The United Arab Emirates said it was considering moving one-tenth of its dollar reserves to the euro, while the governor of the Saudi Arabian central bank condemned the decision by the United States to force Dubai Ports World to transfer its ownership to a 'US entity,' the UK Independent reported.

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

The head of the United Arab Emirates central bank, Sultan Nasser Al Suweidi, said the bank was considering converting 10 per cent of its reserves from dollars to euros.

"They are contravening their own principles," said Al Suweidi. "Investors are going to take this into consideration (and) will look at investment opportunities through new binoculars."

The Commercial Bank of Syria has already switched the state's foreign currency transactions from dollars to euros, Duraid Durgham head of the state-owned bank said. The decision by the bank of Syria follows the announcement by the White House calling on all US financial institutions to end correspondent accounts with Syria due to money-laundering concerns.

Syria's Finance Minister Mohammad Al Hussein said: "Syria affirms that this decision and its timing are fundamentally political."-Khaleej Times Online

It also figures in costs for health care, fuel, national intelligence and the training of Iraqi and Afghan security forces -- ''now a substantial expense,'' it said.

The research service said it considers ''all war and occupation costs,'' while the Pentagon counts just the cost of personnel, maintenance and operations.

The House approved emergency funding that includes the military spending last night by a vote of 348-71. The measure authorizes $72 billion for war costs and almost $20 billion for hurricane relief. The Senate is expected to pass it next month.

Congress already has approved $50 billion in supplemental war funding for the current fiscal year, which ends Sept. 30, after spending $100 billion last year. To date, Congress has approved about $337 billion for the wars since Sept. 11, 2001.

2007 Funding

The administration has said it also will seek $50 billion in war funding for fiscal 2007 to serve as a bridge fund until needs are assessed. That will be on top of the $439.3 billion defense budget the president submitted.

The request the House approved last night includes $67.6 billion for war operations, much of it in costs for personnel and repair and replacement of equipment; about $4.9 billion to train and equip Afghan and Iraqi security forces; and about $2 billion for defenses against roadside bombs, which have been a leading cause of death for U.S. servicemen in Iraq.

To date, 2,310 members of the U.S. military have died in Iraq since the war began three years ago, 1,808 of them in combat, according to the Pentagon.

The hurricane money approved last night will go toward housing, enhancing levees and public safety projects in Louisiana and Mississippi following the devastation caused by Hurricane Katrina last August, the administration has said.

Spending on the wars and hurricane relief will help widen the federal budget deficit to a record $423 billion this fiscal 2006, an increase from last year's $319 billion deficit, the administration forecast last month.

$87 Billion Already

Of the $87 billion already approved for hurricane relief and rebuilding, $31 billion has been earmarked for health and social services, school repairs, payments to farmers and unemployment insurance; $41 billion is going for temporary housing and flood insurance payments and $15 billion is set aside for levee and road repairs and repairs to damaged federal facilities, according to the administration.

The measure passed last night includes an amendment to prohibit a Dubai-owned company from operating port facilities in the U.S. DP World, the third-largest container port operator, has already promised it will sell its U.S. operations to a U.S. buyer. Most lawmakers conceded the issue was moot but wanted their opposition to the original deal to be on record.

Other amendments provide extra money for anti-drug operations in Colombia and peacekeeping efforts in the Darfur region of Sudan.

Tony Capaccio in Washington at acapaccio@bloomberg.net.
Jeff Bliss in Washington at jbliss@bloomberg.net

Through Friday, the House was in session for 19 days, compared with 33 for the Senate. If they stick to their current schedule - including two weeks off in April, a week in May and July, plus all of August - House members will spend 97 days in Washington this year.

The House was in session 108 days in 1948, according to the chamber's archives, compared with 141 days last year.

"This is an election year and people want to see more of their constituents," says House Majority Leader John Boehner, R-Ohio.

During the first two months of the year, House members logged a total of 47 hours in the Capitol. They took off almost the entire month of January , while the Senate confirmed Samuel Alito to the Supreme Court.

For both chambers, workweeks have become short in recent years. Roll call votes are seldom scheduled for Mondays or Fridays. In the House, they are often postponed until late Tuesday.

As a result, it's difficult to schedule committee meetings. Some panels meet when Congress is not in session, but not often.

When in Washington, lawmakers do a lot of multitasking. Last week, Senate Judiciary Committee Chairman Arlen Specter, R-Pa., struggled to ready an immigration bill for the full Senate, as panel members drifted in and out of the room. They were juggling a floor debate on the budget and other meetings.

Critics contend Congress needs time to discuss important issues. "The Tuesday-to-Thursday work schedule is a detriment," says Rep. Dan Lungren, R-Calif., who served five terms in the House during the 1980s and returned last year.

Some experts think an absentee Congress is not bad. "I don't think there's anything wrong with them being out of Washington," says John Samples of the Cato Institute, a think tank that favors limited government. "They might be better representatives."

