"It is not a simple drug matter but a political plot hatched by the U.S. and its allies in a premeditated and deliberate manner to do harm to the DPRK and stifle it over its nuclear issue", said the official Korean Central News Agency.

Pong Su, a 3,500-ton vessel owned by a DPRK company, was seized off the southeastern coast of Australia on April 2003 by Australian law enforcement authorities. Police suspected the freighter had been used to import 250 kg of heroin to Australia. Four crew members were also detained and charged with drug smuggling.

The U.S. State Department's annual report said the Pong Su incident was "the first indication that North Korean enterprises and assets are actively transporting significant quantities of illicit narcotics" outside the country's borders."

The DPRK strongly denied the allegation, saying the U.S. was just trying to "label the DPRK an illegal state under this or that charge, it can never deceive the world."

Following a three year trial, a Victorian Supreme Court jury in Australia returned a not guilty verdict toward four officers of the ship who had been charged with aiding and abetting the importation of a commercial quantity of heroin on March 5. But the court ordered the destruction of the ship.

The KCNA on Monday demanded a formal apology and compensation from the U.S. for inflicting "not small damage upon the DPRK's ship and its crewmen," and asked the U.S. to "stop at once all its farces intended to mislead the international community."

In October, the U.S. government slapped restrictions on a Macaubank and some DPRK companies which it said had been involved in illicit activities, including counterfeiting, money laundering and financing weapons proliferation, ahead of the second phase of the fourth round of six-party talks in November.

The DPRK has denied the U.S. allegations.

Venezuela's National Assembly, dominated by Chavez's allies, approved the modified flag last week after he proposed changes as a tribute to Simon Bolivar, the Venezuelan-born South American liberation hero who Chavez says inspired his socialist revolution.

A small group of Chavez supporters briefly traded blows with opposition marchers protesting against the new flag, which features an eighth star, a white horse on the coat of arms galloping to the left instead of the right, a bow and arrow representing Venezuela's indigenous people and a machete to represent the labourers.

In a ceremony on the 200th anniversary of the country's flag, Chavez raised the new version at the national pantheon before attending a military parade where soldiers marched with participants in his social programmes for the poor.

Stars and gripes

"Eight stars now flutter in the wind in Venezuela, seven originals and the eighth that Simon Bolivar decreed," Chavez said. "And the white horse is now free."

The president said Bolivar decreed in 1817 that another star should be added to the flag to represent the addition of a province to Venezuela.

Since 1863, the flag has had seven stars representing the original seven provinces that rose up against Spain.

Chavez, a former soldier, was elected seven years ago and has promised a revolution for the poor in the world's fifth-largest oil exporter.

His critics at home and in Washington worry about his alliance with Cuba and say he has eroded democracy by exercising authoritarian control.

Critics call the changes to the flag a waste of money. The new flag and coat of arms is eventually to be adopted in Venezuela's currency, passports and government documents.

Opposition marches

Several hundred opposition supporters marched in Caracas to protest against the new flag. One group of demonstrators carried seven white stars and an eighth red one painted with the former Soviet hammer and sickle emblem.

Scuffles briefly broke out after Chavez loyalists hoisted the new flag along the route of the protest march and opposition supporters tried to take it down. Police quickly quelled the clashes.

Rosa de Pool, 70, a secretary participating in the opposition protest, said: "I'm here to defend my flag, you can't change those things without asking the people if they agree or not."

Lilian Luces, 54, said: "It's a whim of the president. I think it's absurd for them to put on another star and turn around the horse."

Last year Chavez dismissed the horse image on the flag as "imperialist" after his daughter asked him why it ran to the right with its head facing backward.

"The white horse is now liberated, free, vigorous, trotting toward the left, representing the return of Bolivar and his dream," Chavez said. "Long live the fatherland!"

However, the government apparently did not have time to update Chavez's presidential sash, which bore the old coat of arms with the horse galloping towards the right.

Outside there is a very Parisian scene. A long, open boulevard, trees stripped of their leaves, a grey light on the grey facades of the 19th-century apartment blocks, and, predictably, the road beneath obscured by thousands of marchers.

