Who’s behind the Gates memo leak?
By Paul Woodward on April 18, 2010
The New York Times reports on a “secret three-page memorandum” that Defense Secretary Robert Gates sent to National Security Adviser Gen James Jones in January, warning that “the United States does not have an effective long-range policy for dealing with Iran’s steady progress toward nuclear capability,” according to unnamed officials who leaked the information.
The narrative line here which is presumably the line which was being fed to the New York Times‘ ever-obliging reporters, was that the there are gaps in the US strategy for dealing with Iran’s nuclear ambitions. It’s far from clear that this was actually the thrust of Gates’ memo.
[I]n his memo, Mr. Gates wrote of a variety of concerns, including the absence of an effective strategy should Iran choose the course that many government and outside analysts consider likely: Iran could assemble all the major parts it needs for a nuclear weapon — fuel, designs and detonators — but stop just short of assembling a fully operational weapon.
In that case, Iran could remain a signatory of the Nuclear Nonproliferation Treaty while becoming what strategists call a “virtual” nuclear weapons state.
To say that the US lacks a strategy here, is itself a statement so vague as to be meaningless. It lacks a strategy to prevent Iran becoming a virtual nuclear state? Or it lacks a strategy for dealing with Iran in such an eventuality? Or it lacks a strategy for dealing with the fact that it may not actually know whether Iran has acquired this form of nuclear capability?
There is no indication in this account that the New York Times reporters saw the memo (and it seems reasonable to infer that they did not), so as is so often the case, it’s likely that the most significant detail in this story is the one that will not be revealed: the identity of the senior official who is the primary source of the narrative.
Was it Dennis Ross? He’d certainly fit the profile of someone in the administration who probably feels like it’s time to change the subject and shift attention away from Israel and back to Iran. As another US official recently told Laura Rozen, “He [Ross] seems to be far more sensitive to Netanyahu’s coalition politics than to U.S. interests.”
Background:
Who Is Dennis Ross? – Aletho News | March 8, 2009
Israel is debated at California Democratic convention, Harman walks out in huff
Marcy Winograd
By Philip Weiss on April 19, 2010
We often note the news that Democratic rank-and-file support for Israel is fading. Well, the California State Democratic Convention yesterday endorsed Congresswoman Jane Harman for reelection from a district around Los Angeles, but before it did so, Harman and her opponent, Marcy Winograd, both appeared before a progressive caucus at the convention, and argued Israel. The Fresno Bee calls the fight the “flashpoint” of the convention. Peggy McCormack, a delegate to the convention, says that the story will be covered today on Pacifica radio, KPFA, 10 am PST. Meantime, her report:
Jane Harman and Marcy Winograd managed to squeeze in a debate of sorts before a couple hundred Progressive Caucus delegates at the Democratic Convention. Marcy herself brought up Israel in order to distance herself from Harman. I never thought I’d hear a candidate talk about brutal occupation, lack of water, unnecessary continuous deaths and lack of democracy. Harman in response called Marcy an extremist who wants to get rid of Israel, and Marcy shot back with a democratic state from the Mediterranean to the Jordan River. This got a standing ovation. And, Harman stood up and said she did not go to the caucus to debate and strode out. Unbelievable. We collected enough signatures to get Marcy’s signature to the floor of the convention, whereupon the vote was done in a strange but legal way with party workers counting the people holding up cards, and of course Harman won. When we called for a recorded vote, John Burton, the party chair, snarled something or other about Marcy should organize better. Clearly Marcy won the standing vote (we all waved our delegate badges) but we had not done our homework to jump at the mike and call for a recorded vote. Doesn’t matter, the point will not be lost on the lobby.
Venezuelan Consulate in Puerto Rico accused of financing political group
El Universal | April 16, 2010
Roberto Arango, a Senator for the New Progressive Party, accused on Thursday night the Venezuelan Consulate in San Juan of financing left-wing groups in Puerto Rico, specifically the Caribbean Bolivarian Coordinating Committee.
The conservative Senator told Efe that he has denounced the “irregular activities” of the Venezuelan diplomatic mission through letters sent to the US State Department and the Federal Bureau of Investigations (FBI).
Arango stressed that he addressed a letter to Venezuela’s President Hugo Chavez to inform him of the activities which, in his view, the Venezuelan diplomats are carrying out in the Puerto Rican capital.
