Kathryn Cramer

The Guam Customs Channel Was Apparently for Jerry Yingling (former Airport Executive Manager) and Lieutenant Pete Daga (former acting Airport Police Chief)

This is part of an ongoing series on unauthorized cameras and listening devices found in the Customs area of the Guam Airport.

Regular readers will recall the unclaimed spy equipment that was found a while back in the Customs area of the Guam Airport. (See my March 3rd, Unauthorized Surveillance Cameras in Guam Airport: Who Was Watching The Customs Channel?.) There was an inquiry into just who was watching Guam Customs, and the report is now out, though it raises at least as many questions as it gives answers: KUAM: Report on Airport's listening equipment released

A collaborative investigation conducted by Pacific Security Alarm and private investigator Greg Hall answered three questions posed by the Guam International Airport Authority: Who installed the audio and video system in the Guam Customs area? When was the system installed? And who was playing Big Brother on Customs?

According to the report submitted to GIAA and Customs officials today, the investigations found answers to those questions and the answers pointed to former Airport executive manager Jerry Yingling and former acting Airport Police chief Lieutenant Pete Daga.

Seven cameras and seven microphones were found inside the Customs screening area at the Airport, purchased and installed by Sunny Electronics and general manager John Wilson. According to the investigator's interview with Daga, the equipment was purchased for two reasons - for security purposes following September 11, 2001 and because of numerous complaints about Customs officers stealing from arriving passengers.

Customs director Rick Blas doesn't buy the justification. He told KUAM News, "When you look at some of these documents submitted as review, these documents indicate they were purchased as far back as April 30, 2001. So where do they get off saying it was all done in the interest of security at the Airport?"

Also stated Blas, "They used the people's money to purchase [this] equipment. Things that weren't quite necessary as they claim to be."

The investigator points out that the camera and audio systems weren't the only things purchased. In fact, there are invoices showing monitoring equipment had also been purchased. Hall indicates in his report that through the investigation he learned the surveillance was being monitored by Yingling and Daga in their personal offices. While Yingling declined to comment on the findings, Blas maintains the cameras and microphones were all part of an ongoing turf war at the time between Customs and the Airport.

"Something done like this is an attack on law enforcement," he said. "This is why people like Pete Daga have no business in law enforcement. These people have jeopardized the lives of my officers who do go out in the general public, do surveillance work and they also do controlled buys. They must be held accountable one way or another."

The investigator also indicates that he interviewed Yingling about the equipment. Hall was told the systems were purchased around the time of the 9/11 attacks and during a time when he, as Airport manager at the time, had received death threats and threats to his staff. Yingling told the investigator the systems were to be placed throughout the Airport to prevent a repeat of the Seventh-Day Adventist Clinic shootings or any terrorist threats. Despite invoices stating otherwise, Hall concluded the audio/video system was installed in July 2002.

So who was watching and listening all Customs movement? Hall explained to GIAA officials, "It was intended for chief Daga and general manager Yingling...it is possible they did watch and listen, however there is no direct evidence that indicates they actually did."

I'm not up on the legal fine points, but it seems to me that surreptitiously monitoring inspections held by U.S. Customs in the a secured area of an airport is probably illegal. So what did they want to know bad enough that they'd want to break the law to find out? Was this information for their own consumption? Or were they monitoring for third parties?

KUAM reports that "Customs director Rick Blas plans to file criminal charges against former Guam International Airport Authority executive manager Jerry Yingling and former GIAA police chief Lieutenant Pete Daga" for "unlawfully intercepting communication of his staff and passengers."

MEANWHILE, Airport Manager Jess Torres weighs in:

Current GIAA Executive Manager Jess Torres said he has not finished reviewing the inch-thick report yesterday but expected to do so today.

"I realize the sensitivity of the report, and yes, Mr. Daga is still my employee here," he said.

"But as far as (possible disciplinary action) I don't want to jump the gun on that one. I'll review it and talk to the people that I need to talk to and then whatever action needs to be taken, we'll cross that bridge when we get to it."

Recall that Torres is the guy who LOVES Manila,  loves it so much that he was apparently accepting very frequent subsidized trips because he could get such deals there on personal grooming services. (While he's there, he probably gets to commiserate with the Philippine airport managers who have a few problems involving customs of their own.)

