Aletho News

ΑΛΗΘΩΣ

Spanish protesters begin longest march yet

Press TV – June 25, 2011
Anti-government protests in Barcelona, Spain on June 19, 2011

Spanish protesters have set off from Barcelona, marching toward the capital, Madrid, on their last and longest march against unemployment, welfare cuts and corruption.

The protesters, who currently number around 50, plan to campaign in every midway city to gather support for the Madrid rally, which is expected to take place on July 24, AFP reported.

The country has witnessed non-stop anti-government demonstrations since May 15.

“First we took to the streets, then the squares, and now the highways,” said Rafael de la Rubia, international coordinator of the movement World without War, who is among the demonstrators.

“After that, we will take Europe,” he asserted.

Spain is struggling to recover from nearly two years of recession triggered for the most part by the collapse of an overheated real estate sector.

The country’s unemployment rate has reportedly surpassed 21 percent in the first quarter of the year — the highest rate recorded for joblessness in the industrialized world.

Currently, some nine million people suffer from poverty across the country.

Last month, Amnesty International warned that hundreds of thousands of families in Spain are at the risk of losing their homes.

Protests are expected to continue as the Bank of Spain says the crippled economy will likely keep the recovery rate slow and the jobless figure will likely remain high for the foreseeable future.

June 25, 2011 Posted by | Corruption, Economics, Solidarity and Activism | Leave a comment

The Myth of Precision-Guided Coercion

By FRANKLIN C. SPINNEY | CounterPunch | June 22, 2011

At the end of May the British press was filled with stories headlined “Gaddafi to be told to stand down or face Apache attack.” As of this writing, the Apaches have attacked, but Gaddafi has not stood down.

The Apache threat is a case study in the sterile but financially lucrative marriage of coercive diplomacy to surgical strikes by precision guided weapons. What passes for a war strategy in Libya is now a comic opera starring NATO as an understrength, self-referencing techno bully, who acts as if he is now so fearsome that he does not even need a carrot to go with his stick.

In effect, the British press said NATO forces were telegraphing their punch. NATO was about to deploy eight attack helicopters, four British Apaches and four French Tigers, armed with Hellfire precision-guided missiles, like those fired from US Predator drones in Pakistan, Yemen, and Libya. The Hellfires were to be targeted against Qaddafi’s forces besieging the Libyan city of Misrata in a desperate hope that that Qaddafi’s forces would crumble or withdraw their support from him.

The psychology described in these reports was not an aberration; it reflects a techno-dependency that comes straight out of the US playbook. In fact, the US version of technological supremacy eliminates the need for cleverness in a military strategist. The mental labors of a Sun Tzu, Napoleon, Grant, or a Manstein are no longer needed, because they can be displaced by silver bullets spit out by machines. All that is needed in a ‘strategist’ is the ability to construct coarse threats, even when, as in the case of Libya, the bullies making those threats are manifestly out of altitude, airspeed, and ideas.

This kind of primitive thinking proves again the extent to which NATO has bought into the flawed US ideology that its technological advantage gives it the ability to coerce all opponents into doing their bidding, even though NATO’s European forces can not afford to waste money on a scale remotely approaching that of the US. You would think a European planner would understand this economic limitation, if not the fallacy of ideology itself. After all, the European planners in NATO have seen this nonsense before — in the Balkan Wars of the 1990s, not to mention Afghanistan and Pakistan.

The central idea in the compound theory of precision-guided coercion is a marriage of the military theory of techno-war, especially the use of high tech surveillance systems and precision-guided weapons, to the political theory of coercive diplomacy. This marriage is more a product of the Pentagon’s advocates of techno-war than the go-along bureaucrats in Foggy Bottom. The Pentagonians sold the succession of Presidents after 1990 on the idea of combining the cold-war inspired theory of the Revolution in Military Affairs (RMA) with post-cold war foreign policies. The RMA (not to mention the Apache attack helicopter) was originally conceived for fighting the tank-heavy forces of the Warsaw Pact on the North German plain, although the roots of using precision guided weapons and surgical strikes can be traced back to the disgraced theory of gradual escalation in Vietnam and the theory of daylight precision bombing in WWII.

Its contemporary reincarnation was spearheaded by William Perry over a twenty year period between the mid 70s and mid 90s. Perry, a quintessential military-industrial operator, equally at home in the Pentagon, the boardroom, or in the lecture halls at Stanford University, got the ball rolling during the height of the Cold War when he was Director of Defense Research and Engineering in the late 1970s during the Carter Administration, and then he sealed it into the post-cold war mindset when he was Deputy Secretary and Secretary of Defense during the Clinton Administration in the 1990s. The Reaganauts merely followed his script during the interregnum in the 1980s by blindly pouring money into high-cost programs he worked so hard to start during the 1970s.

In the 1990s, when the Soviet Union and the Warsaw Pact evaporated, the threat of a peace dividend terrified the Pentagon, the contractors, and their wholly owned subsidiaries in Congress. Perry helped save the day by twisting old cold-war ideas into their contemporary form by combining the military theory of precision strikes to the political theory of coercive diplomacy that had become so attractive to the self-styled foreign policy elite housed in think tanks and academia, awaiting their calls to government service. Most of these ‘elites’ are trained in political science (itself and oxymoron), have little or no military experience, are technological illiterates, and lust after the policy jobs in the Pentagon and Foggy Bottom — in short, they are perfect consumers of the fools gold produced by the technically savvy alchemists of the MICC, like Perry and his ilk.

Coercive diplomacy assumes that carefully calibrated doses of punishment (sticks that would sometimes be accompanied by carrots, but not necessarily) will ineluctably persuade an adversary to act in a way that we would deem acceptable. There is, for example, no carrot in the case of Qaddafi, where Nato is trying to coerce him into leaving office, so NATO can send him to the dock in the Hague to stand trial for crimes against humanity. Some choice! In theory, the precision guidance technologies give the military a capability to carefully calibrate the coercion by surgically striking selected targets with so-called precision-guided weapons, fired from a safe distance, with no friendly casualties, and little unintended damage. Hi-tech surveillance systems would enable target identification and selection and then monitor the effects of the surgical strikes — thus reducing strategy to a cybernetic negative feedback control system, a conception not unlike that of a common household thermostat.

This marriage of primitive pop psychology with the simplistic promises of hi-tech weapons makes war look easy, safe, and cheap — and therefore easy to sell to Presidents with little or no military experience but who are under political pressure to do something ‘decisive.’ These benefits quickly became evident in the United States’ increasing addiction to pointless drive-by shootings with cruise missiles and precision-guided bombs in the 1990s — e.g., bombing a pharmaceutical plant in the Sudan, or destroying an Al Qaeda obstacle course in Afghanistan, not to mention the endless attacks on Iraq’s air defense sites in the 1990s. This mode of thinking is now clearly evident in NATO’s operations against Qaddafi in Libya.

The military dimension of this theory was eagerly adopted by the US foreign policy elite during the 1980s and 1990s, because it mechanized their simplistic theories of coercion by giving them a tool to play their game. Madeline Albright, in particular, as Clinton’s Secretary of State, became addicted to coercive diplomacy in the Balkans, backed up by tit-for-tat surgical strikes. According to General Colin Powell’s memoirs, she once almost gave him an aneurism by demanding, “What’s the point of having this superb military you’re always talking about, if we can’t use it?” Albright and Perry got their first chance to strut their stuff in Operation Deliberate Force in Bosnia in September 1995. While they claimed it was a stunning success, and notwithstanding the uncritical acceptance of these claims by the mainstream media, the results were ambiguous, to put it charitably.

