Tuesday, June 23, 2009

Insurers Revoke Policies to Avoid Paying High

Insurers Revoke Policies to Avoid Paying High Costs

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According to a new report by congressional investigators, an insurance company practice of retroactively canceling health insurance is fairly common, and it saves insurers a lot of money.

A subcommittee of the House Energy and Commerce Committee recently held a hearing about the report's findings in an effort to bring a halt to this practice. But at the hearing, insurance executives told lawmakers they have no plans to stop rescinding policies.

The act of retroactively canceling insurance is called rescission. It happens with individual health insurance policies, where people apply for insurance on their own, not through their employers. Their application generally includes a questionnaire about their health.

The process begins after a policyholder has been diagnosed with an expensive condition such as cancer. The insurer then reviews the health status information in the questionnaire, and if anything is missing, the policy may be rescinded.

The omission from the application may be deliberate, to hide a health condition that might have made the applicant ineligible for insurance. But sometimes there's an innocent explanation: The policyholder may not have known about a health condition, or may not have thought it was relevant.

The rescissions based on omissions or immaterial conditions incensed many lawmakers.

"I think it's shocking, it's inexcusable. It's a system that we have in place and we've got to stop," Energy and Commerce Committee Chairman Henry Waxman (D-CA) said at the hearing.

From the other side of the aisle, Rep. Joe Barton (R-TX) was also appalled.

"Doesn't it bother you to do this?" he asked Don Hamm, CEO of Assurant Health, who appeared with the CEOs of UnitedHealth's Golden Rule Insurance Co. and WellPoint's Consumer Business.

Losing Insurance at a Critical Time

Hamm's insurance company rescinded the policy of Otto Raddatz after he was diagnosed with lymphoma. Raddatz had not told the company about a CT scan by a now-retired doctor that showed gallstones and a weakened blood vessel.

That's because he didn't know about the findings, his sister Peggy Raddatz, an attorney, testified. She spent weeks on the phone and ended up at the Illinois Attorney General's office, which began an investigation. The retired doctor turned out to be off on a fishing trip.

"Luckily, they were able to find the doctor, who was able to say, 'Yes, I never discussed those issues with him; they were very minor,'" Raddatz testifed.

After Minor Misunderstanding, a Policy Revoked

One of Barton's constituents, Robin Beaton of Waxahachie, Texas, did know that her health history included acne and a rapid heartbeat. But she didn't think they were relevant to her current health and left them off her application.

After she was diagnosed with breast cancer and was scheduled for a double mastectomy, her insurer cancelled her policy, leaving her devastated.

"I had to completely refocus on what to do, where to turn, because my insurance canceled me," she said. Beaton called Barton's office, which started a series of phone calls to her insurer. It took a call from Barton himself to get her reinstated.

Committee investigators found a total of 19,776 rescissions from three large insurers over five years. The rescissions saved the insurers $300 million.

Insurers Say They Won't Change Rescission Practice

During the hearing, Barton asked Hamm how he felt hearing the three cases of people who'd been burned by rescission.

"I have to say I felt really bad," Hamm replied.

"It's my hope there will be changes made that this will no longer be necessary," he said. His hope, and that of the other insurance company CEOs who testified, is that a health care overhaul will mean that everyone has insurance. If that were the case, people couldn't wait until they got sick to apply, and insurers wouldn't have to worry about whether someone had lied on an application.

Several lawmakers at the hearing suggested there were things the companies could do right now: They could vet applications when they receive them, rather than waiting until people get sick; they could consider whether something that was omitted was related to a current health condition before rescinding; and they could be more careful to positively identify fraud before rescinding a policy.

Rep. Bart Stupak (D-MI), who chaired the hearing, asked all three CEOs if they would agree to stop rescinding policies except in cases of fraud.

All three said no.

If they don't do something to stop it, said Barton of Texas, Congress will.

New York City workers forced to pay for crisis

New York City workers forced to pay for crisis

By Jeff Riley and A. Wood

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New York City is the home of Wall Street, which has seen trillions of dollars of public funds pumped into the biggest US banks and finance houses, rescuing those responsible for dragging the country and the entire planet into the worst economic catastrophe since the Great Depression of the 1930s.

As the New York Times noted last week, the taxpayer-funded turnaround of the financial sector has set the stage for “the return of supersize banker bonuses,” with senior executives and top traders on track to receive even more money than before the onset of the crisis, in many cases $10 million or more apiece.

For the vast majority of the city’s more than eight million people, those who depend upon their paychecks to make a living, the financial crisis unleashed by the speculative and often criminal activities of those being bailed out has meant attacks on jobs, wages and benefits.

Spearheading this assault is New York’s billionaire Mayor Michael Bloomberg, who has demanded sharp concessions from the more than 280,000 workers employed by the city, while threatening thousands of layoffs.

But cutbacks are being imposed on virtually every section of the working class in New York City, from public employees to hospital workers, construction workers and employees at the New York Times. In every one of these cases, the unions have collaborated fully with management in attacking wages, benefits and working conditions of the workers they purport to represent.

The majority of workers in New York City who have no unions are facing similar attacks. According to Crain’s New York, “An estimated 75 percent of non-unionized businesses are exploring labor-cost reductions like furloughs, pay cuts and increased employee contribution to health plans.”

The city’s biggest union, Local 1199 of the Service Employees International Union, voluntarily reopened its contract covering 145,000 hospital and nursing home workers, supposedly to deal with a crisis of its pension fund resulting from losses on Wall Street.

The employers’ group, the League of Voluntary Hospitals and Homes, responded with a set of concession demands, including elimination of wage increases, additional $100 pension premiums and allowing hospitals to cut funds for training and child care.

Negotiations for give-backs have dragged on for over five weeks, with the union staging ludicrous charades aimed at mobilizing sections of workers into protest actions demanding that hospital CEOs accept 1199’s concessions.

Meanwhile, unions representing hundreds of thousands of municipal workers reached a deal with the Bloomberg administration that trades $1 billion worth of health care concessions over the next six years for a three-month reprieve for 1,000 workers who were to be laid off. The concessions impose new $50 co-pays for emergency room visits, $100 co-pays for hospital admissions and other restrictions on health care.

The agreement did nothing, however, to save the jobs of some 1,000 provisional workers-those hired for positions without first taking civil service exams-who were slated for layoff. The bulk of those targeted were at the Administration for Children’s Services. A fiscal 2010 budget approved by the City Council last Friday has apparently forestalled-temporarily-some of those layoffs.

At the New York Times, the unions agreed to a deal that cuts unionized workers’ pay by 5 percent through the end of the year, while failing to incorporate a no-layoff pledge that union leaders had claimed they would get in return.

The city’s 40 building trade unions have accepted some of the deepest cuts, agreeing to an “Economic Project Labor Agreement” (PLA) last month. The deal reduces wages, hours and benefits for workers at the city’s 12 largest and most expensive construction projects, including the Beekman Tower, a 900-unit luxury condo high rise on the northern edge of the financial district. Construction on the building, designed by the architect Frank Gehry, was shut down in March by the Forest Ratner Co. and resumed only after the concessions agreement.

The deal includes direct pay cuts amounting to as much as $2 an hour plus $2 an hour cuts in payments for annuities and the slashing of overtime rates.

At a union-management Construction Industry Partnership meeting held in February, Larry Silverstein, the developer of the former World Trade Center site, gave a keynote address calling for the concessions in which he said that the demand for cuts in labor costs were being driven by the Wall Street banks.

“We need to reestablish the bottom line on labor costs for banks to be willing to lend,” Silverstein told his audience of developers and union bureaucrats.

Lou Colletti, head of the Building Trades Employers Association, followed up by declaring, “We must take drastic action to survive. The demand being made for cost reduction is not coming from the employers of union labor but from the banks.”

While no doubt such claims are self-serving, there is every reason to believe that the same banks that have been bailed out with trillions of dollars from the public treasury are leading the drive to slash labor costs, reduce public budgets and increase the rate of profit, all at the expense of the jobs and living standards of working people.

The unions have not only proven incapable and unwilling to resist these demands, they are acting as direct partners in imposing them.

Unemployment crisis grips US states

Unemployment crisis grips US states

By Tom Eley

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The unemployment rate increased in 48 of 50 states and Washington, DC, in May, according to US Department of Labor statistics. For the year as a whole, the jobless rate has increased in every state, and in eight states it is now at its highest level since 1976, when monthly state-level statistics were first issued by the federal government. The national jobless rate in May rose to 9.4 percent.

