Saudi Arabia - AN/AAQ-33 SNIPER Targeting Pods
 The proposed sale will improve the operational capability of the Royal Saudi Air Force (RSAF) by upgrading the long-range target detection and identification systems of the Saudi F-15s. |
The Defense Security Cooperation Agency notified Congress of a possible Foreign Military Sale to Saudi Arabia of AN/AAQ-33 SNIPER Targeting Pods as well as associated equipment and services. The total value, if all options are exercised, could be as high as $220 million.
The Government of Saudi Arabia has requested a possible sale of 40 AN/AAQ-33 SNIPER Advanced Targeting Pods, aircraft installation and checkout, digital data recorders/cartridges, pylons, spare and repair parts, support equipment, publications and technical documentation, contractor engineering and technical support, and other related elements of program support. The estimated cost is $220 million.
This proposed sale will contribute to the foreign policy and national security of the United States by helping to improve the security of a friendly country that has been and continues to be an important force for political stability and economic progress in the Middle East.
The proposed sale will improve the operational capability of the Royal Saudi Air Force (RSAF) by upgrading the long-range target detection and identification systems of the Saudi F-15s. The proposed sale will provide an upgraded capability of the RSAF's existing 1980's LANTIRN pod technology. This sale also will increase the RSAF AWACS sustainability and interoperability with the U.S. Air Force, the Gulf Cooperation Council countries, and other coalition air forces.
The proposed sale of a modern F-15 SNIPER targeting system will greatly improve the RSAF's capabilities against offensive air force capabilities. Saudi Arabia will have no difficulty absorbing this improved system capability into its armed forces.
earlier related report
Saudi Arabia - Mission Equipment for AWACS Aircraft
The Defense Security Cooperation Agency notified Congress of a possible Foreign Military Sale to Saudi Arabia of mission equipment for AWACS aircraft as well as associated equipment and services. The total value, if all options are exercised, could be as high as $400 million.
The Government of Saudi Arabia has requested a possible sale of five sets of Airborne Early Warning (AEW) and Command, Control and Communications (C3) mission equipment/Radar System Improvement Program (RSIP) Group B kits for subsequent installation and checkout in five E-3 Airborne Warning and Control Systems (AWACS). In addition, this proposed sale will include spare and repair parts, support equipment, publications and technical documentation, contractor engineering and technical support, and other related elements of program support. The estimated cost is $400 million.
This proposed sale will contribute to the foreign policy and national security of the United States by helping to improve the security of a friendly country that has been and continues to be an important force for political stability and economic progress in the Middle East.
The proposed sale will enhance training opportunities; increase the Royal Saudi Air Force's (RSAF) AWACS operational capability, sustainability, and interoperability with the USAF, Gulf Cooperation Council, and other coalition air forces. Saudi Arabia needs this additional mission equipment to continue its development of an extended Airborne Early Warning (AEW) capability, as well as enhanced command, control and communications (C3). Saudi Arabia will have no difficulty absorbing the upgraded AWACS radar capability into its armed forces.
Iran restarted nuclear weapons program in 2004: dissident
 start me up... |
Iran resumed its nuclear weapons program in 2004, according to a US-based dissident who said Tuesday that US intelligence had failed to include his findings in a surprise about-face downgrading the Iranian threat.
"The weaponization program is alive, is active, and has been resumed since 2004," Iranian opposition figure Alireza Jafarzadeh told AFP, contradicting the US National Intelligence Estimate released a week ago.
"The NIE was only partly right," said Jafarzadeh, formerly the US spokesman for the National Council of Resistance of Iran (NCRI) and author of a book released in January called "The Iran Threat."
"They (Iranians) were forced to pause in 2003 because of the tremendous pressure they were under," he said. "They suspended it to consider their next steps, and started again in 2004."
In August 2002, Jafarzadeh first reported the existence of secret Iranian nuclear sites at Natanz and Arak, prompting denunciations of Tehran by Washington and hurried inspections by the International Atomic Energy Agency.
The Iranian regime maintains the NCRI is a "terrorist" front run by disaffected exiles. The group is the political wing of the Mujahedin-e Khalq Organization, which is banned in the United States and the European Union.
Jafarzadeh was speaking as the United States continued to press for a third round of UN sanctions against Iran despite the new intelligence estimate, arguing that diplomatic pressure caused Tehran to halt its program in 2003.
