foreign-policy

New York City Faces ‘Extreme Downside Risk’ From European Debt Crisis: Report

by on December 16, 2011

Huffington Post…

(Joan Gralla) – New York City’s economy faces an “extreme downside risk” from Europe’s debt crisis because its banks hold over $1 trillion of assets in the city, where they are active lenders, according to a new report released on Thursday. The city’s economy is intertwined with Europe’s because non-financial companies have significant ties to European companies while millions of tourists from this region visit the city every year, according to the report by City Comptroller John Liu. “In light of these widespread commercial interactions, adverse effects on the City’s economy from Europe’s debt crisis appear alarming and lend greater urgency to addressing existing budget issues,” Liu said in a statement. This potential problem could bedevil New York City’s finances, which already are being pressured by the job-cutting downturn of its prime industry: Wall Street. The Democratic comptroller warned that Mayor Michael Bloomberg might be underestimating some risks. The list includes the difficulty of negotiating labor contracts for teachers and supervisors with no wage increases for the past round of bargaining and the possibility that cash-poor New York state will cut $200 million in aid. A mayoral spokesman, saying Bloomberg had warned that New York City’s economic outlook was uncertain, added: “He has kept the city’s fiscal house in order while delivering services that continue to produce record results through two historic downturns.” The kinds of risks that Liu indentified could help widen the city’s budget gaps to $1.7 billion in the current accord, $3.2 billion in fiscal 2013, $4.4 billion in 2014 and $5 billion in 2015. The city’s current budget is balanced. Bloomberg, a political independent, has forecast smaller gaps of $2 billion in 2013, $3.8 billion in 2014 and $4.9 billion in 2015. On the positive side, the comptroller estimated that the city’s five pension funds will cost less than Bloomberg predicted, which could save more than $1 billion from the current fiscal year to 2015. Though New York City typically benefits when the stock market rises, as it sweeps in higher tax collections from profitable banks and brokerages and individuals with capital gains, there is a plus to the market’s current roller-coaster ride. “The Comptroller’s Office believes that continued stock market volatility and low interest rates will further encourage institutional investors to shift portfolios towards commercial real estate, especially in premium markets such as New York City, thereby stimulating transactions of commercial property,” the report said. (Reporting By Joan Gralla) Copyright 2011 Thomson Reuters. Click for Restrictions .

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New York City Faces ‘Extreme Downside Risk’ From European Debt Crisis: Report

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Robert Naiman: Could GOP Sanctions on Europe Tank the Economy and Elect Romney?

by on December 8, 2011

Huffington Post…

Remember, “It’s the Economy, Stupid?” So how come Democrats in Congress — over the objections of the Obama Administration — are helping Republicans press sanctions on Europeans who buy oil from Iran — sanctions that would increase unemployment in the U.S. during the 2012 campaign? The National Defense Authorization Act now contains a Senate amendment by Republican Senator Mark Kirk — supported by many Democrats in Congress — that would sanction European banks and companies that do business with Iran’s Central Bank, in order to stop Europeans from buying Iranian oil. This is a big deal, because Iran is the world’s fifth-largest oil exporter, and blocking Iranian oil exports to Europe would raise the price of oil, in Europe and in the United States. Kirk’s amendment would hurt the U.S. economy, at a time when economic contraction in Europe could push the U.S. back into recession. Is fear of the economic blowback of the sanctions on Europe that Kirk wants to impose justified? Many Europeans seem to think so. On Tuesday, Reuters reported : The European Union is becoming skeptical about slapping sanctions on imports of Iranian oil, diplomats and traders say, as awareness grows that the embargo could damage its own economy without doing much to undercut to Iran’s oil revenues. “Maybe the aim of sanctions is to help Italy, Spain and Greece to collapse and make the EU a smaller club,” one trader joked. The remark reflects the growing unease that EU sanctions would hit hardest some of the continent’s weakest economies, because Iranian oil provides the highest share of their needs, not to mention the rest of the bloc. “The likely increase in oil prices that would result from a ban would be felt by all (European) oil refiners, not just those that are big customers for Iranian oil,” ratings agency Fitch said last week. An oil industry source in Greece, which mostly relies on Iranian oil, said: “Greece can’t be put with its back to the wall.” The threat to Iran’s oil exports and fears about a possible military strike on its nuclear facilities have helped keep oil prices above $100 a barrel… Raising the price of oil will hurt the U.S. economy directly. In addition, hurting the European economy will also hurt the U.S. economy by causing U.S. exports to Europe to fall. Furthermore, adding to Europe’s economic problems now would undermine attempts to contain the European financial crisis, as the trader’s joke about sanctions helping Italy, Spain and Greece to collapse suggests. And if efforts to contain Europe’s financial crisis fail, we’re going to feel that pain in the U.S., just as Europe felt the 2008 U.S. financial crisis. What’s the Republican response to all this? When a U.S. Treasury Department spokesman said , “it is critically important that the steps we take do not destabilize the U.S. and global economy,” a senior GOP Senate aide responded by saying, “Treasury should go back and model the cost to the U.S. economy and the world economy of an Israeli strike on Iran.” So, according to this Republican argument, we only have two choices: sanctions on Europe that will hurt the U.S. economy, or an Israeli military strike on Iran that will hurt the U.S. economy even more. But that’s a false choice, because 1) a lot of people in Israel, including the former head of the Mossad, think the idea of an Israeli attack on Iran is insane, and 2) the U.S. can keep Israel from attacking Iran if it wants, just as the U.S. did during the Bush Administration. Of course, many Republicans claim that Iran’s nuclear program constitutes a national emergency in the United States, so we should be willing to accept higher unemployment in the United States in order to block Iran’s oil exports to Europe. But the “emergency” claim is extremely dubious, for the following reasons: 1) As Pulitzer Prize-winning journalist Seymour Hersh recently noted in the New Yorker , there is still no definitive evidence that Iran has a nuclear weapons program. 2) As former AIPAC staffer MJ Rosenberg recently noted , leading neoconservatives at the American Enterprise Institute — a key cheerleader for war with Iran, as it was a key cheerleader for war with Iraq — are now publicly conceding that the issue for neoconservatives isn’t really whether Iran has a nuclear weapon — it’s trying to maintain a balance of power in the region in favor of Israeli military ambitions. It’s certainly understandable that some Israeli generals would want to maintain their freedom, as they see it, to invade Lebanon anytime they want, but does supporting this ambition constitute a national emergency for people in the United States? 3) As Defense Secretary Leon Panetta recently affirmed , at best a Western military strike on Iran would set back its nuclear program by two years. Since a military strike can’t stop Iran’s nuclear program — and since such a strike would be extremely costly to the U.S. — it’s an extremely stupid thing to do, if the goal is to stop Iran’s nuclear program. The only way that military force can stop Iran’s nuclear program is if it is used to overthrow the Iranian government and install a Western client government. But few dare call for this openly, since thanks to the Iraq and Afghanistan experience, the public is now quite aware of what this program would cost in blood and treasure, and is also aware that despite that cost, the program of installing a client government could fail anyway. So there is no emergency requiring sanctions that hurt the U.S. economy. There’s just another manufactured crisis, designed to force Americans to submit again to the neoconservative agenda. But the question remains: Why would Democrats support this? Do they want to lose the election?

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Robert Naiman: Could GOP Sanctions on Europe Tank the Economy and Elect Romney?

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Occupy L.A. May Branch Out To Occupy Beverly Hills, Skid Row

November 28, 2011

WASHINGTON — After a tense all-nighter with the Los Angeles Police Department, Occupy L.A. activists and their tents outside City Hall have been given a temporary reprieve. The police re-opened the streets around City Hall to traffic Monday morning and essentially left Occupy L.A. alone. Four activists had been arrested — hardly the anticipated outcome from either side. Late Friday, Mayor Antonio Villaraigosa declared 12:01 a.m. Monday as the deadline by which Occupy L.A. had to vacate City Hall Park. In a letter to the activists, he wrote: “The Occupy movement is now at a crossroads.” Villaraigosa did not give an explicit explanation as to why he wanted the park cleared of the occupation’s 500 tents, food service and library. Peter Sanders, the mayor’s senior press secretary, said in an email Monday afternoon that the mayor “respects Occupy L.A.’s right to exercise their freedom of speech but that going forward, tents will not be allowed in City Hall Park and the laws regarding city parks will be enforced.” If the mayor thought his threat Friday would send Occupy L.A. members scattering to off-site locations, he was wrong. Sunday night’s general assembly was packed . When a moderator asked how many people were attending the assembly meeting for the first time, many hands shot up. But Occupy L.A.’s continuing general assemblies might be short lived. Los Angeles Police Department Chief Charlie Beck told reporters at a Monday morning press conference that the eviction will happen. “We will enforce the law on our own time schedule,” Beck said. Rumors had already begun that the eviction could come Monday at noon. The Occupy L.A. activists have been just as adamant about holding their ground. “We’re not going away,” PJ Davenport assured The Huffington Post. “We knew that the eviction order was coming down,” Davenport said. “But you can’t help but feel cheated yet again by your local government when they tell you that your time is up and you need to move elsewhere.” Yet some within Occupy L.A. are already considering such a move, Davenport conceded. Los Angeles is a sprawling city with 9.8 million residents and a nearly endless stretch of distinct neighborhoods, enclaves and cultures. Post-eviction, activists aren’t thinking about shrinking. They’re thinking about franchising. Instead of one space, how about 50 spaces? Instead of Occupy L.A., how about Occupy Beverly Hills and an Occupy Skid Row? “You will see tents across the metro area,” Davenport suggested. “If they’re not allowed at City Hall, you will see them around City Hall.” “None of us are interested in working out of an office,” Occupy L.A. activist Joan Donovan insisted. “We want real change. We hope that we show that by occupying, we are extremely serious.” Donovan said the idea of diversifying into several spaces may grow out of necessity — and a way to empower the leaders who grew up through the City Hall space. “We don’t know if we are going to get space this big again,” she explained. “The tactic would be to let all the people who became leaders here to begin the process somewhere else … It would be awesome if there was an Occupy Beverly Hills. It would be the perfect opportunity to talk to tourists about how to better spend their money, how to be better citizens. The idea is to get people to think.” There’s serious talk, Donovan said, of an occupation starting up in Los Feliz. And others are talking about Occupying Rodeo Drive. The greater Los Angeles area already boasts an Occupy Long Beach , an Occupy Venice and an Occupy Pasadena , among other spots. “There are people talking about doing a more permanent occupation of Skid Row,” said Jeremy Rothe-Kushel, an Occupy L.A. activist. “The other possibilities are fully on the table. I think there’s going to be a negotiation about centralization vs. decentralization.”

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Jeff Cimbalo: The Latest Plan to Control Euro Members

November 24, 2011

What’s the newest strategy of the European Commission to remove any democratic accountability from the eurozone members? They are now aiming to consolidate all eurozone members on the IMF Executive Board into a single member, represented by… the European Commission. The move would make the Commission less reliant on the pronouncements of European Council and the interests of the Union’s member states. While there are benefits to consolidating the eurozone’s votes, they don’t have much to do with the eurozone. This action could be part of the more consolidated eurozone that Merkel envisions floating this December in Brussels. If the Commission is talking about it now, it might mean that France and Germany’s longtime opposition to attacks on their prerogatives in international organizations may be thawing. On the face of it, the Union would lose a lot from this plan. Right now eurozone member states control 28.3 per cent of voting quotas, and the Union itself controls almost 32 per cent (not counting Poland which, as an alternate Board member, would vote an additional 2.7 per cent). A larger number of seats influences more votes than the aggregate eurozone as a whole, which controls about 20.5 per cent of the voting quotas. These numbers suggest that the Commission is willing to give up some voting strength for the Union as a whole for greater control over the eurozone’s votes. The biggest risk with the move is the degree to which eurozone members, if transformed into one IMF member called the “eurozone,” can and ought to be held responsible for the failure of a eurozone member to repay its debts. Sanctions for this are rare but they have occurred in Sudan and Zimbabwe, and the Membership Agreement for the IMF provides for suspension of voting rights in those cases (Article XXXVI and Schedule L). Either the eurozone members’ voting rights will have to be joined to the various crises of their members, or one of the only remedies the IMF has for non-compliance will have to be gutted for the eurozone. I would bet on the latter. This move is also likely to drive the eurozone farther from the non-euro members of the Union. By consolidating all eurozone votes into one, it is a bloc vote every time, with no formal need for the Commission to consider the concerns or other EU member states. Keep in mind that all Union members are already obligated under the Lisbon Treaty to “uphold the Union’s position in [international] forums.” (Article 34.) Under this plan, the Union would not even need to try to form a position. It remains to be seen if non-euro members want to give up the Union’s current favorable arrangement in the IMF to essentially allow an organ of the whole Union, the European Commission, to force the eurozone to vote as a bloc even on matters where there is no existing Union position to follow. It is also unknown if changes for how the EU votes at other institutions, such as the G-20 and the UN, might follow.

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Rep. John Conyers: Eliminating Regulations That Protect the Health and Safety of Americans Is Not Job Creation

November 24, 2011

As you are preparing to gather around the Thanksgiving table, the Republican majority in Congress is rushing to push through legislation that will undermine the continued health and safety of the loved ones seated next to you. Over the next two weeks they will bring three bills to the House floor that will halt regulation as we know it, making it more difficult to protect public health and safety. Nobody likes red tape and everyone can agree that there are areas where our regulations could be streamlined. However, these bills go much further and will make it virtually impossible to enact new regulations or fine-tune existing ones. Indeed, under these bills it would even be harder to get rid of burdensome regulation. Consider H.R. 3010, the “Regulatory Accountability Act of 2011,” the latest salvo in conservatives’ war against safeguards provided by regulations. If enacted, H.R. 3010 would effectively halt agency rulemaking, which threatens the government’s ability to protect the American people from a wide range of health and safety harms. H.R. 3010 will result in “paralysis by analysis” by imposing numerous unnecessary analytical requirements on agencies before they even start the rulemaking process. This bill will arrest the rulemaking process and slow down the implementation of critical regulations that ensure our air and water is clean, and our consumer products are safe. But that is not the only bill being crammed into the remaining few days of the congressional session. H.R. 10, The “REINS Act,” would adversely impact how necessary and beneficial rules are promulgated by imposing a mandate requiring all new major regulations to be affirmatively approved by both Houses of Congress and signed by the president within 70 days before they can take effect. By requiring congressional approval and by giving Congress too little time to act, the REINS Act will effectively prevent major rules, including those related to public safety, from ever being implemented. Rounding out the trio of public safety killing legislation is H.R. 527, the “Regulatory Flexibility Improvements Act of 2011.” Under current law, rulemaking agencies must make an analysis for every new rule that would have significant economic impact on a substantial number of small entities, such as small businesses. Among other things, this bill repeals the authority of an agency to waive or delay this analysis in response to an emergency that makes compliance or timely compliance impracticable. So if there is an epidemic of E. coli or listeria infection caused by some item in our nation’s food distribution network, or if there is an imminent environmental disaster that could be addressed systemically through regulation, this bill says “Don’t worry. Don’t rush.” My conservative colleagues argue that this legislation is necessary because too much regulation is responsible for our nation’s current economic difficulties. They must be suffering from some collective form of amnesia. It was not too much regulation of Wall Street that led to the near collapse of the worldwide marketplace. It was not too much regulation that caused the BP oil spill. And, it was not too much regulation that allowed mortgage brokers, servicers, bankers and others to engage in predatory lending and falsify foreclosure documents in court proceedings. Regulation has had no discernable impact on our economy compared with the devastating impact that the lack of demand has had. As a July Wall Street Journal survey of business economists found , “The main reason U.S. companies are reluctant to step up hiring is scant demand, rather than uncertainty over government policies.” Even the business community recognizes that the biggest problem it faces is lack of demand. The most recent National Federation of Independent Business survey of its members likewise shows that business owners believe that poor sales — not regulation — are the biggest problem. The focus of this debate, rather, should be on the fact that regulations are really about job creation. Historically, American-made goods have been sought the world over because of their high quality and safety standards. But the United States will lose this competitive advantage if we continue toward lowering our regulatory standards. The solution to the recession is fairly straightforward. We must increase demand for American goods, create jobs and resolve the home foreclosure crisis. If we continue this regulatory race to the bottom, American manufacturers will be less competitive, demand will further weaken, and fewer — not more — jobs will be created. These bills provide yet another opportunity for big business to recklessly cut corners on public health and safety in the name of increasing big profits without creating a single new job. The safety standards for American goods are so high, and our products are so consistently safe that it is no surprise we often take for granted the regulations that ensure their quality. So as you sit down to a nice meal consisting of food put through a thorough inspection process with loved ones who traveled safely on planes, trains and automobiles subject to rigorous safety standards, remember: Regulations don’t kill jobs, they save lives. And that there are plans underway in Washington to undermine the regulatory process that guarantees the health and safety of millions of Americans.

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Sen. Tom Udall: Amend the Constitution and Overturn Citizens United

November 14, 2011

Co-authored with U.S. Senators Dick Durbin, Jeff Merkley, Chuck Schumer, and Sheldon Whitehouse Now more than ever, the American people are showing just how fed up they are with the explosion of big corporate influence over our politics. And now more than ever, the Supreme Court is ignoring its own precedents to unleash a torrent of corporate and special interest money in our elections. We must put the American people back in charge of our democracy. If the Supreme Court refuses to allow Congress and individual states to regulate the role of money in our elections, we must amend the Constitution to change that — and together, we are beginning the amendment process this month. Passing a constitutional amendment is no easy feat — we’ve only passed 27 in our entire history, and powerful corporate interests are already lining up against us. But an incredible people-powered campaign to restore our democracy in already mounting, unlike anything we have ever seen. Since launching our petition at ReverseCitizensUnited.com yesterday, over 50,000 activists have already stood up to demand this constitutional amendment, which would allow Congress and the states to enact common-sense campaign finance reforms. If you’ve read this far, please take a moment to sign our petition , too. Historically, Congress and state legislatures have established contribution limits, disclosure requirements, and other rules to limit the influence of special interests in elections and ensure that government works for the American people, not powerful corporations. Then, in last year’s controversial Citizens United vs. FEC decision, Republican appointees on the Supreme Court overturned prior precedent and struck down Congress’ sensible regulations on corporate spending in political campaigns. A key solution to address the root cause of this problem is to amend the Constitution to make it absolutely clear to the Supreme Court and the special interests that Congress and state governments have the power to limit the flow of corporate money into campaigns. Our constitutional amendment will stop the growing corrosive influence of big business on our elections and on our government, but it won’t pass unless the American people speak out and demand it . These historic times call for extraordinary measures to ensure our government remains “of the people, by the people and for the people,” not just powerful interests with the deepest pockets. Thank you for standing with us to return our elections to the hands of everyday citizens, rather than the special interests.

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Report: Plan To Aid Jobless Homeowners Fails To Give Out All Its Money

October 7, 2011

A government program aimed at helping unemployed homeowners avoid foreclosure ended with more than half its money unspent . The Emergency Homeowners’ Loan Program ended last month and the government will use only $432 million of the $1 billion it set aside for the program , according to USA Today . The reason? Officials charged with administering the program couldn’t approve enough applicants in time to receive the aid. The Department of Housing and Urban Development approved 11,832 of the 100,000 applications for the program, which was enacted as part of the Dodd-Frank regulations passed in response to the financial crisis, according to USA Today . Officials initially said that the program would provide $50,000 to 30,000 unemployed or underemployed homeowners in order to avoid foreclosure. One of the reasons for the low number of approved applicants could be the strict requirements of the program. In order to receive a loan, applicants had to prove that their income had fallen by at least 15 percent due to the economic downturn , according to The Washington Post . In addition, applicants had to prove that once the loan disappeared — it has a maximum of two years or $50,000 — they’d be able to resume paying their mortgage. Organizations across the country reported having difficulties finding applicants who qualified as the deadline for the loan neared at the end of last month, The New York Times reported. At a community development corporation in Minnesota’s Twin Cities of St. Paul and Minneapolis, 31 out of 250 applicants received approval , according to the NYT . A non-profit in California faced a similar uphill battle; the organization deemed 25 of the 1,200 applicants qualified and of those 25, five were approved as of Sept. 28, The Times reported. The Emergency Homeowners’ Loan Program is just one of the Obama Administration’s loan modification programs that haven’t reached their goals , according to Propublica. Others include the Home Affordable Refinance Program, which aimed to help 4 to 5 million homeowners refinance their mortgages at low interest rates and a plan that gave money to state governments to experiment with programs for helping homeowners. The Home Affordable Modification Program — a plan also passed as part of the Dodd-Frank reforms that aimed to use subsidies to push bailed-out banks to modify home loans — has also had less than stellar results. When Obama first introduced HAMP in 2009 he said it would help 3 to 4 million homeowners; instead, the program has helped less than 700,000. Despite the deluge of programs aimed at helping homeowners and the housing market, the industry that precipitated the recession has yet to recover. A surplus of foreclosed properties is continuing to push home prices down and millions of homeowners owe more on their homes than they’re worth .

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Disney CEO Stepping Down In 2015

October 7, 2011

LOS ANGELES — Disney CEO Robert Iger will remain in his job through March 2015 and then serve as executive chairman for another 15 months to help break in a new chief executive, the company said Friday. The definite end to what will be a decade-long tenure suggests the eventual promotion of one of his two closest lieutenants, either Jay Rasulo, the chief financial officer, or Tom Staggs, chairman of the parks division. The two veteran executives swapped jobs in late 2009 in a move that groomed both to take over one day. Iger, 60, took the reins of The Walt Disney Co. in September 2005 after the tumultuous ouster of Michael Eisner following a shareholder revolt led by Roy Disney, the late nephew of the company’s founder. A former weatherman who rose through the ranks of ABC, Iger has orchestrated some of the company’s biggest acquisitions, including the $7.4 billion purchase of animated movie studio Pixar in 2006 and the $4.2 billion acquisition of comic book giant Marvel in 2009. Iger entered the Disney executive track when the house of Mickey Mouse bought Capital Cities/ABC for $19 billion in 1995, which also brought with it pay TV juggernaut ESPN. One of Iger’s first moves as chief executive was to right relations with Steve Jobs, the just-deceased Apple Inc. co-founder. Jobs worked with Iger to bring ABC shows to iTunes and ended up being Disney’s largest shareholder and go-to adviser through its purchase of Pixar. On Wednesday, Iger called Jobs “a great friend.” Iger will also become chairman of Disney after John Pepper retires at the 2012 shareholder meeting in March. Iger’s contract had been set to expire in January 2013. “The board is delighted that the company has been able to secure the longer-term continuation of Bob’s unique blend of experience and leadership skills,” Pepper said in a statement. “His ability to bring together the many parts of Disney’s business against a clear and proven strategy, while instilling a culture of innovation, collaboration and discipline, will continue to serve the long-term interests of shareholders.” In 2010, Iger was awarded a pay package valued at $28 million, up 30 percent from a year earlier. He received no upfront signing bonus for his new contract. But a securities filing said he will receive an annual salary of $2.5 million, up from $2 million, and an incentive bonus target of $12 million per year through fiscal 2015, up from the target of $10 million earlier. Disney’s fiscal year ends in late September or early October. His annual stock grants bonus target was also set higher, at $15.5 million through fiscal 2015, up from $9 million.

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Perry-Bush Dispute Still Burns

September 19, 2011

By WILL WEISSERT, ASSOCIATED PRESS (AP) AUSTIN, Texas — Here’s the still-beating heart of the rift between Texas Gov. Rick Perry and his predecessor, George W. Bush: When Bush was governor he refused to appoint Perry’s brother-in-law to the Texas appeals court bench. With Perry now running for president, the spotlight is shining on the tense relationship between the two Texans and their allied camps. In public, both Perry and Bush shrug off any friction. “Between the Bushes and Rick Perry there is absolutely no rift at all,” Perry recently told conservative radio show host Sean Hannity. When Bush was asked in a separate interview about it, he mentioned Karl Rove, one of his most trusted advisers, and said: “Maybe with Karl. Not with my brother, with my dad, not with me at all. I admire him.” Despite all the niceties, Perry didn’t hold back when asked during a recent Republican debate about Rove’s comments that Perry’s 2010 book “Fed Up!” contained such explosive language that it could be “toxic” in the general presidential election. “Karl has been over the top for a long time in some of his remarks,” Perry said. Bush’s vice president, Dick Cheney, also has chastised Perry for branding Social Security “a Ponzi scheme.” Perry responded to that by saying, “If Vice President Cheney or anyone else says that the program that we have in place today, and young people who are paying into that expect that program to be sound and for them to receive benefits when they reach retirement age, that is just a lie.” These were just the latest tiffs in a spat that goes back to 1995. Perry was the state’s agricultural commissioner and Bush was the newly sworn-in governor. Perry lobbied for the appointment of his wife’s brother, Joseph E. Thigpen, to a vacancy on the 11th Court of Appeals in Eastland. Bush turned him down. Bill Ratliff, who was Perry’s first lieutenant governor, said Perry blames Rove for denying the request. “It created some friction between the two and Karl got blamed.” Bill Miller, a veteran Austin political consultant, confirms Ratliff’s recollection. “The staff always takes the blame,” Miller said. “Karl absolutely was the surrogate.” In a letter on commission stationary and dated Dec. 17, 1994, Perry wrote a recommendation to Clay Johnson, Gov.-elect Bush’s director of appointments. “Let me, for the sake of `truth in advertising,’ share that Joseph is my brother-in-law,” Perry said. “He is an outstanding talent who has the ability to be a distinguished jurist.” The appointment would last only the two years remaining on the vacant seat’s term, then the judge would face an election. “I obviously will campaign vigorously for him in 1996,” Perry said of Thigpen. Bush spokesman Freddy Ford did not return messages seeking comment on the matter. Mark Miner, Perry’s campaign spokesman, said the request “has no bearing on the good relationship between President Bush and Governor Perry.” “This happened years ago,” Miner said, “and people have moved on.” Thigpen, who like Perry grew up in West Texas, served as district attorney from 1977 until 1984 of a rural district that stretched north of Abilene. He also filled in as needed as a neighboring county’s attorney from 1989 to 1993, when he was fired because the county commissioners claimed he wasn’t often available when they sought his counsel. That mark on his record made Bush look for another candidate, and Jim R. Wright was appointed to the Appeals Court in April 1995. Thigpen, now 65, said he didn’t want to discuss being passed over. “I’m an old man,” he said, “and I prefer to be left that way.” Since the appointment flap, the Perry and Bush camps have drifted farther apart. This year, the establishment embodied by former President George H.W. Bush, father of George W. Bush, is pitted against the enraged tea partyers Perry wants to help him win the nomination. Many who know both former governors say it’s little wonder they never saw eye to eye. The Bush family was patrician. The Perrys were tenant cotton farmers. George W. Bush went to Yale and Harvard, famously quit drinking and rarely curses. Perry graduated from Texas A&M, enjoys fine wine and frequently peppers his speeches with “damns” and “hells.” The two men share the experience of being college cheerleaders. It’s unclear whether bad blood between the two could make it harder for Perry to attract large donors in Texas and around the country who previously backed Bush. Contacted by phone, several people who raised more than $200,000 for Bush campaigns indicated that the Perry-Bush relationship wouldn’t likely sway which candidate they ultimately support. Rove and Perry reconciled briefly in 1998, when Perry was in a dead-heat race for lieutenant governor. Rove believed an attack ad Perry was running was too negative, so he asked Perry to ditch it. In return Rove delivered the all-important endorsement of George H.W. Bush, which helped propel Perry to victory. George W. Bush was already in full national campaign mode while also keeping close tabs on Texas government to ensure it didn’t derail his plans to run for the White House. When Bush took Rove and the rest of his inner circle to Washington, Perry built his own Texas campaign team that twice helped him win the governor’s post. The feud further escalated when Rove and many other top Bush advisers went to work for U.S. Sen. Kay Bailey Hutchison in her fierce battle against Perry for the 2010 gubernatorial nomination. Bush’s father even endorsed her. Despite the political firepower behind Hutchison, Perry trounced her and cruised to his second re-election. Some say Perry will want the support of the Bush family and its national political muscle over a long campaign. For now, though, Team Bush, which left the White House with record-low approval ratings, is an easy target. Austin tea party activist Don Zimmerman called Perry’s chiding Rove on national TV “a no-brainer.” “One of the weapons the Democrats will have against Governor Perry is to say, `Here comes another Bush,’” Zimmerman said. “He’s going to run away from that image as fast as he can.”

