<h1 class="storyheadline">Freddie and Fannie's Achilles' heel</h1><h2 class="storysubhead">Both troubled lenders need capital, but they cannot raise it in the way that many companies would. Fortune's Carol Loomis explains their vulnerability. </h2>By Carol Loomis, Fortune senior editor at large
Neither Fannie Mae nor Freddie Mac can make use of the most popular form of preferred stock. More from Fortune Don't look now: Here comes the recession
The next credit scandal
A Genius plan for Miramax's founders
FORTUNE 500 Current Issue Subscribe to Fortune NEW YORK (Fortune) -- Mortgage giants Freddie Mac and Fannie Mae need capital - in today's credit crisis, there's no doubt about that. Freddie even said last week that it was "seriously considering" cutting its $2 annual dividend by half, a radical step indicating how strapped the company is. Freddie also reported it had hired two Wall Street firms to explore "capital-raising alternatives."

And Freddie and Fannie are going to need some especially creative alternatives. Why? When either Freddie or Fannie attempt to build capital, they are handicapped by a peculiarity that very few investors know about: They cannot sell the most popular kind of preferred stock, the "cumulative" variety, because their regulator will not let these securities count toward capital.

What "cumulative" signifies in this context is that if dividends are missed, they pile up to be paid on some brighter day, if that arrives. To the extent that Freddie and Fannie issue preferred shares, therefore, they are forced into selling the "non-cumulative" variety. That means if a dividend is missed, say, in the first quarter of 2008, the owners of the preferred will never get that dividend. It's just gone, zip!

Naturally, prudent investors are not wild about owning non-cumulative preferred shares, which is why there are not many of these securities around. What smart investor unnecessarily wants to put himself in the position - no matter how remote - of missing a dividend and never thereafter being able to capture it?

Freddie, Fannie seek a few billion But the fact is that many investors don't read their prospectuses, don't get full disclosure from their brokers, and are not clued-in to this market wrinkle. For example, Fannie Mae (Charts) sold $500 million of preferred shares on November 16th. Go to Fannie's website, where the security is described: "non-cumulative, perpetual, fixed-rate preferred stock at a dividend rate of 7.625% per annum." How many investors, particularly those being solicited by retail firms to buy these $25 securities, really understood the implications of the term "non-cumulative"?

Of course, the dividend on that preferred will keep on being paid as long as any common dividend is paid. A company can't deny a payout to its preferred shareholders while continuing to reward its common shareholders, and thus far there are no signs that Fannie will stop paying its common stock dividend. Still, the $500 million that Fannie just raised will not solve its total capital needs; it'll be coming to the market again.

But it's Freddie that right now has the emergency. Because of big losses Freddie has taken, its capital has fallen perilously close to the minimums required by its regulator. So that's why it's seeking "capital-raising alternatives."

All this, of course, means dilution for Freddie's existing common shareholders. During a Freddie conference call this past week, analyst Fred Cannon of Keefe Bruyette & Woods probed what the damage could be by asking whether Freddie might not have to raise $2 billion to $4 billion in capital. The company's chief financial officer ducked, saying simply, "This will be a large transaction." It won't be, he added, a sale of common stock.

That leaves the world expecting Freddie to offer a boatload of convertible preferred - non-cumulative, of course. The security will have to be priced well, with a good dividend and a conversion price not way above the market.

And speaking of that market, Freddie (Charts, Fortune 500) closed at $26.47 a share last week. That's 35% below its price a week earlier. If Freddie wants to calm investors, it had better figure out its "alternatives" quickly.

Bank of England warns credit crisis to worsen

By Angela Monaghan
Last Updated: 10:37am GMT 26/11/2007


The Bank of England's chief economist has warned that the impact of the credit crunch on the banks may only be the tip of the iceberg.

<li>Full news and analysis of the credit crisis Charlie Bean has warned that banks may reveal greater lossesCharles Bean said that the banks have so far reported "only a relatively small fraction of the likely losses associated with the US sub-prime market."

"It is quite likely that, over the coming months, there will be more revelations to come out, not necessarily just in this country," he added.

The message from Mr Bean comes after Goldman Sachs warned earlier this month that sub-prime mortgage losses could force banks to slash lending by $2,000bn (£980bn) and push the United States into a deep recession.

Mr Bean said that the immediate future would be characterised by "lots of volatility" and said that it would be "quite a long time before things come back to a full state of normality."

advertisement&lt;SCRIPT language="JavaScript1.1" SRC="http://ad.uk.doubleclick.net/adj/N1137.telegraph.phd/B2587486;abr=!ie;sz=300x250;click=http://ads.telegraph.co.uk/event.ng/Type=click&amp;FlightID=24018&amp;AdID=29207&amp;TargetID=3822&amp;ASeg=&amp;AMod=&amp;Redirect=;ord=oIaKik,bduwgWNAbmiW?"&gt;&lt;/SCRIPT&gt;He made the comments in an interview with the Liverpool Daily Post, and said that the Bank was waiting to see what impact the crisis would have on the wider economy.

"What matters particularly to us is the impact on the economy at large.

"It is reasonable to expect lenders to be more cautious in extending loans whether to households or riskier lending to businesses, maybe some mergers and acquisitions, maybe the commercial property market may be particularly hit.

"That's something that the Monetary Policy Committee will be monitoring closely," he said.

He added that monetary policy would depend on inflationary pressure from the rapidly growing economies of China and India.

"Over the last two or three years, we have moved into a slightly less favourable external environment where the ill-effects of the development of China and India have started to be felt in the form of intense upward pressure they have been putting on commodity prices.

"Those pressures are likely to remain there for some time. The key question will be the extent to which the supply of those commodities can expand to meet the increasing demand from emerging economies.

"So the backdrop to our attempts to keep inflation in line with target is less favourable than it has been.

"We can always meet our inflation target through setting the appropriate monetary policy, but what it will mean is if the imported component of inflation is somewhat higher, the domestically generated component needs to be somewhat lower to compensate, and that may mean we have to run a tighter monetary policy for a while to get that domestic inflation down."

<h1 class="storyheadline">Don't look now: Here comes the recession</h1><h2 class="storysubhead">Even with a boost from holiday spending, the U.S. economy looks shaky, thanks to slumping housing prices, Wall Street woes and debt-laden consumers. How bad could it get? </h2>By Colin Barr, senior writer
Debt-strapped consumers seem likely to cut back spending to the point where it shrinks the U.S. economy.VideoMore video Fortune contributor Ben Stein says the looming Social Security crisis is nothing compared what seniors will face with Medicare costs. Play video More from Fortune Don't look now: Here comes the recession
The next credit scandal
A Genius plan for Miramax's founders
FORTUNE 500 Current Issue Subscribe to Fortune NEW YORK (Fortune) -- The cash registers were ringing on Black Friday, but make no mistake: American consumers are jittery, and seem all but certain to push the U.S. economy into recession.

After years of living happily beyond their means, Americans are finally facing financial reality. A persistent rise in energy prices will mean bigger heating bills this winter and heftier tabs at the gas pump. Job growth is slowing and wage gains have been anemic. House prices are sliding, diminishing the value of the asset that's the biggest factor in Americans' personal wealth. Even the stock market, which has been resilient for so long in the face of eroding consumer sentiment, has begun pulling back amid signs of deep distress in the financial sector.

The latest evidence of the long-awaited consumer retrenchment: Chic discounter Target (Charts, Fortune 500) last week reported a weaker-than-expected third quarter, as sales of higher-margin apparel and home goods slowed. Starbucks (Charts, Fortune 500) reported for the first time that customer traffic in its stores declined in its latest quarter compared to a year earlier. Wal-Mart (Charts, Fortune 500) shares hit a six-year low in September after the retail giant posted another wan sales increase.

With consumer spending accounting for about three-quarters of U.S. economic activity, some economists say it is inevitable that the economy will stop growing at some point in the coming year, for the first time since the mild recession of 2001. "Right now, the question is how bad it's going to get," said David Rosenberg, chief North American economist at Merrill Lynch. "The question is one of magnitude."

Not everyone agrees. Many economists believe the Federal Reserve will steer the economy into a period of slow growth but avoid a recession, which is typically defined as two or more consecutive quarters of economic contraction. Indeed, the Fed already has twice cut its overnight interest-rate target, and options markets show investors expect the Fed to cut by another quarter-point at its Dec. 11 meeting, taking the Fed funds bank-lending rate down to 4.25%.

Government officials have steered well clear of recession talk, with recent Fed documents citing instead the risk of "an unexpectedly severe weakening in economic activity." But Rosenberg and others are skeptical of the Fed's influence on an economy staggering under a mountain of personal, corporate and government debt. The economic recovery underway in 2002 was driven by low interest rates and abundant credit availability -- helped along by then-Fed chief Alan Greenspan's decision to cut interest rates as low as 1% in 2003.

Freddie, Fannie seek a few billion Rosenberg said the low rates and easy underwriting meant loans were available to just about anyone with a pulse, so recent economic gains were more credit-induced "by a factor of four" than any other U.S. expansion on record. Now many of those loans are going bad, which is why investors are fleeing any debt riskier than U.S. Treasury securities.

Making matters worse, the banking system is coming under severe strain. Wall Street has recognized more than $40 billion in losses this year on souring subprime mortgages and a related problem, the toxic debt known as collateralized debt obligations. The losses could constrain the economy by forcing banks and brokerages to sock money away rather than lending it out to businesses and individuals.

Freddie Mac (Charts, Fortune 500), the big government-sponsored mortgage investor, provided some insight into that dynamic last week, when it said a $2 billion third-quarter loss had wiped away two-thirds of its regulatory capital surplus -- raising the prospect that the company will have to become a seller of mortgages at a time when the limping housing market desperately needs Freddie to be a buyer.

"The infection that started in housing is spreading," said Northern Trust chief economist Paul Kasriel. He says banks are extremely vulnerable to the defaults and foreclosures now sweeping American neighborhoods, with mortgage exposure amounting to 63% of U.S. banks' earning assets.

As a result of that exposure - and the hefty losses that financial institutions are going to have to take as more loans go bad -- Kasriel believes Fed chief Ben Bernanke is in a very different position than Greenspan was seven years ago, when the economy last showed signs of heading into recession.

"I'm wondering if Bernanke will have the same latitude" to cut rates, Kasriel said, referring both to the uncertain health of the banking system and the persistent weakness of the U.S. dollar, which is trading at lows unseen since the end of the gold standard in 1971. When Greenspan slashed U.S. interest rates in the early part of the decade, "the financial system was intact," Kasriel said. "Banks were able to extend cheap credit."

But with banks choking on bad loans, Kasriel doesn't expect to see the return of the easy lending standards that fueled the housing boom. Instead, he expects to see "greater risk aversion" that will slow credit growth and reduce the value of assets like property. He says the median U.S. house price would need to fall 17% to return to its 2001 level, which he notes was hardly at the bottom of the house-price cycle. A decline of that magnitude will further erode home-equity borrowing by Americans and, presumably, deliver one more blow to consumers' wallets.

The American consumer seems to grasp the risks. A growing number of Americans expect the economy to tip into recession in the next year -- 40% last week, up from 31% in October, going by a Reuters/Zogby poll released last week. Rosenberg said government statistics show that 500,000 self-employed workers have lost their jobs since July -- a greater loss than was seen in all of 2001. Reported unemployment figures remain low, but Kasriel says those numbers "smell worse than a week-old fish."

The combination of an emerging consumer recession and a heavily stressed financial system has some experts suggesting that a financial meltdown looms.

"In short, the financial markets are at a critical point," fund manager John Hussman of the Hussman Funds wrote last week in a Web site post devoted to discussing a possible financial crisis. "It's possible that investors will somehow adopt a fresh willingness to speculate, but my impression is that in the weeks ahead, investors will be forced to recognize that the recession risk has tipped."

Others are more direct. Nouriel Roubini, an economics professor at New York University who has been predicting the collapse of the housing bubble for years, wrote recently that not only is a recession inevitable, he also sees "the risk of a severe and worsening liquidity and credit crunch leading to a generalized meltdown of the financial system of a severity and magnitude like we have never observed before."

Such a meltdown, he writes, would include bank runs such as the one seen earlier this year at Britain's Northern Rock and the bankruptcy of some broker-dealer firms.

That view isn't widely shared, of course. Few expect Americans to find themselves out on the street corner soon selling apples. Jim Griffin, an economist who writes for ING Investment Weekly in Hartford, Conn., shuns recession forecasts as unreliable and believes worries about the nation and the financial system are mostly overstated.

Griffin sees this fall's turmoil as "part of the next historical phase" in the global economy, as the U.S. shifts from driving world growth to riding behind developing nations. He expects U.S. export growth to help cushion the blows dealt by the housing bust and related bad debt.

Merrill Lynch's Rosenberg is less sanguine than Griffin, but he too discounts the voices of doom. "We've had consumer recessions before," Rosenberg said. "The world doesn't end." Let's hope not.

