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Israel’s new strategy: “sabotage” and “attack” the global justice movement

Ali Abunimah, The Electronic Intifada, 16 February 2010

An extraordinary series of articles, reports and presentations by Israel’s influential Reut Institute has identified the global movement for justice, equality and peace as an “existential threat” to Israel and called on the Israeli government to direct substantial resources to “attack” and possibly engage in criminal “sabotage” of this movement in what Reut believes are its various international “hubs” in London, Madrid, Toronto, the San Francisco Bay Area and beyond.

The Reut Institute’s analyses hold that Israel’s traditional strategic doctrine — which views threats to the state’s existence in primarily military terms, to be met with a military response — is badly out of date. Rather, what Israel faces today is a combined threat from a “Resistance Network” and a “Delegitimization Network.”

The Resistance Network is comprised of political and armed groups such as Hamas and Hizballah who “rel[y] on military means to sabotage every move directed at affecting separation between Israel and the Palestinians or securing a two-state solution” (The Delegitimization Challenge: Creating a Political Firewall, Reut Institute, 14 February 2010).

Furthermore, the “Resistance Network” allegedly aims to cause Israel’s political “implosion” — a la South Africa, East Germany or the Soviet Union — rather than bring about military defeat through direct confrontation on the battlefield.

The “Delegitimization Network” — which Reut Institute president and former Israeli government advisor Gidi Grinstein provocatively claims is in an “unholy alliance” with the Resistance Network — is made up of the broad, decentralized and informal movement of peace and justice, human rights, and BDS (boycott, divestment and sanctions) activists all over the world. Its manifestations include protests against Israeli officials visiting universities, Israeli Apartheid Week, faith-based and trade union-based activism, and “lawfare” — the use of universal jurisdiction to bring legal accountability for alleged Israeli war criminals. The Reut Institute even cited my speech to the student conference on BDS held at Hampshire College last November as a guide to how the “delegitimization” strategy supposedly works (“Eroding Israel’s Legitimacy in the International Arena,” Reut Institute, 28 January 2010).

The combined “attack” from “resisters” and “delegitimizers,” Reut says, “possesses strategic significance, and may develop into a comprehensive existential threat within a few years.” It further warns that a “harbinger of such a threat would be the collapse of the two-state solution as an agreed framework for resolving the Israeli-Palestinian conflict, and the coalescence behind a ‘one-state solution’ as a new alternative framework.”

At a basic level, Reut’s analysis represents an advance over the most primitive and hitherto dominant layers of Israeli strategic thinking; it reflects an understanding, as I put it in my speech at Hampshire, that “Zionism simply cannot bomb, kidnap, assassinate, expel, demolish, settle and lie its way to legitimacy and acceptance.”

But underlying the Reut Institute’s analysis is a complete inability to disentangle cause and effect. It seems to assume that the dramatic erosion in Israel’s international standing since its wars on Lebanon in 2006 and Gaza in 2009 is a result of the prowess of the “delegitimization network” to which it imputes wholly nefarious, devious and unwholesome goals — effectively the “destruction of Israel.”

It blames “delegitimizers” and “resisters” for frustrating the two-state solution but ignores Israel’s relentless and ongoing settlement-building drive — supported by virtually every state organ — calculated and intended to make Israeli withdrawal from the West Bank impossible.

It never considers for a moment that the mounting criticism of Israel’s actions might be justified, or that the growing ranks of people ready to commit their time and efforts to opposing Israel’s actions are motivated by genuine outrage and a desire to see justice, equality and an end to bloodshed. In other words, Israel is delegitimizing itself.

Reut does not recommend to the Israeli cabinet — which recently held a special session to hear a presentation of the think tank’s findings — that Israel should actually change its behavior toward Palestinians and Lebanese. It misses the point that apartheid South Africa also once faced a global “delegitimization network” but that this has now completely disappeared. South Africa, however, still exists. Once the cause motivating the movement disappeared — the rank injustice of formal apartheid — people packed up their signs and their BDS campaigns and went home.

Instead, Reut recommends to the Israeli government an aggressive and possibly criminal counter-offensive. A powerpoint presentation Grinstein made to the recent Herzliya Conference on Israeli national security actually calls on Israel’s “intelligence agencies to focus” on the named and unnamed “hubs” of the “delegitimization network” and to engage in “attacking catalysts” of this network. In its “The Delegitimization Challenge: Creating a Political Firewall” document, Reut recommends that “Israel should sabotage network catalysts.”

The use of the word “sabotage” is particularly striking and should draw the attention of governments, law enforcement agencies and university officials concerned about the safety and welfare of their students and citizens. The only definition of “sabotage” in United States law deems it to be an act of war on a par with treason, when carried out against the United States. In addition, in common usage, the American Heritage Dictionary defines sabotage as “Treacherous action to defeat or hinder a cause or an endeavor; deliberate subversion.” It is difficult to think of a legitimate use of this term in a political or advocacy context.

At the very least, Reut seems to be calling for Israel’s spy agencies to engage in covert activity to interfere with the exercise of legal free speech, association and advocacy rights in the United States, Canada and European Union countries, and possibly to cause harm to individuals and organizations. These warnings of Israel’s possible intent — especially in light of its long history of criminal activity on foreign soil — should not be taken lightly.

The Reut Institute, based in Tel Aviv, raises a significant amount of tax-exempt funds in the United States through a nonprofit arm called American Friends of the Reut Institute (AFRI). According to its public filings, AFRI sent almost $2 million to the Reut Institute in 2006 and 2007.

In addition to a state-sponsored international “sabotage” campaign, Reut also recommends a “soft” policy. This specifically involves better hasbara or state propaganda to greenwash Israel as a high-tech haven for environmental technologies and high culture — what it terms “Brand Israel.”

Other elements include “maintain[ing] thousands of personal relationships with political, cultural, media and security-related elites and influentials” around the world, and “harnessing Jewish and Israeli diaspora communities” even more tightly to its cause. It even emphasizes that Israel should use “international aid” to boost its image (its perfunctory foray into earthquake-devastated Haiti was an example of this tactic).

What ties together all these strategies is that they are aimed at frustrating, delaying and distracting attention from the fundamental issue: that Israel — despite its claims to be a liberal and democratic state — is an ultranationalist ethnocracy that relies on the violent suppression of the most fundamental rights of millions of Palestinians, soon to be a demographic majority, to maintain the status quo. There is no “game changer” in Reut’s new strategy.

Reut is apparently unaware even of the irony of trying to reform “Brand Israel” as something cuddly, while at the same time publicly recommending that Israel’s notorious spies “sabotage” peace groups on foreign soil.

But there are two lessons we must heed: Reut’s analysis vindicates the effectiveness of the BDS strategy, and as Israeli elites increasingly fear for the long-term prospects of the Zionist project they are likely to be more ruthless, unscrupulous and desperate than ever.

Ali Abunimah is co-founder of The Electronic Intifada and author of One Country: A Bold Proposal to End the Israeli-Palestinian Impasse.