The state of Michigan again had both the highest unemployment rate in the nation at 14.1 percent, and its biggest monthly increase, up 1.3 percentage points from 12.9 percent in April. Michigan, Indiana, and Ohio have been devastated by the shutdown of auto plants and their suppliers, orchestrated by President Barack Obama's Auto Task Force. In Ohio, unemployment increased to 10.8 percent, and in Indiana it rose to 10.6 percent. The Midwest as a whole had an unemployment rate of 9.8 percent. Kentucky, whose economy is also tied to the auto industry, saw its unemployment rate increase to 10.6 percent.

California, the nation's most populous state with about 37 million residents, lost the largest number of jobs, and its unemployment rate rose to 11.5 percent, the highest level on record and an enormous increase over May 2008, when the rate stood at 6.8 percent. There are now 2.1 million officially unemployed in the state, 885,000 more than last May. California has been hammered by a near-bankruptcy of the state government (14,000 public sector jobs were lost in May), the housing crisis (10,000 construction jobs lost) and a sharp fall-off in manufacturing (10,000 factory jobs lost.)

Among the regions, the West Coast had the highest jobless rate at 10.1 percent. Oregon, the state with the second highest unemployment rate, saw an increase to 12.4 percent from 12 percent in April. The state's wood products industry has lost tens of thousands of jobs in the past year. Washington state's unemployment rate rose to 9.4 percent in May. In Nevada, unemployment rose to its highest recorded level ever, at 11.3 percent.

The rapid increase in unemployment in the Southeast took economists by surprise. South Carolina's unemployment rate surged to 12.1 percent. The state has been hard-hit by layoffs in manufacturing, purging about 30,000 jobs since last May. In one South Carolina county, Allendale, unemployment is over 22 percent. In neighboring North Carolina, the jobless rate rose to 11.1 percent, nearly double the level of a year ago, largely owing to layoffs in banking, furniture manufacture, and metal fabrication industries. In Georgia the unemployment rate climbed to a record high of 9.7 percent. Georgia has been particularly hard hit by the financial crisis, with several regional banks collapsing so far this year. In Alabama, the unemployment rate increased rapidly from 9 percent to 9.8 percent in one month.

In Florida, the fourth most populous American state, the jobless rate vaulted to 10.2 percent, its highest level in 34 years. Florida lost 61,000 jobs in May, only slightly fewer than California. Arizona joined Florida as the states with the most rapid increase in unemployment. In Texas, the second most populous state, the unemployment rate increased for the seventh consecutive month and now stands at 7.4 percent.

Of the regions, the Northeast had the lowest unemployment rate, at 8.3 percent. Rhode Island paced the area in joblessness, with its rate increasing a full percentage point from April to 12.1 percent in May.

Major metropolitan areas are experiencing drastic increases in unemployment, as well. Metro Los Angeles now has an unemployment rate of 11.6 percent. In New York City there were about 360,000 officially unemployed in May, or nine percent of the workforce. In Washington, DC, unemployment rose to 10.7 percent, and in Chicago it climbed to 9.9 percent. The Detroit metropolitan area had the highest unemployment rate of any major US city, increasing to 15.4 percent. It is much higher—close to 25 percent—in the city proper.

Only in the sparsely populated states of Nebraska and Vermont did the unemployment rate hold steady. The agricultural states of Nebraska and nearby North Dakota share the lowest unemployment rate, both at 4.4 percent. This may reverse itself as the decline in agricultural commodity prices ripples through the plains states' economies.

As always, the official rate belies the true scope of unemployment by removing from the workforce count a large number of workers who are inactive or “discouraged” in seeking work, and by counting as employed those who are only able to get part-time hours. While state-by-state statistics for this expanded definition of unemployment are not available, it is very likely that the real unemployment rate in Michigan is now approaching 25 percent, and that in a number of states, including California, it is around 20 percent. On a national level, this broader rate of unemployment and underemployment stood at 16.4 percent in May. These are near-depression-level figures.

Layoff announcements continue. Rupert Murdoch's News Corp. on June 16 announced that it would cut the workforce of its social networking division, MySpace, by 30 percent, dismissing 420 workers. On June 12, Textron announced it would lay off 1,300 workers from its Cessna Aircraft plants in Kansas. Lockheed Martin will lay off 750 workers from its Owego, New York, factory. The Broward County public school system in South Florida is going forward with plans to lay off 400 teachers. Metalcraft, a machine fabricating plant located in the town of Mayville, Wisconsin, said it would indefinitely extend the layoffs of 375 workers who have been out of work since April. This will devastate the small town, which has fewer than 5,000 residents.

In one revealing layoff announcement, Hartford County, Maryland, carried forward plans to lay off over 35 employees from its public libraries. It will also likely close a branch, reduce library hours and services, even as patron use reaches an all-time high. “I am distressed that the library, which is seeing increased usage due to the economy, will have to limit its hours, services and maybe locations just when the community needs those services the most,” local resident Patricia H. Fisher told the Baltimore Sun.

The first quarter of 2009 has also witnessed a fall-off in personal income. According to data from the Bureau of Economic Analysis (BEA), personal income fell 0.5 percent nationally. In California and Michigan, it tumbled by 0.8 percent. Meanwhile, private sector earnings fell in the first quarter by 1.4 percent nationally, and dropped in all 50 states.

The declines in private sector earnings and personal income spell disaster for state and local budgets, already in dire straits in much of the country due to the twin economic and financial crises. According to a recently-released analysis by the Nelson A. Rockefeller Institute of Government, state-level income tax collections fell a staggering 26 percent in the first quarter of 2009 compared to the previous year.

The fall-off was most pronounced in the states that have been hardest hit by the collapse in real estate and manufacturing. In Arizona, first quarter personal income tax revenue fell by 55 percent from the previous year; in South Carolina the decline was 38.6 percent; in Michigan, 34.4 percent. California, which is already teetering on the brink of bankruptcy, saw a decline of 33.8 percent in personal income tax receipts. The data bodes ill for the largest US state, which collects nearly half of its state revenues from income taxes, one of the highest proportions in the nation.

The drop in personal income tax revenue results from layoffs, wage cuts, and reductions in hours worked. The budget crisis in the states will be aggravated by declining revenue from real estate and sales taxes. The Rockefeller Institute predicted declining revenue will require a new round of austerity measures. It “will punch still deeper holes in the budgets of many states [and] increases the risk that state budget agreements for 2009-10 will not close budget gaps completely, and that states will need to make midyear budget cuts,” the report notes.

Some analysts tried to find a silver lining in the latest spate of dismal economic data, latching on to a Labor Department report that found that the total number of unemployed workers collecting benefits fell last week for the first time since January, by 148,000. Now, a total of 6.69 million workers are receiving unemployment benefits. However, as Forbes pointed out, the drop came after 21 consecutive weeks of increases, and about “half of the unemployed have been reaching the end of their 26 weeks of unemployment payments without finding jobs—so they disappear from that unemployment statistic without actually being employed.” The number of US workers filing for new jobless benefits claims also rose last week by 3,000 to 608,000.

Obama's economic advisers predicted in January that with passage of the economic stimulus package, the US unemployment rate this year would not exceed 8 percent in 2009. It has already hit 9.4 percent, rendering meaningless the stimulus package's modest promises of job creation. Most economists now believe that the US unemployment rate will top 10 percent by year’s end, and that it could rise to 11 percent at some point in 2011.

There is general agreement, moreover, that employment levels and conditions of labor will not return to those that prevailed prior to the financial crisis. This is no accident. The ruling elite, led by the Obama administration, has seized on the crisis as a long-awaited chance to restructure class relations to its advantage for decades to come.

Obama, Harper force bankruptcy on auto parts industry

Obama, Harper force bankruptcy on auto parts industry

By Tom Eley

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President Barack Obama’s Auto Task Force this week rejected a request from two national organizations of auto-parts suppliers for up to $10 billion in loan guarantees. Task Force member Ron Bloom told industry representatives that Obama favors bankruptcies and the “contraction” of the industry— that is, tens of thousands of layoffs. “Consolidation for the industry needs to take place,” Bloom is reported to have said.

The Canadian government has also rejected assistance to the industry. Currently there are about 400,000 auto parts jobs in the US, and another 100,000 in Canada. At least a third of these workers will confront layoffs within the next year or two.

“The carnage will be occurring in the next 60 to 120 days,” said Craig Wiggins of the auto consultation firm Tooling & Capital Solutions of Tecumseh, Ontario. “It’s still going to be an abolute bloodbath.” Wiggins was involved with the loan negotiations taking place in both Washington and Ottawa.

Neil De Koker, president of the Original Equipment Suppliers Association, said the US Treasury’s decision would likely result in “disorderly chaos in the industry.” The Motor & Equipment Manufacturers Association (MEMA) joined in the appeal for the loans. The Treasury had earlier extended $5 billion in loans and guarantees to firms in the industry that supplied General Motors and Chrysler Group LLC.

