Tuesday, June 29, 2010

On vacation until July 12th. Peace brothers and sisters.

BP's First "Spill"

BP's First "Spill"

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Only one industry in the world can make Wall Street’s earnings look like chump change: Big Oil. This is, after all, a business where a “slump” year for international oil giant ExxonMobil means annual profits of only $19 billion. A few years earlier, on the back of skyrocketing oil prices, the same company had netted $45 billion, the single largest annual profit in history, a sum that exceeded the gross domestic products of more than half the world’s nations. And as Exxon was drilling its way into the record books in the U.S. in 2008, Royal Dutch Shell was doing the same in Britain, hauling in $27.5 billion, or a mind-bending $75 million in profits daily. To keep the cash coming in, the five biggest oil and gas corporations have spent nearly $34 billion in the past three years on exploration. To keep American lawmakers off their backs or in their pockets, they’ve spent $195 million on lobbying over that same period.

Here’s what they haven’t spent their largesse on: oil-spill response. BP, whose American operations may never recover from its Deepwater Horizon catastrophe, told Congress it spent about $9.6 million in each of the past three years on research into safer drilling technologies. ConocoPhillips spent an even more meager $1.3 million -- and that was over three years. Congressman Ed Markey (D-Mass.) has ripped oil companies for their negligence, and called their preparations for future catastrophes “paltry.” Given the funding, it’s hardly a surprise that oil companies like BP are now stuck with antiquated and ineffective tools when a spill occurs, no less a spill a mile under the Gulf of Mexico’s waters. As the Associated Press reported recently, the main technologies being used in the Gulf -- oil dispersants, offshore booms, and skimmers -- are the very same ones employed to clean up the Exxon Valdez spill two decades ago.

Now that it’s helped create one of the great environmental catastrophes in history, BP has typically pledged to right its wrongs, including by giving $500 million to fund “independent research” into the impact of the Gulf spill on the marine and shoreline environment. Of course, you don’t need millions in funding to know that the effect of BP’s spill will reverberate throughout the Gulf coast region and along Florida’s white sand beaches for decades, possibly generations. As Stephen Kinzer, the acclaimed author of the newly published Reset: Iran, Turkey, and America’s Future, writes in his debut TomDispatch post, the Deepwater spill is hardly the first time BP has wreaked havoc on a nation and its people. Andy

BP in the Gulf -- The Persian Gulf
How an Oil Company Helped Destroy Democracy in Iran

By Stephen Kinzer

To frustrated Americans who have begun boycotting BP: Welcome to the club. It's great not to be the only member any more!

Does boycotting BP really make sense? Perhaps not. After all, many BP filling stations are actually owned by local people, not the corporation itself. Besides, when you're filling up at a Shell or ExxonMobil station, it's hard to feel much sense of moral triumph. Nonetheless, I reserve my right to drive by BP stations. I started doing it long before this year's oil spill in the Gulf of Mexico.

My decision not to give this company my business came after I learned about its role in another kind of “spill” entirely -- the destruction of Iran's democracy more than half a century ago.

The history of the company we now call BP has, over the last 100 years, traced the arc of transnational capitalism. Its roots lie in the early years of the twentieth century when a wealthy bon vivant named William Knox D'Arcy decided, with encouragement from the British government, to begin looking for oil in Iran. He struck a concession agreement with the dissolute Iranian monarchy, using the proven expedient of bribing the three Iranians negotiating with him.

Under this contract, which he designed, D'Arcy was to own whatever oil he found in Iran and pay the government just 16% of any profits he made -- never allowing any Iranian to review his accounting. After his first strike in 1908, he became sole owner of the entire ocean of oil that lies beneath Iran's soil. No one else was allowed to drill for, refine, extract, or sell “Iranian” oil.

”Fortune brought us a prize from fairyland beyond our wildest dreams,” Winston Churchill, who became First Lord of the Admiralty in 1911, wrote later. “Mastery itself was the prize of the venture.”

Soon afterward, the British government bought the D'Arcy concession, which it named the Anglo-Persian Oil Company. It then built the world's biggest refinery at the port of Abadan on the Persian Gulf. From the 1920s into the 1940s, Britain's standard of living was supported by oil from Iran. British cars, trucks, and buses ran on cheap Iranian oil. Factories throughout Britain were fueled by oil from Iran. The Royal Navy, which projected British power all over the world, powered its ships with Iranian oil.

After World War II, the winds of nationalism and anti-colonialism blew through the developing world. In Iran, nationalism meant one thing: we’ve got to take back our oil. Driven by this passion, Parliament voted on April 28, 1951, to choose its most passionate champion of oil nationalization, Mohammad Mossadegh, as prime minister. Days later, it unanimously approved his bill nationalizing the oil company. Mossadegh promised that, henceforth, oil profits would be used to develop Iran, not enrich Britain.

This oil company was the most lucrative British enterprise anywhere on the planet. To the British, nationalization seemed, at first, like some kind of immense joke, a step so absurdly contrary to the unwritten rules of the world that it could hardly be real. Early in this confrontation, the directors of the Anglo-Iranian Oil Company and their partners in Britain's government settled on their strategy: no mediation, no compromise, no acceptance of nationalization in any form.

The British took a series of steps meant to push Mossadegh off his nationalist path.

They withdrew their technicians from Abadan, blockaded the port, cut off exports of vital goods to Iran, froze the country’s hard-currency accounts in British banks, and tried to win anti-Iran resolutions from the U.N. and the World Court. This campaign only intensified Iranian determination. Finally, the British turned to Washington and asked for a favor: please overthrow this madman for us so we can have our oil company back.

American President Dwight D. Eisenhower, encouraged by his Secretary of State John Foster Dulles, a lifelong defender of transnational corporate power, agreed to send the Central Intelligence Agency in to depose Mossadegh. The operation took less than a month in the summer of 1953. It was the first time the CIA had ever overthrown a government.

At first, this seemed like a remarkably successful covert operation. The West had deposed a leader it didn't like, and replaced him with someone who would perform as bidden -- Mohammad Reza Shah Pahlavi.

From the perspective of history, though, it is clear that Operation Ajax, as the operation was code-named, had devastating effects. It not only brought down Mossadegh's government, but ended democracy in Iran. It returned the Shah to his Peacock Throne. His increasing repression set off the explosion of the late 1970s, which brought to power Ayatollah Khomeini and the bitterly anti-Western regime that has been in control ever since.

The oil company re-branded itself as British Petroleum, BP Amoco, and then, in 2000, BP. During its decades in Iran, it had operated as it pleased, with little regard for the interests of local people. This corporate tradition has evidently remained strong.

Many Americans are outraged by the relentless images of oil gushing into Gulf waters from the Deepwater Horizon well, and by the corporate recklessness that allowed this spill to happen. Those who know Iranian history have been less surprised.

Obama and Cameron pledge to defend BP profits

Obama and Cameron pledge to defend BP profits

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US President Barack Obama and British Prime Minister David Cameron met this weekend during the G20 summit in Canada to discuss the ongoing crisis in the Gulf of Mexico as a result of the BP oil spill. The goal of the meeting, however, was not to coordinate cleanup and recovery efforts, but to once again give a US and UK government guarantee of the profits of BP.

A statement on the meeting released by Cameron’s office on Sunday reports that Obama and Cameron “agreed that BP should meet its obligations to cap the leak, clean up the damage and meet legitimate compensation claims. They also agreed that it was to both countries’ advantage for BP to remain a strong and stable company.”

The reference to “legitimate claims” was intended as a clear signal that the governments of the two companies would not press for full restitution of those impacted by the disaster. BP has used the same term repeatedly, even as it has delayed or denied claims. The language deliberately places the onus on the individual or business affected by the disaster to prove that their claim is in fact “legitimate.”

The US government’s commitment to limiting the liability of BP was underscored by comments from Kenneth Feinberg, the administrator of the $20 billion compensation fund, who will be tasked with mediating claims. During a town hall meeting in Larose, Louisiana on June 25, Feinberg declared, “There is absolutely no sense at all driving BP into bankruptcy. That would be a disaster.”

As for the statement that BP will remain “strong and stable,” put simply this means that the company should return adequate profits to its investors. The message sent to BP shareholders was received loud and clear. Reports of the meeting’s conclusions led to a rise of 3.99 percent in BP’s shares, which had fallen to a 14-year record low on Friday.