The leader of the party that favors Puerto Rico’s integration to the US as the 51st state said that Chavez did not answer to his letter.
Israeli Leftist Groups May be Violating US Law
By Maayana Miskin | Israel National News | April 19, 2010
Two of Israel’s largest extreme-left organizations, B’Tselem and Peace Now, have been accused of potentially violating United States law by acting illegally as foreign agents. The U.S. Department of Justice has been informed of the accusations, and is looking into the matter.
The charges were raised by Attorney Lee Bender. Bender first notified the Department of Justice’s National Security Division of the potentially illegal status of Americans for Peace Now in November 2009. While awaiting the conclusions of the Justice Department, he developed concerns about B’Tselem as well and last week contacted the National Security Division to report in the group.
The Americans for Peace Now group is part of the Isreli left-wing movement that campaigns against a Jewish presence in all of the land restored to Israel in the Six-Day War in 1967. Its activists often support Arab incitement as part of the “resistance.” B’Tselem is a self-acclaimed human rights group that consistently has condemned Israel for counterrorist operations against Hamas and has blamed Israel for most Arab violence. Both organizations use the Israeli Supreme Court as venue for attempting to bring about home demolitions in Judea and Samaria communities and for attempts to indict Israeli civilians and soldiers for what they term unnecessary violence in the face of perceived terrorist threats.
Both organizations are suspected of violating the Foreign Agents Registration Act (FARA). The law, enacted in 1938, requires those acting as agents of foreign principles in a political or quasi-political capacity to disclose their relationship to the foreign principles and their activities.
B’Tselem and Peace Now both receive much of their funding from the European Union and individual European countries. As Bender wrote, “They have and continue to receive funds from European governments, and have an office in Washington D.C. that lobbies United States officials.”
If the two organizations are found to be foreign agents under FARA, they will need to report all contact with American officials, as well as for every political activity they organize.
In Israel, organizations funded by foreign governments are required to report the donations they receive to the Non-Profit Associations Registrar. Since 2008, such groups have been required to make their donations public via the Internet as well.
In 2009, MK Danny Danon revealed that he plans to criminalize the activities of Peace Now, B’Tselem and similar organizations by making it illegal for foreign-funded groups to engage in political activity inside Israel.
Afghan interpreters ‘abandoned’ after being wounded
Afghan interpreters serving on the frontline with British troops have accused the Ministry of Defence of abandoning them when they are badly wounded and denying them the care they were promised.
By Ben Farmer in Kabul | 18 Apr 2010
One interpreter maimed in a bomb blast said he was denied essential plastic surgery because he was not British. Another said he was abandoned in a coma in an Afghan hospital, then left with medical bills. Both said the MoD had promised them desk jobs when they recovered, but they remained unemployed. Ten of their fellow interpreters in Helmand province resigned in protest at their treatment, they said.
The Ministry of Defence in London disputed their claims, but they were backed by two other interpreters interviewed by the Daily Telegraph.
Nato-led forces are reliant on civilian interpreters to translate conversations into Dari and Pashtu when they interact with local people or Afghan forces.
The Ministry of Defence employs 450 Afghans as interpreters. Fourteen have been killed and 27 wounded in the past four years.
Shafiullah Hotak, 23, signed up for the £400-a-month interpreters’ position in early 2007, translating for British troops including the Royal Marines and 2 Para, helping them mentor Afghan soldiers in Helmand.
But 20 months into his job, he was badly wounded when a Taliban home-made bomb went off in Gereshk district.
Mr Hotak said British recruiters had never explicitly discussed medical care, but had assured his that he would be “well looked after”.
“They said: ‘We will take care of you guys, don’t worry about anything’.”
Another interpreter said they had been verbally told they would get the same treatment as the British troops. But in the Aug 2008 attack, he lost large amounts of muscle from his left arm in the explosion. After five days of emergency treatment at Camp Bastion, he said he was told he could not have plastic surgery because of a lack of surgeons.
“They gave me emergency surgery and after that they told me you need to go home and do your treatment yourself. Because I wasn’t British, they didn’t take me to Birmingham with the other wounded.
“When the British told me that, I was in a bed, I couldn’t even move myself.” He was eventually given plastic surgery by US forces in Bagram airbase, north of Kabul, but has lost much use of his left arm. He could not continue his frontline job, was not given the promised office job and was eventually fired, he claimed.
Another interpreter who received severe facial injuries after being caught in a separate blast declined to be named, fearing he would be blacklisted from working with international forces.
