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Quick jump to below stories:
U.S. Trade Deficit Hits $66 Billion, Another Record
GOP memo touts new terror attack as way to reverse party's decline
Kuwait's biggest field starts to run out of oil
Powerful Government Accountability Office report confirms key 2004 stolen election findings
US uneasy as Beijing develops a strategic string of pearls
Equatorial Guineans get poorer despite oil boom

U.S. Trade Deficit Hits $66 Billion, Another Record

By VIKAS BAJAJ
The New York Times
November 10, 2005
http://www.nytimes.com/2005/11/10/business/10cnd-econ.html?hp&ex=1131685200&en=1edae8f1604746
a8&ei=5094&partner=homepage

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.

The trade deficit widened by 11 percent and set another record in September, the government reported today, as exports of airplanes plummeted because of a strike at Boeing and imports of natural gas and petroleum products surged in the weeks after Hurricane Katrina struck the Gulf Coast. The deficit with China also hit a record.

The United States imported $66.1 billion more in goods and services than it exported in the month, breaking the previous record set in February when the economy registered a $60.4 billion deficit, the Commerce Department reported. The trade deficit in the first nine months of the year totaled $529.8 billion, about 18 percent higher than at this time in 2004.

Economists had been expecting the trade balance to widen to $61.5 billion in October, according to a survey by Bloomberg News.

"One-third of the widening of the deficit is the oil bill, and aircraft sales explains most of the rest," said Carl Weinberg, chief global economist at High Frequency Economics, a research firm. "It's a little superficial."

In the aftermath of Katrina, which hit New Orleans at the end of August, gasoline and natural gas imports spiked because much of the domestic production and refining in the Gulf Coast was shut down. Natural gas imports surged 30 percent, to $3.7 billion, and petroleum products and fuel oil jumped 22.8 percent, to $6.8 billion.

Crude oil imports, however, fell by $350 million, reflecting the shutdown of refineries in the Gulf Coast because of damage from Katrina and later from Hurricane Rita. A large oil import terminal off the coast of Louisiana was also shut down for several days in September because of hurricane damage.

In an indication that the surge in energy imports is easing, the Labor Department reported today that the price of petroleum-based imports fell 4.4 percent in October after surging 8 percent in September. The price of all imports dropped 0.3 percent, only the second month this year that it has fallen, after rising 2.3 percent in September. Excluding petroleum products, import prices rose by 0.8 percent in October.

The United States' trade deficit with China, the largest with any single country, rose 8.8 percent, to $20.1 billion. Exports to the country fell 17 percent and imports rose by 4 percent.

Earlier this week, American and Chinese government officials reached a deal to restrict textile imports from that country for the next three years. The Bush administration and Congress have also been pressing China to allow its currency, the yuan, to appreciate against the dollar, which would make American exports more attractive in China and Chinese imports less so.

The Chinese government reported today that its October trade surplus with the rest of the world jumped to a record $12 billion in October. So far this year, the booming country has amassed a surplus of $80.4 billion, up from $32 billion at this time last year.

All told, exports to all countries fell by $2.8 billion, virtually all of it because of falling airplane sales. That is largely a result of a machinists' strike at Boeing, which forced delayed the shipment of 30 planes, according to the company.

Exports of food fell $296 million, reflecting transportation delays caused by the shutdown of the Port of New Orleans, from which many agricultural products are shipped.

Imports rose $4 billion, most of it from industrial supplies and materials, a broad category that includes energy products. Imports of consumer goods, food and capital goods rose slightly, but the country brought fewer cars and car parts from overseas in September.

Mr. Weinberg said he expected the trade deficit to narrow in the coming months and next year as aircraft sales pick up again and energy prices continue their retreat; oil and gasoline prices are already below where they were immediately before Katrina struck. Just this week, Boeing projected an 11.7 percent increase in revenue in 2006 on higher airplane deliveries.

But other economists were less sure of an improvement in the trade balance, noting that imports may rise as American businesses restock depleted inventories. "The trend is not going to be that great if imports are picking up in momentum," said Joshua Shapiro, chief United States economist for MFR Inc., a research firm in New York.

Separately, the Labor Department reported that claims for unemployment benefits rose by about 2,000, to 326,000 last week. Compared to the same week last year, claims were down by about 5,000.