The meeting during the G20 summit was only the latest in a series of statements from both Cameron and Obama pledging their commitment to BP profits. Cameron warned earlier in the week, during an interview with CBC, that it was “in all our long-term interests that there is some clarity, some finality, to all of this, so that we don’t at the same time see the destruction of a company that is important for all our interests.”

Cameron sought to reassure critics of BP as well as company shareholders by claiming that the company had the best interests of the public at heart, saying “BP wants to cap the oil, it wants to clean up the oil, it wants to pay compensation to fishermen and hotel owners and people who have suffered and it should do that.” In fact, the interests of BP are in direct conflict with both a serious clean up and containment response, and adequate compensation for those whose lives have been devastated.

The prime minister added, “I believe it can and I believe it should and I believe it is in both Britain and America’s interests that BP remains a strong and stable company.”

As for the Obama administration, its response has been, from the beginning, to defend BP, the oil industry, and the expansion of deep-sea oil drilling.

While any just and rational response to the Deepwater Horizon disaster would necessarily include the criminal investigation and prosecution of BP executives, along with the seizure of the company’s assets for the purpose of funding an emergency response to the oil spill, the response of the Obama administration has been to minimize and cover up the size of the disaster, to protect BP from financial liabilities and to defuse public anger towards the oil giant.

As the Deepwater Horizon spill began, the Obama administration not only did not make any arrests, but instead left BP in charge of cleanup and containment efforts, insisting falsely that the oil company was the only body with the technology and expertise to bring an end to the spill. Obama also left unchallenged BP’s assertions that scientific data collected on site by the corporation was proprietary information that did not have to be made public. There can be no doubt that granting these rights to BP contributed significantly to the worsening of the disaster.

As public anger grew, the administration made a brief and fleeting reference to a possible criminal probe, but this has since been dropped.

While Obama made public relations appearances in the media during previous weeks intended to portray the president as “angry and frustrated” over the spill and BP’s handling of it, he met privately with BP CEO Tony Hayward to work out measures for limiting BP’s financial liability. The creation of a $20 billion fund, to be paid out over four years, was designed to create as minimal impact as possible on the company’s cash flow. The selection of Feinberg, with the full approval of BP executives, was intended as another signal to Wall Street and the City of London that the company’s bottom line would be protected.

Should the company be proven criminally negligent in its actions leading up to the April 20 Deepwater Horizon disaster—and there is ample evidence to prove that it was—there would be no limit to the amount it would be forced to pay in compensation. The real cost of the spill could reach well beyond $1 trillion, far more than the company is worth.

The escrow fund was also an attempt to cover-up for the fact that the federal government has done nothing to mobilize social resources to respond to the disaster or to ensure proper compensation.

Meanwhile, the disaster caused by the oil giant continued to spread. A significant amount of oil has now washed ashore on the beaches of Mississippi. A thick oil sheen and tar balls made landfall on Sunday with at least seven of the state’s beaches affected. The further devastation of the fishing and tourism industries in the state, along with Louisiana, Alabama, and Florida, are virtually guaranteed.

The Pentagon's Threat to the Republic

The Pentagon's Threat to the Republic

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The New York Times' David Brooks minimized General Stanley McChrystal's remarks in Rolling Stone magazine as "kvetching." For the Times' Maureen Dowd, McChrystal and his "smart-aleck aides" were merely engaging in "towel-snapping" jocularity. The Washington Post editorial board noted that Afghan President Hamid Karzai called McChrystal the "best commander of the war," and concluded that the general should be retained as the Afghan commander. The Post and Times' editorial boards have called for the replacement of President Obama's key civilian advisors on Afghanistan. Meanwhile, these papers and many others have downplayed the critical issue that dominates this sad affair - the fundamental importance of civilian supremacy in military policy and decision-making.

There is no more important task in political governance than making sure that civilian control of the military is not compromised and that the military remains subordinate to political authority. Unfortunately, President Obama has demonstrated too much deference to the military, retaining the Bush administration's secretary of defense as his own; appointing too many retired and active-duty general officers to such key civilian positions as national security adviser and intelligence tsar; and making the Pentagon's budget sacrosanct in an age of restraint.

The reappointment of General David Patraeus as commander of forces in Afghanistan places the general on an extremely high political plateau that makes it more difficult to discuss alternatives to the failed counter-insurgency strategy, and places too much influence in the hands of the Pentagon on decisions involving war and peace. President Obama recognized the McChrystal affair as a challenge to civilian control and leadership, but the appointment of Petraeus enhances the political power of the military and could become an obstacle to the president's exercise of civilian control in the near term. Too many influence people view Petraeus as the answer to our Afghan problems; he isn't.

The imbalance in civilian-military influence is far more threatening to the interests of the United States than any developments in Afghanistan. President Nixon's ending of the draft has created a professional military, which has fostered the very cultural behavior that General McChrystal demonstrated in his contempt for civilian leadership. The Goldwater-Nichols Act in 1986 created regional commanders-in-chief (CINCs) who expanded the martial reach of the United States in the post-Cold War world; these CINCs have become more influential than U.S. ambassadors and assistant secretaries of state in sensitive Third World areas. The Act created a powerful chairman of the Joint Chiefs of Staff and, during Desert Storm in 1991, the chairman often ignored the secretary of defense and personally briefed war plans to the president. It is noteworthy that the Act passed the Senate without one vote of opposition.

The contemptuous remarks of McChrystal and his aides are very familiar to anyone who has spent a great deal of time around senior military officers, particularly special operations officers. Upon arrival at the National War College in 1986 to join the faculty after a 20-year career at the Central Intelligence Agency, I assumed that the major threats to U.S. security emanated from the Soviet Union, China, and various Third World trouble spots. I soon learned that the typical U.S. military officer believed the major threats to U.S. security were the media, the Congress, and liberal Democrats. Since the end of the draft, the officer corps has become increasingly conservative and libertarian, and it is a rare officer who votes as a Democrat. In the 1970s, more than half of all senior officers considered themselves independents; currently, the overwhelming majority of senior officers are registered Republicans, and there are very few registered Democrats.

Special operations officers are even more conservative than their traditional brethren, and it is noteworthy that the nickname for all commanders of the Joint Special Operations Command, like McChrystal, is "The Pope." Ironically, McChrystal is a registered Democrat, a social liberal, and an Obama supporter in the 2008 election.

Key congressional figures and influential journalists are already calling for the resignation of the president's representative in Afghanistan, Ambassador Karl Eikenberry, who provided the White House with two important cables in November 2009 warning against any additional military deployments to Afghanistan. Eikenberry's advice was lapidary: he warned that Karzai was not an "adequate strategic partner" and that his government lacked the "political will or capacity to carry out basic tasks of governance;" he said that we have "overestimated the ability of Afghan security forces to take over by 2013...and underestimated how long it will take to restore or establish civilian government;" and he argued that "more troops won't end the insurgency as long as Pakistan sanctuaries remain...and Pakistan views its strategic interests as best served by a weak neighbor." He bluntly argued against a premature decision regarding a troop increase, favoring "alternatives beyond strictly military counterinsurgency efforts within Afghanistan."

Eight months later, the situation in Afghanistan has worsened, and Eikenberry's diagnosis has become more prescient. Even McChrystal has said that there's no way we can kill our way out of Afghanistan. And there is no way that U.S. forces will be able to build a civilian government in Afghanistan and then mediate between the government and the Afghan people, objectives that are central to the Petraeus-McChrystal counter-insurgency strategy.

It is time for President Obama to remind the Pentagon that decisions regarding national security must be made by civilian officials and that the service academies and the war colleges must stress the central importance of civilian control. During my 18 years at the National War College, various commandants steadily cut back the number of hours devoted to the U.S. political process, and made it more difficult to introduce contrarian lecturers who understood the importance of disagreement and diversity of perspective. The military culture may require an authoritarian and hierarchical structure, but it must understand the importance and sanctity of the egalitarian and individualistic values of U.S. democracy.

President Dwight D. Eisenhower's profound and prophetic Farewell Address in 1961 warned against the excesses of the military-industrial complex, and he also expressed the hope that his successors at the White House understood the demands of the military and the necessity for limiting and restraining those demands. Unfortunately, our most recent presidents in the wake of the end of the Cold War have not been willing to limit the influence of the military and have placed too much power in the hands of the Pentagon. President Obama must take note.

