South News Nov 28

UN sanctions killing Iraqi children 

The Iraqi parliament in an emergency session Thursday, discussing the effect the sanctions are having on children, urged President Saddam Hussein to give notice to the UN Special Commission on Iraq (UNSCOM)  to complete its disarmament mission within six months.

Parliamentary speaker Saadoun Hammadi said that parliament on Thursday had "adopted a recommendation for UNSCOM to end its work and close the files in a maximum of six months, as of November 20." Hammadi said the recommendation was adopted "during an extraordinary session of parliament" during which "the work of UNSCOM and the health situation was discussed." He said the recommmendation "would be presented to the Iraqi president." 

Earlier in the week a private American group Voices in the Wilderness defied U.S. law by delivering medical aid to Iraq. Medical supplies were sent to two hospitals in the Iraqi capital Baghdad where basic medicines and cash are in short supply. Speaking to CNN in Baghdad, Tuesday, Dan Handleman was critical of the international community's policy on Iraq. "I think it is ironic that there are weapons inspectors here looking for weapons of mass destruction, when they need look no further than the U.S.-U.N. economic sanctions. That is a weapon of mass destruction," Handleman said. 

The Iraqi Health Minister, Umid Medhat Mubarak, has said that more than seven-thousand children under the age of five died last month because of the lack of drugs and medical supplies caused by sanctions. He was among members of the national assembly who took part in a funeral procession in Baghdad for children who died as a result of such shortages on Wednesday. 

The Health Minister comments come on top of a new UNICEF survey  which states that nearly one million children in Iraq are malnourished. According to the United Nations Children's Fund survey released Wednesday, more than 30 per cent of children under age five -- some 960,000 children -- are chronically malnourished. That represents a 72 per cent increase since 1991. 

"What we are seeing is a dramatic deterioration in the nutritional well-being of Iraqi children since 1991," said Philippe Heffinck, UNICEF's representative in Baghdad. He expressed particular concern that there had been no sign of any improvement since the "oil-for-food" program began. 

"It is clear that children are bearing the brunt of the current economic hardship. They must be protected from the impact of the sanctions. Otherwise, they will continue to suffer, and that we cannot accept." 

Unicef reports that 32% of children under the age of five -- a total of 960,000 -- are undernourished. The problem is far greater than in neighbouring Jordan or Turkey. The study is based on an Iraqi government survey last year of 6,375 households in the country and two follow-up surveys this year. 

"What concerns us now is that there is no sign of any improvement since Security Council Resolution 986 came into force," said Mr Heffinck, referring to the document that set up the oil-for-food plan which came into effect a year ago. 

The educational picture was also grim, with more than one quarter of primary school age children not in school. "It is clear that children are bearing the brunt of the current economic hardship", said Mr. Heffinck. "They must be protected from the impact of sanctions. Otherwise, they will continue to suffer, and that we cannot accept." 

Nerve gas scare fails to divert from UN sanctions 

Iraq accused the United States on Thursday of trying to whip up "hysteria" with a new scare to divert world attention from UN sanctions.The Iraqi Baath party newpaper Thawra, said: "The American administration is using all its media means to mislead world public opinion by alleging that Iraq is storing chemical weapons inside presidential palaces.'' It said the U.S. wanted to divert public attention from the suffering of Iraqis caused by stringent U.N. sanctions.

US Defence Secretary William Cohen repeated CIA allegations Tuesday that Iraq "may have produced as much as 200 tonnes of VX, and this would of course be theoretically enough to kill every man, woman, and child on the face of the Earth."

"Iraq has not produced and does not possess a single gram of nerve gas," General Amer al-Saadi, an disarmament adviser to President Saddam Hussein said Wednesday. Saadi insisted that "non-American experts in UNSCOM know perfectly well that the activity of Iraq in this sector before the Gulf War was limited to laboratories." 

"The United Nations is perfectly aware of the details of Iraq's chemical programme and of its efforts to cooperate with UNSCOM in the destruction of chemical arms and their sites of production," said the general in response to Cohen's allegations.

Saadi accused Cohen of fabricating "a non-scientific exaggeration aimed at provoking a campaign of hysteria against Iraq." "The US administration is waging this campaign against Iraq to influence international public opinion, after having failed to muster support for its plans to attack Iraq and maintain sanctions on its people," said Saadi. 

On Thursday Iraq's influential newspaper Babel,in a front page editorial, said the VX scare draws world attention to America's huge biochemical stockpiles. ``When they say that Iraq has produced 200 tons of nerve gas, it is an embarrassing lie.''