Lawmakers will make $165,200 this year. Leaders earn more.

The opening of the Tehran bourse has been described by a Bulgarian university professor named Krassimir Petrov as ''the ultimate nuclear weapon that can swiftly destroy the financial system underpinning the American empire". Both Petrov and William Clark, writing in a publication called the Energy Bulletin, have suggested that the decision by US President George W Bush to attack Iraq on March 20, 2003, was to thwart then-dictator Saddam Hussein's move to price his crude in euros rather than dollars. They and other writers have been warning that Iran's decision to open a euro-denominated oil bourse places the mullahs in the same danger of being attacked.

That appears to be an overstretch. First, there is the question of how much crude an Iranian oil bourse would handle. Iran is the world's fourth-largest producer of crude, pumping only about 5% of the world total, and is unlikely to add much to that, according to a Hong Kong-based energy research analyst for a major US investment bank in an interview with Asia Times Online. He prefers to remain unnamed.

The Iranian fields are mature and over the next decade their production will probably begin to fall, the Hong Kong-based energy analyst says. Other nations that are likely to trade on the Tehran bourse probably would include Venezuela, the world's 10th-largest producer, run by President Hugo Chavez, who is eager to tweak the US nose.

There appear to be few others at the moment. Saudi Arabia, for instance, has very nearly become a US client state, as has Kuwait. Mexico, Canada and Norway appear unlikely to fall in line in euro trade, Norway especially since neither it nor the United Kingdom uses the euro as its currency. Russian President Vladimir Putin briefly floated the idea of pricing Russian energy exports in euros in 2003, only to have the idea shot down decisively when Prime Minister Mikhail Kasyanov a few days later said: "This topic cannot even be discussed. There can be no administrative decisions here. The market decides … oil is a commodity that is traded for dollars, and if it is sold for dollars, it means that suits the buyers and sellers."

According to an independent financial research analyst based in Shanghai also interviewed Asia Times Online, a decision by any other country than Iran or Venezuela to trade in euros in Tehran is going to be made on a commercial basis and not a political one. At this time, it is not a commercial decision that appears to make sense despite the fact that a number of Middle East nations, angered by the US decision to block a Dubai state-owned company from buying and operating six US seaports, said their central banks are considering switching their reserves from US dollars into euros.

According to a March 14 story in The Independent of London, the United Arab Emirates, which includes Dubai, said it was looking to move a tenth of its dollar reserves into euros, and the governor of the Saudi central bank condemned the US move blocking Dubai Ports World from taking over the US ports as ''discrimination''.

As an example of the dollar's imperviousness to reports of petro-switches, the UAE announcement had almost no effect on world currency markets, whose traders are skittish enough to respond to slight rumors of wheat blight in the Caucasus to shift in and out of currencies with lightning speed. The US dollar, which spent last week strengthening against the euro before the threats by the Middle Eastern central bankers, fell slightly against the European currency by a quarter of a percentage point to a one-week high of $1.1945 - before it retreated later.

Then there is the question of which crude importers will want to pay in petro-euros rather than petrodollars. Although use of the dollar as the world's fiat currency has been declining for about 30 years, some 70% of international currency reserves, which finance international trade, are in US dollars. Japan and China alone have built up nearly US$2 trillion in US Treasury bonds and other dollar holdings. China in particular has floated trial balloons about switching reserves out of the dollar, only to have the trial balloons decisively shot down by the People's Bank of China, the country's central bank.

Japan and China now face a quandary. They and their fellow international creditors are as much hostage to their debtor as the US is hostage to them. Any fall in the dollar that would be driven by a switch to petro-euros risks damaging their reserves.

The peril of driving down the US dollar, either intentionally or unintentionally, was illustrated on July 21, 2005, when the People's Bank of China discarded its strict peg of 8.28 yuan to US$1, valuing its currency against a basket of foreign currencies instead, and allowing the trading band for the yuan to widen slightly, by 2%, to 8.11:US$1. In hours, the yuan rose to its new level. At that time, China was holding US$600 billion in foreign reserves. The 2% move against the dollar cost China US$30 billion in dollar reserves.

China and Japan are now two of the world's largest importers of crude, although both are dwarfed by the United States, which produces only 7.61 million barrels of oil per day against consumption of more than 20 million barrels, according to the CIA World Factbook.

Then there is the question of what the holders of euros are going to do with their money. With Britain and Norway, two major oil producers, excluded from the euro currency zone, the euro bond market is dwarfed by the dollar bond market, to the point where there is no place in Europe to invest prospective vast sums of petro-euros.

By and large, once crude transactions take place in euros, the euros are exchanged for dollars. In November 2000, when Saddam Hussein announced he would switch international transactions from a US dollar standard to euros, a United Nations study estimated that Iraq's initial shift in pricing cost the country at least $270 million in transaction and other costs. Saddam recouped that money when the euro rose 17% against the dollar on other factors.