The auto parts industry has been hammered by the national collapse in auto sales, which have declined by more than one third from last year, and the bankruptcies of GM and Chrysler, which have disrupted long-established supply chains.

Twenty-one auto parts manufacturers have filed for bankruptcy so far this year. Among these are major concerns such as Visteon Corp., Metaldyne Corp., Noble International Ltd. and Cooper-Standard Automotive Inc., all headquartered in Michigan. An industry executive anticipates that these will now be a “rush of failures.” The manufacturers’ associations pleaded with the Obama administration, warning that without further assistance 49 major suppliers would collaspe in 2009, followed by 60 more in 2010.

“There are a number of parts manufacturers that are virtually on the edge of being pushed into a Chapter 11 situation,” MEMA President Bob McKenna warned. “And, on the other hand, when business picks up, you’ve got to have money to invest in building those products to satisfy the market. But in an environment where nobody is lending money, particularly to the automotive industry, it’s pretty tough.”

Particularly hard-hit by the destruction of much of the auto parts industry will be the states of Michigan, Ohio, Indiana and Kentucky. The collapse of the parts suppliers will accelerate next week, ironically, when Chrysler resumes production. As the Windsor (Ontario) Star notes, “in order to drive down parts prices, the Detroit Three have been feeding [suppliers] just enough business for the past three years to keep them staggering along in a near-death state. The zombies will start to die in larger numbers next week when Chrysler reopens its plants for production and elects not to keep some of them alive. More will disappear when GM does the same in a few weeks.”

Canadian workers, especially in Ontario, will also suffer disproportianately. About one third of the 1,700 “tier one” large-scale parts producers have operations in Canada. The Conference Board of Canada reported this week that it anticipates the destruction of 37,000 of the country’s 100,000 parts jobs in 2009, a decline in auto parts production by 39 percent, a staggering 48 percent decline in parts exports, and the disappearance of many small and medium-sized producers. Only five years ago, there were almost 140,000 parts jobs in Canada. Next year there will be slightly more than 60,000.

It is expected, however, that two large Canadian parts firms, Magna International Inc. and Linamar Corp., will benefit disproportionately from the industry’s collapse, assuming market share from the wreckage of their US and Canadian counterparts.

Much of the parts industry is located in the small towns and medium-sized cities of the American Midwest and southwestern Ontario. In one example, the collapse of Noble International will result in the closure of a plant in Archbold, Ohio, a small town in rural northwest Ohio. There are just over 4,000 residents in Archbold. Noble was among the town’s largest employers. It will lay off 75 workers. The plant had operated in the town since 1967.

Obama’s decision to allow the auto parts suppliers to collapse demonstrates, once again, that its intervention in the auto industry has never had as its aim “saving jobs.” On the contrary. Washington and Ottawa have deliberately set about to destroy the jobs and living standards of auto workers as a first stage for a broader assault on the entire working class. At the same time, the Bush and Obama administrations have handed over trillions of dollars to the finance industry, in the form of guarantees on their debts, loans and direct cash infusions.

The UAW has been an indispensible co-conspirator in the assault on American auto workers. This pro-business enterprise has sought to stamp out all resistance among workers to layoffs, going so far as to conclude a six-year “no strike pledge” with GM and Chrysler.

Now Ford Motor Co. has requested the same treatment from the UAW. Ford CEO Alan Mulally told reporters at Detroit’s National Summit on the economic crisis this week that conversations with the UAW over the no-strike pledge were already under way. Outlawing the strike is “one piece of the conversation we’re having with them,” Mulally said. “We continue to talk with them on improving our competitiveness.”

UAW executives have helped impose a vast array of concessions on GM and Chrysler workers, including wage and benefits cuts, and changes to workplace rules. The UAW blackmailed workers, telling them that giving up concessions was the only way they could save their jobs. But after forcing the give-backs, Chrysler and GM announced plant closures and tens of thousands of layoffs. With its no-strike pledge, the UAW hopes to snuff out worker resistance for years to come.

For itself, the UAW officialdom secured a majority stake in Chrysler and will be a major shareholder in GM as well.

Ford is the only one of the “Big Three” US automakers that did not enter bankruptcy this year. In the name of “competetiveness,” as Mullally put it, the UAW is now negotiating similar terms with Ford.

More than 1 billion people hungry worldwide in 2009

More than 1 billion people hungry worldwide in 2009

By Joe Kishore

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Humanity will achieve the dubious distinction this year of having more than 1 billion members of its species living in hunger for the first time in history.

The number of undernourished is estimated to soar by about 100 million over last year, to 1.02 billion, according to the Food and Agriculture Organization of the United Nations (FAO).

The 11 percent surge in the world’s hungry is primarily a product of the global economic crisis, combined with persistently high food prices. World economic output is expected to decline by more than 3 percent this year—the first global contraction since the Second World War. The economic crisis, the FAO notes, “has reduced incomes and employment opportunities of the poor and significantly lowered their access to food.”

The world’s hungry are concentrated in Asia and the Pacific (642 million), Sub-Saharan Africa (265 million), Latin America and the Caribbean (53 million), and the Near East and North Africa (42 million). Sub-Saharan Africa has the highest concentration of hungry, while the Middle East and North Africa saw the most rapid growth in the number of hungry people (13.5 percent).

The agency’s definition of hunger is based on the number of calories consumed. Depending on the relative age and gender ratios of a given country, the cutoff varies between 1,600 and 2,000 calories a day.

It is likely the FAO figures significantly underestimate the number of people suffering from hunger. A study published earlier this year found that 12 million children are at risk of inadequate food in the United States (see, “US: 12 million children face hunger and food insecurity”). FAO figures estimate the total number of hungry people in the entire “developed world” (including the US and Europe) at 15 million.

According to the FAO, the growth of hunger is not the result of a decline in food production. Cereal production, for example, will only slightly decrease this year from 2008. Instead, “the poor are less able to purchase food, especially where prices on domestic markets are still stubbornly high.... At the end of 2008, domestic staple foods still cost on average 24 percent more in real terms than two years earlier; a finding that was true across a range of important foodstuffs.”

In other words, the sharp growth in hunger is due not to a lack of capacity, although global food production could be significantly increased given a rational and scientific allocation of agricultural resources. Instead, the rise in social misery results from the fact that millions more people are now unable to afford the most basic necessities.

The FAO highlights three aspects of the present crisis that make it particularly severe. First, it follows the rapid growth in food prices in the years 2006-2008. This bubble was driven in part by speculative activities of investors pouring money into commodities as the financial crisis developed. This preceding surge in prices eroded any buffer created by households to cope with economic shocks (see figure).

Second, the crisis is global. The FAO notes, “When economic crises are confined to individual countries, or several countries in a particular region, governments can make recourse to instruments such as currency devaluation, borrowing or increased use of official assistance to face the effects of the crisis.”

Third, poorer countries are “more financially and commercially integrated into the world economy” and are therefore “far more exposed to changes in international markets.” They are highly susceptible to rapid changes in global demand or supply and credit restrictions.

Another related factor not mentioned by the FAO has been the way in which the US government has monopolized credit markets to fund its multi-trillion-dollar bank bailouts, exploiting the privileged position of the American dollar to do so. Poorer countries do not have this privilege and are facing higher borrowing costs as a consequence.

The FAO takes note of the growth in interest rates for debt to “developing countries” along with the complete absence of available credit for some nations. The economic crisis has led to other rapid shifts in capital markets, including the drying up of foreign direct investment.

Many poorer countries are seeing a sharp decline in remittances from migrants, by 5 to 8 percent. The FAO notes: “What is more, remittances have usually been resistant to shocks and often even increased during economic crises in recipient countries. The countercyclical effect of these transfers is unlikely to happen this time due to the global dimension of the current recession.”

The FAO also expects foreign aid to drop by 25 percent to the poorest 71 countries. Total official development assistance (ODA) aid from all countries has been about $100 billion a year—as compared to bank bailouts running in the trillions and a US military budget of more than $500 billion.

Countries that rely on exports have been particularly hard hit by the economic crisis, and world trade is anticipated to fall between 5 and 9 percent this year.

The implications of the rapid deterioration of the global economy and the consequent decline in living standards for millions of people were not lost on UN officials. Dr. Jacques Diouf, director-general of the FAO, commented: “The silent hunger crisis...poses a serious risk for world peace and security.” Josette Sheeran of the World Food Program noted, “A hungry world is a dangerous world.”

Many commentators pointed to the possibility of a repeat of the food riots that broke out in 2008. Earlier this year, the G8 countries met to discuss the global “food emergency.” Little emerged from the conference save a mutually expressed concern about the danger of social upheaval and revolution.

Journalism as state provocation

The New York Times and Iran: Journalism as state provocation

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In an editorial published Thursday entitled “Iran’s Nonrepublic,” the New York Times once again denounced the country’s presidential elections, declaring that “government authorities bulldozed the results” and that the victory of the incumbent, Mahmoud Ahmadinejad, was “bogus.”

