Fuel suppliers demand airlines pay cash in advance

From The TimesMay 26, 2008

Carl Mortished and Amanda Andrews
Airlines are being forced to pay cash in advance for jet fuel as the major oil companies tighten the screws on an industry that is being crushed by an extraordinary surge in the price of crude oil.

Sources within the airline industry indicate that credit is being denied to most of the leading American carriers and the practice is moving to Europe and Asia. So uncertain is the cash solvency of the industry that jet fuel suppliers insist on prepayments into special bank accounts.

A credit controller at a leading European multinational oil company told The Times that the oil industry was moving to jet fuel prepayment. “It’s common in the US and it is moving to Europe. We have been moving to prepayment since Swissair went bust.”

The need to put up money before delivery of fuel is a huge financial burden that has been shifted from the oil companies to the airlines. According to John Armbrust, a US jet fuel consultant, the oil industry had $5 billion (£2.5 billion) of jet fuel credit outstanding to airlines before the 9/11 terrorist attacks. Now they are demanding that airlines leave cash on deposit.

“The airlines can’t afford it. Traditionally, oil companies extended credit for 14 or 21 days and some as long as 30 days. Now, most American airlines are on prepay. South West is one of a few likely to still get credit.”

The extent of the cash squeeze was highlighted last week when American Airlines said that it would charge $15 per bag checked even as it revealed plans to shed 75 aircraft, shrinking the airline’s capacity by 12 per cent.

The price of jet fuel has risen by 60 per cent since January and American Airlines paid $665 million more for fuel in the first quarter of this year than in the same period of 2007.

The credit crunch is likely to worsen and a number of financial institutions will fail, according to research from Atradius, the credit insurance group which conducted a global survey of its customers’ views of the financial outlook. Although Atradius said that companies expect the number of failures to be small, about 65 per cent expect there to be failures.

The group added that direct exposure to sub-prime lending is higher in Europe than in the United States even though the bulk of the sub-prime mortgage defaults are in the US and many of the securities these loans are packaged into would have originated from US-based mortgage companies.

“Some explanation for this may be investments by European companies in US securities offering higher returns and more frequent use of secondary financial markets to securitise receivables by European countries,” it said.

Atradius added that only 12 per cent of companies across the world do not expect an economic slowdown in the next year. In Britain, more than 90 per cent of companies surveyed expect a slowdown, the highest percentage. About one in six companies expects a slowdown of only the national economy; a quarter expect a slowdown of the global economy and half expect a slowdown of both. The expectation of a slowdown is also high in Mexico, the United States, Spain, Italy, France and Belgium and lowest in Sweden and the Netherlands.

Atradius found that larger companies are more likely to have been affected by the credit crisis. Although fewer than 30 per cent of small companies reported an impact, almost half of all large companies (with more than €1 billion annual gross sales) said that they had felt the credit-crisis pinch.

Companies operating within the energy industry have been especially affected, but those in the healthcare and services industries reported a relatively low frequency of impact.

IAEA: No N-weaponization found in Iran

Tue, 27 May 2008


IAEA Director General Mohamed ElBaradei
The IAEA has not detected the use of nuclear material linked to Iran's "alleged studies" of weaponization, the agency's latest report says.

The findings are part of a restricted International Atomic Energy Agency report forwarded to the UN Security Council and to the 35 board members of the agency on Monday, May 26.

“The Agency has been able to continue to verify the non-diversion of declared nuclear material in Iran. Iran has provided the Agency with access to declared nuclear material and has provided the required nuclear material accountancy reports in connection with declared nuclear material and activities,” said the report, a copy of which was obtained by Press TV.

The IAEA holds the view that clarification of the alleged studies "on the green salt project, high explosives testing and missile re-entry vehicle project" is critical "to an assessment of the nature of Iran's past and present nuclear program."

"Iran has agreed to address the alleged studies," it said.

According to the report, Iran's response to a May 9 request by the UN nuclear watchdog to provide "additional clarifications" on the nuclear drive is currently being assessed by the agency.