Some might argue I am being unfair. Surely, the damage done in 11 days by the 708 guided weapons striking 48 target complexes forced Slobodan Miloševic to the bargaining table at Dayton. Did that not prove, to paraphrase Richard Holbrooke’s remarks to the annual convention of the Air Force Association in 1996, that more bombing leads to better diplomacy?

That argument, however, ignores the decisive effects of Operation Storm, the August 1995 Croatian ground offensive that cleansed the Krajina of more than 200,000 Serbs and changed the situation on the ground in Bosnia by cutting the Bosnian Serb supply lines. It also fails to consider that all the belligerents were exhausted and needed a rest. Nevertheless, the lesson the marriage partners wanted to learn, namely that a weak-willed Miloševic would respond predictably to precision-guided coercion, did have one effect: It set the stage for the gross miscalculation at the so-called Rambouillet peace conference.

This can be seen in an intelligence analysis of Miloševic’s psychology in late 1998 and early 1999. A U.S. National Intelligence Estimate issued in November 1998 (quoted in the Washington Post of April 8,1999) said, “Miloševic is susceptible to outside pressure. He will eventually accept a number of outcomes [in Kosovo], from autonomy to provisional status with final resolution to be determined, as long as he remains the undisputed leader in Belgrade.” An interagency report coordinated by the Central Intelligence Agency in January 1999 (reported in the April 18, 1999 New York Times) went even further, saying “After enough of a defense to sustain his honor and assuage his backers [Miloševic] will quickly sue for peace.”

The Rambouillet “Accord” aimed to give Miloševic a chance to defend his honor. That NATO’s demands were unacceptable should be no surprise. Like the infamous Austro-Hungarian diktat to Serbia in 1914, they were blatant infringements on Serbia’s national sovereignty. The Accord’s military implementation annex (Appendix B) proposed to give NATO forces “free and unimpeded access throughout the FRY” [Federal Republic of Yugoslavia, i.e., Serbia, Montenegro, and Kosovo], immunity from “arrest, investigation or detention,” and authorized NATO to “detain” Serbian individuals and turn them over to unspecified “appropriate authorities.”

The plan backfired. Miloševic did not react predictably like a mechanical thermostat, but chose instead to escalate rapidly by unleashing his forces in Kosovo — whereupon the “carefully calibrated” limited bombing campaign aimed at changing one man’s behavior exploded into a general war against the Serbian people. NATO had expanded the target list to include the Serbian power grid and civilian infrastructure, the war settled into a grinding siege of attrition, and planners worried about running out of cruise missiles. The conduct of the bombing campaign was shaped more by the speed with which targets got through the approval cycle than by any strategy linking a particular target’s destruction to a desired tactical or strategic effect. As a result, NATO bombers effectively destroyed the economic infrastructure of a tiny nation with an economy smaller than that of Fairfax County, Virginia.

U.S. military planners had predicted that a “precision” bombing campaign would force the Serbs to capitulate in only two to three days, but the air campaign ground on for seventy-nine days. At war’s end, U.S. forces had flown only 15 per cent as many strike sorties as in Operation Desert Storm against Iraq in 1991, but had expended 72 per cent as many precision-guided munitions and 94 per cent as many cruise missiles.

When it was over, NATO intelligence determined that only minute quantities of Serbian tanks, armored personnel carriers, self-propelled artillery, and trucks—all high-priority targets—were destroyed, in part because the Serbs fooled our complex surveillance and precision guidance technologies with simple decoys. There are even reports that they used cheap microwave ovens as decoys to attract our enormously expensive radar homing missiles. Serbian troops marched out of Kosovo in good order, their fighting spirit intact, displaying clean equipment and crisp uniforms, and in larger numbers than planners said were in Kosovo to begin with. Moreover, the terms of Serb “surrender,” which the undefeated Serb military regarded as a sellout by Serbian president Miloševic, were the same as those the Serbs agreed to at the Rambouillet Conference, before U.S. negotiators led by Secretary of State Madeleine Albright inserted a poison pill (in the form of the military annex mentioned above) to queer the deal.

Of course, the weapons makers love the marriage of high-cost precision weapons to coercive diplomacy, because it generates an astronomical need for a never ending flow of money into their financial coffers with orders for new weapons, even when the quantity of those weapons decreases. Congressmen love it because the money and patronage continues to flow to their districts. So, the economic result is what we in the Pentagon used to call a self-licking ice cream cone. And the cone has become particularly tasty in the age of perpetual small wars we have created after the Cold War ended in 1991. [Readers interested in the domestic causes of this perpetual war are referred to my essay, The Domestic Roots of Perpetual War.]

Will precision guided coercion get lucky and eventually work for NATO in its pissant operation in Libya?

Perhaps. After all, Qaddafi’s forces are tiny, ill equipped and poorly trained. They can not possibly be compared in terms of effectiveness to the Serb Army in the 1990s. On the other hand, England and France cannot afford to waste money on the scale of the US. Moreover, it is by no means certain that the theory will work in Libya: it did not and has not worked in Iraq or Afghanistan, where the decapitations of Saddam and Osama were done the old fashioned way via lots of detective work coupled with by activities that looked more like those of a police SWAT team than a military combat operation. In any case, it is not at all clear that these decapitations are silver bullets that achieve anything beyond soothing our pride. The Pentagon and its wholly owned subsidiaries in Congress certainly do not want these decapitations to end the perpetual war. Indeed, Buck McKeon, Chairman of the House Armed Services Committee, is madly trying to legislate the idea that the terrorist threat posed by Al Qaeda has mutated and the long war will continue for the foreseeable future.

If the marriage of coercive diplomacy to surgical strikes succeeds in Libya, its proponents will trumpet it as a canonical proof of their theory. If it fails again like it did in Kosovo, it won’t matter. There will be no divorce in the US, and the union will live on and grow richer. The high-cost of precision guided coercion may bankrupt England and France and reduce the foreign market for US weapons, but that is a small price to pay. It will not affect the money flowing into the coffers of the US Military – Industrial – Congressional Complex. That is because new, more-expensive weapons are always on the drawing board to discount any failures in the present weapons. In this way, the promise of new technology repeatedly washes the inconvenient truth of history from what is left of the critical faculties of the mind.

No one will question what is a patently silly way of thinking, because, as the late American strategist Colonel John Boyd used to say, ‘the real strategy is don’t interrupt the money flow, add to it’ — and that always works like a charm in Versailles on the Potomac, if not Brussels.

~

Franklin “Chuck” Spinney is a former military analyst for the Pentagon. He currently lives on a sailboat in the Mediterranean and can be reached at chuck_spinney@mac.com

June 22, 2011 Posted by | Corruption, Militarism | Leave a comment

Which Bankrupt EU State Is the World’s Fourth Biggest Arms Importer?

By Steve McGiffen | Spectrezine | June 21st, 2011

Nothing exposes the hypocrisy of those currently running the EU and almost every one of its member states more than the recent discovery by French journalist Jean-Louis Denier that the Greek government is being encouraged to spend vast sums of money on a range of hardware which no-one needs and no sane person wants.

Having spent the last couple of years arguing that austerity is not the ‘necessary’ policy response demanded by the financial and economic crisis, I find that, behind the scenes, it isn’t in any real sense austerity which is happening at all.

It turns out that throughout this crisis of Greek public debt, and under the direction of the same international potentates who are imposing cuts in spending on welfare, pensions, health care, the public sector and all of the other usual targets, the country’s ‘socialist’ government has continued to spend vast sums on armaments.

The fact that the principal suppliers of these arms are two of ‘austerity’s’ biggest proponents, the USA and Germany, should not surprise us. We have moved beyond a situation in which lying by leaders is not so much accepted as expected, into one in which reality plays no role whatsoever in their discourse.

