FACTBOX-Key political risks to watch in the UAE

June 01, 2010

Reuters

The cloud over the financial future of Dubai after the Dubai World debt crisis is the overriding risk to watch in the United Arab Emirates this year.

Added to that are some lingering worries about an escalation of Iran's nuclear dispute with Western powers, a long-running territorial row with Iran and Islamist extremism.

DUBAI DEBT AND FINANCIAL WOES

The United Arab Emirates' economy is expected to grow by 2.5 percent this year, the slowest pace in the Gulf Arab region, as large debts burdening state-linked firms in Dubai weigh on a recovery following the Dubai World debt crisis.

Dubai's finances had already been a subject of concern after the global financial crisis popped a property bubble that saw multi-billion-dollar projects shelved and thousands of job cuts. The UAE economy is estimated to have shrunk 1.4 percent in 2009.

But the real shock came when Dubai World, one of three flagship holding companies of the Dubai government, said in November it would seek a delay on repaying $26 billion of debt linked mainly to property units Nakheel [NAKHD.UL] and Limitless, sending global markets into a tailspin.

Neighbouring emirate Abu Dhabi, the seat of the seven-member UAE federation and home to the bulk of its oil wealth, lent Dubai $10 billion in a two-part bailout, helping avert default in December on an Islamic bond issued by Nakheel.

Dubai World reached a deal in May to restructure $23.5 billion in debt with its core lenders, addressing the most immediate of a string of problems facing investors in Dubai.

The deal, which includes no new money from the government, must still be agreed by banks outside the core negotiating panel, which holds 60 percent of the exposure. Failure to reach a final agreement with creditors could damage the UAE's ability to tap credit markets for years to come, hindering growth.

Analysts say Dubai World's debt crisis has strained relations between Dubai, known for extravagant real estate projects, and the wealthier but more staid Abu Dhabi.

The two emirates have shared the financial and political reins of the UAE since its inception in 1971, but further assistance from Abu Dhabi could boost its role at the helm of the federal union, possibly upsetting a delicate power balance.

What to watch:

- The final outcome of the Dubai World deal with creditors. Failure would push the cost of insuring Dubai's debt in the credit default swaps market to new heights along with bond yields for its companies. A negative result could also depress investor sentiment, hampering future prospects.

- Will Abu Dhabi have to intervene further to meet any Dubai debt obligations? While intervention could prevent potentially disastrous repercussions of a default, it could also set a precedent that Abu Dhabi will always step in to solve the problems of its flashy neighbour. Abu Dhabi would prefer Dubai stand on its own and wants to contain further spillover effect from Dubai's debt onto its economy and that of the federation.

BUSINESS SENTIMENT

Lack of transparency and worries about government guarantees for the debt of massive state-linked companies will make investors wary about keeping their money in the country after Dubai's debt debacle.

Dubai needs to take concrete steps to improve transparency and communication after initially leaving investors in the dark about the fate of their money and making overly optimistic -- and confusing -- statements at the height of the crisis.

Whereas other Gulf states funded growth with proceeds from soaring oil prices, Dubai borrowed to invest through a network of state-linked conglomerates that offered limited transparency.

Creditors lent to state-linked Dubai companies on the implicit understanding that they would be backed by the Dubai government only to find there were no such formal guarantees.

Dubai World's troubles have raised fears among investors that other state-linked firms could also face problems. Moody's downgraded seven Abu Dhabi state-linked firms in March, citing a lack of explicit state support in the wake of Dubai's crisis.

What to watch:

- The possibility of debt problems emerging in other state-linked units. Fresh Dubai debt problems could hamper investment.

REGIONAL ISLAMIST MILITANCY

The United Arab Emirates, the world's third largest oil exporter, has so far been spared major al Qaeda attacks that have hit other Gulf states but as a regional business and tourism hub it could make an attractive target for militants.

Al Qaeda sparked fears of a regional resurgence after the merger last year of the group's Yemeni and Saudi branches into a Yemen-based regional arm, which went on to claim responsibility for a failed plot to bomb a U.S.-bound plane in December.

The group has threatened attacks on Westerners in the Gulf region and seeks the fall of the U.S.-allied Saudi royal family.

While the UAE may not be al Qaeda's top target in the region, it has many potential targets, with a large expatriate population and Western institutions such as retail outlets, restaurants, banks and schools, as well as bars and nightclubs.

The UAE does have tight security that may have helped it ward off attacks until now, but as an old regional trade centre it has had an open door to people from many walks of life. This has also made it vulnerable to international score-settling.

