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Quick jump to below stories:
Taiwan sends warship to islands claimed by Japan
Latin America rises up
A truckload of nonsense
U.S. slaps sanctions on Israel
China's Foray Into Latin America Worries U.S.
OPEC unable to lower oil price

Taiwan sends warship to islands claimed by Japan

By David McNeill
New Zealand Herald
22.06.05 1.00pm

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

TAIWAN - Tokyo's worsening relations with its Asian neighbours suffered a further blow yesterday when Taiwan sent a warship to claim jurisdiction over a group of islands claimed by Japan as well as China.

Tokyo's defence minister Yoshinori Ohno appealed for 'calm' after his Taiwanese counterpart Lee Jye boarded a warship with fifteen senior politicians and sailed for the resource-rich Tiaoyutai Islands in a symbolic show of support for Taiwan's fishermen, who have repeatedly clashed with the Japanese Coast Guard.

The 4,200-ton frigate sailed close to the islands - dubbed Senkaku in Japan -- in the East China Sea before returning to Taiwan, where the government has come under heavy fire for not standing up to what one legislator called Japan's "expansionary policies" in the region.

The makeup of the expedition, which included legislators from the three major Taiwanese parties, indicated the move enjoyed widespread popular support.

Wang Jin-pyng, a politician on board the warship, said the aim was to "safeguard Taiwan's sovereignty and to protect Taiwanese fishermen that have been expelled from the area by the Japan Coast Guard."

Tadashi Ikeda, the de-facto Japanese ambassador to Taipei, called the decision to send the warship to the islands "inappropriate."

The islands are about 400 kilometers from Japan's Okinawan coast and are also claimed by China, which reacted angrily after what it called Tokyo's "expansion" of its exclusive economic zone to within 37km of the Taiwan coast.

Four Taiwanese fishermen claim that 13 of their boats have been seized by Japan in the last four years and have threatened to escalate the dispute unless Taipei takes a firmer line.

Two weeks ago, increased seizures by Japan's patrol boats sparked a protest by the fishermen that won huge support back home.

Last weekend, a Taiwanese captain detained then released on bail by the Japanese coast guard returned home to a hero's welcome.

The clash is another sign of rising tensions in East Asia, which has already been badly shaken by rows over how Japan records and commemorates its colonial rule of the region.

For years a lethargic presence on the international diplomatic scene, Tokyo under nationalist Prime Minister Junichiro Koizumi has begun taking a more aggressive stance over long-standing territorial claims, bringing increasing friction with its neighbours.

This month, another local Japanese parliament called for regular inspections of the uninhabited Tiaoyutai, in an apparent bid to strengthen Japan's claims over the islands.

China called the move "a serious infringement on its territorial sovereignty."

The islands, which China calls Diaoyu, were incorporated by Japan in 1895.


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Latin America rises up

Cover story
Isabel Hilton
Monday 20th June 2005

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

While Bush pursues his global mission, big changes are happening in his own backyard. A region Washington is used to bullying has started to rebel - and it has found a new friend. By Isabel Hilton

When George W Bush came to office in 2000, the first foreign leader he met was the president of Mexico, Vicente Fox. Bush, from his Texas background, proclaimed a new era in US-Latin relations - faute de mieux, perhaps, given his then limited experience of the wider world. It was to be based not on the old model of US domination, but on the partnership of the Free Trade Area of the Americas - billed by its admirers as the first step to creating a stable, democratic hemisphere in which increasingly prosperous nations would act in partnership under the benevolent leadership of Uncle Sam.

Five years on, by means that were little dreamt of in 2000, Bush is busy spreading his ideas of prosperity and democracy in places as distant as Georgia and Ukraine, Afghanistan and Iraq, Saudi Arabia and Sudan. Meanwhile, the Latin American project is in tatters. He failed to win the region's support for the war on terror or the Iraq invasion; the negotiations on the free-trade deal are stalled, and early this month his administration suffered a serious humiliation at an Organ- isation of American States (OAS) summit in that most Latino of American states, Florida, when the OAS rebelled against an important Bush proposal. While Washington has been looking elsewhere, a slow revolution in its own backyard has changed the geopolitical map, perhaps for ever.

