"Rather, they should vote to raise the ceiling this week. It would be unthinkable for them not to take action," he said, warning that the "full faith and credit" of the US government was too precious to be compromised.

Snow has issued increasingly urgent warnings to Congress that the statutory debt limit of 8.184 trillion dollars will be hit this week, and that the government will then lose its borrowing power.

Once the US government reaches the ceiling, it comes under threat of defaulting on its debts and can lose the ability to raise future credit on the capital markets.

Last week, Snow said new issues of federal debt instruments would only raise enough cash to keep government operations financed until mid-March.

But Democratic members of Congress are said to be balking at increasing the debt limit unless the administration of President George W. Bush, which has overseen a huge rise in the US budget deficit, curbs its appetite for funds.

"We have to remember that current federal borrowing needs today are simply the product of past decisions," Snow said in his speech.

"While we always welcome a debate on budget priorities, swift action on the debt limit must still be taken this week.

"There should be no doubt over whether the government will be able to pay its bills on time, this time next week."

That news must come from places like the internet site you're now reading, not the corporate press. And I'm here to tell you the story.

More than an hour before the start of the hearing on the "supplemental" spending bill for the war, five of us from Voices for Creative Nonviolence's "Winter of Our Discontent" campaign lined up outside the Appropriations Committee Hearing Room in the Rayburn House Office Building. Ed Kinane, Cynthia Banas, Lorie Blanding, Jeff Leys, and yours truly were prepared to shine a light of reality, however briefly, into one of Disneyland's darkest corners. Two of our crew had banners that said, "STOP THE KILLING," ready to open them when we began, in turn, to read names of U.S. soldiers and Iraqis killed in the war.

We'd been in line early enough to be among the first 15 people admitted, but by the time the hearing room was changed from it's assigned grand room to a much smaller venue, 60-plus representatives, their staffs, AND a few dozen lobbyist-regulars were shown in, the general public was shown an overflow room a few doors away.

Moments after entering the overflow, we realized we'd just been cut out of the actual hearings and would not be able to say what we had prepared. We regrouped in the hallway outside of where the hearing had just begun.

Three members of the D.C. Antiwar Network, Malachy Kilbride, Pete Perry, and David Barrows reacted to the switcheroo faster than we did. They barged into the hearing room, forcefully told the Members of Congress they all had the war's blood on their hands, and got promptly ejected by the Sergeant at Arms deputies.

Fortuitously, a couple minutes later, my hometown Congressperson and Appropriations Committee member from Toledo, Marcy Kaptur (D-OH), arrived. I greeted her and we chatted briefly, and then she asked if I was going to attend the hearing.

"No, it seems to be pretty filled up with staff and lobbyists," I replied.

Walking up to the Sergeant of Arms guarding the double doors, she informed him she wanted to find a seat for her constituent. What was I to do but go in and take what seemed to be the last chair in the room?

By then, Committee Chair Jerry (not the one they love in France) Lewis (R-CA), had opened the first agenda item, an amendment to prevent the administration from completing its plans to hand over operations at a strategically located Middle Eastern port to a Dubai-run company. Discussion was lively, including one comment from Rep. Jim Moran (D–VA), who, trying to slow the rush to snub Dubai, actually said, "If we want to Americanize and Westernize the Arab world," the U.S. needs to continue doing business with nations like Dubai that are "run by a staunchly pro-American, pro-business person."

At this time, a goodly number of reporters were attentively in attendance. I was, unfortunately, about to make a serious mistake in activist judgment.

As the only one of our merry band able to get into the hearing, I knew I'd be flying solo at my first Congressional testimony, and decided to wait until the hearing progressed beyond the amendments, to the $67 Billion war appropriation itself.

My heart sank as I watched half the reporters abandon ship right after the Dubai Port amendment sailed through. A second amendment quickly passed. A few more reporters left. Then Lewis announced a recess so members could return to the House floor for a series of votes.

Not wanting to relinquish my serendipitously-won seat, I stayed put, surprised in a few minutes as Ed Kinane slipped through the relaxed security at the door. We quickly exchanged notes, decided we'd stay until the committee reconvened, and then watched as a half-dozen Capitol Police appeared. The stage was set.

The committee returned about an hour later, sans TV cameras, photogs or any reporters as best I could tell. Luckily, the one cameraperson operating the video unit on a tripod was back at his post – for about 5 minutes – until he began breaking down his equipment. As innocuously as possible, I zipped over to what I learned was no less than the network pool camera operator, and whispered to him he may want to stick around a bit.

"Why, is there going to be a protest," he asked loudly enough for the immediate world to hear?

"Yes, there is," I replied, not knowing why I bothered whispering again.

"Well, we saw the one already," he returned, "and besides, the networks said we can call it a day."

Nothing else I said would deter him so I returned to my seat.

Hoping that C-Span might still record our protest, I sat for a short while longer near Ed who noted that his own representative, James Walsh (R-NY), had just risen to offer an amendment. Walsh wanted to shift some Veterans Administration funds from future hospital construction to ongoing operational needs. The Congressman who, like the vast majority of his colleagues consistently voted to fund the war, wanted to be sure the hospitals could keep up with the results.