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Ron Paul Goes After Rick Perry Over Texas Job Growth

September 13, 2011

The second key moment in Monday night’s GOP debate, as it relates to Rick Perry’s fortunes, came when Rep. Ron Paul (R-Texas) went after the Texas governor. Paul was asked if Perry should get credit for Texas’ job growth. Not only did Paul say no, he said that under Perry, his taxes have doubled, the state’s debt has tripled, and 170,000 of the state’s new jobs were government jobs. “I’m a taxpayer there,” Paul said. “My taxes have gone up. Our taxes have doubled since he took office. Our debt has gone up nearly triple. So no — and 170,000 of the jobs were government jobs. So I would put a little damper on this, but I don’t want to offend the governor because he might raise my taxes or something.” Perry said that people are coming to Texas “because there’s a land of freedom in America — freedom from over-taxation, freedom from over-litigation and freedom from over-regulation.” That came moments after Romney had gotten in a nice jab at Perry, saying that under the previous two governors, Democrat Ann Richards and Republican George W. Bush, job growth per year was higher: 2.5 percent for Richards, 3.5 percent for Bush and 1 percent for Perry. “I think the governor would agree with me that if you’re dealt four aces, that doesn’t make you necessarily a great poker player,” Romney said. “And the four aces that are terrific aces — the ones the nation should learn from — are the ones I described: zero income tax, low regulation, right to work state, oil in the ground and Republican legislature. Those things are terrific.” “You were doing pretty good until you got to talking poker,” Perry replied. Perry is looking good overall, but the shots from Paul will bloody him a little. Maybe a reason why Perry should have avoided going after the Texas congressman in the last debate . A rivalry has been brewing between the two lone-star state candidates over the past few weeks. Paul called Perry “Al Gore’s Texas cheerleader” for once working to help elect the Democrat. Perry’s team, in turn, is branding Paul a turncoat for once leaving the GOP. The AP has more : Last week, Paul likened Perry to a “candidate of the week” and predicted Perry’s poll numbers would fall quickly once voters got to know him better. He told The Associated Press, “Texas has had a lot of changes in these last eight years, not exactly positive either.” This week, Paul rolled out a TV ad suggesting that Perry wants to unravel the Reagan legacy. The ad highlighted Paul’s own endorsement of Reagan’s unsuccessful bid for the GOP nomination in 1976 and Perry’s work on then-Sen. Al Gore’s unsuccessful presidential bid in 1988. The ad said: “Rick Perry helped lead Al Gore’s campaign to undo the Reagan revolution, fighting to elect Al Gore president of the United States. Now, America must decide who to trust: Al Gore’s Texas cheerleader or the one who stood with Reagan.” Perry was a Democrat serving in the state legislature at the time. He switched parties in 1989 and successfully ran for state agriculture commissioner as a Republican. Paul’s ad drew a rebuke from Perry’s campaign, which said in a statement, “Like President Reagan, Gov. Perry has cut taxes and freed employers from government regulations that kill jobs.” Perry aides also dug up and distributed Paul’s 1987 letter of resignation from the Republican Party.

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Rep. Dennis Kucinich: International Policy: Its Relationship to the Domestic Economy

September 9, 2011

Tonight I wish to speak to this Congress and to my fellow Americans about international policy and its relation to the domestic economy. I will advocate a new direction America must take in the world so that we can meet the needs of our people here at home. For the past decade we have relied on the force of our arms to make America secure while our economy has rotted from within. America has lost its focus. America has spent more time concentrating on reshaping the world than on reshaping our economy. We have created hundreds of thousands of jobs for military contractors all over the world, while we just learned that we created zero jobs here in the United States in the month of August as unemployment continues to stay above 9%. Come home America. We must begin to focus on things here at home and stop roaming the world looking for dragons to slay. We have a right and an obligation to defend our nation. That includes working for peace abroad and seeking peaceful resolution of conflict, a capacity that, at our peril, we have not fully developed: I call it strength through peace. It involves the pursuit of what President Franklin Roosevelt called the “Science of Human Relations,” actually engaging those with whom we disagree most to attempt to find a way to co-exist peacefully. As Dr. Martin Luther King said at a commencement address at Oberlin College in 1965: We must find some alternative to war and bloodshed… I do not wish to minimize the complexity of the problems to be faced in achieving disarmament and peace. But we shall not have the courage, the insight, to deal with such matters unless we are prepared to undergo a mental and spiritual change. It is not enough to say we must not wage war. We must love peace and sacrifice for it. We must fix our visions not merely on the negative expulsion of war, but upon the positive affirmation of peace. We must see that peace represents a sweeter music, far superior to the discords of war. I believe the American people have the capacity to ‘undergo a mental and spiritual change’ that Dr. King spoke about. People are about that work in their own private lives everyday. The question is, does our government and those who lead it have that capacity? Are we willing to look, recognize that the path we are on leads only to destruction and poverty and are we willing to embark courageously on a new path? To those who say that this is naïve, I ask; has the strategy of military intervention, which took us and keeps us in Iraq, Afghanistan and Libya, made us any safer? The muscle-bound “with us or against us” mindset which passes for statecraft has placed us on a march of folly that in the past decade has left America with thousands of dead young soldiers, over a million dead innocents in Iraq, Afghanistan, Pakistan and the surrounding region, a new generation of terrorists and trillions upon trillions of dollars in debt. As poverty and war are twins, so are peace and prosperity. Mindful of the disaster of spreading war and being an eyewitness as to how easily our country seems to be drawn into conflict, I traveled to Syria this year, to personally urge their leader to stop the violence, respect human rights, and begin a transition toward a democratic state. I traveled to Lebanon afterwards to hear the concerns of leaders who also believe that the violence in Syria must stop and are concerned that if radical fundamentalism results in the overthrow of the government of Syria, the same fires will consume their own nation which developed a fragile political and social consensus after years of civil war. I opposed the war in Libya, not only because it was unconstitutional, but it was and is unconscionable for America to precipitate or take sides in a civil war, spending perhaps billions in an ongoing war while we have so many pressing needs here at home. We went in because we were told a massacre could occur, yet civilian casualties in Libya mounted after the U.S. and NATO attacked. In order to please the West, Libya cooperated with the CIA, got rid of its WMD program in 2004 and privatized its economy, resulting in massive unemployment. It was moving through to reform even as the West moved to bomb it and, inexplicably, the West moved to take up the cause of elements of Al Qaeda spurring the rebels. We learn today from CNN that the rebels and fighters aligned with them are looting weapons warehouses across Libya, where as many as 20,000 surface-to-air missiles had previously been kept under lock and key. Western officials, perhaps the same geniuses who knowingly helped Libyan rebels with ties to al Qaeda overthrow the Libyan government, are now worried the surface to air missiles and other weapons will get into the wrong hands. This lawless interventionism spurred on by an unaccountable NATO which violates United Nations Security Council resolutions with impunity, this attempt to use force to bring others to subjection in the name of democracy, actually has become a device for control over the wealth of other nations, the squandering of our own wealth, and the spreading of poverty here at home. Did our government just wake up one day and discover that 14 million Americans are out of work and that we need a massive program to put them back to work? No. It has known that for some time. War has become our great distraction. It has given those who have little or no ability to construct a fair economy an opportunity to pretend to leader at the expense of those brave men and women who serve and at the expense of the American economy and the expense of the American taxpayers. We can no longer afford participating in this wargame of nations. I opposed the war in Afghanistan, and have brought Congress to confront it several times because the U.S. has spent one half a trillion dollars trying to democratize a tribal nation while failing to spend sufficient resources to protect our democracy here at home. The latest report is that we may be in Afghanistan through 2024, at the request of the Afghanistan government. This will cost us hundreds of billions, even trillions more. Doesn’t it make more sense for America to come home, at the request of and for the benefit of the American people? I led opposition in this Congress to the war in Iraq. Nine years ago I warned this Congress that there was no reason to go to war against Iraq. I was asked at that time whose side I was on: America’s or the murderous dictator Saddam Hussein? Opposing that intervention was seen by some as coddling a murderous dictator. No matter that Hussein had opposed Al Qaeda. No matter that there was no proof that Iraq had anything to do with 9/11 or al Qaeda’s role in 9/11; no matter that Iraq did not have the intention or capability of attacking the United States and that no one had been able to show that Iraq had weapons of mass destruction. I wasn’t “for” Saddam Hussein. I was for the truth. And for peace. America pursued the war anyway. America put the lives of its sons and daughters on the line. America will spend over three trillion dollars for this war that was based on lies. And even today we find our government will not bring the troops home as promised, but instead will continue to spend billions on this stupid and corrupt war in Iraq while our own nation is falling apart. Money for war, but no money for jobs? Am I advocating isolationism? Certainly not. We need to strengthen the United Nation’s peacekeeping ability and blunt NATO’s warmaking capability. We must stop NATO from going rogue. We need a counter-terrorism strategy which brings people to justice, not which dispenses justice from 10,000 ft., with the help of Predator Drones. It is the predatory interventionism which must stop. We must stop intervening for the benefit of oil companies or other corrupt corporate interests. We cannot be the policeman of the world and lay off police and firemen in our own nation. We cannot continue to bomb bridges in other countries and say we do not have the money to build bridges here in America. We must stop pretending that America can solve all the problems in the world when we can’t solve our own problems here at home. How can we bring democracy to other nations when we are losing it at home? We cannot tell other people how to live when we have people here at home who are having difficulty living. We should look to the wisdom of Proverbs where it was written: “He who troubleth his own house shall inherit the wind” (Proverbs 11:29) and we must work to set our own house in order. There were no weapons of Mass Destruction in Iraq. But there are weapons of mass destruction here in America. Unemployment is a Weapon of Mass Destruction. Poverty is a Weapon of Mass Destruction. Homelessness is a Weapon of Mass Destruction. Inadequate education is a Weapon of Mass Destruction. Lost pension benefits are Weapons of Mass Destruction. Poor health care is a Weapon of Mass Destruction. Yet despite the obvious needs domestically, the Pentagon budget now consumes over 50% of our discretionary spending. And the Pentagon budget has grown alongside the war budget. Just this year the wars and the Pentagon budget will consume close to $1 trillion in taxpayers’ money. A trillion dollars! Do you have any idea how many jobs a trillion dollars can create? Stop the wars, trim the bloated Pentagon budget and use the savings to put America back to work. The American people want work not warfare. Can we see any clearer example of the danger of endless war? We are supposed to be impressed with the strength of our leaders who, in the name of America wield awesome weapons against states a fraction of our size while when it comes to the economy and jobs, the same leaders lack the ability to confront Wall Street, which is destroying jobs on Main Street. While spending trillions for unnecessary wars, the government bailed out the banks for $700 billion, refusing to link the bailout to mortgage modification which would have helped millions of Americans stay in their homes. The Fed, which infamously looked the other way as the financial crisis was building and failed to properly monitor the overexposure of top banks, created $1.2 trillion out of nothing and gave secret emergency loans to some of the largest banks who helped to cause the financial collapse through reckless investments. This secret money created out of nothing, but backed by the full faith and credit of the U.S., is going to fuel an international financial system which siphons wealth out of the U.S., avoids paying taxes, takes American jobs and moves them to low-wage climates. According to Bloomberg News the “$1.2 trillion peak on December 5, 2008… was almost three times the size of the U.S. federal budget deficit that year and approximates the amount of money, $1.27 trillion that is due in unpaid principal on 6.5 million homes that are in or facing foreclosure.” Secret loans went to: Morgan Stanley 107.3 Billion Citigroup $99.5 billion Bank of America $91.4 billion Goldman Sachs $69 billion and to Foreign Borrowers: Banks of Scotland $84.5 billion Zurich based UBS AG 77.2 billion How is it possible that banks too big to fail still exist? We all know that the banks will fail again. The taxpayers will be asked bail them out again; to preserve the wealth of shareholders, bondholders and executives, again. The destruction of the middle class has been accelerated by the Wall Street manipulators who brought about the collapse of the housing market destroyed trillions of wealth built into American homes. Risk, like taxes, is a yoke unfairly placed upon the shoulders of the middle class. As income and resulting wealth is being redistributed upward at a pace not seen since the 1920s, the purchasing power of the middle class has been seriously eroded. Americans have less equity in homes to fuel home equity loans to keep their consumer spending up. A third of all Americans owe more than their home is worth. How is it possible that 120 million Americans literally have no wealth, just debts: How did it happen that 150 million Americans have less wealth than the top 400 individuals? How did it come to pass that the top 13,400 households, according to David Cay Johnston, have more yearly income than the bottom 96 million Americans? Who created this economy where welfare for the wealthy creates a system where a person earning $4 billion a year managing a hedge fund pays a lower tax rate on most of his income than a person who drives a truck? In a report just released, the Pew Charitable Trust wrote : “The idea that children will grow up to be better off than their parents is a central component of the American Dream and sustains American optimism. However… a middle class upbringing does not guarantee the same status over the course of a lifetime. A third of Americans raised in the middle class… fall out of the middle as adults.” The implications are this report are chilling. America’s middle class is being destroyed. America is headed toward a two class society. Just as America could not survive half free and half slave, America cannot survive half rich and half poor. “What happens to a dream deferred?” wrote Langston Hughes. “Does it dry up, Like a raisin in the sun? Or fester like a sore – - And then run? Does it stink like rotten meat? Or crust and sugar over Like a syrupy sweet? Maybe it just sags Like a heavy load. Or does it explode?” It is democracy itself which at risk here. An economic democracy is a precondition of a political democracy. With endless wars, without solid jobs to sustain a middle class, a new national security state armed with the Patriot Act, will exist primarily to provide surveillance of a growing, bristling poverty class. America knew this forty-four years ago, when on February 29, 1968, The Report of the National Advisory Commission on Civil Disorders or Kerner Report pronounced: “Our nation is moving toward two societies, one black, one white — separate and unequal.” Then the inequalities were in lack of access to opportunities for jobs, housing, education and social services. In 1998, thirty years after the Kerner Report, Senator Fred Harris, said, “there is more poverty in America, it is deeper, blacker and browner than before, and it is more concentrated in the cities, which have become America’s poorhouses.” The inequalities exist today. Just since January of 2009, unemployment has skyrocketed among African Americans from 12.7% to 16.7%. Among, Hispanics the unemployment rate is currently 11.3% While intensifying among people of color, poverty today is colorblind. Foreclosures have spread through all American neighborhoods as a wildfire, consuming with it the hopes and dreams of millions. We had a moral urgency to address unemployment in the inner cities, but we failed as a society to do that. We have learned that writ large, the fate of people who live in our cities has been the fate of those who live in the suburbs, because the same massive economic machinery that for generations was crushing the hopes of millions of inner city Americans — banks who disinvested, insurance companies who redlined, businesses which pulled out, this same plague is now visited throughout America. The official unemployment figure of 9.1% conceals a much larger, more devastating picture in America. According to a recent study by Youngstown State University: the de facto unemployment rate, as conceived and computed by their center for Working Class Studies, is 26.37% This figure includes individuals who are no longer looking for work (discouraged), underemployed and those who are marginally employed. Corporations are sitting on trillions of dollars and not hiring because of “uncertainty,” insinuating that small changes in federal regulations or tax policy are killing jobs. Yet we know that massive changes in federal tax policy and government regulations have taken place at periods of great economic growth in the United States. Our economy has not hit a rough spot in the road; it has hit a wall. The greatest losers in today’s economic system are the young. They have been fleeced. They were promised good jobs with good pay if they got a good education. Millions have done that only to discover that the jobs we promised were not there. Millions of young people have moved in with their family and friends, barely scraping by, dreading student loans that they have to repay. The dread when those loans come due. The major fault in the domestic economy is the failure to provide well paying jobs for Americans. The reasons for the high unemployment and low paying jobs are many, but two major reasons stand out: lack of consumer demand and stagnant wages accompanying low union participation. There is a lack of consumer demand in an economy that is 70% dependent on consumer spending. There are those who say we can spur demand with more tax cuts for businesses. This fails the test of experience. Business received tax cuts. We still have high unemployment. Business profits are greater than ever. Investment is less. We have learned from the past few years that businesses will not invest while economy is in bad shape. Since World War II, America has come out of every recession in less than a year, but this time we have had a false recovery. The economic numbers improved briefly, while stimulus was injected. Today we are back in recession, a double dip recession that is destroying people’s lives and setting back our nation. We did not have enough stimulus to begin with. As the stimulus runs out things are getting worse. The recession is feeding on itself. In 1937, a second round of depression surfaced as stimulus was withdrawn, requiring another effort by the government to stabilize the economy. The parallel between 1937 and 2011 is obvious. We need a second stimulus. It has to be strong enough to put millions of Americans back to work. State and local governments are forced to lay off people by the hundreds of thousands. These layoffs are not introducing efficiency. They undermine service and reduce the necessary role of government in the life of a community. Massive aid is needed to all areas of government, not because governments have spent recklessly, but because revenues are down. Income tax revenue is down. Sales tax revenue is down. Property tax revenue is down due to foreclosures. We can stimulate the economy by providing revenue to rehire state and local government employees. That is the easiest way to put hundreds of thousands back to work. This is an obvious way to stimulate the economy on a significant scale. State, local government, public schools, public and private college would all have an enhanced ability to restore service. Such a stimulus would create an economic climate where businesses will expand their investment, utilizing their own profit. The same thing is true in the housing area. The government must immediately implement a new housing program. More and more properties are becoming vacant and vandalized, while people are doubling up. We need a full-scale program where economically troubled homeowners are given the right to rent, at a market rate, property in foreclosure. The government would provide a rent subsidy while the homeowners seek work. The American people want work, not welfare. There should be work for those who are able to work. Government must become the employer of last resort. The private sector is not providing the jobs. When the private sector fails to provide the jobs, the government has a moral responsibility and a practical responsibility to step forward to put the country back to work. As with FDR and the New Deal, the government must now put millions of Americans back to work rebuilding our infrastructure. The American Society of Civil Engineers issued a report that $2.2 trillion in infrastructure rebuilding must take place to move the commerce of America. It is not enough to describe the situation and to make a few suggestions as to what could be done to take us in a new direction. There comes a time when we need to look at some dramatic change that needs to be done to restructure our economy. This month I am going to be introducing a bill which will be aimed at addressing our structural economic problems directly. It is called the National Employment Economic Defense act — the NEED Act. America needs millions of jobs. How can we create millions of jobs in a time of annual deficits, long-term debt and contracting budgets? Here’s how: The Federal Reserve creates money out of nothing and it has given it to banks. The Fed has assumed that power through an Act of Congress. The Federal Reserve has used all of its standard monetary policy tools. But the American economy is not getting better. Whatever the Fed is doing, it is not working. The reason why is perhaps best explained by the Fed itself: “The Fed can’t control inflation or influence output and employment.” The Fed has been buying Treasury and other securities to put downward pressure on interest rates. The idea is to lower finance costs, encourage more borrowing and nudge investors into riskier investments. This provides breathing space but little else. Consumers are already over their heads in debt and they aren’t going to borrow more. Neither will producers, when sales are slack. Higher default rates are widening spreads. Many investors will still prefer to make a small gain on government securities rather than risk taking losses. Reality beats theory. The reality is that not enough people have enough money. Why is this? Where does our money come from? Why isn’t it coming? The Fed doesn’t create money we use in our bank accounts. The banks do. Most of this money is created when banks make loans. This is why the Fed can’t control inflation or influence output and employment. Output and employment depend on demand. Demand depends on how much money people have, or can borrow. Because banks create this money, they control demand. If banks aren’t lending or borrowers aren’t borrowing, new money isn’t being created to replace the money removed when bank loans are paid, so the money supply shrinks. The Fed can only put more money into the economy by buying assets from non-banks. No money goes into the economy when the Fed buys their assets. It’s just a swap of one asset for another, called reserves. Banks can’t lend reserves into the economy. The non-bank sellers of assets are mainly large institutional investors. They don’t spend much of the money they receive, they reinvest it in other assets — that is their business. But this churning of assets up in the stratosphere doesn’t “trickle down” to earth. The real economy of families, shops and small businesses of roads and schools is bypassed. We know this. The money is not getting to where it is needed. Until it does, things can only get worse. None of the current policies work because of the way the current system is set up. Here is how we fix it. We have to reclaim our Constitutional power to issue money into the economy, unburdened by debt. Last Congress I introduced legislation to do just that, and I am reintroducing it next week. Here is what the legislation does: It ends the Fed’s unaccountability by putting it under Treasury. It ends fractional reserve banking, ending banks’ ability to control demand in our economy. It empowers our nation to issue money directly into the economy to create jobs to rebuild our crumbling infrastructure, unhindered by debt and interest payments – - creating millions of new, well-paying jobs. It gets the money to where it is needed the most. It gets the economy going and keeps it going. It avoids debt and deficits. It primes the pump of the economy. It enables us to regain control of our destiny as a nation. This plan would not create inflation because it would reduce infrastructure costs. Lower costs means prices can go down. Lower prices do not define inflation. Real wealth will be created with the new money. Infrastructure is enduring wealth, unlike the “financial wealth” of the stock market. If government borrows money created by banks for infrastructure it is an interest bearing debt, paid for over a long time. But if government creates money for infrastructure and spends it into circulation, there’s no debt or interest costs. The same amount of money is created in either case, adding to the money supply by exactly the same amount. This is also a way to save the free enterprise system from self-destruction. The American people know what is going on in our economy. It is run by Wall Street for Wall Street. It is run by banks for banks. Unless we look at serious structural reforms we are headed for a two class society. The ability to coin or create money is an inherent power under Article I, Section 8 of the United States Constitution. The NEED Act would enable the government to invest in America. This coming Sunday we will observe the 10th anniversary of a terrible blow to our nation’s sense of security and confidence. We will never forget September 11, 2011. But we also need to remember the enduring capacity of our nation to bounce back from tragedy. We need to remember what this country is made of. America is made of vision and courage: the courage and vision of Washington, Jefferson and Adams to put lives, fortune, sacred honor on the line for the purpose of freedom and independence. We are the country of FDR and the New Deal, of John F. Kennedy and the New Frontier, of LBJ and the Great Society. We are a nation of charismatic leaders like Ronald Reagan and Bill Clinton, who, agree with them or not, inspired a sense of optimism and confidence in America. We need to remember who we are. And in the act of remembering we will regain our confidence, we will regain our economic strength, we will put people back to work, we will help millions save their homes, we will protect the retirement security of elderly Americans, we will ensure that our children will be able to obtain a college education and a job when they graduate. We will restore our public institutions and the services they provide. We can do all of this and more. But we must ask that those who operate the engines of finance to abandon their recklessness, their selfishness and pledge allegiance to our nation and its people. We must demand that corporations pay a fair share of the taxes. We must end the off-shoring of jobs and profits. While some our leaders, with trembling hands and nervous eyes have focused abroad, our country is falling apart from within. America was never meant for decline. America was always meant for an upward, uplit path. We now must correct our course. We must move away from trying to determine the fate of nations around the globe and focus on the fate on the one nation that must matter to us more than all others — The United States of America! This speech was delivered to Congress on September 7, 2011. See video of the address here .

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China Suggests Time Is Right For New Global Reserve Currency

August 6, 2011

PRESS ASSOCIATION — China’s state-run news agency says America’s ‘debt-addiction’ is threatening the world economy and that Washington must slash its defence and social welfare spending. The commentary published by China’s official Xinhua News Agency is Beijing’s first official response to the downgrading of US debt. The commentary says that if Washington fails to rein in spending, there would be more “devastating” credit rating cuts to come and global financial turbulence. It demands international supervision over US dollar issues and suggests a new global reserve currency is needed. See also: US suffers first-ever credit rating downgrade.

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Tea Party-Backed Lawmakers Divide On Contentious Issue

July 10, 2011

(Reuters) – Tea Party movement-backed lawmakers have marched in lockstep toward the goal of shrinking the government but that unity dissolves when it comes to America’s role in the world. Republicans who were elected to Congress with support of the grassroots movement have bucked Republican orthodoxy by supporting some defense spending cuts, and they have been at the forefront of criticism of the U.S. Libya intervention. But they appear more divided on how quickly to pull out from Afghanistan, with some favoring a quicker drawdown than President Barack Obama has proposed and others, a slower one. “It’s really a little bit of a trap to suggest that there is somehow a foreign policy view of the Tea Party,” said Danielle Pletka of the American Enterprise Institute think tank. The movement has no clear-cut ideology beyond keeping government small and cutting spending so it is not clear how strong a force on national security issues the Tea Party will be. Movement support helped strip $450 million from funds for an alternate engine for the F-35 fighter aircraft. Tea Party-backed lawmakers have led criticism of the Libya intervention. On Thursday, a House proposal to defund U.S. military operations in Libya came close to passage with considerable Tea Party backing; about two-thirds of the 59-member House Tea Party caucus voted for it. The measure was sponsored by Republican Justin Amash, who was elected last year with Tea Party support, and liberal Democrat Dennis Kucinich. It failed on a vote of 199-229. Foreign policy has simply not been the Tea Party’s chief concern. U.S. Representative Ron Paul, the Republican presidential contender who has been called the “intellectual godfather” of the movement, is anti-war and non-interventionist. PAUL VERSUS BACHMANN Paul’s son, Tea Party adherent and freshman Republican Senator Rand Paul, also teamed up with Democrats in a New York Times opinion piece calling for removing all U.S. combat forces from Afghanistan by the end of next year. This would make America “more secure and stronger economically,” Paul argued, along with Senators Jeff Merkley and Tom Udall. It was time to act “aggressively to bring our troops and tax dollars home.” Pletka said it is wrong to assume that the hands-off world view of the Pauls were the “heart and soul” of the Tea Party. “I don’t think that everybody who is fiscally responsible is also interested in leading America’s retreat from the world,” Pletka said. The leaders of the Tea Party caucuses in the House and Senate, Michele Bachmann and Jim DeMint, are taking a more hawkish, traditionally Republican approach to the Afghan war. DeMint told CNN recently the United States should “finish the job” in Afghanistan and not “withdraw too quickly.” When Democrat Obama last month announced the start of the drawdown of troops from Afghanistan, Bachmann accused the president of putting politics ahead of national security. “We must never forget that 9/11 was hatched in the caves and the mountains of Afghanistan. The Taliban has a presence there. Al Qaeda has a presence there. We must defeat them in their backyard,” she told National Public Radio. Critics of the Afghan war seem to be “outliers” among Tea Party-backed lawmakers as well as in Congress at large, agreed Republican Representative Jason Chaffetz, a war critic who says he is “very much Tea Party-oriented.” But Chaffetz believes voter attitudes on Afghanistan are shifting his way. He told Reuters he gets a positive response in Utah whenever he discusses the need to leave Afghanistan. “It’s a guaranteed applause line. I can stand up in front of any audience, make the case, and get huge applause,” Chaffetz said. “On Libya, it’s even stronger. Nobody knows why we are there.” (Editing by Doina Chiacu) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Amazon Dropping California Businesses?