And the University of Michigan reported that its consumer confidence index rose after falling for three straight months, edging up to 79.9 this month, up from 76.5 in October.

Back To Story List


GOP memo touts new terror attack as way to reverse party's decline

By DOUG THOMPSON
Publisher, Capitol Hill Blue
Nov 10, 2005, 06:19
http://www.capitolhillblue.com/artman/publish/printer_7639.shtml

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.

A confidential memo circulating among senior Republican leaders suggests that a new attack by terrorists on U.S. soil could reverse the sagging fortunes of President George W. Bush as well as the GOP and "restore his image as a leader of the American people."

The closely-guarded memo lays out a list of scenarios to bring the Republican party back from the political brink, including a devastating attack by terrorists that could “validate” the President’s war on terror and allow Bush to “unite the country” in a “time of national shock and sorrow.”

The memo says such a reversal in the President's fortunes could keep the party from losing control of Congress in the 2006 midterm elections.

GOP insiders who have seen the memo admit it’s a risky strategy and point out that such scenarios are “blue sky thinking” that often occurs in political planning sessions.

“The President’s popularity was at an all-time high following the 9/11 attacks,” admits one aide. “Americans band together at a time of crisis.”

Other Republicans, however, worry that such a scenario carries high risk, pointing out that an attack might suggest the President has not done enough to protect the country.

“We also have to face the fact that many Americans no longer trust the President,” says a longtime GOP strategist. “That makes it harder for him to become a rallying point.”

The memo outlines other scenarios, including:

--Capture of Osama bin Laden (or proof that he is dead);

--A drastic turnaround in the economy;

--A "successful resolution" of the Iraq war.

GOP memos no longer talk of “victory” in Iraq but use the term “successful resolution.”

“A successful resolution would be us getting out intact and civil war not breaking out until after the midterm elections,” says one insider.

The memo circulates as Tuesday’s disastrous election defeats have left an already dysfunctional White House in chaos, West Wing insiders say, with shouting matches commonplace and the blame game escalating into open warfare.

“This place is like a high-school football locker room after the team lost the big game,” grumbles one Bush administration aide. “Everybody’s pissed and pointing the finger at blame at everybody else.”

Republican gubernatorial losses in Virginia and New Jersey deepened rifts between the Bush administration and Republicans who find the President radioactive. Arguments over whether or not the President should make a last-minute appearance in Virginia to try and help the sagging campaign fortunes of GOP candidate Jerry Kilgore raged until the minute Bush arrived at the rally in Richmond Monday night.

“Cooler heads tried to prevail,” one aide says. “Most knew an appearance by the President would hurt Kilgore rather than help him but (Karl) Rove rammed it through, convincing Bush that he had enough popularity left to make a difference.”

Bush didn’t have any popularity left. Overnight tracking polls showed Kilgore dropped three percentage points after the President’s appearance and Democrat Tim Kaine won on Tuesday.

Conservative Pennsylvania Republican Senator Rick Santorum told radio talk show host Don Imus Wednesday that he does not want the President's help and will stay away from a Bush rally in his state on Friday.

The losses in Virginia and New Jersey, coupled with a resounding defeat of ballot initiatives backed by GOP governor Arnold Schwarzenegger in California have set off alarm klaxons throughout the demoralized Republican party. Pollsters privately tell GOP leaders that unless they stop the slide they could easily lose control of the House in the 2006 midterm elections and may lose the Senate as well.

“In 30 years of sampling public opinion, I’ve never seen such a freefall in public support,” admits one GOP pollster.

Democratic pollster Geoffrey Garin says the usual tricks tried by Republicans no longer work.

"None of their old tricks worked," he says.

Rep. Thomas M. Davis III (R-Va.) admits the GOP is a party mired in its rural base in a country that's becoming less and less rural.

"You play to your rural base, you pay a price," he says. "Our issues blew up in our face."

As Republican political strategists scramble to find a message – any message – that will ring true with voters, GOP leaders in Congress admit privately that control of their party by right-wing extremists makes their recovery all but impossible.

“We’ve made our bed with these people,” admits an aide to House Speaker Denny Hastert. “Now it’s the morning after and the hangover hurts like hell.”