The demonstration passing beneath my windows is against a new law that allows small businesses to hire young people on short-term contracts. A small enough change, you might think, certainly not something that will make a major impact on a legal framework offering far greater job security than anything in the UK or pretty much anywhere else in Europe. But enough, nonetheless, to bring several hundred thousand people on to the streets. A young communist hands out leaflets calling on everyone to fight against précarité

There is a whole lexicon of French political words for which there is no direct equivalent in English and the one most in evidence these days is précarité (precariousness, insecurity). The word is spattered across the scores of banners, and hundreds of pamphlets, and crackles out of the loudspeakers and bullhorns on the floats. And it is a good word to keep in mind for anyone interested in understanding modern France.

On the television in my office there are live pictures of the demo spliced with images from a heated debate at the National Assembly. Dominique de Villepin, the urbane French Prime Minister, is explaining the need for the new law. It is about modernising the country, he is saying. The world has changed and France must change with it. A lot of people apparently disagree with him. Beside the Prime Minister, impassive, arms crossed, in a blue suit and blue tie, is Nicolas Sarkozy, the interior minister, and the man who, perhaps more than anyone else in the country, wants to change France.

Sarkozy is another word that anyone wanting to understand modern France needs to keep in mind. Sarkozy and précarité.

Oddly, it is Sarkozy, not de Villepin, or even the weakening President Jacques Chirac, who is the most visible politician in France these days. His short, stocky bustling form is everywhere. His immediately recognisable features, so easy to caricature that French cartoonists say they are bored of drawing him, are on posters slapped up over walls, on the front page of newspapers, on trashy talk shows and serious discussion programmes. Though most journalists in France continue to scrupulously respect the division between public and private life, Sarkozy's turbulent marriage is a topic of conversations in bistros and bars. A 'romantic novel', a thinly disguised and salacious account of his relationship with his beautiful 'soul mate' wife Cécilia, is selling tens of thousands of copies. The issue of Paris Match which revealed last summer that Cécilia was flat-hunting in New York with a 'new friend' (she had left her husband apparently because she did not want to be France's First Lady) was one of the highest-selling of 2005. Last week Cécilia, it was breathlessly reported in otherwise serious newspapers, was seen at Place Beauvau, the interior minister's official residence, confirming the couple's much-rumoured reconciliation.

Sarkozy is a phenomenon as much as a politician. He is hated and loved, feared and admired with a passion that far exceeds his actual deeds or statements. For some 'Sarko' is the only man who can save France. For others - one of the marchers outside my window actually spat on the wet Tarmac when I asked him what his opinion of 'Sarko' was - he is all that threatens the country. Yannick Noah, the former tennis star and one of the most popular men in France, has publicly said that if Sarkozy is elected President next year he will leave the country. Nobody is indifferent to Sarkozy. Somehow he has managed to push his stubby fingers deep into all the fault lines and wounds of French politics and society - and then twist hard.

Sarkozy was born in 1955 in the utterly bourgeois 17th arrondissement of Paris close to where he still lives. The second son of a wealthy Hungarian immigrant, he was largely educated privately. He is not, as some like to claim, an outsider in terms of the French political elite. Though trained as a lawyer, his first love was always politics and he started campaigning for the French conservatives at the age of 19. Socialists are few and far between in the 17th arrondissement.

In 1983, at the astonishingly young age of 28 and a year after marrying for the first time, he was elected mayor of Neuilly-sur-Seine, close to where he was born in Paris. In 1984 he met Cécilia Ciganer Albeniz, then 27 and a Sorbonne-educated concert-standard pianist, part-time model and public relations specialist. In 1988 he became a deputy in the National Assembly. Five years later Cécilia left her husband, Sarkozy left his wife and in 1996 the pair were married.

Sarkozy's first taste of real media attention had come in 1993 when, as mayor of Neuilly, he had successfully negotiated with a bomb-carrying crank who was holding a nursery school hostage. The nation watched him leaving the school with a small child in his arms. I saw the images recently on a French television show devoted to 'historic moments of our times' as chosen by viewers. The young Sarkozy walks out of the school, straight towards the cameras, with the same efficient muscular strut he has now. He is the impatient man of action, sleeves rolled up, risk-taking, a player and a thinker and a fighter. As the cartoonists have got tired of drawing him, so commentators have got tired of the adjective 'Napoleonic'.