The NIE was a diplomatic bombshell that contradicted forceful US assertions that Iran's nuclear program was a gathering threat that raised the prospect of "World War III."
While the NIE expressed with "moderate confidence" that Iran was not now trying to build nuclear weapons, Jafarzadeh said the program had only been suspended in 2003 to evade IAEA inspections.
Under the control of the Iranian Revolutionary Guards, the top-secret weapons program was in fact moved from one site at Lavizan-Shian and scattered across various underground installations in 2004, he said.
Jafarzadeh said he had shared his analysis with contacts in the US intelligence community before the NIE's publication, but suggested a "certain agenda" by some in the community anxious to downplay Iran's threat.
"We've gone back and checked every site that we knew of... since 2002 to see if any of those activities were halted in those sites," he told a press conference, presenting slides purporting to show ongoing nuclear activity.
"With the exception of Lavizan-Shian... no other site was ever shut down," the Washington-based Jafarzadeh said, arguing that the US intelligence assessment "needs to be fixed."
"I don't think the international community, I don't think the United States government can afford to make such mistakes and provide the opportunity for the mullahs to get the bomb before we all know."
Derivatives Trade Soars To Record $681 Trillion
The Bank for International Settlements (BIS) is reporting Derivatives traded on exchanges surged 27 percent to a record $681 trillion in the third quarter.
The amounts are based on the notional amount underlying the contracts.Does Anybody Trust Anybody?Investors may have shifted some trading to exchanges from the over-the-counter market to reduce the risk of counterparties defaulting on deals, the BIS said.
- Interest-rate futures, contracts designed to speculate on or hedge against moves in borrowing rates, led the increase with a 31 percent increase to $594 trillion.
- Trading in stock index futures and options rose 19 percent to a record $81 trillion in the third quarter, as investors speculated on whether the credit-market losses would spread to the equity markets.
- Trading in currency futures and options increased 18 percent to $6.4 trillion, the BIS said.
Read the last paragraph in the above article carefully.
Already banks no longer trust each other and/or are so capital impaired they cannot or will not lend to each other overnight. Washington Mutual is the latest casualty in that regard. See WaMu Cuts Dividend and Jobs, and Prices Preferred Stock in response.
Now we find out that there appears to be a growing suspicion about the possibility of counterparties defaulting on derivative deals. Given that derivatives are ten times the global economy that suspicion sure seems justified.
Credit Market Fueled Record Derivatives Activity
BIS says credit market problems fueled record activity in derivatives.
The Bank for International Settlements said the summer's credit market troubles led to record activity on derivatives exchanges but weighed heavily on bond issuance.Hmmm. An expansion in technical trading and hedge funds are also a factor. Nothing quite like 10,000 hedge funds levered up 10-1 or higher betting on chart patterns adding up to enormous multiples of the world's economy.
Growth in transactions between banks and other financial institutions was particularly strong, consistent with the increasing importance of hedge funds, portfolio diversification by institutional investors, such as pension funds, and an expansion in technical trading. BIS analysts also noted a marked increase in turnover involving emerging market currencies.
Derivatives Legal Issues
While on the subject of derivatives we may as well throw in a bonus item: Wall Street in legal trouble over derivatives prospectus.
The New York state Attorney-General has sent subpoenas to banking giants after announcing an investigation into the sub-prime market crash. According to the New Zealand Herald, Atty Gen Andrew Cuomo has sent subpoenas to several banks, including Bear Stearns, Merrill Lynch and Deutsche Bank.Failsafe Prediction
The banks are being asked to show how they assessed the quality of the home loans underlying derivatives such as mortgage-backed securities and collateralised debt obligations (CDOs), the newspaper says. Mr Cuomo suggests that the banks creating the derivatives could be in trouble for failing in their legal obligation to ensure that prospectus information on the derivatives being sold was true.
I have a failsafe prediction: Several hedge funds are going to get carted out on a stretcher all at once and cause a cascade of defaults. Many hedges are in place that are based on other counterparty hedges paying off in the event of "an event". When "the" event comes, those hedges will prove to be worthless.
Long Term Capital Management (LTCM) will look like a picnic in the park compared to the derivatives mess we are currently building up. For more on LTCM and the inherent systemic risks of leveraged derivatives please see Genius Fails Again.
