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FBI Uncovers Another Of Its Own Plots, Senator Feinstein Responds By Saying We Should Censor The Internet

By Mike Masnick | Techdirt | April 3, 2015

As you may have heard, yesterday the FBI “uncovered” yet another of its own terrorist plots, the latest in a very long line of “terrorist plots” the FBI has “uncovered” — in which the details always show that it was an undercover FBI “informant” (often doing this to get off leniently for some other issue), who more or less goads hapless, naive people, into a “plot” that had no real chance of ever happening. This appears to be the same sort of thing.

Still, politicians never leave an opportunity like this unexploited, and so in jumps Senator Dianne Feinstein, arguing that the only proper way to deal with this is to, of course… censor the internet:

I am particularly struck that the alleged bombers made use of online bombmaking guides like the Anarchist Cookbook and Inspire Magazine. These documents are not, in my view, protected by the First Amendment and should be removed from the Internet.

For what it’s worth, Dianne Feinstein’s “view” is wrong. The Anarchist Cookbook is very much protected by the First Amendment. While the book is banned in other countries, who don’t have the equivalent of the First Amendment, it’s perfectly legal in the US. The FBI/DOJ has extensively investigated the Anarchist’s Cookbook in particular over the years, and as far back as 1997 directly told Senator Feinstein that she could not ban it. This is from the DOJ back in 1997:

Senator Feinstein introduced legislation during the last Congress in an attempt to fill this gap. The Department of Justice agrees that it would be appropriate and beneficial to adopt further legislation to address this problem directly, if that can be accomplished in a manner that does not impermissibly restrict the wholly legitimate publication and teaching of such information, or otherwise violate the First Amendment.

The First Amendment would impose substantial constraints on any attempt to proscribe indiscriminately the dissemination of bombmaking information. The government generally may not, except in rare circumstances, punish persons either for advocating lawless action or for disseminating truthful information — including information that would be dangerous if used — that such persons have obtained lawfully.

And yet, Feinstein’s first response to the FBI uncovering yet another of its own plots is to go back to trying to censoring the internet in direct violation of the First Amendment? Yikes.

Oh, and even worse… in keeping with the fact that this plot was actually created by the FBI itself, guess where the two “terrorist wannabes” got the Anarchist Cookbook? From the undercover FBI agent! From the criminal complaint itself [pdf]:

On or about Novermber 2, 2014, the UC [Undercover Officer] met with VELNTZAS and SIDDIQUI. When VELENTZAS was reading a book called “Chemistry: The Central Science,” the UC asked how this book was going to benefit them. VELENTZAS stated that they could practice at her house, but could not leave any residue. The UC stated that practicing at the house was not a good idea because the people living in the apartment below VELENTZAS might hear loud noises, referring to noises from explosions. VELENTZAS said she could always tell her neighbors that she dropped some bookshelves. The UC and VELENTZAS then discussed the fact that the UC had downloaded The Anarchist Cookbook. VELENTZAS suggested the UC print out the parts of the book that they would need. During the conversation, the UC stated, “We read chemistry books with breakfast. Like, who does that?” VELENTZAS responded, “People who want to make history.”

The complaint also lists many other books and magazines and web pages that the various people read throughout, and later has one of the wannabe terrorists thanking the undercover agent for introducing The Anarchist’s Cookbook to her.

As for the other document that Feinstein wants to censor, Inspire is Al Qaeda’s magazine. And, again, reading through the complaint you see that it was actually the undercover agent who brought the magazine. The wannabe terrorist did ask the undercover agent to get it, and eventually it was the undercover agent who actually got it. Velentzas keeps asking the undercover agent to find a copy of Inspire, over and over again in the complaint until eventually the agent complies:

On or about December 24, 2014, the UC visited VELENTZAS and brought the Spring 2014 issue of Inspire magazine, as previously requested by VELENTZAS.

In other words, in neither case did the would be terrorists get the “bad” material from the internet. In both cases it came from the undercover FBI agent.

Meanwhile, it seems like the only real result of this ridiculous statement will be for Feinstein to drive ever more awareness to the old Anarchist’s Cookbook, so yet another generation of teenagers can discover it and think they’ve found something totally cool online.

April 3, 2015 Posted by | Civil Liberties, Full Spectrum Dominance | , , | 2 Comments

Humanitarians for War in Syria (Part Two)

About Those Chlorine Gas Attacks in Syria

By RICK STERLING | CounterPunch | April 3, 2015

With allegations of chlorine gas attacks in Syria on March 16, some humanitarian groups have called for a “No Fly Zone” over part of Syria. I believe this is reckless and dangerous and will explain why.

Part 1 of this article was published on March 31. It documented the campaign by Avaaz and others for a “No Fly Zone” in Syria and contrasted the promises with the consequences in Libya.

Part 2 examines the allegations of chlorine gas attacks in Syria, what various organizations are doing and saying and where major violations of international law are occurring.

Humanitarians Pushing for Intervention

We have a strange situation where “human rights” groups are demanding foreign intervention in Syria via a “No Fly Zone” while military leaders are expressing caution saying “hold on…do you realize that’s an act of war?” The humanitarian interventionists may feel righteous in their cause, but they should be held accountable when it leads to disaster and tragedy as we saw in Libya.

After decades of wars and occupation based on deception, exaggeration and outright lies, it’s past time to demand proof of accusations and to be skeptical regarding any call for military action.

What is the Evidence from Syria?

Syrian rebels and supporters have repeatedly accused the Syrian military of using chemical weapons, often with the accompanying demand for foreign intervention. The Syrian government has consistently denied the accusations.

A major push for a foreign attack on Syria followed the highly publicized incidents in Ghouta in outer Damascus on August 21, 2013. Many humanitarian groups such as Human Rights Watch (HRW) joined or led in accusing the Syrian government of being responsible and calling for “action.” A military attack was averted by the Syrian government agreeing to remove its existing chemical weapons and manufacturing facilities.

Opposition supporters like Kenan Rahmani predicted that the Syrian government would not comply with the agreement. But it did. On October 1, 2014, the Organization for Prohibition of Chemical Weapons (OPCW) announced that the elimination of prohibited chemical weapons and facilities in Syria had been successfully completed. It was a remarkable achievement and the Nobel Peace Prize was awarded to the Organization for the Prohibition of Chemical Weapons (OPCW). Syria received little credit.

During 2014, as the Syrian government was working to successfully implement the agreement to dispose of banned chemical weapons, new unverified accusations emerged that the Syrian military was using barrel bombs containing poisonous chlorine gas. The accusations prompted renewed demands from governments actively supporting the armed opposition. The Syrian government removed all prohibited chemicals and facilities but now is accused of using a chemical which is not on the prohibited list.

According to its report, in May 2014, an OPCW team tried to investigate at the site of alleged chlorine gas attacks. The Syrian government gave the OPCW team passage to the rebel controlled area but the convoy was attacked by a rebel faction. None of the team members was injured but that stopped their on-site investigation. Instead, the OPCW worked with the well-funded opposition-supporting Violations Documentation Center to arrange interviews with numerous people from three villages. The interviews were conducted outside Syria, probably in Turkey. They gathered photographs, videos and other evidence and expressed “high confidence that chlorine had been used as a weapon in Syria” in three villages. They did not ascribe responsibility.