February 16, 2010 Posted by | Ethnic Cleansing, Racism, Zionism, Solidarity and Activism | Comments Off on Israel’s new strategy: “sabotage” and “attack” the global justice movement

NYT Sees UN-Syria Conspiracy Theory

By Robert Parry | Consortium News | February 15, 2010

The New York Times simply refuses to deal with “enemy” Muslim states with any sense of objectivity or fairness, reaffirming its deep-seated bias again on Sunday with the publication of a one-sided article about the assassination of former Lebanese Prime Minister Rafik Hariri on its fifth anniversary.

The article entitled “A U.N. Betrayal in Beirut” by op-ed contributor Michael Young argues that the original United Nations-authorized Hariri investigation, which pointed the finger of guilt at the Syrian government and its Lebanese allies, was correct but was then undercut by U.N. officials for political reasons.

The hero of the Times op-ed is German prosecutor Detlev Mehlis, who headed the initial U.N. inquiry and was subsequently replaced by Belgian investigator Serge Brammertz, who is portrayed as an incompetent who squandered Mehlis’s supposedly courageous work. Young wrote:

“Mr. Mehlis had few doubts about Syria’s involvement, and said so in his first report. He asked for President Assad’s testimony (over Syrian protests), interviewed Syrian intelligence officers in Vienna and arrested suspects. When Mr. Mehlis stepped down from his position in December, 2005, he felt he had enough to arrest at least one of the intelligence officers.

“However, the investigation wilted under his successor. … Mr. Brammertz issued uninformative reports and displayed a lack of transparency that discouraged potential witnesses, unsure of whether he had solid evidence in hand, from coming forward; … he failed to follow through on the interviews with the Syrian officers; and though he met with President Assad, he apparently did not formally take down his testimony.”

Young’s narrative fits with the Times’ previous hostility toward the Syrians regarding the Hariri case and other issues, much as the Times regularly tilted its coverage against Iraq prior to the U.S.-led invasion in 2003 and currently slants its reporting against the government of Iran.

On the Hariri case, the Times would have its readers believe that U.N. leaders lost their nerve and dumped a brilliant prosecutor in favor of an incompetent to sabotage the case.

But what Young and the Times failed to disclose on Sunday was that Mehlis’s initial investigation amounted to a rush to judgment that relied heavily on two witnesses whose testimony was later discredited or retracted. His successor, Brammertz, had no choice but to retrace Mehlis’s steps because there had been so many slip-ups.

The murder mystery began on Feb. 14, 2005, when an explosion destroyed a car carrying Hariri through the streets of Beirut.

Because Syria was then on President George W. Bush’s hit list for “regime change” – and Syria was considered a front-line enemy of Israel – speculative evidence of Syrian guilt was an easy sell to the U.S. news media. When Mehlis’s preliminary report was issued, there was little U.S. media skepticism about its assertions of guilt regarding Syrian leaders and their Lebanese allies.

“There is probable cause to believe that the decision to assassinate former Prime Minister Rafik Hariri could not have been taken without the approval of top-ranked Syrian security officials and could not have been further organized without the collusion of their counterparts in the Lebanese security services,” declared Mehlis’s report on Oct. 20, 2005.

Despite the curiously vague wording – “probable cause to believe” the killing “could not have been taken without the approval” and “without the collusion” – Bush immediately termed the findings “very disturbing” and called for the U.N. Security Council to take action against Syria.

The U.S. press joined the stampede in assuming Syrian guilt. On Oct. 25, 2005, a New York Times editorial said the U.N. investigation had been “tough and meticulous” in establishing “some deeply troubling facts” about Hariri’s murderers. The Times demanded punishment of top Syrian officials and their Lebanese allies.

But Mehlis’s investigative report was anything but “meticulous.” Indeed, it read more like a compilation of circumstantial evidence and conspiracy theories than a dispassionate pursuit of the truth.

As a wealthy businessman with close ties to the Saudi monarchy, Hariri had many enemies who might have wanted him dead for his business or political dealings. The Syrians were not alone in having a motive to eliminate Hariri.

Indeed, after the assassination, a videotape was delivered to al-Jazeera television on which a Lebanese youth, Ahmad Abu Adass, claimed to have carried out the suicide bombing on behalf of Islamic militants angered by Hariri’s work for “the agent of the infidels” in Saudi Arabia.

However, Mehlis relied on two witnesses – Zuhair Ibn Muhammad Said Saddik and Hussam Taher Hussam – to dismiss the videotape as part of a disinformation campaign designed to deflect suspicion from Syria.

Mehlis then spun a narrative of a Syrian conspiracy to kill Hariri. Four pro-Syrian Lebanese security officials were jailed on suspicion of involvement in Hariri’s murder. Everything was falling neatly into place.

As a new U.S. press hysteria built over another case of pure evil traced to the doorstep of an American adversary in the Muslim world, holes in the U.N. report were mostly ignored. At, we produced one of the few critical examinations of what had the looks of a rush to judgment. [See’s “The Dangerously Incomplete Hariri Report.”]

A Case Crumbles

Much like the Bush administration’s Iraqi WMD claims – which the Times also touted uncritically – Mehlis’s Hariri case against the Syrians soon began to crumble.

One witness, Saddik, was identified by the German newsmagazine Der Spiegel as a swindler who boasted about becoming “a millionaire” from his Hariri testimony. The other one, Hussam, recanted his testimony about Syrian involvement, saying he lied to the Mehlis investigation after being kidnapped, tortured and offered $1.3 million by Lebanese officials.

Mehlis soon stepped down, as even the New York Times acknowledged that the conflicting accusations had given the investigation the feel of “a fictional spy thriller.” [NYT, Dec. 7, 2005]

Mehlis’s subsequent replacements backed away from his Syrian accusations. Brammertz began entertaining other investigative leads, examining a variety of possible motives and a number of potential perpetrators.

“Given the many different positions occupied by Mr. Hariri, and his wide range of public and private-sector activities, the [U.N.] commission was investigating a number of different motives, including political motivations, personal vendettas, financial circumstances and extremist ideologies, or any combination of those motivations,” Brammertz’s own interim report said, according to a U.N. statement on June 14, 2006.

In other words, Brammertz had dumped Mehlis’s single-minded theory that had pinned the blame on senior Syrian security officials. Though Syria’s freewheeling intelligence services and their Lebanese cohorts remained on everyone’s suspect list, Brammertz adopted a far less confrontational and accusatory tone toward Syria.

Still, the U.S. news media, which had played the initial Mehlis accusations against Syria as front-page news, barely mentioned the shift in the U.N. probe.
Virtually nothing appeared in the U.S. news media that would alert the American people to the fact that the distinct impression they got in 2005 – that the Syrian government had engineered a terrorist bombing in Beirut – was now a whole lot fuzzier.

Instead, it remained common practice for the New York Times and the rest of the mainstream U.S. news media to continue citing the Mehlis report and referring to “Syrian officials implicated in Mr. Hariri’s killing” without providing more context.