EU-AU Summit: Of Money, Mugabe, China
The EU-AU summit currently underway in Lisbon, Portugal has already attracted a huge amount of attention for understandable reasons. It has toxic leaders like Zimbabwe's Robert Mugabe and Sudan's Omar al-Bashir in attendance. (As a result of Mugabe's presence, the UK PM Gordon Brown has boycotted the summit as promised, as have a number of other EU leaders.) There is also a lot of trade at stake as the EU aims to maintain its status as Africa's largest trading partner despite growing Chinese presence in the region. While it may seem that China now drives much economic activity in the region in order to secure the raw materials needed by the Chinese industrial machine, Europe has had a long head start owing to the continent's colonial past.
Let us begin with the Economist analyzing why this summit is taking place despite all the controversy. It says that the summit is driven primarily by economic reasons--the EU doesn't want China to muscle in on its "turf." However, it also says that the enticements offered by the EU are not very attractive and do not justify the damage inflicted to the EU's image by inviting odious characters like Mugabe and Bashir:
The Portuguese, who hold the EU presidency, see this first EU-Africa summit since 2000 as the capstone of their six-month tenure. They accept that the summit carries a “political price”: the one-man-against-the-rest EU split caused by the refusal of Britain's prime minister, Gordon Brown, to attend, in protest against the presence of Zimbabwe's president, Robert Mugabe. But, the Portuguese say, China and others have forced their hand.For the Europeans are worried that they are losing both trade and clout on a continent that they used to regard as their own backyard. Over the past five years resource-hungry China has swept across a grateful continent, buying oil and minerals. African-Chinese trade has increased five-fold over that time to more than $50 billion last year. Europe's long-standing links mean that it is still Africa's biggest trading partner, but the Chinese are catching up. For example in October the Industrial and Commercial Bank of China paid $5.6 billion for a 20% stake in Standard Bank of South Africa.
India, too, has been buying oil and mineral concessions in countries such as Sudan and Nigeria. America has revived its interest in Africa: it wants to take 25% of its oil imports from there to decrease its dependence on the Middle East...Europeans complain that China damages Africa by not linking its loans and investments to improvements in government and human rights. [Yes, well, don't invite Mugabe and Bashir to an EU-AU summit, then.] But Africans are dismissive: as one official says, “Europe is jealous. They say we have gotten a new colonial master, but our old one wasn't so good.”
The Lisbon summit will thus be an explicit counterpoint to the China-Africa summit of November 2006, when China cemented its new relationship with a promise of yet more money. Now the Europeans will try to woo the bride back from Beijing, using concessions and inducements.
The main concession is to be less critical of regimes that are a bit light-fingered, or disdainful of human-rights. João Cravinho, the Portuguese minister responsible for the summit, contends that the Europeans have been “excessively simplistic” in insisting on European models of government for Africa. Instead, Europe will “focus on the essence of government [and be] less hung-up on particular forms of decision-making.” Getting into the spirit, Europe overturned its own travel ban on Mr Mugabe, a stranger to decent behaviour, to allow him to attend the summit. Mr Mugabe will be lectured—and is then free to join in the cuddly group photographs. Sudan's president, Omar al-Bashir, will also be at the summit, but there are no plans to nag him about brutality in Darfur.
Of the new inducements, trade deals called Economic Partnership Agreements are the ones Europe thinks will help Africa most. The EU argues that these are good for development, offering African countries full access to the European market while allowing them to keep about 20% of their own markets closed to protect fragile domestic industries. But some African countries, such as South Africa and Nigeria, argue that they are being bullied into making agreements by the end of the year. The Europeans argue that the deals are designed to encourage regional integration in Africa. The Africans retort that by making separate deals with different countries they are doing exactly the opposite.
Europe's new insouciance about human rights will worry many, especially those suffering atrocities in Zimbabwe and Darfur, while the inducements hardly look tempting. Europe needs to do much better than this if it is to win the bride.
Meanwhile, Bloomberg has more on the political maneuvering going on, with a reference to China' role in the region:
``The current situation in Zimbabwe damages the image of the new Africa,'' German Chancellor Angela Merkel told representatives from 80 EU and African states in a keynote speech at the meeting attended by Mugabe. ``Nothing can justify the intimidation of those holding different views and hindering freedom of the press.''
