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“Justice” for a billionaire, none for the state he ripped off

Systemic Disorder | July 30, 2014

There has been much cheering across the corporate media about the Permanent Court of Arbitration in The Hague ordering the Russian government to pay more than US$51 billion as compensation for confiscating the assets of Yukos, yet silence concerning the original theft of the company by Mikhail Khodorkovsky.

The basis of the decision by the arbitration court was that the assets of Yukos, seized for alleged non-payment of taxes, were sold for US$9 billion, well below the estimated value of the company. Conveniently left out of this picture is that Mr. Khodorkovsky purchased the assets for $159 million seven years earlier in a rigged process that he controlled. He did so as one of seven oligarchs who bought deeply unpopular former President Boris Yeltsin a second term and were handed control of the country’s vast natural resources as a reward.

This is a story that can not be separated from the fall of the Soviet Union and the looting of its assets, with a handful of newly minted oligarchs, mostly former black marketeers who became bankers, coming to control post-Soviet Russia’s economy. Estimates of the size of the assets that came to be owned by the seven biggest oligarchs (Mr. Khodorkovsky was one of them) in the late 1990s range up to one-half of the Russian economy. This at the same time that the Russian economy shrank by 45 percent and an estimated 74 million Russians lived in poverty according to the World Bank; two million had been in poverty in 1989.

An important factor in the failure of Mikhail Gorbachev’s perestroika was that working people saw the reforms as coming at their expense. A 1987 reform loosened job protections in exchange for enterprise councils that were to have given workers a voice in management, but the councils were largely ineffective or co-opted by managements. The law had also been intended to eliminate labor shortages. It didn’t, and a 1990 reform was stealthily passed to reduce employment and eliminate the ability of working people to defend themselves. Enterprises would now have private owners with the right to impose management and ownership shares could be sold.

Exhaustion from years of struggle also were a factor in the lack of organized resistance to the elements of capitalism that were introduced in the last years of perestroika and to the shock therapy that was imposed on Russia at the start of 1992, days after the formal dissolution of the Soviet Union and the assumption of uncontested power by President Yeltsin. Shock therapy wiped out Russians’ savings through hyperinflation and state enterprises were sold at fire-sale prices, or sometimes simply taken.

Connections allowed him to set up businesses

Mr. Khodorkovsky used his connections as an official within the Communist Youth League to found a company that imported and resold computers and other goods at huge profits and engaged in currency speculation. The proceeds were used to buy companies on the cheap and found a bank. His bank, Menatep, earned large fees by providing credit when it was in scarce supply during the post-Soviet collapse.

When President Yeltsin was up for re-election in 1996, he faced a daunting challenge as his popularity rating was well below 10 percent — tens of millions of Russians had been plunged into poverty and the economy had contracted for several years in succession. The president admitted in his memoirs that he was about to cancel the election. But he was presented with a plan by the seven oligarchs, the scheme that became known as “loans for shares.”

These seven oligarchs offered Yeltsin a bargain: In lieu of paying taxes, they would make loans to the government so it could meet its expenses, such as actually paying its employees. In return, the government would give the oligarchs collateral in the form of shares of the big natural-resources enterprises that were soon to be privatized. (Other state enterprises had been quickly privatized upon the implementation of shock therapy.)

If the loans were repaid, the bankers would give the shares back. If not, the oligarchs would hold auctions to sell the collateral. The government had no ability to pay back these loans, but Yeltsin issued a decree sealing the deal in August 1995.

The oligarchs used their own banks to conduct the subsequent auctions, and, through a mix of rigged terms and conveniently closed airports, won them all at prices that were small fractions of the enterprises’ reasonable market value. These enterprises represented Russia’s enormous reserves of oil, nickel, aluminum and gold, and a minority share in the dominant gas company, Gazprom.

These seven oligarchs all became billionaires through the “loans for shares” scam. The oligarchs, who owned almost the entire Russia mass media, spent 33 times the legal limit on the election and provided 800 times more television coverage of Yeltsin than was provided to his opponents.

Mr. Khodorkovsky’s bank, Menatep, was put in charge of the auction of Yukos. It avoided competitive bidding, enabling his holding company to buy it for $159 million, only $9 million above the starting price. As long as Boris Yeltsin was president, the oligarchs could steal all they wanted. Nor did Western authorities complain about this; President Yeltsin’s bombardment and illegal disbanding of the Russian Parliament in 1993, resulting in more than 500 deaths, was celebrated as a democratic triumph. Indeed, the World Bank’s chief economist for Russia declared, “I’ve never had so much fun in my life.”

Corporate lawyers as arbitrators

The Permanent Court of Arbitration that handed down the $51 billion judgment is one of the international tribunals that hear investor-state disputes behind closed doors. As is customary with these bodies, the arbitrators are corporate lawyers appointed by governments.

In the Yukos case, each side could choose one of the three panelists who hear the case. The deciding panelist was Yves Fortier, a former chair of one of Canada’s biggest corporate law firms and of Alcan Inc., a mining company since bought by Rio Tinto, and a director of several other companies.

I see no sense in denying that politics were behind Mr. Khodorkovsky’s prison sentence and his loss of Yukos. But there can be no dispute that politics and shady dealing earned him his fortune in the first place. The gangster capitalism in which he excelled in the 1990s, cheered on by the West, was without mercy. Are there going to be outpourings of sympathy for the tens of millions of Russians immiserated so that the country’s Khodorkovskys could become billionaires? I think we already know the answer.

July 31, 2014 Posted by | Deception, Economics | , | Leave a comment

The Slow-Motion Collapse of the Ukrainian State and the Rada’s Capitulation

By Andrew KORYBKO | Oriental Review | July 30, 2014

Acting Ukrainian Prime Minister Arseniy Yatsenyuk recently announced his resignation from the government amidst parliamentary infighting in the Rada, supposedly over none of the factions wanting to take the fall for the upcoming suicidal IMF stipulations. (His desire to leave off the hook ahead of the coming economic and social collapse of Ukraine has apparently come into collision with the interests of Western power groups seeking to establish control over the Ukrainian gas trasportation system first – OR ). The withdraw of the nationalist party Svoboda and Klitschko’s (German) project Udar continues the chain reaction of institutional collapse that began in late-November with the EuroMaidan Color Revolution. If a new Rada isn’t formed within 30 days, elections will have to take place. It has already been forecasted that this is nothing more than a ploy to solidify Poroshenko’s power base (Udar is a close ally) and expand the reach of the Svoboda nationalists. These risky and Machiavellian calculations will likely have far-reaching implications, continuing to push Ukraine ever further towards full-scale collapse and spreading the black hole of chaos that has begun to emerge in the country.