Extended jobless benefits start running out

Extended jobless benefits start running out

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On June 1, an estimated 325,000 eligible unemployed workers were denied extended unemployment benefits. By the end of June, if Congress does not pass the latest emergency unemployment benefits extension bill, this number is expected to mushroom to at least one and a quarter million workers, according to government figures.

Why is it that in the midst of the worst capitalist economic crisis since the Depression of the 1930s desperate workers can’t receive even a measly amount of money from the government? This money represents a withheld percentage of their wages, so why aren’t they automatically entitled to it?

The immediate answer is that while the bill passed the House of Representatives on June 11, the millionaire Senate, including both Republicans and Democrats, has stalled its passage due to a certain provision within the same bill. No measure can become law unless both houses of Congress approve it.

That provision centers on whether the wealthiest people living in the U.S. will continue to enjoy enormous tax breaks and pay at most just 15 percent of their income, or will have to pay more to narrow the tax loophole that exists. Since the Senate majority’s priority is to represent the interests of mainly Wall Street investors, these lawmakers are doing everything they can to save their clients a reported $25 billion in earnings over the next decade. Most workers have to dole out close to 50 percent of their incomes, if not more, in various taxes, whether there is an economic crisis or not, whether they are unemployed or underemployed.

This is not the first time that the Senate has stalled on passing extended unemployment benefits. Their excuse for doing this repeatedly, even using the filibuster tactic, is their “concern” for the federal deficit. If this concern were truly genuine, they would not be bending over backwards to bail out their ruling-class masters with billions of dollars in so-called stimulus money and tax breaks.

State budgets pay for 26 weeks of unemployment benefits. After that time, the federal government pays for extended benefits, up to 99 weeks in total. According to the U.S. Department of Labor, there are currently 15 million jobless workers. Unofficially, however, there are millions more, considering those who have given up looking for work and those who are excluded, including youth, the undocumented, prisoners and others. Forty-six percent of the official 15 million have been out of work for more than half a year. This is the highest level recorded since 1948, when these statistics were first compiled.

Jobless rates overall and state by state create a false notion of what is really going on underneath. For instance, in May the U.S. government claimed in one breath that jobless rates fell, but in the next breath stated that this was due to two important factors: one, more unemployed people became so discouraged that they stopped looking for work, and two, the government created temporary jobs working for the 2010 U.S. Census.

According to this report, Nevada has the highest official unemployment rate of any state, at 14 percent, with Michigan a very close second at 13.6 percent. Detroit still has the highest unemployment rate of any city. It is officially 22 percent, but it is at least double that rate among African-American youth.

In fact, for Black workers in general, the depression did not begin at the end of 2007 when the current economic crisis began to intensify for most workers. These oppressed workers have been victims of a last-hired, first-fired racist policy for many decades. Due to deindustrialization caused by the restructuring of the capitalist economy over the past 25 years, Black workers have lost their unionized jobs disproportionately — especially in auto and steel — at a much faster pace than white workers.

The Institute for Southern Studies gives these statistics on Black unemployment based on January 2010 figures: Eight percent of African-American men have lost their jobs since November 2007, and while the June 2010 unemployment rate is officially 9.7 percent, for African Americans it is 16.4 percent. The state with the highest unemployment rate for African Americans is South Carolina at 20.4 percent, which amounts to more than one out of every five Black workers.

These statistics alone should be motivation enough for the national labor leaders to put resources into mobilizing the unemployed and employed, the unorganized and organized, in the hundreds of thousands to go to Washington, D.C., and stay there to demand a government-funded jobs program for all. Another demand should be no-strings-attached, extended unemployment benefits, for however long the workers need them.

Brutal Crackdown on Protesters at G20 Summit (with video)

Brutal Crackdown on Protesters at G20 Summit (with video)

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In the largest mass arrests in Canada’s history, approximately 900 protesters were rounded up in Toronto, according to police estimates, after anarchists vandalized stores along Queen Street on Saturday, according to the Toronto Globe and Mail. An estimated 25,000 protested peacefully.

The activists had assembled to protest the gathering of world leaders for the economic summit known as G8/G20. Protesters took issue with inaction on climate change and global poverty.

But that doesn’t explain the brutal attacks that video from rabble.ca shows of cops dressed in riot gear, guns drawn, rushing peaceful protesters singing the Canadian national anthem at one point of confrontation, or another, where protesters just appear to be milling about.

Some peaceful protesters allege that the police allowed the “anarchists” to run riot as a pretext for rushing the much larger groups of peaceful protesters, who were detained for more than 24 hours. One gay bystander who got swept up in the mass arrests told rabble.ca that gay people were “kept in a separate cage,” where he spent 26 hours.

The videos show an army of robo-cops, with shields, helmets and guns forming a line against the protesters, and then rushing the protest gathering in small teams of five or so, and dragging individuals out of the crowd.

Watching the video, you can see cops on the line beginning to twitch before making the rush. rabble also has a video interview with a young American woman who was arrested and detained, in which she describes the conditions. She was made to give up her bra and her shoes, which were both deemed potential weapons.

Here are the rabble.ca videos:

Protesters stormed while singing “Oh, Canada”

Another storming of the protest

Toronto Police Attack Peaceful Protesters and Journalists at G20 Protests from brandon jourdan on Vimeo.

Interview with a detainee

Billions in Cash Airlifted From Kabul

Corruption Suspected in Airlift of Billions in Cash From Kabul

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KABUL—More than $3 billion in cash has been openly flown out of Kabul International Airport in the past three years, a sum so large that U.S. investigators believe top Afghan officials and their associates are sending billions of diverted U.S. aid and logistics dollars and drug money to financial safe havens abroad.

The cash—packed into suitcases, piled onto pallets and loaded into airplanes—is declared and legal to move. But U.S. and Afghan officials say they are targeting the flows in major anticorruption and drug trafficking investigations because of their size relative to Afghanistan's small economy and the murkiness of their origins.

[AFMONEY]

Officials believe some of the cash, if not most, is siphoned from Western aid projects and U.S., European and NATO contracts to provide security, supplies and reconstruction work for coalition forces in Afghanistan. The North Atlantic Treaty Organization spent about $14 billion here last year alone. Profits reaped from the opium trade are also a part of the money flow, as is cash earned by the Taliban from drugs and extortion, officials say.

The amount declared as it leaves the airport is vast in a nation where the gross domestic product last year totaled $13.5 billion. More declared cash flies out of Kabul each year than the Afghan government collects in tax and customs revenue nationwide. "It's not like they grow money on trees here," said a U.S. official investigating corruption and Taliban financing. "A lot of this looks like our tax dollars being stolen. And opium, of course."

Most of the funds passing through the airport are being moved by often-secretive outfits called "hawalas," private money transfer businesses with roots in the Muslim world stretching back centuries, officials say.

The officials believe hawala customers who have sent millions of dollars of their money abroad include high-ranking officials and their associates in President Hamid Karzai's administration, including Vice President Mohammed Fahim, and one of the president's brothers, Mahmood Karzai, an influential businessmen.

Where they allegedly get the money is one of the questions under investigation.

Vice President Fahim, responded through his brother, A.H. Fahim, a businessman, who denied the allegations. "My brother? He doesn't know anything about money," Mr. Fahim said.

Mahmood Karzai said in an interview he has engaged in only legitimate businesses and has never transferred large sums of cash from the country.

In a Jan. 22 financial disclosure form that he gave the Wall Street Journal to review, Mr. Karzai declared his net worth was $12,157,491 with assets of $21,163,347 and liabilities of $9,006,106. He reported an annual income of just over $400,000 but didn't provide dates.

Mahmood Karzai, an American citizen, blamed the allegations that he was transferring illicitly earned cash from Afghanistan on political opponents.

"Yes, millions of dollars are leaving this country but it is all taken by politicians. Bribes, corruption, all of it," he said. "But let's find out who is taking it. Let's not go on rumors. I've said this to the Americans."

President Karzai addressed the matter at a news conference Saturday, calling for greater scrutiny of business run by relatives of officials.

"Making money is fine and taking money out of the country is fine," he said. "The relatives of government officials can do this, starting with my brothers. But there's a possibility of corruption," he said without being specific.

Between the beginning of 2007 and February of this year, at least $3.18 billion left through the airport, according to Afghan customs records reviewed by The Wall Street Journal.

The Sharay-e-Shahzada financial trading center, the main money exchange market in Kabul. More than $3 billion in cash has been openly flown out of Kabul International Airport in the past three years.