July 2, 2011

In the wake of a shake-up over sales tax, many online vendors are evaluating the future of their businesses in the state of California. Specifically, Amazon has declared that they will drop all affiliates in the Amazon Associates program, ending business with those vendors. It seems the online retailer would prefer to not do business at all, instead of dealing with state sales taxes.

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New Jersey Anti-Union Bill Paves Way For Other States

July 2, 2011

TRENTON, N.J. — The nation’s financial downturn left many states in such a precarious position that they were forced this year to make tough decisions on expensive but long-untouchable public employee benefits. Nowhere was this breakthrough more evident than in union-friendly New Jersey, where a Republican governor aided by Democrats enacted sweeping cost-saving changes that touched pensions and health care simultaneously. Experts say the overhaul is not only significant in scope, but also marks a pivotal moment as other states look to defuse the ticking time-bomb employee benefit obligations have become as a result of the recession, government benefits becoming more generous than those in the private sector, and poor planning by politicians. With one bill, New Jersey increased required pension contributions, increased the amount workers will pay for health benefits, raised the retirement age, and eliminated automatic cost-of-living increases for current retirees among other things. The ideas aren’t new, experts said, but New Jersey’s success in adopting a comprehensive solution rather than taking a piecemeal approach is noteworthy. “What New Jersey has done is farther-reaching versions of the reforms done all around the country, but all together at once,” said Joshua Rauh, an associate professor of finance at the Kellogg School of Management at Northwestern University. All 50 states have combined unfunded pension and retiree health care obligations that top $1 trillion, according to an Associated Press examination of state balance sheets. Five states have unfunded public employee pension liabilities of $50 billion or more, and a recent study by the Pew Center for the States found that only 5 percent of states saved toward their obligations for retiree health care benefits. “The bigger the annual (obligation) bill is for states, the more pressure it puts on them to not spend money on things like education or public safety,” said Sue Urahn, the managing director for Pew. Although New Jersey’s powerful public employee unions did not go down without a fight, Republican Gov. Chris Christie and his and Democratic allies in the Legislature managed to circumvent collective bargaining without the turmoil that occurred in several other states – most notably Wisconsin. Unlike Wisconsin though, New Jersey suspended – not eliminated – collective bargaining on health care for four years. And New Jersey had a much larger pension and health benefits problem to solve. With underfunded retirement systems short of eventual liabilities by a combined $110 billion, New Jersey’s retiree obligations are among the biggest in the country and are growing. Some studies estimated the pension fund in the New Jersey, the nation’s most densely populated state, would go broke within the decade. “There is nothing like the absence of cash to focus one mind’s on change,” said former New York lieutenant governor Richard Ravitch, who along with other government officials will serve on a new task force to look into states’ current money problems and the extent of their debt. Illinois and California are also in dire straits with each owing more than $100 billion in promises to state and local public workers. Wisconsin, where public protests raged on for days over the GOP-led elimination of collective bargaining rights, falls in the middle of all states in terms of retiree obligations. While bigger states have bigger debt obligations, smaller Northeastern states – with more prevalent unions than out West – fared worse in terms of the percentage they have set aside for retirement funds. As in New Jersey, Connecticut, Rhode Island, Maryland, New Hampshire, and Maryland all have pension systems that are underfunded by at least a third, according the Pew Center. An examination of health care debt reveals an even worse financial picture. Nineteen states haven’t set aside any money toward their health care funds, instead dealing with benefits that far exceed those in the private sector on a pay-as-you-go basis for expenses incurred by current retirees, Pew found. In 2009, 14 states offered free health benefits to some or all individual state employees, and half as many states also paid for family plans, according to the National Conference of State Legislatures. What is even more notable than the scope of New Jersey’s change to employee benefits, is that normally union-backing Democrats – albeit only a handful – helped to pass it. Those who supported it said the state could not wait any longer. “Unions at the local levels were unwilling to give up any concessions at all,” said New Jersey’s Democratic Assembly Speaker Sheila Oliver. “I think at some point you have to put politics aside and solve the problem.” Union officials say politicians have been effective at deflecting blame for years of irresponsible behavior, such as skipping pension payments and borrowing against investments in flush years, by using the economic downturn to portray public workers as the problem. “They flipped the tables to say `Look at these individuals who have these plans that you don’t enjoy anymore and you’re paying for it,’” said Harold Schaitberger, general president of the International Association of Fire Fighters, which represents 300,000 career firefighters in North America. “They use those debt figures to whip up public fear because people aren’t paying attention to what politicians are doing,” added Bob Master, the political director for the Communications Workers of America’s Northeast region. Master said that increasing health premiums for current state workers will do nothing to shore up the liability for existing retiree obligations. Michigan tried to address its health care obligation by making teachers and state workers start paying 3 percent of their pay toward retiree health costs last year under Democratic Gov. Jennifer Granholm. Public sector unions sued and the payments are tied up in court because judges have so far ruled that employees can’t be forced to pay for retirement benefits they may never get. New Jersey unions also plan to sue over the elimination of cost-of-living increases, called COLAs, for current retirees. Colorado, Minnesota, and South Dakota have all tried to reduce COLAs only to face ongoing lawsuits. A few other states have managed suspend them for a year, but no state has been successful in eliminating them totally. Getting rid of the annual increases achieves a large and immediate savings. In separate district court rulings on Wednesday, judges in Colorado and Minnesota upheld the reduced COLAs – a good signal for New Jersey, which allows for them to be reinstated once the pension account becomes 80 percent funded. “COLAs needed to be addressed head-on … it’s a big cost savings,” said Alicia Munnell, director of the Center for Retirement Research at Boston College. “It attacks the notion that pensions cannot be changed for existing employees.” But Munnell said the New Jersey legislation was also sweeping for what it gave to unions: the power to sue if the state should once again skip an annual pension payment – a move intended to ensure that the state doesn’t get itself back into trouble when the economy improves. ___ Associated Press writers Rik Stevens in Albany, N.Y., Ann Sanner in Columbus, Ohio, Judy Lin in Sacramento, Calif., Kathy Hoffman in Lansing, Mich., and Roger Schneider in Milwaukee contributed to this report.

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For A Change, Gas Cheaper On Independence Day Than Memorial

July 2, 2011

(AP) NEW YORK — Call it an Independence Day discount. Gasoline prices usually peak in the summer. This year, however, they peaked a little earlier, on May 5. The subsequent slide has made gas about 24 cents per gallon cheaper than it was on Memorial Day. The national average now stands at $3.55 per gallon. That’s the cheapest gasoline has been since late March. Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, expects the national average to drop another 25 to 30 cents per gallon this year. “Prices will be lower until we get to hurricane season, then who knows?” Kloza said. Hurricanes that pass through the Gulf of Mexico can potentially disrupt oil production and force fuel prices higher. While gas is cheaper than it was on Memorial Day, it’s hardly inexpensive. It’s still 79 cents more than a year ago. And the only other year gas prices were higher for the July Fourth holiday was 2008, when gas was around $4.10 per gallon. The drop in gas is due to a decline in oil prices. Benchmark West Texas Intermediate has given up more than 16 percent since the beginning of May. The contract for August delivery lost 48 cents to settle at $94.94 per barrel Friday on the New York Mercantile Exchange. In London, Brent crude fell 71 cents to settle at $111.77 per barrel on the ICE Futures Exchange. Oil fell Friday after China reported that its manufacturing industry cooled off in June, slipping to its slowest pace in 28 months. Activity slowed down as credit tightened due to inflation-fighting measures and weaker oversea demand. The country is still expected to drive world oil demand for years, but a slowdown in manufacturing could temper the demand for fuels. In the U.S., however, factory activity picked up in June, in part because of lower fuel prices. The Institute for Supply Management, a trade group of purchasing executives, said Friday that its index of manufacturing activity has increased for 23 straight months. In other Nymex trading for August contracts, heating oil dropped 2.18 cents to settle at $2.9245 per gallon and gasoline futures added less than a penny to settle at $2.9726 per gallon. Natural gas fell 6.3 cents to settle at $4.33 per 1,000 cubic feet.

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Strauss-Kahn’s Replacement Coming Within The Month

June 21, 2011

WASHINGTON — The International Monetary Fund says it will interview the two leading candidates for the top job at the 187-nation lending institution this week with the goal of completing the selection process by June 30. The IMF said in a statement that Agustin Carstens, the head of Mexico’s central bank, would meet with the IMF’s executive board on Tuesday, and French Finance Minister Christine Lagarde would be interviewed by the board on Wednesday. Lagarde is considered the front-runner for the position to succeed former IMF Managing Director Dominique Strauss-Kahn, who resigned last month after his arrest on sexual assault charges. The IMF said that its 24-member executive board would meet on June 28 to pick a new managing director with the aim of completing the selection process by June 30.

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As Greece Teeters Closer To Default, Investors Bet On Political Will For Preserving European Union

June 21, 2011

As Greece teetered closer to the precipice of government default, investors appeared to come to the conclusion on Monday that although the troubled country probably will receive help from Europe and avoid a sudden default, it will be forced to restructure its debt soon. As the cost of insuring Greek debt continued to skyrocket on Monday, the euro wavered; U.S. markets modestly rose; and European markets modestly fell. As traders weighed the news of Europe’s ultimatum to Greece to slash its budget by July 3 or risk defaulting — just as Greece’s political leadership faces a vote of no confidence tomorrow — the markets ultimately wagered that even though Greece probably will not be able to pay back its investors in full, it probably will be able to avoid a sudden default that would pose an existential threat to the European Union. “They [European leaders] do not want this grand experiment — bringing together Europe into a single common market and single currency — they do not want that to fail,” said Nariman Behravesh, chief economist at IHS Global Insight. “That is the thing they are all trying to avoid, and they will.” “It’s amazing how impending crisis can focus minds,” Behravesh added. “There are ways out. It does not have to end in a meltdown. It doesn’t. Europe is a rich region; they’ve got the money. The issue is the political part.” Mark Vitner, a senior economist at Wells Fargo, called the situation a game of chicken between the Greeks and the large European banks holding Greek debt. “It will come to whatever the ultimate deadline is; it always seems to,” he said. Some economists expressed less confidence in Greece’s ability to pull itself away from the brink of default, which could threaten the American economic recovery . Jay Bryson, a global economist at Wells Fargo, said that there is a “50/50″ chance that Greece will pass its required austerity measures and restructure its debt in a less damaging way. If the country does not implement sufficient budget cuts, it will be forced to default within the next couple of months. Bryson said that it makes sense for European leaders to force the issue now. “If these guys [Greek leaders] really truly are insolvent, you’re probably better off restructuring the debt at this point than giving them even more money,” he said. Gary Burtless, an economist at the Brookings Institution, pointed to the very high cost of insuring Greek debt as a sign that investors fear that the government will not be able to pay its obligations back in full. “There’s a very widespread fear in the market that these bonds are not going to be repaid on time and at the interest rate that is stated on the face of the bonds,” Burtless said. Scott MacDonald, head of research at Aladdin Capital LLC, said: “The market expects there to be a huge discount to Greek paper”: an expectation that could become a self-fulfilling prophecy. “You reach a stage where it becomes very, very difficult to climb back off the ledge, and I don’t know if we can climb back off the ledge here,” MacDonald said. “It depends on how they default.”

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Naomi Cahn: Expanding the Employment Discrimination Defense Manual

June 20, 2011

Wal-Mart is the largest private employer in the country, and its employment decisions affect lots of people – and their families and communities. Ten years ago, in 2001, Betty Dukes, who is an ordained Baptist minister and a “greeter” at a Wal-Mart store in Pittsburg, California, sued Wal-Mart on behalf of every woman who had worked for the company since 1998, or about 1.5 million women. Ms. Dukes began working for Wal-Mart in 1994, and among her claims was that two of the male greeters in the same store were paid more than she was. Her case ultimately made it to the Supreme Court earlier this year. The only question that the Supreme Court had to decide was whether to give “class certification” to the group of women, that is whether all 1.5 million women could join in the same lawsuit together. Although the two lower courts that heard the case had decided that the case could go forward, Justice Scalia and four other members of the Supreme Court said no (Chief Justice John Roberts, and Justices Anthony Kennedy, Clarence Thomas, and Samuel Alito). Under its narrow interpretation of the procedural rules that concern class actions, the court held that there were not enough questions and answers in common to members of the class. Not surprisingly, Justice Ruth Bader Ginsburg led three other dissenters (Justice Stephen Breyer, Sonia Sotomayor, and Elena Kagan). They would have allowed the plaintiffs to try to go forward under another section of class action procedural rules. As she explained, there was, indeed, a common question: “whether Wal-Mart’s pay and promotions policies gave rise to unlawful discrimination.” And, she listed some of the evidence in support of a claim… …that gender bias suffused Wal-Mart’s company culture. Among illustrations, senior management often refer to female associates as “little Janie Qs.” One manager told an employee that “[m]en are here to make a career and women aren’t.” A committee of female Wal-Mart executives concluded that “[s]tereotypes limit the opportunities offered to women.” [citations omitted] The court did not decide whether Wal-Mart had discriminated against Betty Dukes, so she might still win her individual case. And some group of workers, perhaps storewide, district-wide, or even regionally, might be able to satisfy the majority’s very restrictive test, and be able to go forward as a much smaller class. But that’s not the point. As lawyers who have litigated individual sex discrimination cases, we know that they are time-consuming and expensive and difficult and emotionally-wrenching. Class action lawsuits allow one case to be brought on behalf of thousands of (or in this case, more than a million) workers who are employed in different stores and who hold different jobs but have common claims. They are used not just for claims of sex discrimination but also for claims of race discrimination. They have the potential to affect working conditions throughout a company as well as to bring justice to the individuals leading the lawsuit. In fact, after the lawsuit was filed , Wal-Mart “made an impressive effort to treat women more equitably.” The Wal-Mart v. Dukes ruling is important not only for class action claims. Justice Scalia has expanded his employment discrimination defense manual, a manual available to any employer defending against any type of discrimination claim. In a 1998 case, he developed the Civility Code defense, the Equal Opportunity Harasser defense, and the Teasing, Roughhousing and Horseplay defense. Today, he has added a new defense: We Have a Policy! This seems to be a defense that can now be raised in any Title VII case to combat good statistical evidence of discrimination and it could reach far beyond lawsuits against corporate Goliaths. The five-member-majority opened the opinion with the solemn intonation that: “Wal-Mart’s announced policy forbids sex discrimination.” 
 
The heart of the contradiction here is the court’s finding of no common claims and yet its embrace of a failed nationwide antidiscrimination policy as a shield. In Dukes, the plaintiffs were arguing that managers used their subjective discretion to treat women differently than men. There was good expert evidence showing a “statistically significant disparity between men and women at Wal-Mart… [that] can be explained only by gender discrimination.” The court also ignored the structural discrimination claims. For example, as the dissenters pointed out, the company had a nationwide policy of requiring as a condition of promotion to manager that all employees must be willing to relocate. There was good evidence that this operated as a structural barrier to the promotion of women. The court viewed the plaintiffs’ argument about subjective discretion as “a policy against having uniform employment policies.” Yet, in a sleight of hand trick that would make Penn & Teller proud, the court again whips out Wal-Mart’s antidiscrimination policy: that policy, the court said, is an effective shield against class claims of subjective discretion resulting in statistical pay and promotion disparities. In reality, the way this anti-discrimination policy was to allow managers to discriminate. The court’s opinion makes any discrimination case, large or small, much more difficult to bring.

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Big Banks Face Criticism For Their Speculative Role In Global Food Crisis

May 2, 2011

Today, rising food prices are reeking havoc in the developing world. While some blame overpopulation, and others ethanol, another culprit has emerged of late: banks and the role of speculative commodity indexes. The primary danger of the indexes, according to a new article by Frederick Kaufman in Foreign Policy , is that they fundamentally alter the food market by transforming key stapes into a financial asset that performs more or less like a stock. So while billions worldwide scramble to find money pay for food, food prices are often subject to intensified distortions of supply and demand from speculative markets. Since 1999, when the government first deregulated the commodities market, Kaufmann explains, investors have flocked to investing in food. The basis for that excitement is a Goldman Sachs-developed innovation known as the commodity index. Today, Kaufmann says, it’s a tool that has been replicated throughout the banking industry. The excitement over commodities trading has only picked up in the years since the financial crisis first brought the world economy — and the U.S. housing bubble — to its knees. That, Kaufmann says , was when this really kicked off: “The money tells the story. Since the bursting of the tech bubble in 2000, there has been a 50-fold increase in dollars invested in commodity index funds. To put the phenomenon in real terms: In 2003, the commodities futures market still totaled a sleepy $13 billion. But when the global financial crisis sent investors running scared in early 2008, and as dollars, pounds, and euros evaded investor confidence, commodities — including food — seemed like the last, best place for hedge, pension, and sovereign wealth funds to park their cash… In the first 55 days of 2008, speculators poured $55 billion into commodity markets, and by July, $318 billion was roiling the markets. Food inflation has remained steady since.” Criticism of this speculation has heated up in recent weeks, with the Asian Development Bank releasing a report critical of the trend and recommending the elimination of policies “that create hurdles in transferring food from surplus to deficit regions.” Last September, the United Nations Special Rapporteur On The Right To Food wrote that “a significant portion” of rising food prices was due to the role of speculation. And then last week, Barclays Capital, the United Kingdom’s biggest commodity trader according to World Development Movement , became the target of protests by anti-poverty groups. “First, it was sub-prime mortgages, now it’s food commodities,” Deborah Doane, director of the World Development Movement, said, according to the Guardian . “The lack of transparency in these markets bears worrying resemblance to the behaviour that led to the 2008 financial crash.” Regardless of the reason, there is no denying that rising food prices have had a tangible affect around the globe. In mid-April, the World Bank reported that with food prices rising 36 percent from last year, at least 44 million people worldwide have been pushed into poverty since last June. With 1.2 billion people living on less than $1.25 per day, even small food price shocks can be devastating. Read the full Foreign Policy piece here.

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Obama Administration Considers Altering U.S. Military’s Global Role

April 14, 2011

By Colin Clark Editor, AOL Defense WASHINGTON — The Obama administration, with very little fanfare, has launched what national security experts say is the most significant reconsideration of the United States’ military role in the world since at least the end of the Cold War. The announcement was made yesterday in President Obama’s deficit speech, in which he appeared to call for cutting as much as another $400 billion in spending from the Department of Defense. “Over the last two years, [Defense] Secretary [Robert] Gates has courageously taken on wasteful spending, saving $400 billion in current and future spending. I believe we can do that again. We need to not only eliminate waste and improve efficiency and effectiveness, but conduct a fundamental review of America’s missions, capabilities, and our role in a changing world,” Obama said. The Pentagon “will identify alternatives for the president’s consideration,” Gates’ press secretary Geoff Morrell said late yesterday afternoon. The “roles and missions analysis” — military shorthand for the review — should be finished by the beginning of Fiscal Year 2013, about 10 months from now. One of Gates’ closest advisers, Andrew Krepinevich, called the president’s remarks “an almost earth-shattering speech” during an address at a conference sponsored by the Institute for Foreign Policy Analysis on the future of the Marine Corps. Krepinevich, who is head of the Center for Strategic and Budgetary Assessment and also serves on the Defense Policy Board, told AOL Defense he believes this is the most significant strategic period since the turbulent period after World War II. Krepinevich said the cuts come at a very difficult time. The threat level the U.S. faces is likely to increase for the next decade and, more ominously, the threats are shifting in form. If the U.S. is forced to cut defense spending in this environment, it may well be left with the wrong mix of weapons, strategy and personnel to handle the changing world, Krepinevich said. But he was cautious in his analysis of the Gates’ announcement of a roles and missions study, which traditionally focuses on smaller changes. The White House has not, as far as he knows, decided to launch a strategic review. But Krepinevich said he thinks the White House and Pentagon must first focus on strategy because the stakes are so high and there are so many fundamental military and social changes underway across the globe. Jacquelyn Davis, a defense expert at the Institute for Foreign Policy Analysis (IFPA), told AOL Defense that she believes Libya may spell the “death” of the NATO alliance — a statement that shows just how fundamental the stakes are. Another speaker at the IFPA conference, national security author Bob Kaplan, called the current period the “most unstable era in a long time.” But it looks as though the president isn’t really asking for an additional $400 billion in defense cuts. A White House fact sheet issued after the Wednesday speech says the cuts will come from “security spending,” which defense budget expert Todd Harrison, who works with Krepinevich at CSBA, noted would include the departments governing veterans, energy, homeland security and defense. “It looks like we won’t know every much until the [roles and missions] review is done,” how much might be cut from the Pentagon budget, Harrison said. Any savings would be spread over 12 years, out to 2023. Harrison said the pledge of cuts is “kind of vague, but the takeaway is that it’s a larger cut than we expected.” Launching in Spring 2011, AOL Defense will provide news, insight and tools about the defense sector. Follow Colin on Twitter at @colinclarkaol . Follow defense news on Twitter at @aoldefense .

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Ross Eisenbrey: Colombia’s Anti-Union Violence Rules out Free Trade Agreement

February 11, 2011

President Obama is being pressed by the U.S. Chamber of Commerce and corporate interests to advance a free trade agreement with Colombia that he campaigned against when he ran for president. The agreement’s potential economic benefits are uncertain but certainly small, while its importance to U.S. foreign policy is enormous. Passage of the Colombia free trade agreement would mark the administration’s abandonment of concern about human rights and labor rights among our trade partners. In particular, the president would be turning his back on unions here, in Colombia, and around the world. Unions identify Colombia as the single most dangerous country for union organizing. The Chamber and the office of the U.S. Trade Representative say that things have changed in Colombia. To paraphrase their argument: Trade unionists are still targeted and murdered but in smaller numbers than in the past — so Colombia should be rewarded with increased trade. The level of anti-union violence in Colombia is only acceptable if you don’t really care about the victims or justice. Last year, 46 unionists were murdered in a country less than one-seventh the size of the United States — a rate that would translate to more than 320 murdered union members and leaders in a country of our size. Would we stand for that here? Even if the number of murders had fallen to zero last year, it would be far too soon to reward Colombia for an improvement. The violence against unionists in Colombia has been so vicious and overwhelming that there should be no trade deal until years have passed without any further incidents. In addition to the murders of more than 2,850 trade unionists (more than 700 of whom were union leaders) over the last 25 years, there have been more than 10,000 violent incidents such as kidnappings, cases of torture, assaults, death threats, disappearances, etc. Appalling violence continues in Colombia. Last year’s 46 murders of unionists followed 47 in 2009 and 49 in 2008. Eleven of the 2010 murders occurred during the new Santos presidency, and dozens of death threats are being made against unionists and their leaders month after month. The campaign of terror hasn’t stopped. Nothing will change until the killings are investigated and the murderers prosecuted. Most of the unionists’ murders have never even been investigated. The Colombian attorney general is investigating only 800 cases in the unionhuman rights groups’ database of murdered trade unionists. Fewer than 10 percent of the unionists’ murders have been successfully prosecuted, and many of them were trials in absentia, where the killer was not in custody and has not been punished. In most cases, the person who ordered or authorized the killing was not prosecuted. The powers behind the violence largely have been untouched, including the military units responsible for extrajudicial executions. There is plenty of evidence that the situation in Colombia is getting worse — not better. In December, the government’s National Reparations and Reconciliation Commission acknowledged that there are now at least 6,000 members of paramilitary or successor criminal bands, up from an estimated 4,000 in 2008. Paramilitary or successor criminal bands are present in 151 Colombian municipalities and are “very powerful, very dangerous,” according to Defense Minister Rodrigo Rivera. Human Rights Watch reports that the number of officially identified massacres between January and November 2010 reached 38 — the highest level since 2005 and a 41 percent increase over the same period in 2009. These paramilitaries are a constant threat to trade unionists. U.S. and multinational corporations, including Dole, Chiquita, Del Monte and Nestle, have been linked to the paramilitaries. Until the organizations, institutions, and people responsible are brought to justice and sufficient changes have been made to prevent further violence, Colombian unions can’t operate freely. That means that the paramilitaries must be dismantled and outlawed, the military commanders and government officials involved in the killings must be dismissed, and some minimum number of the murderers and their conspirators must be prosecuted and appropriately punished. We’ve gone down this road before, with disastrous results. Guatemala is the second deadliest country for union organizers. In the two years before passage of the Central America Free Trade Agreement, the murder of unionists in Guatemala fell to zero. Once CAFTA passed, the murders resumed, with 16 unionists killed in 2009. U.S. workers shouldn’t have to compete against workers whose wages are suppressed by a campaign of terror supported by Colombian government officials, the Colombian business community, and the military. The United States should not reward a corrupt and violent business community. The Colombia free trade agreement should be conditioned — at a minimum — on demobilization of the paramilitaries, an end to anti-union violence for at least three years, and justice for the union victims of the terror campaign.

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WikiLeaks Bank Of America Documents A Snore?

February 9, 2011

LONDON: The bombshell that WikiLeaks founder Julian Assange has said could “take down a bank or two” may in fact be something of a dud. Assange has said privately he does not know if his cache of internal Bank of America (BAC.N) data, whose public release he has suggested might be imminent, contains any big news or scandal, according to three people familiar with the WikiLeaks leader’s private discussions about the material. They said that Assange said it consists of e-mails from the hard-drive of a Bank of America executive’s computer and that the latest messages are dated sometime in 2006. The sources said that Assange privately acknowledged the material was not self-explanatory and that he personally was unable to make much sense of it. Assange indicated it would require a substantial amount of effort by financial experts to determine whether any of the material was newsworthy, according to the sources. Assange’s private characterizations of the Bank of America material as being dated and difficult to interpret contrasts with inflammatory public statements he has made — some as recently as last month — touting the significance of bank-related materials WikiLeaks has been planning to publish. A person who works with Assange did not respond to an emailed request for comment. In an interview in November with Forbes, Assange said WikiLeaks planned early in 2011 to release “either tens or hundreds of thousands of documents depending on how you define it” from a cache of material the website had received from an unnamed American bank. Assange said the material would highlight “some flagrant violations, unethical practices” and added that it could “take down a bank or two.” In the Forbes interview, Assange wouldn’t identify which U.S. bank the material came from. In an interview last month with U.S. television program “60 Minutes,” Assange again declined to identify which bank his cache of data came from, claiming to the CBS newsmagazine: “There’ll be a process of elimination if we denied some and admitted others… I think it’s great. We have all these banks squirming, thinking maybe it’s them.” But in an interview with Computerworld magazine in October, 2009, he said “We are sitting on 5GB from Bank of America, one of the executive’s hard drives.” The contrast between the schadenfreude with which he has talked about the bank documentation in public and the caution with which he has described the material in private may provide fresh ammunition to opponents of Assange, who have accused him of hyping revelations and promoting conspiracy theories for personal and political gain. His critics include former WikiLeaks collaborators, who allege Assange has sought to dominate WikiLeaks by fostering a cult of personality. Assange and WikiLeaks have become international media phenomena because he has delivered on some of his claims — particularly through WikiLeaks’ acquisition and publication of thousands of classified U.S. government reports about diplomatic machinations and the wars in Iraq and Afghanistan. WikiLeaks critics have also accused Assange of exaggerating the importance of the leaked official documents, and some internal U.S. government assessments of the impact of WikiLeaks’ publication of American government secrets have suggested that long-term damage to U.S. interests and foreign policy are likely to be limited. Some former WikiLeaks collaborators who split away from the website due to what they regarded as Assange’s erratic and imperious behavior said that over the last year, he had lost interest in publishing financial secrets which had flowed into the website and was much more enthusiastic about publishing material which would irritate or damage the U.S. government. Last month, Assange appeared at a London press conference where Rudolf Elmer, former head of a private Swiss bank’s operations in the Cayman Islands, handed over what purported to be two discs containing documentation of alleged offshore tax abuses by wealthy business people. The day after the press conference, Elmer pleaded guilty in a Zurich court to violating Swiss laws on bank secrecy, and was released without a custodial sentence. Hours after the court hearing, Elmer’s house was raided by Swiss authorities and he was taken away and detained. (Editing by Claudia Parsons and Jim Impoco) Copyright 2010 Thomson Reuters. Click for Restrictions .