Nearing the Precipice

In the run-up to the most recent stage of institutional collapse, Kiev had found itself in a conundrum. After revving up the population for so-called Western integration and signing the EU Association Agreement and receiving IMF loans, the Rada realized that none of its members wanted to be responsible for implementing the brutal economic ‘tweaks’ that both of them necessitate. This is the immediate cause of the current Rada crisis – everyone wanted to ‘join the West’, but no one wanted to take electoral responsibility for what that truly means.

Concurrent to this, Ukraine also banned one of its consistently largest political parties, the Communist Party, which polled 15% at the last legitimate election in 2012. For a country trying to ingratiate itself with ‘Western values’, it is contradictory that it would carry out such a policy, however, it cannot be said to be unexpected. After all, there had been loud calls for lustration ever since the February coup against legitimate president Yanukovich. This policy of political (and therefore, social) exclusion has been aided by the nationalist and fascist forces that have swept to power and influence in Ukraine in recent months.

All of this is to say nothing of the enormous humanitarian catastrophe ongoing in the Donbass region, where the UN officially estimates that at least 1,000 people have been killed and over 3,500 injured since the start of punitive operations against Federalist supporters in mid-April. 500,000 refugees have fled to Russia since then, with over 34,000 of them currently being housed by the state.

The Real Reason for the Void

The aforementioned explanations for the current governing void all owe their genesis to events that started earlier than the coup itself. First and foremost, Ukraine has been a geopolitical chess piece for the US since its independence in 1991. Zbigniew Brzezinski wrote about its role as a pivot of America’s Eurasian influence in his 1997 work “The Grand Chessboard”, quipping that “Without Ukraine, Russia ceases to be a Eurasian empire”. This strategic advice was certainly heeded at the State Department, since Victoria Nuland admitted that the US had spent $5 billion for “democracy promotion” in Ukraine since 1991. This investment wasn’t for “democracy” but rather for regime change by mobocracy, as can be seen by the Maidan mobs that ravaged Kiev before the coup. The drawn-out urban warfare of EuroMaidan, coupled with an intense Western propaganda campaign of state demonization, inevitably led to the shredding of the state’s structure right after the coup. This is something which did not even happen after the 2004 Orange Revolution, when the governing apparatus still relatively functioned in comparison to today.

Had it not been for the US’ geostrategic goals in enacting regime change in Ukraine and attacking Russia via proxy, there would be no crisis in the country. Refugees would not be streaming eastwards and Ukraine would not be split along civilizational fault lines. The growing black hole of chaos is completely attributable to the efforts of the US to follow through on its threats to disrupt Russia’s Eurasian Union integration goals, of which Ukraine was a possible candidate for membership prior to the destabilization’s commencement.

Ukraine Before the Storm

Events have been so dramatic and have moved so fast since November that it may be easy to forget what the country was like one year ago. In summer 2013, the government was corrupt but workable, with no large-scale violence and relative macro stability. All political parties were welcome in the inclusive government and the country had profitable dealings with the US, EU, and Russia. Importantly, energy supplies were secured and no downstream partners were in danger of a winter shortage.

Flash forward to the present day. The ‘government’ is dysfunctional and cripplingly corrupt, resembling Italy during the Cold War (one could even provocatively say today). Wide-scale violence has already claimed over 1,000 lives and destroyed the infrastructure in of one of Ukraine’s most formerly prosperous regions, destabilizing the entire Donbass. Lustration has made the Rada an exclusive club of those in alliance with the oligarchs, and extreme fringe movements hold disproportionate influence over the country. Although nominally moving towards Europe economically, Ukraine is now shackled in debt and is on the cusp of losing all bilateral trade with Russia, on which its economy is dependent. Failed political maneuvering by Kiev forced Russia to shut off the gas tap, raising fears of a cold winter and almost certainly guaranteeing another future crisis at the end of the year.

Over the Edge and Into the Unknown

In hindsight, the EuroMaidan coup may very well be seen as the fatal outside blow that wrecked Ukrainian statehood once and for all. The country is experiencing a painful and extended collapse before the eyes of the world, with the current political void being but the latest iteration of its downward spiral. Ukraine has gone over the edge and into unknown territory, with the only blueprint being the Yugoslavian scenario. The black hole of chaos inside of Ukraine is only growing, with the country now certainly exhibiting the symptoms of failed state status. There was an outside-engineered coup in a geopolitically convenient area, a proxy government, a merry-go-round parliament, a civil war that could possibly involve an intervention by its neighbor (Russia), and rabid nationalists scheming for power.

Being a country of 45 million and located smack dab in the middle of Eastern Europe, Ukraine may be ‘too big to fail’ for its foreign backers. In the past, it could never sustain itself on its own, being previously dependent on Russia since independence. Now that Russia has been violently pushed away, Ukraine is making itself a burden on the West and the EU, neither of which now wants to properly deal with it. The Western integration of Ukraine was a slogan used by both Ukrainian and Western politicians alike, none of whom wanted to take on the responsibilities associated with it, thereby putting the country in an untenable position and leading to the destitution of its masses.

Any entity demonstrating Ukraine’s failed-state characteristics should be something that other states’ militaries steer clear away from at all costs, but the US and NATO have unreasonably been moving even closer to this sick man since its symptoms began to show. The absorption of Ukraine into Shadow NATO under these circumstances is tantamount to directly involving the alliance in Ukraine’s hurricane-like spiral of chaos. Granting the country major non-NATO ally status is dangerous and irresponsible, especially when occurring during a government collapse and the increasingly dictatorial tendencies of its leader. The situation in Afghanistan, the most recent major non-NATO ally, has at least been semi-stable and predictable due to the forcible NATO occupation there (set to expire at the end of the year, however), but such a situation does not (yet) exist in Ukraine. It may be, however, that the West finds its Ukrainian operation ‘too big to fail’, and as the country experiences slow-motion economic, military, and political collapse, it may desperately think that NATO integration can plug these processes and reverse the inevitable.

Andrew Korybko is the American political correspondent of Voice of Russia who currently lives and studies in Moscow, exclusively for ORIENTAL REVIEW.

July 31, 2014 Posted by | Economics | , , | Leave a comment

What’s Really at Stake in the Impasse Over Centrifuges

Hillary Mann Leverett on the Iran Nuclear Talks

CCTV America

Earlier this week, Hillary appeared on CCTV’s The Heat to discuss the Iran nuclear talks; click on video above or see here.  In her segment, she focused on what really drives the divide between Tehran and the Western members of the P5+1 (the United States, Britain, and France) over Iranian enrichment—namely, the clash between the Islamic Republic’s commitment to strategic independence and Western powers’ determination that Tehran must accept their directives regarding implementation of the Nuclear Non-Proliferation Treaty (NPT) and the dynamics of Middle Eastern power politics.  As Hillary notes,

“There has been progress on some significant issues—but this fundamental issue about enrichment is critically important.  It gets to not just the number of centrifuges…The issue is really a question of independence.