This obviously leaves the world's holders of US Treasuries in a quandary. There is little doubt that they would love to diversify away from the US currency, not least because of the growing danger of a dollar collapse. But a possible dollar collapse is much more likely to stem from the unsustainability of the country's gigantic and growing trade and budgetary deficits and the irrational fiscal policies of the Bush administration.

(Copyright 2006 Asia Times Online Ltd.

This isn't the first time I've gotten rightwing attention as a homewrecker. Back in the mid-'90s, James Dobson's Focus on the Family once described me as a woman who'd dedicated her life to the destruction of the American family, in more or less those words.

Partly this is just the rightwing translation of the word "feminist." Some of you may recall Pat Robertson's attack on feminism during the controversy over the Equal Rights Amendment in the '80s. Feminists, he said, busy themselves becoming lesbians, killing their children, and advancing Marxism -- a formidable agenda to say the least, especially if your children are fast on their feet.

What brought me to the Atlanta airport was not a trip to a convention of lesbian, Marxist, child-killers. I was returning from a holiday spent with my son and his girlfriend and my nephew and his wife, and I was rushing home because I was eager to rejoin my granddaughters (ages 4 and 1), who are the lights of my life.

News of the Dobson attack had hit at a similar moment: I was returning from a visit to my grandmother and an ailing aunt in Iowa. My job may be to "destroy the American family," but I've never managed to destroy a single family member, even one of the more irritating ones. If anyone is "ruining" the American family, it's all the employers who refuse to recognize that their employees have family responsibilities, as well as jobs.

I'm thinking of two categories of employers, which often overlap: 1) Those who don't pay enough for their employees to live on, thus forcing them to work second jobs, and 2) those who abuse their salaried employees with expectations of 10 or more hours of work per day. Apparently there are more and more such anti-family employers, as Americans now surpass even the famously workaholic Japanese in annual hours on the job.

From 1979 to 2000, Japan reduced the average annual hours worked by 305, whereas the United States reduced its annual hours by a whopping total of four, according to The State of Working America, 2004-2005. All variety of things suffer when work expands to fill evenings and weekends -- health, for example, and citizenly participation. How can you frame an opinion on the issues if you never get a chance to read or have long discussions with friends?

But families -- and especially children -- take the worst hit. It's just not possible to be a responsible and responsive parent or spouse if your work leaves you with barely enough time to shower. But to get back to Kate O'Beirne: Will you help me save the family by joining me in a campaign for adequate wages and a return to the concept of the eight-hour day? If not, let's at least fight fair. You get out your photos of your grandkids (if any) and I'll get out mine.

Barbara Ehrenreich is a columnist for The Progressive. Her latest book is "Bait and Switch: The (Futile) Pursuit of the American Dream."

The daily headlines suggest that a toxic combination of arrogance, corruption and incompetence is weakening the Republican Party's hold on national political power. As the Democrats struggle to capitalize on this opportunity, progressives should remember what happens when one side wins an election without defeating the opponent's main ideas.

Back in 1992 Bill Clinton campaigned successfully for president with promises to "put people first" and provide health insurance for all. But he quickly discovered that the ideas that had been dominant during the administrations of Ronald Reagan and George H.W. Bush were still hegemonic.

Market fundamentalism -- a dogmatic belief in the power of Adam Smith's "invisible hand" to create prosperity -- survived the Republicans' electoral defeat. Clinton was pressured to put aside many of his campaign promises to conform to this orthodoxy. And when he did defy market fundamentalism by pushing for universal health insurance, he suffered a catastrophic defeat.

Market fundamentalism has ruled the country for close to 25 years. It has produced weak economic performance, corporate crime waves, government corruption and a coarsening of the culture. But the amazing thing is that efforts to hold the market fundamentalists accountable have gained so little traction.

Perhaps the best explanation for this has been offered by former Labor Secretary Robert Reich. In "The Lost Art of Democratic Narrative," published by The New Republic in March 2005, Reich argues that differences over economic policy have been fought out in American politics over the past century by appropriating four specific story lines -- the rot at the top, the mob at the gates, the triumphant individual and the benevolent community. The party that tells these stories most persuasively wins, he observes, and in recent years the prize has gone to the Republicans.

In the 1930s, in contrast, the Democrats were successful in telling people a story in which government action could overcome the rot caused by business greed while also protecting us from the overseas mobs following fascist (and later, communist) leaders. Moreover, government assistance would create a benevolent community that could respond, as FDR said, to the "third of a nation [that was] ill-housed, ill-clad and ill-nourished." Within this community of care, hard work would be rewarded so that individuals could triumph and achieve upward mobility for their families.

According to Reich, the critical turning point came when the Republicans, starting with Reagan, hijacked these same stories and constructed a plot line in which the rot came from liberal elites, with the "Evil Empire" of the Soviets playing the role of the mob at the gates. Triumphant individuals had to be freed from government interference to restore the health of voluntary and faith-based communities. The Republicans have been telling versions of these same stories ever since, with George W. Bush endlessly promising to protect us from the terrorist mobs that have to be resisted overseas.