Foreign Policy News and Commentary Update November 24, 2007


THREE AMERICAN COMICS FIND ISLAMIC AUDIENCES LAUGH TOO: THE 'AXIS OF EVIL' TOURS THE MIDDLE EAST POKING FUN AT STEREOTYPES - DAN MURPHY (CHRISTIAN SCIENCE MONITOR, NOVEMBER 26)
http://www.csmonitor.com/2007/1126/p01s05-wome.html

FOREIGN SHOPPERS HIT 'MALL OF AMERICA': THANKS TO WEAK DOLLAR, MORE EUROPEANS AND CANADIANS ARE TRAVELING TO US TO DO THEIR HOLIDAY SHOPPING - RON SCHERER (CHRISTIAN SCIENCE MONITOR, NOVEMBER 26)
http://www.csmonitor.com/2007/1126/p02s01-usgn.html

U.S. PEACE CORPS RECRUITING OLDER VOLUNTEERS - SARAH ABRUZZESE (INTERNATIONAL HERALD TRIBUNE, NOVEMBER 25): Though older recruits are nothing new to the Peace Corps, it recently began an initiative to entice people age 50 or older into joining at a time when many of them are stepping away from careers and into the great unknown of retirement. In the 1970s, older members represented 5 percent of the corps. That grew to a high of 9.7 percent in 1991, but the number slowly fell back to 5 percent last year.
http://www.iht.com/articles/2007/11/25/america/peace.php

CANADA'S MORAL COMPASS - PIERRE ATLAS (REAL CLEAR POLITICS, NOVEMBER 24): "Unlike the United States, Canada does not wield tremendous military or economic power, but it does have something in abundance that America has been losing of late: soft power. According to numerous surveys of world opinion, respect for the United States has dropped dramatically over the past seven years, and George W. Bush is the world's most reviled leader. But nobody hates Canada, and I doubt few people around the world, or even in Canada, really hate Prime Minister Stephen Harper."
http://www.realclearpolitics.com/articles/...al_compass.html

IRAQ HAS ONLY MILITANTS, NO CIVILIANS: "TACTICAL PERCEPTION MANAGEMENT" IN IRAQ - DAHR JAMAIL (TOMDISPATCH, NOVEMBER 26): At the time of this writing, the group Just Foreign Policy has offered an estimate of Iraqis killed since the U.S.-led invasion and occupation. Their number: 1,118,846. Consider that possibility in the context of the latest round of news from Iraq about lessening violence. It is an indication of the success of an effective Pentagon "tactical perception management campaign," of the way the Bush administration has continued to "catapult propaganda," and of the dehumanization of Iraqis that has gone with it, that the possibility of the number of dead Iraqis being in this range has largely been dismissed (or remained generally undealt with) in the mainstream media in the United States.
http://www.tomdispatch.com/post/174866/tom..._pentagon_style

IRAQIS RETURNING, BUT AT LOWER RATE THAN GOVERNMENT REPORTS - DAMIEN CAVE (INTERNATIONAL HERALD TRIBUNE, NOVEMBER 26)
http://www.iht.com/articles/2007/11/26/africa/returnees.php

20,000 VETS' BRAIN INJURIES NOT LISTED IN PENTAGON TALLY - GREGG ZOROYA (USA TODAY, NOVEMBER 24): At least 20,000 U.S. troops who were not classified as wounded during combat in Iraq and Afghanistan have been found with signs of brain injuries, according to military and veterans records compiled by USA TODAY.
http://www.usatoday.com/news/military/2007...ninjuries_N.htm http://www.juancole.com/2007/11/20000-brai...ot-counted.html

TROOP LEVELS IN IRAQ TO FALL BY 5,000: THE U.S. ARMY'S 3RD BRIGADE, 1ST CAVALRY, WHICH HAS BEEN OPERATING MOSTLY IN VOLATILE DIYALA PROVINCE, IS TO DEPART - ANN M. SIMMONS (LOS ANGELES TIMES, NOVEMBER 25)
http://www.latimes.com/news/nationworld/wo...=la-home-center

$144 MILLION OVER BUDGET AND STILL NOT OPEN FOR BUSINESS: IRAQ EMBASSY AS GILDED PALACE - CHRISTOPHER BRAUCHLI (COUNTERPUNCH, NOVEMBER 24)
http://www.counterpunch.org/brauchli11242007.html

MILITARY WANTS MORE VIEWS ON IRAQ REPORTS: SEPTEMBER'S ASSESSMENT PUT TOO MUCH FOCUS ON GEN. PETRAEUS, SAY OFFICIALS CONCERNED ABOUT THE WAR'S EFFECT ON PUBLIC SUPPORT - JULIAN E. BARNES (LOS ANGELES TIMES, NOVEMBER 26): "This is not Dave Petraeus' war. This is George Bush's war," said one senior official, underscoring the military's view that its role is to carry out the decisions made by political leaders.
http://www.latimes.com/news/nationworld/na...=la-home-center

HOW GOES THE WAR? - PAUL GREENBERG (WASHINGTON TIMES, NOVEMBER 24): However encouraging the news from Iraq, the news from Washington grows ever grimmer. Divided we fall.
http://www.washingtontimes.com/apps/pbcs.d...mplate=printart

LET'S HEAR IT FOR GOOD NEWS FROM IRAQ - JEFF JACOBY (BOSTON GLOBE, NOVEMBER 25): The news from Iraq has been so encouraging in recent months that last week even the mainstream media finally sat up and took notice. Can the Democratic Party be far behind?
http://www.boston.com/bostonglobe/editoria...om_iraq?mode=PF

THE CASE FOR ILLEGAL MINGLING - THOMAS L. FRIEDMAN (NEW YORK TIMES, NOVEMBER 25): Casualties are down in Iraq, but we need to see a lot more.
http://www.nytimes.com/2007/11/25/opinion/...agewanted=print

HANDS OFF IRAN - CHRIS HEDGES (NATION, NOVEMBER 21): A war with Iran is doomed.
http://www.thenation.com/doc/20071210/hedges

A SEPARATE PEACE WITH SYRIA ? EDITORIAL (BOSTON GLOBE, NOVEMBER 24): For Israel, the United States, and those Arab regimes that seek to counter a perceived threat from Iran, Syrian President Bashar Assad has a valuable card to offer: the option of subtracting Syria from an arc of Iranian influence that now stretches through Iraq and Syria to Lebanon.
http://www.boston.com/bostonglobe/editoria...h_syria?mode=PF

AMERICAN FOLLY - CAROLINE GLICK (JERUSALEM POST, NOVEMBER 25): The Americans have shown themselves to be unworthy of Israel's trust. There is no good excuse for the Bush administration's decision to embrace the Palestinians at Israel's expense.
http://www.jpost.com/servlet/Satellite?cid...ticle%2FPrinter

OBSTACLES AND OPPORTUNITY FOR MIDEAST PEACE - JAMES CARROLL (BOSTON GLOBE, NOVEMBER 26): The internationalization of Middle East reconciliation efforts can break the choke hold that has suffocated not only Israeli and Palestinian impulses, but those of the heretofore ineffectual negotiating partners, especially the United States.
http://www.boston.com/bostonglobe/editoria...t_peace?mode=PF

BUSH'S MIDDLE EAST UNRAVELS FURTHER JUAN COLE (INFORMED COMMENT: THOUGHTS ON THE MIDDLE EAST, HISTORY, AND RELIGION, NOVEMBER 26): As of this weekend, Lebanon does not have a president and the country's stability is in doubt. The Palestinian Authority is divided and is a mess, with the elected government having been overthrown by a US-backed coup.
http://www.juancole.com/2007/11/bushs-midd...ls-further.html

THE REAL TWO-STATE SOLUTION - ALUF BENN (SALON, NOVEMBER 26): This week President Bush will convene an international conference in Annapolis, Md., to promote the "two-state solution" for Israelis and Palestinians. The meetings and noble proclamations toward that goal, however, will bear little relation to reality here in the Middle East. Essentially, Bush is too late. For most Israelis, the two-state solution already exists.
http://www.salon.com/opinion/feature/2007/...tate/print.html

THE REGION: INVITING A BULL INTO THE CHINA SHOP ? BARRY RUBIN (JERUSALEM POST, NOVEMBER 25): What most of Washington simply fails to understand is that any real demand for Palestinian or Arab concessions will be fodder for radical groups and frighten Arab regimes, pushing the latter away from support for America rather than toward it. And any Israeli concessions obtained by this process will not satisfy their demands, either
http://www.jpost.com/servlet/Satellite?cid...ticle%2FPrinter

THROUGH IRAQ'S CLOUD COVER - VICTOR DAVIS HANSON (WASHINGTON TIMES, NOVEMBER 24): If you take the anger about George Bush out of the equation, along with the Iraq war and the fear of any more invasions by the United States, why not support democratic reform in the Middle East? We know the alternatives only play into the hands of terrorists.
http://www.washingtontimes.com/apps/pbcs.d...mplate=printart

DEMOCRACY MYTH: FANTASY PAKISTAN - STANLEY KURTZ (NATIONAL REVIEW, NOVEMBER 26): Pakistan has never been a democracy. Woe to us if Nawaz Sharif and his ?democratic? friends take power. And shame on us if, charmed by manipulators of that magical word ?democracy,? we hand power to Nawaz Sharif and his Islamist allies on a silver platter.
http://article.nationalreview.com/?q=ZDg2Y...YWMxOGFhM2MxMWE=

BACK TO THE BRINK IN THE BALKANS - RICHARD HOLBROOKE (WASHINGTON POST, NOVEMBER 25): The United States and most of the European Union (led by Britain, France and Germany) will recognize Kosovo quickly. Russia and its allies will not. Kosovo's eight-year run as the biggest-ever U.N. project will end with great tension and a threat of violence that could spread to Bosnia.
http://www.washingtonpost.com/wp-dyn/conte...2301237_pf.html

VENEZUELA'S PATH TO SELF-DESTRUCTION: VOTERS ARE ON THE VERGE OF HANDING PRESIDENT HUGO CHAVEZ THE POWER TO TURN THEIR COUNTRY INTO A DICTATORSHIP - WILLIAM RATLIFF (LOS ANGELES TIMES, NOVEMBER 24): Chavez promises Venezuelans perks, such as six-hour workdays, and redress of their grievances against domestic and foreign oppressors, including the United States.
http://www.latimes.com/news/opinion/la-oe-...-opinion-center

AUSTRALIA'S PATH BENDS AWAY FROM U.S. - RAYMOND
BONNER (NEW YORK TIMES, NOVEMBER 26): The defeat of John Howard, Australia?s prime minister, in Saturday's election deprived President Bush of one of his most steadfast allies and will bring changes in Australia's foreign policy that will be felt in Washington.
http://www.nytimes.com/2007/11/26/world/as...agewanted=print

AUSTRALIAN U-TURNS - EDITORIAL COMMENT (FINANCIAL TIMES, NOVEMBER 26): The generational shift represented by the triumph of the 50-year-old Mr. Rudd over a man 18 years his senior will affect other aspects of policy and further diminish international support for President George W. Bush.
http://www.ft.com/cms/s/0/d8d72bb6-9b8a-11...00779fd2ac.html

AUSSIE OUSTER ? REVIEW & OUTLOOK (WALL STREET JOURNAL, NOVEMBER 26): Australia's new Prime Minister is Kevin Rudd, a Mandarin-speaking former foreign service officer. On foreign policy, Mr. Rudd's policies also aren't likely to be radically different from those of Mr. Howard -- though his rhetoric tilts more toward the United Nations.
http://online.wsj.com/article/SB119603009823003325.html PAID SUBSCRIPTION

OBAMA IS RIGHT ON IRAN - SHELBY STEELE (WALL STREET JOURNAL, NOVEMBER 26): Moral authority is the single greatest challenge of American foreign policy.
http://online.wsj.com/article/SB1196042346...in_commentaries PAID SUBSCRIPTION

FIGHTING IDENTITY: WHY WE ARE LOSING OUR WARS - MICHAEL VLAHOS (HUFFINGTON POST, NOVEMBER 25): In a world of the stripped and left-behind -- one-half about to become two-thirds of humanity -- we do not have a counter-offer. We offer only lordly altruism, while denying our own identity problem.
http://www.huffingtonpost.com/michael-vlah...we_b_74036.html

AMERICA IN THE TIME OF EMPIRE - CHRIS HEDGES (TRUTHDIG, NOVEMBER 26): The decision to measure the strength of the state in military terms is fatal. It leads to a growing cynicism among a disenchanted citizenry and a Hobbesian ethic of individual gain at the expense of everyone else. Few want to fight and die for a Halliburton or an Exxon. This is why we do not have a draft. It is why taxes have not been raised and we borrow to fund the war. It is why the state has organized, and spends billions to maintain, a mercenary army in Iraq. We leave the fighting and dying mostly to our poor and hired killers. No nationwide sacrifices are required. We will worry about it later. It all amounts to a tacit complicity on the part of a passive population. This permits the oligarchy to squander capital and lives.
http://www.truthdig.com/report/item/200711...time_of_empire/

RICE'S TURNABOUT ON MIDEAST PEACE TALKS - ELISABETH BUMILLER (NEW YORK TIMES, NOVEMBER 26): 'There was absolutely no prospect of a Middle East peace process that was going to lead to anything,' Rice said in an interview in May about her thinking in 2001. 'I just didn't see it.' Nearly seven tumultuous years later, Ms. Rice, as secretary of state, has led the Bush administration to a startling turnaround and is now thrusting the United States as forcefully as Mr. Clinton once did into the role of mediator between the Israelis and Palestinians.
http://www.nytimes.com/2007/11/26/washingt...agewanted=print SEE ALSO
http://www.nytimes.com/2007/11/26/washingt...agewanted=print

It's Not Only theIsrael Lobby --
Other Interests Benefit from the Chaos

by Jon Basil Utley http://antiwar.com/utley/?articleid=11840

The new, public debate about the Israel lobby is missing a major point – the lobby's allies, the many other interests in America that want chaos in the Middle East. For example, in the Walt-Mearsheimer book there is no listing in the index for "military-industrial complex." For all its vaunted power, the Israel lobby could not dominate America's Mideast policies without cover and active support from other powerful groups. Although AIPAC promotes the lobby's image in Congress as being all powerful, it isn't. The book does specify Christian Zionists as an integral part of the lobby, but it neglects many others.

Another important question is how, when polling data shows that most Jews opposed the Iraq war, did the Likud/settler minority faction take over the whole Israel lobby? Although a minority with an agenda will often win over an amorphous majority, that is not a sufficient explanation. Indeed Jews are at the forefront of the fight against the war and the consequent encroaching police state here in America. Some of the most honest reporting on Israel comes from Jewish media: Ha'aretz in Israel and The Forward in America. What happened? ---------------

The first major ally is the military-industrial complex, now funded by the new system of hidden congressional earmarks. Arnaud de Borchgrave first wrote about there being 15,000 defense budget earmarks. These allow a congressman to slip contracts into the budget for favored constituents, who then donate money to the congressman's reelection committee and may also provide well-paid jobs in their districts. These encourage warmaking, or at least threats of war, as never before. It's hard to hide money in the budget for "a bridge to nowhere," but a missile to nowhere will never be questioned, as its sponsors cloak their profits in "national defense."----------
Please go to link above for whole article

Annapolis Conference & Syria's Truth

By Aaron Mannes


If Syria switched teams, from its current alignment with Iran to the U.S. aligned Arab states led by Egypt, Saudi Arabia, Jordan, and the Gulf states, it would be a diplomatic masterstroke. It would isolate Iran and cut loose its key terrorist proxies: Hezbollah, Hamas, Palestinian Islamic Jihad and the lesser Damascus-based groups. If it could be done, it might even be worth paying Syria’s price - return of the Golan Heights and wiping the slate clean on past Syrian support for terrorism, including the investigation into the assassination of former Lebanese Prime Minister Rafiq Hariri.

