Monday, March 3, 2008

U.S. Mortgage Rates Will Tumble to Four-Decade Low

U.S. Mortgage Rates Will Tumble to Four-Decade Low

By Kathleen M. Howley

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Freddie Mac, the world's second- largest buyer of home loans, said the average U.S. fixed mortgage rate in 2008 probably will tumble more than three-quarters of a percentage point to the lowest in at least 45 years.

The average rate for a 30-year fixed mortgage will fall to 5.5 percent from 6.3 percent last year, the McLean, Virginia-based company said in a forecast today. That would be the lowest annual average in records that go back to 1963.

The low rates won't be enough to spur a recovery in the U.S. real estate market, said Brian Bethune, an economist at Global Insight Inc., based in Lexington, Massachusetts. Bethune forecasts the average fixed rate will be 5.4 percent this year.

``The lower rates, in themselves, are not going to cause a housing turnaround because they are second in importance to excess inventory and falling prices,'' Bethune said. ``People are going to stay away from the market if they see instability, and lenders are going to have a hard time valuing properties and issuing mortgages.''

Economic growth will slow to 2.3 percent this year from 2.5 percent last year, Freddie Mac said in the forecast. Inflation probably will be 2.5 percent, down from 2008's 4 percent, the report said. Freddie Mac would not comment on its forecast, according to spokeswoman Eileen Fitzpatrick.

A slowing economy and low inflation typically signal a reduction in long-term rates, set by investors in mortgage-backed securities, Bethune said.

Home Sales, Prices

Combined sales of new and existing homes probably will drop to 5 million in 2008 from 5.72 million last year, the third consecutive decline, Freddie Mac said. Sales will pick up in 2008, rising to 5.23 million, according to the forecast. Home prices probably will drop 5 percent in 2008 and 3 percent next year, Freddie Mac said, basing its estimate on its Conventional Mortgage Home Price Index that excludes loans above $417,000.

The Federal Reserve has slashed its benchmark rate twice this year in an attempt to avert the first recession since 2001. The January cuts totaling 1.25 percentage points were the largest one- month reductions since August 1982 when the Open Market Committee cut rates by 2 percentage points.

More than two-thirds of Americans own their own home, with total mortgage debt of $11 trillion, data compiled by the Fed show. About two-thirds of those loans are fixed-rate mortgages, according to the Federal Housing Finance Board.

The Federal Reserve's rescue has failed

The Federal Reserve's rescue has failed

By Ambrose Evans-Pritchard

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The verdict is in. The Fed's emergency rate cuts in January have failed to halt the downward spiral towards a full-blown debt deflation. Much more drastic action will be needed.

Yields on two-year US Treasuries plummeted to 1.63pc on Friday in a flight to safety, foretelling financial winter.

The debt markets are freezing ever deeper, a full eight months into the crunch. Contagion is spreading into the safest pockets of the US credit universe.

It is hard to imagine a more plain-vanilla outfit than the Port Authority of New York and New Jersey, which manages bridges, bus terminals, and airports.

The authority is a public body, backed by the two states. Yet it had to pay 20pc rates in February after the near closure of the $330bn (£166m) "term-auction" market. It had originally expected to pay 4.3pc, but that was aeons ago in financial time.

"I never thought I would see anything like this in my life," said James Steele, an HSBC economist in New York.

No sane mortal needs to know what term-auction means, except that it too became a tool of the US credit alchemists. Banks briefly used the market as laboratory for conjuring long-term loans at Alan Greenspan's giveaway short-term rates. It has come unstuck. Next in line is the $45trillion derivatives market for credit default swaps (CDS).

Last week, the spreads on high-yield US bonds vaulted to 718 basis points. The iTraxx Crossover index measuring corporate default risk in Europe smashed the 600 barrier. We are now far beyond the August spike.

Sub-prime debt is plumbing new depths. A-rated securities issued in early 2007 fell to a record 12.72pc of face value on Friday. The BBB tier fetched 10.42pc. The "toxic" tranches are worthless.

Why won't it end? Because US house prices are in free fall. The Case-Shiller index for the 20 biggest cities dropped 9.1pc year-on-year in December. The annualised rate of fall was 18pc in the fourth quarter, and gathering speed.

As the graph shows below, US households are only halfway through the tsunami of rate resets - 300 basis points upwards - on teaser loans.

graph: US households are only halfway through the tsunami of rate resets

The UK hedge fund Peloton Partners misjudged this fresh leg of the crunch. After an 87pc profit last year betting against sub-prime, it switched sides to play the rebound. Last week it had to liquidate a $2bn fund.

Like many, Peloton thought Fed rate cuts from 5.25pc to 3pc (with more to come) would end the panic. But this is not a normal downturn, subject to normal recovery. Leverage is too extreme. Bank capital is too eroded. Monetary traction eludes the Fed. An "Austrian" purge is under way.

UBS says the cost of the credit debacle will reach $600bn. "Leveraged risk is a cancer in this market."

Try $1trillion, says New York professor Nouriel Roubin. Contagion is moving up the ladder to prime mortgages, commercial property, home equity loans, car loans, credit cards and student loans. We have not even begun Wave Two: the British, Club Med, East European, and Antipodean house busts.

As the once unthinkable unfolds, the leaders of global finance dither. The Europeans are frozen in the headlights: trembling before a false inflation; cowed by an atavistic Bundesbank; waiting passively for the Atlantic storm to hit.

Half the eurozone is grinding to a halt. Italy is slipping into recession. Property prices are flat or falling in Ireland, Spain, France, southern Italy and now Germany. French consumer moral is the lowest in 20 years.

The euro fetches $1.52 (from $0.82 in 2000), beyond the pain threshold for aircraft, cars, luxury goods and textiles. The manufacturing base of southern Europe is largely below water. As Le Figaro wrote last week, the survival of monetary union is in doubt. Yet still, the ECB waits; still the German-bloc governors breathe fire about inflation.

The Fed is now singing from a different hymn book, warning of the "possibility of some very unfavourable outcomes". Inflation is not one of them.

"There probably will be some bank failures," said Ben Bernanke. He knows perfectly well that the US price spike is a bogus scare, the tail-end of a food and fuel shock.

"I expect inflation to come down. I don't think we're anywhere near the situation in the 1970s," he told Congress.

Indeed not. Real wages are being squeezed. Oil and "Ags" are acting as a tax. December unemployment jumped at the fastest rate in a quarter century.

The greater risk is slump, says Princetown Professor Paul Krugman. "The Fed is studying the Japanese experience with zero rates very closely. The problem is that if they want to cut rates as aggressively as they did in the early 1990s and 2001, they have to go below zero."

This means "quantitative easing" as it was called in Japan. As Ben Bernanke spelled out in November 2002, the Fed can inject money by purchasing great chunks of the bond market.

Section 13 of the Federal Reserve Act allows the bank - in "exigent circumstances" - to lend money to anybody, and take upon itself the credit risk. It has not done so since the 1930s.

Ultimately the big guns have the means to stop descent into an economic Ice Age. But will they act in time?

"We are becoming increasingly concerned that the authorities in the world do not get it," said Bernard Connolly, global strategist at Banque AIG.

"The extent of de-leveraging involves a wholesale destruction of credit. The risk is that the 'shadow banking system' completely collapses," he said.