U.S. officials say the sum of declared money may actually be higher: One courier alone carried $2.3 billion between the second half of 2008 and the end of 2009, said a senior U.S. official, citing other documents that are in the possession of investigators.

The officer said officials believe the money was declared, and that Afghan customs records may not be complete.

In their declarations, couriers must record their own names and the origins of the money they are transporting. Instead, they usually record the name of the Afghan hawala that is making the transfer and the one in Dubai that is accepting the cash. Often, the actual sender of the money isn't named, officials said.

"We do not even know about it. We don't know whose it is, why it is leaving, or where it is going," Finance Minister Omar Zakhilwal said at a December conference about the money leaving the airport.

The capital flight has continued apace in 2010. In the week ending May 29, more than $20 million, about half of it in U.S. currency, left the airport, according to a senior Afghan customs official. Apart from U.S. dollars, the currencies being flown out range from Saudi riyals and Pakistani rupees to Norwegian kroners and even outdated Deutsche marks now redeemable for euros.

"You get boxes loaded on the back of airplanes. You get guys, literally, bringing boxes of cash onto the plane," said the senior U.S. official.

The declared cash is believed to represent only "a small percentage" of the money moving out of the airport and all of Afghanistan, said Gen. M. Asif Jabar Khail, the chief customs officer at Kabul's airport.

Hundreds of millions of undeclared dollars, maybe billions, are being carried across Afghanistan's porous border with Iran and Pakistan, where a number of Afghan hawalas have branches, he said.

One figure often cited by Afghan and Western officials is $10 million a day leaving Afghanistan. That is $3.65 billion a year, more than a quarter of the current GDP.

Officials can't say how much money is coming into Afghanistan; that isn't tracked by Afghan authorities.

Afghanistan's endemic corruption and the suspected involvement of high-ranking officials in the opium trade has left the government deeply unpopular and fueled support for the Taliban, undercutting a war effort that is now focused on convincing Afghans to support their own state and turn away from the insurgents.

U.S. officials are also trying to disrupt the flow of money to the Taliban.

The insurgency is believed to earn a sizable portion of its operating expenses from extortion and the opium trade, funds that can easily be moved abroad to avoid detection or seizure.

But anticorruption efforts have increasingly taken center stage for the U.S. and its Western allies.

Restoring the credibility of the Afghan government is a central tenet in the American counter-insurgency strategy. Combating corruption by the government is now as important a priority as actually fighting insurgents. The investigations into the money flow are part of the shift in focus.

The U.S.-led initiatives carry significant risks: many of those believed by U.S. officials to be involved in shipping money out of the country are key Afghan power brokers who are important allies in the fight against the Taliban.

Balancing demands to clean up the government with the need to keep them on the same side will not be easy, especially after so many years of Western officials effectively turning a blind eye to allegations of wrongdoing by their Afghan allies, U.S. officials say.

Gen. David Petraeus, who is to take over shortly as top U.S. commander in Afghanistan from Gen. Stanley McChrystal, faces the added burden of getting to know many of the main players in the country at the same time that officials under his command are investigating some of them and their associates.

The formal banking system here is in its infancy, and hawalas form the backbone of the financial sector. The State Department says that 80% to 90% of all financial transactions in Afghanistan run through hawalas.

Hawala networks run on what is effectively an honor system and much of the business they do is legitimate.

At their simplest, a customer drops off money at one dealer and is given a numeric code or password, which is then used by the money's recipient when the cash is picked up elsewhere.

The hawala operators then settle up among themselves.

Hawala fees are far cheaper than standard banks, often as little as $150 to move $100,000, and transfers can be done in minutes or hours as opposed to days.

The United Nations, NATO and international aid groups in Afghanistan have at times even used hawalas to move money and pay staff.

Afghanistan, shattered by three decades of war, is a predominantly cash society. "Afghanistan is a country that is built on personal connections and trust.

If someone trusts them, he will do business with them," said Haji Najib, the chairman of Kabul's hawala association. "It is the same for hawala."

But those ties also make hawalas especially difficult for investigators to penetrate to find the identity of funds being transferred.

Most of the cash loads are taken on one of the eight flights a day from Kabul to Dubai in the United Arab Emirates. Wealthy Afghans have long parked their money in Dubai.

Dubai and neighboring emirates, with their tight banking secrecy laws, also have been used by the Taliban and al Qaeda as a convenient locale to move or stash money, although Emirati authorities have aided American efforts to shut the flow of terror money.

Investigators say it is tough to trace where the Afghan money goes from Dubai. Some of it likely stays in Dubai, either in banks or property, some is probably moved to U.S. and Europe or back to Afghanistan and Pakistan. Dubai officials didn't respond to requests to comment.

Over the past year, U.S. and other Western officials have grown alarmed by the ways in which corruption was fueling support for the Taliban and indications that the massive infusions of poorly monitored Western dollars were helping foster a culture of graft.

A U.S. Drug Enforcement Administration-led operation to disrupt Taliban finances created last year is now largely focused on corruption, and military intelligence is dedicating more assets to fighting the problem. NATO is also creating a task force to scrutinize contracts given to provide security, supplies and reconstruction work for coalition forces.

American officials have been working with Afghanistan's central bank to impose Western-style regulation on hawalas.

Under Afghan regulations enacted in the last few years, hawalas must report to the central bank every transaction they made monthly.

When they suspect illicit activity, they are required to file suspicious activity reports, as banks do in the U.S.

Compliance has been spotty, say central bank officials. Most still keep track of their transactions in handwritten ledger books, sometimes transcribed in code.

So far, not one suspicious activity report has been filed, said a central bank official who deals with enforcement matters.

Cash also moves easily without detection or declaration through the airport's VIP section, where officials aren't searched and often driven straight up to their planes, according to Gen. Asif and U.S. and Afghan officials.

Gen. Asif said that last year, his men found a "pile of millions of dollars," all undeclared, and tried to stop it from being put on a flight to Dubai.

But "there was lots of pressure from my higher ups," Gen. Asif said. He refused to name the officials who were pressuring him, but said: "It came from very, very senior people. They told me there was an arrangement with the central bank and told me to let it go."

Israel 'Plots Tehran Raid'

ISRAEL 'PLOTS TEHRAN RAID'

MANAMA: Israel is massing warplanes in the Caucasus for an attack on Iran, it was revealed yesterday.

Preparations are underway to launch the military attack from Azerbaijan and Georgia, reports our sister paper Akhbar Al Khaleej, quoting military sources.

Israel was, in fact, training pilots in Turkey to launch the strike and was smuggling planes into Georgia using Turkish airspace, they said.

However, Turkey was unaware of Israel's intention of transferring the planes to Georgia, the sources said.

The unexpected crisis between Israel and Turkey following an Israeli commando raid on an aid flotilla bound for Gaza Strip hit Israeli calculations.

Azerbaijan-based intelligence units, working under the cover of technicians, trainers and consultants, have helped with the preparations, the sources said.

Military equipment, mostly supplied by the US, was transported to a Georgian port via the Black Sea.

Georgian coastguard and Israeli controllers are co-operating to hide the operations from Russian vessels, said the sources.

They point out that according to Israel, it will not be in a position to launch a strike on Iran without using bases in Georgia and Azerbaijan due to the limited capabilities of its nuclear submarines stationed near the Iranian coast.

Meanwhile, Iran's Press TV reported that a very large contingent of US ground forces had massed in Azerbaijan, near the Iranian border. The independent Azerbaijani news website Trend confirmed the report.

Those reports came just days after the Pentagon confirmed that an unusually large fleet of US warships had indeed passed through Egypt's Suez Canal en route to the Gulf. At least one Israeli warship reportedly joined the American armada.

Press TV also quoted Iranian Revolultionary Guard Brigadier General Mehdi Moini as saying that the country's forces are mobilised and ready to face Israelli and American "misadventures" near its borders.

* Iran last night said it has cancelled plans to send an aid ship to the Gaza Strip as Israel "had sent a letter to the UN saying that the presence of Iranian and Lebanese ships in the Gaza area will be considered a declaration of war on that regime and it will confront it," Irna said.

G-8 'fully believes' Israel will attack Iran, says Italy PM

G-8 'fully believes' Israel will attack Iran, says Italy PM

World leaders meet in Ontario for two days of talks, urge Iran to 'respect rule of law' and 'hold transparent dialogue' over its nuclear program.