Iran is fiercely devoted to its independence.  That’s what the Islamic Revolution was all about—for Iran to be independent of foreign powers—and it wants this civilian nuclear program as part of its program for independence.  So it needs to not dismantle any of its current infrastructure—which includes about 10,000 operating centrifuges—and to increase it, to a have full-fledged civilian nuclear power program.

The United States wants just the opposite.  The United States has finally come around, after more than ten years of pounding its fist on the table, to admitting that maybe Iran could have a symbolic program—but that Iran needs to remain dependent on other countries…Not only does this go against the very principles of the revolution in Iran, for independence, but, in fact, Iran tried that.  They bought fuel from Argentina, until the United States got angry and forced Argentina to cut it off.  And they were part of a project called Eurodif, where Iran bought ten percent of that project, and then they were cut off.

So that’s the fundamental divide—whether to keep Iran dependent on the international community, or to allow them to be independent.  That is going to be a very difficult bridge to cross…It’s not a matter of time; it’s a matter of mentality.”

Of course, official Washington’s hegemonic mentality—and its accompanying pretensions—are increasingly at odds with the actual distribution of power in an evolving international order.  In part, this reflects the declining utility of America’s military might; to paraphrase a line from that timeless study in the exercise of power (and classic Hollywood blockbuster film), The Godfather, “the United States doesn’t even have that kind of muscle anymore—and can’t really use that much of what it still has.”  As Hillary elaborates, that’s an important reason the United States is negotiating, however reluctantly, with Iran:

“It’s interesting that President Obama has refrained…since January of this year, from saying that all options are on the table, for two reasons.  One, I think, in terms of allowing the negotiations to go forward, is to take the military option off the table as an offensive rhetorical device against the Iranians.

But part of this is real.  This is something that, from all my trips to Iran, I understood.  The Supreme Leader there, security and political analysts there, realized a few years ago that after America’s failed interventions in Iraq, Afghanistan, Libya, and Syria, we don’t have the military option on the table, and that gives room for negotiations.

So, even though I’m not optimistic there’s going to be a deal, a comprehensive deal either today or in four months (the new deadline), I do think that there’s enough incentive on both sides to continue negotiations for a very long time.  And you may see in September, when the United Nations convenes in New York, you may see not only continued intensive negotiations of high-level officials, but potentially even a President Obama-President Rohani meeting—not to actually seal the deal, but to inject enough momentum to keep things going past the November congressional elections and continue to kick this can down the road.”

Hillary is similarly skeptical about the prospects for a unilateral Israeli attack against Iran:

“Even though a tragically high number of Palestinians have been killed in this current conflict [in Gaza], there is a bit of exposure of the emperor wearing no clothes, that the Israelis are not able to defeat HAMAS in Gaza.  And the Iranians certainly see the Israelis having no clothes, that they don’t have the technical capability to bomb Iran’s nuclear facilities.  With that, there is, again, more time for negotiations.”

Beyond the purely military dimension of America’s relative decline, the rising influence of non-Western powers—China, Russia, and, in the Middle East itself, Iran—has also helped push the United States into multilateral nuclear talks with the Islamic Republic.  As Hillary explains, that’s an important reason the P5+1 is negotiating with Iran:

“The world has changed in the past ten years.  Ten years ago, when the United States would say that the U.S., Israel, France, and Britain were ‘the international community,’ nobody really made that much noise.  Today, they do.  So today, the United States has to take the views of, particularly, Russia and China very squarely into account.  They have to be at the table, and they have to buy into what the political and security order is going to look like in the Middle East—not just how many centrifuges Iran is going to have.  That’s why we have the negotiations.”

Yet, even though it has been pushed into multilateral nuclear negotiations with Iran, the United States continues to take hegemonically assertive positions in the talks.  Take Washington’s positions on the duration of a prospective final agreement, the number of centrifuges Iran should be “allowed” to operate under a final agreement, and limiting Iran’s alleged “breakout” capability.  As Hillary describes,

“The United States wants at least a ten-year, and they’re gunning really for a twenty-year deal.  That has nothing to do with proliferation.  That has to do with their wanting to outwait the Supreme Leader, the Supreme Leader’s life…so that the Islamic Republic has, in their view, a prospect of collapsing into a more pro-American political order.

The Iranians are not buying into that…they’re focused more on what their practical needs are, based on when they have contracts or prospective contracts for nuclear plants, when they need the fuel, and how much fuel they need.

That gets into the number of centrifuges—and, again, this is where the Supreme Leader has spoken about numbers that are much greater than the Americans are willing to consider at this point.  But he’s focused on what are the practical needs—the practical needs as told to him by the head of Iran’s atomic energy agency, who (guess what) has his Ph.D. from MIT here in the United States, and who knows what he’s doing.

So [the Iranians] are really talking about a practical needs-based approach, based on a sovereign country pursuing a technical, practical program.  The United States is focused on power and influence, and on maintaining a pro-American political and security order in the Middle East…

The so-called ‘breakout issue’ is also a lot of smoke and mirrors.  Again, it’s aimed at limiting Iran’s domestic, indigenous, sovereign capacity to pursue this program.

If the United States and its so-called partners were really interested in proliferation, they would accept the Iranian deal, which is to convert all—not some, but all—their enriched uranium into oxide, into powder to make into fuel.  All of it.  You’d solve the proliferation issue overnight, but the United States isn’t interested in that…We’re interested in constraining capacity, to constrain Iran’s power—its rising power, particularly in the Middle East—at a very volatile time for the United States.”

Hillary goes on to discuss the strategic imperative for the United States to pursue “Nixon-to-China”-style rapprochement with the Islamic Republic—and, in the process, “to change America’s strategy from one of dominance and hegemony in the Middle East to one that is a balance of power, that recognizes and deals with all the critical powers as they are, not as we would like to transform the Middle East.”

–Flynt Leverett and Hillary Mann Leverett

July 31, 2014 Posted by | Economics, Militarism, Nuclear Power, Video | , , , | Leave a comment

How sanctions will affect the West’s $35bn invested in Russian oil

RT | July 30, 2014

The US and EU have banned the export to Russia of hi-tech oil equipment needed in Arctic, deep sea, and shale extraction projects. This will leave Western companies, which have an estimated $35 billion invested in Russian oil, in a bind.

New stage three sanctions won’t immediately slash Russian oil production, which at 10.55 million barrels per day is the world’s largest, but could derail future foreign investment in Russia’s oil industry. Russia is home to the largest combined oil and gas reserves in the world.

The US and the 28 EU countries hope to influence Moscow’s foreign policy in eastern Ukraine.

New restrictions “will make it more difficult for Russia to develop its oil resources over the long term,” President Barack Obama said as he unveiled the new tough regime.

The sanctions will hit the heart of Russia’s economy- oil, but not touch the gas sector. Together, the two make up more than 50 percent of revenues for the Russian state. Russia has an estimated $7.5 trillion in oil and gas resources, many of which require Western oil technology to extract.

