Israel’s online economic magazine Globes is reporting that Israel has refused an American offer to solve the dispute with Lebanon over the maritime borders in the Mediterranean.
According to the magazine, the continuing dispute over the borders could undermine the development of Lebanese area Block Nine, where excavation work for oil and gas is currently being carried out.
Block Nine is located to the north of the Israeli oil field Alon, which is thought to contain large amounts of natural gas.
In 2010, Lebanon filed a complaint with the UN against Israel’s incursion in the Lebanese area of the sea, which is called EEZ.
The area is about 850km2 and is disputed between Lebanon and Israel.
While the US offered to mediate to solve the dispute, Israel refused and responded directly to the UN in regards to the Lebanese complaint.
According to Globes, Lebanon’s recent bids for oil excavation in the area include its claim of ownership, calling the area the “southern Lebanese borders”.
October 31, 2013
Posted by aletho |
Economics | Israel, Lebanon, United States |
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By Sherwood Ross | October 26, 2013
At a time when a record 47-million Americans live in poverty, when cities are going bankrupt, when 10 million jobless can’t find work and millions more are too discouraged to look, when the infrastructure is crumbling, when schools are running down, when bridges,roads and water mains need urgent repair, and when the AP reports four out of five Americans are in the financial soup, President Obama’s plan to spend $60 billion to refurbish an aging nuclear weapons arsenal is an obscene waste of tax dollars.
This president, who campaigns like a progressive and governs like a reactionary, is about to modernize a costly nuclear arsenal that President Ronald Reagan, in his shining moment, called “totally irrational, totally inhumane, good for nothing but killing, possibly destructive of life on earth and civilization”. Reagan sensibly called for “a world free of nuclear weapons” and met with Soviet Russia’s Gorbachev at four summit conferences between 1985 and 1988 to draw down missile and nuclear stockpiles.
Yet Obama appears hell-bent on updating the seven aging hydrogen bomb designs (why, oh, why, in the name of god, why?) that would require construction of costly new facilities when millions of American families can’t find decent housing and small businesses can’t find money to expand! According to a report by Ralph Vartabedian of the Los Angeles Times, the new scheme “essentially violates the Obama administration’s pledge against developing nuclear weapons.” The reporter interviewed Philip Coyle, former head of the U.S. nuclear testing program no less, quoting him as saying the Obama plan “sends the wrong message to the rest of the world.”
It also puzzles a lot of Americans. Areport by the Union of Concerned Scientists, writes Vartabedian, “raises new objections that the plan would require construction of unnecessary facilities and introduce untested combinations of parts inside the bombs—which could erode confidence in their reliability and safety.” (A polite way of saying, “Holy Hell, Look Out!”)
Speaking of safety, in an article titled “Nukes of Hazard” in the Sept. 30th issue of The New Yorker, Louis Menand writes, “most of the danger that human beings faced from nuclear weapons after the destruction of Hiroshima and Nagasaki had to do with inadvertence—with bombs dropped by mistake, bombers catching on fire or crashing, missiles exploding, and computers miscalculating and people jumping to the wrong conclusion. On most days (during the Cold War), the probability of a nuclear explosion happening by accident was far greater than the probability that someone would deliberately start a war.”
Yet, instead of destroying all nuclear weapons and calling upon the other members of the lunatic nuclear fraternity to do likewise, President Obama is setting the wrong example and raising the stakes of a nuclear accident that could far exceed the havoc that an accidental nuclear release is currently inflicting on Japan—and perhaps the rest of the world as well. Reviewing Eric Schlosser’s new book, “Command and Control,”(Penguin) Menand writes, there have been “hundreds” of incidents since 1945 “when accident, miscommunication, human error, mechanical malfunction, or some combination of glitches nearly resulted in the detonation of nuclear weapons.”
What’s more, “the more extensive, elaborate, and fine-tuned the nuclear-weapons system became, the greater its exposure to the effects of an accident,” Menand writes. “For the system to work,” he adds, “for the warnings to be timely, communications to be transparent, missiles to launch, explosives inside the warheads to detonate, and nuclear cores to fission—everything has to be virtually perfect. The margin for error is tiny. And nothing is perfect.” Also consider, if you will, that the new nukes will make those dropped on Japan look like cherry bombs.
To spend $60 billion on weapons that must never be used, and whose use Reagan warned can destroy civilization, is a horrific waste of taxpayers’ dollars when, as CNN Money reports, roughly “three quarters of Americans are living paycheck-to-paycheck, with little or no emergency savings.”
Menand warns not to give too much credit to Mr. Reagan for calling for an end to nuclear bombs, as he was only responding to pressure from the American public. Well, I think the American public would really prefer not to have nuclear weapons around today, just as polls show it wants out of the Middle East. President Reagan showed the way. If Obama goes through with this wild spending plan, the survivors may well refer to it as Obama’s Folly.
Sherwood Ross can be reached at sherwoodross10@gmail.com
October 26, 2013
Posted by aletho |
Economics, Militarism, Progressive Hypocrite, Timeless or most popular | Louis Menand, Obama, Ronald Reagan, Union of Concerned Scientists, United States |
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With European auto sales near a 20-year low, it’s unthinkable that an automaker would willingly cut ties with its largest foreign client. But in February 2012 Peugeot did just that by severing ties with Iran. The move was forced by its new partner, General Motors, which had just been bailed out by the US government.
The decision has cost an estimated €4 billion in lost sales and helped force 8,000 job cuts. In France’s first such industrial closure in two decades, the last car has just rolled off the line at a plant located in a heavily-Muslim suburb of Paris.
Via a partnership with automaker Iran Khodro, in 2011 Iran accounted for 13% of Peugeot’s annual sales. The cars were assembled in Iran, giving domestic autoworkers valuable experience and helping Iran to become one of the world’s top 20 auto-producing countries.
The French press has largely remained silent on the key role Iran sanctions have played in damaging Peugeot, despite pleas from union leaders.
Ironically, giving up the Iranian market seems to have been in vain, as multiple sources have reported that GM has significantly scaled back its alliance with Peugeot. If the sanctions on Iran were designed to inflict the maximum amount of pain on Peugeot, they may have achieved their goal.
October 26, 2013
Posted by aletho |
Economics, Wars for Israel | Automotive industry, France, General Motors, Iran, Paris, Peugeot, PSA Peugeot Citroën |
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Imagine if you will… an epic government failure.
Chronic mismanagement and cost over-runs. Incomplete software coding, timely political donations and undelivered promises. And zero accountability.
Now, imagine the outrage.
No, really. You will actually have to imagine the outrage.
That’s because The Great American Outrage Machine™ has no interest in generating a scandal around the ultimate example of government failure: the F-35 fighter jet.
Like the comically bad roll-out of the Affordable Care Act’s website, the long-delayed and often-rejiggered F-35 program is a costly disaster rife with technological snafus, software problems and repeated contractor incompetence.
Unlike the circle-jerk of posturing, pontification and media preoccupation that gave us The Shutdown of 2013, the “first $1 trillion weapon system in history” has quietly metastasized into a debacle that is, to quote Sen. John McCain, “worse than a disgrace.”