Earlier this year a Hamas leader was killed in a Dubai hotel room, in a hit widely blamed on Israel.

What to watch:

- Any expansion of attacks by the Yemen-based al Qaeda arm in the region could mean that all Gulf countries, including the UAE, are at risk of being targeted. A serious attack could unsettle local and international markets, particularly energy.

- Could the UAE become the scene of more political assassinations by foreign elements? More score-settling could be destabilising and has the potential to prompt the UAE to tighten entry rules on what has been an open business and tourism hub.

IRAN ESCALATION, SANCTIONS

The Gulf Arab region, of major strategic value to Western powers, is seriously concerned about the possibility of being drawn into an armed conflict if a nuclear row between Iran and Western powers escalates further.

In addition, Dubai's close economic ties with non-Arab Iran have drawn scrutiny from the United States, which is pushing for a fourth round of U.N. sanctions on Tehran for refusing to halt its atomic activities.

Washington and its allies suspect Shi'ite Iran, just across the water from the Sunni-dominated UAE, of seeking a nuclear weapons capability. Iran says it wants to generate electricity.

U.S. officials regularly travel to the UAE to urge vigilance against Iranian banks and businesses based in the UAE.

Further economic measures against Iran could hit Dubai, home to around 80,000 Iranians and thousands of Iranian businesses.

Last year, Dubai's re-exports to Iran -- goods originally coming from Europe, Asia or elsewhere and then sold on to Iran -- rose 4.8 percent to 21.3 billion dirhams ($5.8 billion).

The UAE has tried to walk a fine line on Iran to avoid both alienating a trade partner and drawing Washington's ire, and has said it would abide by all U.N. Security Council resolutions.

The UAE's extensive purchases of U.S. arms and facilities it offers to the U.S. military could make it a potential target for revenge if the nuclear dispute spirals into a military conflict.

What to watch:

- Any signs the Iran nuclear dispute could turn to an armed conflict. That could deter outside investors, hit global markets -- with a knock-on effect on local ones -- and push oil prices sharply higher.

- Further sanctions on Iran, a major Dubai trade partner, could impact a recovering UAE economy, and Abu Dhabi could come under more U.S. pressure to clamp down on trade links.

TERRITORIAL DISPUTE WITH IRAN

A territorial dispute with Iran over three Gulf islands located near key shipping lanes used for oil and gas export has rumbled on for three decades, with little sign of it turning to armed conflict, but both sides remain sensitive on the issue.

Tehran issued a sharp riposte in April after the UAE foreign minister drew parallels between Iran's control of the islands and Israel's occupation of Arab land.

The islands, Abu Musa and the Greater and Lesser Tunbs, are controlled by Iran but claimed by the UAE with broad Arab backing. Ties with Iran have been strained since Iran installed maritime offices on one of the islands in 2008.

"Occupation of any Arab land is occupation ... Israeli occupation of Golan Heights, southern Lebanon, West Bank or Gaza is called occupation and no Arab land is dearer than another," Foreign Minister Sheikh Abdullah bin Zayed al-Nahayan said.

The UAE remarks have enraged Tehran, which accused the UAE of "brazenly and impudently" likening Iran to arch-foe Israel.

What to watch:

- Any signs that either side might further escalate the dispute, either with unilateral acts or through damaging trade, which could dampen an economic recovery.

- Tehran warned of an intense popular reaction if the occupation remarks were repeated, but the UAE foreign minister again made similar assertions on a visit to the West Bank.

By By Cynthia Johnston, Editing by Samia Nakhoul

Source: http://www.reuters.com/article/idUSLDE64N08C20100601

Turkey seeks U.S. support vs Israel on flotilla

June 01, 2010

Reuters

WASHINGTON, June 1 (Reuters) - Turkey on Tuesday pressed for stronger U.S. support after Israel's raid on a Turkish-backed aid flotilla, saying the crisis could hit U.S. hopes for Middle East peace amid worsening tensions over Iran's nuclear program.


Foreign Minister Ahmet Davutoglu, in Washington for talks with Secretary of State Hillary Clinton, said Ankara wanted a clear U.S. condemnation of Monday's raid after Israeli forces killed nine people, including four Turks, while trying to stop a convoy of vessels delivering aid to the Gaza Strip.

"Some of our allies are not ready to condemn the Israeli actions," Davutoglu said.
He said he was disappointed with Washington's cautious response to an incident he likened to the Sept. 11, 2001, attacks on the United States.