Mugabe's presence came close to wrecking the summit, the first such gathering since 2000. The Zimbabwean leader, who's banned from the 27-nation EU, received a visa from the Portuguese government only after African leaders said they wouldn't come if he were barred. This prompted a boycott by some European leaders, including British Prime Minister Gordon Brown, who says Mugabe is responsible for ``the collapse of Zimbabwe's society and economy.''
In addition to the U.K., Lithuania, the Czech Republic, Poland, Hungary, Slovakia and Cyprus didn't send heads of state or government to the summit, according to a list of participants from the Portuguese foreign ministry...
``Europe wanted this summit to end 50 years of uneasy post- colonial relations. But the meeting is attended by a leader who exploits the colonial past and uses it as an excuse for his human- rights violations and endemic corruption at home,'' Fredrik Erixon, director of the Brussels-based European Centre for International Political Economy, said in an interview. Several of the EU countries at the summit are former African colonial powers including the U.K., France, Belgium, Germany, Spain, Italy and Portugal. ``This summit is a summit of equals,'' said Socrates. ``There are no minor cultures; there are no superior civilizations.''
Aside from human rights, migration and security, EU leaders are using the two-day summit as a bid to counter growing Chinese influence in Africa as competition for the continent's energy and mineral resources grows. ``The EU hasn't missed the boat, but they've certainly lost a lot of ground,'' John Kotsopoulos, an Africa expert at the Brussels-based European Policy Centre research institute, said in a telephone interview.
China is providing $8 billion in loans and investment to Africa and attaches no political demands to aid -- in contrast to Europe, which often links aid to governance and human rights. ``China's approach, also based on their own experiences and values, has forsworn conditions with the exception of the diplomatic recognition of Taiwan,'' said Christopher Alden, an Africa expert at the London School of Economics and author of the book ``China in Africa.'' China regards Taiwan as a renegade province that must be reunited with the mainland, by force if necessary.
Retired South African bishop Desmond Tutu urges action on the part of the EU in dealing with Mugabe, though not much seems to be forthcoming aside from Merkel's largely symbolic swipe. From Africasia:
Meanwhile, South Africa’s retired Anglican bishop Desmond Tutu on Friday said European Union (EU) leaders must confront Mugabe over his human rights abuses at the EU-Africa summit that begins in Lisbon, Portugal today, saying silence could be seen as condoning the abuses in the southern African country. “I would expect that they (EU leaders) would criticise any regime that violates human rights because if you don't, you are condoning those violations. The violators will think you are on their side," Tutu told Renascenca radio station. Tutu, who said he was deeply saddened with what has happened in Zimbabwe, has over the past seven years been among the few African leaders to publicly criticize Mugabe whom he once described as a “caricature of an African leader.” He said he expected EU leaders to “speak without any euphemism on human rights which are being violated so blatantly in Zimbabwe.”
Banana Wars Never End, Part III
There must be something about fighting over bananas that captures the fancy of trade watchers the world over. I have noted developments in the banana wars during recent times [1, 2]. For those of you who are not quite familiar with this row, the Guardian has a brief history. The world's largest banana exporter, Ecuador, and the world's largest banana producer, US-based Chiquita, have long been critical of the EU granting preferential access to the commodity exports of former European colonies which fall under the Africa, Carribean, and Pacific (ACP) grouping. They have already filed and won rulings at the WTO asking for reductions in the tariffs applied to Ecuadorean bananas. However, Ecuador believes that the EU hasn't yet acceded to the WTO rulings, and has asked the WTO to check for compliance. The EU appears to have yet again been found in violation of the binding WTO rulings.