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AND IN OTHER GUAM NEWS:

• The Associated Press reports that Japan wants to explain their estimate that Tokyo should pay $26 billion to move 8,000 Marines from Okinawa to Guam:

  Surprised by the cost, Japan will ask the United States to explain its estimate that Tokyo will pay some $26 billion for the realignment of the U.S. military here, a top government official said Thursday.

  U.S. Deputy Undersecretary of Defense Richard Lawless made the estimate on Tuesday, shocking some Japanese officials.

  Chief Cabinet Secretary Shinzo Abe said Japan would seek a clarification from Washington. The Lawless comment came days after the two countries agreed that Japan would pay some $6 billion to help move 8,000 Marines from Okinawa to Guam.

  "We need to ask the U.S. side which items are included," Abe said. "This amount is not the result of any agreement, and we have not received any request from the U.S. to shoulder this amount."

  Prime Minister Junichiro Koizumi said Thursday that he did not know how the Americans arrived at that estimate, and that the government would not impose a tax increase to pay for the realignment.

  The number has drawn considerable attention in Japan, since it would amount to more than 60 percent of the country's entire annual defense budget of $42 billion.

• The Washington Times reported in March: Pentagon 'hedge' strategy targets China

  The Pentagon is moving strategic bombers to Guam and aircraft carriers and submarines to the Pacific as part of a new "hedge" strategy aimed at preparing for conflict with China, Pentagon officials said yesterday.
      Peter Rodman, assistant defense secretary for international security affairs, told a congressional commission that the response to the emerging military threat from China is part of the White House national security strategy made public yesterday.

  (I dunno. This week, it looked like the biggest conflict Bush was heading for with China was whether he or Chinese President Hu Jintao were going to get to drink that last of the champagne.)

"What we are witnessing is a political purge of the CIA."

Larry Johnson has a another good post on Mary McCarthy ends with a powerful passage that bears wider broadcasting:

What we are witnessing is a political purge of the CIA. The Bush Administration is working to expel and isolate any intelligence officer who does not toe the line and profess allegiance to George. It is no longer about protecting and defending the Constitution. No. It is about protecting the indefensible reputation of George Bush.

The firing of Mary McCarthy and her trial in the media is a travesty. Particularly when George Bush continues to harbor leakers who put selfish political motives above the welfare of this nation. It remains to be seen if Mary McCarthy had anything to do with the leak of secret prisons. There is no doubt, however, that Karl Rove, Scooter Libby, Stephen Hadley, Dick Cheney, and George Bush directly participated in a campaign to leak misleading intelligence information to the American people. Patrick Fitzgerald's court filings make that point abundantly clear. Under George Bush, America is being asked to tolerate Gulag Politics. That is something I find intolerable and unconscionable.

And it is worth noting also that this was the week in which Bush apologized to the Chinese President for a protestor during the White House welcome ceremony and pushed the issue by making sure she was criminally charged.

Wonder where they got the face. (And you should, too.)

Two stories to be read together:

The Chicago Tribune: Bear attack victim gets face transplant

BEIJING, CHINA -- A man whose face was badly disfigured after an attack by a black bear two years ago received a partial face transplant Friday, in what a hospital described as a first for China.

The hospital's claims, if verified, would make China the second country to conduct the procedure. . . .

In the operation, a statement from Xijing Hospital in the central city of Xi'an said, Li Guoxing was given a new cheek, upper lip, nose, and an eyebrow from a single donor. No details were provided about the donor.

. . . and then read this one: Wanjia Forced Labor Camp Examined Falun Gong Practitioner's Organ Conditions Four Times

The police from the local "610 Office" took her to four different hospitals in Harbin to perform blood tests and to checkup on the condition of her internal organs. Her testimony caused quite a stir in the court.  . . .

A female doctor at Heilongjiang No. 2 Hospital commented that the skin of my thigh was very fair and fine when she examined it. She asked if I had any skin allergy. She was checking me out and noticed that I was scratching my thighs. She said, "Does your skin feel itchy very often?" I replied, "My skin feels itchy because I was ordered to sleep next to a fellow Falun Gong practitioner suffering from severe scabies. Next she did a test on my wrist. Five minutes later, the area she tested on became red. She asked if I had allergy to any medicine, and  . . .