In both the New Deal and the Republican stories, however, there is a fifth narrative, providing a principle of order that integrates and organizes the four other elements. Starting in the 1930s, the Democrats employed a narrative in which an activist government overcomes the weaknesses of an unregulated market economy to achieve stability and renewed economic growth.

This story would not ordinarily have been an easy sell, but the severity of the Depression made people receptive. Roosevelt and the Democrats seized the opportunity, and the narrative of an activist government reinforced by the New Deal's concrete successes gave credibility to Democratic stories about the rot, the mob and the triumphant individuals living in benevolent communities.

That powerful Democratic narrative dominated U.S. politics for more than 30 years. But the combination of disillusionment over the Vietnam War, the stagflation of the 1970s and growing conflicts over gender, race and the environment began to undermine its effectiveness. As Republicans started to mobilize resentment against Democratic policies, Democratic politicians stopped telling the old stories.

This opened the way for the Republicans to invoke Adam Smith's mysterious mechanism of the "invisible hand" as the critical element that binds the other Republican stories together. Since the market can be relied on to coordinate all economic activity, the triumphant individual can be set free of government restrictions, and liberal elites can be dismantled.

But it is not an option for progressives simply to recycle the stories and rhetoric of the New Deal. Years of conservative dominance have undermined any notion that government can actually serve the public good. Right-wingers pointed to the pathetic federal response to Hurricane Katrina as proof that government cannot protect us. Republican corruption and ineptitude, in short, has the partially intentional function of discrediting government in general. Reich's stories won't work without a new master narrative that explains how we could all prosper under a different policy regime.

It is useful to remember that Franklin Roosevelt developed and mobilized the language of activist government well before Keynes and others came up with an economic justification for it. Roosevelt made the initial break with market fundamentalism on his own, and it was only later that the Keynesian revolution in economics legitimized his path.

Similarly, it was not the economic research of men like Friedrich von Hayek and Milton Friedman that made the revival of market fundamentalism possible. It was the fact that their economic ideas could be easily expressed in familiar and simple moral terms. In both cases, the key to changing the dominant story has not been economic theory but the power of a moral language.

This suggests that we could make the phrase "moral economy" serve as the organizing narrative for a revival of progressive ideas. The term has a long and rich history, but it is also shorthand for the argument that sustainable prosperity must be built on strong moral foundations. This is something that Adam Smith, one of the patron saints of market fundamentalism, understood, but it is a lesson that his contemporary followers have completely forgotten. Smith recognized that the pursuit of self-interest can only serve the common good if individuals are systematically constrained by moral sentiments.

The essential idea was brilliantly expressed in the title of a 1980s bestseller, "All I Really Need to Know I Learned in Kindergarten." The guiding principles of a moral economy are familiar rules such as don't hit, take turns, play by the rules, listen to the teacher, don't waste food and art supplies, and be prepared to share. These principles produce order in the elementary school classroom, and they can also assure order and prosperity in our nation's economy.

These kindergarten rules, in fact, translate directly into the four key principles that would be an integral part of a moral economy. "Don't hit" and "take turns" are about the principle of reciprocity; we need to behave toward others as we want them to act toward us. We should avoid force and coercion in our economic relations, including the quiet violence that occurs when we exploit someone's vulnerability or ignorance. Reciprocity is the foundation upon which trust is built, and high levels of trust are indispensable for economic prosperity.

"Play by the rules" and "listen to the teacher" express the principle of responsible competition. In the world of sports, competition pushes people to elevate their performance beyond all expectations. But the competition is so productive precisely because it is structured by rules and because the referees are on the field waving penalty flags. Economic competition is the same; it leads to elevated performance only with clear rules and when the regulators are able to call fouls and march off penalty yardage. And these rules must be continually updated to discourage unfair and injurious competitive strategies.

The injunction against waste is the principle of conservation of all resources, including human beings, nature and the built environment. Providing the maximal opportunity for each person to develop his or her capacities is the best way to avoid wasting our human resources. Conservation of both nature and constructed materials is central to the vision of a sustainable economy that no longer assumes that fossil fuels and minerals can be indefinitely wrested from the earth.

Finally, sharing exemplifies the principle of cooperation. Market ideology focuses only on competition, but a productive economy depends on cooperation. The most productive firms are those that create high levels of cooperation between employees and managers, and most large-scale economic efforts require complex webs of cooperation between different firms and public-sector agencies. An economy's capacity to generate and exploit innovations is a direct result of its ability to facilitate cooperation among these different actors.

These four principles -- reciprocity, responsible competition, conservation and cooperation -- interact and reinforce one another to enhance a moral economy's effectiveness. But market fundamentalists understand nothing of this. In fact, their policies have weakened our economy by deliberately ignoring and violating all these principles.