For the first time since this Greek tragedy began, I am now really frightened.

Uribe's Illegal Cross-Border Raid

Uribe's Illegal Cross-Border Raid

Colombian Deaths in Ecuador

By Richard Gott

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The deaths of Raúl Reyes and Julián Conrado, two senior figures in the Revolutionary Armed Forces of Colombia (Farc), are clearly a serious blow to the guerrilla organisation. It will now call a halt to the release of hostages held by the Farc in the jungle over many years, a process that had been proceeding slowly under the auspices of the Venezuelan president Hugo Chávez. Freedom in the short term for the former presidential candidate Ingrid Betancourt, in which the French president Nicolas Sarkozy has taken a personal interest, now seems unlikely, and many people believe that she is dying. Hopes of the imminent release of three US defence contractors have also been dashed.

By all accounts, the midnight attack on the camp of the Farc leaders, a mile inside Ecuadorean territory in the jungle region south of the Putumayo river, was a political decision taken by the Colombian president, Alvaro Uribe, to end the peace process orchestrated by Chávez. Four Colombian politicians, held as hostages by the Farc for the past six years, were released last week and given a royal welcome in Caracas. Reyes had been among those who organised their freedom. Killed at the age of 59, Reyes had long been more of a diplomat than a guerrilla commander, though he was often photographed in military fatigues and carrying a gun.

According to the Ecuadorean president, Rafael Correa, the bodies of the Farc commanders and 13 guerrillas were recovered in their pyjamas after being bombed while sleeping in a tent on the Ecuadorean side of the frontier. The Colombian air force, Correa claimed, had used advanced technology "with the collaboration of foreign powers" to locate the camp and "to massacre" its occupants. Uribe's government is a close ally of the United States and of Israel, whereas Correa belongs to the radical camp led by Chávez. Subsequent to the bombing, Colombian troops crossed the frontier into Ecuador to recover the bodies.

Ever since 9/11, the United States has requested the Colombian government to refer to the Farc as a "terrorist" organisation, a word also now used by the European Union. Yet the Colombian guerrillas are the most long-lasting of all such movements in Latin America, long pre-dating the current obsession with "terrorism". Their leader, Manuel Marulanda, first led the Farc in the early 1960s and has survived into the 21st century, while Raúl Reyes had run the organisation's political wing for many years. A well-known negotiator and promoter of the Farc's cause in meetings in Europe and Latin America, Reyes was a crucial collaborator in the recent efforts by the Venezuelan president and the Colombian senator, Piedad Córdoba, to release some of the Colombian hostages.

The Farc has witnessed many changes over the past 40 years, but none of them has affected its ability to survive. One change has been the increasing production in Colombia of the raw material for cocaine and heroin, fuelling the drug markets of the United States and Europe, that was once grown in Bolivia and Peru. Land in Colombia devoted to growing cannabis, coca and poppies has grown fivefold since the 1960s, and the Farc has long provided protection to the rural workers on these plantations, as well as exacting tribute from the drug barons.

Another change has been the growth of paramilitary organisations, first sponsored by the drug barons and then by the state, that have revived the pattern of civil war that has been a particular Colombian phenomenon since the 19th century. Coupled with the growth of the paramilitaries has been the US-designed Plan Colombia, a military aid package first agreed with President Clinton in 1999, that has made Colombia the fifth largest recipient of US aid in the world.

A third change has been the collapse of the Soviet Union, and the corresponding loss of influence of the Colombian Communist Party, once the principal political backer of the Farc. The death in 1990 of Jacobo Arenas, the talented Communist leader, left Marulanda and Reyes as the Farc's sole commanders.

Negotiations between the guerrillas and the government have been a feature of the past 25 years, but an unfortunate experience in the 1980s turned the Farc into a reluctant participant. After a ceasefire in 1984, the Farc was encouraged to establish a legal political party, the Patriotic Union, and to put forward candidates in the elections in 1985. The Patriotic Union was reasonably successful, securing six senators, 23 deputies, and several hundred local councillors. But the outcome was disastrous. After emerging into the open and putting their heads above the parapet, many of the UP supporters were singled out and killed. More than 4,000 left-wing activists and organisers were assassinated in the year after the elections. The guerrillas retired to their safe territories in the rural areas, and vowed not to make the same mistake again. Further negotiations took place between 1999 and 2002, but the government negotiators could not overcome this legacy of mistrust on the part of the Farc. When Uribe became president in 2002, he abandoned all such efforts and embarked on seeking an entirely military solution.

Last year, Uribe came under considerable pressure from within Colombia to make greater efforts to secure the release of the hostages, and this was backed by many governments in Latin America as well as by France. Hugo Chávez took up the challenge, and in spite of non-cooperation from Uribe, he was instrumental in moving the process on. The Farc will soon find new commanders, but the wilful slaughter of Reyes and the other guerrillas in an illegal cross-border operation in Ecuador will put all peace negotiations on hold for a considerable time, which was clearly Uribe's purpose in ordering the strike.

He is now getting more than he bargained for. Chávez has indicated his own personal disgust with the Colombian action by closing the Venezuelan embassy in Bogota and by ordering troops to the border. While still dealing with a powerful internal insurgency, Uribe now faces two angry presidents in two important neighbouring countries, mobilising their armies on his frontiers.

Truce or Bloodbath

Truce or Bloodbath

Ignoring its own people's wishes in attacking Gaza, Israel leaves Hamas no choice but to fight back

By Azzam Tamimi

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recent poll published in the Israeli daily Ha'aretz suggested that 64% of Israelis favoured a negotiated truce with Hamas. But in the past few days, a military onslaught that has so far claimed more than a hundred Palestinian lives, mostly women and children, has made it clear that the Israeli leadership is not interested in any peaceful exit from the current predicament.

The Ha'aretz poll may point to a lack of confidence in the government's ability to settle its problem with Gaza through the use of force, and vindicate those within the military and intelligence community who have been advising the Israeli prime minister, Ehud Olmert to talk to Hamas. A truce as once proposed by Giora Eiland, who served as national security adviser to the former prime minister Ariel Sharon, would entail a reasonable exchange of prisoners and a lifting of sanctions in exchange for a cessation of all hostilities between the two sides. Hamas would, in principle, have agreed to negotiate a truce along these terms. But it seems that Olmert's cabinet has not given up on the idea of bringing Hamas to its knees or finishing it off altogether.

The attack on Gaza comes at a time when all previous means of inciting the Strip's population against Hamas have failed. The sanctions imposed globally on Hamas and the siege that almost suffocates Gaza's 1.5 million inhabitants have neither forced Hamas to accept the three conditions set out by the Quartet (the US, the UN, Russia and the EU) nor convinced the Palestinian population to rise against it.

The enormous resources dedicated to empowering an influential group within Fatah to effect a coup against the legitimate government backfired and finally uprooted that group from the Palestinian political scene. Starving Gaza while the Ramallah-based West Bank authority receives financial and political backing from Israel and its allies in the west has failed to shift Palestinian opinion in favour of President Mahmud Abbas and his prime minister, Salam Fayyad. So, rather than heed the advice of the experts and fulfil the wish of his own public, Olmert has decided to go to war with the Gaza Strip.