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David Isenberg: Outsourcing War and Peace: Part 1

January 7, 2011

It’s a new year so it’s time for a new book on private military contractors. Out later this month is Outsourcing War and Peace: Preserving Public Values in a World of Privatized Foreign Affairs by Laura A. Dickinson. She is a law professor at Arizona State University. I’m in the process of writing a review and don’t want to give anything away but there is a lot of useful information here. So with the permission of her publisher, Yale University Press, I am going to post three excerpts from the book. Here is the first part. Privatization of Defense Department Operations It was not until the presidency of Bill Clinton that privatization began to penetrate deeply into the corridors of the Pentagon and other foreign policy agencies. Through the reinventing government program of Vice President Al Gore, the Clinton administration accelerated the privatization pace across all governmental sectors. But what is significant for our purposes is that in this period the foreign policy sector was also part of the privatization trend. At the DOD, Secretary William Cohen was a key figure. Caught between escalating price tags for weapons systems and political pressure to cut costs in the post-Cold War era without weakening the military’s capabilities, Secretary Cohen turned to the private sector for advice. During the summer of 1997 he assembled a committee that included leading executives from private industry to offer their wisdom about the road ahead. Cohen then proceeded to pursue a reform path that aimed to modernize defense by embracing the rhetoric, practices, and methodologies of American businesses.39 This embrace is perhaps most apparent in his Defense Reform Initiative, which he launched in the fall of 1997 as an effort to “aggressively apply to the Department those business practices that American industry has successfully used to become leaner and more flexible in order to remain competitive.” The four pillars of the initiative included the following practices: “(1) reengineer by adopting the best private sector business practices in defense support activities; (2) consolidate organizations to remove redundancy and move program management out of corporate headquarters and back to the field; (3) compete many more functions now being performed in-house, which will improve quality, cut costs, and make the Department more responsive; and (4) eliminate excess infrastructure.” To further these goals, Secretary Cohen proposed reductions of 33 percent in the number of employees in the Office of the Secretary of Defense, 29 percent in the Joint Staff, 10 percent in military headquarters, 21 percent in defense agencies, and 36 percent in departmental field activities. He also sought to make at least thirty thousand DOD positions subject to competition with the private sector each year for five years, outsourcing those that the private sector could perform better–dwarfing any previous outsourcing efforts. Thus, he sought to implement the troika of practices that had become the buzzwords of American industry in the 1980s and 1990s: downsize, compete, and outsource. While Secretary Cohen cut many civilian employees, Pentagon officials downsized troops and closed military bases, replacing uniformed soldiers with contractors for certain support roles. In the words of one senior DOD official, “The peace dividend requirement forced us to downsize. We had to reduce Army divisions from 18 to 10. But we didn’t cut all types of troops proportionally. We didn’t want to take the risk on the combat side. We took the risk on the support side. In 1991 we had 56 combat brigades. We cut the number down to 46. But if we had taken I down proportionally, we would have taken it down to 36.” Thus, the Pentagon increasingly came to rely on contractors to supply food, build bases, deliver latrines, and perform other support roles. Yet, at the same time, DOD cut its acquisitions staff by 38 percent. As a senior DOD official later noted, “Where we screwed up was not to cut the guys who buy the tanks and the big equipment; instead, we cut the guys who do nuts, bolts, supplies and so on–these were the guys who we were going to need as we turned more and more to service contractors. Thus, at the very moment that the military was turning increasingly to contractors to provide support services to troops, the Pentagon, under pressure from Congress, cut back severely on the acquisitions workforce that would become increasingly necessary to manage those contractors. Yet such cuts were politically much easier to make because, as Steven Schooner has argued, there is no natural political constituency for the acquisitions workforce.

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David Isenberg: PMC: Past, Present, and Future

December 31, 2010

Hmm, celebrate my birthday today or write the final PMC post for 2010? Hey, I’m a multitasking man; no reason I can’t do both. It’s been precisely a year and eight days since I first started writing on private military and security contracting issues for the Huffington Post. I started on Dec. 23, 2009, with this piece ” Contractors ‘R U.S. ” Since then I wrote, including this one, 224 posts, or 61 percent of the time. Thanks to Huffington Post management for letting me do so much. Of course, the fact that I’ve not yet been able to find fulltime work after returning to the United States in late 2009 has given me time to write. I’d like to find one though, so in case there is an employer out there looking for someone please feel free to contact me. The beginning sentence in my first post was “Welcome to the wonderful, and frequently wacky, world of military and foreign policy outsourcing and privatization.” A one year anniversary seems sufficient reason to muse a bit about that world. Guess what; it’s still wacky but there are a few signs that at least the public debate about it is becoming a bit more rational. Of course, that may not be saying much, given how low the bar has been set in the past when it comes to public discussion of the issue, but one takes what one can get. Thanks to work by groups ranging from the Commission on Wartime Contracting, Special Inspector General for Iraq Reconstruction, Special Inspector General for Afghanistan Reconstruction, various NGOs, some outstanding reporters, some very good bloggers, and even a relatively few farsighted officials within the PMSC industry itself critical and key issues like oversight and accountability are moving, albeit slowly, from rhetoric to reality. Note: that is not to say everything is fine and dandy in the PMSC world. Of course, it is not. But the trend is positive, even if the upward slope is an exceedingly gentle incline, instead of a sharp angle. What is important to think about in the future regarding private contractors? Note that I did not write private military or private security contractors. That is not an oversight, pardon the pun. The use of private contractors to do things formerly done by people in government is vastly more widespread than commonly thought and goes far beyond those carrying guns or serving food in a dining facility and delivering supplies to troops under a LOGCAP contract, to name the two main divisions in what the government persists in politely calling “contingency operations.” Note to the younger generation: this is what, back in the 20th century, we used to call war. Just looking at the so-called national security realm contractors are widespread in the intelligence community, they are critical to the Department of Homeland Security, they do the majority of the work for the U.S. Agency for International Development. They are heavily involved in what will be the growing field of cyber defense and, if it comes to that, outright cyber war Just looking at some of the industry literature I have lying around, in 2010 contractors were supporting counter-narcotics work in Afghanistan, Mexico; and Nigeria (SOS International Ltd.), helping farmers in Pakistan and providing HIV/AIDS prevention in Ethiopia (International Relief and Development), proving Unexploded Ordnance (UXO) and mine clearance services (EODT and Pax Mondial), and provide training for Basic and Advanced Law of War that is required by the Pentagon for all contractors accompanying U.S. armed forces overseas. Speaking of literature, during the year I have frequently referred to and quoted from academic scholarship. If nothing else, the law journal articles I cited were at least good for helping you go to sleep. So for the last academic reference in 2010 let me refer you to an article published earlier this month. It is “Sovereignty and Privatizing the Military: An Institutional Explanation” by Ulrich Peterson, published in Contemporary Security Policy journal. He looks at some of the standard explanations for the rise of privatized military companies both in the United States and elsewhere and finds them insufficient. But he does find some uniquely American history to explain whey privatization finds such fertile ground in the United States. One consequence of the idea of shared sovereignty is that the federal state does not possess the exclusive right of maintaining the most powerful means by which oppression could be exercised: the armed forces. Although control over the use of force abroad is located at the federal level, it is not the exclusive right of the federal government to own means of violence. … It shares this privilege with the constituent states and even the citizens. The most important point is that in this crucial area of statehood, the idea of ‘sharing’ has already been introduced. Adding another actor therefore did not amount to a violation of a paradigm. This significantly lowered the barrier for the participation of market actors. The interaction of the principles of shared sovereignty and the minimal state led to extensive privatization in the armed forces. Second, although the state is of course supposed to defend its citizens, defensive force is not its sole prerogative. The right to own weapons and to use them in self-defence, some argue even against the state, is deeply rooted in American history. This notion of everybody’s right to self-defence paved the way for privatizing defensive services such as the protection of senior civilian officials, site security, and convoy security. Thus, the domestic structure and the international changes resonated well with each other and therefore facilitated extensive privatization. It’s an interesting argument and one that, on the face of it, makes sense. If you follow the logic of it far enough it means that the largest private security force in the United States would be the membership of the National Rifle Association. Perhaps it will be wooed by the International Stability Operations Association as its next member. At the end of my first post I wrote, “Before going any further let’s acknowledge that that vast majority of contractors working in Iraq and Afghanistan and elsewhere are decent, honorable men and women, doing their best to do difficult jobs in dangerous and hazardous environments.” That is still true. Let’s hope that in the future those men and women have people in their management who are as good as they are. And to all of you who read these posts I wish you a very a very merry and serene 2011.

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Steve Clemons: The Impact Today and Tomorrow of Chalmers Johnson

November 21, 2010

Next week, Foreign Policy magazine and its editor-in-chief Susan Glasser will be releasing its 2nd annual roster of the world’s greatest thinkers and doers in foreign policy. I have seen the list — and it’s impressively creative and eclectic. There is one name that is not on the FP100 who should be — and that is Chalmers Johnson , who from my perspective rivals Henry Kissinger as the most significant intellectual force who has shaped and defined the fundamental boundaries and goal posts of US foreign policy in the modern era. Johnson, who passed away Saturday afternoon at 79 years, invented and was the acknowledged godfather of the conceptualization of the ” developmental state “. For the uninitiated, this means that Chalmers Johnson led the way in understanding the dynamics of how states manipulated their policy conditions and environments to speed up economic growth. In the neoliberal hive at the University of Chicago, Chalmers Johnson was an apostate and heretic in the field of political economy. Johnson challenged conventional wisdom with he and his many star students — including E.B. Keehn, David Arase, Marie Anchordoguy, Mark Tilton and others — writing the significant treatises documenting the growing prevalence of state-led industrial and trade and finance policy abroad, particularly in Asia. Today, the notion of “State Capitalism” has become practically commonplace in discussing the newest and most significant features of the global economy. Chalmers Johnson invented this field and planted the intellectual roots of understanding that other nation states were not trying to converge with and follow the so-called American model. Johnson for his seminal work on Japanese political economy, MITI and the Japanese Miracle was dubbed by Newsweek ‘s Robert Neff as “godfather of the revisionists” on Japan. Neff also tagged Clyde Prestowitz, James Fallows, Karel van Wolferen and others like R. Taggart Murphy and Pat Choate as the leaders of a new movement that argued that Japan was organizing its political economy in different ways than the U.S. This was a huge deal in its day — and these writers and thinkers led by the implacable Johnson were attacked from all corners of American academia and among the crowd of American Japan-hands who wanted to deflect rather than focus a spotlight on the fact that Japan’s economic mandarins were really the national security elite of the Pacific powerhouse nation. In the 1980s when Johnson was arguing that Japan’s state directed capitalism was succeeding at not only propelling Japan’s wealth upwards but was creating “power” for Japan in the eyes of the rest of the world, Kissinger and the geostrategic crowd could not see beyond the global currency and power realities of nuclear warheads and throw-weight. The revisionists were responsible for injecting the economic dynamics of power and national interest in the equation of a nation’s global status. To understand China’s rise today, the fact that China has become the Google of nations and America the General Motors of countries — the US being seen by others as a very well branded, large, underperforming country — one must go back to Chalmers Johnson’s work on the developmental state. Scratch beneath these Johnson breakthroughs though and go back another decade and a half and one finds that Chalmers Johnson, a one time hard-right national security hawk, deconstructed the Chinese Communist revolution and showed that the dynamic that drive the revolutionary furor had less to do with class warfare and the appeal of communism but rather high octane “nationalism.” Johnson saw earlier than most that the same dynamic was true in Vietnam. His work which was published as Peasant Nationalism and Communist Power while a UC Berkeley doctoral student launched him as a formidable force in Asia-focused intellectual circles in the U.S. Johnson’s ability to launch an instant, debilitating broadside against the intellectual vacuousness of friends or foes made him controversial. He chafed under the UC Berkeley Asia Program leadership of Robert Scalapino whom Johnson viewed as one of the primary dynastic chiefs of what became known as the “Chrysanthemum Club”, those whose Japan-hugging meant overlooking and/or ignoring the characteristics of Japan’s state-led form of capitalism. Johnson was provocatively challenged graduate students in the field to choose sides — to work either on the side where they acquiesced to a corrupt culture of US-Japan apologists who wanted the quaint big brother-little brother frame for the relationship to remain the dominant portal through which Japan was viewed or alternatively on the side of those who saw Japan and America’s forfeiture of its own economic interests as empirical facts. When Robert Scalapino refused to budge despite Johnson’s agitation, Johnson who then headed UC Berkeley’s important China Studies program abandoned the university and became the star intellectual of UC San Diego’s School of International Relations and Pacific Studies . There is no doubt that Johnson but UCSD’s IRPS on the map and gave it an instant, global boost. But as usual, Johnson — incorruptible and passionate about policy, theory, and their practice — eventually went to war with the bureaucrats running that institution. Those who had come in to head it were devotees of “rational choice theory” — which was spreading through the fields of political science and other social sciences as the so-called softer sciences were trying to absorb and apply the harder-edged econometrics-driven models of behavior that the neoliberal trends in economics were using. Johnson and one of his proteges, E.B. “Barry” Keehn, wrote a powerful indictment of rational choice theory that helped trigger a long-running and still important intellectual divide that showed that rational choice theory was one of the great ideological delusions of the era. I too joined this battle and wrote extensively about the limits of rational choice theory which I myself saw dislodging university language programs, cultural studies, and more importantly — the institutional/structural approaches to understanding other political systems. Johnson once told me when I was visiting him and his long-term, constant intellectual partner and wife, Sheila Johnson, that the UCSD School of International Relations and Pacific Studies no longer either really taught international relations or pacific studies — and that a student’s entire first year was focused on acultural skill set development in economics and statistics. To Johnson, this tendency to elevate econometric formulas over the actual study of a nation’s language, history, culture and political system was part of America’s growing cultural imperialism. Studying “them” is really about “us” — as “they” will converge to be like “us” or will fall to the way side and be insignificant. It was that night that Chalmers Johnson, Sheila Johnson and I agreed to form an idea on had been developing called the Japan Policy Research Institute . Chalmers became President and I the Director. We maintained this working relationship at the helm of JPRI together for more than 12 years and spoke nearly every week if not every other day as we tried to acquire and publish the leading thinking on Japan, US-Japan relations and Asia more broadly. We became conveners, published works on Asia that the official journals of record of US-Asia policy viewed as too risky, and emerged as key players in the media on all matters of America’s economic, political, and military engagement in the Pacific. Today, JPRI is headed by Chiho Sawada and is based at the University of San Francisco. However, this base of JPRI gave Chalmers Johnson the launch pad that led to the largest contribution of his career to America’s national discourse. From his granular understanding of political economy of competing nations, his understanding of the national security infrastructure of both sides of the Cold War, he saw better than most that the US had organized its global assets — particularly its vassals Japan and Germany — in a manner similar to the Soviet Union. Both sides looked like the other. Both were empires. The Soviets collapsed, Chalmers told me and wrote. The U.S. did not — yet. The rape of a 12 year-old girl by three American servicemen in Okinawa, Japan in September 1995 and the statement by a US military commander that they should have just picked up a prostitute became the pivot moving Johnson who had once been a supporter of the Vietnam War and railed against UC Berkeley’s anti-Vietnam protesters into a powerful critic of US foreign policy and US empire. Johnson argued that there was no logic that existed any longer for the US to maintain a global network of bases and to continue the occupation of other countries like Japan. Johnson noted that there were over 39 US military installations on Okinawa alone. The military industrial complex that Eisenhower had warned against had become a fixed reality in Johnson’s mind and essays after the Cold War ended. In four powerful books, all written not in the corridors of power in New York or Washington — but in his small home office at Cardiff-by-the-Sea in California, Johnson became one of the most successful chroniclers and critics of America’s foreign policy designs around the world. Before 9/11, Johnson wrote the book Blowback: The Costs and Consequences of American Empire . After the terrorist attacks in 2001 in New York and Washington, Blowback became the hottest book in the market. The publishers could not keep up with demand and it became the most difficult to get, most wanted book among those in national security topics. He then wrote Sorrows of Empire: Militarism, Secrecy and the End of the Republic , Nemesis: The Last Days of the American Republic , and most recently Dismantling the Empire: America’s Last Best Hope . Johnson, who used to be a net assessments adviser to the CIA’s Allen Dulles, had become such a critic of Washington and the national security establishment that this hard-right conservative had become adopted as one of the political left’s greatest icons. Johnson measured himself to som e degree against the likes of Noam Chomsky and Gore Vidal — but in my mind, Johnson was the more serious, the most empirical, the most informed about the nooks and crannies of every political position as he had journeyed the length of the spectrum. Chalmers Johnson served on my board when I worked at the Japan America Society of Southern California. He and I, along with Sheila Johnson — along with Tom Engelhardt one of the world’s great editors — created the Japan Policy Research Institute. Johnson served on the Advisory Board of the Nixon Center when I served as the Center’s founding executive director. We had a long, constructive, feisty relationship. He helped propel my career and thinking. In recent years, we were more distant — mostly because I was not ready, as he was, to completely disown Washington. Many of Johnson’s followers and Chal himself think that American democracy is lost, that the republic has been destroyed by an embrace of empire and that the American public is unaware and unconscious of the fix. He may be right — but I took a course trying to use blogs, new media, and a DC based think tank called the New America Foundation to challenge conventional foreign policy trends in other ways. Ultimately, I think Chalmers was content with what I was doing but probably knew that in the end, I’d catch up with him in his profound frustration with what America was doing in the world. Chalmers and Sheila Johnson saw me lead the battle against John Bolton’s confirmation vote in the Senate as US Ambassador to the United Nations — but given the scale of his ambitions to dislodge America’s embrace of empire, Bolton was too small a target in his eyes. He was probably right. Saying Chalmers Johnson is dead sounds like a lie. I can’t fathom him being gone — and with all of the amazing times I’ve had with him as well as the bouts of political debate and even yelling as we were pounding out JPRI materials on deadline, I just can’t imagine that this blustery, irreverent, completely brilliant force won’t be there to challenge Washington and academia. Few intellectuals attain what might have been called many centuries ago the rank of “wizard” — an almost other worldly force who defied society’s and life’s rules and commanded an enormous following of acolytes and enemies. Wizards don’t die — and I hope that those who read this, who knew him, or go on reading his works in the decades ahead provoke, inspire, jab, rebuke, applaud, and condemn in the way he did. In one of my fondest memories of Chalmers and Sheila Johnson at their home with their then Russian blue cats, MITI and MOF, named after the two engines of Japan’s political economy — Chal railed against the journal, Foreign Affairs , which he saw as a clap trap of statist conventionalism. He decided he had had enough of the journal and of the organization that published it, the Council on Foreign Relations . So, Chalmers called the CFR and told the young lady on the phone to cancel his membership. The lady said, “Professor Johnson, I’m sorry sir. No one cancels their membership in the Council in Foreign Relations. Membership is for life. People are canceled when they die.” Chalmers Johnson, not missing a beat, said “Consider me dead.” I never will. He is and was the intellectual giant of our times. Chalmers Johnson centuries from now will be seen, I think, as the intellectual titan of this past era, surpassing Kissinger in the breadth of seminal works that define what America was and could have been. My sincere condolences to Sheila, to others in his extended family — particularly among all of his students and colleagues who were part of the Johnson dynasty — and to his friends in San Diego who were a vital part of the texture of the Johnson household. — Steve Clemons publishes the popular political blog, The Washington Note . Clemons can be followed on Twitter @SCClemons

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David Isenberg: The Ecstasy and Agony of SIGAR

November 19, 2010

One of the consequences or perhaps accomplishments is the better word, of the use of private military and security contractors in the U.S. wars in Afghanistan and Iraq has been the heightened emphasis on finding the proper means to detect, investigate, fraud, waste and abuse when it occurs. One of the means the U.S. government has chosen to accomplish this is the creation of the Special Inspector General (SIG) office. In fact, to date it has created three of them: the Special Inspector General for Iraq Reconstruction (SIGIR), headed by Stuart W. Bowen, Jr., the Special Inspector General for Afghanistan Reconstruction (SIGAR) headed by Arnold Fields, a retired Marine general, and the Special Inspector General of the Troubled Asset Relief Program (SIGTARP). How is that working out you ask? Well, the message is mixed, if the events of yesterday are any indication. On the plus side yesterday the Senate Subcommittee on Contracting Oversight held a hearing entitled, ” Oversight of Reconstruction Contracts in Afghanistan and the Role of the Special Inspector General .” The purpose of the hearing was to examine the role of the Special Inspector General for Afghanistan Reconstruction (SIGAR) in providing independent oversight of reconstruction contracts in Afghanistan. Seemingly SIGAR is keeping busy. Here is an excerpt from Mr. Field’s testimony: The U.S. engagement in Afghanistan is now in its 10th year. Since 2002, the United States has invested over $56 billion dollars in the reconstruction of Afghanistan. President Obama has requested an additional $16.2 billion dollars for FY 2011. That would bring the total reconstruction funding to more than $72 billion, surpassing the $57 billion that the Congress has appropriated for Iraq’s reconstruction. Since receiving full funding in June 2009, SIGAR has moved aggressively to fulfill its Congressional mandate to conduct, supervise, and coordinate audits and investigations of programs, operations, and contracts utilizing reconstruction funds. We have conducted audits and investigations in 22 of Afghanistan’s 34 provinces. Over the last 18 months, SIGAR has issued 34 audit reports and made more than 100 recommendations. We made 23 recommendations just in the last five reports. These audits addressed more than $4.4 billion in reconstruction spending and have already helped produce important improvements in the way U.S. agencies are implementing the reconstruction program. Moreover, we have published nine comprehensive quarterly reports to the Congress. SIGAR has developed a robust investigations capability. We have 89 ongoing investigations of contract and procurement fraud, as well as corruption. SIGAR investigators, who, on average, have 24 years of prior experience investigating complex financial crimes and contract fraud, are part of the US and Afghan effort to track cash shipments out of the Kabul airport. SIGAR has also conducted joint investigations that have already resulted in four convictions and the ordered repayment of millions of dollars to the U.S. Government. In regard to private security contractors this was noteworthy: One important goal of the new contracting guidance is to prevent U.S. funds from undermining the reconstruction effort by unintentionally fueling corruption, financing insurgents, or strengthening criminal networks. In this regard, SIGAR has been particularly concerned about the role and cost of private security companies (PSCs) and their subcontractors. We are currently conducting an audit of a USACE task order for private security services. Our audit is not only reviewing contract planning, management and costs, but it is also identifying subcontractors. We expect this audit to be completed early next year. We have plans to initiate three more audits related to PSC contracts this year. The first will identify all the PSCs operating in Afghanistan, as well as the costs of their services to the U.S. government since 2007. The second will determine the ability of military commanders to track convoys guarded by PSCs. The third will be a focused contract audit of a PSC contract. SIGAR is also watching the statements and actions of Afghan officials regarding the use of private security contractors and the related impact on costs to the American taxpayer. These changes that have been announced could have a dramatic impact on the existing reconstruction effort and our planned work. So it appears that just like SIGIR before it that SIGAR is doing necessary and valuable work. Indeed, Stuart Bowen testified that SIGs can be an extremely effective cross-cutting accountability tool in complex, multi-agency operations and concluded that the U.S. government would benefit from the creation of a permanent SIG for contingency operations. In his written statement he noted: Hybrid hiring models that provide stability for core staff and maintain flexibility of temporary contingency-specific surges would retain that capacity in a permanent organization. A statute establishing a single contingency SIG could be enacted, providing core authorities, including adequate jurisdiction and personnel authorities, and providing, as is the case for SIGIR and SIGAR, that the agencies administering programs must provide space and support in-theater. A permanent core staff of about 25, at a cost of roughly $5 million per year, could design strong internal controls, high-quality plans, and structures for consistent productivity – ensuring a consistent oversight baseline in the chaotic world of contingency operations. The existence of this core staff would eliminate the need to develop new administrative capabilities (such as budgeting, human resources, information technology, and logistics) each time another overseas contingency operation arose. We would support the use of excepted-service personnel authorities for the core staff so as to keep the core staff’s ethos as close as possible to the standards that will be demanded of the staff brought in temporarily to deal with specific contingencies. The decision to deploy the SIG to a specific contingency could be made by the Congress, or by the President or some other executive branch authority pursuant to statute. Various “modules” ranging from $8 million to $24 million per year in incremental costs could be envisioned to supplement the core staff to cover specific contingency operations. A look at the combined FY 2010/2011 budgets for SIGIR and SIGAR puts the average cost of Special IG oversight at $60 million annually. Combining these functions into one office could potentially save $20 million per year. Call it unfortunate but the need for SIG’s is not going to go away, even when all U.S. forces are out of Iraq and Afghanistan. There will be other contingency operations. They may not look like Iraq or Afghanistan. They may occur in Haiti, or Pakistan, or Yemen, or somewhere that is least expected. All indications point to an increase in national security challenges in failed or fragile states. When decisions are taken to engage in stabilization and reconstruction, ensuring the oversight of multiple federal agencies acting in the same space will continue to be a difficult problem, as will be the challenge of quickly deploying appropriate permanent agency oversight personnel. At the same time, given resource constraints, the U.S. government will have to address reconstruction and stabilization much more economically, efficiently, and effectively. A Special Inspector General for Overseas Contingency Operations can fill this need. It is a mistake not to deploy oversight at the earliest possible stage of a stabilization and reconstruction operation. We need to be able to do so quickly and efficiently. Unless we do so, oversight will be far from what is required, money will be wasted, and program managers, senior leadership in the agencies, and the Congress will be insufficiently informed – and we will be doomed to repeat the mistakes of the past. So what’s the bad news? Well, a bipartisan group of senators has asked the president to remove Arnold Fields as head of the SIGAR, after a negative review this summer put his agency’s law enforcement status at risk and prompted the Justice Department to consider suspending the agency’s law enforcement powers. Critics question the quality of reports by the agency. A major complaint is that SIGAR tends to follow the lead of the joint contracting corruption task force, which comprises officials from various agencies. One reviewer said the agency should perform more audits that expose contracting fraud and then find mechanisms to ban those contractors. Even worse yesterday Sen. Claire McCaskill, head of the subcommittee, released new information regarding a sole-source contract awarded by SIGAR to Joseph Schmitz, a former Defense Department Inspector General. Mr. Schmitz, who resigned from the Defense Department in 2005, received $96,000 for approximately two months’ work as an “Independent Monitor” of SIGAR’s investigations division. The decision to hire Mr. Schmitz, who left government service to work for Prince Group LLC, the parent company of the private security company formerly known as Blackwater, infuriated congressional critics. In a letter to Obama in late September, McCaskill, along with Sens. Tom Coburn, R-OK, Chuck Grassley, R-IO, and Susan Collins, R-ME, called SIGAR a “failing organization” in need of new leadership. An analysis by Coburn’s staff shows that inspectors general at the Pentagon, State Department and U.S. Agency for International Development and for Iraq reconstruction have all been much more efficient than SIGAR at generating savings and recoveries. During the hearing, McCaskill also noted that an audit cited by Fields as an example of SIGAR’s prowess was based largely on work done by the inspector general at USAID. Yesterday, the Project on Government Oversight jointed the senators in urging the removal of Fields. POGO noted : One criticism levied against the SIGAR by the four Senators was its failure to have a meaningful strategic plan for auditing and investigations. An IG’s strategic plan is a critical tool used to decide what issues should be given priority and is especially important when there are numerous issues competing for the attention of relatively few auditors and investigators. Observers have pointed out that some SIGAR audits have duplicated what is already known. For example, a January 2010 audit by the SIGAR on U.S. assistance for the construction of a power plant in Kabul “updates and builds upon the audit report issued by the Office of the Inspector General of the U.S. Agency for International Development (USAID) in November 2009,” according to the SIGAR audit. The USAID IG audit was issued only two months earlier. In another example, an August 2010 SIGAR report on “U.S. Reconstruction Efforts in Afghanistan Would Benefit from a Finalized Comprehensive U.S. Anti-Corruption Strategy,” which took eleven months to finish, reads like a summary of news reports and previous assessments. “It shouldn’t take eleven months to compile information mostly contained in news reports,” said POGO Investigator Jake Wiens. While these are not characteristic of all of SIGAR’s audits, they are two out of the eleven audit reports SIGAR has produced in 2010. Last year, most of its earliest audits were severely criticized in a memo written by Hill staffers and obtained by Foreign Policy’s blog, “The Cable.” As POGO has written in a report on IGs, reaction is one of the best means of measuring an IG’s impact. Congress has often unfavorably compared the SIGAR to the Special Inspector General for Iraq Reconstruction on this basis.