The OAS has never been regarded as an outfit with many teeth. Set up by the US in 1948, its brief was to "combat communism in Latin America", and for most of its existence it has been a virtual instrument of US foreign policy. (It approved the US overthrow of the Arbenz government in Guatemala in 1954, expelled Cuba in 1962 and supported the US invasion of the Dominican Republic in 1965.) But in recent weeks, the US has suffered two important defeats in the OAS, enough to signal that something unusual is going on. The first was the US failure, for the first time in history, to impose its candidate as secretary general this year. Having failed to muster support for the former president of El Salvador Francisco Flores, Washington next gave its support to the Mexican foreign minister, Luis Ernesto Derbez. His rival was the Chilean interior minister Jose Miguel Insulza, whose candidacy was backed by Hugo Chavez, Venezuela's populist president and Washington's current Latin bugbear.

When Condoleezza Rice went on a five-day tour of Latin America in April, shortly after Donald Rumsfeld had been on a similar mission, she stopped off in Mexico to heap praise on Derbez. On a later stop in Santiago, Rice snubbed Insulza publicly. When it came to the appointment, though, it was Rice who was snubbed. Through five rounds of voting, the 34 OAS members stubbornly failed to endorse Derbez and in the sixth, in an unprecedented show of defiance to Washington's will, they chose Insulza.

It was a measure of how much regional influence Washington has lost under George W Bush and of the diminishing sympathy in Latin America for Washington's usual tactics - the latest manifestation of which is its desire to unseat Hugo Chavez. The Bush administration has made several attempts to solve its Chavez problem, the most embarrassing of which was the bungled April 2002 coup, backed by Washington, which ended in humiliation when Chavez supporters turned out in his defence.

Chavez's highly public friendship with Fidel Castro is a red rag to Washington, where defeating the "Cuban-Venezuelan axis" (as Otto Juan Reich, until recently Bush's senior State Department official on Latin America, called it recently) is "an urgent necessity". But how to do it? More than 50 years of sanctions, punctuated by attempts at more direct intervention, have failed to dislodge Castro. The debacle in Venezuela - a country riding high on soaring oil prices and impervious to economic threat - has left Washington with few weapons. The OAS, the traditional tool of US policy in the region, began to look like a last resort.

But there was another humiliation when the 35th meeting of the OAS General Assembly in Fort Lauderdale, Florida, which wrapped up on 7 June, refused to back the Bush proposal that the OAS should engage countries "where democracy is under threat" or, as Rice had put it, that the "OAS has to be a valid instrument to help the countries of America whose democracies are in peril". It was not enough, Rice said, that governments be democratically elected (as Chavez has been, more than once); they must also govern in a democratic manner - a reference to Chavez's populist style.

But OAS members are no longer willing to sanction intervention against governments the US does not like. Even Mexico, still the US's closest ally, spoke up against the US and supported instead the Chilean proposal to reaffirm OAS principles of self-determination and non-intervention, and to insist that the OAS not act unless invited to do so by the country concerned. It was a revolt, and another sign of a waning influence that touches economic, security and diplomatic policy.

Last November, Rumsfeld attempted to revive an approach to Latin America not seen since the 1980s. At a conference of defence ministers of the Americas in Quito, Ecuador, he invoked the attacks of 11 September 2001 to justify a new defence accord that would have allowed the creation of multinational forces capable of intervening anywhere in the region. He also encouraged member states to follow the US lead and use their armed forces for domestic surveillance and security. Arguing that worries about internal security were the chief obstacle to investment in Latin America, he urged governments to consider "defence-related aspects of open-market development".

"We have had to conduct an essential re-examination of the relationships between our military and our law-enforcement responsibilities in the United States," Rumsfeld said. "The complex challenges of this new era and the asymmetric threats we face require that all elements of state and society work together. Our citizens depend on us to clearly define the roles, the missions, and the responsibilities of our various security forces." Looking at the region, he said: "Now democracy in the region is troubled as citizens increasingly question the concrete benefits they can enjoy under democracy and economic orthodoxy, and populism regains a foothold."

Rumsfeld's argument met with a stony reception in a hemisphere that had failed to support the US invasion of Iraq, and where there are clear memories of the 1970s - the last time the US organised cross-border security co-operation, in the form of Operation Condor. The campaigns of terror against leftist movements in Latin America of which Operation Condor was a part resulted in the torture and murder of tens of thousands of people.

By the 1990s, Latin America's US-supported military dictatorships had given way to elected governments, most of which implemented the economic policies of the Washington consensus - privatisation and economic liberalism. More than a decade later, however, there is widespread disillusionment with the failure of such policies to help the region's poor.

