Friday, August 15, 2008

Who Orchestrated the Fall of Bear Stearns?

The Bear Stearns Conspiracy

By Nicholas von Hoffman
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This is one scandal the National Enquirer has not reported. No babies with mystery fathers, no former vice presidential candidates cowering in a hotel basement to escape the paparazzi.

This scandal, relegated to the business pages if covered at all, is un-juicy compared to l'affaire Edwards, with a wife betrayed, children humiliated, hypocrisy exposed -- it is a small wonder, after the ethical hemming and hawing, that the big-time publishers and broadcasters jumped in to take part in the fun.

Yet, entertainment value aside, the Edwards scandal directly affected almost nobody but the Edwards family and a few disillusioned followers. The Bear Stearns conspiracy scandal affected and continues to affect tens of thousands of people in all sorts of ways.

As the story lacked prurient interest, it was left to Bloomberg.com to unearth persuasive information that the Wall Street firm was seemingly brought down by a conspiracy that netted its participants a profit of upwards of $250 million on an investment of $1.7 million in a week or so. Nice work, if you can get it.

The putative conspirators, whose name or names have not been made public, pulled off their heist with ease. They bought a bunch of what Wall Street calls "puts." A put is a piece of paper guaranteeing its owner the right to sell 100 shares of stock at a stated price within a specified period of time. In the case of this bank job, the period of time was as little as five days.

With Bear Stearns stock selling at over $60 a share, somebody bought the right to sell almost 6 million shares at $30 a share. To make money on these puts, the price of Bear Stearns stock would have to lose more than half its value fast. In fact, in the days immediately after the unknown person or persons bought all those puts, Bears Stearns stock dropped like a duck shot out of the sky, to a price of $10 a share or less. The persons behind the scheme then bought Bear Stearns shares at $10 or less and exercised the puts, thereby selling them for $30 and pocketing the difference.

How could someone know that in a matter of days the fifth-largest trading house on Wall Street would see the value of its stock drop to next to nothing?

"Even if I were the most bearish man on earth, I can't imagine buying puts 50 percent below the price with just over a week to expiration," says Thomas Haugh, general partner of Chicago-based options trading firm PTI Securities & Futures LP, cited by Gary Matsumoto of Bloomberg. "It's not even on the page of rational behavior, unless you know something."

Then with the price of stock still above $50, somebody bought puts giving them the right to sell the stock at five dollars a share -- which is about what you would expect to be the price of the shares of a company in bankruptcy. Matsumoto quotes one broker as saying, "When you buy $5 strikes [puts] when the stock is trading over $50, you either have to be manipulating, or you have to have insider information." Another broker quoted in his report remarked, "Nobody in their right mind would buy that put unless you knew what was going down."

The timing of the purchase of the puts screams out that a well-placed person inside Bear Stearns was telling someone on the outside of the firm's increasing confusion and division. At a crucial moment when rumors were rife on Wall Street that Bear Stearns customers would not be able to withdraw their money, the stock market was hit by a large number of orders to sell Bear Stearns stock. That augmented the force of the rumors of insolvency already working to depress the price, even as panicky customers fell over one another getting their money out. There are too many disastrous coincidences here to be explained just by bad luck.

The name of the bearer of this bad luck remains hidden. A spokeswoman for the Chicago Board of Options Exchange, where the puts were bought, has refused to tell Bloomberg the name.

We know the name of the mother of the baby John Edwards did or did not sire, but we are in the dark as to who may have authored the scheme that cost thousands of people their jobs and their savings and that gave the financial markets a major kick down the mountain, a fall that will continue to take millions of us with them.

Wal-Mart sees slowdown spreading

Wal-Mart sees slowdown spreading

ByJonathan Birchall

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Wal-Mart, the world's largest retailer, said on Thursday it was seeing evidence of the slowdown in US consumer demand spreading to developing markets as customers in its international markets deal with growing food and energy costs.

Lee Scott, CEO, said Wal-Mart was seeing "a global economy that is difficult".

"It started in North America and spread to Europe; the economic difficulties are now showing up in some of the developing countries as well," he said.

"People are eating more sandwiches in Puerto Rico, and relying more on private-label products in the UK. Customers in many areas are buying cheaper cuts of meat for dinner, and, similar to the US, people in other countries are eliminating vactions and entertaining more at home."

The retailer also highlighted concerns over inflation in China, where inflation was running at approximately 8 per cent during the second quarter.

However, Wal-Mart, which operates international stores in Latin America, the UK, Japan and China, said it had increased market share in many of its international markets during its second quarter, while its low-price focus again helped it outperform its retail competitors in the US.

Mr Scott also said Wal-Mart's successful effort to improve its cash flow "would give us the opportunity to participate in things that will benefit Wal-Mart long term" – a reference to possible acquisitions. The company had $4.9bn in free cash at the end of the quarter, from a negative cash position of $773m a year ago.

The retailer reported a 17 per cent increase in earnings for the quarter from its continuing businesses, to 86 cents per share, ahead of its own target, on a 10.4 per cent increase in sales to $101.6bn. Net earnings rose 9.3 per cent to $3.4bn

It also raised its full-year guidance, citing "the underlying strength of our operation", to a range of $3.43 to $3.50 per share, from $3.30 to $3.43.

The company again highlighted tight inventory management at Wal-Mart's US stores, which account for the bulk of its profits, while effective marketing and merchandising reduced the need to dispose of excess goods at sale prices.

Eduardo Castro-Wright, head of Wal-Mart US, acknowleged that US economic stimulus tax rebate cheques had provided a boost for business during the quarter, in which Wal-Mart's US stores saw a 4.6 per cent increase in sales. But he also highlighted moves that had reduced the need for price-cut clearances - including holding inventory growth to just 0.4 per cent during the quarter.

He said the company was also increasing efforts to reduce the impact of higher fuel costs on its supply chain with a range of initiatives aimed at increasing the efficiency of its trucking fleet.

During the quarter, Mr Castro-Wright said Wal-Mart's electronics and pharmacy business had seen strong growth. He also cited improvements in sales in the retailer's previously sluggish clothing and home furnishings businesses.

Internationally, Wal-Mart highlighted the strong performance of its Trust Mart stores in China, and of its stores in Brazil.

On Wednesday, Wal-Mart announced it would invest $1.1bn in 80 to 90 new stores in Brazil next year, where it currently operates 330 stores.

Tom Schoewe, chief financial officer, said the investment represented a shift towards organic growth in Brazil, after the assimilation of its 2004 Bom Preco and 2006 Sonae acquisitions there.

Concern as US inflation jumps

Concern as US inflation jumps

By James Politi

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Thursday’s news of a 0.8 per cent jump in the US consumer price index in July, coupled with a 0.3 per cent increase in the same measure excluding food and energy, could damage – or at least delay – the emerging optimism on inflation.

The recent drop in the price of oil had stoked hopes that inflationary forces could abate more rapidly than previously expected.

This would potentially remove one of the two main threats to economic stability that the Federal Reserve has been trying to balance, along with growth risks, and reduce the pressure from more hawkish members within the US central bank to begin raising interest rates from their current level of 2 per cent.

However, the July data on US consumer prices – which were worse than expected on both the headline and the core measures – suggest inflation will remain a significant source of concern for the foreseeable future.

Zach Pandl, economist at Lehman Brothers, said he remained “comfortable” that inflation would ease in the months ahead, but added that the latest data implied “that process might be more gradual”.

The surprise increase in core inflation was especially disturbing for some economists, in that it highlighted how high food and energy prices were starting to be passed on to consumers through higher prices of final goods such as clothing and this trend was unlikely to be reversed in the light of the recent oil price declines.

“Although commodity prices have declined, price setters might be saying they think they will remain high on average over the next several years,” Mr Pandl said. While energy prices had risen by 6.6 per cent in June, they increased by only 4 per cent in July.

Nevertheless, some economists remained sanguine that headline inflation might have peaked in July and would quickly move down. “It should be down to nearer 3 per cent by the end of the year,” said Capital Economics in London.

As far as the implications for the Fed are concerned, expectations are growing that interest rates will stay on hold well into next year, as both inflation and growth risks have been reinforced.

“The Fed is in the same uncomfortable position as it has been for months – caught between a weak economy and elevated inflationary pressures – only more so,” said Kenneth Beauchemin of Global Insight.

Economists at Goldman Sachs added: “Although the inflation numbers will stir up some FOMC members, we continue to think there is no meaningful probability of a rate hike given current conditions in the economy and the financial markets.”

U.S. court rules Saudi Arabia immune in 9/11 case

U.S. court rules Saudi Arabia immune in 9/11 case

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The Kingdom of Saudi Arabia, four princes and other Saudi entities are immune from a lawsuit filed by victims of the September 11 attacks and their families alleging they gave material support to al Qaeda, a federal appeals court ruled on Thursday.