A year after the siege came Sarkozy's first real taste of power with an appointment as a junior finance minister. A few injudicious - and unlucky - political calculations left Sarkozy out of major appointments in the late 1990s and he turned his undoubted energy to building his support base in the heart of the biggest right-wing political party - the UMP - instead, eventually becoming its president. In 2002, the newly re-elected President Jacques Chirac appointed him Minister of the Interior. He has not been out of the public eye since.

Chirac, most French commentators agree, is political carrion. Sarkozy, who is 'obsessed' by the presidency according to one biographer, has made little secret of his desire to run for France's highest office. De Villepin, who has never actually contested an election, is likely to be his main rival for the right-wing vote. The latter, a part-time poet who favours a more conciliatory and aristocratic style, rarely plays the media game with the same skill as his busy rival (although during the UMP's summer conference he managed successfully to leave Sarkozy waiting at a breakfast table in full view of the TV cameras while he, stripped to the waist, finished a well-photographed swim). De Villepin does however reassure many voters. Whether the two potential candidates detest each other or, like a pair of gladiators, grudgingly respect each other's different talents is unclear.

But though his rise has been swift, little in his actual career sets Sarkozy apart from many other French politicians. Apart from the fact that he did not go to one of the major schools that groom the vast majority of the French elite and his parents were immigrants, his is a standard political man's background. It certainly does not explain why Sarko arouses such visceral loathing or admiration among his compatriots.

When I arrived in Paris six months ago, a friend told me about the bread served at breakfast in her local cafe. 'Some days it's good,' she said. 'Other days, if the baker's lost on the horses or rowed with his wife, then it isn't.' At the time I did not recognise that, very gently, she was giving me the key to understanding modern France and the modern French world-view. She was saying was what many French people feel. France is defiantly not part of the consumerist, capitalist, US-led economic and cultural wave that is engulfing the world. France is different. My friend spoke of two other elements which were new to me. She described herself as neither from left nor right but 'a republican', and spoke of the importance of a multi-polar world. The implication was that the leaders of the pole opposed to the 'Anglo-Saxons' would be the French. 'Anglo-Saxon' is another word you hear often in France. It means Anglophone, economically liberal, rampantly capitalist. It means the brutish British with their powerful economy and low taxes, their lower levels of unemployment but higher levels of poverty. It means the unsophisticated, insular, ignorant, crassly self-confident Americans who have somehow - and this is apparently an historic injustice of enormous proportions - managed to become the world's only superpower. It means a threat. It also means, of course, an overweening sense of précarité.

One of the things that struck me most on arrival in France was this sense of external threat and internal crisis, despite the fact that the nation is still quite evidently one of the most successful states of the modern world. I started counting 'crises' - the crisis of wine, of textiles, of the press, of the railways (the latter immeasurably better than the UK's shambolic, expensive and filthy system) - and then gave up. As for threats, the biggest threat of all, that which apparently menaces all that France stands for, is globalisation, something that I had largely considered as a relatively benign process that brought countries closer together. Not for many in France. The destruction of distance, the melting of frontiers, was seen by many as a potential disaster. Even the project of the European Union was seen as a sinister Anglo-Saxon led 'liberal' plot to undermine the French social model and its cultural and economic traditions. The spread of the English language was an appalling loss to the world, not a means to greater international communication.

All is thus insecure, threatened, precarious, whether jobs or a way of life. This explains, to a degree, the intensely powerful myths that surround French agriculture - even if France's future clearly lies not in producing steak and turnips but in capitalising on its incredible reserves of knowledge, thought and culture.

The latter cannot fail to impress. If you want one difference with the UK, you will find it in the general level of popular conversation. In Bobigny, in the famous Paris banlieues - the celebrated department 93, scene of so much of the trouble last autumn - I spoke to a taxi driver who, after comparing rap lyrics to those of Corneille, the classic French playwright, explained to me the history of politically engaged French songwriting since the 1940s. In a poor provincial town in eastern France, the local mayor and backbench MP talked to me about different concepts of urban planning, making rapid references to major sociologists. He, incidentally, was a Sarkozy supporter. Everywhere the general level of public conversation is several notches higher than it is across the Channel and immeasurably superior to that found across the Atlantic.