Argentina, which under Carlos Menem was the poster child of the International Monetary Fund, collapsed in 2001 in the biggest loan default in history, reducing much of the once-prosperous middle classes to rummaging through dustbins to survive. In Brazil, the left-wing government of Luis Ignacio "Lula" da Silva has disappointed its supporters by following a liberal economic agenda and failing in its promises to the poor. Elsewhere, social programmes have been cut back and most people see little benefit from IMF policies. Against this backdrop, whatever questions hang over Hugo Chavez's political style, the poor of Latin America see him as a latter-day hero and leaders are grateful for the favourable deals on oil he has extended to many.

But it is not just that US tactics no longer chime with the Latin mood. A new force has quietly been growing in Latin America, offering broader perspectives for a region once heavily dependent on the US for its economic development. While the US has been trying to promote its Free Trade Area of the Americas, negotiations for which are currently suspended, Latin America has seen a growth of internal economic integration and a steady advance in trade and investment with the EU and Asia. Last year, Latin American exports to Asia rose by 34 per cent to $14bn, a factor that helped to explain a regional growth rate of 5.5 per cent. By far the biggest element in that trade is China. For Beijing, Hugo Chavez's politics are irrelevant: he is a source of oil. Venezuela produces 2.5 million barrels of oil a day and supplies the US with between 13 and 15 per cent of its oil imports. But China has invested more than $1bn in petroleum projects in Venezuela and wants to invest nearly $350m to extract oil from eastern Venezuelan oilfields, as well as an additional $60m in natural gas wells.

Last November, the Chinese president, Hu Jintao, toured Latin America and his triumphant progress was a handy reckoner of the growth of China's influence and the corresponding waning of US power. His first stop was Brazil, where he built on the success of Lula's visit to China in May 2004. (The two had issued a statement in Beijing that talked of "the democratisation of international relations and global multi-polarisation" - Chinese code for ending US domination of world affairs.)

In Brazil, Hu signed a memo in which Brazil recognised China's "full market economy status" - something the US has resisted. Behind the memo lies Lula's hostility to the FTAA and desire to build a counterweight to US influence in Mexico and central America. For his part, Hu wants allies to help China resist US trade pressure on anti-dumping; and China and Brazil have been working together at the World Trade Organisation, countering several US initiatives.

After his success in Brazil, Hu continued to Argentina, where he promised a ten-year investment programme worth $20bn to develop railways, telecommunications, hydrocarbon fuels and space technology. Next stop was Chile, where he agreed to start negotiations to establish a free trade area. He signed strategic partnerships with Argentina and Mexico, finishing in Cuba, where he discussed investment in a nickel mine, biotechnology and telecoms. In total, Hu announced investments in the region worth $100bn over the next ten years. While Washington has been making war, its backyard has quietly been looking east.

This article first appeared in the New Statesman.

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"Attaching conditions like these to aid is bad enough. It amounts to saying: 'We will give you a trickle of money if you give us the crown jewels.' Attaching them to debt relief is in a different moral league: 'We will stop punching you in the face if you give us the crown jewels.' The G8's plan for saving Africa is little better than an extortion racket."

-- George Monbiot

[Out of the blue, the Bretton Woods institutions (IMF and WB) have decided to "forgive" the vast debts owed to them by the poorest countries of the world. Monbiot pins down this illusory moment of sudden virtue, and shows the violence underneath. - JAH]

A truckload of nonsense

George Monbiot
Tuesday June 14, 2005
The Guardian,5673,1505927,00.html

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

An aura of sanctity is descending upon the world's most powerful men. On Saturday the finance ministers from seven of the G8 nations (Russia was not invited) promised to cancel the debts the poorest countries owe to the World Bank and the International Monetary Fund. The hand that holds the sword has been stayed by angels: angels with guitars rather than harps.

Who, apart from the leader writers of the Daily Telegraph, could deny that debt relief is a good thing? Never mind that much of this debt - money lent by the World Bank and IMF to corrupt dictators - should never have been pursued in the first place. Never mind that, in terms of looted resources, stolen labour and now the damage caused by climate change, the rich owe the poor far more than the poor owe the rich. Some of the poorest countries have been paying more for debt than for health or education. Whatever the origins of the problem, that is obscene.

