes over the administration of postwar Iraq ...

criminals from various countries would be infiltrated into Iraq, as

they have done in Kosovo. How can peace be established by an

organization whose policemen allowed eight war crimes suspects to

escape from prison, as happened to UN policemen in Kosovo. Instead of

feeling shame for such things, the chiefs of UNMIK Police produce

propaganda about their successes. The key American role in postwar Iraq

will prove what was learned from Kosovo."

The Madman and the Iraqi War

By: Dr. Sam Vaknin

It is the war of the sated against the famished, the obese against the

emaciated, the affluent against the impoverished, the democracies

against tyranny, perhaps Christianity against Islam and definitely the

West against the Orient. It is the ultimate metaphor, replete with

"mass destruction", "collateral damage", and the "will of the

international community".

In this euphemistic Bedlam, Louis Althusser would have felt at home.

With the exception of Nietzsche, no other madman has contributed so

much to human sanity as has Louis Althusser. He is mentioned twice in

the Encyclopaedia Britannica merely as a teacher. Yet for two important

decades (the 1960s and the 1970s), Althusser was at the eye of all the

important cultural storms. He fathered quite a few of them.

Althusser observed that society consists of practices: economic,

political and ideological. He defines a practice as:

"Any process of transformation of a determinate product, affected by a

determinate human labour, using determinate means (of production)"

The economic practice (the historically specific mode of production,

currently capitalism) transforms raw materials to finished products

deploying human labour and other means of production in interactive

webs. The political practice does the same using social relations as

raw materials.

Finally, ideology is the transformation of the way that a subject

relates to his real-life conditions of existence. The very being and

reproduction of the social base (not merely its expression) is

dependent upon a social superstructure. The superstructure is

"relatively autonomous" and ideology has a central part in it.

America's social superstructure, for instance, is highly ideological.

The elite regards itself as the global guardian and defender of

liberal-democratic and capitalistic values (labeled "good") against

alternative moral and thought systems (labeled "evil"). This

self-assigned mission is suffused with belligerent religiosity in

confluence with malignant forms of individualism (mutated to

narcissism) and progress (turned materialism).

Althusser's conception of ideology is especially applicable to

America's demonisation of Saddam Hussein (admittedly, not a tough job)

and its subsequent attempt to justify violence as the only efficacious

form of exorcism.

People relate to the conditions of existence through the practice of

ideology. It smoothes over contradictions and offers false (though

seemingly true) solutions to real problems. Thus, ideology has a

realistic attribute - and a dimension of representations (myths,

concepts, ideas, images). There is harsh, conflicting reality - and the

way that we represent it both to ourselves and to others.

"This applies to both dominant and subordinate groups and classes;

ideologies do not just convince oppressed groups and classes that all

is well (more or less) with the world, they also reassure dominant

groups and classes that what others might call exploitation and

oppression is in fact something quite different: the operations and

processes of universal necessity"

(Guide to Modern Literary and Cultural Theorists, ed. Stuart Sim,

Prentice-Hall, 1995, p. 10)

To achieve the above, ideology must not be seen to err or, worse,

remain speechless. It, therefore, confronts and poses (to itself) only

questions it can answer. This way, it is confined to a fabulous,

fantastic, contradiction-free domain. It ignores other types of queries

altogether. It is a closed, solipsistic, autistic, self-consistent, and

intolerant thought system. Hence the United States' adamant refusal to

countenance any alternative points of view or solutions to the Iraqi

crisis.

Althusser introduced the concept of "The Problematic":

"The objective internal reference ... the system of questions

commanding the answers given"

The Problematic determines which issues, questions and answers are part

of the narrative - and which are overlooked. It is a structure of

theory (ideology), a framework and the repertoire of discourses which -

ultimately - yield a text or a practice. All the rest is excluded.

It is, therefore, clear that what is omitted is of no less importance

than what is included in a text, or a practice. What the United States

declines or neglects to incorporate in the resolutions of the Security

Council, in its own statements, in the debate with its allies and,

ultimately, in its decisions and actions, teaches us about America and

its motives, its worldview and cultural-social milieu, its past and

present, its mentality and its practices. We learn from its omissions

as much as we do from its commissions.

The problematic of a text reveals its historical context ("moment") by

incorporating both inclusions and omissions, presences and absences,

the overt and the hidden, the carefully included and the deliberately

excluded. The problematic of the text generates answers to posed

questions - and "defective" answers to excluded ones.

Althusser contrasts the manifest text with a latent text which is the

result of the lapses, distortions, silences and absences in the

manifest text. The latent text is the "diary of the struggle" of the

un-posed question to be posed and answered.

Such a deconstructive or symptomatic reading of recent American texts

reveals, as in a palimpsest, layers of 19th century-like colonialist,

mercantilist and even imperialist mores and values: "the white man's

burden", the mission of civilizing and liberating lesser nation, the

implicit right to manage the natural resources of other polities and to

benefit from them, and other eerie echoes of Napoleonic "Old Europe".

