Dragon-elephant ties no zero-sum game

CHINA / National

Dragon-elephant ties no zero-sum game
(Media Release)
Updated: 2006-05-29 09:33

Expressing its commitment to a multi-polar world, India has assured China that it is not pursuing a "balance of power" policy and is not being used to "contain" China.

Ahead of Indian Defence Minister Pranab Mukherjee's visit to China starting Sunday, Indian Ambassador to Beijing Nalin Surie said: "On our part let me say that India does not pursue a balance of power policy, nor has it done so in the past. Our commitment to a multi-polar world is of long standing and a basic principle of independent India's foreign policy."

"If there are more centres of economic activity, if there are more centres of political influence, if there are varied founts of culture, the more diversified the world order and regional order become, the greater the interaction among peoples and countries and the greater will be the chance of maintaining peace and security," he said.

"India seeks an international environment which is supportive of and contributes to her developmental goals," he said in a major foreign policy speech here at the prestigious Peking University on the occasion of the ongoing 10-day "India Festival". "Let me underline that diversity and tolerance are the hallmark and enduring strength of India and Indian civilization."

At the same time, the world has recognized India's emergence as a responsible nuclear weapon state and this has required India to shoulder additional regional and global responsibility, Surie said, while assuring Beijing that New Delhi is not being used to "contain" China.

His remarks came amid fears expressed by the opponents of the Indo-US nuclear deal which, they claim, is aimed at containing China.

However, Surie acknowledged that the rapid development of India-China bilateral relations in recent years and "our rapid economic development has understandably begun to elicit worldwide interest, comparison and comment".

"Analysts, writers and commentators in the international media and even some academics have now begun essaying us as rivals and competitors and picking favourites from the two," he noted.

"There is no doubt a self serving element in this effort... It will benefit neither of our peoples to see our relations as a zero-sum game. Our developing bilateral relations are not a zero sum game. They are a positive sum game not only for both our countries but for Asia and I believe for the whole world," he said.

India and China together can be a great force for good, for development, for peace and common prosperity," Surie said.

"Cooperation between the two most populous and among the fastest growing economies in the world is also important for peace in the region, in Asia and the world," he said. "We have undoubtedly had a difficult phase in our relationship in the past. But that is behind us," Surie said, referring to the 1962 conflict as well as other differences between New Delhi and Beijing.

"This is clearly reflected in the June 2003 Declaration and April 2005 Joint Statement signed by our prime ministers. There is growing space for both our countries as they develop and integrate further into the global economy," he said as both Indian and Chinese governments are jointly celebrating 2006 as the "India-China Friendship Year".

Commenting on the current trends in India-China ties, Surie said they were developing and moving in the right direction. "We are engaged in the process of improving them further. While we are on this path it will be important not to be thrown off-track by rhetorical or motivated questions and scenarios of who will win - the dragon or the elephant." He acknowledged a series of high-level visits has helped ratchet the quality of the relationship to a higher plane.

On the vexed border issue, Surie noted that the two special representatives, appointed in 2003 to explore from the political perspective of the overall bilateral relationship the framework of a boundary settlement, have started work on the second phase of their work in right earnest.

"The second phase has now begun in right earnest. In this phase it is the expectation that the Special Representatives will draw up an agreed framework for the resolution of the boundary based on the agreed political parameters and guiding principles," he said.

Both sides have agreed at the highest level that they are not a threat to each other and both sides will qualitatively enhance the bilateral relationship at all levels and in all areas while addressing differences through peaceful means in a fair, reasonable and mutually acceptable manner, he said.

"It is also our intention not to let our differences affect the overall development of bilateral relations."

Surie pointed out that if one reviews the progress in bilateral ties over the last six years it is clear that our relations have entered a dynamic phase. "The task ahead is to make this process self generating, self sustaining and to mutual benefit."

Copyright By chinadaily.com.cn. All rights reserved

Iran could be west’s trial run — Mbeki

Iran could be west's trial run — Mbeki  

http://www.businessday.co.za/articles/topstories.aspx?ID=BD4A205658
25 May 2006

Jonathan Katzenellenbogen
International Affairs Editor

WESTERN states could be putting pressure on Iran in a "trial run" to prevent countries without nuclear weapons from enriching uranium, President Thabo Mbeki said last night.  

If Iran's peaceful nuclear ambitions were blocked, other signatories to the Nuclear Non-Proliferation Treaty (NPT), which include SA, might have to forgo this right at some stage, Mbeki said at a dinner in London.  

In this light, he said, Iran's rights to the peaceful use of nuclear technology needed to be protected like those of other countries.  

"So the Iran thing is not unique in itself, but is a pacesetter for (what) might happen in the future," he  said.  

"We believe that Iran's rights in this regard need to be protected. In part we are raising this because you get these whispers that Iran constitutes a trial run, and if there is success in terms of prohibiting Iran to do the things they are permitted by the (non-proliferation) treaty, that will be extended to all other countries."  

Mbeki also warned that placing the Iranian nuclear programme before the United Nations (UN) Security Council could raise tension.  

"You will have escalating actions taken by the security council which will lead to conflict that nobody should really want."  

He said SA would prefer the International Atomic Energy Agency (IAEA) to handle the Iranian question.

Mbeki's remarks at the dinner, ahead of his meeting yesterday with British Prime Minister Tony Blair, highlighted the stark differences between SA and the UK, the other five permanent members of the security council and Germany, which are putting pressure on Iran to drop its uranium enrichment programme.

Earlier this year, SA abstained from an IAEA vote, which was passed, proposing that Iran be referred to the security council over its programme.

"So that you not only have a small club of nuclear weapon states, but then you also have a small club of countries that can do anything at all in terms of developing nuclear technology for peaceful purposes," Mbeki said. He also said that "in all our interactions, the Iranians will insist that they are committed" to peaceful nuclear use and pointed to ayatollahs having issued a fatwa against the production of nuclear weapons.  

SA had undertaken to help in confidence-building measures to convince the international community that Iran's intentions were peaceful, Mbeki said.  

Earlier in London, senior officials from security council permanent members and Germany met to weigh up a package of incentives and threats drafted by European Union (EU) leaders to defuse the nuclear stand-off with Iran, but both sides dampened hope of a breakthrough arrangement.

Iran says it has mastered a limited   uranium enrichment cycle.  

The EU package is likely to include an offer of a light-water reactor and an assured supply from abroad of fuel for civilian atomic plants so that Iran would not have to enrich uranium itself. The package will also warn of possible targeted sanctions if Iran, the world's fourth-biggest oil producer, refuses the offer.

Diplomats said they would first discuss sanctions aimed at officials involved in Iran's nuclear programme before seeking ways to halt trade deals.

But some EU officials, many security analysts and the IAEA say Washington should start direct dialogue with Iran after 26 years of official silence. They believe the only way to entice Iran back to good-faith negotiations and get it to stop seeking sensitive atomic know-how would be a US pledge not to try to topple Tehran's Islamic government.

IAEA chief Mohamed ElBaradei was expected to tell US Secretary of State Condoleezza Rice in talks in Washington yesterday that US-Iranian engagement was vital to resolving the crisis, said Vienna-based diplomats familiar with ElBaradei's thinking.  

A defiant Iranian President Mahmoud Ahmadinejad yesterday urged "resistance" in the dispute, and said Iran would deliver a "historic slap in the face" to any state that tried to deprive it of nuclear technology .

In Washington, Israeli Prime Minister Ehud Olmert said in an address to the US congress yesterday that Iran posed a threat to Israel's existence and urged swift international action.

"A nuclear Iran means a terrorist state could achieve the primary mission for which terrorists live and die: the mass destruction of innocent human life." With Reuters

----
Siddharth Varadarajan
Deputy Editor
The Hindu
I.N.S. Building, Rafi Marg
New Delhi - 1

Telephone: +91-11-2371-5426
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Kremlin Voices Concern at U.S. Conventional Missile Plans

Kremlin Voices Concern at U.S. Conventional Missile Plans

By AGENCE FRANCE-PRESSE, MOSCOW

05/11/06

The Kremlin voiced worry May 11 at reported U.S. plans to mount
non-nuclear warheads on intercontinental strategic missiles to strike
targets anywhere in the world within minutes with no prior warning and
called for talks on subject.
"I think this would be an irresponsible decision," said Sergei
Sobyanin, the newly-appointed head of President Vladimir Putin's
Kremlin administration, in a briefing to a group of foreign reporters.
The use of such a weapon could produce confusion and an unpredictable
response from other countries, Sobyanin said.
"This is an extremely dangerous trend," he said, adding: "There needs
to be a dialogue about this."
Although he did not directly name the United States, Putin on May 10
also raised Russia's concern over plans to put conventional warheads
on intercontinental ballistic missiles (ICBMs), weapons long at the
center of the former U.S.-Soviet Cold War arms race and key
disarmament treaties.
"The launch of one such missile may trigger an inadequate response
from the nuclear powers, including a full-scale retaliatory strike
with the use of strategic nuclear forces," Putin said in his annual
state of the nation address.
A U.S. Defense Department report posted on the Internet states that
plans to incorporate conventional weapons capabilities into U.S.
strategic nuclear forces have been under investigation since Congress
called for a post-Cold War review of the country's nuclear deterrent
forces in 2001.
Western arms experts have cautioned, however, that Russia in
particular would have to be provided with some way of distinguishing a
conventionally-armed ICBM from a nuclear-tipped ICBM to ensure that
any use of such a weapon was not a nuclear strike.
U.S. experts say that conventional ICBMs would give the option of
striking a target anywhere on Earth within about 30 minutes and with a
large element of surprise, since there is no reliance on easily
detectable ships or aircraft.