At the same time, echoing a statement made by President Barack Obama the day before, the newspaper warned, “Given its history with Iran, the United States must take special care not to be seen as interfering.”

The Times editorial board does not believe that this stricture applies to itself. Since the results of the June 12 election were announced, the newspaper has pursued a journalistic policy of out-and-out provocation in service of the imperialist interests that official Washington insists it must not be seen as pursuing.

The Times observes no standard of journalistic objectivity, reporting as fact that the Iranian election was stolen, without providing a scintilla of proof to back it up. Instead, it uncritically repeats the insistence of the Mousavi camp that it is so.

The newspaper has not even bothered to report, much less analyze, the vote totals, which are readily available by both city and province and refute the claims made that the ballots were rigged to give Ahmadinejad a 60 percent margin across the board.

On the contrary, they show that Mousavi won—in some cases by a two-to-one margin—precisely in the areas that are now the center of the election protests—the wealthier suburbs of Tehran, Shiraz and elsewhere.

The US has intense interests in Iran, with the Obama administration fighting wars on its eastern and western borders. There is, moreover, the long history of hostility between the two countries, stemming from Washington’s previous domination of Iran and its oil wealth through its dictatorial client regime under the Shah, and the revolution that brought that regime to an end. Given these interests and this history, conscientious coverage of Iranian politics, particularly by US journalists, calls for not only objectivity, but also sensitivity to Washington’s intervention in Iran’s affairs and attempts to influence its politics.

The Times coverage, however, exhibits no such objectivity whatsoever. The newspaper has simply ignored commentary from prominent analysts of the region who have suggested that the claims of a rigged election are not supported by the evidence. These include Anthony Cordesman, the chief military strategy and Middle East analyst for the Center for Strategic and International Studies; Hillary Mann Leverett, the former chief Iran analyst on George W. Bush’s National Security Council, and her husband Flynt Leverett, a long time CIA analyst and NSC staffer, who together wrote a column entitled “Ahmadinejad won. Get over it;” and George Friedman, the head of the Stratfor private intelligence service.

All of them said that the right-wing populist Ahmadinejad retained substantial popular support in Iran, particularly among the rural poor and more oppressed social layers, and warned against “Iran experts” who based their analyses on wishful thinking and contact with a more affluent, English-speaking minority in Iran.

The fact that the Times employs its claims of fraud to demand a new election—calling the Guardian Council’s call for recounting ballots a “cynical gesture”—is highly significant. The newspaper is not interested in correcting vote fraud, but rather in bringing pressure to bear within the Iranian state to effect a political coup.

This was spelled out explicitly Thursday by Times foreign affairs columnist Roger Cohen, who speculated that Iran’s supreme leader, Ayatollah Ali Khamenei, “will come to view Ahmadinejad as a liability.” He continued, “In Mousavi he has a credible vehicle for a reform of the regime that serves to preserve it... The supreme leader can find the means to reverse course.”

This succinctly sums up Washington’s aims—to exert pressure on the Iranian state to carry out a change at the top that will render the regime more amenable to US interests in the region and more open to American capital within Iran. The concern for democracy, while sincerely held by millions of Iranians, is for the Times, as for the US government, merely a pretext.

No doubt there were instances of vote-rigging in Iran, but this is the rule, not the exception, in elections around the globe. And not infrequently, particularly in the so-called lesser developed countries, elections end in charges of fraud by the losing party that trigger mass demonstrations and even armed clashes.

Just last April, elections in Moldova ended in violent protests, with the losing party claiming fraud and the winning one saying it was the victim of an attempted coup. In November of last year in Nicaragua, nationwide local elections in which the opposition claimed irregularities led to confrontations involving thousands of people armed with bats, rocks, machetes and guns. Last July, charges of election fraud led to mass rioting in the capital of Mongolia. There is no record of the Times becoming particularly exercised about any of these events.

Particularly instructive is the attitude taken by the newspaper toward the disputed 2006 presidential election in Mexico, when the conservative candidate Felipe Calderon—with just 36 percent of the vote and amid substantiated charges of gross electoral fraud—claimed victory over his left-nationalist opponent, Andres Manuel Lopez Obrador.

The Times called for no new election then, and was largely indifferent to the evidence that the election had been rigged. While the massive crowds that took to the streets of Mexico City were comparable to those seen in Tehran, the newspaper showed only disdain for the protesters.

On July 7, just five days after the contested vote totals were announced, the Times haughtily editorialized: “Mr. Lopez Obrador has occasionally furthered his political career by inviting supporters to take to the streets... but he should resist inciting mass protests, which would harm Mexico’s stability and add to his image as a less-than-committed democrat.”

In Mexico, the victim of vote fraud was told to stand down in the interests of “stability,” while mass protests by his supporters were portrayed as a threat to democracy—the exact inverse of the newspaper’s approach to the Iranian events. Why the difference? In Mexico, the candidate favored by Washington won, and in Iran, the White House seeks not stability, but destabilization.

Even closer to home, the approach of the newspaper to the claims of a stolen Iranian election stands in stark contrast to the open theft of the 2000 election by the Republican Party, which only two years before had sought to carry out an extra-constitutional coup against an elected president by means of a bogus impeachment—an operation that the Times had helped legitimize.

In that election, it was not a matter of the government offering a partial recount of disputed ballots in Florida, but a direct intervention by the US Supreme Court to stop a statewide recount that had been ordered by the Florida Supreme Court to insure that all votes were properly counted. Did the Times advocate mass protests or demand a new election? Far from it. The newspaper made itself an accomplice to this unprecedented assault on democratic rights—the suppression of the vote to install the candidate who had lost the popular vote nationally.

In the course of the bitter battle over the Florida vote, a Times editorial demanded an end to “wild talk of vote-stealing and coups d’état”—precisely what was happening. And after the US Supreme Court selected Bush, negating the will of the majority of voters, the newspaper demanded that the decision be accepted in order to “unify the nation.” It praised Democratic candidate Al Gore for capitulating, calling it “a patriotic duty.”

Neither the Times nor the US government are in a position to give lessons to Iran or anyone else on the subject of democracy. The American electoral system, rife with fraud, is controlled lock, stock and barrel by two parties of big business whose national candidates are vetted for their loyalty to a financial oligarchy.

Leading US politicians—including John Kerry in an op-ed piece published by the Times Thursday—have insisted that the US must keep a low profile in Iran because of its role in organizing the 1953 coup that overthrew the nationalist prime minister, Mohammad Mossadeq, and ushered in the 26-year torture regime of the Shah. By the same token, the editors of the Times should keep their mouths shut.

In 1953, their correspondent in Tehran, Kennett Love, was not only a willing conduit for CIA disinformation, but acknowledged participating directly in the coup. He subsequently wrote of giving an Iranian army tank column instructions to attack Mossadeq’s house. Afterwards, the Times celebrated the coup and demanded unconditional support for the Shah’s regime.

Little has changed since. It is not difficult to find evidence that the Times acts—both in its news coverage and its editorial line—as a major instrument of US foreign policy. Its main function is to provide justifications for the policies pursued by American imperialism around the globe, while manipulating public opinion at home and abroad to support them. As the “newspaper of record,” it sets the agenda for much of the US media, which echoes its line.

There was, of course, the well-known and criminal role played by the newspaper in promoting—and through its senior correspondent Judith Miller helping to fabricate—the lies of the Bush administration about “weapons of mass destruction” that were used as the pretext for the war against Iraq.

Then there was the newspaper’s endorsement of the abortive April 2002 coup against Venezuelan President Hugo Chavez. The Times praised the sections of the Venezuelan military that had “intervened and handed power to a respected business leader.” It argued that, as a result of the armed overthrow of an elected president, “Venezuelan democracy is no longer threatened.” It likewise helped Washington cover its tracks, claiming—incredibly—that the coup was “a purely Venezuelan affair.”

More recently, there was the newspaper’s response—both its reporting and editorials—to the August 2008 Russian-Georgian war. Using the same methods as in Iran—contempt for journalistic objectivity, the retailing of claims made by Washington and its allies as fact and disregarding of all evidence to the contrary—the Times presented the war as an unprovoked act of Russian aggression. It willfully ignored undeniable evidence that the fighting began as an unprovoked and brutal attack by Georgian forces on Tskhinvali, the capital of Georgia’s breakaway province of South Ossetia.

The Times cast the conflict as “Russia’s war of ambition,” an attempt by Vladimir Putin “to re-impose by force and intimidation as much of the old Soviet sphere of influence as he can get away with.” Facts on the ground, reported by monitors in Georgia from the Organization for Security and Cooperation in Europe (OSCE) among others, belied this account and pointed to the US using Georgia as its proxy in an act of aggression against Russia itself.