For decades American foreign policy realists, most recently in the Iraq Study Group, have called for engagement with Syria in order to achieve this aim. The news that Syria will send an emissary to the upcoming conference in Annapolis has raised hopes that this maneuver is possible.

But it won’t happen and anyone who believes that it will doesn’t know the truth about Syria - literally. They must not have read The Truth About Syria by Barry Rubin.

Read the complete review here.

November 26, 2007 05:21 PM Link TrackBack (0) Print
First target for Iran: Qatar?

By Olivier Guitta


Iran has been vocal about what it would do in case of an American or Israeli strike on its nuclear facilities.

I just wrote a piece on that topic for the Middle East Times.

Here is an excerpt:

What would be the most logical target Iran would strike in case of a U.S. or Israeli attack on its nuclear sites?

Qatar.

In fact, Iranian Revolutionary guards have already threatened to attack Qatari oil and gas facilities (hence crippling the world economy by creating an oil and gas shock) by sea and air by using suicide boats and air missiles.

For Iran, it's a no-brainer: Qatar hosts the largest U.S. base in the Middle East (8,000 U.S. soldiers are stationed there) and is also viewed by some as being friendly with Israel.

What is Qatar doing about it?

First and foremost, Qatar has been heavily using the diplomatic weapon. Its strategy is to befriend everyone: from Israel to Hamas, from Syria to France.

Even though Qatar's deputy foreign minister Mohamed al-Ruhaimi firmly believes that "speaking to everyone allows us to have a dynamic and independent policy," it is a recipe for disaster. For instance, Qatar has not been terror-free: in fact, in March 2005, a suicide bomber (most likely linked or inspired by al-Qaida) killed one Briton and wounded 12 people in Doha in an attack at a theater frequented by Westerners.

To read the rest, please click here.

November 26, 2007 03:15 PM Link TrackBack (0) Print
In "Call for Donations," Al Qaeda Admits Financial Stress

By Andrew Cochran


On November 20, I posted on the success of the U.S.-led Iraq Threat Finance Cell in disrupting Al Qaeda in Iraq's financial network. Reuben Paz, one of the leading experts in the CT community and the founder and Director of the Project for the Research of Islamist Movements (PRISM) at the GLORIA Center in Israel, has written a follow-up to that post for us, with an analysis of Al Qaeda's admission of financial distress. I am pleased to run Mr. Paz's analysis below in its entirety with my gratitude:

On 20 November 2007, Andrew Cochran reported on this blog about the success of the U.S. ITFC in shutting down elements of Al-Qaeda's financial network in Iraq, and that the government of a key Gulf state has assisted in these efforts. On the same day, the Washington Post published a report of its own about the U.S. efforts to break Iraqi insurgents’ financial networks, and the growing interest of insurgents in money rather than ideology.

A significant evidence for the U.S. successes in this field has recently appeared from an unexpected direction - Al-Qaeda itself. The Global Islamic Media Front (GIMF)—the primary indoctrination and propaganda means of Al-Qaeda, published on the same day - 20 November 2007, on the main Jihadi forum of Al-Hesbah, an unprecedented announcement, which we may title A CALL FOR DONATIONS. It was not the first time that Jihadi elements posted material on the significance of the Jihad bil-Mal (financial Jihad). However, past writings on the issue have had the religious and indoctrination nature. This time it looks as a genuine call resulting out of a real stress. The post by the “official” GIMF provides it also a nature of an official call by Al-Qaeda, not just some group belonging to the Iraqi insurgency. It does not refer to Iraq or any other place in particular, and therefore, it might also indicate the stress in which the organization is found in other regions of Jihadi fight as well, in the field of finance.

The post by GIMF—titled “A Call from the People of the Places of Fight (Ahl al-Thughur): Oh Muslims, Do You Think You are Going to Enter Paradise?”—is “upgrading,” for the first time in recent years, the financial Jihad to the same level of the fighting form of Jihad. After the process of “upgrading” and the legitimacy of the Jihad by propaganda through the Internet in the past two years, it is now the turn of the financial Jihad to receive the legitimacy of a fully recognized Jihad.

Read More »


The author of this call is not hiding or coloring the financial situation of the group in the battle field:

“Oh Muslims !! this is a call for you from the fighters to the entire Muslims. Following the campaign against Islam to dry its sources, many of the people who support this religion suffer from lack of equipments and basic means for their Jihad, after the belief in Allah. The situation became really bad. Imagine brothers, that some of them carry weapons with no ammunition. Sometimes they have no food or place of refuge. I see you calling for Jihad day and night without implementing it, as if the Jihad is just carrying weapons. Brothers, in many cases the financial Jihad is not less than Jihad by fighting (Al-Jihad bil-Nafs). How could the Mujahid fulfill his huge tasks without weapons? Or without the support for his family while he is away or martyred?

The Noble Qur’an gave the financial Jihad a great priority. It is always compared to the Jihad by fighting as two sides of the equation. Moreover, in all the Qur’anic verses that record the two, except for one verse, the financial Jihad has a priority over the fighting Jihad.

… From these verses and stories, the significance of the financial Jihad is clear. The infidels spend their money to fight [the supporters of] Allah, and their reward, at the end of the day, is only defeat. Should not the believers spend their money to strengthen the basics of religion and enable its spread in the world? No one can claim that he owns nothing. I tell him, don’t you know any wealthy Muslim? Approach him and encourage him [to donate]. We know how far the infidels (Taghout) are suffocating the finance of the Mujahidin, and how dangerous it is.”

The picture is clear and the call seems to be genuine. There is also an interesting element in using the term Taghout for “those who suffocate the finance of the Mujahidin.” This term is used for the Arab or Muslim governments, rather than the U.S. or other Western “enemies.” This might be an indication to the cooperation of Arab governments in this field. This call is significant and reassures the success in fighting the Jihadi insurgency through its “pockets.” Nevertheless, it should also be an indicator to the openness of Al-Qaeda, which runs much of its affairs in public on the Internet, and an indicator for the reliability of the E-Jihad and the significance of its profound monitoring.

« Close It

November 26, 2007 11:13 AM Link TrackBack (0) Print
Danger in Afghanistan

By Douglas Farah


The Washington Post on Sunday carried a disturbing piece on Afghanistan, where the problems cited are part of a broader pattern of the same mistakes across the spectrum in the war with radical Islamists.

After summing up the litany of problems, from a weak and failing government to the fact that the _jihadists_ seem to be able to easily replace the large number of combatants being killed, Karen DeYoung writes that:

But others said the problem is not Pakistan or a lack of military or financial resources in Afghanistan. It is the absence, they say, of a strategic plan that melds the U.S. military effort with a comprehensive blueprint for development and governance throughout the country.

"There are plenty of dollars and a hell of a lot more troops there, by a factor of two, from when I was there," the former commander said. The question, he said, is "who owns the overarching campaign for Afghanistan, and what is it?" My full blog is here.

November 26, 2007 09:29 AM Link

Hands off Iran ... Or Else

Chris Hedges, Truthdig

Rights and Liberties: I will not pay my income tax if Bush and Cheney go to war with Iran. You should consider it too.

Excerpts from the President's Remarks at the Annapolis ConferenceToday, President Bush will address The Annapolis Conference at the U.S. Naval Academy. The following are excerpts from his remarks as prepared for delivery. Gloom Before Annapolisby Robert SpencerAs the Annapolis summit looms, Muslim opinion on it appears to be sharply divided, and no one is particularly enthusiastic.

Even Larry Summers Predicts Doom

A Dollar the Size of a Postage Stamp
By MIKE WHITNEY

Lately it seems as though everyone wants to take a poke at the dollar. Last week, it was the Brazilian supermodel who demanded euros for her jaunts on the catwalk instead of USD. The week before that, hip-hop impresario, Jay-Z, released a video dissin' the dollar and praising the euro as the 'baddest Dude in the 'hood'.

Lambasting the greenback has become trendy. It's a favorite pastime of politicians, too. At the November OPEC meeting in Riyadh, Iran's president Mahmoud Ahmadinejad asked the assembled finance ministers to "study the feasibility of selling oil in another currency." Ahmadinejad disparaged the dollar as "a worthless piece of paper".

The fiery Venezuelan President, Hugo Chavez, followed Ahmadinejad's lead predicting that the demise of the dollar would mean the "end of the Empire."

Hugo may be on to something. The dollar is America's Achilles heel; if the dollar tanks, so does the empire. That means the taxpayer will have to foot the bill for Bush's bloody-interventions in Iraq and Afghanistan, rather than the Chinese. That also means that the US will have to export something of greater value than Daisy Cutters and gulags. That could be a tall-order, now that Bush has boarded up the factories, hollowed out the industrial base, and outsourced 3 million manufacturing jobs. We'll have to scrape the rust off the machinery and get back into the widget-making business like we were before the Free Trade fiasco.

Central banks across the globe are trying to figure out how to ditch their dollar reserves without triggering a stampede for the exits. No one wants to see that. But, then, nobody wants to be stuck with vaults full of Uncle Sam's green confetti either. So, the question arises; What is the best way to divest oneself of $5.6 trillion (total USD held overseas) before the Lusitania capsizes?

Kuwait, Venezuela, Iran, Russia, and Norway have already opted to ignore the destabilizing effects of "conversion" from dollars and are in some stage of divestiture. Others will follow. The UAE, Bahrain, Qatar, Oman and Saudi Arabia are considering switching from the dollar-peg to a basket of currencies so they can hedge against the inflation that's battering their economies. It's only a matter of time before the Petrodollar System---which links the dollar to petroleum sales and creates a de facto "international currency"---unravels completely, precipitating the final collapse of Breton Woods.

Talk of America's impending currency disaster is no longer relegated to the Internet blathershere. Mainstream journalists have joined the chorus and are sending up their own red flags. The UK Telegraph's economics's editor, Liam Halligan, made this grim observation in his recent article, "Bet Your Bottom Dollar Tensions Will Follow":

"The importance of "dollar divestment" cannot be overstated. At the very least it means the greenback has much further to fall - plunging the US into recession. But it begs a bigger, more alarming, question. How will Washington react to the end of the US hegemony?"

The dollar was savaged by the monetary policies of the Federal Reserve. The Fed's policies were designed to coincide with Bush's Middle East Crusade. They were supposed to work like two wheels on the same axle. The administration believed that, by 2007, the military would need only 30,000 or so troops to maintain security in Iraq. That would give Bush's legions the chance to turn east and push on to the next target-state, Iran. If things went according to plan -- and no one thought the high-tech US war machine could be stopped -- the US would control two-thirds of the world's oil. This would allow America to keep writing bad checks on green paper for the next century.

But then, of course, the plan hit a snag. The Iraqi resistance mushroomed, the US got bogged down in an "unwinnable" war, and the once-mighty dollar shriveled into nothingness. Now we're at a turning point and our leaders are in a state of denial. Bush is still playing Teddy Roosevelt, while Paulson and Bernanke are just plain shell-shocked. They probably know the game is over. As the dollar continues to wither; the frustration is beginning to mount in Europe. Liam Halligan sums it up like this:

"Europe has finally had enough of America's "benign neglect" dollar policy. As a large economic area, with a floating exchange rate, the eurozone suffers most. Over the past seven years, the single currency has risen by a shocking 82 per cent against the greenback. That's hammered eurozone exports - provoking serious trade disputes between the EU and US, the world's two biggest trading blocks. No wonder French President Nicolas Sarkozy describes America's drooping dollar as "a precursor to economic war". (UK Telegraph, "Bet Your Bottom Dollar tensions Will Follow")

Sarkozy is leading the charge for "intervention"; the buzzword for shoring the greenback through exchange controls and buying up billions of dollars. But it's a risky business; especially when net capital inflows -- which are the monthly purchases of US-backed securities and Treasuries --have gone negative for the last two months. That means the US isn't attracting enough foreign investment to finance its trade deficit. So the dollar will have to fall to compensate.

So, how much loot is Sarkozy willing to put up to keep the dollar from slumping further -- $100 billion, $500 billion, $1,000 billion? And where's the bottom?

The fact is, the greenback took a "header" down the stairwell and by the time it picks itself up, it could be eye to eye with the peso. Who knows? Maybe its time we all learned Spanish?

More than two-thirds of all sovereign foreign exchange holdings are denominated in dollars. When those dollars are converted into back into foreign currencies and start recycling into the US; we're in deep trouble. Inflation will soar. Surely, the Fed must have known this day would come when they were pumping trillions of dollars into subprime mortgages and complex debt-instruments which served no earthly purpose except to fatten the bottom line for rapacious bankers and hedge-fund managers. The Fed also knew that the nation's wealth was not being "efficiently deployed" for capital improvements on factories, technology or industry. Oh, no. That would have ensured that America would remain competitive in the global marketplace into the new century. Instead, the money was shoveled into the bottomless sinkhole of stucco homes with composition roofing and toxic credit default swaps.

The stock market lost another 237 points yesterday; the third 200-plus slide in a week. Now all three indexes are down more than 10% since their record high on Oct 9. Treasury yields are plunging as investors flee the stock market looking for safety. That means the Fed will have to slash rates again at its December 11 meeting to provide more low interest crack for the investor class. Traders see an 82% chance that Bernanke will cut the Fed Fund's rate by another quarter point to 4.25%. All that is likely to do is put the dollar into free fall and send food, oil and gold prices to the moon. It won't pay off the overdue mortgage payments and it won't remove the billions of dollars of debt from the banks' balance sheets. It's pointless. The US is headed for a "hard landing" and its dragging the rest of the world along with it.

Harvard Economics professor, Lawrence Summers offered this sobering warning yesterday in an article in the Financial Times, "Wake up to the dangers of a deepening crisis":

"Three months ago it was reasonable to expect that the subprime credit crisis would be a financially significant event but not one that would threaten the overall pattern of economic growth. This is still a possible outcome but no longer the preponderant probability. Even if necessary changes in policy are implemented, the odds now favor a US recession that slows growth significantly on a global basis. Without stronger policy responses than have been observed to date, moreover, there is the risk that the adverse impacts will be felt for the rest of this decade and beyond. Several streams of data indicate how much more serious the situation is than was clear a few months ago."