Envisioning a moral economy does not require any heroic assumptions about human nature; it does not assume that people are always cooperative and kind. On the contrary, it starts from the idea that the individual pursuit of self-interest has to be controlled, or it will turn destructive.

Market fundamentalists are the utopians; they imagine that the market magically transforms everyone into angels who can be trusted to do the right thing. The moral-economy narrative recognizes that there is no "royal road," no magic formula that will produce the desired combination of prosperity, order and justice. Rather, it is through the continuous exercise of democratic self-governance that we can reform our institutions to make both the economy and the government work better to achieve our shared objectives.

By establishing this vision of a moral economy, we can tell a unified story of how our fellow citizens can prosper. But it is important to avoid those old assumptions that government is always good and corporations are necessarily evil. Our government consistently fails to help people with day-to-day problems of health care, education and childcare, or finding work that pays a decent wage. Reforming government so that it works effectively for people is a critical part of building a moral economy.

At the same time, shared prosperity depends on "enterprise" -- collective projects of innovation carried out with boldness and energy. Entrepreneurial activity can and should occur throughout society -- in the public sector, in the nonprofit sector, in small business, in large corporations and in a wide variety of collaborations among these sectors.

A moral economy would unleash this capacity for shared problem-solving in ways that fit with the four principles laid out earlier. So while we expose corporations that cheat their employees or the public, we should reward those that channel their efforts into innovations. A reformed corporate sector is a critical building block of a moral economy.

With the construction of a moral economy as the frame, Reich's other stories fall into place. The "rot at the top" has never smelled so putrid; the decay comes from the obscenely wealthy who have abandoned real enterprise for paper manipulations that generate outlandish returns. The "mob at the gates" continues to be those committed to jihad against the West. But the Bush administration's response to this threat has been completely self-defeating.

We need, instead, greater international cooperation to combat terrorism and concerted efforts to build a moral economy at the global level. Creating a world in which children born in the slums of Cairo, Islamabad and Lagos have real opportunities for meaningful employment and political participation is the only way to isolate the jihadists.

The triumphant individuals in this narrative are people of different ethnicities, immigrants and native born, both women and men, gay and straight, rural, suburban and urban, for whom the doors of opportunity would be reopened by the project of building a moral economy. With such an economy, our nation would become a "benevolent community" in which each individual is able to reach his or her full potential.

To be sure, stories are not enough. We also need bold policy ideas that would implement the principles of a moral economy. But the stories have to come first, and those stories must connect us to our nation's richest traditions.

The great popular movements of our nation's history -- against the slave trade, for the abolition of slavery, for women's suffrage, for trade union rights, for restraints on the power of big business in the Progressive Era, and extending to the civil rights movement, the New Left and the environmental movement -- can all be understood as efforts to align our economic and political institutions with our deepest moral commitments. We will be honoring their legacy when we present a vision of a moral economy as an alternative to the failed claims of market fundamentalism.

But, in an extraordinary off the record interview with Scotland on Sunday, one of his closest allies revealed that:

• The Prime Minister and a select band of confidants involved had to "convince each other" that taking loans from party supporters was the right thing to do;

• Blair opted for the loans strategy because the party was "skint" and faced meltdown during the General Election campaign last year;

• The clinching argument was the belief that rival parties were using the system to swell their coffers.

This weekend, Blair and the Labour high command have also "gagged" Labour's treasurer to prevent him from exposing the identities of the party's multi-millionaire lenders, because they are protected by commercial "confidentiality clauses".

The Prime Minister entered into the deal with the group of lenders to ensure that their contributions could not be exposed at a later date.

However, it emerged last week that three Labour lenders - Sir David Garrard, Chai Patel and Barry Townsley - were on the list of nominations for elevation to the Lords signed by Party chairman Ian McCartney in October.

The source, a senior Labour figure who was close to the hectic planning that produced the loans strategy last night came out fighting, claiming the party's rivals were already exploiting the system.

But he suggested that there was some reluctance within Blair's inner circle over entering into the arrangements. He recalled that, although the move was not illegal, they had needed to "convince each other" to ditch a veto that had been in place under previous Labour regimes.

"Why did the party do it? Because the party was skint," he said. "We weren't going to get beaten up [in the election] if the others were doing it.

"We didn't exactly invent the wheel, it was there. The wheel was there.

"Blair knew exactly what was going on. As far as he was concerned, it was absolutely legal. It wasn't a matter of convincing him because it was absolutely legal. It was a matter of everyone convincing each other."

Labour Party Treasurer Jack Dromey, who is conducting an investigation into the so-called loans-for-peerages affair, has been given a secret list of all the lenders.

But he has been warned that he cannot go public with their names in a report on the embarrassing saga, which he plans to deliver to party chiefs on Tuesday, because it could leave Labour officials open to legal action in the future.