Director General of the UN nuclear watchdog Mohamed ElBaradei called on Iran to "implement all measures required to build confidence in the peaceful nature of its nuclear program," the report added.

The West has been at loggerheads with Iran over the country's nuclear drive. Washington and its allies accuse Tehran of pursuing nuclear weaponry; claiming that Iran's uranium enrichment program is aimed at producing fuel for a nuclear weapons progmra - such substance could also be used to produce electricity in nuclear power plants.

IAEA's latest report came a week after ElBaradei said that there is no 'concrete evidence' that Iran is developing a nuclear bomb.

"We haven't seen indications or any concrete evidence that Iran is building a nuclear weapon and I've been saying that consistently for the last five years," ElBaradei said speaking at a May 20 session of the World Economic Forum on the Middle East.

The IAEA boss referred to a Dec 3 joint assessment by 16 US spy agencies, which conceded with 'high confidence' that Tehran is not running a nuclear weapons program, and said that the US intelligence report confirmed his agency's assessment on Iran.

McBush

S&P: US home prices tumble a record 14.1 pct in 1Q

By J.W. ELPHINSTONE, AP Business Writer

U.S. home prices dropped at the sharpest rate in two decades during the first quarter, a closely watched index showed Tuesday, a somber indication that the housing slump continues to deepen.

Standard & Poor's/Case-Shiller said its national home price index fell 14.1 percent in the first quarter compared with a year earlier, the lowest since its inception in 1988. The quarterly index covers all nine U.S. Census divisions.

Prices nationwide are at levels not seen since the third quarter of 2004, according to Maureen Maitland, a S&P vice president. However, the index is still up 60 percent versus 2000.

The narrower indices also set record declines in the first quarter. The 20-city index tumbled 14.4 percent, the lowest since that index was started in 2001. The 10-city index plunged 15.3 percent, a record in its 20-year history.

"There are very few silver linings that one can see in the data. Most of the nation appears to remain on a downward path," said David Blitzer, chairman of S&P's index committee.

Nineteen of the 20 metro areas reported annual declines, with 15 of them posting record lows. Six metro areas lost more than 20 percent.

Las Vegas had the worst quarterly performance, falling 25.9 percent, followed by Miami and Phoenix. Only Charlotte, N.C., stayed above water, gaining less than 1 percent over the previous year.

Last week, the Office of Federal Housing Enterprise Oversight said home prices fell 3.1 percent in the first quarter, the largest drop in its 17-year history and only the second quarter of price declines recorded.

The OFHEO index is narrower in scope and is calculated using mortgages of $417,000 or less that are bought or backed by Fannie Mae or Freddie Mac. That excludes properties bought with some of the riskier types of home loans.




Copyright © 2008 The Associated Press.

Israel has 150 nuclear weapons: Former U.S. president

Israel has 150 nuclear weapons in its arsenal, according to former U.S. President Jimmy Carter. He made the statement while arguing that the U.S. should talk directly to Iran to persuade it to drop its nuclear ambitions.

Carter cited Israel's nuclear arsenal and those of the U.S., Russia, China, Britain and France as proof that Iran would find it almost impossible to develop weapons and the missiles to deliver them in secret.

Israel has never admitted having nuclear weapons, although the world assumes their existence. Nor do U.S. officials deviate in public from Israel's line.

Meantime, UN nuclear watchdog chief Mohamed ElBaradei is slated to release his latest report on Tehran's uranium enrichment activities. The report is expected to be put before the IAEA Board of Governors' members on Monday.

Spending On Iraq Poorly Tracked

Audit Faults Accounting for $15 Billion in Work

Dang, that $15 billion was around here a few minutes ago.
Tom

By Dana Hedgpeth
Washington Post Staff Writer
Friday, May 23, 2008; D01



The inspector general for the Defense Department said yesterday that the Pentagon cannot account for almost $15 billion worth of goods and services ranging from trucks, bottled water and mattresses to rocket-propelled grenades and machine guns that were bought from contractors in the Iraq reconstruction effort.