"Psychologically this attack is like 9-11 for Turkey because Turkish citizens were attacked by a state, not by terrorists, with an intention, a clear decision of political leaders of that state," he said.


"We expect full solidarity with us. It should not be a choice between Turkey and Israel. It should be a choice between right and wrong."

International fury over the flotilla attack has created a tough balancing act for the Obama administration, particularly with Turkey, a key NATO ally seen by Washington as a secular Muslim power that can counter Islamic militancy in the region.

Both Turkey and Israel, the United States' closest Middle East ally, are pivotal players on peace in the region and the impasse over Iran's nuclear program. A rupture in relations between the two could badly complicate U.S. foreign policy.

MEDIATION ON HOLD
Davutoglu said he had planned to discuss relaunching indirect Israeli-Syrian peace talks with Israeli Prime Minister Benjamin Netanyahu but that the initiative was now on hold. Netanyahu scrapped his own planned Tuesday visit to Washington after the crisis erupted.

"We were planning to have meetings to discuss a regional peace plan," Davutoglu told reporters at a briefing. "But they (Israeli officials) didn't respect the rights of individuals and they didn't respond to our efforts to restore our relations and to restart Israeli-Syrian indirect talks.

"If they don't act, how can we convince Syria or other countries in the region that they want peace?"


The United Nations has called for an impartial investigation into what happened as Israeli forces boarded the ship where the killings occurred, and Davutoglu said he would seek U.S. support for an immediate and unconditional release of all those detained in the raid.

Turkey also will raise the issue with the North Atlantic Treaty Organization because the incident was an attack on citizens of a NATO country by a non-NATO state, he said.

The United States and Turkey already were at odds over Iran, with Turkey and Brazil pushing a new proposed atomic fuel deal for Tehran as a diplomatic alternative to the tough U.N. sanctions that Washington wants.

The United States has rejected the proposal as too little, too late and says the measure does not address core concerns that Tehran is seeking to develop nuclear weapons. Tehran says its nuclear program is purely peaceful.

Davutoglu said on Tuesday the proposed fuel deal would be a confidence-building measure that could lead to further discussions on Iran's nuclear plans, and rejected suggestions that Turkey and Brazil were helping Tehran to delay U.N. action on sanctions.

"This is not defending Iran," he said. "This is defending regional peace, global peace, and the national interests of Turkey."
By Andrew Quinn, Editing by Bill Trott
Source: http://www.reuters.com/article/latestCrisis/idUSN01115314

Israel rejects call to join anti-nuclear treaty

May 29, 2010

Reuters

Israel on Saturday rejected as "flawed and hypocritical" a declaration by signatories of a global anti-nuclear arms treaty that urged it to sign the pact and make its atomic facilities subject to U.N. inspections.

All 189 parties to the Non-Proliferation Treaty, including the United States, called on Friday in a declaration that singled out Israel for a conference in 2012 to discuss banning weapons of mass destruction in the Middle East.

"As a non-signatory state of the NPT, Israel is not obligated by the decisions of this conference, which has no authority over Israel," the Israeli government said in an emailed statement.

"Given the distorted nature of this resolution, Israel will not be able to take part in its implementation," it said.

The 28-page declaration said U.N. Secretary-General Ban Ki-moon and key states would arrange a conference that would include all nations in the region, by implication including bitter enemies Israel and Iran.

Israel is presumed to have a sizable nuclear arsenal but neither confirms nor denies it. It is the only Middle East state that has not signed the NPT and, like fellow non-members India and Pakistan, did not take part in the review conference.

U.S. officials, irked at efforts to single out Israel, made clear the proposal might go nowhere, saying the Middle East could not be declared WMD-free until broad Arab-Israeli peace prevailed and Iran curbed its uranium enrichment programme.

"HYPOCRITICAL"

Alluding to this point, the Israeli statement said: "This resolution is deeply flawed and hypocritical. It ignores the realities of the Middle East and the real threats facing the region and the entire world."

Iran was not mentioned in the NPT declaration.

Israel and Western powers suspect Iran is seeking to develop nuclear weapons capability due to its past concealment of nuclear activity from the watchdog International Atomic Energy Agency and continued restrictions on IAEA access.

Tehran says it is enriching uranium only to generate electricity and isotopes for agriculture and medical treatment.

The Israeli statement said Prime Minister Benjamin Netanyahu would discuss the NPT declaration with President Barack Obama when the two leaders meet on Tuesday at the White House.

Obama welcomed agreements on a range of non-proliferation issues at the NPT meeting but said he would oppose efforts to isolate Israel and any actions to jeopardize its security.