But the French love affair with words has its drawbacks. A Swiss journalist friend spoke of the 'logorrhoea' of the French, which is unfair, but does indicate the degree to which words are favoured over action. There is a strong sense that if the ideas are there, and expressed in the right words, then actions are superfluous. So, during the riots of last year, which pitted angry, unemployed, alienated, disenfranchised youth from ethnic minorities against not angry, employed, fully franchised white policemen, the refrain 'the Republic is not racist' was everywhere. This was true: the principles of the French Republic are inspiring, the institutions are impartial, the laws are stunning in the simple elegance of their justice. But there is liberté, égalité, fraternité and there is réalité. As another French friend commented: 'We are interested in pourquoi (why), the Anglo-Saxons are interested in comment (how).'

Which is where Sarkozy comes in.

The problem with talking about Sarkozy is that, despite his extraordinary media exposure, he is something of an unknown quantity. To some he is a dangerous, dictatorial demagogue without ideology. A man who described the rioters in the banlieues as 'rabble', who says he will clean out bad estates with a sand-blaster, who favours zero tolerance policing, harsh immigration policies, an extension of the powers of the President (should he hold the job) and whose power base is in the none-too-gentle world of the French hard, though not the extreme, right. His detractors, and even some of his friends, say that he is 'psychologically fragile', pointing to his wild statements around the time of his break-up with Cécilia (and his consoling relationship with a journalist). But, though some of this may be true, Sarkozy has also spoken about the need to revamp France's fundamental law of secularism to allow mosques to be funded with state money to prevent extremism. He wants to give votes to non-naturalised immigrants in local elections and has come out strongly for positive discrimination for ethnic minorities, a measure that the French left, hobbled by their adherence to Republican values and their antipathy to anything Anglo-Saxon, has opposed. He has also, his supporters say, shown a resolve and a practical intelligence that few can rival on the French political scene. 'He is not an opportunist,' Camille Servan-Schrieber, a political adviser, tells me. 'He is a pragmatist. He is interested in the best solution at the best time.'

Whether Sarkozy is the best solution to France's problems depends in part on how you view those problems. One of the debates currently obsessing the French is the supposed 'decline' of their country. In recent months there have been furious rows between the 'declinologues' and their adversaries. The message of the former is that it is about time France woke up, got rid of its antiquated and expensive social model, its ossified bureaucracy, its over-powerful trade unions and began engaging with, and competing in, a fast-changing world.

A cultural, political and economic Maginot line will be no more effective than its military predecessor, they say. Such thinking is not just limited to the right. Bernard Kouchner, the founder of Medecins sans Frontiers and popular centre-left politician, said last week that France was suffering from 'severe arthritis'. But those who oppose the declineists say they are aggressive right-wing capitalists (or left-wing sell-outs), Anglo-Saxon in attitude and sympathy, who are wrong about the state of the nation. France is not 'falling down', they say, but the sole hope of global resistance to the planetary dominance of new-liberal economics and American culture. According to them, the decline-ists are just capitalists looking to strip the French people of all the hard-fought winnings of centuries of social struggle.

And this bitter division explains - as well as his colourful personal life - the astonishing profile of Sarkozy in French society. If the hour is one in which France is declining, then Sarkozy, with his talk of a 'clean break' with the past, is the man. If France is not declining, then Sarkozy is just another ambitious, and possibly dangerous, politician who shoots from the hip. There are powerful currents in France supporting either analysis. In the coming months and years we will see which triumphs. One thing is sure: the boulevards are likely to see many more marches before the contest is resolved.

Need to know

Born Nicolas Paul Stéphane Sárközy de Nagy-Bócsa (nicknamed Sarko) on 28 January 1955 in Paris.

Position Minister of the Interior and President of the Union pour un Mouvement Populaire (UMP).

He says 'Nothing will lead me astray from the path that I have chosen.'

They say 'He calls problems by their real name, and he makes promises he intends to keep.'
Stephane Rozes of the polling firm CSA

I will never forgive him. And to think that I have seen him in his boxers.'
President Jacques Chirac

On the ideological front, China's model of protecting one-party rule by improving the economic livelihood of the people and emphasizing the principles of sovereignty, non-interference and territorial integrity while calling for a multipolar international system challenges the US-led international order, which favors democracy, human rights and humanitarian intervention.