Once again Olmert is taking a gamble. He might have been encouraged by the fact that, unlike Hizbullah in Lebanon, Hamas has no immediate regional backers and is less capable of confronting his troops. The rockets fired from Gaza are nothing compared with the missiles Hizbullah used in July 2006.

This is perhaps what encourages senior Israelis officials to threaten the Palestinians with a "shoah" if they continue to defy Israel. It is not clear whether the Israeli deputy defence minister meant to use the Hebrew word for Holocaust when he warned the Palestinians of Gaza. What really matters is that the message has been delivered; this Israeli administration, which has failed to force capitulation on the Palestinians, is willing to use its war machine to burn them alive.

The Israeli establishment is incapable of learning a single lesson from past experience. Hamas, like Hizbullah, and the Palestinians, like the Lebanese, have no choice but to fight back until the Israelis are forced to retreat. Few people thought that Hizbullah could defeat Israel in 2006. Fewer people may think today that Hamas is capable of something similar. They might be surprised. The number of casualties among the Palestinians will, undoubtedly be much higher, but Israelis will die and suffer too. The only way to avoid a bloodbath is for the Israeli army to withdraw immediately from Gaza and negotiate a truce before it is too late.

Silenced in the Barracks

Silenced in the Barracks

By Jessica Pupovac

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The Pentagon fails to protect US troops from sexual abuse.

When military sexual assault survivors call Susan Avila-Smith, she advises them to keep their mouths shut while she works on getting them home.

"It breaks my heart to do that," she says, "but I want to get them out alive and that's my main goal."

Since she left the Army in 1995, Avila-Smith estimates that she has helped about 1,200 rape survivors separate from the U.S. Armed Forces and claim their Veterans Affairs (VA) benefits. As founder of Women Organizing Women, an online support group for survivors of military sexual trauma (MST), Avila-Smith has heard it all. But lately, she's been more sensitive than usual.

"Maria's case has triggered something in me," she says. "I imagine the VAs are filling up right now with women who never even stepped foot in there before."

"Maria" is 20-year-old Marine Lance Cpl. Maria Lauterbach, who disappeared from Camp Lejeune, outside of Jacksonville, N.C., on Dec. 14, 2007, one month before she was expected to give birth. As the local police enlisted the press to help reach out to Lauterbach and solicit information from the local community, it was soon reported that she had recently accused a superior at Camp Lejeune of rape.

Naval Criminal Investigative Service agent Paul Ciccarelli attempted to quell suspicions that the two might be linked, assuring the Associated Press that the "sexual encounter" was "not criminal." On Jan. 10, the Marine Corps Times, a weekly newspaper serving military personnel, bolstered this claim, speculating that she may have fled to avoid charges for "making false statements."

That same day, Lauterbach's accused assailant, Marine Cpl. Cesar Laurean, was scheduled to appear at the Onslow County Sheriff's office for questioning. He never showed up. On Jan. 11, Laurean, who had reported for duty for a full month after Lauterbach's disappearance, failed to do so. His wife told investigators that she believed he had left for Mexico and gave investigators a note written by Laurean that said Lauterbach had slit her own throat with a knife, and he then buried her. Detectives have rejected that claim, and an autopsy found that Lauterbach died of a blunt force trauma to the head.

Later that day, her charred body was uncovered in a shallow grave behind the Laurean home. The horrific discovery took place only weeks before she was to testify against Laurean.

The drama set off a media frenzy, with updates on the cross-border manhunt constantly flashing across CNN tickers. Radio and talk show hosts, meanwhile, dissected Lauterbach's character and credibility and questioned the delayed military response.

But Avila-Smith wasn't surprised. "Unfortunately, the way her case was handled is the norm," she says.

The Lauterbach case, according to Avila-Smith and many others, exemplifies the "criminal failure" of all branches of the military to address sexual assault for what it is-a violent crime. It is a "broken system" that she says puts victims on the defense, grants immunity to assailants and, in the end, puts rape survivors who have the courage to speak out, in even greater danger than if they had just accepted the abuse as collateral damage in their military careers.

Missing the Mark

In 2003, a firestorm of media reports and investigations, prompted by an anonymous whistleblower at the Air Force Academy, exposed the prevalence of sexual assault in the armed forces and its training centers. That same year, the results of a study conducted by Dr. Anne Sadler of the Iowa City VA Medical Center found 28 percent of female veterans having suffered MST while on active duty.

In response, Congress called on the Department of Defense to overhaul its approach to sexual assault within its ranks. The 2005 defense authorization bill mandated the creation of the Sexual Assault Prevention and Response Office (SAPRO), which, according to its website, has since served as "the single point of accountability and oversight for sexual assault policy."

SAPRO has made many strides in fine-tuning the Uniform Code of Military Justice and encouraging MST reporting. It has held a range of workshops, trainings and outreach campaigns to define and denounce sexual assault. It also has set up a website to educate service members on how to deal with-and deter-the crime. At the same time, Sexual Assault Response Coordinators (SARCs) and victim advocates have been stationed on every major base to coordinate victims' services.

However, according to many women, the reforms are missing the mark.

Former Army Pvt. 1st Class Jessica Doe, who prefers that her last name remain confidential, says that after she was raped by an instructor at Fort Eustis, Va., the SARC "blew it off like it was nothing." Jessica pressed charges anyway, but says all that came of her search for justice was "rumors, scorn and lack of friends within my own unit." The instructor was verbally reprimanded.

"I lost my benefits and everything," she says. "I lost my career because the Army was going to be my career."

Interrogators, Not Investigators

A 2004 survey of U.S. service members conducted by the Pentagon's Advisory Committee on Women in the Services found fear of repercussions to be the number one "perceived barrier" to reporting sexual abuse, noted by 81 percent of female respondents and 73 percent of male respondents.

Confidentiality, career-related concerns and distrust of leadership were also cited by a majority of rape victims.

Marine Cpl. Brittany Thornton says a member of her unit in Okinawa, Japan, raped her on Christmas Day 2005. She reported the incident right away, pressed charges and was put on antidepressants, which she says her commanding officer saw as reason to remove her from her post in weapons maintenance and assign her to a desk job.

"They revoked all of my certification," she says, "even though my psychiatrist said the drugs wouldn't affect anything." As a result, Thornton was unable to go on deployments, while her alleged assailant was "traveling all over the Pacific."

"I felt like I was being punished," she says. "I think it was just a way for them [the chain of command] to make things difficult for me because they didn't believe me."

The administrative position, however, gave her access to court documents and allowed her to look up her own file. Thornton says she was appalled at what she found.

The CID (or Criminal Investigation Division) agent in her case had taken the liberty to completely revise her account of the assault. "She made it sound like I told her that we went out and got drunk and had sex and I didn't really want to, and afterwards I regretted it," she says. "It was nothing like what I had [actually] said." Meanwhile, her case "went nowhere," she says, and her assailant eventually received nothing more than a "slap on the wrist."

"A Different Truth"

Former CID agent Sgt. Myla Haider told In These Times that Thornton's case is not rare. "If there was an adequate response to begin with, it might have made it to court and gotten prosecuted," she says, "but [Thornton's case] wasn't anything unusual from what I've seen."

Haider has investigated dozens of rape cases and says she almost always encountered a pervasive "attitude toward victims," that guarantees the failure of the case.