On a related issue, I recently noted that African countries also in the ACP grouping together with various NGOs have been clamoring for an extension of preferential trade agreements with the EU such as that which fomented the banana wars. What this case brings out is that it's not mainly a case of the evil EU lording it over former colonies to end such tariffs as some would make of it. As with Ecuador, these preferential agreements injure other developing countries not in the ACP. From a social justice standpoint, is there much of a case for favoring one developing country over another as a source of banana exports? The EU can atone for its perceived colonial misjudgments through ways less injurious to other LDCs by, for instance, providing aid to ACP countries. Perhaps more developing countries can benefit from a level playing field of lower tariffs on agricultural products all around--what a novel idea. When that moment comes, the banana wars may finally end. From the Associated Press:
The European Union has failed to bring its import tariffs for bananas in line with international trade rules, a WTO compliance panel ruled Monday, possibly opening up the door to millions of dollars (euros) in commercial sanctions from Ecuador. The confidential decision — distributed Monday to the parties and confirmed by Ecuadorean and European officials — is an important development in the decade-old World Trade Organization dispute pitting Latin American countries and the United States against the EU.The verdict will also be closely followed by Chiquita Brands International Inc., whose shares climbed 9.2 percent last Tuesday on early reports that the EU would lose the case. The tariff costs Chiquita US$1, or €.68 per share annually, according to Barry Sine, an Oppenheimer & Co. analyst.
"It was a total victory," said an Ecuadorean official to the WTO after reviewing the report. "We are very happy with the result." The official asked not to be cited by name because he was not authorized to speak to the media.
Michael Mann, spokesman for EU Farm Commissioner Marian Fisher Boel, confirmed the loss, but criticized the WTO panel for taking a "purely formalistic" approach that ignored data showing an increase in European imports of bananas from Latin America as a whole.
The WTO has consistently ruled against how Brussels sets tariffs for bananas, forcing it to overhaul a system that grants preferential conditions for producers from African and Caribbean countries, mainly former British and French colonies.
The EU claimed that a new banana tariff established last year — €176, or $258 per ton — brought its import rules in line with WTO rulings. But Ecuador, the world's largest banana producer, said the new tariff actually took away some of its market share in Europe, hurting more than 1 million Ecuadoreans dependent on the banana industry.
"In any event, all this is largely academic," Mann said, adding that preferences will be granted under WTO-compliant economic partnership agreements as of next year. "The EU is engaged in good-faith negotiations on the future bound tariff for bananas with all suppliers. It is through negotiations, not litigation, that we will find a solution that is satisfactory for all." The verdict is expected to be publicly released in March, at which point the EU can lodge a final appeal. The U.S. also revived a complaint against Brussels' banana rules at the WTO this year. Colombia initiated a new dispute.
Ecuador claimed in March to have already lost US$131 million because of the discriminatory tariff. It has yet to say how it would retaliate against the EU. Latin American bananas currently have around 60 percent of the EU banana market, while African and Caribbean producers have 20 percent, according to EU officials. Bananas grown in the EU — mostly on Spanish and French islands — account for another 20 percent.
The bananas case was first brought to the Geneva-based trade referee in 1996, but has since spawned a series of disputes as trade lawyers wrangled over procedural intricacies and legislation that had previously never been tested. The U.S., in 1999, and Ecuador a year later both won the right to impose trade sanctions on European goods after the WTO found the EU's rules to be illegal.
Evaluating Nestor Kirchner
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BY LATIN AMERICA ADVISOR
Inter-American Dialogue
Argentine President Nestor Kirchner [today] turns over power to his wife, Cristina Fernandez de Kirchner, who was elected in October to succeed her husband. Overall, how would you rate Nestor Kirchner's term in office? What has to happen over the next four years for him to stand a good chance for re-election?
Freddy Thomsen, Head of E.F. Thomsen economic consultancy in Buenos Aires: Nestor Kirchner's main achievement during his term in office was to complete it. This was not obvious when he came to power in 2003 with 22 percent of the vote, especially considering his three predecessors were forced to shorten their presidencies. He even managed to anoint his wife as president. His quest for popularity led him to adopt many policies that will be costly to the country. Strong economic growth and political stability were accompanied by double-digit inflation, lack of investment in energy, suspicions of government corruption, manipulation of official statistics, and an unfriendly business environment for many long-term investors. It is not obvious what has to happen over the next four years for Nestor Kirchner to stand a good chance for re-election, should he decide to run. If the economy continues to perform as today (unlikely), won't voters take growth for granted and become more demanding about, say, inflation, corruption, and public safety? Should the economy weaken, will voters blame only Mrs. Kirchner and call for the return of Nestor, or will they direct their anger against both? What can be said is that Nestor Kirchner will need to remain far ahead of his opponents in quickly aligning himself with public opinion, whatever the direction in which it may swing. This quickness of reflexes was one of his strengths as president, and could continue to prevent any opposition candidate from posing a serious challenge in 2011.