Greece may, in the estimation of politicians and the mass media, be a badly-governed, corrupt kleptocracy populated by robber barons and a lazy, feckless class of reluctant workers, but it is at least armed to the teeth. The immediate cause of Greece’s financial crisis was a doubling, from 2005 to 2008, of the value of loans from western banks to the country’s government. By the end of that period, these loans amounted to $160 billion.

At the same time, the ‘defence’ bill of this relatively small, relatively poor European Union member state was growing by a third in five years (to 2009) as it became the world’s fourth largest importer of armaments.

This is a country with fewer than 11 million people, one of the world’s lowest birth-rates, and a negative rate of growth. With a GDP close to that of Spain it isn’t as poor as sometimes assumed, but its wealth is unequally distributed and it spends only 4% of its annual budget on education, putting it 105th in a global league table. Within the EU, only Slovakia spends proportionally less on schooling its people.

The Greek ‘defence’ budget, moreover, is higher than this, at 4.3% of GDP. Such figures can be hard to credit.

It’s more than two thousand years since any part of Greece was a superpower, yet its leaders prefer bombs to books. It is thus clear that the ever-increasing bail-outs are in reality, directly or indirectly, consecrated to the purchase of arms. Year on year, Greece has been spending money it does not have on weapons it does not need.

According to a joint investigation by Greek and German justices, bribery of top Greek politicians, public officials and military leaders has been used to secure contracts. The money to purchase these weapons is supplied by bank loans which come from the same countries which are supplying the arms, including the US, Germany and France. About $3 billion on French combat helicopters; $2 billion on US fighter planes; roughly the same figure on French Mirage aircraft; almost three times that sum on German submarines; and a trifling half a million or so on French combat helicopters.

This presumably exempts Greece from recent criticism from outgoing US Defence Secretary Robert Gates that Europeans don’t spend enough on arming themselves. Just what Greece is expecting to defend itself from is unclear.

Its old enemy Turkey is in fact gradually reducing its arms purchases and last year proposed to Greece an accord under which each would cut its spending on weaponry by 20%. Despite its financial crisis, Greece refused to agree to this.

Only in 2009 did Athens start to experience difficulties in paying for imported arms, and at that point the EU began to show concern. When it could meet the bill for the astronomical sums spent on weaponry which, mercifully enough, is for the most part unlikely ever to be used, no-one had a problem.

This puts into a strange new context the recent spat between Germany and the European Central Bank as to how best to help Greece to pay its debts without destabilising markets. Every single aspect of this row serves merely to cover up the reality of a situation in which a middle-income country can no longer afford to provide the means whereby its people can lead decent, productive, satisfying lives, yet can spend billions and billions on instruments designed to bring other lives to a premature end.

Back in Greece, protests continue as a new round of cuts, amounting to €6.5 billion before the end of 2011, is debated in the Greek parliament. Deputies from the ruling former social-democratic PASOK are beginning to defect.

I was recently asked an interesting question by a young American woman who had been watching events unfolding in Spain. An uprising in a dictatorship has an easy solution, in a sense, she said: you can introduce parliamentary democracy and hope that this provides a platform for resolving grievances which everyone can respect. But what happens if you have an uprising in a parliamentary democracy?

I couldn’t answer. But I suspect we may soon find out.

June 21, 2011 Posted by | Corruption, Militarism | Leave a comment

Deutsche Bank writes German Finance Ministry’s Greek debt policy, documentary reveals

By Jane Burgermeister | June 17, 2011

The German government’s policy on debt restructuring for Greece is lifted directly from policy papers prepared by the Deutsche Bank, it has emerged.
The proposal floated at the beginning of June by the German Finance Minister Wolfgang Schäuble for a voluntary bond swap leading to a prolongation of the outstanding Greek sovereign bonds by seven years is based on a document by Deutsche Bank, investigative reporters from Germany’s ARD TV station have revealed.

http://www.wdr.de/tv/monitor/sendungen/2011/0616/Griechenland.php5

The Deutsche Bank document called “Proposal for Greek liability management exercise – burden sharing without haircuts” insisted, not surprisingly, on a voluntary participation by banks.

The revelation that the Finance Ministry in Berlin just takes over the contents of policy papers of Deutsche Bank offers yet more proof that Chancellor Angela Merkel and Wolfgang Schäuble are puppets of the commercial banks.

Merkel and Deutsche Bank CEO Josef Ackermann attended this year’s Bilderberg conference in Switzerland and would have had ample opportunity to discuss ways and means to expropriate yet more money from the tax payers under one pretext or another.

The Deutsche Bank plan brings no real relief to Greece from the loan sharking operation run by the EU and ECB, which, acting like the Federal Reserve, flooded the Greek economy with cheap money in a boom phase before helping to ignite a bust, allowing banks like Deutsche Bank to call in the debts, seize collateral and impose loans at penal interest rates which tax payers across the eurozone have to pay.

Also, Deutsche Bank itself broke a voluntary agreement to retain Greek souverein bonds, offloading them in stealth on the ECB. The ECB holds billions of dubious Greek debt against the rules and it is the tax payer’s who will have to pay.

Of what worth are voluntary agreements when Deutsche Bank breaks them?

The proposal by Schäuble was a PR stunt to hoodwink the electorate and the increasingly restive German parliament, worried that the scenes in Athens might soon be repeated in Berlin.

Yet another theatrical PR stunt was the announcement by Merkel at a joint press conference with Nicholas Sarkozy today that Germany is not going to insist on private creditors reducing their interest rates for Greece, after all. What a surprise!

June 18, 2011 Posted by | Corruption, Deception | Leave a comment

Berlusconi suffers defeat in referendum

Press TV – June 13, 2011

The majority of Italians have backed an opposition-proposed referendum which calls for abolishing immunity for Prime Minister Silvio Berlusconi and banning nuclear power production.

The government worked hard to keep the turnout below 50 percent to be able to scrap the vote, but Italians flocked the polls to vote in opposition to the government.

With the turnout of 57 percent, over 90 percent voted against the government, since the majority of voters were opponents.

The opposition has already begun calling on the government to step down.

“At this point they should resign,” Pier Luigi Bersani, the leader of Italy’s main opposition Democratic Party, told reporters.

During the two-day referendum, Italians voted against legislation that allows the country’s ministers to avoid attending corruption trials. They further opposed an existing law that forces the privatization of local water utilities, as well as a plan to resume nuclear power production.

The Italians’ main concern was voting on whether their country should resume nuclear power production, following Japan’s Fukushima Daiichi nuclear plant disaster triggered by a powerful earthquake and an ensuing tsunami in March.

The nuclear vote aimed at putting an end to Berlusconi’s plans to restart Italy’s atomic energy program by 2014.

Most of those who participated in the referendums were reportedly supporters of the center-left opposition. Berlusconi, on the other hand, had urged his supporters to boycott the ballot.

The referendum is widely viewed as a test measuring Berlusconi’s popularity and power base. The Italian premier is currently involved in four corruption trials.

The 74-year-old has had an extensive history of criminal allegations, including mafia involvement, corruption, and bribery of police officers, lawyers, and judges.

The vote comes after Berlusconi’s party suffered a humiliating defeat in mayoral elections in Milan and Naples last month.

June 14, 2011 Posted by | Corruption, Nuclear Power | Leave a comment

Protests continue in Spain

Press TV – May 29, 2011

Spaniards remain camped out at Madrid’s main square, despite tight security, to protest against the government’s austerity measures and growing unemployment rate.