"The investigators themselves," Haider explains, "when working on cases, tended to focus on reasons a victim could be lying." She described seeing "tag team interviews," in which "one agent after another is sent in there to 'get the truth' out of the victim."

"On occasion, that results in the victims becoming very upset," she added, describing one case in which a victim "went running out of the office and declined to cooperate any further."

Every MST survivor interviewed for this investigation told a similar story.

"My CID wasn't an investigator, he was an interrogator," says Pvt. S. Clark, of North Carolina, who preferred her first name not be used. "The thing that I remember is him leaning over the desk, with his cigarette breath, screaming at me, 'Why won't you admit that it was rough, consensual sex between two drunken adults?'"

Clark's attacker had beaten her so badly that, months later, she began having seizures, which her doctors attributed to "cranial tearing." Still, she says, the CID agent "made me feel as if I had dishonored my army and my country by speaking out against another soldier."

Sometimes this attitude, says Haider, leads to claims being recanted. "The law enforcement response makes it so that victims don't want anything to do with the investigation anymore," she says.

Even if the victim continues to cooperate despite being re-victimized by law enforcement, the focus on her credibility happens at the expense of collecting relevant testimony, leaving the case little chance of surviving.

While physical evidence is collected according to protocol, Haider says this can seldom prove anything other than intercourse-useful for "stranger rapes," but irrelevant for proving acquaintance rapes, which are the majority of cases.

"CID training does not focus on evidence collection for acquaintance rape situations," Haider says. As a result, "CID agents tended not to take acquaintance rape seriously."

CID spokesman Chris Grey says that since Haider left the command, it has begun "a very comprehensive Sexual Assault Sensitivity Training program."

However, according to Haider, recent data call into question the effectiveness of that training.

According to the Pentagon's "2006 Annual Report on Military Services Sexual Assault," 18 percent of the cases reported in 2004 were thrown out for being unfounded, unsubstantiated or "lacking sufficient evidence," prior to reaching a court martial.

In 2006, the first full year during which the training program had the opportunity to reap results, the proportion of cases thrown out on the same grounds more than doubled, to 37 percent.

Even when cases do result in commander action, that action is rarely ever a criminal justice response.

In 2006, only 292 cases (out of 2,974 reported) resulted in a court martial. Meanwhile, 488 cases resulted in an "administrative punishment," such as a letter of reprimand, a discharge from the military, forced resignation or a reduction in pay or rank.

"The 2005 reforms have done nothing in terms of offender accountability," Haider explains. "There are public service announcements and ad campaigns that say the military has zero tolerance for sexual assault, but the reality speaks a different truth." She said she doesn't believe there are many rapists in the military, but those that are sexual predators learn quickly that they can get away with it and will inevitably go on to attack again.

"They are sending women into combat zones, but not doing what it takes to protect them," she says.

Avoidable Tragedy

Protection, however, is not only a matter of deterring crime through punitive measures. It is also a matter of taking action to protect victims from their alleged assailants after a crime is reported. That responsibility rests in large part with commanders.

Thornton was allegedly left to live in the same barracks as her assailant for a full six months after her assault, despite repeated requests for a transfer.

Sara, a former Airman 1st Class who requested that her full name not be used, says that after her assault in late 2005, she was met with the same indifference.

"I was never granted a protective order, although I asked frequently," she says. "It also took me three months to be granted a new room so that my attacker would not know where I lived. Then they moved me into a room that was closer to his room than the first."

According to Mary Lauterbach, Maria's mother, it's that kind of negligence that may have cost her daughter her life.

Maria Lauterbach had obtained a military order of protection-a feat in itself-but was forced to stay on the same base as her alleged assailant and attend meetings and functions that he would inevitably be at, in spite of her protection order. She was on her way to one such event on Dec. 14, when she was last seen.

Maria's mother is now urging the Marine Corps to take greater steps to remove victims from harms way and put distance between them and their accused assailants.

"We think the Marines could have done more to protect Maria when she made the report," Chris Conard, Mary Lauterbach's attorney, told NBC's "The Today Show." "We know everything was done to protect the accused-perfectly proper. But they could have transferred her to another base, another unit."

"It was an avoidable tragedy," his co-counsel, Merle Wilberding, says.

"The Second Rape"

Leaving survivors in the same place to fend for themselves also leaves them open to the scorn of their fellow soldiers. Many survivors call it the "second rape"-the moment when they realize that not only their command but their platoon, as well, is going to desert them.

Lauterbach told her mother that Laurean was "very popular" on base, and that after filing charges against him, she was harassed and even punched by one of his friends. Someone even keyed her car.

According to Clark, the private from North Carolina, the hardest part of reporting her assault was losing the "spirit of brotherhood" that she previously enjoyed in the Army. "They all hated me and acted like I turned on them personally," she says. "These are the people that if you go to war, you're supposed to stand up and take a bullet for them. [Yet] they are the people that will turn their back on you and call you a whore when you are assaulted."

Others were formally punished for making complaints, and hit with charges for "false reporting," "lewd behavior" or "adultery."

Airman 1st Class Cassandra Hernandez, 20, says three of her fellow airmen gang-raped her during a late-night party at Pope Air Force Base in Fayetteville, N.C., in May 2006. She says she reported the incident and sought all of the help available to her. Nonetheless, she wrote in a letter to the governor of Texas, her native state, "I felt like no one was looking out for my interests."

Hernandez says she stopped cooperating with the investigation when charges were filed against her for "lewd behavior" and "underage drinking." The three men accused of gang raping her were offered testimonial immunity in exchange for cooperating with the prosecution.

After much media scrutiny, however, her commander dropped the lewd behavior charge but still gave Hernandez an administrative punishment for underage drinking.

Independence Needed

According to the Dorothy Mackey, founder of Survivors Take Action Against Abuse by Military Personnel and a former U.S. Air Force captain and commander, the only way to address the epidemic of sexual assault in the military is by establishing an agency, completely independent of the Pentagon, that would be responsible for investigating and prosecuting rape within its ranks.

"The agency would be two-fold," Mackey explains. "One part that deals with nothing but the victims, and another part that has prosecution authority."

Although such an agency may be difficult to fund, she says, it would be in the interest not only of military personnel, but also the civilian world. "When assailants' records are kept clean, they return to the civilian world with no record of violent crime and are kept out of the sex offender registry," she says.

In the civilian world, that is significant. Nearly one in four veterans in state prisons nationwide were sex offenders, compared to one in 10 non-veterans, according to a 2004 Department of Justice report.

Mackey believes the military is incapable of policing itself because she says it glorifies violence and shuns individual rights. And she's not alone in her thinking.

"We espouse violence as the means to all ends," says former Maj. Tyler Boudreau, who resigned from the Marines last year after 18 years of military service, and became an avid blogger and war critic. "It is not curious when the individual soldier or Marine packs that brainwashing home with him to his wife or to the barracks where the females live."

Although Boudreau says he preached the need to treat women with respect, the message was overwhelmed by the glorification of violence as a means to establish dominance, for both a man and a nation. That message, he says, transferred into an "intensely chauvinistic" atmosphere.

According to ex-CID agent Haider, the chauvinist culture might explain quite a bit. "Rape is not taken seriously enough in the military because it is a crime that affects primarily women-and women are still not taken seriously in the military," she says. "There is a lot more sympathy if the victim is a man because most agents are male and they can relate to the violation. They are horrified by that. But when it's a woman, it's the opposite. Their attitude is almost contemptuous."