Summers is not the smartest guy on the block. If he was he wouldn't have said men and smarter than women and he'd still be president of Harvard. But he's a capable economist and he can sniff disaster as it comes stampeding round the corner.

Mike Whitney lives in Washington state. He can be reached at: fergiewhitney@msn.com

US wages covert war on Iraq-Iran border

For weeks, the Iranian artillery has been raining shells on hills where suspected Kurdish anti-Iranian militants are based on both sides of the Iran-Iraq border. At the same time, elite US Special Forces are operating inside Iran, training the militants and scouting potential targets for air strikes, a former commando tells Nelson Rand. The Kurdish administration in northern Iraq has placed temporary curbs on the anti-Tehran rebels, but as they have US backing, their fight is far from over. (Nov 27, '07)

Remembering Howard Dean’s 2004 Campaign
by Joshua Frank / November 27th, 2007

Four years ago today Howard Dean was ahead in the polls and set to dominate the early race in Iowa and the primaries in New Hampshire. It was the first time the internet had been used to amass support for a presidential candidate, and the outpouring of antiwar fervor for Dean’s campaign threw the Washington establishment in to a tailspin. It was set to be a campaign to remember, yet it amounted to little more than a forgotten headline. Below we run the following essay from Joshua Frank’s book Left Out! How Liberals Helped Reelect George W. Bush to remember what we are so soon to forget: the Democrats aren’t ready or willing to reform, let alone oppose. It’s a valuable lesson, one we ought to keep in mind as the following year of electoral madness and political punditry unfolds. Tomorrow we’ll run the second half of Frank’s essay, outlining the DLC powers that crushed Dean’s grassroots movement, despite that Dean, during his tenure in Vermont, was a pro-war, pro-business insider. - DV Editors (Full article …)

TIME MAGAZINE – MIDDLE EAST BLOG
11/25/07
What the Saudis Want from Annapolis

Scott Macleod

Saudi Arabian Foreign Minister Saud al-Faisal tells TIME that he is optimistic about this week's Middle East peace conference in Annapolis because of what he calls U.S. determination "to see this through." Continuous U.S. mediation in post-conference negotiations, including pressure on Israel, he says, "can turn things around" and lead to a comprehensive settlement before President Bush's term expires in 13 months.

But, speaking in Paris just hours before his scheduled arrival in the U.S., Prince Saud warned Israelis that they would have no peace until Israel withdrew from Arab territories captured in the 1967 war. Saud, who will be the highest ranking Saudi to ever attend a peace conference with the Jewish state, added that he would not shake the hand of Prime Minister Ehud Olmert or make a symbolic visit to Jerusalem before a peace deal. "The hand that has been extended to us has been a fist so far," he said. He warned Israelis against seeking a surrender, adding, "We don't need a Versailles for the Arab world, a peace that will only be an instigator of future wars."

TIME: Are you optimistic about Annapolis?

Saud: One of the elements of optimism is the sense of determination of the United States to see this through. Peace without the complete and direct involvement of the United States is impossible. The assurance that it is going to be a comprehensive peace that is pursued, to tackle the main issues of borders, Jerusalem, refugees, is certainly one of the elements.

Did you have reservations about attending?

We were fearful of failure. For us, of course, and what the turn of events after a failure would be. But also for the United States. We were anxious that the credibility of the United States is maintained.

Why were you afraid for yourselves?

We have assiduously worked for a strategy for peace. We have convinced our people of the viability of that strategy. If failure occurred, people would turn away from this strategy. Undoubtedly, failure will increase the trend toward radicalism, and undoubtedly it will provide terrorists with further means of recruitment.

Are you confident in the Bush administration's steering of the peace process?

We have confidence in that. I hope we are proven right. Both sides alone won't reach an agreement. It is obvious from the last 60 years of experience with negotiations. With their continuous involvement, and serious intent, this can turn things around [if the United States really is going to put its weight behind its proposals].

Have Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas achieved anything in their talks?

No, that is one of the great disappointments. Everybody had hoped by the time they reached the conference, that Olmert and Abbas had reached some kind of understanding especially about what needs to be done on the ground, issues like a freeze on settlements, the wall, and other issues that make Palestinian life easier. How reasonable is it to assume that you can have negotiations for removing the occupation and at the same time the Israelis are acquiring more land and building more settlements? Here is an obvious area where an intermediary has to step in and say, "No, this cant be."

Do you think Olmert is sincere?

Israel has to make a choice. They have lived for the last 60 years basing their policy on force. Yet they are not closer to achieving peace or security than they have been in the past. It is time for them to try a different policy, a policy of accepting to live with the Palestinians and live in the neighborhood. We don't need a Versailles for the Arab world, a peace that will only be an instigator of future wars.

What do you think of Olmert?

I don't know the man.

He responded positively to the Arab peace initiative and Saudi involvement in the peace process.

Does he accept the principles of the peace proposal totally? Withdrawal for total peace? This will be a test for him in this next conference.

Will you try to get to know him at the conference, shake his hand and have a chat?

No, this is not theater. We are going seriously for peace negotiations. We are not going there just to take pictures of somebody shaking somebody's hand. We can't give false impressions to people. The hand that has been extended to us has been a fist so far. Once it opens for peace, it will be shaken.

Will you avoid shaking his hand if he approaches you?

I'm not going to be there for theatrical gestures of shaking hands that mean nothing. You shake hands, and it implies that you have agreed on something. We have not agreed on anything yet. Better than shaking our hands, he should respond in honesty to the proposals that we have put on the table.

Shaking his hand could send a signal to Israelis that there is a partner for peace.

We are there to support Mahmoud Abbas, the Syrians, and the Lebanese to get their territory. We are there in all honesty, if peace is achieved, to pursue that what was promised in the Arab peace plan. That is normalization, after the peace. We are not going to be party to gestures that could be interpreted as normalization before peace is attained.

What will the Saudi role be after the Annapolis conference?

Saudi Arabia is not looking for a unique role for itself to play. We will not of course negotiate in place of the Palestinians or the Syrians or Lebanese. But we will help in any way that we can if asked by these sides to help.

Would you visit Jerusalem?

No. Not before peace. We will visit only Jerusalem that is liberated.

What is your time frame for reaching a comprehensive peace agreement?

The time frame is very clear. It is until the end of the Bush administration.

Can it happen?

Of course. Every man on the street and every woman on the street, not only the politicians, knows what the settlement will look like in the end. It just needs the action to bring it about. It looks like the 1967 border, with delineation of that border. It looks for a negotiated solution for the Palestinian [refugees] return. It looks for a return of East Jerusalem as part of the Palestinian territories.

And Arab acceptance of Israel's legitimacy as a state?

Of course.

Is there flexibility in the Arab peace initiative, or is it "take it or leave it"?

It is a very simple equation. Either Israel wants peace or territory. It can't have both.

With modifications of borders?

This is up to the negotiators, of course.

What does Israel get in return?

We have made clear that peace means more than the end of hostilities. It means normalization. It means open borders. It means all those elements that normal human beings in one neighborhood act with together.

Can you imagine an Israeli embassy in Riyadh, or a Saudi embassy in Israel?

I hope we can imagine that they will withdraw, first of all. And that normalization will come after withdrawal.

You advocate unity between Abbas' Fatah party and Hamas, but how can you have a peace agreement that includes a group that doesn't accept Israel's legitimacy?

You are entering into negotiations where there is a group of Israelis who say they don't want Palestinians in their land and want a Jewish homeland only. You have that kind of position on both sides. We hope reasonable people, people of peace and good faith, will win the day.

If Annapolis doesn't work out, can you just pick this up again, a few years from now?

I think this is really a turning point. The next conflict will be very dangerous. We have seen shades of that. Israel in particular has to worry about that. Some vulnerability appeared on its part in the Lebanon adventure which is not absent from the minds of anybody who wants to do mischief in the region.

So this is the last chance?

I could say that. I think it if it is not the last chance, it is the precursor of the end of the one direction and the beginning of a new direction in the Middle East, and a disturbing one at that.

Is your peace effort driven by fear of Iran?

Peace with Israel has its own conditions and elements that are not connected with Iran. We want to make peace with Israel on its own terms. Iran is a neighbor that we hope we can live in peace and stability with. It takes two to act in this. They have to want the same thing too. The test with Iran is what they do in Iraq.

Can the nuclear dispute with Iran be handled diplomatically, or are you concerned the U.S. will bomb Iran?

We not only think it can be solved diplomatically, but we are working towards that objective. We hope that conflict will be avoided. Conflict in that region will be a disaster for the international community as much as for the states of the region.

Are you encouraged by the efforts of the Iraqi government for national reconciliation?

It needs a government that would leave no stone unturned and move heaven and earth in order to get the national reconciliation going on, and we haven't seen, unfortunately, such an effort until now.

Iran builds new longer-range missile
e9 = new Object(); e9.size = "160x600,120x600"; e9.noAd = 1; TEHRAN, Nov 27 (AFP) Nov 27, 2007
Iran announced on Tuesday that it has built a new missile with a range sufficient to put Israel and US bases in the Middle East within easy reach, amid rising tensions over Tehran's contested nuclear drive.Defence Minister Mostafa Mohammad Najjar said the new "Ashura" missile had a range of 2,000 kilometres (1,240 miles) -- the farthest in Iran's arsenal, state media reported.

"The construction of the Ashura missile with a range of 2,000 kilometres is one of the accomplishments of the ministry of defence," Iranian news agencies quoted Najjar as saying.

"The missiles are being made in line with Iran's deterrent and defence doctrine," he added.

However, there has been considerable confusion in recent months about the capacities of Iran's longer-range missiles, seen by experts as one of its chief military assets.

At its main military parade in September, Iran unveiled the Ghadr-1 (Power), which was said to have a range of 1,800 kilometres (1,100 miles).

The country's best-known longer-range missile, the Shahab-3, has been said by officials in the past to have a range of 2,000 kilometres. Yet at the military parade it was said to have only a 1,300-kilometre (800-mile) range.

Some Western military experts claimed that the Ghadr-1 was no more than a Shahab-3 under a different name. It has the "baby bottle" style nose for extra aerodynamic efficiency seen on versions of the Shahab-3.

The agencies did not publish any pictures of the Ashura, which is named after the holy mourning ceremony marking the death of Shiite Imam Hossein.

Najjar added to the confusion on Tuesday by saying Iran was developing Ghadr missiles that would also have a range of 2,000 kilometres.

Iran has regularly touted the abilities of its missiles at a time of mounting tension with the West over its nuclear programme.

France, which has in recent months expressed increasing concern over Iran's nuclear ambitions, said it was worried by the new longer-range missile.

"This news is a cause of concern for us, and it illustrates the need to be extremely vigilant with regard to Iran's actions and intentions," foreign ministry spokeswoman Pascale Andreani told reporters.

Najjar also announced that Iran had developed a new submarine named "Ghadir" after another holy day and a destroyer called "Moj" (wave), without giving further details.

The United States has never ruled out a military attack against Iran to punish its years of defiance in the nuclear crisis, even though Washington says it favours resolving the standoff through diplomacy.

Tehran has said it will never initiate any attack but has also warned it will strike back with crushing force if the United States launches an assault.

Iranian military officials have publicly threatened to hit US bases in Iraq, Afghanistan and on the Arabian peninsula with their missiles if Washington attacks.

"Iran will never launch an attack but if Iran is attacked we will respond with all our force against aggressors," Najjar was quoted as saying.

The commander of Iran's elite Revolutionary Guards, Mohammad Ali Jarari echoed that on Tuesday, adding that Tehran had "other capabilities that we believe it is our right to use throughout the region and also around the world."

In remarks on state-owned Press TV, he said "we think there is a possibility of air campaign against a number of special sites ... but if our enemies are wise, they will never even do that."

Without elaborating, he said that with the "same strategies" used by Hezbollah in the Lebanese Shiite movements summer war with Israel last year "we can nullify their (US) military superiority.

"Keep in mind that they are stationed near Iran's borders and well within the range of our different weapons."

The United States accuses Iran of trying to develop a nuclear weapon, a charge that Tehran vehemently denies.

It has also vowed never to recognise Israel -- the region's sole if undeclared nuclear power -- and President Mahmoud Ahmadinejad has called for the Jewish state to be "wiped from the map."

Iran is one of the few regional powers absent from a US-hosted meeting in Annapolis, Maryland that aims to kickstart peace talks between Israel and the Palestinians.

Iranian officials have expressed frustration that states such as Saudi Arabia and its ally Syria are attending the meeting.

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Public Sees Progress in War Effort

Released: November 27, 2007

Summary of Findings

For the first time in a long time, nearly half of Americans express positive opinions about the situation in Iraq. A growing number says the U.S. war effort is going well, while greater percentages also believe the United States is making progress in reducing the number of Iraqi casualties, defeating the insurgents and preventing a civil war in Iraq.

Roughly half of the public (48%) believes the U.S. military effort in Iraq is going very or fairly well. Judgments about the overall situation in Iraq have been improving steadily since the summer. As recently as June, only about a third of Americans (34%) said things were going well in Iraq.

The latest national survey by the Pew Research Center for the People & the Press, conducted Nov. 20-26 among 1,399 adults, finds that improved public impressions of Iraq are particularly evident when it comes to security-related issues. The number of Americans who say that the United States is making progress in reducing the number of civilian casualties in Iraq has doubled from 21% to 43% since June. The proportion saying that progress has been achieved in preventing terrorists from establishing bases in Iraq is also up substantially, as is the number saying the U.S. is making progress in defeating the insurgents militarily.

However, a rosier view of the military situation in Iraq has not translated into increased support for maintaining U.S. forces in Iraq, greater optimism that the United States will achieve its goals there, or an improvement in President Bush's approval ratings.

By 54%-41%, more Americans favor bringing U.S. troops home from Iraq as soon as possible rather than keeping troops in Iraq until the situation has stabilized. The balance of opinion on this measure has not changed significantly all year.

Similarly, Americans remain evenly divided over whether the U.S. is likely to succeed or fail in achieving its goals in Iraq; improved perceptions of the situation in Iraq have not resulted in a changed outlook in this regard. In addition, Bush's overall job approval now stands at 30%, which is largely unchanged since June and equals the lowest marks of his presidency.