. . .  so the witness lived to tell the tale.

So, um. Why are the media outlets credulously replicating the press release without pressing the issue of facial provenance? Enquiring minds want to know. Today, Falun Gong. Tomorrow bloggers. Shouldn't we ask?

Wonder how Hao Wu's organs are doing.

UPDATE, April 19th: See also the BBC: China 'selling prisoners' organs'.

Mitläufer in the Caucus-Race: Google Helps Keep China Safe from the Indecency of Democracy; Intel to Help, Too.

Here are two news stories to be read side by side.

Xinhua (China): Central news websites back Internet self-censorship (via Rebecca MacKinnon & Imagethief)

  BEIJING, April 11 (Xinhua) -- China's central news websites on Tuesday backed the proposal of major Beijing-based portals for self-censorship and the eradication of pornographic and violent Internet content.

    In a joint announcement, 11 news websites vehemently supported the initiative, saying it represents the aspiration of China's Internet users.

    "Chinese websites are capable and confident of resisting indecent Internet content," the announcement said.

  The websites also vowed to play a leading role in self-censoring Internet content in compliance with the "Eight Honors and Disgraces", a new concept of socialist morality set forth by Hu Jintao, president and general secretary of the Communist Party of China (CPC) Central Committee, recently.

    "We will make the Internet a vital publisher of scientific theories, spread the advanced cultures and promote decency, so as to boost economic growth, maintain social stability, and promote the building of a socialist harmonious society," they pledged.  . . .

    "We are in a stern opposition to indecent on-line messages that undermine public morality and the culture and fine traditions of the Chinese people," the proposal acknowledged.

. . . and the New York Times: Google Chief Rejects Putting Pressure on China

BEIJING, April 12 — Google's chief executive, Eric E. Schmidt, whose company has been sharply criticized for complying with Chinese censorship, said on Wednesday that the company had not lobbied to change the censorship laws and, for now, had no plans to do so.

"I think it's arrogant for us to walk into a country where we are just beginning operations and tell that country how to run itself," Mr. Schmidt told reporters from foreign news organizations.

Mr. Schmidt is visiting China this week to promote Google's new Chinese search engine and to meet with officials of government ministries. He announced the opening of a research and development center in Beijing's high-technology district and also introduced a Chinese-language brand name for the company's domestic search engine — Gu Ge, which roughly translates as "a harvesting song."

But in briefing sessions that involved both Chinese and foreign reporters, Mr. Schmidt faced questions about the censorship controversy that has involved Google, Microsoft, Yahoo and Cisco Systems.

At a Congressional hearing in February, executives from the four companies were criticized as collaborating with the Chinese government to silence dissidents. Google's Chinese search engine, introduced in January, blocks subjects restricted by the government, including searches for "Tibet" and "democracy."

On Wednesday, Mr. Schmidt defended the decision to cooperate with the censors, saying that accepting the restrictions of Chinese law were unavoidable for Google to enter the Chinese market. "We had a choice to enter the country and follow the law," Mr. Schmidt told the foreign reporters. "Or we had a choice not to enter the country."

Interestingly, Google Inc. is having a few issues with democracy of  its own. From the San Jose Mercury News: Google shareholder wants two-tiered stock structure dismantled

A pension fund that owns 4,735 Google shares -- out of a total of 297 million -- filed a proposal Wednesday asking the Mountain View company to dismantle its two-class stock structure. That arrangement gives co-founders Sergey Brin and Larry Page and Chief Executive Eric Schmidt control of Google.

But to pass, the measure would require the support of those from whom it wants to strip power -- Brin, Page and Schmidt hold nearly 70 percent of the voting control of the company. . . .

Google has two classes of stock. The class B shares held by the three executives count as 10 votes for every share, compared to one vote for every share of class A stock held by most other shareholders. The proposal will be voted on during Google's annual shareholder meeting on May 11.

As of March 17, Brin, Page and Schmidt owned 76.1 million shares of Google stock, almost all of it class B. The shares represented 25.6 percent of all shares outstanding, but gave them voting power worth 68.8 percent.

But returning to the matter at hand, Google's co-option into the Chinese censorship apparatus, I can't help but be astonished how easy it is for smart guys like Schmidt to be transformed into Mitläufer.

