Cash-strapped states weigh selling roads, parks

By MARTIGA LOHN, Associated Press Writer

ST. PAUL, Minn. – Minnesota is deep in the hole financially, but the state still owns a premier golf resort, a sprawling amateur sports complex, a big airport, a major zoo and land holdings the size of the Central American country of Belize.

Valuables like these are in for a closer look as 44 states cope with deficits.

Like families pawning the silver to get through a tight spot, states such as Minnesota, New York, Massachusetts and Illinois are thinking of selling or leasing toll roads, parks, lotteries and other assets to raise desperately needed cash.

Minnesota Gov. Tim Pawlenty has hinted that his January budget proposal will include proposals to privatize some of what the state owns or does. The Republican is looking for cash to help close a $5.27 billion deficit without raising taxes.

GOP lawmakers are pushing to privatize the Minneapolis-St. Paul International Airport and the state lottery. Both steps require a higher authority — federal legislation in the case of the airport, a voter-approved constitutional amendment for the lottery. But one lawmaker estimated an airport deal could bring in at least $2.5 billion, and the lottery $500 million.

Massachusetts lawmakers are considering putting the Massachusetts Turnpike in private hands. That could bring in upfront money to help with a $1.4 billion deficit, while also saving on highway operating costs.

In New York, Democratic Gov. David Paterson appointed a commission to look into leasing state assets, including the Tappan Zee Bridge north of New York City, the lottery, golf courses, toll roads, parks and beaches. Recommendations are expected next month.

Such projects could be attractive to private investors and public pension funds looking for safe places to put their money in this scary economy, said Leonard Gilroy, a privatization expert with the market-oriented Reason Foundation in Los Angeles.

"Infrastructure is more attractive today than ever," Gilroy said. "It's tangible. It's a road. It's water. It's an airport. It's something that is — you know, you hear the term recession-proof."

Unions don't like privatization deals out of fear that worker wages and benefits will be squeezed as private operators try to boost their profit by streamlining services.

Taxpayers, too, can lose out if the arrangements don't work — and sometimes even if they do, said Mark Price, a labor economist with the Keystone Research Center in Harrisburg, Pa. Higher tolls on privatized roads can push drivers onto state-operated roads, wearing them down faster and raising public costs over time.

"You're privatizing some profits in this process and socializing some losses," Price said.

Selling or leasing public assets can produce an immediate infusion of cash for the state, while foisting the tough decisions, such as raising tolls, onto private operators instead of the politicians.

"The downsides are often after they leave office," said Phineas Baxandall, a researcher with the consumer-oriented U.S. Public Interest Research Group in Boston.

Some states struck major privatization deals well before the economic crisis hit.

Indiana, for example, brought in $3.8 billion in 2006 by leasing the Indiana Toll Road for 75 years. Chicago stands to collect $2.5 billion by leasing Midway Airport, if the federal government approves, and has raised an additional $3.5 billion since 2005 through deals for the Chicago Skyway toll road, parking ramps and parking meters.

But in September, investors walked away from a $12.8 billion bid to lease the Pennsylvania Turnpike for 75 years after legislators failed to act on the deal. And Texas lawmakers uneasy over a proposed private toll road system approved a two-year moratorium on such contracts last year.

David Fisher, who managed Minnesota's state-owned properties a few years ago under former Gov. Jesse Ventura, warned that the state has a hard time finding buyers for properties such as old mental institutions.

Fisher said some public properties belong in private hands, such as Giants Ridge Golf & Ski Resort, a top-rated getaway in Biwabik, and Ironworld, a museum and library in Chisholm. Both are owned and subsidized by Iron Range Resources, a state agency.

"Certainly those things could be privatized, I think without harm to the state, but I don't know that you could find the right buyer," Fisher said.

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The Evil Solution

By Rod Nordland

Somali pirates last September captured a Ukrainian cargo ship, the MV Faina, loaded to the gunnels with heavy weaponry, including 33 Russian-designed T-72 battle tanks. Since then, American and Russian naval vessels have been shadowing the ship at its anchorage off the fishing village of Hindawao, 300 miles north of Mogadishu. This month there were reports that the ship's owners had agreed on ransom terms, but the Faina and its crew are still being held. NEWSWEEK's Rod Nordland interviewed Shamun Indhabur, who is thought to be the leader of the pirates who took the Faina, and the Sirius Star, a Saudi supertanker with $100 million worth of oil aboard. The interview was conducted by satellite telephone to the bridge of the Faina, through Somali translator Abukar al-Badri. Excerpts:

NEWSWEEK: What is your background, and how did you capture the MV Faina?
Shamun Indhabur: I was a fisherman before I turned to piracy, a crewmember of a small fishing boat. We used to capture lobsters and sharks.