But she hopes that will change.

So does former Pvt. Jessica Doe. "What happened to Maria Lauterbach was a worst-case scenario, but I know she wasn't the first to lose her life like that," she says. "I just hope that her loss will open more people's eyes and help us to make a change."

Maria Lauterbach was buried with full military honors on Feb. 2, with her dress blues placed in her casket. Her unborn son, whom she had decided to name Gabriel, was buried beside her in a small, silver casket.

Approximately 900 people attended the funeral service in Maria's hometown of Vandalia, Ohio. Among them was Marine Lance Cpl. Robin Kahle, who drove 900 miles round trip to place her own Good Conduct Medal on Maria's casket. She then paid her respects by reporting her own rape to a high-ranking Marine participating in the service.

"It was a very respectful service," says Avila-Smith, who traveled from her home in Seattle to represent the thousands of military sexual trauma survivors moved by Maria's story, "and a real wake up call."

The Low-Income Homeowner Tax

The Low-Income Homeowner Tax

By Dean Baker

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Forget about trying to get more kids health care insurance by expanding SCHIP or increasing government funding for child care. The new way the politicians plan to help moderate-income families is to have them pay a special 18 percent income tax to live in a home in which they have no equity.

Here's the deal. As we know, millions of moderate-income families are facing foreclosure on their homes because they have mortgages that they can't afford and they live in homes that are worth less than the amount on their mortgage. This is a situation where the banks would ordinarily take a huge hit since they have no hope of recouping anywhere near the amount owed on the mortgage when the home goes through the foreclosure process.

But the politicians are coming to the rescue. They want the government to step in and either guarantee or directly issue new mortgages to these homeowners. When these new mortgages are issued to pay off most or all of the prior mortgages, they will be giving the banks far more money than they can reasonably hope to get if the houses had gone through the foreclosure process.

This can be viewed as bad policy because it is giving tens of billions of taxpayer dollars to the truly rich. But it should be viewed as even worse policy because it is effectively taxing millions of low- and moderate-income families to live in homes in which they have no equity. This low-income homeowner tax can be demonstrated with simple arithmetic.

Typically, houses sell for about 14 times as much as what it would cost to rent the same unit for a year. The run-up in house prices in the bubble raised the ratio of sale price to annual rent to more than 20 to 1. While prices have begun to fall, in many areas the ratio of sale price to annual rent is still more than 20 to 1.

Working from this ratio, it is easy to see homeowners are almost certainly paying far more to stay in their houses than it would cost them to rent the same home, and these excess payments are a large share of their income.

Suppose a moderate homeowner gets a 6 percent mortgage, and then pays an additional 1 percent of the sale price each year on both tax and maintenance. This means their costs of "owning" the house is equal to 8 percent of the sale price, not counting any payments of principle on the mortgage. Since the rent of the home is just 5 percent of the sale price, the homeowner is paying 60 percent more in housing costs each year than they would if they were a renter.

Let's put numbers in this story. Suppose the house would sell for $200,000. The 20 to 1 sale to rent ratio implies it would rent for $10,000 a year or $830 a month. Instead, this homeowner is paying $12,000 a year in interest, $2,000 a year in taxes and $2,000 a year in maintenance for a total of $16,000 a year, or $1,330 per month.

This additional $6,000 a year in housing costs is likely to be large relative to the family's income. Housing costs average 30 percent of disposable income, so this sum would be equivalent to an 18 percent tax on the family's disposable income. This sum is also roughly what it would cost to insure two kids for a year, and more than enough to pay for child care for a kid for a full year.

Paying extra to own, rather than rent, a home could make sense if the homeowner was accumulating equity in the house. However, this is almost certainly not the case. House prices are falling rapidly and will likely to continue to fall until the overhang from the housing bubble is eliminated. The vast majority of moderate-income homeowners facing foreclosure will never see a dime in equity on their home. In other words, the excess housing payments are basically just a tax that gives no return whatsoever to these homeowners.

It is truly bizarre we are struggling to find ways to pay for health care and child care for kids in low-income families at the same time the government is encouraging these families to throw large amounts of money away so they can be called homeowners. Many of these families will still need help for their kids, but they would need much less if we ended the 18 percent homeowner tax. We need a housing policy designed to give people decent housing, not to fulfill ideological commitments to an "ownership society."

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer ( He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues. You can find it at the American Prospect's web site.

Does Labor Need More Clout?

Does Labor Need More Clout?

By Robert B. Reich

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We're finally reaping the whirlwind of widening inequality. A recession looms because most consumers are at the end of their ropes and can't buy more. Median hourly wages, adjusted for inflation, are no higher than what they were three decades ago. Since then, most of what's been earned in America has gone to the richest 5 percent. But the rich won't buy much more because they already have most of what they want - after all, that's what it means to be rich.

There's no magic bullet for reversing the trend toward widening inequality. Surely, better schools for children from poor and lower-middle class communities are part of the answer. So is a bigger refundable tax credit - in effect, a cash supplement - for working families. Both should be financed by a higher marginal tax rate on the rich.

But an additional part of the solution - rarely talked about these days - is stronger labor unions. This is especially true for low-paid workers in local service occupations, such as retail workers, hotel and restaurant employees, and people who work in hospitals. If they were unionized, they'd have the bargaining leverage they need to get better wages. They'd also have a voice for suggesting to management better ways of delivering services - often improving productivity enough to cover the higher pay.

But it's been difficult for low-wage workers to organize themselves into unions. Employers often fire or intimidate those who take the lead. While it's illegal to do so, the penalty for employers who get caught is in effect a slap on the wrist. Charges of illegal dismissals take years to wind their way through the National Labor Relations Board. And even when the board finds that an employer acted illegally, the worst that can happen is the worker has to be rehired and given back pay that was lost.

A half century ago, most employers obeyed the law and allowed workers to organize. In the 1950s, the board found only one of every 20 union elections marred by illegal firings. But as competition heated up in subsequent decades, employers have felt increasing pressure to cut wages. So union-busting became common. By the early 1990s, according to government data, illegal dismissals occurred in one of every four union elections. Nowadays, even though polls show most workers would organize a union if they could, the process is so complicated that it's rare they even get to choose.

Even employers who should know better are fighting unions. Take the St. Joseph's Hospital System, for example. It's a huge, 14-hospital enterprise with 21,000 employees, including hospitals in Santa Rosa and in Orange County. The system is owned by an order of nuns who have distinguished themselves in the past with their support for civil rights and social justice, including marching along with Cesar Chavez and the farm worker's union and backing the service employees' union "Justice for Janitors" campaign in the 1980s.

But when it comes to its own workers, St. Joseph's has dug in its heels. Workers have been trying to organize there since 2004, and the outmoded NLRB process hasn't protected them. The NLRB found St. Joseph's employees had been "threatened with adverse consequences" for supporting a union. But St. Joseph's still won't even negotiate with its employees a process for holding a fair union election. I've spoken with the chief executive, Deborah Proctor, and with Sister Katherine Gray, chair of the St. Joseph Health System. Both insist that their workers "don't need a union" because "we take good care of them."