In the case of the present crisis in Iran, the Times has employed all of these methods of distortion and deceit on a grand scale, in an effort that was prepared well before the elections were held.

Leading this effort is Executive Editor Bill Keller, who is arguably the most morally compromised editor in the US today—and that’s saying something! It was Keller who, at the request of the Bush administration, withheld a story on the National Security Agency’s illegal domestic spying operation until after the 2004 election, playing what may have been a decisive role in delivering Bush a second term.

He was recently dispatched to Tehran to write “Memos from Iran.” The extraordinary character of this assignment is shown in the fact that between taking over as the newspaper’s senior editor in July 2003 and his trip to Iran, Keller—the newspaper’s man in Moscow during the collapse of the Soviet Union—is credited by the Times web site with writing precisely six articles, none of them news stories.

Keller’s presence is evidence that the Times is involved in a major operation. He was accompanied to Tehran by a number of others, including the vicious anti-socialist foreign affairs columnist Roger Cohen. A veteran propagandist for US imperialist interests, Cohen has churned out justifications for the US intervention in the Balkans, the war against Iraq, the US policy in Georgia, and now the destabilization effort in Iran.

In the days of Kennett Love, the CIA put journalists on its payroll to secure their collaboration. With the likes of Keller and Cohen, this is no longer necessary. The lavishly-paid senior columnists and editors at the Times don’t need to be bribed. Their social interests are naturally in sync with the aims of US imperialist policy.

The seamless intersection of the news and views published in America’s leading newspaper with the interests of US imperialism and its ruling elite is both a symptom and contributing factor in the advanced decay of democratic processes in the United States.

NSA monitors millions of American e-mails

NSA monitors millions of American e-mails

By Tom Eley

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Several current and former agents within the National Security Agency (NSA), speaking on condition of anonymity, have told the New York Times that the spy agency likely monitors millions of e-mail communications and telephone calls made by Americans. The new revelations follow the disclosure in April that the NSA’s monitoring of domestic e-mail traffic broke the law in 2008 and 2009.

Last year, Congress passed legislation providing the NSA greater latitude to spy on the communications of Americans, so long as it resulted inadvertently from the agency’s efforts to spy on foreigners or those it “reasonably believed” to be outside US borders. This authorized the NSA to intercept tens of millions of e-mail and phone communications that pass through American telecommunication “gateways.” The measure was attached to a congressional law granting immunity to telecommunications companies that turned over private phone records to federal authorities.

Among those voting for the bill was then-Senator Barack Obama of Illinois. In all, 293 members of the House and 69 senators voted to pass the bill.

To launch investigations specifically targeting American “terror suspects,” the legislation requires that the NSA first gain a warrant from the secretive Foreign Intelligence Surveillance Court (FISC). In fact, this is a mere formality. The FISC almost never turns down a government request for a warrant.

Yet the NSA’s activities have gone beyond even this pseudo-legal system specifically constructed in order to allow domestic spying. It is not known how many Americans have been spied upon, but the Times’s sources report that in 8 of 10 warrants issued by the FISC, the NSA “is believed to have gone beyond legal boundaries.” Further, “Because each order could single out hundreds or even thousands of phone numbers or e-mail addresses, the number of individual communications that were improperly collected could number in the millions,” the Times reported.

A former agent said the NSA’s illegal domestic spying operations have been underway for years. In 2005, the agent said he was trained to use a secret database called Pinwale, which allows agents “to read large volumes of e-mail messages to and from Americans.” The agent said he believes that American e-mail messages culled by the program could amount to as much as 30 percent of the total. Two current NSA agents confirmed that the program continues today.

Sources confirmed to the Times that spying on the domestic e-mail of Americans was at the heart of a bitter feud within the Bush administration in 2004 involving former Attorney General John Ashcroft and top Justice Department officials who “staged a near revolt over what they viewed as possibly illegal aspects of the NSA’s surveillance operations.” The crisis unfolded at the hospital bedside of Ashcroft, who was recovering from pancreatitis. Ashcroft and acting Attorney General James Comey refused to sign an order reauthorizing a domestic electronic surveillance program they believed to be in violation of 1978’s Foreign Intelligence Surveillance Act (FISA).

“The controversy was mostly about that issue,” a former Bush administration official with knowledge of the dispute told the Times. At the time, Comey expressed concern over “the collection of ‘meta-data’ “ on Americans’ communications, which could be used to build a database that identifies both broad communication patterns as well as to map out communication links among individuals and groups. The Bush administration went ahead with the program without Justice Department authorization. (see “Former Justice Department official describes illegal actions by Bush administration in defense of domestic spying”)

The NSA has evidently told lawmakers that the known instances in which it broke legally established domestic spying guidelines were inadvertent cases of “overcollection.” While the NSA refused comment for the Times story, a spokeswoman for National Intelligence Director Dennis Blair claimed that due to legal and logistical complications, “technical and inadvertent errors can occur,” and that “when such errors are identified, they are reported to the appropriate officials, and corrective measures are taken”

The chairman of the House Select Intelligence Oversight Panel, Rush Holt (Democrat, New Jersey), cast doubt upon this vague explanation. “Some actions are so flagrant that they can’t be accidental,” he told the Times.

This is an extraordinary declaration. The leading member of the House committee tasked with overseeing US spy agencies is saying, in effect, that the NSA is deliberately breaking the law in order to spy on large number of Americans without warrants or any other form of legal justification. Taken together with the revelations from the Times’s anonymous sources, it paints a portrait of an intelligence apparatus that operates with impunity, unaccountable to the legislative and judicial branches of government—much less to the American people, who in the last three national elections have repudiated the anti-democratic policies of the Bush administration.

The Times followed its investigative article with an editorial that correctly points out that the NSA abuses underway were prepared by last year’s congressional revisions of FISA. The editorial notes that “President George W. Bush started violating that law shortly after 9/11 when he authorized the NSA to conduct domestic wiretapping without first getting the required warrant. When that program was exposed by The Times in late 2004, the Bush team began pressuring Congress to give retroactive legal cover to the eavesdropping operation and to the telecommunications companies that participated in it.”

The reference to the Times exposing the article in late 2004 is rather self-serving. In fact, the Times shielded the evidence of NSA domestic spying from the American public until after the 2004 election, at the behest of the Bush administration. (See, “A damning admission: New York Times concealed NSA spying until after 2004 election”)

Congressmen have not revealed to the American public details of their concerns over the NSA domestic spying program, and Senator Dianne Feinstein of California, the chairman of the Senate Intelligence Committee, on Wednesday rushed to deny the implications of the Times story. “Everything that I know so far indicates that the thrust of the story—that there are flagrant actions essentially to collect content of [American e-mails]—is just simply not true, to the best of my knowledge,” she claimed.

In fact, the Obama administration and leading Democrats are fully committed to advancing the power of the police state built up during the Bush years.

In testimony before the Senate Judiciary Committee on Tuesday, Attorney General Eric Holder refused to state that warrantless wiretapping of Americans’ phone conversations is illegal, a position both he and President Barack Obama advocated before Obama’s inauguration. He also refused to say whether or not the Justice Department would rescind a 2006 Bush administration White Paper that attempted to provide a legal rationale for the warrantless wiretapping program.

The revelations also serve as another indication of the powerful domestic role of the military-intelligence apparatus—a power increasingly independent of the nation’s political institutions and laws.

In April, after voices within or close to the “national security community” launched high-decibel criticism of President Barack Obama’s decision to comply with a court order and release Bush administration legal memorandum that sought to create a pseudo-legal basis for torture, Obama responded by promising that there would be no investigation of those who ordered or carried out torture.

This only emboldened the military-intelligence apparatus and the Republican right. Top generals supported Obama when he reversed his earlier acceptance of a court order to release dozens of photos depicting US soldiers torturing Iraqi prisoners. Then, buckling under pressure from the military-intelligence apparatus, Obama also backtracked on campaign promises to end the military tribunal system for trying alleged terrorists held at the Guantanamo Bay prison camp.

Indeed, the congressmen ostensibly tasked with overseeing the nation’s spy agencies are themselves the subjects of its espionage. It is openly acknowledged that the NSA carries out spying operations on members of the US Congress and prominent political figures. In April, it came to light that the NSA had been wiretapping the conversations of Rep. Jane Harman, a California Democrat and then the ranking member on the House Intelligence Committee, as she promised to intervene on behalf of two indicted pro-Israeli lobbyists in return for political favors. Harman had herself been an outspoken advocate of the NSA’s warrantless spying operations.

The former agent interviewed by the Times also confirmed that Pinwale had been used by an agent to access the e-mail account of former President Bill Clinton. He indicated that the agent who had done so was investigated, but not whether or not he was dismissed.