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World leaders "believe absolutely" that Israel may decide to take military action against Iran to prevent the latter from acquiring nuclear weapons, Italian Prime Minister Silvio Berlusconi said Saturday.

“Iran is not guaranteeing a peaceful production of nuclear power [so] the members of the G-8 are worried and believe absolutely that Israel will probably react preemptively,” Berlusconi told reporters following talks with other Group of Eight leaders north of Toronto.

The leaders of the G-8, which comprises Britain, France, Germany, Italy, Japan, Russia, Canada and the United States, devoted much of their two-day session to discussion of the contentious nuclear programs unfolding in North Korea and Iran.

The leaders issued a statement on Saturday calling on Iran to "respect the rule of law" and to "hold a "transparent dialogue" over its nuclear ambitions.

In their communiqué, the leaders of the world's richest countries said they respected Iran's right to a civilian nuclear program, but noted that such a right must be accompanied by commitment to international law.
"We are profoundly concerned by Iran's continued lack of transparency regarding its nuclear activities and its stated intention to continue and expand enriching uranium, including to nearly 20 percent," they said in a communique.

"Our goal is to persuade Iran's leaders to engage in a transparent dialogue about its nuclear activities and to meet Iran's international obligations," adding that they urged the Islamic Republic "to implement relevant resolutions to restore international confidence in the peaceful nature of Iran's nuclear program."

Their conclusions followed Iranian President Mahmoud Ahmadinejad's declaration late last week that Tehran was prepared to lay down its conditions to the international community regarding discussion of its nuclear program.

It's the Jobs, Stupid

It's the Jobs, Stupid

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The Americans wrapped up their meetings at the Toronto summit in an oddly contradictory posture. With much of the world afflicted with austerity fever, President Obama's team found itself in the awkward position of pushing the Europeans not to abandon economic stimulus -- while Obama himself is unable to get the U.S. Senate to approve even modest sums to extend expiring unemployment insurance for upwards of a million workers, or his $23 billion request for emergency aid to the states to spare 300,000 schoolteacher layoffs.

The British, Germans, and Canadians, meanwhile were giving priority to deep budget cuts in their own countries -- while smaller European nations were being made to extract even more severe cuts in exchange for guarantees of their government debt. Obviously, if every nation is cutting back, then economic recovery falters. But this seems far from obvious to the world's leaders.

In part, this general outbreak of austerity is the price that Obama is paying for giving too much attention to deficit-reduction at home, and not enough to jobs. The administration's own embrace of austerity, in the form of a freeze on domestic spending after this fiscal year, as well as Obama's fiscal commission, not only undercuts his credibility with the G-8. It gives ammunition to Senate Republicans and Democratic deficit hawks who refuse to appropriate another dime for jobs measures that are not "paid for" by tax increases or other spending cuts (which of course undercuts any stimulus effect.)

One good piece of news is the departure of OMB director Peter Orszag, the leading deficit hawk inside the administration. Orszag was the architect of the fiscal commission and the domestic spending freeze, and the foe of even modest increased outlays on jobs.

It's not clear that his successor will be a great deal better, though some of the names leaked to the press -- notably Laura Tyson or Gene Sperling -- are less hawkish.

If the Republicans make massive gains this November, the main reason will be the lingering economic slump, which now belongs to the incumbent Democratic administration.

You could spin recent events to suggest that President Obama finally had a pretty good week. He showed presidential resolve in getting BP to part with $20 billion. He fired the insubordinate General Stanley McCrystal. And he persuaded Congressional Democrats to put aside House and Senate differences and agree to a conference bill on financial reform.

But in all of these cases, the back story doesn't reflect so well on Obama. McCrystal's policy, which will continue, is a fantasy. He should have been fired for insubordination several months ago when he was trying to back the president into a corner with his public pronouncements.

Had the new administration cleaned house at Dick Cheney's Interior Department early on, and not given BP safety waivers, the spill probably would not have occurred.

And Obama hardly participated in the final deliberations on financial reform. For lack of progressive presidential leadership, the banking lobby gained back some of what it had lost on the Senate floor, in weaker provisions on derivatives, big loopholes in banks' ability to continue risky trading activities, and looser limits on banks' ability to invest in risky hedge funds and private equity.

Polls show a continuing erosion in the public's confidence in Obama and the Democrats. And none of the recent cases of presidential leadership touches on the real issue that is killing the Democrats, namely high unemployment.

Speaking of polls, one of the oddities of the Administration's reticence on the jobs issue is the reported counsel of the White House political staff that the public cares more about deficit-reduction than about jobs. In this account, the public sees deficit reduction as a sign that government is out of control and doesn't believe that more government spending will help solve the jobs crisis.

Political advisers who take such results at face value are fools. Yes, you can get poll respondents to say that the deficit is a serious concern, but it's a far less salient one than worries about losing your job, your health insurance, your pension, or the value of your home. If Obama can persuade the American people that he is their champion on these immediate pocketbook issues, the abstract worry of the deficit evaporates.

The political team also reportedly argues that Obama can't get serious jobs measures through the Senate in any case, and therefore a major effort would only make him look ineffectual. But this is also the wrong reading.

As I argued in a recent piece for The American Prospect, adapted from A Presidency in Peril, Obama needs to learn from the example of Harry Truman. In the summer and fall of 1948, when Republicans controlled both houses of Congress, and Truman was widely given up as a goner, Truman responded by deliberately sending "the do-nothing 80th Congress" legislation on housing and jobs that he knew they would defeat -- to dramatize the difference between his own program and the Republican one.

Truman not only won re-election in November 1948 in American history's greatest
electoral upset; his coattails were so attractive that 75 House seats went from Republican to Democrat, and the Democrats took back both houses of Congress.

If today's Republicans are blocking aid to spare 300,000 school teacher pink slips, and over a million unemployed workers who are losing their unemployment insurance and Cobra health coverage, Obama should be hanging that callous behavior around their necks, Truman style.

And in that respect, there is one surprising piece of news on the polling front from a most unlikely quarter -- the Peter G. Peterson Foundation.

The Peterson Foundation, bankrolled at a billion dollars, is spending a small fortune to persuade the American people that the deficit is a more serious menace than economic collapse, and that Social Security and Medicare need to go on the chopping block. I have rebutted this view in a paper for the Scholar's Strategy Network.

One of the Foundation's grantees is a closely linked organization called "America Speaks," which is supposedly a representative sounding of public opinion on the Peterson Foundation's favorite causes.

The "national town meeting" just completed June 26th, involving thousands of Americans by satellite link. You have to read the press release very carefully to find these results, but after extensive deliberations, the America Speaks poll included these findings:

  • 85 percent wanted to raise the cap on earnings subject to Social Security taxes--far more than the percent that wanted to reduce benefits or raise the retirement age.
  • 85 percent wanted to cut military spending.
  • 64 percent wanted a carbon tax.
  • 61 percent wanted a financial transactions tax.
  • 58 percent favored a new higher tax bracket for millionaires.


And these surprisingly progressive conclusions came, despite the fact that the exercise was heavily funded by the nation's most powerful propaganda organization that works to frighten Americans into believing that Social Security and Medicare are bankrupting the country! See Dean Baker's terrific new analysis of what the public understands and misunderstands about deficits, Social Security, and Medicare.

The people are often ahead of the leaders and the pundits. If the administration paid attention to where public opinion really is, we'd be hearing a lot more about jobs and a lot less about deficits.

Sticking the Public with the Bill for the Bankers' Crisis

Sticking the public with the bill for the bankers’ crisis

How else can we interpret the G20 communiqué that includes not even a measly tax on financial transactions?

My city feels like a crime scene and the criminals are all melting into the night, fleeing the scene. No, I’m not talking about the kids in black who smashed windows and burned cop cars on Saturday.

I’m talking about the heads of state who, on Sunday night, smashed social safety nets and burned good jobs in the middle of a recession. Faced with the effects of a crisis created by the world’s wealthiest and most privileged strata, they decided to stick the poorest and most vulnerable people in their countries with the bill.

How else can we interpret the G20’s final communiqué, which includes not even a measly tax on banks or financial transactions, yet instructs governments to slash their deficits in half by 2013. This is a huge and shocking cut, and we should be very clear who will pay the price: students who will see their public educations further deteriorate as their fees go up; pensioners who will lose hard-earned benefits; public-sector workers whose jobs will be eliminated. And the list goes on. These types of cuts have already begun in many G20 countries including Canada, and they are about to get a lot worse.