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John Feffer: What’s So Funny About Outsourcing?

October 26, 2010

What were NBC executives thinking? The unemployment rate remains near double digits, and many Americans have simply stopped looking for work. And what does the network premiere this fall but a sitcom called Outsourced about an American manager sent to run a call center in India. The jokes revolve around funny names, unappetizing food, Sikh turbans, arranged marriages. “It’s hard to know what a normal smell is here and what isn’t,” says Todd Dempsy, the culturally insensitive manager played by Ben Rappaport, in last week’s “Touched by an Anglo” episode . And there’s indeed something fishy about a show that capitalizes on U.S. jobs going overseas during an economic downturn. On the other hand, Outsourced introduces American viewers to bhangra music and lots of Indian faces. It makes fun of the inanities of American culture (bachelorette parties, pimping cars, fake vomit). The acting is pretty good, including the very funny Sacha Dhawan and Anisha Nagarajan. An inter-cultural romance beckons on the horizon. There’s even the occasionally pointed comment, such as the assistant manager Rajiv’s aside to his American boss that “this country is just a cash register to you.” And it’s hard to remember when a prime time show took place somewhere other than the United States. If you get all of your information about the world from network television, you might not even be able to locate Canada on a map (oh, yeah, that place just to the right of Northern Exposure ). The premise of Outsourced is that Todd, the American manager, is saddled with a B team of call center employees — quirky but loveable underdogs who are just struggling to get by. In other words, American audiences are being asked to sympathize with a group of Indian workers lucky to have the jobs that Americans have recently lost. That the show succeeds in finding an audience — an average of 6.3 million viewers a week, making the show the #1 new network show so far this season — is quite an achievement. Or it’s another sign of the gulf between cosmopolitans who benefit from globalization and blue-collar workers whose wages have gone steadily downhill because of competition from abroad. Some people appreciate the 24-hour customer service line, regardless of the accent of the person on the other end. Others are strictly “Buy American.” Of course, sometimes the same person lost her job last week at the factory and this week shops at WalMart to save money by getting cheap shirts from Sri Lanka, cheap produce from Mexico, and cheap Halloween decorations from China. President Barack Obama has been on both sides of the debate. During the presidential election, as Foreign Policy In Focus contributor Roger Bybee explains in Obama’s About-Face on Trade , “both Obama and rival candidate Hillary Clinton continued to focus on free trade and the flight of jobs offshore. They felt compelled to do so to woo Democratic voters infuriated by corporations abandoning U.S. workers and communities. These perceptions are validated by data from Public Citizen estimating that the United States has lost about 4.9 million jobs and 43,000 factories because of free trade deals like the North American Free Trade Agreement and normalization of trade relations with China.” As president, meanwhile, “Obama has been waging a long-running battle against offshoring in general, and to India in particular,” writes FPIF contributor Saif Shahin in Obama: Blowing It on India . “Last year, he urged U.S. companies to ‘say no to Bangalore, yes to Buffalo.’ Two months ago, he signed into law a steep hike in the fees of some visa categories preferred by professionals working for Indian companies where information technology (IT) jobs are outsourced. The extra money will go into building a better border fence with Mexico.” But the president has also supported free-trade agreements with South Korea, Panama, and Colombia. And he pushed through bailouts for U.S. companies without conditions that would have restricted their outsourcing of jobs. He surrounded himself with a free-trade clique from Wall Street, so what did you expect? Progressives face a somewhat different dilemma on this issue. On the one hand, we have always stood with labor unions to support the creation (and retention) of good manufacturing jobs. On the other hand, we push for the radical reduction in global poverty. The rise of new service and manufacturing centers in China and India alone has pulled hundreds of millions out of poverty. “It’s possible to make the case that China’s success in bringing masses of peasants out of poverty–as many as 400 million and counting–is the single most important event in the world in the past quarter-century,” writes Robert Dreyfuss in The Nation . “To be sure, much of China’s growth since the late ’70s has come at the expense of the environment and of workers laboring under atrocious conditions.” In theory, the two positions can be reconciled. We must back trade and other policies that raise wages and provide good benefits in countries that use low-wage labor as their comparative advantage. In the case of chocolate, for instance, it’s not just low-wage labor but child labor and slavery that goes into the making of so much of the candy we hand out on Halloween, as Andrew Korfhage explains in this OtherWords op-ed. Tax policies that reduce the enormous disparity between CEO pay and the rest of the workforce would also help to level the playing field. In this way the national interest would converge with the global interest. Even if passed, however, such reforms would take some before equalizing wages and reducing the flow of jobs from the United States to India. In the meantime, the opportunity to hire a workforce that can give you “follow-the-sun” service at low wages and in English is an irresistible combination. Moreover, it’s become more difficult in an age of sustainability to make the rising-tide- lifts-all-boats argument. Environmentalists acknowledge that U.S. consumers are simply going to have to cut back on our disproportionate use of world resources if we are to have an equitable solution to the climate change problem. It’s nice to argue that the wages and benefits of workers around the world should be raised to American standards (and preferably those of the 1960s before real wages started to decline). But like a world that owns as many cars as Americans, is such a global wage regime environmentally feasible? Or will the gradual rise of wages in places like China and India necessarily involve a gradual decline in wages in places like the United States and Europe? Don’t expect Outsourced to wrestle with these difficult questions. It’s a sitcom, after all. But it remains a remarkable change in the zeitgeist that millions of Americans are willing, week after week, to watch and root for so many non-Americans (who are not kicking a soccer ball). If nothing else, Outsourced humanizes the people so often demonized for taking American jobs. Even the Buy America crowd can take some measure of solace when watching the show. Except for a few framing shots, the show is filmed in Los Angeles with American actors. However, director Ken Kwapis says that if the show is successful , he’ll do more work on location. Is Outsourced itself going to be outsourced? Subscribe to FPIF’s World Beat here . Sign up with FPIF on Facebook . Follow FPIF on Twitter. Follow John Feffer on Twitter.

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Josh Silver: Washington Post Endorses Comcast-NBC: Ironically Proves Dangers of Mega-Merger

October 25, 2010

Today, the Washington Post published a piece of unabashed corporate advocacy , arguing that the pending mega-merger of cable giant Comcast and NBC-Universal should be swiftly approved by regulators. The editorial claims that media concentration is not a problem, and that “advocacy groups (opposing consolidation) have been poor prognosticators of the effects of large media mergers.” I’m not sure what planet the WaPo editors live on. Weakened media ownership limits have led to a media system with far too many newspapers, radio and television stations in too few hands. Public interest groups have correctly predicted the host of problems brought by rampant consolidation: woefully few outlets owned by women and people of color, huge profit pressures that result in job cuts, closed news bureaus, and a system where hard hitting, investigative commercial television and radio journalism is nearly an oxymoron. Radio is homogenized, with too many ads and opinions, and scant original reporting. On television, the most important issues are synthesized into seven second sound bites and impossibly short segments that are devoid of context and crucial information. The net result of ownership consolidation (aided and abetted by the rise of the Internet) is poorly-staffed newspapers and commercial television and radio that are long on hot-headed opinions, advertisements and mindless entertainment, but short on the substance that an informed democracy requires. Defenders of the status quo are either benefiting from it, or are like frogs in warming water: it happened so slowly, they haven’t realized it’s boiling over. The great irony of the Post’s endorsement is that the editorial itself is a poignant example of why the Comcast-NBC merger is so dangerous. When media companies control too much, their own interests — and opinions — directly conflict with the public’s desperate need for sound policy and diverse, independent, critical viewpoints. The Post is not a disinterested or neutral observer in this case. The Washington Post Company owns Cable One, provider of television, internet and phone services to several states. They own six television stations, a long list of print publications, plus Slate.com, Foreign Policy and other online sites. Yes, the op-ed technically discloses this, but fails to disclose how greatly these interests influence the Post’s position on this issue. The Post suggests that “FCC officials should resist calls by some merger opponents to impose ‘net neutrality’ principles.” Yet it fails to explain that, as an Internet service provider, the company has self-interest in abolishing Net Neutrality, the rule that prevents Internet providers from creating fast lanes and slow lanes on the Internet in order to maximize profits. The Post argues that the $30 billion deal “should be allowed to proceed,” and that strong conditions need not be applied to the deal. Instead “[c]ompetitors who believed that they were harmed by unfair dealing could have their complaints adjudicated by the FCC” on a case by case basis. But to anyone familiar with the FCC, the threat of enforcement is almost always an empty one. The process is long and expensive — and complaints languish for months or even years before any FCC action, if at all. And that’s for companies that can afford high-powered connections and high priced-attorneys. If you’re an average person whose cable bill is skyrocketing, or whose internet connection is slow and expensive — well, you’re screwed. The backlog of consumer complaints at the FCC is notorious. For the vast majority of people, the agency’s complaint process is a right without a remedy. Comcast is already the nation’s largest Internet broadband and cable television provider. NBCU owns 26 television stations, Universal Pictures, the NBC Television Network, Bravo, CNBC, NBC News, MSNBC, Oxygen, Syfy (Sci Fi Channel), Telemundo, USA Network, and the Weather Channel. If the merger is approved, a single corporation would own a huge array of popular content and would control how that content — and the content produced by its competitors – is distributed over the airwaves, cable, and Internet. As all media moves to a digital platform, the harms of the “vertical integration” of content and distribution become more severe. Comcast can starve competing online video providers by withholding access to NBC programming. It can also move video content that is currently offered for free on sites like NBC.com behind a “paywall” tied to a cable subscription so that you must pay for cable TV if you want to watch TV online. President Obama boldly proclaimed — on the campaign trail and once he took office — that he would promote policies that “encourage diversity in the ownership of broadcast media, promote the development of new media outlets for expression of diverse viewpoints, and clarify the public interest obligations of broadcasters who occupy the nation’s spectrum.” Obama’s top antitrust official Christine Varney said in May 2009, that “vigorous antitrust enforcement must play a significant role in the government’s response to economic crises to ensure that markets remain competitive.” Yet today, Wall Street analysts are increasingly bullish that the merger will be approved by the FCC and the Justice Department, cheered on by Washington Post’s editorial page. Score yet another victory for the entrenched big money interests that rule Washington, and yet another defeat for the American people.

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Sarah Stephens: Embargoes

October 22, 2010

On October 19, 1960 President Eisenhower put in place an embargo against Cuba that has lasted to this day. Fifty years later, the Obama administration is enforcing these sanctions in some high profile areas with greater vigor than even the Bush administration. Now we’re learning that while the United States likes to impose embargoes, it doesn’t really like being subject to them. So it’s worth spending a moment considering what happens when the sanctions shoe is on the other foot. China is in a trade tiff with the United States. China is accused of subsidizing its exports of green technology into our market. Such actions are at variance with its membership in the World Trade Organization, and now the U.S. Trade Representative is investigating the complaints. China is retaliating against the U.S.T.R.’s scrutiny. Despite its denials, it is beginning to impose what experts are calling an “embargo” on shipments of “rare earths” to the United States and elsewhere. Rare earths — not the 60s-era soul band out of Detroit — are critical materials used to manufacture items as diverse as cellphones, wind turbines, guided missiles and pharmaceuticals. While rare earths are actually abundant, China monopolizes the mining of them. An embargo of rare earth exports would violate international trade law, and a decision to withhold them internationally would shut down the world economy. Consequently, China’s rare earth retribution is stirring an extremely uneasy reaction. The Defense Department is studying the national security risks of dependence on China. Congress is considering loan guarantees to jump-start the mining of rare earth here in the U.S. U.S. Representative Mike Coffman says “The administration needs to join with other countries and have a united front to tell China this is not appropriate.” He calls the embargo “extremely disturbing” and is urging President Obama to ensure our national security interests are not beholden to the Chinese. Paul Krugman in the N.Y. Times goes a step further calling China “a rogue economic superpower, unwilling to play by the rules.” Strong stuff, indeed, and not a single U.S. policy maker, expert, or industrialist has called on the Obama administration to capitulate or to give China exactly what it’s asking for despite the risks to our economy posed by its rare earth embargo. They’d be run out of town if they did. Investigations, hot rhetoric, and government programs to circumvent the effects of an embargo — understandable reactions as China, the third largest economy in the world, tries pushing around the world’s largest economy in an effort to obtain trade concessions from us. This brings us to Cuba, the world’s 66th-largest economy, subject to a U.S. embargo for five decades; an embargo covering not just rare earth but everything with limited exceptions for food and medicine. The purpose of the U.S. embargo against Cuba is every bit as clear as China’s rare earth embargo against us; as President Obama restated this week, the goal is to bend Cuba to the will of the United States, until it reforms its economy and political system to our satisfaction. But Cuba, like its neighbor to the North, is unwilling to capitulate and undermine its sovereignty. So, the U.S. embargo continues. Next week, as it has for the last eighteen years, the U.N. General Assembly will consider a resolution condemning the U.S. embargo against Cuba. In 2009, 187 countries voted for the resolution. Just three voted against it: Palau, Israel (itself subject to embargoes and boycotts since 1948), and the United States, which is now smarting from the shortage of rare earth. If past is prologue, this year’s resolution will pass the General Assembly overwhelmingly, and the Obama administration — which promised to move beyond unilateralism in foreign policy — will essentially be left again standing alone. This next U.S. vote to preserve our failed Cuba embargo will send a disturbingly familiar signal to the world community. One can only imagine the message received in Beijing.

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John Feffer: Take This Job and… Transform It

October 5, 2010

The song Take This Job and Shove It hit No. 1 on the country music charts in 1978. The blue-collar worker in the song that Johnny Paycheck made famous was working up the nerve to leave the factory after 15 years on the production line. It wasn’t necessarily the best time to mouth off at the line boss. The U.S. economy wasn’t so hot. Unemployment was 6.1 percent , which politicians considered unacceptable. Real wages, which peaked in 1973, were in a long tailspin. Unions continued to hemorrhage members. Workers were angry, and the song captured some of that feeling. But the song came out before the rise of China and India, before computers facilitated outsourcing, before free-trade agreements further eroded the U.S. manufacturing sector. The hero of the song wasn’t working in the golden age of American labor. But he had a good shot at getting another factory job. Three decades later jobs are a precious commodity. The unemployment rate is hovering just under 10 percent, and the debate is hot and heavy over how to create more jobs. In The New York Review of Books , economists Paul Krugman and Robin Wells recommend “practically everything that might stimulate the economy. If more spending on infrastructure is politically impossible, at least make the case for it and pound its opponents for their obstructionism.” That was certainly the message this weekend when tens of thousands of people came to Washington, DC to push the government on the jobs issue. Union members, in their different-colored shirts, turned the Mall into a multi-hued quilt. Religious leaders stood beside GLBT activists and proponents of immigrant rights. Concerned at the tea party’s momentum and the prospect of Congress shifting to the right after the mid-term elections, progressives have attempted to pull together into some semblance of coalition. And jobs are the glue that holds this coalition together, at least for now. The other fixative that binds this coalition is opposition to war spending. Virtually all the speakers at Saturday’s rally mentioned the enormous amount of money we’re wasting on the wars we’re waging in Afghanistan, Iraq, Pakistan, Yemen, and elsewhere. Lawmakers are all sharpening their knives to make cuts in federal spending to bring down the deficit. Defense Secretary Robert Gates wants to economize on some military operations, through only to pour the savings into other Pentagon programs. Otherwise the U.S. military has resisted attempts to slash its budget. “More Jobs, Less War” seems like a perfect rallying cry for progressives. But here’s the problem. Many unions, although perhaps willing to oppose the war in Afghanistan, are hesitant to advocate cutting Pentagon spending. With a base that continues to shrink, they fear losing dues-paying members who manufacture weapons. Politicians, too, don’t want to appear anti-job by voting for anything that would close down production lines in their district. There’s a way around this impasse. We need to update the Johnny Paycheck song. The new refrain should be Take This Job and…Transform It . “The obvious solution to the current economic crisis in the United States is to reduce military spending and apply those savings to a green technology initiative that reduces our dependency on fossil fuels, shrinks our carbon footprint and creates jobs,” Miriam Pemberton and I write in AlterNet . “Such a ‘green stimulus’ could pull our economy out of recession.” In our new Green Dividend report , we show how this “obvious solution” can become a politically feasible one by playing matchmaker. We need to identify, community by community, the existing manufacturing capabilities and workforce skills and match them to the requirements of new green manufacturing. “After the Cold War ended, the United States missed a golden opportunity to use a ‘peace dividend’ to fund a large-scale conversion program to transform the defense sector into the core of a new manufacturing system,” we write. “The green dividend is perhaps our last shot at transforming the U.S. economy. We have been given a second chance. If we blow it this time, there will not likely be another.” The military sector has already prepared its fallback option. If the Pentagon starts cutting contracts, its contractors will try to boost military exports. What the Pentagon won’t buy, other countries have lined up to purchase. The Obama administration has begun to change the rules — simplifying the approval process for arms sales — to expand the U.S. share of the export market. The United States, as Foreign Policy In Focus columnist Conn Hallinan explains in a 60-Second Expert version of his recent column , has been No. 1 in this dubious category for many decades. We export war not only with our troops, but with our arms sales. The military sector uses the jobs argument to maintain the status quo even at a time of troop draw-downs in Iraq and canceled weapon systems. Meanwhile, in a misguided effort to craft a foreign policy that boosts jobs at home, the Obama administration is falling back on its predecessors’ free-trade arguments. Cutting tariffs and regulations, Washington argues, will create jobs. So Obama is preparing to move forward on the U.S.-South Korea free trade agreement, which the legislatures in both countries have yet to approve. Lawmakers are right to be cautious. “Opening markets only means more intense competition and downward pressure on worker wages,” write FPIF columnist Christine Ahn and FPIF contributor Martin Hart-Landsberg in Forget the FTA Fix, Just Say No . “The experience of past decades of trade liberalization should be proof enough. A case in point: both U.S. and Chinese workers have seen their working and living conditions deteriorate while dominant transnational corporations and their national allies in both countries have gained enormous profits.” The United States is No. 1 in military spending, No. 1 in military exports, and No. 1 in promoting free trade agreements. We’re not near No. 1 in the categories that matter in the 21st century, such as generating green energy. If we don’t transform military jobs into green manufacturing jobs, the United States won’t simply lose its ranking in the global economy. Worse, we will be dragged down by a self-reinforcing and self-defeating policy: peddling weapons and wars that perpetuate the itch they are meant to scratch. Subscribe to FPIF’s World Beat here . Sign up with FPIF on Facebook . Follow FPIF on Twitter. Follow John Feffer on Twitter.

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David Isenberg: Riding Herd on Cowboys in the Middle East

August 15, 2010

In the perpetual debate over legal accountability of, and prosecution if necessary, of private military and security contractors one often sees the arguments reduced to two simplistic arguments. PMSC opponents argue the contractors argue in a legal vacuum and with utter impunity. This is, of course, as anyone who has even done the most cursory reading on the subject knows, is utter nonsense. On the other hand, PMSC supporters argue that contractors are covered by a host of regulations and laws, both national and international, and any more are simply unnecessary. Of course, the fact that even PMSC trade associations in the past have supported, with varying degrees of enthusiasm, changes to the Military Extraterritorial Jurisdiction Act (MEJA) and the Uniform Code of Military Justice (UCMJ) weakens their argument a bit. Still, it is true that there are a large number of rules, regulations, policy directives, and laws on the books with which contractors are supposed to comply. So their argument, when you follow it to its inevitable conclusion echoes that of the National Rifle Association, i.e., we don’t need more laws, but better enforcement of existing laws. Well then, in that case let’s take a look at a journal article published this past spring. In an article ” Cowboys in the Middle East: Private Security Companies and the Imperfect Reach of the United States Criminal Justice System ” in the quarterly journal Connections Christopher M. Kovach, who serves as a Captain in the United States Air Force Judge Advocate General’s Corps, notes the limitations of the revised MEJA. He writes: The premise of MEJA is simple. It explicitly creates a separate federal criminal offense for any act committed outside the U.S. if the act would constitute a felony within the jurisdiction of the United States. Those covered by MEJA include: those persons subject to the Uniform Code of Military Justice (UCMJ), or military law; anyone employed by or accompanying the armed forces outside the United States; and contractor employees of any federal agency or provisional authority whose employment supports the mission of the U.S. Department of Defense overseas. However, MEJA is imperfect. By its definition, it does not apply to nationals of the country in which the U.S. forces are stationed, although it may apply to third-country nationals. In fact, DoD now requires that third-country nationals (which, as noted above, make up a substantial part of the PSC contractor force in Iraq) be advised of potential criminal jurisdiction under MEJA “before accepting employment and immediately upon arriving at their work locations overseas.” Nor does it apply to crimes less than felonies. There are also difficulties in its implementation: it contains high-level procedural requirements as prerequisites–for example, “military criminal investigators … are required to forward their reports to the legal office of the responsible combatant command.” This may prove to be an onerous burden. But the most glaring obstacle is that MEJA is simply not responsive. According to one commentator, “MEJA is poorly suited to serve as an effective tool to shape contractor employee behavior and deter criminal acts … because its design makes it nonresponsive to the deterrence needs of military commanders….” MEJA requires coordination between the military and the Department of Justice (DoJ), as U.S. Attorneys ultimately make the final call about whether to prosecute; in so doing, they must “consider resources available to conduct the prosecution,” as a trial would come from their budget, and “should be expected to consider the seriousness of the crime; the difficulty of gathering evidence; difficulties of securing testimony from witnesses located in, and perhaps nationals of, an area of military hostilities; and competing caseloads and priorities in the U.S. Attorneys’ own districts.” In sum, MEJA prosecutions are (and given these constraints, probably should be) rare. As for the UCMJ he notes: UCMJ jurisdiction has notable pros and cons: it is “portable and responsive to the needs of military officials responsible for the safety and welfare of deployed personnel,” but it is arguably constitutionally deficient when applied to contractors. The military justice system is “designed to deploy,” and within deployed environments, commanders would have ready access to evidence and witnesses–as well as prosecutors and defense counsel, who also deploy. But whether or not one can predict how the Supreme Court might ultimately address the question, commanders will be wary of using the process. The one test case that exists was not subject to higher review. And those deployed prosecutors will surely advise commanders against initiating court-martial proceedings in serious cases. But Kovach does think that even with its limitations MEJA can be improved. MEJA will never be a universal panacea; it should not be used to prosecute war crime s like those arguably committed by Blackwater personnel in Baghdad. But it should be more widely used, and it should cover companies like Blackwater. As drafted, only forces “supporting the mission” of the Department of Defense fall under U.S. jurisdiction. Many PSCs, however, are under contract to the Department of State. Ultimately, U.S. foreign policy and the U.S. military itself are “hurt by the confusion caused by these essentially independent combat forces … with the imprimatur of the U.S. government.” Without the swift application of justice, discipline suffers. Therefore, Congress should make two changes to increase the scope of MEJA. First, it must ensure MEJA applies to any contractor accompanying the armed forces, not simply those employed by the Department of Defense. Second, it must lower the threshold for prosecution and give DoJ the option–however rarely it might be used–to bring charges against contractors for crimes not rising to the felony level. Additionally, Congress must grease the wheels of the criminal justice system as well. As it stands, commanders are charged with conducting initial investigations. Investigations then go to the Domestic Security Section of DoJ’s criminal division. From there, they make their way to the appropriate U.S. Attorney’s office, which makes a decision to prosecute; and such decision is back-channeled all the way back to the commander in the field. This takes time. While DoJ should ultimately make the final call on whether to prosecute, designated district courts should assume ownership over MEJA cases in deployed environments. For example, one district court could “own” Iraq. Pumping dollars and manpower into the corresponding U.S. Attorney’s office, including establishing personnel specializing in MEJA, would streamline the process. Commanders would benefit from a direct link to the office responsible for prosecuting offenses they investigate; U.S. Attorneys would equally benefit from building a working relationship with senior military officials, investigators, and prosecutors. To effectively create that kind of relationship, DoD and DoJ should accomplish more formal liaising. Provisions already exist to appoint military prosecutors as special Assistant U.S. Attorneys. They are routinely used to “prosecute crimes committed on federal military installations by persons not subject to the UCMJ.” Usually, this means the not-so-glamorous world of traffic violations. But appointing a military prosecutor from the nearest military installation–someone able to share data (and often experiences) with the prosecutor and commander in the field–would afford the U.S. Attorney’s office ready access to a resource more commonly versed in battlefield conditions and investigations. DoD could bridge the gap from the deployed environment to a base legal office on a military installation. Subsequently, DoJ could dispatch the local military prosecutor to act as a special Assistant U.S. Attorney. This would greatly lighten the workload for the U.S. Attorney’s office; it would also allow the corps of military prosecutors commissioned into the various branches of the armed forces to make better use of their training and experiences. This process would ultimately energize the use of MEJA, permitting it to act as a deterrent, and ensure that PSC guardsmen accompanying the armed forces no longer escape the reach of United States law.