Although the Prime Minister has attempted to defuse the furore, it threatened to spiral further out of his control last night, after it was confirmed that the controversial policy was conducted by a tight circle of his aides - to the exclusion of even senior Cabinet ministers including Gordon Brown and John Prescott.

Dromey launched a furious attack on the party hierarchy last week after it emerged that at least three of the lenders had subsequently been nominated for a seat in the House of Lords.

Scotland on Sunday also understands that Sir Jeremy Beecham, the elected chairman of the party's all-powerful National Executive Committee (NEC), who will chair an important meeting of the body in London on Tuesday, was upset that he had not been consulted.

Knowledge of the fundraising strategy was restricted to Blair, Labour's then general secretary, Matt Carter, and the party's main fundraiser, Lord Levy. Party chairman Ian McCartney was let in on the secret when Carter and Levy asked him for permission to seek the huge loans last spring to help bankroll a General Election campaign that cost at least £17m.

In addition to the internal fall-out from the revelations, Labour will come under further pressure to disclose more details of the loan arrangements to the body in charge of sanctioning nominations to the upper chamber.

A spokeswoman for the Lords Appointments Commission said: "In light of recent events we have written to the leaders of all three political parties asking them whether there is anything else they would like to tell us."

The party last night maintained that it had done nothing wrong.

Battered Blair living on borrowed time

THE names were barely readable for Ian McCartney, as he struggled with the important papers handed to him during his recuperation from heart surgery last October. Officially, the Labour Party chairman was on lengthy sick leave following a critical heart bypass operation. But some things simply could not wait.

Chai Patel, Barry Townsley, Sir David Garrard and at least one other candidate had been presented to him for elevation to the House of Lords, all with the blessing of Tony Blair. None of the names will have stood out as particularly surprising - or familiar - to McCartney as he discharged his duty by signing the papers.

It was not until last week that these apparently innocuous names developed an explosive significance for McCartney and the entire Labour movement. For the men on the list for ennoblement were not long-serving party stalwarts, nor tireless philanthropists. They were, rather, tycoons who had handed millions of pounds to Labour in the run-up to last year's General Election.

Until a furious Patel broke his silence last week, nobody other than the wealthy benefactors and a tight circle around Blair himself knew anything about the cash, which had been delivered via a complex loan strategy designed to ensure the party could fund its successful bid for a third term in office.

Patel wrote to the House of Lords Appointments Commission to ask if his nomination for a peerage had been blocked, though he denies that his nomination was in exchange for his reported £1.5m loan to Labour.

"If they had said: 'You will get this by signing this,' I would have walked out of the room," insisted Patel.

"I am very sad that whatever happens from here I am linked to an event which has got nothing to do with the things I believe in, but has been reduced to a bazaar where people are saying: 'What is the price of the peerage?'"

New Labour has long been pilloried as having a love affair with lucre, but what made this row stand out from previous scandals was the implication that this time the money was loaned rather than donated so that the transaction could be kept secret.

As revelations of the loans seeped out, one who shared this view was none other than Jack Dromey, the Labour Party treasurer, who had no idea of the apparent link between loans and nominations to the Lords.

While Downing Street was finally waking up to the implications of a policy agreed a year before, a furious Dromey ploughed through last Sunday's newspaper revelations about the loans with increasing alarm. Across the room, his wife, the Constitutional Affairs Minister Harriet Harman, was also weighing up the consequences.

Dromey, deputy general secretary of the Transport and General Workers' Union, decided that Labour must investigate itself to prevent the matter spiralling out of its control. He contacted Downing Street on Monday to demand full details of the loans, and his increasingly irate public interventions would propel the affair into a full-blown crisis.

"This was all about Jack's ego," one furious fellow party apparatchik complained. "He didn't like being left out. He had his position and he thought it gave him power, when really it is a purely honorific title."

Honorific or not, the party treasurer is an elected official and he jointly signs the annual report on its finances. But Dromey was denied access to information on a funding stream that had brought almost £14m into Labour coffers. Unfortunately for an increasingly evasive party establishment, Dromey, a veteran of the Grunwick strike and pickets of the 1970s, is not one to give up.

Significantly, the usual rebel MPs who can always be relied upon to oppose Blair were not the only ones to echo his complaints. On Wednesday, as concerns over the policy began to accelerate, the Prime Minister was waylaid by Warrington North MP Helen Jones as he rushed out of Prime Minister's Question Time and berated, in public, over his behaviour. When he arrived at the Labour MPs' ruling parliamentary committee, one member, his former minister Angela Eagle, picked up the theme.

"She really had a go," another member of the committee told Scotland on Sunday. "When she mentioned the issue of the loans, the response was like when your aged aunt farts at the dinner table. Pure embarrassment. But his answers were not wholly convincing."

By the time Blair emerged from the meeting, his advisers were beginning to accept that he could not simply ride out this storm. After a last-ditch series of meetings with Dromey on Wednesday failed to allay his concerns, it was decided that the Prime Minister would have to demonstrate that he was taking action. His monthly press conference the following day was identified as the ideal opportunity to begin the fightback.