No one wanted to oppose that idea, especially when it didn't require any new money. Walsh's amendment passed quickly. Although it looked like I'd be speaking only to those in the hearing room, there would never be better timing. I rose to my feet, wearing a Navy pea coat with my third class Petty Officer insignia, and my Veterans For Peace cap.

"My name is Mike Ferner, from Ohio. I served as a Navy Hospital Corpsman during the Viet Nam war," I began, "And if you really want to do something about the numbers of wounded and disabled veterans coming back to our VA hospitals, the best thing you can do is STOP THIS WAR!"

Introducing Ed as he scrambled to unfold the banner, I told a now-attentive Appropriations Committee that we were on day 22 of a 34-day fast against the war, and that "…speaking for the majority of Americans who are now against this war, we say, STOP THE KILLING!"

"Listen to just a few names of the victims of our government's war," I demanded, and was able to announce two Marines, Daniel Bubb, 19, and Christopher Poston, 20, and two Iraqi citizens, Ahmed Khalaf, and Hamza Khuzai, before two Capitol Police officers grabbed me and ripped the paper out of my hands.

Refusing to go quietly into the night as I was hustled from the chamber, I looked several representatives in the eye and said, "Those are the names of dead veterans from this war. You are violating international laws…you are committing war cri…" and then it was face down on the hallway floor.

Next came the traditional "up against the wall" routine for handcuffing, and we began the trip to the Capitol Police booking facility. On the way out of the Rayburn Building, we passed a couple very posh dinners held in different hearing rooms. As I nodded and said hello to the food service workers in the hallway, I was glad I'd asked my arresting officer to leave my VFP cap on my head.

We were charged with disrupting a Congressional committee hearing and cited into D.C. Superior Court on March 28. The Capitol cops relieved us of belts, money, I.D., shoelaces, everything in our pockets, and took us to D.C. city jail for electronic fingerprinting and face scanning. After those pleasantries, the D.C. cops drove us about four blocks from the police station to a corner somewhere in the district around 2:00 a.m.

I bummed 50 cents from a passing cop for a pay phone call so we could contact our support team, Carmelite Sister Maureen Foltz, and my wife, Sue Carter, who plucked the two of us off the street.

Ed and I were assigned a court date only eight days after the scheduled end of our fast on March 20, so we've decided not to incur the additional expense of going home to Syracuse and Toledo respectively, and stay in Washington.

And – you heard it here first – we also decided to extend the fast until March 28 for a total of 42 days.

But PLEASE do us a favor: if you're thinking of a "thank you" or some other gracious response, DON'T. We don't need your thanks. The Iraqi people and our soldiers need your action to stop this damnable war. Think about it and determine one big step you can take that's more than anything you've yet done. Do it right there, in your hometown, before Ed and I go to court on March 28. Before the full House and Senate vote $67,000,000,000 more for the war. Get your friends together and sit-in at your local congressional offices. Demand they STOP THE KILLING.

Then we can thank you.

In addition to fasting with Voices for Creative Nonviolence, Ferner is a freelance writer. His book based on trips to Iraq before and after the U.S. invasion, "Inside the Red Zone: A Veteran For Peace Reports from Iraq" is due out in August.

As concern rises in the United States and elsewhere over the future availability of oil, the global community of energy experts has split into two camps: the optimists believe that oil is abundant and will remain so for years to come, while the pessimists think supplies will become increasingly scarce. For both, Saudi Arabia, the world's leading oil producer, has a pivotal role. The optimists believe that it will continue to expand its output, thereby satisfying ever-increasing global demand; the pessimists contend that its oilfields will soon decline, eliminating any prospect of expanding the world's net oil supply. To reach any conclusions about world supply, we must first consider Saudi Arabia.

It is impossible to exaggerate Saudi Arabia's importance in the global oil-supply equation. Not only is it the leading producer and exporter of oil, but it is also the only major supplier with substantial spare capacity, allowing it to boost output quickly in times of crisis. This was of decisive importance in 1990, when Iraq invaded Kuwait and both countries' production was no longer on the market. By swiftly upping its own output, Saudi Arabia prevented another global oil shock like those after the Arab oil embargo of 1973-74 and the Iranian revolution of 1979.

Given its unique ability to increase output in times of crisis, Saudi Arabia has long been viewed in Washington as a vital part of US energy security. When the price of crude began its meteoric rise in spring 2005, the first thing President George Bush did was to invite Crown Prince (now King) Abdullah to his ranch in Crawford, Texas, to plead with him to boost Saudi output. "The crown prince understands that it is very important [to] make sure that the price is reasonable," Bush told reporters before the meeting (1).

After the meeting, a Bush aide announced that Abdullah had promised to increase Saudi output, and noted that this "can't help but have a positive downward effect" on oil prices (2). Although Abdullah's promises to increase Saudi output have yet to produce a marked decline in energy prices, Washington has continued to put pressure on Riyadh to expand its production.

The oil future
Even more important than its role as a swing producer in times of crisis is Saudi Arabia's expected contribution to future oil output. "With one-fourth of the world's proven oil reserves," the US department of energy (DoE) observed in 2004, "Saudi Arabia is likely to remain the world's largest net oil exporter for the foreseeable future" (3). Every assessment released by the DoE indicates that Saudi oil production will continue to grow and that it will play a critical role in satisfying the ever-increasing global demand for petroleum. The DoE predicts that Saudi Arabia will provide over one-quarter of all new oil added to global supplies between 2001 and 2025.