MEANWHILE, not wanting to be left out of the Caucus-Race, Intel Corp. has signed a memorandum of understanding with the Shanghai company Baidu: Intel and Baidu 'join hands' in China

HONG KONG (MarketWatch) -- Intel Corp. and Internet search engine Baidu.com have signed a memorandum of understanding to develop search applications for Intel platforms in a deal that could have important branding and technology implications for the two companies in China's high-stakes online market.
According to a press release issued by Baidu's (BIDU : 56.80, +1.22, +2.2% ) offices in Shanghai, the two companies will cooperate in developing search applications for laptops, handsets, personal computers, and other home appliances.

Baidu is basically viewed as a direct competitor to Google's (GOOG : 408.95, -0.71, -0.2% ) growing aspirations in China. The Shanghai-based startup is widely viewed as having a better search engine for Chinese text, however, its ability to search the international web pages lags behind Google. . . .

Intel spokesman Thomas M. Kilroy said the cooperation would "provide optimized search performance".

Um. Optimized for what?

I think it's time for a quote from Alice's Adventures in Wonderland: Chapter III - A Caucus-Race and a Long Tale

'What IS a Caucus-race?' said Alice; not that she wanted much to know, but the Dodo had paused as if it thought that SOMEBODY ought to speak, and no one else seemed inclined to say anything.

'Why,' said the Dodo, 'the best way to explain it is to do it.' (And, as you might like to try the thing yourself, some winter day, I will tell you how the Dodo managed it.)

First it marked out a race-course, in a sort of circle, (`the exact shape doesn't matter,' it said,) and then all the party were placed along the course, here and there. There was no `One, two, three, and away,' but they began running when they liked, and left off when they liked, so that it was not easy to know when the race was over. However, when they had been running half an hour or so, and were quite dry again, the Dodo suddenly called out `The race is over!' and they all crowded round it, panting, and asking, `But who has won?'

This question the Dodo could not answer without a great deal of thought, and it sat for a long time with one finger pressed upon its forehead (the position in which you usually see Shakespeare, in the pictures of him), while the rest waited in silence. At last the Dodo said, 'EVERYBODY has won, and all must have prizes.'

Ah, capitalism! As Richard at The Peking Duck remarks:

Now that China is (or at least seems to be) the place to go to get rich, this seems to be everyone's attitude. "Who are we to impose our cultural beliefs on another country...?" All such complex ethical issues dissolve in front of the one god worshipped by everyone, money.

Lucent, Alcatel, & China: Issues of National Security & Censorship Technologies

Luencent Technologies, inc. (LU) -- which subsumed the legendary Bell Labs -- is in merger talks with Alcatel (ALA). Matt Armstrong of Mountain Runner makes an interesting point about the NYT story Lucent Talks Raise Issue of Security.

An important Alcatel relationship was ignored here: the relationship with China. Alcatel Shangahai Bell (ASB) is a substantial partnership with equally substantial backing from its near equal partner. Alcatel is the majority partner in ASB at 50% + 1 share. It is worth reading through this presentation by ASB's Executive Vice President of Sales & Services from November 2005. ASB is particularly active and successful in Africa and elsewhere.

See also BusinessWeek (via Telecommunications Industry and Regulation).

Of course, this all raises national security issues. But even if you feel comfortable with those, try googling "Alcatel Shanghai censorship." I find that you come up with some rather interesting material. This is from IEEE Spectrum magazine in an article by Steven Cherry, The Net Effect:

China's Internet is the most efficiently censored in the world. . . .

Now China's experiment in cyberspace censorship is about to take a dramatic turn. A massive upgrade to the country's Internet will soon give China a robust, state-of-the-art infrastructure easily on a par with any in the developed world. China Telecom Corp., in Beijing, is investing US $100 million in what it calls the ChinaNet Next Carrying Network, or CN2.

The former national telephone monopoly is snapping up new network routers from four of the largest telecommunications equipment companies in the world: Cisco Systems and Juniper Networks of the United States; the French giant Alcatel; and Huawei Technologies, the only Chinese company to get a CN2 contract. During the next 12 months, the routers—the vertebrae of an Internet backbone—are to be installed in 200 cities throughout China's 31 provinces, autonomous regions, and municipalities.