When we hijacked MV Faina it was early morning 24 September 2008, in Somali waters. We took it after 60 minutes of fighting between the crewmembers and our gunmen and eventually the captain decided to surrender after we fired some rockets to warn them that we were close to destroying the ship if they didn't surrender. The captain tried to escape, but he didn't succeed. He had a pistol and he refused to surrender until we were close to killing him. When we intercepted the ship and saw the shipment [of arms], then we thought it was going to Somalia and belonged to the Ethiopians [whose army is supporting the transitional government in Somalia], but the captain told us that it was going to South Africa. Then later we saw that it was going to southern Sudan, after we forced the captain to show us the manifests.

What's the situation on board the Faina now?
The middlemen tried to steal some of the money we agreed on [estimated at more than $3 million]. And now we can't trust them. They're trying to take the money, and we are the criminals. We can't accept that.

How are your ransoms paid?
We get the money two ways. A boat takes the money from Djibouti, then a helicopter takes the money from the boat, then it drops the money in waterproof cartons on assigned [small] boats. Then we collect it, check if it is false or not, then we release the ship. The other way we get the money is a boat from Mombasa.

Isn't it dangerous for middlemen to be carrying so much money into a lawless place like Somalia? I've heard some of them have been killed doing it, is that true?
The pirates are different groups. Those in Puntland may have problems with the middlemen and sometimes kill them.

Why has there been such an increase Somali piracy? In Somalia all the young men are desperate. There is wide unemployment in the country, there are no sources of income. One of the only sources we have had is fishing, and the superpowers and Asian countries sidelined us in our own sea. So at first we started out just to counter illegal fishing, but international forces started to protect them.

Now the European Union is sending an additional naval force. Are you worried about the increased naval presence?
We know the EU and NATO forces are coming, but that is not the solution. The solution is to restore peace in Somalia so that we can have a better life and more job opportunities. I can tell you that sending forces will not stop us going into piracy. They can arrest us if they find us out at sea, they've arrested our friends several times, but that will never deter us from this business. The only thing that can stop piracy is a strong government in Somalia.

The most friendly forces in Somali waters are the U.S. forces. They arrest us and release us, because they know we are not going to hurt them. But the French and the Indians treat us badly and sometimes they don't know what they're doing. The Indians sunk that Thai boat [a fishing vessel reportedly taken over by pirates this month] and said it was pirates, but I tell you there was not a single pirate on that boat.

Are you worried about another attack ashore, such as the one the French conducted, now that the U.N. has approved such attacks?
The French forces made two attacks. They arrested our friends, but French nationals will pay for that. If we get a ship with French nationals, we will punish the crew and they will pay double ransom. We're not worried about another attack [against pirates on land], because now we are on very high alert and they will never succeed with another raid.

You justify piracy against all shipping even though your only complaint was against foreign fishing boats operating in your waters. Does that really make sense?
I justify it as a dirty business encouraged by the foreign forces that were escorting illegal fishing boats and toxic waste dumpers. And if they are escorting fishing boats, they can't escort all commercial shipping, and if we are forced to avoid fishing our waters, then those [commercial] ships are all our fish.

How do you justify attacking pleasure yachts hundreds of miles offshore, or cruise liners, or even any vessel so far from Somalia?
Luxury yachts are what we are looking for, because what we need is money, and if we get a luxury yacht, we make a fortune.

Some ships have started putting armed guards on their vessels. Others have used weapons such as sonic guns, which use beams of loud noise to deter pirates. Does any of that worry you?
It will not protect them. We also have rocket-propelled grenades and we can destroy them. For those with the sonic guns, we hijacked some of them even after they fired the sonic guns. Truly speaking, when we go to sea we are drunk, and we are like hungry wolves running after meat. We don't even know what we are doing until we have boarded.

Some of the leaders of the Islamists now fighting the Somali government have criticized pirates for giving the country a bad name, and for attacking Muslim-owned ships like the Sirius Star.
The Islamists have a memorandum of understanding with us. What they are saying to the media is not their real position. They just want to send a message to their Arab friends who sometimes fund them.

What if the Islamists come back to power?
The Islamists are not homogenous groups, they are heterogeneous. I can guess they'll never come back to power as in 2006, but they can fight one another and create a huge mess. If they did take power, they must restore law and order and create job opportunities for us. If they don't, then piracy will never stop.

How are the Somali pirates organized? Do you all coordinate your actions?
The pirates belong to different groups, but we have umbrella groups. There are two main groups, one in Puntland and the other in south and central Somalia, which is my group. I am a member of the seven top committee members in south and central. We are a group of men with norms and terms, and we respect them.