That pattern continued Sunday in Young’s article, with the online version linking to a 2005 story that trumpeted Mehlis’s initial report. Young and the Times cite no articles describing the subsequent collapse of Mehlis’s case.

Last year, the U.N. tribunal examining Hariri’s murder and other terrorist acts in Lebanon acknowledged that it lacked the evidence to indict the four Lebanese security officials who had been held without formal charges since 2005. Finally, Judge Daniel Fransen of a special international tribunal ordered the four imprisoned security officials released.

In a similar situation – say, one that involved a U.S. ally – the release would have been viewed as proof of innocence or at least the absence of significant evidence of guilt.

In this case, however, the New York Times refused to acknowledge the obvious fact that the case against Syrian complicity was weak. Instead, the Times framed the development as underscoring “the legal pitfalls of a divisive international trial.” [NYT, April 30, 2009]

That stubbornly one-sided approach has now extended to the fifth anniversary of the Hariri slaying. Instead of acknowledging the flaws in Mehlis’s initial findings – or recognizing how recklessly premature those accusations were – the Times is now promoting a conspiracy theory that U.N. officials willfully tanked the investigation.

Yet the only conspiracy that Young’s article seems to corroborate is the one in which the Times and its editors relentlessly portray Muslim governments that are out of Washington’s favor as the “bad guys.”


February 16, 2010 Posted by | Mainstream Media, Warmongering, Wars for Israel | Comments Off on NYT Sees UN-Syria Conspiracy Theory

Seeds of discontent: the ‘miracle’ crop that has failed to deliver

A new ‘ethical’ biofuel is damaging the impoverished people it was supposed to help

By Cahal Milmo and Andrew Wasley | The Independent | 15 February 2010

A “miracle” plant, once thought to be the answer to producing renewable biofuels on a vast scale, is driving thousands of farmers in the developing world into food poverty, a damning report concludes today.

Five years ago jatropha was hailed by investors and scientists as a breakthrough in the battle to find a biofuel alternative to fossil fuels that would not further impoverish developing countries by diverting resources away from food production.

Jatropha was said to be resistant to drought and pests and able could grow on land that was unsuitable for food production. But researchers have found that it has increased poverty in countries including India and Tanzania.

Millions of the plants have been grown in anticipation of rich returns, only for growers to be hit by poor yields, conflict over land and a lack of infrastructure to process the oil-rich seeds.

Oil giant BP, which planned to spend almost £32m on a joint venture to set up jatropha plantations, has now pulled out and the charity ActionAid today warns that jatropha needs to be cultivated on prime food-growing land to produce significant yields.

According to one estimate, up to one million hectares of jatropha – an area equivalent to Devon and Cornwall combined – are being cultivated around the globe, despite little evidence that it can produce enough oil to make the crop commercially sustainable.

Meredith Alexander, head of trade at Actionaid and co-author of its “Meals per Gallon” report, said: “Jatropha is a real gold-rush crop, and the same amount of common sense that applies in a gold rush has been applied to the jatropha rush.

“Jatropha was the subject of an explosion of fabulous propaganda. But this was an untried crop at commercial levels and the many thousands of marginal farmers who have gone into production have been experimented on with disastrous results. They are simply not getting the income they were promised and now cannot afford food for their families,” she said.

A native of central America, Jatropha curcus was brought to Europe in the 16th century and subsequently spread across Africa and Asia. Until recently, its few uses included a malaria treatment and an indigestion remedy.

But despite jatropha’s much-lauded ability to grow where food crops cannot flourish, campaigners say there is evidence that commercially viable yields can only be obtained in fertile soil.

In India, forecasted annual yields of three to five tonnes of seeds per hectare have been scaled back to 1.8 to two tonnes. The Overseas Development Institute, a leading international development think-tank, has stated that “as the mainstay of people’s livelihoods, jatropha looks distinctly marginal”.

ActionAid said its researchers found repeated cases of farmers being left with jatropha crops they could not sell and land previously used to grow food crops being taken over by sub-contractors who then employed locals on wages that could not compete with rises in the price of foodstuffs partially caused by biofuel production.

Raju Sona, a farmer in north-east India who gave up land that usually produces vegetables to grow jatropha, said: “No one will buy jatropha. People said if you have a plantation then surely you have a good market. But we didn’t see such a market. I threw the seeds away.”

A number of British companies are continuing to market jatropha as a “highly ethical and green” investment. One fund offers investors three packages for prices ranging from £7,500 to £15,600 in a brochure entitled “Money really does grow on trees”. That company says it has funded the planting of 32 million jatropha shrubs worldwide through a London-based provider called Carbon Credited Farming (CCF) Plc.

Jeff Reeves, head of global operations for CCF, which estimates it will have 300 million jatropha shrubs planted on 120,000 acres worldwide by the end of 2010, admitted that there had been problems establishing the crop.

He told The Ecologist magazine: “In many cases it is government policy and people that are to blame, rather than jatropha itself. Well-managed, jatropha … can work. But there have been countries where poor management has meant this is not the case.”

D1 Oils, a London-based biofuels company which has invested heavily in jatropha, insisted it was too early to write off the crop as a long-term biofuel source. But its former co-investor, BP, disagreed. A spokesman said: “As other [renewable fuel] technologies came up, we looked again at whether jatropha was going to be the best biofuel source that could be scaled up. There were problems with it. We have decided to look elsewhere.”

* Some of this research appeared in the Ecologist


February 16, 2010 Posted by | Economics, Science and Pseudo-Science | Comments Off on Seeds of discontent: the ‘miracle’ crop that has failed to deliver

Children as young as 12 arrested in night raids in Silwan, East Jerusalem

B’Tselem | February 16, 2010

B’Tselem recently uncovered a number of cases in which minors aged 12-15 from Silwan, in East Jerusalem, were arrested in the middle of the night by police officers and Israel Security Agency agents accompanied by armed border policemen. In four cases documented by B’Tselem, the minors were taken from their beds and homes and brought, their hands cuffed, to interrogation at the police station in the Russian Compound, in West Jerusalem. The parents of the children were not allowed to accompany them. The minors were then interrogated on suspicion of stone throwing. Testimonies given to B’Tselem indicate that, during the questioning, the interrogators beat and threatened them. The detention of one of them, a 14-year-old, was extended for seven days. The rest were released. There are indications that several other minors were similarly arrested and interrogated.

The ongoing friction between residents of Silwan and the settlers in nearby Beit Yehonatan and security personnel guarding it, in which context Palestinian children in the neighborhood throw stones at the building, is apparently the reason for the arrests.

The authorities’ treatment of the minors completely contravenes the Youth Law, as amended in 2008 (Amendment No. 14). Under the Law, a minor who is suspected of committing a criminal offense may consult as a rule, with a parent or other relative prior to being questioned, and the parent or relative may be present during the questioning. The Law also prohibits, other than in exceptional cases, questioning a minor at night, and states that, if the objective can be achieved in a less harmful way, the minor should not be arrested. In the present case, some of the parents were willing to undertake to bring the minors in the morning for questioning, and there was no need for the night operation.