In a related development, within days the military is expected to release details of a new “Cyber Command” that would oversee and develop the military’s espionage and war-making capabilities on computer systems. The NSA, which controls most of the functions that would be associated with cyberwarfare, will figure prominently in the new command.

Serving the Medical-Industrial Complex

Serving the Medical-Industrial Complex

By Robert Parry

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The usual knock on government programs is that they’re not as efficient as the private sector, which we’re told can provide the same product for less money and with higher quality. Thus, it should be no big deal when the public and private collide because the private sector should prevail.

However, in providing health insurance, those rules clearly don’t apply, which is why congressional Republicans and so-called “centrist” Democrats are going to such lengths to deny the American people access to a public option on health insurance.

Indeed, if a public option were to be piggybacked onto the existing Medicare bureaucracy, the chances for savings could be impressive for average Americans and the overall American economy.

Insurance middlemen could be eliminated; investigators who ferret out “preexisting conditions” wouldn’t be needed; doctors could save on administrative costs; the burden on U.S. industry providing health benefits could be reduced; and more money could be freed to cover the nearly 50 million uninsured or for actual doctoring.

For a nation facing multiple fiscal crises – all complicated by the costs of health care – one might think that the most sure thing in the health care debate would be to allow a cost-saving public option, which as President Barack Obama says would help keep private health insurers “honest” regarding their promises to trim waste and control premiums.

According to a New York Times/CBS poll, that point is obvious to 72 percent of the American people who favor “offering everyone a government administered health insurance plan like Medicare that would compete with private health insurance plans.”

It’s also reflected in a study cited by Sen. Chuck Grassley, R-Iowa, and other insurance industry defenders saying that 119 million Americans would bolt from their private insurers to the public option if they were given the chance.

To put that figure in perspective, it is about two-thirds of Americans who have private insurance through their employers or as individuals. In other words, the industry's defenders say two of every three customers want out.

Though some analysts doubt the defection rate would reach 119 million, Grassley’s argument is that Americans would so prefer a government-run plan that it would destroy the private insurance industry – and that therefore the public option simply can’t be permitted.

Grassley’s fear of 119 million Americans voting with their pocketbooks against private health insurance represents a remarkable admission of failure by the industry and its backers. It says, in effect, that the industry’s treatment of its customers has been so highhanded over the decades that the industry can only survive if Americans are left with the unappetizing choice of private coverage or no coverage.

Representing Whom?

So, not only are the Republicans – and some Democrats – standing against the desires for 72 percent of the population but, in effect, they also are trying to lock in 119 million unhappy customers for a profit-making industry. To add another windfall for the insurance industry, Congress may compel the near 50 million uninsured to buy insurance under penalty of fines.

Even in the sorry history of special-interest-dominated Washington, it is rare for politicians to so blatantly adopt defense of a private industry over the will of the people.

One might think that Democrats would take this club and beat the Republicans over the head with it. The Democrats could argue that the public option is not only popular but could save money for struggling U.S. businesses by bringing down their health insurance costs and freeing up more money for investment and for the hiring of new workers.

One of the key factors that drove General Motors into bankruptcy was how its health insurance benefits for employees inflated the company’s costs-per-worker total and thus hurt its competitiveness against rivals who operate in countries where the government pays for health care.

The public option issue also would seem ready-made for Democrats given that the New York Times/CBS poll found that a solid majority of Americans (57 percent) were willing to pay higher taxes so that all Americans could have “health insurance that they can’t lose no matter what.” [NYT, June 21, 2009]

Nevertheless, key “centrist” Democrats, such as Sens. Max Baucus of Montana and Kent Conrad of North Dakota, are ready to scuttle the public option to secure a few GOP votes so they can claim their plan is “bipartisan.” Conrad has called for substituting a privately run, non-profit “cooperative” for the public option.

While Conrad’s “cooperative,” which would be ostensibly owned by its members, has some superficial appeal, it would require the creation of an entirely new bureaucracy – rather than relying on the government’s existing infrastructure for Medicare – and would likely be run by high-paid executives recruited from the existing private insurance industry.

Critics of Conrad’s plan also note that the cooperative would have far less leverage in negotiating lower prices from pharmaceutical companies and other parts of the medical industry, so the savings would be marginal – which is exactly why the idea appeals to industry groups.

Patrons and the People

It goes without saying that the medical-industry complex has made generous contributions to all the key lawmakers, especially those like Grassley and Baucus who are at the top of the influential Senate Banking Committee.

But the obsession of some Senate Democrats, like Conrad, to find “common ground” with Republicans seems to go beyond simply rewarding benefactors. Though it’s clear that many, if not most, Republicans have a single-minded goal – to sabotage the Obama administration – Democrats nevertheless continue in their quest for the elusive “bipartisanship.”

This quest goes on despite the fact that Republicans were trounced in the last two elections, are down to 40 senators, and are facing historically low approval ratings. Still, “centrist” Democrats insist on bending over backwards to accommodate the GOP desires, even when those desires fly in the face of popular opinion and do not represent the most sensible policies.

These Democrats – sometimes including President Obama – appear deeply influenced by Inside-the-Beltway chatter coming from pundits who still reflect the Ronald-Reagan-to-George-W.-Bush conventional wisdom that “government is the problem,” that tax cuts are the answer to every question, and that “self-regulating markets” have made bureaucrats largely irrelevant.

Despite the nation’s cascading crises – which can be traced to too little government, excessive tax cuts and a lack of sound regulation – the chattering class has not been shaken from its biases. So, the minority Republicans are given far more time and space than they reasonably deserve (and much more than minority Democrats got during George W. Bush’s presidency).

Amid Republican charges of “socialism,” the reaction of Democrats, like Baucus and Conrad, is to position themselves in what they must consider the safe center, earning praise from the pundits for their courageous willingness to stand up to the Democratic “base” – and to the overwhelming majority of Americans – in order to stop the public option.

But Baucus and Conrad will likely find that the safe center isn’t so safe. When half-measures and half-baked compromises leave the American people disappointed or angry, the fault will be laid on the government’s failure to do the job right.

And that failure will be cited by Republicans and the pundits as further proof of the superiority of the private sector.

Memo Reveals US Plan to Provoke an Invasion of Iraq

Memo Reveals US Plan to Provoke an Invasion of Iraq

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A confidential record of a meeting between President Bush and Tony Blair before the invasion of Iraq, outlining their intention to go to war without a second United Nations resolution, will be an explosive issue for the official inquiry into the UK's role in toppling Saddam Hussein.

The memo, written on 31 January 2003, almost two months before the invasion and seen by the Observer, confirms that as the two men became increasingly aware UN inspectors would fail to find weapons of mass destruction (WMD) they had to contemplate alternative scenarios that might trigger a second resolution legitimising military action.

Bush told Blair the US had drawn up a provocative plan "to fly U2 reconnaissance aircraft painted in UN colours over Iraq with fighter cover". Bush said that if Saddam fired at the planes this would put the Iraqi leader in breach of UN resolutions.

The president expressed hopes that an Iraqi defector would be "brought out" to give a public presentation on Saddam's WMD or that someone might assassinate the Iraqi leader. However, Bush confirmed even without a second resolution, the US was prepared for military action. The memo said Blair told Bush he was "solidly with the president".

The five-page document, written by Blair's foreign policy adviser, Sir David Manning, and copied to Sir Jeremy Greenstock, the UK ambassador to the UN, Jonathan Powell, Blair's chief of staff, the chief of the defence staff, Admiral Lord Boyce, and the UK's ambassador to Washington, Sir Christopher Meyer, outlines how Bush told Blair he had decided on a start date for the war.

Paraphrasing Bush's comments at the meeting, Manning, noted: "The start date for the military campaign was now pencilled in for 10 March. This was when the bombing would begin."

Last night an expert on international law who is familar with the memo's contents said it provided vital evidence into the two men's frames of mind as they considered the invasion and its aftermath and must be presented to the Chilcott inquiry established by Gordon Brown to examine the causes, conduct and consequences of the Iraq war.

Philippe Sands, QC, a professor of law at University College London who is expected to give evidence to the inquiry, said confidential material such as the memo was of national importance, making it vital that the inquiry is not held in private, as Brown originally envisioned.

In today's Observer, Sands writes: "Documents like this raise issues of national embarrassment, not national security. The restoration of public confidence requires this new inquiry to be transparent. Contentious matters should not be kept out of the public domain, even in the run-up to an election."

The memo notes there had been a shift in the two men's thinking on Iraq by late January 2003 and that preparing for war was now their priority. "Our diplomatic strategy had to be arranged around the military planning," Manning writes. This was despite the fact Blair that had yet to receive advice on the legality of the war from the Attorney General, Lord Goldsmith, which did not arrive until 7 March 2003 - 13 days before the bombing campaign started.