The tactic was not universally welcomed. Dromey sensed a stitch-up and, according to one colleague, "retreated with Harriet to discuss what to do".

"He seriously considered resigning his position with the party," the source added, "but he decided to fight on in pretty dramatic fashion."

Less than an hour after Blair had survived the landmark vote on his Education Bill on Wednesday, relieved ministerial advisers were winding down in the bars in and around Westminster when they received texts telling them to turn on TVs, wherever they were.

"They were all about Jack's interviews. It was incredible," said one aide. In an attempt to get his retaliation in first, Dromey toured television studios to announce his own inquiry into the "improper" interpretation of Labour's own sleaze-busting party funding rules.

"Even Enron, I think, would be amazed at hearing the sort of accounting practices that seem to be going on in the Labour Party," said Dromey. In a neat move that signified the gravity of what he was entering into, Harman immediately resigned her responsibility for electoral reform.

The loophole in the Political Parties and Referendum Act, which requires parties to declare donations but enables them to "hide" loans, has been known for some time. Indeed, it is believed that the Tories have used the legislation to conceal details of up to £20m-worth of loans. But previous Labour general-secretaries, particularly David (now Lord) Triesman, forbade their party from following suit.

In the run-up to last year's election, however, his successor, Matt Carter, was faced with a campaign bill estimated at £20m, while donations were at an alarmingly slow rate.

Party insiders believe that Carter appealed to the party's legendary fundraiser, Lord Levy, who helped devise the new loans-for-Labour strategy. Whether that, in turn, developed into loans-for-peerages remains a matter of debate and Dromey's investigation.

Patel was approached after the election, in July, as the party struggled with a soaring overdraft, a slump in membership and gathering concerns among its traditional bankers, the Co-op and Unity Trust banks. He was schmoozed at dinner parties at Levy's north London home where, amid the splendour of marble and a swimming-pool, Blair himself could be relied upon to make an appearance. At the end of it, he agreed a loan at a "commercial rate of interest" - which meant it did not have to be disclosed. Three months later, he was on the fast-track to the House of Lords.

"This kind of behind-the-scenes loan arrangement was invented by the Conservatives to get around the law," complained Eagle, who is also a member of the party's ruling National Executive Committee (NEC). "It's therefore a great disappointment to me to come across the possibility that someone in the Labour Party may have been doing the same thing."

Other MPs joined in: Gordon Prentice bemoaned the "swirling allegations" and David Winnick called for current nominations for peerages to be suspended while the entire process was "cleaned up".

While Tory backbenchers made hay with the row, David Cameron was unable to put the government to the sword because of his party's own form on the matter. But this offered only temporary relief for the increasingly beleaguered Prime Minister in the wake of attacks from within his own party, and especially those who hope to hasten Gordon Brown's takeover at the top.

An august Blair launched a revised counter-attack at his press conference, at noon on Thursday, in which he signalled an acceptance that he had to give ground. In a nifty twist, he stressed his own discontent at the system of party funding, and he then bestowed upon the Cabinet Secretary, rather than himself, the right to recommend honours.

It was a traditionally polished performance, but Scotland on Sunday has been told that the sleaze-busting blueprint was "pinched" wholesale from a masterplan drawn up by the Brown camp in preparation for their man's attempts to "clean out the stables" if he succeeds Blair.

The Prime Minister's public appearance came immediately after a Cabinet meeting at which his own deputy revealed his anger at the status quo. John Prescott reportedly "went bananas" as he sat at the Cabinet table - but the object of his rage was not the Prime Minister. "He was livid with Dromey for going public," the source added. "In doing so he did, however, disclose that he had known nothing about it. He said: 'I didn't know the facts; nobody knew the facts.'"

Prescott was not alone. Brown's allies maintain that the Chancellor was similarly in the dark, which only adds another troubling element to this most mysterious of Labour's dalliances with sleaze and cronyism. In his day-job, Brown has maintained a rigid control over the nation's finances - a budget of around £500bn - yet Blair and his closest aides kept him out of their big secret on party funding.

While Brown's people appear not to have orchestrated the row that engulfed Blair this week, they have not been slow to exploit his latest weakness - and it has been left to Downing Street to sort the mess out.

Immediately after Blair's performance on Thursday, Dromey was summoned for further negotiations which, according to the Prime Minister's aides, produced a "truce". Unfortunately, this does not appear to be the view of Dromey, who hopes to produce a report to the NEC on Tuesday.

Scotland on Sunday understands that the treasurer has been furnished with a list of all those who have loaned money to the party, and how much of the £14m they have contributed.

However, he has also been warned that he cannot reveal any of the names, because they signed confidentiality clauses with Labour before releasing the money - and the party could face legal action if these are broken.

