Tuesday, May 31, 2011

House Prices Have Now Fallen Farther Than They Did In The Great Depression

House Prices Have Now Fallen Farther Than They Did In The Great Depression

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Home prices began double-dipping months ago, but now that S&P/Case Shiller has chimed in, it really must be so.

This report is the most widely-followed home price index, equally quoted in bank boardrooms, Treasury Department back rooms, and Congressional Committees.

The report finds home prices in Q1 of this year are now 2.9 percent below the previous quarterly bottom in Q1 of 2009, effectively giving up all the gains of the past few years, which were of course fueled by the home buyer tax credit.

"Just about everybody agrees we're going to miss the seasonally strong period in 2011, which we should be at the very beginning of right now with May, but nobody thinks that will make any difference," says S&P's David Blitzer. "Everybody's now keeping their fingers crossed for 2012 and wondering whether people just don't want to own homes anymore."

Keeping your fingers crossed for the housing market is just the tip of the iceberg. Prices have now fallen, on this index, more than they did during the Great Depression. "On that occasion, the peak in prices was not regained until 19 years after they first fell," notes Paul Dales at Capital Economics.

So what about the banks? Sure, they took huge write-downs already, but there is clearly more pain to come, especially given that this report out today is actually a three month running average based on home sale closings in March, so really you could say the whole thing is based on sales contracts signed around six months ago. We've seen considerably more housing weakness since then.

"All will have to take new markdowns if these price pressures continue, which everything points to the fact that it will," says Peter Boockvar at Miller Tabak. "Bank balance sheets are still cluttered with mortgage loans, and they are still being asked to take back bad mortgages from those that bought them, like Fannie Mae and Freddie Mac, so the lower home prices go, the risk rises that another round of balance sheet write downs may be necessary."

And speaking of Fannie and Freddie (and I'll throw in private label and FHA), when you consider the enormous volume of bank-owned (REO) inventory of foreclosed properties they're holding....

...you have to also consider what a drop in home values means to all that. The chart we have shows all the REO without the banks included, as we don't know that, but if you take additional data from RealtyTrac showing total REO inventory at 872,990 in May and multiply it by the latest median home price from the National Association of Realtors ($163,700 in April), you get around $142.9 billion in value at risk minus at least a 25 percent discount because it's a foreclosure already.

"With each subsequent dip in home prices, the portfolio is worth less and the banks will suffer increasing losses," notes RealtyTrac's Rick Sharga.

It's impossible to say what the bank losses are right now, especially when you have to add in more potential put backs, where Fannie and Freddie force the banks to buy back bad loans. All we know is that the more home prices fall, the more the banks stand to suffer, and we all know what happened the last time they suffered.

"If we do not see a meaningful recovery in home prices by the end of the year, we may need to contemplate impairment charges on first liens owned by banks and wholesale write-downs of second lien exposures. This implies solvency issues for BAC [BAC 11.75 0.06 (+0.51%) ] , WFC [WFC 28.37 0.23 (+0.82%) ] , JPM [JPM 43.24 0.45 (+1.05%) ] and C [C 41.15 0.18 (+0.44%) ] , and big losses for the U.S. government and private investors," says Chris Whalen of Institutional Risk Analytics.

America's Vanishing Middle Class: A Tale of Two Economies

America's Vanishing Middle Class: A Tale of Two Economies

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The US economy today borders on schizophrenic. To be sure, we are seeing signs of positive momentum. The last three months have delivered almost 250,000 new jobs per month on average. Great news, but at the same time, unemployment is growing and now exceeds nine percent. Both consumer confidence and small business confidence is higher than where they were last year. But confidence has been falling rapidly for the past few months.

Were Charles Dickens to show up as a commentator on the evening news, he would have a ready vocabulary to describe our current economic situation: This recovery is very much A Tale of Two Cities. After years of record low interest rates, multiple stimulus packages, and the expansion of tax cuts and credits, we are in the midst of a very real recovery, but it is a recovery characterized by asymmetry. Banks and major corporations are flush with capital — large businesses are recording record profits — but job growth is tepid, unemployment remains high and small businesses are struggling.

At first glance, the combination of record corporate profits alongside anemic job growth seems contrary, but the two are directly connected. The primary reason corporate profits are at record highs is that large companies learned to be lean and highly productive during the worst years of the recession. The profits generated through a reduced but more productive headcount has induced many large companies to continue this lean approach even as we emerge from recession. The result: record profits despite weak revenue growth, which leads to a lack of hiring.

The job growth problem is even more nuanced than that. It turns out that the hiring we are seeing is at the extreme ends of the spectrum. To ensure strong profits, corporations are cutting out the middle layers of management — the middle-class. In their place, they are hiring at the very low end and promoting at the high end. Senior management compensation is up nearly 25% this year ($9M for the average S&P 500 CEO), to levels higher than in pre-recession days, according to executive compensation research firm Equilar.

On the other side, we have job growth coming in at the bottom of the pyramid, mostly minimum wage and temporary positions. Take last month's job creation, for example. Out of the 260,000 jobs created in April, a whopping 60,000 jobs came from one company: McDonald's. There is nothing wrong with flipping burgers for a living, but it will not pull us out of a recession.

Meanwhile, middle-class jobs are declining at an alarming rate. Middle income jobs have been falling rapidly for some time and now represent well less than half of all jobs in the US. New numbers from the Bureau of Labor Statistics suggest that these middle income jobs have been replaced by low-income jobs. This has left 17 million college-educated Americans with jobs well below their educational levels. If the middle-class are filling the jobs available for the less educated, then the poorest Americans will largely be left jobless. The question we need to start asking is not "how do we add jobs to the economy?"; rather, it is "how do we create middle-class jobs to rebuild our economy?"

Without middle-class jobs, our society will enter into a "Stagnant Age" of two classes: rich and poor. And with two-thirds of our GDP coming from consumer spending — and most of that coming from the middle-class — we will be left with a shrinking economy.

Obama administration seeks to block legal challenges to Medicaid cuts

Obama administration seeks to block legal challenges to Medicaid cuts

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The Obama administration is seeking to block lawsuits challenging state budget cuts to Medicaid, the joint state- and federal-funded health care program for the poor and disabled. Many states are slashing already inadequate reimbursement rates for medical providers serving Medicaid recipients, even as the economic crisis has caused enrollment in the program to soar.

Medicaid serves low-income children, pregnant women, the elderly, blind and disabled—an enormous but politically disenfranchised segment of the population. Currently, some 60 million Americans receive health care through the program, including one in three children, four in ten pregnant women, and 70 percent of nursing home residents.

Coupled with skyrocketing health care costs, low state reimbursement rates over the past decade have created acute provider shortages in many areas of the country. Under-compensated for their services by state health departments, providers are forced to turn away Medicaid patients, making basic care increasingly inaccessible for enrollees. Medicaid patients may have to travel hundreds of miles, wait for weeks to see a doctor, or resort to crowded emergency rooms for treatment.

The consequences are a violation of the Medicaid program’s mandates, a number of lawsuits argue. Federal law stipulates that reimbursements must be “sufficient to enlist enough providers” to ensure enrollees have the same level of health care access as the general population. The Obama administration insists the law is “broad and nonspecific” and lawsuits against state officials “would not be compatible” with its federal enforcement.

The Justice Department’s solicitor general spelled out the administration’s position in a friend-of-the-court brief filed with the Supreme Court May 26 in answer to multiple suits against inadequate state reimbursement rates, which have been consolidated under a single lead case, Douglas v. Independent Living Center of Southern California, expected to be taken up later this year.

That the Obama administration has preemptively weighed in on the case brought by medical providers reveals both its contempt for the plight of the poorest Americans, as well as its reliance on state governments to carry out some of the severest cuts to social programs.

The attack on Medicaid is of a piece with the targeting of Medicare, public education, and other fundamental social programs upon which tens of millions of working class families depend. Bipartisan budget talks headed by Vice President Joe Biden are preparing trillions of dollars in cuts to the social safety net.

The budget plan adopted by the Republican-controlled House would slash Medicaid spending by $1.4 trillion over ten years. It would convert the program into a block grant to the states, limiting federal spending to preset amounts regardless of states’ needs, thus forcing the states to do the dirty work of tightening eligibility, benefits and provider reimbursements.

While the Obama administration has rebuffed the Republican proposal to phase out Medicare entirely, it has been relatively low-key in its response to the equally destructive proposal to block-grant Medicaid, which one study forecast would render 44 million more people uninsured over the coming decade.

Douglas v. Independent Living Center of Southern California consolidates a series of legal challenges to cutbacks in payments to physicians, hospitals, and pharmacies by the state of California in 2008 and 2009. Reimbursement rates for prescription medications were cut below costs, forcing pharmacists to stop dispensing to Medicaid recipients. Providers and recipients argued that the cuts violated federal law, under which state statutes on Medicaid were subordinate.

The US Court of Appeals for the Ninth Circuit in San Francisco ruled in favor of the health providers in three separate cases, citing the supremacy clause of the Constitution, which makes federal law “the supreme law of the land.” The California Department of Health Care Services appealed to the Supreme Court, which agreed in January that it would hear the case, primarily to address whether providers can challenge state budget cuts in the federal court system.

“I find it appalling that the solicitor general in a Democratic administration would assert in a Supreme Court brief that businesses can challenge state regulation under the supremacy clause, but that poor recipients of Medicaid cannot challenge state violations of federal law,” Washington and Lee University health law professor Timothy Jost commented to the New York Times May 28.

The National Governors Association, National Conference of State Legislatures, and 31 states have endorsed California’s appeal with friend-of-the-court briefs. State officials argue, “Allowing ‘supremacy clause lawsuits’ to enforce federal Medicaid laws will be a financial catastrophe for states.”

Numerous states are currently pushing through billions of dollars in cuts.

Last week, the Democratic governor of Oregon, John Kitzhaber, endorsed a plan to cut Medicaid payment rates by 19 percent beginning July 1, and an additional 15 percent beginning in July 2012. The proposal would cut $735 million, and result in the loss of $676 million more in federal matching funds. The consequences will be dire for enrollees and providers alike. Currently Oregon reimburses doctors for only 60 percent of costs for treating Medicaid patients.

Similar cuts are being inflicted in the Massachusetts Medicaid program. The Democratic-controlled state legislature passed a budget plan last week underfunding the health program by $750 million and cutting WIC, the Women, Infants and Children nutritional support program by $2.7 million. Some $8 million more in direct benefits for the poor are to be cut. (See “Massachusetts residents react to budget cuts”)

Other states are purging the Medicaid rolls with excessively tight eligibility requirements. New Jersey Governor Chris Christie, a Republican, proposed last week to save $300 million by denying coverage to adult enrollees who earn more than $5,317 per year for a family of three. This is one-fifth of the current income eligibility level, already absurdly low.