Israel, whose jets bombed Iraq's nuclear reactor in 1981 and mounted a similar sortie over Syria in 2007, has hinted that it could use force to deny Iran the means to build an atomic bomb.

The Israeli government statement said: "The real problem with WMDs in the Middle East does not relate to Israel but to those countries that have signed the NPT and brazenly violated it: Iraq under Saddam, Libya, Syria and Iran."

Libya in 2003 ended years of international isolation after it promised to give up nuclear, chemical and biological weapons and has followed through on those promises.

(Writing by Joseph Nasr, Editing by Mark Heinrich)

Source: http://www.reuters.com/article/idUSTRE64S1ZN20100529

Nuclear treaty talks on brink of failure: diplomats

May 28, 2010

Reuters

Talks on shoring up the global anti-nuclear arms treaty were on the edge of failure on Friday as the United States and its allies clashed with Egypt over a push to pressure Israel to scrap any atom bombs it has.

For a month the 189 signatories of the 1970 nuclear Non-Proliferation Treaty have been meeting in New York in hopes of agreeing on a plan to shore up the troubled pact, which analysts say has been hit by Iran's and North Korea's atomic programs and failure by the nuclear powers to disarm.

The latest draft of a final declaration for the NPT review conference calls for U.N. Secretary-General Ban Ki-moon to organize a meeting of all Middle Eastern states in 2012 on how to make the region free of nuclear and other weapons of mass destruction (WMD) as demanded by a 1995 NPT resolution.

The creation of a WMD-free zone would eventually force Israel to abandon any atomic bombs it has. The Jewish state, which like nuclear-armed India and Pakistan never signed the NPT, is presumed to have a sizable nuclear arsenal but neither confirms nor denies it. Israel is not participating in the NPT meeting.

In a radical departure from the previous U.S. administration, President Barack Obama's negotiators had agreed to join the NPT's other four official nuclear powers -- Britain, France, Russia and China -- in backing such a conference while encouraging reluctant Israel to participate.

The five permanent U.N. Security Council members and a group of Arab states led by Egypt are close to a deal that would make the 2012 conference happen, delegates say. But the two sides have reached an impasse on the question of whether Israel should be named in the declaration as a problem state.

The Egyptians insist the declaration must state explicitly that Israel should join the NPT as a non-nuclear weapon state, but the Americans are refusing, diplomats said.

LAST-MINUTE COMPROMISE?

One Western diplomat familiar with the talks described the situation as "not looking too hopeful."

He said there was a "stark choice for the Arabs -- name and shame Israel or have a conference in 2012 to move forward the 1995 promise ... toward a WMD-free zone in the Mideast."

"My bet is their (the Arabs') short-term political needs will trump their long-term strategic interest," he said.

Other delegates confirmed the possibility that the NPT review conference would fail to agree on a final declaration because of disagreements on the Middle East question, repeating what happened at the last NPT review conference in 2005.

But diplomats said they hoped the United States and Egypt -- the key players in the Middle East negotiations -- would strike a last-minute compromise that salvaged the conference.

"We've worked so hard for the past month," one diplomat said. "We've got a strong draft that would strengthen all three pillars of the NPT -- disarmament, non-proliferation and peaceful use of nuclear energy. It shouldn't be thrown away."

Western diplomats said Israel had reluctantly agreed to attend the 2012 conference but only on condition that it not be "named and shamed" in the final declaration.

Iran's envoy to the U.N. nuclear watchdog, Tehran's chief delegate, accused the United States of causing the impasse at the NPT talks. Apart from the Middle East WMD-free zone, he said Washington and the other nuclear powers had rejected key demands of Iran and the other non-aligned developing nations.

Ambassador Ali Asghar Soltanieh said those demands were for a precise deadline for nuclear powers to disarm, a call for negotiations on a treaty banning the use of atomic arms, and a pledge from the five nuclear powers not to use atomic bombs on states without them, known as a "negative security assurance."

"The nuclear weapon states, particularly the United States, have not cooperated to find a solution for these four main issues," Soltanieh told reporters, adding that the NPT talks had reached a deadlock.

If the nuclear powers refuse to compromise, "they should be blamed for consequences," Soltanieh said, adding that Tehran was prepared to block a declaration that it viewed as too weak. Since NPT meetings make decisions by consensus, Iran has a virtual veto.