More recently there was an alleged chlorine gas attack on March 16, 2015 with six deaths including three children. The Avaaz petition and campaign sprung from this alleged incident.

Along with these accusations, there has been a steady drumbeat from various organizations that the Syrian government is committing war crimes. For example, Physicians for Human Rights (PHR) issued a press release on May 14 with the title “New Map Shows Government Forces Deliberately Attacking Syria’s Medical System.”

Are the Accusations Objective or Biased?

Following are some of the major organizations reporting or making accusations regarding the conflict in Syria:

Organization for the Prohibition of Chemical Weapons (OPCW) – This is the official intergovernmental organization tasked with promoting adherence to the Chemical Weapons Convention. It has been responsible for removal of chemical weapons from Syria. It was then tasked with investigating allegations about use of chlorine gas as a weapon. While OPCW seeks to be highly professional and nonpartisan, there are questions of potential conflict of interest and bias as follows:

* The director general of OPCW, Ahmet Uzumcu, is the appointee of Turkey, a country which actively supports the Syrian opposition and has pushed for a No Fly Zone. Given that Uzumcu is a political appointee of a state directly involved in the conflict, he has a potential conflict of interest: he might advance his own career and please the Turkish government by making the Syrian government look bad.

* The interviews with villagers were done with OPCW “working closely” with the partisan “Violations Documentation Center.” How did OPCW verify the integrity of the witnesses?

* According to OPCW report, NATO’s CBRN Task Force (Chemical-Biological-Radioactive-Nuclear) collected data “in the field following reported attacks” and supplied this to OPCW. What exactly was the NATO task force doing in the rebel controlled territory?

* The official report of the OPCW notes that in the UN Security Council “Some doubts and questions were also raised in regard to the procedures and methods (of the Fact Finding Mission).”

AVAAZ – Avaaz is clearly biased and was involved in the Syria conflict from early on. They were supplying satellite phones and otherwise aiding and promoting local activists from early on. Is that a good thing? Not necessarily; their claims and actions in Syria have been controversial and criticized.

WHITE HELMETS / SYRIAN CIVIL DEFENCE – This is a new organization, highly publicized as civilian rescue workers in Syria. Their video and reports have influenced Avaaz and other humanitarian groups. Avaaz refers to the White Helmets as “Syria’s respected and non-partisan civil protection force.”

In reality the White Helmets is a project created by the UK and USA. Training of civilians in Turkey has been overseen by former British military officer and current contractor, James Le Mesurier. Promotion of the program is done by “The Syria Campaign” supported by the foundation of billionaire Ayman Asfari. The White Helmets is clearly a public relations project which has received glowing publicity from HuffPo to Nicholas Kristof at the NYT. White Helmets have been heavily promoted by the U.S. Institute of Peace (U.S.IP) whose leader began the press conference by declaring “U.S.IP has been working for the Syrian Revolution from the beginning”.

Apart from the PR work, White Helmets work in areas of Aleppo and Idlib controlled by Nusra (Al Queda). The video from a medical clinic on March 16 starts with a White Helmets logo. The next video of same date and place continues with the Nusra logo.

US and UK tax dollars pay for a program which has an appealing rescue component and is then used to market and promote the USA and UK policy of regime change in Syria in de facto alliance with Nusra.

The fake “independence and neutrality” of White Helmets is shown by their active promotion of a No Fly Zone.

MEDECINS SANS FRONTIERS (MSF) and other humanitarian groups no longer have staff in Syria. They rely on witnesses and videos provided by rebels. In a war zone it is difficult to ascertain when someone is speaking out of fear or intimidation or for payment. Witnesses in rebel-controlled territory may claim that helicopters dropped bombs with chlorine. But what if the witnesses are lying? The possibility for manipulation and deceit is huge.

PHYSICIANS FOR HUMAN RIGHTS (PHR) is also active reporting on the Syria conflict. They make bold but sometimes inaccurate assertions. They recently claimed that “people in Homs are facing serious health consequences as the medical system collapses, with only three doctors available.” This is inaccurate. I personally visited Homs one year ago and drove around the city for hours. Since the rebels departed the Old City last May it is being rebuilt and nearly all the city continues normally except for periodic terrorist car bombs.

A recent PHR press release is headlined “New Map shows Government Forces Deliberately Attacking Syria’s Medical System.” It looks slick and impressive but is inaccurate. For example, one of the most dramatic attacks on a Syrian hospital was the suicide bombing of Al Kindi Hospital in Aleppo. Yet the PHR map shows the attack having been carried out by “government forces.” Readers are encouraged to look at the 3 minute rebel video of the suicide attack which leaves no doubt who was responsible.

SUMMARY. Statements/documentation from the Syrian government and supporters tend to be dismissed or ignored; statements/video from opposition witnesses and activists tend to be accepted uncritically. That is bias.

WHO BENEFITS?

The starting point for many criminal investigations is who has a motive? Who benefits from an action or event?

In order to prevail, the Syrian opposition needs foreign intervention.  In order to prevail, the Syrian government needs to prevent foreign intervention.

Who benefited from from use of sarin gas that would cross Obama’s ‘red line’? The answer was always obvious. This received surprisingly little consideration as the US Government and humanitarian groups like Human Rights Watch argued that the Syrian Government was culpable without even considering who had motive.

Since that time, in-depth analysis of the August 2013 chemical attack in Ghouta increasingly points to the use of sarin gas by the rebels not the Syrian government. The “vector analysis” advanced by HRW has been discounted. The US and other countries almost began an international attack on the basis of false claims and analysis.

Similarly, who benefits from the use of chlorine gas that would violate the new UN Security Resolution? To ask the question is to answer it. Clearly it is the opposition rebels who benefit when the Syrian government is charged with using chlorine gas bombs. Clearly they are the ones who seek foreign intervention or imposition of a No Fly Zone.

A War of Aggression Against Syria

Supporters of intervention sometimes claim Syria has been “abandoned” by the international community. On the contrary, the Syrian conflict has continued primarily BECAUSE of foreign involvement.

The unholy alliance of Qatar, Saudi Arabia, Turkey, USA, France and Britain (with silent partner Israel) have supplied, trained, provided weapons and salaries for Syrian and international fighters seeking to topple the government. They openly called themselves, with Orwellian chutzpah, the “Friends of Syria” as they divide the tasks of supplying the rebels and consider who should be the “legitimate political representatives”.

The crime has not been the absence of international effort; it has been the absence of enforcement of international law. The US and allies are doing to Syria what the US did to Nicaragua in the 1980’s. As the International Court at the Hague said in its decision on June 27, 1986:

… the United States of America, by training, arming, equipping, financing and supplying the “contra” forces or otherwise encouraging, supporting and aiding military and paramilitary activities in and against Nicaragua, has acted, against the Republic of Nicaragua, in breach of its obligation under customary international law not to intervene in the affairs of another State.