Ohio Governor John Kasich, also a Republican, released a budget plan last week outlining Medicaid funding cuts to nursing homes totaling $222 million. The state’s Department of Job and Family Services had already cut over $600 million in Medicaid expenditures in the first quarter of 2011.

Following the model established in Florida, Ohio is also privatizing case management. Kasich’s plan calls for moving 37,000 disabled children into managed-care plans that will base determinations of payment not on medical need but on cost savings. “To me, it’s good old-fashioned market competition,” the governor’s “Office of Health Transformation” director Greg Moody told the Columbus Dispatch.

The American working class overwhelmingly opposes cuts to the program. A recent poll by the Kaiser Family Foundation found that more than half of respondents reported having a personal connection with Medicaid, with either themselves or loved ones having received benefits. The poll found 60 percent of people wanted Medicaid to remain as an entitlement program, as opposed to a block grant program; only 13 percent of respondents said they would support cuts to Medicaid in the name of “deficit reduction.”

White House unveils corporate deregulation scheme

White House unveils corporate deregulation scheme

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The Obama administration this week released details of its plans to sharply cut regulations on corporations, as part of the effort to eliminate all constraints on big business profit-making.

The White House deregulation scheme was initially announced in January, as part of the right-wing shift by the administration in the wake of the 2010 elections. This shift included an agreement in December to extend tax cuts for the wealthy. The release of the first installment of proposed deregulation now comes as the White House is engaged in negotiations aimed at sharply cutting federal health care programs.

The venue for the White House announcement was almost as significant as the details. The initial proposal in January was made in an opinion piece by Obama in the Wall Street Journal. This week, Cass Sunstein, the administrator of the Office of Information and Regulatory Affairs, announced the conclusion of a four-month examination of all regulations in another article in the Journal.

Sunstein followed up the Journal piece with a speech at the right-wing American Enterprise Institute, known for its vociferous opposition to any restrictions placed on the corporate and financial elite. Sunstein began by praising the “excellent work on regulatory policy that has been done at AEI for many years.”

As with Obama’s earlier announcement, Sunstein’s comments echoed all the standard anti-regulatory rhetoric of the ultra-right. Obama, Sunstein wrote in the Journal, called for “an unprecedented government-wide review of regulations already on the books so that we can improve or remove those that are out-of-date, unnecessary, excessively burdensome or in conflict with other rules.”

Thirty federal agencies had made proposals to eliminate or modify hundreds of regulations, Sunstein added, in order to “save private-sector dollars [i.e., corporate and bank profits] and unlock economic growth by eliminating unjustified regulations.”

While details are still emerging, the deregulations will have a significant impact on public safety. One of the proposals, for example, would, according to Sunstein, “eliminate the obligation for many states to require air pollution vapor recovery systems at local gas stations, on the ground that modern vehicles already have effective air pollution control technologies.” Of course, not all vehicles on the roads fall into this category.

Another aspect of the anti-regulatory drive will focus on the Occupational Safety and Health Administration (OSHA), responsible for monitoring workplace safety and injuries. Sunstein told the American Enterprise Institute that the new rules would “remove over 1.9 million annual hours of redundant reporting burdens on employers and save more than $40 million in annual costs. Businesses will no longer be saddled with the obligation to fill out unnecessary government forms.”

This presentation―that corporations are burdened by needless regulations relating to workplace safety―is an utter fiction. In fact, US workplace injuries are systematically underreported. As detailed in the recent investigation into the Upper Big Branch mine disaster, which killed 29 coal operators in April 2010, corporations routinely violate basic safety precautions, endangering the lives and safety of workers on a daily basis. Government agencies charged with inspecting workplaces are notoriously understaffed and existing regulations are poorly enforced.

The AFL-CIO’s “‘Dead on the Job’ Report,” 2011, points out: “In 2009, according to preliminary data from the Bureau of Labor Statistics, 4,340 workers were killed on the job―an average of 12 workers every day―and an estimated 50,000 died from occupational diseases. More than 4.1 million work-related injuries and illnesses were reported, but this number understates the problem. The true toll of job injuries is two to three times greater―about 8 million to12 million job injuries and illnesses each year.…

“The number of workplace inspectors is woefully inadequate. The federal Occupational Safety and Health Administration (OSHA) and the state OSHA plans have a total of 2,218 inspectors (925 federal and 1,293 state inspectors) to inspect the 8 million workplaces under the OSH Act’s jurisdiction. Federal OSHA can inspect workplaces on average once every 129 years; the state OSHA plans can inspect them once every 67 years. The current level of federal and state OSHA inspectors provides one inspector for every 57,984 workers.”

Sunstein stressed that any regulations will be the product of close discussion with the corporations affected. “The president made an unprecedented commitment to promoting public participation in the rulemaking process,” he stressed to the AEI. The regulations will also be subject to a strict cost-benefit analysis, i.e., they will measure social benefits against the monetary impact of the regulations on corporate profits. Regulations will proceed “only on the basis of a reasonable determination that the benefits justify the costs,” he added.

Notably absent in Sunstein’s comments was any reference to the series of disasters over the past two years alone resulting from corporate malfeasance, in which regulatory agencies functioned as little more than adjuncts of the business and financial interests they supposedly oversaw.

In addition to the Upper Big Branch explosion, this includes the financial collapse of 2008, the product of rampant speculation by the giant banks and hedge funds; the BP oil disaster of April 2010, which set off the worse environmental disaster in US history; and a whole series of food recalls resulting from unsafe agricultural practices.

The initial deregulations are intended only as a first step. They are “the start of an ongoing process,” Sunstein wrote in the Journal. “Our goal is to change the regulatory culture of Washington by constantly asking what’s working and what isn’t.”

In his speech to the AEI, he explicitly contrasted “what we know now” about regulations to the New Deal period of the 1930s and the Great Society programs of the 1960s. The implication was clear: whatever constraints to corporate profit-making were put in place then would be targeted for elimination.

G8 meeting pledges austerity and war

G8 meeting pledges austerity and war

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At the end of their two-day summit in the French resort city of Deauville, G8 leaders demanded an intensification of austerity programs across the globe. They also reiterated their resolve to overthrow uncooperative regimes by means of war.

There is a profound connection between both agendas. Confronted with the most serious economic crisis since the 1930's, the major imperialist powers are wiping out all the gains achieved by workers in the post-war period. They are well aware that such a program will provoke the types of mass opposition already seen in Egypt, Tunisia, Greece, Portugal, and most recently Spain. The working class in the US is also once again on the move.

In response, governments across the globe are beefing up their own military apparatus to deal with the increasing domestic opposition to their policies, while also conducting a growing number of open-ended colonial wars aimed at re-dividing the world and its resources.

The militarisation of social life was expressed in the massive security operation surrounding the summit itself. At a cost of 200 million euros, the armies of police, soldiers and special agents deployed at Deauville had the task of shielding the summit participants from the outside world.

At the same time, while leading imperialist governments agree on the need to impose an agenda of austerity and militarism, they are sharply divided over how to reconcile such measures with their own, national interests. Behind the official tableau of smiles, kisses and handshakes were fierce conflicts. This was evident from the talks at the summit devoted to the international finance crisis.

European leaders faced intense pressure from non-European countries to put their own house in order and take effective measures to stem the intensifying crisis of the Euro.

The Japanese deputy chief cabinet secretary, Tetsuro Fukuyama told journalists: “Many leaders pointed out that Europe's debt problem, the price hikes of oil, food a nd commodities, and the overheating of emerging economies are among factors putting downwards pressure on the global economy.”

For their part, US delegates at the summit warned that the continuing European debt crisis was driving down the value of the euro against the dollar and threatening the American export industry.

European leaders reacted to the international criticism by stepping up pressure on the Greek government for yet another round of austerity measures and privatisations. Concern about the worsening debt crisis in Greece—the weakest link in the chain of highly indebted European countries—comes after warnings from leading members of the European Central Bank that a default or restructuring of Greek debt would inaugurate a chain reaction with catastrophic effects for the European and international banking system. A large proportion of the debts of Greece, Ireland, Portugal and Spain total about $2 trillion, with a large proportion held by European banks.

Earlier this week, Greek Prime Minister George Papandreou was unable to win support from opposition leaders for a new slate of austerity measures. Against a background of almost daily protests and demonstrations in Greece in opposition to further cuts in living standards and jobs, investors are worried that the Greek government may back down on its pledge to carry out additional attacks on the working population.

Greece has become a testing ground for the type of austerity measures European governments are intent on implementing in their own countries. Equally, the example of Greece demonstrates that such policies are driving the country into deeper recession and only worsening its economic problems. European elites are divided on how best to proceed, with layers of the German financial and political elite pushing hard for a restructuring of Greek debt.

European debt is dwarfed both in absolute and relative terms by US debt to the rest of the world. The American government, for its part, is determined to implement historic cuts in health care and retirement programs, including Medicare and Medicaid. Behind the backs of the American people, the Democratic and Republican parties are working out the precise mechanism for how these cuts will be achieved.

Growing tensions between leading G8 countries were also exposed with respect to the second main item on the G8 agenda—imperialist policy in northern Africa. At the end of the summit, US President Barack Obama, his French counterpart Nicolas Sarkozy and British Premier David Cameron all expressed their determination to pursue their ruthless campaign to force Libyan leader Muammar al-Gaddafi from office.

Last Tuesday, NATO forces headed by British warplanes carried out their most intensive bombing campaign in Libya since the start of the NATO campaign over two months ago. Britain is currently preparing to send Apache attack helicopters, and France has said it will follow suit. According to a report in the Guardian newspaper, the Apache helicopters are the most effective means for the NATO allies to liquidate Gaddafi.

In statements made at the end of the summit, however, both Obama and Cameron made clear that they expect other nations, including Germany, which refrained from supporting the Libya campaign, to foot the bill for their military adventures and help bankroll US and British commercial interests aimed at opening up the economies of major countries in North Africa and the Middle East.

The emergence of a US-British-French military axis as the leading force in the NATO campaign against Libya has shifted the balance of international forces. German commentators were quick to point out that in the course of his recent trip to Europe, Obama deliberately left Germany, the continent's largest economy, off his schedule.

Obama began his trip in Ireland before moving on to Britain, where he praised the traditional "special relationship" between the two transatlantic partners. Following his trip to France and photo ops with the French president at the Deauville summit, Obama flew over Germany in order to reach his last port of call, Germany's nearest eastern neighbour, Poland.

In order to satisfy the interests of the international finance elite, the world's leading imperialist powers are increasingly resorting to a policy of social counterrevolution at home and colonial war abroad. This was the message to emerge from the latest meeting of G8 countries. In the course of implementing their program, the major powers and power blocks are increasingly coming into confrontation with one another.