That's not what I've heard from St. Joseph employees. Of course, it's not unusual for management and labor to have different views. That's one way a union can be helpful to management. It gives employees enough security to feel free to share their candid views. Such sharing is also good for customers - such as hospital patients - because front-line workers often know more about how people are being treated, and how treatment can be improved, than does top management.

Hospital workers are among the lowest-paid and hardest-working people in America. They deserve a union. But the old NLRB process won't even get them a fair hearing because it's so broken. That's why workers at St. Joseph's - like so many other workers across America - are seeking a fairer process for union elections.

The "Employee Fair Choice Act," which recently passed the House of Representatives, would let workers have a union if a majority wants one, in a simple up-or-down vote. St. Joseph's workers aren't even asking that much. They just want an arbitrator, chosen by both management and labor, who'd help both sides quickly resolve any conflicts along the way to a vote. So far, St. Joseph's management says no.

The American economy is in trouble largely because lower and middle-income workers no longer have the buying power they need to keep it going. Inequality is wider now than it's been in more than 70 years. Unions could help reverse this trend. But if even an order of nuns can stop workers from forming one, we've got a very long way to go.

I Was Kidnapped by the CIA

I Was Kidnapped by the CIA

By Peter Bergen

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Inside the CIA's extraordinary rendition program and the bungled abduction of would-be terrorists.

Map of CIA Rendition Flights
(Photo: Trevor Paglen and John Emerson)

For hours, the words come pouring out of Abu Omar as he describes his years of torture at the hands of Egypt's security services. Spreading his arms in a crucifixion position, he demonstrates how he was tied to a metal door as shocks were administered to his nipples and genitals. His legs tremble as he describes how he was twice raped. He mentions, almost casually, the hearing loss in his left ear from the beatings, and how he still wakes up at night screaming, takes tranquilizers, finds it hard to concentrate, and has unspecified "problems with my wife at home." He is, in short, a broken man.

There is nothing particularly unusual about Abu Omar's story. Torture is a standard investigative technique of Egypt's intelligence services and police, as the State Department and human rights organizations have documented myriad times over the years. What is somewhat unusual is that Abu Omar ended up inside Egypt's torture chambers courtesy of the United States, via an "extraordinary rendition" - in this case, a spectacular daylight kidnapping by the Central Intelligence Agency on the streets of Milan, Italy.

First introduced during the Clinton administration, extraordinary renditions - in which suspected terrorists are turned over to countries known to use torture, usually for the purpose of extracting information from them - have been one of the cia's most controversial tools in the war on terror. According to legal experts, the practice has no justification in United States law and flagrantly violates the Convention Against Torture, an international treaty that Congress ratified in 1994. Nonetheless, Congress and the American courts have essentially ignored the practice, and the Bush administration has insisted that it has never knowingly sent anyone to a place where he will be tortured.

But Abu Omar's case is unique: Unlike any other rendition case, it has prompted a massive criminal investigation - though not in the United States. An Italian prosecutor has launched a probe of the kidnapping, resulting in the indictment of 26 American officials, almost all of them suspected cia agents. It has also generated a treasure trove of documents on the secretive rendition program, including thousands of pages of court filings that detail how it actually works. Late last year, I traveled to Milan to review those documents and to Egypt, where Abu Omar now lives. What I found was a remarkable tale of cia overreach and its consequences - a tale that could represent the beginning of a global legal backlash against the war on terror.

An avuncular, portly man in his mid-40s clad in a turban and a floor-length blue robe, Abu Omar met me at a corner store near his home, the first time he had agreed to talk to an American magazine reporter. He took me to his tidy, cramped apartment near Alexandria's run-down Victorian rail station. The walls were bare other than some religious calligraphy. The screen saver on his computer was a picture of Mecca.

Abu Omar, whose full name is Hassan Mustafa Osama Nasr, served me pungent coffee and sugary biscuits prepared by his unseen wife. Then, leaning forward in a massive gilded chair, he told me how in the weeks before the March 2003 invasion of Iraq, he'd felt he was being watched and followed as he walked the streets of Milan, where he'd been granted political asylum in 2001 following an earlier spell of imprisonment and torture in Egypt. A member of Egypt's militant Islamic Group and a part-time cleric, he had been waging a public campaign against the impending war; Italian authorities had been investigating his circle of acquaintances since mid-2002 and believed he might have been recruiting fighters to go to Iraq, a charge he denies.

A little before noon on February 17, 2003, Abu Omar was headed to his mosque, incongruously located inside a garage. He strolled down Via Guerzoni, a quiet street mostly empty of businesses and lined with high, view-blocking walls. A red Fiat pulled up beside him and a man jumped out, shouting "Polizia! Polizia!" Abu Omar produced his ID. "Suddenly I was lifted in the air," he recalled. He was dragged into a white van and beaten, he said, by wordless men wearing balaclavas. After trussing him with restraints and blindfolding him, they sped away.

Hours later, when the van stopped, Abu Omar heard airplane noise. His clothes were cut off and something was stuffed in his anus, likely a tranquilizing suppository. His head was entirely covered in tape with only small holes for his mouth and nose, and he was placed on a plane. Hours later he was hustled off the jet. He heard someone speaking Arabic in a familiar cadence; in the distance, a muezzin was calling the dawn prayer. After more than a decade in exile, he was back in Egypt.

Abu Omar was taken into a building, put in a blue prison suit, freshly blindfolded, and presented to someone described as an important pasha, or government official. The pasha said he'd be released if he'd go back to Italy to spy on the militants at his mosque. He said no.

And so began Abu Omar's descent into one of the 21st century's nastier circles of hell. His cell had no lights or windows, and the temperature alternated between freezing and baking. He was kept blindfolded and handcuffed for seven months. Interrogations could come at any time of the day or night. He was beaten with fists, electric cables, and chairs, stripped naked, and given electric shocks.

His tormentors' questions largely revolved around his circle of Islamists in Italy, though every now and again they'd indicate that they knew he wasn't a big-time terrorist. They were detaining him only because "the Americans imposed you on us." When he asked, "Why, then, do you abuse me so much?" they replied, "This is our family tradition."

In the fall of 2003, Abu Omar was taken to another prison; it was here that he was crucified and raped by the guards. After seven more months of torture, a Cairo court found there was no evidence that Abu Omar was involved in terrorism and ordered him freed. He was told not to contact anyone in Italy - including his wife - and not to speak to the press or human rights groups. Above all, he was not to tell anyone what had happened.

After agreeing to the conditions, he was deposited at his mother's home in Alexandria. He promptly called his wife in Italy. It was the first time she'd heard from him in 14 months. Italian investigators, who'd been monitoring Abu Omar's phone in Milan for years, recorded the call. His wife asked him how he had been treated. He told her sarcastically, "They brought me food from the fanciest restaurant," though nearly three weeks later, he admitted to her, "I was very close to dying." He also spoke with a friend in Milan, Mohamed Reda El Badry, whose phone was also being tapped by Italian investigators. "I was freed on health grounds," he told El Badry in one of the recorded calls. "I was almost paralyzed; still today I cannot walk more than 200 yards.... I was incontinent, suffered from kidney trouble."

And then, just as suddenly as Abu Omar had reappeared, he vanished again. Egyptian authorities had gotten wind of his calls to Italy. This time he was imprisoned for three years. He smuggled out a letter describing his ordeal, which found its way to the Arab and Italian press and international human rights organizations. Inevitably, that led to more torture.