To appreciate fully Saudi Arabia's pivotal role, it is useful to consult the projections of future supply and demand released each year by the DoE. In 2004 it predicted that world oil demand would rise by 57% between 2001 and 2025, from 77m to 121m barrels per day (mbd). In response to this, Saudi oil output was expected to rise by 120% during this period, from 10.2mbd to 22.5mbd, a net increase of 12.3mbd. No other country or group of countries came close in anticipated growth rates. Russia and the former Soviet republics of the Caspian Sea region have a combined anticipated increase of 8.5mbd; Iran, Iraq, and Kuwait were jointly projected to achieve an increase of 7.6mbd; and Nigeria, the leading producer in Africa, was expected to gain only 1.6mbd. Most other regions were projected to experience declining or stagnant production, so Saudi Arabia's addition was deemed essential to satisfying anticipated demand (4). But is Saudi Arabia truly capable of increasing its oil output by 12.3mbd - or by any amount at all? This question has stirred up controversy among oil analysts.

The controversy began in February 2004, when the New York Times reported that a number of analysts had concluded that Saudi Arabia's major oil-fields had been more thoroughly depleted than was commonly thought, raising significant doubt about its ability to boost output beyond the then current rate of 9-10mbd. Although its production had kept pace with international demand in the past, said the Times, its "oil-fields now are in decline, prompting industry and government officials to raise serious questions about whether the kingdom will be able to satisfy the world's thirst for oil in coming years" (5).

Anger and alarm
This article provoked anger and alarm in Saudi Arabia. A few days later senior officials of Saudi Aramco, the state-owned oil company, told an audience in Washington that the company was fully capable of boosting its output in future. "We have the potential to add more oil than anyone else," said Mahmoud Abdul-Baqi, Aramco's vice-president for exploration. "We will continue to deliver for another 70 years at least" (6). The Saudi Arabian oil minister, Ali al-Naimi, was even more emphatic: If world demand continued to rise, "we're going to be ready to meet it" (7).

These assurances were reiterated by the US DoE, which generally assumes an optimistic stance in the debate over global petroleum availability. In the 2004 edition of its International Energy Outlook, the DoE reported that Saudi Arabian officials "are confident in their ability to sustain significantly higher levels of production capacity well into the middle of this century" (8).

This was not the final word. In May 2005 Houston banker Matthew Simmons published a bombshell of a book, Twilight in the Desert, in which he claimed that most major Saudi oil-fields are in decline and incapable of sustaining higher output: "There is only a small probability that Saudi Arabia will ever deliver the quantities of oil that are assigned to it in all the major forecasts of world oil production. Saudi Arabian production is at or very near its peak sustainable volume... and it is likely to go into decline in the very foreseeable future" (9).

Four main points
Simmons is not a militant environmentalist or an anti-oil partisan. He is the chairman and CEO of one of the world's leading oil-industry investment banks, Simmons & Company International. For decades he has been pouring billions of dollars into the energy business, financing the exploration and development of new oil reservoirs around the world. He has become a friend and associate of many top figures in the oil industry and the US government, including Bush and the vice president, Dick Cheney. He has also accumulated a storehouse of information about the status of major oil fields, making him one of the most knowledgeable figures in the field. That is why his dour assessment is so significant.

His argument boils down to these points:

most of Saudi Arabia's oil is extracted from four or five giant fields;

these were first developed 40-50 years ago, and have since given up must of their easily extracted petroleum;

to maintain high levels of production in these fields, the Saudis have increasingly come to rely on the use of water injection and other secondary recovery methods to compensate for the drop in natural field pressure;

in time, the ratio of water to oil in these underground fields will grow to the point where further oil extraction becomes difficult, if not impossible.

Twilight in the Desert is not easy to read. Most of it consists of a detailed account of Saudi Arabia's vast oil infrastructure, relying on technical papers written by Saudi oil engineers on aspects of production in particular fields. Much of this has to do with the ageing of Saudi oilfields and the use of water injection to maintain the pressure in underground reservoirs , which can result in the degradation of untapped supplies. By drawing on these technical studies, Simmons is able to demonstrate that Saudi Arabia's largest fields are rapidly approaching the end of their productive life.

The Saudis responded to these allegations with anger and alarm. At a conference in Washington, Naimi disputed the claims and insisted that his country was fully capable of raising its output as needed. "I want to assure you here today that Saudi Arabia's reserves are plentiful and that we stand ready to increase output as the market dictates," he declared on 17 May 2005. At a meeting in Paris, he announced plans to increase Saudi oil production from 10mbd to 12mbd by 2009 and indicated that it could rise to as much as 15mbd if demand continued to expand (10).

But this time there has been greater scepticism from experts. Many analysts have noted that the extra oil being pumped by Saudi Arabia is high in sulphur content, making it unusable for many refineries, and that the Saudis are not making great progress in efforts to increase output. Speaking of the encounter between Bush and Abdullah, Jason Schenker of the Wachovia Corporation said: "There will be no real change as a result of this meeting" (11).

The US changes its mind
The most striking indication of this change in outlook is the new assessment in the DoE's International Energy Outlook 2005, released last July. The 2004 edition gave that Saudi 12.3mbd increase we mentioned, but the new edition projected an increase of only 6.1mbd by 2025, less than half as much (12). No explanation was provided for this turnaround, but it can only be assumed that the analysis of Simmons and other sceptics has begun to influence official thinking in Washington.