The international fissures which led to two world wars in the past century are re-emerging against the background of an intensification of the international economic crisis. The only progressive alternative is the unification of the European, US and world working class

Obama signs extension of Patriot Act spy powers

Obama signs extension of Patriot Act spy powers

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US President Barack Obama signed a renewal of three of the most notorious provisions of the USA PATRIOT Act Friday, meaning that the whole of the act will remain in effect without modification through 2015.

The move reinforces once again the wholehearted support by the Democratic Party for the policies of domestic spying, torture, and violation of democratic rights, adopted during the Bush administration and continued by Obama.

The provisions were set to expire Thursday, compelling Obama, who is currently making a tour of Europe, to sign the bill electronically from France in order to avoid any lapse of the legal authority for US intelligence agencies to spy on the American people.

Such a gap would have no effect on ongoing investigations, but would have called into question additional authorization of spying under the act's provisions. Regardless, Obama took extraordinary measures to make sure the bill was signed before midnight, getting up at 5:45 a.m. French time to sign the bill electronically with an autopen.

Obama signed the bill only hours after the Senate voted to approve it on a vote of 72 to 23, following a vote earlier in the day in the House of Representatives, where it passed by 250 to 153. In Thursday's Senate vote, 30 out of 51 Senate Democrats voted for the bill, along with 41 Republicans and independent Joseph Lieberman, who caucuses with the Democrats.

For the past few days, Obama had a member of his staff on call to fly a copy of the bill to Europe, but the signing was held up by vocal opposition on the Senate floor from Senator Rand Paul, a Republican from Kentucky, who opposed the bill on libertarian grounds.

The first of the three provisions allows “roving wiretaps,” which are authorizations to intercept all the communications of a suspect, not just specific phone numbers or Internet addresses. Another portion, the so called “library provision,” or section 215, allows the government nearly unlimited access to business, purchase, and travel records of suspects. A third component, called the “lone wolf” provision, authorizes surveillance of individuals who are not suspected of connections with foreign organizations.

The USA PATRIOT Act was signed into law on October 26, 2001, as a key component of the assault on democratic rights initiated by the Bush Administration following the September 11, 2001 terrorist attacks. The bill broadened the powers of police and intelligence agencies to monitor communications and obtain medical, financial and business records.

Although most of the hundreds of provisions in the bill were made permanent on its passage, certain of the most invasive provisions were set to expire, or “sunset,” within four years. At the time, a number of Democrats feigned opposition to some of the bill's proposal, but the inclusion of sunset provisions enabled them to accept the bill while claiming it was a temporary measure.

With the renewal of the three key provisions—among the most sweeping powers granted by the bill—the entire content of the act is still in place, nearly ten years later.

The initial renewal was made in two parts, first in 2005 and then in 2006, with the latter bill extending the authorizations for roving wiretaps and warrantless access to business records.

These controversial provisions were set to expire in 2010, but were reauthorized by the Democratic-controlled Congress for one year. At the time, a section of Democratic lawmakers were calling for cosmetic modifications to the law.

Now, following the 2010 elections, Obama has a more secure political base from which to extend the provisions for a longer period, and the Democrats have dropped nearly all pretenses to supporting even minor changes to the bill.

The Patriot Act was one of the most hated emblems of the Bush Administration, and contributed to the widespread popular hostility that enabled the Democrats to win congressional victories in 2006 and 2008, and propelled Obama to the presidency.

Prior to his election, Obama styled himself as an opponent of the very provisions he has now renewed for a second time. Speaking from the Senate floor on December 15, 2005, Obama condemned the so-called “gag orders” authorized by the Patriot Act, saying, “if someone wants to know why their own government has decided to go on a fishing expedition through every personal record or private document—through library books they've read and phone calls they've made—this legislation gives people no rights to appeal the need for such a search in a court of law. No judge will hear their plea, no jury will hear their case. This is just plain wrong.”

In 2007, in the run-up to his presidential campaign, Obama called for removing the most egregious sections of Patriot Act, saying, “No more illegal wire-tapping of American citizens. No more national security letters to spy on citizens who are not suspected of a crime.”

But according to a report released by the Department of Justice earlier this month, the use of the National Security Letters that Obama claimed to oppose doubled last year, from 6,114 individuals to 14,212 individuals.

The renewal of the Patriot Act provision, this time for four years, and with the enthusiastic support of the Obama Administration, refutes once more the claims that Obama and the Democrats represent any sort of political alternative to the policies of the Bush presidency. It was particularly notable that it was left to Paul, one of the most right-wing members of the Senate, to posture as the defender of civil liberties against the Democrats and Obama.

The Patriot Act was a cornerstone of the Bush Administration's policies, which, based on the claims it was engaged in a “war on terror,” laid the foundation for perpetual war, and the essentially unlimited dominion of the state over civil liberties. This entire framework, from the war on terror, to the policy of torture, to illegal detention and wiretapping, was appropriated completely by the Obama Administration.

The extension of the bill is an expression of the ongoing political attack on the working class. While pursuing policies deliberately calculated to create high unemployment, the closures of schools, the layoff of hundreds of thousands of government workers, the Obama administration is laying the foundations to combat political opposition through police state measures.

When a mass movement against the Obama administration's policies develops, there can be no doubt that the repressive machinery reauthorized in the Patriot Act will be set into motion against the danger of mass political opposition from working people.

Look Out Below

Look Out Below

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The slowdown has begun. The economy has started to sputter and unemployment claims have tipped 400,000 for the last seven weeks. That means new investment is too weak to lower the jobless rate which is presently stuck at 9 percent. Manufacturing--which had been the one bright-spot in the recovery-- has also started to retreat with some areas in the country now contracting. Housing, of course, continues its downward trek putting more pressure on bank balance sheets and plunging more homeowners into negative equity.

The likelihood of another credit expansion in this environment is next-to-nil. Total private sector debt is still at historic highs which augurs years of digging out and painful deleveraging. Analysts have already started slicing their estimates for 2nd Quarter GDP which will be considerably lower than their original predictions. With the economy dead-in-the-water, the IPOs, the Mergers & Acquisitions (M&A), and the stock buybacks and all the other ways of amplifying leverage will slow putting a dent in quarterly earnings and pushing down stock prices. Here's a clip from the Wall Street Journal:

"After a disappointing first quarter, economists largely predicted the U.S. recovery would ramp back up as short-term disruptions such as higher gas prices, bad weather and supply problems in Japan subsided.

But there's little indication that's happening. Manufacturing is cooling, the housing market is struggling and consumers are keeping a close eye on spending, meaning the U.S. economy might be on a slower path to full health than expected.

"It's very hard to generate a rapid recovery when rapid recoveries are historically driven by housing and the consumer," said Nigel Gault, an economist at IHS Global Insight. He expects an annualized, inflation-adjusted growth rate of less than 3% in coming quarters—better than the first-quarter's 1.8% rate, but too slow to make a meaningful dent in unemployment." ("Economists Downgrade Prospects for Growth", Wall Street Journal)

The Fed has tried to revive the economy by buying government bonds (QE2) which helped to boost equities prices. Unfortunately, the program sent gas and food prices higher too, which has only deepened the distress for consumers forcing them to cut their discretionary spending even more. While retail sales improved significantly in the latter months of the program, a closer look at the data shows that most of the money went for food and fuel. So, basically, QE2 was a "wash". Now businesses are left with bulging inventories and fewer customers because demand is weakening. This is from the New York Times:

"An economy that is growing this slowly will not add jobs quickly. For the next couple of months, employment growth could slow from about 230,000 recently to something like 150,000 jobs a month, only slightly faster than normal population growth. That is certainly not fast enough to make a big dent in the still huge number of unemployed people.

Are any policy makers paying attention?...

The most sensible response for Washington would be to begin thinking more seriously about taking out an insurance policy on the recovery. The Fed could stop worrying so much about inflation, which remains historically low, and look at how else it might encourage spending. As Mr. Bernanke has said before, the Fed “retains considerable power” to lift growth.

The White House and Congress, meanwhile, could begin talking about extending last year’s temporary extension of business tax credits, household tax cuts and jobless benefits beyond Dec. 31. It would be easy enough to pair such an extension with longer-term deficit reduction." ("The Economy Is Wavering. Does Washington Notice?", New York Times)

This is more than just a "rough patch". The economy is stalling and needs help, but consumers and households are not in a position to take on more debt, and every recovery since the end of WW2 has seen an increase in debt-fueled consumption. So, where will the spending come from this time? That's the mystery. The early signs of "green shoots" were produced by fiscal stimulus from increased government spending. But now that the deficit hawks are in control of congress, the budget will be pared and the economy will remain sluggish. If government spending is cut, unemployment will rise, the output gap will widen, and GDP will fizzle. Contractionary policies do not lead to growth or prosperity. Just look at England.

Most of the Inflationistas have returned to their bunkers sensing that deflationary pressures are building and the signs of Depression have reemerged. Stocks appear to be on the brink of a major correction. Here's what economist Nouriel Roubini told Bloomberg News on Friday:

"The world economy is losing strength halfway through the year as high oil prices and fallout from Japan’s natural disaster and Europe’s debt woes take their toll.... Until two weeks ago I’d say markets were shrugging off all these concerns, saying they don’t matter because they were believing the global economic recovery was on track. But I think right now we’re on the tipping point of a market correction....

With slow global economic growth, they’re going to surprise on the downside. We’re going to see the beginning of a correction that’s going to increase volatility and that’s going to increase risk aversion.” ("Roubini Sees Stock-Correction ‘Tipping Point’", Bloomberg)

With short-term interest rates stuck at zero and QE2 winding down by the end of June, the Fed appears to be out of bullets. At the same time, government (at all levels) is trimming spending and laying off workers.

When spending slows, the economy contracts. It's that simple. Without emergency stimulus, commodities will fall hard and stocks will follow. Look out below.

How Our Government Has Merged With Corporations

How Our Government Has Merged With Corporations

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The 20th century was the bloodiest and most violent in human history. This led some countries to fascism - a system characterized by the state and large business becoming almost indistinguishable. The first decade of the 21st century suffers from that anti-democratic legacy.

The government of the United States, for example, is largely rented to corporations. Big business sends multiple thousands of lobbyists to Washington, DC, to buy favors and get their point of view across in Congress and the executive branch: The wars in Afghanistan and Iraq and the new war in Libya have been a boon to munitions manufacturers, "security" companies and private mercenary armies. They are part of a permanent war economy, making the US the world's sheriff.

This so-called "defense" has spawned America's largest businesses, besides being the mother of the military-industrial complex. One company, Lockheed Martin, gets more than $29 billion per year for making weapons for the Pentagon. Lockheed Martin also makes foreign policy for America.(1)

The financial meltdown of 2008 proved beyond reasonable doubt that the government is in the pockets of, in this case, banks "too large to fail." President Barack Obama, elected to redress the injustices of the George W. Bush administration, ditched his promises and ethics to bailout banking billionaires.