Views of U.S. Military Effort


Public impressions of the U.S. military effort in Iraq are more positive now than at any point since September 2006. At that time, 47% said things were going very or fairly well. A few months earlier, in June, 53% said things were going well, the last time a majority expressed a positive view of conditions in Iraq. Through the following fall and winter, however, Americans grew increasingly downbeat about progress in the war. In February 2007, just 30% said the U.S. military effort was going very or fairly well – the lowest recorded in a Pew survey.

Opinions about the situation in Iraq have slowly turned around in the second half of 2007. In June, barely a third of Americans (34%) saw the situation in Iraq going well. This rose to 41% in September, 44% in October and 48% currently.

While Iraq remains a deeply polarizing issue across party lines, there has been improvement in how both Democrats and Republicans view the war. At the lowest point in February, barely half of Republicans (51%) said things were going well. Today, 74% of Republicans say the same. And while Democrats remain far more skeptical than Republicans, the proportion of Democrats expressing a positive view of the Iraq effort has doubled since February (from 16% to 33%).

Independents' assessments of how the military effort is going remain far closer to the views of Democrats than of Republicans. Currently, 41% of independents offer a positive assessment, while half say things are not going well. In February, 26% of independents expressed a positive view of the situation in Iraq.


Less Political Progress Seen


In February, about two-thirds of the public (66%) said the U.S. was "losing ground" in preventing civilian casualties, while just 20% saw progress being achieved. Opinions about progress in this area have changed dramatically; in the current survey, 46% say the U.S. is losing ground, compared with 43% who believe the U.S. is making progress.

More Americans also say the United States is making progress in preventing a civil war (up 14 points since February) and defeating the insurgents militarily (up 13 points). However, perceptions of progress in several other areas – including establishing democracy in Iraq, rebuilding Iraq's infrastructure and training Iraq's forces have shown less change.

Opinions about progress toward specific military and political goals remain deeply divided along partisan lines, with Republicans consistently more likely than Democrats to say progress is being achieved. For instance, while there has been an across-the-board increase in the belief the U.S. is making progress in reducing civilian casualties, about twice as many Republicans as Democrats say the United States is making progress on this (60% of Republicans vs. 28% of Democrats).


Stable Support for Troop Withdrawal


Since February, majorities have consistently supported a withdrawal of U.S. forces from Iraq as soon as possible.

Despite the improvement in views of the situation, 54% continue to favor a troop withdrawal while 41% say the United States should keep its troops in Iraq until the situation is stabilized.

Attitudes about what to do with U.S. forces have remained very stable across political lines. Two-thirds of Republicans (67%) currently favor maintaining troops in Iraq, little change from February (71%). Just 39% of independents and 21% of Democrats want to keep troops in Iraq – again, virtually unchanged from nine months ago.


Iraq in a Word


The belief that the situation in Iraq is getting better also is reflected in the single words that people use to describe the war. The word "improving" is most frequently used to characterize people's impression of the war; 29 respondents mentioned this word.

For the most part, negative descriptions of the Iraq situation – such as "terrible" (26 mentions), "bad" (24), and "mess" (21) still predominate. However, fewer people use each of these words in characterizing their impressions of the war than did so in September. Individual mentions of the word "improving" have increased over this period, from eight in September to 29 in the current survey.


Most Important Problem


The survey finds that the war in Iraq continues to be viewed as the most important problem facing the nation, though it is not nearly as dominant a concern as it was early this year. Currently, 32% volunteer the war as the biggest problem facing the United States, while 14% mention the economy. In January, mentions of the war outnumbered mentions of the economy by roughly eight-to-one (42% vs. 5%).

While the economy has increased as a concern, so too have energy and gas prices. Currently, 7% name energy and gas prices as the most important national problem, up from just 2% in September and January.

Overall, 31% of the public mentions either the economy, energy or another economic issue (such as unemployment or the budget deficit) as the top national problem. That compares with 40% who cite the Iraq war or another foreign policy issue. In both January and September, foreign policy concerns outpaced economic issues by far wider margins.

Text: Mearsheimer and Walt interview US academics John Mearsheimer and Stephen Walt speak to the BBC News Website about their controversial new book The Israel Lobby and US Foreign Policy.

What do you think of the way your book was received in the US?

Stephen Walt : It is striking and it is probably something one would predict, having read our book, that virtually all of the mainstream reviews in the United States have been either somewhat negative or harshly negative.

And many have included many personal attacks on us - not all but the vast majority. For example, the Washington Post has run four separate pieces on our book and three of the four are harshly negative, and a couple of them raise the anti-Semitism charge quite explicitly - that's just the Washington Post.

But you would also predict from the book that the reviews outside the United States would be much better. There have been, I think, about eight or nine reviews now in the United Kingdom and virtually all of them are very positive...

Again, this in some way confirms our basic argument that it's much easier to talk about this subject, and that we get a much fairer hearing outside the United States than we do inside the US - which does not surprise us at all.

John Mearsheimer : There is no question that the book has been savaged in the mainstream media in the United States, which is to be expected. But one should also recognize that we have travelled widely in the United States to talk about the book, and everywhere we go, we find that the audiences are clearly on our side, although there are always a few people at each event who harshly criticise us.

Moreover, we have received a huge number of e-mails, letters, and phone calls since the original article appeared in March 2006 and I would estimate that 80% of them are supportive. There is even widespread support for our views in policy-making circles in Washington...

It is worth noting that we have received lots of excellent reviews from readers on amazon.com. I believe we now have 97 reviews and 63 of them are 5-star reviews, which is the best review a book can get. The bottom line is that I think a huge number of Americans agree with what we have to say.

Were you not surprised by the accusations of anti-Semitism? In the book - knowing perhaps that you were on thin ice - you strongly condemn anti-Semitism and anti-Zionism.

John Mearsheimer : We went out of our way to make our arguments perfectly clear, so that they would not be misunderstood. Nevertheless they have been misrepresented time after time in the United States.

But that is not because we are on thin ice, it's because the arguments of the other side are so weak. They can't beat us with facts and logic, so they misrepresent our arguments and then attack the arguments that we did not make.

Do you not play down the determination of Israel's enemies in the book? You portray them as people who can be reasoned with. Isn't that a rosy view?

John Mearsheimer : We made it clear in the book that Israel has enemies. But there are ways that Israel can deal with most of those enemies and significantly improve its security situation.

Syria would be a good example. In 2000, the Israelis and the Syrians came very close to cutting a deal where Syria would get back the Golan Heights and in return it would make peace with Israel, which would include a Syrian agreement to end its support of Hezbollah and Hamas.

However, it was the Israelis who foolishly walked away from the deal, not the Syrians. Israel certainly has some enemies, but most of those enemies could be effectively dealt with if the Israelis pursued different policies than the ones they're now pursuing.

Stephen Walt : I would add that none of those enemies poses an existential threat to Israel at present. Israel has the strongest military in the region, and it has several hundred nuclear weapons of its own. Israel is not going out of business, and we think that's a wonderful thing.

To the extent that Israel does face threats, like from say Hamas or Hezbollah, those are threats that do not jeopardise Israel's existence. They don't have the capabilities to threaten Israel in that way.

And even if a country like Iran were some day down the road to have nuclear weapons, it could not threaten Israel's existence without committing national suicide. So yes, Israel has security problems but they are manageable ones."

What about Iran? Many argue that it has lied about its nuclear program, and the only way to deal with it is to play hardball. Not all of those who hold this view are susceptible to the US Israel lobby.

John Mearsheimer : First of all, we do not deny that the possibility Iran might acquire nuclear weapons is a problem. The question is: how best to address that problem? With regard to the point that Iran has lied to the US and the international community, as you know states sometimes lie.

And in fact, the Israelis lied to the United States about their nuclear program in the 1960s. So it is not altogether surprising that there is evidence that Iran has lied, and the United States and this international community should take that into account when they deal with Iran.

With regard to your point that the United States and other countries should play hardball with Iran, that strategy effectively means keeping the military option on the table. However, as long as that option remains on the table, you are in effect giving the Iranians powerful incentives to acquire nuclear weapons of their own...

The best way, we argue, to deal with Iran's leaders is to try to negotiate with them and try to work out a modus vivendi where they develop a nuclear capability but not a nuclear weapons capability. And to be more specific, the best way to achieve that outcome is to take the military threat off the table.

Many would agree that the Bush administration has made mistakes in Iraq. But why attribute those mistakes to the influence of a lobby? They could have been honest mistakes, or the result of incompetent planning.

Stephen Walt : There have obviously been many mistakes made and some elements could be attributed to incompetence. We do not let the Bush administration off the hook at all. We point out that the final decision to go to war in Iraq was made by President Bush, and he obviously deserves his share of the blame.

But Bush did not think this idea up by himself. In fact, the entire idea of toppling Saddam was originally conceived by the neoconservatives, who are a key component of the Israel lobby.

The lobby has also pushed the United States to adopt a confrontational policy towards Syria, Iran, and Israel's other enemies. Instead of focusing on defeating Al Qaeda and working in an even-handed way to settle the Israeli-Palestinian conflict -which would make Bin Laden's message less attractive - the United States went after Iraq instead and gave Israel a free hand towards the Palestinians.

And the results have been a complete failure, and a disaster for the United States and Israel alike.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/americas/7104252.stm

Published: 2007/11/22 10:31:15 GMT

© BBC MMVII

abm
+ Ex-Czech PM calls US anti-missile plan 'provocation': report
Prague (AFP) Nov 26, 2007 - A former Czech prime minister condemned on Monday the United States' plans to place anti-missile radars in the Czech Republic as a "useless provocation" of Russia, according to media reports. "The true objective of this radar base is to aim at Russia" and notably to monitor their ballistic missile tests, Milos Zeman said, cited by CTK agency. Russia has vehemently opposed the whole idea, ... more

iran
+ IAEA tight-lipped on Iran's nuclear fuel claims
Vienna (AFP) Nov 26, 2007 - The UN atomic watchdog declined to comment Monday on claims by Iran that it was now in a position to make its own fuel for a 40-megawatt heavy water research reactor under construction in the centre of the country. The International Atomic Energy Agency was similarly tight-lipped on a statement from Tehran, which said that the IAEA had formally closed two key dossiers in its long-running inv ... more

November 5, 2007: Check Your Freedom at the Door, by Kent Masterson Brown

Road to Empire
An illegal treaty with Iraq seals our fate by Justin Raimondo Is the U.S. going to occupy Iraq indefinitely, or will we withdraw our troops within the next year or so, as the majority of Americans would have it? President Bush and Iraqi Prime Minister Nouri al-Maliki don't care what Americans – or Iraqis – think or want: they've already settled the question by signing a "Declaration of Principles for a Long-Term Relationship of Cooperation and Friendship Between the Republic of Iraq and the United States of America" that commits American soldiers to the task of defending the present Iraqi government against internal enemies, as well as foreign-based threats to its sovereignty, either real or imagined. As the Declaration declares, the U.S. is tasked with:

"Supporting the Republic of Iraq in its efforts to combat all terrorist groups, at the forefront of which is al-Qaeda, Saddamists, and all other outlaw groups regardless of affiliation, and destroy their logistical networks and their sources of finance, and defeat and uproot them from Iraq. This support will be provided consistent with mechanisms and arrangements to be established in the bilateral cooperation agreements mentioned herein."

It's in this context that the Kyl-Lieberman resolution, enthusiastically supported by Hillary Clinton as well as the Bush administration, takes on special importance: having targeted the Iranian security force known as al-Quds, or the Revolutionary Guards, as an officially designated "terrorist" group, the American garrison is already authorized to take on Tehran. The road to war with Iran is paved, and we're ready to roll no matter who sits in the driver's seat.

The administration is denying that this is a treaty, which would need to be ratified by the U.S. Senate: it is, instead, a "strategic framework agreement" that just happened to be announced after Congress went into recess. Asked if the administration would seek any congressional "input" on the forging of this agreement, Lt. Gen. Douglas Lute, the administration's point man on Iraq, answered:

"In the course of negotiations like this, it's not – it is typical that there will be a dialogue between congressional leaders at the negotiating table, which will be run out of the Department of State. We don't anticipate now that these negotiations will lead to the status of a formal treaty which would then bring us to formal negotiations or formal inputs from the Congress."

Short answer: hell no.

Oh, they may solicit the complicity of the top Democratic leadership in both houses of Congress, to the extent of asking them not to make any waves, but essentially they'll do what they have always done in the hundred-plus countries where U.S. troops are currently stationed, and that is negotiate a Status of Forces Agreement, the essential element of which immunizes our soldiers from being prosecuted by local authorities for crimes against the natives. In this case, however, the scope of the agreement is a bit more comprehensive, encompassing economic and political elements, as well as the "security" factor, i.e., the military details of the continuing occupation, including U.S. troop levels and the construction of permanent American bases.

What stands out is the stated intention of the Iraqi government to give what news accounts describe as "preferential" treatment to U.S. investment in the country, which presumably means the vital oil production sector. One imagines that the bidding process is already taking place, with all sorts of sub rosa agreements being made to divvy up the country's potentially lucrative oil reserves.

For an administration ostensibly devoted to "free markets," this sort of crony capitalism is a disgrace. It is, in short, good old-fashioned imperialism of the sort embodied by the British East India Company.

So what are the Iraqis getting in return for allowing the wholesale looting of their natural resources? Fifty thousand U.S. troops stationed permanently in the country, mostly in urban areas – the plan is for 14 "enduring bases," as we found out back in 2003. In spite of all the palaver about "foreign" threats, there is no doubt that we are now in the business of protecting the Iraqi "government" from their own people. In return, favored American corporate interests will be allowed to strip the country bare.

This agreement formalizes Iraq's status as a de facto U.S. protectorate, a province of the empire – an American beachhead in a radically destabilized Middle East that could easily be used as a launching pad for future (and even more ambitious) wars of "liberation."

There's just one big problem for the War Party: the Iraqi constitution requires a vote by the Parliament in order to give the Status of Forces Agreement (or this preliminary declaration of intent) the force of law. And that looks problematic, at best, given the weakness of the Maliki regime. As Liwa Sumaysim, formerly tourism minister and now a member of the Iraqi Parliament from the fiercely nationalistic party of Shi'ite cleric Moqtada al-Sadr, put it: "The Iraqi parliament must have the final word on it."