The Nicaraguan Foreign Minister at that time was Father Miguel D’Escoto. He served as president of the United Nations General Assembly in the year 2008-2009. When recently asked his opinion on what is happening in Syria he responded:

“What the U.S. government is doing in Syria is tantamount to a war of aggression, which, according to the Nuremberg Tribunal, is the worst possible crime a State can commit against another State.”

The conflict in Syria continues primarily because foreign powers continue to “arm, equip, finance and supply” the equivalent of the Contras. Imposing a No Fly Zone in Syria would not make anyone safer; it would dramatically expand the war and lead to vastly more, not fewer deaths.

Those who genuinely want peace in Syria need to press for ENDING foreign intervention in Syria via proxy armies and ENCOURAGING reconciliation and negotiations without preconditions.

The humanitarians pushing for intervention in Syria are not R2P (responsible to protect). They are R4W (responsible for war).

Rick Sterling is a founding member of Syria Solidarity Movement. He can be reached at rsterling1@gmail.com

April 3, 2015 Posted by | Deception, Mainstream Media, Warmongering, War Crimes | , , , , , , , , , , , | Leave a comment

The US-Israel-Iran Triangle’s Tangled History

By Robert Parry | Consortium News | April 2, 2015

As Israeli Prime Minister Benjamin Netanyahu continues to accuse Iran’s Islamic State of seeking Israel’s destruction – and U.S. neocons talk openly about bombing Iran – the history of Israel’s cooperative dealings with Iran, including after the ouster of the Shah and the rise of Ayatollah Ruhollah Khomeini in 1979, seems to have been forgotten.

Yet, this background is important when evaluating some of Iran’s current political players and their attitudes regarding a possible deal with world powers to limit Iran’s nuclear program to peaceful purposes only. In the United States and Israel – for their own politically sensitive reasons – much of this history remains “lost” or little known.

The division inside Iran between leading figures who collaborated with the U.S. and Israel behind the scenes and those who resisted those secret dealings took shape in the early 1980s but remains in place, to some degree, to this day.

For instance, Ayatollah Ali Khamenei, the country’s current Supreme Leader, was more the ideological purist in 1980, apparently opposing any unorthodox strategy involving Israeli and Republican emissaries that went behind President Jimmy Carter’s back to gain promises of weapons from Israel and the future Reagan administration.

Khamenei appears to have favored a more straightforward arrangement with the Carter administration for settling the dispute over the 52 American hostages who were seized from the U.S. Embassy in Tehran on Nov. 4, 1979, by Iranian radicals.

However, other key political figures – including Ali Akbar Hashemi Rafsanjani and Mehdi Karoubi – participated in the secret contacts with the Republicans and Israel to get the military supplies needed to fight the war with Iraq, which began in September 1980. They were later joined by Prime Minister Mir Hossein Mousavi.

In 1980, these internal Iranian differences played out against a dramatic backdrop. Iranian radicals still held the 52 hostages; President Carter had imposed an arms embargo while negotiating for the hostages’ release; and he was struggling to fend off a strong campaign challenge from Republican Ronald Reagan.

Meanwhile, Israel’s Likud Prime Minister Menachem Begin was furious at Carter for pushing him into the Camp David peace deal with Egyptian President Anwar Sadat that required Israel returning the Sinai to Egypt in exchange for normalized relations.

Begin also was upset at Carter’s perceived failure to protect the Shah of Iran, who had been an Israeli strategic ally. Begin was worried, too, about the growing influence of Saddam Hussein’s Iraq as it massed troops along the Iranian border.

At that time, Saudi Arabia was encouraging Sunni-ruled Iraq to attack Shiite-ruled Iran in a revival of the Sunni-Shiite conflict which dated back to the Seventh Century succession struggle after the death of the Prophet Mohammad. The Saudi prince-playboys were worried about the possible spread of the ascetic revolutionary movement pushed by Iran’s new ruler, Ayatollah Khomeini.

Upsetting Carter

Determined to help Iran counter Iraq – and hopeful about rebuilding at least covert ties to Tehran – Begin’s government cleared the first small shipments of U.S. military supplies to Iran in spring 1980, including 300 tires for Iran’s U.S.-manufactured jet fighters. Soon, Carter learned about the covert shipments and lodged an angry complaint.

“There had been a rather tense discussion between President Carter and Prime Minister Begin in the spring of 1980 in which the President made clear that the Israelis had to stop that, and that we knew that they were doing it, and that we would not allow it to continue, at least not allow it to continue privately and without the knowledge of the American people,” Carter’s press secretary Jody Powell told me in an interview for a PBS documentary.

“And it stopped,” Powell said — at least, it stopped temporarily.

Questioned by congressional investigators a dozen years later, Carter said he felt that by April 1980, “Israel cast their lot with Reagan,” according to notes I found among the unpublished documents in the files of a congressional investigation conducted in 1992. Carter traced the Israeli opposition to his possible reelection in 1980 to a “lingering concern [among] Jewish leaders that I was too friendly with Arabs.”

Carter’s National Security Adviser Zbigniew Brzezinski also recognized the Israeli hostility. Brzezinski said the Carter White House was well aware that the Begin government had “an obvious preference for a Reagan victory.”

Begin’s alarm about a possible Carter second term was described, too, by Israeli intelligence and foreign affairs official David Kimche in his 1991 book, The Last Option. Kimche wrote that Begin’s government believed that Carter was overly sympathetic to the Palestinian cause and was conspiring with Arabs to force Israel to withdraw from the West Bank.

“Begin was being set up for diplomatic slaughter by the master butchers in Washington,” Kimche wrote. “They had, moreover, the apparent blessing of the two presidents, Carter and [Egyptian President Anwar] Sadat, for this bizarre and clumsy attempt at collusion designed to force Israel to abandon her refusal to withdraw from territories occupied in 1967, including Jerusalem, and to agree to the establishment of a Palestinian state.”

Extensive evidence now exists that Begin’s preference for a Reagan victory led Israelis to join in a covert operation with Republicans to contact Iranian leaders behind Carter’s back and delay release of the 52 American hostages until after Reagan defeated Carter in November 1980.

That controversy, known as the “October Surprise” case, and its sequel, the Iran-Contra scandal in the mid-1980s, involved clandestine ties between leading figures in Iran and U.S. and Israeli officials who supplied Iran with missiles and other weaponry for its war with Iraq. The Iran-Iraq conflict began simmering in spring 1980 and broke into full-scale war in September.

More Straightforward

Khamenei, who was then an influential aide to Ayatollah Khomeini, appears to have been part of a contingent exploring ways to resolve the hostage dispute with Carter.

According to Army Col. Charles Wesley Scott, who was one of the 52 hostages, Khamenei visited him on May 1, 1980, at the old U.S. consulate in Tabriz to ask whether milder demands from Iran to the Carter administration might lead to a resolution of the hostage impasse and allow the resumption of U.S. military supplies, former National Security Council aide Gary Sick reported in his book October Surprise.