Thousands of angry protesters have packed the capital’s Puerta Del Sol square, since the protests began two weeks ago, and promised to stay out in makeshift tents until Sunday, a Press TV correspondent reported on Sunday.

The leading protest group known as “the indignants” once again took to Madrid’s main square to decide whether to carry on a vigil, AFP reported.

In Barcelona, fresh clashes erupted between protesters and police amid a mass celebration following Barcelona’s Champions League 3-1 win against Manchester United.

On Friday, similar clashes in Spain’s second-largest city left over a hundred protesters wounded after police ordered them to move their tents out of Catalonia Square.

Jorge Naroja, a spokesman for the “Democracia Real Ya” (Real Democracy Now) compared protests in Spain with the anti-government movements in the Middle East and North Africa, saying what they have in common is protesters’ courage and their determination to fight corrupt politicians and dictators.

The protests in Spain are inspired by the recent revolutions in Tunisia and Egypt as pas part of the Islamic Awakening that has been sweeping across the Middle East and North Africa.

Spain has been witnessing demonstrations against the government’s austerity measures since mid-May.

The massive protests came after the government of Spanish Prime Minister Jose Luis Rodrigues Zapatero introduced a slew of drastic austerity measures.

The measures include the cutting of civil servant wages, as part of its plans to curb the budget deficit from 11 percent a year earlier to within three percent of the GDP, a limit set by the European Union by 2013.

May 29, 2011 Posted by | Corruption, Solidarity and Activism | Leave a comment

$6.64 Billion Damages Sought over Israeli Government and AIPAC Use of Stolen Classified US Trade Data

Grant F. Smith | IRmep | May 24, 2011

WASHINGTON–(BUSINESS WIRE)–Today the Section 301 Committee of the US Trade Representative formally received a petition demanding $6.64 billion in compensation for US exporters. In 1984 US exporters were urged to submit business confidential data about their prices, market share, internal costs and market strategy to the International Trade Commission. The USTR guaranteed confidentiality and compiled the data into a classified report for use in negotiating the US-Israel Free Trade Agreement.

The Israeli government obtained the classified USTR report and passed it to the American Israel Public Affairs Committee to use in lobbying and public relations. Declassified FBI investigation files in the petition reveal AIPAC’s legislative director made illicit duplications before returning the report by order of the USTR. The FBI interviewed Israeli Minister of Economics Dan Halpern who admitted obtaining the classified document and giving it to AIPAC.

According to the petition Israel unfairly leveraged the business confidential data stolen from US corporations and industry groups to create new export oriented industries to penetrate the American market. Israel thereby gained an unwarranted systemic advantage. The US-Israel FTA is an anomaly among all bilateral FTAs in that it principally benefits the foreign party, providing a destination for 40% of Israel’s exports. The petition claims it is now a private industry funded foreign aid program. In 2010 the US Israel FTA produced an $11.2 billion US deficit in goods trade. Over a decade the US deficit has averaged $7.09 billion per year. The cumulative US-Israel deficit in current dollars since 1985 is $80.9 billion.

Analysis of all other US-bilateral FTAs reveals that they do not deliver a systemic advantage to either partner. In 2010, the US had a $31.43 billion total surplus with its other bilateral FTA partners, though in 2006 and 2007 these same agreements produced a narrow US deficit.

The petition recommends the $6.64 billion be proportionally divided between nearly 80 US organizations according to their trailing 10 year revenues. If the Israeli government will not pay damages directly, the petition recommends the US implement a five year import duty over all Israeli exports to the United States to generate the compensation.

For information about the petition and compensation formula, contact Grant F. Smith at the Institute for Research: Middle Eastern Policy in Washington, DC at 202-342-7325 or by email at info@IRmep.org.

May 28, 2011 Posted by | Corruption, Economics, Timeless or most popular | Leave a comment

Breakup of the Eurozone?

Is Iceland’s Rejection of Financial Bullying a Model for Greece and Ireland?

By MICHAEL HUDSON | CounterPunch | May 27, 2011

Last month Iceland voted against submitting to British and Dutch demands that it compensate their national bank insurance agencies for bailing out their own domestic Icesave depositors. This was the second vote against settlement (by a ratio of 3:2), and Icelandic support for membership in the Eurozone has fallen to just 30 per cent. The feeling is that European politics are being run for the benefit of bankers, not the social democracy that Iceland imagined was the guiding philosophy – as indeed it was when the European Economic Community (Common Market) was formed in 1957.

By permitting Britain and the Netherlands to blackball Iceland to pay for the mistakes of Gordon Brown and his Dutch counterparts, Europe has made Icelandic membership conditional upon imposing financial austerity and poverty on the population – all to pay money that legally it does not owe. The problem is to find an honest court willing to enforce Europe’s own banking laws placing responsibility where it legally lies.

The reason why the EU has fought so hard to make Iceland’s government take responsibility for Icesave debts is what creditors call “contagion.” Ireland and Greece are faced with much larger debts. Europe’s creditor “troika” – the European Central Bank (ECB), European Commission and the IMF – view debt write-downs and progressive taxation to protect their domestic economies as a communicable disease.

Like Greece, Ireland asked for debt relief so that its government would not be forced to slash spending in the face of deepening recession. “The Irish press reported that EU officials ‘hit the roof’ when Irish negotiators talked of broader burden-sharing. The European Central Bank is afraid that any such move would cause instant contagion through the debt markets of southern Europe,” wrote one journalist, warning that the cost of taking reckless public debt onto the national balance sheet threatened to bankrupt the economy.

Europe – in effect, German and Dutch banks – refused to let the government scale back the debts it had taken on (except to smaller and less politically influential depositors). “The comments came just as the EU authorities were ruling out investor ‘haircuts’ in Ireland, making this a condition for the country’s €85bn (£72bn) loan package. Dublin has imposed 80 percent haircuts on the junior debt of Anglo Irish Bank but has not extended this to senior debt, viewed as sacrosanct.” (Ambrose Evans-Pritchard, Daily Telegraph.)

At issue from Europe’s vantage point – at least that of its bankers – is a broad principle: Governments should run their economies on behalf of banks and bondholders. They should bail out at least the senior creditors of banks that fail (that is, the big institutional investors and gamblers) and pay these debts and public debts by selling off enterprises, shifting the tax burden onto labor. To balance their budgets they are to cut back spending programs, lower public employment and wages, and charge more for public services, from medical care to education.

This austerity program (“financial rescue”) has come to a head just one year after Greece was advanced $155 billion bailout package in May 2010. Displeased at how slowly the nation has moved to carve up its economy, the ECB has told Greece to start privatizing up to $70 billion by 2015. The sell-offs are to be headed by prime tourist real estate and the remaining government stakes in the national gambling monopoly OPAP, the Postbank, the Athens and Thessaloniki ports, the Thessaloniki Water and Sewer Company and the telephone monopoly. Jean-Claude Juncker, Luxembourg’s Prime Minister and chairman of the Eurozone’s group of finance ministers, warned that only if Greece agreed to start selling off assets (“consolidating its budget”) would the EU agree to stretch out loan maturities for Greek debt and “save” it from default.

The problem is that privatization and regressive tax shifts raise the cost of living and doing business. This makes economies less competitive, and hence even less able to pay debts that are accruing interest, leading toward a larger ultimate default.

The textbook financial response of turning the economy into a set of tollbooths to sell off is predatory. Third World countries demonstrated its destructive consequences from the 1970s onward under IMF austerity planning. Europe is now repeating the same shrinkage.