Was it illegal for American officials to send Abu Omar to Egypt? Yes, according to the United Nations Convention Against Torture, which prohibits delivering someone to a country where there are "substantial grounds" to assume that he might be tortured. Were there substantial grounds to believe that transferring Abu Omar to Egypt would result in his being tortured? Plenty, according to a State Department report that detailed the methods used by Egypt's security services during the year that Abu Omar was abducted and confined, including stripping and blindfolding prisoners; dousing them with cold water; beatings with fists, whips, metal rods, and other objects; administering electric shocks; suspending prisoners by their arms; and sexual assault and threats of rape.

The White House has routinely claimed that when the United States renders individuals to other countries it receives assurances that, as President Bush stated at a press conference in March 2005, "they won't be tortured...This country does not believe in torture." Several months later, Secretary of State Condoleezza Rice reiterated, "The United States has not transported anyone, and will not transport anyone, to a country when we believe he will be tortured."

But in the case of Abu Omar, Rice's assertions are demonstrably false. According to a previously unpublished study conducted by Katherine Tiedemann of The New America Foundation and myself, the same is true of many of the extraordinary renditions going back to the program's beginnings in 1995. (See "Rendition by the Numbers," below.) Fourteen documented extraordinary renditions took place under the Clinton administration. Almost all of those prisoners were rendered to Egypt, where at least three were executed. After 9/11 the pace of renditions sped up and the program expanded dramatically. Prisoners were now also transferred to Jordan, Yemen, Morocco, Algeria, and even Libya, Sudan, and Syria. In all, we found 53 documented cases of extraordinary rendition since September 2001; only one prisoner specifically said he had not been tortured. Of the sixteen men who have been released, eight claimed they were tortured and/or mistreated while in foreign custody; one died within weeks of being released. Nineteen of the rendered men have not been heard from since they disappeared.

Brad Garrett is a former fbi special agent who obtained uncoerced confessions from two of the most high-profile terrorists in recent American history: Ramzi Yousef, who bombed the World Trade Center in 1993, and Mir Aimal Kasi, who shot and killed two cia employees outside the Agency's headquarters the same year. "The whole idea that you would send anyone to some other country to obtain the intel you want is ludicrous," he told me in an email. "If we want the intel, there are approaches that will render the information without torture. The problem is that someone in the U.S. government is convinced that torture is the way to go, and so if we are not allowed to do it, then send them to someplace where torture is sanctioned."

The extraordinary rendition program was not primarily intended to yield information, according to Michael Scheuer, the cia official whom the Clinton White House tasked with implementing it. "It came from an improvisation to dismantle these terrorist cells overseas. We wanted to get suspects off the streets and grab their papers," Scheuer explains. "The interrogation part wasn't important." He also claims that the program was overseen by congressional committees and "was lawyered to death." After 9/11, "The White House was desperate," Scheuer says. The rendition program quickly expanded because holding any but the most important Al Qaeda prisoners was a "burdensome proposition" for the Agency.

"Before 9/11 we never asked for some guarantee that prisoners would not be tortured or coerced," says Scheuer. The Bush administration says it has since sought such assurances, but Garrett, the interrogator, thinks those promises are worthless in any case. "In my view it is a shell game and a legal cya to say that the other country (Egypt - give me a break) will not use torture," he wrote. "We are unfortunately promoting terrorism by using these abhorrent approaches. Shame on us."

Milan's slate-grey skies glower over the city in both summer and winter, and charmless skyscrapers dominate the skyline of the financial, media, and fashion capital of Italy. It's an unlikely setting for the operatic tale of Abu Omar's cia kidnappers and their nemesis, Deputy Chief Prosecutor Armando Spataro.

Spataro may have launched the first-ever criminal case against American officials over an extraordinary rendition, but he's hardly a bleeding-heart Euro-liberal. A prosecutor for more than three decades, the affable 59-year-old has put droves of drug traffickers, mafia dons, and terrorists behind bars. When I asked him if he was anti-American, he laughed and asked, "What do you think?" gesturing around his massive office inside the gloomy, Mussolini-era Palace of Justice. The walls were festooned with photographs of marathons he has run in the United States, certificates of appreciation from the Drug Enforcement Administration, and reproductions of paintings by Warhol, Rockwell, and Hopper.

Spataro had been building a potential terrorism case against Abu Omar for months before his kidnapping; as a result of his investigation, a number of Abu Omar's acquaintances were convicted of terrorism offenses and in 2005 Abu Omar himself was indicted in absentia on charges that he had been recruiting fighters to go to Iraq. But his sudden disappearance into the bowels of Egypt's prisons had set back Spataro's probe dramatically.

I asked Spataro why he'd pushed so hard to investigate the snatching of a militant he himself was about to indict. In measured tones, he explained, "Kidnapping is a serious crime. It is important for European democracy that all people are submitted to the law. It is possible to combat terrorism without extraordinary means."

The prosecutor also didn't appreciate being lied to - American officials had let it be known around Milan that Abu Omar had likely fled to the Balkans. It didn't take Spataro long to get past the smoke screen and even track down an eyewitness to the abduction. But the bulk of his case would revolve around a rookie mistake made by the kidnappers: using cell phones, and unencrypted ones at that. Spataro's investigators reviewed the records from three Italian cell phone companies with relay towers in the vicinity of where the Egyptian militant disappeared and ran them through a commercial data-crunching program. Of the more than 10,000 cell phones in use during a three-hour window around the kidnapping, 17 were in constant communication with each other. The investigators also determined that soon after the abduction, some of the cell phones' users traveled to Aviano Air Base, a major American installation several hours east of Milan. And virtually all of the phone numbers stopped working two or three days after the abduction.

The suspicious cell phones had made calls to the American consulate in Milan and to numbers in Virginia (where the cia is headquartered). The phones, most registered under bogus names, also made many calls to prominent hotels in Milan - hotels where, the Italian investigators found, a dozen Americans had stayed in the weeks before the kidnapping. They registered under addresses in the Washington, D.C., area, and Spataro believes they used their real passports. Their movements matched those of the suspicious cell phones. Over the course of several weeks the Americans had blown more than $100,000 on easily traceable credit cards at hotels such as the Principe di Savoia, where rates start at $345 a night and which offers a special room-service menu for dogs. Others took side trips to Venice, where they stayed at the five-star Danieli and Sofitel hotels.

If the Americans had only used encrypted satellite phones and paid in cash - standard tradecraft, according to cia veteran Robert Baer, the former operative who was the model for George Clooney's character in Syriana - Spataro would have had fewer leads to follow. Why the sloppiness? Very probably, say law enforcement sources in Milan, because the Americans had clued in senior Italian intelligence officials about their plans and thus felt safe.

Next, Spataro's investigators began reviewing records from Italian air-traffic control, nato, and the main European air-traffic facility in Brussels. They discovered that a 10-seat jet departed from Aviano a few hours after Abu Omar was abducted and flew to Ramstein Air Base in Germany. An hour after it landed, an Executive Gulfstream with the tail number N85VM departed Ramstein for Cairo. In March 2005, the Chicago Tribune reported that this jet was owned by Phillip Morse, a partner in the Boston Red Sox and one of a number of individuals whose planes are occasionally rented by the cia.