And although increasingly well-compensated contractors will “surge” over the next few weeks to remediate the epic fail of a healthcare website that has ballooned from an estimated cost of $94 million to over $400 million, it pales in comparison to an “aerospace megaproject” that is seven years behind schedule and 70% over the initial budget estimate of $233 billion—all to deliver 409 fewer planes than originally planned.
Even worse, a recent report by the Pentagon’s Inspector General detailed an array of management and quality-assurance problems at Lockheed Martin’s production facility in Fort Worth, Texas, all of which contributed to over 200 repairs on each plane. Of course, each of those repairs translates into added cost to the taxpayer-funded program. Citing the report, McClatchy’s James Rosen noted that beyond the 28 “major” problems among the total of 70 found at Lockheed’s Fort Worth facility, there were another 119 “major issues at Lockheed’s five main subcontractors’ plants.”
Despite these problems, the F-35 program soldiered on through the Congressional budget process, thus far emerging both “unscathed” by budget battles and immune to the “indiscriminate” cuts imposed by The Sequester.
Perhaps not coincidentally, the IG’s report was completed at the end of 2012, but was not released until September 30th of this year—months after the House approved $600 billion of Pentagon spending and weeks after the Senate Armed Service Committee submitted its slightly less fruitful version of the defense spending bill.
And Lockheed used the long interregnum between the completion and release of the IG’s report to simply dismiss its claims as “out-of-date” and functionally irrelevant. It is true that Lockheed has trimmed the per plane cost from, according to the Project on Government Oversight, a peak of $161 million per plane to $133 million in 2012 and, if Lockheed is to be believed, downward over the next few years to somewhere between $114 million and $156 million per plane, depending on model specifications, engine options, retrofits and upgrades.
If these numbers are a bit mindboggling, it is only the tip of a giant contracting iceberg uncovered by Adam Ciralsky in a lengthy Vanity Fair exposé of the F-35 program. It reads like anti-government porn for hot and bothered budget hawks. Here are some of the “sexier” details:
- Looking for software coding issues? Lockheed’s got ’em. The F-35 will not be “fully-functional” until Lockheed’s rapidly expanding pool of software engineers finally delivers 8.6 million lines of code. Also, proper maintenance of the planes is delayed until another 10 million lines of code are written and uploaded to maintenance computers.
- How about design flaws? There have been many, but none sums up the problems more than the case of the $500,000 helmet that had to be developed to compensate for the massive, dangerous blind-spots created by a visually restrictive cockpit design.
- What about incompetence? The stealthy design of the F-35 may have been sold as state-of-the-art, but continual redesigns have literally slowed down the plane. The special radar-evading coating was changed in mid-production, but the new coating bubbles and peels at high speeds, meaning the planes are restricted from flying at or above supersonic speeds until Lockheed can remediate the problem.
But the real takeaway of Ciralsky’s story is something called Total System Performance Responsibility. It refers to a type of “Performance Based Logistics” (PBL) that “revolutionized” the way the Pentagon issued contracts by putting more “responsibility” (a.k.a. “power”) in the hands of the contractor. This “innovative thinking” in the Pentagon’s contracting process promised to free-up the creative power of the private sector by removing the oppressive power of government oversight.
Sure, it sounds like something Ayn Rand wrote in a love letter to Milton Friedman. But this deadly serious idea took flight at the start of Bush the Younger’s administration and it portended a decade of defense contractors gone wild—particularly in Iraq and Afghanistan.
What it meant for the F-35 contract was, according to Ciralsky, that “…Lockheed was given near-total responsibility for design, development, testing, fielding, and production.” Instead of oversight along the way, “… the Pentagon gave Lockheed a pot of money and a general outline of what was expected.”
Which brings the story back around to Healthcare.gov.
Like the open-ended Total System Performance Responsibility contract system used by the Pentagon, various agencies tasked with launching the Affordable Care Act sometimes awarded Indefinite Delivery/Indefinite Quantity (IDIQ) contracts—as is the case with the now infamous deal GCI Federal received to “build” the website. And yes, an IDIQ contract is exactly like it sounds—it is a broadly-defined trough with few parameters and little oversight, kinda like your plate during the “Oceans of Shrimp” promotion at Golden Corral.
Sadly, IDIQ contracts are not unusual. Nor is the practice of contractors giving well-timed political donations.
The Beltway is teeming with companies drawn to the recession-proof feeding frenzy chummed by members of Congress and various political appointees. Fifty-five companies got a piece of the Affordable Care Act. But only a select few hook “free from oversight” mega-deals like the one secured by Lockheed Martin.
Unsurprisingly, some of the winners of the ACA rollout are well-practiced anglers of tax dollars. Yup, the Sunlight Foundation found that defense giants like Booz Allen Hamilton ($2.6m), Northrop Grumman ($1.66m) and Science Applications International Corp. ($1.77m) couldn’t resist getting “a taste” of the ACA. The big winner was General Dynamics’ subsidiary Vangent ($28m), which they acquired just in time to belly up to the ACA trough.
Meanwhile, the Pentagon served up $6.3 billion worth of contracts during the Obamacare-inspired shutdown. So, the corporate feasting continued even as taxpayers were force-fed a bogus debate over a “government takeover of healthcare,” which is little more than a legally-binding promise under the ACA to enshrine in perpetuity the profitable health insurance industry and its massive, private bureaucracies. An actual government takeover would’ve replaced health insurance with healthcare. But that didn’t happen.
And the punchline of this grand budgetary joke?
Lockheed has prospered beyond its expectations. They just beat estimates for the 3rd quarter of this year! And General Dynamics just scored a $3 billion missile deal!
When it comes to securing their profitable contracts, government failure is not an option.
October 24, 2013
Posted by aletho |
Economics, Militarism | IDIQ, Project On Government Oversight |
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Americans, even well-informed ones, don’t know all of the mistakes made by neoconized and corrupted Washington in the past two decades. However, enough is known to see that the US has lost economic and political power, and that the loss is irreversible.
The economic cost of this loss will be born by what remains of the middle class and the increasingly poverty-stricken lower class. The one percent will have offshore gold holdings and large sums of money in foreign currencies and other foreign assets to see them through.
In the political arena, the collapse of the Soviet Union presented Washington with the grand opportunity to reallocate the Pentagon budget to other uses. Part of the reduction could have been returned to taxpayers for their own use. Another part could have been used to improve worn out infrastructure. And another part could have been used to repair and improve the social safety net, thus insuring domestic tranquility. A final, but perhaps most important part, could have been used to begin repaying the Treasury IOUs in the Social Security Trust Fund from which Washington has borrowed and spent $2 trillion, leaving non-marketable IOUs in the place of the Social Security payroll tax revenues that Washington raided in order to fund its wars and current operations.
Instead, influenced by neoconservative warmongers who advocated America using its “sole superpower” status to establish hegemony over the world, Washington let hubris and arrogance run away with it. The consequence was that Washington destroyed its soft power with lies and war crimes, only to find that its military power was insufficient to support its occupation of Iraq, its conquest of Afghanistan, and its financial imperialism.