After treatment in Camp Bastion, he was transferred unconscious to an Afghan hospital and his family were only contacted a week later when doctors found a phone number in his pocket. He said he had been left with £1,200 of outpatient medical bills and also not given the desk job he was promised.
Farid, a 22-year-old colleague who resigned after seeing what had happened to Mr Hotak, said: “When we were working with the British, they were our friends. When we were injured, they didn’t care about us.”
Wounded interpreters working for American forces have also complained of poor care, claiming insurance companies can take months to pay their medical bills. The private company supplying interpreters for American forces last year admitted it had at one point a backlog of more than 170 insurance claims from wounded staff.
A Ministry of Defence spokesman said Afghan civilian employees were given a “high standard of medical treatment”.
She said: “While it is not appropriate to comment on the medical records of an individual, we have investigated and can find no evidence that the standards of care were breached in the case you highlight.
“Follow up checks are carried out and further medical care is offered if necessary. There is no evidence to suggest that these processes were not followed in Mr Hotak’s case.”
She added: “We are not aware of any instances where an individual has been denied work due to having spoken with the press or where medical treatment procedures have not been followed.”
International activist arrested on false accusations in Sheikh Jarrah
Illegal colonist throws eggs in a separate incident
International Solidarity Movement | 19th April 2010
At approximately 11.30pm on the 18th April, a British ISM activist, Robin Brown, was arrested in Sheikh Jarrah having been falsely accused by Israeli settlers of attacking them with tear gas. Those present in the hours leading up to his arrest insist this cannot possibly be true. Brown was released from police custody at 3am on the 19th – recognition from the police that there was absolutely no evidence to support the settlers’ accusations.
Earlier in the evening, settlers had attempted to destroy a mural that was recently painted in the front garden of the Al Kurd home, half of which is occupied by settlers. Running past the wall, they threw cupfuls of white paint at the mural before fleeing down the street. Despite their later claims to police, there was no confrontation in the street between them and the Palestinian residents of the neighbourhood, or the international activists who were also present.
The previous night, Israeli settlers attacked local residents in the street, pepper spraying two of them. As the police say that, when called to the area on the night of the 18th, a settler did show signs of having been gassed, it seems possible that this was inflicted upon him by a fellow settler, still in possession of the pepper spray used the night before. The police who arrested and interrogated Brown found no traces of any kind of gas or spray on his hands, clothes or bag, proof that, if any gas was used, it did not come from him.
Brown says, “It is clear that settlers have decided to try to find ways to get rid of the international activists who sit in solidarity with Sheikh Jarrah residents, and who document the violence and harassment that is inflicted upon them by the settlers. Settlers frequently make up lies in an attempt to get Palestinians arrested. It’s no surprise that they’re now doing the same to internationals”.
Obama’s “Remainees”
Will not one but two Guantanamos define the American future?
By Karen J. Greenberg | April 19, 2010
On his first day in office, President Barack Obama promised that he would close the Bush-era prison at Guantanamo Bay, Cuba, “as soon as practicable” and “no later than one year from the date of this order.” The announcement was met with relief, even joy, by those, like me, who had opposed the very existence of Guantanamo on the grounds that it represented a legal black hole where the distinction between guilt and innocence had been obliterated, respect for the rule of law was mocked, and the rights of prisoners were dismissed out of hand. We should have known better.
By now, it’s painfully obvious that the rejoicing, like the president’s can-do optimism, was wildly premature. To the dismay of many, that year milestone passed, barely noticed, months ago. As yet there is no sign that the notorious 8-year-old detention facility is close to a shut down. Worse yet, there is evidence that, when it finally is closed, it will be replaced by two Guantanamos – one in Illinois and the other in Afghanistan. With that, this president will have committed himself in a new way to the previous president’s “long war” and the illegal principles on which it floundered, especially the idea of “preventive detention.”
Guantanamo in Illinois
For those who have been following events at Guantanamo for years, perhaps this should have come as no surprise. We knew just how difficult it would be to walk the system backward toward extinction, as did many of the former lawyer-critics of Guantanamo who joined the Obama administration. The fact is: once a distorted system has been set in stone, the only way to correct it is to end the distortion that started it: indefinite detention.