The actions by the authorities severely violated the human rights of the minors, all of whom are Israeli permanent residents. A military-style operation conducted in the middle of the night, with the aim of detaining for interrogation minors aged 12-15 suspected of stone throwing is illogical and unjustifiable on any grounds. It is hard to believe that the security forces would have acted similarly with Jewish minors.

B’Tselem has sent urgent letters to the Jerusalem police commander, Maj. Gen. Ilan Franco, and to the head of the Department of the Investigation of Police, Herzl Shviro, calling for an end to police, ISA, and Border Police operations to detain minors in Silwan. If any child from the neighborhood is suspected of having committed a criminal offense, he can be summoned for questioning in the presence of an adult on his behalf. Also, the questioning must be conducted by youth interrogators.


February 16, 2010 Posted by | Civil Liberties, Subjugation - Torture | 1 Comment

Non-Violent Resistance

“Non-Violence is a powerful weapon that can and will weaken the iron fist of the Occupation”

By Sami Awad, Director of the Holy Land Trust | 15 Feb 2010

What is Non-Violent Resistance?

Non-Violence is an alternative to either armed resistance or passive acceptance of the status quo. It is both a strategy and a philosophy which rejects violence as a means to promote change, and instead aims to change power relations through assertive acts of omission (refusal to do something) or commission (actively challenging the status quo). It is a method by which to change the minds of both the oppressor and oppressed so that a new reality can be built upon different perceptions of the ‘other’.

The many tactics of non-violence can be broken down into three broad categories:

1) Civil Disobedience: when individuals or a group refuse to obey rules and laws, therefore undermining the power of the oppressor. For example refusing to respect laws prohibiting the gathering of people, or the waving of a flag as has been the case in Palestine.

2) Reverse Strike: Involves community building and the creation of alternatives, in order to make a people less dependent on the facilities of their oppressor. This can involve boycotts of the oppressor’s goods and services and the development of alternatives.

3) Direct Action: These are symbolic actions which are specifically directed to gain broad sympathy or express personal grief, opinions and commitment to a just cause. Direct action can take many forms along the spectrum between assertiveness and aggressiveness. For example a peaceful protest versus a group of individuals actively removing a roadblock or earth mound.

Successful non-violent campaigns are able to effectively utilize all three of these methods simultaneously.

non violent

Non-Violence in Palestine – Past and Present

Despite the common mischaracterization of Palestinian resistance as wholly violent or radical, there is a long and rich history non-violent actions and campaigns, as well as a large number of contemporary ones. For instance:

In 1902, the inhabitants of three Palestinian villages – al-Shajara, Misha and Melhamiyya – held a collective peaceful protest against the takeover of 70,000 dunums (7,000 hectares) of agricultural land by the first European Zionist settlers.

In 1936 Palestinians held a six-month non-violent industrial strike against the British Mandate’s refusal to grant self determination to Palestine. The ultimate aim of the strike was to make Palestine ungovernable by anyone but the Palestinians themselves.

Fifty years later, in 1986, Hannah Siniora, then editor of the East Jerusalem Arabic Daily, called for Pales-tinian civic disobedience by boycotting Israel-made cigarettes. This led to a full-scale Palestinian boycott of Israeli soap, food, water, clothes and other consumer goods.

The 1987-1993 First Intifada was largely conducted non-violently. Palestinians held mass public demonstra-tions, refused to pay taxes, and sought out local alternatives to Israeli facilities. Community leader Mubarak Awad initiated olive tree planting on Palestinian land about to be confiscated by Israeli settlers. Israeli law prohibited any construction on land dedicated to growing fruit. Awad used non-violent resistance, and Israel’s own laws, to challenge the encroaching settlements.

Currently, and especially since construction of the separation Wall began on June 16th 2002, Palestinian villages across the West Bank have cooperated in non-violent resistance. The communities of Jayyous, Budrus, Bil’in, Ni’lin and Umm Salamonah have all non-violently resisted the Wall being built around them. Weekly non-violent demonstrations against the Wall are held in the cities of Bil’in and Nihlin (north of Ramallah) which bring together Palestinians and Israelis, as well international activists.

The Logic of Non-Violent Resistance

The logic of a non-violent strategy to resolve the Israeli-Palestinian conflict is simple. Turning this knowledge into a practical campaign effective in achieveing Palestinian goals is much more difficult. Practically, a non-violent strategy allows for a broader and therefore larger participation among the citizenry than armed conflict does. This was true in the First Intifada – largely credited with empowering civil society, women, as well as the young and old. The players in the Second Intifada, on the other hand, were restricted to their ability and willingness to fight violently.

Secondly, by unilaterally removing violence from one side of the equation, there is the possibility of transforming the perception of victimhood within Israel and the international community, which could in turn affect policy. Looking back through this book, it is clear that Palestinians and Israelis live in a rather assymmetric world, and that this conflict disproportionately affects Palestinians. Yet in the minds of Western Europeans and Americans especially, the perception of Palestinians has been shaped more by the sporadic acts of terror, rather than by the accumulation of suffering wrought by occupation.

Israel’s Response to Non-Violence

Israeli, Palestinian and international human rights organizations routinely catalogue, and often film, Israel’s response to non-violent actions. The response usually consists of using overwhelming force to disburse crowds.

Most typically, Israel employs tear gas, concussion grenades and rubber bullets to do so, but on many documented occasions they have employed live ammunition, and most recently have begun showering protesters with a mixture of sewage water and chemicals from nearby settlements. The saddest part of this response is the effect that it has upon the non-violence movement in general. The fact that protesters have been literally showered in sewage, beaten and sometimes killed in the daily or weekly events, reaffirms the notion amongst those most skeptical of a peaceful strategy that ‘Israel only responds to violence’.

This perception is further strengthened by the lack of accountability laid upon those soldiers and their commanders who routinely sidestep the law in their use of force. Rarely, if ever, has anyone been punished; and never have these punishments made their way up the ranks or into the realm of those who design policies. This lack of accountability has endowed soldiers with a sense of immunity from their actions; a perception which no doubt adds to their willingness to utilize force – even when unneccessary.

This last summer the small village of Ni’lin north of Ramallah began to organize weekly, and sometimes daily demonstations against the encroaching wall. On July 29th, the ten year old unarmed Ahmed Hassan Yusef Musa was struck in the head by a rubber bullet and killed at one such demonstration. The following day, at Ahmed’s funeral – turned demonstration, 19 year old Yusuf Ahmad Amira was shot dead by the IDF. Neither case has resulted in punishment.

This is the same village where a 17 year old girl Salaam Kanan was able to capture video footage of a bound and blindfolded Palestinian man being shot at point blank range by a soldier a few feet from his commanding officer. This particular case received alot of attention; however, Israeli, Palestinian and international human rights organizations insist that many more incidents like this take place when no cameras are present.