The BP poisoning of the Gulf of Mexico in the spring of 2010 was a consequence of BP making energy policy for the US government.

The federal government often sides with manufacturers of hazardous products. I know this from personal experience. I worked for 25 years for the US Environmental Protection Agency (EPA). The EPA has been manipulating science with the blowing of corporate wind and political interest.

The EPA nearly always is using science to cover up the hazardous and biocidal nature of American industry, including the poisoning of nature and humans by nuclear power plants, which are siblings of nuclear weapons.

This is happening not because we don't know the effects of nuclear power. We know too much, in fact. We know, for example, that uranium and plutonium, fueling both nuclear bombs and nuclear power plants, are toxic for almost an eternity. John Gofman and Arthur Tamplin, who made contributions on the effects of radioactivity on humans and the environment and worked at the Lawrence Radiation Laboratory in Livermore, California, called nuclear power "poisoned power."(2) Leonidas Petrakis, a former senior scientist and department chairman at Brookhaven National Laboratory, did nuclear scattering experiments at the Berkeley accelerator and, otherwise, is an expert on energy. In a personal note, he equaled "nuclear" to "insanity." Helen Caldicott, a pediatrician and former professor of medicine at Harvard, called her 1978 book "Nuclear Madness." She repeated that charge in an interview with Amy Goodman of Democracy Now! on March 30, 2011. Petrakis says it would take 250,000 years for an area contaminated by plutonium-239 to be safe again. This is why he dismisses as irresponsible any talk by "experts" or "nuclear hawks" recommending "glass encapsulation of the nuclear waste," storing it in salt caves in Nevada or New Mexico for 1,000 or more years. These nuclear advocates, he says, "prefer to ignore the scores of isotopes involved in nuclear waste (including Pu-239) and talk only about iodine-131, which has a half life of 8 days, and for which conveniently there is 'a pill' (as a society we love those pill solutions!)"

The reason behind the barbarism of manufacturing nuclear bombs and using bomb technology to boil water for electricity is the Nuclear Regulatory Commission and its efforts to legitimize the monster of the nuclear weapons. In addition, the owners of nuclear power plants influence politicians and scientists to support their lethal product.

In the same corrupt way, the EPA has been licensing toxic and cancer-causing farm chemicals that, essentially, poison our food and drinking water while causing harm and death to wildlife. These chemicals came out of the cauldron of WWII. Many are neurotoxins and many hurt our immune system, damaging the female animal more than the male. Some of these toxins castrate the male animal, including man. They also change the sex of animals, stopping their reproduction. And many of these pesticides injure or kill wildlife at extremely low amounts, contributing to a massive extinction of species, which is unprecedented in history.

According to the Center for Biological Diversity, a nonprofit conservation organization in San Francisco, pesticides are a "significant threat" to both endangered species and biological diversity. On January 19, 2011, the Center sued the EPA for its failure to protect endangered species: The wave of extinction decimating plants and animals, according to the Center, is the worst since the dinosaurs disappeared 65 million years ago. Species become extinct at a rate of 1,000 to 10,000 times the natural rate.

Pesticides are also pushing honeybees to the brink of extinction. Honeybees give us honey and pollinate one-third of our crops. And according to the US Fish and Wildlife Service, pesticides kill on average 72 million birds every year.

The EPA's acts cause much destruction. Yet, in some measure, they fall within the context of the law. Indeed, the tragedy of a government department, EPA, "protecting public health and the environment" is that, in reality, a department with such an honorable and necessary mission is really protecting the profits of corporations, not public heath and the environment. Pesticides' vast impacts are nearly invisible because Americans have been brainwashed to consider pesticides as "normal" for farming as apple pie. The EPA does what Congress and the business of America has enshrined into law. For example, it legalizes America's unhealthy and hazardous food.

I call the food Americans eat "unhealthy and hazardous" because, unless it is certified organic, it is contaminated by legal and illegal poison residues. Just because the EPA approves so much poison in the food, that approval does nothing to lessen the toxic effects of the poison residues. According to EPA data from the 1970s, these residues change the nutrition of food and pose immediate or long-term health threats to those growing and consuming it. EPA researchers pointed out in the 1970s that farmers die from cancer at twice the rate of those living in the cities. That farmer death rate must be much higher now.

The EPA pushes these unethical policies because America's chemical and agribusiness corporations make huge profits from selling farmers and householders pesticides and fertilizers. For example, manufacturers of pesticides earn around $40 billion per year. In addition, the US Department of Agriculture and the country's 65 agricultural universities have made possible the near extinction of small family farmers for the sake of large farmers and giant agribusiness corporations. Such a massive crime leaves our academic mandarins undisturbed. I taught at one of those "land-grant universities," the University of Maryland, during 2003-2004. With the exception of a couple of my colleagues, the other "resource science" professors even refused to use words like "family farmer" or "sustainable agriculture." Agribusiness is their calling.

This undoing of rural America, and the inevitable ditching of public health and democracy did not happen overnight. Rather, after WWII, the Pentagon decided that, for national security purposes, the US had to side with the large farmers and business corporations large enough to support an empire.

Just like other government departments, the EPA also serves this empire, embracing the agenda of corporate America.

The latest demand of agribusiness is the genetic engineering of the food of America and the world for the corporate control of food. The EPA bought this scheme, knowing that it would exacerbate the pesticide effects of American agriculture. But genetically engineered food is hazardous to rats and risky to humans.(3) In addition, genetic engineering is sold as an elixir for human immortality, at least, that's the spin of the engineers fiddling with the very structure of life. Both the government and the wealthy fund such a nightmarish prospect. According to Spencer Stober and Donna Yarri, experts on biomedical sciences, genetic engineers don't dispel the fantasy of engineered humans living forever.(4)

In addition, the EPA approves the release of the toxic effluents of animal farms, machines and factories into the air and water of the country with the result of harming both public health and nature.

These machines and factories are also fueled by coal, petroleum and gas, the burning of which is causing global warming, a long-term calamity for the earth and her people. For the most part, it is industry that is the chief beneficiary of government policies and actions. We fail to call such merging of government and industry fascist, lest we feel shame for such a plunge in civilization and degeneracy in political organization.

This demands drastic rejection of current political ideologies fueling the running of government for millionaires and corporations. Business institutions that have become gigantic must be cut down to size, and their privileges, including fake treatment as if they were persons, withdrawn. We should choose honest people to represent us while we forbid any private money for their election. We have to demand our government return to the fundamental values of democracy and justice we inherited from the Greeks. Yes, democracy is difficult, but it is the only antidote to plutocracy and its subsidiary, fascism. Another Renaissance would do us good. In fact, it is necessary for our survival.


1. William D. Hartung, "Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex," (New York: Nation Books, 2011).

2. John W. Gofman and Arthur R. Tamplin, "Poisoned Power: The Case Against Nuclear Power Plants before and after Three Mile Island," (Emmaus, PA: Rodale Press, 1979).

3. Jeffrey M. Smith, "Genetic Roulette: The Documented Health Risks of Genetically Engineered Foods," (Fairfield, Iowa: Yes! Books, 2007).

4. Spencer Stober and Donna Yarri, "God, Science and Designer Genes," (Santa Barbara, CA: Praeger, 2009).

‘Malintent detection’ technology tested in the northeast United States

‘Malintent detection’ technology tested in the northeast United States

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The U.S. Department of Homeland Security (DHS) has begun field testing new technology designed to identify people who intend to commit a terrorist act.

Nature reported that the DHS has been conducting tests of Future Attribute Screening Technology (FAST) in the past few months at an undisclosed location in the northeast.

The technology uses remote sensors to measure physiological properties, such as heart rate and eye movement, which can be used to infer a person's current mindset.

According to a Privacy Impact Assessment (PDF) released by the DHS in 2008, the technology is intended to measure a person's malintent -- the intent to cause harm.

"Behavioral scientists hypothesize that someone with malintent may act strangely, show mannerisms out of the norm, or experience extreme physiological reactions based on the extent, time, and consequences of the event," the report stated. "The FAST technology design capitalizes on these indicators to identify individuals exhibiting characteristics associated with malintent."

The DHS has claimed accuracy rates of around 70 percent, but some scientists have questioned the results.

"Even having an iris scan or fingerprint read at immigration is enough to raise the heart rate of most legitimate travellers," Tom Ormerod, a psychologist in the Investigative Expertise Unit at Lancaster University, told Nature.

John Verrico, a spokesman for the DHS, said he could not comment on the performance of FAST because the results were still being analyzed and that additional tests would continue to be conducted.

Details of Life as F.B.I. Target

Details of Life as F.B.I. Target

AUSTIN, Tex. — A fat sheaf of F.B.I. reports meticulously details the surveillance that counterterrorism agents directed at the one-story house in East Austin. For at least three years, they traced the license plates of cars parked out front, recorded the comings and goings of residents and guests and, in one case, speculated about a suspicious flat object spread out across the driveway.

“The content could not be determined from the street,” an agent observing from his car reported one day in 2005. “It had a large number of multi-colored blocks, with figures and/or lettering,” the report said, and “may be a sign that is to be used in an upcoming protest.”

Actually, the item in question was more mundane.

“It was a quilt,” said Scott Crow, marveling over the papers at the dining table of his ramshackle home, where he lives with his wife, a housemate and a backyard menagerie that includes two goats, a dozen chickens and a turkey. “For a kids’ after-school program.”

Mr. Crow, 44, a self-described anarchist and veteran organizer of anticorporate demonstrations, is among dozens of political activists across the country known to have come under scrutiny from the F.B.I.’s increased counterterrorism operations since the attacks of Sept. 11, 2001.

Other targets of bureau surveillance, which has been criticized by civil liberties groups and mildly faulted by the Justice Department’s inspector general, have included antiwar activists in Pittsburgh, animal rights advocates in Virginia and liberal Roman Catholics in Nebraska. When such investigations produce no criminal charges, their methods rarely come to light publicly.

But Mr. Crow, a lanky Texas native who works at a recycling center, is one of several Austin activists who asked the F.B.I. for their files, citing the Freedom of Information Act. The 440 heavily-redacted pages he received, many bearing the rubric “Domestic Terrorism,” provide a revealing window on the efforts of the bureau, backed by other federal, state and local police agencies, to keep an eye on people it deems dangerous.

In the case of Mr. Crow, who has been arrested a dozen times during demonstrations but has never been convicted of anything more serious than trespassing, the bureau wielded an impressive array of tools, the documents show.

The agents watched from their cars for hours at a time — Mr. Crow recalls one regular as “a fat guy in an S.U.V. with the engine running and the air-conditioning on” — and watched gatherings at a bookstore and cafe. For round-the-clock coverage, they attached a video camera to the phone pole across from his house on New York Avenue.