Financial power is to achieve what military conquest had done in times past. Pretending to make subject economies more “competitive,” the aim is more short-run: to squeeze out enough payments so that bondholders (and indeed, voters) will not be obliged to confront the reality that many debts are unpayable except at the price of making the economy too debt-ridden, too regressively tax-ridden and too burdened with rising privatized infrastructure charges to be competitive. Spending cutbacks and a regressive tax shift dry up capital investment and productivity in the long run. Such economies are run like companies taken over by debt-leveraged raiders on credit, who downsize and outsource their labor force so as to squeeze out enough revenue to pay their own creditors – who take what they can and run. The tactic attack of this financial attack is no longer overt military force as in days of yore, but something less costly because its victims submit more voluntarily.

But the intended victims of predatory finance are fighting back. And instead of the attacker losing their armies and manpower, it is their balance sheets that are threatened – and hence their own webs of solvency. When Greek labor unions (especially in the public enterprises being privatized), the ruling Socialist Party and leading minority parties rejected such sacrifices, Eurozone officials demanded that financial planning be placed above party politics, and demanded “cross-party agreement on any overhaul of the bail-out.”  In other words, Greece should respond to its wave of labor strikes and popular protest by suspending party politics and economic democracy. “The government and the opposition should declare jointly that they commit to the reform agreements with the EU,” Mr. Juncker explained to Der Spiegel.

Criticizing Prime Minister George Papandreou’s delay at even starting to sell state assets, European financial leaders proposed a national privatization agency to act as an intermediary to transfer revenue from these assets to foreign creditors and retire public debt – and to pledge its public assets as collateral to be forfeited in case of default in payments to government bondholders. Suggesting that the government “set up an agency to privatize state assets” along the lines of the German Treuhandanstalt that sold off East German enterprises in the 1990s,” Mr. Juncker thought that “Greece could gain more from privatizations than the €50 billion ($71 billion) it has estimated” (Evans-Pritchard).

European bankers had their eye on the sale of as much as $400 billion of Greek assets – enough to pay off all the government debt. Failing payment, the ECB threatened not to accept Greek government bonds as collateral. This would prevent Greek banks from doing business, wrecking its financial system and paralyzing the economy. This threat was supposed to make privatization “democratically” approved – followed by breaking union power and lowering wages (“internal devaluation”). “Jan Kees de Jager, Dutch finance minister, has proposed that any more loans to Greece should come with collateral arrangements, in which European state lenders would take over Greek assets in the event of a sovereign default.” (Peter Spiegel, Financial Times.)

The problem is that ultimate default is inevitable, given the debt corner into which governments have recklessly deregulated the banks and cut property taxes and progressive income taxes. Default will become pressing whenever the ECB may choose to pull the plug.

The ECB makes governments unable to finance their spending

Introduction of the euro in 1999 explicitly prevented the ECB or any national central bank from financing government deficits. This means that no nation has a central bank able to do what those of Britain and the United States were created to do: monetize credit to domestic banks. The public sector has been made dependent on commercial banks and bondholders. This is  a bonanza for them, rolling back three centuries of attempts to create a mixed economy financially and industrially, by privatizing the credit creation monopoly as well as capital investment in public infrastructure monopolies now being pushed onto the sales block for bidders – on credit, with the winner being the one who promises to pay out the most interest to bankers to absorb the access fees (“economic rent”) that can be extracted.

Politics is being financialized while economies are being privatized. The financial strategy was to remove economic planning from democratically elected representatives, centralizing it in the hands of financial managers. What Benito Mussolini called “corporatism” in the 1920s (to give it its polite name) is now being achieved by Europe’s large banks and financial institutions – ironically (but I suppose inevitably) under the euphemism of “free market economics.”

Language is adapting itself to reflect the economic and political transformation (surrender?) now underway. Central bank “independence” was euphemized as the “hallmark of democracy,” not the victory of financial oligarchy. The task of rhetoric is to divert attention from the fact that the financial sector aims not to “free” markets, but to place control in the hands of financial managers – whose logic is to subject economies to austerity and even depression, sell off public land and enterprises, suffer emigration and reduce living standards in the face of a sharply increasing concentration of wealth at the top of the economic pyramid. The idea is to slash government employment, lowering public-sector salaries to lead private sector wages downward, while cutting back social services.

The internal contradiction (as Marxists would say) is that the existing mass of interest-bearing debt must grow, as it receives interest – which is re-invested to earn yet more interest. This is the “magic” or “miracle” of compound interest. The problem is that paying interest diverts revenue away from the circular flow between production and consumption. Say’s Law says that payments by producers (to employees and to producers of capital goods) must be spent, in the aggregate, on buying the products that labor and tangible capital produces. Otherwise there is a market glut and business shrinks – with the financial sector’s network of debt claims bearing the brunt.

The financial system intrudes into this circular flow. Income spent to pay creditors is not spent on goods and services; it is re-invested in new loans, or on stocks and bonds (assets in the form of financial and property claims on the economy), or increasingly on “gambling” (the “casino capitalism” of derivatives, the international carry trade (that is, exchange-rate and interest-rate arbitrage) and other financial claims that are independent of the production-and-consumption economy. So as financial assets accrue interest – bolstered by new credit creation on computer keyboards by commercial banks and central banks – the financial rake-off from the “real” economy increases.

The idea of paying debts regardless of social cost is backed by mathematical models as complex as those used by physicists designing atomic reactors. But they have a basic flaw simple enough for a grade-school math student to understand: They assume that economies can pay debts growing exponentially at a higher rate than production or exports are growing. Only by ignoring the ability to pay – by creating an economic surplus over break-even levels – can one believe that debt leveraging can produce enough financial “balance sheet” gains to pay banks, pension funds and other financial institutions that recycle their interest into new loans. Financial engineering is expected to usher in a postindustrial society that makes money from money (or rather, from credit) via rising asset prices for real estate, stocks and bonds.

It all seems much easier than earning profit from tangible investment to produce and market goods and services, because banks can fuel asset-price inflation simply by creating credit electronically on their computer keyboards. Until 2008 many families throughout the world saw the price of their home rise by more than they earned in an entire year. This cuts out the troublesome M-C-M’ cycle (using capital to produce commodities to sell at a profit), by M-M’ (buying real estate or assets already in place, or stocks and bonds already issued, and waiting for the central bank to inflate their prices by lowering interest rates and untaxing wealth so that high income investors can increase their demand for property and financial securities).

The problem is that credit is debt, and debt must be paid – with interest. And when an economy pays interest, less revenue is left over to spend on goods and services. So markets shrink, sales decline, profits fall, and there is less cash flow to pay interest and dividends. Unemployment spreads, rents fall, mortgage-holders default, and real estate is thrown onto the market at falling prices.

When asset prices crash, these debts remain in place. As the Bubble Economy turns into a nightmare, politicians are taking private (and often fraudulent) bank losses onto the public balance sheet. This is dividing European politics and even threatening to break up the Eurozone.

Breakup of the Eurozone?

Third World countries from the 1960s through 1990s were told to devalue in order to reduce labor’s purchasing power and hence imports of food, fuel and other consumer goods. But Eurozone members are locked into the euro. This leaves only the option of “internal devaluation” – lowering wage rates as an alternative to scaling back payments to creditors atop Europe’s economic pyramid.

Latvia is cited as the model success story. Its government slashed employment and public sector wages fell by 30 per cent in 2009-10. Private-sector wages followed the decline. This was applauded as a “success story” and “accepting reality.” So now, the government has put forth a “balanced budget amendment,” to go with its flat tax on labor (some 59 percent, with only a 1 percent tax on real estate). Former U.S. neoliberal presidential candidate Steve Forbes would find it an economic paradise.

“Saving the euro” is a euphemism for governments saving the financial class – and with it a debt dynamic that is nearing its end regardless of what they do. The aim is for euro-debts to Germany, the Netherlands, France and financial institutions (now joined by vulture funds) to preserve their value. (No haircuts for them). The price is to be paid by labor and industry.