The nerve gas VX was accidently developed in insecticide research by a British scientist in 1949 and weaponized by the U.S. Army in 1961. The US stockpile of 1,170 tons of VX is housed at the Newport Weapons Depot in Indiana. A recent CIA report notes that “just 10 milligrams on the skin will kill the average adult male. One gallon (3.785 liters) of VX contains 362,000 such doses.” By definition, if the VX is evenly applied at this dosage, 50 percent — or 181,000 people — will die as a result, with the remaining 181,000 becoming seriously ill.” 

VX is a colorless and odorless liquid that turns into a gas on contact with oxygen. It blocks the transmission of impulses along the central nervous system, causing convulsions, respiratory paralysis, and death. The effect is immediate with death occuring quickly. 

VX is made from common chemical agents and it is the CIA's preoccupation with dual use chemicals from which it bases its scare campaigns. The report stated the Iraqis could have made as much as 500 tons of VX, having obtained the critical precursors, chlorine [65 tons], phosphorus pentasulfide and di-isopropylamine [200 tons each]. This led to UNSCOM destroying “ hundreds of tons of VX precursors" in 1991 while water purification and treatment plants went without.

At a Pentagon briefing Tuesday, US defense secretary Cohen ironically said that Iraq, in a perverse way, has done the world a favor in recent weeks by creating the stir over United Nations weapons inspections because it has educated people about the dangers of chemical and biological weapons. 

Cohen spoke as he released an annual Pentagon report naming 25 countries as worldwide potential threats of nuclear, biological and chemical arms. According to sources, the information on Iraq only reworks the previous year's version and which was originally based on the secret October 1988 CIA report ,Chemical and Biological Weapons: The Poor Man’s Atomic Bomb. The CIA report stated, “Iraq is now developing biological weapons and ...we expect it to initiate full-scale production of botulinum toxin, anthrax and [redacted] agent this year.”

This report is the same one which identified the famous Iraqi baby-milk factory at al-Ghurayb. During the Gulf war in 1991 the US bombed this baby milk factory in Baghdad on information from the CIA that the infant formula plant was really making Anthrax. 

On January 23, 1991 CNN's Peter Arnett visually dismissed White House claims that the destroyed baby milk factory was really a chemical/biological weapons facility. But the Pentagon went on to question all reports being filed from Iraq as "propaganda" and many people, including a U.S. Senator, began to question Peter Arnett's patriotism.

The packages on the ground said "baby milk" in English, and file footage of the plant showed workers with clothing that also said "baby milk factory" in English. He took a sample back to the Al Rashid hotel. 

Yet in the post Gulf War analysis House Armed Services Committee only said, “A baby formula plant is very similar to a plant for making some types of biological weapons .... the Baghdad milk plant did have another kind of security. It was viewed as odd that a milk plant would have a manned security gate and be surrounded by a nine-foot fence.” Recently an UNSCOM inspector said , “but in Iraq, lots of places have nine-foot high fences. Some even have guard towers. As of today, we still don’t know.” 

Asia the victim of a vicious financial cycle 

By Martin Khor  

Last week saw more turmoil in Asia's financial markets. South Korea, until recently touted as the strongest East Asian Tiger economy, fell into the clutches of the IMF. A vicious cycle, triggered by speculative attacks and a drastic fall in the local currency, has developed in the affected Asian economies. Will the IMF's increasing powers in Asian countries lead them to their rescue or into even deeper waters? 

WHAT a tumultuous week it was for Asian countries, where the financial crisis seemed to be spiralling downwards with no end in sight. In Malaysia, we suffered from further declines in the currency and stock market levels and this added to the drama of a week which also saw Parliament expressing confidence in the Prime Minister and making it clear to the visiting US State Department official William Ramsay that Malaysia rejected the application of the US law sanctioning firms like Petronas for investing in Iran. 

But what was really stunning was the speed with which South Korea's financial situation deteriorated, to the point where it was forced to seek help from the IMF. It has become difficult or even impossible for countries to control the value of their currencies. The Asian countries have opened up their economies, including the flow of funds, to the outside world. 

Due to financial deregulation and liberalisation, foreign funds have been able to participate increasingly in the trading of Asian currencies, in the stock market and in the provision of foreign loans to local companies. With speculators and investors (whether of the manipulative or the serious type) controlling such big blocks of funds, and with their being able to move in and out of the East Asian markets so freely, these countries have increasingly lost control of their currencies to "the market." Looking at the current problems in South-East Asia and South Korea, it is the sharp fall in currency that has been the trigger setting off a vicious cycle of events that have led to "financial meltdowns" at such a terrifying speed. 