As of today, here’s the Guantanamo situation and its obdurate math. One hundred eighty-three detainees remain incarcerated there. Perhaps we should call them “remainees.” According to the estimates of the Guantanamo Detainee Review Task Force set up by Attorney General Eric Holder, about half of them will be released sooner or later and returned to their homelands or handed over to other “host” countries. They will then join approximately 600 former Guantanamo inmates released from custody since 2002. Another 35 or so remainees will be put on trial, according to reports on the task force’s recommendations and, assumedly, convicted in either civilian courts or by military commissions. For the remaining 50 or so – those for whom evidence convincing enough for trial and conviction is absent, but who are nonetheless deemed by the president to constitute a threat to the nation – the legal future is dim, even if the threat assessment which keeps them behind bars has nothing to do with normal American legalities.
Some of these long-term remainees may, in fact, have been jihadists at the time they were rounded up. Given the years of incarceration and the conditions they experienced, many more of the remainees may have been radicalized in Guantanamo itself, and might now seek to harm the U.S. or its citizens. In addition, half of them originally came from Yemen, a country unstable enough that, on return, some might indeed be recruited by forces intent on doing the U.S. harm. Although, in defiance of the warnings of its right-wing critics, the Obama administration did return six remainees to Yemen at the end of 2009, the Christmas Day bombing attempt by Umar Farouk Abdulmutallab only ratcheted up concerns about possible radicalization and training there. There have been no further transfers to Yemen since then.
So what is an administration that has made a firm promise and encountered an obstacle-laden, politically charged reality to do? If you take seriously the plans that this administration has been floating, the answer is simple: close down Guantanamo by putting in play two other Guantanamos (lacking the poisonous name) – one on American soil and one in Afghanistan, one future-oriented and sure to prove problematic, the other reeking of past disasters.
At some future date, the Obama administration has announced plans to move those Guantanamo detainees who are neither tried nor released to the still-to-be-refurbished Thomson Correctional Facility in Thomson, Illinois – “Gitmo North,” as it’s been dubbed by Senate Minority Leader Mitch McConnell (R-Ky.). Plans to relocate at least some detainees to a prison in the U.S. surfaced last summer. The idea has since encountered congressional resistance on the grounds of safety and security, heightened by outsized American fears that such prisoners have Lex Luthor-like powers and that al-Qaeda has the capability to attack any non-military prison holding them. The administration, however, is still pursuing the Thomson plan.
McConnell and other Republicans may be using the “Gitmo” label to stoke American fears of terrorism on our soil, but they are not wrong in another sense. A jail holding uncharged and untried remainees for the foreseeable future – or even a remainee who has been tried and acquitted – will indeed be “Gitmo,” whatever its official name and whatever happens to the prison in Cuba. In July 2009, in fact, the strikingly un-American idea of a presidentially imposed post-acquittal detention was first suggested by Jeh Johnson, the current general counsel for the Department of Defense, as one possible fate for a dangerous detainee whom a deluded jury (or a jury deprived of torture-induced confessions) might free. In this scenario, such a remainee, like those never brought to trial, would potentially remain under lock and key until the end of hostilities in the “long war,” itself imagined as at least a generational affair.
Guantanamo in Afghanistan
In other words, what’s being proposed is the moving of a (renamed) Guantanamo, body and soul, to the United States. That’s already a dismal prospect, but hardly the end of the line when it comes to post-Guantanamo thinking for this administration. In fact, a new idea has emerged recently. Last month, according to the Los Angeles Times, the White House hinted that the administration was contemplating using the already existing prison at Bagram Air Base in Afghanistan as yet another replacement for Guantanamo – apparently for housing future prisoners in what is no longer officially termed the Global War on Terror.
Were this to happen, it would be a squaring of the circle, a strange return to the origins of it all. Bagram was, notoriously enough, the place where, in 2001-2002, many of the prisoners who ended up at Guantanamo were first held (and often badly mistreated). Perhaps my mind has simply taken a cynical turn, but I can’t help wondering whether the administration might someday simply dump some of the Guantanamo remainees there as well. Then, we would be grimly back where George W. Bush’s Global War on Terror began. The “advantage” of Bagram, of course, is simple enough: prisoners on an American military base in distant Afghanistan might not be subject to the same levels of scrutiny or legal “meddling” (as the supporters of the Guantanamo process like to term it) as in Cuba or the United States – all those habeas challenges and challenges to military commissions that have, in eight years, convicted only three detainees (only one of whom still remains in custody), and all those human rights concerns.