(Editing by Bill Trott)

Source: http://www.reuters.com/article/idUSTRE64Q72D20100528

UN nuclear conference calls on India to joint NPT, CTBT

May 26, 2010

Press Trust Of India

Breaking the tradition of not naming countries, the first draft of the final document of 2010 Nuclear-Non Proliferation Treaty Review conference has asked India, Pakistan and Israel to join NPT and CTBT.
"The conference calls upon India, Israel and Pakistan to accede to the treaty as non-nuclear weapon States, promptly and without conditions, thereby accepting an internationally legally binding commitment not to acquire nuclear weapons or other nuclear explosive devices," the first draft of the document said.
"The conference also calls upon India and Pakistan to maintain moratoriums on nuclear testing and calls upon India, Israel and Pakistan to sign and ratify the Comprehensive Nuclear-Test Ban Treaty (CTBT) without delay and without conditions," it said.
The NPT Review Conference is held every five years to assess the progress in reaching the goals set out in the 1970 treaty to disarm and stop the spread of nuclear weapons.
This year it started on May 3 and would end on May 28 when the final draft is expected.
India, Pakistan and Israel have not signed the treaty and do not attend. The last conference in 2005 ended in failure.
Speaking on the condition of anonymity, a Western diplomat said here that there were countries, which had accepted that India and Pakistan were not going to become part of the treaty and suggested a new track to reign them into the non-proliferation regime.
"We are going to try and put them in a cooperation system with obligations so that they would have the same obligations that NPT countries without being in the NPT," he said, noting that such an agreement was better than doing nothing.
Several experts, however, have pointed out that by the time the final document was prepared the names of the countries may be replaced by a more general call for the universal acceptance of the Nuclear Non-Proliferation Treaty.
Officials noted that naming Israel, for instance, would lead to the country not cooperating with the Arab nations on a plan to have a Middle East free nuclear weapons free zone.
"We want something so that all countries come to the table," the Western diplomat said. "But it's so fragile, it's so difficult."
Mark Hibbs, an expert at the Carnegie Endowment for International Peace, who had attended the meetings noted that there seemed to be a "tacit agreement" not to retain the names by the end of the conference.

Source: http://www.hindustantimes.com/UN-nuclear-conference-calls-on-India-to-joint-NPT-CTBT/Article1-548632.aspx

Diplomat says Iran deal flawed

May 25, 2010

ASSOCIATED PRESS AND JPOST.COM STAFF

A Western diplomat speaking anonymously has referred to the proposed uranium fuel agreement between Iran, Turkey and Brazil as technically flawed.

AFP is reporting that the diplomat said, "Getting this fuel in one year is impossible. It takes at least one and a half years to have this." He added, "There is something tricky there, but we will see in a year. It is still too early."

The anonymous diplomat's comments came after Iran formally submitted the fuel swap deal to the International Atomic Energy Agency on Monday.

Seeking to evade new UN sanctions, Iran submitted its plan on Monday to swap some of its enriched uranium for reactor fuel and said the onus was on world powers to defuse tensions by accepting the deal.

The proposal, which was shared with The Associated Press, did not go beyond generalities already outlined last week. Thus, it was unlikely to deter the US, Russia, China, Britain and France — the five permanent UN Security Council members — which have agreed on a draft fourth set of sanctions against Iran for refusing to give up uranium enrichment.

The deal would commit Iran to ship 1,200 kilograms of low-enriched uranium to Turkey, where it would be stored. In exchange, Iran would receive, within one year, higher-enriched fuel rods to be used in a US-built medical research reactor.

Source: http://www.jpost.com/IranianThreat/News/Article.aspx?id=176405

Peres, Botha deny 1970s Israel-South Africa nuke pact

May 25, 2010

ANI- Israel's President Shimon Peres and former South African Foreign and Defence Minister P. W. 'Pik' Botha have both dismissed and rejected reports of the two countries inking a nuclear weapons pact in March 1975.

According to The Guardian and the South African Press Association (SAPA), Peres said Israel has never negotiated the exchange of nuclear weapons with South Africa.

His office said "There exists no basis in reality" for claims based on declassified secret South African documents that he offered nuclear warheads for sale with ballistic missiles to the apartheid regime in 1975. Israel has never negotiated the exchange of nuclear weapons with South Africa. There exists no Israeli document or Israeli signature on a document that such negotiations took place," it said.

SAPA quoted Botha as saying that at the time he was ambassador to the US and the UN, so he could not have been involved in such meetings.

'I would have known', he said.

But he said that as minister of foreign affairs from April 1977, and, towards the end of his term, as negotiator with the US on the signing of the nuclear non-proliferation treaty, he had known "what was going on".