February 16, 2010 Posted by | Solidarity and Activism | Comments Off on Non-Violent Resistance

Don’t Worry About Dependence on Foreign Oil

By Ivan Eland | September 1, 2008

Politicians regularly turn public fear into votes. President Bush proved a master at this in his 2004 reelection success. Most presidents who don’t win the popular vote the first time don’t get a second term, but fear pushed Bush over the top in 2004.

In the 2008 election, oil prices are high, and the presidential candidates from both parties are trying to get into the White House by fear mongering about U.S. dependence on foreign oil. Barack Obama and John McCain both seem to think such dependence is a bad thing, and the American public wholeheartedly agrees. Because almost everyone concurs (except many economists) on this questionable proposition, the debate on high oil prices and what to do about them degenerates from there.

The facts are that oil prices are high by historical standards (although at this writing, they have declined somewhat from their peak, and the media has provided less coverage of this downward slide than it did of their upward movement) and the United States imports about two-thirds of the crude oil that it consumes.

In the globalized world, however, the United States is heavily dependent on imports for many important necessities and products – for example, semiconductors. International trade allows U.S. companies and the American public to take advantage of the world market to get better goods at cheaper prices. Thus, when politicians generate fear of U.S. dependence on foreign oil, they are implicitly alleging that oil is somehow special. Oil is heavily used in transportation and the manufacture of such industrial items as petrochemicals and plastics. Yet to use the example of semiconductors mentioned above, imported semiconductors also are key component parts of important items throughout the economy – for example, computers, television sets, other electronic devices, cars, etc. Therefore, the politicians are not only implying that oil is special, but that it is also “strategic.”

Oil is strategic, however, only in the narrow sense that its derivatives help run tanks, aircraft, ships, helicopters, and other vehicles that the U.S. military would use in a war. (Of course, so do semiconductors.) But the United States produces about 1.8 billion barrels of oil annually, almost 13 times what the U.S. military used at the height of its consumption during the latest simultaneous wars in Iraq and Afghanistan (144 million barrels per year). Thus, there is plenty of domestically produced oil to run the U.S. military in times of war.

With the probability of any worldwide conventional war among great powers escalating into a global thermonuclear holocaust being quite high – in which case nobody would be caring about the vaporized imported oil – such a widespread conventional conflict is very unlikely. Thus, in any regional war, the U.S. economy would be able to get oil from the regions of the world not involved in the conflict. The price might go up because of the war, but industrial economies are actually quite resilient to oil price increases. For example, the U.S. economy has not collapsed in the wake of recent record oil prices, and from late 1998 to late 2000, Germany maintained respectable economic growth rates in the face of a 211 percent price increase in oil.

But what if the war occurred in the volatile Persian Gulf region? The United States only gets 21 percent of its oil from the Persian Gulf. Most of it comes from Canada, Mexico, Nigeria, and Venezuela. Of course, a war anywhere in the world will cause the price of oil to go up. But about 80 percent of U.S. semiconductor imports come from East Asia, yet the media doesn’t constantly run hysterical stories on price spikes in semiconductors or on the horrible U.S. dependence on East Asian semiconductors. And the politicians don’t talk about using the U.S. military to safeguard such supplies from East Asia.

But can’t the world run out of oil, especially with developing nations, such as China and India, using more? Theoretically, the answer is yes because there are only finite deposits in the earth. Yet because exploration and recovery technology is constantly improving, proven oil reserves have tended to increase over time. Also, as oil prices go up, conservation increases and alternative energy sources – natural gas, solar, geothermal, etc. – become more attractive economically. For example, the conventional wisdom was that U.S. natural gas fields were in irreversible decline, but the high price of oil has led to a drilling boom to find more of this substitute. New technology to extract natural gas from shale beds has increased production in the U.S. dramatically and will probably also do so around the world. So who knows, similar technological leaps might also increase the amount of recoverable oil around the world.

But one thing is sure: it’s a myth that being dependent on imported oil is bad. As a way to stump politicians who perpetuate this nonsense, perhaps we should ask them this question: If oil is so critical and will become even more valuable when world supplies allegedly dwindle in the future, shouldn’t we use other countries’ oil now and have the U.S. government require that our limited production be saved to use or sell as the shortages worsen and future prices go even higher? Diametrically opposed to the present time, with the prevalent fears of dependency on foreign oil, this “conservation theory” was all the rage in the late 1930s and 1940s when a slowdown in finding new oil deposits seemed to threaten chronic future shortages (similar to the dire predictions after World War I and in the early 1920s before big oil discoveries were made late in the 1920s).

Of course, this is not the right policy prescription either. We should instead treat oil as any other product and let the market provide ample supplies at the lowest cost to the consumer.


February 16, 2010 Posted by | Malthusian Ideology, Phony Scarcity, Timeless or most popular, Wars for Israel | Comments Off on Don’t Worry About Dependence on Foreign Oil

E-book on Jewish National Fund’s role in colonization of Palestine released

Press release, Scottish Palestine Solidarity Campaign, 16 February 2010

The Scottish Palestine Solidarity Campaign has published an e-book on the Jewish National Fund (JNF) that meets a need for an affordable introduction to the activities of the JNF, an organization supported financially by the British taxpayer but whose activities in Israel/ Palestine are politically-driven, and whose politics are nakedly racist. This little book reveals how a British charity works openly for the dispossession of Palestinian Arabs and the establishment of fully segregated Jewish-only communities and areas that exclude Arabs.

The book explains why, when the JNF Committee sought legal advice from England in 1905 as to the possibility of registering as a charity, their legal advisors were unanimous that it would be impossible:

“We therefore conclude that the purpose of the Fund will be a political rather than a charitable one and that limiting the Fund’s use to strictly charitable purposes would run counter to the main purpose of the Fund …”

The JNF initially failed to secure charitable status, being refused by the House of Lords in 1932, but it now enjoys charitable status for activities that would be illegal if carried out in the countries where it raises the funds, including the UK where the JNF enjoys the patronage of Prime Minister Gordon Brown and the leaders of the other two main political parties.

Edited by Mortaza Sahibzada, JNF: Colonising Palestine since 1901 is available for download from the Scottish Palestine Solidarity Campaign.

Ilan Pappe’s introduction reveals through the open commitment of the JNF’s founders to the expulsion, what is today termed “ethnic cleansing,” of the native Palestinians and their replacement by Jewish immigrants. Pappe discusses the JNF’s success in obtaining much of the land pillaged from the Palestinians by the Zionist militias through murder and violence in 1948 and its effective control of much more through its role as an agent of the State of Israel in keeping almost all the land surface of Israel for exclusively Jewish ownership at the expense of Israel’s one million Palestinian citizens. The author shows the JNF’s audacity in presenting itself as a “green” movement as it plants trees with the express aim of obliterating all traces of ethnically cleansed and destroyed Palestinian communities.