The Pentagon did not have the proper documentation, including receipts, vouchers, signatures, invoices or other paperwork, for $7.8 billion that American and Iraqi contractors were paid for phones, folders, paint, blankets, Nissan trucks, laundry services and other items, according to a 69-page audit released to the House Committee on Oversight and Government Reform.

An earlier audit by the inspector general found deficiencies in accounting for $5.2 billion of U.S. payments to buy weapons, trucks, generators and other equipment for Iraq's security forces. In addition, the Defense Department spent $1.8 billion of seized Iraqi assets with "absolutely no accountability," according to Rep. Henry A. Waxman (D-Calif.), who chairs the oversight committee. The Pentagon also kept poor records on $135 million that it paid to its partners in the multinational military force in Iraq, auditors said.

The Army disagreed with some of the auditors' findings, saying that it is difficult to maintain an adequate paper trail in a war zone and that it has improved its record-keeping and accountability efforts. Robert L. Wilkie, assistant secretary of defense for legislative affairs, declined an invitation to testify before from Waxman's committee.

Of the $7.8 billion in payments detailed in the audit released yesterday, about $1.4 billion did not meet the most minimal requirements for documentation, making it highly possible that waste, fraud or abuse had occurred, according to auditors. In one case, there is a copy of a $5.6 million check from the U.S. Treasury paid to an Iraqi contractor but no documents saying what was purchased. In another, a South Carolina contractor was paid $11 million, according to a voucher, but auditors said they could not tell what goods or services were received.

"Without a receiving report and invoice, we don't know what we paid for," said Mary Ugone, the Defense Department's deputy inspector general for auditing. She said internal controls and paper trails were inadequate and that the Army's "finance personnel were not adequately trained" in overseeing the billions of dollars paid.

Auditors referred more than two dozen vouchers, totaling $35 million, to criminal investigators at the Pentagon.

Waxman said the poorly documented expenditures of seized Iraqi assets included a $320 million cash payment for employing 1,000 people that was handed over to the Iraqi Finance Ministry with "little more than a signature in exchange."

"Investigators looked at 53 payment vouchers and couldn't find even one that adequately explained where the money went," Waxman said.

The money paid to military coalition partners, including Britain, Poland and South Korea, was intended to help local reconstruction and humanitarian projects. Auditors said that none of the files reviewed "contained sufficient supporting documentation to provide reasonable assurance that these funds were used for their intended purpose." In one case, the Defense Department made an $8 million payment to Polish forces with minimal documentation, according to the audit.

An audit report issued in November found that $5.2 billion of U.S. payments to buy weapons, trucks, generators and other equipment to support Iraqi security forces had major deficiencies in how items were accounted for, saying that the Defense Department did not know "what equipment is due in, due out, issued and on hand." The inspector general found that the Defense Department could not account for 12,712 of 13,508 weapons, including assault rifles, machine guns and grenade launchers for Iraqi forces.

"When we turned them over to the Iraqis, they weren't properly accounted for," said Gary Comerford, a spokesman for the Defense Department's inspector general, saying serial numbers were not consistently recorded. "The paper trail is not complete."

The November audit also described how the Pentagon paid $32 million for the construction of an Iraqi military facility in Anbar province that was never built. Defense Department officials told staff members of the oversight committee that "this is embarrassing" because "not a spade of dirt was turned."

A Declaration of Independence From Israel

Posted on Jul 2, 2007
By Chris Hedges

Israel, without the United States, would probably not exist. The country came perilously close to extinction during the October 1973 war when Egypt, trained and backed by the Soviet Union, crossed the Suez and the Syrians poured in over the Golan Heights. Huge American military transport planes came to the rescue. They began landing every half-hour to refit the battered Israeli army, which had lost most of its heavy armor. By the time the war was over, the United States had given Israel $2.2 billion in emergency military aid.

The intervention, which enraged the Arab world, triggered the OPEC oil embargo that for a time wreaked havoc on Western economies. This was perhaps the most dramatic example of the sustained life-support system the United States has provided to the Jewish state.

Israel was born at midnight May 14, 1948. The U.S. recognized the new state 11 minutes later. The two countries have been locked in a deadly embrace ever since.