“You’re asking the wrong man,” Scott replied, noting that he had been out of touch with his government during his five months of captivity before adding that he doubted the Carter administration would be eager to resume military shipments quickly.

“Frankly, my guess is that it will be a long time before you’ll get any cooperation on spare parts from America, after what you’ve done and continue to do to us,” Scott said he told Khamenei.

But Khamenei’s outreach to a captive U.S. military officer – outlining terms that then became the basis of a near settlement of the crisis with the Carter administration in September 1980 – suggests that Khamenei favored a more traditional approach toward resolving the hostage crisis rather than the parallel channel that soon involved the Israelis and the Republicans.

In that narrow sense, Khamenei was allied with Abolhassan Bani-Sadr, the sitting Iranian president in 1980 who also has said he opposed dealing with Israel and the Republicans behind President Carter’s back. In a little-noticed letter to the U.S. Congress, dated Dec. 17, 1992, Bani-Sadr said he first learned of the Republican hostage initiative in July 1980.

Bani-Sadr said a nephew of Ayatollah Khomeini returned from a meeting with an Iranian banker, Cyrus Hashemi, who had led the Carter administration to believe he was helping broker a hostage release but who had close ties to Reagan’s campaign chief William Casey and to Casey’s business associate, John Shaheen.

Bani-Sadr said the message from the Khomeini emissary was clear: the Reagan campaign was in league with some of the Central Intelligence Agency’s pro-Republican elements in an effort to undermine Carter and wanted Iran’s help. Bani-Sadr said the emissary “told me that if I do not accept this proposal they [the Republicans] would make the same offer to my rivals.”

The emissary added that the Republicans “have enormous influence in the CIA,” Bani-Sadr wrote. “Lastly, he told me my refusal of their offer would result in my elimination.”

Bani-Sadr said he resisted the GOP scheme, but the plan ultimately was accepted by Ayatollah Khomeini, who appears to have made up his mind around the time of Iraq’s invasion in mid-September 1980.

Clearing the Way

Khomeini’s approval meant the end of the initiative that Khamenei had outlined to Col. Scott, which was being pursued with Carter’s representatives in West Germany before Iraq launched its attack. Khomeini’s blessing allowed Rafsanjani, Karoubi and later Mousavi to proceed with secret contacts that involved emissaries from the Reagan camp and the Israeli government.

The Republican-Israeli-Iranian agreement appears to have been sealed through a series of meetings that culminated in discussions in Paris arranged by the right-wing chief of French intelligence Alexandre deMarenches and allegedly involving Casey, vice presidential nominee (and former CIA Director) George H.W. Bush, CIA officer Robert Gates and other U.S. and Israeli representatives on one side and cleric Mehdi Karoubi and a team of Iranian representatives on the other.

Bush, Gates and Karoubi all have denied participating in the meeting (Karoubi did so in an interview with me in Tehran in 1990). But deMarenches admitted arranging the Paris conclave to his biographer, former New York Times correspondent David Andelman.

Andelman said deMarenches ordered that the secret meeting be kept out of his memoir because the story could otherwise damage the reputation of his friends, William Casey and George H.W. Bush. At the time of Andelman’s work on the memoir in 1991, Bush was running for re-election as President of the United States.

Andelman’s sworn testimony in December 1992 to a House task force assigned to examine the October Surprise controversy buttressed longstanding claims from international intelligence operatives about a Paris meeting involving Casey and Bush.

Besides the testimony from intelligence operatives, including Israeli military intelligence officer Ari Ben-Menashe, there was contemporaneous knowledge of the alleged Bush-to-Paris trip by Chicago Tribune reporter John Maclean, son of author Norman Maclean who wrote A River Runs Through It.

Maclean said a well-placed Republican source told him in mid-October 1980 about Bush’s secret trip to Paris to meet with Iranians on the U.S. hostage issue. Maclean passed on that information to State Department official David Henderson, who recalled the date as Oct. 18, 1980.

Since Maclean had never written a story about the leak and Henderson didn’t mention it until Congress started its cursory October Surprise investigation in 1991, the Maclean-Henderson conversation had been locked in a kind of time capsule.

One could not accuse Maclean of concocting the Bush-to-Paris allegation for some ulterior motive, since he hadn’t used it in 1980, nor had he volunteered it a decade later. He only confirmed it, grudgingly, when approached by a researcher working with me on a PBS Frontline documentary and in a subsequent videotaped interview with me.

Also, alibis that were later concocted for Casey and Bush – supposedly to prove they could not have traveled to the alleged overseas meetings – either collapsed under close scrutiny or had serious holes. [For details on the October Surprise case, see Robert Parry’s Secrecy & Privilege and America’s Stolen Narrative.]

Military Shipments

Though the precise details of the October Surprise case remain murky, it is a historic fact that Carter failed to resolve the hostage crisis before losing in a surprising landslide to Reagan and that the hostages were not released until Reagan and Bush were sworn in on Jan. 20, 1981.

It also is clear that U.S. military supplies were soon moving to Iran via Israeli middlemen with the approval of the new Reagan administration.

In a PBS interview, Nicholas Veliotes, Reagan’s assistant secretary of state for the Middle East, said he first discovered the secret arms pipeline to Iran when an Israeli weapons flight was shot down over the Soviet Union on July 18, 1981, after straying off course on its third mission to deliver U.S. military supplies from Israel to Iran via Larnaca, Cyprus.

“It was clear to me after my conversations with people on high that indeed we had agreed that the Israelis could transship to Iran some American-origin military equipment,” Veliotes said.

In checking out the Israeli flight, Veliotes came to believe that the Reagan-Bush camp’s dealings with Iran dated back to before the 1980 election.

“It seems to have started in earnest in the period probably prior to the election of 1980, as the Israelis had identified who would become the new players in the national security area in the Reagan administration,” Veliotes said. “And I understand some contacts were made at that time.”

In the early 1980s, the players in Iran also experienced a shakeup. Bani-Sadr was ousted in 1981 and fled for his life; he was replaced as president by Khamenei; Mousavi was named prime minister; Rafsanjani consolidated his financial and political power as speaker of the Majlis; and Karoubi became a powerful figure in Iran’s military-and-foreign-policy establishment.

Besides tapping into stockpiles of U.S.-made weaponry, the Israelis arranged shipments from third countries, including Poland, according to Israeli intelligence officer Ben-Menashe, who described his work on the arms pipeline in his 1992 book, Profits of War.

Since representatives of Likud had initiated the arms-middleman role for Iran, the profits flowed into coffers that the right-wing party controlled, a situation that allowed Likud to invest in Jewish settlements in the West Bank and created envy inside the rival Labor Party especially after it gained a share of power in the 1984 elections, said Ben-Menashe, who worked with Likud.

The Iran-Contra Case

According to this analysis, Labor’s desire to open its own arms channel to Iran laid the groundwork for the Iran-Contra scandal, as the government of Prime Minister Shimon Peres tapped into the emerging neoconservative network inside the Reagan administration on one hand and began making his own contacts to Iran’s leadership on the other.