Can the American Congress say the same? I think not.

The Americans are careful to cloak their illegal and increasingly untenable military occupation of Iraq in all sorts of pretensions to legality: they refer to the UN resolution, which sanctions Iraq as a "terrorist" state and a "threat" to "international peace." The Bush administration will go to the Security Council once again for a renewal of this formal mandate – even though it declares, in effect, that Iraq remains a pariah among nations, which rankles the Iraqis. The idea is to transition over to a bilateral Iraqi-U.S. agreement that supersedes the UN framework and codifies the terms of the occupation in Iraqi law.

Whether the Iraqis will go for it, or the more nationalistic elements, such as the Sadrists, manage to stall approval of the declaration and derail the U.S.-Iraqi "negotiations" over the exact content of a future Status of Forces Agreement is a pretty even bet. What you can count on, however, is that we won't hear a peep out of the U.S. Senate or the House of Representatives, which doesn't at all mind being in recess while the president commits us to an open-ended occupation – and America takes a giant step down the road to empire.

Neocon columnist Jonah Goldberg complains that "the word 'empire' substitutes for an argument; there are no good empires, just as there are no good fascists, or racists, or dictators." What he doesn't say is that this argument is only good in America: why, even the supposedly antiwar archbishop of Canterbury, as the denizens of National Review's "The Corner" recently noted, has hailed the alleged achievements of British imperialism as compared to the vulgar American version. The British routinely point to their imperial past as a source of pride, as do American Anglophiles. The French, the Spanish, and the Italians all revel in the supposed glory of their past conquests: it's only the Americans who disdain the very idea of having an empire, and, indeed, instinctively sense something profoundly un-American about the whole concept of Washington, D.C., as the capital of a global imperium.

That's what ordinary Americans think, at any rate: the elites, on the other hand, believe they are uniquely qualified – and, indeed, have a duty – to rule over the peoples of the world … for their own good, of course. To believe otherwise is to stand condemned as an "isolationist," a dreaded epithet reserved for any politician or public person who refuses to get with the program and dares challenge the fundamental assumptions upon which U.S. foreign policy has been built since the days of Harry Truman.

So you don't believe the U.S. has any business stationing its troops in 100-plus countries? What are you, some kind of isolationist dinosaur? Don't you realize that we have a moral obligation to be "engaged" in the world? It scarcely merits mentioning that this sort of "engagement" means a policy of perpetual war, and that, in particular, the neoconservative dream of a remade Middle East is a prescription for a regional conflict that would dwarf the current level of conflict in Iraq by several orders of magnitude. Which is why it is never acknowledged, at least in "mainstream" venues, yet that is the future being mapped out for us.

That Congress is in recess as this most important step is being taken is emblematic of our elected representatives' abdication in the foreign policy realm, and specifically of their constitutional duty to review and ratify – or reject – treaties. Yet their abstention is hardly a big surprise: after all, this is the same sorry collection of solons who stood passively by while we were lied into war, then complained that they didn't know, they couldn't help it, and it was all the Republicans' fault, anyway. This deft maneuver by the Bush administration will give the Democrats an ample out if and when they inherit the occupation. Our hands are tied, they'll cry, as their antiwar base demands a U.S. withdrawal. We must stand by our agreements, or else we'll be seen as unreliable. And, hey, what are you, anyway – some kind of kooky "isolationist"?!

Of course, the Senate could reconvene, at the pleasure of Harry Reid, the Democratic majority leader, and debate, in an emergency session, the U.S.-Iraqi declaration and the prospect of a permanent U.S. presence – but the Democrats (at the leadership level) don't consider this a matter of great urgency. To the Beltway crowd, Democrats as well as Republicans, the Empire is a fact of life, and – when the balance sheet is drawn up – a good thing. After all, who, other than themselves, is better qualified to run the world? And if you can't handle that, my friend, then you most certainly are one of those dreadful "isolationists."

Iraq politicians oppose US pact Iraqi opposition groups have criticised moves towards a long-term US-Iraqi pact following the expiry of the UN mandate governing foreign troops in Iraq. On Monday US and Iraqi leaders signed a "declaration of principles" on enduring military, political and economic ties.

Sunni Arab and Shia politicians said it would lead to what they described as "US interference for years to come".

The Iraqi parliament will have to approve any final agreement before it can come into force.

The declaration was signed separately by President George W Bush and Iraqi Prime Minister Nouri Maliki on Monday.

MPs from the Shia bloc loyal to the cleric Moqtada Sadr expressed deep reservations about the agreement.

'Collaborators'

The declaration of principles sets the framework for negotiations next year on a long-term bilateral relationship, including the presence of US troops and economic ties.

It sets a 31 July 2008 target date to formalise US-Iraq relations, allowing for the expiration of the renewable UN mandate authorising the presence of US-led multinational forces in Iraq.

The Sunni group the Association of Muslim Scholars said the Iraqi signatories of the declaration would be looked on a "collaborators with the occupier".

The bilateral moves came as at least five Iraqi civilians were killed in two separate incidents involving US patrols.

Correspondents say US investors benefiting from preferential treatment could earn huge profits from Iraq's vast oil reserves, causing widespread resentment among Iraqis.



Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/midd...ast/7115131.stm

Published: 2007/11/27 13:57:12 GMT

© BBC MMVII

Reporters say Baghdad too dangerous despite surge

By David Morgan1 hour, 8 minutes ago

Nearly 90 percent of U.S. journalists in Iraq say much of Baghdad is still too dangerous to visit, despite a recent drop in violence attributed to the build-up of U.S. forces, a poll released on Wednesday said.

The survey by the Washington-based Pew Research Center showed that many U.S. journalists believe coverage has painted too rosy a picture of the conflict.

A separate Pew poll released on Tuesday showed that 48 percent of Americans believe the U.S. military effort in Iraq is going very or fairly well, up from 34 percent in June, amid signs of declining Iraqi civilian casualties and progress against Islamist militants such as al Qaeda in Iraq.

But most journalists said they believe violence and the threat of violence have increased during their tenures.

Much of the danger for journalists is faced by local Iraqis, who often do most of the reporting outside Baghdad's heavily fortified Green Zone, the data showed.

Fifty-eight percent of U.S. news organizations have had local Iraqi staff killed or kidnapped within the past year, the survey said. About two-thirds of news outlets said local staff face physical or verbal threats at least several times a month.

"Above all, the journalists -- most of them veteran war correspondents -- describe conditions in Iraq as the most perilous they have ever encountered, and this above everything else is influencing the reporting," the authors said in a report that accompanied the data.

At least 122 journalists and 41 media support staff have been killed in Iraq since the U.S.-led invasion in 2003, the New-York based Committee to Protect Journalists says. About 85 percent of those killed were Iraqis.

Pew's Project for Excellence in Journalism surveyed 111 journalists who have worked in Iraq for 29 news organizations, all but one of them U.S.-based. The poll was conducted September 28 through November 7, Pew said.

HIGH MARKS FOR REPORTING EFFORT

Pew had tried to reach a total of 181 journalists, which it believes are nearly all those who have covered Iraq for American news organizations.

The journalists gave high marks to the overall reporting effort, with 74 percent rating news-gathering as good or excellent. The highest marks went to coverage of U.S. troops and the war against insurgents.

Despite claims by U.S. officials that reporting from Iraq is negatively biased, 70 percent of those surveyed believe overall coverage is accurate, while 15 percent say the coverage makes the situation look better than it is.

Forty-four percent of journalists believe reporting has treated the Bush administration fairly, while 43 percent said coverage has been too easy on U.S. officials.

But the data also showed that 67 percent are at least somewhat concerned that the accuracy and completeness of their reports have suffered because of ongoing security problems that limit their access to the country.

President George W. Bush's so-called surge strategy to stabilize Baghdad and its environs has been credited with a fall-off in attacks on Iraqi civilians and U.S. coalition forces over the past two months.

But 87 percent of respondents said at least half of Baghdad remains too dangerous for a Western journalist to visit, with the capital's Shi'ite-dominated Sadr City enclave rated the most dangerous spot in Iraq. Eighteen percent said the entire city of Baghdad is too dangerous for travel.

Most U.S. journalists have traveled to danger spots such as Sadr City, either under the protection of private security guards or the U.S. military.

"Eight in 10 journalists believe conditions have deteriorated for reporters since their own first posting in the country," the survey's authors said.

Under-reported subjects of the war include the plight of Iraqi civilians, Shi'ite-on-Shi'ite violence in southern Iraq and general events occurring outside Baghdad, journalists said.

(Editing by Alister Bull and David Alexander)

Copyright © 2007 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

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Six Questions for Douglas Macgregor on Iraq and the “Surge”
DEPARTMENT Washington Babylon
BY Ken Silverstein
PUBLISHED November 27, 2007

Douglas Macgregor is a retired Army colonel and a decorated Persian Gulf War combat veteran who was an active duty officer (and Pentagon advisor) until 2004. He has authored three books on modern warfare and military reform. His latest is Transformation under Fire: Revolutionizing the Way America Fights. Macgregor writes for the Straus Military Reform Project at the Center for Defense Information in Washington, D.C. He recently replied by email to a series of questions about the current situation, and future prospects, in Iraq.

1. How big of a change has there been in recent months in the military situation in Iraq?
The situation on the ground has definitely changed, but not for the reasons the Bush Administration and its generals claim. The main reasons include cash-based deals with Sunni leaders and Shiite leader Muqtada al Sadr’s independent decision earlier this year to temporarily restrain his Mahdi army from attacking U.S. forces. There have also been improved force protection measures–increased commitment of emergency ordnance disposal units to clear mines from roads–and increased use of unmanned combat aerial vehicles. As a result, American casualties have declined in the last 90 days to the levels experienced in 2006.

2. Has the “surge” in troop levels played an important role here as well?
Not really. Where once there was one country called Iraq, there are now three emerging states: one Kurdish, one Sunni, and one Shiite. More than two years of sectarian violence have left districts in and around Baghdad completely Sunni or completely Shiite, and that has significantly reduced violence in those districts and resulted in fewer bodies in the streets. This new strategic reality, combined with huge cash payments to the Sunni insurgent enemy, is what has given U.S. forces a respite from the chaos of the last four years. The introduction of a few thousand additional troops into Baghdad’s neighborhoods was never going to result in any kind of strategic sea change.

3. So is the problem in Iraq one of refining counterinsurgency tactics?
The Sunni Arab leadership has suspended its rebellion against the U.S. military occupation because the White House and its generals in Baghdad have given Sunnis independence from the hated Shiite-dominated government and money–lots of money. When U.S. casualties were rising last spring, General David Petraeus issued directives to coalition forces to extend the model of Anbar province by offering cash payments to more and more Sunni Arab leaders outside of that region. One army officer on his second tour summed up the change this way: “Since we refuse to leave and are much more powerful than al Qaeda, they are siding with us. They call this the ‘great awakening’.” The tactic of paying your enemy not to fight is not a new one, but it has limitations. If the plan is to leave Iraq, it’s a good solution. If the plan is to stay in perpetuity, and that seems to be the case with the Bush Administration, history says it’s dangerous. Eventually, the underlying hatred for the foreign presence overwhelms greed.

4. How will this play out in terms of Iraqi political reconciliation?
One of the unspoken assumptions that underpins the “great awakening” is that U.S. occupation forces will place untold thousands of Sunni insurgents on the U.S. government’s payroll, which will allow them to rearm and recuperate inside Sunni-pure enclaves while U.S. forces open a new front in the war of occupation against the Shiite militias. The question now is whether the Shiite militias will launch the kind of campaign against U.S. forces that the Sunnis waged for nearly four years.

5. What’s the likelihood of a future full-out clash between Iraqi Sunnis and Shiites?
No one knows because selected Shiite Arabs also benefit from U.S. military action and subsidies. From the beginning of the American intervention, the United States backed the Islamic Supreme Council of Iraq (ISCI) in its struggle for power with Muqtada al Sadr, despite the ISCI’s Iranian ties and origins. The problem for U.S. forces is that Sadr has a far stronger base of support inside Iraq’s Shiite population than the ISCI. But it is doubtful that Sadr will stand idly by while U.S. forces halt operations against the Sunnis, the Shiites’ old enemies, and allows them to rebuild. Sadr may well step up attacks on Americans, assisted, of course, by the Shiite-dominated Iraqi Security Forces. What the majority Shiite Iraqi army would do in these circumstances is another unknown.

6. What’s Iraq going to look like five years down the road?
The current Administration wants to stay in Iraq with the object of controlling it and removing its oil wealth with the help of American and British oil companies. But it’s unclear whether the United States can sedate the Sunni population with cash while exploiting their fear of Iran–for example, by promising that giant American bases like the 30,000-man U.S. Air Base in Balad will form an anti-Iranian Maginot line stretching from the Indian Ocean to the Turkish border. This may be the Bush Administration’s strategic ploy to win the support of neighboring Sunni Arab countries for continuing the U.S. military occupation of Iraq long after Bush leaves office. But there are lots of variables the United States does not control, both internal and external. The Muslim Arab populations of the region do not want U.S. forces permanently stationed in their countries. In addition, future Turkish intervention in Northern Iraq, especially with Iranian and Syrian support, would leave the United States in a very dangerous position. We can only hope that the next Administration realizes it can buy the oil without parking a tank on top of the oil wells.



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The triumphant neocons by Robert Parry

Citing signs of military progress in Iraq, America’s neoconservatives are reasserting their vision of the United States as an imperial power that can reshape the Muslim world in a way favorable to the interests of Washington and Tel Aviv.


Casting aside the image of the war as a bloody quagmire, the neocons are again selling Iraq as a vital beachhead in the Middle East from which the United States can project power throughout the region and achieve victory over Islamic militants hostile to Israel.

“It does not have the drama of the Inchon landing or the sweep of the Union comeback in the summer of 1864,” wrote neoconservative columnist Charles Krauthammer. “But the turnabout of American fortunes in Iraq over the past several months is of equal moment – a war seemingly lost, now winnable.” [Washington Post, Nov. 23, 2007]

Krauthammer and other neocons also are back to baiting Democratic war critics for supposedly living in “a state of denial” and refusing to acknowledge President George W. Bush’s wisdom in dispatching more than 20,000 additional U.S. troops for a “surge” under Gen. David Petraeus.