© Copyright 2005 Capitol Hill Blue

Back To Story List


Kuwait's biggest field starts to run out of oil

It was an incredible revelation last week that the second largest oil field in the world is exhausted and past its peak output. Yet that is what the Kuwait Oil Company revealed about its Burgan field.

Peter J. Cooper, Editor-in-Chief
AME (Arabian Modern Equipment)
Saturday, November 12, 2005
http://www.ameinfo.com/news/Detailed/71519.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.

The peak output of the Burgan oil field will now be around 1.7 million barrels per day, and not the two million barrels per day forecast for the rest of the field's 30 to 40 years of life, Chairman Farouk Al Zanki told Bloomberg.

He said that engineers had tried to maintain 1.9 million barrels per day but that 1.7 million is the optimum rate. Kuwait will now spend some $3 million a year for the next year to boost output and exports from other fields.

However, it is surely a landmark moment when the world's second largest oil field begins to run dry. For Burgan has been pumping oil for almost 60 years and accounts for more than half of Kuwait's proven oil reserves. This is also not what forecasters are currently assuming.

Forecasts wrong

Last week the International Energy Agency's report said output from the Greater Burgan area will be 1.64 million barrels a day in 2020 and 1.53 million barrels per day in 2030. Is this now a realistic scenario?

The news about the Burgan oil field also lends credence to the controversial opinions of investment banker and geologist Matthew Simmons. His book Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy claims that the ageing Saudi oil filed also face serious production falls.

The implications for the global economy are indeed serious. If the world oil supply begins to run dry then the upward pressure on oil prices will be inexorable. For the oil producers this will come as a compensation for declining output, and cushion them against an economic collapse.

However, the oil consumers then face a major energy crisis. Industrialized economies are still far too dependent on oil. And the pricing mechanism of declining oil reserves will press them into further diversification of energy supplies, particularly nuclear, wind and solar power.

Geological facts

All this was foreshadowed in the energy crisis of the late 1970s when a serious inflection in oil supply by the year 2000 was clearly forecast. How ironic that those earlier forecasts now look correct, while more modern and recent forecasts begin to look over optimistic and out-of-date with geological reality.

Nobody can change the geology, and forces of nature that laid down reserves of oil and gas over millions and millions of years. Could it be that we have been blinded by technological advances into thinking that there is some way to beat nature?

The natural world has an uncanny ability to hit back at the arrogance of man, and perhaps a reassessment of reality at this point is called for, rather than a reliance on oil statistics that may owe more to political maneuvering than geological facts.

Back To Story List


[Falsified intelligence to justify the Iraqi invasion; Rove, Libby, Cheney tied to Valerie Plame outing; Stolen elections? These are all issues that have been documented for – in some cases – up to three years or more. Why are they getting attention now? What’s next? Headlines about the stolen 2000 election or that George W. Bush made huge profits through illegal insider trading at Harken Energy in the 1980s? Don’t get your hopes up about a drastic resuscitation of the American political system and a mythic return to a pristine American democracy that has long since vanished (if it ever existed). These scandals are serving a purpose. They will be used to distract attention from the angry and vicious beast that hovers over us; waiting to pounce with the first cold breaths of winter in the form of economic collapse, energy and food shortages, and instability the likes of which only a few of us can remember. Blame the Neocons, blame big business, blame anything but the paradigm of infinite growth, overpopulation and resource depletion. – MCR ]

Powerful Government Accountability Office report confirms key 2004 stolen election findings

by Bob Fitrakis & Harvey Wasserman
October 26, 2005
http://www.freepress.org/departments/display/19/2005/1529

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 a legal noose appears to be tightening around the Bush/Cheney/Rove inner circle, a shocking government report shows the floor under the legitimacy of their alleged election to the White House is crumbling.

The latest critical confirmation of key indicators that the election of 2004 was stolen comes in an extremely powerful, penetrating report from the Government Accountability Office that has gotten virtually no mainstream media coverage.

The government's lead investigative agency is known for its general incorruptibility and its thorough, in-depth analyses. Its concurrence with assertions widely dismissed as "conspiracy theories" adds crucial new weight to the case that Team Bush has no legitimate business being in the White House.