In his article today, Sands says the memo raises questions about the selection of the chair of the inquiry. Sir John Chilcott sat on the 2004 Butler inquiry, which examined the reliability of intelligence in the run-up to the Iraq war, and would have been privy to the document's contents - and the doubts about WMD running to the highest levels of the US and UK governments.

Many senior legal experts have expressed dismay that Chilcott has been selected to chair the inquiry as he is considered to be close to the security services after his time spent as a civil servant in Northern Ireland.

Brown had believed that allowing the Chilcott inquiry to hold private hearings would allow witnesses to be candid. But after bereaved families and antiwar campaigners expressed outrage, the prime minister wrote to Chilcott to say that if the panel can show witnesses and national security issues will not be compromised by public hearings, he will change his stance.

Lord Guthrie, a former chief of the defence staff under Blair, described the memo as "quite shocking". He said that it underscored why the Chilcott inquiry must be seen to be a robust investigation: "It's important that the inquiry is not a whitewash as these inquiries often are."

This year, the Dutch government launched its own inquiry into its support for the war. Significantly, the inquiry will see all the intelligence shared with the Dutch intelligence services by MI5 and MI6. The inquiry intends to publish its report in November - suggesting that confidential information about the role played by the UK and the US could become public before Chilcott's inquiry reports next year.

Jobless Pain Continues in Most States in May

Jobless pain continues in most states in May

by Lisa Lambert

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Signs unemployment pains may be easing in individual U.S. states in April disappeared by May, when jobless rates jumped in 48 states and the District of Columbia, according to data released on Friday.

Michigan again reported the highest unemployment rate of 14.1 percent, followed by Oregon, which notched 12.4 percent, its greatest on record, the U.S. Labor Department said.

Not only did Michigan hold the highest spot in terms of unemployment, a position it has had for 25 of the last 26 months, but the state also experienced the largest monthly increase in its rate as two American auto behemoths -- General Motors and Chrysler -- struggled.

Michigan has had a jobless rate of 7.0 percent or more since April 2007, and broke above 9.0 percent in December.

Oregon, which has seen its rate spike over the last few months, had the largest increase from a year earlier, 6.7 percentage points, the Labor Department said.

"News on state unemployment rates is dismal," wrote Philippa Dunne, editor of the economic newsletter The Liscio Report.

The National Conference of State Legislatures called the data "disappointing".

The national unemployment rate last month was 9.4 percent, and 17 states and the District of Columbia recorded rates that were higher. In 15 states and the District of Columbia rates were greater than 10 percent, meaning that in those states at least one in 10 people does not have a job.

In Nebraska, the rate edged down to 4.4 percent from 4.5 in April while the rate in Vermont was unchanged at 7.3 percent.

California registered its highest unemployment rate on record, 11.5 percent, and also lost the most jobs, 68,900, of all the states in May, followed by Florida, which lost 61,000.

Southern states, too, also reached historical highs, with North Carolina, South Carolina, Florida and Georgia all registering record high unemployment rates.

At the same time, the number of jobs dropped in 39 states, but increased in 11 states and the District of Columbia.

Massachusetts gained the most jobs, 4,900.

Oregon's unemployment rate is now more than twice its year-ago level.

The Northwestern state has been shedding manufacturing jobs for three years, but the drop has been the most severe since the end of 2008, according to the Oregon Employment Department. Employment in durable goods manufacturing, dominated by wood products in a region known for logging, peaked in August 2006, with 156,900 jobs and is now at 118,900.

Joy Margheim, a Policy Analyst at Oregon Center for Public Policy, said on a conference call with reporters the state's jobless rate has also risen as more people enter the job pool, with retirees and spouses who had stayed home returning to the labor market and newcomers moving into the state with no job.

Noting that Ohio, where the unemployment rate is 10.8 percent, never regained the jobs it lost during the last recession in 2001, Zach Schiller, research director of Policy Matters Ohio, told the same call that chronic joblessness is becoming a problem in the manufacturing-centered state.

"We're in a pretty long-term decline," he said.

Water for Sale; Thirst for Profit: Corporate Control of Water in Latin America

Water for Sale; Thirst for Profit: Corporate Control of Water in Latin America

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What is called for is an international code for the public's access to a guaranteed supply of water as a basic human right.

The Corporate Crusade to Commodify Water

Water has been characterized as the oil of the 21st century. Blue gold. It is essential to life, and yet humanity faces a growing water crisis as a result of severe mismanagement in water and sanitation, which will be exponentially exacerbated in the coming decades by population growth combined with declining resources. Latin America has the greatest income disparity in the world and the population's access to water reflects this inequality. Over 130 million people living in the region do not have access to potable water in their homes, and sanitation is in even poorer condition, as it is estimated that only one in six persons has adequate sanitation services. According to the 2007 Annual Report from the nonprofit organization Water For People, "Every day, nearly 6,000 people who share our world die from water-related illnesses - more than 2 million each year - and the vast majority of these are children…There are more lives lost each year to water-related illnesses than to natural disasters and wars combined." It is clear that lack of access to clean water is a serious issue, one that has only started to gain international attention from a variety of organizations in recent years.

The Fifth World Water Forum took place in Istanbul, Turkey, from March 16-22, 2009, with over 25,000 people attending, representing 182 countries. The World Water Forum, the largest water policy event in the world, is held every three years. It is organized by the World Water Council, a private think-tank based in Marseille, France. The People's Water Forum, a global water justice movement which has referred to the World Water Forum as "false" and "corporate driven," also gathered in Istanbul to protest the Fifth World Water Forum. In the People's Water Forum Declaration, they sharply criticize the World Water Forum, stating that it is motivated by private interests and attempts to create the misleading illusion of an utterly false global consensus on water management. The Declaration also asks that the next water forum be organized by the UN General Assembly, calls for water to be defined as a human right, and denounces all forms of privatization and commercialization of water and sanitation services. Joining the discussion, the International Water Forum, a by-invitation-only Forum sponsored by the United Nations Institute for Training and Research (UNITAR), the City of Atlanta Department of Watershed Management, and CIFAL Atlanta will be held on July 9-10 of this year to discuss global water scarcity as well as methods for establishing a sustainable water supply.

The struggle over water is certainly not a new phenomenon. Wide-scale water privatization began in the 1990s and was often stipulated as a condition for assistance from international financial aid institutions, primarily the World Bank and the Inter-American Development Bank. Since then, there has been ongoing conflict over water management, with Latin America at the center of many of the models for resistance and restructuring. These water-related conflicts, popularly referred to as "water wars," gained international attention a decade ago. The expulsion of water giant Bechtel by the citizens of the Bolivian city Cochabamba marked the beginning of a greater resistance to water privatization and commercialization in Latin America. Given the failures of privatization and neoliberal policies in Latin America, it should not come as a surprise that the people are objecting to the commodification of this basic human need.

Privatization and Commercialization

It is worth noting that privatization and commercialization are distinct processes when discussing their implementation in Latin America. Privatization connotes reorganization and management from a source other than the public sector, and can involve a spectrum of private occupation. Commercialization entails the introduction of management institutions, such as free market competition (albeit simulated, in this case) into the process. However, privatization and commercialization are frequently concurrent processes, as was the case in Cochabamba.

There are only a few arguments commonly employed to defend water privatization in Latin America. The primary justification is that the governments of one of these countries have previously failed to adequately provide water, either because of incompetence or corruption. Organizations like the World Bank, which frequently finance privatization projects, dogmatically believe that the open market is more efficient at resource management than the state because the government is "overextended." Furthermore, they think that the competition in private sector development will lead to higher quality and lower cost services. Another common rationale is that making water into a commercial good - thus assigning monetary value to water - makes consumers less likely to waste it. According to this argument, the commercialization of water would prevent its overuse.

These assumptions, however, are problematic. The postulation that competition is an inherent element of privatization is misguided. In fact, the corporate monopoly on water in Latin America is part of the reason that prices have been high and quality has been low. It could be wiser to address the concern about wasting water through an expansive educational program that encompasses both fundamental health issues regarding drinking water and sanitation, and information about the importance as well as preferred methods of water conservation. Another possible solution is through government regulation, which could be more effective if it were done transparently and involved community participation. The state could potentially utilize subsidies, a water tax or a credit to promote the sustainable use of water. The greatest problem with the mindset behind privatization is that while it considers water a human need, it is not deemed a human right, which essentially denies the universal right to life. Regardless, the fact is that Latin American countries that have experienced privatization of their water supply have seen little improvement, and in most cases water supply and quality have declined.