It is likely that even the DoE's much-reduced projection will prove wildly optimistic. Not even Naimi, in his most expansive moments, has claimed that Saudi Arabia can push its oil output above 15mbd, and he has never explicitly promised that it will rise much above 12mbd. If Simmons is right, even that level may prove beyond the kingdom's reach.

None of this discussion has addressed the separate question of whether political conditions in Saudi Arabia will affect oil production. A major domestic upheaval, such as that in Iran after the overthrow of the shah in 1978-79, would almost certainly produce a downturn in production, possibly for many years. A powerful terrorist attack on Saudi oil facilities (such as almost happened last month) would have a similar result.

But even if conditions remain relatively stable, we should begin to plan for a world in which the global supply of oil will probably never satisfy the insatiable demand.

© 1997-2006 Le Monde diplomatique.

The oil income, which showed a 33 percent increase over the receipts for the preceding month, also bolstered Nigeria's gross external rese-rves to $31.32 billion at the end of January 2006, representing an increase of 10.7 per cent over $28.28 billion accumulated as at December 2005.

Making these disclosures in its monthly report for January, the Central Bank of Nigeria (CBN) said the level of reserves in the month under review could finance about 32.3 months of foreign exchange disbursements compared with 18.4 months in December 2005.

In the same month also, the total assets/liabilities of the 25 deposit money banks (DMBs) that emerged at the end of first phase of consolidation exercise amounted to N4.694 trillion in the review month.

The apex bank explained that "foreign exchange inflow and outflow through the CBN in January 2006 amounted to $3.1 billion and $0.92 billion respectively, representing a net inflow of $2.18 billion."

When compared with the levels of $2.7 billion and $1.49 billion in the preceding month, the bank added, inflow rose by 14.7 per cent, while outflow declined significantly by 38.2 per cent.

"Provisional data on aggregate foreign exchange flows through the economy in January 2006 indicated that total inflow increased by 9.4 per cent to $4.58 billion. Oil sector receipts, which accounted for 63.9 per cent of the total, increased by 33 per cent over the preceding month's level to $2.92 billion," said the CBN
Non-oil public sector inflows, according to the CBN report, however, fell by 65.1 percent to $0.2 billion and accounted for 3.8 per cent of the total, while autonomous inflow declined by $2.93 or 0.2 per cent to N1.48 billion from the level in the preceding and accounted for 32.3 per cent of the total.

It attributed the decline in autonomous inflow to the "reduction in the non-oil export earnings during the month under review."

The banking watchdog noted that at $0.97 billion, aggregate foreign exchange outflow from the economy fell by 36.8 per cent and attributed the "sharp fall" largely to the decline in the funding of the Dutch Auction System (DAS), drawing on letters of credits and other official payments by 75.9, 89.4 and 11.6 per cent respectively during the review month.

Analysis of non-oil export proceeds by top 100 exporters, according to the CBN, revealed that, their earnings in January slumped to $42.07 million, indicating a significant decline of 29.40 per cent from the preceding month's level.
"A breakdown of the proceeds by the top 100 exporters in January 2006 showed that non-oil export proceeds in respect of the agricultural, manufacturing sub-sector and others fell from $33 million, $20.85 million and $5.73 million in the preceding month to $20.26 million, $20.35 million and $1.46 million respectively.

"The decline was attributable largely to variations in the prices of some of the goods traded at the international commodities market during the review month. The shares of agricultural, manufacturing and others sub-sectors in total non-oil export proceeds were 48.1, 48.4 and 3.5 per cent compared with 55.4, 35 and 9.6 per cent respectively, in December 2005. The top of the 100 exporters accounted for 100 per cent of all the non-oil export proceeds in January 2006," the CBN said.

On sectoral utilization of foreign exchange, the Central Bank stated that the industrial sector accounted for the bulk (47.7 per cent) of total foreign exchange disbursed in January 2006, followed by general merchandise (16.7 per cent).

Other beneficiary sectors, in a descending order of importance included invisible (15.1 per cent), transport (10 per cent), food (15.1 per cent), agricultural products (0.4 per cent).

The CBN noted that at the foreign exchange market, the demand pressure moderated further in the review month as foreign exchange sales by the CBN to the end- users, through the authorized dealers, fell by 62.5 per cent.

According to the bank, under the DAS, the weighted exchange rate of the naira vis-a-vis the US dollar appreciated by 0.02 per cent to N129.06 per dollar in January 2006.
In the bureaux de change segment of the market, the rate depreciated from N141.73 per dollar in December 2005 to N144.09 per dollar in January 2006. Consequently, the premium between the official and bureaux de change rates widened from 9.9 per cent in December 2005 to 11.7 per cent in the month under review.

However, the CBN said the total assets/liabilities of the DMBs will be N5.029 trillion when the 14 banks in liquidation were included using their statutory returns rendered to the apex bank.

According to the apex bank, "both foreign assets and claims on private and Federal Government rose during the period which was sourced mainly from the increase in demand, time, savings and foreign currency deposits invested in the Federal Government securities, acquisition of unclassified assets as well as extension credit to the private sector."
It noted that at N2.135 trillion, credit to the domestic economy rose by N143.5 billion or 7.2 per cent over the preceding month's level, attributing the rise to the increase in claims on both public and private sectors during the period.