--
Siddharth Varadarajan
Deputy Editor
The Hindu
I.N.S. Building, Rafi Marg
New Delhi - 1

Telephone: +91-11-2371-5426
Fax: +91-11-2371-8158
Mobile: +91-98111-60260

The Hindu: http://www.thehindu.com
My personal website: http://svaradarajan.blogspot.com

Pentagon Defends Global-Strike Plan -- Conventional warheads for SLBMs

Pentagon Defends Global-Strike Plan
Wade Boese

Arms Control Today May 2006

A recently unveiled initiative to arm some U.S. submarine-launched
ballistic missiles (SLBMs) with conventional warheads has lawmakers
wondering whether dangerous misunderstandings and miscalculations
could arise with other nuclear powers, particularly Russia. Pentagon
officials downplay the possibility, contending that the benefits of
the new capability outweigh the potential risks.

The Department of Defense is asking Congress this year for $127
million to start replacing nuclear warheads with conventional warheads
on 24 Trident D-5 SLBMs. Within two years, two dozen missiles would be
equally dispersed among 12 separate submarines, which means each
vessel would carry 22 nuclear-armed and two conventional-armed
missiles. The conventional warheads, four per missile, would be either
a solid slug or a bundle of rods known as a flachette round, not
explosive warheads.

Although the Bush administration revealed its intentions to pursue
conventional global-strike capabilities in its December 2001 Nuclear
Posture Review, the SLBM option was first detailed in early February
as part of the Quadrennial Defense Review. (See ACT, March 2006.) The
so-called prompt global-strike concept behind the SLBM conversion
seeks to enable the United States to attack a target anywhere in the
world with a conventional warhead in less than an hour.

At a March 29 hearing of the Senate Armed Services Strategic Forces
Subcommittee, legislators expressed some unease about the SLBM
proposal. Subcommittee chairman Jeff Sessions (R-Ala.) and ranking
member Bill Nelson (D-Fla.) both questioned whether submarines with
mixed loads might cause confusion for other countries about the type
of missile fired and its intended target. In such a circumstance, they
worried a country might mistakenly conclude that it was under U.S.
nuclear attack and potentially retaliate with nuclear weapons.

Assistant Secretary of Defense for International Security Policy Peter
Flory said the Pentagon takes this concern "very seriously." However,
he and General James Cartwright, commander of U.S. Strategic Command,
minimized the danger of miscalculation. In addition to its traditional
mission of exercising operational control over deployed nuclear
forces, Strategic Command over the past few years also has been tasked
with overseeing the development and fielding of missile defenses and
global-strike capabilities.

Flory said that the United States has emergency communication
mechanisms, such as hotlines, with Russia and China "for mitigating
any potential risk of misperception." Cartwright and Flory also stated
the United States would rely on advance notification measures and
military-to-military talks to help alleviate uncertainty. They further
asserted the launch and trajectory of a conventional system could be
made to appear differently than that of a nuclear missile.

Cartwright also made the case that the United States has a long record
of launching non-nuclear missiles without a negative incident. "Since
1968, we've launched 433 of these warheads on these missiles without
ambiguity through notification processes," Cartwright testified. The
general was referring to SLBM and land-based ICBM test launches not
involving nuclear warheads, a spokesperson from Strategic Command told
Arms Control Today April 21.

Claiming that Russia is the sole country with the current capability
to detect and respond rapidly to a ballistic missile launch, Flory
argued that "the Russians will know very quickly as they have all the
way through the Cold War and up to today what the trajectory is and
where the impact points will be."

Still, Russia detected a missile launch near Norway in January 1995
that led Kremlin leaders to be notified that the United States might
have initiated a surprise nuclear attack. Moscow did not immediately
order a counterattack and, after anxious minutes, eventually
determined that the "missile," which was a scientific rocket, posed no
threat.

Flory and Cartwright maintained that proceeding with conventional
SLBMs was worthwhile. Cartwright contended such a capability gives the
United States an option for dealing with "fleeting targets" that have
a high "regret" factor if they are not destroyed, such as
unconventional weapons threats, enemy command and control elements,
and terrorists. "In many cases, nuclear weapons are not going to be an
appropriate choice for those types of targets, and so you want a
conventional alternative," Cartwright said.

SLBMs were selected over ICBMs as the inaugural conventional prompt
global-strike option in part because of their greater accuracy and
global range. U.S. ICBM fields are in Montana, North Dakota, and
Wyoming, limiting the missiles' reach and increasing possible
overflight and miscalculation problems, particularly with Russia.

   
14.05.2006  Source:  URL: http://english.pravda.ru/world/asia/80261-iran_oil-0

On the 5th of May Iran registered its Oil Exchange, which will become the fifth Stock Exchange of its kind in the world. Other exchanges operate in New York, London, Singapore and Tokyo. Which exact companies will be allowed to trade at this Exchange is, like the official opening, still unknown. Yet the Iranian Exchange will be unique, as all trading will be conducted in Euros. On the already functioning Stock Exchanges business is conducted in dollars and, because of this, the specific term 'petrodollars' came into use. If the Iranian Petroleum Exchange allows the major oil companies to trade on its floor then the dollar seriously risks losing its position in the world market. This is a possibility that many experts already consider very plausible.

Will the situation change on the World Oil Market? How will the opening of the Oil Exchange affect the rate of the dollar?

The present happenings in the Oil Market are already well known – the price of oil will continue to grow. But what changes will occur with the creation of the new Exchange? From now on will all the oil have to be purchased from the Iranian Exchange? With the opening of the new exchange neither the price of milk will rise nor will it decrease in quantity. This is a fully political gesture on the part of Iran.

As concerns the introduction of trading with the euro, this corresponds perfectly with the present direction of the world economy: the dollar falls and the euro gets stronger.

If we compare the presumed turnover of the Iranian Exchange and the full turnover of the economy of the USA we will see that the same mistakes are still being made. The dollar will continue to fall while the price continues to grow on oil. The growth will continue as long as American pursues its present political agenda. The USA of course has its dividends - to raise the competitiveness of its own goods.

Iran declares that with the opening of the Exchange it hopes to reduce the influence of America on its own economy and the economy of the region. But can it achieve this?

At present the USA has practically no influence on Iran and its economy. In turn Iran does not have the potential to influence USA politics. Therefore, from the Iranian perspective, they are prepared to make their different political declarations and gestures. The end, however, is easy to miscalculate. It could lead to the liquidation of Iran's atomic aspirations.

So the creation of this new Exchange, the games of Iran, in which they continue to play, will carry on until Uncle Sam decides to put his foot down, for when he does, the games will soon come to an end.

Will Iran gain any profit from the opening of the new Oil Exchange?

Undoubtedly Iran has the potential for economic profit. Yet the creation of the Exchange will, however, not play a defining role in the in the Iranian economy, with or without the euro Iran has its own political agenda and economic motives have, for a long time, not played a very important role. One main concern is that Iran is governed, not only by political motives, but by deeply rooted religious ones as well.

Russia has now to adjust its focus of attention from the economic area to the political. By this I mean her new political energy agenda.

What's more, these new events will, in no way, have an affect on the world's economic direction. Just as the prices on oil and gas have grown, so they will continue to grow.

How long will the rise in energy prices continue?

This will eventually lead towards a crisis that will hit the economy of the oil producing countries. To begin with, I think, it will quickly strike the developing countries such as China and India, followed later by Europe and the USA.

At this very moment we are seeing the same crisis, only in a slower from, that already occurred when the Arabian countries established an embargo. Now it is just on a larger scale, though, in reality, it is the same thing.

The point is not that the 'world does not have sufficient oil' for this simply isn't true. World supplies of oil will last us yet many more years, but for the West there exists the problem of Iran, problems of the new Latin American countries, terrorism from the East, Russia, and the constant concerns of energy which still leave the West feeling very insecure. And all these problems are coming from the very countries that provide the west with its energy.

The price, therefore, continues to rise but in reality a barrel of oil is still sold at a cheap price.

However, the desire to reduce the consumption of oil in order to find different sources of energy does still not exist, despite the fact that these alternatives are now ready for development. The problem of thermal reactors is still being dealt with very ineffectively, while the use of other forms of energy are inexhaustible, and could help solve the present energy problem. In theory this is a task that will be decided in the next century.

There is, of course, the possibility to use hydrate methane, another powerful source of energy, and, if it were developed and used effectively, would provide the same amount of energy reserves as oil and gas combined.

So in fact there are solutions to the present day problems, only there is not the political desire to realize them.

And when the political situation reaches its peak, when Iran and Saudi Arabia decide to shut off the supply to the west, then it will be the west that will have to find and develop these alternative fuel sources.

Politcom

Translated by Guerman Grachev
Pravda.Ru

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Rambler's Top100

 

IRIB, 26 April 2006

Tehran, April 26 - Oil Minister Kazem Vaziri Hamaneh said on Wednesday that the establishment of Oil Stock Exchange is in its final stage and the bourse will be launched in Iran in the next week.

He told reporters, upon arrival from Qatar where he attended the 10th General Assembly of International Energy Agency and consultations with OPEC member states, that registration of the Oil Stock Exchange is underway and the entity will operate after being approved by by Council of Stock Exchange.

He rejected a statement attributed to him saying that Oil Stock Exchange will bring to the ground the US economy and said, "I don't know who has speculated that I've not talked about US economy." Asked about conference on energy in Doha, he said that more than 60 countries and 30 oil companies and consultants took part in the conference.

Vaziri Hamaneh said that serious discussions were held including security of supply and demand, security of investment in energy and environment issues.

"The best method for security of demand in the oil sector is that consumers should be given opportunity to enter into partnership with the suppliers in investment in oil industry." He said that the conference called for diversifying energy resources and cooperation of the developed states with the countries possessing oil and gas resources.

Asked about the oil price rise, Vaziri-Hamaneh said that oil price is being influenced by political situation, whereas it should be freed from political impacts and economic and technical fundamentals should determine the oil prices.

"As long as political impacts dominate the oil market, price hike will continue," he concluded.