Abe Hayeem of Architects and Planners for Justice in Palestine analyses the intense politicization of Israeli architects and their complicity in Zionist war crimes. While the JNF was intimately involved in the racially-driven confiscation of Palestinian lands, architects also worked easily in the nightmare world of legally-designated “Present Absentees,” i.e. Palestinians still inside Israel after 1948 but whose land was slated for transfer to exclusively Jewish ownership. Bringing the story up to date, Hayeem notes the JNF’s involvement in illegal confiscation operation on behalf of the Israeli state, in collusion with illegal settlers in the occupied West Bank, the intimidation of Palestinian land-owners by Jewish authorities, and the complicity of the country’s architects in racist schemes to oppress and dispossess Palestinians.

Uri Davis examines the British Park, proclaimed in a sign there as “a gift of the Jewish National Fund of Great Britain.” The British Park is built on the ethnically cleansed Palestinian villages of Ajjur and Zakariyya, making the UK JNF complicit in war crimes and unfit for charitable status on grounds of multiple violations of international humanitarian law. Astonishingly, Prof. Davis alleges that the British Park is used to store some of Israel’s nuclear weapons of mass destruction.

Susannah Tarbush looks at Gordon Brown’s decision to become a Patron of the JNF on his arrival in 10 Downing St, shortly after the Israeli Knesset passed a racist law confirming the apartheid nature of JNF-controlled lands in Israel, forbidding their transfer to any non-Jew. She deals with the petition from Architects and Planners for Justice in Palestine and the inevitable accusation from Israelis that the British architects who criticized the JNF’s involvement in human rights violations as “anti-Semitic.”

Sonia Karkar criticizes Australian PM John Howard for allowing a JNF park to be named after him in the Negev, where the Israeli system of apartheid takes the form of forcing the local Bedouin Arabs off their land and into villages that the government they are citizens of refuses to recognize or supply with basic services. The John Howard Park shares the Negev with Government crop-spraying aircraft which destroy the Bedouin’s crops.

Ben White, author of Israeli Apartheid: A Beginner’s Guide, tackles the Kafka-esque mind-game of an Israeli park being dedicated to Black civil rights leader Martin Luther King, the non-Jewish property owners being categorized as “present absentees,” and the fruits of Zionist ethnic cleansing supposedly “perpetuating the message of equality and peace.” White shows how the attempt to associate the Zionist colonial venture with the US civil rights movement comes up against the harsh reality of Israeli ethnic cleansing with the JNF center stage.

In similar vein, Raheli Mizrahi argues that the Venezuelan and Bolivian governments should take action against their local JNF bodies and deny the Israelis the ideological cover provided by their appropriation of the symbols of the anti-colonial struggle in South America. She touches on the sometimes cruel treatment of Arab, notably Yemeni, Jews in Israel.

The authors of the closing remarks section report on the intra-Zionist discussions at a London JNF fundraiser before their vocal protest at the JNF’s ongoing land theft and racism.

Seven appendices contain important documents relating to the struggle to end the impunity the JNF derives from official support in many countries.

Download the full report [PDF]


February 16, 2010 Posted by | Ethnic Cleansing, Racism, Zionism | Comments Off on E-book on Jewish National Fund’s role in colonization of Palestine released

Tom Friedman’s Peak Confusion

Twisted Energy Politics

By ROBERT BRYCE | February 16, 2010

When it comes to energy issues, Thomas Friedman simply doesn’t care about the facts.

That reality was made apparent, once again, in Friedman’s column in the February 10 issue of the New York Times. In an otherwise mostly sensible article, written from Yemen, where Friedman was talking about the need for proper educational opportunity in the Arabic and Islamic worlds, Friedman concluded that the US will have to maintain a strong military presence in the region in order to counter al-Qaeda. But he continues, we also must “help build schools and fund scholarships to America wherever we can. And please, please, let’s end our addiction to oil, which is what gives the Saudi religious ministry and charities the money to spread anti-modernist thinking across this region.”

Friedman has been bashing the Saudis for so long, it’s hardly worth recounting the many instances where he does so. But the fact that Friedman once again trots out the tired cliché of our “addiction to oil” and that he then immediately ties that issue to the Saudis shows that he simply doesn’t know what he’s talking about. Rather than stick to the facts, he retreats to a mindless slogan that contributes nothing to the need for a broader discussion of energy policy and the reality of the global marketplace.

The US could quit buying oil tomorrow, all oil, and it won’t put the Saudis out of business. According to the EIA, in 2008, the Saudis exported an average of 8.4 million barrels of oil per day. Of that quantity, the US accounted for about 1.5 million barrels per day.

Thus, even if the US somehow managed to segregate Saudi crude from its other oil imports, and also prevented the Saudis from selling that 1.5 million barrels per day somewhere else, Saudi Arabia would still be selling about 7 million barrels of oil on the global market. Needless to say, that 7 million barrels per day will bring the kingdom a fair bit of revenue.

Of course, Wednesday’s column isn’t the first time Friedman has shown that he cares more about polemics than facts. In August 2008, he held up Denmark as an energy model that should be copied by the US. In the wake of the 1973 Oil Embargo, Friedman claims that Denmark “responded to that crisis in such a sustained, focused and systematic way that today it is energy independent.” Friedman went on to lament America’s situation, writing that if “only we could be as energy smart as Denmark!”

Wrong. Wrong. Wrong.

Friedman clearly loves the idea of energy independence, but the data shows that Denmark is not energy independent – it’s not even close. The Danes import all of their coal. I repeat, Denmark imports all of its coal. Furthermore, those coal imports – and coal consumption – show little sign of declining even though Denmark’s wind power production capacity has increased rapidly over the past few years. And Denmark is even more dependent on coal than the US! (1)

Nor did Friedman bother to mention that thanks to the Danish government’s exorbitant taxes, the Danes now have some of the world’s most expensive electricity and most expensive motor fuel.

In 2006, the Energy Information Administration looked at residential electricity rates in 65 countries and found that Denmark’s rates were the highest, by far, at some $0.32 per kilowatt-hour. That was about 25% higher than the electricity costs in the Netherlands, which had the next-highest rates in the survey, at $0.25 per kilowatt-hour. And that’s not a new phenomenon. From 1999 through 2006, Denmark had either the highest – or the next-highest – electricity rates of the countries surveyed by the EIA. (In 1999 and 2000, Japan’s electricity rates were slightly higher than those in Denmark.)  Furthermore, Denmark electricity rates are the highest in Europe – and no other country comes close. (2)

In 2008, electricity rates were even higher, with Danish residential customers were paying $0.38 per kilowatt-hour – or nearly four times as much as US residential customers who were paying about $0.10 per kilowatt-hour. And the Danes were paying more than twice as much as their counterparts in nuclear-heavy France, where residential electricity costs were $0.17 per kilowatt-hour.

While Danish homeowners are getting spanked by expensive electricity, Danish motorists are getting absolutely mugged at the service station. In late 2008, Danish drivers were paying $1.54 per liter for gasoline, while drivers in the U.K. were paying $1.44 and US motorists were paying $0.56. According to GTZ, an agency of the German government, only a handful of countries have more expensive fuel than Denmark, a list that includes Italy, Norway, Turkey and Germany.