They tracked Mr. Crow’s phone calls and e-mails and combed through his trash, identifying his bank and mortgage companies, which appear to have been served with subpoenas. They visited gun stores where he shopped for a rifle, noting dryly in one document that a vegan animal rights advocate like Mr. Crow made an unlikely hunter. (He says the weapon was for self-defense in a marginal neighborhood.)

They asked the Internal Revenue Service to examine his tax returns, but backed off after an I.R.S. employee suggested that Mr. Crow’s modest earnings would not impress a jury even if his returns were flawed. (He earns $32,000 a year at Ecology Action of Texas, he said.)

They infiltrated political meetings with undercover police officers and informers. Mr. Crow counts five supposed fellow activists who were reporting to the F.B.I.

Mr. Crow seems alternately astonished, angered and flattered by the government’s attention. “I’ve had times of intense paranoia,” he said, especially when he discovered that some trusted allies were actually spies.

“But first, it makes me laugh,” he said. “It’s just a big farce that the government’s created such paper tigers. Al Qaeda and real terrorists are hard to find. We’re easy to find. It’s outrageous that they would spend so much money surveilling civil activists, and anarchists in particular, and equating our actions with Al Qaeda.”

The investigation of political activists is an old story for the F.B.I., most infamously in the Cointel program, which scrutinized and sometimes harassed civil rights and antiwar advocates from the 1950s to the 1970s. Such activities were reined in after they were exposed by the Senate’s Church Committee, and F.B.I. surveillance has been governed by an evolving set of guidelines set by attorneys general since 1976.

But the Oklahoma City bombing in 1995 demonstrated the lethal danger of domestic terrorism, and after the Sept. 11 attacks, the F.B.I. vowed never again to overlook terrorists hiding in plain sight. The Qaeda sleeper cells many Americans feared, though, turned out to be rare or nonexistent.

The result, said Michael German, a former F.B.I. agent now at the American Civil Liberties Union, has been a zeal to investigate political activists who pose no realistic threat of terrorism.

“You have a bunch of guys and women all over the country sent out to find terrorism. Fortunately, there isn’t a lot of terrorism in many communities,” Mr. German said. “So they end up pursuing people who are critical of the government.”

Complaints from the A.C.L.U. prompted the Justice Department’s inspector general to assess the F.B.I.’s forays into domestic surveillance. The resulting report last September absolved the bureau of investigating dissenters based purely on their expression of political views. But the inspector general also found skimpy justification for some investigations, uncertainty about whether any federal crime was even plausible in others and a mislabeling of nonviolent civil disobedience as “terrorism.”

Asked about the surveillance of Mr. Crow, an F.B.I. spokesman, Paul E. Bresson, said it would be “inappropriate” to discuss an individual case. But he said that investigations are conducted only after the bureau receives information about possible crimes.

“We do not open investigations based on individuals who exercise the rights afforded to them under the First Amendment,” Mr. Bresson said. “In fact, the Department of Justice and the bureau’s own guidelines for conducting domestic operations strictly forbid such actions.”

It is not hard to understand why Mr. Crow attracted the bureau’s attention. He has deliberately confronted skinheads and Ku Klux Klan members at their gatherings, relishing the resulting scuffles. He claims to have forced corporate executives to move with noisy nighttime protests.

He says he took particular pleasure in a 2003 demonstration for Greenpeace in which activists stormed the headquarters of ExxonMobil in Irving, Tex., to protest its environmental record. Dressed in tiger outfits, protesters carried banners to the roof of the company’s offices, while others wearing business suits arrived in chauffeured Jaguars, forcing frustrated police officers to sort real executives from faux ones.

“It was super fun,” said Mr. Crow, one of the suits, who escaped while 36 other protesters were arrested. “They had ignored us and ignored us. But that one got their attention.”

It got the attention of the F.B.I. as well, evidently, leading to the three-year investigation that focused specifically on Mr. Crow. The surveillance documents show that he also turned up in several other investigations of activism in Texas and beyond, from 2001 to at least 2008.

For an aficionado of civil disobedience, Mr. Crow comes across as more amiable than combative. He dropped out of college, toured with an electronic-rock band and ran a successful Dallas antiques business while dabbling in animal rights advocacy. In 2001, captivated by the philosophy of anarchism, he sold his share of the business and decided to become a full-time activist.

Since then, he has led a half-dozen groups and run an annual training camp for protesters. (The camps invariably attracted police infiltrators who were often not hard to spot. “We had a rule,” he said. “If you were burly, you didn’t belong.”) He also helped to found Common Ground Relief, a network of nonprofit organizations created in New Orleans after Hurricane Katrina.

Anarchism was the catchword for an international terrorist movement at the turn of the 20th century. But Mr. Crow, whose e-mail address contains the phrase “quixotic dreaming,” describes anarchism as a kind of locally oriented self-help movement, a variety of “social libertarianism.”

“I don’t like the state,” he said. “I don’t want to overthrow it, but I want to create alternatives to it.”

This kind of talk appears to have baffled some of the agents assigned to watch him, whose reports to F.B.I. bosses occasionally seem petulant. One agent calls “nonviolent direct action,” a phrase in activists’ materials, “an oxymoron.” Another agent comments, oddly, on Mr. Crow and his wife, Ann Harkness, who have been together for 24 years, writing that “outwardly they did not appear to look right for each other.” At a training session, “most attendees dressed like hippies.”

Such comments stand out amid detailed accounts of the banal: mail in the recycling bin included “a number of catalogs from retail outlets such as Neiman Marcus, Ann Taylor and Pottery Barn.”

Mr. Crow said he hoped the airing of such F.B.I. busywork might deter further efforts to keep watch over him. The last documents he has seen mentioning him date from 2008. But the Freedom of Information Act exempts from disclosure any investigations that are still open.

“I still occasionally see people sitting in cars across the street,” he said. “I don’t think they’ve given up.”

Imperial Eye on Pakistan

Imperial Eye on Pakistan

Pakistan in Pieces, Part 1

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As the purported assassination of Osama bin Laden has placed the focus on Pakistan, it is vital to assess the changing role of Pakistan in broad geostrategic terms, and in particular, of the changing American strategy toward Pakistan. The recently reported assassination was a propaganda ploy aimed at targeting Pakistan. To understand this, it is necessary to examine how America has, in recent years, altered its strategy in Pakistan in the direction of destabilization. In short, Pakistan is an American target. The reason: Pakistan’s growing military and strategic ties to China, America’s primary global strategic rival. In the ‘Great Game’ for global hegemony, any country that impedes America’s world primacy – even one as historically significant to America as Pakistan – may be sacrificed upon the altar of war.

Part 1 of ‘Pakistan in Pieces’ examines the changing views of the American strategic community – particularly the military and intelligence circles – towards Pakistan. In particular, there is a general acknowledgement that Pakistan will very likely continue to be destabilized and ultimately collapse. What is not mentioned in these assessments, however, is the role of the military and intelligence communities in making this a reality; a veritable self-fulfilling prophecy. This part also examines the active on the ground changes in American strategy in Pakistan, with increasing military incursions into the country.

Imperial Eye on Pakistan

In December of 2000, the CIA released a report of global trends to the year 2015, which stated that by 2015, “Pakistan will be more fractious, isolated, and dependent on international financial assistance.”[1] Further, it was predicted, Pakistan:

Will not recover easily from decades of political and economic mismanagement, divisive politics, lawlessness, corruption and ethnic friction. Nascent democratic reforms will produce little change in the face of opposition from an entrenched political elite and radical Islamic parties. Further domestic decline would benefit Islamic political activists, who may significantly increase their role in national politics and alter the makeup and cohesion of the military – once Pakistan’s most capable institution. In a climate of continuing domestic turmoil, the central government’s control probably will be reduced to the Punjabi heartland and the economic hub of Karachi.[2]

The report further analyzed the trends developing in relation to the Pakistan-India standoff in the region:

The threat of major conflict between India and Pakistan will overshadow all other regional issues during the next 15 years. Continued turmoil in Afghanistan and Pakistan will spill over into Kashmir and other areas of the subcontinent, prompting Indian leaders to take more aggressive preemptive and retaliatory actions. India’s conventional military advantage over Pakistan will widen as a result of New Delhi’s superior economic position.[3]

In 2005, the Times of India reported on a US National Intelligence Council report, written in conjunction with the CIA, which predicted a “Yugoslavia-like fate” for Pakistan, saying that, “by year 2015 Pakistan would be a failed state, ripe with civil war, bloodshed, inter-provincial rivalries and a struggle for control of its nuclear weapons and complete Talibanisation.”[4]

In November of 2008, the US National Intelligence Council released a report, “Global Trends 2025,” in which they outlined major trends in the world by the year 2025. When it came to Pakistan, the report stated that, “Ongoing low-intensity clashes between India and Pakistan continue to raise the specter that such events could escalate to a broader conflict between those nuclear powers.”[5] It stated that Pakistan “will be at risk of state failure.”[6] In examining potential failed states, the report stated that:

[Y]outh bulges, deeply rooted conflicts, and limited economic prospects are likely to keep Palestine, Yemen, Afghanistan, Pakistan, and others in the high-risk category. Spillover from turmoil in these states and potentially others increases the chance that moves elsewhere in the region toward greater prosperity and political stability will be rocky.[7]

The report referred to Pakistan as a “wildcard” and stated that if it is “unable to hold together until 2025, a broader coalescence of Pashtun tribes is likely to emerge and act together to erase the Durand Line [separating Pakistan from Afghanistan], maximizing Pashtun space at the expense of Punjabis in Pakistan and Tajiks and others in Afghanistan.”[8]

In January of 2009, a Pentagon report analyzing geopolitical trends of significance to the US military over the next 25 years, reported that Pakistan could face a “rapid and sudden” collapse. It stated that, “Some forms of collapse in Pakistan would carry with it the likelihood of a sustained violent and bloody civil and sectarian war, an even bigger haven for violent extremists, and the question of what would happen to its nuclear weapons,” and as such, “that ‘perfect storm' of uncertainty alone might require the engagement of U.S. and coalition forces into a situation of immense complexity and danger.”[9]

A top adviser to former President George Bush and current President Obama warned in April of 2009, that Pakistan could collapse within months, and that, “We have to face the fact that if Pakistan collapses it will dwarf anything we have seen so far in whatever we're calling the war on terror now.” The adviser and consultant, David Kilcullen, explained that this would be unlike the conflicts in Afghanistan and Iraq, which each had a population of over 30 million, whereas “Pakistan has [187] million people and 100 nuclear weapons, an army which is bigger than the American army, and the headquarters of al-Qaeda sitting in two-thirds of the country which the Government does not control.”[10]