Few doubt that China will emerge as a 21st-century global power. The questions now are about when it will emerge and what kind of power it will be. The issue of how China continues to censor its Internet, even as its infrastructure becomes vastly more sophisticated, has implications beyond what ideas China's populace—almost one-fifth of humanity—will be allowed to tap into. For one thing, if censorship technology flourishes in China, it will be easier and cheaper for it to also take root elsewhere. "The concern I have is that this is laying the foundation for a much more intrusive and censorship-friendly Internet infrastructure for all countries," says Roger Clarke, a consultant in Canberra, Australia, affiliated with the Australian National University. "The features that China wants installed in intermediating devices and software will gradually find their way into all of the suppliers' products, if only because it's cheaper that way."

Whether China's Internet censorship continues at the same level or—with its powerful new equipment—increases will probably play a significant role in answering the "What kind of global power?" question. Experts say that up to now, there have been technological constraints on the amount of censorship possible at the router level. In the network now taking shape in China, those constraints will be largely eliminated, making censorship more a matter of politics than of technology.

So there is a whole other way to read the potential security issues involved in a Lucent-Alcatel deal, having to do with irrevocable matters of technology transfer that will be used for upgrading their censorship capabilities in ways that can be exported worldwide: to quote a business headline from two years ago, "Alcatel Shanghai Bell Delivers Next-Generation Solutions." Let's help out that next generation and can this deal.

(On the other hand, in Today's Global Economy, as they say, there is of course the chance that this horse is already way out of the barn.)

ON A RELATED NOTE, Rebecca MacKinnon has a fine post on the subject of Yahoo and China.

You can engage in China and choose not to do certain kinds of business. Yahoo! has placed user e-mail data within legal jurisdiction of the People's Republic of China. Google and Microsoft have both chosen not to do so. Why did Yahoo! chose to do this?  Either they weren't thinking through the consequences or they don't care.

(Via BoingBoing & Dan Gilmore.)

The Global ONLINE Freedom Act of 2006 (HR 4780)

There are two very different bills with very similar names that are sometimes being discussed interchangeably. Short version: Global ONLINE Freedom Act of 2006 (HR 4780) mostly good; Global INTERNET Freedom Act (HR 4741) lame.

HR 4741 attempts to address the problem of Internet censorship, but its authors seem innocent of the fact that the US is exporting the tools to do the thing the bill's authors want combated.

On  the other hand, HR 4780, on a quick read through, looks pretty good and would sort out a lot of the Google-China type issues, and also seem to me to lay the groundwork for restricting exports of SmartFilter-type stuff, and also some of the most worrisome DRM enforcement tools that may be developed. (Wouldn't it be great to kill DRM by keeping the enforcement tools from being exported from the US into the global market?)

Before leaping into the fray, I want to have HR 4780 explained to me by someone who really knows how to read this sort of thing, but it looks awfully good to me.

Both Rebecca MacKinnon and the EFF have weighed in and have misgivings with the part of the bill specifying that would require US Internet companies to hand over all lists of forbidden words provided to them by "any foreign official of an Internet-restricting country." But I find one passage of Danny O'Brien of the EFF's discussion of what he'd like to see instead at least as problematic as what he intends to replace.

Don't Do Direct Business with Forces of State Oppression

Companies should be prohibited from providing intentional ongoing support and assistance to those who abuse human rights in foreign countries. While many products such as filtering software, Internet monitoring programs and programs to unlock protected data can have multiple uses, American companies should not be actively and knowingly providing services that facilitate censorship or repression.

This is sufficiently vague as to allow for implementation along the lines of a trade embargo in which individuals needing access to US technology to overcome their oppression might be denied it in the name of not doing business with oppressive states.

And MacKinnon remarks,

But we must act in a way that respects the rights of people in other countries as much as we respect our own rights.

These are nice ideals, but I don't see how any kind of Internet filtering technology could be meaningfully restricted without ways of monitoring what was being filtered. My preferred tactic is adding censorware and related technologies to the Munitions List such that their export would require State Department approval, which would be given or not on a case-by-case basis. This would also require a recognition on the part of the US firms creating censorware that it is in a sense a military-type technology and needs to be handled accordingly.

