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HALLIBURTON

Cha-Ching Cheney

The stock market may be suffering, but Operation Iraqi Freedom has sure been good for business at Halliburton, the Houston oil-services company famous for its former CEO, Dick Cheney. And the vice president hasn't entirely severed his financial ties to the big Defense contractor. Even while Halliburton is scoring Army contracts that could top $2 billion, Cheney is still receiving annual compensation from the company he led from 1995 to August 2000, NEWSWEEK has learned.

When Cheney stepped down from Halliburton to run for vice president, he sold his company stock and gave profits from his stock options to charity. But he still had more compensation coming. Rather than taking it in a lump-sum payment of about $800,000, Cheney opted for "deferred compensation," Wendy Hall of Halliburton tells NEWSWEEK. Cheney chose annual payments of "less than $180,000" from 2001 to 2005, says Hall, which offers a tax benefit. Cheney, through spokeswoman Cathie Martin, contends he has no financial ties to Halliburton because of an insurance policy he took out for the value of his deferred compensation, which means he will get paid even if the company goes under. "He has no financial interest in the success of the company," says Martin, who adds that Cheney has no say in awarding Defense contracts. Indeed, NEWSWEEK learned last week that Halliburton is not a finalist for a $600 million reconstruction contract in Iraq.

But some Washington players are questioning the vice president's ethics. Cheney should "sever all financial ties to Halliburton," says Larry Noble of the capital's nonpartisan Center for Responsive Politics. "I don't think this passes the smell test." Congressman Henry Waxman, a California Democrat, complained to the Army last week about the contract Halliburton's Kellogg, Brown & Root unit received in early March to fight Iraqi oil fires. The Army secretly awarded Halliburton the contract, which analysts say could be worth up to $1 billion, without receiving other bids. Waxman told NEWSWEEK that Cheney's ties to Halliburton "raise a red flag."

Cheney and Halliburton have a long history. While Defense secretary in the first Bush administration, Cheney awarded KBR the Army's first private contract to manage troop tent cities. During the Clinton years Halliburton lost that contract after KBR came under fire for allegedly overcharging the government. But after Cheney was elected, KBR was again awarded the contract and has rung up $1.15 billion so far on the 10-year deal. The Army says it chose KBR for the fires because it was in Kuwait and could work fast. For Cheney, the political flames may just be getting started.

MIDDLE EAST

Finally, a Dealmaker?

Is a Middle East peace deal within reach? Last month's selection of Abu Mazen as the first Palestinian prime minister has reinvigorated an effort led by the European Union, Russia, the United States and the United Nations to bring Palestinians and Israelis back to the bargaining table. Their so-called road map seeks to establish a provisional Palestinian state by the year-end and a full-fledged state by 2005. The key--Abu Mazen, deputy chairman of the Palestine Liberation Organization and close aide to Yasir Arafat for the past 40 years. A nationalist and opponent of Zionism--he once wrote a paper disputing the scale --of the Holocaust--he's nevertheless considered a potential peacemaker by his Israeli counterparts. Officials in Jerusalem say they're pleased by his initial conciliatory gestures, including plans to induce Islamic Jihad and Hamas leaders to declare a ceasefire. "He is a pleasant surprise," says one Sharon adviser. But many are skeptical that Abu Mazen can break the 30-month deadlock. Sharon, who's vowed not to dismantle West Bank settlements and has offered Palestinians a state on only 40 percent of West Bank land, is unlikely to make the concessions the road map requires, experts say.

MILITARY

High Tech, Low Effect

The war in Iraq is undoubtedly the first major conflict of the Information Age. But that doesn't mean that technology has entirely dominated the fighting. To be sure, U.S. precision bombing has lived up to its name, and battlefield commanders are armed with far more real-time data than ever before. Yet despite the hail of bombs falling on Baghdad, Saddam Hussein has continued to broadcast on Iraqi television, leading some to wonder why the Pentagon hasn't used its much-heralded "E-bomb" to shut down his signal.

As NEWSWEEK and other publications reported a few weeks ago, the E-bomb emits a high-energy pulse that is supposed to cause lights to blink out, computers to freeze and phones to go silent. It hasn't been dropped on Baghdad, however, because there is no E-bomb--at least operationally. Back in the spring of 2001, the Defense Department tested a device that succeeded in disabling electrical circuits by shooting out a microwave beam. But the so-called bomb was so big it'd take a truck, not a cruise missile, to haul it. And the beam's range was so limited "you'd have to back the truck up against the target," according to a source familiar with the program. The bottom line: "You might as well cut the [electrical] wires." The Defense Department, to be fair, has always stressed the R&D nature of the E-bomb. In the avalanche of prewar hype, though, it's small wonder that caveat was lost.