"I was very closely connected with our Atomic Energy Board and later Corporation. I would have known about it," he said.

He had also known Peres and other senior Israeli leaders.

It was of course possible that an offer was made at a low level, between officials. But for it to have any significance, it should have been brought to the attention of the South African ministers connected with the country's own weapon production.

"As a serious offer of one government to another, my answer is no. Definitely not," Botha said.

The South African documents, which are dated March 31 1975 and marked "top secret," show Peres' offer was made in response to Botha's request for Israel to supply them with warheads.

But they make no mention of any "exchange" between the parties. At the time, South Africa had not yet acquired nuclear capabilities and would not do so for several years.

At the talks, Israeli officials "formally offered to sell South Africa some of the nuclear-capable Jericho missiles in its arsenal", the memo said.

It also said Peres and Botha signed an agreement about military ties between the two countries, including a clause that said "the very existence of this agreement" was to remain secret.

The material was discovered by US academic Sasha Polakow-Suransky while researching a book on the close relationship between the two allies.

Source: http://sify.com/news/peres-botha-deny-1970s-israel-south-africa-nuke-pact-news-international-kfzokdggebh.html

Revealed: how Israel offered to sell South Africa nuclear weapons

24 May 2010

Chris McGreal

The Guardian

Secret South African documents reveal that Israel offered to sell nuclear warheads to the apartheid regime, providing the first official documentary evidence of the state's possession of nuclear weapons.

The "top secret" minutes of meetings between senior officials from the two countries in 1975 show that South Africa's defence minister, PW Botha, asked for the warheads and Shimon Peres, then Israel's defence minister and now its president, responded by offering them "in three sizes". The two men also signed a broad-ranging agreement governing military ties between the two countries that included a clause declaring that "the very existence of this agreement" was to remain secret.

The documents, uncovered by an American academic, Sasha Polakow-Suransky, in research for a book on the close relationship between the two countries, provide evidence that Israel has nuclear weapons despite its policy of "ambiguity" in neither confirming nor denying their existence.

The Israeli authorities tried to stop South Africa's post-apartheid government declassifying the documents at Polakow-Suransky's request and the revelations will be an embarrassment, particularly as this week's nuclear non-proliferation talks in New York focus on the Middle East.

They will also undermine Israel's attempts to suggest that, if it has nuclear weapons, it is a "responsible" power that would not misuse them, whereas countries such as Iran cannot be trusted.

A spokeswoman for Peres today said the report was baseless and there were "never any negotiations" between the two countries. She did not comment on the authenticity of the documents.

South African documents show that the apartheid-era military wanted the missiles as a deterrent and for potential strikes against neighbouring states.

The documents show both sides met on 31 March 1975. Polakow-Suransky writes in his book published in the US this week, The Unspoken Alliance: Israel's secret alliance with apartheid South Africa. At the talks Israeli officials "formally offered to sell South Africa some of the nuclear-capable Jericho missiles in its arsenal".

Among those attending the meeting was the South African military chief of staff, Lieutenant General RF Armstrong. He immediately drew up a memo in which he laid out the benefits of South Africa obtaining the Jericho missiles but only if they were fitted with nuclear weapons.

The memo, marked "top secret" and dated the same day as the meeting with the Israelis, has previously been revealed but its context was not fully understood because it was not known to be directly linked to the Israeli offer on the same day and that it was the basis for a direct request to Israel. In it, Armstrong writes: "In considering the merits of a weapon system such as the one being offered, certain assumptions have been made: a) That the missiles will be armed with nuclear warheads manufactured in RSA (Republic of South Africa) or acquired elsewhere."

But South Africa was years from being able to build atomic weapons. A little more than two months later, on 4 June, Peres and Botha met in Zurich. By then the Jericho project had the codename Chalet.

The top secret minutes of the meeting record that: "Minister Botha expressed interest in a limited number of units of Chalet subject to the correct payload being available." The document then records: "Minister Peres said the correct payload was available in three sizes. Minister Botha expressed his appreciation and said that he would ask for advice." The "three sizes" are believed to refer to the conventional, chemical and nuclear weapons.

The use of a euphemism, the "correct payload", reflects Israeli sensitivity over the nuclear issue and would not have been used had it been referring to conventional weapons. It can also only have meant nuclear warheads as Armstrong's memorandum makes clear South Africa was interested in the Jericho missiles solely as a means of delivering nuclear weapons.

In addition, the only payload the South Africans would have needed to obtain from Israel was nuclear. The South Africans were capable of putting together other warheads.