They are happening for a simple reason. When the G20 met in London in 2009, at the height of the financial crisis, the leaders failed to band together to regulate the financial sector so that this type of crisis would never happen again. All we got was empty rhetoric, and an agreement to put trillions of dollars in public monies on the table to shore up the banks around the world. Meanwhile the U.S. government did little to keep people in their homes and jobs, so in addition to hemorrhaging public money to save the banks, the tax base collapsed, creating an entirely predictable debt and deficit crisis.

At this weekend’s summit, Prime Minister Stephen Harper convinced his fellow leaders that it simply wouldn’t be fair to punish those banks that behaved well and did not create the crisis (despite the fact that Canada’s highly protected banks are consistently profitable and could easily absorb a tax). Yet somehow these leaders had no such concerns about fairness when they decided to punish blameless individuals for a crisis created by derivative traders and absentee regulators.

Last week, The Globe and Mail published a fascinating article about the origins of the G20. It turns out the entire concept was conceived in a meeting back in 1999 between then finance minister Paul Martin and his U.S. counterpart Lawrence Summers (itself interesting since Mr. Summers was at that time playing a central role in creating the conditions for this financial crisis – allowing a wave of bank consolidation and refusing to regulate derivatives).

The two men wanted to expand the G7, but only to countries they considered strategic and safe. They needed to make a list but apparently they didn’t have paper handy. So, according to reporters John Ibbitson and Tara Perkins, “the two men grabbed a brown manila envelope, put it on the table between them, and began sketching the framework of a new world order.” Thus was born the G20.

The story is a good reminder that history is shaped by human decisions, not natural laws. Mr. Summers and Mr. Martin changed the world with the decisions they scrawled on the back of that envelope. But there is nothing to say that citizens of G20 countries need to take orders from this hand-picked club.

Already, workers, pensioners and students have taken to the streets against austerity measures in Italy, Germany, France, Spain and Greece, often marching under the slogan: “We won’t pay for your crisis.” And they have plenty of suggestions for how to raise revenues to meet their respective budget shortfalls.

Many are calling for a financial transaction tax that would slow down hot money and raise new money for social programs and climate change. Others are calling for steep taxes on polluters that would underwrite the cost of dealing with the effects of climate change and moving away from fossil fuels. And ending losing wars is always a good cost-saver.

The G20 is an ad hoc institution with none of the legitimacy of the United Nations. Since it just tried to stick us with a huge bill for a crisis most of us had no hand in creating, I say we take a cue from Mr. Martin and Mr. Summers. Flip it over, and write on the back of the envelope: Return to sender.

What the G20 Protests are Really About

What the G20 Protests are Really About

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g20-42  What the G20 Protests are Really About

To your left is an anarchist, to your right a cop in riot gear, and just yards away is a burning police car - it’s chaos. The G20 is holding its annual summit this weekend in Toronto and has certainly sparked an outcry. Rallies have been occurring throughout Canada’s largest city all week, reaching a pinnacle on Saturday with a protest ending in violence. The infamous Black Bloc, who were responsible for most of the violence last year in Pittsburg, along with other protesters surged through downtown throwing bricks through windows and clashing with police.

The Black Bloc paint a dark picture of activism, but most of the protesters actually remained peaceful. Unfortunately though, their messages got lost in the confusion. Here’s an explanation of the real issues, and why the summit has made everyone so upset.

Poverty

According to the Ontario Coalition Against Poverty (OCAP) John Clarke, “The whole process of putting together this grouping has been about impoverishing people, and benefiting the richest members of society.”

Specifically, OCAP is protesting the proposed “two decades of austerity” policy that mandates governments cut back on social program spending and increase user rates and taxes in order to reduce deficits. The policy would be calamitous to social assistance locally and abroad leaving many living in poverty, said Clarke.

The enormous cost of the summit has just added fuel to the flames. The two day summit in Toronto, plus the cost incurred by the G8 Summit in Huntsville, Ontario will set tax payers back more than $1 billion dollars. It’s the priciest G8/G20 summit ever, and the most expensive 72 hours in Canadian history.

“It’s deeply offensive, but in a bizarre sense there’s also something strangely fitting about the representatives of the wealthiest people on the planet getting together to devise an agenda of austerity and dinging us for $1 billion in the process.”

Clarke said the money could cover the cost of social benefits in the province of Ontario for the next five years.

Climate Change

With the failure of the United Nations’ Copenhagen Summit last December, many feel the G20 is now responsible for fighting climate change. But according to many environmentalists, the world leaders are failing.

“They’re not handling it at all,” said Toronto based activist Pieter Basedow. Basedow thinks it’s realistic to come up with a strategy to reduce emissions by 300 parts per million by 2030, and keep temperatures from rising beyond 2 degrees Celsius. “But the governments aren’t paying any attention to that.”

Oxfam Canada is rallying to bring awareness to the connection between climate change, women’s rights, and food security. “We can’t look at climate change without seeing that it disproportionately affects women and children,” said former Oxfam board member Rick Julianson. “When a drought or a flood comes, it hits the most vulnerable people first, and that’s the women.”

“A dialogue is always good, but [the G20] are not bringing our voices to the table. It would be much more positive if they would take the expertise at Oxfam and other groups, and said ‘let’s together try to come up with ideas’.”

Gender Equity

Dagmar Werkmeister of Gender Justice, a Toronto group that fights against injustices toward women, queer people, and trans people, hovers over a half a dozen placards on the grass of Allan Gardens, the site of Friday’s much more peaceful rally. The signs contain a wide range of massages from “Love is Not a Crime” to “Access for All.” The scene illustrates the mélange of messages encapsulated by gender equity.

Werkmeister says the G20 doesn’t pay enough attention to queer and trans issues. “It’s illegal to be homosexual in more than seventy countries in the world, and they don’t do anything about that.”

But quickly the conversation shifts to women’s rights - a hot topic in Canada. Outrage has boiled since Prime Minister Stephen Harper and his Conservative government announced the G8 Maternal Health Initiative that seeks to reduce mortality rates for mothers around the world, yet cuts funding for safe abortions.

“It’s absolutely outrageous to have maternal and child health on an agenda when you’re not willing to talk about family planning,” said Werkmeister. “Women around the world are not going to be given the same rights that Canadian women are given in terms of when I reproduce, how I reproduce, or if I reproduce.”

Leaders from the United States have criticized Harper’s proposal, challenging the long held notion that Canada is the more liberal nation. There’s a lot of concern among women’s groups that these discussions will reopen the abortion issue here in Canada, forty-one years after it was legalized in 1969.

Immigration

Pete Beaulieu of No One is Illegal, an organization fighting for immigrants’ rights with chapters across Canada, explains that the problems immigrants face start with the G20’s neo-liberal agenda. “These policies of exploitation often result in the displacement of people, and at the same time we’re seeing criminalizing of migration and militarization of borders.” That goes for Canada, and the rest of the G20 nations.

Just yesterday on the first day of the summit, Citizenship and Immigration Canada announced the adjustment of its 2010 immigration policy to include more economic immigrants. In other words, Canada will be more willing to accept immigrants if they fill the jobs that will help the economy. It’s a trend that is expected to spread through G20 countries.

The concern among activists is that migrants fleeing from humanitarian and climate crisis will face closed doors if they don’t have the desired skills.

* * *

These mesaages barely begin to scratch the surface. Add to the cornucopia of causes: labor rights, socialism, Aboriginal land claims, drug law reform, disability rights, anti-globalization, animals rights, anti-nuclear proliferation, and pacifism. The overload has left many heads spinning, but has also garnered a lot of attention.

“What we’re trying to do is build a movement,” said Clarke. “We certainly want to challenge and disrupt this gathering to the extent that’s possible. But more important than that is what’s on the ground after this is all over.”

After the broken glass and blood is cleaned off the streets, hopefully they’ll be left with something.

The Third Depression

The Third Depression

Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31.

Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.

And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.

In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer.

But future historians will tell us that this wasn’t the end of the third depression, just as the business upturn that began in 1933 wasn’t the end of the Great Depression. After all, unemployment — especially long-term unemployment — remains at levels that would have been considered catastrophic not long ago, and shows no sign of coming down rapidly. And both the United States and Europe are well on their way toward Japan-style deflationary traps.

In the face of this grim picture, you might have expected policy makers to realize that they haven’t yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy.