Thus, currency speculation contributes greatly to and magnifies the conditions that cause sharp and sudden drops in a currency's level. Compounding the problem is the fact that the three financial markets (the currency, stock and money markets) are now inter-related and developments in one affect the condition of the others. 

This makes it difficult to make policy choices, for there are trade-offs between policy objectives. When the currency falls, confidence in the stock market will be affected as foreign investors fear the value of their shares will be reduced in terms of their own currencies. There is also fear that local companies will shoulder heavier debt repayment burdens. 

Thus, share prices also drop and some foreign investors sell off some of their shares. This in turn leads to further weakness in the local currency, due to the higher demand of the foreign investors for foreign exchange. 

Meanwhile, to protect the local currency from further dropping, financial authorities are often forced to jack up interest rates as higher interest makes the currency more attractive to investors. But higher interest rates have a dampening effect on the stock market. They also add to the woes of businessmen as this means even higher debt servicing charges.

After all, South Korea is the heavyweight among the East Asian developing countries, and the eleventh biggest economy in the world. The financial failures of Thailand and Indonesia were depressing enough. But the collapse of South Korea is an even greater shock. 

When the currency depreciations hit Thailand, Indonesia, Malaysia and the Philippines, it was not unforeseen that in the end South Korea would be the worst affected. The bail-out loan facility to be arranged by the IMF for South Korea could be in the range of US$20bil to US$60bil and may eventually be higher than those for Thailand (US$18bil), Indonesia (US$30bil) and even Mexico (US$50bil). 

This is not the first time East and South-East Asian countries have faced difficult times. In 1986-87, Malaysia faced a severe recession, with the failure of deposit-collecting co-operatives, rising unemployment, high external debt and the so-called "twin deficits" in the budget and balance of payments. 

Through a combination of policies, drawn up by politicians and bureaucrats of the nation themselves (and not by any IMF or World Bank experts) the country pulled out of the recession and eventually went into a decade-long high-growth streak. 

Now, the country is again facing serious economic challenges. In comparison with the situation 10 years ago, the economic fundamentals today are better. And so, logically speaking, it should be easier this time to repair the weaknesses, then go back on the development track. 

Unfortunately, the framework in which Malaysia and other Asian countries are operating has changed. This makes the task of making the right policies much more complex and difficult. Until very recently, the Asian countries almost took it for granted that they could maintain stable currencies against the US dollar. Even when the Malaysian economy was so weak in the second half of the 1980s, the ringgit's value could be maintained. 

Meanwhile, the financial position of companies (especially those that have borrowed heavily and in foreign currency) can be seriously affected. They can be hit from many directions. The decline in currency increases their foreign loan and thus their debt servicing charge. The fall in share prices reduces their market assets and could lead to their bankers calling for a return of part of their loans as the shares pledged as collateral have decreased in value. And the rise in interest rates further adds to their debt servicing burden. 

The financial woes of the companies in turn have a negative effect on the banks as there is an increase in their non-performing loans. The vicious cycle would not be so serious if only the stock market fell (but not the currency too), or if the currency drops, but this doesn't have such a bad impact on the stock market. Or if there is a drop in currency and share prices, but the companies and government have low or no external debt. 

It is the simultaneous existence of all three factors that led Thailand, Indonesia and South Korea into such serious crises. Malaysia too has seen equally sharp falls in the ringgit and the stock market, but fortunately the level of foreign debt is significantly lower than that of the other three countries. Thus the Malaysian economy is in a stronger position to withstand the battering of speculators and the gyrations of the markets. 

Like Thailand and Indonesia before it, South Korea poured in substantial amounts of foreign exchange in a futile attempt to support the won. But the speculative attacks were too strong, and the foreign reserves too little. In the end, the sums just could not add up. With a foreign debt level of US$100bil, reserves of US$30bil (and some of that already spent trying to support the currency), many billions of dollars of unpayable corporate debts (translated in the banking system into non-performing loans), and a continuous series of sharp falls in the currency last week, the government and country were in urgent need of US$20bil to US$50bil. 

Desperate to avoid coming under the IMF umbrella, South Korea tried to get loans on a bilateral basis with Japan and the US, but they refused. So on Friday, needing to prevent a further slide, the government took the bitter pill of announcing it was seeking IMF help. 