 

By Jerome R. Corsi

May 8, 2006

© 2006 WorldNetDaily.com

http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=50100

Last week, Iran's oil ministry granted a license to establish an Iranian oil bourse on the Gulf island of Kish, an economic free zone, to price and trade oil in the Euro, not in the dollar. This idea – strongly backed by the administration of President Mahmoud Ahmadinejad – may well be the final straw that draws the United States into war against Iran.

In 2000, Saddam Hussein received U.N. permission to sell Iraqi oil for euros, not dollars. Saddam further received permission from the United Nations to convert the $10 billion oil-for-food reserve fund from euros to dollars.

Many Bush administration critics have argued that the real reason for the 2003 war against Iraq was not concern that Iraq had or would use WMD, but concern by the U.S. Treasury that Saddam Hussein was waging an international economic war to convince oil-producing nations to hold their foreign exchange currencies in the euro, not the dollar.

The proposal to establish an Iranian oil bourse first surfaced under the presidency of Khatami. The idea languished for months, until last month when President Ahmadinejad again took up the initiative and pressed for action. Iran's goal is to create a bourse where oil is priced in the euro, to compete with the dollar pricing of oil that now dominates the major international oil exchanges, the New York Mercantile Exchange, NYMEX and London's International Petroleum Exchange, IPE.

Pricing oil transactions in the euro will create more of a psychological impact. Iran's real goal is to shift the world away using the dollar as the major currency of foreign exchange holdings. This little understood market has been key to our ability to sustain our economic growth, despite the unprecedented budget deficits of the Bush administration.

Today, the U.S. Treasury is increasingly dependent upon 70 percent or more of world foreign exchange reserves being held in the dollar. China has just signed a $100 billion deal with Iran to develop the huge Yadvaran oil field. For decades to come, Iran promises to be China's major supplier of oil and natural gas. China is also the second largest holder of foreign reserve dollar holdings, second only to Japan. China has already announced their intention to block any serious sanctions coming out of the Security Council deliberations. Undoubtedly, Iran will push China to increase their foreign reserve currency position in the euro, simply to show their economic support for Iran.

We expect that the Iranian oil bourse will be relatively small and experimental at first. But for the Ahmadinejad administration to press for opening the bourse at a time when Iran's nuclear program is being discussed by the Security Council shows the extent of Iran's defiant determination to oppose the United States.

Ahmadinejad has continued to make statements threatening Israel, while asserting that economic sanctions cannot harm Iran economically. Ahmadinejad has a point. With over $200 million a day in windfall oil profits, Iran has more than enough cash flow to support their struggling economy and to fund the aggressive development of their nuclear program.

Iran should be careful, however, in also taking on the established order of international oil. Sanctions already in place shut American oil companies out of participating in Iran's rich oil markets. Iran is the fourth largest exporter of oil in the world, none of which flows directly to the United States. Already the price of oil has spiked to nearly $75 a barrel over international uncertainty with Iran's nuclear program. If a deepening Iranian crisis moves the price of oil toward $80 a barrel, while Iran is threatening to open up an oil bourse to price oil in the euro, Iran is only asking for a confrontation.

Taking on the Bush administration with a possible nuclear threat to Israel is a seriously dangerous policy whose end-game may well end up in war. If Iran wants also to seriously threaten the dollar's position as a dominant foreign reserve currency, a war becomes almost certain. The Iranian oil bourse may never be mentioned by U.S. policymakers as a official reason the United States decides to go to war with Iran, but it may end up being the straw that broke the camel's back.

Jerome R. Corsi received a Ph.D. from Harvard University in political science in 1972 and has written many books and articles, including co-authoring with John O'Neill the No. 1 New York Times best-seller, "Unfit for Command: Swift Boat Veterans Speak Out Against John Kerry." Dr. Corsi's most recent books include "Black Gold Stranglehold: The Myth of Scarcity and the Politics of Oil," which he co-authored with WND columnist Craig. R. Smith, and "Atomic Iran: How the Terrorist Regime Bought the Bomb and American Politicians."

 

 

Northwest Arkansas Arkansas Democrat-Gazette // THE ASSOCIATED PRESS

Posted on Saturday, May 6, 2006

URL: http://www.nwanews.com/adg/Business/153888/

TEHRAN, Iran — Iran took a step on Friday toward establishing an oil market denominated in euros, a plan analysts described as highly unlikely to materialize but which in theory could have serious consequences for the U. S. economy.

Iranian state-run television said the country's oil ministry granted a license for the eurodenominated market, an idea first suggested in 2004, though just who would trade on it remains unclear.

Global oil trading is now conducted in dollars on exchanges in New York and London.

But if the Iranian market were to succeed — or if Iran simply demanded payment for its oil in euros — commodities experts said it could lead central bankers around the world to convert some dollar reserves into euros, possibly causing a decline in the dollar's value.

"If OPEC decided they didn't want dollars anymore," A. G. Edwards commodities analyst Bill O'Grady said, "it would signal an end of American hegemony by signaling an end to the dollar as the sole reserve currency status."

Iran is the fourth-largest oil producing country in the world, the second-largest in OPEC and controls about 5 percent of the global oil supply, so it has a measure of influence over international oil markets. Tehran also partially controls the Persian Gulf 's Strait of Hormuz through which much of the world's oil supply must pass.

First suggested in 2004 when reformist president Mohammad Khatami was in power, the idea of a euro-denominated oil exchange gained new life after the stridently nationalist Mahmoud Ahmadinejad was elected president last summer.

Iran has sought to use its oil resources as a bargaining tool in Tehran's ongoing standoff with the West over its nuclear program.

But O'Grady and others say there are practical reasons why the Iranian threat — the subject of much discussion in some corners of the Internet in recent weeks — is largely empty.

For starters, Iran is not a very attractive site for a market, given the volatile nature of its politics, the U. S. sanctions against it and the lack of a transparent legal system.

Moreover, there is no indication that the European Union is interested in vying to become the world's central bank, which requires a willingness to run large currency deficits, he said.

PFC Energy oil analyst Jamal Qureshi said the fears stirred up by a hypothetical euro-denominated oil market in Iran or anywhere else are overblown, not least because the oil trade is just a small component of the overall global economy. Information for this article was contributed by Brad Foss of The Associated Press.
Copyright © 2001-2006 Arkansas Democrat-Gazette, Inc. All rights reserved. Contact: webmaster@nwanews.com

 

The May artillery preparation by the US and Russia before July G8 Summit in St. Petersburg

Sergei Shakaryants

4.05.2006
http://www.regnum.ru/english/637974.html

When during the "Common Vision of Common Neighborhood" conference in Vilnius on May 4 US Vice President Richard Cheney took up the burden to openly criticize Russia for its home and foreign policies and, later, US President George Bush said himself – thereby proving that in Vilnius Cheney was speaking "not on his own behalf" — that Washington was not satisfied with "the level of democracy" in Russia, many understood that they in the White House were beginning some kind of battle against Moscow. Their goal might be to get some kind of carte blanche before the July G8 Summit in St. Petersburg to be able to pressure the Kremlin in the "Iranian dossier" issue. As you may know, it was exactly in early May that Russia and China had once again rejected the UN SC's resolution on Iran, drafted by the UK and some western countries.

However, the US and its allies might as well want to turn the St. Petersburg G8 into some kind of "public flogging" for Russia – for Cheney's indictment contains quite surprising charges: like, Moscow is allegedly "toying" with the territorial integrity of some neighboring states. Any unbiased observer could see that Cheney was, first of all, meaning Russia's official stance on the ethnic conflicts in the CIS, and so, through its vice president in nowhere but the Baltic states, the US has given a start to a process that will inevitably dismantle the CIS and — as the Americans believe — will tear away and then reshape the peacemaking formats in the CIS conflict zones. They believe that this all will allow them to push Russia out of the peace-making and -keeping operations – for example in the selfsame Abkhazia or South Ossetia. In this light, one can agree with the "forebodings" of some Azeri officials that during the G8 Summit the US may raise the problem of Karabakh too.

Georgia and Ukraine have already started the CIS dismantling. We already know what their presidents Mikhail Saakashvili and Viktor Yushchenko are going to offer instead, say, to Armenia or Azerbaijan — "Commonwealth of Democratic Choice" – an alternative to the failed GUUAM-GUAM — a framework that the extra-regional forces will now use to "push a-la-west democracy" from "the Adriatic to the Caspian seas" (as they said in Vilnius). However, this is a topic for a separate discussion.

Everybody understood that they in the Kremlin would not be able to pretend they did not see the openly anti-Russian meaning of what Cheney and Bush said. That's why the quick response of Russian FM Sergey Lavrov on May 6 made clear to the experts that in his annual address to the Russian parliament Russian President Vladimir Putin would not fail to outline his basic policy during his the G8 talks. Obviously, Russia began preparing for "a battle" with the US beforehand. One proof is the enhanced Russian-German diplomatic, political and business activities in January-February 2006.

Particularly, Lavrov said: "Democracy is necessary not only inside the state but also on the international arena." About Cheney's speech Lavrov said: "I thought that a person holding such an office is objectively informed of everything but his advisors or assistants must have let him down. For example, Cheney says: 'the opponents of reforms in Russia are seeking to reverse the gains of the last decade.' I think one should not explain to the Russian people what gains he is talking about – the country was on the verge of breakup." Lavrov said that, in fact, the Russian authorities are seeking to preserve Russia's unity; in the last 40 years Russia has broken no single oil or gas export contract; as regards the statement that Russia undermines the territorial integrity of its neighbors – in early 90 it was exactly Russian peacekeepers who gave their lives to stop bloodshed in Moldova and Georgia. "Not to remember this is blasphemy," Lavrov noted. To clear the air Lavrov said: "One thing I agree with is Mr. Cheney's desire to see the world as a community of sovereign democracies. Russia wants to be and is becoming sovereign, strong and stable democracy and hopes that they in the world will take it as equal partner whose presence in global problem solving is indispensable. I think that such statements will not undermine the efforts we are making with the US, with Europe, with other leading counties to build a fair world with no conflicts and with countries developing stably and democratically."