As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the economy, by improving business confidence. As a practical matter, however, America isn’t doing much better. The Fed seems aware of the deflationary risks — but what it proposes to do about these risks is, well, nothing. The Obama administration understands the dangers of premature fiscal austerity — but because Republicans and conservative Democrats in Congress won’t authorize additional aid to state governments, that austerity is coming anyway, in the form of budget cuts at the state and local levels.

Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it’s true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain, which has been far more reluctant to take the hard-liners’ medicine.

It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.

So I don’t think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times.

And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.

The Secret State's Mad Scheme to Control the Internet

Through the Wormhole: The Secret State's Mad Scheme to Control the Internet

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Prussian military theorist Carl von Clausewitz once famously wrote that "war is the continuation of politics by other means." A century later, radical French philosopher Michel Foucault turned Clausewitz on his head and declared that "politics is the continuation of war by other means."

In our topsy-turvy world where truth and lies coexist equally and sociopathic business elites reign supreme, it would hardly be a stretch to theorize that cyber war is the continuation of parapolitical crime by other means.

Through the Wormhole

In Speed and Politics, cultural theorist Paul Virilio argued that "history progresses at the speed of its weapons systems." With electronic communications now blanketing the globe, it was only a matter of time before our political masters, (temporarily) outflanked by the subversive uses to which new media lend themselves, would deploy what Virilio called the "integral accident" (9/11 being one of many examples) and gin-up entirely new categories of threats, "Cyber Pearl Harbor" comes to mind, from which of course, they would "save us."

That the revolving door connecting the military and the corporations who service war making is a highly-profitable redoubt for those involved, has been analyzed here at great length. With new moves to tighten the screws on the immediate horizon, and as "Change" reveals itself for what it always was, an Orwellian exercise in public diplomacy, hitting the "kill switch" serves as an apt descriptor for the new, repressive growth sector that links technophilic fantasies of "net-centric" warfare to the burgeoning "homeland security" market.

Back in March, Wired investigative journalist Ryan Singel wrote that the "biggest threat to the open internet" isn't "Chinese hackers" or "greedy ISPs" but corporatist warriors like former Director of National Intelligence Mike McConnell.

Having retreated to his old haunt as a senior vice president with the ultra-spooky firm Booz Allen Hamilton (a post he held for a decade before joining the Bush administration), McConnell stands to make millions as Booz Allen's parent company, the secretive private equity powerhouse, The Carlyle Group, plans to take the firm public and sell some $300 million worth of shares, The Wall Street Journal reported last week.

"With its deep ties to the defense establishment" the Journal notes, "Booz Allen has become embedded in a range of military operations such as planning war games and intelligence initiatives." That Carlyle Group investors have made out like proverbial bandits during the endless "War on Terror" goes without saying. With "relatively low debt levels for a leveraged buyout," the investment "has been a successful one for Carlyle, which has benefited from the U.S. government's increasing reliance on outsourcing in defense."

And with 15,000 employees in the Washington area, most with coveted top secret and above security clearances, Booz Allen's clients include a panoply of secret state agencies such as the CIA, the Defense Intelligence Agency, the Department of Homeland Security, NSA and the U.S. Air Force. With tentacles enlacing virtually all facets of the secretive world of outsourced intelligence, the firm has emerged as one of the major players in the cybersecurity niche market.

While McConnell and his minions may not know much about "SQL injection hacks," Singel points out that what makes this spook's spook dangerous (after all, he was NSA Director under Clinton) "is that he knows about social engineering. ... And now he says we need to re-engineer the internet."

Accordingly, Washington Technology reported in April, that under McConnell's watchful eye, the firm landed a $14.4 million contract to build a new bunker for U.S. Cyber Command (CYBERCOM). Chump change by Pentagon standards perhaps, but the spigot is open and salad days are surely ahead.

Now that CYBERCOM has come on-line as a "subordinate unified command" of U.S. Strategic Command (STRATCOM), it's dual-hatted Director, Air Force General Keith B. Alexander confirmed by the Senate and with a fourth, gleaming star firmly affixed on his epaulettes, the real fun can begin.

A denizen of the shadows with a résumé to match, Alexander is also Director of the National Security Agency (hence the appellation "dual-hatted"), the Pentagon satrapy responsible for everything from battlefield signals- and electronic intelligence (SIGINT and ELINT), commercial and industrial espionage (ECHELON) to illegal driftnet spying programs targeting U.S. citizens.

Spooky résumé aside, what should concern us here is what Alexander will actually do at the Pentagon's new cyberwar shop.

A Fact Sheet posted by STRATCOM informs us that CYBERCOM "plans, coordinates, integrates, synchronizes, and conducts activities to: direct the operations and defense of specified Department of Defense information networks and; prepare to, and when directed, conduct full-spectrum military cyberspace operations in order to enable actions in all domains, ensure US/Allied freedom of action in cyberspace and deny the same to our adversaries."

As Antifascist Calling previously reported, CYBERCOM's offensive nature is underlined by the role it will play as STRATCOM's operational cyber wing. The training of thousands of qualified airmen, as The Register revealed last month, will form the nucleus of an "elite corps of cyberwarfare operatives," underscoring the command's signal importance to the secret state and the corporations they so lovingly serve.

Cybersecurity: The New Corporatist "Sweet Spot"

Fueling administration moves to "beef up," i.e. tighten state controls over the free flow of information is cash, lots of it. The Washington Post reported June 22 that "Cybersecurity, fast becoming Washington's growth industry of choice, appears to be in line for a multibillion-dollar injection of federal research dollars, according to a senior intelligence official."

"Delivering the keynote address at a recent cybersecurity summit sponsored by Defense Daily," veteran Post reporter and CIA media asset, Walter Pincus, informs us that "Dawn Meyerriecks, deputy director of national intelligence for acquisition and technology, said that along with the White House Office of Science and Technology, her office is going to sponsor major research 'where the government's about to spend multiple billions of dollars'."

Bingo!

According to a Defense Daily profile, before her appointment by Obama's recently fired Director of National Intelligence, Dennis C. Blair, Meyerriecks was the chief technology officer with the Defense Information Systems Agency (DISA), described on DISA's web site as a "combat support agency" that "engineers and provides command and control capabilities and enterprise infrastructure to continuously operate and assure a global net-centric enterprise in direct support to joint warfighters, National level leaders, and other mission and coalition partners across the full spectrum of operations."

During Defense Daily's June 11 confab at the Marriott Hotel in Washington (generously sponsored by Northrop Grumman, Raytheon, General Dynamics and The Analysis Group), Meyerriecks emphasized although "tons of products" have been commercially developed promising enhanced security, "there's not an answer Band-Aid that is going to come with this."

All the more reason then, to shower billions of taxpayer dollars on impoverished defense and security corps, while preaching "fiscal austerity" to "greedy" workers and homeowners facing a new wave of foreclosures at the hands of cash strapped banks.

"We're starting to question whether or not the fundamental precepts are right," Meyerriecks said, "and that's really what, at least initially, this [new research] will be aimed at."

Presumably, the billions about to feed the "new security paradigm," all in the interest of "keeping us safe" of course, means "we need to be really innovative, because I think we're going to run out of runway on our current approach," she said.

Washington Technology reported Meyerriecks as saying "We don't have any fixed ideas about what the answers are." Therefore, "we're looking for traditional and nontraditional partnering in sourcing."

Amongst the "innovative research" fields which the ODNI, the Department of Homeland Security and one can assume, NSA/CYBERCOM, will soon be exploring are what Washington Technology describe as: "Multiple security levels for government and non-government organizations. Security systems that change constantly to create 'moving targets' for hackers," and more ominously for privacy rights, coercive "methods to motivate individuals to improve their cybersecurity practices."

The Secret State's Internet Control Bill

Since major policy moves by administration flacks always come in waves, Homeland Security Secretary Janet Napolitano told the American Constitution Society for Law and Policy June 18, that in order to fight "homegrown terrorism" the monitoring of internet communications "is a civil liberties trade-off the U.S. government must make to beef up national security," the Associated Press reported.

While the Obama regime has stepped-up attacks on policy critics who have disclosed vital information concealed from the American people, prosecuting whistleblowers such as Thomas Drake, who spilled the beans on corrupt NSA shenanigans with grifting defense and security corps, and wages a low-level war against WikiLeaks, Cryptome, Public Intelligence and other secret spilling web sites, it continues to shield those who oversaw high crimes and misdemeanors during the previous and current regimes.