Target: Pakistan

Going back to the later years of the Bush administration, it is apparent that the US strategy in Pakistan was already changing in seeing it increasingly as a target for military operations as opposed to simply a conduit. In August of 2007, newly uncovered documents revealed that the US military “gave elite units broad authority” in 2004, “to pursue suspected terrorists into Pakistan, with no mention of telling the Pakistanis in advance.”[11]

In November of 2007, an op-ed in the New York Times stated categorically that, “the United States simply could not stand by as a nuclear-armed Pakistan descended into the abyss,” and that, “we need to think — now — about our feasible military options in Pakistan, should it really come to that.” The authors, Frederick Kagan and Michael O’Hanlon are both well-known strategists and scholars at the American Enterprise Institute and Brookings Institution, two of the most prominent and influential think tanks in the United States. While stating that Pakistan’s leaders are still primarily moderate and friendly to the US, “Americans felt similarly about the shah’s regime in Iran until it was too late,” referring to the outbreak of the Iranian Revolution in 1979. They warn:

The most likely possible dangers are these: a complete collapse of Pakistani government rule that allows an extreme Islamist movement to fill the vacuum; a total loss of federal control over outlying provinces, which splinter along ethnic and tribal lines; or a struggle within the Pakistani military in which the minority sympathetic to the Taliban and Al Qaeda try to establish Pakistan as a state sponsor of terrorism.[12]

They state that the military solutions are “daunting” as Pakistan is a nation of 187 million people, roughly five times the size of Iraq. They wrote that, “estimates suggest that a force of more than a million troops would be required for a country of this size,” which led them to conclude, “Thus, if we have any hope of success, we would have to act before a complete government collapse, and we would need the cooperation of moderate Pakistani forces.” They suggested one plan would be to deploy Special Forces “with the limited goal of preventing Pakistan’s nuclear materials and warheads from getting into the wrong hand.” However, they admit that, “even pro-American Pakistanis would be unlikely to cooperate.” Another option, they contend:

would involve supporting the core of the Pakistani armed forces as they sought to hold the country together in the face of an ineffective government, seceding border regions and Al Qaeda and Taliban assassination attempts against the leadership. This would require a sizable combat force — not only from the United States, but ideally also other Western powers and moderate Muslim nations.[13]

The authors concluded, saying that any state decline in Pakistan would likely be gradual, therefore allowing the US to have time to respond, and placed an emphasis on securing Pakistan’s nuclear arsenal and combating militants. They finished the article with the warning: “Pakistan may be the next big test.”[14]

In December of 2007, the Asia Times Online ran a story about the US plan to rid Pakistan of President Musharraf, and that the US and the West, more broadly, had begun a strategy aimed at toppling Pakistan’s military. As part of this, the US launched a media campaign aimed at demonizing Pakistan’s military establishment. At this time, Benazir Bhutto was criticizing the ISI, suggesting they needed a dramatic restructuring, and at the same time, reports were appearing in the US media blaming the ISI for funding and providing assistance to Al-Qaeda and the Taliban. While much of this is documented, the fact that it suddenly emerged as talking points with several western officials and in the media does suggest a turn-around against a long-time ally.[15]

Both Democratic and Republican politicians were making statements that Pakistan represented a greater threat than Iran, and then-Senator (now Vice President) Joseph Biden suggested that the United States needed to put soldiers on the ground in Pakistan in cooperation with the “international community.” Biden said that, “We should be in there,” and “we should be supplying tens of millions of dollars to build new schools to compete with the madrassas. We should be in there building democratic institutions. We should be in there, and get the rest of the world in there, giving some structure to the emergence of, hopefully, the reemergence of a democratic process.”[16]

In American policy-strategy circles, officials openly began discussing the possibility of Pakistan breaking up into smaller states, and increasing discussion that Musharraf was going to be “removed,” which obviously happened. As the Asia Times stated:

Another worrying thing is how US officials are publicly signaling to the Pakistanis that Bhutto has their backing as the next leader of the country. Such signals from Washington are not only a kiss of death for any public leader in Pakistan, but the Americans also know that their actions are inviting potential assassins to target Bhutto.

If she is killed in this way, there won't be enough time to find the real culprit, but what's certain is that unprecedented international pressure will be placed on Islamabad while everyone will use their local assets to create maximum internal chaos in the country.[17]

Of course, this subsequently happened in Pakistan. As the author of the article pointed out with startlingly accurate foresight, “Getting Bhutto killed can generate the kind of pressure that could result in permanently putting the Pakistani military on a back foot, giving Washington enough room to push for installing a new pliant leadership in Islamabad.” He observed that, “the US is very serious this time. They cannot let Pakistan get out of their hands.”[18]

Thus, it would appear that the new US strategic aim in Pakistan was focused on removing the Pakistani military from power, implying the need to replace Musharraf, and replace him with a new, compliant civilian leadership. This would have the effect of fracturing the Pakistani elite, threatening the Army’s influence within Pakistani politics, and undertaking more direct control of Pakistan’s government.

As if on cue, in late December it was reported that, “US special forces snatch squads are on standby to seize or disable Pakistan's nuclear arsenal in the event of a collapse of government authority or the outbreak of civil war following the assassination of Benazir Bhutto.”[19]

The New York Times ran an article in early January 2008, which reported that, “President Bush’s senior national security advisers are debating whether to expand the authority of the Central Intelligence Agency and the military to conduct far more aggressive covert operations in the tribal areas of Pakistan.” The article stated that the new strategy was purportedly in response to increased reports of Al-Qaeda and Taliban activity within Pakistan, which “are intensifying efforts there to destabilize the Pakistani government.” Bush’s National Security team supposedly organized this effort in response to Bhutto’s assassination 10 days previously.[20]

Officials involved in the strategy discussions said that some “options would probably involve the C.I.A. working with the military’s Special Operations forces,” and one official said, “After years of focusing on Afghanistan, we think the extremists now see a chance for the big prize — creating chaos in Pakistan itself.” Of pivotal importance to the strategy, as the Times reported: “Critics said more direct American military action would be ineffective, anger the Pakistani Army and increase support for the militants.”[21] Perhaps this is not simply a “side-effect” of the proposed strategy, but in fact, part of the strategy.

As one prominent Pakistani political and military analyst pointed out, raids into Pakistan would expand anger and “prompt a powerful popular backlash” against the Pakistani government, losing popular support.[22] However, as I previously stated, this might be the intention, as this would ultimately make the government more dependent upon the United States, and thus, more subservient.

On September 3, 2008, it was reported that a commando raid by US Special Forces was launched in Pakistan, which killed between 15 and 20 people, including women and children. The Special Forces were accompanied by five U.S. helicopters for the duration of the operation.[23]

In February of 2009, it was reported that, “More than 70 United States military advisers and technical specialists are secretly working in Pakistan to help its armed forces battle Al Qaeda and the Taliban in the country’s lawless tribal areas.” So not only are U.S. Special Forces invading Pakistani territory; but now US military advisers are secretly advising the Pakistani Army on its own operations, and the advisers are themselves primary made up of Special Forces soldiers. They provide the Pakistani Army “with intelligence and advising on combat tactics,” and make up a secret command run by US Central Command and Special Operations Command (presumably JSOC – Joint Special Operations Command).[24]

In May of 2009, it was reported that, “the U.S. is sending Special Forces teams into one of Pakistan's most violent regions as part of a push to accelerate the training of the Pakistani military and make it a more effective ally in the fight against insurgents there.” The Special Forces were deploying to two training camps in the province of Baluchistan, and “will focus on training Pakistan's Frontier Corps, a paramilitary force responsible for battling the Taliban and al Qaeda fighters.” Further, the project “is a joint effort with the U.K.,” which helps “fund the training, although it is unclear if British military personnel would take part in the initiative. British officials have been pushing for such an effort for several years.”[25]

In December of 2009 it was revealed that, “American special forces have conducted multiple clandestine raids into Pakistan's tribal areas as part of a secret war in the border region where Washington is pressing to expand its drone assassination programme,” which was revealed by a former NATO officer. He said these incursions had occurred between 2003 and 2008, indicating they go even further back than US military documents stipulate. The source further revealed that, “the Pakistanis were kept entirely in the dark about it. It was one of those things we wouldn't confirm officially with them.” Further, as the source noted, British “SAS soldiers have been active in the province” of Bolochistan in 2002 and 2003 and “possibly beyond.”[26]

The “Balkanization” of Pakistan: Blaming the Pakistanis

Selig S. Harrison is a director of the Asia Program at the Center for International Policy, senior scholar of the Woodrow Wilson International Center for Scholars, former senior associate of the Carnegie Endowment for International Peace, and former journalist and correspondent. “His reputation for giving ‘early warning’ of foreign policy crises was well established during his career as a foreign correspondent. In his study of foreign reporting, Between Two Worlds, John Hohenberg, former secretary of the Pulitzer Prize Board, cited Harrison’s prediction of the 1965 Indo-Pakistan war eighteen months before it happened.” Further, “More than a year before the Russians invaded Afghanistan, Harrison warned of this possibility in one of his frequent contributions to the influential journal Foreign Policy.”[27]

On February 1, 2008, Selig Harrison threw his renowned “predictive” abilities on Pakistan in an op-ed for the New York Times in the run-up to the Pakistani elections. He started by stating that, “Whatever the outcome of the Pakistani elections, now scheduled for Feb. 18, the existing multiethnic Pakistani state is not likely to survive for long unless it is radically restructured.” Harrison then went on to explain that Pakistan would likely break up along ethnic lines; with the Pashtuns, concentrated in the northwestern tribal areas, the Sindhis in the southeast uniting with the Baluch tribesmen in the southwest, with the Punjab “rump state” of Pakistan.[28]

The Pashtuns in the north, “would join with their ethnic brethren across the Afghan border (some 40 million of them combined) to form an independent ‘Pashtunistan’,” and the Sindhis “numbering 23 million, would unite with the six million Baluch tribesmen in the southwest to establish a federation along the Arabian Sea from India to Iran,” presumably named Baluchistan; while the rump state of Pakistan would remain Punjabi dominated and in control of the nuclear weapons. Selig Harrison explained that prior to partition from India, which led to the creation of the Pakistani state in 1947, Pashtun, Sindhi and Baluch ethnicities had “resist[ed] Punjabi domination for centuries,” and suddenly:

they found themselves subjected to Punjabi-dominated military regimes that have appropriated many of the natural resources in the minority provinces — particularly the natural gas deposits in the Baluch areas — and siphoned off much of the Indus River’s waters as they flow through the Punjab.

The resulting Punjabi-Pashtun animosity helps explain why the United States is failing to get effective Pakistani cooperation in fighting terrorists. The Pashtuns living along the Afghan border are happy to give sanctuary from Punjabi forces to the Taliban, which is composed primarily of fellow Pashtuns, and to its Qaeda friends.