That's why when on May 10 Putin appeared with his annual address to Russia's Federal Assembly, special attention was given to the paragraphs about Russia's foreign policy and security for the time being. The South Caucasus and some other CIS countries were mostly eager to know what Putin thinks about the changes in Russia's migration policy – just count how many citizens of our country are presently earning their living in Russia and sending home untaxed money transfers in freely convertible currency in order to feed their poor families. Still, we are inclined to first of all analyze the foreign policy and defense parts of Putin's address.

It should be noted that the text of this document has made it clear that Russia, at least, for today is inclined to regard the West's policy in the CIS as an ordinary rivalry. That's exactly what Putin wants to say: "now that the world is being actively rebuilt we are facing many new problems. These challenges are less predictable and nobody can say how dangerous they might be. The conflict space is actively enlarging and, which is even more dangerous, is beginning to cover our vital interests." They in the CIS and the West should understand the last phrase as an imperative signal to all extra-regional forces that Moscow will not give in "the zone of its vital interests" "without fight." It is symptomatic that today the Russian President has "as if imperceptibly" begun to use the vocabulary the US administration used in early 90 when "opening up" the whole post-Soviet space and calling it "newly independent states and "zone of American vital interests."

Let's put aside Putin's clear remarks that despite their lagging financing, Russia's defense complex and armed forces can give worthy rebuff to any persons or countries who will try to "scare" Moscow. Obviously, Russia's key strategy before the St. Petersburg G8 is that it links nonproliferation of mass destruction weapon (which first of all refers to nuclear weapon – and this is a subtle hint at the "Iranian nuclear dossier") with the new turn of arms race, including the US' deepening activities to create a national anti-missile system. Let's give a couple of quotations: "…today it's early to speak about the end of the arms race… the race is just unfolding and it is going up to a new technological level to produce a threatening arsenal of destabilizing arms (he obviously means non-conventional arms).

Experts are already discussing the plans of use of intercontinental ballistic missiles with non-nuclear warheads. But nuclear powers may inadequately react to the launch of such a missile – they may counter-act in a large-scale nuclear strike. Not everybody in the world has given up its stereotypes and prejudice…" In our view, by saying this Putin just reminded the West that Russia's national security concept has a point that allows Russia to deal response or even preventive nuclear strikes in case of a war or a threat of war. Well, this is all but "a declaration of war" against the West. Let's remind once again – "the war was declared" against Russia at the Vilnius conference by Mr. Cheney, who made an ultimatum: either you break up yourself and we call it "the deepening of the western standard democracy" or…

Even the Western media called Cheney's speech "a new Fulton speech," "cold war ghost," etc, while Putin's address is just a reminder that the challenge can be accepted. In other words, this is an ordinary strategic game until the G8 presidents dot their "i's" by themselves.

The US CIS "democratization" policy also got it from Putin. True, again indirectly: "Today the percentage of our defense expenses in GDP are comparable or a bit smaller than in big nuclear powers like France or the UK… but only absolute figures matter, in absolute figures they are just half of what those countries have and are in no way comparable to the expenses of the US. Their absolute military budget is 25 times as big as that of Russia. That's what they in the military call "their home, their fortress. They did it well. Well done! But this does not mean that we must not build our own strong home. Because we see what is going on in the world. We do see. As they say 'comrade wolf knows whom to eat.' He is eating and is not listening to anybody and seems not to be going to. What becomes of their pathos about the necessity to fight for human rights and democracy when it comes to the necessity to push their own interests? It turns out that here everything is possible with no restrictions." In our view, this is what the Kremlin actually thinks about "the fruits" of the "color revolutions" in the CIS, designed by US political technologists.

And the last point of the defensive-preventive part of Putin's address. He said that Russia has means that can overcome air defense systems and will allow Moscow to fulfill its key task – to guarantee stable peace in the world and to preserve the strategic balance of forces. Putin also made clear that the Russian army will shortly have maneuverable warheads – units that make missile flight path unpredictable for potential enemy.

Only after that did Putin announce the cardinal tasks of Russia's foreign policy – which will obviously be valid for not only this year but the whole period till the next presidential election of 2008. Here Putin said that the CIS is still a priority for Russia's FM. True, the CIS as such has already fulfilled its historical mission and should be reformed. This might be a hint that the Kremlin's political technologists are already working to transform the CIS into one or even several new organizations, which would reintegrate the actions and efforts of all the present CIS states. We have already heard their names and not once – CSTO, Russia-Belarus Union, EurAsEC, CES (common economic space).

The other key task of Moscow's foreign policy is to harmonize relations with the EU, Russia's biggest partner. There is nothing new here – the Russian President still trusts the Russian-EU bilateral agreement for creating "four common spaces." On two of the four the sides have actually been actively working in the last months. We can certainly add to this "the fifth common space" between Russia and the EU – the quickly ongoing Russian-German project of Northern gas pipeline.

As regards the US, it seems that Russia has decided to make it known beforehand that, once its major partner in the West (especially in politics and fight with terrorism), Washington, is no longer a priority in Russia's foreign policy. The US has got into the class of Russia's "special partners" along with China, India, some Asia-Pacific, Latin American and African countries. And if many experts believed that by Cheney's Vilnius speech President Bush made clear to Russia that in St. Petersburg they would have an unpleasant talks, by his speech Putin made even more clear to Bush that today they have nothing special to talk about – let's say once again: "the wolf is eating and is not listening to anybody and seems not to be going to…"

And the last task of Moscow's foreign policy is to promote the UN reforms so that it can further be "the carcass of the modern world order" — "a regulator allowing to jointly develop a new up-to-date code of behavior in the world." But, at the same time, the UN should become as efficient as possible. We can try to go deep into this problem, but it is too is a topic for separate discussion…

It's not a secret that the reason for this "attack" on Russia and those CIS countries who reject the "anti-Russian" democracy is that some of the G-8 and, primarily, the US are very much eager to get new levers of control over Moscow – at least, some new ways of political and other pressure on it. This might also be due to Russia's plans to repay its debts to the "Paris Club" ahead of time or to the US' plans to stop Russia's impartiality in the "Iranian problem?" – this may even be some complex task Russia's international enemies are trying to solve. One thing is clear: the West (the US) fears lest it might lose not only the strings that help it to manipulate Russia but also any "control" over the actions of Russian leaders – present or future. And this is quite possible. That's probably why after Putin's address Russia's Federal Assembly was told that starting from July 1, 2006 Russia will be ready to convert its ruble…

Sergey Shakaryants – expert of the Caucasus Analytical Center

 

The Pipes Carry Clout With the Oil

By JAD MOUAWAD
New Yor Times: May 14, 2006

AS energy-rich countries feel empowered by high oil prices, they are increasingly using a blunt instrument to make their influence felt. Call it the power of the pipeline.
New, superlong pipelines are planned for South America, the Middle East, Russia and Africa, and oil-producing countries are using them to forge political alliances, punish foes and extract concessions from customers.

"Pipelines mean political leverage," said Frank A. Verrastro, the director of the energy program at the Center for Strategic and International Studies in Washington.

On a recent visit to Lithuania, Vice President Dick Cheney lambasted Russia for using oil and natural gas as "tools of intimidation and blackmail." Later, on a stopover in Kazakhstan, he urged energy-rich Central Asian nations to bypass Russia altogether when considering pipeline routes to the West.

President Vladimir V. Putin himself made energy security a theme this year in talks with other industrialized nations. But on the day it took over the presidency of the Group of Eight, Russia cut off natural gas supplies to Ukraine over a price dispute, freezing out both its independent-minded neighbor as well as the European Union in the dead of winter.

In the end, a compromise was reached and Ukraine agreed to pay more for its gas, until then subsidized by Russia. But Russia's neighbors also learned a shocking new reality: whoever controls the taps also holds the upper hand.

Transnational pipelines have been around for more than a century, but with low prices and supplies aplenty, they had lost much of their strategic significance over time. Supertankers, first built in the early 1950's, allowed producers to ship anywhere around the world, and freed consumers from the whims of a single seller. About two-thirds of the oil trade is now carried by tankers.

But matters have changed in recent years: higher demand has put pressure on energy networks, supplies have had trouble catching up with consumption, and tensions have risen. Today, every drop counts.

"Pipelines play a critical role in an age of increased tightness in energy markets, terrorist threats to energy infrastructure, and political use of energy resources," said Anne Korin, the co-director of the Institute for the Analysis of Global Security, a research center based in Washington.

Consider the case of Iran, which wants to build a natural gas pipeline to India and is even considering extending the route all the way to China. The project, spanning about 1,600 miles at a cost of $7 billion, would provide Iran with a large market for its substantial gas reserves while helping India meet its growing energy needs. The pipeline would also add to Iran's political clout.

There are drawbacks. The pipeline must run through Pakistan's Baluchistan region, a prospect that worries India given the area's history of lawlessness.

And while Pakistan's current leaders welcome the proposed route because they would also benefit from Iranian gas, a pipeline might afford future governments with a vital means of pressuring India. The United States also strongly opposes the plan. "The last thing the United States wants is for India to be in Iran's debt," Ms. Korin said.

None of this has been lost on Hugo Chávez, the president of Venezuela, who persuaded his neighbors to look at a 6,000-mile pipeline linking his country to Brazil and Argentina. He has named it El Gran Gasoducto del Sur, the Great Gas Pipeline of the South. With a potential cost of $23 billion, the proposal makes little economic sense; it would be much cheaper to build liquefaction terminals and ship the gas by tankers.

But Mr. Chávez's plan is not only meant to transport gas; it also carries a political message. The pipeline should be "considered one of the fundamental steps to South America's integration," according to Petróleos de Venezuela, the state oil company.