Obama said he wanted the sanctions “to bite.”

The sanctions won’t only bite at Russia, but Western oil companies like BP and ExxonMobil, and equipment suppliers may fall victim to the oil technology ban.

Introduction of EU sanctions against the Russian energy sector will drive up European energy prices, the Russian Foreign Ministry warned on Wednesday.

BP

BP is one of the most exposed to the Russian market, after the UK-based company bought a 19.75 percent stake in the state oil company Rosneft, a company already on Obama’s sanctions list.

Previously, BP insisted it was “business as usual” with Russia, but the sectoral sanctions could derail the company’s strategy in Russia, where it sources nearly one-third of its global oil production.

“Any future erosion of our relationship with Rosneft, or the impact of further economic sanctions, could adversely impact our business and strategic objectives in Russia, the level of our income, production and reserves, our investment in Rosneft and our reputation,” BP said on Wednesday, before the heavy-handed sanctions were announced.

The same day, the British energy company reported a big bump in second quarter profits, which rose 25.3 percent to $3.23 billion.

In June, Rosneft agreed to supply BP with up to 12 million tons of oil and oil products over 5 years. The deal assumes a prepayment of at least $1.5 billion.

ExxonMobil

ExxonMobil has been present in the Russian market for over 20 years. In partnership with Rosneft, the Texas-based oil major has many projects in Russia underway- including the $500 billion exploration of the Bazhenov oil field in Western Siberia, and a $15 billion liquefied natural gas terminal in Russia’s Far East.

If forced to quit Russia, Exxon could pull out as much as $1 billion in funds intended to go to offshore Arctic and fracking projects in Siberia, Bloomberg News reported.

After the sanctions were announced, Rosneft Chairman Alexander Nekipelov said ExxonMobil may suspend cooperation with Rosneft, but only in an extreme situation.

“As far as we know, Exxon does not have plans to stop cooperation with Rosneft, and we hope the situation will not go that far,” Nekipelov said.

“We are assessing the impact of the sanctions,” Alan Jeffers, an Exxon spokesman, told Bloomberg News via email.

Nekipelov said the American company doesn’t want to give up its joint projects with Rosneft- it has already invested too much.

In May, the two companies agreed on four Arctic exploration projects. Additionally, ExxonMobil and Rosneft will operate a new joint offshore drilling rig in the Kara Sea, where the two companies have rights to over 11.3 million acres of Russia’s Pacific Ocean waters. The company also has a substantial stake in the Far East Sakhalin oil project, which covers 85,000 acres.

Exxon CEO Rex Tillerson hasn’t made any official comment on the new sanctions.

Total

France’ oil major and largest company, Total, has huge operations in Russia, its fourth largest market. The morning after the sanctions, the group’s stock dipped 2.66 percent in Paris. On Wednesday, the company reported an estimated second quarter net profit drop of 12 percent

Total owns about 18 percent of Novatek, Russia’s second largest gas producer, which was affected in the previous round of US sanctions.

“We stopped buying shares in Novatek the day of the airplane accident after considering all the uncertainty that it created,” the French company’s CEO said in the earnings call on Wednesday.

Novatek leads the $27 billion Yamal LNG project with Total, along with China’s CNPC. The South-Tambeyskoye field has an estimated 492 billion cubic meters of proven gas reserves.

Russia is “a great oil and gas country and we’ll have to wait and see the nature of these new sanctions first,” the CEO said on Wednesday, adding it was a “crucial” market.

The project is highly dependent on US technology and will experience serious difficulties if sanctions are imposed.

Total expects its hydrocarbon production in Russia to rise to 400,000 barrels a day from 207,000 barrels in 2013.

Halliburton and Schlumberger

Blocking the exports of specific goods and technology to Russia is going to squeeze the world’s largest oil service and equipment companies- both US-based- which depend on Russia for sales.

Halliburton relies on Russia for 4-5 percent of global sales, and Schlumberger generates 5-6 percent, according to an estimate by RBC Capital Markets.

Both oilfield service groups, which provide Russia with horizontal drilling and hydraulic fracturing technology, could lose sales because of sanctions, but they won’t be driven out all together.

The stock price has dropped for both companies after the sanctions were announced- Halliburton is down 1.95 percent, and Schlumberger dipped 0.70 percent.

Dick Cheney, former US Vice President, and avid Russia critic, served as Halliburton’s CEO through 2000.

READ MORE: EU and US impose new round of sanctions on Russia over Ukraine

July 30, 2014 Posted by | Economics | , , , , , | Leave a comment

Mystery Surrounds U.S. Justice Department Move to Wrap Anti-Iran Group in Shroud of Secrecy

By Noel Brinkerhoff and Steve Straehley | AllGov | July 30, 2014

The U.S. Department of Justice has drawn attention to itself for helping an organization opposed to Iran maintain secrecy of its records, which are caught up in a defamation lawsuit filed against the group.

United Against Nuclear Iran (UANI) was founded six years ago and is operated by and gets advice from a who’s who list of American and foreign politicos, including former U.S. Senator Joseph Lieberman; Frances Townsend, the former homeland security adviser to President George W. Bush; Dennis Ross, a former Middle East adviser to both Republican and Democratic presidents; plus former intelligence chiefs from Israel, Germany and Britain.

Victor Restis, a Greek shipping magnate accused by UANI of violating sanctions by doing business with Iran, filed a defamation suit against the group. Restis’ lawyers have sought to compel UANI to release information about its donors and other details.

But the Justice Department stepped in and asked a federal judge to block the request, claiming the records contain sensitive information that the government considers important. Federal attorneys insisted “that certain information” would jeopardize law enforcement investigations, expose investigative techniques or identify confidential sources if released, according to The New York Times.

U.S. District Judge Edgardo Ramos in New York City granted the government’s request, while also describing the U.S. government’s involvement as “very curious.” The Justice Department has until July 31 to claim law enforcement privilege and keep the information from being disclosed permanently. In the meantime, each side has hurled charges and countercharges at the other.

“I am particularly concerned,” Ramos said in April, “that the defendants are able to utilize certain information in its public statements, and then not have to answer to their actions on the basis of a privilege.”

The claim of privilege puts the Justice Department in a conundrum. Federal intelligence agencies are not supposed to work with outside agencies to influence U.S. public opinion. But if UANI hasn’t been working with the government, what information could it have that would be so sensitive? We might find out on Thursday.

July 30, 2014 Posted by | Corruption, Economics, Ethnic Cleansing, Racism, Zionism, Progressive Hypocrite, Wars for Israel | , , , , | Leave a comment

European Union agrees on Russian sectoral sanctions – top EU officials

RT | July 29, 2014

The EU has agreed on a new package of sanctions against Russia targeting the military, oil and finance sectors, according to a joint statement by the presidents of the EU Commission and Council.