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Frida Berrigan: A Way Forward: Reexamining the Pentagon’s Spending Habits

July 14, 2010

Crossposted with Foreign Policy in Focus What is a trillion? It is a big number for sure. The best explanation I have found for this mind-blowing figure is from children’s book author David Schwartz. “One million seconds comes out to be about 11½ days. A billion seconds is 32 years. And a trillion seconds is 32,000 years.” What is a trillion dollars? What can you get for that much money? Rethink Afghanistan — Robert Greenwald’s effort to help us understand the war on terror, its costs, and consequences — has a new Facebook application aimed at breaking down exactly how much we can get for one trillion dollars. It is fun (in a qualified-world wide web-war on terror sort of way), and eye-opening. During one round of the game, we were able to spend $999.5 billion to: Hire every worker in Afghanistan for one year at a total cost of $12 billion;

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Gaza Activists Send Boat to Test Blockade Israel Kills Five Palestinians

June 1, 2010

By Jonathan Ferziger and Calev Ben-David June 1 (Bloomberg) — Pro-Palestinian activists are sending another ship to try and breach Israel’s blockade of the Gaza Strip, a day after nine people were killed in an Israeli commando raid on boats attempting to enter Gaza. Russia today joined the European Union in demanding that Israel open its borders into the Gaza Strip. Egypt, which shut its frontier with Gaza after the Islamic Hamas movement seized full control of the area in 2007, said it will allow medical and aid shipments into the enclave. In Gaza today, Israeli forces killed two Palestinians who tried to infiltrate into Israel and another three who attempted to fire a rocket. Israel says it needs to control Gaza’s borders or else Hamas will smuggle in material to make rockets and attack its territory. Palestinians, backed by the UN and human rights groups, say the restrictions on food imports and construction materials have created a humanitarian crisis. “We conduct a dialogue with countries about the sanctions that apply on Gaza and we’re open to suggestions, though obviously the naval blockage must remain in place as long as we know that Iran, Syria and Hezbollah will try to bring in deadly missiles that will be shot at Israel,” Prime Minister Benjamin Netanyahu ’s spokesman, Mark Regev , said in an interview today. Israel is holding 634 people who were taken from the boats, Interior Ministry spokeswoman Sabine Haddad said. Forty-five others signed statements waiving their right to a court hearing and were deported immediately. Deportation Hearings The detainees were taken to a prison in the southern city of Beersheba to await deportation hearings, Haddad said. The majority of them are from Turkey while others are from countries including the U.K., U.S., Greece, Sweden, Norway, Morocco, Kuwait and Lebanon. “This disaster with the Israeli commandos has just made us more determined to reach Gaza,” said Audrey Bomse, a spokeswoman for the Free Gaza Movement, one of the flotilla’s organizers. The MV Rachel Corrie, named after an American pro- Palestinian activist killed in 2003 by an Israeli army bulldozer in Gaza, lagged behind the original flotilla because of mechanical problems and should get to the waters near Gaza by the end of this week, she said. Israel’s benchmark TA-25 Index fell for a fourth day, declining 0.9 percent at the close in Tel Aviv after a 1.6 percent drop yesterday. Russia and the European Union called for the “immediate opening of crossings for the flow of humanitarian aid, commercial goods and people to and from Gaza,” according to a joint statement. The United Nations Security Council today condemned “acts which resulted” in the deaths while Turkish Prime Minister Recep Tayyip Erdogan said the Israeli raid was an act of “despicable recklessness.” Open Crossing Egypt will open its Rafah border crossing to allow medical and humanitarian aid into the Gaza Strip, state-run Nile News television reported today. Egyptian authorities said the border will be open from 8:30 a.m. to 7 p.m. until further notice, Hamas Interior Ministry spokesman Ihab al-Ghussein said in an e-mailed statement. Though Egypt supports Palestinian independence, it opposes Hamas, which wants to create an Islamic state. Egypt has periodically opened its crossing for humanitarian supplies. Israeli aircraft attacked the northern Gaza Strip today, an army official said, speaking on condition of anonymity. The Popular Resistance Committees, a militant group, said three of its members were hit by an Israeli air-to-ground missile as they were trying to launch a rocket, a spokesman for the group who goes by the name Abu Mujahed said in a telephone interview. Knives and Clubs The army said that the two Palestinians killed trying to infiltrate Israel from Gaza were armed. Blockading Gaza “is turning into a human rights and public relations disaster” for Israel, said Martin Indyk , director of foreign policy at the Brookings Institution in Washington and a former U.S. ambassador to Israel. “Israel needs to find a better way.” Israel said its soldiers were attacked with knives and clubs after boarding a vessel and seven soldiers were wounded, including by gunfire after activists aboard the ship managed to grab Israeli firearms. The clash was in international waters. The six ships in the “Freedom Flotilla” came from Sweden, Greece and Turkey on a mission aimed at breaking Israel’s blockade that organizers pledged would be nonviolent. Israel had warned it wouldn’t let the ships reach Gaza and called the aid delivery a propaganda trick. Norman Paech, a 72-year-old former German lawmaker who returned to Berlin today, said he heard shooting while he was below deck on one of the ships. ‘They’ll Stop Us’ “We didn’t at all prepare for such an attack,” Paech told reporters in Berlin. “We said ‘they’ll stop us; they’ll control us.’” He said three lightly injured Israeli soldiers were brought below deck to a converted medical hold, where activists in the “double digits” with heavier injuries were treated. He said he saw three activists carrying sticks. “I tried to hold them back, but they went on deck with them,” Paech said. “There really wasn’t anything more than that. We never saw any knives.” Israeli newspaper columnists criticized the way the raid was carried out, with Ben Caspit writing in Ma’ariv that “the flotilla operation, conducted at dawn off the Gaza shore, was complete idiocy.” Several of the dead were from Turkey, which said relations with Israel may suffer irreparable harm. Netanyahu cut short a trip to Canada to return to Israel, canceling a meeting scheduled in Washington with President Barack Obama . Rocket Fire Obama expressed “deep regret at the loss of life” and said it was important to learn “all the facts and circumstances around this morning’s tragic events as soon as possible,” according to a statement yesterday from the White House. Israel has restricted entry of people and goods into Gaza since 2007 allowing in a limited range of supplies including food, clothing and medicine. Hamas is considered a terrorist organization by Israel, the U.S. and the European Union. Israel fought a three-week war in Gaza starting in December 2008 that it said was meant to stop Hamas and other militant groups from firing rockets into its territory. Some 330 rockets have been fired from Gaza into Israel since the end of the operation, killing one foreign worker last March, the army said. Israeli bombing and ground operations during the war destroyed thousands of houses across Gaza, and Israel’s restrictions on construction materials have prevented Palestinians from being able to rebuild. The army says Hamas has used materials such as cement and iron pipes to build rockets and bunkers. To contact the reporters on this story: Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net ; Calev Ben-David in Jerusalem at cbendavid@bloomberg.net .

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Israel Under Growing Pressure to Ease Gaza Blockade After Flotilla Deaths

June 1, 2010

By Jonathan Ferziger and Calev Ben-David June 1 (Bloomberg) — Russia joined the European Union in demanding that Israel open its borders into the Gaza Strip and Egypt said it will allow medical and aid shipments into the enclave, a day after nine people were killed in an Israeli raid on a ship attempting to breach its blockade. The United Nations Security Council today condemned “acts which resulted” in the deaths while Turkish Prime Minister Recep Tayyip Erdogan said the Israeli raid was an act of “despicable recklessness.” Israel says it needs to control Gaza’s borders or else the Islamic Hamas movement which controls the enclave will smuggle in material to make rockets and attack its territory. Palestinians, backed by the UN and human rights groups, say the restrictions on food imports and construction materials have created a humanitarian crisis. Egypt has shut its border crossings into Gaza since Hamas seized full control of the area in 2007. “We conduct a dialogue with countries about the sanctions that apply on Gaza and we’re open to suggestions, though obviously the naval blockage must remain in place as long as we know that Iran, Syria and Hezbollah will try to bring in deadly missiles that will be shot at Israel,” Prime Minister Benjamin Netanyahu ’s spokesman, Mark Regev , said in an interview today. Israel’s benchmark TA-25 Index fell for a fourth day, declining 1.7 percent at 2:01 p.m. in Tel Aviv after a 1.6 percent drop yesterday. ‘Negative Sentiment’ Israeli markets “ will continue to trade amid the negative sentiment and uncertainty surrounding the Gaza flotilla incident and deteriorating relations with Turkey,” Saar Golan , a trader at Clal Finance Brokerage Ltd. in Tel Aviv, said in a note to investors. The situation may harm future contracts for Elbit Systems Ltd., Israel’s biggest non-government defense contractor, which has sold drones and other military equipment to Turkey, Golan said. Elbit fell 4.2 percent to 188.80 shekels. Russia and the European Union called for the “immediate opening of crossings for the flow of humanitarian aid, commercial goods and people to and from Gaza,” according to a joint statement. Egypt will open its Rafah border crossing to allow medical and humanitarian aid into the Gaza Strip, state-run Nile News television reported today. The report didn’t say how long the crossing would remain open. Though Egypt supports Palestinian independence, it opposes Hamas, which wants to create an Islamic state. Blockading Gaza “is turning into a human rights and public relations disaster” for Israel, said Martin Indyk , director of foreign policy at the Brookings Institution in Washington and a former U.S. ambassador to Israel. “Israel needs to find a better way.” Knives and Clubs Israel said its soldiers were attacked with knives and clubs after boarding a vessel and seven soldiers were wounded, including by gunfire after activists aboard the ship managed to grab Israeli firearms. The clash was in international waters. The six ships in the “Freedom Flotilla” came from Sweden, Greece and Turkey on a mission aimed at breaking Israel’s blockade that organizers pledged would be nonviolent. Israel had warned it wouldn’t let the ships reach Gaza and called the aid delivery a propaganda trick. Several of the dead were from Turkey, which said relations with Israel may suffer irreparable harm. Israel is holding 634 people who were taken from the boats, Interior Ministry spokeswoman Sabine Haddad said. Forty-five others signed statements waiving their right to a court hearing and were deported immediately. The detainees were taken to a prison in the southern city of Beersheba to await deportation hearings, she said. The majority of them are from Turkey while others are from countries including the U.K., U.S., Greece, Sweden, Norway, Morocco, Kuwait and Lebanon. ‘Disproportionate’ Force French President Nicolas Sarkozy said Israel had used “disproportionate” force. German Chancellor Angela Merkel said she had spoken by phone with Netanyahu and Erdogan called for “a comprehensive investigation.” New York-based Human Rights Watch said the raid raises “grave concerns about possible unlawful and excessive use of force.” Netanyahu cut short a trip to Canada to return to Israel, canceling a meeting scheduled in Washington with President Barack Obama . “Gaza has become a Hamas terrorist base, backed by Iran, firing thousands of rockets at Israel, and has amassed tens of thousands more to fire at our cities, our towns, our children,” Netanyahu said yesterday during a visit to Ottawa. “We try to let all humanitarian goods into Gaza after they have undergone our security checks.” ‘Deep Regret’ Obama expressed “deep regret at the loss of life” and said it was important to learn “all the facts and circumstances around this morning’s tragic events as soon as possible,” according to a statement yesterday from the White House. Israel has restricted entry of people and goods into Gaza since the territory was taken over by Hamas in 2007, allowing in a limited range of supplies including food, clothing and medicine. Hamas is considered a terrorist organization by Israel, the U.S. and the European Union. Israel fought a three-week war in Gaza starting in December 2008 that it said was meant to stop Hamas and other militant groups from firing rockets into its territory. Some 330 rockets have been fired from Gaza into Israel since the end of the operation, killing one foreign worker last March, the army said. Israeli bombing and ground operations during the war destroyed thousands of houses across Gaza, and Israel’s restrictions on construction materials have prevented Palestinians from being able to rebuild. The army says Hamas has used materials such as cement and iron pipes to build rockets and bunkers. Indyk said one way Israel could solve its “dilemma” was a “cease-fire deal in which Hamas commits to preventing violent attacks from Gaza and stopping all smuggling into Gaza in return for Israel opening the passages with international monitors.” To contact the reporters on this story: Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net ; Calev Ben-David in Jerusalem at cbendavid@bloomberg.net .

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UN Security Council Condemns Violence During Israel Raid on Gaza Flotilla

June 1, 2010

By Jonathan Ferziger and Calev Ben-David June 1 (Bloomberg) — The United Nations Security Council condemned “acts which resulted” in nine deaths during ab Israeli raid on ships bringing aid to the Gaza Strip, adding to pressure on Israel to give up control of the enclave’s borders. The council’s 15 member governments agreed today after more than 12 hours of negotiations to endorse a “prompt, impartial, credible and transparent investigation,” and requested the release of the flotilla and captured civilians. The situation in Gaza is “not sustainable,” the council said. Israel, which is facing international criticism over the boat deaths, says it needs to control Gaza’s borders or else Hamas will smuggle in material to make rockets and attack its territory. Palestinians, backed by the UN and human rights groups, say the restrictions on food imports and construction materials have created a humanitarian crisis. “We conduct a dialogue with countries about the sanctions that apply on Gaza and we’re open to suggestions, though obviously the naval blockage must remain in place as long as we know that Iran, Syria and Hezbollah will try to bring in deadly missiles that will be shot at Israel,” Prime Minister Benjamin Netanyahu ’s spokesman, Mark Regev , said in an interview today. The Palestinian Authority’s chief peace negotiator, Saeb Erakat , yesterday called Israel’s raid a “war crime.” British Foreign Secretary William Hague urged Israel to “allow unfettered access” to Gaza, a call echoed by European Union foreign policy chief Catherine Ashton . ‘Public Relations Disaster’ Blockading Gaza “is turning into a human rights and public relations disaster” for Israel, said Martin Indyk , director of foreign policy at the Brookings Institution in Washington and a former U.S. ambassador to Israel. “Israel needs to find a better way.” Israel’s benchmark TA-25 Index fell for a fourth day, declining 0.8 percent at 11:15 a.m. in Tel Aviv after a 1.6 percent drop yesterday. The shekel fell 0.1 percent to 3.8825 per dollar, extending yesterday’s slide of more than 1.6 percent. Israeli markets “ will continue to trade amid the negative sentiment and uncertainty surrounding the Gaza flotilla incident and deteriorating relations with Turkey,” Saar Golan , a trader at Clal Finance Brokerage Ltd. in Tel Aviv, said in a note to investors. The situation may harm future contracts between Elbit Systems Ltd., Israel’s biggest non-government defense contractor, which has sold drones and other military equipment to Turkey, Golan said. Elbit fell 2.6 percent to 191.90 shekels. Attacked With Knives Israel said its soldiers were attacked with knives and clubs after boarding a vessel and seven soldiers were wounded, including by gunfire after activists aboard the ship managed to grab Israeli firearms. The clash was in international waters. The six ships in the “Freedom Flotilla” came from Sweden, Greece and Turkey on a mission aimed at breaking Israel’s blockade that organizers pledged would be nonviolent. Israel had warned it wouldn’t let the ships reach Gaza and called the aid delivery a propaganda trick. Several of the dead were from Turkey, which said relations with Israel may suffer irreparable harm. Israel committed “murder” and violated international law when it intercepted the ships, Turkish Foreign Minister Ahmet Davutoglu told the emergency meeting of the security council. ‘Disproportionate’ Force French President Nicolas Sarkozy said Israel had used “disproportionate” force. German Chancellor Angela Merkel said she had spoken by phone with Netanyahu and Turkish Prime Minister Recep Tayyip Erdogan and called for “a comprehensive investigation.” New York-based Human Rights Watch said the raid raises “grave concerns about possible unlawful and excessive use of force.” Netanyahu cut short a trip to Canada to return to Israel, canceling a meeting scheduled in Washington with President Barack Obama . “Gaza has become a Hamas terrorist base, backed by Iran, firing thousands of rockets at Israel, and has amassed tens of thousands more to fire at our cities, our towns, our children,” Netanyahu said yesterday during a visit to Ottawa. “We try to let all humanitarian goods into Gaza after they have undergone our security checks.” ‘Deep Regret’ Obama expressed “deep regret at the loss of life” and said it was important to learn “all the facts and circumstances around this morning’s tragic events as soon as possible,” according to a statement yesterday from the White House. Israel has restricted entry of people and goods into Gaza since the territory was taken over by Hamas in 2007, allowing in a limited range of supplies including food, clothing and medicine. Hamas is considered a terrorist organization by Israel, the U.S. and the European Union. Israel fought a three-week war in Gaza starting in December 2008 that it said was meant to stop Hamas and other militant groups from firing rockets into its territory. Some 330 rockets have been fired from Gaza into Israel since the end of the operation, killing one foreign worker last March, the army said. Israeli bombing and ground operations during the war destroyed thousands of houses across Gaza, and Israel’s restrictions on construction materials have prevented Palestinians from being able to rebuild. The army says Hamas has used materials such as cement and iron pipes to build rockets and bunkers. Indyk said one way Israel could solve its “dilemma” was a “cease-fire deal in which Hamas commits to preventing violent attacks from Gaza and stopping all smuggling into Gaza in return for Israel opening the passages with international monitors.” To contact the reporters on this story: Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net ; Calev Ben-David in Jerusalem at cbendavid@bloomberg.net .

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Israeli Raid on Ship Adds to Pressure for Easing Gaza Controls

May 31, 2010

By Jonathan Ferziger and Calev Ben-David June 1 (Bloomberg) — Israel’s raid on a flotilla of ships bringing aid to the Gaza Strip, which left nine dead, has increased pressure for an end to the country’s control of the coastal enclave’s borders. British Foreign Secretary William Hague yesterday issued a statement calling on Israel to “allow unfettered access” to Gaza, while European Union foreign policy chief Catherine Ashton urged the “unconditional opening of crossings” into Gaza. Israel, which is facing international criticism over the boat deaths, says it needs to control Gaza’s borders or else Hamas will smuggle in material to make rockets and attack its territory. Palestinians, backed by the United Nations and human rights groups, say the restrictions on food imports and construction materials have created a humanitarian crisis. Blockading Gaza “is turning into a human rights and public relations disaster” for Israel, said Martin Indyk , director of foreign policy at the Brookings Institution in Washington and a former U.S. ambassador to Israel. “Israel needs to find a better way.” Israel said its soldiers were attacked with knives and clubs after boarding a vessel and seven soldiers were wounded, including by gunfire after activists aboard the ship managed to grab Israeli firearms. The clash was in international waters, said the Free Gaza Movement, which organized the flotilla. ‘Freedom Flotilla’ The six ships in the “Freedom Flotilla” came from Sweden, Greece and Turkey on a mission aimed at breaking Israel’s blockade of Gaza that organizers pledged would be nonviolent. Israel had warned it wouldn’t let the ships reach Gaza and called the mission a propaganda trick aimed at making it look bad. Several of the dead were from Turkey, which said relations with Israel may suffer irreparable harm. Israel committed “murder” and violated international law when it intercepted the ships, Turkish Foreign Minister Ahmet Davutoglu told an emergency meeting of the United Nations Security Council. French President Nicolas Sarkozy said Israel had used “disproportionate” force. German Chancellor Angela Merkel said she had spoken by phone with Israeli Prime Minister Benjamin Netanyahu and Turkish Prime Minister Recep Tayyip Erdogan and called for “a comprehensive investigation.” Netanyahu cut short a trip to Canada to return to Israel, canceling a meeting scheduled in Washington with President Barack Obama . ‘Hamas Terrorist Base’ “Gaza has become a Hamas terrorist base, backed by Iran, firing thousands of rockets at Israel, and has amassed tens of thousands more to fire at our cities, our towns, our children,” Netanyahu said yesterday during a visit to Ottawa. “Our policy is this: We try to let all humanitarian goods into Gaza after they have undergone our security checks.” Obama expressed “deep regret at the loss of life” and said it was important to learn “all the facts and circumstances around this morning’s tragic events as soon as possible,” according to a statement from the White House. Israeli stocks fell the most in four days. The benchmark TA-25 Index lost 1.6 percent, the biggest drop since May 25, to 1,082.74 at the close in Tel Aviv. The shekel fell as much as 1.5 percent to 3.8729 to the dollar and traded at 3.8652 at 5:14 p.m. yesterday. Aboard the ships were more than 500 people, including European members of parliament and Swedish author Henning Mankell , according to the Free Gaza Movement. Israeli Navy ships have intercepted three previous efforts by the Free Gaza Movement, formed in 2008 to deliver aid to the territory by sea. Attacked With Knives An Israeli military official, speaking on condition of anonymity, told reporters that soldiers boarded the ships after approaching on three military helicopters and several commando boats at about 4 a.m., according to a pool report provided by the Associated Press. One of the commandos, also speaking on condition of anonymity, said after descending from one of the helicopters on a rope, he was immediately attacked by a group of passengers with metal sticks and knives, the pool report said. The commando said activists grabbed soldiers, stripped them of their helmets and equipment, and threw them from the top deck to the lower deck, the report said. Saeb Erakat , the Palestinian Authority’s chief peace negotiator, called the incident a “war crime” and said the international community must take “swift and appropriate action.” Three-Week War Israel has restricted entry of people and goods into Gaza since the territory was taken over by Hamas in 2007, allowing in a limited range of supplies including food, clothing and medicine. Hamas is considered a terrorist organization by Israel, the U.S. and the European Union. Israel fought a three-week war in Gaza starting in December 2008 that it said was meant to stop Hamas and other militant groups from firing rockets into its territory. Some 330 rockets have been fired from Gaza into Israel since the end of the operation, killing one foreign worker last March, the army said. Israeli bombing and ground operations during the war destroyed thousands of houses across Gaza, and Israel’s restrictions on construction materials have prevented Palestinians from being able to rebuild. The army says Hamas has used materials such as cement and iron pipes to build rockets and bunkers. “The area is ruled by Hamas, a terror organization that is arming itself all the time with weaponry and rockets intended to hurt Israel,” Israeli Defense Minister Ehud Barak said at a news conference yesterday in Tel Aviv. Indyk said one way Israel could solve its “dilemma” was a “cease-fire deal in which Hamas commits to preventing violent attacks from Gaza and stopping all smuggling into Gaza in return for Israel opening the passages with international monitors.” To contact the reporter on this story: Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net ; Calev Ben-David in Jerusalem at cbendavid@bloomberg.net

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Israeli Raid on Gaza Aid Ship Increases Pressure to Relax Border Controls

May 31, 2010

By Jonathan Ferziger and Calev Ben-David June 1 (Bloomberg) — Israel’s raid on a flotilla of ships bringing aid to the Gaza Strip, which left nine dead, has increased pressure for an end to the country’s control of the coastal enclave’s borders. British Foreign Secretary William Hague yesterday issued a statement calling on Israel to “allow unfettered access” to Gaza, while European Union foreign policy chief Catherine Ashton urged the “unconditional opening of crossings” into Gaza. Israel, which is facing international criticism over the boat deaths, says it needs to control Gaza’s borders or else Hamas will smuggle in material to make rockets and attack its territory. Palestinians, backed by the United Nations and human rights groups, say the restrictions on food imports and construction materials have created a humanitarian crisis. Blockading Gaza “is turning into a human rights and public relations disaster” for Israel, said Martin Indyk , director of foreign policy at the Brookings Institution in Washington and a former U.S. ambassador to Israel. “Israel needs to find a better way.” Israel said its soldiers were attacked with knives and clubs after boarding a vessel and seven soldiers were wounded, including by gunfire after activists aboard the ship managed to grab Israeli firearms. The clash was in international waters, said the Free Gaza Movement, which organized the flotilla. ‘Freedom Flotilla’ The six ships in the “Freedom Flotilla” came from Sweden, Greece and Turkey on a mission aimed at breaking Israel’s blockade of Gaza that organizers pledged would be nonviolent. Israel had warned it wouldn’t let the ships reach Gaza and called the mission a propaganda trick aimed at making it look bad. Several of the dead were from Turkey, which said relations with Israel may suffer irreparable harm. Israel committed “murder” and violated international law when it intercepted the ships, Turkish Foreign Minister Ahmet Davutoglu told an emergency meeting of the United Nations Security Council. French President Nicolas Sarkozy said Israel had used “disproportionate” force. German Chancellor Angela Merkel said she had spoken by phone with Israeli Prime Minister Benjamin Netanyahu and Turkish Prime Minister Recep Tayyip Erdogan and called for “a comprehensive investigation.” Netanyahu cut short a trip to Canada to return to Israel, canceling a meeting scheduled in Washington with President Barack Obama . ‘Hamas Terrorist Base’ “Gaza has become a Hamas terrorist base, backed by Iran, firing thousands of rockets at Israel, and has amassed tens of thousands more to fire at our cities, our towns, our children,” Netanyahu said yesterday during a visit to Ottawa. “Our policy is this: We try to let all humanitarian goods into Gaza after they have undergone our security checks.” Obama expressed “deep regret at the loss of life” and said it was important to learn “all the facts and circumstances around this morning’s tragic events as soon as possible,” according to a statement from the White House. Israeli stocks fell the most in four days. The benchmark TA-25 Index lost 1.6 percent, the biggest drop since May 25, to 1,082.74 at the close in Tel Aviv. The shekel fell as much as 1.5 percent to 3.8729 to the dollar and traded at 3.8652 at 5:14 p.m. yesterday. Aboard the ships were more than 500 people, including European members of parliament and Swedish author Henning Mankell , according to the Free Gaza Movement. Israeli Navy ships have intercepted three previous efforts by the Free Gaza Movement, formed in 2008 to deliver aid to the territory by sea. Attacked With Knives An Israeli military official, speaking on condition of anonymity, told reporters that soldiers boarded the ships after approaching on three military helicopters and several commando boats at about 4 a.m., according to a pool report provided by the Associated Press. One of the commandos, also speaking on condition of anonymity, said after descending from one of the helicopters on a rope, he was immediately attacked by a group of passengers with metal sticks and knives, the pool report said. The commando said activists grabbed soldiers, stripped them of their helmets and equipment, and threw them from the top deck to the lower deck, the report said. Saeb Erakat , the Palestinian Authority’s chief peace negotiator, called the incident a “war crime” and said the international community must take “swift and appropriate action.” Three-Week War Israel has restricted entry of people and goods into Gaza since the territory was taken over by Hamas in 2007, allowing in a limited range of supplies including food, clothing and medicine. Hamas is considered a terrorist organization by Israel, the U.S. and the European Union. Israel fought a three-week war in Gaza starting in December 2008 that it said was meant to stop Hamas and other militant groups from firing rockets into its territory. Some 330 rockets have been fired from Gaza into Israel since the end of the operation, killing one foreign worker last March, the army said. Israeli bombing and ground operations during the war destroyed thousands of houses across Gaza, and Israel’s restrictions on construction materials have prevented Palestinians from being able to rebuild. The army says Hamas has used materials such as cement and iron pipes to build rockets and bunkers. “The area is ruled by Hamas, a terror organization that is arming itself all the time with weaponry and rockets intended to hurt Israel,” Israeli Defense Minister Ehud Barak said at a news conference yesterday in Tel Aviv. Indyk said one way Israel could solve its “dilemma” was a “cease-fire deal in which Hamas commits to preventing violent attacks from Gaza and stopping all smuggling into Gaza in return for Israel opening the passages with international monitors.” To contact the reporter on this story: Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net ; Calev Ben-David in Jerusalem at cbendavid@bloomberg.net

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Osborne, Hague, Cable, Fox in Cameron’s Cabinet as Liberal Democrats Join