Unfortunately, Friedman’s polemics on energy are nothing new. Back in 2006, Friedman published a column in the Times saying that the U.S. should build a wall around itself. “Build a virtual wall. End our oil addiction.” Getting rid of our need for oil will, he wrote, “protect us from the worst in the Arab-Muslim world….These regimes will never reform as long as they enjoy windfall oil profits.” The solution, he declared is for America to build “a wall of energy independence” around itself. Doing so, “will enable us to continue to engage honestly with the most progressive Arabs and Muslims on a reform agenda.”

Remember that this is the same Friedman, who, in his 2005 best-selling book, The World is Flat, declared that the world was increasingly globalized and the implications of that were obvious. In this new “flat” world, money, jobs, and opportunity, Friedman said, will “go to the countries with the best infrastructure, the best education system that produces the most educated work force, the most investor-friendly laws, and the best environment. (3)

Hmmm. So doesn’t that also mean that in our new “flat” world, that energy will be exported by the countries that have the best infrastructure for providing that energy to the world market?

Friedman’s problem is that he wants it both ways: he espouses the merits and potential of the new flat world, while also insisting that the US should withdraw into energy isolationism, and thereby surrender any participation in the world’s single biggest industry, the global energy sector. The irreconcilable contradictions in Friedman’s arguments are easily seen in the penultimate paragraph in The World is Flat where he claims that the “two greatest dangers we Americans face are an excess of protectionism – excessive fears of another 9/11 that prompt us to wall ourselves in, in search of personal security – and excessive fears of competing in a world…that prompt us to wall ourselves off, in search of economic security. Both would be a disaster for us and for the world.”

So, to summarize Friedman’s world view, he wants a “wall of energy independence” around America while simultaneously warning Americans that the two greatest dangers are a) walling “ourselves in” and b) walling “ourselves off.”

Friedman sees a flat world where walls are dangerous because they will isolate the US from other countries. But when it comes to energy, walls are good because they isolate the US from other countries. Oh, and along the way, we need to bankrupt the Saudis, because, well, they might give money to people who don’t think like we do.

Is anyone else here confused?

Robert Bryce’s fourth book, Power Hungry: The Myths of “Green” Energy and the Real Fuels of the Future, will be published in April.


(1) BP Statistical Review of World Energy. In 2007, Denmark got 26% of its primary energy from coal while the US got 24.3%.

(3) Yale Global Online, “’Wake Up and Face the Flat Earth’ – Thomas L. Friedman,” April 18, 2005. Available:


February 16, 2010 Posted by | Economics, Malthusian Ideology, Phony Scarcity, Wars for Israel | 1 Comment

Some thoughts on Ethan Bronner at the New York Times

By Jonathan Cook | 12 February 2010

The revelation that the son of Ethan Bronner, the New York Times’ Jerusalem bureau chief, is serving in the Israeli military has highlighted an issue that should have been in the spotlight long ago. Ali Abunimah makes some important points about the NYT’s coverage of the Middle East on the Mondoweiss site. Although the paper has a Palestinian reporter in Gaza, Abunimah notes:

“[Taghreed] Khodary is allowed to report only on Palestinians. Neither she nor any other Arab reporter is allowed to report on Israeli Jews. While Jews/Americans may report on Palestinians, the converse is not true. Why is this? It must be – I assume – because there is an inherent, perhaps unacknowledged assumption that an Arab/Palestinian is or will be automatically biased against Israelis/Jews. Whereas, we are supposed to accept that in no case is a Jewish reporter who identifies with Israel biased even when his son has joined an occupation army that is raiding Palestinian refugee camps and communities dozens of times per week.”

Abunimah is right: there is a very strong assumption among editors in the Western media about who should be allowed to cover the Israeli-Palestinian conflict and in what ways. But actually the bias in the Western media runs much deeper than Abunimah allows.

Those who seek to defend Bronner’s continued posting in Jerusalem, despite the obvious – some might say, ultimate – conflict of interest, argue that there are at least as many, if not more, Palestinian journalists covering the region for the Western media as there are Jews and Israelis. That may be true in a literal sense but, because the argument implies that Palestinian journalists are the ones shaping the news agenda, it is entirely misleading. It ignores the reality of how Western news organisations operate in places such as the Middle East. Inadvertently, Abunimah risks creating much the same impression with his reference to Taghreed Khodary’s reporting from Gaza — a posting that can be credited not to the NYT’s policy of diversity among its reporting staff but to the simple fact that Israel’s severe restriction on journalists entering the Strip has left the paper with little choice but to hire one of the “natives”.

What needs emphasising is that Palestinians working for the Western media do not have anywhere near the same standing, or influence, as reporters like Bronner or his Jewish-Israeli colleague in Jerusalem, Isabel Kershner. The vast majority are essentially gofers, even if there is a discernible hierarchy: some are known as “fixers” because they speak the local language, have good contacts, and can set up meetings and translate for the star reporter; others, working for the wire agencies, are fact-collectors (often known as “stringers”), sending information from their localities that is then processed in the bureau’s head office in Jerusalem or Tel Aviv; and finally there are a tiny number of very lucky Palestinians, called “super-stringers”, like Khodary, who get a mention in the byline.

In all these examples the Palestinian reporters have no meaningful control over the news agenda of the media outlet that employs them. That agenda is set either by the imported star reporter or by the editors far away in head offices in New York, Washington, London, and so on. That relationship of master-servent is clearest in the case of the fixer, whose job is to arrange whatever it is that the star reporter wants.

Similarly, the wire agencies rely on dozens of Palestinian fact-collectors, or stringers, dotted all over the West Bank and Gaza to supply them with a constant flow of local stories. A stringer might send a tip-off to his editors that a tank has just fired at a building in his village, killing a family of five. He will get the victims’ names and ages, and maybe provide a brief description of what happened, and phone it in to the head office. Often there will be little or no interest, or it will be run as small news item (a brief) offering nothing more than the bare facts. If there is more interest, it will probably be written, or “packaged”, by a reporter or editor in the head office, in Jerusalem or Tel Aviv, usually heavily staffed with Israelis and / or Jews. The editors, for example, decide if the firing of the tank shell is to be described as an act of “provocation” or “retaliation”. We know from experience which description they usually prefer.

The story reaches the pages of the NYT only if it fits its news agenda or if it is related to something the star reporter is covering. Again, how these facts are presented to the outside world is almost entirely outside the control of the fact-collector.

Similarly, super-stringers like Khodary have limited influence over the news process in which they take part. To have reached the status of super-stringer, they must have shown that they understand very precisely what is expected of them, what language is used (eg. “fence” or “wall”; “illegal settlement” or “disputed neighbourhood”), what stories are covered and which angles are preferred. In most cases, they will be told what story the editors want from them rather than initiate the story. Their job is often to retell a report from the wire agency, using their own contacts and knowledge to give “added value”. In the main, this is quite unlike Bronner’s role: usually he will advise his editors which topics are important and select his own angles. The difference of status between the “star reporter” and the “super-stringer” is similar to that between a tenured professor and a supply teacher.