There are indications that, in considering the reuse of Bagram as a parking lot for “the worst of the worst,” Obama administration officials remain remarkably blind to the history they are threatening to repeat. Evidently they don’t grasp the obvious parallels between Guantanamo and Bagram. Nevertheless, the language they are wielding has begun to sound eerily familiar. Last month, for instance, a senior Pentagon official was quoted saying that the idea of reinvigorating Bagram as a holding facility for such prisoners might not be the ideal solution, but was the “least bad” choice. How similar that sounds to the words former Secretary of Defense Donald Rumsfeld applied to Guantanamo Bay when he announced its opening in 2002. It was, he acknowledged almost apologetically, the “least worst place.”
If a two-prison solution were to go into effect, that would mean President Obama had fully accepted the Bush administration’s notion of a generational global battlefield against terror. After all, that’s what underlay Gitmo from the beginning, and that’s what would underlie a rejuvenated Bagram as well. In theory, there could be a workable solution lurking somewhere in all this murky planning, if it were undergirded with actual legal definitions; if, in the case of Thomson, the Illinois facility-to-be, the prisoners placed there were first charged, tried, and convicted; and if, in the case of Bagram, anyone placed there was declared a prisoner of war, or given some legally recognized status according to the laws of war or the Geneva Conventions. But as of now, it looks like both facilities will instead offer an endorsement of so-called preventive detention.
The administration’s disingenuousness on this point is overwhelming. On the one hand, we are told that the terms “war on terror” and “enemy combatants” are history and that Guantanamo will soon join them. But Guantanamo was never purely a place in Cuba. What made it so wrong was the system of indefinite detention that lay at its core and that continues to defy the rule of law as defined by the U.S. Constitution, U.S. military law, and the international conventions that this country has signed onto.
Closing Guantanamo does not simply mean emptying the prison cells at that naval base and throwing away the keys. It means ending the policy that has become synonymous with Guantanamo – of incarcerating individuals without the need to prove their guilt, and without a clear and recognizable process for determining the grounds for their detention.
Faced with opposition in Congress and in public sentiment generally, the Obama administration increasingly seems focused on ending not the conceptual nightmare we call Guantanamo, but the irritating problem that Guantanamo represents. Unfortunately, as this administration will learn to its regret, there is no closing Guantanamo if preventive detention continues.
In reality, a two-Guantanamo policy is likely to prove an unwieldy disaster and will hardly lead the country out of the quagmire of incarceration that the Bush administration mired us in. In the end, that quagmire is not legal (though the legal issues it raises are fundamental), nor political (though it may look that way from Capitol Hill); it’s psychological. And there is only one way to escape from it: end once and for all the notion of preventive detention by placing firm and unbending confidence in our military, our intelligence agencies, and our system of justice to identify enemies, prosecute those whom they can, and abide by the laws of war for prisoners of war.
Perhaps it’s also time for us to accept life in a world of imperfect security. It may sound harsh, but it’s not nearly as soul-defeating as the idea that not one, but two Guantanamos, will define the American future.
Karen J. Greenberg, the executive director of the Center on Law and Security at the NYU School of Law, is the author of The Least Worst Place: Guantanamo’s First 100 Days, among other works.
Barak: “The Only Way out of Iran Crises is a Bold Israeli Move”
Al-Manar TV – 19/04/2010
Israel Defense Minister Ehud Barak told Israel Radio on Monday that the only way out of the current “stalemate” with Iran is a bold Israeli move, adding that he felt that Iran did not pose an “immediate existential threat” to Israel.
Barak also responded to remarks by Admiral Mike Mullen, chairman of the U.S. military’s Joint Chiefs of Staff, who said Sunday that the military options available to Barack Obama would go “a long way” to delaying Iran’s nuclear progress but may not set the country back long-term. He called a military strike his “last option” right now.
Barak told Israel Radio that the time has come for sanctions with a specific deadline “in order to facilitate what Mullen’s remarks imply.”
“I prefer to refrain from speculation about the future,” Barak added. “Right now, Iran does not pose an existential threat to Israel. If Iran becomes nuclear, it will spark an arms race in the Middle East. This region is very sensitive because of the oil flow, the region is important to the entire world. The fact that Iran is not an immediate threat, but could evolve into one, means that we can’t let ourselves fall asleep.”