You are waiting for me to say but, and I will not disappoint you. The but comes in paragraph 2 of the finance ministers' statement. To qualify for debt relief, developing countries must "tackle corruption, boost private-sector development" and eliminate "impediments to private investment, both domestic and foreign". These are called conditionalities. Conditionalities are the policies governments must follow before they receive aid and loans and debt relief. At first sight they look like a good idea. Corruption cripples poor nations, especially in Africa. The money which could have given everyone a reasonable standard of living has instead made a handful unbelievably rich. The powerful nations are justified in seeking to discourage it.

That's the theory. In truth, corruption has seldom been a barrier to foreign aid and loans: look at the money we have given, directly and through the World Bank and IMF, to Mobutu, Suharto, Marcos, Moi and every other premier-league crook. Robert Mugabe, the west's demon king, has deservedly been frozen out by the rich nations. But he has caused less suffering and is responsible for less corruption than Rwanda's Paul Kagame or Uganda's Yoweri Museveni, both of whom are repeatedly cited by the G8 countries as practitioners of "good governance". Their armies, as the UN has shown, are largely responsible for the meltdown in the eastern Democratic Republic of Congo (DRC), which has so far claimed 4 million lives, and have walked off with billions of dollars' worth of natural resources. Yet Britain, which is hosting the G8 summit, remains their main bilateral funder. It has so far refused to make their withdrawal from the DRC a conditionality for foreign aid.

The difference, of course, is that Mugabe has not confined his attacks to black people; he has also dispossessed white farmers and confiscated foreign assets. Kagame, on the other hand, has eagerly supplied us with the materials we need for our mobile phones and computers: materials that his troops have stolen from the DRC. "Corrupt" is often used by our governments and newspapers to mean regimes that won't do what they're told.

Genuine corruption, on the other hand, is tolerated and even encouraged. Twenty-five countries have so far ratified the UN convention against corruption, but none is a member of the G8. Why? Because our own corporations do very nicely out of it. In the UK companies can legally bribe the governments of Africa if they operate through our (profoundly corrupt) tax haven of Jersey. Lord Falconer, the minister responsible for sorting this out, refuses to act. When you see the list of the island's clients, many of which sit in the FTSE 100 index, you begin to understand.

The idea, swallowed by most commentators, that the conditions our governments impose help to prevent corruption is laughable. To qualify for World Bank funding, our model client Uganda was forced to privatise most of its state-owned companies before it had any means of regulating their sale. A sell-off that should have raised $500m for the Ugandan exchequer instead raised $2m. The rest was nicked by government officials. Unchastened, the World Bank insisted that - to qualify for the debt-relief programme the G8 has now extended - the Ugandan government sell off its water supplies, agricultural services and commercial bank, again with minimal regulation.

And here we meet the real problem with the G8's conditionalities. They do not stop at pretending to prevent corruption, but intrude into every aspect of sovereign government. When the finance ministers say "good governance" and "eliminating impediments to private investment", what they mean is commercialisation, privatisation and the liberalisation of trade and capital flows. And what this means is new opportunities for western money.

Let's stick for a moment with Uganda. In the late 80s, the IMF and World Bank forced it to impose "user fees" for basic healthcare and primary education. The purpose appears to have been to create new markets for private capital. School attendance, especially for girls, collapsed. So did health services, particularly for the rural poor. To stave off a possible revolution, Museveni reinstated free primary education in 1997 and free basic healthcare in 2001. Enrolment in primary school leapt from 2.5 million to 6 million, and the number of outpatients almost doubled. The World Bank and the IMF -which the G8 nations control - were furious. At the donors' meeting in April 2001, the head of the bank's delegation made it clear that, as a result of the change in policy, he now saw the health ministry as a "bad investment".

There is an obvious conflict of interest in this relationship. The G8 governments claim they want to help poor countries develop and compete successfully. But they have a powerful commercial incentive to ensure that they compete unsuccessfully, and that our companies can grab their public services and obtain their commodities at rock-bottom prices. The conditionalities we impose on the poor nations keep them on a short leash.

That's not the only conflict. The G8 finance ministers' statement insists that the World Bank and IMF will monitor the indebted countries' progress, and decide whether they are fit to be relieved of their burden. The World Bank and IMF, of course, are the agencies which have the most to lose from this redemption. They have a vested interest in ensuring that debt relief takes place as slowly as possible.