Russia has been particularly adept at balancing its economic needs and its role as an energy superpower.

When considering an oil pipeline to the Sea of Japan or straight to China, Russian energy officials waited for two years before committing themselves. China was initially favored, but after much dithering, Russia picked the longer and costlier option to its eastern seaport of Nakhodka, instead of the Chinese route to Daqing. The reason: the plan allows oil exports to Japan as well as to other potential markets, including the United States and eventually China as well.

Then there is the matter of what Mr. Cheney called "blackmail."

Last month, President Putin suggested that Russia might redirect future exports to Asia instead of Europe because of what he called "unprincipled competition" blocking the expansion of Gazprom, Russia's biggest energy company, in Europe.

"To the extent that you are concerned that countries like Russia might be using energy as political tools, one of the best ways to protect yourself is to create alternate pathways to move energy to markets," said Steven Pifer, a deputy assistant secretary of state for European and Eurasian affairs from 2001 to 2004.

In the 1990's, that sort of thinking led energy planners in the United States to support construction of a pipeline to carry oil from the vast reserves of Azerbaijan, Kazakhstan and Uzbekistan, which are all landlocked around the Caspian Sea, through Turkey, while avoiding Russia to the north, as well as Iran, which would have provided the shortest route, to the south.

"In all these cases," Ms. Korin said, "you have a big problem with Central Asia, where there is lots of energy but few politically pleasant and unproblematic ways to get the supplies out if you don't want to be overly reliant on Russia or on Iran."

It took nearly a decade to build the $3.9 billion pipeline, which starts in Baku, the capital of Azerbaijan, snakes through Georgia, and ends at the port of Ceyhan, Turkey. Oil will start flowing this summer.

A big drawback for pipelines is that they are relatively easy targets for terrorists. In Iraq, hundreds of bombings have frozen exports from the northern Kirkuk fields. In Colombia, one pipeline, running from the north to the eastern Caribbean port of Coveñas, has been ruptured by so many attacks in the past two decades that it has been nicknamed "the flute."

But such concerns won't stop new projects. Mr. Pifer, who also worked at the National Security Council where he oversaw Russian affairs under President Clinton, recalled that in the 1990's the United States distributed a bumper sticker around Central Asia. It read, "Happiness is multiple pipelines."

 

Democrat proposes India nuclear deal compromise

By Carol Giacomo, Diplomatic Correspondent

Thu May 11, 2006 5:11 PM ET

WASHINGTON (Reuters) - A leading Democratic lawmaker said on Thursday
that a landmark U.S.-India nuclear deal lacks the necessary support to
pass the Congress and he put forward a compromise intended to keep the
accord alive.

But a senior U.S. official said the administration believes it still
can win congressional approval of the deal without the delays and
"legislative hurdles" California Rep. Tom Lantos (news, bio, voting
record)' proposal would create.

Under the initiative announced by Lantos, senior Democrat on the House
of Representatives International Relations Committee, Congress would
welcome the deal, which would permit U.S. civil nuclear technology
sales to India for the first time in three decades.

But the proposal would delay making critical changes in U.S. law until
the two countries negotiated a formal peaceful nuclear cooperation
agreement -- implementing a political deal struck by the U.S. and
Indian leaders last July -- and until India agreed on a system of
inspections of its civil nuclear facilities by the International
Atomic Energy Agency.

Only then would Congress expedite its approval of critical changes in
the U.S. Atomic Energy Act with a yes or no vote that would bar
amendments that could further delay or scuttle the deal, a senior aide
to Lantos told reporters.

This is similar to the "fast track" mechanism that Congress has often
used to act on trade deals.

The administration, which considers the accord key to improved ties
with rising Asian power India, has met considerable resistance after
pushing Congress to quickly change the atomic energy act even before
the implementing agreement and the IAEA "safeguards" accord are
completed.

"The administration's suggested legislation to implement this bold
nuclear deal -- which I fully support -- does not have the wide and
bipartisan backing it needs," Lantos told an international relations
committee hearing.

COMPROMISE

There are too few days left on the legislative calendar to resolve the
problems so "we need to come up with a compromise that will keep the
momentum for this important agreement moving forward," he said.

State Department counselor Philip Zelikow, reacting to Lantos'
proposal, said "right now our view is to handle this differently."

Zelikow told the American Enterprise Institute think tank that Lantos'
objectives could be realized within the legislation the administration
has already put forward.

He expressed optimism Congress would approve the nuclear deal,
although he acknowledged uncertainty about when that might happen and
whether lawmakers would put conditions on it.

Zelikow said Washington and New Delhi both must do more to ensure the
agreement is enacted.

Many American non-proliferation experts and lawmakers have expressed
serious concerns about the U.S.-India deal, arguing it could allow
India to increase its nuclear weapons stockpile.

India never signed the nuclear Non-proliferation Treaty, developing
weapons in contravention of international norms.

Democratic Rep. Howard Berman (news, bio, voting record) of California
announced plans to introduce amendments to the administration bill,
including a demand that Congress retain the right to approve the
nuclear cooperation agreement by a majority vote.

The administration approach would avoid the enhanced scrutiny Congress
envisioned for such agreements, Democratic Rep. Edward Markey (news,
bio, voting record) of Massachusetts told the hearing.

Attempting to undercut such sentiments, Lantos said his proposal would
reassure India while "not compromising" Congress' oversight role.

"The Indian government... needs the confidence that we will adopt the
necessary legislation in order to negotiate the final details of this
agreement with the United States," he said.

The agreement has also come under attack in India.

Raid on Nuclear Fuel Market

Raid On Nuclear Fuel Market

By Rudo de Ruijter

08 May, 2006
Countercurrents.org

In the background of the political joust about Iran, a few countries
are reshaping the world. They are taking possession of the global
nuclear fuel market. New IAEA regulations should keep newcomers away.
The US, UK, France, Germany, Russia, China and Japan will become
world's nuclear filling stations. Under the auspices of the IAEA these
suppliers will dictate the rules, the prices and the currencies they
want to get paid in. Iran has become the pretext and test case for
their plans. The problems of tomorrow's world economy are being shaped
today.

Iran and the Non-Proliferation Treaty

US President Bush wants us to believe that Iran has plans for nuclear
weapons. Well, we remember, that in 2002 he accused Iraq of having
weapons of mass destruction. That turned out to be a lie, so let us
look more closely at the facts.

Iran is a member state of the Non-Proliferation Treaty (NPT) from the
very first moment in 1968. [1] The NPT is a treaty not only to stop
proliferation of nuclear arms, but also to help each other to develop
civil nuclear energy. [2] In the treaty, the nuclear-weapon states
(US, Russia, China, France and England) promised nuclear disarmament.
(So far, they have not kept their promises.) The other members had to
sign agreements with the International Atomic Energy Agency (IAEA),
NPT's watchdog, for the implementation of controls. IAEA's agreement
with Iran entered into force on May 15 1974. [3]

Iran's nuclear history

At that time shah Reza ruled Iran. Thanks to the Anglo-US' operation
Ajax in 1953 he was still on the throne. From 1957 Shah Reza wanted to
develop nuclear energy in Iran. [4] The US offered all the help and
stuff he wanted: a research reactor, enriched uranium and plutonium.
The research reactor was started in 1967, but went critical soon
after. Then the French became good friends too. They promised to
repair the reactor. The shah made a $ 1 billion loan to the French for
the construction of an enrichment plant in Tricastin in the South of
France. From 1974 still more countries offered their services to the
shah. Agreements followed for five reactors and fuel from France, two
reactors and fuel from the US, regular purchases of uranium from
Australia and two reactors from West Germany. Denmark delivered 10
kilo of highly enriched uranium and 25 kilo of natural uranium.
Technical staff came in from Argentina and India, while Iranian
students went to UK and West Germany. Discussions took place with
Pakistan and Turkey for regional nuclear cooperation. The Iranian
budget for the atomic energy rose from $ 30 million in 1975 to $ 1
billion the following year, and still more reactors were ordered from
the US. By the end of 1978, with not a single reactor completed yet,
the shah ran out of money. Meanwhile, popular opposition against the
shah's blood shedding oppression rose to a climax.

From shah Reza to Khomeini

The opposition against the shah had grown since 1953, when popular
hero and Prime Minister Mossadeq had been overthrown by a joint coup
of the CIA, the English and the shah. [5] Mossadeq had successfully
strived to nationalize the Anglo Iranian Oil Company (BP). Sued by
England, Mossadeq had won the case at the International Court in The
Hague. [6] During the coup, the shah initially fled the country, but
came back after the army had succeeded to beat down the protests of
the population. In 1960, to please his American friends, he granted
diplomatic immunity to all US' personnel working in Iran. A young
opponent, called Ruhollah Khomeini dared to criticize the shah
publicly. The first time he was jailed and recidivist a few years
later he was expelled. The shah's oppression increased over time. In
riots many hundreds of opponents were killed and thousands injured. By
1977 all opposition movements finally united and in January 1979 the
shah definitely fled the country. Khomeini returned to Iran in triumph
and on April 1st 1979 the Islamic Republic of Iran was established by
referendum. In November 1979, when Iranian students heard that the
shah had gone to the US, they stormed the US embassy in Tehran to
claim the extradition of the shah in order to summon him to trial. A
long hostages crisis followed. A US' attempt to free them failed.
President Saddam Hussein of Iraq, a good friend of the US at that
time, invaded Iran, announcing he would be in Tehran within three
days. However, the war between Iraq and Iran would last 10 years and
cost hundreds of thousands of lifes. With the end of the Warschau Pact
in 1989 and Saddam's mistake to invade Kuwait, the US attitude toward
Iraq made a 180-degree turn. Iraq and Iran were both US' enemies now.
But since these countries detain 10.5 and 10 percent of world's oil
reserves respectively and the US is world's biggest consumer (with 25
percent of world's oil production), it was foreseeable the US would
not just ignore these countries. The US now has less than 2 percent of
world's oil reserves. Its dependency on foreign oil is rapidly
increasing and, according to Bush, 60 percent today. [7]

The accusations against Iran: 130 Grams of Uranium

On June 16 2003 the International Atomic Energy Agency announced, that
Iran had not reported a uranium import of 1991 and the subsequent
stocking and processing. That is true. But from a confidential IAEA
document of June 6 2003 we learn, that this import contained just 130
gram of uranium. [8] According to article 37 of the official agreement
between the IAEA and Iran, in force since May 15 1974, nuclear
materials containing less than 1 kilo of uranium are exempted from the
IAEA safeguards. [9] The IAEA accusations made the world believe that
Iran had transgressed the rules.