Now seen universally as a lawless warmonger and a nuisance, Washington’s soft power has been squandered. With its influence on the wane, Washington has become more of a bully. In response, the rest of the world is isolating Washington.
The prime minister of India, Manmohan Singh, recently declared China and Russia to be India’s “most important partners” with whom India shares “common strategic interests.” Prime Minister Singh said: “ India and Russia have always had a convergence of views on global and regional issues, and we value Russia’s perspective on international developments of mutual interest.”
India joined China in expressing concerns about the Federal Reserve’s practice of printing money in order to cover Washington’s vast red ink. The BRICS (Brazil, Russia, India, China, South Africa) are taking steps to create their own method of settling trade accounts in order to protect themselves from the looming dollar implosion,
China has forcefully called for a “de-Americanized world.” After watching the “superpower” offshore a large part of its GDP to China and then add to the diminished tax base the burden of $6 trillion in wars that brought no booty and served no US interest, China has concluded that American power is spent. The London Telegraph thinks “it is only a matter of time before the renminbi replaces the dollar as the primary currency for trading commodities and resources.”
The Obama regime attempted to attack Syria based on the sort of lies that the Bush regime used to invade Iraq, only to be slapped down by the British Parliament and Russian government. This rebuke was followed by the childishness of the government shutdown and threat of default. Consequently, the Washington morons have lost their monopoly on economic and political leadership. A few days ago the British government announced a historic agreement that permits British investors direct access to China’s markets and allows Chinese banks to expand their operations in Great Britain.
In Australia, the US dollar will no longer be used as the currency in which to settle the Australian trade accounts with China. Instead of dollars, trade will be settled in the Chinese currency.
Washington served as cheerleader, as did most economists and libertarians, while US corporations, greedy for short-term profits and executive bonuses, offshored US industry and manufacturing, calling it free trade. The obvious and predicted result is that China’s demand for resources needed to fuel its industrial and manufacturing power now dominates markets. This means that the US dollar is being displaced as world currency. The only market that America dominates is the market for financial fraud.
When industrial, manufacturing, and tradeable professional service jobs are offshored, they take US GDP and tax base with them. The foreign country gets the benefit of the relocated economic activity. Due to the revenues lost from jobs offshoring, there is a large gap between federal revenues and federal expenditures. As Washington’s irresponsible behavior has raised so many doubts about the dollar’s value and the government’s commitment to stand behind its massive debt, foreign countries with trade surpluses with the US are less and less willing to recycle those surpluses into the purchase of US Treasury debt.
Today the two largest holders of US Treasury debt are not investors or even foreign central banks. The two largest holders are the Federal Reserve and the Social Security Trust Fund.
As for those $6 trillion wars, that’s to pay for national defense to protect us from women, children, and village elders in far away countries devoid of air forces and navies, and to provide those recycled taxpayer monies from the military/security complex that find their way into political contributions.
The Wall Street gangsters sighed for relief over the last minute debt ceiling agreement. This shows how short-term Wall Street’s outlook is. All the October agreement did was to push off the crisis to January and February. The “debt ceiling agreement” did not produce a new debt ceiling that would last beyond February, and it did not resolve the large difference between federal revenues and expenditures. In other words, the can was again kicked down the road. A repeat of the October fiasco won’t play well.
Obamacare is causing the premiums on private insurance polices to rise substantially, almost doubling in some situations unless people move to the uncertain exchanges, and Obamacare’s raid on Medicare payroll tax revenues has resulted in a cut in Medicare payments to health care providers. The result is a further reduction in consumer discretionary income and a further drop in the economy.
This in turn means a larger federal budget deficit and the need for the Federal Reserve to purchase more debt.
Another reason the Federal Reserve is faced with increasing, not tapering, quantitative easing (money printing) is the decline in foreign purchases of US Treasury bills, notes, and bonds. As the instruments pay interest that is less than the rate of inflation, holding Treasury debt makes no sense when the dollar’s value and the potential of default are open questions.
According to reports, not only are foreign governments, such as China, ceasing to buy US Treasury debt, China has started to sell off its holdings, substituting gold in the place of US Treasury debt.
This means that the bonds must be purchased by the Fed or interest rates will rise as the increased supply of bonds on the market drives down bond prices. The only way the Fed can purchase a larger supply of bonds is by printing more money, that is, by more quantitative easing.
With the world moving away from using the dollar to settle international accounts, as the Fed prints more dollars the rate at which foreign holders of dollar assets sell off their holdings will rise.
To get out of dollars requires that the dollar proceeds from selling Treasuries, US stocks and US real estate be sold in the currency markets. The selling of dollars drives down the exchange value of the US dollar and results in rising US inflation. The Fed can print money with which to purchase Treasury debt, but it cannot print foreign currencies with which to purchase dollars.
The decline in the dollar’s exchange value and the domestic inflation that results will force the Fed to stop printing. What then covers the gap between revenues and expenditures? The likely answer is private pensions and any other asset that Washington can get its hands on.
Initially, private pensions will be taxed at a rate to recover the tax-free accumulation in the pensions. The second year a national emergency will be used to confiscate some share of pensions. Those relying on the pensions will find themselves with less income. Consumer spending will decline. The economy will worsen. The deficit will widen.
You can see where this is going, and there seems to be no way out. Policymakers, economists, and corporation executives are in denial about the adverse effects of offshoring, which they still, despite all the evidence, maintain is good for the economy. So nothing will be done about offshoring. Republicans will blame the budget deficit on welfare and entitlements, and if those are cut consumer spending will decline further, widening the budget deficit. Inflation will rise as incomes fall, and social cohesion will break down.
Now you know why Homeland Security purchased 1.6 billion rounds of ammunition, enough ammunition to fight the Iraq war for 12 years, has its own para-military force and 2,700 tanks. If you think the “terrorist threat” in America warrants a domestic armed force of this size, you are out of your mind. This force has been assembled to deal with starving and homeless people in the streets of America.
September employment report: According to the Bureau of Labor Statistics (BLS), September brought 148,000 new jobs, enough to keep up with population growth but not reduce the unemployment rate. Moreover, John Williams (shadowstats.com) says that one-third of these jobs, or 50,000 per month on average, are phantom jobs produced by the birth-death model that during difficult economic times overestimates the number of new jobs from business startups and underestimates job losses from business failures.
The BLS reports that 22,000 of September’s jobs were new hires by state governments, which seems odd in view of the ongoing state budgetary difficulties.
In the private sector, wholesale and retail trade produced 36,900 new jobs, which seems odd in light of the absence of growth in real median family income and real retail sales.
Transportation and warehousing produced 23,400 new jobs, concentrated in transit and ground passenger transportation. This also seems odd unless the price of gasoline and pinched budgets are forcing people onto public transportation.
Professional and business services accounted for 32,000 jobs of which 63% are temporary help jobs.