Nearly a year ago, senior Judiciary Committee Democrat John Conyers (D-MI) asked the GAO to investigate electronic voting machines as they were used during the November 2, 2004 presidential election. The request came amidst widespread complaints in Ohio and elsewhere that often shocking irregularities defined their performance.

According to CNN, the U.S. House Judiciary Committee received "more than 57,000 complaints" following Bush's alleged re-election. Many such concerns were memorialized under oath in a series of sworn statements and affidavits in public hearings and investigations conducted in Ohio by the Free Press and other election protection organizations.

The non-partisan GAO report has now found that, "some of [the] concerns about electronic voting machines have been realized and have caused problems with recent elections, resulting in the loss and miscount of votes."

The United States is the only major democracy that allows private partisan corporations to secretly count and tabulate the votes with proprietary non-transparent software. Rev. Jesse Jackson, among others, has asserted that "public elections must not be conducted on privately-owned machines." The CEO of one of the most crucial suppliers of electronic voting machines, Warren O'Dell of Diebold, pledged before the 2004 campaign to deliver Ohio and thus the presidency to George W. Bush.

Bush's official margin of victory in Ohio was just 118,775 votes out of more than 5.6 million cast. Election protection advocates argue that O'Dell's statement still stands as a clear sign of an effort, apparently successful, to steal the White House.

Among other things, the GAO confirms that:

1. Some electronic voting machines "did not encrypt cast ballots or system audit logs, and it was possible to alter both without being detected." In other words, the GAO now confirms that electronic voting machines provided an open door to flip an entire vote count. More than 800,000 votes were cast in Ohio on electronic voting machines, some seven times Bush's official margin of victory.

2. "It was possible to alter the files that define how a ballot looks and works so that the votes for one candidate could be recorded for a different candidate." Numerous sworn statements and affidavits assert that this did happen in Ohio 2004.

3. "Vendors installed uncertified versions of voting system software at the local level." 3. Falsifying election results without leaving any evidence of such an action by using altered memory cards can easily be done, according to the GAO.

4. The GAO also confirms that access to the voting network was easily compromised because not all digital recording electronic voting systems (DREs) had supervisory functions password-protected, so access to one machine provided access to the whole network. This critical finding confirms that rigging the 2004 vote did not require a "widespread conspiracy" but rather the cooperation of a very small number of operatives with the power to tap into the networked machines and thus change large numbers of votes at will. With 800,000 votes cast on electronic machines in Ohio, flipping the number needed to give Bush 118,775 could be easily done by just one programmer.

5. Access to the voting network was also compromised by repeated use of the same user IDs combined with easily guessed passwords. So even relatively amateur hackers could have gained access to and altered the Ohio vote tallies.

6. The locks protecting access to the system were easily picked and keys were simple to copy, meaning, again, getting into the system was an easy matter.

7. One DRE model was shown to have been networked in such a rudimentary fashion that a power failure on one machine would cause the entire network to fail, re-emphasizing the fragility of the system on which the Presidency of the United States was decided.

8. GAO identified further problems with the security protocols and background screening practices for vendor personnel, confirming still more easy access to the system.

In essence, the GAO study makes it clear that no bank, grocery store or mom & pop chop shop would dare operate its business on a computer system as flimsy, fragile and easily manipulated as the one on which the 2004 election turned.

The GAO findings are particularly damning when set in the context of an election run in Ohio by a Secretary of State simultaneously working as co-chair of the Bush-Cheney campaign. Far from what election theft skeptics have long asserted, the GAO findings confirm that the electronic network on which 800,000 Ohio votes were cast was vulnerable enough to allow a a tiny handful of operatives -- or less -- to turn the whole vote count using personal computers operating on relatively simple software.

The GAO documentation flows alongside other crucial realities surrounding the 2004 vote count. For example:

The exit polls showed Kerry winning in Ohio, until an unexplained last minute shift gave the election to Bush. Similar definitive shifts also occurred in Iowa, Nevada and New Mexico, a virtual statistical impossibility.