REFORM: Serbian Sweep

When reformist Serbian Prime Minister Zoran Djindjic was assassinated on March 12, shock and despair permeated Belgrade. To many it seemed that despite the fall of Slobodan Milosevic in October 2000, the country was still controlled by his regime's cronies, former paramilitary commanders and criminal overlords. But Djindjic, the so-called Serbian Kennedy, may be accomplishing more in his death than he could have hoped while alive--a long-awaited crackdown on the country's most unruly elements.

Within hours of the prime minister's death, police arrested one of Milosevic's most malicious followers, Franko Simatovic, the founder of the JSO (a shadowy division of Milosevic's secret service), on suspicion of being involved. Thousands of Slobo cronies have been arrested since. And the government has announced that it will entirely disband the JSO.

Experts in the region say that even Djindjic's judicial reforms may finally see the light of day, given the popular outcry that has greeted his death. There were many reasons that Djindjic couldn't finish off the "old system on all levels," says Antonela Riha of B-92 Radio, a cherished voice of freedom during the Slobo days. "But this time, both people in the government and the citizens are too mad to allow [the corruption] to continue. This has to be the cutoff."

TURKEY

A House Of Cards

Turkey didn't just sour its political relations with Washington when it failed to approve U.S. troop deployments on its soil. It also broke a golden rule of business--never snub your major creditor. The result: Turkey now faces a major crisis of investor confidence. The United States had offered Ankara a compensation package worth $24 billion as a sweetener for its cooperation in the war, but is now putting only $1 billion on the table. Says Andrew Jeffreys, CEO of the Oxford Business Group, a regional analyst: "Turkish finance is always a high-wire act--and now they have no safety net."

In the last fortnight the Turkish lira has dropped from 1.63 million to the dollar to as low as 1.73 million. Yields on domestic debt have risen from 63 percent to 75 percent. (The announcement of the new U.S. aid package brought them back down to 67 percent at the end of last week.) At those levels, even with the new package, Turkey will have to scramble to meet IMF targets of 20 percent annual inflation and raising government income by 5 percent. Failure to do so will hinder the disbursement of a vital $16 billion IMF package brokered last year. But the real ticking time bomb is the mountain of Turkish government debt. A staggering 87 percent of government income--$94.5 billion this year alone--goes to debt servicing, the bulk of it on the volatile and insanely expensive domestic debt market. Without the original U.S. deal, "Turkey's economy is a real house of cards," says an EU diplomat specializing in the Turkish economy. "There's zero margin for error." Turkey's business elite are deeply worried that a new economic melt-down could knock the country off its pro-Western, EU-bound course altogether. "If we don't come to our senses, Turkey will step back 50 years," Tuncay Ozilhan, head of Turkey's Industrialists' and Businessmen's Association, warned the government last week. The U.S.-led war on Iraq may yet achieve its stated goal of spreading democracy and prosperity in the region. But so far, in Turkey, it looks to have just the opposite effect.

MEDICINE

Super Drug?

If a salesman told you a single drug could cure headaches, obesity, sore muscles and even body odor, all for the low, low price of $300, you'd probably think he was selling snake oil. But many scientists now say there's a drug that does all that and more--Botox. The poison that erases wrinkles may be an effective therapy for many of life's other bodily indignities. Doctors are administering it for a wide range of ailments it isn't approved for (yet). "People said using Botox off-label would be a waste of time," says New York ear, nose and throat doctor Andrew Blitzer. "But a lot more patients are going to benefit."

The most promising new use for Botox is as a headache treatment. It's unclear how Botulinum toxin soothes an aching brain--it may inhibit the nerves that transmit pain--but large studies confirm that people get fewer headaches after being Botoxed. Blitzer cites a patient whose migraines kept her from work four days a month, despite conventional drug treatments. He injected Botox into her forehead, and she hasn't had a migraine since. The drug also works for other chronic nonsinus headaches--doctors simply inject it under the skin, near the pain.