"Central Bank's credit to the DMBs, however, declined substantially by 56.8 per cent to N18.4 billion in January 2006 reflecting the decline in loans and advances from the CBN.

"Total specified liquid assets of the DMBs stood at N1.353 trillion representing 50.9 per cent of their total deposit liabilities. The level of assets was 10.1 percentage points above the stipulated minimum ratio of 40 per cent for fiscal 2006," the bank said.

For the discount houses, the CBN said their total assets/liabilities stood at N101.9 billion in January representing an increase of N2.5 billion or 2.6 per cent over the level in the preceding month. The increase in assets, the apex bank said was attributable largely to the "255.7 per cent increase in balances with other banks. On the other hand, the increase in was attributable to the increase in money at call and amount owing by N125.9 billion or 0.4 per cent and N5.2 billion or 13 per cent respectively, during the review month."

The bank added that discount houses investments in Federal Government securities of less than 91 days maturity amounted to N46.9 billion or 59.4 per cent of their total deposit liabilities. This level of investment was 3.5 and 0.6 per cent below the level in the preceding month and the prescribed minimum of 60 per cent for fiscal 2006 respectively.

"Total borrowing by discount houses was N45 billion, while their capital and reserves amounted to N13 billion resulting in a gearing ratio of 3:5:1 compared with the prescribed maximum target of 50:1 for the year.

Meanwhile, the Federal Government yesterday began a massive deployment of troops in the troubled oil-rich city of Warri, suggesting that negotiations between the government and the Niger Delta youth militants, holding three foreign oil workers hostage in the creeks, may have broken down.
The deployment of troops coincided with a visit by the Chief of Naval Staff, Vice Admiral Ganiyu Adekeye, to the Warri naval base, NNS Delta.

The number of troops now being deployed could, however, not be ascertained as the military did not use the Warri naval base which is in the town to make the deployment for security reasons.

But the President of the Movement for the Survival of Ogoni People (MOSOP), Mr. Ledum Mitee, said yesterday in Abuja that war was not the answer and urged the Federal Government to be cautious.

Speaking with THISDAY, the Ogoni activist said the most enduring response would be a massive deployment of funds to the region for its rapid development in such a way that plenty of jobs that would take the militants off the gun would be created.

The Federal Government, however, appeared to have a different think as Adekeye on arriving Warri in a naval helicopter proceeded to address Naval officers an exercise which took several hours.

At the end of the briefing, Adekeye was evasive in his response to questions asked by newsmen and left hurriedly after answering only three queries.

Adekeye, who was accompanied by the Flag Officer Commanding (FOC), Western Naval Command, Rear Admiral John Kpokpogri, and the Commanding Officer, Warri Naval Base, Captain Mufutau Ajibade, told newsmen that a military option could not be ruled out in deciding the situation in the creeks, but made it clear that it would be the last option if all others fail.

THISDAY gathered, however, that the Chief of Naval staff might have decided to personally witness the deployment of the troops to the creeks, hence his presence in Warri at the Sunday deployment.

It was reliably gathered from impeccable security sources that there might be an ultimate show down at Okorenkoko between the military and the militants within the next few days, unless the hostages still in captivity were released. But Mitee said as long as the Federal Government continues to shy away from addressing the "genuine agitations' of the people of the Niger Delta, the killing of soldiers, taking of foreign oil workers hostage and bombing of oil installations by militia groups in the Niger Delta will not end. Apart from the killing of 13 Nigerian soldiers by militants last week, and the kidnap of nine expatriate oil workers last month, the activities of the militants have over the past months cut Nigeria's crude oil exports by as much as 458,000 barrels per day.

The MOSOP president blamed the activities of the militants on the failure of the Federal Government and oil companies to respond to the "genuine agitations" of the people of the region.

"These are things we all warned of before; that if we do not give peaceful advocacy a chance to succeed, then this sort of situation becomes inevitable," said Mitee, declaring, "it is unacceptable for communities to live in abject poverty and next door are oil workers living in opulence in these days of the Internet and GSM."

He identified the frustration suffered by the army of unemployed youths in the Niger Delta, "government rhetoric" on developing the region, and its failure to implement any of its white papers on the numerous crises in the region, as largely contributory to the current wave of militancy in the region.

He regretted that the Federal Government was spending so much to secure national security without realising that injustice was the greatest threat to national security.

According to him, "people are already getting a little bit frustrated and I think that the reactions of government have not helped matters. People feel as if government is not responding to their agitations. After almost every serious crisis in the Niger Delta, one committee is set up, after that, people go to sleep. They keep harping on national security perhaps without realising that the injustice remains the greatest threat to national security.

"There needs to be a dividing line between criminal elements and genuine agitations. Government has always treated both issues as if they are the same. Once you now move in and take the thing as a purely law and order thing, without dealing with the communities, then the communities now sit back and feel that government is actually not after the criminals, but after the champions of their agitations," he stated.

The activist said apart from the creation of at least 20, 000 jobs as a "shock measure" in each of the Niger Delta states, oil companies should also embark on the provision of social amenities such as electricity and potable water to the host communities, since, in his words "no flow station that has extended light to the villages has ever been reported shut because if you shut it you will be plunged into darkness."