The ruling by the Second Circuit Court of Appeals in Manhattan upheld a 2006 ruling by U.S. District Judge Richard Casey dismissing a claim against Saudi Arabia, a Saudi charity, four princes and a Saudi banker of providing material support to al Qaeda before the September 11 attacks.

The victims and their families argued that because the defendants gave money to Muslim charities that in turn gave money to al Qaeda, they should be held responsible for helping to finance the attacks.

The appeals court found that the defendants are protected under the Foreign Sovereign Immunities Act.

The court also noted that exceptions to the immunity rule do not apply because Saudi Arabia has not been designated a state sponsor of terrorism by the U.S. State Department.

Don’t Cage Dissent

Don’t Cage Dissent

How Taxpayer Money Is Wrapped Up in Georgian War

How Taxpayer Money Is Wrapped Up in Georgian War

By Sharona Coutts

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Russia's announcement Tuesday morning that it will cease its offensive in Georgia has created a potential lull in what was a rapidly escalating military and diplomatic crisis.

Whether the fighting really ends, one result of the conflict is clear: it has thrown a bright light on that region's importance to global oil supplies. A pipeline that runs through Georgia is the second largest in the world.

But a little-reported fact is that American tax dollars were used to help fund big oil projects in the region.

Georgia sits between the rich oil deposits of the Caspian Sea in the East, and the friendly shores of the Mediterranean in the West. Since 2006, a 1,100 mile pipeline has pumped that crude from Baku, in Azerbaijan, westwards across the conflict-torn continent to tanker ships waiting at the Turkish city of Ceyhan. The multi-billion-dollar Baku-Tbilisi-Ceyhan pipeline is run by an international consortium, including American oil-giants Chevron and Conoco-Phillips.

The Daily Mail in the U.K. has reported that Russian planes have targeted the pipeline, and Georgia's president, Mikheil Saakashvili, told reporters at a conference call that the war is a Russian oil-grab to "control energy routes."

So, how is U.S. taxpayer money bound up in all of this?

It has to do with the role of the two government agencies, the Export-Import Bank (Ex-Im) and the Overseas Private Investment Corporation (OPIC), that lend money to private companies doing business overseas.

These agencies exist to promote U.S. business abroad, which they do by giving loans and guarantees for projects that are too big or, in many cases, too risky for the tastes of private banks and financiers.

"We exist to take risks that the commercial markets either cannot or are not willing to make," said Phil Cogan, spokesman at the Ex-Im Bank. "That's the reason for export credit agencies for the most part. It's to support the exporters of the United States because those exporters wouldn't be able to make the sale unless there was a guarantee or direct lending."

In the case of this pipeline, the Ex-Im Bank gave a $160 million guarantee to a group of banks that wanted to lend money to the companies involved in the project. If the project fails or goes up in flames (which it could do, literally) Ex-Im will bail out the private banks, and taxpayers will be left holding the bag.

Same deal for OPIC, which gave the project $100 million in "political risk insurance." In other words, the companies apparently weighed the risk of just the sort of conflict the region is now facing, and then went to a government agency for insurance.

Critics see these guarantees as a form of corporate welfare.

"If we're talking about the oil and gas industry, there's absolutely no need for the federal government to be investing in any new projects," said Keith Ashdown from Taxpayers for Common Sense, a non-profit that works to reduce wasteful government spending. "These guys are making money hand over fist, and they can be investing in their own new capital projects."

In the case of the BTC pipeline, activists and academics have been warning about the project's dangers for years, and arguing that taxpayers shouldn't incur the risk.

Ex-Im spokesman Cogan stresses that the government-funded bank usually brings in a net profit from the fees it charges for insuring risky projects. He also said that this loan is far from the biggest that Ex-Im has made.

Nor is the U.S the only country whose taxpayers helped make the deal happen. The biggest player in the project is British Petroleum, which owns just over 30 percent of the pipeline. The U.K.'s export credit agency, as well as the European development bank, also put money into the deal.

BP spokesman Robert Wine said despite the reports that the pipeline has been targeted by Russian planes, the "pipeline hasn't been affected by the conflict." He said that BP "continues to monitor the situation."

"The pipeline is a channel that runs through Georgia," he said. "We don't have business interests of any great note in Georgia, and clearly this is a matter for the governments of Georgia and Russia."

Help Our Veterans Vote

Help Our Veterans Vote

By SUSAN BYSIEWICZ

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WHAT is the secretary of Veterans Affairs thinking? On May 5, the department led by James B. Peake issued a directive that bans nonpartisan voter registration drives at federally financed nursing homes, rehabilitation centers and shelters for homeless veterans. As a result, too many of our most patriotic American citizens — our injured and ill military veterans — may not be able to vote this November.

I have witnessed the enforcement of this policy. On June 30, I visited the Veterans Affairs Hospital in West Haven, Conn., to distribute information on the state’s new voting machines and to register veterans to vote. I was not allowed inside the hospital.

Outside on the sidewalk, I met Martin O’Nieal, a 92-year-old man who lost a leg while fighting the Nazis in the mountains of Northern Italy during the harsh winter of 1944. Mr. O’Nieal has been a resident of the hospital since 2007. He wanted to vote last year, but he told me that there was no information about how to register to vote at the hospital and the nurses could not answer his questions about how or where to cast a ballot.

I carry around hundreds of blank voter registration cards in the trunk of my car for just such occasions, so I was able to register Mr. O’Nieal in November. I also registered a few more veterans — whoever I could find outside on the hospital’s sidewalk.

There are thousands of veterans of wars in Korea, Vietnam, the Persian Gulf and the current campaigns in Iraq and Afghanistan who are isolated behind the walls of V.A. hospitals and nursing homes across the country. We have an obligation to make sure that every veteran has the opportunity to make his or her voice heard at the ballot box.

Connecticut’s attorney general, Richard Blumenthal, and I wrote to Secretary Peake in July to request that elections officials be let inside the department’s facilities to conduct voter education and registration. Our request was denied.

The department offers two reasons to justify its decision. First, it claims that voter registration drives are disruptive to the care of its patients. This is nonsense. Veterans can fill out a voter registration card in about 90 seconds.

Second, the department claims that its employees cannot help patients register to vote because the Hatch Act forbids federal workers from engaging in partisan political activities. But this interpretation of the Hatch Act is erroneous. Registering people to vote is not partisan activity.

If the department does not want to burden its staff, there are several national organizations with a long history of nonpartisan advocacy for veterans and their right to vote that are eager to help, as are elected officials like me.

The department has placed an illegitimate obstacle in the way of election officials across the country and, more important, in the way of veterans who want to vote. A group of 21 secretaries of state — Republicans and Democrats throughout the country, led by me and my counterpart in Washington State, Sam Reed — has asked Secretary Peake to lift his department’s ridiculous ban on voter registration drives.

Bills that would require the department to repeal the ban have been filed in both houses of Congress. They need to be signed into law no later than Oct. 1, so that veterans in V.A. care don’t miss their states’ deadlines to register to vote in the fall elections.

But federal legislation shouldn’t be needed for the Department of Veterans Affairs to lift the ban on voter registration drives by state and local election officials and nonpartisan groups.

The federal government should be doing everything it can to support our nation’s veterans who have served us so courageously. There can be no justification for any barrier that impedes the ability of veterans to participate in democracy’s most fundamental act, the vote.

Wal-Mart Caught on Tape Lying to Employees

Wal-Mart Caught on Tape Lying to Employees

By Kathy G
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Today's Wall Street Journal reports that Wal-Mart was recently caught redhanded: they blatantly lied to employees about labor law and the Employee Free Choice Act (or "card check"). A video the Journal got a hold of shows the following:

In the hour-and-a-half meeting, held for managers in a Southern state, the leader tells employees that their wages may be reduced to minimum wage for up to three months before a contract is negotiated, that union authorization cards violate workers' right to privacy by including their Social Security numbers on them and that if a small unit within a store votes to unionize, the entire store will be unionized.

"If you have 10 associates in a photo lab and six sign union authorization cars, now the store is unionized," the meeting leader told employees. "Six people can make a decision for 350 people," which is about the average number of workers in a Walmart supercenter.

But actually, none of those things are true.

Reducing wages during contract negotiations is illegal, card check can't legally require that employees provide their Social Security numbers (and won't in the future either, even if the law is changed), and organizing one unit in a store won't make the entire store unionized. Labor experts say that those three statements the Wal-Mart official made during the meeting were untrue, and that, in fact, Wal-Mart may have been breaking the law by spreading false information.

It's unclear whether Wal-Mart will face any legal consequences for the lies they told. But the Journal article notes that action has been taken on another front: labor groups have filed a complaint against Wal-Mart with the Federal Elections Commission. They're asking the commission to investigate whether the meetings Wal-Mart organized around the country warning thousands of employees about the consequences of electing a Democratic president violated the law (you can find the complaint here).