All 28 member states agreed on the broader economic sanctions, which “will limit access to EU capital markets for Russian State-owned financial institutions, impose an embargo on trade in arms, establish an export ban for dual use goods for military end users, and curtail Russian access to sensitive technologies particularly in the field of the oil sector,” the statement says.

Fresh sanctions come amid the EU’s growing frustration with Russia’s alleged interference in eastern Ukraine, and is being fanned by the tragedy of the shooting down of MH17, which killed hundreds of EU citizens.

The tougher stance goes along with American foreign policy after the US issued a fresh round of sanctions against Russia on July 16.

Many worry that sanctions, which in the past haven’t proved a practical measure in punishing countries, will have a boomerang effect, and end up hurting Western markets more than Russia itself, particularly financial centers like London.

Worldwide, Russia ranks the fifth largest economy by purchasing power, and even after sanctions will remain a large and powerful international player.

July 29, 2014 Posted by | Economics | , , | Leave a comment

Hague court had no authority in Yukos case, ruling politicized – Moscow

RT | July 28, 2014

The Hague’s arbitration court was not legally empowered to view the case of Yukos Oil Company v. Russia, and the court’s “one-sided” ruling disregards previous Strasbourg court decisions on the issue, the Russian Finance Ministry said in a statement.

Viewing the case, filed by shareholders of former Russian oil giant Yukos against the Russian government, was not in the jurisdiction of the Permanent Court of Arbitration (PCA) in the Hague, as Russia has not ratified the Energy Charter Treaty, the ministry said on Monday.

The statement, following the court’s sensational Monday ruling that ordered Russia to pay $50 billion in damages, also provided a detailed list of issues, which, according to the ministry, make the decision “opportunistic” and “politically biased.”

First of all, The Hague court ignored the previous decisions of the Strasbourg-based European Court of Human Rights (ECHR), which in September 2011 ruled that the Russian authorities had carried out “legitimate” and not politically motivated actions against Yukos “to counter the company’s tax evasion,” the ministry noted. The ruling contradicted Yukos shareholders’ claims that the company’s assets were purposefully expropriated by Moscow.

The Russian Finance Ministry meanwhile blasted the arbitration ruling as based on “one-sided investigation with one-sided application of evidence.”

The Hague court in effect reviewed the decisions of Russian courts on Yukos “as if the arbitration court was an additional authority for appealing the court orders,” the ministry said. It has made “theoretical speculations not supported by evidence” over the motivation of the Russian authorities’ actions in the case of Yukos, it added.

The international body failed to note that the people who controlled Yukos, including the oil tycoon Mikhail Khodorkovsky released from jail in December, were apparently aware of financial machinations aimed at a mass-scale tax evasion in favor of the company, the ministry stressed. The tax evasion scheme, which involved the creation of numerous bogus companies, was not properly considered in the court.

The arbitration court went as far as to judge “what Russian tax legislation should be like” as opposed to what it required in reality, the ministry said. The court refused to pass several controversial issues on taxes for review by Russian, UK or Cyprus competent authorities despite relying on the Energy Charter Treaty that outlines a need for such reviews, it added.

While in effect saying The Hague court decision was not legally binding for Moscow, the ministry added that “the Russian Federation will challenge the arbitration court’s decisions in the courts of the Netherlands.”

According to the ministry, “the arbitration court failed to approach the adjudication with common sense, which is required from the judges in such situations,” which resulted in an nonobjective and biased decision.

“Such an approach undermines the authority of the Arbitration court and the Energy Charter Treaty, which are being applied in increasingly politicized manner and, as in this case, have become the objects of abuse on behalf of domestic investors trying to evade taxes,” the ministry said.

ECHR is expected to announce a fresh decision on Yukos’ multi-billion dollar claim against Russia on Thursday, as the defunct company’s shareholders have filed a separate application with the Strasbourg court, Reuters reported.

Background: ‘Mega-arbitration’: Court orders Russia to pay $50bn in Yukos case

July 28, 2014 Posted by | Economics | , , , , , , , , | Leave a comment

The US’ H17 End Game: Shadow NATO in Ukraine and Russia as a ‘State Sponsor of Terrorism’

By Andrew KORYBKO | Oriental Review | July 28, 2014

The Ukrainian Civil War took a violent and headline-grabbing international turn for the worst on 17 July following the downing of Flight MH17. Although it appears more and more likely that it was the Ukrainian Army that shot it down and not the anti-Kiev Resistance, pro-Western media has been aggressively pushing the narrative that Russia, specifically President Putin, was involved and has been suppressing evidence to the contrary. It has even gone as far as to infer that “Russian-backed separatists” carried out a “terrorist attack”, further upping the propaganda ante. The reason behind this massive information war is that the US wants to “isolate Russia” and expand NATO into Ukraine, something which it has largely been unable to successfully do up until this point. In fact, it appears as though the US is now readying to play its trump card – granting Ukraine major non-NATO ally status and declaring Russia as a “state sponsor of terrorism”, both of which would in turn advance NATO interests and threateningly force the EU to choose whether its destiny lies with the Atlantic or the Continent.

“Operation: Isolation” before Flight MH17

Prior to the downing of MH17, US-led sanctions against Russia were unsuccessful in isolating Moscow. The EU refused to enact any meaningful sanctions that would endanger its $330 billion yearly trade with Russia, thereby mitigating the US’ economic bullying efforts. In fact, the verbal threat of sanctions was actually beneficial for Russia since it motivated the country to look outside the West for future economic prospects. An historic gas deal with China was signed in May that was worth nearly half a trillion dollars, and in the same month, the Eurasian Economic Union was officially formed. Then, right before 17 July, Putin attended the BRICS conference in Brazil where he met with leaders representing nearly half of the world’s population, and they committed to creating the alternative BRICS Development Bank. Clearly, Russia wasn’t going to be isolated by the West.

All while this was happening, the US kept trying to find a backdoor way for incorporating Kiev’s armed forces into NATO, and it found it through its local lackey, Poland. A plan was concocted by Ukraine to create a joint brigade between it, Lithuania, and Poland, with Poland being the key NATO partner involved (Lithuania on its own is almost insignificant in international and military affairs of any kind). The importance here is that Kiev has been institutionalizing the relationship it has with its new strategic partner, Poland, also inviting its former overlord and mercenary-in-arms into the east to assist with “creating new jobs” (read: plundering) in Donbass. What is happening here is that even if the West was unsuccessful in isolating Russia, it could at the very least move as much of its influence eastward to the Russian frontier as it can in order to enact maximum pressure on Moscow.