One of the suspicious cell phones had made hundreds of calls in the vicinity of both the Milan residence and the country house of the cia's station chief in Milan, Robert Lady. Armed with a warrant, Spataro's investigators searched Lady's country house in June 2005 and found that he'd gone on a 10-day trip to Cairo a week after Abu Omar's abduction. The investigators also found surveillance photos of Abu Omar taken on the street where he was picked up, as well as printed directions to Aviano Air Base. And they discovered a telling email sent to Lady from a former colleague in the Milan consulate: On Christmas Eve, 2004, as Spataro's inquiry was gathering momentum, she told Lady she'd received an email "through work" titled "Italy, don't go there" - an apparent reference to the investigation. She'd also heard that Lady, who has since retired, had relocated to Geneva "until this all blew over."

Even Arianna Barbazza, the court-appointed public defender for 13 of the 26 American officials indicted in the Abu Omar case, conceded that the case against Lady and his colleagues is substantial. Lady could receive a sentence of up to 15 years. (The trial is scheduled to start in March, although none of the indicted Americans is expected to show up. The cia has refused to comment on the case or its rendition program.)

Another important break came when Luciano Pironi, the mysterious Italian police officer who had first "arrested" Abu Omar on the street, began to cooperate with Spataro. Prior to Abu Omar's arrest, Pironi was found to have been "frequently and intensely" in contact with Lady. Pironi said that Lady had told him that the operation was approved by the Italian military-intelligence agency, sismi, and that Lady had received a tip that Abu Omar was planning to hijack a school bus operated by the American school in Milan - a claim Italian law enforcement officials say is false.

Lady, who speaks fluent Italian and had good relations with his local counterparts, emerges from this tale as something of a tragic figure. He had opposed the snatch of Abu Omar on the grounds that it was counterproductive; he knew that Italy's counterterrorism police had been trying to build a case against the Egyptian militant and had even warned a top Italian counterterrorism official, Stefano D'Ambrosio, that the cia was planning the Abu Omar operation. D'Ambrosio told Italian investigators that Lady considered the whole scheme "stupid." But Lady was forced to lead the operation by his bosses in Rome and Langley, who were under intense pressure from the White House to produce results in the war on terrorism. Lady told Pironi that he'd never have spent all his savings to buy a retirement house in the Italian countryside "unless he had been sure that no inquiry against him was under way."

Today, that house has been seized by Italian authorities and Lady, who fled to the States, is the subject of a Europe-wide arrest warrant. In a final twist of irony, Lady told a friend in the Italian police that in his retirement he'd hoped to work for a firm made up of former cia officers who specialize in negotiating releases for people abducted in South America.

In february 2007, Abu Omar was finally released - this time, it seems, for good. "Without the human rights and media campaign, I would still be in prison," he told me. The conditions of his release were that he stay in Egypt and keep quiet about his treatment. But realizing that notoriety might be his best protection, Abu Omar attended the trial of a 22-year-old blogger whom the Egyptian government accused of insulting President Hosni Mubarak. (He was sentenced to four years.) In the Alexandria courtroom, he paraded his scars before the cameras and talked about his years of torture. "Now I am a public figure," he told me. "It protects me."

Jobless and still monitored by Egypt's security services, Abu Omar now spends most of his time cruising the Internet and posting occasional comments on Arabic-language newspaper sites. Toward the end of our interview he pulled out a plastic bag stuffed full of Christmas cards with pictures of windmills and little red robins sent by people in the United Kingdom who'd learned about his case through a letter-writing campaign organized by Amnesty International. He told me he is happy that these kind people write, sending the message that someone out there knows he hasn't disappeared.

Rendition by the Numbers

Much about the cia's extraordinary rendition program remains unknown. But a review of reports from human rights organizations, legal observers, and the media shows its recent expansion and a pattern of abuse. -P.B.

1995 TO SEPTEMBER 11, 2001

14 known extraordinary renditions

12 prisoners sent to Egypt

3 prisoners executed in Egypt

1 prisoner has been released


53 known extraordinary renditions

9 prisoners sent to Syria

9 sent to Jordan

7 sent to Egypt

7 eventually sent to Guantanamo

19 prisoners' current situation is unknown

16 prisoners have been released

8 of those released say they were tortured

1 says he was not tortured

Pentagon to test invisible gases in Crystal City

Pentagon to test invisible gases in Crystal City

The Pentagon is scheduled to release an odorless, invisible, and yes, harmless, gases into the city Thursday to test how quickly they spread through buildings, officials said.

The test is part of the military's national security preparation for the capital area.

Over the past few years, the defense agency has worked with Arlington County to set up chemical sensors throughout the county, where thousands of defense employees work in leased office space.

The Pentagon has also supplied the sensors and accompanying monitoring equipment to Arlington for the county's own use.

"Within minutes, if someone attacks the Pentagon, it becomes a problem for Arlington," Pengtagon Force Protection Agency Director Paul Benda said.

The sensors scan broad areas, Benda said.

If weather cooperates, the Pentagon will release perfluorocarbon tracers, which are commonly used commercially to detect leaks, and sulfur hexafluoride, a common window insulator filling, near the Jefferson Plaza building at 10am on Thursday and Friday.

Officials in yellow vests will set up 80 battery-operated samplers - toolbox-looking cases with 12 air tubes inside of them - throughout Crystal City and will check the air samples in the tubes afterwards to evaluate how quickly and how high the gases spread.

The data will help the Pentagon and Arlington shape their lockdown policies for chemical and biological attacks or accidents, and will also help them determine the most effective locations for sensors.

"We want to place our sensors so we can detect this stuff as quickly as possible," Benda said.

The test, dubbed "Urban Shield: Crystal City Urban Transport Study," is similar to one conducted in Manhattan a few years ago, officials said.

US gasoline consumption falls hardest in 16 years

US gasoline consumption falls hardest in 16 years, excepting Katrina

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Credit and cash-strapped Americans are beginning to curb their expenses on gasoline as prices continue their upward rise, new government figures show.

In the last six weeks, US gasoline consumption has fallen 1.1% from 2007, despite the ever-present increase in cars on the road -- the largest drop in 16 years, excepting declines that followed 2005's Hurricane Katrina.

Fearing inflation, investors have poured money into commodities, pushing oil prices close to their adjusted value high of $103.76 in 1980, a paid-restricted article in the Wall Street Journal Monday notes.

"As refiners pay more for the oil they use, gasoline prices have gained sharply in recent weeks to an average of $3.13 a gallon in the week ended Feb. 25, up 40% from $2.24 a gallon in January 2007," adds the Journal. "That's stoking worries that prices will rise even more sharply as demand gets a boost from the approaching vacation season, when more Americans take to the road. Some experts predict gasoline could cost as much as $4 a gallon this summer."

The rising price of gasoline has also pushed some consumers into fuel-efficient vehicles.

"Pinched consumers also are speeding up their shift to more fuel-efficient cars," the article notes. "Sales of large cars dropped by 2.6% in 2006 and by 10.5% in 2007. In January, they plummeted 26.5% from a year earlier, according to Autodata Corp.

Dealers are also selling fewer minivans and large SUVs. Small car sales in January were up 6.5% from 2007, according to a survey by Autodata, the article notes.