Rosendo Fraga, Director of the Union for the New Majority Studies Center in Buenos Aires: At the end of 2006, President Kirchner's project to reform the Constitution to establish indefinite re-election—as he did in Santa Cruz province when he was governor—was definitively tripped up when his pilot experience of imposing it in Misiones province was categorically defeated in a referendum. The Argentine leader reacted with realism, accepted defeat, and shrewdly moved to pass an alternative plan: indefinite re-election-lite through the presidential election of his wife. That is how today in Argentine politics one can imagine that in 2011 Kirchner will return to the presidency for four or eight more years, to be later succeeded by his wife and return to power after her. In four years, many things can change in Argentine politics, and no one can guarantee whether or not Kirchner will be president again. In this regard, Venezuelan President Hugo Chavez's recent defeat confirms that politics tends to be a succession of the unpredictable. However, what Kirchner has achieved is the possibility that he will be president between 2011 and 2019. Politics, looking forward, functions like the market: "if I have the future, I have the present, if I lose the future, I lose the present." To continue having the chance to return to the presidency, Kirchner needs to have two situations in his favor: a global economy that grows and demands food, and economic growth and a fractured political opposition. The latter is important, because Chavez's defeat shows that one can lose an election with a favorable economy if the opposition comes together. Perhaps Chavez's political challenge is now to achieve, as Kirchner did, a version of indefinite re-election-lite, since, if he doesn't, the loss of future power could overtake the present.
Graciela Romer:, Director of Graciela Romer & Associates in Buenos Aires: The first thing that must happen is his truly wanting to be re-elected in 2011, but if that were to happen, he must first get through four years, which at first glance seem easier to get through than the ones he had between 2003-2004 (following the worst economic crisis in Argentine history) and on which he depends for voters to want him to return. It doesn't seem realistic to think that, if Cristina Fernandez de Kirchner (CK) doesn't govern well, people will demand his return and re-elect him. Above all, this is because the vast majority thinks Nestor Kirchner will continue playing an important role in the next government. However, the challenges CK must face are not simple. It's true that her husband leaves a more robust economy, with reserves at $40 billion, with a fiscal surplus that, although smaller than during the last electoral year, will be compensated for in the coming months by an increase in fiscal collections through export withholdings and higher taxes. Better unemployment and poverty rates are also evident. But CK must focus on various fronts—from the border conflicts with Uruguay and improving employment quality (which still remains at 40 percent marginal or informal employment), to the need to improve institutional quality and the business climate to attract investment—which becomes increasingly urgent if she wants to sustain growth rates and, above all, put the brakes on the spiral of inflationary expectations present in the country today.
Lino Gutierrez, President of Gutierrez Global, LLC and a former US Ambassador to Argentina: Nestor Kirchner assumed power after the worst economic crisis in Argentine history; he leaves Argentina well on its way to economic recovery. Argentina has averaged GDP growth above 8 percent for five consecutive years. Kirchner significantly lowered unemployment, cut poverty rates in half, and generated budget surpluses throughout his term. He negotiated a favorable debt rescheduling agreement and created a sustainable debt payment schedule. Obviously, Argentina's strong economic recovery was helped by a favorable international environment, including high commodity prices for exports and a competitive exchange rate for the peso. Kirchner leaves unresolved problems for his successor, including high inflation, subsidized gas prices, and an overly taxed export sector. Internationally, Argentina was a responsible actor during its two years on the United Nations Security Council. Argentina's deployment of troops to Haiti contributed to regional stability. Argentina contributed on proliferation issues, counternarcotics, and the global war on terrorism. Its pursuit of the Iranian perpetrators of the AMIA bombing after years of inaction was much welcomed. It is regrettable that Argentina did not move forward on the FTAA, did not follow through on second-generation economic reforms, including protecting intellectual property rights and fiscal reform, and occasionally gave Chavez a forum to promote his agenda. Although Kirchner leaves office with a high approval rating, his re-election—assuming he decides to run in 2011—will depend on how Cristina's government performs. Most Argentines see the Fernandez administration, with a number of ministers carried over from Kirchner's government, as the second act of the Kirchner administration.
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