Washington, at the beginning of the relationship, was able to be a moderating influence. An incensed President Eisenhower demanded and got Israel’s withdrawal after the Israelis occupied Gaza in 1956. During the Six-Day War in 1967, Israeli warplanes bombed the USS Liberty. The ship, flying the U.S. flag and stationed 15 miles off the Israeli coast, was intercepting tactical and strategic communications from both sides. The Israeli strikes killed 34 U.S. sailors and wounded 171. The deliberate attack froze, for a while, Washington’s enthusiasm for Israel. But ruptures like this one proved to be only bumps, soon smoothed out by an increasingly sophisticated and well-financed Israel lobby that set out to merge Israeli and American foreign policy in the Middle East.

Israel has reaped tremendous rewards from this alliance. It has been given more than $140 billion in U.S. direct economic and military assistance. It receives about $3 billion in direct assistance annually, roughly one-fifth of the U.S. foreign aid budget. Although most American foreign aid packages stipulate that related military purchases have to be made in the United States, Israel is allowed to use about 25 percent of the money to subsidize its own growing and profitable defense industry. It is exempt, unlike other nations, from accounting for how it spends the aid money. And funds are routinely siphoned off to build new Jewish settlements, bolster the Israeli occupation in the Palestinian territories and construct the security barrier, which costs an estimated $1 million a mile.

The barrier weaves its way through the West Bank, creating isolated pockets of impoverished Palestinians in ringed ghettos. By the time the barrier is finished it will probably in effect seize up to 40 percent of Palestinian land. This is the largest land grab by Israel since the 1967 war. And although the United States officially opposes settlement expansion and the barrier, it also funds them.

The U.S. has provided Israel with nearly $3 billion to develop weapons systems and given Israel access to some of the most sophisticated items in its own military arsenal, including Blackhawk attack helicopters and F-16 fighter jets. The United States also gives Israel access to intelligence it denies to its NATO allies. And when Israel refused to sign the nuclear nonproliferation treaty, the United States stood by without a word of protest as the Israelis built the region’s first nuclear weapons program.

U.S. foreign policy, especially under the current Bush administration, has become little more than an extension of Israeli foreign policy. The United States since 1982 has vetoed 32 Security Council resolutions critical of Israel, more than the total number of vetoes cast by all the other Security Council members. It refuses to enforce the Security Council resolutions it claims to support. These resolutions call on Israel to withdraw from the occupied territories.

There is now volcanic anger and revulsion by Arabs at this blatant favoritism. Few in the Middle East see any distinction between Israeli and American policies, nor should they. And when the Islamic radicals speak of U.S. support of Israel as a prime reason for their hatred of the United States, we should listen. The consequences of this one-sided relationship are being played out in the disastrous war in Iraq, growing tension with Iran, and the humanitarian and political crisis in Gaza. It is being played out in Lebanon, where Hezbollah is gearing up for another war with Israel, one most Middle East analysts say is inevitable. The U.S. foreign policy in the Middle East is unraveling. And it is doing so because of this special relationship. The eruption of a regional conflict would usher in a nightmare of catastrophic proportions.

There were many in the American foreign policy establishment and State Department who saw this situation coming. The decision to throw our lot in with Israel in the Middle East was not initially a popular one with an array of foreign policy experts, including President Harry Truman’s secretary of state, Gen. George Marshall. They warned there would be a backlash. They knew the cost the United States would pay in the oil-rich region for this decision, which they feared would be one of the greatest strategic blunders of the postwar era. And they were right. The decision has jeopardized American and Israeli security and created the kindling for a regional conflagration.

The alliance, which makes no sense in geopolitical terms, does makes sense when seen through the lens of domestic politics. The Israel lobby has become a potent force in the American political system. No major candidate, Democrat or Republican, dares to challenge it. The lobby successfully purged the State Department of Arab experts who challenged the notion that Israeli and American interests were identical. Backers of Israel have doled out hundreds of millions of dollars to support U.S. political candidates deemed favorable to Israel. They have brutally punished those who strayed, including the first President Bush, who they said was not vigorous enough in his defense of Israeli interests. This was a lesson the next Bush White House did not forget. George W. Bush did not want to be a one-term president like his father.

