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Archive for November 19th, 2006

Blair hit by Saudi ‘bribery’ threat


SAUDI ARABIA is threatening to suspend diplomatic ties with Britain unless Downing Street intervenes to block an investigation into a £60m “slush fund” allegedly set up for some members of its royal family.

A senior Saudi diplomat in London has delivered an ultimatum to Tony Blair that unless the inquiry into an allegedly corrupt defence deal is dropped, diplomatic links between Britain and Saudi Arabia will be severed, a defence source has disclosed.

The Saudis, key allies in the Middle East, have also threatened to cut intelligence co-operation with Britain over Al-Qaeda.

They have repeated their threat that they will terminate payments on a defence contract that could be worth £40 billion and safeguard at least 10,000 British jobs.

The Saudis are furious about the criminal investigation by the Serious Fraud Office (SFO) into allegations that BAE Systems, Britain’s biggest defence company, set up the “slush fund” to support the extravagant lifestyle of members of the Saudi royal family.

The payments, in the form of lavish holidays, a fleet of luxury cars including a gold Rolls-Royce, rented apartments and other perks, are allegedto have been paid to ensure the Saudis continued to buy from BAE under the so-called Al-Yamamah deal, rather than going to another country. Al-Yamamah is the biggest defence contract in British history and has kept BAE in business for 20 years.

At least five people have been arrested in the probe. They include Peter Wilson, BAE’s managing director of international programmes, and Tony Winship, a former company official who oversaw two travel and service firms that are alleged to have been conduits for the payments. Both deny any wrongdoing.

The Saudi threat was made in September after the royal family became alarmed at the latest turn in the fraud inquiry. Sources close to the investigation say the Saudis “hit the roof” after discovering that SFO lawyers had persuaded a magistrate in Switzerland to force disclosure about a series of confidential Swiss bank accounts.

The sources said the accounts relate to substantial payments between “third party” offshore companies that may have received large sums in previously undisclosed “commissions”. Fraud office sources say they are now trying to get more documents that will tell them who benefited from the accounts. The trail is said to lead to the Saudi capital Riyadh.

The Saudis learnt of this development only when they were contacted by the Swiss banks in the late summer. “They hit the roof,” said a source close to the investigation.

The Saudi royal family, which effectively controls the government, instructed a senior diplomat, said to be Prince Mohammed bin Nawaf, its London ambassador, to visit Downing Street. He held a meeting with Jonathan Powell, Blair’s chief of staff, according to the sources.

The diplomat is said to have delivered a 12-page letter drawn up by a Saudi law firm demanding a detailed explanation of why the investigation was still continuing. The Saudis had been given the impression during a meeting with Blair in July last year that the inquiry would be stopped, say the sources.“The Saudis are claiming in this letter that the British government has broken its undertaking to keep details of the Al-Yamamah deal confidential,” said a source who has read the document.

“It regards the disclosure of these documents to the SFO from Switzerland, and from the Ministry of Defence, as a totally unacceptable breach of that undertaking. They are claiming the deal is protected by sovereign national immunity and that the British have no right to poke around in their private financial affairs.

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Democrats to quickly target oil industry tax breaks


WASHINGTON (AP) — House Democrats are targeting billions of dollars in oil company tax breaks for quick repeal next year. A broader energy proposal that would boost alternative energy sources and conservation is expected to be put off until later.

Hot-button issues such as a tax on the oil industry’s windfall profits or sharp increases in automobile fuel economy probably will not gain much ground given the narrow Democratic majorities in the House and Senate.

Incoming House Speaker Nancy Pelosi, in an outline of priorities over the first 100 hours of the next Congress in January, promises to begin a move toward greater energy independence “by rolling back the multibillion dollar subsidies for Big Oil.”

Yet the energy plan being assembled by Pelosi’s aides for the initial round of legislation is less ambitious than her pronouncement might suggest.

For the most part, the tax benefits are ones that lawmakers talked of repealing this year when Congress struggled to respond to the public outcry over soaring summer fuel prices and oil companies’ huge profits.

Topping the list for repeal are:

• Tax breaks for refinery expansion and for geological studies to help oil exploration.

• A measure passed two years ago primarily to promote domestic manufacturing. It allows oil companies to take a tax credit if they choose to drill in this country instead of going abroad.

Democrats say neither tax benefit should be needed for an industry reaping large profits at today’s high crude oil prices.

Over 10 years, the production tax credit saves oil companies $5 billion, and the refinery measure and exploration credit a total of about $1.4 billion, according to Congressional Budget Office estimates.

Other oil tax breaks probably will go unchallenged. That includes some passed by Congress only a year ago and others already targeted for repeal this year.

For example, House Democrats have no plans to change a provision that allows oil companies to avoid billions of dollars in taxes by the way they calculate inventories.

The Senate this year agreed to a repeal; the effort was abandoned amid House GOP opposition and an uproar from other industries that also benefit from the tax language.