Will the F.E.C. take action? It seems like there's a decent shot they might:

Legal experts said election-law complaints against employers are rare but that the complaint against Wal-Mart merits consideration. "I think it's going to be a case that the FEC is going to have to take seriously," said Joseph M. Birkenstock, a Washington attorney specializing in election law. The key to the case will be "exactly what was said" at meetings, he said.

Wal-Mart is clearly feeling the heat. They're known for playing hardball, but it seems like lately, they've been more reckless than usual. I think it's because they are very, very nervous about the prospects of a Democratic takeover, and about the potential impact of the Employee Free Choice Act on the Wal-Mart empire. All of which means we're probably making more headway on these issues than I thought.

U.S. groups file election complaint against Wal-Mart

U.S. groups file election complaint against Wal-Mart

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Labor groups on Thursday asked federal regulators to look into whether Wal-Mart Stores Inc broke the law during company meetings with store managers where it warned about the consequences of a proposed labor law backed by Democrats.

At issue is whether Wal-Mart's discussion of the law, which would make it easier for workers to unionize, amounted to an effort to dissuade employees from voting for Democratic presidential candidate Barack Obama. Wal-Mart denies that it tried to influence voting.

WakeUpWalmart.com said it filed a complaint with the Federal Election Commission in conjunction with the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) and other groups.

A spokeswoman for WakeUpWalmart.com said the group has heard from about two dozen Wal-Mart workers in recent weeks regarding comments made by managers about the legislation. A Wall Street Journal story earlier this month disclosed some of the meetings' details.

At some meetings, "they outright said if you vote for Barack Obama this law is going to pass, your wages would go down, you could lose your job," said Meghan Scott. She added that the comments varied in their directness.

Wal-Mart has acknowledged holding meetings with U.S. store managers, where it warned them of the possible consequences of the labor-friendly Employee Free Choice Act that is backed by Obama.

But the retailer, which has kept its U.S. stores free of unions, denies telling workers how to vote.

Wal-Mart opposes proposed legislation that would make it easier for workers to unionize by signing a card rather than holding a vote.

Obama, a co-sponsor of the original bill, has called for passage of the act. Presumptive Republican presidential nominee John McCain has voted against it.

In the United States, Wal-Mart operates more than 4,200 stores, including Sam's Club warehouse locations, and it employs more than 1.4 million workers.

Wal-Mart spokesman David Tovar said that if the FEC decides to investigate, it will find the company did nothing wrong.

"Our policies are clear and we have communicated to our associates that if anyone representing our company gave the impression they were telling associates how to vote, they were wrong and were acting without approval," Tovar said.

He declined to say whether any managers had been disciplined for making unapproved comments.

Ill and in Pain, Engineer Dies While Detained in U.S. Hands

Ill and in Pain, Detainee Dies in U.S. Hands

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He was 17 when he came to New York from Hong Kong in 1992 with his parents and younger sister, eyeing the skyline like any newcomer. Fifteen years later, Hiu Lui Ng was a New Yorker: a computer engineer with a job in the Empire State Building, a house in Queens, a wife who is a United States citizen and two American-born sons.

But when Mr. Ng, who had overstayed a visa years earlier, went to immigration headquarters in Manhattan last summer for his final interview for a green card, he was swept into immigration detention and shuttled through jails and detention centers in three New England states.

In April, Mr. Ng began complaining of excruciating back pain. By mid-July, he could no longer walk or stand. And last Wednesday, two days after his 34th birthday, he died in the custody of Immigration and Customs Enforcement in a Rhode Island hospital, his spine fractured and his body riddled with cancer that had gone undiagnosed and untreated for months.

On Tuesday, with an autopsy by the Rhode Island medical examiner under way, his lawyers demanded a criminal investigation in a letter to federal and state prosecutors in Rhode Island, Connecticut, Massachusetts and Vermont, and the Department of Homeland Security, which runs the detention system.

Mr. Ng's death follows a succession of cases that have drawn Congressional scrutiny to complaints of inadequate medical care, human rights violations and a lack of oversight in immigration detention, a rapidly growing network of publicly and privately run jails where the government held more than 300,000 people in the last year while deciding whether to deport them.

In federal court affidavits, Mr. Ng's lawyers contend that when he complained of severe pain that did not respond to analgesics, and grew too weak to walk or even stand to call his family from a detention pay phone, officials accused him of faking his condition. They denied him a wheelchair and refused pleas for an independent medical evaluation.

Instead, the affidavits say, guards at the Donald W. Wyatt Detention Facility in Central Falls, R.I., dragged him from his bed on July 30, carried him in shackles to a car, bruising his arms and legs, and drove him two hours to a federal lockup in Hartford, where an immigration officer pressured him to withdraw all pending appeals of his case and accept deportation.

"For this desperately sick, vulnerable person, this was torture," said Theodore N. Cox, one of Mr. Ng's lawyers, adding that they want to see a videotape of the transport made by guards.

Immigration and detention officials would not discuss the case, saying the matter was under internal investigation. But in response to a relative of Mr. Ng's who had begged that he be checked for a spinal injury or fractures, the Wyatt detention center's director of nursing, Ben Candelaria, replied in a July 16 e-mail message that Mr. Ng was receiving appropriate care for "chronic back pain." He added, "We treat each and every detainee in our custody with the same high level of quality, professional care possible."

Officials have given no explanation why they took Mr. Ng to Hartford and back on the same day. But the lawyers say the grueling July 30 trip appeared to be an effort to prove that Mr. Ng was faking illness, and possibly to thwart the habeas corpus petition they had filed in Rhode Island the day before, seeking his release for medical treatment.

The federal judge who heard that petition on July 31 did not make a ruling, but in an unusual move insisted that Mr. Ng get the care he needed. On Aug. 1, Mr. Ng was taken to a hospital, where doctors found he had terminal cancer and a fractured spine. He died five days later.

The accounts of Mr. Ng's treatment echo other cases that have prompted legislation, now before the House Judiciary Committee, to set mandatory standards for care in immigration detention.

In March, the federal government admitted medical negligence in the death of Francisco Castaneda, 36, a Salvadoran whose cancer went undiagnosed in a California detention center as he was repeatedly denied a biopsy on a painful penile lesion. In May, The New York Times chronicled the death of Boubacar Bah, 52, a Guinean tailor who suffered a skull fracture and brain hemorrhages in the Elizabeth Detention Center in New Jersey; records show he was left in an isolation cell without treatment for more than 13 hours.

When Mr. Ng died last week, he had spent half his life in the United States, his sister, Wendy Zhao, said in a tearful interview.

Born in China, he entered the United States legally on a tourist visa. Mr. Ng stayed .. it expired and applied for political asylum. He was granted a work permit while his application was pending, and though asylum was eventually denied, immigration authorities did not seek his deportation for many years.

Meanwhile, his sister said, Mr. Ng (pronounced Eng), who was known as Jason, graduated from high school in Long Island City, Queens, worked his way through community technical college, passed Microsoft training courses and won a contract to provide computer services to a company with offices in the Empire State Building.

In 2001, a notice ordering him to appear in immigration court was mistakenly sent to a nonexistent address, records show. When Mr. Ng did not show up at the hearing, the judge ordered him deported. By then, however, he was getting married, and on a separate track, his wife petitioned Citizenship and Immigration Services for a green card for him — a process that took more than five years. Heeding bad legal advice, the couple showed up for his green card interview on July 19, 2007, only to find enforcement agents waiting to arrest Mr. Ng on the old deportation order.

Over the next year, while his family struggled to pay for new lawyers to wage a complicated and expensive legal battle, Mr. Ng was held in jails under contract to the federal immigration authorities: Wyatt; the House of Correction in Greenfield, Mass.; and the Franklin County Jail in St. Albans, Vt.

Mr. Ng seemed healthy until April, his sister said, when he began to complain of severe back pain and skin so itchy he could not sleep. He was then in the Vermont jail, a 20-bed detention center with no medical staff run by the county sheriff's office. Seeking care, he asked to be transferred back to Wyatt, a 700-bed center with its own medical staff, owned and operated by a municipal corporation.

In a letter to his sister, Mr. Ng recounted arriving there on July 3, spending the first three days in pain in a dark isolation cell. Later he was assigned an upper bunk and required to climb up and down at least three times a day for head counts, causing terrible pain. His brother-in-law B. Zhao appealed for help in e-mail messages to the warden, Wayne Salisbury, on July 11 and 16.

"I was really heartbroken when I first saw him," Mr. Zhao wrote Mr. Salisbury after a visit. "After almost two weeks of suffering with unbearable back pain and unable to get any sleep, he was so weak and looked horrible."

The nursing director replied that Mr. Ng had been granted a bottom bunk and was receiving painkillers and muscle relaxants prescribed by a detention center doctor.