So here you have the job picture that the presstitutes, hyping “the jobs gain,” don’t tell you. The scary part of the September job report is that the usual standby, the category of waitresses and bartenders, which has accounted for a large part of every reported jobs gain since I began reporting the monthly statistics, shows job loss. Seven thousand one hundred waitresses and bartenders lost their jobs in September. If this figure is not a fluke, it is bad news. It signals that fewer Americans can afford to eat and drink out.
The unemployment rate that is reported is the rate that does not count as unemployed discouraged workers who are unable to find jobs and cease to look. This favored rate, the darling of the regime in power, the presstitutes, and Wall Street, also is not adjusted for the category of “involuntary part-time workers,” those whose hours have been cut back or because they are unable to find a full-time job. Obamacare, as is widely reported, is causing employers to shift their work forces from full time to part time in order to avoid costs associated with Obamacare. The BLS places the number of involuntary part-time workers at 7,900,000.
The announced 7.2% unemployment rate is a meaningless number. The rate can decline for no other reason than people unable to find jobs drop out of the work force. You are not counted in the work force if you are discouraged about finding a job and no longer look for a job.
The phenomena of discouraged workers shows up in the measure of the labor force participation rate, which has declined in the 21st century. The opportunities for American labor are so restricted that a rising percentage of the working age population have given up looking for jobs.
Yet, the Obama regime, the Wall Street gangsters, and the pressitute media tell us how much better the economic situation is becoming as more small businesses close, as memberships decline in golf clubs, as more university graduates return home to live with their parents, who are drawing down their savings to live, as Fed Chairman Bernanke has made it impossible for them to live on interest payments on their savings.
According to the US census bureau, real median household income in 2012 was $51,017, down 9% from $56,080 in 1999, 13 years ago. In contrast, annual compensation in 2012 for US CEOs broke all records. Two CEOs were paid more than $1 billion, and the worst paid among the top ten took home $100 million. When the presstitutes speak of economic recovery, they mean recovery for the one percent.
America is in the toilet, and the rest of the world knows it. But the neocons who rule in Washington and their Israeli ally are determined that Washington start yet more wars to create lebensraum for Israel.
Early in the 21st century the liberal Democrat Senator from New York, Chuck Schumer, and I coauthored an article in the New York Times about the adverse effects on the US economy of jobs offshoring. The article caused a sensation. The Brookings Institution in Washington quickly convened a conference which was covered by C-SPAN. C-SPAN rebroadcast the conference several times. During the conference I said that if jobs offshoring continued, the US would be a third world economy in 20 years.
Wall Street quickly shut up Senator Schumer, but I am sticking by my forecast. Indeed, I think we are already there.
October 24, 2013
Posted by aletho |
Economics, Militarism, Timeless or most popular | BRICS, Social Security Trust Fund, United States |
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A Wisconsin judge who declared Wisconsin Gov. Scott Walker’s (R) union-busting law unconstitutional more than a year ago held the Wisconsin Employment Relations Commission in contempt of court on Monday for continuing to enforce that law against school and municipal workers.
Walker’s law includes a one-two punch that dramatically weakens the ability of unions to improve workers’ wages while simultaneously encouraging those workers to drop the union. First, the law only permits public workers to collectively bargain for raises limited to the rate of inflation, thus curtailing one of the primary benefits of unionization — increased wages. It then requires unionized public workers to vote every year on whether they want to still be represented by a union.
Judge Juan Colas’ 2012 order blocks these restrictions from going into effect against city, county and school district workers, although state workers remain largely subject to Walker’s law. His order on Monday clarifies that the order applies statewide, and not just to the narrow group of plaintiffs before his court.
Yet, while Colas’ most recent decision is a victory for public workers in Wisconsin, this victory is likely to be temporary. His original 2012 ruling is pending before the very conservative Wisconsin Supreme Court. And the conservatives on that court already reinstated Walker’s law once after it was blocked (on a different legal grounds) by a lower court.
October 23, 2013
Posted by aletho |
Economics, Solidarity and Activism | Scott Walker, Wisconsin, Wisconsin Supreme Court |
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The Turkish newspaper, Hurriyet, reported that Turkish Prime Minister, Recep Tayyip Erdogan, will meet Russian President, Vladimir Putin, in Moscow at the end of November, when discussions will focus on the Syrian crisis.
Hurriyet noted that Erdogan will visit the Russian capital where he will head a delegation of a large number of ministers and will preside over the meeting of the joint ministerial committee of the Turkish-Russian Cooperation Council during 21st to the 22nd November. The meeting will discuss several political, trade and investment issues between the two countries.
Deputy Russian foreign minister, Alexei Meshkv, said that the two sides will address several regional and international issues of mutual interest and will discuss ways to develop bilateral relations. In an exclusive interview with the Turkish newspaper Meshkov asserted that Russian-Turkish relations are evolving in several areas, especially in the energy field. The two sides are also cooperating on the construction of the Mersin Nuclear Power and the South Stream natural gas pipeline project, which will pass through the Black Sea.
October 22, 2013
Posted by aletho |
Economics | Russia, South Stream, Syria, Turkey |
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US President Barack Obama’s job approval rating has suffered one the largest quarter-to-quarter declines of his presidency, according to the latest Gallup poll.
The survey indicates that Obama averaged a 44.5 percent job approval rating during his 19th quarter in office, a decline of more than three percentage points from his 18th quarter.
The 19th quarter, which ran from July 20 through October 19, is now the third in a row in which Obama’s approval rating has declined, the poll showed.
The approval rating decreased in the middle part of the 19th quarter when he was pushing for military action against Syria, something the American public did not favor.
Furthermore, the legislative battles over the federal budget and the Affordable Care Act, as well as the federal debt limit took a toll on the president’s popularity, Gallup said.
According to a survey by Pew Research, the 16-day government shutdown pushed public trust in government near record lows, with fewer than two in 10 Americans saying they trust Washington to do what is right most of the time.
The survey also found that only 14 percent of Americans are satisfied with the way things are going in the US, and 81 percent said they were dissatisfied.
Recent estimates by the economists show that the US government’s policy blunders in recent years have significantly slowed economic growth and kept roughly 2 million people out of work.
On Sunday, US Treasury Secretary Jack Lew said the recent fiscal fight between Republicans and Democrats had a bruising impact on the country’s economy and eroded the confidence of both businesses and consumers.
October 21, 2013
Posted by aletho |
Economics, Militarism, Progressive Hypocrite | Obama, Press TV, United States, United States presidential approval rating |
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As the second most populous former Soviet republic, Ukraine has seemed uncomfortable with its independence since 1991 and less than committed to making it work. The fundamental issue has always been, does the country remain entwined with its larger neighbour Russia, or does it succumb to the blandishments of the West and distance itself completely from a country with which it was co-joined for over 1000 years?