Government authority is to lose most of all. Just as the public domain is to be carved up and sold to pay creditors, economic policy is being taken out of the hands of democratically elected representatives and placed in the hands of the ECB, European Commission and IMF.

Spain’s unemployment rate is 20 per cent, much as in the Baltics, with nearly twice as high an unemployment rate among recent school graduates. But as William Nassau Senior is reported to have said when told that a million Irishmen had died in the potato famine: “It is not enough!”

Can anything be enough – anything that works for more than the short run? What “helping Greece remain solvent” means in practice is to help it avoid taxing wealth (the rich aren’t paying) and help it roll back wages while obliging labor to pay more in taxes while the government (i.e. “taxpayers,” a.k.a. workers) sells off public land and enterprises to bail out foreign banks and bondholders while slashing its social spending, industrial subsidies and public infrastructure investment.

One Greek friend in my age bracket has said that his private pension (from a computing company) was slashed by the government. When his son went to collect his unemployment check, it was cut in half, on the ground that his parents allegedly had the money to support them. The price of the house they bought a few years ago has plunged. They tell me that they are no more eager to remain part of the Eurozone than the Icelandic voters showed themselves last month.

The strikes continue. Anger is rising. When incoming IMF head Christine Lagarde was French trade minister, she suggested that: “France had to revamp its labor code. Labor unions and fellow ministers balked, and Ms. Lagarde backtracked, saying she had expressed a personal opinion.” This opinion is about to become official policy – from the IMF that was acting as “good cop” to the ECB’s “bad cop.”

I suppose that all that is really needed is for people to understand just what dynamics are at work that make these attempts to pay in vain. The creditors know that the game is up. All they can do is take as much as they can, as long as they can, pay themselves bonuses that are “free” from recapture by public prosecutors, and run to their offshore banking centers.

Michael Hudson is a former Wall Street economist and Distinguished Research Professor at University of Missouri, Kansas City (UMKC).

May 27, 2011 Posted by | Corruption, Economics | Leave a comment

Dominique Strauss Kahn arrested- IMF names replacement?

Penny For Your Thoughts | May 15, 2011

That didn’t take long!
His allies are suggesting this is politically motivated….
A “conspiracy.” A word that has morphed into a buzz word used for derision & dismissal.
This arrest works out well for Sarkozy. Notice how quickly the IMF names a replacement?
Within hours.

I.M.F. Names Replacement as Chief Awaits Arraignment Strauss- Kahn, has not even been arraigned and he is out!
John Lipsky is in.

Mr. Lipsky, the I.M.F.’s first deputy managing director, is a former U.S. Treasury executive and onetime banker at JP Morgan. William Murray, an I.M.F. spokesman, said that Mr. Lipsky, who has been overseeing the logistics of the bailout of the Greek economy, would meet with members of the I.M.F. board in Washington later in the day, according to Reuters.

A JP Morgan man at the head of the IMF.

Wow! JP Morgan’s reach just got a whole lot longer. More on Mr Lipsky

Was this politically motivated?
Dominique Strauss-Kahn is victim of trap, minister suggests

A French government minister said Sunday he could not rule out that IMF head Dominique Strauss-Kahn’s arrest for alleged sexual assault was the result of a set-up with political motives. “We cannot rule out the thought of a trap,” Henri de Raincourt, minister for overseas co-operation in President Nicolas Sarkozy’s government, said in a broadcast interview.

Strauss-Kahn arrest removes Sarkozy’s toughest rival

Dominique Strauss-Kahn’s arrest on sexual assault charges removes the toughest rival to French President Nicolas Sarkozy for the 2012 presidential race, bumping up his chances of re-election to a second term.

Who benefits?

Had Kahn conducted himself in this fashion previously and got away with it?
Perhaps this time he miscalculated his political opponents?

May 15, 2011 Posted by | Corruption | Leave a comment

Italy’s Great Nuclear Swindle

The Radioactive Dictatorship of Silvio Berlusconi

By MICHAEL LEONARDI – CounterPunch – May 13, 2011

Italy’s democracy is in tatters as Silvio Berlusconi and his ruling right-wing coalition work to block a citizen’s referendum that would repeal the decision of the Berlusconi government to return to nuclear energy production on the peninsula. Italy has not produced nuclear energy since 1990 and recent polls indicate that more than 75 % of Italians are opposed to nuclear energy production. The referendum in question is on the ballot for the 12th and 13th of June, although a recent call by the Berlusconi government for a one year moratorium on the relaunch of nuclear energy in Italy threatens to push the referendum off the ballot through a last minute legal ruling. The campaign to bring this referendum to a vote was spearheaded by opposition political party Italia Dei Valori (Italy of Values) which led a broad based coalition of citizen and environmental groups to gather the 500,000 signatures needed to get the referendum on the ballot.

Italy is the only G8 country that does not produce nuclear energy. It has been free of functioning nuclear power plants since 1990 but does receive around 10% of its electricity from nuclear energy generated in France and Germany. Citizens successfully passed a referendum in 1987, one year after the catastrophic Chernobyl accident, that called for the phasing out and suspension of nuclear energy production. In 1987 Italy had two operating nuclear plants and has had four operational reactors in its history. In 2007 while campaigning for his third election, Berlusconi announced his intentions to return to nuclear energy production in Italy as a strategic part of a national energy policy.

Back in 2007 Berlusconi wasn’t the only one who supported a return to nuclear energy. Important elements of the newly formed Democratic Party also voiced their support for a return to nuclear power. A wikileaks cable 07ROME2438 revealed that Pier Luigi Bersani, the current secretary of the Italian Democratic Party who in 2007 was serving as Economic Development Minister for the Romano Prodi led Center Left coalition government, opened the door for Italy’s return to atomic energy by forging the Global Nuclear Energy Partnership agreement with then US energy secretary Samuel Bodman. At that time Bersani stated that “a return to nuclear energy was not excluded by the 1987 referendum” and that it was his hope that the agreement forged between the Prodi and Bush administrations would “help lead to a change in attitude from the Italian people toward nuclear energy.” Walter Veltroni, the ex-mayor of Rome who was the newly formed Democratic Party’s first candidate for president against Berlusconi in 2008, also voiced his openness to the idea of returning to Nuclear Energy production.

Since Fukushima Bersani and his fellow Democrats have been much more subdued about their support for Nuclear Energy and they have voiced strong opposition to the current government’s plan for the construction of new reactors. The Democrats have joined the chorus of the Green Party, Italia Dei Valori and scores of citizens groups in calling Berlusconi’s attempts to block the referendum a “theft” and a “deceptive attempt to hinder the democratic process.” Fukushima has inspired renewed vigor in the antinuclear movement and worked to sway public opinion in opposition to nuclear power that had become increasingly split over the past few years.

Following Berlusconi’s election victory in 2008 and his return to power for the third time since 1994, Italy’s new minister of economic development Claudio Scajola — before being forced out of office by a corruption scandal involving bribery and fraud in 2010 — announced that the government had scheduled the start of construction for the first new Italian nuclear power plant by 2013. On February the 24th of 2009, an agreement between France and Italy was signed allowing Italy to share in France’s expertise in the area of nuclear power station design. On July 9th 2009 the Italian legislature passed an energy bill covering the establishment of a Nuclear Regulatory Agency and giving the government six months to select sites for new plants. These sites have never been finalized. On the 3rd of August 2009, Italy’s energy giant Enel and Eletricite de France established a joint venture Sviluppo Nucleare Italia Srl for studying the feasibility of building at least four reactors using a design of French reactor builder Areva — the worlds largest nuclear energy company. These energy oligarchs, with Berlusconi as their champion, are doing everything in their power to preserve their multi-billion dollar investment in a nuclear future.