Bolivia's Water War

Bolivia is the classic example of a situation in which the water privatization and commercialization process was disastrous. Two concessions to private, corporate control in Bolivia - part of a condition of a World Bank loan of US$20 million to the Bolivian government in 1997 - have now been rejected through popular uprisings. The first was in Cochabamba in 2000 against Aguas de Tunari, a subsidiary of the enormous U.S.-based Bechtel Corporation (which was the only bidder). The second uprising occurred in La Paz/El Alto, where a subsidiary of the French company Suez, called Aguas de Illimani S.A. (AISA), was thrown out in 2005. In Cochabamba, after Bechtel was installed, it quickly raised rates by an average of 35% (and in some cases as much as 200%), which was far outside the budget of the city's poor and would have left many without access to water. Licenses were even required for individuals to collect rainwater from their roofs, and people were charged for water taken from their own wells. Protests escalated to the point that the Bolivian government declared a state of martial law, and eventually the company was forced to abandon their operations in the country. Supporters of privatization in Bolivia argue that these tariff increases were necessary to improve the existing infrastructure and expand the service area. Furthermore, some have suggested that antecedent economic and social factors, such as political corruption and pre-existing anti-privatization public sentiment, contributed to the tinderbox complexity of the situation in Cochabamba and were responsible for the failure of water privatization.

After Bechtel was driven out by public outrage, the international attention given to Cochabamba's "Water War" faded, although problems still remained. Marcela Olivera, the Latin American Coordinator of Food and Water Watch's Water for All Campaign, writes that,

"the other battle that's still going on, that we're fighting now in the form of the struggle over water rights, has to do with our not being able to put together an effective, participatory popular alternative with social controls to serve as a counter to privatization, to private control of resources. This is a battle that's still being waged in Cochabamba, but it's less romantic and not so easy to talk about, because there are a lot of problems with the water company. Things have not been resolved now that the company has been reclaimed. I think this is where the true work lies - -work that is harder, unrecognized, and still involves an entrenched battle."

The withdrawal of Bechtel left SEMAPA, Bolivia's municipal water service, in charge of distribution. This service was also inadequate and left the poorer southern districts without water. After Evo Morales was elected in 2005, in part due to the social protest ignited by the Cochabamba incident, he created a Ministry of Water in Bolivia with the goal of achieving equal and universal access to water. While Bolivia has approved a new constitution that considers water a fundamental right and bans private appropriation, little progress has been made towards the country's goal, as only US$800,000 was appropriated for the water budget in 2008.

Models for Change: Bolivia, Venezuela, and Peru

The town of Sebastian Pagador, in southern Bolivia, has become an example of community-based innovation. In 1990, they formed a collective called APAAS (Association of Production and Administration of Water and Sanitation), in which the 390 families in the area formed a committee, and every member family had the monthly responsibility of digging six meters and paying one boliviano for supplies. By 1993 they had built an entire distribution system. It was a long and rigorous process, but today, around 600 houses in the area have access to potable water seventeen hours a day, and each household only has to pay US$3 a month. The members of the water collective are proud of their ability to provide service from a system they built by hand, but also of their management style that gives control to the people rather than to administrators. There are, however, still issues with this system. Financial restrictions make it impossible for them to expand to meet increased demand, they have not been able to construct a water treatment system, and the wells that they currently use are expected to dry up in approximately a decade.

Venezuela provides another case study of effective restructuring of water management. Mariela Cruz Salazar of the Technical Water Committee in Camancitos, Venezuela discusses Venezuela's alternative for community management. The Venezuelan government created "technical water committees" and "community water councils" where all of the technical water committees can meet to discuss their problems and ideas. The government helps to finance these projects, and has educated people in environmental issues and in the conservation and administration of water. If an issue concerning water arises in the community, a citizen's assembly convenes to discuss the problem and then communicates with the State Institute for Water Resources. Together, Water Resources and the community plan and prepare future projects. Salazar writes that, "We're managing the water as an organized community, not just by receiving the water, but by training the community in how to use it rationally and conserve it for the future." Although the figures are debatable (the WHO/UNICEF Joint Monitoring Program and the Andean Development Corporation [CAF] project lower estimates), the Ministry of Environment says that in 2008, 93 percent of the population had access to water supply and sanitation. This would mean that Venezuela is one of the few places to achieve the UN Millennium Development Goals for water and sanitation.

The circumstances in Peru are very similar to those in many other Latin American countries. In 1992, their constitution was modified so that the country's resources and production were open to multinational corporations and a neoliberal economic agenda. Although they managed to stop water privatization in 2006, Peru continues to struggle with creating an alternative proposal and implementing a system that guarantees more permanent rights to water. Although coverage of the recent protests that began in early April and the violent conflict that occurred on June 5th has focused on the issues of new laws, free trade, and the extraction of oil and natural gas, water is also an important part of this conflict. The series of laws approved by President Alan Garcia would remove indigenous control of land and natural resources. It would also likely lead to substantial amounts of development in the rainforest. According to Reuters reporter Dana Ford, "Law 29833 creates new public agencies to oversee water management and distribution. Small farmers fear the changes will drive up costs, reduce their access to water while giving more of it to corporate growers, and eventually lead to the privatization of the water agencies." Additionally, deforestation that would be part of development in the rainforest contributes to flooding, droughts and the melting of glaciers as a result of global warming. This environmental perspective that is brought to the water issue is distinctive. Nelly Avendaño of the Front for the Defense of Water, in Peru's Junín region, expresses a remarkably comprehensive understanding of the necessary action which must be taken:

"…it's a question of maintaining, conserving and protecting our water sources, of providing drinking water that is safe for human consumption, of modernizing agricultural irrigation methods. Ultimately, all this needs to be followed by the construction of water treatment plants for sewage and wastewater, so that this develops its own cycle and is converted into clean water for agricultural or industrial use. If our policies don't integrate the issues of water resources, sanitation, and the environment into one, then the system will undoubtedly continue to fail us."

The Front for the Defense of Water recognizes that the privatization of water is a complex issue, which concerns both environmental sustainability and the natural rights of humankind.

Turning the Tide

Civil society has made strides against the runaway process of privatization and commercialization of water, but there is a formidable challenge ahead. While transnational companies have experienced setbacks in their attempts to privatize water in Latin America, they have had to change their strategy, but privatization still persists in the region. Since privatization has become such an anathema, corporations use different terms to describe their ventures. The appropriation of a territory or bioregion, as is the case in Peru, allows for control over the resources in that area. Large companies, with total engineering capacities at hand, can divert whole rivers as part of their production projects, or end up making water unusable for local inhabitants, which essentially is privatization, but through contamination. Bottling water and monopolizing technology for extraction and purification are other forms of privatizing water and vending it to the highest bidder.

In addition to using these methods to gain control of water, corporations normally see to it that they benefit from the wording and intent of free trade agreements. NAFTA considers water to be an "investment," the WTO General Agreement on Trade in Services and the proposed FTAA call it a "service," and in both NAFTA and the WTO it is regarded as a "good."

Privatizing and commercializing water guarantees that the focus on its management and distribution will be profit, not what is best for people or, for that matter, the planet. Profits from the bottled water industry are so high that the infrastructure necessary to provide the world's population with potable water could be created by applying the profits accumulated over just one year. The US$100 billion that people spent on bottled water in 2005 is three times what would be needed to achieve the UN goal of making water available to everyone by 2015. The terrible situation that the lack of a proper water supply and sanitation creates for so many is avoidable and, as of now, is largely a product of poor resource management. A NACLA report by Maude Barlow and Tony Clark states that, "While the region's available resources could provide each person with close to 110, 500 cubic feet of water every year, the average resident has access to only 1,010 cubic feet per year. This compares to North America's annual average of 4,160 cubic feet and Europe's 2,255.6."

To ensure equality, water must be considered a human right and not just a need, privilege or commodity. However, the issue requires a broader vision that goes beyond simply an evaluation of the failures of privatization and includes a consideration of alternatives. The community-based programs that have included village-based education have been very successful in making water available to the communities they serve. While this is a valuable model, it has limitations when applied in bigger cities. Even though there have been problems with government management in the past, advocates of public access insist that privatization is not the answer. A water management system that includes public and community cooperation has great potential when combined with a more comprehensive educational program and increased transparency. However, the focus must shift to include not only alternative models, but also preventative planning. As the world population increases and water sources grow more scarce, the World Bank expects that by 2025, more than two-thirds of humanity will not have a reliable source of potable water, and adequate sanitation will probably become even less common. The Intergovernmental Panel on Climate Change predicts that the figure of those without water in Latin America would include somewhere between 7 million and 77 million people. The growing movement surrounding water rights must tackle these predictions by addressing the less immediate, yet equally important concerns of restructuring agriculture and irrigation, minimizing pollution, and working to protect the environment before providing this vital resource becomes an issue of true scarcity rather than mismanagement, as now is the case.