House Democrats also are shying away from tampering with more than $1 billion worth of oil- and gas-related tax breaks enacted last year. These breaks largely benefit small companies or gas utilities rather than the major oil companies now awash in cash.

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Drug for Troops Labeled Dangerous

BALTIMORE (AP) — A blood-coagulating drug designed to treat rare forms of hemophilia is being used on critically wounded U.S. troops in Iraq despite evidence it can cause clots that lead to strokes, heart attacks and death in other patients, The (Baltimore) Sun reported for Sunday’s editions.

Recombinant Activated Factor VII, which is made by Danish pharmaceutical company Novo Nordisk, is approved in the United States for treating forms of hemophilia that affect fewer than 3,000 Americans. It costs $6,000 a dose.

The Food and Drug Administration said in a warning last December that giving Factor VII to patients who don’t have the blood disorder could cause strokes and heart attacks. Its researchers published a study in January blaming 43 deaths on clots that developed after injections of Factor VII.

However, the Army medical command considers it a medical breakthrough that gives front-line physicians a way to control deadly bleeding. Physicians in Iraq have injected it into more than 1,000 patients, reported The Sun, which makes its first Sunday edition available Saturday afternoon.

“When it works, it’s amazing,” said Col. John B. Holcomb, an Army trauma surgeon and commander of the Army’s Institute of Surgical Research. “It’s one of the most useful new tools we have.”

Critics strongly disagree.

“It’s a completely irresponsible and inappropriate use of a very, very dangerous drug,” said Dr. Jawed Fareed, director of the hemostasis and thrombosis research program at Loyola University in Chicago and a specialist in blood-clotting and blood-thinning medications.

Military doctors said patients requiring transfusions of 10 or more units of blood have a 25 percent to 50 percent chance of dying from their injuries, and there is enough evidence of the drug’s effectiveness to continue promoting its use.

“I’ve seen it with my own eyes,” said Air Force Lt. Col. Jeffrey Bailey, a trauma surgeon deployed this summer as senior physician at the American military hospital in Balad, Iraq. “Patients who are hemorrhaging to death, they get the drug and it stops. Factor VII saves their lives.”

However, doctors at military hospitals in Germany and the United States have reported unusual and sometimes fatal blood clots in soldiers evacuated from Iraq, including unexplained strokes, heart attacks and pulmonary embolisms, or blood clots in the lungs. And some have begun to suspect Factor VII, The Sun reported.

Contacted Saturday by The Associated Press, an Army spokeswoman, Mary Ann Hodges, declined to comment immediately on the report because she had not seen it.

Doctors say determining the precise cause of blood clots is rarely possible, making it difficult to establish definitively whether Factor VII is responsible for complications. And military doctors caution against drawing any conclusions from individual cases.

Officials at Novo Nordisk said complications don’t mean the drug is too dangerous to use.

“It’s really not a question of an absolute safety level, but rather a ratio of benefit to risk that has to be established,” said Dr. Michael Shalmi, vice president of biopharmaceuticals for Novo Nordisk.

“We’re making decisions, in the middle of a war, with the best information we have available to us,” said Holcomb at the Army’s Institute of Surgical Research.

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Kissinger: No Military Victory in Iraq


LONDON — Military victory is no longer possible in Iraq, former Secretary of State Henry Kissinger said in a television interview broadcast Sunday.

In a wide ranging interview on British Broadcasting Corp. television, Kissinger presented a bleak vision of Iraq, saying the U.S. government must enter into dialogue with Iraq’s regional neighbors _ including Iran _ if any progress is to be made in the region.

“If you mean by ‘military victory’ an Iraqi Government that can be established and whose writ runs across the whole country, that gets the civil war under control and sectarian violence under control in a time period that the political processes of the democracies will support, I don’t believe that is possible,” he said on the BBC’s Sunday AM breakfast show.

But Kissinger warned against a rapid withdrawal of troops, saying it could lead to “disastrous consequences,” destabilizing Iraq’s neighbors and causing a long-lasting conflict.

“If you withdraw all the forces without any international understanding and without any even partial solution of some of the problems, civil war in Iraq will take on even more violent forms and achieve dimensions that are probably exceeding those that brought us into Yugoslavia with military force,” he said.

Iraq’s neighbors, especially those with large Shia populations, would be destabilized should their be a quick withdrawal from Iraq, Kissinger said.

“So I think a dramatic collapse of Iraq _ whatever we think about how the situation was created _ would have disastrous consequences for which we would pay for many years and which would bring us back, one way or another, into the region,” he said.

Kissinger, whose views have been sought by the Iraqi Study Group, led by former Secretary of State James Baker III, called for an international conference bringing together the permanent members of the United Nations Security Council, Iraq’s neighbors and regional powers like India and Pakistan to work out a way forward for the region.

He also said that the process would have to include Iran and that the U.S. must enter into dialogue with the country.