The “Terrorist” Label and Shadow NATO

Almost immediately after it happened, the MH17 catastrophe was seized upon by Western political opportunists as valuable capital for their geostrategic game. As was mentioned in the first paragraph, pro-Western media outlets immediately laid the blame squarely at Putin’s feet, and this wasn’t coincidental. The objective in doing so has been to generate enough anti-Russian sentiment in Europe so as to justify mutually disadvantageous sanctions (more so for the socially and politically fractured EU, many of whose members are still in recession, than for the economically resolute Russia). The EU, and especially Germany, will only “shoot itself in the kneecaps” as either an emotional or forced response, as to do so under any normal circumstances would be absolutely unreasonable.

Thus, the “terrorist” label entered the discourse.

Petro Poroshenko serving as the US insider even in the presidential position.It has now become popular for Western opinion makers to repeat the Kiev slur that the anti-coup Resistance are “terrorists”, emphasizing that they are “Russian-backed” and “supported by Putin”. It doesn’t matter that none of this is true – what is important is that it is repeated as loudly and as often as can be. The result is to acclimate the public into believing that Russia under Putin is a pariah state, much as Newsweek magazine tried to convince their audience with its last hate piece. Poroshenko has taken things even further, likening MH17 to Lockerbie and 9/11 and trying to get Donetsk and Lugansk’s governments on the international terrorist list.

It is only a short leap of “logic” to see the connection between Russia and Putin as terrorist sponsors and the US’ designation of state-sponsor-of-terrorism status onto the country. Such a step would lead to immediate US sanctions and intense pressure on the EU to cut off its major non-energy trade contacts with Russia and fiendishly move towards diversifying away from Russian gas (to say nothing of killing the South Stream project). The US will only take this extreme step if it is sure that it has more influence over Europe than Russia does and that Europe can be convinced to sacrifice its economic well-being for ideological and political reasons (which is not that far-off of a possibility for such an indoctrinated leadership).

Just as before the tragedy, it must be noted that the US is still pursuing the goal of shadow NATO integration with Ukraine parallel to isolating Russia. It is reported that it may be on the cusp of granting Ukraine major non-NATO ally status and even providing pinpoint precision intelligence for attacking anti-Kiev SAM sites. This could rapidly creep into something much more, per the Libya model, especially since US military advisors will be on the ground. Thus, in one fell swoop, by evoking the “terrorist” label, the US can ‘kill two birds with one stone’ – guilt/force the EU into “isolating Russia” (thereby isolating and harming itself as well) and swallow Ukraine into Shadow NATO.

Concluding Thoughts

The US has plainly demonstrated that it is salivating for a Cold War redux with Russia, and once more, Europe is caught in the middle. It is completely contrary to any of its interests for it to participate in this needless and aggressive geopolitical struggle, but as the EU seems wont to do nowadays, it may easily get sucked into it out of misguided ideological and political reasons dictated by the US. In fact, it may have little choice: the US could unilaterally declare Russia as a state sponsor of terrorism and then force the EU, whose largest export market is the US and with whom it is negotiating the Trans-Atlantic Trade and Investment Partnership (which European political elite naively believe will benefit them), into acquiescing to its military occupier’s demands. This wouldn’t “isolate” Russia, which has already made a strong push into the non-Western world since April, as much as it would isolate the EU, but ironically, this may even work in Washington’s favor by crippling its friendly economic rival and keeping it under its thumb for at least another decade.

Moreover, Russia as a “state sponsor of terrorism” would create a clear dividing line between the West and Russia and could give a renewed hybrid purpose to NATO. Whereas in the Cold War it was an anti-Russian organization and then in the “Global War on Terror” it nominally became an anti-terrorist organization, it may soon carry the new hybrid mission of containing a “terrorist-supporting” Russia. This would also provide enhanced justification to European populations for the deployment of even more US and NATO personnel in Eastern Europe, as well as deeper and faster Shadow NATO integration for Ukraine, Georgia, and Moldova, thereby laying the framework for a Western battering ram into Russia’s Near Abroad. All of this would rightfully alarm Russia, which would then defensively ramp up its multivector cooperation with ‘The Rest’ and BRICS. This would be especially so for its prized strategic partner and fellow Western target, China, potentially creating an eventual de-facto alliance between the two giants out of shared security concerns and transforming the Eurasian strategic landscape.

Andrew Korybko is the American political correspondent of Voice of Russia who currently lives and studies in Moscow, exclusively for ORIENTAL REVIEW.

July 28, 2014 Posted by | Economics, False Flag Terrorism, Militarism, Timeless or most popular | , , , , , , | Leave a comment

U.S. Wasted $34 Million Pushing Soybeans on Afghanistan

By Noel Brinkerhoff | AllGov | July 26, 2014

From military hardware to counternarcotics operations, the United States has invested billions of dollars in Afghanistan to rebuild, if not reshape, the war-torn country. Much of this investment has proved ineffective, and the failings of American policy now include a misguided effort involving soybeans.

Four years ago, the U.S. Department of Agriculture (USDA) decided it would be a good idea to spend $34 million on getting Afghan farmers to grow soybeans and for Afghan consumers to eat them.

The USDA struck out on both counts, according to a report (pdf) from the Office of the Special Inspector General for Afghanistan Reconstruction (SIGAR), a frequent critic of U.S. spending in the country, and the Center for Public Integrity.

For starters, American officials thought farmers in the nation’s northern reaches could successfully grow soybeans. This decision was made despite the findings of British researchers last decade that “soybeans were inappropriate for conditions and farming practices in northern Afghanistan, where the program was implemented,” SIGAR’s top official, John Sopko, wrote in a letter to Agriculture Secretary Tom Vilsack.

The U.S. also paid about $1.5 million to build a processing plant for soybeans. When the crops failed, the government paid to have 4,000 metric tons of soybeans flown in from the United States at a cost of about $2 million to keep the plant running.

Nor could American experts convince Afghans to incorporate soybeans into their diet. The Center for Public Integrity reported that this effort “has largely been a flop, marked by mismanagement, poor government oversight and financial waste.”

But even if the U.S. didn’t bungle its implementation of the soy-is-good-for-you strategy, the plan was likely to fail anyway, the center concluded, because of “a simple fact, which might have been foreseen but was evidently ignored: Afghans don’t like the taste of the soy processed foods.”

To Learn More:

Afghans Don’t Like Soybeans, Despite a Big U.S. Push (by Alexander Cohen and James Arkin, Center for Public Integrity)

The U.S. Wasted $34 Million TryingTo Make Soybeans Happen In Afghanistan (by Hayes Brown, Think Progress)

Letter to Tom Vilsack (Special Inspector General for Afghanistan Reconstruction) (pdf)

More Than Three-Quarters of Soybeans, Corn and Cotton Grown in U.S. are Genetically Engineered (by Noel Brinkerhoff, AllGov)

July 26, 2014 Posted by | Corruption, Economics | , , , | Leave a comment

Mississippi Cuts $1.3 Billion from Schools, Gives $1.3 Billion to Nissan

By Carl Gibson | Reader Supported News | July 23, 2014

Mississippi has proved to us all that austerity, or the political ideology of “government living within its means,” is a farce. All austerity means is taking money away from public services, and giving it to private business. Mississippi Governor Phil Bryant and the GOP-led legislature illustrated that perfectly in two ways.