Meanwhile, the Ijaw Reformation Council (IRC) has condemned the 10 point demand made by the captors of the hostages as ridiculous and amounted to asking for a break up of Nigeria.
The IRC at a press conference addressed by its President, Mr. Lucky Izoukumor, said the Niger Delta struggle could not be achieved by criminality.

Izoukumor said that from all indication, no government could fully implement the demands made by the captors, hence the need to be more realistic.

Besides, he regretted that religious dimension was being brought into the struggle following a claim by some persons that all those released were Muslims.

He said the time had come for the militants to release the hostages unconditionally in the interest of the Ijaw people and the Niger Delta, as the people would bear the brunt of any military action taken by the Federal Government.

"We ARE not terrorists," screamed a black-masked militant brandishing an assault rifle. "We are freedom fighters!"

He had arrived minutes earlier in a motorboat bristling with machine-guns and rocket-propelled grenades held by fighters in camouflage body armour and balaclavas.

White flags, a tribute to their tribe's god of war, fluttered from the stern.

This is the Niger Delta, the heart of Africa's biggest oil producer. But despite the billions of dollars in oil wealth, this region - about 70,000 square kilometres - is home to some of the world's poorest people. Most of the fishermen in these creeks live in the same huts and use the same bark nets that their fathers did. More than 60 per cent of Nigeria's 128 million inhabitants scrape by, earning less than $1 a day, with no hope of employment or education.

In many places, the frustration with a government ranked by Transparency International as the third most corrupt in the world has spilled over into violence.

"We have no water to drink, no schools, no electricity, no jobs," complained one machine-gun-toting youth from the latest Delta-based insurgent group, the Movement for the Emancipation of the Niger Delta (MEND).

"Have you been to Abuja (the capital)? It is paradise there. Why can't we have that down here?"

MEND has masterminded a spate of attacks and two mass kidnappings in the past three months. The first abduction, in January, ended with all four foreigners released unharmed. But after the Nigerian military ordered retaliatory strikes on strategic targets or innocent villagers, depending on who you talk to, a second group of nine expatriate workers were seized last month. Six have been released, but the group still holds two Americans and a Briton.

Alex Vines, head of the African program at London's Royal Institute for International Affairs think tank, believes the attacks are linked to next year's elections. "This type of activity and violence happens during every electoral cycle. The surprise is not that it has happened but that is has happened so soon," he said.

The violence has shut down a fifth of Nigeria's production. The damage to Africa's biggest oil producer, which normally pumps 2.5 million barrels a day, is sending shockwaves through a market already jittery about instability in the Middle East.

The militias know that with 90 per cent of Nigeria's export earnings coming from oil, attacking oil installations is the quickest way to make the Government take notice of their demands. They want an inquiry into killings by the military, promises of development and the release of key tribal leaders.

One of those they want freed is Alhaji Dokubo Asari, whose threats of an all-out war on oil interests drove prices to record highs two years ago. Asari, on trial for treason, has said he was originally armed as a political enforcer to ensure the election of current Rivers State governor Peter Odili in 2003.

"Don't forget, most of these militants received their first weapon from the ruling party," local human rights activist Dimieari Von Kemedi said.

"When the elections were over, the guns melted into the swamps. Given the weapons now available in the Delta, any serious politician will be looking for bigger and better weapons for their own boys."

Twenty-year-old Akpoviri Igbeh, unemployed and looking for work around Warri's docks, approves of what MEND is doing. "They kidnap those foreigners so that people know what is going on here," he said. "We have the right to use force because nobody is listening. We are like the goose that laid the golden egg, but nobody cares for us."

The foreign ownership of cargo ships that deliver rocket launchers, attack helicopters, high-tech safety gear, and other equipment to US troops around the world has received relatively little notice. But the arrangement, under which each ship receives a $2.6 million annual subsidy, is coming under new scrutiny as a result of the furor over the now-canceled plan to have a Dubai-based company take over management of six US ports.

Representative Gene Taylor, a Mississippi Democrat whose district includes major shipbuilding facilities, said Pentagon officials offered assurances when the subsidy program began a decade ago that few of the cargo ships in the US Maritime Security Program would be foreign owned.

But with so many vessels in the program now under the control of four foreign companies, Taylor said he wants Congress to require all cargo ships that supply US military forces to be owned by US companies. Taylor said the military would be vulnerable to a cutoff of crucial supplies if a foreign-owned vessel suddenly pulled out of the program.

Similar qualms have been raised at past congressional hearings by officials including the former head of Transcom -- the Pentagon's transportation command -- and House Armed Services Committee Chairman Duncan Hunter, but the Defense Department has said it had little choice but to utilize foreign-owned ships because so many US owners have sold out to overseas conglomerates.

''First they said, 'No big deal, it is just a couple of foreign-owned ships,' " Taylor said, referring to how Pentagon officials, a decade ago, defended the program to him. ''It is a seduction by degrees of our national security . . . I am hoping that this Dubai ports deal will cause enough Americans to learn about this and put pressure" on their congressional representatives to require American ownership.

Under the program, budgeted at $1.7 billion over 10 years, the Defense Department pays the owners of 60 ships an annual subsidy of $2.6 million in exchange for the right to take over the operations of the cargo vessels at any time. After the ship owners receive the call from the Pentagon, the ships move as soon as possible to report for military duty. They fly American flags and are staffed by American crews.