Reagan’s National Security Adviser Robert McFarlane, who had close ties to the Israeli leadership, collaborated with Peres’s aide Amiram Nir and with neocon intellectual (and National Security Council consultant) Michael Ledeen in spring 1985 to make contact with the Iranians.

Ledeen’s chief intermediary to Iran was a businessman named Manucher Ghorbanifar, who was held in disdain by the CIA as a fabricator but claimed he represented high-ranking Iranians who favored improved relations with the United States and were eager for American weapons.

Ghorbanifar’s chief contact, as identified in official Iran-Contra records, was Mohsen Kangarlu, who worked as an aide to Prime Minister Mousavi, according to Israeli journalist Ronen Bergman in his 2008 book, The Secret War with Iran.

However, Ghorbanifar’s real backer inside Iran appears to have been Mousavi himself. According to a Time magazine article from January 1987, Ghorbanifar “became a trusted friend and kitchen adviser to Mir Hussein Mousavi, Prime Minister in the Khomeini government.”

In November 1985, at a key moment in the Iran-Contra scandal as one of the early missile shipments via Israel went awry, Ghorbanifar conveyed Mousavi’s anger to the White House.

“On or about November 25, 1985, Ledeen received a frantic phone call from Ghorbanifar, asking him to relay a message from the prime minister of Iran to President Reagan regarding the shipment of the wrong type of HAWKs,” according to Iran-Contra special prosecutor Lawrence Walsh’s Final Report.

“Ledeen said the message essentially was ‘we’ve been holding up our part of the bargain, and here you people are now cheating us and tricking us and deceiving us and you had better correct this situation right away.’”

Earlier in the process, Ghorbanifar had dangled the possibility of McFarlane meeting with high-level Iranian officials, including Mousavi and Rafsanjani. Another one of Ghorbanifar’s Iranian contacts was Hassan Karoubi, the brother of Mehdi Karoubi. Hassan Karoubi met with Ghorbanifar and Ledeen in Geneva in late October 1985 regarding missile shipments in exchange for Iranian help in getting a group of U.S. hostages freed in Lebanon, according to Walsh’s report.

A Split Leadership

As Ben-Menashe describes the maneuvering in Tehran, the basic split in the Iranian leadership put then-President Khamenei on the ideologically purist side of rejecting U.S.-Israeli military help and Rafsanjani, Mousavi and Mehdi Karoubi in favor of exploiting those openings in a pragmatic way to better fight the war with Iraq.

The key decider during this period – as in the October Surprise phase – was Ayatollah Khomeini, who agreed with the pragmatists on the need to get as much materiel from the Americans and the Israelis as possible, Ben-Menashe told me in a 2009 interview from his home in Canada.

Ben-Menashe said Rafsanjani and most other senior Iranian officials were satisfied dealing with the original (Likud) Israeli channel and were offended by the Reagan administration’s double game of tilting toward Iraq with military and intelligence support while also offering weapons deals to Iran via the second (Labor) channel.

The ex-Israeli intelligence officer said the Iranians were especially thankful in 1985-86 when the Likud channel secured SCUD missiles from Poland so Iran could respond to SCUD attacks that Iraq had launched against Iranian cities.

“After that (transaction), I got access to the highest authorities” in Iran, Ben-Menashe said, including a personal meeting with Mousavi at which Ben-Menashe said he learned that Mousavi knew the history of the Israeli-arranged shipments in the October Surprise deal of 1980.

Ben-Menashe quoted Mousavi as saying, “we did everything you guys wanted. We got rid of the Democrats. We did everything we could, but the Americans aren’t delivering [and] they are dealing with the Iraqis.”

In that account, the Iranian leadership in 1980 viewed its agreement to delay the release of the U.S. Embassy hostages not primarily as a favor to the Republicans, but to the Israelis who were considered the key for Iran to get the necessary military supplies for its war with Iraq.

Israeli attitudes toward Iran soured when the lucrative arms pipelines of the Iran-Iraq War dried up after the conflict finally ended in 1988. Iran’s treasury was depleted as was the treasury of Iraq, where Saddam Hussein lashed out at one of his oil-rich creditors, the Kuwaiti royal family, in 1990, invading the country and setting the stage for a U.S.-led Persian Gulf War that drove the Iraqis out of Kuwait.

With Iraq burdened by post-war sanctions and its military might restricted by weapons inspectors, Israel began to view Iran as its principal regional threat, a view shared by the wealthy Saudis. That common viewpoint gradually created the basis for a de facto Israeli-Saudi alliance which has begun to come out of the shadows in recent years. [See Consortiumnews.com’sDeciphering the Mideast Chaos.”]

Meanwhile, in Iran, this half-hidden history of double-dealing and back-stabbing remains part of the narrative of distrust that continues to afflict U.S.-Iranian relations. Even 35 years later, some of the same Iranian players are still around.

Though Mousavi and Karoubi fell out of favor when they were associated with the Western-backed Green Movement in 2009, Rafsanjani has remained an influential political figure and Khameini replaced the late Ayatollah Khomeini as Iran’s Supreme Leader. That makes him the most important figure in Iran regarding whether to accept a U.S.-brokered deal limiting Iran’s nuclear program — or not.

~

Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated Press and Newsweek in the 1980s. You can buy his latest book, America’s Stolen Narrative, either in print here or as an e-book (from Amazon and barnesandnoble.com).

April 3, 2015 Posted by | Timeless or most popular, Wars for Israel | , , , , , , , , , , , , | 1 Comment

Netanyahu demands that Iran commit to recognizing Israel’s “right to exist”

Israeli Prime Minister Benjamin Netanyahu on Friday demanded that any final agreement between Iran and world powers must insist that Iran commit to recognizing Israel’s right to exist.

Netanyahu spoke after meeting with his security cabinet, which he said was “united in opposition to the proposed deal” that was announced by the parties on Thursday.

April 3, 2015 Posted by | Ethnic Cleansing, Racism, Zionism, Video, Wars for Israel | , , , | 2 Comments

Greece preparing for Grexit, own currency – media

RT | April 3, 2015

Athens is currently trying to negotiate a new bailout deal with its Troika of creditors, but if that falls ‘Plan B’ could reportedly involve getting rid of the euro and cutting off its banking system from the European Central Bank.

Greece’s government is getting ready to nationalize the country’s banks and return to the the drachma, the Telegraph reported citing sources.

“We are a left-wing government. If we have to choose between a default to the IMF or a default to our own people, it is a no-brainer,” a senior official told The Daily Telegraph.

“We will shut down the banks and nationalise them, and then issue IOUs if we have to, and we all know what this means. What we will not do is become a protectorate of the EU,” according to another source.

The drachma was Greece’s currency from 1832 until 2002, when it switched to the euro. At the time, 1 euro equaled about 340 drachma.

When the financial crisis hit Iceland in 2008, the government decided to let the banks fail and default on $85 billion, and the country’s three main banks were nationalized. The transition was painful- the stock market plummeted 90 percent, unemployment jumped to 10 percent, and inflation ballooned to 18 percent. Though the economy still struggles with an unstable currency, a slow and steady recovery has occurred. GDP is finally back at pre-crisis levels, unemployment has improved to 5 percent, and inflation is below 2.5 percent.