Pashtun civilian casualties resulting from Pakistani and American air strikes on both sides of the border are breeding a potent underground Pashtun nationalist movement. Its initial objective is to unite all Pashtuns in Pakistan, now divided among political jurisdictions, into a unified province. In time, however, its leaders envisage full nationhood.

... The Baluch people, for their part, have been waging intermittent insurgencies since their forced incorporation into Pakistan in 1947. In the current warfare Pakistani forces are widely reported to be deploying American-supplied aircraft and intelligence equipment that was intended for use in Afghan border areas. Their victims are forging military links with Sindhi nationalist groups that have been galvanized into action by the death of Benazir Bhutto, a Sindhi hero as was her father, Zulfikar Ali Bhutto.[29]

This passage is very revealing of the processes and perceptions surrounding “Balkanization” and “destabilization.” What I mean by this, is that historically and presently, imperial powers would often use ethnic groups against each other in a strategy of divide and conquer, in order “to keep the barbarians from coming together” and dominate the region.

Zbigniew Brzezinski wrote in his 1997 book, “The Grand Chessboard,” that, “Geopolitics has moved from the regional to the global dimension, with preponderance over the entire Eurasian continent serving as the central basis for global primacy.”[30] Brzezinski then gave a masterful explanation of the American global strategy, which placed it into a firm imperialistic context:

To put it in a terminology that hearkens back to the more brutal age of ancient empires, the three grand imperatives of imperial geostrategy are to prevent collusion and maintain security dependence among the vassals, to keep tributaries pliant and protected, and to keep the barbarians from coming together.[31]

While imperial powers manipulate, and historically, even create the ethnic groups within regions and nations, the West portrays conflict in such regions as being the product of these “ethnic” or “tribal” rivalries. This perception of the East (Asia and the Middle East) as well as Africa is referred to as Orientalism or Eurocentrism: meaning it generally portrays the East (and/or Africa) as “the Other”: inherently different and often barbaric. This prejudiced perspective is prevalent in Western academic, media, and policy circles. This perspective serves a major purpose: dehumanizing a people in a region that an imperial power seeks to dominate, which allows the hegemon to manipulate the people and divide them against each other, while framing them as “backwards” and “barbaric,” which in turn, justifies the Western imperial power exerting hegemony and control over the region; to “protect” the people from themselves.

Historically and presently, Western empires have divided people against each other, blamed the resulting conflict on the people themselves, and thus justified their control over both the people, and the region they occupy. This was the strategy employed in major recent geopolitical conflicts such as the breakup of Yugoslavia and the Rwandan genocide. In both cases, Western imperial ambitions were met through exacerbating ethnic rivalries, providing financial, technical, and military aid and training to various factions; thus, spreading violent conflict, war, and genocide. In both cases, Western, and primarily American strategic interests were met through an increased presence militarily, pushing out other major imperial and powerful rivals, as well as increasing Western access to key economics resources.

This is the lens through which we must view the unfolding situation in Pakistan. However, the situation in Pakistan presents a far greater potential for conflict and devastation than either Yugoslavia or Rwanda. In short, the potential strategy of “Balkanization” and destabilization of Pakistan could dwarf any major global conflict in the past few decades. It’s sheer population of 187 million people, proximity to two major regional wars in Iraq and Afghanistan, its strategic location as neighbor to India, China, and Iran with access to the Indian Ocean, and its nuclear arsenal, combine to make Pakistan the potential trigger for a much wider regional and possibly global war. The destabilization of Pakistan has the potential to be the greatest geopolitical catastrophe since World War II.

Thus, Selig Harrison’s op-ed in the New York Times in which he describes the “likely” breakup of Pakistan along ethnic lines as a result of “ethnic differences” must be viewed in the wider context of geopolitical ambitions. His article lays the foundation both for the explanation of a potential breakup, and thus the “justification” for Western intervention in the conflict. His “predictive” capacities as a seasoned journalist can be alternatively viewed as pre-emptive imperial propaganda.

Fracturing Pakistan

The war in Afghanistan is inherently related to the situation in Pakistan. From the days of the Afghan-Soviet war in the 1980s, arms and money were flowing through Pakistan to the Mujahideen in Afghanistan. During the civil war that followed, Pakistan armed and financed the Taliban, which eventually took power. When the U.S. and NATO initially attacked Afghanistan on October 7, 2001, this was primarily achieved through cooperation with Pakistan. When the war theatre was re-named “AfPak,” the role of Pakistan, however, was formally altered. While the previous few years had seen the implementation of a strategy of destabilizing Pakistan, once the “AfPak” war theatre was established, Pakistan ceased to be as much of a conduit or proxy state and became a target.

In September of 2008, the editor of Indian Defence Review wrote an article explaining that a stable Pakistan is not in India’s interests: “With Pakistan on the brink of collapse due to massive internal as well as international contradictions, it is matter of time before it ceases to exist.” He explained that Pakistan’s collapse would bring “multiple benefits” to India, including preventing China from gaining a major port in the Indian Ocean, which is in the mutual interest of the United States. The author explained that this would be a “severe jolt” to China’s expansionist aims, and further, “India’s access to Central Asian energy routes will open up.”[32]

In August of 2009, Foreign Policy Journal published a report of an exclusive interview they held with former Pakistani ISI chief Lieutenant General Hamid Gul, who was Director General of the powerful intelligence services (ISI) between 1987 and 1989, at a time in which it was working closely with the CIA to fund and arm the Mujahideen. Once a close ally of the US, he is now considered extremely controversial and the US even recommended the UN to put him on the international terrorist list. Gul explained that he felt that the American people have not been told the truth about 9/11, and that the 9/11 Commission was a “cover up,” pointing out that, “They [the American government] haven’t even proved the case that 9/11 was done by Osama bin Laden and al Qaeda.” He said that the real reasons for the war on Afghanistan were that:

the U.S. wanted to “reach out to the Central Asian oilfields” and “open the door there”, which “was a requirement of corporate America, because the Taliban had not complied with their desire to allow an oil and gas pipeline to pass through Afghanistan. UNOCAL is a case in point. They wanted to keep the Chinese out. They wanted to give a wider security shield to the state of Israel, and they wanted to include this region into that shield. And that’s why they were talking at that time very hotly about ‘greater Middle East’. They were redrawing the map.”[33]

He also stated that part of the reason for going into Afghanistan was “to go for Pakistan’s nuclear capability,” as the U.S. “signed this strategic deal with India, and this was brokered by Israel. So there is a nexus now between Washington, Tel Aviv, and New Delhi.” When he was asked about the Pakistani Taliban, which the Pakistani government was being pressured to fight, and where the financing for that group came from; Gul stated:

Yeah, of course they are getting it from across the Durand line, from Afghanistan. And the Mossad is sitting there, RAW is sitting there — the Indian intelligence agency — they have the umbrella of the U.S. And now they have created another organization which is called RAMA. It may be news to you that very soon this intelligence agency — of course, they have decided to keep it covert — but it is Research and Analysis Milli Afghanistan. That’s the name. The Indians have helped create this organization, and its job is mainly to destabilize Pakistan.[34]

He explained that the Chief of Staff of the Afghan Army had told him that he had gone to India to offer the Indians five bases in Afghanistan, three of which are along the Pakistani border. Gul was asked a question as to why, if the West was supporting the TTP (Pakistani Taliban), would a CIA drone have killed the leader of the TTP. Gul explained that while Pakistan was fighting directly against the TTP leader, Baitullah Mehsud, the Pakistani government would provide the Americans where Mehsud was, “three times the Pakistan intelligence tipped off America, but they did not attack him.” So why all of a sudden did they attack?

Because there were some secret talks going on between Baitullah Mehsud and the Pakistani military establishment. They wanted to reach a peace agreement, and if you recall there is a long history of our tribal areas, whenever a tribal militant has reached a peace agreement with the government of Pakistan, Americans have without any hesitation struck that target.

... there was some kind of a deal which was about to be arrived at — they may have already cut a deal. I don’t know. I don’t have enough information on that. But this is my hunch, that Baitullah was killed because now he was trying to reach an agreement with the Pakistan army. And that’s why there were no suicide attacks inside Pakistan for the past six or seven months.[35]

An article in one of Canada’s national magazines, Macleans, reported on an interview with a Pakistani ISI spy, who claimed that India’s intelligence services, Research and Analysis Wing (RAW), have “tens of thousands of RAW agents in Pakistan.” Many officials inside Pakistan were convinced that, “India’s endgame is nothing less than the breakup of Pakistan. And the RAW is no novice in that area. In the 1960s, it was actively involved in supporting separatists in Bangladesh, at the time East Pakistan. The eventual victory of Bangladeshi nationalism in 1971 was in large part credited to the support the RAW gave the secessionists.”[36]

Further, there were Indian consulates set up in Kandahar, the area of Afghanistan where Canadian troops are located, and which is strategically located next to the Pakistani province of Baluchistan, which is home to a virulent separatist movement, of which Pakistan claims is being supported by India. Macleans reported on the conclusions by Michel Chossudovsky, economics professor at University of Ottawa, that, “the region’s massive gas and oil reserves are of strategic interest to the U.S. and India. A gas pipeline slated to be built from Iran to India, two countries that already enjoy close ties, would run through Baluchistan. The Baluch separatist movement, which is also active in Iran, offers an ideal proxy for both the U.S. and India to ensure their interests are met.”[37]

Even an Afghan government adviser told the media that India was using Afghan territory to destabilize Pakistan.[38] In September of 2009, the Pakistan Daily reported that captured members and leaders of the Pakistani Taliban have admitted to being trained and armed by India through RAW or RAMA in Afghanistan in order to fight the Pakistani Army.[39]

Foreign Policy magazine in February of 2009 quoted a former intelligence official as saying, “The Indians are up to their necks in supporting the Taliban against the Pakistani government in Afghanistan and Pakistan,” and that, “the same anti-Pakistani forces in Afghanistan also shooting at American soldiers are getting support from India. India should close its diplomatic establishments in Afghanistan and get the Christ out of there.”[40]

The Council on Foreign Relations published a backgrounder report on RAW, India’s intelligence agency, founded in 1968 “primarily to counter China's influence, [however] over time it has shifted its focus to India's other traditional rival, Pakistan.” For over three decades both Indian and Pakistani intelligence agencies have been involved in covert operations against one another. One of RAW’s main successes was its covert operations in East Pakistan, now known as Bangladesh, which “aimed at fomenting independence sentiment” and ultimately led to the separation of Bangladesh by directly funding, arming and training the Pakistani separatists. Further, as the Council on Foreign Relations noted, “From the early days, RAW had a secret liaison relationship with the Mossad, Israel's external intelligence agency.”[41]