Even if it is not perfect, HR 4780 has a lot to recommend it. Reporters Without Borders apparently supports the bill, and I am tentatively inclined to do likewise. Also, while HR 4780 does not specifically add censorware to the Munitions List, it lays the groundwork for that possibility.

Certainly, we don't need yet another situation in which the US plays global cop, but the bill is aimed mostly at policing our own technology exports in a situation in which we are exporting the tools for dystopia.

"Affordable" Transplants in China

This morning, I happened across a really subtle page on Flickr with a screenshot promoting the idea of going to China for one's organ transplants on the basis that it is easier to get a transplant match and is cheaper than a transplant in the US. All the photos on the site from which the screen shot is taken are of caucasians, and the target market for these transplant services seems to be Americans. I was seaching on the tag "censorship" and at first I didn't get it. When I did, I nearly choked on my coffee.

Here's the screenshot:

Though the issue of where the organs come from is never really addressed on the pages of the Yeson site I read, there is the general implication that matches are not too hard to come by in China as compared to the US. In his blog, Dr. Yeson remarks:

Currently, more than 17,000 people in the United States are waiting for liver transplants. According to the United Network for Organ Sharing (UNOS), about 5,300 liver transplantations were performed in the United States in 2002.

Also, there is a discussion of using living donors.

The site never does explain why it might be easier in China to finding matching donors for Americans than it would be in the US. The general implication is that there is a far larger pool of available organs to draw upon. But the fellow on Flickr helps out with this link:
Majority of China's Transplants Come from Prisoner's Organs

Increasing numbers of patients with liver cirrhosis or renal failure from regions including South East Asia, North America, Europe and Australia are flying to China for organ transplants. China has become the world's center for organ trade and transplants. But, what China may not be revealing to the world, is that the main source for organ transplants come from executed convicts.

According to the U.S.-based China Information Center, due to higher survival rates of liver and kidney transplants, China's hospitals are experiencing a boom in this business. As such, recently, there have been moves to expand facilities and make liver treatment and transplant more accessible to patients.

Think about this the next time you hear a story about Yahoo getting someone in China arrested.

See also this document, Sale of Human Organs in China, from the website of the US State Dept.

(On the other hand, sometimes grim tales of organ transplants are not true.)

Kuwait Dabbling in Allowing Foreign Investment: I Wonder What This Machine Does

Kuwait, which has strict controls on foreign investment, especially in its oil industry, has in the past few years begun to open the door a little to foreign investors in the form of something called Project Kuwait:

In March 2001, Kuwait's national assembly passed the "Foreign Direct Investment Act," which aimed at promoting foreign investment. Among other things, the Act eased restrictions on foreign banks, provided long-term protection to foreign investors against nationalization or confiscation, and eliminated the requirement for foreign companies to have a Kuwaiti sponsor or partner. In the oil sector, the Kuwaiti constitution forbids foreign ownership of Kuwait's mineral resources, but the Kuwaiti government is exploring allowing foreign investment in upstream oil development under terms . . . which provide for per-barrel fees to the foreign firms rather than traditional production sharing agreements (PSA's). The Kuwaiti government is currently making an attempt to enact legislation to facilitate foreign investment in the upstream oil sector, as part of its "Project Kuwait" initiative to boost production capacity. The Kuwaiti parliament is expected to act on the proposed legislation sometime in 2005.  . . .

"Project Kuwait" is a $7 billion, 25-year plan, first formulated in 1997 by the SPC, to increase the country's oil production (and to help compensate for declines at the mature Burgan field), with the help of international oil companies (IOCs). In particular, Kuwait aims to increase output at five northern oil fields -- Abdali, Bahra, Ratqa, Raudhatain, and Sabriya (Kuwait's third largest field) -- from their current rate of around 650,000 bbl/d to 900,000 bbl/d within three years. Project Kuwait has been repeatedly delayed, however, due to political opposition and resistance from nationalists and Islamists in parliament to the idea of allowing foreign companies into the country's oil sector. Legislation which would facilitate Project Kuwait has been introduced again in the Kuwaiti parliament in early 2005. The bill was approved by the Finance and Economic Committee in June 2005, but with amendments limiting its scope to four of the five fields, excluding Bahra. Final action on the bill by the full parliament is still pending, but is expected by the end of 2005.