To this end Berlusconi’s council of ministers announced a one year moratorium on all questions relating to the research and activation of sites for new nuclear plants in Italy on the 24rd of March 2011, less than two weeks from the earthquake in Japan and subsequent Fukushima nuclear disaster. This move was immediately met with skepticism from Italy’s antinuclear movement and opposition political parties and was seen as a poorly veiled attempt to block the June referendum. On April 26th, the 25th anniversary of the catastrophic Chernobyl accident, Berlusconi held a press conference with French president Nikolay Sarkozy in Rome. At this press conference Berlusconi made his radioactive intentions clear for all. “We are absolutely convinced that nuclear energy is the future for the whole world,” he said. He went on to detail how recent polls showed that the referendum to block nuclear power for decades to come could pass at this time and that by temporarily suspending Italy’s return to nuclear program the issue would be revisited when the Italian voters had been “calmed down” and returned to the realization that Nuclear Energy was the most viable and safe way to produce electricity. He went on to explain how the “leftists and ecologists” had manipulated the emotions of the Italian voters after Chernobyl and penalized the Italian people who have to pay higher electric rates than France that operates 58 nuclear power plants. Berlusconi explained that the “situation in Japan had scared the Italian voters” and that the “inevitable return to nuclear power in Italy” would not be abandoned nor would the collaborations between Enel and Eletricite de France.

Now with Germany and Japan announcing the phasing out of their Nuclear programs and the scrapping of plans for the construction of new reactors, it would seem like political suicide to barge full steam ahead with a pro nuclear stance, but this is Italy and Berlusconi is still at the command. Berlusconi is now in control of all the major television outlets, including the state owned RAI, so getting the word out to the voters that there will be a vote on the 12th and 13th of June is proving difficult, and the heavy hand of State censorship has been wielded. At the annual May Day concert in Rome, sponsored by Italy’s two largest labor unions and televised on the state run RAI, the performing artists were required to sign a waiver agreeing not to speak about the upcoming referendums or risk a fine of over ten thousand euros. This left a bitter taste in the mouths of many of the attendees of this May Day celebration as news surfaced almost immediately that the state media outlet had censored the event.

As of now the referendum to block Nuclear Power is still on the ballot. Only a last minute ruling by the Supreme Court could remove it, and the Berlusconi government is banking on this decision as a result of their so-called nuclear moratorium. The antinuclear referendum is accompanied on the June ballot by two other referendums, one to repeal the Berlusconi government’s attempts to privatize water and the other to repeal a law called “legittimo impedimento” which was passed by the Right wing majority in order to protect Berlusconi from prosecution by giving him and members of parliament immunity from prosecution while serving in office. Each of these referendums required the gathering of half a million valid signatures and will need the high participation of 50 % plus 1 eligible voters to reach the mandated quorum in order to be considered valid. No legislative referendum has been able to reach this quorum in over a decade. Now the Berlusconi government is also trying to block the vote to keep water publicly owned. In recent legislation they created a new Water Authority in an attempt to legally block this referendum as well. While it is evident to the engaged and politically active citizenry that the Berlusconi government is pulling out all the stops to block the democratic process, the masses who get their information from Berlusconi’s private and state run television empire are being kept in the dark. No news on the referendums is reported unless it is it is very late at night or the early hours of the morning.

To publicize these referendums the citizens are taking to the streets, leafleting, using creative direct action and social networking on the internet to spread the news and get out the vote. On May 9th Greenpeace activists unfurled a large banner from Mussolini’s balcony on Palazzo Venezia in Rome. The banner includes a caricature of Berlusconi saying “Italians, I decide your future” and a call for Italians to vote on the Nuclear Referndum. Angelo Bonelli, President of the Italian Green Party, summed it up like this: “The referendums will be voted on anyway, despite the fact that the thieves of democracy have returned to action. The attempts of the government to steal the democratic rights of the Italian people to vote against nuclear energy and the privatization of water will not succeed.” On the 12th and 13th of June, the Italian people can change the course of their future by voting yes to say no to nuclear energy and the privatization of their water resources.

~

Michael Leonardi splits his time between Ohio and Italy. He can be reached at mikeleonardi@hotmail.com

May 13, 2011 Posted by | Corruption, Economics, Full Spectrum Dominance, Nuclear Power | Leave a comment

Geithner scuppered IMF plan to impose haircut on Irish debt

WakeUpFromYourSlumber | May 8, 2011

According to Morgan Kelly, a highly-respected Irish economist, In November 16th 2010, the rarely-altruistic IMF suggested that unguaranteed bonds in failing Irish banks should be given a haircut by an average of two-thirds.  This plan, which would have lessened the penury imposed on the Irish taxpayer, was apparently scuppered by one Timothy Geithner, US Treasury Secretary and Don of the Wall Street Mafia.  Kelly describes this and more in his op-ed piece in the Irish Times of May 7th 2011, part of which is quoted below

On November 16th, European finance ministers urged [finance minister Brian] Lenihan to accept a bailout to stop the panic spreading to Spain and Portugal, but he refused, arguing that the Irish government was funded until the following summer. Although attacked by the Irish media for this seemingly delusional behaviour, Lenihan, for once, was doing precisely the right thing. Behind Lenihan’s refusal lay the thinly veiled threat that, unless given suitably generous terms, Ireland could hold happily its breath for long enough that Spain and Portugal, who needed to borrow every month, would drown….

Ireland’s Last Stand began less shambolically than you might expect. The IMF, which believes that lenders should pay for their stupidity before it has to reach into its pocket, presented the Irish with a plan to haircut €30 billion of unguaranteed bonds by two-thirds on average. Lenihan was overjoyed, according to a source who was there, telling the IMF team: “You are Ireland’s salvation.”

The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers. The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way. An instructive, if painful, lesson in the extent of US soft power, and in who our friends really are.

The negotiations went downhill from there. On one side was the European Central Bank, unabashedly representing Ireland’s creditors and insisting on full repayment of bank bonds. On the other was the IMF, arguing that Irish taxpayers would be doing well to balance their government’s books, let alone repay the losses of private banks. And the Irish? On the side of the ECB, naturally.

May 9, 2011 Posted by | Corruption, Economics | Leave a comment

Skyrocketing Crime Rates and Imperial Wars

By James Petras | 05.04.2011

Imperial interventions in civil wars have a devastating effect on countries that last for decades and affect the entire economy and society. One indicator of the long-term consequences of imperial military intervention is the tremendous increase of violent crime, the multiplication of gangs, homicides and general insecurity in Central America.

Violence increased far beyond what existed prior to imperial wars in such countries as Iraq, Afghanistan and Somalia. In the period prior to imperial intervention in Central America, during times of revolutionary ferment, high levels of social organization via inclusive social movements, channeled discontent into political and social channels. Revolutionary movements organized armed resistance against specifics targets; repressive police, military and death squad militias. Imperial intervention included military advisers and counter-insurgency strategies which uprooted peasants via scorched earth policies and destroyed communities. Assaults on urban barrios led to the break-up of family and neighborhood networks. The social bonds which integrate people into a moral and social community were ruptured: the goal of imperial planners is to decimate any independent popular civil-society organization as a political threat to its illegitimate collaborator regime.