Similar jousts are about the Additional Protocol. During the embargo
against Iraq, when proof had to be found of weapons of mass
destruction and Saddam was not willing to grant more rights to the UN
inspectors, the IAEA had developed additional rules to make controls
easier. The new rules also make it easier to discriminate among
members: excessive rules for one country, friendly rules for others.
In June 2003 only 33 of the 188 members of the Non-Proliferation
Treaty had accepted to sign the Additional Protocol. Nevertheless the
US and a delegation of the European Union formed by France, Germany
and the United Kingdom, wanted to force Iran to sign the Additional
Protocol. In exchange, the three European countries (E3) promised to
come up with interesting commercial deals. Iran was willing to hear
what they had to propose. This is not so surprising. 30 percent of
Iran's oil goes to Europe and 40 percent of its imports come from
Europe. Spring 2003, Iran had even switched its oil sales from dollars
to euros, which is good for Europe and bad for the US, since it
weakens the dollar. During the talks about new commercial deals with
the Europeans Iran voluntarily agreed to suspend its research program
for uranium enrichment and to grant additional rights to the IAEA for
extended checking of their nuclear facilities. After repeated Iranian
requests it became clear, that the E3 countries did not intend to
deliver the promised deals. They just wanted to keep the talks going
on indefinitely, meantime preventing Iran from enriching uranium. Iran
resumed its program and re-established the contractual conditions for
the IAEA controls. This resulted in the attempt of the US and E3 to
have the UN Security Council condemn Iran.

US' agenda: The oil, the dollar and the foreign debt…

So, if the so-called proofs against Iran appear to be fabricated, what
is the real issue? I think the general idea is clear to all. With its
excessive energy consumption the US thinks, it is necessary to have
pro-US governments in Iraq, Iran and, for the UNOCAL pipeline project,
also in Afghanistan. During the Cold War Saddam Hussein in Iraq and
shah Reza in Iran were useful US' allies, but these days are over.
Thanks to Bush we now have wars in Afghanistan and Iraq. Iran is
located in between. Considering the reputation the US has built up in
Iran a spontaneous arising of a pro-US government is not likely to
happen soon.

The second thing that explains more immediately Bush aggressive stance
against Iran is its part in the weakening dollar. A new Iranian oil
bourse, if successful, may even trip up US' hegemony. [10]

In a glance, this is how it works. World's oil and gas is traded in
US-dollars. Since 1971 the US has had the advantage to be the
petrodollar supplier of the world. Supplying dollars to foreign
countries means, the US can print money and purchase goods, services
and investments with it. Since the foreigners need these dollars to
buy oil, and keep them also in use in the international trade outside
the US, the US has never had to deliver anything in return. Merely
supplying money means free shopping. This is how US' foreign debt grew
to 3,200,000,000,000 dollars today. And if some day the world gets
tired of the abuse and does not want US-dollars anymore, their massive
offers of dollars on the exchange markets would immediately push the
exchange rate down, the dollar would become worth next to nothing and
the foreign debt would vanish. So it is very advantageous to deliver
currencies that are permanently needed and wanted abroad.

But with today's' sky rocketing debt, the dollar has become
vulnerable. When Saddam Hussein switched to the euro on November 6
2000 [11, 12], the exchange markets were temporarily overflowed by
dollars. With Iran considering a similar switch since 1999 and maybe
more OPEC countries to follow [13], speculations and decreasing trust
set in motion a long and continuous descent of the dollar, which
risked leading to its collapse. [14] By the end of 2002 the dollar
rate had fallen 18 percent. [15] This probably explains, why the US
could not wait and on March 20 2003 even overruled the UN Security
Council to invade Iraq. The Iraqi oil trade has been switched back to
dollars on June 6 2003. [16] From spring 2003, Iran also switched to
the euro, and during the two years that followed the dollar rate lost
another 12 percent.

The US free shopping advantage only works insofar foreign countries
need additional dollars. So, each time when oil prices rise on US
controlled International Petroleum Exchange (IPE) of London and New
York Mercantile Exchange (NYMEX), more dollars are needed in the
world. [17] As 85 percent of the oil trade takes place outside the US,
for each extra dollar needed inside the US, seven dollars are needed
outside and result in free shopping. To increase the foreign dollar
demand still further, the US Federal Reserve sells Treasury Bonds to
foreigners, which reduces the amount of dollars abroad. This increases
foreign demand for dollars and raises the exchange rate. To stop the
exchange rate from rising continually, new dollars have to be
"delivered" to the foreigners, resulting again in free shopping. If
the US wants to lower the dollar rate it can just import more. In
fact, as long as world demand for dollars keeps growing, the US can
decide itself about the rate of their currency and enjoy free
shopping. For the year 2004, the latter represented an advantage of
3,000 dollar per US' inhabitant. Recently, foreigners are not so
willing anymore to fuel US' fairy credit carrousel. The US tries to
seduce them with higher interests, but foreign demand for bonds stays
insufficient. The only remaining way to obtain enough new credit is to
increase world's demand for dollars by making the oil prices rise on
IPE and NYMEX. And that is what is happening since mid 2004.

Here, once again, an Iranian initiative endangers US' credit
carrousel. Iran wants to establish an independent non-dollar oil
bourse. Assuming it succeeds in creating enough trade to establish a
recognized world oil price, and assuming they keep the price stable,
oil prices on IPE and NYMEX cannot rise freely anymore. The credit
carrousel may stop. The Iranian Oil Bourse will not only reduce the
power of IPE and NYMEX, it will also have its influence on the
exchange rate between dollars and euros. If oil gets cheaper in euros,
there will be a rush on euros. And vice versa. The US and EU both see
this bourse as a risk. The opening of the Iranian Oil Bourse had been
scheduled for March 20 2006, the Iranian New Year. It is now announced
for the first week of May 2006. [18]

Seeking allies

To take measures against Iran the US needs allies. Allies are useful
for cost sharing of operations and to let them clean up the mess, as
in Afghanistan and Iraq. The best way to gain allies is to have your
enemies condemned by a UN Security Council resolution. That means the
US has to convince the other veto-holding countries. Of course, that
would not work, if the US disclosed its real reasons. The US had to
come up with something better, which could unite and reward all of the
veto-countries. Well, veto-countries are the victor states of the
Second World War. They happen to have in common to be nuclear weapon
states, all disposing of uranium enrichment facilities. So how about a
project to reward them with the exclusive rights for uranium
enrichment and for the supply of nuclear fuel to the
non-nuclear-weapon states? [19]

The strange European delegation

Then, in the diplomatic stage-play about Iran, Bush is joint by the
UK, France and Germany, the so-called E3. They would represent the
European Union. This strange composition of an EU-delegation starts to
make sense, when we notice that these countries are the European
countries possessing enrichment facilities. Camouflaged under the flag
of the European Union they have their own special interest in
enrichment and reprocessing.

How European are these E3 countries? In fact, as European
representatives, France and Germany make a strange case in willing to
get their trade partner Iran condemned by the UN Security Council. It
indicates they are playing poker for high stakes. They deliberately
risk disrupting an Iranian oil market priced in euros, either through
a direct conflict against Iran or by allowing the US to obtain an
embargo.

Bush, if he does not obtain his embargo, would probably not even mind
to see the Iranian power plants under construction bombed once again,
to make Iran consume its oil, instead of selling it in euros. And what
role does the UK play in this EU-delegation? Well, with its IPE oil
market always playing in symbiosis with NYMEX, and its subsequent
impossibility to adopt the euro, they serve as the messenger-boy of
the White House. As usual.

The tone of the E3 talks with Iran is not the one you would normally
expect between trade partners who wish to improve their relations. The
reports about the discussions are long litanies of obligations the E3
seeks to impose to Iran. Iran is treated like the naughty schoolboy,
who will have to obey one way or the other. [20] In January 2006,
French President Chirac even covertly threatened with a possible
nuclear attack. Of course such an attitude can only be
counter-productive.

Russia and China

To reach a Security Council resolution with sanctions against Iran the
US, France, UK and Germany have to convince Russia and China not to
use their right of veto. Since Russia and China are enrichment
countries too, that seemed easy, but failed until now. Russia and
China do not want any armed intervention against Iran. Russia still
bears the scars of the Chernobyl catastrophe in 1986, with hundreds of
thousands of irradiated citizens, new generations with genetic
deformations, and unsolved plutonium radiation problems for hundreds
of centuries to come. It has not build any new reactors since then.
Russia has a more shaded view on world's nuclear future. Besides, it
still has fossil energy sources. China has good relations with Iran
for the supply of oil and gas during the coming decades. If it wants
to let Iran down, it would have to foresee alternatives for their high
needs of energy. Besides, China does not seem to share the aggressive
stance of the US and the E3.

Is enrichment in non-nuclear-weapon states dangerous?