Attaching conditions like these to aid is bad enough. It amounts to saying: "We will give you a trickle of money if you give us the crown jewels." Attaching them to debt relief is in a different moral league: "We will stop punching you in the face if you give us the crown jewels." The G8's plan for saving Africa is little better than an extortion racket.

Do you still believe our newly sanctified leaders have earned their haloes? If so, you have swallowed a truckload of nonsense. Yes, they should cancel the debt. But they should cancel it unconditionally.

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U.S. slaps sanctions on Israel

Sale of unmanned aerial vehicles to China irks America

Conal Urquhart

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

TEL AVIV: The United States has imposed sanctions on Israel after a dispute over Israel's sale of drones - unmanned aerial vehicles - to China, according to news reports.

The U.S. has suspended co-operation on several development projects and frozen delivery of night-vision equipment.

An official at the U.S. embassy in Tel Aviv said he was aware of the reports but would not comment on them. He said the information about the sanctions had come from the Israeli Government and not the U.S.

The sanctions have been in place for at least three months and were approved by Donald Rumsfeld, the Defence Secretary, and Condoleezza Rice, the Secretary of State, seven months ago, according to the reports.

Washington angry
Although the U.S. is primarily angered by the behaviour of civil servants whose tenure stretches back to the Labour Government of Ehud Barak in 2000, the crisis threatens Israel's relations with the U.S.

A report in the Israeli newspaper Ha'aretz concluded: ``Following the crisis, one can sense the repulsion toward Israel among lower - and middle-ranking officials in Washington.

"More and more of them are saying that it is not worth doing business with Israel.''

The U.S. believes that Israeli officials lied to them about the export of Harpy Killer drones to China.

The officials claimed that Israel was merely refurbishing old drones which had been exported with American consent. The U.S. argued that the drones had been upgraded using new technology which it had shared with Israel.

The U.S. fears that China is becoming increasingly well-armed and may seek to settle longstanding territorial and political disputes by the threat and use of force.

China's threat
China has repeatedly threatened Taiwan with attack if it declares independence, and South Korea and Japan are concerned about China translating its size into military power.

The U.S. is also keen that the E.U. maintain its arms embargo on China, which was put in place after the crushing of pro-democracy protesters in Tiananmen Square in 1989.

Guardian Newspapers Limited 2005
© Copyright 2000 - 2005 The Hindu

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China's Foray Into Latin America Worries U.S.

Voices Magazine Newswire
By Jon E. Dougherty
9 June 2005

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

As the economy of the People's Republic of China continues to expand at a breakneck pace, so too is Beijing's need for energy and other natural resources. To fill the void, China is looking to countries typically within the geopolitical sphere of the United States.

Particularly worrisome to U.S. officials is China's expansion of influence into Latin America, where it is working to secure supplies of oil, copper, iron and other natural resources, according to a recent report by the Congressional Research Service [CRS].

In addition to shoring up its supply lines, China is also using its considerable economic and political clout to persuade a dozen Latin American and Caribbean nations which currently have diplomatic relations with Taiwan to break them, in a bid to further isolate the island democracy, reports in this week's editions.

In the report, analysts note that continued Chinese involvement in Latin America and the surrounding region "could pose a future threat to U.S. influence," which, in turn, could also threaten U.S. national security. As in the Cold War, the U.S. attempted to thwart Soviet influence in the Western Hemisphere at every turn; there is no reason to believe Washington wouldn't want to do the same regarding China, which the Bush administration has, in the past, defined as a potential rival.

Still, according to the CRS report, some nations in the region don't view China's newfound interest in a positive light. "Although many Latin American countries welcome the new Chinese investment, some view China as an economic threat and are concerned that both their domestic industries and their U.S. export markets will be overwhelmed by cheap Chinese imports," it said.

In terms of securing energy resources, China has made overtures to Venezuela and Mexico, two nations which supply the U.S. with the bulk of their excess oil production.

Anti-U.S. coalition

In geostrategic terms, a number of U.S. experts believe China is working to build a "third-world" coalition of nations opposed to U.S. influence, according to the report.

"According to this view, the assertive Chinese commercial interest demonstrated at the November 2004 Asia Pacific Economic Cooperation (APEC) forum meeting in Chile should serve as a wake-up call to U.S. policymakers to focus more attention on China's growing role in the region," it said. "China's regional presence, they say, ultimately could have significant strategic implications for the United States when China begins to take action to protect its interests in the region."