Robert Johnson, a spokesman from the US Maritime Administration, which helps manage the program, said the government maintains strict oversight of the ships when they are carrying military supplies.

''The ships in the program fly the US flag, they are operated by US crews with a US captain, and, when they are activated, they are under US government control," Johnson said.

But Taylor and others worry that in a global emergency, a foreign owner could suddenly pull his ships from the program, leaving the Pentagon in the lurch. Although the ships are owned by countries in Europe and Asia that are considered US allies, the countries do not always support American military interventions.

It was fear of a similar situation that led to the creation of the subsidy -- called the Maritime Security Program -- in 1995. The initial program required that all ships be American owned, but made a special exception for five vessels.

By the third year of the program, however, the Maritime Administration allowed additional exceptions for foreign ownership, and takeovers of the two largest American companies in the program quickly led to the majority of the ships being owned by foreign companies.

Today, out of 60 ships in the program, 45 are controlled by conglomerates whose parent companies are headquartered in Singapore, Denmark, Germany, Norway, and Sweden. Most of the ships have been used to supply US forces during the Iraq war.

Recent decades have seen a precipitous decline in the American manufacture and registration of cargo vessels. While the US still makes naval vessels, the manufacture of large commercial ships has mostly gone overseas, as exemplified by the demise of facilities such as the Fore River Shipyard in Quincy. Foreign governments, meanwhile, have helped subsidize competing shipyards.

About 97 percent of US international trade is carried on foreign-flagged vessels, many of which register in nations with comparatively lax requirements and lower taxes, according to a government report on the national security implications of the nation's decline in commercial shipbuilding.

The 2001 report warned that the ''US commercial market for merchant vessels does not support the construction of the type of large sealift vessels needed in wartime."

That concerns some experts who worry that it gives foreign countries too much control over US commercial and military shipments.

''There is no doubt that America has outsourced its merchant marine," said Richard Gurnon, president of the Massachusetts Maritime Academy, which trains civilians to operate merchant ships. ''We are the biggest importing nation in the world. What if foreign countries say, 'We aren't going to ship things to you any more; we don't like your foreign policy.' "

One of the US executives who fought for the subsidy program -- and then sold his company's ships to a foreign firm -- was John Snow, now the US secretary of the treasury.

In 1995, Snow was the chief executive of CSX, a large US transportation company that included Sea-Land, which had 15 ships in the Maritime Security Program. CSX and other ship owners, in a joint statement submitted that year to Congress, asked for the new subsidy program, saying, ''If we do nothing, American flag vessels and their American crews will fast become extinct in international liner trades. A fundamental part of our national sealift capability will be lost."

Subsequently, in 1999, CSX sold Sea-Land to a Danish firm, A.P. Moller-Maersk. Maersk had previously won approval for four of its own ships to participate in the program. Maersk initially operated the 15 additional ships acquired from Sea-Land through a US-owned company, but later received approval from the US Maritime Administration to take control of the vessels on its own, and added five more ships to the program through another acquisition.

Maersk spokeswoman Barbara Garrow said Maersk has a long and trusted track record with the Pentagon.

''The Department of Defense . . . has called us a 'true partner' in the war on terrorism. We are extremely proud of our decades of service to the United States and in the war on terrorism," Garrow said.

Garrow said the US subsidiary operates independently from the Danish headquarters, saying it is ''controlled by a board of directors comprised entirely of US citizens."

But the plan to allow the Maersk-owned ships to stay in the program had drawn opposition from US-owned shipping companies, who questioned whether a foreign company would cooperate in a global crisis.

''Maersk has financial interests and conducts business in many countries, some of which have strong policy conflicts with the United States," said Joseph T. Keegan, former president of U.S. Ship Management Inc., at a 2002 House Armed Services subcommittee hearing. ''Let's consider this hypothetical: If our government determines to deploy . . . ships to the Taiwan Straits. . . . my company will unhesitatingly do what's asked. However, please consider the factors which a company like Maersk, which does a huge amount of business with the People's Republic of China, would be forced to consider in the event of such a contingency."

At a hearing later that year, General Handy -- then head of the transportation command -- said, ''I certainly am more comfortable with a totally US-owned company. I mean, there is no question in my mind . . . I would be far more comfortable with a US company."

But he added that, due to the insufficient supply of US-owned ships, he would ''favor the flexibility of going on the market and being able to deal with both" foreign- and American-owned companies.

The hearing ended with members of Congress expressing concern about the lack of US-owned ships but taking no action.

In addition to CSX, companies representing more than a dozen other ships sold out to foreign companies. American President Lines, which had nine ships in the program, was acquired by Neptune Orient Lines, controlled by the Singapore government.

Last week the US caused dismay after political opposition to the takeover of P&O by Dubai Ports World forced DPW to agree to transfer P&O's US port management business to a "US entity" .

The governor of the UAE central bank, Sultan Nasser al-Suweidi, said the bank was looking to convert 10 per cent of its reserves, which stand at $23bn (£13.5bn), from dollars to euros. "They are contravening their own principles," he said. "Investors are going to take this into consideration [and] will look at investment opportunities through new binoculars."