Israel advocated removing Saddam Hussein from power and currently advocates striking Iran to prevent it from acquiring nuclear weapons. Direct Israeli involvement in American military operations in the Middle East is impossible. It would reignite a war between Arab states and Israel. The United States, which during the Cold War avoided direct military involvement in the region, now does the direct bidding of Israel while Israel watches from the sidelines. During the 1991 Gulf War, Israel was a spectator, just as it is in the war with Iraq.

President Bush, facing dwindling support for the war in Iraq, publicly holds Israel up as a model for what he would like Iraq to become. Imagine how this idea plays out on the Arab street, which views Israel as the Algerians viewed the French colonizers during the war of liberation.

“In Israel,” Bush said recently, “terrorists have taken innocent human life for years in suicide attacks. The difference is that Israel is a functioning democracy and it’s not prevented from carrying out its responsibilities. And that’s a good indicator of success that we’re looking for in Iraq.”

Americans are increasingly isolated and reviled in the world. They remain blissfully ignorant of their own culpability for this isolation. U.S. “spin” paints the rest of the world as unreasonable, but Israel, Americans are assured, will always be on our side.

Israel is reaping economic as well as political rewards from its lock-down apartheid state. In the “gated community” market it has begun to sell systems and techniques that allow the nation to cope with terrorism. Israel, in 2006, exported $3.4 billion in defense products—well over a billion dollars more than it received in American military aid. Israel has grown into the fourth largest arms dealer in the world. Most of this growth has come in the so-called homeland security sector.

“The key products and services,” as Naomi Klein wrote in The Nation, “are hi-tech fences, unmanned drones, biometric IDs, video and audio surveillance gear, air passenger profiling and prisoner interrogation systems—precisely the tools and technologies Israel has used to lock in the occupied territories. And that is why the chaos in Gaza and the rest of the region doesn’t threaten the bottom line in Tel Aviv, and may actually boost it. Israel has learned to turn endless war into a brand asset, pitching its uprooting, occupation and containment of the Palestinian people as a half-century head start in the ‘global war on terror.’ ”

The United States, at least officially, does not support the occupation and calls for a viable Palestinian state. It is a global player, with interests that stretch well beyond the boundaries of the Middle East, and the equation that Israel’s enemies are our enemies is not that simple.

“Terrorism is not a single adversary,” John Mearsheimer and Stephen Walt wrote in The London Review of Books, “but a tactic employed by a wide array of political groups. The terrorist organizations that threaten Israel do not threaten the United States, except when it intervenes against them (as in Lebanon in 1982). Moreover, Palestinian terrorism is not random violence directed against Israel or ‘the West’; it is largely a response to Israel’s prolonged campaign to colonize the West Bank and Gaza Strip. More important, saying that Israel and the US are united by a shared terrorist threat has the causal relationship backwards: the US has a terrorism problem in good part because it is so closely allied with Israel, not the other way around.”

Middle Eastern policy is shaped in the United States by those with very close ties to the Israel lobby. Those who attempt to counter the virulent Israeli position, such as former Secretary of State Colin Powell, are ruthlessly slapped down. This alliance was true also during the Clinton administration, with its array of Israel-first Middle East experts, including special Middle East coordinator Dennis Ross and Martin Indyk, the former deputy director of the American Israel Public Affairs Committee, AIPAC, one of the most powerful Israel lobbying groups in Washington. But at least people like Indyk and Ross are sane, willing to consider a Palestinian state, however unviable, as long as it is palatable to Israel. The Bush administration turned to the far-right wing of the Israel lobby, those who have not a shred of compassion for the Palestinians or a word of criticism for Israel. These new Middle East experts include Elliott Abrams, John Bolton, Douglas Feith, the disgraced I. Lewis “Scooter” Libby, Richard Perle, Paul Wolfowitz and David Wurmser.