Thailand and Indonesia too had tried to get financial support directly from Japan and other Asian countries instead of going through the IMF, but eventually the individual contributions were pooled together under the IMF. 

Countries that get into severe financial problems dislike and resent having to seek a bailout from the IMF, and for good reasons too. The IMF acts on behalf of all the contributors to the bailout fund, and imposes a detailed set of conditions to go with the loan. 

As the conditions, known as "structural adjustment policies", are drawn up by the IMF unilaterally, the country has little or no say. The policies are usually wide-ranging and touch on sensitive political and economic issues (that can include dismantling of government companies and institutions, allowing more foreign banks and financial institutions greater rights in the country, and severe cutbacks in government spending). 

Perhaps even this humiliation could be worthwhile if the IMF-imposed policies, however painful, were the correct measures to take to bring the country back to financial health. However, IMF policies tend to be "monetarist" and ultra-conservative, inducing a recession. And many African countries, despite taking the "structural adjustment" medicine for many years have not improved on their debt situation, have suffered recession, and seen a rise in poverty. 

Even Jeffrey Sachs, director of Harvard University's Institute of International relations, and a key adviser to the IMF and World Bank, has strongly attacked the IMF policies imposed on Thailand and Indonesia, stating that they were based on wrong diagnoses and would convert a financial problem into a full-blown economic crisis. 

There is also a belief that the IMF secretariat acts at the behest and in the interests of the Western countries (particularly the US) and that its job is basically that of a debt collector to ensure the foreign banks get paid back their loans in full. 

Two months ago, Japan and some Asean countries proposed to establish an Asian regional fund to help countries in trouble, and that the policies of this fund be controlled by countries in the region and not the IMF. Since then the IMF secretariat and the US have actively campaigned against such an independent fund, fearing that the conditions on borrowers would be different from those of the IMF, whose powers would thus be curbed. 

Last week, at a crucial meeting of finance officials in Manila attended by Asian and Western countries, the concept of an independent Asian Fund was scrapped and instead it was agreed that whatever regional facility may be created, it should work under the framework of the IMF. 

Thus, IMF conditions will still reign supreme and it now remains to be seen whether the "structural adjustment policies" that the IMF is foisting on Thailand, Indonesia and, soon, South Korea can solve their problems or will make them even worse. 

Bushfires burning out of control in Australia 

Hundreds of bushfires raged out of control Friday, and firefighters warned that this year could see the spectre of new Ash Wedneday type fires. After the Indonesian fires in July the El Nino weather phenomenon has taken an early toll as summer officially begins in Australia next week. Melbourne on Wednesday recorded it's highest temperature for November since records began 86 years ago.

Waterbombing is underway across New South Wales in an attempt to regain control over some of the State's worst bushfires. More than 1,000 firefighters were struggling to control 160 fires.The areas of most concern at the moment continue to be at Linden in the Blue Mountains, the Hawkesbury north of Sydney, around Cessnock in the Hunter Valley, and in the Shoalhaven south of Sydney.

Bushfire Services Commissioner Phil Koperburg says he cannot rule out a repeat of the devastating bushfires of January 1994. He says today's weather conditions will make fighting the fires difficult, despite the cooler temperatures. The deteriorating situation has prompted the closure of national parks in and around Sydney. The National Parks and Wildlife Service says the parks will remain closed until at least tomorrow. 

In the neighboring state of Victoria authorities were planning to drop firefighters into inaccessible parts of the Snowy River National Park to fight some of the 177 forest fires started within the past two days. The Department of Natural Resources and Environment is mobilising about 500 firefighters and 15 fire-bombing aircraft today. Fire control officer David Wells says forecast weather conditions should help. 

Few of the 80 fires started by lightning strikes on tinder dry trees in the east Victorian forests had been contained but firefighters are optimistic that milder weather conditions today will help them control the 19 bushfires still burning across Gippsland. The biggest remaining fires are in the Bendoc and Nowa Nowa areas of East Gippsland. Both are about 40 hectares, and are in remote and rugged country. 

In South Australia, fire authorities were using water bombers to try to control some of the 25 fires sparked as storms swept across the state.The water bombing aircraft were cincentating on the Heggaton Conservation Reserve on the Eyre Pennsula this morning to help control a fire that has been burning out of control for past two days . Water bombing aircraft and ground crews have also been tackling blazes at Coffin Bay, Sleaford Mere and Wanilla . 

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