China's rapid growth, development and modernization is also proceeding in tandem with China's growing resource needs, which are placing pressure on raw material prices and fueling a global competition for certain resources, notably energy resources given China's position as the second-largest oil consumer after the United States.

However, events in these two regions are not mutually exclusive. China's growing economic influence has proceeded in tandem with a growing military capability and more proactive political and diplomatic policy on the world stage, including in the Middle East. Its policy toward the Middle East has emerged as a microcosm of its foreign policy throughout the world, being driven by a desire to maintain a stable international environment in order to focus on its internal development, forming a close bond with the developing world, gaining access to raw materials and markets, and elevating its status on the world stage.

China's relations with the Middle East

China's relations with the Middle East are rooted in China's support for anti-colonial struggles during the Cold War. Beijing's wave of diplomatic recognition with the Arab world began in 1956, with China's establishment of diplomatic relations with Egypt, and completed in 1990 when Saudi Arabia established diplomatic relations with China.

With the end of the Cold War and China's emergence as a net oil importer in 1993, China's primary interest in the Middle East has been to gain access to the region's vast oil and gas supplies. While China is trying to diversify its energy import supplies, it still depends on the Middle East for half of its oil imports, with Saudi Arabia and Iran providing about 30% of China's oil imports.

Meanwhile, numerous states in the region have agreed to invest in China's downstream infrastructure, as demonstrated in December when Kuwait signed an agreement to invest in refinery and petrochemical infrastructure in Guangdong province.

Also in December, China and the Organization of Petroleum Exporting Countries (OPEC) launched an energy dialogue. In fact, many recent diplomatic initiatives by China toward the Middle East can be seen through the prism of China's growing energy needs.

For example, the visit by King Abdullah bin Abdul Aziz to China in January was the first by a Saudi monarch to China. This visit demonstrated the deepening relationship between the world's fastest growing source of oil demand (China) and the world's biggest oil supplier (Saudi Arabia). Since 2002, Saudi oil shipments to the US have been declining while shipments have been increasing to China. Indeed, last year Saudi Arabia was China's leading source of oil imports.

China has secured numerous energy exploration agreements with the Saudi government. For example, Sinopec has won the right to explore for natural gas in Saudi Arabia's al-Khali Basin, while Saudi Arabia has agreed to assist China in the development of its strategic petroleum reserves and upgrade China's downstream refinery capacity as demonstrated by the construction of a refinery for natural gas in Fujian province.

Sino-Saudi relations extend beyond the energy sphere. Both countries maintain close relations with Pakistan and China has sold Saudi Arabia CSS-2 "East Wind" intermediate-range ballistic missiles. Saudi Arabia has also emerged as China's leading trade partner in the region with Sino-Saudi trade amounting to US$14 billion in 2005.

A similar deepening of relations can be seen in the case of Sino-Iranian relations. While China abstained in the vote to refer Iran's nuclear ambitions to the United Nations Security Council at the meeting of the International Atomic Energy Agency (IAEA) in January, it still maintains strong relations with Iran.

When the Iran issue is discussed at the Security Council, China could employ a similar tactic to that which it employed over the issue of Sudan, which is also a significant oil supplier to China; in 2004, the Security Council was forced to water down a resolution condemning atrocities in the Darfur region to avoid a Chinese veto.

China's relations with Iran, while rooted in centuries of history from the "Silk Road" and the voyages of Zheng He, have recently blossomed as a result of China's growing energy needs. China has signed a $100 billion deal with Iran to import 10 million tons of liquefied natural gas over a 25-year period in exchange for a Chinese stake of 50% in the development of the Yahavaran oilfield in Iran. China has also expressed a desire in direct pipeline access to Iran via Kazakhstan.

Relations in the economic sphere have also continued to blossom as bilateral trade reached $9.5 billion in 2005, fueled by growing Chinese investment in Iran's infrastructure. Iran has also been drawn into China's sphere of influence by its observer status at the Shanghai Cooperation Organization.