Crunch day April 9

The Greek government has €463.1 million of IMF loans to be repaid by April 9 and another €768 million falling due in May.

After Greece does this, and the EU approves the reform proposals by Finance Minister Yanis Varoufakis, the Troika of lenders- the IMF, the European Central Bank, and the European Commission, is expected to release the next €7.2 billion tranche to Athens.

According to senior official, Syriza and Prime Minister Alexis Tsipras have the power to decide not to make the upcoming payments.

“We may have to go into a silent arrears process with the IMF. This will cause a furor in the markets and means that the clock will start to tick much faster,” the source told The Telegraph.

On Friday the Finance Ministry denied rumors they wouldn’t pay the €460 million sum on April 9.

Countries in the past that have defaulted in their IMF loans include Sudan, Peru, Liberia, the Congo, Somalia, Zambia, Guyana, Yugoslavia, Vietnam, Zimbabwe, and Iraq.

With its massive €316 billion debt, a collapse of the Greek economy has the potential to shake the rest of Europe. The reason the EU came to Athens’ rescue with two bailouts totaling 240 billion euro was to protect the euro currency, which at the time was shared by 18 separate countries, Greece included.

In the case that lending is cut off, Greek banks will overnight become insolvent and Athens would have to start printing its own currency to replace the euro.

In February, deposits in Greek banks declined by around €7.6 billon to a 10-year low of €140.5 billion, as customers started pulling out their money over growing concerns the country may leave the eurozone.

Options on table

Alexis Tsipras came to power in January on the promise of no more austerity from the EU, but has had to compromise many of his big ideals in order to receive more funds.

The four month extension agreed in February will expire at the end of June. In anticipation, Greek and EU officials will hash out a more permanent solution, which could include a third bailout package, or if Greece has its way, debt forgiveness.

Greece needs to receive about €17 billion in order to meet its payments for the rest of 2015.

Another option Greece has is to turn its back on its European creditors and look eastward, either to China or Russia, for a loan with less strings attached. The Greek PM is scheduled to visit Moscow and meet with President Vladimir Putin on April 9.

Former Greek Prime Minister Antonis Samaras has returned to the political arena to try and build a coalition to make sure Greece stays in the eurozone.

Read more: Greece submits 26-page reform plan to get €7.2bn bailout

April 3, 2015 Posted by | Economics | , , | 2 Comments

France denies any timetable set for lifting Iran sanctions

Press TV – April 3, 2015

The French foreign minister says no special timetable has been agreed with Iran on lifting the sanctions imposed on the country as part of an understanding reached between Tehran and world powers on Iran’s nuclear program.

Laurent Fabius said Friday that the mutual understanding reached in the Swiss city of Lausanne a day earlier contained no agreement on the precise schedule for lifting the sanctions on Iran.

Iran and P5+1 group of countries – Russia, China, France, Britain, the US and Germany – along with officials from the European Union reached a mutual understanding on Tehran’s nuclear program after eight days of marathon talks in Lausanne.

“The Iranians want sanctions to be lifted immediately…We say to them: we will ease the sanctions as you respect what you have agreed to,” Fabius told Europe 1 radio station, emphasizing, however, “On this point, there is not yet a deal.”

According to the joint statement, which is the basis for a final deal, the two sides have envisaged a mechanism for lifting sanctions after the agreement, known as the Joint Comprehensive Plan of Action (JCPOA), is reached by the end of June.

The joint statement read by Iranian foreign minister Mohammad Javad Zarif in Persian late Thursday stipulated that the parties to the JCPOA will, after the adoption of the Security Council resolution, need a period of preparation time to implement the JCPOA. Once the preparation period is over, and simultaneous with the start of the implementation of nuclear measures by Iran on a designated date, the lifting of “all sanctions” will automatically go into action.

Fabius, whose government has adopted a harsh stance toward Iran’s nuclear program, also cautioned Tehran that sanctions could be re-imposed if Iran violates its obligations.

“…If you don’t live up to your commitments, of course we can return to the situation we had before,” he said.

The joint statement also reiterated that within the framework of the solutions reached, the necessary mechanism has been envisaged for the mutual reversibility of the commitments included in the JCPOA in case of a failure to meet obligations by each party.

Fabius, however, branded the framework agreement reached between Iran and P5+1 as “historic.”

April 3, 2015 Posted by | Deception | , | Leave a comment

Free Trade, Corporate Plunder and the War on Working People

By COLIN TODHUNTER | CounterPunch | April 3, 2015

Prior to last year’s national elections in India, there were calls for a Thatcherite revolution to fast-track the country towards privatisation and neo-liberalism. Under successive Thatcher-led governments in the eighties, however, inequalities skyrocketed in Britain and economic growth was no better than in the seventies.

Traditional manufacturing was decimated and international finance became the bedrock of the ‘new’ economy. Jobs disappeared over the horizon to cheap labour economies, corporations bought up public utilities, the rich got richer and many of Britain’s towns and cities in its former industrial heartland became shadows of their former selves. Low paid, insecure, non-unionised labour is now the norm and unemployment and underemployment are rife. Destroying ordinary people’s livelihoods was done in the name of ‘the national interest’. Destroying industry was done in the name of ‘efficiency’.

In 2010, 28 percent of the UK workforce, some 10.6 million people, either did not have a job, or had stopped looking for one. And that figure was calculated before many public sector jobs were slashed under the lie of ‘austerity’.

Today, much of the mainstream political and media rhetoric revolves around the need to create jobs, facilitate ‘free’ trade, ensure growth and make ‘the nation’ competitive. The endless, tedious mantra says ordinary people have to be ‘flexible’, ‘tighten their belts, expect to do a ‘fair day’s work for a fair day’s pay’ and let the market decide. This creates jobs. This fuels ‘growth’. Unfortunately, it does neither. What we have is austerity. What we have is an on-going economic crisis, a huge national debt, rule by profligate bankers and corporate entities and mass surveillance to keep ordinary people in check.

So what might the future hold? Unfortunately, more of the same.

The Transatlantic Trade and Investment Partnership

The Transatlantic Trade and Investment Partnership being negotiated between the EU and US is intended to be the biggest trade deal in history. The EU and US together account for 40 percent of global economic output. The European Commission tries to sell the deal to the public by claiming that the agreement will increase GDP by one percent and will entail massive job creation.

However, these claims are not supported even by its own studies, which predict a growth rate of just 0.01 percent GDP over the next ten years and the potential loss of jobs in several sectors, including agriculture. Corporations are lobbying EU-US trade negotiators to use the deal to weaken food safety, labour, health and environmental standards and undermine digital rights. Negotiations are shrouded in secrecy and are being driven by corporate interests. And the outcome could entail the bypassing of any democratic processes in order to push through corporate-friendly policies. The proposed agreement represents little more than a corporate power grab.