But his condition continued to deteriorate. Once a robust man who stood nearly six feet and weighed 200 pounds, his relatives said, Mr. Ng looked like a shrunken and jaundiced 80-year-old.

"He said, 'I told the nursing department, I'm in pain, but they don't believe me,' " his sister recalled. " 'They tell me, stop faking.' "

Soon, according to court papers, he had to rely on other detainees to help him reach the toilet, bring him food and call his family; he no longer received painkillers, because he could not stand in line to collect them. On July 26, Andy Wong, a lawyer associated with Mr. Cox, came to see the detainee, but had to leave without talking to him, he said, because Mr. Ng was too weak to walk to the visiting area, and a wheelchair was denied.

On July 30, according to an affidavit by Mr. Wong, he was contacted by Larry Smith, a deportation officer in Hartford, who told him on a speakerphone, with Mr. Ng present, that he wanted to resolve the case, either by deporting Mr. Ng, or "releasing him to the streets." Officer Smith said that no exam by an outside doctor would be allowed, and that Mr. Ng would not be given a wheelchair.

Mr. Ng told his lawyer he was ready to give up, the affidavit said, "because he could no longer withstand the suffering inside the facility," but Officer Smith insisted that Mr. Ng would first have to withdraw all his appeals.

The account of his treatment clearly disturbed the federal judge, William E. Smith of United States District Court in Providence, who instructed the government's lawyer the next day to have the warden get Mr. Ng to the hospital for an M.R.I.

The results were grim: cancer in his liver, lungs and bones, and a fractured spine. " 'I don't have much time to live,' " his sister said he told her in a call from Rhode Island Hospital in Providence.

She said the doctor warned that if the family came to visit, immigration authorities might transfer her brother. Three days passed before the warden approved a family visit, she said, after demanding their Social Security numbers. Late in the afternoon of Aug. 5, as Mr. Ng lay on a gurney, hours away from death and still under guard, she and his wife held up his sons, 3 and 1.

"Brother, don't worry, don't be afraid," Ms. Zhao said, repeating her last words to him. "They are not going to send you back to the facility again. Brother, you are free now."

FBI to Get Freer Rein to Gather Domestic Information

FBI to get freer rein to look for terrorism suspects

Marisa Taylor

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Attorney General Michael Mukasey confirmed plans Wednesday to loosen post-Watergate restrictions on the FBI's national security and criminal investigations, saying the changes were necessary to improve the bureau's ability to detect terrorists.

Mukasey said he expected criticism of the new rules because "they expressly authorize the FBI to engage in intelligence collection inside the United States." However, he said the criticism would be misplaced because the bureau has long had authority to do so.

Mukasey said the new rules "remove unnecessary barriers" to cooperation between law enforcement agencies and "eliminate the artificial distinctions" in the way agents conduct surveillance in criminal and national security investigations.

"There was clear-eyed and bipartisan recognition after the attacks that we needed to be able — and allowed — to collect intelligence in the United States," he said in speech prepared for an anti-terrorism conference in Portland, Ore. "Indeed, there was a loud demand for it."

Noting one area that needs to change, he said agents currently can rely on informants to gather information in ordinary criminal investigations, but are more limited in national security cases. The new rules, he said, will do away with those differences.

"Under the new guidelines, the investigative steps that the FBI may take in a particular investigation will not be driven by irrelevant factors, such as the type of paperwork the agent uses to open the investigation," he said.

In addition, agents assigned to national security investigations will be given more latitude to conduct surveillance based on a tip. Also, agents will be permitted to search more databases than allowed previously in criminal cases. As it stands now, agents who get a tip about a possible organized crime figure cannot use certain databases that they are allowed to access in national security cases, such as those containing information about state-issued drivers' licenses.

The Justice Department has kept the draft rules under wraps for at least a month and is expected to publicly release the final version within several more weeks. Even then, portions are expected to remain classified for national security reasons.

Mukasey said he planned to consult with Congress about the rules before releasing them. Nonetheless, Mukasey provided enough detail Wednesday to alarm civil libertarians.

Michael German, a former veteran FBI agent who is now policy counsel for the American Civil Liberties Union, said if Mukasey moves ahead with the new rules as he describes them, he'll be weakening restrictions originally put in place after the Watergate scandal to rein in the FBI's domestic Counter Intelligence Program, or COINTELPRO. At the time, the FBI spied on American political leaders and organizations deemed to be subversive throughout the late 1950s and into the 1960s.

"I'm concerned with the way the attorney general frames the problem," German said. "He talks about 'arbitrary or irrelevant differences' between criminal and national security investigations but these were corrections originally designed to prevent the type of overreach the FBI engaged in for years."

The Justice Department's Inspector General has found that between 2003 and 2006 the FBI sought personal records of Americans by relying improperly on so-called "national security letters", rather than seeking court approval. Last week, the FBI apologized to two newspapers for secretly obtaining reporters' phone records without following proper bureau procedures.

FBI officials have said the bureau has since instituted stronger oversight to prevent abuses, but German said recent events demonstrated that Mukasey needed to strengthen the FBI's guidelines, not "water them down."

"Nobody's complaining about the FBI collecting domestic intelligence when it's appropriate and authorized under the law," German said. "What the attorney general is doing is expanding the bureau's intelligence collection without addressing the mismanagement within the FBI. If you have an agency collecting more with less oversight, it's only going to get worse."

Mukasey denied that the new rules would allow agents to investigate someone simply based on race, religion or exercise of First Amendment rights.

Earlier, the Associated Press had reported that Mukasey was considering allowing agents to investigate someone based on a terrorism profile that could rely on race or ethnicity as a factor.

However, Mukasey did not say whether the new guidelines would give the FBI more leeway to rely on race or ethnicity as a significant factor in determining whether an investigation should be launched.

One-Fifth of Iraq Funding Paid to Contractors

One-Fifth of Iraq Funding Paid to Contractors

William Fisher

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As a new report forecasts that the 190,000 private contractors in Iraq and neighbouring countries will cost U.S. taxpayers more than 100 billion dollars by the end of 2008, an under-the-radar Florida court case suggests that U.S. President George W. Bush -- a staunch contractor supporter -- is preparing to throw security contractors such as Blackwater under the political bus.

In the Florida case, relatives of three American servicemen killed in the 2004 crash of an aircraft owned by Blackwater Aviation in Afghanistan are suing the company for damages, based in part on U.S. government reviews that concluded that errors committed by Blackwater staff were responsible for the deaths. This week, despite Bush's support for what he has called the critical roles played by overseas contractors, his administration failed to meet a deadline for presenting the court with any defence of Blackwater.

The administration's silence has caused consternation for Blackwater and its supporters. Erik Prince, Blackwater's chairman, told TIME magazine, "After the president has said that, as commander-in-chief, he is ultimately responsible for contractors on the battlefield it is disappointing that his administration has been unwilling to make that interest clear before the courts."

Some observers have speculated that the Administration's silence can be attributed to the controversial nature of the contractor issue and a reluctance to address it during a hotly contested presidential election year.

The Florida battle, which could eventually find its way to the U.S. Supreme Court, turns on the question of whether Blackwater and other overseas contractors are subject to U.S. law. That question arises because of a decree issued in 2005 by the then U.S. Iraq administrator, L. Paul Bremer, granting contractors legal immunity.

The Iraqi government claims that Blackwater and other contractors have been responsible for the deaths of Iraqi civilians and wants to make them subject to Iraqi law. The U.S. has resisted this move, which is thought to be part of the ongoing stalemate in negotiations with Iraq over the future status of U.S. forces in that country.

The White House has also attacked a bill recently passed by the House of Representatives that would place combat-zone contractors under the jurisdiction of U.S. courts. It called the measure an unacceptable extension of federal jurisdiction overseas, and said it would place additional burdens on the military.

Blackwater's argument is that the company should be covered by the same "sovereign immunity" that protects the U.S. military from lawsuits because the downed flight in question in the Florida case was under the command and control of the U.S. military.

Last month, this argument was rejected by three federal judges, who cited the U.S. government's failure to take a position in defence of Blackwater as one of their reasons. In their decision to allow the lawsuit to proceed, the judges ruled, "The apparent lack of interest from the United States… fortifies our conclusion that the case does not yet present a political question."

Lawyers for many major contractors including DynCorp, Kellogg Brown and Root (KBR), Blackwater and others, say a dangerous precedent would be established if this and similar cases are allowed to go forward. Such a decision, they say, would open contractors to large money damages and greatly higher risk insurance costs that could adversely affect their ability to carry out the jobs the U.S. government has hired them to do.

As the Florida case made its way through the U.S. legal system, a new report from the Congressional Budget Office (CBO) contends that the cost of having military personnel provide security services in Iraq might be little different from the prices charged by private security contactors.

The report said that 6-10 billion dollars has been spent on security contactors thus far in 2008 and estimated that about 25,000-30,000 employees of security firms were in Iraq as of early this year. It estimates that, if spending for contractors continues at about the current rate, 100 billion dollars will have been paid to military contractors for operations in Iraq.