In February 2003, KPC completed a draft contract and proposed financial terms for Project Kuwait. There are three major consortia competing for the project, led by: 1) ChevronTexaco (along with Total, PetroCanada, Sibneft and Sinopec); 2) ExxonMobil (along with Shell, ConocoPhillips, and Maersk); and 3) BP (along with Occidental, ONGC/Indian Oil Corp.). Reportedly, KPC prefers to have three groups working under three separate IBBCs: one for Raudhatain and Sabriya (the largest IBBC); one for Ratqa, Bahra and Abdali; and one for Minagish and Umm Gudair. Currently, foreign companies like BP, Shell, and ChevronTexaco operate in Kuwait strictly under service contracts (SCs).

Alexander's Gas & Oil Connection (2003) has more detail:

One consortium is led by US major ChevronTexaco, which is the operator and has a 50 % stake. France's Total is the second operator and has a 20 % stake. The consortium's non-operating partners are PetroCanada, Sibneft and Sinopec, each having a 10 % stake.

A second consortium is led by the UK's BP as operator with a 65 % stake, and includes the US' Occidental Petroleum and India's Indian Oil Corporation as non-operators. A third consortium is led by US major ExxonMobil as first operator with a 37.5 % stake. Shell is the consortium's second operator with a 32.5 % stake. US firm ConocoPhillips and Denmark's Maersk are non-operating participants.

I think it's really sweet how they're spreading the love around the member countries of the UN Security Council! For example, group number one includes: Chevron (US), Total (France), Petro-Canada (Canada), Sibneft (Russia), & Sinopec (China). As Henry Kissinger said, power is the ultimate aphrodisiac.

This distribution sounds, well, a little familiar: From the Timesonline, 2004: Saddam ‘bought UN allies’ with oil

The UN oil-for-food scheme was set up in 1995 to allow Iraq to sell controlled amounts of oil to raise money for humanitarian supplies. However, the leaked report reveals Saddam systematically abused the scheme, using it to buy “political influence” throughout the world.

The former Iraqi regime was in effect free to “allocate” oil to whom it wished. Dozens of private individuals were given oil at knockdown prices. They were able to nominate recognised traders to buy the cheap oil from the Iraqi state oil firm and sell it for a personal profit.

The report says oil was given to key countries: “The regime gave priority to Russia, China and France. This was because they were permanent members of, and hence had the ability to influence decisions made by, the UN Security Council. The regime . . . allocated ‘private oil’ to individuals or political parties that sympathised in some way with the regime.”

The report also details how the regime benefited by arranging illegal “kickbacks” from oil sales.

From September 2000, it is said Saddam made $228m (£127m) from kickbacks deposited in accounts across the Middle East. The analysis details only the export of oil — not the import of humanitarian supplies, also alleged to have been riddled with corruption.

So here we see that same UN Security Council buy-off pattern. Interesting. So what's up?

This 2003 article, Kuwait will not Benefit form Foreign Investment in the Northern Fields Even if an Agreement with Iraq is Reached, argues that the purpose of Project Kuwait is not the additional capacity that will be generated, but rather that it is driven by "political consideration."

Kuwait may not benefit from allowing foreign investment in its upstream oil industry because it does not need the additional capacity, especially at a time when Kuwait is trimming its production along with other OPEC members to increase oil prices. Recently, Kuwait called on OPEC members to extend production cuts beyond September 2002 and lobbied successfully to prevent OPEC from increasing its quota. In a recent speech, Nader Sultan, the CEO of KPC, declared that Kuwait will invest in extra capacity only if there is a demand for it. He insisted that investment in extra capacity must be justified by the return on investment; otherwise funds will be directed toward more profitable investments. When OPEC is cutting output, there is no justification for more investment to increase capacity. This conclusion gives even more weight to the previous conclusion that "Project Kuwait" is based mostly on political considerations.

So, just what are the politics of this? Whatever the answer turns out to be, it is likely to be complex, as this 2004 article explains: Scheme to expand Kuwait's oil production likely to cause stir

One of the most heated debates is likely to be on the fate of a scheme proposed by the government to expand production from oilfields in the far north of the country, close to the Iraqi border. On the face of it, this does not seem to be high on the list of controversial subjects that have tend to raise the blood pressure of certain Kuwaiti MPs (like demands that women should be given the vote, for example). But when one points out that the scheme has been on the drawing board since 1998, it becomes clear right away that the proposals are far from straightforward.