It should come as little surprise that this is the case. Based on a recent report, the European Commission’s trade and investment policy reveals a bunch of unelected technocrats who care little about what ordinary people want and negotiate on behalf of big business. The Commission has eagerly pursued a corporate agenda and has pushed for policies in sync with the interests of big business. It is effectively a captive but willing servant of a corporate agenda. Big business has been able to translate its massive wealth into political influence to render the European Commission a “disgrace to the democratic traditions of Europe.”

This proposed trade agreement (and others like it being negotiated across the world) is based on a firm belief in ‘the market’ (a euphemism for subsidies for the rich, cronyism, rigged markets and cartels) and the intense dislike of state intervention and state provision of goods and services. The ‘free market’ doctrine that underpins this belief attempts to convince people that nations can prosper by having austerity imposed on them and by embracing neo-liberalism and ‘free’ trade. This is a smokescreen that the financial-corporate elites hide behind while continuing to enrich themselves and secure taxpayer handouts, whether in the form of bank bailouts or other huge amounts of corporate dole.

In much of the West, the actual reality of neo-liberalism and the market is stagnating or declining wages in real terms, high levels of personal debt and a permanent underclass, while the rich and their corporations to rake in record profits and salt away wealth in tax havens.

Corporate plunder in India 

Thatcher was a handmaiden of the rich. Her role was to destroy ‘subversive’ or socialist tendencies within Britain and to shatter the post-1945 Keynesian consensus based on full employment, fairness and a robust welfare state. She tilted the balance of power in favour of elite interests by embarking on a pro-privatisation, anti-trade union/anti-welfare state policy agenda. Sections of the public regarded Thatcher as a strong leader who would get things done, where others before her had been too weak and dithered. In India, Narendra Modi has been portrayed in a similar light.

His government is attempting to move ahead with ‘reforms’ that others dragged their feet on. To date, India has experienced a brand of ‘neo-liberalism lite’. Yet what we have seen thus far has been state-backed violence and human rights abuses to ‘secure’ tribal areas for rich foreign and Indian corporations, increasing inequalities, more illicit money than ever pouring into Swiss bank accounts and massive corruption and cronyism.

Under Modi are we to witness an accelerated ‘restructuring’ of agriculture in favour of Western agribusiness? Will more farmers be forced from their land on behalf of commercial interests? Officialdom wants to depopulate rural areas by shifting over 600 million to cities. It begs the question: in an age of increasing automation, how will hundreds of millions of agriculture sector workers earn their livelihoods once they have left the land?

What type of already filthy and overburdened urban centres can play host to such a gigantic mass of humanity who were deemed ‘surplus to requirements’ in rural India and will possibly be (indeed, already are) deemed ‘surplus to requirements’ once in the cities?

Gandhi stated that the future of India lies in its villages. Rural society was regarded as India’s bedrock. But now that bedrock is being dug up. Global agritech companies have been granted license to influence key aspects of agriculture by controlling seeds and chemical inputs and by funding and thus distorting the biotech research agenda and aspects of overall development policy.

Part of that ‘development’ agenda is based on dismantling the Public Distribution System for food. Policy analyst Devinder Sharma notes that the government may eventually stop supporting farmers by doing away with the system of announcing the minimum support price for farmers and thereby reduce the subsidy outgo. He argues that farmers would be encouraged to grow cash crops for supermarkets and to ‘compete’ in a market based on trade policies that work in favour of big landowners and heavily subsidised Western agriculture.

By shifting towards a commercialised system that would also give the poor cash to buy food in the market place, rather than the almost half a million ‘ration shops’ that currently exist, the result will be what the WTO/ World Bank/IMF have been telling India to for a long time: to displace the farming population so that agribusiness can find a stronghold in India.

We need only look at what happened to the soy industry in India during the nineties, or last year’s report by GRAIN, to see how small farmers are forced from their land to benefit powerful global agritech. If it cannot be achieved by unfair trade policies and other duplicitous practices, it is achieved by repression and violence, as Helena Paul notes:

“Repression and displacement, often violent, of remaining rural populations, illness, falling local food production have all featured in this picture. Indigenous communities have been displaced and reduced to living on the capital’s rubbish dumps. This is a crime that we can rightly call genocide – the extinguishment of entire Peoples, their culture, their way of life and their environment.”

Although Helena Paul is referring to the situation in Paraguay, what she describes could well apply to India or elsewhere.

In addition, the secretive corporate-driven trade agreement being negotiated between the EU and India could fundamentally restructure Indian society in favour of Western corporate interests and adversely impact hundreds of millions and their livelihoods and traditional ways of living. And as with the proposed US-EU agreement, powerful transnational corporations would be able to by-pass national legislation that was implemented to safeguard the public’s rights. Governments could be sued by multinational companies for billions of dollars in private arbitration panels outside of national courts if laws, policies, court decisions or other actions are perceived to interfere with their investments.

A massive shift in global power and wealth from poor to rich

Current negotiations over ‘free’ trade agreements have little to do with free trade. They are more concerned with loosening regulatory barriers and bypassing any democratic processes to allow large corporations to destroy competition and siphon off wealth to the detriment of smaller, locally based firms and producers.

The planet’s super rich comprise a global elite. It is not a unified elite. But whether based in China, Russia or India, its members have to varying extents been incorporated into the Anglo-American system of trade and finance. For them, the ability to ‘do business’ is what matters, not national identity or the ability to empathise with someone toiling in a field who happened to be born on the same land mass. And in order ‘to do business’, government machinery has been corrupted and bent to serve their ends. In turn, organisations that were intended to be ‘by’ and ‘for’ ordinary working people have been successfully infiltrated and dealt with.

The increasing global takeover of agriculture by powerful agribusiness, the selling off of industrial developments built with public money and strategic assets and secretive corporate-driven trade agreements represent a massive corporate heist of wealth and power across the world. The world’s super rich regard ‘nations’ as population holding centres to be exploited whereby people are stripped of control of their livelihoods for personal gain. Whether it concerns rich oligarchs in the US or India’s billionaire business men, corporate profits and personal gain trump any notion of the ‘national interest’.

Still want a Thatcherite revolution?

Colin Todhunter is an extensively published independent writer and former social policy researcher based in the UK and India.

April 3, 2015 Posted by | Economics | , , , , , , , | Leave a comment

Sen. Menendez pleads not guilty to federal corruption charges

Press TV – April 3, 2015

US Senator Robert Menendez has pleaded not guilty to 14 federal charges of corruption.

The New Jersey Democrat was indicted on Wednesday on bribery and conspiracy offenses in connection with an ongoing investigation into his unlawful dealings with Salomon Melgen, a Florida doctor and longtime political donor.

A bribery charge is among the most serious accusations of corruption the federal government can make.

Menendez pleaded not guilty in Newark court on Thursday.

The senator, who has held his seat since 2006, was charged with accepting nearly $1 million in gifts and campaign contributions from Melgen in exchange for political favors.

He will have to turn over his passport, according to multiple reports.

“Prosecutors at the Justice Department don’t know the difference between friendship and corruption and have chosen to twist my duties as a senator and my friendship into something that is improper,” Menendez said during a brief press conference on Wednesday.