A few weeks prior to the election, an unauthorized former ES&S voting machine company employee, was caught on the ballot-making machine in Auglaize County

Election officials in Mahoning County now concede that at least 18 machines visibly transferred votes for Kerry to Bush. Voters who pushed Kerry's name saw Bush's name light up, again and again, all day long. Officials claim the problems were quickly solved, but sworn statements and affidavits say otherwise. They confirm similar problems in Franklin County ( Columbus). Kerry's margins in both counties were suspiciously low.

A voting machine in Mahoning County recorded a negative 25 million votes for Kerry. The problem was allegedly fixed.

In Gahanna Ward 1B, at a fundamentalist church, a so-called "electronic transfer glitch" gave Bush nearly 4000 extra votes when only 638 people voted at that polling place. The tally was allegedly corrected, but remains infamous as the "loaves and fishes" vote count.

In Franklin County, dozens of voters swore under oath that their vote for Kerry faded away on the DRE without a paper trail.

In Miami County, at 1:43am after Election Day, with the county's central tabulator reporting 100% of the vote - 19,000 more votes mysteriously arrived; 13,000 were for Bush at the same percentage as prior to the additional votes, a virtual statistical impossibility.

In Cleveland, large, entirely implausible vote totals turned up for obscure third party candidates in traditional Democratic African-American wards. Vote counts in neighboring wards showed virtually no votes for those candidates, with 90% going instead for Kerry.

Prior to one of Blackwell's illegitimate "show recounts," technicians from Triad voting machine company showed up unannounced at the Hocking County Board of Elections and removed the computer hard drive.

In response to official information requests, Shelby and other counties admit to having discarded key records and equipment before any recount could take place.

In a conference call with Rev. Jackson, Attorney Cliff Arnebeck, Attorney Bob Fitrakis and others, John Kerry confirmed that he lost every precinct in New Mexico that had a touchscreen voting machine. The losses had no correlation with ethnicity, social class or traditional party affiliation---only with the fact that touchscreen machines were used.

In a public letter, Rep. Conyers has stated that "by and large, when it comes to a voting machine, the average voter is getting a lemon - the Ford Pinto of voting technology. We must demand better."

But the GAO report now confirms that electronic voting machines as deployed in 2004 were in fact perfectly engineered to allow a very small number of partisans with minimal computer skills and equipment to shift enough votes to put George W. Bush back in the White House.

Given the growing body of evidence, it appears increasingly clear that's exactly what happened.

GAO Report

Revised 10/27/05

Bob Fitrakis & Harvey Wasserman are co-authors of HOW THE GOP STOLE AMERICA'S 2004 ELECTION & IS RIGGING 2008, available via http://freepress.org and http://harveywasserman.com. Their WHAT HAPPENED IN OHIO, with Steve Rosenfeld, will be published in Spring, 2006, by New Press.

Back To Story List


US uneasy as Beijing develops a strategic string of pearls

Declan Walsh in Gwadar
The Guardian
Thursday November 10, 2005
http://business.guardian.co.uk/story/0,,1639037,00.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.

There is an air of El Dorado about Gwadar, a fishing village on the Persian Sea with dreams of becoming a glittering metropolis. Advertising billboards along the rubbish-strewn streets feature digitised images of skyscrapers and tourist-clogged beaches. Offices with names like Gold Mine Investments and New World City have sprung up overnight. Property prices have risen up to 30-fold, turning poor fishermen into small-time tycoons with four-wheel drives and second wives

Dealers such as Kamran Ali, 25, have flooded in from the big cities. "In five years' time this will be like Dubai, or parts of Europe," he said.

Or, possibly, Beijing. Gwadar's ambitious plans hinge on a giant deepwater port whose money, bricks and mortar come from China. Last year 400 Chinese labourers worked 24-hour shifts to complete the project, intended to serve Afghanistan and Central Asia. Through cheap loans and generous grants the Chinese government covered 80% of the $250m (£144m) cost.

Now a dredger is out in the bay carving a deep channel that will accommodate cargo ships, oil tankers and, if necessary, warships.

A high-stakes geopolitical game is sweeping Asia. Triggered by a roaring economy, propelled by swelling confidence and funded by chequebook diplomacy, Beijing is projecting its new might across the continent - and setting off alarm bells from Washington to Tokyo.

"There is a cauldron of anxiety about China," the US deputy secretary of state, Robert Zoellick, said in September.