Washington was once willing to stay Israel’s hand. It intervened to thwart some of its most extreme violations of human rights. This administration, however, has signed on for every disastrous Israeli blunder, from building the security barrier in the West Bank, to sealing off Gaza and triggering a humanitarian crisis, to the ruinous invasion and saturation bombing of Lebanon.

The few tepid attempts by the Bush White House to criticize Israeli actions have all ended in hasty and humiliating retreats in the face of Israeli pressure. When the Israel Defense Forces in April 2002 reoccupied the West Bank, President Bush called on then-Prime Minister Ariel Sharon to “halt the incursions and begin withdrawal.” It never happened. After a week of heavy pressure from the Israel lobby and Israel’s allies in Congress, meaning just about everyone in Congress, the president gave up, calling Sharon “a man of peace.” It was a humiliating moment for the United States, a clear sign of who pulled the strings.

There were several reasons for the war in Iraq. The desire for American control of oil, the belief that Washington could build puppet states in the region, and a real, if misplaced, fear of Saddam Hussein played a part in the current disaster. But it was also strongly shaped by the notion that what is good for Israel is good for the United States. Israel wanted Iraq neutralized. Israeli intelligence, in the lead-up to the war, gave faulty information to the U.S. about Iraq’s alleged arsenal of weapons of mass destruction. And when Baghdad was taken in April 2003, the Israeli government immediately began to push for an attack on Syria. The lust for this attack has waned, in no small part because the Americans don’t have enough troops to hang on in Iraq, much less launch a new occupation.

Israel is currently lobbying the United States to launch aerial strikes on Iran, despite the debacle in Lebanon. Israel’s iron determination to forcibly prevent a nuclear Iran makes it probable that before the end of the Bush administration an attack on Iran will take place. The efforts to halt nuclear development through diplomatic means have failed. It does not matter that Iran poses no threat to the United States. It does not matter that it does not even pose a threat to Israel, which has several hundred nuclear weapons in its arsenal. It matters only that Israel demands total military domination of the Middle East.

The alliance between Israel and the United States has culminated after 50 years in direct U.S. military involvement in the Middle East. This involvement, which is not furthering American interests, is unleashing a geopolitical nightmare. American soldiers and Marines are dying in droves in a useless war. The impotence of the United States in the face of Israeli pressure is complete. The White House and the Congress have become, for perhaps the first time, a direct extension of Israeli interests. There is no longer any debate within the United States. This is evidenced by the obsequious nods to Israel by all the current presidential candidates with the exception of Dennis Kucinich. The political cost for those who challenge Israel is too high.

This means there will be no peaceful resolution of the Palestinian-Israeli conflict. It means the incidents of Islamic terrorism against the U.S. and Israel will grow. It means that American power and prestige are on a steep, irreversible decline. And I fear it also means the ultimate end of the Jewish experiment in the Middle East.

The weakening of the United States, economically and militarily, is giving rise to new centers of power. The U.S. economy, mismanaged and drained by the Iraq war, is increasingly dependent on Chinese trade imports and on Chinese holdings of U.S. Treasury securities. China holds dollar reserves worth $825 billion. If Beijing decides to abandon the U.S. bond market, even in part, it would cause a free fall by the dollar. It would lead to the collapse of the $7-trillion U.S. real estate market. There would be a wave of U.S. bank failures and huge unemployment. The growing dependence on China has been accompanied by aggressive work by the Chinese to build alliances with many of the world’s major exporters of oil, such as Iran, Nigeria, Sudan and Venezuela. The Chinese are preparing for the looming worldwide clash over dwindling resources.

The future is ominous. Not only do Israel’s foreign policy objectives not coincide with American interests, they actively hurt them. The growing belligerence in the Middle East, the calls for an attack against Iran, the collapse of the imperial project in Iraq have all given an opening, where there was none before, to America’s rivals. It is not in Israel’s interests to ignite a regional conflict. It is not in ours. But those who have their hands on the wheel seem determined, in the name of freedom and democracy, to keep the American ship of state headed at breakneck speed into the cliffs before us.