Given the ongoing frictions between Iran and the West, Sino-Iranian relations are also a source of potential friction for Sino-US relations. For example, while China has voiced its commitment to the non-proliferation regime, Chinese companies have been the subject of numerous sanctions for the transfer of ballistic missile technologies to Iran. Since the mid-1980s, China has sold Iran anti-ship cruise missiles such as the Silkworm (HY-2), the C-801 and the C-802.

While gaining access to the region's vast energy resources is China's primary motivation for deepening relations with the region, there are a number of other factors driving China's Middle East policy. As the ideological center of the Islamic world, China has attempted to maintain good relations with the Arab world in order to get its support on the Uighur insurgency in Xinjiang autonomous region and maintain amicable relations with the 55 million Muslims residing in China.

While China's main efforts in preventing external actors from fueling the Uighur insurgency have focused on Central and South Asian states, countries in the Middle East, most notably Saudi Arabia and Iran, have also had an important role to play in quelling the insurgency given their moral and material support. Most notably, Wahabbi Islam, which is an export from Saudi Arabia, has played a significant role in the rise of extremist, fundamentalist Islam in Pakistan, Afghanistan and the Central Asian republics on China's western borders.

In order to garner the goodwill of the region, Beijing has made numerous symbolic gestures. For example, in September 2002 Beijing appointed its first Middle East peace envoy. While this has had little significance for the Israeli-Palestinian peace process, it has nevertheless demonstrated China's increasing attention to the region.

Similarly, while China has maintained a low profile in the US intervention in Iraq, in May 2004 China submitted a document to the UN Security Council proposing that US-led forces withdraw from Iraq. China has also consistently called for a larger UN role in Iraq. China is deepening its economic cooperation with the region through the China-Arab Cooperation Forum and the Framework Agreement between China and the Gulf Cooperation Council, which includes negotiations for a free trade zone.

While China has maintained a historically close relationship with the Arab world, including sympathizing with the Palestinian cause, it has nevertheless also pursued an increasingly close relationship with Israel in recent years. Israel is one of only a handful of countries that has never granted diplomatic recognition to Taiwan.

In recent years, Sino-Israeli relations have been fueled by China's growing dependence on Israel for arms imports and upgrades, particularly hard-to-find US-made weapons platforms. Israel is now China's second-largest supplier of weaponry after Russia. Most notably, Israel has sold China "Harpy" anti-radar drones and Python-3 air-to-air missiles.

Nevertheless, there are limits to Sino-Israeli relations given the close relationship between Israel and the US, as evinced by Israel's decision (under US pressure) to cancel the sale of the Phalcon airborne early warning radar system to China in July 2000 and its decision not to upgrade Harpy drones for China in 2004.

Potential for China-US rivalry

While China and the US are not engaged in overt competition in the Middle East, it is not difficult to envision that the region could emerge as the stage for future Sino-US rivalry. Not only are the US and China dependent on energy resources from the Middle East, but both states offer competing models for international conduct, with the Chinese model becoming increasingly popular in the region.

While the US has become more willing to engage in humanitarian intervention, preemptive action and regime change, with the Middle East emerging as the most likely candidate for the US to practice these policies, China retains a preference for a traditional Westphalian-style of conducting international relations with emphasis on non-intervention, state sovereignty and territorial integrity.

Since September 11, 2001, and the launch of the US-led "war on terror" and the Greater Middle East initiative to spread democratic principles across the Middle East, regimes in the region, including those that have traditionally maintained close relations with Washington such as Saudi Arabia, have deepened relations with Beijing in order to hedge their bets against a downturn in relations with the US.

China's relations with pariah, terrorism-sponsoring governments in the region including Iran, Libya and Syria, as well as the proliferation of ballistic missile technologies and other weapons platforms to these countries, has already created a source of tension between the US and China.

The implications of Sino-US energy competition in the Middle East extend beyond the region. At present, China has to depend on the US to patrol sea lanes through which its oil imports from the Middle East transit. Beijing is attempting to reduce this dependence by diversifying to access oil and gas imports from other regions and developing port facilities through which China can import oil by pipeline.

This "string of pearls" strategy, as it has been characterized, has been made apparent by China's development of port facilities at Gwadar in Pakistan, which is on the doorsteps of the Persian Gulf and the Strait of Hormuz. China has also expressed a desire to augment its blue water naval capability over the long term, which could be used to compete with the US in policing waterways in the South China Sea and Indian Ocean.