Menendez is the first US senator to face federal bribery charges since 1980 when Harrison A. Williams Jr., another New Jersey Democrat, was indicted as part of the federal corruption investigation known as Abscam.

Menendez is the chairman of the Senate Foreign Relations Committee and a key voice on Capitol Hill to call for increased sanctions against Iran.

Melgen, who was also named in the incitement, pleaded not guilty Thursday.

April 3, 2015 Posted by | Corruption, Deception | , | Leave a comment

Europe and the BRICS countries forge an independent rating system

By Ian BLOHM | Oriental Review | April 2, 2015

Despite attempts to portray the work of the “big three” as globally oriented, the rating agencies maintain a close link to the US financial institutions. The 2008 economic crisis sent their reputations reeling. Now the global market for making ratings needs to be de-monopolized and equipped with new, transparent tools for working with risk.

Currently, Fitch, Standard & Poor’s, and Moody’s enjoy almost complete legal immunity for their evaluations and are guaranteed high profits, regardless of the consequences. According to the French edition of Le Monde, between 2000 and 2007, Moody’s earnings quadrupled, thanks to CMBS, ABS, CDO, and other securities that had become the main source of the company’s financial gains, with a profitability margin of 52%. Unfortunately, accurate data on S&P and Fitch are not published, although it would be interesting to look at the accounting records of these organizations that insist on full transparency for everyone but themselves.

In any event, the US taxpayer makes up for any discrepancy between the rating and the reality – suffice it to recall the 2008 scandal over the ratings of “toxic” assets within the US banking system just before the collapse of Lehman Brothers.

The way it works

Rating agencies act as a “filter” regulating the movement of investment capital from developed markets into developing ones. The mechanism is simple – any rating assigned by the “Big Three” that is used by the head of a major investment fund affects the default risk. Actual business practice is often ignored. For example, the retirement accounts of America’s senior citizens can be invested into crazy foreign financial schemes, as long as their ratings are properly pitched. The rating system is designed so that cash from banks and investment funds passes only into the “right” hands under favorable terms. This creates a type of political road map for investors, which has little to do with the real macroeconomic indicators.

But this does not stop the experts from the “Big Three.” “Imagine a large group of people arguing strenuously with each other,” David Levey, a former managing director of Moody’s, told Foreign Affairs. “It could sometimes get to that. These were very exciting meetings and often there were substantial disagreements. In every case, the ultimate decision was made by majority vote.” But were any of the people involved in these debates elected? And on what basis did they wield such influence?

In 2011, this question was answered by William Harrington, a former senior president at Moody’s (a voice in the wilderness, indeed). “This salient conflict of interest permeates all levels of employment, from entry-level analyst to the chairman and chief executive officer of Moody’s corporation,” Harrington said in a filing to the US financial regulator, the Securities and Exchange Commission (SEC).

The myth that the rating agencies are a “global” business.

With a single stroke of a pen, highly rated players are given a significant competitive advantage based on their proximity to the source of investment. To ensure political control over developing markets, the analyses of all three ratings agencies always include assessment criteria that affect the overall result. At Moody’s, for example, those criteria are called “institutional strength” or “susceptibility to event risk.”

At their own risk and peril, agency analysts evaluate the stability of the institutions of a sovereign player, on the basis of some kind of “global” paradigm of historical development. Not one of the agencies is entirely forthcoming about its methodology for assigning ratings. And this is hardly surprising – how else to explain high ratings to the press, given sovereign bankruptcies, in, for example, Iceland?

The idea of global development, as part of a neoliberal world order, arose only recently (in the late 1980s) and is, like many ideological concepts, a political tool. The agencies, however, use this idea in all their documents, all the while professing objectivity. To evaluate developing markets, regardless of the local conditions, the “universal” IMF criteria are used, such as the degree of privatization and liberalization of the national economy. The crises in Latin America offer clear evidence of what happens when a government is prompted by the “ratings racket” to sell off its liquid assets during a period of financial instability.

For example, in February 2015, the rating agency Moody’s downgraded the credit rating of the Brazilian oil and gas company Petrobras from Baa2 to Ba2, and as a result the company plunged from “investment grade” to “speculative.” The influential Brazilian edition of Jornal do Brasil calls that decision “absurd and premeditated robbery” and asks – what is more significant, the three million barrels per day produced by Petrobras or the opinion of a group of anonymous Moody’s analysts who upheld Greece’s high rating until the bitter end.

The “good” and “bad” guys

It has long been noted that if a more or less sovereign government comes to power in a country that has been exhausted by the neoliberal economic programmes, the “Big Three’s” ratings begin to drop as if by magic. The most remarkable story in recent times has been seen in France. In 2012 the French market, one of the most highly developed in the EU, found itself on the rating agencies’ “bad guys” list, due to its “incorrect” tax policy and the government’s refusal to relegate its local culture to the mercies of the anonymous forces of the financial market.

According to the journalist Édouard Tétreau, (Le Monde) in his article “The United States of Europe vs. the dream of Standard & Poor’s,” ratings are manipulated in order to “Balkanize” Europe. To counter this, he prescribes the creation of real banks in Europe that can “send the brokers on Wall Street and the City of London packing.” During the assaults on the EU’s credit, Antonio Tajani, a former vice president of the European Commission, told El País that the rating agencies “work for the dollar.” In short, when it comes to evaluating the real economic indicators, old Europe is doing its best to distance itself from the ratings.

Among Europe’s “good guys,” the rating agencies list only the minuscule economies of the Baltic states of Lithuania, Latvia, and Estonia, which in 2014 received upgraded investment ratings from S&P for their progress in tax reform.

In the US, the “Big Three” are evidence of the miracles of lobbying. On January 12, 2003, the state of Georgia passed strong anti-fraud laws drafted by consumer advocates. Four days later, Standard & Poor’s announced that if Georgia passed anti-fraud penalties for corrupt mortgage brokers and lenders, packaging including such debts could not be given AAA ratings. S&P’s move meant Georgia lenders would have no access to the securitization money machine. It is interesting that this situation arose five years before the time bomb known as the subprime crisis went off.

Is there an alternative?

The rating market is in dire need of de-monopolization. “We can’t have private companies, whose primary goal is maximizing profit, behaving like sovereign judges passing down opinions that are binding for disinterested third parties,” believes Thomas Straubhaar, the director of the Hamburg Institute of International Economics. The BRICS countries are solidly united with Europe in the search for alternatives to the “Big Three.”

New, transnational rating agencies, such as the Universal Credit Rating Group (UCRG), will be an important milestone in the rating market. UCRG was created in 2012 as a partnership between the Chinese rating agency Dagong, Russia’s RusRating, and United States’ Egan-Jones. The fundamental principle behind the formation of new transnational actors must be the requirement that they are unbiased and unaffiliated with any state or corporate entity.

Ian Blohm is the economist and international financial adviser of the Polish origin. He is currently based in Moscow and can be reached at ian_blohm@myway.com

April 3, 2015 Posted by | Deception, Economics | , , , , , | Leave a comment