Botha did not go ahead with the deal in part because of the cost. In addition, any deal would have to have had final approval by Israel's prime minister and it is uncertain it would have been forthcoming.

South Africa eventually built its own nuclear bombs, albeit possibly with Israeli assistance. But the collaboration on military technology only grew over the following years. South Africa also provided much of the yellowcake uranium that Israel required to develop its weapons.

The documents confirm accounts by a former South African naval commander, Dieter Gerhardt – jailed in 1983 for spying for the Soviet Union. After his release with the collapse of apartheid, Gerhardt said there was an agreement between Israel and South Africa called Chalet which involved an offer by the Jewish state to arm eight Jericho missiles with "special warheads". Gerhardt said these were atomic bombs. But until now there has been no documentary evidence of the offer.

Some weeks before Peres made his offer of nuclear warheads to Botha, the two defence ministers signed a covert agreement governing the military alliance known as Secment. It was so secret that it included a denial of its own existence: "It is hereby expressly agreed that the very existence of this agreement... shall be secret and shall not be disclosed by either party".

The agreement also said that neither party could unilaterally renounce it.

The existence of Israel's nuclear weapons programme was revealed by Mordechai Vanunu to the Sunday Times in 1986. He provided photographs taken inside the Dimona nuclear site and gave detailed descriptions of the processes involved in producing part of the nuclear material but provided no written documentation.

Documents seized by Iranian students from the US embassy in Tehran after the 1979 revolution revealed the Shah expressed an interest to Israel in developing nuclear arms. But the South African documents offer confirmation Israel was in a position to arm Jericho missiles with nuclear warheads.

Israel pressured the present South African government not to declassify documents obtained by Polakow-Suransky. "The Israeli defence ministry tried to block my access to the Secment agreement on the grounds it was sensitive material, especially the signature and the date," he said. "The South Africans didn't seem to care; they blacked out a few lines and handed it over to me. The ANC government is not so worried about protecting the dirty laundry of the apartheid regime's old allies."

Source: http://www.guardian.co.uk/world/2010/may/23/israel-south-africa-nuclear-weapons

As tensions rise, Israel launches air raid drill

May 23, 2010

Retures


JERUSALEM, May 23 (Reuters) - Israel launched its biggest air raid exercise on Sunday to test its preparedness against possible missile strikes from Iranian-sponsored militant groups as international tensions rose over Tehran's nuclear programme.

Israel has called for strong economic sanctions against Iran over its nuclear plans but, in a hint of possible military action, has said all options were on the table should diplomacy fail to resolve the dispute.

Israeli officials said the exercise, which will include sounding air raid sirens on Wednesday, would focus on municipal authorities' responses to a scenario in which missiles were launched from the Gaza Strip, controlled by Hamas Islamists, and by Hezbollah guerrillas in Lebanon. Both are allies of Iran.

In public remarks at the start of the weekly cabinet meeting on Sunday, Prime Minister Benjamin Netanyahu described Israel's biggest civil defence exercise as a routine, protective move and said the government sought only "quiet, stability and peace".

The air raid sirens will sound on Wednesday nationwide in a signal to Israelis to take cover in shelters or designated secure areas for 10 minutes, and much of the public is expected to take part in this drill.

In a test of an emergency warning system, the military's Home Front Command will also send text messages that read -- "Have a nice day" -- to cellphone owners in certain areas of the country, the army said in a statement to test communications.

Rescue services will be put on a practice emergency footing, while a partial distribution of gas masks is also planned, in addition to air raid drills to be held at schools and hospitals.

FIVE-DAY DRILL

The five-day drill dubbed "Turning Point 4" has sparked nervousness in the region as diplomatic efforts intensify to curb Iran's nuclear ambitions, which the West and Israel believe are aimed at building atomic weapons.

Iran denies its uranium enrichment programme is a quest for nuclear arms and says it is purely for power. Israel is widely believed to have the Middle East's only nuclear arsenal.

Itamar Rabinovitch, an expert on Middle East affairs and a former Israeli ambassador to Washington, said Israel must prepare for the possibility Iranian leaders would encourage Hamas and Hezbollah to fire on Israel in the event of stiffer U.N. sanctions against Iran.

"We must show we don't intend to be sitting ducks in the event of such an attack," Rabinovitch said.

Hezbollah fired more than 4,000 rockets into Israel during the 2006 Lebanon war. Hamas carried out numerous cross-border rocket attacks in the past, and Israel launched a war in the Gaza Strip in late 2008 with the aim of ending such strikes.