Since 2008, Mississippi has violated a constitutional mandate to adequately fund the state’s public K-12 schools. The Mississippi Adequate Education Program, or MAEP, was established in 1997 to make sure a proper portion of taxes went to fund schools. A community’s ad valorem taxes will cover up to 27 percent of the cost, while the state covers the rest. The state’s contribution is essentially the base student cost times the daily attendance in a certain school district. The mandated amount would be readjusted every five years for inflation. Mississippi has spent $648 less per student than it did in 2008. Currently, Mississippi has underfunded its public schools by at least $1.3 billion.

In May of last year, the United Auto Workers released a study showing that Nissan’s Canton, Mississippi, plant was getting $1.33 billion in tax breaks from the state in return for Nissan’s promise to provide Mississippians with good-paying, full-time jobs. $850 million in tax breaks would be spaced out over a 30-year period, with $400 million in cash aid. Mississippi would even pay $90 million in interest on the debt incurred to reward Nissan with its lavish tax breaks. Mississippi has already given $378 million to Nissan, which paid for its access roads, water usage, and worker training. Nissan also gets to keep $160 million in income taxes from workers over the next 25 years, which would normally have gone to Mississippi’s public programs. No employer has gotten that sweet a deal from any state government.

However, out of all 5,200 workers at Nissan’s Canton plant, most of them are employed by temp agencies. Regular, full-time employees are paid over $23 per hour and have benefits, but the temp workers at the Canton plant are often hired for just half that amount, given no healthcare, retirement, benefits, or paid time off, and have very little job security. The automaker has even issued a 5-year wage freeze for its Mississippi workers even as the company pocketed $3.3 billion in profit last year. Nissan likes to brag that it never lays people off, yet they don’t count temp workers who have been let go. While many other Nissan plants have unionized workforces, Nissan has indirectly threatened to close its Mississippi plant for good and move out of state if its workers organize.

While Mississippi is paying for a giant chunk of Nissan’s subsidies with the exact amount of money it cut from schools in the last six years, the state is actually following a nationwide trend. According to the Center on Budget and Policy Priorities, a nonprofit think tank, most states are funding schools even less than they used to before the global recession, which officially ended in 2009. Out of the 35 states following this trend, ten of those states have cut education by more than 10 percent. And despite modest increases in their tax revenues, 15 states are providing less funding per student than they did last year.

Nor is Nissan alone in their greed-inspired quest for huge tax breaks without fulfilling their promises to create jobs. A New York Times database from 2012 shows that over 150,000 state-based tax handouts to private businesses amount to $80.4 billion each year. Many of these corporations, like General Motors, took these handouts, and then shuttered operations a short time later. New Jersey governor Chris Christie has awarded over $2 billion in tax incentives during his tenure. That’s more under just one governor than in the combined tenures of all of New Jersey’s governors since 1996. But despite the handouts to corporations, New Jersey’s job growth is still lagging behind the rest of the nation. As of December of 2012, New Jersey had only restored half of the private sector jobs lost since the start of the recession.

States all over should have already realized that since globalization has sent manufacturing jobs overseas, real job growth lies in highly-skilled, technical industries. And to attract those employers, a state needs to have an educated workforce ready to take on those jobs. Unless states stop the disturbing trend of cutting education funding in favor of giving big tax breaks to any corporation that asks for them, their economies will only get worse.

Carl Gibson, 27, is co-founder of US Uncut, a nonviolent grassroots movement that mobilized thousands to protest corporate tax dodging and budget cuts in the months leading up to Occupy Wall Street. Carl and other US Uncut activists are featured in the documentary We’re Not Broke, which premiered at the 2012 Sundance Film Festival. Carl is also the author of How to Oust a Congressman, an instructional manual on getting rid of corrupt members of Congress and state legislatures based on his experience in the 2012 elections in New Hampshire. He lives in Sacramento, California.

July 23, 2014 Posted by | Economics | , | Leave a comment

Venezuela Participates in BRICS Gathering, New Agreements Reached

By Ewan Robertson | Venezuelanalysis | July 20, 2014

Mérida – Venezuela participated in the gathering of the BRICS emerging powers and Latin American regional blocs in Brazil this week, where new agreements were hailed as beginning the creation of a new global financial architecture.

Several multilateral meetings were held in the city of Fortaleza, including the 6th BRICS (Brazil, Russia, India, China and South Africa) Summit, and meetings between China and the Union of South American Nations (UNASUR) and the Community of Latin American and Caribbean States (CELAC).

During the BRICS summit, the five emerging economies created a new development bank and a multilateral reserve fund, each of which will potentially hold US $100 billion of pooled capital. The reserve fund will be used to support members of the bloc against adverse economic conditions or external impacts.

The creation of the new institutions is partly motivated by dissatisfaction with the terms of the financial hegemony exercised by the U.S. and its European allies through the IMF and World Bank.

“The strength of our project has positive potential: we want the global [financial] system to be fairer and more equal,” said Brazilian president Dilma Roussef to media.

On Wednesday and Thursday China met with the UNASUR and CELAC blocs in order to explore strategies through which the Asian power could deepen its involvement in Latin America.

In the meeting with UNASUR countries it was discussed how BRICS and UNASUR could create more ties. After the meeting, Venezuelan president Nicolas Maduro reported that it had been proposed that the new BRICS Development Bank and UNASUR’s Bank of the South adopt a common strategy in the regional and global economies.

“The [new] financial institutions have the same objectives: the construction of a new financial architecture that benefits economic development in conditions of equity for our countries; where speculative financial capital is ended, where the looting of our economies is ended, and productive investment which creates employment and wealth is promoted,” he said to Telesur on Wednesday.

The Venezuelan president also argued that closer relations between BRICS and Latin America represented a “win win alliance” and “the birth of the multi-polar world”.

“In the past we were dominated powers, and now we are emerging countries and blocs,” he said.

The BRICS bloc has become a key trading partner for Venezuela. Commerce with the bloc increased by 72% from 2006 – 2013.

Meanwhile, agreements reached on Thursday between China and the CELAC bloc, which brings together all countries in the Americas apart from the U.S. and Canada, included the establishment of a $1 billion investment fund for infrastructure projects in Latin America, and a Chinese offer of scholarships for 6,000 Latin American students.

Other funds potentially worth $15 billion to support Latin American development were also discussed.

Latin America has become an important source of Chinese investment and exports, while South American powers have increasingly turned to China as a source of financing, technology transfer, and destination to export primary materials.