“Even as evidence has mounted that General Petraeus' new counterinsurgency strategy is succeeding, Democrats have remained emotionally invested in a narrative of defeat and retreat in Iraq, reluctant to acknowledge the progress we are now achieving,” said Sen. Joe Lieberman, a neoconservative Independent from Connecticut, in a Nov. 8 speech.

After nearly five years of carnage – the deaths of almost 3,900 American soldiers and hundreds of thousands of Iraqis – the neocons finally see vindication for themselves, at least within the Washington news media where they maintain a powerful influence.

Though the neocon comeback may prove ephemeral if the Iraq War drags on and the U.S. position continues to deteriorate in Afghanistan and Pakistan, the neocons still can claim to be in a stronger political position vis a vis the election of the next president than they were in 2000 and 2004.

On the Republican side, the frontrunners in the presidential race are even more hawkish about fighting “World War III” against Muslim militants than Bush has been.

While Bush at least rhetorically calls for closing the Guantanamo Bay prison, former Massachusetts Gov. Mitt Romney said “we ought to double Guantanamo” and use it as a place to hold Islamic militants while denying them legal rights.

Not to be outflanked on the right, former New York Mayor Rudolph Giuliani has advocated “aggressive questioning” of terror suspects and has refused to label as torture “waterboarding,” a simulated drowning technique that dates back to the Inquisition.

The Hillary Question

On the Democratic side, frontrunner Hillary Clinton has tried to avoid offending the neocons as much as possible. She followed their line on Iraq from 2002 to 2006, before shifting into cautious opposition to appease the anti-war fervor of rank-and-file Democrats.

Then, after building what appeared to be a safe lead in Democratic polls, the New York senator tilted back in the neoconservative direction, voting for a Lieberman-sponsored resolution that urged Bush to take a harder line against Iran by labeling its Revolutionary Guard a terrorist entity.

Though many grassroots Democrats suspect that Sen. Clinton is a “closet neocon” or “Lieberman-lite,” some Inside-the-Beltway Democrats see her more as a triangulator who simply wants to dilute the intensity of neocon opposition to her candidacy.

Similarly, after winning the White House in 1992, President Bill Clinton gave the job of CIA director to neocon James Woolsey. One well-placed Democratic source told me the move was a patronage plum to the editors of The New Republic, an influential neocon-leaning magazine that lent support to Clinton.

If Hillary Clinton does win the Democratic nomination, the neocons would almost surely side with the Republican nominee in the general election, but the neocons might be less hostile toward her than they were toward the two previous Democratic nominees.

In 2000, though Al Gore put Lieberman on the Democratic ticket, most influential neocons resented Gore’s emphasis on multilateral solutions to international problems, from global warming to the Middle East conflict. They liked George W. Bush’s assertion of a muscular U.S. unilateralism.

In 2004, the neocons viewed Massachusetts Sen. John Kerry with deep suspicion, despite his vote in favor of the Iraq War.

As for Election 2008, the neocons see potential political gain if they can solidify the image of progress in Iraq and transform this emerging Washington conventional wisdom into an opinion shared broadly by American voters.

If the neocons can do that, the benefits could spill over into the presidential race, helping Republicans who advocate aggressively fighting “World War III,” while undermining the Democratic candidates who have been the most critical of the Iraq War.

To that end, the neocons are back to portraying Iraq War critics as “defeatists” who favor "surrender" and who are betraying “the troops.”

Public Doubts

Still, the neocon strategy faces major obstacles, particularly public concern about the heavy toll that the Iraq War has taken on the U.S. military and the U.S. Treasury.

While an open-ended occupation of Iraq and renewed belligerence toward other unfriendly Muslim countries might be appealing to the neocons, the notion of endless war at whatever the cost has lost much of its allure to the American people.

As the U.S. dollar sinks, as domestic needs go unmet, as investors from Abu Dhabi bail out Citigroup and as communist China gets a stranglehold on U.S. debt, the neocon dream of an imperial America bestriding the world as a military colossus looks less and less sustainable.

More and more Americans also are growing leery of other tradeoffs implicit in the neocon plan for an imperial system – the acceptance of an all-powerful Executive, the elimination of inalienable rights for individuals, and the eradication of the Republic as envisioned by the Founders.

Though given short shrift by the national U.S. news media, this grassroots pro-Republic sentiment is reflected in the surprising support for Rep. Ron Paul of Texas on the Republican side and the growing doubts about Sen. Clinton on the Democratic side.

As the United States heads into Election Year 2008, the neocons may need all their media clout for making their case and all their skills at exploiting the fears of Americans to ensure that one of their favored candidates again lands in the White House.

[For more on the rise of the neocons, see Robert Parry's last three books, Lost History; Secrecy & Privilege; and Neck Deep.]

Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Neck Deep: The Disastrous Presidency of George W. Bush, was written with two of his sons, Sam and Nat, and can be ordered at neckdeepbook.com. His two previous books, Secrecy & Privilege: The Rise of the Bush Dynasty from Watergate to Iraq and Lost History: Contras, Cocaine, the Press & 'Project Truth' are also available there. Or go to Amazon.com.

Grooming the next Ahmad Chalabi By Alan Weisman Richard Perle is again propping up regime-toppling Mideast dissidents who lack credibility.
For many Pakistanis, a state of economic emergency By Henry Chu Anger with President Musharraf has as much to do with the increasing cost of staples as it does with his recent crackdown on civil liberties.

6 Questions for Macgregor on Iraq and the “Surge” – Ken Silverstein, Harpers
The Failures of Lt. Gen. Sanchez – Jack Kelly, Real Clear Politics
Caution: Taliban Crossing? – Arthur Keller, New York Times
U.S. and Iran - Vallely and Gedrich, Washington Times
Iran: No Profit from New Cold War - Ali-Asghar Kazemi, Daily Star
An Opening in Annapolis – Washington Post editorial
Starting from Annapolis – New York Times editorial
Make Annapolis Work - Jerusalem Post editorial
After Annapolis – Boston Globe editorial
Annapolis Lays Ground for Progress – USA Today editorial
Handshakes and Empty Words at Annapolis – National Review editorial
Give Peace a Chance – The Australian editorial
Oasis or Mirage? – Thomas Freidman, New York Times
Another Piece Summit – Cal Thomas, Washington Times
How Annapolis Helps – David Ignatius, Washington Post
What's Plan B? - Daoud Kuttab, Daily Star
Mideast Policies – Harlan Ullman, Washington Times
Annapolis and History of Abject Failure – Gideon Rachman, Financial Times
Annapolis: The Cost of Failure – Henry Siegman, New York Review of Books
Annapolis: Madrid on Tranquilizers - Rami Khouri, Daily Star
Still Time for Mideast Peace – Aaron David Miller, Canberra Times
Knotty Issues at Annapolis – Helle Dale, Washington Times
Grooming the Next Ahmad Chalabi – Alan Weisman, Los Angeles Times
Saudi Arabia: Crime and Punishment - Schwartz and Al-Alawi, Weekly Standard
Ghosts of Rwanda – Michael Gerson, Washington Post
PRC – Taiwan: Peace through Confusion – Paul Greenberg, Washington Times
Venezuela Veers Towards Dictatorship – Los Angeles Times editorial
Venezuela: Comeback for Communism – Steve Chapman, Washington Times
Give Venezuela Credit - Angelo Rivero Santos, Los Angeles Times
Youth of Venezuela Rise Up – Christian Science Monitor editorial
Ensure Transparency in Terrorism Trials - Miami Herald editorial

Mideast Oasis or Mirage? - Thomas Friedman, New York Times
Republicans Need to Reunite Their Base - Howard Fineman, MSNBC
How Will Values Voters Vote? - Tony Blankley, Washington Times
A Bad Fight for Mitt Romney - Jennifer Rubin, New York Observer
Govern by Principle, Stand Up for Equality - Barack Obama, DM Register
Obama's Amnesia Problem - Peter Beinart, Washington Post
McCain's Electability Argument - Reid Wilson, RealClearPolitics
Huckabee is a Fiscal Conservative - Dick Morris, The Hill
As Center Shifts Left, Populism Revives - Michael Lind, Financial Times
The (Impossible) American Dream - Robert Samuelson, Newsweek
Pelosi's English-Only Showdown - John Fund, Wall Street Journal
Fate of the Know-Nothings - Jeff Jacoby, Boston Globe
Social Security: Five Myths and a Slur - Ruth Marcus, Washington Post
On Environment, the Free Market Does It Better - John Stossel, RCP
A Crime That Screams for Outrage and Action - Scot Lehigh, Boston Globe
Iraq Must Seize Opportunity - Anthony Cordesman, Financial Times
Al-Qaida's Emerging Defeat - Austin Bay, RealClearPolitics

Media Whiplash on Iraqby Monica CrowleyAfter years of pounding the war in Iraq as a failure, the New York Times is now tripping over themselves reporting 'happiness' in Iraq. So what's really going on?

The Iraqification of Afghanistan

Marie Cocco, Washington Post Writers Group

ForeignPolicy: As the disaster in Iraq continues, the forgotten country of Afghanistan is on the verge of becoming another widespread human rights disaster.


One in Ten Americans Went Hungry Last Year

Abid Aslam, IPS News

More than one in 10 people in the United States go hungry, according to government figures suggesting its food programs are falling short in the world's wealthiest country.


As Peace Conference Begins, Palestinians Fear Land-Grab in Progress

Fareed Taamallah, AlterNet

ForeignPolicy: Even while peace talks are underway, the illegal expansion of Israeli "settlements" will continue.

Who's Who of Presidential Campaign National Security Advisers

By James Gordon Meek


As a companion to the New York Daily News' three-month investigation into who is advising Democratic frontrunners Hillary Clinton and Barack Obama on counterterrorism, national security and foreign affairs, today we offer a complete list of the major presidential candidates' top wisemen on these important national issues.

The presidential campaigns of Democrat Christopher Dodd and Republican Fred Thompson would not disclose their advisers to the Daily News. But in the case of Thompson, our reporting yielded two names. There also are some security experts advising multiple candidates, such as National Security Network director Rand Beers, who are not included on the master list. A former career counterterrorism official at the National Security Council who worked on John Kerry's unsuccessful 2004 presidential bid, Beers told me he is counseling Democrats Joe Biden, Dodd, Clinton and Obama.

Read the full list at the Mouth of the Potomac Blog after the jump.

November 27, 2007 01:32 PM Link

How you helped build Pakistan's bomb
By Catherine Collins and Douglas Frantz

Globalization, what a concept. You can get a burger prepared your way practically anywhere in the world. The Nike Swoosh appears at elite athletic venues across the United States and on the skinny frames of T-shirted children playing in the streets of Kolkata. For those interested in buying an American automobile, a word of warning: it is not so unusual to find more "American content" in a Japanese car than one built by one of Detroit's Big Three.

So don't kid yourself about the Pakistani bomb. From burgers to
bombs, globalization has had an impact. Pakistan's nuclear arsenal - as many as 120 weapons - is no more Pakistani than your television set is Japanese. Or is that American? It was a concept developed in one country and, for the most part, built in another. Its creation was an example of globalization before the term was even coined.

A proliferation chain reaction
So where to begin? Some argue that Pakistan started down the nuclear road under president Dwight D Eisenhower's 1953 Atoms for Peace program, billed as a humanitarian gesture aimed at sharing the peaceful potential of atomic energy with the world. But Atoms for Peace was a misnomer - a plan to divert growing domestic and international concern over radioactive fallout from America's nuclear tests. It would prove to be a White House public relations campaign to dwarf all others.

In fact, Atoms for Peace educated thousands of scientists from around the world in nuclear science and then dispatched them home, where many later pursued secret weapons programs. Among them were Israelis, South Africans, Pakistanis and Indians.

Homi Sethna, chairman of the Indian Atomic Energy Commission, spelled out the program's impact after his country tested its first nuclear device in 1974. "I can say with confidence," he wrote, "that the initial [Atoms for Peace program] cooperation agreement itself has been the bedrock on which our nuclear program has been built".

If you think that India's program, in turn, did not inspire Pakistan's, think again.

Zulfikar Ali Bhutto, the late Pakistani prime minister and father of Benazir Bhutto, first talked publicly about nuclear weapons in the early 1960s when he was Pakistan's energy minister. In his 1967 autobiography, Bhutto wrote, "All wars of our age have become total wars ... and our plans should, therefore, include the nuclear deterrent." But Pakistan's generals rejected his ideas, arguing that the cost of producing a nuclear bomb would cut too deeply into spending on conventional weapons. It wasn't until after Bhutto became prime minister that he officially launched Pakistan's nuclear weapons program in 1972.

Consider here, yet another atomic beginning: Pakistan, a poor, backward country, with little indigenous technical or industrial infrastructure, made next to no progress on the nuclear front, despite Bhutto's enthusiasm, until the arrival of Abdul Qadeer Khan at the end of 1975.

The Indian-born Khan had fled his home in Bhopal in the 1950s to settle in the new state of Pakistan. There, he went to university, quickly becoming frustrated by the lack of opportunity. Study and advanced degrees in Europe followed until, finally, Khan found himself working at the Physics Dynamics Research Laboratory in Amsterdam in the spring of 1972.

At the time, powerful companies like Westinghouse and General Electric controlled the facilities that provided enriched uranium to civilian reactors throughout the Western world. In 1971, in an effort to protect the fledgling US commercial nuclear industry, president Richard Nixon had ordered that the closely guarded enrichment technology not be shared with any other country, not even allies.

That led other nations to begin developing their own enrichment technology to ensure continual access to an adequate fuel supply. The lab where Khan was employed, known by its Dutch initials FDO, was the in-house research facility for a Dutch conglomerate that worked closely with Urenco, a consortium formed by the governments of Britain, West Germany and the Netherlands to design and manufacture centrifuges.

To cut right to the chase, Khan, who was able to work at the lab without serious scrutiny from the Dutch security police, found that he had easy access to the latest uranium-enrichment technology. Within three years, he had left the lab - in possession of plans for Europe's most advanced centrifuge and a shopping list of relevant equipment manufacturers, experts for hire, and sources for the necessary raw materials to enrich uranium for a nuclear bomb, all scattered across the globe.