In May China signed a $600m deal with the president of Uzbekistan, Islam Karimov, 12 days after his troops killed hundreds of protesters. Relations are warming with former enemies seeking a bulwark against US might. In August almost 10,000 Chinese and Russian forces took part in a joint exercise.

In Pakistan an old friendship is being rekindled. China helped to build Pakistan's weapons plants and, according to western intelligence, had a hand in its nuclear bomb. The two countries' friendship is "higher than the Himalayas and deeper than the ocean", according to popular cliche.

Now it is driven by a fresh impetus - increased cooperation between Islamabad's enemy, India, and China's rival, America. "It's a classic case of the enemy of my enemy is my friend," said Dr Rifaat Hussain, director of the army-run Institute for Strategic Studies and Research Analysis in Islamabad.

This year the two countries signed 22 trade agreements, including the joint production of a jet fighter, and the sale of four Chinese navy frigates to Pakistan. But in Gwadar, China insists, its interest is purely commercial.

The port has a great commercial attraction. It lies 1,250 miles from Xinjiang, a landlocked western province and latecomer to China's economic boom. From next year Beijing hopes for a fresh flow of traffic across the Himalayas and down to the Persian Sea.

But Gwadar also has an immense strategic lure. It lies close to the Straits of Hormuz, the gateway to the Gulf through which 40% of the world's oil passes. Most Chinese oil supplies pass through the Malacca Straits, thousands of the miles to the south, that Beijing perceives as US controlled. To counter this vulnerability Beijing has adopted the "string of pearls" policy - cultivating commercial or military ties in strategic ports from the Gulf to the east coast of China. Gwadar is the first pearl in a line that stretches to Bangladesh, Cambodia and into the South China Sea.

The Pentagon is watching uneasily. China's military is modernising rapidly. One US military report claimed the Chinese navy was beefing up to "deter the potential disruption of its energy supplies from potential threats, including the US navy, especially in the case of a conflict with Taiwan".

China dismisses such talk as scaremongering. The dragon does not breathe fire, Premier Wen Jiabao told a meeting of Asian ministers in Islamabad last April. "Even if we become stronger and more developed, we will not stand in the way of others, still less become a threat," he said.

Other analysts say a purely military analysis ignores the wider picture of China's political reforms, embrace of international trade and normalisation of relations with the west.

When the first ships sail into Gwadar by the end of next year it will not be used by any military, Chinese or otherwise, according to Akbar Ali Pesnani, chairman of the Gwadar port authority: "It's a strictly commercial venture."

Chinese officials brush aside claims they will use Gwadar to monitor sea traffic passing into the Middle East. Their main future involvement with the port is an offer of help in building a railway link across Pakistan towards their own borders, they say.

Even then, there is no guarantee Gwadar will succeed. Most access roads are still on the drawing board; property development has been marred by fraud and speculation; land prices dipped sharply recently, causing some estate agents to leave town. "We give it a 50/50 chance of success," said one western diplomat in Islamabad.

However, China's enthusiasm is undiminished, despite running into bloody local opposition. In May 2004 a car bomb in Gwadar killed three Chinese engineers working on the port and injured 11. Intelligence services suspected local nationalists.

But elsewhere optimism is tinged with apprehension. "China has to turn to the international resource supply system, and will seek military force to safeguard its share when necessary," wrote Zhang Wenmy of the China Institute of Contemporary International Relations this year. "There has never been a case in history where such a pursuit was realised in peace."

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Equatorial Guineans get poorer despite oil boom

Mon Oct 31, 2005 9:20 AM GMT
By Bernadino Ndze Biyoa
http://today.reuters.co.uk/news/newsArticle.aspx?type=
reutersEdge&storyID=2005-10-31T091658Z_01_NOA133364
_RTRUKOC_0_FEATURE-GUINEA.xml

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.

MALABO (Reuters) - The shiny four-wheel-drive cars cruising Malabo's streets are a daily reminder to Balbina Asie Peliko that oil has brought wealth to some in Equatorial Guinea.

To her, oil has just brought more misery.

"What used to be cheap, has doubled in price," she said, squatting beside banana bunches and cocoyam stacked in the market of the tiny central African state's island capital.

Asie Peliko has waited for hours under the blazing sun, hoping to sell fruit from her village. With the money she hopes to get soap, rice or some second-hand clothes for her children.