On Sunday, U.S. Defense Secretary Robert Gates, releasing a statement about a secret memorandum he sent to the White House in January, said he identified “next steps in our defense planning process” that would be reviewed by decision makers in the coming weeks and months.
“There should be no confusion by our allies and adversaries that the United States is properly and energetically focused on this question and prepared to act across a broad range of contingencies in support of our interests,” Gates said in the statement, issued to refute characterizations of the memo in a New York Times report.
The financial meltdown wasn’t a mistake – it was a con
Hiding behind the complexities of our financial system, banks and other institutions are being accused of fraud and deception, with Goldman Sachs just the latest in the spotlight.
By Will Hutton | The Observer | 18 April 2010
The global financial crisis, it is now clear, was caused not just by the bankers’ colossal mismanagement. No, it was due also to the new financial complexity offering up the opportunity for widespread, systemic fraud. Friday’s announcement that the world’s most famous investment bank, Goldman Sachs, is to face civil charges for fraud brought by the American regulator is but the latest of a series of investigations that have been launched, arrests made and charges made against financial institutions around the world. Big Finance in the 21st century turns out to have been Big Fraud. Yet Britain, centre of the world financial system, has not yet levelled charges against any bank; all that we’ve seen is the allegation of a high-level insider dealing ring which, embarrassingly, involves a banker advising the government. We have to live with the fiction that our banks and bankers are whiter than white, and any attempt to investigate them and their institutions will lead to a mass exodus to the mountains of Switzerland. The politicians of the Labour and Tory party alike are Bambis amid the wolves.
Just consider the roll call beyond Goldman Sachs. In Ireland Sean FitzPatrick, the ex-chair of the Anglo Irish bank – a bank which looks after the Post Office’s financial services – was arrested last month and questioned over alleged fraud. In Iceland last week a dossier assembled by its parliament on the Icelandic banks – huge lenders in Britain – was handed to its public prosecution service. A court-appointed examiner found that collapsed investment bank Lehman knowingly manipulated its balance sheet to make it look stronger than it was – accounts originally audited by the British firm Ernst and Young and given the legal green light by the British firm Linklaters. In Switzerland UBS has been defending itself from the US’s Inland Revenue Service for allegedly running 17,000 offshore accounts to evade tax. Be sure there are more revelations to come – except in saintly Britain.
Beneath the complexity, the charges are all rooted in the same phenomenon – deception. Somebody, somewhere, was knowingly fooled by banks and bankers – sometimes governments over tax, sometimes regulators and investors over the probity of balance sheets and profits and sometimes, as the Securities and Exchange Commission (SEC) says in Goldman’s case, by creating a scheme to enrich one favoured investor at the expense of others – including, via RBS, the British taxpayer. Along the way there is a long list of so-called “entrepreneurs” and “innovators” who were offered loans that should never have been made. Lloyd Blankfein, Goldman’s CEO, remarked only semi-ironically that his bank was doing God’s work. He must wake up every day bitterly regretting the words ever emerged from his mouth.
For the Goldmans case is in some ways the most damaging. The Icelandic banks, Anglo Irish bank and Lehman were all involved in opaque deals and rank bad lending decisions – but Goldman allegedly went one step further, according to the SEC actively creating a financial instrument that transferred wealth to one favoured client from others less favoured. If the Securities and Exchange Commission’s case is proved – and it is aggressively rebutted by Goldman – the charge is that Goldman’s vice-president Fabrice Tourre created a dud financial instrument packed with valueless sub- prime mortgages at the instruction of hedge fund client Paulson, sold it to investors knowing it was valueless, and then allowed Paulson to profit from the dud financial instrument. Goldman says the buyers were “among the most sophisticated mortgage investors” in the world. But this is a used car salesman flogging a broken car he’s got from some wide-boy pal to some driver who can’t get access to the log-book. Except it was lionised as financial innovation.
The investors who bought the collateralised debt obligation (CDO) were not complete innocents. They had asked for the bond to be validated by an independent expert into residential mortgage-backed securities – a company called ACA management. ACA gave the bond the thumbs-up on the understanding from Fabrice Tourre that the hedge fund Paulson were investing in it. But the SEC says Tourre misled them, a pivotal claim that Goldman denies. The reality was that Paulson was frantically buying credit default swaps in the CDO that would go up in price the more valueless it became – a trade that would make more than $1 billion. Worse, Paulson had identified some of the dud sub-prime mortgages that he wanted Tourre to put into the CDO. If the SEC case is true, this was a scam – nothing more, nothing less.