Conclusion

Sino-US competition in the Middle East is by no means inevitable. The Middle East may emerge as a stage for cooperation between the world's major energy consumers, including the US, China, Japan and India. This has already been seen with the joint bid by China National Petroleum Corp and India's Oil and Natural Gas Corp for energy assets in Syria, and China and India having a 50% and 20% stake respectively in the development of Yahavaran field in Iran.

The growing dependence on Middle East energy by China, India and Japan may also encourage these states to play a more proactive role in resolving long-standing disputes in the region, bringing peace and stability. China's low-key presence in the ongoing debate over the US intervention in Iraq and abstention over the vote to refer Iran to the UN Security Council also suggests that China does not seek to engage in open confrontation with the US over issues in the Middle East. There are also technical barriers to China's access to Middle East oil given that China lacks the refineries to process the heavy sour crude from the region.

Nevertheless, Chinese and US interests in the Middle East are not identical. In many ways, there has been a role reversal for the US and China on the world stage - while China had originally fueled revolutionary change through sponsoring anti-colonial struggles and communist insurgencies, it is now the US that is attempting to fuel change in the international system by rejecting international conventions (eg Kyoto Protocol, Anti-Ballistic Missile Treaty) and norms (preemptive action, granting recognition to India as a nuclear power).

On the other hand, while the US has traditionally favored stability even at the cost of supporting unsavory regimes, it is now China that increasingly favors stability in the international system, even if it means supporting pariah regimes such as Myanmar, Iran, Nepal, North Korea, Uzbekistan and Zimbabwe. In the Middle East, the volatile mix of long-standing disputes, great power competition and Islamist extremism create the recipe for further instability in the region.

More than 60 countries have so far ordered large stocks of the antiviral medication - the only oral medicine believed to be effective against the deadly H5N1 strain of the disease - to try to protect their people. The United Nations estimates that a pandemic could kill 150 million people worldwide.

Britain is about halfway through receiving an order of 14.6 million courses of the drug, which the Government hopes will avert some of the 700,000 deaths that might be expected. Tamiflu does not cure the disease, but if taken soon after symptoms appear it can reduce its severity.

The drug was developed by a Californian biotech company, Gilead Sciences. It is now made and sold by the giant chemical company Roche, which pays it a royalty on every tablet sold, currently about a fifth of its price.

Mr Rumsfeld was on the board of Gilead from 1988 to 2001, and was its chairman from 1997. He then left to join the Bush administration, but retained a huge shareholding .

The firm made a loss in 2003, the year before concern about bird flu started. Then revenues from Tamiflu almost quadrupled, to $44.6m, helping put the company well into the black. Sales almost quadrupled again, to $161.6m last year. During this time the share price trebled.

Mr Rumsfeld sold some of his Gilead shares in 2004 reaping - according to the financial disclosure report he is required to make each year - capital gains of more than $5m. The report showed that he still had up to $25m-worth of shares at the end of 2004, and at least one analyst believes his stake has grown well beyond that figure, as the share price has soared. Further details are not likely to become known, however, until Mr Rumsfeld makes his next disclosure in May.

The 2005 report showed that, in all, he owned shares worth up to $95.9m, from which he got an income of up to $13m, owned land worth up to $17m, and made $1m from renting it out.

He also had illiquid investments worth up to $8.1m, including in partnerships investing in biotechnology, issuing reproductions of paintings, and operating art galleries in New Mexico and Wyoming. He also has life insurance with a surrender value of up to $5m, and received up to $1m from the DHR Foundation, in which he has assets worth up to $25m, and $773,743 from the Donald H Rumsfeld Trust, in which he has assets of up to $50m.

Late last week no one at Gilead Sciences was available to comment on Mr Rumsfeld's sale of its stock. In a statement to The Independent on Sunday the Pentagon said: "Secretary Rumsfeld has no relationship with Gilead Sciences, Inc beyond his investments in the company. When he became Secretary of Defence in January 2001, divestiture of his investment in Gilead was not required by the Senate Armed Services Committee, the Office of Government Ethics or the Department of Defence Standards of Conduct Office.

"Upon taking office, he recused himself from participating in any particular matter when the matter would directly and predictably affect his financial interest in Gilead Sciences."