May 12, 2010

By Mark Deen and Gonzalo Vina May 12 (Bloomberg) — Prime Minister David Cameron will name his Cabinet today after his Conservative Party forged a power-sharing accord with Nick Clegg’s Liberal Democrats. The ministerial team comprises up to four Liberal Democrats. Following are some key figures. George Osborne , Chancellor of the Exchequer The 38-year-old has been an architect of Conservative strategy since he helped Cameron win the party leadership in 2005. A graduate of Oxford University, he did a stint in journalism before starting to work for the Conservatives in 1994. He entered Parliament in the 2001 election. As the lawmaker responsible for Conservative economic policy, in 2007 he promised to impose a flat tax on foreigners living in the U.K. and cut levies on inheritance and home purchases. The pledges helped the Conservatives overtake Labour in opinion polls. His commitment to fixing the public finances was questioned during the election campaign when he pledged to use 6 billion pounds ($9 billion) of spending cuts this year to lower payroll taxes rather than reduce the budget deficit. Osborne, whose family owns the Osborne & Little wallpaper company, is a father of two. William Hague , Foreign Secretary A former leader of the Conservative Party, Hague is one of the most experienced members of Cameron’s team. A graduate of Oxford University and Insead business school, he was elected to Parliament in 1989 and later became a minister in Prime Minister John Major’s government. At 36, Hague became the youngest leader of his party since the 18th century when the Conservatives lost power in 1997. He resigned in 2001 when the Conservatives gained just one seat in the election that led to Tony Blair’s second term. Hague has regularly stood in for Cameron in House of Commons debates, underlining his seniority within the Conservative leadership. In his role as the lawmaker responsible for Conservative foreign policy, he said in 2006 that Britain’s relationship with the U.S. should be “solid but never slavish,” a criticism of Blair’s outspoken support of the U.S. Hague, 49, is married without children. Vince Cable , Business/Banking Liberal Democrat Cable, 67, will be given responsibility over business and banking, according to BBC Radio. He entered Parliament in 1997, representing the West London constituency of Twickenham and has held the economic portfolio for the party since 2003 and been its deputy leader since 2006. He came to prominence during the global financial crisis. He had warned of high levels of indebtedness in the U.K. a year before the crisis spilled onto Britain’s high streets when Northern Rock Plc needed government aid to stay in business. Attacking Brown’s record as prime minister, Cable said in 2007 he had gone through a “remarkable transformation in the last few weeks from Stalin to Mr. Bean.” Cable came to the Liberal Democrats as a member of the Social Democratic Party, which broke away from the Labour Party in the 1908s. Cable advised former Labour leader John Smith when he was Labour’s Trade Secretary in 1979, according to Robert Waller and Byron Criddle’s Almanac of British Politics.     Cable served as a Labour Councillor in Glasgow between 1971 and 1974, before joining the Social Democrat Party. Before entering politics, Cable was chief economist at Royal Dutch Shell Plc. He was educated at Cambridge Universsity and Glasgow University, where he gained a Phd in economics.     Cable remarried in 2006 after the death of his first wife. He told BBC Radio 4 last year that he wears rings from both marriages. Liam Fox , Defense Secretary A medical doctor whose family lived in public housing when he was a child, Fox was first elected to Parliament in 1992. In John Major’s Conservative government, he served as a party whip in the House of Commons and a junior minister at the Foreign Office. When the Conservatives lost a third straight election in 2005, Fox sought election as party leader and placed third behind Cameron and David Davis . Since taking responsibility for Conservative defense policy in December that year, Fox has urged better treatment of soldiers and pledged to renegotiate some military procurement contracts. Fox, 48, is married with no children. To contact the reporters on this story: Mark Deen in London at markdeen@bloomberg.net ; Gonzalo Vina in London at gvina@bloomberg.net

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`Don’t Retreat, Reload,’ Palin Tells Republican Activists in New Orleans

April 10, 2010

By John McCormick April 10 (Bloomberg) — Sarah Palin strode back onto her party’s national political stage yesterday, mocking President Barack Obama and telling Republicans, “Don’t retreat, reload.” The 2008 vice presidential candidate said the slogan, which drew a standing ovation, is a plea for political action. “That is not a call for violence,” she told the Southern Republican Leadership Conference in New Orleans, responding to those who have questioned such language at a time when lawmakers have faced threats over their support of the health-care overhaul. Palin, 46, spoke ahead of an appearance today by Republican National Committee Chairman Michael Steele , who is dealing with the fallout from revelations that his organization spent almost $2,000 at a sex-themed California nightclub. Speaking to more than 3,000 activists, Palin criticized the Obama administration’s handling of national security, government spending and energy policy. She said the president’s recently announced plan for added offshore oil and gas drilling is insufficient to address energy needs. “Let’s drill, baby, drill, not stall, baby, stall,” she said, reprising one of her lines from the 2008 campaign. Her campaign-style speech to a standing-room-only audience was at an event unofficially considered the first stop for Republicans seeking the right to take on Obama in 2012. While she attacked Obama, Palin stopped short of declaring ambitions for a presidential bid, as her audience chanted “Sarah.” ‘Yes We Can’ She said Obama’s campaign slogan of “Yes We Can” had become: “Yes, we can spread the wealth around. Yes we can spend money that we do not have, on programs that we don’t need.” On foreign policy, Palin said the “Obama doctrine” has become one of “coddling enemies and alienating allies.” Obama dismissed Palin in an interview broadcast yesterday on ABC’s “Good Morning America” program, when he was asked about her criticism of his recent decision to resist the use of nuclear weapons against non-nuclear nations that abide by a nonproliferation treaty. “Last I checked, Sarah Palin’s not much of an expert on nuclear issues,” Obama said. “If the secretary of defense and the chairman of the Joint Chiefs of Staff are comfortable with it, I’m probably going to take my advice from them and not from Sarah Palin.” Palin responded by suggesting Obama doesn’t have any more experience with such matters than she does. “Now, the president, with all the vast nuclear experience that he acquired as a community organizer, and as a part-time senator, and as a full-time candidate, all that experience, still no accomplishment to date with North Korea and Iran,” she said. ‘Victory Lap’ Charging that Obama is on a “taxpayer-funded victory lap” following passage of the health-care bill, she cautioned against embracing “Yes We Did” as a 2010 campaign slogan. “I wouldn’t be so quick to slap that one on a bumper sticker,” she said, suggesting that “repeal and replace” might be more popular. Palin said her party has nothing to be ashamed of, even if some have labeled it the party of no. “When the other party is wrong, we’re stiffening our spines,” she said. “If they’re proposing, the other side is proposing, an idea that violates our values, violates our conscience, violates our Constitution, what’s wrong with being the party of no?” The Democratic National Committee responded by criticizing the claim in Palin’s speech that she had vetoed some federal funding while she was Alaska governor. “We know that Sarah Palin has a real problem with history, but this is sad even by her standards,” party spokesman Hari Sevugan said in a statement. “Palin claims that she vetoed Recovery Act dollars to create jobs for Alaskans, but in fact she accepted nearly every single dime.” ‘Starve the Beast’ In this fall’s elections, Palin said Republicans must rally behind their candidates and “help starve the beast.” Besides firing up potential supporters, Palin also sought to win over some stomachs. Left on the chairs of delegates as they entered the hotel ballroom was “An Alaska snack from SarahPac,” a reference to her political action committee. The teriyaki sticks with caribou meat were packaged by an Alaska company, Indian Valley Meats Inc. Attendees at the three-day gathering are voting in a straw poll for their presidential preferences, so such treats are a common gift from potential presidential candidates. Absent Contenders Palin’s attendance stood in contrast with some of the other top potential 2012 Republican presidential candidates. Minnesota Governor Tim Pawlenty , former Massachusetts Governor Mitt Romney and former Arkansas Governor Mike Huckabee all sent their regrets. The conference drew all the serious presidential contenders at this point in the election cycle four years ago. Besides Palin, a Fox News contributor, other Republican speakers at the event include former House Speaker Newt Gingrich , Louisiana Governor Bobby Jindal , Mississippi Governor Haley Barbour , Texas Governor Rick Perry , House Republican Conference Chairman Mike Pence of Indiana, former Pennsylvania Senator Rick Santorum and Representative Ron Paul of Texas. To contact the reporter on this story: John McCormick in New Orleans at jmccormick16@bloomberg.net

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Dan Schiller: Google v. China: Principled, Brave, or Business As Usual?

April 5, 2010

Google has made good on its threat to close its China-based search service in response to state censorship and hacker intrusions. The response in the U.S. is predictable. Nicholas D. Kristof set the tone last January, when he wrote that “Google’s decision to stand up to Chinese cyberoppression [is] positively breathtaking.” “Google’s decision to stop censoring its search service in China,” declares the New York Times , “was a principled and brave decision.” The human rights framing of this issue works powerfully as rhetoric. Resistance to state censorship in the cause of democracy evinces a long and noble history, and China has built an intricate and technologically advanced censorship system . The issues at stake here, however, are not well captured by this Internet-as-human-rights rhetoric, which pits a corporate freedom-fighter against an authoritarian state. Google executives themselves suggest that economic issues are also central: Internet censorship, declares Google’s Director of Public Policy, “creates significant barriers for U.S. companies doing business abroad….Barriers to the free flow of information online have significant and serious economic implications: they impose often one-sided restrictions on the services of U.S. and global Internet companies, while also impeding other businesses who depend on the Internet to reach their customers” http://www.google.com/search?q=alan+davidson+congressional-executive&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a). “It is good for our business to push for free expression,” states Google’s chief legal officer . The “free flow of information” doctrine is not new: it has served as a cornerstone of U.S. foreign policy since WWII. “Free flow” paints hard-edged economic and strategic interests in an appealing, but essentially misleading, language of universal human rights. It portrays freedom for corporations to invest in foreign lands and for US media companies to drench the world in American cultural commodities as “peoples speaking to peoples” — to use rhetoric current during the 1940s. The arrival of the Internet evidently does nothing to alter this. Around the Internet are arrayed a stunning number of transnational market leaders based in the US: In desktop software, Microsoft; in microelectronics, Intel; in Internet plumbing, Cisco; in mobile appliances and related media applications, Apple; in social networking, Facebook and Twitter; in E-commerce eBay and Amazon; and, of course, in search — Google. While these corporations control markets in countries around the globe, the single major exception is the PRC. For the fact is, that China has not permitted its national market to become integrated into an extraterritorial system that is dominated by the United States. China’s central-state authority has been directed, rather, to claiming its explosively expanding domestic market for homegrown companies. This is called import-substitution and it is the way to understand Google’s China conflict and the conflicts to come. Akin to those policies adopted in earlier decades by Korea, Japan and, indeed, the United States itself, China’s import-substitution program has begun to succeed. The second largest domain name after .com is .cn; fully 80% of China’s 16.3 million domain names end in .cn. An astonishing build-up of domestic telecom equipment manufacturers has been coupled to successful efforts to forestall China’s giant network operators — Mobile, Telecom and Unicom — from accepting more than nominal investment by foreign interests. Not eBay, the world’s largest auction site, but Jack Ma’s Alibaba, operates China’s largest online marketplace. Google has 80% of the US search market, and 90% of the European search market – but only a still-substantial 30+% of China’s search market, half that of China’s own Baidu. As the Financial Times reported (3/24/10, p. 2), “the Chinese authorities had no intention of allowing [Google] to assume the sort of market dominance it enjoys in many other countries around the world.” Import-substitution may be a launch-pad to transnational market expansion for Chinese suppliers. Certainly, there are already unmistakable signs that this too is deliberate. Alibaba is beginning to transnationalize, while Huawei and ZTE are now competing effectively with network infrastructure vendors worldwide . On the U.S. side, the significant fact is not that Secretary of State Hillary Clinton has again invoked the longstanding US rhetoric — now recast as “internet freedom” — as the touchstone of official policy . It is that Google has concluded that it must turn to the U.S. state (WSJ 3/25/10 p. A15), to “deepen the government’s role in advancing free expression on the internet globally.” Evidently, on both sides of the Pacific, corporations and governments collaborate in pursuit of profit-making. The geopolitics of the Internet are breaking out into the open. Not only China’s political-economic ambitions, but likewise those of the United States, signal increasingly pointed conflicts ahead.

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David Isenberg: AFRICA: The Mother of All PMC

March 22, 2010

With all the attention being paid to private military and security contractors working in Iraq and Afghanistan it is easy to forget they operate in other parts of the world. But it would be wrong to do so. While PMCs are to the best of my knowledge not, at least not yet, operating in the Arctic, they are just about everywhere else. And one region where they are increasingly prominent is Africa, the region most closely identified with the modern private security contractor. This is the region that produced the now disbanded Executive Outcomes, the most famous PMC in modern history. Just as Africa is the birthplace of humanity it is also the birthplace of the modern PMC. While EO no longer exists the use of PMC by the U.S. and commercial firms has steadily increased. One impetus for the growth of PMC there was the Pentagon’s October 2007 establishment of AFRICOM (United States African Command), the U.S. military’s most recent unified command. To its credit, unlike other unified commands, AFRICOM, responsible for military relations with 53 African nations, focuses on war-prevention, rather than war-fighting. But because the U.S. military deliberately chooses to keep a small military presence in Africa it must rely to a greater degree on private contractors. As Aviation Week reported on March 17: The prospect of a mass deployment of U.S. contractors is worrisome to more than a few observers outside of Africom. Contractors have generally performed creditably in Iraq and Afghanistan, but their presence raises issues pertaining to control of their activities, which authority–U.S. or local–has legal responsibility for them and, of course, their cost. Many observers argue that the money spent on contractors is excessive and would be better invested in local economies. But where Africom might not have the capacity to perform these missions across the continent (it has a staff of about 1,200 spread over 53 countries), the State Dept. is spending almost $100 million a year to pay military contractors to train local forces through its African Contingency Operations Training and Assistance program. In the Fiscal 2010 State-Foreign Operations Appropriations bill, the Obama administration is asking for $96.8 million in funding for the program, which, since 2005, has trained more than 77,000 from about two dozen African nations. But the program is not without critics. A June 2008 Government Accountability Office report found that the State Dept. has had trouble “assessing the proficiency of trained peacekeepers against standard skills taught in training and accounting for the activities of trained instructors.” It is not hard to find examples of PMC doing work for AFRICOM. In January the State Department awarded DynCorp International a task order for operations and maintenance support in Liberia, under the AFRICAP contract. AFRICAP is a State Dept. program that uses contractors to provide military training, perform advisory missions and provide logistical support and construction services for State’s programs across Africa. In September 2009, the department awarded a 5-year, multiple-award, indefinite-delivery/indefinite-quantity contract to three companies: PAE Government Services; DynCorp International and Protection Strategies Inc., with the ceiling for each coming in at $375 million. The task order, with a value of $5.2 million for the initial 6 month base period, has a potential total value of $20 million over two years if all options are exercised. Under the task order, DynCorp will provide operations and maintenance support for facilities of the Armed Forces of Liberia at Edward B. Kesselly Barracks and Camp Ware in Liberia. Services provided will include electrical power generation, water supply, waste disposal, and vehicle maintenance. In 2008 I noted that DynCorp has previously provided logistical support and training for peacekeepers in Liberia and Somalia. In Liberia DynCorp and PAE worked together in the Security Sector Reform program, funded by the State Department. DynCorp was contracted to provide basic facilities and basic training for the Armed Forces of Liberia, while PAE won the contract for building some bases, forming and structuring the AFL and its component units, and for providing specialized and advanced training, including mentoring the AFL’s fledgling officer and non-commissioned officer corps. DynCorp’s job was essentially to “recruit and make soldiers,” while PAE is employed to “mentor and develop” them into a fully operational force. MPRI has also provided training for the militaries of Benin, Ethiopia, Ghana, Kenya, Mali, Malawi, Nigeria, Rwanda and Senegal under the State Department’s African Contingency Operations and Assistance Program, (formerly the African Crisis Response Initiative), and separately provided training and analysis to the South African military. Northrop Grumman also operated under a $75 million contract to support the ACOAP program, which aimed to train 40,000 African peacekeepers over five years. KBR provided services to at least three bases in Djibouti, Kenya and Ethiopia used by the U.S. Combined Joint Task Force-Horn of Africa. Just last week NATO reported that in response to the African Union request for strategic airlift support to the African Union Mission in Somalia (AMISOM), the United States used DynCorp to conduct airlift missions under the NATO banner in support of the Ugandan troop rotations. The airlift, which commenced on 5 Mar 2010 and was completed on 16 Mar 2010, transported 1700 Ugandan troops from Uganda into Mogadishu and re-deploying 850 Ugandan troops out of Mogadishu. Back in January Gen William Ward, the head of AFRICOM, in an interview with Radio France said , that AFRICOM does not use PMC. But the AFRICOM public affairs office later clarified his statement to indicate that he referred only to security contractors. More importantly, State Department AFRICAP and ACOTA contracts do use security companies. While, to date, Western PMCs, are thought to have conducted themselves reasonably well and fulfilled their contracts competently they are still viewed by many as being on probation. Last year Eeben Barlow, who founded Executive Outcomes, wrote on his blog: A number of PMCs/PSCs are sponsored by Western governments who have motives that are not always obvious. These PMCs become their favoured companies to use – and they act on behalf of the sponsoring government’s foreign policy and also act as intelligence fronts. They are not there to help clients but rather to advance their government’s agendas – usually to the detriment of the client-government.

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Clinton to Meet Putin in Moscow After Urging Delay to Iran’s Nuclear Plant

March 19, 2010

By Indira Lakshmanan, Lyubov Pronina and Lucian Kim March 19 (Bloomberg) — U.S. Secretary of State Hillary Clinton , who’ll meet Russian Prime Minister Vladimir Putin in Moscow today, urged her hosts to delay plans to bring a nuclear power station in Iran online. “We think it would be premature to go forward with any project at this time because we want to send an unequivocal message to the Iranians,” Clinton said yesterday after meeting with her Russian counterpart, Sergei Lavrov . A few hours earlier, Putin said the Russian-built Bushehr plant’s first reactor may begin work this summer after repeated delays. Clinton is in Russia for two days of talks on arms control, possible new sanctions against Iran and the Middle East peace process. The meeting with Putin was added to her schedule at the last minute. She is also set to meet President Dmitry Medvedev . The U.S. is seeking to shore up support from Russia for tougher international sanctions intended to prevent Iran from developing nuclear weapons. Russia, which holds a veto in the United Nations Security Council, has sent contradictory signals over a tighter embargo. Medvedev said this month Russia was ready to consider sanctions that wouldn’t hurt civilians. Clinton said the Bushehr plant is “something we will be discussing not only with Russia but also with our other partners.” Signal to Iran Philip Crowley , a State Department spokesman, said Bushehr didn’t come up in Clinton’s meeting with Lavrov, and that the U.S. is concerned only with the timing of the plant’s opening. “This isn’t about Russia,” Crowley told reporters after the meeting. Clinton’s “concern was simply what signal does this send broadly as we are working hard to apply pressure on Iran and shift their path.” Iranian Deputy Foreign Minister Mehdi Akhundzadeh , who was also in Moscow yesterday, called on Russia to “redouble” efforts to implement agreements, including completion of the Bushehr plant. ZAO Atomstroyexport, Russia’s reactor builder, said Bushehr will be launched in July, Interfax reported, citing the company official in charge of construction, Vladimir Pavlov. Lavrov will host a meeting today of the Middle East Quartet, consisting of the U.S., UN, European Union and Russia, following Israel’s announcement of plans to expand Jewish neighborhoods in east Jerusalem. Indirect peace talks between Israel and the Palestinian Authority have stalled, and the U.S. and its partners have condemned the Israeli decision. ‘Many Conversations’ Clinton and Lavrov will be joined by UN Secretary-General Ban Ki-Moon , EU foreign policy chief Catherine Ashton and the Quartet’s envoy Tony Blair , a former U.K. prime minister. Israeli Prime Minister Benjamin Netanyahu and Clinton discussed by telephone possible steps to advance the prospects for the peace talks, Crowley told reporters early today in Moscow. “They discussed specific actions that might be taken to improve the atmosphere for progress toward peace,” Crowley said. President Barack Obama said on March 17 that there’s no crisis in U.S.-Israeli relations as a result of the clash over the settlements. Clinton, on her second trip to Russia since becoming secretary of state last year, is also in discussions on a replacement for the 1991 Strategic Arms Reduction Treaty and cooperation on bringing peace to Afghanistan. Obama made nuclear disarmament a priority in his promise to “reset” relations with Russia after they had reached post-Cold War lows under his predecessor, George W. Bush . “In the last year, the bilateral relationship between Russia and the U.S. has moved in a very positive direction,” Clinton said yesterday. A new arms control treaty is “in the home stretch” and negotiations will be completed “in the near future,” Lavrov said. Earlier, he said Russia and the U.S. “aren’t adversaries” any longer, “but we’re also not friends.” To contact the reporters on this story: Indira Lakshmanan in Moscow at ilakshmanan@bloomberg.net ; Lyubov Pronina in Moscow at lpronina@bloomberg.net ; Lucian Kim in Moscow at lkim3@bloomberg.net

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Alexander Haig, Former Secretary of State, Four-Star General, Dies at 85

February 20, 2010

By Laurence Arnold Feb. 20 (Bloomberg) — Alexander Haig , the decorated four- star general and assertive aide to U.S. presidents who declared himself “in control” at the White House after Ronald Reagan was shot, has died, the Associated Press reported. He was 85. He died today at Johns Hopkins Hospital in Baltimore from complications associated with an infection, AP said, citing the Haig family. Haig straddled the worlds of politics and the military during almost two decades in posts that included supreme commander of the North Atlantic Treaty Organization . His 18- month tenure as Reagan’s first secretary of state, the pinnacle of his political career, was marred by turf battles and by the famous comment he could never live down. He uttered it on March 30, 1981, hours after John Hinckley Jr . shot and wounded Reagan outside a Washington hotel. As surgeons worked to save Reagan’s life at a nearby hospital, and with Vice President George H.W. Bush in flight to Washington from Texas, Haig huddled with other top officials at the White House, then went before reporters. “Constitutionally, gentlemen,” he told the press, “you have the president, the vice president and the secretary of state, in that order, and should the president decide he wants to transfer the helm, he will do so.” He went on, “as of now, I am in control here in the White House, pending the return of the vice president and in close touch with him.” Fourth in Line In fact, under the rules of presidential succession, Haig wasn’t in control. The secretary of state is fourth in line to the presidency, behind the vice president, speaker of the House and president pro tempore of the Senate. His off-the-cuff comment gave Haig a lasting image as a power-grabber. “It was reminiscent of Dr. Strangelove,” Richard Darman , Reagan’s deputy chief of staff, wrote in his memoir. “Haig intended to calm the nation. He unnerved the world.” Haig had “lost control” and “written his own political epitaph,” Larry Speakes, Reagan’s spokesman, recalled in his memoir. “From then on, other members of the Reagan team would be viewing him with suspicion, and within 15 months their hazing would drive him out of the White House.” For his part, Haig long defended his comment as merely “a statement of fact that I was the senior Cabinet officer present.” The ‘Vicar’ During his stormy term as secretary of state, Haig called himself the “vicar of American foreign policy” and reportedly chafed when others — even Reagan — took steps without his approval. In one instance, White House Chief of Staff James A. Baker III rebuked Haig for remarks on Central America that diverted attention from the administration’s planned message about the economy. “Indiscreet and volatile, knowledgeable and arrogant, Haig was ever ready to take offense at slights real and imagined,” Richard Reeves wrote in “ President Reagan: The Triumph of Imagination .” In April 1981, while convalescing from his gunshot wound, Reagan penned a heartfelt handwritten note to Soviet leader Leonid Brezhnev , extolling the importance of peace. Haig tried without success to persuade Reagan to sharpen the letter’s tone. Haig’s tenure was “doomed from that moment,” according to Reagan biographer Lou Cannon. Reagan’s Limits “Al really did not understand how much Reagan intended to be his own president,” Cannon said in a 2008 interview. “Reagan delegated a ton of stuff, arguably more than he should have, but he considered the U.S.-Soviet relationship the most important thing on his plate, and he was never about to delegate that.” Haig resigned in June 1982 and presented his side of the story in a 1984 book, “ Caveat: Realism, Reagan and Foreign Policy .” The Reagan White House was “an administration of chums,” he wrote, and his status as an outsider was a “handicap.” He said he was unjustly blamed for failing to forge a diplomatic solution to avert the Falklands War between Argentina and the U.K. He also denied longstanding allegations that he gave Israel a green light to invade Lebanon in 1982. Haig became a presidential candidate himself in 1987, joining a Republican field that included Bush, the sitting vice president. He dropped out on Feb. 12, 1988, four days before the New Hampshire primary, and endorsed Senator Robert Dole , who went on to lose the nomination to Bush. Attacking Bush Haig spent much of his brief candidacy attacking Bush, venting some leftover resentment toward the Reagan White House. Rejecting one of Reagan’s central arguments, candidate Haig said the ballooning budget deficit was a “Republican deficit” that couldn’t be blamed on congressional Democrats. He indicated that at least some of his anger toward Bush stemmed from his feelings toward Baker, a Bush friend and adviser. Alexander Meigs Haig Jr. was born on Dec. 2, 1924, the son of a lawyer. He was raised in the suburbs of Philadelphia. He graduated in 1947 from the U.S. Military Academy at West Point, New York, and obtained a master’s degree in international relations from Georgetown University in 1961. He served military assignments in Japan, Korea, Europe and Vietnam, working part of the time under General Douglas MacArthur . Among numerous commendations, Haig received a Distinguished Service Cross , the nation’s second-highest medal for heroism, for leading outnumbered U.S. troops in a 1967 battle with Viet Cong forces. Nixon White House He joined Richard Nixon ’s White House in 1969 as chief military assistant to National Security Adviser Henry Kissinger , became deputy assistant to the president for national security and was promoted to general in 1972. He worked on negotiations for a cease-fire in Vietnam as well as arrangements for Nixon’s historic visit to China in 1972. After a brief stint as Army vice chief of staff, Haig returned to the White House and succeeded H.R. Haldeman as chief of staff as Nixon’s team dealt with the fallout from the Watergate break-in. Haig played a central role in persuading Nixon to resign in August 1974. Nixon’s successor, Gerald Ford , named Haig commander-in- chief for U.S. forces in Europe. Haig then spent five years as supreme allied commander in Europe, responsible for the multi- nation forces of NATO. He survived an assassination attempt in June 1979 when a bomb exploded near his car as he was being driven to his NATO office in Belgium. That same year, he became president and chief operating officer of Hartford, Connecticut-based United Technologies Corp . Confronting Soviets Reagan, upon taking office in 1981, named him the 59th secretary of state. Haig endured contentious confirmation hearings in the Senate, then went to work building a foreign policy rooted in direct confrontation with the Soviet Union in Cuba, Central America and elsewhere. His resignation in June 1982 marked the end of his work in government. He returned to United Technologies as senior adviser and director while opening and serving as chairman of Worldwide Associates Inc. , which provides political and security consulting to international corporations. He served on the boards of several companies, including America Online Inc., MGM Grand Inc. and Metro-Goldwyn-Mayer Inc. He was popular on the paid lecture circuit and hosted an independently produced weekly television program, “World Business Review. ” In addition to his 1984 book on the Reagan White House, he wrote “Inner Circles: How America Changed the World,” published in 1992. Haig married the former Patricia Fox on May 24, 1950. They had two sons, Alexander and Brian, and a daughter, Barbara. To contact the reporter on this story: Laurence Arnold in Washington at larnold4@bloomberg.net .