The CBO report revealed that about 20 percent of funding for operations in Iraq has gone to contractors. Currently, it said, there are at least 190,000 contractors in Iraq and neighbouring countries -- a ratio of about one contractor per U.S. service member. It noted that the U.S. has relied more heavily on contractors in Iraq than in any other war for functions ranging from food service to guarding diplomats.

The report also noted that the legal status of contractor personnel is a grey area of U.S. law, particularly for those who are armed. It said that military commanders have less direct authority over contractors because a government contracting officer rather than a military commander manages their contracts.

The CBO review was requested by Senator Kent Conrad, a North Dakota Democrat who is chairman of the Senate Budget Committee. In a statement, Conrad said the Bush administration's reliance on military contractors has set a dangerous precedent. The use of contractors "restricts accountability and oversight; opens the door to corruption and abuse; and, in some instances, may significantly increase the cost to American taxpayers," he said.

The report comes at a time when the actions of contractors in Iraq and Afghanistan are coming under increased scrutiny. Contractors -- including Blackwater and KBR -- have been investigated in connection with shooting deaths of Iraqis and the accidental electrocutions of U.S. troops. The Senate Democratic Policy Committee heard testimony a few weeks ago from a former Defence Contract Audit Agency (DCAA) contract overseer who was effectively fired because he refused to authorise 1 billion dollars in unsubstantiated charges from KBR. The Government Accountability Office released a report that confirmed whistleblower complaints of DCAA supervisors issuing unsupported findings that were favourable to contractors. And last week, Government Executive magazine reported that nearly a dozen former DCAA employees see DCAA as a very troubled agency that is more concerned with performance goals than actually overseeing contracts.

The death of a U.S. soldier, who was electrocuted in January while showering in Iraq, prompted a House committee oversight hearing last month into whether KBR has properly handled the electrical work at bases it maintains. The military has also said that five other deaths were due to improperly installed or maintained electrical devices, according to a congressional report.

Contractors' activities have drawn sharp criticism from private non- governmental watchdog groups, such as OMB Watch. OMB stands for the Office of Management and Budget, which prepares and presents the president's budget to congress.

Craig Jennings, OMB's Federal Fiscal Policy Analyst, told IPS, "100 billion dollars is a very large amount of money -- in fact, Iraq's GDP was just over 100 billion dollars in 2007. But what staggers my imagination is how sober adults would be willing to divert such vast sums of America's financial resources to the bank accounts of private firms whose dealings are opaque to taxpayers and, for the most part, held unaccountable."

Jennings added, "I think advocates of unaccountable privatisation are beginning to reap what they have sown: defending privatisation of war- making on such an enormous scale is becoming tenuous. It's hard to paint a picture of contractors providing taxpayers value when so many instances of contractor misconduct have found their way into the public's consciousness."

Jennings also called attention to the shortcomings of the military auditing process. He told IPS, "This magnitude of expenditures on private contractors is especially striking in light of recent government and media reports of dysfunction in the DCAA. The protection of the interests of American taxpayers is apparently suffering a number of impediments."

A Frozen Katrina

A Frozen Katrina

by Katrina vanden Heuvel

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As John McCain and the Republicans trumpet their election year boldfaced lie–drill now so we can lower prices at the pump today–they continue to ignore a looming energy disaster with lives hanging in the balance.

Currently, eight million homes rely on heating oil during the winter months, and last winter’s prices forced too many citizens to choose between heat, food, and medicine.

According to the New York Times, heating oil prices are now 36 percent higher than they were last winter and bills will be up to $1500 higher than they were last year. As for the 54 million households heating with natural gas, prices are expected to be 67 percent higher this winter. Current funding for the Low Income Heating Energy Assistance Program (LIHEAP) is below 1980’s levels–”a time when fuel prices were just a tiny fraction of what they are now,” The Timberjay newspapers point out. In fact, last year’s $2.5 billion in LIHEAP funding allowed just 16 percent of eligible recipients to receive aid. Congressional representatives of New England states have sought as much as $6.5 billion in additional LIHEAP funding to meet the anticipated needs of the upcoming winter. With both lower-income and middle-class people now unable to afford this basic necessity–a requirement for security in one’s own home–newspapers in the Northeast are sounding a clarion call to head-off the impending disaster.

As the Boston Globe wrote in an editorial this month:

The country had a few days to prepare for Hurricane Katrina, and failed. It has more than three months to prepare for this frozen Katrina, and there will be no excuse this time…. A frozen Katrina will be measured in hypothermia cases and malnutrition or unfilled prescriptions if the poor are forced to spend grocery or medicine money on fuel.

“It could be New England’s own Katrina disaster,” read a Stowe Reporter editorial. “Hundreds of homes rendered uninhabitable, families’ finances stretched to the limit, some driven away altogether to take shelter with friends or family. But unlike Katrina, this calamity is clearly visible on the horizon and we have months to prepare.”

The Rutland Herald warned of service-providers who are already stretched thin:

No one wants to see refugees from the cold breaking into stores or second homes to spend the night, but there will be desperate people that the state’s social service providers will be challenged to help, since most homeless shelters are full at present and may not be able to house any more people in upcoming months.

And, finally, from the Concord Monitor :

It will be interesting to see if the prospect of masses of New Hampshire citizens freezing at home gets the attention it so clearly deserves.

Indeed, the crisis has gotten the attention of Democrats–and some Republicans–in Congress, but an effort to respond was thwarted by yet another GOP Senate filibuster. Senator Bernie Sanders (I-VT) tried to increase LIHEAP funding all the way back in November, while President Bush proposed cutting it by $379 million. In March, Sen. Sanders offered a budget amendment that would have rescinded the Bush tax cuts for the wealthiest three-tenths of 1 percent of taxpayers and increased LIHEAP funding by $4 billion. Last month, he was the lead sponsor of the Warm in the Winter and Cool in the Summer Act which would double LIHEAP funding, adding $2.5 billion to the program (less than one week’s funding in Iraq). Although President Bush threatened a veto (no surprise there, he has also proposed cutting the weatherization program that helps lower-income families reduce energy consumption over the long-term), there were fifty-two co-sponsors, including thirteen Republicans. Sanders called it a “tripartisan bill” with the majority of Congress, the nation’s governors, AARP and others on board.

“People in the north understand that it would be inhumane to stand by while seniors freeze to death this winter or kids get sick,” he said “People in hot-weather states know heat waves can be killers.” In a floor speech, Sanders cited Center for Disease Control statistics to further illustrate the urgency of this legislation:

Historically, from 1979 to 2003, excessive heat exposure caused 8,015 deaths in the United States. During this period, more people in this country died from extreme heat than from hurricanes, lightning, tornadoes, floods, and earthquakes combined…. During 1979 to 2002, a total of 16,555 deaths in the United States, an average of 689 per year…were attributed to exposure to excessive natural cold.

But when it came time to vote on the legislation on July 26, there were only fifty votes to end a Republican filibuster–ten shy of the sixty needed to bring the bill to the floor for a vote. The GOP wanted “a vote on legislation that would open up the continental shelf to oil drilling.”

“I understand the games that are played in Washington, but it doesn’t make the obstruction tactics any less revolting,” Sanders said following the vote. “This is life or death. People are dying in the summer heat. People will freeze to death this winter.”

While Republicans continue to push drilling as their election year elixir, real pain, real lives, and real security are ignored.

Now It’s The Post Covering Up John McCain’s Mob Connections

Now It’s The Post Covering Up John McCain’s Mob Connections

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IF YOU STILL DOUBT that the big media is determined to keep under wraps the organized crime origins of the $200 million fortune of John McCain and his wife Cindy, take note of how the prestigious Washington Post touched on the issue in its July 22 edition. Rather, instead, note how the Post covered up the matter.

The Post reported: Cindy Lou Hensley grew up as an only child, and a privileged one, in a large rancher in an upper-class section of Phoenix. Her dad, Jim Hensley, founded what became a large Anheuser-Busch distributorship, and her mom, Marguerite, was a proper belle who emphasized impeccable manners.

The Post also added, almost discretely, that Mrs. McCain’s wealth “may” exceed $100 million (although most sources estimate it is worth $200 million or more) and—for the record—that “she was the apple of her father’s eye.”

The Post did not mention that Mrs. McCain’s father was a highly-placed fixture in the Arizona branch of the national organized crime syndicate: He was the chief henchman of the late Kemper Marley, Arizona point man for infamous mob chief Meyer Lansky and his powerful partners-in-crime, the super-rich Bronfman family of Montreal.

In that capacity—for 40 years until his death in 1990—Marley was undisputed political boss of Arizona, acting as the behind-the-scenes power over both the Republican and Democratic parties.

As such, his wealth and connections played the primary role in advancing John McCain’s political career from the start.