Within the USSR Ukraine was an economic power house with a large heavy industrial sector and flourishing agriculture based on its excellent ‘black soil’. To Western eyes, the typical Ukrainian was Nikita Khrushchev — a plump, jolly fellow; a bit crude, perhaps, but a good, stolid Soviet citizen. When Gorbachev arranged a referendum on preserving a reformed Soviet Union in March 1991, 76 percent of voters in Ukraine supported remaining in the USSR. Yet only eight months later 90 percent of them voted for independence. Some might say, how capricious! Could things have changed so quickly? They obviously did, meaning that the Communist apparatchiki jumped the sinking ship and the sheep followed.
Since then, the country has been ruled by a mixture of ex-Soviet officials and Komsomolski joined by a growing band of oligarchs, some who have grown rich from the oil and gas transportation business. Typical of this genre is Yulia Timoshenko, the former prime minister, now serving a prison sentence for embezzlement and therefore regarded as a saintly martyr by the EU oligarchs who regard ripping off the peasantry as far less of a sin than being imprisoned for it.
Making matters worse is the fact that Washington and its European allies have repeatedly involved themselves in Kiev’s dysfunctional politics for their own purposes not the country’s well-being. The country is a strategic linchpin mainly because of its Black Sea coast where the Russians still maintain an important military base in the Crimea, rented from Ukraine.
The Curse of Orange
In 2004, large sums of Western money were poured into Kiev to overturn the results of the country’s presidential election which had been won by Viktor Yanukovich, a mundane but competent bureaucrat from the more Russian-leaning eastern Ukraine. Fears were that he might be less amenable to the ‘reform agenda’ pushed by Brussels and Washington. For several weeks hordes of young people camped in a tent city in central Kiev alleging fraud and claiming that their chosen candidate, Viktor Yushchenko, was the real winner of the poll. They were joined by members of the European Parliament and supported by the U.S. embassy mainly in the form of orange paraphernalia – scarves, flags, T-shirts – which gave the movement its name: the Orange Revolution. At the time, Western-sponsored, allegedly spontaneous ‘colour revolutions’ were all the rage in the former USSR.
By fair means (and certainly foul) the Oranges prevailed. A repeat election was held and Viktor Yushchenko – inevitably – was the winner. He became president and Mrs Timoshenko, also a heroine of the Orange Revolution, was appointed his prime minister. The youth melted away from Kiev now that the free food and drink, provided by the revolution’s western funders, had disappeared. But, soon, all was not well. Yushchenko and his prime minster fell out and she was dismissed a year later, in 2005.
The falling out inside the Orange camp was a symptom of the fractious and feuding nature of Ukraine’s post-Communist elite. The Ukrainian parliament (Verkhovna Rada) was another woeful example of institutional failure. Increasingly dominated by supporters of the defeated (or deposed) President Yanokovich, as the Orange factions fell out and lost support in fresh parliamentary elections, it was the scene of regular fisticuffs and brawls between different factions – all shown on television. Mrs Timoshenko’s supporters were usually the first to throw the punches. It seemed that the Orange team’s promise of Western-style, cutting edge politics was a forlorn dream.
In 2010 the reviled Yanukovich was elected president – again. Allegations of his 2004 election fraud were forgotten. The U.S. and its European friends had made little attempt to rescue their Orange protégées, still, the fear lurked that the new president would lurch perilously towards Moscow. But, surprisingly, his first post-election visit was to Brussels and he seemed keen to pursue closer ties with the EU. However, relations with Russia did improve and Yanukovich began to contemplate Ukraine’s possible participation in the Russian-Belarusian-Kazakh Customs Union, a rival organisation to the EU – certainly when it came to seducing former Soviet republics into the fold. It is at this point that the latest Ukrainian drama – potentially, its most consequential – begins to unfold.
Enter Salvation: the EU beckons
The European Union aware that its members were enlargement weary came up with the idea of a ‘Union Lite’ – the Eastern Partnership – to ease the remaining post-Soviet orphans into the club but, sort of, through the back door. Unveiled in 2009, the idea was heavily promoted by Poland, whose Foreign Minister, Radislav Sikorski, promised all sorts of free trade and other economic benefits to the six potential ‘partners’, including Ukraine – the main one being closer contact with the economic paradise inhabited by their neighbours, the Poles. In truth, any ‘economic benefits’ that did emerge would go to the West rather than the poverty-stricken ‘partners’ who would find that Brussels’ largesse was restricted to its cronies.
Like the rest of the bloc, Ukraine’s economy had suffered during the 1990s as its Soviet markets disappeared. Things began to improve during Leonid Kuchma’s presidency (and Yanukovich’s premiership). Although courted by the west, Kuchma did not completely shut down the country as required by the ‘Washington consensus’. In fact, with economic boom in places like China, Ukraine’s raw materials (iron and steel from the east) were in strong demand. The country’s agricultural base had survived and its farms were productive – unlike the Polish version in Sikorski’s Euro-paradise.
Immediately, things started to go wrong as the Orange team began their time in office by interfering in the gas transit arrangements with Russia. In early 2006, after much provocation, Moscow cut off gas supplies to the West through the Ukrainian pipeline system due to Kiev’s arrears of payment as well as its aberrant behaviour. Negotiations with Moscow followed, and fed up with the debts and messing around, the Russians started to charge the Ukrainians more for their domestic supplies of gas. This impacted the country’s energy-dependent, heavy industrial base which was about to be hit anyway by the economic collapse in 2008 which resulted in less global demand for iron and steel.
Despite a change of government in 2010 rather than cease trouble making and find a solution to disagreements with Moscow, it seems that the apparat in Kiev has decided to walk away and accept the West’s somewhat poisoned chalice. Even the apparently, Moscow-friendly Yanokovich. In August 2013, his government indicated that it would sign the partnership agreement in November 2013 during the forthcoming European summit in Lithuania (another lucky beneficiary of the European project).
Tug of War: Moscow Reacts
The Russians have reacted angrily, stating that Ukraine cannot be a member of both customs unions. Ukraine’s economy is heavily dependent on Russia which takes 35 percent of Ukrainian exports. As Vladimir Putin’s envoy Sergei Glazyev points out: “Millions of people working in the industrial sector, with which we cooperate and which has thousands of ties with Russia, want [Ukraine’s accession to the Customs Union]. These are rocket constructors, shipbuilders, chemists, metallurgists, and especially farmers and producers of food, whose products are not in demand anywhere else except Russia,” Glazyev said in an interview published in the Russian-language Ukrainian newspaper Vesti.[1]
If the agreement is finally signed, Moscow says it will impose tariffs on Ukrainian goods which are likely to be ‘dumped’ in Russia as Ukraine is flooded with imports from the EU. But, the Ukrainian elites aren’t worried by any of this. They yearn to belong to the Euro club with its juicy perks and prospects for further self-enrichment. As Glazyev noted: “Numerous political scientists and experts, who have fed on European and American grants for 20 years … are doing a certain political job on their clients’ behalf. In addition, a whole generation of diplomats and bureaucrats has appeared after the years of the ‘orange’ hysteria, who are carrying out an anti-Russian agenda”.[2]
Having embraced several economic basket-cases (including the over-hyped Poland) since 2004, what is in the deal for Europe? Yes, they can flood Ukraine with food and drink (thus destroying the country’s still productive agricultural base) and they can – for a price – plaster the country with European super and hyper markets. For Tesco, Aldi & co. a population of 48 million is virgin territory – a boost for Tesco whose eastern European outlets have lost money in the last few years. Otherwise, after 22 years of ‘freedom’ there is precious little left for the much vaunted ‘strategic foreign investor’ to gobble up.