In El Salvador, the US provided over $300 million a year in arms and training for almost a decade. The Pentagon through its advisory missions, in collaboration with local landlords and generals, financed and forcibly recruited thousands of peasants into death squad ‘civilian militias’ to assassinate local movement activists and terrorize farm workers’movements and trade union organizations. Under imperial military pressure the leaders of the major Central American guerrilla organizations signed on to a peace agreement. The “peace accords” retained the US collaborator regimes in power and the promised social reforms were never implemented. As a result, the homicide rate skyrocketed. The discharged guerrilla militants and unemployed right wing militia members, armed and trained, and with no future, became the bases for gangs, drug and people traffickers, kidnappers and extortionists. The number of people who were annually killed in violent crime (1991-2011) exceeded the number who died each year during the revolutionary struggle (1979-1990).

Having successfully blocked the prospects of positive socio-economic transformations in wealth, land ownership, the judicial system and allocation of public investments, the US pushed for neo-liberal ‘free trade agreements’ which further decimated small farmers and retail commerce. Mass outmigration and crime became the ‘roads out of poverty’ in the aftermath of imperial intervention. Violent crime became so pervasive that the business elites of the US and Central America were hesitant to invest and profit from the low wages and the unemployed who crowded the labor market. The cost of hiring private security armies to protect upscale neighborhoods, business operations, country clubs, and exclusive restaurant and leisure centers became prohibitive. Faced with the “unfavorable climate for business” created by the very same pro-business Pentagon intervention, after two decades of murder and mayhem, the World Bank intervened. The World Development Report (WDR) for 2010 (published in 2011) focuses on the theme of “conflict, security and development”. The Report proposed a series of measures to lessen what it calls “mass violence”. The Report was taken up and elaborated in the Financial Times (4/27/11 p. 9) by Martin Wolf in an article titled “Remove the scourge of conflict”. The Report and Wolf provide time series data between 1999-2009 showing the vertical growth of “criminal violence after civil wars”; time series data show that countries with high poverty rates based on the (percent of population with income below $1.25 per day) have experienced greater violence than those with low poverty rate; time series data show that greater ‘violence’ reduced real GDP growth.

Both the WB Report and the Financial Times fail to identify the true nature of the ‘violent conflict’, the principle source of violence and the foreign and domestic elite economic policies which deepen and prolong ‘violence’.

In the case of Central America, particularly El Salvador, Guatemala, Nicaragua and Honduras, the WB and Financial Times resort to vacuous generalization to avoid discussing the massive military role of US imperialism in promoting large scale, long term violence in the countries. Instead the FT strikes a phony philosophical note “man is a violent animal” (Alas). In fact imperialist rulers are violent animals; especially with regard to poor countries attempting to free themselves of US backed oligarchies. To their discredit the WB and FT obfuscate the data by claiming that the deaths were a product of “civil wars”.

Throughout the 1970’s and 1980’s the US and Israel provided arms, advisers, technical capacity to the murderous Guatemalan regime which slaughtered over 300,000; mostly Indians and wiped off the map over 420 villages. During the US decade long proxy war against the progressive Sandinista revolutionary movement via the Somoza dictatorship (1969-78) and the decade long Contra terror war against the Sandinista government (1979-89), over 50,000 people were killed, hundreds of thousands maimed and displaced and productive farms, factories, infrastructure, clinics and schools and co-operatives were targeted by US counter-insurgency advisers.

As mentioned earlier, El Salvador’s social movements and their supporters throughout civil society were targeted by US backed military and paramilitary groups forcing hundreds of thousands to flee to urban squatter settlements or across borders and overseas. Similar outcomes occurred during the US counter-insurgency campaign in Honduras and invasions of Grenada and Panama in the 1980’s.

Imperial backed invasions, counter-insurgency campaigns and the subsequent imposition of corrupt oligarchs led to the total disarticulation of local social networks and the bankruptcy of small scale farms because of the importation of subsidized US foodstuffs. These led to the presence of a deadly combination: thousands of automatic rifles, tens of thousands of unemployed displaced rural youth living in urban slums and an economy geared to enriching elite importers, exporters and US bankers and creditors. The WB Report in all of 301 pages and numerous tables does not contain a single phrase about the nature, consequences and the profound and lasting impact of imperial intervention on the out of control homicide rates in Central America or elsewhere. Instead we are told it’s all about a “civil war”.

The mendacious cover-up proceeds to the current decade. The WB Report and the FT sound an optimistic note claiming that annual battle deaths have “fallen to 42,000 in the 2000’s”. First, calling the US-NATO invasion of Iraq and Afghanistan a “civil war” is a travesty to common knowledge; and then falsifying the over 1 million Iraqi deaths into a few thousand, flies in the face of independent surveys published in the prestigious British medical journal the Lancet.

What is striking about the imperialist interventions and most relevant to the growth of violent crime, is the fact that the subsequent client rulers, are themselves deeply enmeshed in international criminal networks. Drug dealing and large scale theft of billions in aid funds and public revenues is the hallmark of Central American clients who are most intimately tied to Washington. The same is true in Iraq and Afghanistan: tribal clans and ethnic gangs who pledged allegiance to the US occupiers run billion dollar heroin enterprises. They murder civil society activists and undermine the bases of community based organizations.

Policy Proposals

Based on a diagnosis that ignores the imperial causes of social breakdown and the subsequent spiraling violent crime rate, the WB Report and the FT propose “lessons” for a “successful transition to ending high rates of violence”.

Since their diagnosis of the historical roots of crime is deeply flawed, the prescriptions fail to come to terms with the political and economic transformations necessary to reduce spiraling homicide rates.

The WB Report proposes (1) “inclusive coalitions” for change, (2) impact programs that produce quick results and impress people, (3) reforms of the security and justice institutions, (4) a pragmatic perspective of several decades to bring about change. In other words the WB Report recognizes that its policies, allies and agencies are so embedded in the current system that its “reform proposals” are at best designed to co-opt local leaders in coalitions, to pursue incremental changes, which will not reverse homicide rates for several decades.

The WB Report proposes to create bottom-up “links” between the neo-liberal state and civic society: an impossible task when “the state” is the principle agency undermining employment via its free market policies. Their proposal to act against corruption and to reform the police and judicial system overlooks the fact that the past and present closest political and judicial collaborators of US counter-insurgency and dominance are precisely those corrupt officials willing to repress popular movements and provide military bases. The WB Report calls for greater intervention by “external institutions” (like itself and US AID) to “deliver support”, when it was precisely external intervention which short circuited changes fought for by “bottom up” grass roots movements.

The point of departure for a reduction of violent crime is precisely to reduce or eliminate external intervention by the US: the need to eliminate military aid and training programs which block and repress social movements and organize coups; to eliminate WB programs promoting agro-export elites and to promote agrarian reforms led by and for co-operatives and family farmers; to end free trade and the saturation of the local market with subsidized US food exports so as to allow peasants to produce for local markets. Above all there is a need for the US and WB to pay $ multi-million dollar compensation for the destruction caused by the counter-insurgency war and neo-liberal policies, as a way of creating alternative employment for young people tempted by the drug gangs. Because of the long term destruction resulting from imperialist wars, the process of decriminalizing society will require a profound revolution in institutions and culture, one which will by necessity need to root out the current crop of generals, oligarchs and World Bank trained economists who perpetuate the conditions which spawn crime. Those changes will require supporting social movements independent of the state; immediate positive impacts to attract popular support will result from movements engaged in direct action – like occupying large rural estates. Police and security reforms can only be instituted as part of a process of regime changes in which ties to repressive overseas experts are replaced by links to community councils. Crime will be reduced in direct relation to greater independence from the regional policemen and with greater freedom to pursue an alternative economy based on social solidarity.

May 5, 2011 Posted by | Corruption, Economics, Militarism, Timeless or most popular | Leave a comment

« Previous Entries     Next Entries »