In this light, Napolitano's statement that "we can significantly advance security without having a deleterious impact on individual rights in most instances," is a rank mendacity.

With enough airspace to fly a drone through, the Home Sec boss told the gathering "at the same time, there are situations where trade-offs are inevitable." What those "situations" are or what "trade-offs" were being contemplated by the administration was not specified by Napolitano; arch neocon Joe Lieberman however, graciously obliged.

As "Cyber War" joins the (failed) "War on Drugs" and the equally murderous "War on Terror" as America's latest bête noire and panic all rolled into one reeking mass of disinformation, Senators Joseph Lieberman (ID-CT), Susan Collins (R-ME) and Tom Carper (D-DE) introduced the Protecting Cyberspace as a National Asset Act of 2010 in the Senate.

The bill empowers the Director of a new National Center for Cybersecurity and Communications (NCCC), to be housed in the Department of Homeland Security, to develop a "process" whereby owners and operators of "critical infrastructure" will develop "response plans" for what the legislation calls "a national cybersecurity emergency."

This particularly pernicious piece of legislative flotsam would hand the President the power to declare a "national cyber-emergency" at his discretion and would force private companies, internet service providers and search engines to "comply with the new risk-based security requirements." Accordingly, "in coordination with the private sector ... the President [can] authorize emergency measures to protect the nation's most critical infrastructure if a cyber vulnerability is being exploited or is about to be exploited."

Under terms of the bill, such "emergency measures" can force ISPs to "take action" if so directed by the President, to limit, or even to sever their connections to the internet for up to 30 days.

While the administration, so far, has not explicitly endorsed Lieberman's bill, DHS Deputy Undersecretary Philip Reitinger told reporters that he "agreed" with the thrust of the legislation and that the Executive Branch "may need to take extraordinary measures" in the event of a "crisis."

Under the 1934 Communications Act, the World Socialist Web Site points out, "the president may, under 'threat of war,' seize control of any 'facilities or stations for wire communications'."

"Though dated," socialist critic Mike Ingram avers, "that definition would clearly apply to broadband providers or Web sites. Anyone disobeying a presidential order can be imprisoned for one year. In addition to making explicit the inclusion of Internet providers, a central component of the Lieberman bill is a promise of immunity from financial claims for any private company which carries through an order from the federal government."

Under terms of the legislation, the president requires no advance notification to Congress in order to hit the internet "kill switch," and his authority to reign supreme over the free speech rights of Americans can be extended for up to six months after the "state of war" has expired.

While the bill's supporters, which include the secret state lobby shop, the Intelligence and National Security Alliance (INSA) claim the Lieberman-Collins-Carper legislation is intended to create a "shield" to defend the U.S. and its largest corporate benefactors from the "looming threat" of a "Cyber 9/11," one cannot discount the billions of dollars in plum government contracts that will fall into the laps of the largest defense and security corps, the primary beneficiaries of this legislation; thus the bill's immunity provisions.

Indeed, current INSA Chairwoman, Frances Fragos Townsend, the former Bushist Homeland Security Adviser, was appointed in 2007 as National Continuity Coordinator under the auspices of National Security Presidential Directive 51 (NSPD-51) and was assigned responsibility for coordinating the development and implementation of Federal continuity of government (COG) policies. As readers of Antifascist Calling are aware, plans include contingencies for a declaration of martial law in the event of a "catastrophic emergency." Whether or not a "national cybersecurity emergency" would fall under the penumbral cone of silence envisaged by NSPD-51 to "maintain order" is anyone's guess.

However, in a June 23 letter to Lieberman-Collins-Carper, the Center for Democracy and Technology (CDT) and 23 other privacy and civil liberties groups, insisted that "changes are needed to ensure that cybersecurity measures do not unnecessarily infringe on free speech, privacy, and other civil liberties interests."

CDT states that while "the bill makes it clear that it does not authorize electronic surveillance beyond that authorized in current law, we are concerned that the emergency actions that could be compelled could include shutting down or limiting Internet communications that might be carried over covered critical infrastructure systems."

Additionally, CDT avers that the bill "requires CCI owners to share cybersecurity 'incident' information with DHS, which will share some of that information with law enforcement and intelligence personnel." While Lieberman-Collins-Carper claim that "incident reporting" doesn't authorize "any federal entity" to compel disclosure "or conduct surveillance," the bill does not indicate what might be included in an 'incident report' and we are concerned that personally-identifiable information will be included." Count on it!

In a press release, INSA's chairwoman declared that the legislation is important in "establishing a public-private partnership to promote national cyber security priorities, strengthen and clarify authorities regarding the protection of federal civilian systems, and improve national cyber security defenses."

Amongst the heavy-hitters who will profit financially from developing a "public-private partnership to promote national cyber security priorities," include INSA "Founding Members" BAE Systems, Booz Allen Hamilton, CSC, General Dynamics, HP, Lockheed Martin, ManTech International, Microsoft, Potomac Institute for Policy Studies and Science Applications International Corporation (SAIC).

Talk about one hand washing the other! A casual glance at Washington Technology's 2010 list of the Top 100 Federal Government Contractors provides a telling definition of the term "stakeholder"!

Blanket Surveillance Made Easy: Einstein 3's Roll-Out

During a recent Cyberspace Symposium staged by the Armed Forces Communications and Electronics Association (AFCEA), an industry lobby group chock-a-block with defense and security corps, a series of video presentations set the tone, and the agenda, for CYBERCOM and the secret state's new push for heimat cybersecurity.

During a question and answer session "with a small group of reporters" in sync with the alarmist twaddle peddled by AFCEA and STRATCOM, Defense Systems' Amber Corrin informed us that "one possibility" floated by Deputy Defense Secretary William Lynne III to "keep us safe," is the deployment of the privacy-killing Einstein 2 and Einstein 3 intrusion detection and prevention systems on civilian networks.

"To support such a move" Defense Systems reported, "a task force comprising industry and government information technology and defense interests ... has been forged to examine issues surrounding critical infrastructure network security."

As Antifascist Calling reported last July, Einstein 3 is based on technology developed by NSA under its Tutelage program, a subordinate project of NSA's larger and more pervasive privacy-killing Stellar Wind surveillance operation.

Einstein 3's deep-packet inspection technology can read the content of email messages and other private electronic communications. Those deemed "threats" to national security networks can then be forwarded to analysts and "attack signatures" (or suspect political messages) are then stored in a massive NSA-controlled database for future reference.

Federal Computer Week disclosed in March that the Department of Homeland Security's U.S. Computer Emergency Readiness Team (US-CERT) "plans to partner with a commercial Internet Service Provider and another government agency to pilot technology developed by the National Security Agency to automate the process of detecting cyber intrusions into civilian agencies' systems."

"The exercise," according to reporter Ben Bain "aims to demonstrate the ability of an ISP to select and redirect Internet traffic from a participating government agency using the new technology. The exercise would also be used demonstrate the ability for U.S. CERT to apply intrusion detection and prevention to that traffic and to generate automated alerts about selected cyber threats."

That testing is currently underway and has been undertaken under authority of National Security Presidential Directive 54, signed by President George W. Bush in 2008 in the waning days of his administration. While the vast majority of NSPD-54 is classified top secret, hints of its privacy-killing capabilities were revealed in the sanitized version of the Comprehensive National Cybersecurity Initiative (CNCI) released by the Obama White House in March.

The Electronic Privacy Information Center (EPIC) has filed suit against the government in federal court after their Freedom of Information Act request to the National Security Agency was rejected by securocrats. The agency refused to release NSPD-54, since incorporated into Obama's CNCI, stating that they "have been withheld in their entirety" because they are "exempt from release" on grounds of "national security."

In a follow-up piece earlier this month, Federal Computer Week disclosed that the exercise "will also allow the Homeland Security Department, which runs the Einstein program, to share monitored information with the National Security Agency, though that data is not supposed to include message content."

"The recent combination of those three elements--reading e-mail messages, asking companies to participate in the monitoring program, and getting the NSA in the loop--has set off alarm bells about future uses of Einstein 3," FCW's John Zyskowski disclosed.

Those bells have been ringing for decades, tolling the death of our democratic republic. As military-style command and control systems proliferate, supporting everything from "zero-tolerance" policing and urban surveillance, the deployment of packet-sniffing technologies will soon join CCTV cameras, license plate readers and "watchlists," thus setting the stage for the next phase of the secret state's securitization of daily life.