Cheap labour and cut-price prostitution will be Ukraine’s major exports if the Polish or Baltic model of European integration is anything to go by. Poland’s main ‘export’ is cash remittances from almost three million migrants scattered across the western EU, especially in Britain. Maybe Foreign Minister Sikorski hopes that Ukraine will replace Poland as the mega-El Salvador of Europe if it accedes to a visa-free association with the EU?
For Ukraine’s future, the immediate and most troubling issue is energy: the country is haunted by its fragile status as a transit route to Western Europe and its own parlous ability to pay the world market price for fuel .
In 2010 a joint Russian-German pipeline began to carry Russian gas to Europe under the Baltic sea. Moscow’s decision to redirect energy exports to the west had been driven by ongoing problems with the Ukrainian route, mainly caused by the Orange politicians (and encouraged by the west). By 2013 Ukraine’s revenues for transporting Russian gas to Europe had nearly halved. Meanwhile, under pressure to ‘distance’ themselves from their evil neighbour, in 2012 Ukraine started to import some gas (at subsidised prices) from Germany’s Ruhrgas. Presumably, this was Russian gas going on a rather roundabout journey but, for good, geopolitical reasons.
Ukraine: an economic basket case?
However, the much promoted energy independence might be achieved – at least, sometime in the future. In 2013, with hubris at fever pitch, various regions in Ukraine began signing contracts with companies like Chevron and Royal Dutch Shell for shale gas exploration. Initial tests have indicated large deposits around the country. Perhaps, finally, the Ukrainians would be free from Russian imports, although exactly when is unknown (2050 is one date bandied about). And, will the domestic customer benefit from lower prices, especially when the profits will go to Chevron & co.? None of this concerns the greedy mix of energy companies and Ukrainian politicos, noses already in the trough and snouts sniffing for more kickbacks.
But, maybe the Europeans have failed to take note of some of the risky business practises encountered by Western investors in Ukraine. According to the Financial Times “Swissport, for example, claims to have spent much of this year struggling to reverse a court ruling that stripped it of a 70 per cent stake in Ukraine’s largest air cargo handler. It won a victory in Ukraine’s highest commercial court on October 2, but could face further legal challenges. London & Regional Properties recently lost management control over Globus one of Ukraine’s top shopping malls. Even McDonalds has been caught up. The fast food giant claims that raiders are trying to seize ownership of one of its 75 local restaurants. Other investors whose assets have faced legal threats in Ukraine steelmaker ArcelorMittal , the biggest foreign investor in the country.[3]
Sometimes, pressures appear to be applied by state law enforcement itself. In two separate incidents last month, fraud investigators raided and temporarily paralysed the local subsidiary of Italy’s Unicredit bank; at Vitmark Ukraine, a juice manufacturer owned by private equity fund Horizon Capital, documents, computers and other items were seized.
On top of this, Ukraine is in debt and, again, poised to go cap in hand to the IMF for further loans. At the end of September the cost of insuring 3-year Ukrainian debt hit a three year high. Among emerging markets, the country has one of the biggest burdens of short-term external debt relative to foreign exchange reserves. Its reserves fell by about 30 per cent to less than $20bn in the year to the end of August. According to Moody’s, this provides 2.3 months’ import coverage. The ratings agency said in its downgrade note”.[4]
Bizarre, then, that while he was in Germany in May 2013, President Yanukovich boasted that the Partnership Agreement “will have a substantial positive influence on the European economic situation and will help Europe emerge from the crisis”. As one commentator pointed out “even without any trade liberalization Ukraine is buying more and more German goods, but it essentially has nothing to export there. Under these circumstances, offering itself as the “saviour of Europe” is a bit presumptuous”.[5] Germany isn’t going to promote anything in Ukraine that might smack of competition (in heavy industry, for example). Instead various ‘green’ projects were floated around at the May meeting.
So, Ukraine is broke; its goods are of an inferior quality and unlikely to appeal to the European consumer; its business practices (including their legal underpinning) are dubious. Why bring the EU closer to such a place when over twenty years of western involvement has not led to any improvement? The answer, as everyone really knows, is political. This is the first really promising opportunity to drag Ukraine away from Russia, a country with which is shares a long border, a common language and historical experience as well as family and religious ties. But, the hatred felt in the west for Mr. Putin has only intensified with his intervention to stop an attack on Syria. Sealing Ukraine’s ties with Europe are a good way of giving him a bloody nose.
The deal still needs to be finalised and this seems to pivot upon Yanukovich agreeing to Brussels’ demand that Yulia Timoshenko, jailed in 2011 for embezzlement and abuse of office, be freed. The Europeans see her plight as a human rights tragedy almost on a par with Nelson Mandela’s incarceration on Robben Island, ignoring the fact that this is the second time she has been imprisoned for economic crimes – in 1994 she was convicted of money laundering and extortion. Many Ukrainians find this sanctification hard to take. They are more likely to accept Matthew Brzezinski’s description of her modus operandi as the ‘gas princess’ in his book Casino Moscow.[6] The incarceration of a rich and powerful lady with a shady past is what seems to separate the Ukrainians from economic nirvana in the EU’s embrace.
As of this writing, Timoshenko’s release looks to be imminent, as Yanukovich has indicated his support for parliamentary action to allow her to be released from prison and sent to Germany, ostensibly for medical treatment.
Why does all this matter? Several basket cases have been absorbed into the EU already but with many negative repercussions, never mentioned by politicians like Sikorski. As people in former Soviet Bloc countries have fled the poverty resulting from membership of the EU, Ukrainians will also flee to western Europe once the ‘free trade’ rules kick in and visa rules are liberalised. How much more migrant labour can countries like Britain support? The Russians seem to be much angrier by Ukraine’s European aspirations than they were when the Baltic States joined NATO and EU. At the recent Yalta Conference where old globalist hands like Tony Blair and Bill Clinton urged Ukraine forward to the promised land, Putin’s envoy, Glazyev (also present) warned that signing the pact – rather than entering a Russian customs union – could tip Ukraine into default.
If the EU’s embrace of Ukraine precipitates a crisis in the debt-laden country with its currency worthless and Russia breathing down its neck, won’t Brussels feel obliged to ‘rush forward’ to save Ukraine by offering immediate entry into the EU? In the past, admission to NATO has preceded EU accession in ex-Communist countries. But when Ukrainians have been polled on joining an anti-Russian alliance, with them in the front-line, they have rejected the idea. So now the double-headed Western political monolith in Brussels is pushing EU accession first, to be followed by membership of NATO down the road.