Israel has held a country-wide civil defence exercise annually for the past three years and military officials said the current drill is the most extensive in its 62-year history.

Hezbollah rockets did cause significant casualties during the Lebanon war, and Israeli officials have said that since the conflict ended, the group has bolstered its arsenal with more powerful and longer-range weapons.

Rockets fired from the Gaza Strip have rarely caused fatalities in Israel and carry a relatively small warhead. But Hamas has said it now has rockets that can reach deep into Israel. 

By Allyn Fisher-llan

Source: http://www.reuters.com/article/latestCrisis/idUSLDE64M01R

U.S., Egypt strive for Mideast nuclear arms ban deal

(Reuters) - The United States and Egypt are working to bridge differences on a proposed Middle East nuclear arms ban, an idea that could one day force Israel to scrap any atom bombs it has, U.N. diplomats say.

The U.S. efforts to secure a deal with Egypt and other Arab countries reflect Washington's concern to win their backing for sanctions against Iran over its nuclear program by offering a concession over U.S. ally Israel, even though Washington says such a ban is impossible without peace in the Middle East.

Western diplomats say that the success or failure of a month-long meeting on the 1970 nuclear Non-Proliferation Treaty (NPT) currently under way in New York hinges on the sensitive negotiations on an Egyptian proposal to hold a conference on establishing a zone free of nuclear arms in the Middle East.

"If we can't get a deal on the Middle East in the next few days, the NPT review conference will probably collapse," a Western diplomat told Reuters. "It's what happened in 2005."

Another Western diplomat familiar with the talks was guardedly optimistic. Despite the appearance of a chasm separating the Arabs from the United States and the four other permanent U.N. Security Council members, "informal conversations indicate the sides are not in reality too far apart," he said.

"The next few days will be critical," the envoy added.

NPT review conferences are held every five years to take stock of and assess compliance with the anti-nuclear arms pact. They make decisions by consensus, which makes it difficult to reach agreements, since all 189 NPT signatories have a veto.

The last review conference in 2005 was widely viewed as a failure. It collapsed due to Egypt's outrage at the failure to move forward on the Middle East nuclear-arms-free zone idea and developing nations' anger at the United States for refusing to reaffirm disarmament pledges from 2000.

Both Egypt and the United States are eager to avoid another collapse. Cairo does not want to be labeled as a spoiler again, while the United States wants an outcome that helps ratchet up the pressure on Iran and supports President Barack Obama's determination to move toward a world free of nuclear arms.

If there is no deal on the Middle East, envoys say, there can be no agreement on a final declaration that "names and shames" Iran and North Korea and acknowledges the disarmament steps the big powers have taken, which Washington and its allies want.

U.S. COUNTERPROPOSAL

The United States and the four other countries allowed to keep nuclear arms under the NPT -- fellow Security Council veto powers Britain, France, China and Russia -- have been negotiating with the Arabs on the sidelines of the NPT meeting, which concludes at the end of next week, to secure a deal.

Egypt, which chairs the powerful 118-nation bloc of non-aligned developing nations, circulated a proposal to all 189 NPT signatories calling for a conference by next year on ridding the Middle East of nuclear arms in which all countries in the region would participate.

Washington came up with a counterproposal, which calls for "the convening of a conference in 2012-2013 of all states of the Middle East to discuss implementation of the 1995 resolution in its entirety."

The 1995 resolution adopted by NPT signatories calls for making the Middle East a zone without atomic bombs or other weapons of mass destruction, and notes that the Middle East peace process could help to make it a reality.

Israel neither confirms nor denies having nuclear arms.

Egypt has insisted that both Israel and Iran would have to participate in such a conference, even though Tehran does not recognize Israel's right to exist. Western diplomats agree, but say that Israel would be reluctant to participate.

Still, the Jewish state could be persuaded, they say.

"Israel will attend if the cost of not attending is higher than the cost of attending," a senior Western diplomat said.

Among the possible enticements for Israel would be to ensure that any such regional conference also covers biological and chemical weapons, not just nuclear arms, as well as regional security and other issues, Western diplomats said.

Like nuclear-armed India and Pakistan, Israel never signed the NPT and is not officially at the NPT review conference. Egypt and Syria are outside the chemical weapons convention that bans production, stockpiling and use of chemical arms.

Diplomats say the sticking points include the format for such a conference and the question of whether it should be organized by the United Nations, as the Arabs would like.

Editing by Mohammad Zargham

Source: http://www.reuters.com/article/idUSTRE64K12C20100521?feedType=RSS&feedName=topNews