But ideology does not consist merely of texts.

"(It is a) lived, material practice - rituals, customs, patterns of

behavior, ways of thinking taking practical form - reproduced through

the practices and productions of the Ideological State Apparatuses

(ISAs): education, organized religion, the family, organized politics,

the media, the cultural industries ..." (ibid, p.12)

Althusser said that "All ideology has the function (which defines it)

of 'constructing' concrete individuals as subjects"

Subjects to what? The answer is: to the material practices of the

ideology, such as consumption, or warfare. This (the creation of

subjects) is done by acts of "hailing" or "interpellation". These

attract attention (hailing) and force the individuals to generate

meaning (interpretation) and, thus, make the subjects partake in the

practice.

The application of this framework is equally revealing when one tackles

not only the American administration but also the uniformly "patriotic"

(read: nationalistic) media in the United States.

The press uses self-censored "news", "commentary" and outright

propaganda to transform individuals to subjects, i.e. to supporters of

the war. It interpellates them and limits them to a specific discourse

(of armed conflict). The barrage of soundbites, slogans, clips, edited

and breaking news and carefully selected commentary and advocacy

attract attention, force people to infuse the information with meaning

and, consequently, to conform and participate in the practice (e.g.,

support the war, or fight in it).

The explicit and implicit messages are: "People like you - liberal,

courageous, selfless, sharp, resilient, entrepreneurial, just,

patriotic, and magnanimous - (buy this or do that)"; "People like you

go to war, selflessly, to defend not only their nearest and dearest but

an ungrateful world as well"; "People like you do not allow a monster

like Saddam Hussein to prevail"; "People like you are missionaries,

bringing democracy and a better life to all corners of the globe".

"People like you are clever and won't wait till it is too late and

Saddam possesses or, worse, uses weapons of mass destruction"; "People

like you contrast with others (the French, the Germans) who

ungratefully shirk their responsibilities and wallow in cowardice."

The reader / viewer is interpellated both as an individual ("you") and

as a member of a group ("people like you..."). S/he occupies the empty

(imaginary) slot, represented by the "you" in the media campaign. It is

a form of mass flattery. The media caters to the narcissistic impulse

to believe that it addresses us personally, as unique individuals.

Thus, the reader or viewer is transformed into the subject of (and is

being subjected to) the material practice of the ideology (war, in this

case).

Still, not all is lost. Althusser refrains from tackling the

possibilities of ideological failure, conflict, struggle, or

resistance. His own problematic may not have allowed him to respond to

these two deceptively simple questions:

(a) What is the ultimate goal and purpose of the ideological practice

beyond self-perpetuation?

(b) What happens in a pluralistic environment rich in competing

ideologies and, thus, in contradictory interpellations?

There are incompatible ideological strands even in the strictest

authoritarian regimes, let alone in the Western democracies. Currently,

IASs within the same social formation in the USA are offering competing

ideologies: political parties, the Church, the family, the military,

the media, the intelligentsia and the bureaucracy completely fail to

agree and cohere around a single doctrine. As far as the Iraqi conflict

goes, subjects have been exposed to parallel and mutually-exclusive

interpellations since day one.

Moreover, as opposed to Althusser's narrow and paranoid view,

interpellation is rarely about converting subjects to a specific - and

invariably transient - ideological practice. It is concerned mostly

with the establishment of a consensual space in which opinions,

information, goods and services can be exchanged subject to agreed

rules.

Interpellation, therefore, is about convincing people not to opt out,

not to tune out, not to drop out - and not to rebel. When it encourages

subjects to act - for instance, to consume, or to support a war, or to

fight in it, or to vote - it does so in order to preserve the social

treaty, the social order and society at large.

The business concern, the church, the political party, the family, the

media, the culture industries, the educational system, the military,

the civil service - are all interested in securing influence over, or

at least access to, potential subjects. Thus, interpellation is used

mainly to safeguard future ability to interpellate. Its ultimate aim is

to preserve the cohesion of the pool of subjects and to augment it with

new potential ones.

In other words, interpellation can never be successfully coercive, lest

it alienates present and future subjects. The Bush administration and

its supporters can interpellate Americans and people around the world

and hope to move them to adopt their ideology and its praxis. But they

cannot force anyone to do so because if they do, they are no different

to Saddam and, consequently, they undermine the very ideology that

caused them to interpellate in the first place.

How ironic that Althusser, the brilliant thinker, did not grasp the

cyclical nature of his own teachings (that ideologies interpellate in

order to be able to interpellate in future). This oversight and his

dogmatic approach (insisting that ideologies never fail) doomed his

otherwise challenging observations to obscurity. The hope that

resistance is not futile and that even the most consummate and powerful

interpellators are not above the rules - has thus revived.

Just a War or a Just War?

By: Dr. Sam Vaknin