A further point worth noting is that Abunimah’s list of recent Jewish / Israeli reporters covering the conflict for the NYT is, as far I know, not exhaustive. My impression is that most of the NYT’s senior reporters over the past two decades have been Jewish or Israeli. Like Abunimah, I am uncomfortable judging a journalist’s record of reporting based on his or her ethnic identification. But these scruples should not blind us to the danger that the apparent long-term structural bias in the NYT’s selection processes may have contributed significantly to distorting Western understanding of what is going on in the conflict. The consistent favouring of Jewish reporters for the Israeli-Palestinian beat needs explaining by the editors of the NYT. This is especially true given my first point about the lack of Palestinian, or Arab, reporters who have any real input into the news-gathering processes of the Western media.

Should there not be concerns about balance, or the appearance of balance, in simple quantitative terms in the NYT’s selection of reporters dealing with such a contested subject? If there are two senior reporting posts at the NYT’s Jerusalem bureau, is it defensible to have them both occupied by Jews and / or Israeli Jews? If Jews are better able to use their connections to cover Israeli and Jewish issues (one argument being put forward), is not the converse true? Would Palestinians not be able to cover some issues in the conflict more authentically and convincingly than Jewish reporters? Should Jews be restricted to covering Israeli stories, and Palestinian to covering Palestinian stories? And if we recoil from that thought, what does that tell us about the current reality in which only Israelis and Jews get to set the news agenda at the NYT (and many other media) for both sides of the conflict?

It is about time we saw a little more transparency and self-reflection from the editors of the New York Times.


February 16, 2010 Posted by | Mainstream Media, Warmongering | 1 Comment

Goldman Goes Rogue – Special European Audit To Follow

The Baseline Scenario | February 14, 2010

At 9:30pm on Sunday, September 21, 2008, Goldman Sachs was saved from imminent collapse by the announcement that the Federal Reserve would allow it to become a bank holding company – implying unfettered access to borrowing from the Fed and other forms of implicit government support, all of which subsequently proved most beneficial.  Officials allowed Goldman to make such an unprecedented conversion in the name of global financial stability.  (The blow-by-blow account is in Andrew Ross Sorkin’s Too Big To Fail; this is confirmed in all substantial detail by Hank Paulson’s memoir.)

We now learn – from Der Spiegel last week and today’s NYT – that Goldman Sachs has not only helped or encouraged some European governments to hide a large part of their debts, but it also endeavored to do so for Greece as recently as last November.  These actions are fundamentally destabilizing to the global financial system, as they undermine: the eurozone area; all attempts to bring greater transparency to government accounting; and the most basic principles that underlie well-functioning markets.  When the data are all lies, the outcomes are all bad – see the subprime mortgage crisis for further detail.

A single rogue trader can bring down a bank – remember the case of Barings.  But a single rogue bank can bring down the world’s financial system.

Goldman will dismiss this as “business as usual” and, to be sure, a few phone calls around Washington will help ensure that Goldman’s primary supervisor – now the Fed – looks the other way.

But the affair is now out of Ben Bernanke’s hands, and quite far from people who are easily swayed by the White House.  It goes immediately to the European Commission, which has jurisdiction over eurozone budget issues.  Faced with enormous pressure from those eurozone countries now on the hook for saving Greece, the Commission will surely launch a special audit of Goldman and all its European clients.

This audit should focus on ten sets of questions.

  1. Which eurozone governments have worked with Goldman, and on what basis, over the past decade?  All actions prior to and after the introduction of the euro need to be thoroughly reexamined.
  2. What transactions has Goldman facilitated and how has that affected the reporting of European government debt?  (Under the Maastricht Treaty, eurozone government debt is not supposed to exceed 60 percent of GDP.)
  3. In the case of Greece, the accusation is that Goldman deliberately and in a premeditated manner conspired to hide the true degree of government debt.  Is this true, and to what extent has Goldman helped other countries engage in similar transactions, e.g., countries now seeking entry to the eurozone?
  4. What is the full extent of Greek and other government liabilities, if these are accounted for properly?  Without this reckoning, it is impossible to design a proper level of European Union (or any other) support for weaker eurozone countries.
  5. Are there non-eurozone countries that have also been aided and abetted by Goldman in this fashion?  For example, are the UK and Switzerland implicated – and thus endangered?
  6. Has Goldman extolled the virtues of government debt in Greece, or other countries, while at the same time helping to deceive investors on the true risks inherent in those debts?  What were Goldman’s own holdings of these securities?
  7. Is there evidence that Goldman has structured similar transactions for the private sector – enabling companies to conceal the level of their true indebtedness?  Have securities issued by such firms also been endorsed by Goldman to the buying public?
  8. Were Goldman’s US-based supervisors aware of Goldman’s activities in Greece and other eurozone countries?  Did they condone activities that undermine the integrity of the European Union?
  9. Where was the European Central Bank while all of this was happening?  Has the ECB become dangerously enraptured with the new Wall Street and its “techniques”?
  10. Did any responsible official really think that what Goldman was constructing was really some sort of productivity-enhancing financial innovation – as opposed to a sophisticated form of scam?

The Federal Reserve must cooperate fully with this investigation.  Ordinarily, the Fed might be tempted to sit on useful information, but they can now feel themselves in Senator Bob Corker’s crosshairs.  Republican Senator Corker is willing to cooperate with Senator Dodd on financial sector reform, opening up the possibility of legislation that will pass the Senate, but he wants the Fed to lose its supervisory powers.  If the Fed refuses to help – willingly and fully – the European Commission with bringing Goldman to account, that will just strengthen the hand of Senator Corker and his allies.

If the Federal Reserve were an effective supervisor, it would have the political will sufficient to determine that Goldman Sachs has not been acting in accordance with its banking license.  But any meaningful action from this direction seems unlikely.

Instead, Goldman will probably be blacklisted from working with eurozone governments for the foreseeable future; as was the case with Salomon Brothers 20 years ago, Goldman may be on its way to be banned from some government securities markets altogether.  If it is to be allowed back into this arena, it will have to address the inherent conflicts of interest between advising a government on how to put (deceptive levels of) lipstick on a pig and cajoling investors into buying livestock at inflated prices.

And the US government, at the highest levels, has to ask a fundamental question: For how long does it wish to be intimately associated with Goldman Sachs and this kind of destabilizing action?  What is the priority here – a sustainable recovery and a viable financial system, or one particular set of investment bankers?

To preserve Goldman, on incredibly generous terms, in the name of saving the financial system was and is hard to defend – but that is where we are.  To allow the current government-backed (massive) Goldman to behave recklessly and with complete disregard to the basic tenets of international financial stability is utterly indefensible.

The credibility of the Federal Reserve, already at an all-time low, has just suffered another crippling blow; the ECB is also now in the line of fire.  Goldman Sachs has a lot to answer for.

By Simon Johnson


February 16, 2010 Posted by | Corruption, Economics | Comments Off on Goldman Goes Rogue – Special European Audit To Follow