The pirates holding the Sirius Star have threatened to dump its oil if their demands are not met. Is that a serious threat, and do they realize how much damage that could do not only to Somalia but other countries as well?
Those holding the Sirius Star and the MV Faina I'm aboard now, we are the same group. And we know the risk of spilling the oil shipment. But when evil is the only solution, you do evil. That is why we are doing piracy. I know it is evil, but it is a solution.

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Israel expands Gaza campaign as militants fire rockets

By Nidal al-Mughrabi

GAZA (Reuters) - Israel Monday expanded its fiercest air offensive in the Hamas-ruled Gaza Strip in decades and prepared for a possible ground assault, after a three-day bombardment which has killed more than 300 Palestinians.

Rockets fired by Islamist militants in Gaza killed three Israelis, two after nightfall in less than an hour, increasing pressure on the government as the army amassed infantry and armored forces along the border.

The Palestinian toll from the onslaught rose to 335 dead and 800 wounded, medical officials in Gaza said. A United Nations agency said at least 62 of the dead were civilians.

"We have an all-out war against Hamas and its kind," Israeli Defense Minister Ehud Barak told parliament, using a term he has employed in the past to describe a long-term struggle against Israel's Islamist enemies.

Broadening their targets to include the Hamas government in the Gaza Strip, Israeli warplanes bombed the Interior Ministry, which supervises 13,000 members of the group's security forces. The building had been evacuated and there were no casualties.

The planes also attacked the homes of two top commanders in Hamas's armed wing. They were not home, but several family members were among the seven dead.

Hamas, an Islamist movement that took over the Gaza Strip in 2007, defied the Israeli assaults, the fiercest in the coastal territory since the 1967 Middle East war.

Rocket fire from Gaza at Israel intensified immediately after Hamas declared the end of a truce on December 19.

With six weeks to go to an election that polls suggest the more hawkish right-wing Likud party will win, Israel's centrist government says the offensive aims to put a stop to the rockets.

Four Israelis have been killed by rockets since the offensive began Saturday.

GROUND INCURSION?

Israel declared areas around the Gaza Strip a "closed military zone," citing the risk from Palestinian rockets, and ordered out journalists observing a build-up of armored forces.

Excluding the press could help Israel conceal preparations for a ground incursion following air strikes that have turned buildings to rubble and left hospitals struggling to cope.

Wounded Gazans trickled one by one into Egypt and 10 trucks carrying medical supplies were allowed to cross into the blockaded territory. Border officials said about 30 Palestinians were expected to leave for treatment.

Israeli markets largely shrugged off the conflict, and stock indices rose 0.7 to 0.9 percent Monday, after losing 1.5 percent Sunday, the day after the attacks on Gaza began.

Oil prices rose above $40 a barrel Monday, boosted by the weak dollar and the Gaza violence, which served as a reminder of tensions that could threaten crude supplies from the region.

Most Gazans in the territory of 1.5 million people, one of the most densely populated areas on earth, stayed at home, in rooms away from windows that could shatter in blasts from air strikes on Hamas facilities. Residents of southern Israel ran for shelter at the sound of alarms heralding incoming rockets.

In Khan Younis in the southern Gaza Strip, an air strike killed a local commander of Islamic Jihad, three other members of the militant group and a child as they stood in the street.

Israeli aircraft also destroyed a laboratory building at the Islamic University, a significant cultural symbol in Gaza.

"MANY DAYS"

Mark Regev, a spokesman for Israeli Prime Minister Ehud Olmert, said the offensive would go on until the population in southern Israel "no longer live in terror and in fear of constant rocket barrages."

"(The operation could) take many days," said military spokesman Avi Benayahu.

Hamas spokesman Fawzi Barhoum has urged Palestinian groups to use "all available means" against Israel, including martyrdom operations" -- meaning suicide bombings.

The Gaza operation and civilian casualties have enraged Arabs across the Middle East. Protesters burned Israeli and U.S. flags to press for a stronger response from their leaders.

Palestinian President Mahmoud Abbas, whose writ runs only in the West Bank since his Fatah faction was ousted from Gaza by Hamas last year, had urged Hamas not to end its truce and has effectively accused it of bringing the onslaught on itself.

Nevertheless, Ahmed Qurie, Abbas's chief negotiator, said on Monday that the Palestinians had put on hold U.S.-backed peace talks with Israel, which have anyway made little progress.

U.N. Secretary-General Ban Ki-moon demanded world leaders "use all possible means to end the violence" and "act swiftly and decisively to bring an early end to this impasse."

But U.S. President George W. Bush's administration, in its final weeks in office, demanded Hamas agree to a ceasefire. White House spokesman Gordon Johndroe said the U.S. "understands that Israel needs to take actions to defend itself."

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