Natural uranium contains 0.7 percent of U-235 atoms, against 99.3
percent of mostly U-238 atoms. To use it as nuclear fuel the
proportion of U-235 atoms has to be increased to 3 to 5 percent. To do
so, the uranium must first be purified and converted into a gas. In
this form batteries of centrifuges can filter out a few of the heavier
U-238 atoms in a long and energy swallowing process. Risks in the
enrichment process are those of the chemical industries and not so
much the low radiation. This uranium is not suitable to make bombs.
For bombs you need a degree of enrichment of at least 90 percent. [21]
If a country, as for instance Iran, decided to develop such highly
enriched uranium, it could take 3 to 5 years to produce sufficiently
for a bomb. Besides, according to scientists, for high enrichment much
larger centrifuge facilities are used. The oft-repeated but mistaken
belief, that one could fabricate unnoticed highly enriched uranium in
a civil nuclear plant, now serves Bush' contention that enrichment
should remain in the hands of world's nuclear-weapon states.

Birth of a new world order

The idea of limiting enrichment capability to the nations that already
have it is not entirely new. The accusations against Iran, the
successful misleading of journalists, politicians and diplomats had
created the ideal circumstances to speed up its realization. The idea
appeared in a UN brochure in 2004. [22] Then it was still in the form
of a call for a voluntary and time-limited moratorium on the
construction of new facilities for enrichment and reprocessing. In
February 2005 the United Nations further elaborated the idea as the
Multilateral Nuclear Approach (MNA) [23]. Already in April 2005
Ambassador Kenzo Oshima of Japan's mission to the UN put the question,
"if the MNA would not not unduly affect the peaceful use of nuclear
energy by those non-nuclear-weapon states that carry out nuclear
activities in faithful and transparent compliance with their NPT
obligations."

On February 6 2006 the US' Department of Energy announced its version
of the idea in their plan for the Global Nuclear Energy Partnership
(GNEP). The following day, at the Oarai Conference in Japan, this GNEP
is presented as an idea of IAEA's head ElBaradei and a proposal of
Bush. [24] And, of course, such a supreme idea should not lack of
glamour. So, a few days later, DOE compliments itself as follows:
"Finally, the partnership arrangement between fuel-cycle and
reactor-only states envisioned by GNEP will help supply the world with
clean electrical power by offering non-fuel-cycle nations commercially
competitive and reliable access to nuclear fuel, in exchange for their
commitment to forgo the development of enrichment and recycling
technologies. "

Questionable elements

The new world order comes in the form of new safeguards within the
IAEA control system. Considering the spirit of the Additional Protocol
we should not count on equal rights or fair relations.

Within the Non-Proliferation Treaty countries, only the nuclear-weapon
states, plus Germany, the Netherlands and Japan have enrichment
facilities today. [25] The rest of the NPT countries would see their
rights to enrich uranium taken away. In exchange, they will get the
solemn promises of the nuclear-weapon states, that the latter will
always deliver the nuclear fuel. Promises? Weren't these the countries
that promised in 1968 to strive for their nuclear disarmament? As we
know, they did not keep their word up to now. Worse, France has even
developed a new generation of nuclear weapons to make the step to
nuclear war easier and progressive. This year, France and the US are
still using their nuclear arsenal to threaten the world.
Non-nuclear-weapon states should now give away more rights and become
dependent of IAEA's club of nuclear fuel suppliers?

To seduce non-nuclear-weapon states, this new plan promises lower
electricity prices. Today, on a global scale, enrichment facilities
would have about twice the capacity the world needs. By preventing the
construction of new enrichment facilities, a better use could be made
of the existing capacities. This would enable lower prices for
enriched uranium, and thus of electricity… Should we believe these
words? The enrichment industries are not driven by the concern to
lower world's electricity prices. In spite of the world's
over-capacity the Europeans are considerably expanding their
production in the UK, Netherlands and Germany. They strive for more
market share and more profit! And if by new IAEA regulations no new
competitors are allowed on the market, this can only result in
excessive pricing of enriched uranium, and thus of electricity.

The new plans foresee a highly regulated and closely monitored fuel
supply distribution system. The IAEA would become the intermediate
between fuel producing and fuel consuming members. At first glance
this may look like a trustworthy construction, since the IAEA is a UN
body. However, the IAEA is also the policeman in the system. I do not
think it is wise to let policemen trade with the parties they should
inspect. Besides, the UN is not some sort of democratic and integer
government that would be able to guarantee their policemen's
impartiality.

The plans for the distribution system recommend minimal national
stocks and joint regional buffers in different host-countries.
Strange, isn't it? The purpose of minimal stocks inside the countries
and regional stocks elsewhere is hardly to defend as a security issue.
Even with enormous stocks of 3.5 percent enriched uranium you cannot
produce any nuclear weapon. Why would the IAEA want countries to
dispose of only small quantities of fuel at a time? I fear there is
only one plausible answer: to keep the non-nuclear-weapon states in a
firm grip. That is a lot of power for our NPT-watchdog. This power
goes far beyond what is needed for their inspections. Even far beyond
the needs of a safe nuclear fuel distribution system. This is pure
power to overrule nations' sovereignty. If a nation does anything that
the watchdog or its masters do not want, the fuel tap can simply be
closed to obtain its immediate submission. It smells like a
dictatorship on world-level. Of course, the fuel supplying countries
will never be affected. They produce their own fuel.

In theory the master of the IAEA is the United Nations Organization.
But does it work that way in reality? The IAEA has a difficult role,
because it cannot ignore tensions and conflicts of interest between
NPT members. The IAEA's independence from parties' national interests
is constantly under strain. Its limited budget forces the IAEA to make
choices, which are influenced by occurring conflicts. During the
embargo against Iraq, we witnessed an IAEA driven crazy by Bush, who
demanded each time more and more thorough controls. The dog was sent
out over and over to make sure Iraq could be safely invaded. Although
the IAEA has the obligation to keep all sensitive information from
their investigations undisclosed, the US military constantly received
sensitive information, with which they prepared the invasion in 2003.
(And finally, to invade Iraq, Bush simply overruled the UN's Security
Council…)

Today, we see the same US' influences in the IAEA's investigations in
Iran. Bush shouts and the dog runs to search for the stick. The rules
for the new world order are presented as "an idea of ElBaradei and a
proposal of Bush.". I presume that both plans, the IAEA's
Multi-National Approach (NMA) and Bush' Global Nuclear Energy
Partnership (GNEP), will merge into a final version dictated by the
US.

Of course, getting a firm grip on all non-nuclear-weapon states as
soon as they get addicted to nuclear energy is a major strategic coup.
But there are far more advantages for the nuclear fuel suppliers.
United under the umbrella of the IAEA, the market will be completely
regulated. As all of them cooperate in the same organizations and all
of them will be interested in the highest possible earnings, together
they will set world's nuclear fuel price. Just like today's world's
oil prices are decided on the market places of IPE and NYMEX, nuclear
fuel prices will be decided by the happy few.

Now comes the tricky part. Nuclear fuel has to be paid for. The
question is: in what currency (or currencies) will the customers have
to pay? These currencies will become the most needed and wanted
currencies in the world. You can compare it to today's US-dollar.

Apparently these currencies have not been decided yet. But, if each
fuel supplier asks to be paid in its own currency, the world would
widely accept Japanese yens, Chinese Yuan renminbi, Russian Rubles,
euros, English pounds and US-dollars. There will probably be some
preferential order due to each supplier's capacity to deliver nuclear
fuel. Each of these countries will know the advantages of the supply
of their currencies to the rest of the world. Of course, in the long
run, each of them will also experience the negative effects on their
economies and, after decades, let their currency collapse to get rid
of the built up debt. In short, this is what can happen with multiple
world currencies. However, the fact that the plans mention, that the
IAEA should become the intermediary between suppliers and customers,
makes it reasonable to suppose that the IAEA will decide in which
currency the customers will have to pay. Bush surely hopes that this
will be the dollar. When nuclear fuel has to be paid exclusively in
dollars, demand for US-dollars and therewith the US hegemony will be
assured for many decades to come.

The UN theatre

With the project for a new world order prepared discretely in the
background, we now have an anti-Iranian alliance of the US and E3.
They smell the opportunity for a coup to seize world's nuclear fuel
market. To succeed, they would just need some legal sauce on the
prohibition of uranium enrichment by non-nuclear-weapon states, with
Iran as example. And a UN Security Council resolution would be enough,
if it legalizes IAEA's stand that it can forbid countries to enrich
uranium.

Of course, they would make it impossible for Iran to stay within the
Non-Proliferation Treaty then. To succeed their coup, they will have
to take care, that Iran does not leave the organization before a
resolution is successfully voted. For if so, there would not be any
ground for a resolution anymore. Countries outside the
Non-Proliferation treaty, like Israel, India, Pakistan, Cuba and
Brazil are free to enrich uranium and do what they want.

The question is: will the US and E3 succeed in seducing Russia and China?

In the event, that such a coup of the nuclear-weapon states would
succeed, it would probably put the Non-Proliferation Treaty and the
UNO under enormous strain. These organizations might loose all
credibility and see many non-nuclear-weapon states leave. The result
may be opposite to what these organizations were designed for.