With its shaky economy and political turmoil in several EU and euro member states, is this what the European Union really needs? With Russia now showing a more robust approach to what it sees as its ‘national interest’ who knows whether what seems on the surface to be an economic spat could lead to something deadlier. The EU’s claim to be a stabilising force for peace on the European continent looks set to collide with its geo-political ambition to do down the Russian state regardless of the costs to ordinary people inside the EU, Ukraine and Russia itself.
[1] “Putin’s aide calls opinion that all Ukrainians want European integration “sick self-delusion”” Interfax, 21st August, 2013 http://www.interfax.co.uk/ukraine-news/putins-aide-calls-opinion-that-all-ukrainians-want-european-integration-sick-self-delusion-2/
[2] ibid
[3]Roman Olyarchik: “EU beckons but investors still getting a rough ride” Beyond Brics Blog, Financial Times, 3rd October, 2013 http://blogs.ft.com/beyond-brics/2013/10/03/ukraine-eu-beckons-but-investors-still-getting-a-rough-ride/#ixzz2gfuGquIJ
[4] [4]Luke Smolinski “Ukraine:investors get nervous” Beyond Brics Blog, Financial Times, 26th September, 2013http://blogs.ft.com/beyond-brics/2013/09/26/ukraine-investors-get-nervous/#ixzz2gfuSIfSP
[5] Natalya Meden, “What Lies Behind the Idea of the EU-Ukraine Association Agreement” Strategic Culture Foundation, 26th June, 2013 http://www.strategic-culture.org/news/2013/06/26/what-lies-behind-idea-eu-ukraine-association-agreement.html
[6] For, Matthew Brzezinski on Timoshenko, see for example: “City reaps benefits of native sons. Dnepropetrovsk is home to 220 national politicians. That is too cozy — and too influential — a relationship to suit many Ukrainians.” Wall Street Journal, 28th February, 1997
Christine Stone is a UK-based lawyer and journalist. She was Director of the British Helsinki Human Rights Group. She is the author most recently (with RPI Academic Advisor Mark Almond) of Post-Communist Georgia: A Short History.
October 21, 2013
Posted by aletho |
Economics, Militarism, Timeless or most popular | European Union, Orange Revolution, Russia, Ukraine, Viktor Yanukovych, Viktor Yushchenko, Yulia Tymoshenko |
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France has called for an explanation for the “unacceptable” and “shocking” reports of NSA spying on French citizens. Leaked documents revealed the spy agency records millions of phone calls and monitors politicians and high-profile business people.
The US Ambassador to France Charles Rivkin was summoned by the French Foreign Ministry to account for the espionage allegations on Monday morning.
“I have immediately summoned the US ambassador and he will be received this morning at the Quai d’Orsay [the French Foreign Ministry],” French Foreign Minister Laurent Fabius told press. He added that “we must quickly assure that these practices aren’t repeated.”
In addition, citing the report on French publication Le Monde, Interior Minister Manuel Valls spoke out on national television against US spy practices.
“The revelations in Le Monde are shocking and demand adequate explanations from the American authorities in the coming hours,” said Valls on television channel Europe 1.
He went on to say that it is totally unacceptable for an allied country to spy on France.
Ambassador Rivkin refrained from commenting on the spy allegations on Monday morning and told Reuters that French-US ties are the “best they have been for a generation.”
Le Monde revealed in a report based on the security leaks of former CIA worker Edward Snowden that the NSA recorded 70.3 million phone calls between December 10, 2012, and January 8, 2013.
The NSA reportedly carries out its espionage in France using a program called ‘US-985D’ which is able to listen in on specific telephone calls and pick up on text messages according to key words used.
Moreover, Le Monde also wrote that it had reason to believe that the spying was not just limited to citizens suspected of being involved in terrorism. According to the data released by Snowden the NSA also eavesdropped on politicians and prominent business figures.
The newspaper did not give any indications as to the identity of the high-profile people.
France is not the only EU nation to be targeted by NSA surveillance. Germany took issue with the US government after it was revealed the NSA was tapping phone lines and recording electronic data in the country.
The EU will take steps to curtail US data mining on Monday in a vote to change data protection rules. The European Parliament’s Committee on Civil Liberties is expected to decide on the issue that would authorize fines for violation of EU data protection.
‘Investment benefits’
The US maintains that its spying activities are in the interests of national security and protect against terrorism. However, Snowden leaks released by Guardian reporter Glenn Greenwald showed the NSA had monitored Brazilian state-owned oil giant Petrobras and infiltrated the electronic communications of the Brazilian and Mexican presidents.
Mexico has also demanded an explanation for reports released by Der Spiegel on extensive spying on Mexican top officials and politicians.
Der Spiegal revealed that former President Felipe Calderon had also been a target for NSA espionage. Citing a classified internal report, it said the US monitors “diplomatic, economic and leadership communications which continue to provide insight into Mexico’s political system and internal stability.”
October 21, 2013
Posted by aletho |
Civil Liberties, Corruption, Deception, Economics, Full Spectrum Dominance | France, Human rights, Information Technology, Intelligence, Internet, National Security Agency, NSA, NSA leaks, Politics, Scandal, Security, United States |
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US electronic surveillance in Mexico reportedly targeted top officials, including both current and previous presidents. Intelligence produced by the NSA helped Americans get an upper hand in diplomatic talks and find good investment opportunities.
The US National Security Agency was apparently very happy with its successes in America’s southern neighbor, according to classified documents leaked by Edwards Snowden and analyzed by the German magazine, Der Spiegel. It reports on new details of the spying on the Mexican government, which dates back at least several years.
The fact that Mexican President Peña Nieto is of interest to the NSA was revealed earlier by Brazilian TV Globo, which also had access to the documents provided by Snowden. Spiegel says his predecessor Felipe Calderon was a target too, and the Americans hacked into his public email back in May 2010.
The access to Calderon electronic exchanges gave the US spies “diplomatic, economic and leadership communications which continue to provide insight into Mexico’s political system and internal stability,” the magazine cites an NSA top secret internal report as saying. The operation to hack into the presidential email account was dubbed “Flatliquid” by the American e-spooks.
The bitter irony of the situation is that Calderon during his term in office worked more closely with Washington than any other Mexican president before him. In 2007 he even authorized the creation of a secret facility for electronic surveillance, according to a July publication in the Mexican newspaper, Excelsior.
The surveillance on President Nieto started when he was campaigning for office in the early summer of 2012, the report goes on. The NSA targeted his phone and the phones of nine of his close associates to build a map of their regular contacts. From then it closely monitored those individuals’ phones as well, intercepting 85,489 text messages, including those sent by Nieto.
After the Globo TV report, which mentioned spying on Mexico only in passing, Nieto stated that US President Barack Obama had promised him that he would investigate the accusations and punish those responsible of any misconduct. The reaction was far milder than that from Brazilian President Dilma Rouseff, another target of NSA’s intensive interest, who has since canceled a planned trip to the US and delivered a withering speech at the UN General Assembly, which condemned American electronic surveillance.
Another NSA operation in Mexico dubbed “Whitetamale” allowed the agency to gain access to emails of high-ranking officials in country’s Public Security Secretariat, a law enforcement body that combats drug cartels and human trafficking rings. The hacking, which happened in August 2009, gave the US information about Mexican crime fighting, but also provided access to “diplomatic talking-points,” an internal NSA document says.