The question now is whether the government will succeed this time, having failed thus far in separating the project - known as Project Kuwait - from the complex web of the nation's internal politics. In other words, will it be able to win the National Assembly's support for a venture which it insists is essential for the country's future and which most MPs say is either unnecessary or politically unacceptable.

The authorities are determined to push ahead regardless. An indication of their determination was the recent creation of a post on the board of the state-owned Kuwait Petroleum Corporation (KPC) dedicated to the northern oilfields scheme.

ITPBusiness.net (2005) suggests that Project Kuwait may be a way off, in effect, allowing Kuwait the use of the military capacity of the participating countries:

Some analysts, however, think it is the government astutely playing geopolitics: let foreign oil prospectors go digging along the border, and should Iraqi tanks rumble over their wells, the majors’ governments will hear their cries and run to Kuwait’s defense.

Despite the controversial nature of Project Kuwait, it seems to have survived the death of one of its key supporters, Emir Sheikh Jaber al-Ahmed al-Sabah.

Kuwait's government is trying to push through parliament the $8.5 billion Project Kuwait, involving multinationals to upgrade four major northern oilfields to help boost its output capacity.

"The country has set a long-term oil strategy which will not change. It is committed to increasing production capacity to meet the needs of the oil markets," Baghli said.

"Project Kuwait will eventually pass after parliament adds the legal touches and some regulatory restrictions on the government," he said.

Several MPs have objected to the plan in its current form, and the parliament is due to hold a special session on January 23 to discuss the long-awaited project, which has been under discussion since the early 1990s.

As of last week Kuwait's Energy Minister Shaikh Ahmad Fahd Al Sabah said top ministry executives will meet with audit bureau officials to 'reach an understanding on the issue':

Kuwaiti MPs and the government have discussed legal and financial objections to a controversial $8.5 billion oil investment in which foreign oil majors would participate.

Objections to the legal framework and financial details had been raised by the audit bureau, the state accounting watchdog, prompting MPs in December to withdraw a report on the long-stalled project preventing its debate in parliament.

The head of parliament's financial and economic affairs committee MP Ahmad Baqer, a former justice minister, said the panel asked the bureau to prepare a fresh report based on new information sent by the energy ministry.

The report will be assessed by the committee after three weeks when it would probably take a final decision on the investment which has been opposed by more than 20 MPs of the 50-member parliament.

Energy Minister Shaikh Ahmad Fahd Al Sabah, who attended the meeting, said top ministry executives will meet with audit bureau officials to 'reach an understanding on the issue.'

'We will study the bureau's comments on the project ... and could accept some of them to make the necessary changes,' Shaikh Ahmad said.

Eight and a half billion dollars, hmm? I think they'll reach an understanding.

UPDATE: Via Mountain Runner, I happened across this Knight Ridder news story: Administration backs off Bush's vow to reduce Mideast oil imports. Why would the Administration want to reduce Mideast oil imports when Kuwait is ready to cut our oil companies such a deal?!?

Ernest Wilson on China, Africa, & Oil

TMP Cafe has a long interesting post  by Ernest Wilson on China, Africa, and oil, a subject which in my opinion gets far too little attention. Here's a small extract, but read the whole thing:

It isn't clear which way China's petro-strategy will go - propping up dictators or promoting development, but it is a critical subject for China-hands and Africa-watchers alike. The answer may depend in part on what the U.S. does. Washington should press Beijing to be a better world citizen in Africa and elsewhere. Administration officials should meet regularly with the Chinese leadership to discuss the benefits of a more enlightened petro-policy, and the costs of clinging to dictators. Getting the Africans involved in this conversation would also be advantageous (especially Abuja and Pretoria), as well as the Europeans, since the French and the British certainly have their own long (and checkered) histories in African oil fields. A more enlightened China resource policy would smooth relations not just with Africa, but also Latin America and other parts of Asia too.

Ernest J. Wilson III is Professor of Government and Politics at the University of Maryland, and Senior Fellow at the Center for Public Diplomacy in the Annenberg School at USC.