Hamad Saud al-Sayyari, the governor of the Saudi Arabian monetary authority, said: "Is it protection or discrimination? Is it okay for US companies to buy everywhere but it is not okay for other companies to buy the US?"

Syria has switched the state's foreign currency transactions to euros from dollars, the head of the state-owned Commercial Bank of Syria, Duraid Durgham, said.

Last week the White House told US financial institutions to terminate all correspondent accounts involving the Commercial Bank of Syria because of money-laundering concerns. Mohammad al-Hussein, Syria's finance minister, said: "Syria affirms that this decision and its timing are fundamentally political."

The euro rose a quarter of one percentage point against the dollar to a one-week high of $1.1945, although it retreated in later trading.

Monica Fan, at RBC Capital Markets, said: "The issue is whether we will see similar attitudes taken by other Middle Eastern banks. It is a question of momentum."

The announcement comes 30 days after a WTO panel upheld a decision condemning the tax breaks, affirming previous judgments that the so- called Foreign Sales Corporation, or FSC, law breached global trade rules by giving illegal subsidies to some U.S. businesses.

The law gave tax exemptions on part of the income of more than 6,000 U.S. exporters, including companies such as Microsoft Corp., Boeing Co. and General Electric Co.

Last month's decision "made it absolutely clear that the U.S. has yet to come into full compliance with earlier rulings and recommendations," the EU told the WTO's dispute settlement body. The panel's ruling was officially adopted by the global commerce body at Tuesday's meeting.

EU legislation means the retaliatory measures, suspended in January will automatically go back into force in 60 days. But the EU noted its "utmost restraint in applying countermeasures" and called on the United States "to ensure full compliance with the applicable rulings and recommendations."

Brussels told the WTO body it was ready "to explore with the U.S. ways and means to put an end to this long-standing dispute," but rejected Washington's claims that the tax breaks were insignificant.

"We believe the remaining benefit to be over $750 million, and this is ... not insignificant," the EU said.

U.S. officials in Geneva were unavailable for comment, and the United States' statement to the dispute settlement body was not immediately circulated.

Washington has repealed the FSC law and claims it has fallen into line with previous WTO rulings, but the appeal body in February upheld that transitional provisions under the 2004 American Jobs Creation Act were still against the commerce body's rules because they allow tax exemptions to continue for a transition period through the end of this year and potentially longer.

In 2002, the WTO authorized $4 billion in sanctions by the EU, although Brussels decided to impose only $300 million and suspended them after Jan. 1, 2005.

The EU estimates the tax advantages from the jobs creation act will benefit airplane maker Boeing alone by at least $615 million over the next decade.

NEW YORK - Newspaper publisher McClatchy Co. (MNI.N: Quote, Profile, Research) on Monday said it would buy larger rival Knight-Ridder Inc. for $4.5 billion in cash and stock, ending a search that put a spotlight on the health of the struggling U.S. newspaper industry.

McClatchy will pay $40 cash and 0.5118 Class A shares for each Knight-Ridder share. The deal values Knight-Ridder at $67.25 per share, above its closing price of $65 on Friday.

The combined company will operate 32 daily newspapers and 50 nondailies after the sale of 12 Knight-Ridder papers, including some of its best known titles such as the Philadelphia Inquirer and the San Jose Mercury News.

The sale of the 12 papers will help pay down debt used to finance the deal and help minimize cost-saving measures, McClatchy CEO Gary Pruitt said in an interview on cable TV network CNBC.

"We have no plans for layoffs at the newspapers," Pruitt said. "There will of course be some consolidation at corporate offices and some Internet operations. But we plan to maintain, sustain and further the journalism at these newspapers."

It will rank as the second-largest U.S. newspaper publisher based on a daily circulation of about 3.2 million people. McClatchy said it expected the deal to close within three to four months.

Key investors in Knight-Ridder began agitating for a sale in November, saying the company had failed to provide enough value for shareholders.

The sale process underlined the difficulty of newspaper publishers fending off competition from Internet news sources, diminishing margins and a series of circulation scandals.

A consortium consisting of Bain Capital, Hellman & Friedman, Texas Pacific Group and Thomas H. Lee Partners also placed a bid for Knight Ridder by Thursday's bid deadline, but it was unclear whether other potential suitors made formal offers.

McClatchy said it would retain Knight-Ridder newspapers serving its fastest-growing markets, including the Miami Herald, the Kansas City Star and the Charlotte Observer. The purchase also gives McClatchy a one-third stake in online job site CareerBuilder.com.

Despite newspaper struggles across the United States, McClatchy's Pruitt said that the company's local presence was key to its growth.

"Our local competitors have fragmented audiences. As a result, we're the last mass medium. We're holding onto that audience better than anybody else, albeit it's slipping slowly each year," Pruitt said on CNBC. "We're the leading local media company and our markets are growing 50 percent faster than the U.S. average."

McClatchy, whose own publications include the Sacramento Bee, said it would have had 2005 revenue of $2.83 billion and earnings of $754 million before interest, tax, depreciation and amortization if it had owned all the Knight-Ridder papers it planned to retain.

The company said it would assume about $2 billion in Knight-Ridder debt at closing and McClatchy will add two Knight Ridder directors to its board.

McClatchy said it expected the deal to reduce earnings per share in the mid-single-digit percentage range in the first year after closing, then add to profit by 2008.

© Reuters 2006.