A top level delegation led by Chinese President Xi Jinping is currently touring the continent to further deepen China’s economic involvement in Latin America, with visits including Brazil, Argentina, and Venezuela, where Xi Jinping arrives today.

Bilateral agreements

Venezuela also held several bilateral meetings in Fortaleza, including with China and Colombia.

The South American OPEC nation agreed to import a further 1,500 Chinese-made Yutong buses for the expansion of its public transport system. A Yutong factory is being built in Venezuela to begin domestic production of the vehicles, which will open next year.

The Venezuelan and Chinese central banks also reached an agreement to share information on statistical methodologies, monetary policy, and funding mechanisms. Both parties called the accord a “breakthrough” for enhancing economic ties.

Since 2001 the two countries have constructed what has been labeled as a “strategic alliance”. A high level bilateral session initiates in Caracas today with the arrival of Chinese president Xi Jinping.

July 20, 2014 Posted by | Economics | , , , | Leave a comment

Has America learned anything from negotiating with Iran?

By Flynt Leverett, Hillary Mann Leverett, and Seyed Mohammad Marandi | Press TV | July 18, 2014

While negotiators from Iran, the United States and the rest of the P5+1 will not meet their July 20 target for a comprehensive nuclear agreement, it is clear they won’t walk away from the table in a huff. So, as the parties prepare to continue the process, what has America learned from negotiating with Iran, and what does it still need to learn to close a final deal?

One thing Washington has learned is that the Islamic Republic is deeply committed to protecting Iran’s independence. Thirty-five years ago, Iran’s current political order was born of a revolution promising Iranians to end subordination of their country’s foreign policy to the dictates of outside powers—especially the United States. Since then, the Islamic Republic has worked hard to keep that promise—for example, by defending Iran against a U.S.-backed, eight-year war of aggression by Saddam Hussein’s Iraq and fending off a steady stream of U.S. and Israeli covert attacks, economic warfare and threats of overt military action.

On nuclear matters, the Islamic Republic’s commitment to protecting Iranian independence focuses on the proposition that Iran has a sovereign right, recognized in the 1968 Nuclear Nonproliferation Treaty (NPT), to enrich uranium indigenously under International Atomic Energy Agency (IAEA) safeguards. The Islamic Republic terminated the purely weapons-related aspects of the U.S.-supplied nuclear program it inherited from the last shah, going so far as to reconfigure the Tehran Research Reactor—which, when transferred by the United States in the 1960s, only ran on fuel enriched to weapons-grade levels (over 90 percent)—to use fuel enriched to just below 20 percent.

But the Islamic Republic has also been determined to develop a range of civil nuclear capabilities, including indigenous enrichment for peaceful purposes. It won’t surrender Iran’s right to do so—even in the face of massive U.S. and Western pressure and sanctions. Beyond sovereignty and practical needs, Iranian policy makers judge that appeasing Washington on the issue will simply lead to more aggressive U.S. demands and pressure on other disputes.

America may have begun to recognize that respecting Iranian independence is key to diplomatic progress. For over a decade, Washington has insisted—contrary to how the vast majority of states read the NPT and to America’s own publicly stated view during the Treaty’s early years—that Iran has no right to enrich. Even today, while Secretary of State John Kerry acknowledges Iran’s right to a “peaceful nuclear program,” the United States refuses to acknowledge that this includes a right to safeguarded enrichment.

However, when Washington has moved, in practical ways, to accept safeguarded Iranian enrichment, Tehran has responded positively. In the Joint Plan of Action agreed last November, America and its British and French partners dropped their longstanding demands that Iran cease all enrichment-related activities before substantial diplomatic progress would be possible. Furthermore, the United States and the rest of the P5+1 agreed that a final deal would encompass an Iranian enrichment program. In return, Tehran made multiple commitments to diminish what America and its Western partners portray as the proliferation risks of Iran’s nuclear activities. These confidence-building measures—which, the IAEA reports, Iran has scrupulously implemented—include stopping enrichment at the near-20 percent level needed for TRR fuel, converting part of its near-20 percent stockpile to oxide form and diluting fissile-isotope purity in the rest, freezing its centrifuge infrastructure and accepting IAEA monitoring well beyond NPT requirements.

While U.S. officials have started to grasp the importance of respecting Iran’s independence, they have yet to draw this insight’s full implications—the main reason a final deal isn’t at hand.

America and its Western partners continue demanding that Iran dismantle most of its safeguarded centrifuge infrastructure—a demand with no basis in the NPT or any other legal instrument and which contributes nothing to Western powers’ purported nonproliferation goals. Iranian Foreign Minister Javad Zarif has made clear that, in a final deal, Iran could agree to cap temporarily the scope and level of its enrichment activities and to operate its centrifuges in ways rendering alleged scenarios of rapid “breakout” implausible (e.g., no stockpiling of low-enriched uranium).

Unfortunately, Western demands for dismantlement appear grounded in a determination that Tehran must “surrender” in a final deal—to forego sustainable indigenous enrichment capabilities and instead rely on foreign fuel suppliers (especially Russia). If Western powers insist that Iran compromise its sovereign rights, there will be no final deal, no matter how long talks are extended.

The United States also still needs to learn—however incomprehensible this may seem to some—that the Islamic Republic is, in fact, a legitimate order for the overwhelming majority of Iranians living inside their country.

Besides restoring Iranian independence, the revolution that produced the Islamic Republic promised Iranians to replace externally imposed autocracy with an indigenously created system, grounded in participatory Islamist governance. For thirty-five years, this is what the Islamic Republic has offered Iranians the chance to build. With all its flaws, the Islamic Republic has delivered for its people in important ways, including impressive (and progressive) developmental outcomes in poverty alleviation, educational access, health-care delivery, scientific and technological advancement, and improving the status of women—despite decades of war, threats of war, and intensifying sanctions.

Still, many American elites persist in depicting the Islamic Republic as a system so despised by its own people as to be chronically in danger of overthrow—a fantasy that has driven Western enthusiasm and not-so-tacit support for regime change in Iran. Beyond its falsity, this misapprehension of reality continues to warp the Western approach to nuclear diplomacy with Tehran. Beyond dictating the “acceptable” scope of Iran’s indigenous capabilities, Western powers want the limits on Iran’s nuclear activities in a final deal to apply for well over a decade. Conversations with Western officials indicate that this demand—also with no basis in the NPT or any other legal instrument—is motivated by assessments that the Islamic Republic will not last for more than ten years. By insisting on a more-than-ten-year term, Western powers are calculating that, when a final deal expires, Iran will have a political order less committed to strategic independence.

This is both foolhardy and reckless. The Islamic Republic is not about to disappear—and no truly legitimate Iranian government will compromise what the vast majority of Iranians see as their nation’s sovereign rights.

When the United States fully understands that, the nuclear issue will almost resolve itself.

July 18, 2014 Posted by | Economics | , , | Leave a comment

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