[1] NPT members:
http://www.carnegieendowment.org/files/Tracking_Ch02map.pdf

[2] NPT text:
http://disarmament2.un.org/wmd/npt/npttext.html (See article IV)

[3] Agreement IAEA-Iran:

http://www.iaea.org/Publications/
Documents/Infcircs/Others/infcirc214.pdf

[4] Iran's nuclear history:
http://www.nti.org/e_research/profiles/1825_1826.html

[5] Growing opposition against the shah:

http://www.countriesquest.com/middle_east/
iran/history/growing_opposition_to_the_shah.htm

[6] Mossadeq: http://www.iranchamber.com/history/
oil_nationalization/oil_nationalization.php

[7] 60 percent dependency on oil imports:
http://www.bloomberg.com/apps/news?pid=10000087&sid=
ar4D7HVGikXo&refer=top_world_news

[8] 130 gram of uranium:
http://www.fas.org/nuke/guide/iran/iaea0603.html (last line)

[9] article 37 of IAEA's agreement with Iran: http://www.iaea.org/Publications/
Documents/Infcircs/Others/infcirc214.pdf

[10] How can the dollar collapse in Iran?
http://www.studien-von-zeitfragen.net/Zeitfragen/
__Collapse_in_Iran/__collapse_in_iran.html

[11] Fred Eckhard stating UN's permission for Iraq's switch to the
euro: http://www.un.org/News/briefings/
docs/2000/20001031.db103100.doc.html

[12] Statistics of Iraqi oil exports in euros:

http://www.un.org/Depts/oip/background/oilexports.html

[13] Colin Nunan, Petrodollar or Petroeuro:
http://www.feasta.org/documents/review2/nunan.htm

[14] IMF warning over dollar collapse:
http://news.bbc.co.uk/1/hi/business/2097064.stm

[15] dollar rates, historical data:
http://fx.sauder.ubc.ca/data.html

[16] Financial Times, June 5th 2003

[17] Oil markets, exemple: http://www.nationalreview.com/nrof_
leuffer/leuffer200410010726.asp

Speculation and fear can, per definition, be influenced.

[18] Iranian Oil Bourse May 2006:
http://www.iribnews.ir/Full_en.asp?news_id=212013&n=32

[19] GNEP: http://www.gnep.energy.gov/

[20] E3 report: http://www.iaea.org/Publications/
Documents/Infcircs/2005/infcirc651.pdf

[21] Uranium enrichment: http://www.uic.com.au/nip33.htm

[22] UN brochure 2004: http://www.un.org/secureworld/brochure.pdf

[23] NMA expert group February 2005:
http://www.iaea.org/OurWork/ST/NE/NENP/NPTDS/Downloads/
SMR_CRP1_SRWOSR/2005/RCM1/Add%20materials/mna-2005_web.pdf

[24] ElBaradei's idea and Bush' proposal. February 7, 2006:
http://www.jaea.go.jp/04/np/documents/sym05_01_endo_en.pdf

[25] Map of world's nuclear fuel stations:
http://www.wise-uranium.org/umaps.html?set=enr

Indian nuclear pact raises doubts in Congress

By Demetri Sevastopulo in Washington

FT May 4, 2006

The White House is facing serious obstacles in its bid to secure
legislation approving its landmark civilian nuclear energy agreement
with India.

Condoleezza Rice, secretary of state, this week met members of the
Senate India caucus to boost support for the deal, which would allow
India to receive nuclear technology and fuel for its civilian nuclear
reactors. In exchange, India would place some facilities under
international safeguards, and separate its civilian and military
programmes.

Ms Rice probably expected a sympathetic ear from the pro-India
senators, but instead met with criticism from Richard Lugar, the
Republican chairman of the Senate foreign relations committee, who had
been invited to join the group.

Mr Lugar, one of the leading non-proliferation advocates in Congress,
was expected to back the administration, but according to three people
familiar with the discussions, he expressed strong reservations to Ms
Rice. He was most concerned that the White House wants Congress to
give it authority to implement the deal before lawmakers receive
details of the final agreement.

Under the arrangement, Congress could not amend the deal. While it
could cancel it, that would require an extremely unlikely two-thirds
majority to override a presidential veto. Mr Lugar was irritated when
Ms Rice professed ignorance of this.

One congressional aide said lawmakers were "astonished" that Mr Lugar
appeared willing to stand up to the administration.

Lawmakers are concerned that they are being asked to approve the deal
without knowing details such as what safeguards India will negotiate
with the International Atomic Energy Agency. They also want to see
whether the Nuclear Suppliers Group, a 45-nation body set up after
India held a nuclear test in 1974, will support the deal.

Andy Fisher, Mr Lugar's spokesman, said Mr Lugar had not reached an
opinion on the deal. He added that there were both compelling reasons
to accept the deal, and some concerns, but he said he expected the
Senate to move ahead with legislation this year.

The White House, which desperately wants a foreign policy success in
election year, received more bad news when Dennis Hastert, the
Republican House speaker, was quoted by India's media last month
during a visit to New Delhi as saying Congress would not vote on the
deal before the November midterm elections. Two people said Mr Hastert
received a reprimand from the White House over the comment.

Mr Bush has also lobbied Henry Hyde, the Republican chairman of the
House international relations committee, although one congressional
aide said he appeared not to have made up his mind. Tom Lantos, the
ranking Democrat, has expressed initial support, but he has raised
concerns about India's military relationship with Iran after New Delhi
recently allowed Iranian ships to make port calls.

Richard Armitage, the former deputy secretary of state who was
instrumental in improving US-Indian relations, said in a recent
interview with the FT that he was concerned the administration had not
secured as good a deal as possible with India.

Joseph Biden, the ranking Democrat on the Senate foreign relations
committee, who initially gave his tentative support, last month also
chastised the administration for not sharing information about
negotiations with India, saying the deal was not a "slam dunk".

A congressional aide who supports the deal said lawmakers were also
angry that the administration had still not responded to questions
raised when Ms Rice testified before the House international relations
committee and Senate foreign relations committee last month.

Mr Lugar's spokesman said the administration was expected to provide
responses soon.

Copyright The Financial Times Ltd. All rights reserved.

Australia, China Conclude Nuclear Deal

Arms Control Today
May 2006

Paul Kerr

Australia and China April 3 concluded two agreements to increase nuclear cooperation. Although the agreements must still be ratified by each country before entering into force, they appear to pave the way for Canberra to help supply Beijing’s expanding nuclear power industry.

In doing so, Australia brushed aside domestic concerns that the agreement could indirectly augment China’s nuclear arsenal. Canberra also denied that it was planning to change policy and allow similar uranium sales to India.

Australian Foreign Minister Alexander Downer and Chinese Foreign Minster Li Zhaoxing signed the agreements, including relevant safeguards, governing the transfer of nuclear material from Australia to China, as well as cooperation on peaceful uses of nuclear energy. The agreements will enter into force 30 days after each side has fulfilled all relevant “domestic requirements.” They are to remain in force for an initial period of 30 years.

Beijing mines its own uranium but is trying to secure access to additional supplies as it seeks to increase its nuclear power-generating capacity to cope with increases in energy demand. Australia is the world’s second-largest producer of uranium, according to a 2004 report from the Organization for Economic Cooperation and Development and the International Atomic Energy Agency (IAEA).

It is not yet clear when the transfer would begin. Australia’s resource minister, Ian MacFarlane, said that Canberra is still “some distance” from exporting uranium to China, Xinhua Financial Network News reported April 3.

The agreements must enter into force before the uranium can be transferred, although contracts can be concluded before then. Downer stated April 3 that the agreements must still be reviewed by the Australian parliament but did not specify a date for the review. An Australian diplomat told Arms Control Today April 24 that “[t]he review process takes several months. At this stage, we do not have an estimate for when it will be completed.”

No specific nuclear cooperation agreements have yet been concluded. But such cooperation is “likely to include” research at a new reactor belonging to the Australian Nuclear Science and Technology Organization, according to a fact sheet from Australia’s Department of Foreign Affairs and Trade.

Canberra has declared repeatedly that the agreements will not help China augment its nuclear weapons arsenal. Downer stated April 3 that the agreements “establish strict safeguards arrangements and conditions” to ensure that Australian uranium, as well as “any collaborative programs in applications of nuclear technology…[are] used exclusively for peaceful purposes.”

According to the nuclear material supply agreement, China is not to use Australian nuclear material for “direct military applications,” such as fissile material for nuclear weapons or fuel for nuclear reactors used for powering naval ships or submarines.

China acceded to the nuclear Nonproliferation Treaty (NPT) in 1992 as a nuclear- weapon state. Australia will supply nuclear material only to Chinese nuclear power facilities under IAEA safeguards, which allow the agency to monitor those facilities to ensure they are not used for military purposes. Beijing’s military facilities are not under such safeguards, according to Australia’s foreign affairs department. Australia and China must still agree on a list of facilities that will receive uranium.

In the event that the IAEA stops administering its safeguards, the two countries can “arrange for the application of safeguards satisfactory to both parties.”

The nuclear material supply agreement also places other restrictions on China. For example, Beijing is required to obtain Canberra’s permission before reprocessing spent reactor fuel, producing uranium with a uranium-235 isotope concentration of 20 percent or more, or transferring nuclear material to countries that do not have a nuclear transfer agreement with Australia.

China currently enriches uranium for its nuclear reactors as well as for some of its nuclear weapons. Uranium used in weapons typically contains about 90 percent uranium-235.

Reprocessing spent reactor fuel can produce plutonium for use as fissile material or as fuel in certain specialized nuclear reactors. China does not currently use plutonium for reactor fuel, but it does use plutonium in its nuclear arsenal.

According to Australia’s foreign affairs department, Canberra can suspend or terminate the nuclear material transfer agreement if Beijing does not abide by either the agreement’s terms or by China’s IAEA safeguards arrangements.

Moreover, Australian officials denied that the deal would free up indigenous Chinese uranium and thereby help Beijing increase its arsenal. The officials noted that China is widely believed to have ceased production of fissile material for nuclear weapons. However, unlike the other four nuclear-weapon states under the NPT— France, Russia, the United Kingdom, and the United States— China has yet publicly to announce a moratorium on fissile material production.

Asked whether Australia plans to supply uranium to India, Downer said in an April 4 interview with Australian Broadcasting Corp. radio that the two countries could “certainly not” conclude such an agreement “under present circumstances.” Australian law prohibits Canberra from exporting uranium to countries that have not signed the NPT.

Washington has recently concluded an agreement with New Delhi that would allow India to obtain U.S.-supplied fuel for its nuclear reactors. Congress must still approve the Bush administration’s proposed changes to U.S. law, which currently prohibits such transfers (See "Congress Ponders Conditions for U.S.-Indian Deal").