Although some Democrats have muttered that Mrs. McCain’s business interests could impact on her husband’s decision-making as president, none has dared cross the line and make reference to the fact this vast wealth was spawned by what others have indelicately (although quite correctly) called “the Jewish Mafia.”

Correspondents for American Free Press have repeatedly referenced the McCain fortune’s ties to the Lansky-Bronfman syndicate going back to 2000 when McCain first ran for president. Most recently, in its July 14/21 issue AFP reported the story again. At that time, AFP pointed out that in its June 30 edition, Newsweek (owned by the Washington Post’s parent company) also suppressed McCain’s mob link.

Newsweek said Mrs. McCain’s family “was deeply rooted in Arizona,” and that her father “was one of the most prominent men in the state,” who was “a World War II bombardier . . . shot down over the English channel,”—in other words, a war hero like McCain.

Newsweek did not mention (or even hint of) the racketeering, corruption and murder associated with Hensley and his patrons.

Newsweek said Hensley “borrowed $10,000 to start a liquor business” which became one of the largest Anheuser-Busch distributorships in the country and pointed out that the vast Hensley influence and fortune “got [McCain] access to money and connections” after he divorced his ailing first wife and married his then mistress, Cindy Hensley, and settled in Arizona where he first ran for office in 1982. But there was much more to the story.

Newsweek did not mention what AFP had reported and which is republished here in order to keep this important story before the American public:

To repeat: McCain’s father-in-law was the top lieutenant for Kemper Marley, the Lansky syndicate’s chief Arizona operative who acted, in turn, as the front man for the Bronfman family—key players in the Lansky syndicate.

During Prohibition, the Canadian-based Bronfmans supplied—and thus controlled—the “spigot” of liquor funneled to Lansky syndicate functionaries in the United States, including Al Capone in Chicago.

After Prohibition, Lansky-Bronfman associates such as Marley got control of a substantial portion of liquor (and beer) distribution across the country. Marley’s longtime public relations man, Al Lizanitz, revealed that it was the Bronfmans who set Marley up in the alcohol business.

In 1948, 52 of Marley’s employees (including Jim Hensley, the manager of Marley’s company) were prosecuted for federal liquor violations. Hensley got a six month suspended sentence and his brother Eugene went to prison for a year.

In 1953 Hensley and (this time) Marley were prosecuted by federal prosecutors for falsifying liquor records, but young attorney William Rehnquist acted as their “mouthpiece” (as mob attorneys are known) and the two got off scot-free. Rehnquist later became chief justice of the Supreme Court and presided over the “fix” that made George W. Bush president in a rightly disputed election.

Arizona insiders say Hensley “took the fall” for Marley in 1948 and Marley paid back Hensley by setting him up in his own beer distribution business.

Newsweek implied Hensley’s company was a “mom and pop” operation that became a big success, but the real story goes to the heart of the history of organized crime.

Hensley’s sponsor, Marley, was also a major player in gambling, a prot�g� of Lansky associate Gus Greenbaum who, in 1941, set up a national wire for bookmakers. After Lansky ordered a hit on his own longtime partner, Benjamin “Bugsy” Siegel, who was stealing money from the Flamingo Casino in Las Vegas—which was financed in part by loans from an Arizona bank chaired by Marley—Greenbaum turned operations of the wire over to Marley while Greenbaum took Siegel’s place in tending to Lansky’s interests in Las Vegas.

In 1948 Greenbaum was murdered in a mob “hit” that set off a series of gang wars in Phoenix, but Marley survived and prospered as did Jim Hensley, who sponsored McCain’s rise to power.

McCain’s father-in-law also dabbled in dog racing and expanded his fortune by selling his track to an individual connected to the Buffalo-based Jacobs family, key Prohibition-era cogs in the Lansky network as distributors of Bronfman liquor.

Expanding over the years, buying up race tracks and developing food and drink concessions at sports stadiums, Jacobs enterprises were described as being “probably the biggest quasi-legitimate cover for organized crime’s money-laundering in the United States.”

In 1976, Hensley’s mentor—Marley (at the height of his power)—was the key suspect behind the contract murder of journalist Don Bolles who was investigating the mob in Arizona, but Marley was never prosecuted.

Since McCain’s career was sponsored by the Lansky-Bronfman syndicate, it is no coincidence McCain recently traveled to London where Lord Jacob Rothschild of the international banking empire raised money among American expatriates on McCain’s behalf.

Rothschild has long been allied with the Bronfman family as major patrons of Israel.

"Naval Blockade" or All Out War Against Iran?

"Naval Blockade" or All Out War Against Iran?

By Michel Chossudovsky

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Author's Note

Shortly after this article was released on August 13, US military sources as well as Stratfor (a Strategic Studies Think Tank) stated that the various press reports (UPI, Middle East Times, Kuwait Times, Debka) regarding the naval deployment to the Middle East were incorrect.

According to the press reports (see UPI, August 11, 2008), the war ships involved in the "Operation Brimstone" war games off the US North Atlantic coast, had set sail for the Middle East. This information is apparently incorrect, according to the US Navy and Stratfor.

It is worth noting that the Kuwaiti government had activated emergency procedures based on the information pertaining to a major naval deployment in the Persian Gulf.

Based on the movement and location of USS carrier and expeditionary strike forces, the Bush administration has not decided to carry out a naval surge directed against Iran immediately following the conduct of the North Atlantic War Games,

The eventuality of a naval blockade directed against Iran is nonetheless being considered by the Pentagon. In fact, the naval blockade initiative is supported by a bill which was launched in the US Congress in late May. (See below for details).

We have checked the most recent information regarding the movements and location of the various USS Carrier and Expeditionary Strike Groups.

The text first released on August 13 has been revised. Corrections, and updates to the text are indicated.

We will provide further updates and analysis as more information becomes available.


Michel Chossudovsky, August 14, 2008

The Bush administration is envisaging the possibility of launching a naval blockade directed against Iran.

Extensive war games were held off the US Atlantic Coastline under "Operation Brimstone" in late July.

These war games were activated shortly after the submission in the US House of Representatives (May 22), of a bill (H CON 362) which called upon the Bush administration to carry out an economic blockade directed against Iran.

"Operation Brimstone": North Atlantic Ocean War Games

Joint Task Force Exercise (JTFEX) 08-4 'Operation Brimstone' commenced on July 21 in North Carolina and off the Eastern US Atlantic coast from Virginia to Florida. Of significance was the participation of British, French, Brazilian and Italian naval forces as part of a multinational US naval exercise directed against Iran.

More than a dozen ships participated in the naval exercise including the USS Theodore Roosevelt and its Carrier Strike Group Two, the expeditionary Strike Group Iwo Jima, the French submarine Amethyste, Britain's HMS Illustrious Carrier Strike Group, Brazil's navy frigate Greenhalgh and Italy's ITS Salvatore Todaro (S 526) submarine. (See Middle East Times, August 11, 2008 , Dailypress.com, July 28, 2008www.mt-milcom.blogspot.com) ,

Stating the purpose of a war game and identifying the real "foreign enemy" by name is not the normal practice, unless there is a decision to send an unequivocal message to the enemy.

Invariably in war games, the foreign enemy is given a fictitious country name: Irmingham, Nemazee, Rubeck and Churia stand for Iran, North Korea, Russia and China (codes used in the Vigilant Shield 07 War Games' Scenario opposing the US to four fictitious enemies. (See William Arkin, The Vigilant Shield 07 War Games: Scenario opposing the US to Russia, China, Iran and North Korea, Washington Post, February 10, 2007)

In the case of "Operation Brimstone", the stated military purpose of the naval exercise is crystal clear: the North Atlantic war games are carried out with a view "to practice enforcing an eventual blockade on Iran". These naval exercises are intended to display US and allied "combat capabilities as a warning to Iran." They are tantamount to a declaration of war:

"The drill is aimed at training for operation in shallow coastal waters such as the Persian Gulf and the Strait of Hormuz."

The USS Theodore Roosevelt equipped with 80-plus combat planes, was carrying an additional load of French Naval Rafale fighter jets from the French carrier Charles de Gaulle. (Ibid). France's E2C Hawkeye early warning aircraft, which was "assigned to the 4th Squadron began flight operations with Carrier Air Wing (CVW) 8 aboard Roosevelt, marking the first integrated U.S. and French carrier qualifications aboard a U.S. aircraft carrier. French Rafale fighter aircraft assigned to the 12th Squadron also joined." Navy.mil, July 24, 2008

Anglo-US war games are a routine practice. What is significant in these large scale naval manoeuvres is the active participation of France, Brazil and Italy in war games which are explicitly directed against Iran.