Because Botox weakens muscles, it may also be useful for treating disorders stemming from involuntary muscle clenching, like stroke-induced paralysis, incontinence caused by a spastic bladder and soreness and cramps. A few doctors have injected it into gastric muscle to make obese patients' stomachs empty more slowly. The effect mirrors that of bypass surgery: patients feel full longer and eat less. Botox may even paralyze sweat glands, which offers hope for people with hyperhydrosis, or excessive, pathological sweating. As trials get underway for these unorthodox treatments, doctors are trying to convince insurers of their efficacy--and safety. Though the long-term effects of off-label Botox use are unknown, the toxin affects only the injected area, and it wears off after a few months. If it's safe, it may really be a wonder drug.

MUSIC Get Your Rave On

The Raveonettes are surprising candidates to be the Next Big Thing in the United States. For one, they're a Danish duo. Second, they play grunge-ish garage rock. Lastly, the vocals on the Raveonettes' debut release, "Whip It On," are not always in harmony--at least as Simon and Garfunkel would define the term--giving the songs an air of haunting mystery. "It's music noir, kinda Hitchcockesque," says guitarist-songwriter Sune Wagner. But despite all that, Wagner and bassist Sharin Foo are among the most eagerly awaited new acts across the Atlantic.

Unlike the rise of so many once unsung singers, this duo's climb to the top has been pretty quick. The Raveonettes were discovered only last May. An endorsement by Rolling Stone magazine started the buzz going, and Columbia Records signed the pair in October. Weeks later they released the EP "Whip It On" in the United States as a teaser for their first full-blown album, "Chain Gang of Love," which comes out in late summer in Britain and America. Whereas "Whip It On" is simplistic in its sound, written using only three guitar chords and extremely basic melodies, the Raveonettes seem to be branching out on "Chain Gang." They're even using four chords on some of the tracks, and are sounding a little like a maturing Nirvana. "We got sophisticated this time," Foo says, chuckling.

FILM

Suicide on Celluloid

Not every-one is thrilled about the year's hot celluloid trend--literary suicide. Nicole Kidman has been picking up awards for her portrayal of writer Virginia Woolf in "The Hours." And Gwyneth Paltrow is wrapping up "Ted and Sylvia," tentatively set for release this fall, where she plays poet Sylvia Plath, who gassed herself at the age of 30.

But Frieda Hughes, daughter of Plath and fellow poet Ted Hughes, was so upset about the prospect of her parents' lives on film that she composed an angry 48-line poem for the March edition of Tatler: "Now they want to make a film/For anybody lacking the ability/To imagine the body, head in oven/Orphaning children." She says that BBC producers kept pestering her to consult in the making of the film. "Why would I want to be involved in moments of my childhood which I never want to return to? I want nothing to do with this film," Hughes told The Sunday Times recently.

Virginia Nicholson, the great-niece of Woolf and a writer herself, is equally un-happy with the depiction of Woolf's suicide by drowning in 1941. "What are we trying to achieve here?" Nicholson said recently. "Maybe in terms of fiction this is OK, but we are talking about real people, so it is very difficult." Film critic Alexander Walker says that during times of uncertainty, moviegoers are naturally drawn to sentimental depictions of strong characters struggling through difficult times. But Hughes and Nicholson seem to feel that silence is what's golden.

WILL FERRELL

Comedian Will Ferrell made a name for himself spoofing President George W. Bush on NBC's "Saturday Night Live," but now he's playing a raucous thirtysomething fraternity guy in the hilarious new movie "Old School." NEWSWEEK's Bret Begun quizzed Ferrell about his new role:

You have quite an extended streaking scene. You do any gluteal workouts in preparation?

I did nothing. When you have certain physical gifts, I think you should share them. I've gotten a lot of mileage out of this body.

How many takes did you do?

We were out there a good couple of hours. The street they chose to do it on had these storefronts. All of them were closed for the night except this 24-hour fitness place, and all the treadmills were up against the window. People started pointing, waving, saying, "Oh, that's that guy from 'Saturday Night Live'!" I'm in a robe until the final moment. Then I drop the robe and I hear "OH, MY GOD!" through the plate glass. By the third take, no one was on the treadmills.

When you decided to pursue acting, did your parents want a refund on their tuition money?

They've always been super- supportive. My dad's a musician and an entertainer.

How did playing George W. Bush help you play a fraternity guy?

When I played Bush, I just imagined a fraternity guy trying to be president. I had to develop more interpersonal skills to play the frat guy.

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