Tourre could see what was coming. In one email in January 2007 he wrote: “More and more leverage in the system. The whole building is about to collapse anytime now… only potential survivor, the fabulous Fab[rice Tourre] .. standing in the middle of all these complex highly leveraged exotic trades he created without necessarily understanding all of the implications of those monstrosities”. Fabulous Fab, like his boss, will not be feeling very fab today.
The cases not only have a lot in common – using financial complexity allegedly to deceive and then using so-called independent experts to validate the deception (lawyers, accountants, credit rating agencies, “portfolio selection agents,” etc etc ) – but they also show how interconnected the financial system is. In Iceland Citigroup and Deutsche Bank covered the margin calls of distressed Icelandic business borrowers, deepening the crisis. Lehman uses the lightly regulated London markets and two independent British experts to validate that their “Repo 105s” were “genuine” trades and not their own in-house liability. The American authorities pursued a Swiss bank over aiding and abetting US nationals to evade tax.
Bankers will complain these cases all involve one or two misguided individuals, but that most banking is above board and was just the victim of irrational exuberance, misguided belief in free market economics and faulty risk management techniques. Obviously that is true – but, sadly, there is much more to the crisis. Andrew Haldane, executive director of the Bank of England, highlights the remarkable reduction in the risk weighting of bank assets between 1997 and 2007. Put simply, Europe’s and the US’s large banks exploited the weak international agreement on bank capital requirements in the so-called Basel agreement in 2004 to reclassify the risk of their loans and trading instruments. They did not just reduce the risk by 5 or 10%. Breathtakingly, they claimed their new risk management techniques were so wonderful that the riskiness of their assets was up to half of what it had been – despite property and share prices cresting to new all-time highs.
Brutally, the banks knowingly gamed the system to grow their balance sheets ever faster and with even less capital underpinning them in the full knowledge that everything rested on the bogus claim that their lending was now much less risky. That was not all they were doing. As Michael Lewis describes in The Big Short, credit default swaps had been deliberately created as an asset class by the big investment banks to allow hedge funds to speculate against collateralised debt obligations. The banks were gaming the regulators and investors alike – and they knew full well what they were doing. Simon Johnson’s 13 Bankers shows how the major American banks deployed vast political lobbying power and money to create the relaxed regulatory environment in which all this could take place. In Britain no money changed hands. Gordon Brown offered light-touch regulation for free – egged on by the Tories, who wanted to go further.
This was the context in which Goldman’s Fabulous Fab created the disputed CDOs, Sean FitzPatrick allegedly moved loans between banks and Lehman created its Repo 105s along with the entire “debt mule” structure revealed this weekend of inter-related companies to shuffle debt around its empire. London and New York had become the centre of an international financial system in which the purpose of banking became making money from money – and where the complexity of the “innovations” allowed extensive fraud and deception.
Now it has all collapsed, to be bailed out by western taxpayers. The banks are resisting reform – and want to cling on to the business practices and business model that has so appallingly failed. It is obvious why: it makes them very rich. The politicians tread carefully, only proposing what the bankers say is congruent with their definition of what banking should be. Labour and Tories alike are united in opposing improved EU regulation of hedge funds, buying the propaganda those operations had nothing to do with the crisis. Perhaps Paulson’s trades at Goldman, and the hedge funds’ appetite for speculating in credit default swaps, may disabuse them.
It is time to reframe the question. Banks and financial institutions should do what economy and society want them to do – support enterprise, direct credit to where it is needed and be part of the system that generates investment and innovation. Andrew Haldane – and the governor of the Bank of England – are right. We need to break up our banks, limit their capacity to speculate and bring them back to earth. Britain should also launch an official investigation into what went wrong – and hand the findings to the Serious Fraud Office. This needs to become this election campaign’s number one issue – not one which either a compromised Labour party or a temporising Conservative party will relish. The Lib Dems, the fiercest critics of the banks, have begun to get very lucky.
Crisis timetable
- September 2007 Funding problems at Northern Rock triggers the first run on a British bank. It is nationalised in February 2008.
- April 2008 Bear Stern faces bankruptcy after a run on the company wipes out cash reserves in less than two days. Backed by the Federal Reserve, JPMorgan buys up shares at far below market value.
- September 2008 Lehman Brothers files for bankruptcy protection, becoming the first major bank to collapse since the start of the credit crisis.