Asked if it was time for President Bush and British Prime Minister Tony Blair to change course, he responded: “I think we have to redefine the course, but I don’t think that the alternative is between military victory, as defined previously, or total withdrawal.

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Embittered Insiders Turn Against Bush


The weekend after the statue of Saddam Hussein fell, Kenneth Adelman and a couple of other promoters of the Iraq war gathered at Vice President Cheney’s residence to celebrate. The invasion had been the “cakewalk” Adelman predicted. Cheney and his guests raised their glasses, toasting President Bush and victory. “It was a euphoric moment,” Adelman recalled.

Forty-three months later, the cakewalk looks more like a death march, and Adelman has broken with the Bush team. He had an angry falling-out with Defense Secretary Donald H. Rumsfeld this fall. He and Cheney are no longer on speaking terms. And he believes that “the president is ultimately responsible” for what Adelman now calls “the debacle that was Iraq.”

Adelman, a former Reagan administration official and onetime member of the Iraq war brain trust, is only the latest voice from inside the Bush circle to speak out against the president or his policies. Heading into the final chapter of his presidency, fresh from the sting of a midterm election defeat, Bush finds himself with fewer and fewer friends. Some of the strongest supporters of the war have grown disenchanted, former insiders are registering public dissent and Republicans on Capitol Hill blame him for losing Congress.

A certain weary crankiness sets in with any administration after six years. By this point in Bill Clinton’s tenure, bitter Democrats were competing to denounce his behavior with an intern even as they were trying to fight off his impeachment. Ronald Reagan was deep in the throes of the Iran-contra scandal. But Bush’s strained relations with erstwhile friends and allies take on an extra edge of bitterness amid the dashed hopes of the Iraq venture.

“There are a lot of lives that are lost,” Adelman said in an interview last week. “A country’s at stake. A region’s at stake. This is a gigantic situation. . . . This didn’t have to be managed this bad. It’s just awful.”

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A Tough Road Ahead for Rove


WASHINGTON, Nov. 18 — Karl Rove, the top White House political strategist, is coming off the worst election defeat of his career to face a daunting task: saving the president’s agenda with a Congress not only controlled by Democrats, but also filled with Republican members resentful of the way he and the White House conducted the losing campaign.

White House officials say President Bush has every intention of keeping Mr. Rove on through the rest of his term. And Mr. Rove’s associates say he intends to stay, with the goal of at least salvaging Mr. Bush’s legacy and, in the process, his own.

But serious questions remain about how much influence Mr. Rove can wield and how high a profile he can assume in Washington after being so closely identified with this year’s Republican losses, not to mention six years of often brutal attacks on the same Democrats in line to control Congress for the remainder of Mr. Bush’s presidency.

Things have not gotten off to a great start since the election. Democrats are taking Mr. Rove’s continued influence at the White House — as well as some of its recent moves, like nominating conservative judges for the federal bench — as a sign that Mr. Bush’s conciliatory pledges of bipartisanship will prove to be fleeting.

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Gonzales blasts surveillance critics

AIR FORCE ACADEMY, Colo. – Attorney General Alberto Gonzales contended Saturday that some critics of the Bush administration’s warrantless surveillance program were defining freedom in a way that poses a “grave threat” to U.S. security.

Gonzales was the second administration official in two days to attack a federal judge’s ruling last August that the program was unconstitutional. Vice President Dick Cheney on Friday called the ruling “an indefensible act of judicial overreaching.”

Gonzales told about 400 cadets from the Air Force Academy’s political science and law classes that some see the program as on the verge of stifling freedom rather that protecting the country.

“But this view is shortsighted,” he said. “Its definition of freedom — one utterly divorced from civic responsibility — is superficial and is itself a grave threat to the liberty and security of the American people.”

Gonzales and Cheney’s attacks on the court order came as the administration was urging the lame-duck Congress to approve legislation authorizing the warrantless surveillance. The bill’s chances are in doubt, however, because of Democratic opposition in the Senate, where 60 votes are required to end debate and vote.

At a news conference, Gonzales would not speculate how the administration would react if Congress did not authorize warrantless surveillance.

“We’re optimistic because of the importance of this program, the success of the program, the stated commitment of the Democratic leadership to work with us in protection of America, and that we’re going to have a good discussion and dialogue about the program,” he said.

“We believe the president has the authority under the authorization of military force and inherent authority of the constitution to engage in this sort of program, but we want to supplement that authority,” he said.

The administration has maintained that its warrantless surveillance program focuses on international calls involving suspected terrorists, and dismisses charges that it is illegal because it bypasses federal law requiring a judge-issued warrant for such eavesdropping.

“It’s absolutely essential that we maintain the tool,” he told reporters. “It’s been very, very important in protecting America, and we look forward to working with Congress to find a way that we can supplement the president’s authority, and continue to maintain this as a valuable tool for the American people.”

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