Since RAW was founded in 1968, it had developed close ties with the Afghan intelligence agency, KHAD, primarily to do with intelligence sharing on Pakistan. In the 1980s, while Pakistan was funding, arming and training the Afghan Mujahideen with the support of Saudi Arabia and the CIA, India was funding two covert groups which orchestrated terrorist attacks inside Pakistan, which included a “low-grade but steady campaign of bombings in major Pakistani cities, notably Karachi and Lahore.” RAW has also had a close relationship with the CIA, as even six years before RAW was created, in 1962, the CIA created a covert organization made up of Tibetan refugees, which aimed to “execute deep-penetration terror operations in China.” The CIA subsequently played a part in the creation of RAW. In the 1980s, while the CIA was working closely with the ISI in Pakistan, RAW, while wary of their relationship, continued to get counterterrorism training from the CIA.[42]

In October of 2009, the New York Times reported that the US strategy “to vastly expand its aid to Pakistan, as well as the footprint of its embassy and private security contractors here, are aggravating an already volatile anti-American mood as Washington pushes for greater action by the government against the Taliban.” The U.S. gave Pakistan an aid deal of $1.5 billion per year for the next five years, under the stipulation of “Pakistan to cease supporting terrorist groups on its soil and to ensure that the military does not interfere with civilian politics.” President Zaradari accepted the proposal, making him even more unpopular in Pakistan, and further angering Pakistan’s powerful military, which sees the deal as interfering in the internal affairs of the country.[43]

America is thus expanding its embassy and security presence within the country, as the Embassy “has publicized plans for a vast new building in Islamabad for about 1,000 people, with security for some diplomats provided through a Washington-based private contracting company, DynCorp.” The NYT article referred to how relations were becoming increasingly strained between Pakistan and the US, and tensions were growing within the country exponentially, as “the American presence was fueling a sense of occupation among Pakistani politicians and security officials,” and several Pakistani officials stated that, “the United States was now seen as behaving in Pakistan much as it did in Iraq and Afghanistan.” Futher:

In particular, the Pakistani military and the intelligence agencies are concerned that DynCorp is being used by Washington to develop a parallel network of security and intelligence personnel within Pakistan, officials and politicians close to the army said.

The concerns are serious enough that last month a local company hired by DynCorp to provide Pakistani men to be trained as security guards for American diplomats was raided by the Islamabad police. The owner of the company, the Inter-Risk Security Company, Capt. Syed Ali Ja Zaidi, was later arrested.

The action against Inter-Risk, apparently intended to cripple the DynCorp program, was taken on orders from the senior levels of the Pakistani government, said an official familiar with the raid, who was not authorized to speak on the record.

The entire workings of DynCorp within Pakistan are now under review by the Pakistani government.[44]

As revealed in the Wikileaks diplomatic cables, U.S. Ambassador to Pakistan Anne Patterson wrote in September of 2009 that the U.S. strategy of unilateral strikes inside Pakistan “risk destabilizing the Pakistani state, alienating both the civilian government and military leadership, and provoking a broader governance crisis in Pakistan without finally achieving the goal.”[45]

In an interview with Press TV, Hamid Gul, former Inter-Services Intelligence chief revealed more of what he sees as the US strategy in Pakistan. He explained that with the massive expansion of the U.S. Embassy in Pakistan, and alongside that, the increased security staff, the Chinese are becoming increasingly concerned with the sovereignty and security of Pakistan. He claimed that the money that the US government offered (with heavy conditions) to Pakistan, $1.5 billion every year for five years, will be spent under the direction of the Americans, and that “they are going to set up a large intelligence network inside Pakistan,” and ultimately “they really want to go for Pakistan's nuclear assets.” He further claimed that the Indians are trying to destabilize Pakistan; however, he explained, this does not necessarily mean disintegrate, but rather:

they are trying to destabilize Pakistan at the moment so that it feels weak and economically has to go begging on its knees to Americans and ask for succor and help. And in that process they will want to expect certain concessions with regards to nuclear power and also with regards to setting up their facilities here in Pakistan.[46]

When he was asked what America’s long-term goal was in regards to Pakistan, Gul responded that the goal:

for America is that they want to keep Pakistan destabilized; perhaps create a way for Baluchistan as a separate state and then create problems for Iran so that this new state will talk about greater Baluchistan... So it appears that the long-term objectives are really to fragment all these countries to an extent that they can establish a strip that would be pro-America, pro-India, pro-Israel. So this seems to be their long-term objective apart from denuclearizing Pakistan and blocking Iran's progress in the nuclear field.[47]

In Part 2 of ‘Pakistan in Pieces’, I will examine the specific ways in which the American strategy of destabilization is being undertaken in Pakistan, including the waging of a secret war and the expansion of the Afghan war into Pakistani territory. In short, the military and intelligence projections for Pakistan over the next several years (discussed in the beginning of Part 1 above) are a self-fulfilling prophecy, as those very same military and intelligence agencies that predict a destabilized Pakistan and potential collapse are now undertaking strategies aimed at achieving those outcomes.


[1] NIC, Global Trends 2015: A Dialogue About the Future With Nongovernment Experts. The Central Intelligence Agency: December 2000: page 64


[2] Ibid, page 66.

[3] Ibid.

[4] PTI, Pak will be failed state by 2015: CIA. The Times of India: February 13, 2005: http://timesofindia.indiatimes.com/world/us/Pak-will-be-failed-state-by-2015-CIA/articleshow/1019516.cms

[5] NIC, Global Trends 2025: A Transformed World. The National Intelligence Council: November 2008: page x


[6] Ibid, page 45.

[7] Ibid, page 65.

[8] Ibid, page 72.

[9] Peter Goodspeed, Mexico, Pakistan face 'rapid and sudden' collapse: Pentagon. The National Post: January 15, 2009: http://www.nationalpost.com/news/world/story.html?id=1181621

[10] PAUL MCGEOUGH, Warning that Pakistan is in danger of collapse within months. The Sydney Morning Herald: April 13, 2009: http://www.smh.com.au/world/warning-that-pakistan-is-in-danger-of-collapse-within-months-20090412-a40u.html

[11] Scott Lindlaw, AP: U.S. gave troops OK to enter Pakistan. USA Today: August 23, 2007: http://www.usatoday.com/news/world/2007-08-23-pakistan-engagement_N.htm

[12] Frederick Kagan and Michael O’Hanlon, Pakistan’s Collapse, Our Problem. November 18, 2007: http://www.nytimes.com/2007/11/18/opinion/18kagan.html

[13] Ibid.

[14] Ibid.

[15] Ahmed Quraishi, The plan to topple Pakistan's military. Asia Times Online: December 6, 2007: http://www.atimes.com/atimes/South_Asia/IL06Df03.html

[16] Ibid.

[17] Ibid.

[18] Ibid.

[19] Ian Bruce, Special forces on standby over nuclear threat. The Sunday Herald: December 31, 2007: http://www.heraldscotland.com/special-forces-on-standby-over-nuclear-threat-1.871766

[20] Steven Lee Myers, David E. Sanger and Eric Schmitt, U.S. Considers New Covert Push Within Pakistan. The New York Times: January 6, 2008: http://www.nytimes.com/2008/01/06/washington/06terror.html

[21] Ibid.

[22] Ibid.

[23] Farhan Bokhari, Sami Yousafzai, and Tucker Reals, U.S. Special Forces Strike In Pakistan. CBS News: September 3, 2008: http://www.cbsnews.com/stories/2008/09/03/terror/main4409288.shtml

[24] Eric Schmitt and Jane Perlez, U.S. Unit Secretly in Pakistan Lends Ally Support. The New York Times: February 22, 2009: http://www.nytimes.com/2009/02/23/world/asia/23terror.html

[25] YOCHI J. DREAZEN and SIOBHAN GORMAN, U.S. Special Forces Sent to Train Pakistanis. The Wall Street Journal: May 16, 2009: http://online.wsj.com/article/SB124241541672724767.html

[26] Declan Walsh, US forces mounted secret Pakistan raids in hunt for al-Qaida. The Guardian: December 21, 2009: http://www.guardian.co.uk/world/2009/dec/21/us-forces-secret-pakistan-raids

[27] CIP, SELIG S. HARRISON. Center for International Policy: http://www.ciponline.org/asia/Seligbio.html

[28] Selig S. Harriosn, Drawn and Quartered. The New York Times: February 1, 2008: http://www.nytimes.com/2008/02/01/opinion/01harrison.html

[29] Ibid.

[30] Zbigniew Brzezinski, The Grand Chessboard: American Primacy and its Geostrategic Imperatives. (New York: Perseus, 1997), page 39

[31] Ibid, page 40.

[32] Bharat Verma, Stable Pakistan not in India’s interest. Indian Defence Review: September 11, 2008: http://www.indiandefencereview.com/2008/09/stable-pakistan-not-in-indias-interest.html

[33] Jeremy R. Hammond, Ex-ISI Chief Says Purpose of New Afghan Intelligence Agency RAMA Is ‘to destabilize Pakistan’. Foreign Policy Journal: August 12, 2009: http://www.foreignpolicyjournal.com/2009/08/12/ex-isi-chief-says-purpose-of-new-afghan-intelligence-agency-rama-is-%E2%80%98to-destabilize-pakistan%E2%80%99/

[34] Ibid.

[35] Ibid.

[36] Adnan R. Khan, New Delhi’s endgame? Macleans: August 23, 2009: http://www2.macleans.ca/2009/04/23/new-delhi%E2%80%99s-endgame/

[37] Ibid. See also Michel Chossudovsky, The Destabilization of Pakistan, Global Research, December 30, 2007

[38] Imtiaz Indher, Afgan MPs call for early withdrawal of foreign troop. Associated Press of Pakistan: April 1, 2009: http://www.app.com.pk/en_/index.php?option=com_content&task=view&id=72423&Itemid=2

[39] Moin Ansari, Proof: Captured TTP terrorists admit to being Indian RAW agents. Pakistan Daily: September 20, 2009: http://www.daily.pk/proof-captured-ttp-terrorists-admit-to-being-indian-raw-agents-11015/

[40] Laura Rozen, Can the intel community defuse India-Pakistan tensions? Foreign Policy: February 16, 2009:

[41] Jayshree Bajoria, RAW: India's External Intelligence Agency. The Council on Foreign Relations: November 7, 2008: http://www.cfr.org/publication/17707/

[42] Ibid.

[43] Jane Perlez, U.S. Push to Expand in Pakistan Meets Resistance. The New York Times: October 5, 2009: http://www.nytimes.com/2009/10/06/world/asia/06islamabad.html

[44] Ibid.

[45] US embassy cables, Reviewing our Afghanistan-Pakistan strategy, The Guardian, 30 November 2010: http://www.guardian.co.uk/world/us-embassy-cables-documents/226531

[46] US military bases 'will destabilize Pakistan'. Press TV: September 13, 2009: http://www.presstv.ir/detail.aspx?id=106106&sectionid=3510302

[47] Ibid.