In a single year, this operation produced 260 classified reports that facilitated talks on political issues and helped the Americans plan international investments.
“These TAO [Tailored Access Operations – an NSA division that handles missions like hacking presidential emails] accesses into several Mexican government agencies are just the beginning – we intend to go much further against this important target,” the document reads. It praises the operation as a “tremendous success” and states that the divisions responsible for this surveillance are “poised for future successes.”
Economic espionage is a motive for NSA spying, which the agency vocally denied, but which appears in the previous leaks. The agency had spied on the Brazilian oil giant, Petrobras, according to earlier revelations. This combined with reports that the NSA hacked into the email of Brazilian President Dilma Rouseff, triggered a serious deterioration of relations between the two countries.
While the NSA declined comment to the German magazine, the Mexican Foreign Ministry replied with an email, which condemned any form of espionage on Mexican citizens. The NSA presumably could read that email at the same time as the journalists, Der Spiegel joked.
October 20, 2013
Posted by aletho |
Corruption, Deception, Economics, Full Spectrum Dominance, Timeless or most popular | Intelligence, Internet, Mass media, Mexico, National Security Agency, NSA, Public Security Secretariat, Scandal, United States, USA |
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Can the world’s biggest corporations act with impunity? When it comes to General Electric (GE) — the eighth-largest U.S. corporation, with $146.9 billion in sales and $13.6 billion in profits in 2012 — the answer appears to be “yes.”
Let us begin with a small-scale case in upstate New York, where in late September 2013 GE announced that it would close its electrical capacitor plant in the town of Fort Edward. Some two hundred workers will lose their jobs and, thereafter, will have little opportunity to obtain comparable wages, pensions, or even employment in this economically distressed region. Ironically, the plant has been highly profitable. Earlier in the year, the local management threw a party to celebrate a record-breaking quarter. But the high-level financial dealings of a vast multinational operation like GE are mysterious, and the company merely announced that the Fort Edward plant was “non-competitive.” The United Electrical Workers (UE), the union that has represented the workers there for the past seventy years, has already begun a vigorous campaign of resistance to the plant closing, but it is sure to be an uphill battle.
If we dig deeper into the record, a broader pattern of corporate misbehavior emerges. Indeed, the Fort Edward factory is one of two GE plants that polluted the communities at Fort Edward and nearby Hudson Falls, as well as a 197-mile stretch of the Hudson River, with 1.3 million pounds of cancer-causing PCBs for several decades. Worried about the dangers of PCBs, workers asked managers about them, and were told that these toxins were perfectly safe — in fact, that the workers should rub the PCBs on their heads to combat baldness! When the extent of this environmental disaster began to be revealed in the 1970s, GE began a lengthy campaign to deny it and, later, a multimillion dollar public relations campaign to prevent remedial action by the Environmental Protection Administration. GE lost this battle, for the EPA insisted upon the dredging of the Hudson River and ordered GE to pay for it. Thus, the Hudson Valley became the largest Superfund cleanup site in the United States, with a project that will take decades to complete.
GE has produced other environmental disasters, as well. Three GE nuclear reactors at the Fukushima Daiichi nuclear power site in Japan melted down on March 31, 2011. This was the world’s worst nuclear accident in three decades, and quickly spread radioactive contamination nearly one hundred fifty miles. Indeed, the stricken reactors are still sending three hundred tons a day of radioactive water flooding into the Pacific Ocean. Dr. Helen Caldicott, who has studied nuclear power for decades, has estimated that up to 3.5 million people could eventually die from cancer thanks to the Fukushima radiation release. In the late 1960s and early 1970s, when these boiling water nuclear reactors were installed, GE’s engineers and management knew that their design was flawed. But the company kept selling them to unsuspecting utilities around the world, including many in the United States. As a result, there are still thirty-five GE boiling water reactors operating in this country, most of them located near population centers east of the Mississippi River. Currently, in fact, more than 58 million Americans live within fifty miles of a GE nuclear reactor.
Another important product produced by GE is the export of jobs. According to an extensive New York Times report on GE in March 2011: “Since 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment.” By the end of 2010, another study found, 54 percent of GE’s 287,000 employees worked abroad. Not surprisingly, the company’s overseas operations in that year provided most of its total revenue. Responding to GE’s claim that it had created thousands of new jobs in the United States during the Obama administration, Chris Townsend, the political action director of the UE, produced a list of 40 U.S. plants the company closed in the country during the same period.
Townsend also noted that, even when GE kept its operations going in the United States, it slashed wages, sometimes by as much as 45 percent at a time. For example, the work of the Fort Edward plant will be moved to Clearwater, Florida, a non-union site where GE pays many workers $12 an hour and hires others through a temp agency at $8 an hour — little more than the minimum wage.
Although technically a U.S. corporation, GE — with operations in 130 nations — apparently feels little loyalty to the United States. Jack Welch, a former GE CEO, once remarked: “Ideally, you’d have every plant you own on a barge to move with currencies and changes in the economy.” According to a Bloomberg analysis, to avoid paying U.S. taxes, GE keeps more of its profits overseas than any other U.S. company — $108 billion by the end of 2012. Most of these profits, GE declared, would be invested in its foreign business enterprises. Thanks to this tax dodge and others, GE reportedly paid an average annual U.S. corporate income tax rate of only 1.8 percent between 2002 and 2011. In 2010, when GE reported worldwide profits of $14.2 billion, it paid no U.S. corporate income tax at all. Instead, it claimed a tax benefit of $3.2 billion. This is a sweet deal for that giant corporation, for the official corporate tax rate is 35 percent.
Despite this appalling record, the U.S. government has been very generous to GE. During the financial crisis of 2008-2009, the federal government’s Temporary Liquidity Guarantee Program loaned approximately $85 billion to GE Capital, the company’s huge finance arm that accounts for roughly half of GE’s profits. GE needed the bailout because, among other reasons, GE Capital was marketing subprime mortgages, making GE the tenth-largest subprime lender in the United States. The Federal Reserve also bought $16.1 billion worth of short-term corporate i.o.u.’s from GE in late 2008, when the public market for this kind of debt had nearly frozen, and GE became one of the largest beneficiaries of this federal program. In yet a further indication of GE’s influence, President Obama appointed Jeffrey Immelt, GE’s CEO, as chair of his Council on Jobs and Competitiveness, which strategizes about how to revive America’s manufacturing base. One of Immelt’s favorite panaceas is to end taxes on the overseas profits of corporations.
Thus, it might seem that those two hundred embattled workers at Fort Edward have no possibility at all of effectively challenging a corporation this wealthy and influential. But stranger things have happened in the United States — especially when Americans have had their fill of corporate arrogance.
October 20, 2013
Posted by aletho |
Corruption, Economics, Environmentalism | Fort Edward, General Electric, PCBs, Polychlorinated biphenyl, United Electrical Radio and Machine Workers of America, United States |
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