"Jack hopes to disclose their names as part of his investigation," a party insider confirmed. "He's trying to find a way of getting them into his report on Tuesday, but the party has made it quite clear that there could be legal consequences if any of the names came out."

A legal battle with those he has worked hard to court in the past? The prospect does not bear thinking about for Blair. As he faces renewed protests over the Iraq war - which will have lasted for three years tomorrow, together with the prospect of further battles from within his own party over education and other controversial public sector reforms, the future must look increasingly grim to a Prime Minister with retirement on his mind.

If there is one minor positive Downing Street has salvaged from the loans-for-peerages scandal, it is the hope that it will bring state funding closer. It is an option that is said to appeal to Blair, and one aide explained last night: "All democracies need strong parties, and these have to be paid for."

But, whether or not Blair is truly happy with the notion that taxpayers should fork out yet more money for their politicians, it is hardly the epitaph he would want after almost a decade in charge of the country. Nor would be want to be remembered for the claim that he sanctioned secret loans to keep his party afloat and then agreed that some of the men who provided them should be elevated to the Lords.

The question for Blair, as he peruses the latest grim details of the latest sordid little scandal to afflict his increasingly fragile premiership, is this: are things going to get much better any time soon; and, if they are not, is it time to give up on his hope for a better legacy and get out while it is still his decision to go?

Exploration yielded surprising results. It turned out that Mexico's richest oil field complex was created 65 million years ago, when the huge Chicxulub meteor impacted the Earth at the end of the Mesozoic Era. Scientists now believe that the Chicxulub meteor impact was the catastrophe the killed the dinosaurs, as well as the cause for creating the Cantrell oil field.

The impact crater is massive, estimated to be 100 to 150 miles (160 to 240 kilometers) wide. The seismic shock of the meteor fractured the bedrock below the Gulf and set off a series of tsunami activity that caused a huge section of land to break off and fall back into the crater under water.

Proponents of the abiotic, deep-earth theory of the origin of oil point argue that the deep fracturing of the basement bedrock at Cantarell caused by the meteor's impact was responsible for allowing oil formed in the Earth's mantle to seep into the sedimentary rock that settled in the huge underwater crater. Geologists have documented that the bedrock underlying the crater shows "melt rock veinlets pointing to large megablock structures as well as a long thermal and fluid transport" as part of the post-impact history. In other words, the bedrock at Cantarell did suffer sufficiently severe fracturing to open the bedrock to flows of liquids and gases from the deep earth below.

An important, but neglected, study of the bedrock underlying the Saudi oil fields provided strong evidence that the oil fields resulted from fractures and faults in the basement rock, not from a disproportionately large number of dinosaurs having died for some reason or another uniquely on the Arabian Peninsula. The study published in 1992 by geologist H.S. Edgell http://perso.wanadoo.fr/brcgranier/gmeop/Edgell_1992.htm argued that the Saudi oil fields, including the giant field at Ghawar, were "produced by extensional block faulting in the crystalline Precambrian basement along the predominantly N-S Arabian Trend which constitutes the 'old grain' of Arabia."

In other words, according to the abiotic, deep earth theory of oil's origin, we do not have to assume that all the dinosaurs herded like Elephants to Saudi Arabia at the end of the Mesozoic Era, where they died in a giant heap that produced oil. Bedrock cracks, whether or not due to meteor impacts, can serve to open the above sedimentary layers to trap oil deposits seeping upward.

Until the 1960s, geologists considered collisions of extraterrestrial objects with the Earth as interesting, but not necessarily important. Since Cantarell was discovered, geologists have come to realize that the intense shock waves generated in meteor impact events have significantly shaped Earth's surface, distributed its crust, and fractured its bedrock. Over 150 individual geological structures, many masked over by subsequent sedimentary deposits, have been identified as important, ranging from circular impact bowls measuring from only a few kilometers in diameter to as much as 200 kilometers (approximately 125 miles) in diameter. Moreover, Cantarell has stimulated interest in meteor impact structures as potential locations to explore in order to find oil producing sites.

In recent years, we have only begun exploring the Gulf of Mexico for oil. So far the results are impressive. Instead of imploring Congress to examine the oil producing potential of wood chips and switch grass, President Bush may be better advised to press ahead to extend oil exploration into the Gulf of Mexico to the limits current technology will permit.

Wouldn't the Bush administration and other "peak oil" advocates be surprised to find that a resource as close as the Gulf of Mexico might just rival the 260 billion barrels of oil reserves Saudi Arabia currently claims?

Mr. Corsi is the author of several books, including Unfit for Command: Swift Boat Veterans Speak Out Against John Kerry (along with John O'Neill), Black Gold Stranglehold: The Myth of Scarcity and the Politics of Oil (along with Craig R. Smith), and Atomic Iran: How the Terrorist Regime Bought the Bomb and American Politicians. He is a frequent guest on the G. Gordon Liddy radio show. He will soon co-author a new book with Jim Gilchrist on the Minuteman Project.