- December 2008 Bernard Madoff arrested for operating the largest Ponzi scheme in history.
- January 2009 The Bank of England launches £200bn quantitative easing.
- March 2010 Former chairman of Anglo Irish bank Sean Fitzpatrick is arrested in Dublin after failing to disclose details of loans worth millions from the bank.
- April 2010 Northern Rock former directors, David Baker and Richard Barclay, are fined £504,000 and £140,000 for deliberately misleading analysts prior to nationalisation.
- April 2010 The US Securities and Exchange Commission accuses Goldman Sachs of “defrauding investors by misstating and omitting key facts”.
Joanna Aniel Bidar
Tehran Summit Urges Nuclear Free World
Al-Manar | April 16, 2010
As Tehran prepares to hold an international denuclearization conference, an Iranian official said the confab aims to promote nuclear disarmament across the world. The two-day conference titled “Nuclear Energy for All, Nuclear Weapons for None” will open on Saturday this week.
Officials from more than 60 countries as well as delegates from various international and non-governmental entities will take part in the conference. Iranian authorities say the conference has been welcomed beyond their expectations.
The meeting aims to convey the message that the world and the Middle East in particular must be free from nuclear weapon. “We are making a platform where everybody could express his view. We would continue to send this very strong message from the capital of Iran, Tehran, the center of the Middle East, that nuclear weapons do not have a place at all in this very sensitive part of the world,” Mohammad Mehdi Akhoundzadeh, Iran’s deputy foreign minister, told Press TV ahead of the nuclear confab.
Akhoundzadeh, who is the secretary general of the summit, said that the conference did not mean to overshadow the nuclear summit held earlier in the US. “This is a process, this is not a project. Some may think that this is to overshadow what’s going on in Washington but we don’t look at it that way,” he reiterated. He said a large number of foreign dignitaries will attend the conference.
“The turnout seems wonderful beyond our expectation. Three Arab foreign ministers and many other foreign ministers from different regions of the world will take part in this conference,” he said. “There would be a very strong presentation of NGOs (non-governmental organizations),” he added.
The meeting comes amid Western efforts to push through a fourth round of UN sanctions on Iran over its nuclear energy program.
The US and its allies accuse Iran of pursuing a nuclear weapons program but Iran rejects the accusations, saying its nuclear program is only for peaceful purposes.
“We were the victim of chemical weapons. We don’t want the Middle East, any body, any government, any country to have nuclear weapons. We feel this is against the humanity,” he said.
The US, which possesses one of the largest nuclear weapons arsenals in the world, is the only country which has used the nuclear bomb in warfare. The mushroom clouds from the US nuclear attacks on the Japanese cities of Hiroshima and Nagasaki still haunt people and governments around the world.
PA: Sick prisoner in solitary dies in Israeli custody
Ma’an – April 17, 2010

Holding a photo of her imprisoned son, a Gaza City woman protests for the right to family visits outside of the Red Cross building on 12 April 2010. Prisoners in 13 Israeli facilities began a boycott of family visits, protesting what they called unequal treatment for prisoners, as the visits were used to punish inmates and harass family members, detainees said. [MaanImages/Wissam Nasser]
Bethlehem – Palestinian Minster of Prisoners Affairs Issa Qaraqe identified a Palestinian prisoner in Israel, announced dead Friday afternoon, as 26 year old Raed Muhammad Ahmad Hammad.
The death comes on the Day of the Palestinian Prisoner, marked by dozens of rallies across the West Bank and Gaza, commemorating the lives of more than 10,000 Palestinians currently held in Israel, and the hundreds of thousands of others who have spent years of their lives incarcerated by Israeli military courts.
Former prisoner Abed An-Naser Farawneh said Hamad’s death came as a result of “intentional medical negligence,” and noted that Hammad was the 198th Palestinian to die in Israeli custody since the occupation of the West Bank and Gaza in 1967.
According to a report from the Palestinian Authority, Hammad was moved into solitary confinement in Israel’s Eshel Prison, despite medical reports indicating the young man was not well.
An announcement by Israel’s prison authority said only that a 31 year old Palestinian died in a southern Israeli facility, and noted investigations into the reasons behind his death had been initiated.
Hammad was a member of the Hamas party, and was serving a prison term following his conviction in an Israeli military court on charges of attempting an attack on Israeli civilians.