"We feel abandoned to poverty. While people talk about oil wealth we do not see anything for our children," she said.

Massive offshore oil discoveries in the last decade have boosted Equatorial Guinea's production from next to nothing to around 350,000 barrels per day, making it sub-Saharan Africa's third largest producer after Nigeria and Angola.

With prices soaring, oil exports are bringing a flood of money to the former Spanish colony. Last year, Equatorial Guinea grew by 34 percent, according to the International Monetary Fund, making it the world's fastest growing economy.

But many of the country's 500,000 inhabitants feel they have yet to reap the rewards. Equatorial Guinea slid down the United Nation's development list this year by 12 places to 121 -- a measure of President Teodoro Obiang Nguema Mbasogo's failure to curb poverty.

That may change. In July, Obiang approved the creation of a fund meant to earmark a tenth of oil revenues for priority social spending. The government says it is already spending more on health care, education and infrastructure but that Malabo's booming population has frustrated efforts to improve conditions.

The capital has doubled in size during the oil boom, as people have flocked from the mountainous jungle mainland to the lush volcanic island of Bioko where Malabo is located.

For those seeking a share of the oil riches, the city's sprawling slums are a bitter disappointment. A short distance from the centre, the shacks of the Ela Nguema shantytown often have mud floors and no running water or electricity.

"We are being left to fate, as we have no way of benefiting from the oil boom," said Fabiola Mbasogo, a market seller who travelled to Malabo in a raft from the mainland.

EXECUTED UNCLE

Obiang and his family have kept a firm grip on power since he deposed and executed his despotic uncle in 1979.

Dissent has been suppressed and security services are guilty of serious human rights abuses, including beatings and torture, according to the U.S. State Department and rights groups such as Amnesty International.

Authorities blamed oil wealth for triggering a coup attempt in March 2004. Dozens of foreigners were accused of being involved, including the son of former British Prime Minister Margaret Thatcher.

The subject of corruption is taboo in Equatorial Guinea's tightly-controlled media. But Obiang's administration has been criticised abroad for misusing the country's oil riches.

The Transparency International watchdog ranked Equatorial Guinea as the seventh most corrupt country in the world, in its 2005 survey of 159 countries.

Obiang's administration has launched a lobbying campaign in Washington to improve its image after a 2004 Senate report found the president and his family received huge payments from U.S. oil companies like Exxon Mobil and Amerada Hess.

"The oil companies in Equatorial Guinea are using Guinean houses, Guinean vehicles, and Guinean land and naturally these are services they are paying for," said Miguel Oyono Ndong, the deputy prime minister who is close to Obiang.

The findings emerged from a probe into Washington D.C.-based Riggs Bank, which held accounts from Equatorial Guinea in excess of $700 million (393 million pounds), making it the bank's biggest account holder.

"We have called on the U.S. Senate to prove where the acts of fraud are," Oyono Ndong told Reuters, saying funds from Riggs Bank had been moved to the Bank of Central African States and would be used for infrastructure projects.

RIGHT DIRECTION

While the IMF slammed Equatorial Guinea for spending only 1 percent of its budget on health care in the five years to 2002, the government says health now accounts for a tenth of the budget -- meeting the World Health Organisation's requirements.

The IMF accepts the government has made steps towards making clear how oil revenues are being spent. World Bank President Paul Wolfowitz recently praised Obiang's government for seeking advice on how best to spend its new-found oil wealth.

Despite concerns over rights abuses and graft, Washington reopened its embassy in Equatorial Guinea in 2003 after an 8 year-break.

The United States, which is the largest investor in Equatorial Guinea, hopes the Gulf of Guinea will supply a quarter of its energy requirements within a decade, versus 14 percent now.

But for many ordinary people in Equatorial Guinea just finding enough food has become a daily struggle. As oil dollars have flooded in, the country is relying more and more on food imports from neighbouring Cameroon.

Three-quarters of the people suffer from malnutrition and the average life expectancy is 49, according to London-based charity War on Want.

"We all hear of Equatorial Guinea as a rich country, but in reality only a few people enjoy this common wealth," said Juan Obiang, a public sector official.

© Reuters 2005.

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