The participation of these countries in extensive war games points to broad consensus. It also suggests that the participating nations have accepted (in political and military terms) to participate in a US-led military operation directed against Iran. The active participation of France and to a lesser extent Italy also suggests that the European Union is firmly behind the US initiative:

"Operations with our friends and allies are the cornerstone of the U.S. Navy's current maritime strategy," said Capt. Ladd Wheeler, Roosevelt's commanding officer. "These combined operations will certainly pay dividends into the future as our navies continue to work together to increase global security."Navy.mil, July 24, 2008

Another important precedent has been set. Brazil's President Luis Ignacio da Silva has ordered the dispatch of the Greenhalgh Frigate, marking the first time that a Brazilian warship (under a government which claims to be "socialist") has operated as part of a US. strike group in war games directed against a foreign country.

According to the Greenhalgh's Commander Claudio Mello, "It allows us to be one more asset in an international operation." (Pilot Online.com, July 28, 2008)

F46 Grrenhalgh

Brazil's Frigate Greenhalgh dispatched to participate in US War Games

Congressional Initiative

The naval blockade against Iran, which is tantamount to a declaration of war is a bipartisan project, which has tacitly been endorsed by the Democrats. In May 2008, a bill was introduced in the House of Representatives (H.CON. RES 362) that called for the enforcement of an all out economic blockade, including the encroachment of trade and the freeze of monetary transactions with the Islamic Republic:

"The President [shall] initiate an international effort to immediately and dramatically increase the economic, political, and diplomatic pressure on Iran .... prohibiting the export to Iran of all refined petroleum products; imposing stringent inspection requirements on all persons, vehicles, ships, planes, trains, and cargo entering or departing Iran; and prohibiting the international movement of all Iranian officials not involved in negotiating the suspension of Iran's nuclear program."

"[H. CON. RES. 362] urges the President, in the strongest of terms, to immediately use his existing authority to impose sanctions on the Central Bank of Iran, ... international banks which continue to conduct financial transactions with proscribed Iranian banks; ... energy companies that have invested $20,000,000 or more in the Iranian petroleum or natural gas sector in any given year since the enactment of the Iran Sanctions Act of 1996; and all companies which continue to do business with Iran's Islamic Revolutionary Guard Corps." (See full text of H.CON RES 362) (emphasis added)

Meanwhile, H CON RES 362 has been referred to the House Foreign Affairs Committee. A similar procedure has taken plance in the Senate.

Concurrent Military Operations: War in the Caucasus

The planning of a naval blockade by the Bush administration (Operation Brimstone, H Con 362) occurs at the very outset of an unfolding crisis in the Caucasus, marked by the Georgian air and ground attacks on South Ossetia and Russia's counterattack. The timing and chronology of these related and concurrent military operations is crucial.

We are not dealing with separate and unrelated military events. The war in Georgia is an integral part of US-NATO-Israeli war preparations in relation to Iran.

Georgia does not act militarily without the assent of Washington. The Georgian head of State is a US proxy and Georgia is a de facto US protectorate.

The attack on South Ossetia was launched by Georgia on the orders of the US and NATO. US military advisers and trainers were actively involved in the planning of Georgia's attacks on the South Ossetia capital. (For further details see Michel Chossudovsky, War in the Caucasus, Towards a Broader Russia-US Military Confrontation, Global Research, August 10, 2008)

Russia is an ally of Iran.

Russia is currently caught up in a military confrontation with Georgia. The Georgian attack on South Ossetia constitutes an act of provocation directed against Russia. It creates an aura of instability in the Caucasus, marked by heavy civilian casualties. It serves to distract Russia from playing a meaningful diplomatic and military role, which might undermine or obstruct the US-led war plans directed against Iran.

Both Russia and China have bilateral military cooperation agreements with Iran. Russia supplies the Islamic Republic with military hardware and technical expertise in relation to Iran's air defense system and missile program.

Since 2005, Iran has an observer member status in the Shanghai Cooperation Organization (SCO). In turn, the SCO has ties to the Collective Security Treaty Organization (CSTO), an overlapping military cooperation agreement between Russia, Armenia, Belarus, Uzbekistan, Kazakhstan, the Kyrgyz Republic, Tajikistan.

The structure and strength of military alliances is crucial. In the context of US war plans directed against Iran, the US is intent upon weakening Iran's allies, namely Russia and China. In the case of China, Washington is seeking to disrupt Beijing's bilateral ties with Tehran as well as Iran's rapprochement with the SCO, which has its headquarters in Beijing.

The Georgian attack on South Ossetia seeks to undermine Russia, which constitutes a significant countervailing military power and ally of Iran.

The ultimate objective is to isolate Iran, cut it off from its powerful allies: China and Russia.

In Washington's mindset, the events in Georgia coupled with media propaganda, can be usefully applied to discredit and weaken Russia prior to the enforcement of a naval blockade on Iran in the Persian Gulf, which could lead into an all out war on Iran.

This somewhat crude line of reasoning tends, however, to overlook America's own military setbacks and weaknesses as well as the enormous risks to America and the World which could result from a continued and sustained confrontation with Russia, let alone an attack on Iran.

In view of the evolving situation in Georgia and Moscow's military commitments in the Caucasus, military analysts believe that Russia will not protect Iran and encroach upon a US led operation directed against Iran, which would be preceded by a naval blockade.

In other words, Washington believes that Moscow is unlikely to get actively involved in a showdown with US and allied forces in the Persian Gulf.

Naval Deployment

According to press reports, upon completing the North Atlantic war games on July 31st, the participating warships in "Operation Brimstone" headed for the Middle East, to join up with other carrier strike groups and a constellation of US, British and French war ships.

Which Carrier Strike groups and Expeditionary Forces sailed for the Middle East upon the completion of "Operation Brimstone" remains to be ascertained.

Below we provide the most recent information pertaining to the movement of Carrier Strike Groups and Expeditionary Strike Groups

According to Stratfor and military sources:

-the USS Iwo Jima and the USS Theodore Roosevelt, according to Stratfor, returned to their home port in Norfolk after concluding participation in JTFEX Operation Brimstone on July 31

-the nuclear powered USS Ronald Reagan Carrier and its Strike Group Seven; according to Stratfor USS Reagan is currently under way in the South China Sea on a routine deployment in the 7th fleet area of responsibility (AOR) (Indian Ocean and Western Pacific)

-the USS Abraham Lincoln is in the Arabian Sea (confirmed by Strafor, "operations in the 5th fleet AOR, which includes Iraq and Afghanistan", namely Ariabian Sea,

- the USS Peleliu which was in the Red Sea and Gulf of Aden. (latest news from Stratfor USS Peleliu is in the Arabian Sea, "operations in the 5th fleet AOR, which includes Iraq and Afghanistan")


USS Abraham Lincoln

In other words, there are at present (August 14, 2008) two Strike Groups in the region: USS Abraham Lincoln, northern Arabian Sea, USS Peleliu Strike Group, northern Arabian sea. There is no confirmation as to whether the USS Ronald Reagan is moving towards the Arabian Sea.

"Maritime Security" to Enforce a Naval Blockade

US Central Command (CENTCOM) under the helm of General Petraeus, coordinates out of Bahrain so-called Maritime Security Operations (MSO) in Middle East waters ( Gulf of Aden, Gulf of Oman, Arabian Sea, Red Sea and Indian Ocean).

This MSO initiative is conducted by the Combined Maritime Force (CMF) with a powerful armada of 36 warships.

Established at the outset of the Iraq war, CMF involves the participation of the US, Canada, Australia, UK, Germany, Australia, Italy, the Netherlands, New Zealand, Portugal, Spain, Turkey and Pakistan.

There are several combined task forces responsible for maritime security (including CTF 150, CTF 152 and the CTF 158 North Arabian Gulf (NAG))

The mandate of the Combined Task Forces "aims to establish security and stability by countering terrorism in the Middle Eastern maritime environment and allowing legitimate mariners to operate safely in the area..." (see Canadian Navy, News),

In the present context, this multinational naval alliance, will be used to encroach upon maritime trade with Iran as well as play an active role in implementing the proposed economic blockade of Iran.

Canada has recently deployed three war ships to the Arabian sea, including HMC Iroquois along with HMC Calgary and HMC Protecteur which will be operating under CTF 150, which is responsible for MSO in the Gulf of Aden, the Gulf of Oman, the Arabian Sea, the Red Sea and the Indian Ocean.



Canada's HMC Iroquois, involved in Maritime Security.
Canada currently leads the CTF 150 Task Force

Among the 36 war vessels involved in so-called Maritime Security Operations, are:

RBNS Sabha (FFG 90) – The Bahraini flagship of CTF 152 conducting Maritime Security Operations (MSO) in the Central and Southern Arabian Gulf.

USS Harry S. Truman (CVN 75) – The U.S. flagship of CTF 50, conducting MSO in the Central and Southern Arabian Gulf , as well as support Operations Enduring Freedom and Iraqi Freedom. (currently in the Atlantic Ocean according to Stratfor).