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Palin Says She’s More Informed, `Won’t Close the Door’ on Presidential Bid

February 7, 2010

By John McCormick Feb. 7 (Bloomberg) — Sarah Palin said she “won’t close the door” on a potential presidential bid during an interview on the “Fox News Sunday” program. “It would be absurd to not consider what it is that I can potentially do to help our country,” she said. “I won’t close the door that perhaps could be open for me in the future.” Asked why she wouldn’t run for president, the former Alaska governor and 2008 Republican vice-presidential nominee responded that she would. “I would if I believe that that is the right thing to do for our country and for the Palin family,” she said. “Certainly, I would do so.” Palin, 45, said she is receiving daily e-mail briefings on domestic and foreign policy from a group of Washington advisers and that she is more knowledgeable on those topics than in 2008. “My focus has been enlarged,” she said. “So, I sure as heck better be more astute on these current events, national issues than I was two years ago.” Palin has been employed as a contributor at Fox News, owned by New York-based News Corp., since January. The interview’s broadcast came the morning after she criticized President Barack Obama’s first year in office by saying “the list of broken promises is long” during a speech to the Tea Party movement’s inaugural national convention. Campaign-Style Speech The campaign-style speech at a dinner in Nashville, Tennessee, was a frontal assault on the administration’s handling of national security and terrorism, even though she stopped short of declaring ambitions for a 2012 presidential bid as her audience chanted “Run Sarah, Run!” “I am a big supporter of this movement,” she said. “America is ready for another revolution.” Palin questioned whether the suspect in the attempted Christmas Day bombing of a Northwest Airlines flight to Detroit was interrogated aggressively enough. “Treating this like a mere law-enforcement matter places our country at grave risk because that’s not how radical Islamic extremists are looking at this,” she said. “To win that war, we need a commander in chief, not a professor of law standing at the lectern.” The current Democratic administration can no longer blame its Republican predecessor for the nation’s ills, Palin said. “They own this now, and voters are going to hold them accountable,” she said in her speech. Tea Party Hero A hero of the leaderless Tea Party movement, Palin told her audience assembled in the U.S. country-music capital that their grassroots efforts will empower voters. Palin said she planned to endorse specific 2010 candidates and that the Republican Party should not be “afraid of contested primaries” within its ranks. Her appearance — the first of several Tea Party events Palin plans to attend in the coming months — marked the end of the three-day National Tea Party Convention . The convention at the Gaylord Opryland Hotel was the first national meeting of a movement that emerged last year amid protests over the policies of Obama and the Democrats who control Congress. Palin is scheduled to campaign today for Texas Governor Rick Perry , a Republican facing a primary challenge from Senator Kay Bailey Hutchison . Reid’s Reelection Race She is planning to speak in March at a Tea Party rally in Searchlight, Nevada, the hometown of Senate Majority Leader Harry Reid , a Democrat who is in a tight race for re-election this year. She is also scheduled to appear in Boston in April for an event marking the movement’s one-year anniversary. Tea Party activists, drawn to Palin’s anti-Washington rhetoric and working-mother personality, would form a natural base for Palin should she decide to make a White House bid. There is little downside in closely associating herself with the movement, a Republican strategist said. “The more she can talk to them and talk to conservative evangelicals, the more she can have a passionate following and appeal to a fairly large swath of GOP voters and independent voters,” said John Feehery , who advised former Republican House Speaker Dennis Hastert . “She has attained rock star status,” he said. “That doesn’t necessarily mean she has a great voice, but she has attained celebrity. For a lot of folks she is off-key. But for her supporters, she’s the best thing since Elvis.” Feehery said he is skeptical Palin will run for president. “What she is doing, frankly, I think, is trying to make some money,” he said. Republicans Seeking Gains Tea Party activists could prove crucial to Republicans seeking gains in November, though organizing challenges remain for the mostly online community. Palin was paid $100,000 for her speech, according to the Associated Press. She told her audience she would give her compensation “to the cause.” Palin burst onto the national scene 17 months ago when Senator John McCain picked her as a running mate for his Republican presidential campaign. She sold herself as a Washington outsider and “hockey mom,” and after losing the election capitalized on her exposure with a $1.25 million advance to write her memoir, “ Going Rogue: An American Life .” To contact the reporter on this story: John McCormick in Nashville at jmccormick16@bloomberg.net .

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Clinton Makes Rounds in London to Push for Tougher Sanctions Against Iran

January 27, 2010

By Indira A.R. Lakshmanan Jan. 28 (Bloomberg) — U.S. Secretary of State Hillary Clinton is taking advantage of meetings with foreign ministers in London to push for tougher sanctions aimed at Iran’s nuclear program. “In the course of many consultations, including today, we believe that there is a growing understanding in the international community that Iran should face consequences for its defiance of international obligations,” Clinton told reporters traveling with her last night. Clinton is discussing strengthening the implementation of existing sanctions and the possible elements of a new United Nations resolution aimed at reining in Iran’s nuclear ambitions, according to U.S. officials who spoke on condition of anonymity because of the sensitivity of the private talks. While Iran says its nuclear program is aimed at generating electricity, the U.S., Europeans and UN inspectors have cast doubt on Iran’s motives for building clandestine atomic facilities and enriching uranium, which can be used for bomb- making. President Barack Obama said he would focus on diplomacy through 2009 before pressing for tougher international pressure this year in an attempt to force Iran to comply with inspectors. Clinton’s effort to drum up support for sanctions while in London for international meetings on Yemen and Afghanistan is a sign of the Obama administration’s attempt to rejuvenate a policy that has foundered in the UN Security Council. China in particular has resisted new sanctions on Iran, which is China’s third-largest source of crude oil. ‘Openness’ to Sanctions Asked how she would change Chinese Foreign Minister Yang Jiechi ’s mind about sanctions when they meet today, Clinton said, “I don’t think there is a mind to change. I think there is an openness” to sanctions and “an awareness of the importance of the international community standing together.” Clinton told reporters she thinks there is a “growing sense” among Security Council powers that Iran’s refusal to “agree to the Tehran research reactor proposal” was “a turning point.” She was referring to an international offer to swap Iran’s uranium for enriched fuel for a medical reactor. Clinton is also scheduled to meet today with foreign ministers from Britain and France, the other nations that sit with the U.S., Russia and China as permanent member of the UN Security Council with veto power. She talked yesterday with her counterparts from Russia, Indonesia and Turkey, and will confer tomorrow with ministers from Germany, Italy, Saudi Arabia and the United Arab Emirates, U.S. officials said. A State Department official said Clinton and Russian Foreign Minister Sergei Lavrov had a constructive talk about how to effectively pressure Iran, including what the official called appropriate action at the UN. Iran Absent Iran announced yesterday that it wasn’t sending a representative to today’s international conference, though it shares a border with Afghanistan. “The approach to the London conference is increasing military presence and not the root of problems,” Ramin Mehmanparast , a foreign ministry spokesman, told the state-run Mehr news agency. Clinton is pressing some countries, such as Indonesia, to use moral persuasion to convince Iran that it isn’t meeting its obligations to the international community, while talks with others will focus on the possible language of a new UN resolution, U.S. officials said. Revolutionary Guard Clinton has indicated the U.S. wants to target Iran’s Revolutionary Guard Corps, an elite military branch with far- reaching business interests and involvement in nuclear and missile development. Iran is already subject to three rounds of UN sanctions, including a 2007 resolution freezing assets and banning travel for some Revolutionary Guard-affiliated companies and officials. Officials representing the five permanent Security Council members and Germany — a group that has held regular talks on the Iranian nuclear issue for several years — plan to hold a conference call this week to discuss the first draft of a sanctions resolution, according to a European diplomat. The group will discuss a proposed U.S. text that suggests strengthening existing measures and probably would add certain Revolutionary Guard individuals or entities to the UN travel ban and asset freeze, the diplomat said. Sanction Implementation U.S. Treasury Undersecretary Stuart Levey , who has played a pivotal role in the design and enforcement of financial restrictions on Iran since the George W. Bush administration, is in London to discuss the implementation of sanctions with foreign officials, the U.S. officials said. The Treasury Department has identified 119 Iranian companies, banks and officials, saying they support Iran’s nuclear or terrorist activities and banning them from dealings with U.S. companies and allowing the U.S. to seize their assets. Treasury officials have discussed with European counterparts the possibility of additional restrictions on financial transactions or insurance for Iranian cargo shipments. Lutz Guellner , spokesman for European Union foreign policy chief Catherine Ashton , told reporters in Brussels yesterday that while there’s “no precise calendar” for a UN debate on Iran, “we can’t wait forever.” To contact the reporter on this story: Indira Lakshmanan in London at ilakshmanan@bloomberg.net .

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Orange Revolution Promise Fades as Yushchenko Rivals Surge to Jan. 17 Vote

January 13, 2010

By James M. Gomez and Daryna Krasnolutska Jan. 13 (Bloomberg) — Ukrainian President Viktor Yushchenko has feuded with Russia and struggled to forge links with the European Union since taking power in the 2004 Orange Revolution . Voters may now turn to his rivals to mend ties with both East and West. Yushchenko is unlikely to survive the Jan. 17 first round of the presidential election, according to two December polls showing 3.7 percent of respondents supported him. Opposition leader Viktor Yanukovych , who favors closer links with Russia, and Prime Minister Yulia Timoshenko , another Yushchenko adversary, placed first and second and probably will face each other in the Feb. 7 second round. A Yushchenko departure may bolster Ukrainian markets, unfreeze a $16.4 billion bailout loan from the International Monetary Fund, ease conflicts with Russia and improve the prospects for a free-trade accord with the EU, said Sacha Tessier-Stall, head of foreign policy at the International Centre for Policy Studies in Kiev. “No matter who wins, there will be an improvement,” said Tessier-Stall. “Yushchenko exacerbated tensions with Russia, thinking it would get himself into the EU. But he failed to see that bad relations with Russia are bad relations with the EU.” Yushchenko yesterday said the election would be “a national referendum about Ukraine’s European future.” Speaking to reporters in Kiev, he said his policies were “simple and clear: Let’s go home, to Europe.” Stalled Accord Both Timoshenko, 49, and Yanukovych, 59, have promised better relations with Russia and publicly supported concluding a free-trade agreement that has stalled over European objections to the country’s economic management. “I want a new president to be flexible,” 60-year-old accountant Valentyna Lozova, an undecided voter, said yesterday in Kiev. “I want the president to be oriented to the European Union, but at the same time the president must set up good relations with all neighbors. I do not like conflicts.” The former Soviet republic’s disputes with Russia led to two gas cutoffs to Europe, in January 2006 and in January last year, as Prime Minister Vladimir Putin accused Ukraine of stealing the fuel. Yushchenko, 55, Timoshenko and state-run NAK Naftogaz Ukrainy denied the charge. About 80 percent of Russian natural gas destined for Europe is shipped through Ukraine, a country of 46 million people that lies between Russia and the EU. A quarter of the gas the EU consumes comes from Russia. Orange Revolution Yushchenko was swept to power in 2004 in the so-called Orange Revolution, when millions of demonstrators demanded new elections. A ruling by the Supreme Court found that Yanukovych’s initial victory was based on fraud. The president, whose face still bears the scars from what his Austrian physicians said was dioxin poisoning, won the re- vote. His victory over Russia-backed Yanukovych raised investor optimism he would make it easier to exploit Ukraine’s geographic position and wealth of raw materials. Ukraine attracted $36 billion in foreign direct investment from the start of Yushchenko’s presidency through November 2009. FDI totaled $5.7 billion between 1999 and 2004. The country also won membership in the World Trade Organization and the EU declared Ukraine a market economy. Timoshenko has served as prime minister twice in an off- again, on-again alliance with Yushchenko. Parties loyal to her and Yanukovych prevented parliamentary votes last year on improving the banking system and passing the 2010 budget. Record Decline That violated requirements for the IMF loan, accorded when the credit crisis undermined demand for exports and crippled the financial sector. The IMF delayed Ukraine’s $3.4 billion tranche due in November as a result of the lack of spending discipline. Ukraine’s economy shrank a record 20.3 percent on an annual basis in the first quarter of 2009. Gross domestic product declined 17.8 percent in the second quarter and 15.9 percent in the third. It is the second-least creditworthy of economies behind Argentina, as measured by the cost of credit-default swaps that protect bondholders against default. Contracts on Ukraine’s debt were trading at 943.113 basis points as of 10:53 a.m. in Kiev, compared with 500.330 basis points for Latvia, according to prices from CMA Datavision in London. Goals ‘Partly Met’ The currency, the hryvnia, was the world’s worst performer versus the dollar from September 2008 to September 2009. The 6.75 percent government bond maturing in 2017 sank to a record- low 34.215 on March 9. It was unchanged today at 83.36. EU Commission President Jose Barroso said on Dec. 4 that Yushchenko “only partly met” goals to prepare Ukraine for closer trade ties and eventual EU membership. Barroso delayed signing a so-called Association Agreement, which includes a free-trade component. A Dec. 12-24 poll by the International Institute of Sociology in Kiev found Yushchenko would get just 3.7 percent of the vote, putting him in fifth place. Timoshenko had 19.2 percent and Yanukovych led with 30.3 percent. The margin of error was 2 percentage points and more than 4,000 people were surveyed. The Kiev-based Democratic Initiatives Foundation, in a poll of 2,010 people from Dec. 12-26, found the same percentages for Yushchenko and Timoshenko and 33.6 percent for Yanukovych. The margin of error was 2.3 points. A Yushchenko departure would allow the country to regain its footing and attract investors, said Ivan Tchakarov , an analyst at London-based Nomura Holdings Inc. “Ukraine can be a positive surprise this year,” he said. “A lot more political capital has been expended building up spheres of influence than doing good. It is high time to change that.” To contact the reporters on this story: James M. Gomez in Prague jagomez@bloomberg.net ;

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Obama to Send 30,000 More Troops, Set Timeline for Afghanistan Withdrawal

December 1, 2009

By Hans Nichols and Indira A.R. Lakshmanan Dec. 1 (Bloomberg) — President Barack Obama will announce tonight he is sending an additional 30,000 U.S. troops to Afghanistan and that American forces will begin withdrawing before the end of his first term, administration officials said. The deployment of the extra force will be expedited and bring the number of U.S. military personnel in Afghanistan to about 100,000. Obama will outline a plan that includes a timetable for Afghan security forces to begin taking over from U.S. troops within about three years, one of the officials said. With the unveiling of his strategy, Obama is tying his presidency to the outcome of a war that has deteriorated since the U.S. ousted the Taliban from power eight years ago. Obama’s televised speech from the U.S. Military Academy at West Point “is really going to prove that he owns the war,” said Karin von Hippel , a scholar at the Center for Strategic and International Studies in Washington. The address comes after a months-long strategy review and will be directed at a range of listeners, including voters weary of the war, lawmakers divided over its cost in lives and money, a scandal-plagued Afghan government and a stubborn Taliban insurgency. Obama’s speech will last about 30 to 40 minutes and will focus on a strategy to “disrupt, dismantle and destroy al-Qaeda and its extremist allies” and help prevent another 9/11-style attack, spokesman Robert Gibbs said on NBC’s “Today” show. Afghan Takeover The ultimate goal, Gibbs said, is to “transfer the responsibility” to Afghanistan’s security forces as they meet unspecified political and civilian benchmarks. “This will not be nation-building,” Gibbs said. “This will not be an open-ended commitment.” The president’s challenge is to demonstrate the U.S. is committed to defeating terrorists and stabilizing Afghanistan without creating the impression that American forces will be there forever, said Patrick Cronin , a senior director at the Center for a New American Security in Washington. “There are multiple messages and multiple audiences,” said Cronin, who until recently ran the Pentagon’s Institute for National Strategic Studies . Obama needs “to show the American public and the Senate and the House of Representatives that we have an exit strategy, not a permanent commitment,” while simultaneously convincing Afghanistan, Pakistan and U.S. enemies “that we are willing to see this through,” he said. Living With Decision The new strategy ends Obama’s ability to “blame the last administration” for failings in Afghanistan, Cronin said. “Now it’s his war, and he’s going to have to live with the decision he makes about troops.” The president may find that Republicans are more receptive to his new plan than members of his own party. Karl Rove , President George W. Bush’s deputy chief of staff, said he would be “among the first to applaud” if reports about Obama’s decision to send 30,000 more troops are correct. “He is providing the resources that his commander said are necessary,” Rove said on the “Today” show. The support of Republicans on the war won’t necessarily translate into backing for the president’s domestic initiatives, such as health care, according to Lawrence Jacobs , a scholar of presidential and legislative politics at the University of Minnesota’s Humphrey Institute in Minneapolis. ‘Two Presidencies’ “Barack Obama is about to experience the well-studied and common pattern of the ‘two presidencies,’ where presidents can draw support across party lines on foreign policy even while stalemated on domestic policy,” Jacobs said. Along with boosting U.S. forces, Obama has asked allies to provide 10,000 more troops for the Afghan campaign, including 1,500 from France, 2,000 from Germany, 1,500 from Italy and 1,000 from Britain, Le Monde reported today, citing an aide to French President Nicolas Sarkozy . France may grant the request but wants its extra troops to focus on training Afghan forces, the newspaper said. Obama ordered his new strategy into effect on Nov. 29 and has been explaining the plan to allied leaders, including Sarkozy and U.K. Prime Minister Gordon Brown . He’s scheduled to brief members of Congress from both parties today at the White House before leaving for West Point. “He has a fairly heavy lift,” said Representative Brian Baird , a Washington state Democrat who visited Afghanistan earlier this month. “He has to persuade lawmakers that it’s a government worth backing, that it’s a mission capable of succeeding and that Pakistan is viable partner,” Baird said. “And then he has to somehow pay for it.” Public Divided The U.S. public is divided. A CNN/Opinion Research Corp. poll conducted Nov. 13-15 showed that 50 percent of Americans would support sending an additional 34,000 troops to Afghanistan and 49 percent would be opposed. The U.S. now has a force of about 69,000, with about 36,000 troops from allied nations. Some Democratic leaders, including Senate Armed Services Committee Chairman Carl Levin of Michigan and Senate Foreign Relations Committee chairman John Kerry of Massachusetts, have questioned an increased military commitment. Republicans, including Arizona Senator John McCain , his party’s senior member on the Armed Services panel, have said telegraphing an intention to withdraw from Afghanistan would let the Taliban and al-Qaeda solidify their presence in areas where the U.S. is drawing down. Hard Sell “He has to convey the fact that his strategy is not an open-ended one for an indefinite war,” said Zbigniew Brzezinski , former national security adviser to President Jimmy Carter . “In different ways he’s going to have a hard sell with both Republicans and Democrats, simply because the country is in a kind of state of unease.” U.S. allies face their own political pressures about the war and will look to Obama’s speech to underscore a durable American commitment before sending additional troops of their own, said Brian Katulis , senior fellow at the Center for American Progress in Washington. “He’s going to need to give our European friends a boost and motivation to do more,” Katulis said. October was the deadliest month for U.S. forces since the fighting began, with 59 military personnel dead from combat and accidents, according to Defense Department figures. Obama took office pledging to shift resources from Iraq to the fight against the Taliban and al-Qaeda. He ordered an additional 17,000 combat troops and 4,000 trainers to Afghanistan earlier this year. In June, he installed General Stanley McChrystal as his top commander and charged him with reviewing NATO’s prospects for victory. Strategy Review Obama’s strategy was devised during a series of White House Situation Room meetings with foreign policy and military advisers after McChrystal submitted a request for additional troops. Obama has said he wants to set benchmarks to measure improvements in Afghanistan’s military and government and lay out a path toward an end to the U.S. engagement. Some of Obama’s more skeptical listeners may be Democrats. House Appropriations Committee Chairman David Obey of Wisconsin is suggesting a tax on the wealthy to pay for the war. Each soldier added to the force would cost about $1 million a year, according to the Office of Management and Budget. To contact the reporters on this story: Hans Nichols in Washington at hnichols2@bloomberg.net ; Indira Lakshmanan in Washington at ilakshmanan@bloomberg.net .

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Sarkozy Ally Wins European Finance Post, Presaging Fight Over Regulations

November 27, 2009

By Ben Moshinsky Nov. 28 (Bloomberg) — French President Nicolas Sarkozy won his bid to install an ally as the European Commission’s next financial-services regulator, fueling British concern that traders and hedge funds will face stricter rules. Michel Barnier , a former French agriculture minister, was picked by Commission President Jose Barroso to lead a push for tougher bank regulation as part of a new team that he announced yesterday. Barroso rebuffed efforts to split financial oversight from enforcing the EU’s internal-market rules. French officials have pushed for tighter regulations on hedge funds than has outgoing internal-markets chief Charlie McCreevy of Ireland and criticized him for not responding forcefully enough to the financial crisis. The U.K., seeking to protect its financial-services industry, has tried to weaken proposed rules for hedge funds and private-equity managers. “Financial services are a vital British economic interest and, while we want to coordinate regulation internationally, the European Commission’s proposals have the potential to do serious harm to our financial-services industry,” William Hague , who speaks for the U.K.’s opposition Conservative Party on foreign policy, said in an e-mailed statement. Seeking to allay British concerns that France would take almost total control of financial regulation, Barroso appointed Jonathan Faull , a U.K. diplomat at the commission, as director general of financial services, a senior staff role. “I’m pragmatic, I’m ready to work with everyone,” Barnier said at a press conference in Paris. “You don’t need to convince me of the importance of London as a financial center. It was my initiative to have a British deputy. It’s not the first time I’ve had one, it’s always worked very well.” Commission Appointments The 27-member commission, which followed the appointment last week of Belgium’s Herman Van Rompuy as president and Britain’s Catherine Ashton as foreign minister, includes Spain’s Joaquin Almunia as antitrust chief, Finland’s Olli Rehn as economy commissioner and Karel De Gucht of Belgium as the top trade negotiator. Denmark’s Connie Hedegaard will be climate commissioner, Guenther Oettinger of Germany energy chief and Italy’s Antonio Tajani industrial-policy head. Sarkozy began his public campaign for the internal-market job immediately after Van Rompuy and Ashton were named Nov. 19. Were Barnier, 58, to follow Sarkozy’s views, London’s financial firms would face tougher laws from Europe. Sarkozy said in May he wanted a European banking regulator with “real sanctioning power.” “We’ll work with whoever we get,” Lesley McLeod , spokeswoman at the British Bankers’ Association, said in a telephone interview in London. U.K. Position The U.K. is currently negotiating with other member states to weaken the powers of European banking regulator proposed by the commission in September. Talks are set to continue at a meeting of European finance ministers in Brussels next week. Barnier will oversee the development of legislation affecting all areas of financial activity, from bank failures to hedge funds and over-the-counter derivatives trading. The commission hinted at imposing limits on the size of bets traders can make on movements in commodity prices, while the U.K. hedge fund industry faces debt and bonus restrictions. “I’d be more worried about the Germans than the French,” said Peter O’Dwyer, director at Trinity Fund Administration Ltd., a Dublin-based fund administrator. “The French and German agendas are different in this directive in my opinion, the French interest is building up Paris as a financial center, and the German agenda is keeping private equity funds out of Germany.” Splitting the Job Barroso said he decided against splitting financial regulation from duties for overseeing the internal EU market of 500 million consumers. Financial services will “probably” be part of the duties for the commissioner for economic and monetary affairs “in the future,” Barroso said. “That should come only when we have a real internal market for financial services.” Barnier, who was France’s minister for agriculture from 2007 to 2009, said in a May 2009 interview that speculation in agricultural commodities was “inexcusable.” The commission is drafting regulations for derivatives trading that will encompass food-commodity trading. The move marks Barnier’s second time working at the EU regulator in Brussels, where he was commissioner for regional policy from 1999 to 2004. After leaving he immediately became foreign minister of France in Jean- Pierre Raffarin’s government. Barnier, who helped organize the 1992 Winter Olympics in Albertville, France, started his political career at 27, when he was elected to the French National Assembly as a deputy for the Savoie region. To contact the reporters on this story: Ben Moshinsky in Brussels at bmoshinsky@bloomberg.net

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Obama Vows to `Finish Job’ in Afghanistan as Decision on Troop Level Nears

November 24, 2009

By Tony Capaccio and Roger Runningen Nov. 24 (Bloomberg) — President Barack Obama will announce his decision on the next steps in the war in Afghanistan on or about Dec. 1, according to a U.S. official familiar with the issue. Defense Secretary Robert Gates , Secretary of State Hillary Clinton and Admiral Michael Mullen , chairman of the Joint Chiefs of Staff, are expected to discuss the decision before Congress that same week, and General Stanley McChrystal , the top U.S. commander in Afghanistan, would testify the following week, the official said. At a news conference today with Indian Prime Minister Manmohan Singh , Obama would say only that he will unveil his decision “after Thanksgiving.” He said his administration’s review of Afghanistan strategy has been “comprehensive and useful.” Obama conducted his final strategy session last night, meeting with his top military and foreign policy advisers for about two hours on the question of how many additional troops to commit to the war as well as a “strategy for getting them out,” press secretary Robert Gibbs said today. “After completing a rigorous final meeting, President Obama has the information he wants and needs to make his decision and he will announce that decision within days,” Gibbs said in a statement. At the previous strategy session on Nov. 11, Obama expressed dissatisfaction with the options being presented, and the administration issued a statement saying the “president believes that we need to make clear to the Afghan government that our commitment is not open-ended.” Benchmarks Obama has said he wants to set benchmarks to measure improvements in Afghanistan’s military and government, including the ability to deliver services to the civilian population and efforts to reduce corruption. The president also has said wants to lay out a path for an exit strategy for a war that began in 2001. Obama said today he’s confident that when Americans hear “a clear rationale” for the U.S. presence and “how we intend to achieve our goals, that they will be supportive.” After eight years in Afghanistan, the U.S. hasn’t committed “either the resources or the strategy to get the job done,” the president said. “It is my intention to finish the job.” McChrystal requested 40,000 more troops to fight the Taliban, which harbored al-Qaeda before being toppled in the invasion following the Sept. 11 attacks. The U.S. contributes about 70,000 of the 110,000 foreign forces waging the Afghan war. $1 Million Per Soldier White House Budget Director Peter Orszag has estimated that each additional soldier in Afghanistan could cost $1 million, for a total that could reach $40 billion if 40,000 more troops are added. Michigan Democrat Carl Levin , chairman of the Senate Armed Services Committee , said last week that higher-income Americans should be taxed to pay for sending more troops to Afghanistan. An “additional income tax to the upper brackets, folks earning more than $200,000 or $250,000” a year, could fund more troops, Levin, a Michigan Democrat, said in an interview for Bloomberg Television’s “Political Capital With Al Hunt .” Gibbs said before last night’s meeting that the idea of a so-called war tax hadn’t come up in Obama’s discussions. The president has told the Joint Chiefs of Staff that “we have to take into account how much all of this is going to cost over a five-year, 10-year period,” Gibbs said yesterday. The U.S. also is urging other members of the North Atlantic Treaty Organization to contribute more to the war. NATO foreign ministers are due to meet in Brussels on Dec. 3-4. Germany to Reassess Germany’s defense minister said last week that his country, the third biggest contributor of troops in the war, would reassess after Obama announces his revised strategy and allies meet in London in January to devise a plan for handing authority back to the Afghan government. The German government of Chancellor Angela Merkel last week supported extending the term of the country’s military presence in Afghanistan through next year, maintaining the upper limit at 4,500 troops. Britain, which has 9,000 soldiers in Afghanistan, has pledged to add 500 more if other nations bolster their contributions. Levin said he wants NATO to provide half the additional forces that might be needed. Among the 17 administration members listed as participants in last night’s strategy session were Vice President Joseph Biden , Clinton, Gates, National Security Adviser James Jones , and, by videoconference: Karl Eikenberry , the U.S. ambassador to Afghanistan, McChrystal and Anne Patterson , the U.S. ambassador to Pakistan. Republicans pressured Obama for a decision. “We encourage you to adopt General McChrystal’s recommendation and to provide him with the forces that will give us the highest chance for success with the lowest risk to the safety and security of our forces,” House Republican Leader John Boehner and 13 others said in a Nov. 20 letter. To contact the reporters on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net ; Roger Runningen in Washington at rrunningen@bloomberg.net .

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