China has also forged closer ties with Cuba, whose leader - Fidel Castro - is a longtime nemesis of the United States. "Military relations between Cuba and China that allegedly extend to arms sales to this Caribbean island nation as well as joint intelligence activity has heightened tension between the two socialist nations and the United States," said a June 2001 report in Asia Times.

Both nations deny China has supplied the island with weapons, but a Washington Times report published June 12, 2001 said U.S. intelligence discovered at least three ships carrying explosives and other weapons had been traced from China to the Cuban port of Mariel a few months earlier.

The Bush administration said it was "very much concerned with this PLA [People's Liberation Army] cooperation [with Cuba] and movement of military equipment into Cuba," according to James Kelly, Assistant Secretary of State for East Asian and Pacific Affairs, in testimony before a House subcommittee.

China is also believed to have established electronic listening posts on the island, to monitor U.S. intelligence traffic.

China's relationship with Cuba could also be seen as analogous to the U.S. relationship with Taiwan, Jason Feer, the publisher of CubaNews, a US-based on-line newsletter on Cuba, says. In the June 2001 issue, he wrote that it "seems unlikely that China would risk a major confrontation with the United States by supplying advanced weaponry that the United States would view as threatening". He added that China saw Cuba more as a "convenient bargaining chip in its ongoing rivalry with the United States."

Countering China's moves

The CRS report recommends the U.S. do a better job of forging even closer ties with Latin American and Caribbean governments, in a bid to counter China's growing influence.

And while senior State Department officials have said they don't believe China is doing anything that would directly challenge the U.S. in terms of security, Beijing is certainly working to improve its ability to exert regional influence.

Deputy Assistant Secretary of Defense for Western Hemisphere Affairs Rogelio Pardo-Maurer, in recent testimony to Congress, warned the U.S. needs "to be alert to rapidly advancing Chinese capabilities, particularly in the field of intelligence, communications and cyber warfare, and their possible application in the region."

He also said the U.S. "would encourage the nations in the hemisphere to take a close look at how such activities could possibly be used against them or the United States."

Jon E. Dougherty is author of Illegals: The Imminent Threat Posed by our Unsecured U.S.-Mexico Border, and editor of Voices Magazine.

© 2005 Voices Magazine.

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"'Everybody in OPEC is at full capacity, maybe Saudi Arabia has something left but it is heavy oil, so in practical physical terms we have nothing,' said Libyan Energy Minister Fathi Bin Shatwan."

OPEC unable to lower oil price

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

Leading OPEC producer Saudi Arabia on Tuesday underlined the cartel's inability to ease fuel costs, saying oil supplies would not rise despite plans to increase official output limits.

Saudi Oil Minister Ali al-Naimi said Riyadh had informed its customers of export allocations for July that mean keeping output steady at 9.5 million barrels a day.

Meeting on Wednesday, the Organization of the Petroleum Exporting Countries is considering lifting production quotas by 500,000-barrels a day, 2 percent, to 28 million bpd.

But OPEC President Sheikh Ahmad al-Fahd al-Sabah conceded the move is little more than a political gesture to consumer countries worried oil prices are impeding world economic growth. "Just symbolic," was Sheikh Ahmad's assessment of the planned policy change.

U.S. crude eased 32 cents to $55.30 a barrel by 1600 GMT, after a $2 leap on Monday. Average prices for the year so far are near $51 a barrel, up $20 from the 2003 average.

Some traders say OPEC looks powerless to prevent prices challenging April's record above $58 a barrel as a resilient global economy, led by China and the United States, soaks up more oil in the second half of the year. "The bulls are going to look at OPEC and say they're almost maxed out on capacity when demand in the fourth quarter is for another million barrels a day on top of what they're producing now," said Nauman Barakat at brokers Refco in New York. "We may be heading towards $60."

OPEC output for 10 members with supply allocations is already close to the proposed new 28-million-bpd limit, so very little, if any, extra output is expected.

Naimi said Saudi, the only producer with spare capacity, already was meeting world crude demand. For the time being, he said, there was no call for more. Others in OPEC are at full stretch. "Everybody in OPEC is at full capacity, maybe Saudi Arabia has something left but it is heavy oil, so in practical physical terms we have nothing," said Libyan Energy Minister Fathi Bin Shatwan.

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