FS Guepratte (F 714) – French Navy ship operating as part of CTF 150 in the North Arabian Sea, Gulf of Aden, Gulf of Oman, Red Sea and the Indian Ocean.

USCGC Wrangell (WPB 1332) – One of several USCG 110’ patrol boats conducting MSO in the North Arabian Gulf.

HMAS Arunta (F 151) – Australian Navy ship conducting MSO as part of CTF 158 .

PNS Tippu Sultan (D 186) – Pakistan Navy ship conducting MSO as part of CTF 150.

RFA Cardigan Bay (L 3009) – British Royal Navy auxiliary ship operating with CTF 158.

USS Port Royal (CG 73) – US Navy guided-missile cruiser deployed with USS Tarawa Expeditionary Strike Group.

Source: US Naval forces, Central Command, Fifth fleet, Combined Maritime Forces

Naval Blockade

The first stage of a naval blockade directed against Iran would in all likelihood be initiated by Maritime Security Operations (MSO) under USCENTCOM.

For Iran, a naval blockade were to be implemented is tantamount to a declaration of war. The blockade constitutes a blatant violation of international law. According to Francis Boyle, a renowned specialist in international law:

"A blockade is an act of war under international and domestic law. A "Blockade" is a term used under international law to specifically refer to belligerent measures taken by a nation for the purposes of preventing the passage of vessels or aircraft to and from another country. Customary international law recognizes blockades as an act of war because of the belligerent use of force even against third party nations in enforcing the blockade. Blockades as acts of war have been recognized as such in the Declaration of Paris of 1856 and the Declaration of London of 1909 that delineate the international rules of warfare."


Meanwhile, war preparations are also being undertaken by Israel and NATO in the Eastern Mediterranean. German war ships are stationed off the Syrian coastline. Turkey which constitutes a major military actor within NATO is a major partner of the US led coalition. It has an extended bilateral military cooperation agreement with Israel. Turkey has borders with both Iran and Syria. (For further details see Michel Chossudovsky, "Triple Alliance": The US, Turkey, Israel and the War on Lebanon, Global Research, August 6, 2006)

Pre-emptive Nuclear War

A diabolical and related consensus is emerging at the political level, pointing to the pre-emptive first strike use of nuclear weapons in the Middle East war theater, more concretely against Iran:

"In January 2005, at the outset of the military build-up directed against Iran, USSTRATCOM was identified as "the lead Combatant Command for integration and synchronization of DoD-wide efforts in combating weapons of mass destruction."

To implement this mandate, a brand new command unit entitled Joint Functional Component Command Space and Global Strike, or JFCCSGS was created.

JFCCSGS has the mandate to oversee the launching of a nuclear attack in accordance with the 2002 Nuclear Posture Review, approved by the US Congress in 2002. The NPR underscores the pre-emptive use of nuclear warheads not only against "rogue states" but also against China and Russia."Michel Chossudovsky, Nuclear War against Iran, Global Research, January 2006)

More recently, a December 2007 NATO sponsored report entitled Towards a Grand Strategy for an Uncertain World: Renewing Transatlantic Partnership". calls for a first strike pre-emptive use of nuclear weapons. The NATO doctrine in this report is a virtual copy and paste version of America's post 9/11 nuclear weapons doctrine as initially outlined in the 2002 Nuclear Posture Review (NPR).

(for details, see Michel Chossudovsky, The US-NATO Preemptive Nuclear Doctrine: Trigger a Middle East Nuclear Holocaust to Defend "The Western Way of Life", Global Research, January 2008)

The preemptive use of nukes as formulated in the NATO Transatlantic Partnership document would be used to undermine an "increasingly brutal World" (e.g. Iran) as well as a means to prevent "rogue enemies" to use "weapons of mass destruction".

Under this NATO framework, which is explicitly envisaged in relation to Iran, US and allied forces including Israel would "resort to a pre-emptive nuclear attack to try to halt the imminent spread of nuclear weapons, " (quoted in Paul Dibb, Sidney Morning Herald, 11 February 2008).

"They [the authors of the report] consider that nuclear war might soon become possible in an increasingly brutal world. They propose the first use of nuclear weapons must remain "in the quiver of escalation as the ultimate instrument to prevent the use of weapons of mass destruction". (Paul Dibb, op cit)

In terms of the ongoing threats directed against Iran, a pre-emptive nuclear attack using tactical nuclear weapons, which are according to the Pentagon is "harmless to the surrounding civilian population" could be carried out in relation to Iran, even if if Iran does not possess nuclear weapons capabilities, as confirmed by the 2007 National Intelligence Estimate (NIE).

According to a 2003 Senate decision, the new generation of tactical nuclear weapons or "low yield" "mini-nukes", with an explosive capacity of up to 6 times a Hiroshima bomb, are now considered "safe for civilians" because the explosion is underground.

Through a propaganda campaign which has enlisted the support of "authoritative" nuclear scientists, the mini-nukes are being presented as an instrument of peace rather than war. The low-yield nukes have now been cleared for "battlefield use", they are slated to be used in the next stage of the Middle East war (Iran) alongside conventional weapons:

"Administration officials argue that low-yield nuclear weapons are needed as a credible deterrent against rogue states.[Iran, North Korea] Their logic is that existing nuclear weapons are too destructive to be used except in a full-scale nuclear war. Potential enemies realize this, thus they do not consider the threat of nuclear retaliation to be credible. However, low-yield nuclear weapons are less destructive, thus might conceivably be used. That would make them more effective as a deterrent."(Opponents Surprised By Elimination of Nuke Research Funds Defense News November 29, 2004)

In an utterly twisted logic, nuclear weapons are presented as a means to building peace and preventing "collateral damage".

The NATO sponsored report --which broadly reflects a growing consensus-- insists that the option of a nuclear first strike is indispensable, "since there is simply no realistic prospect of a nuclear-free world." (Report, p. 97):

"Nuclear weapons are the ultimate instrument of an asymmetric response – and at the same time the ultimate tool of escalation"

The US-NATO doctrine to use nukes on a pre-emptive basis against Iran, with a view to "saving the Western World's way of life", is not challenged in any meaningful way by the antiwar movement.

The mainstream media has a strong grip on the public's perception and understanding of the Middle East war. The dangers of nuclear war in the Post cold War era are barely mentioned and when they are, the use of nuclear weapons are justified as a preemptive military option to ensure the security of Western World.

The truth is twisted and turned upside down.

Media disinformation instills within the consciousness of Americans and Europeans that somehow the war on Iran is a necessity, that Iran is a threat to the Homeland and that the Islamic Republic is supporting Islamic terrorists, who are planning a Second 9/11. And that a pre-emptive nuclear attack is the answer.

In contrast, the powerful economic interests behind the war economy, the Anglo-American oil giants military, the defense contractors, Wall Street are rarely the object of media coverage. The real economic and strategic objectives behind this war are carefully obfuscated.

9/11 is used profusely both by the Bush administration and the media as a justification for waging war, despite the fact that there is mounting evidence of cover-up and complicity of key members of the Bush Administration.

Despite the evidence, Afghanistan, Iraq and now Iran have been portrayed as the "State sponsors of terrorism" and a threat to the Homeland, thereby justifying the various stages of the Middle East military roadmap. The Project for a New American Century, had already described in a 2000 document the nature of this road map or "long war". What is envisaged is a global war without borders:

fight and decisively win multiple, simultaneous major theater wars (PNAC, September 2000)

At present US and coalition forces including NATO and Israel are in an advanced state of readiness to launch an attack on Iran. Leaders of the US led coalition including France, Germany and Italy, should understand that such an action could result in a World War III scenario.

Escalation scenarios have already been envisaged and analyzed by the Pentagon.

US sponsored war games have foreseen the possible intervention of Russia and China in the Middle East. World War III has been on the lips of NeoCon architects of US foreign policy from the outset of the Bush regime.

In response to "Operation Brimstone" and the Naval deployment, Iran's Foreign Ministry said that "Tehran will give a 'maximum response' to the slightest threat against the country's national security."

War propaganda, through media disinformation consists in galvanizing US citizens not only in favor of "the war on terrorism", but in support of a social order which repeals the Rule of Law, derogates fundamental civil liberties, upholds the use of torture and establishes a modern police state apparatus as a means to "preserving Western democracy".

There is a tacit public acceptance of a diabolical and criminal military agenda, which in a very sense threatens "the community of nations" and life on this planet.


In the course of the last four years, Global Research has documented in detail the various war plans directed against Iran. Operation TIRANNT (Theater Iran Near Term) was initially formulated in July 2003, in the wake of the US led Iraq invasion.

We have done our utmost to reverse the tide of media disinformation, to inform our readers and the broader public on the impending dangers underlying the US military adventure.

This is the most serious crisis in modern history which in a very real sense threatens the future of humanity.

We refer our readers to an extensive archive of articles and documents. See our War on Iran Dossier