Before leaving the lab, Khan wrote to prime minister Bhutto offering his services, and he returned to Pakistan to launch that country's own uranium-enrichment laboratory.

FDO was just the start of Khan's reliance on the outside world for bomb-making help. With the support of Pakistani scientists and military officers working undercover as "diplomats" at the country's missions around the world, he set up what became known as "the Pakistani pipeline", securing high-tech equipment from literally hundreds of companies in 20 or more countries.

While some of this is well known, a series of little-publicized letters between Khan and a Canadian-Pakistani engineer, Aziz Abdul Khan, in 1978 and 1979 offer a revealing look at the degree to which globalization shaped Pakistan's nuclear program. The so-called Islamic bomb turns out not to be an indigenous product, but instead a little bit American, Canadian, Swiss, German, Dutch, British, Japanese and even Russian.

Aziz Khan was one of dozens of Pakistani scientists living abroad whom Khan tried to recruit for what he described as a "project of national importance". According to the letters between them, while Aziz Khan declined the offer, he agreed to provide A Q Khan with scientific literature and to spend his vacations at A Q Khan's laboratory outside Islamabad, training and mentoring young engineers.

We obtained the letters - which cover the comings and goings of nuclear experts from nine different countries - from an American government official, who, in turn, received them from Canadian law-enforcement officers after they were taken from Aziz Khan following his arrest in Montreal in 1980.

These exchanges provide a rare behind-the-scenes glimpse into Khan's nuclear Wal-Mart in its infancy, long before he began peddling his finished wares to Iran, North Korea and Libya. After a decade of diplomatic rhetoric about the need to stop the spread of nuclear technology, they also offer a window into the neffectiveness of American and European export controls. By setting these letters - often colorfully translated from Urdu by the Canadian authorities - against the backdrop of the news coverage of the time, you can see just how disturbingly international the assistance was that Khan received.

Buying 'ducks' from Russia
It was an exciting time for Pakistan's fledgling nuclear program. On June 4, 1978, A Q Khan wrote to Aziz Khan, describing early tests of his centrifuge designs, referring to the process of substituting helium for uranium gas as putting "air in the machine".

"June 4 is a historical day for us. On that day we put 'air' in the machine and the first time we got the right product and its efficiency was the same as the theoretical ... As you have seen, my team consists of crazy people. They do not care if it is day or night. They go after it with all their might. The bellows have arrived and like this we can increase the speed of our work."

Khan's international nuclear shopping spree was soon on display as he wrote proudly to his Canadian friend just a week later to recount the trip made by a member of his clandestine procurement network to Japan to obtain some critical, though unexplained help. "Colonel Majeed is back from Japan and thanks God all the problems have been solved. Next month the Japanese would come here and all the work would be done under their supervision."

The following month, he wrote Aziz Khan about one of his Pakistani proteges: "Dr Mirza is back from America. He had gone to get the training for the control room of the air-conditioning plant." In the same letter, he announced that "the plant of Switzerland has arrived", probably a reference to a specialized pumping system to move uranium gas in and out of the centrifuges during enrichment.

In August, the scientist told Aziz Khan that Colonel Majeed was on the road again, "leaving for Germany, England and Switzerland. He would be looking for cable and sub panels. Our friend from Kuwait will join us in November and in this way we will not have to worry about generators and emergency power supply. He has 15 years' experience." Within weeks, Khan wrote enthusiastically that "a German team was here. After staying five days, they went back. It was quite a busy time."

A Q Khan was also in the hunt himself. Mentioning that he had sent a cable to California, he wrote in the autumn of 1978, "If our two units are ready, then myself and Dr Mirza would come for thanks and maybe we could meet you." The "two units" was probably a reference to two huge air-conditioners that Khan bought from an unidentified US company.

In the spring of 1979, Khan would explain: "Dr Alam, Dr Hashmi and myself are going to Germany and Switzerland for two or three days. We have to buy some material there and then we will return through London."

Khan's project was seen abroad as a potentially profitable market, and the Russians, too, were rushing to sell their wares. Using a primitive code, Khan wrote: "Hopefully, in winter there will be ducks from Russia. This is a big job. Now the emergency generators are going to be installed very soon."

But all was not perfect. During the summer of 1978, a British member of Parliament asked why a British subsidiary of the American Emerson Electric Co was selling Pakistan the same high frequency inverter that Britain was using in its own uranium-enrichment project - and by the autumn, shipments to Pakistan had been stopped. Khan complained that a German supplier had tipped the British off when he did not get the nod on a business deal.

"That man from the German team was unethical. When he did not get the order from us, he wrote a letter to a Labour Party member and questions were asked in Parliament. Work is still progressing satisfactorily but the frustration is increasing. It is just like a man who waited for 30 years but cannot wait for a few hours after the marriage ceremony."

By the spring of the following year, Khan's team was feeling the strain. He once again wrote Aziz Khan about his troubles in a clumsy code: "For such a long time, no one has taken a single day's holiday. Everybody is working very hard so that by the end of the year, the factory should start working and should start providing cake and bread. Here there is shortage of food and we need those things very badly. From everywhere our food is being stopped."

Khan's success in obtaining nuclear material abroad did not go unnoticed. American intelligence watched his procurement operation and US officials occasionally complained in public, prompting Aziz Khan to write in June 1979: "There is no doubt that you guys made people here sleepless ... These days you are famous all over the world."

In August of 1979, still struggling, Khan wrote his friend of a deal that he could not consummate in Canada, probably a reference to difficulties in obtaining a specialized type of inverter essential to operating the uranium enrichment plant.

"You must be reading that your countrymen have decided to drink our blood. The way they are after us, it looks as if we have killed their mother. Their building of castles in the air has beaten the Arabian Nights. There is lots of pressure, but I have trust in God in doing my work. I am thinking, if I finish this job, then I would solve the purpose of my life."

Khan did indeed overcome the obstacles - with plenty of help from his friends around the world. And he had learned his lesson well. When he was finished helping Pakistan build its bomb, he turned his talents to another kind of globalization - marketing his wares, and those of his associates from Europe, Asia and South Africa, to a new set of clients.

Douglas Frantz, the former managing editor of the Los Angeles Times and a two-time Pulitzer Prize finalist, is a senior writer at Conde Nast Portfolio. Catherine Collins, a former Chicago Tribune reporter, is now a Washington-based writer. They are co-authors of The Nuclear Jihadist: The True Story of the Man Who Sold the World's Most Dangerous Secrets ... and How We Could Have Stopped Him (Twelve, 2007).

(Copyright 2007 Catherine Collins and Douglas Frantz.)

(Used by permission Tomdispatch)

Selling the US by the dollar
The US$7.5 billion that the Abu Dhabi Investment Authority is paying to buy a 4.9% stake in Citigroup begins the process of selling off America's remarkably innovative and profitable financial system. The country will now be paying a rent, in the form of the profits accruing to Abu Dhabi and the other foreign buyers that must surely follow its lead, equal to what it once collected for itself. - Julian Delasantellis (Nov 28, '07)

White House squabble on releasing Iranians
A behind-the-scenes row in the George W Bush administration played a part in the decision to release nine Iranian prisoners. Vice President Dick Cheney and General David Petraeus, US commander in Iraq, took a hit, but administration hardliners continue to oppose any further move to reduce tensions with Iran. - Gareth Porter (Nov 28, '07)

Hong Kong and the hookah
of Islamic investment
The launch of the Hang Seng Islamic China Index Fund marks Hong Kong's entry into the world of Islamic banking. The benefits of tapping into the billions of dollars of oil revenues that are flowing into the Muslim world could be huge. But the city still lags rivals in embracing the followers of the Koran. - Kent Ewing

PATHOLOGY OF DEBT
PART 3: The credit guns
of August
A profit warning in February by HSBC Holdings, which was directly exposed to the US subprime mortgage market, gave an early indication of the scale of the funding difficulties starting to confront lenders. But it was not until August that the rescue of a smaller German bank highlighted the global aspect of the crisis engulfing money markets. - Henry C K Liu
This is the third part of a five-part analysis.

PART 1: Banks as vulture investors

PART 2: Commercial paper
and pesky SIVs

THE ROVING EYE
'Our' dictator gets away with it
The embrace of President George W Bush and President General Pervez Musharraf endures. Pakistan and its people caught in the middle are left to watch their country burn, and contemplate the worst-case scenario of partition. - Pepe Escobar (Nov 27, '07)

Bush’s Twenty-Billion Dollar Arms Sale to Saudi Arabia
The Zionist Power Configuration Defeats Big Oil, the Military Industrial Complex, the White House and the Pentagon

by James Petras / November 28th, 2007

The debate on which forces determine US Middle East policy has cut across the usual political spectrum: On one side most neo-conservative and progressive writers, academics and journalists argue that the military-industrial complex and Big Oil interests are the most influential forces shaping US policy. On the other, a small group of conservative and leftist writers and a few academics have identified what some call the Israel or Zionist Lobby and others refer to the Zionist Power Configuration (ZPC) as the prevailing influence in deciding US strategic policies in the Middle East. (Full article …)

“A” is for Apartheid or Annapolis
by Susan Abulhawa / November 28th, 2007

In the 80s, we gave up 78% of our homeland to try to pick up the pieces of our lives on the remaining 22% of Palestine. This was, and remains, the only true (brave or otherwise) concession ever made in the so-called ‘Middle East Conflict.” Next came Camp David, then Madrid, then Oslo, then another Camp David, Taba, Wye, (deep breath) Sharm el Sheikh, the Disengagement, the Road Map. Through it all, Israel continued to divide, carve out, confiscate and settle that 22%. They scattered us into a diaspora, shut down our schools, bombed damn near every inch of the West Bank and Gaza, herded us into ghettos, set up checkpoints all around us and employed every tool of imperialism, times ten, to get rid of or subjugate us as a cheap labor force. (Full article …)

Hornberger’s Blog
Wednesday, November 28, 2007

The Feds, Not Wyatt, Should Be Going to Jail
by Jacob G. Hornberger

Federal prosecutors are undoubtedly celebrating the one-year sentence doled out to 83-year-old Houston oilman Oscar Wyatt by a federal district judge. Wyatt committed the heinous federal “crime” of violating the federal government’s infamous “oil-for-food” program by paying a $200,000 bribe to Saddam Hussein’s regime in exchange for the purchase of Iraqi oil under the program.

Never mind that the feds were providing aid to Saddam during the 1980s in the form of weapons of mass destruction to help him kill Iranians. Never mind that the feds provided aid to the Shah of Iran to help him torture and brutalize the Iranian people. Never mind that the feds funnel billions of dollars in U.S. taxpayer money into the coffers of the Pervez Musharraf regime, one of the world’s most brutal and corrupt dictatorial regimes. Never mind that the feds provide millions of dollars in drug-war money to corrupt dictatorial regimes in Latin America.

The lesson here is a simple one: The feds, not American businessmen, will decide which dictatorial regimes will be supported with cash and which ones will not be supported. Wyatt’s “crime” was putting private money into the coffers of a dictator who had once been in favor with the feds but who had now fallen out of favor.

The “oil-for-food” program was the socialist program that the feds came up with in response to growing outrage in the world over what the brutal sanctions were doing to the Iraqi people, especially Iraqi children. The best estimates are that the sanctions contributed to the deaths of hundreds of thousands of Iraqi children. The federal attitude toward those deaths was perfectly reflected in the words of UN Ambassador Madeleine Albright, who told “Sixty Minutes” that, yes, the deaths of half-a-million Iraqi children from the sanctions were “worth it.” What she meant by “it” was the attempt to oust Saddam Hussein from power and replace him with a U.S.-approved stooge, such as Chalabi or Allawi, which of course was the real goal of President Bush’s invasion and occupation of Iraq, after the sanctions had failed to achieve the desired regime change.

As the brutal sanctions continued taking their toll on the Iraqi children and on Iraqi life, without any real effect on Saddam’s grip on power, U.S. officials steadfastly refused to lift the sanctions. Instead, they came up with their infamous “oil-for-food” program, which was just another standard Washington, D.C., central-planning (i.e., socialist) program designed to make it look that the feds were “doing something” for the Iraqi people. In fact, the program became a great big bureaucratic game for D.C. officials. For the best description of the brutal gamesmanship that the feds engaged in, read “Cool War” by Joy Gordon.

It shouldn’t surprise anyone that when you set up a socialist/interventionist program, the opportunity arises for bribery, extortion, and blackmail. That, in fact, is why governments riddle their economic systems with thousands of rules and regulations.

It also shouldn’t surprise anyone that the Saddam Hussein regime would seek bribes from such a program. That’s the way dictatorial regimes operate. Does anyone really think that Gen. Musharraf and his military goons are not squirreling away some money out of those billions of U.S. taxpayer dollars that President Bush has funneled into the country? Does anyone really think that the Latin American regimes that received millions of dollars in U.S. taxpayer money, such as Columbia and Mexico, don’t put some of that money into the private bank accounts of government officials? Does anyone really think that the billions of dollars that the feds shipped into Iraq to “rebuild” the country and that are now accounted for weren’t used for bribes? Heck, while we’re on the subject of bribes, should we just ignore all those federal grants that incumbent politicians and bureaucrats offer voters at election time?

No doubt the federal prosecutors in the Wyatt case were filled with self-righteous indignation over what a bad person Wyatt is in paying the bribe. Never mind that the federal judge who sentenced him was flooded with so many letters praising Wyatt and the exemplary life he has led that he actually gave him a sentence lower than the minimum provided by official sentencing guidelines.

For his part, Wyatt expressed deep remorse over his conduct and even broke down into tears, which is what the feds love to see. Too bad Wyatt didn’t instead say, “Judge, the feds had no right to brutalize Iraqi children with their sanctions, and the oil-for-food program was just a federal scam and sham to cover up the deadly effect of the sanctions. As a businessman, my job is to make a profit by satisfying consumers with a product they need and want. The surcharge that the Iraqi regime was charging me and other oil companies arose as a direct consequence of the oil-for-food program. It was just one more cost of doing business, a cost that arose as a direct consequence of federal meddling in the Middle East. Anyway, what’s the difference between my putting money into the pockets of foreign dictators and the foreign aid that the feds put into the pockets of foreign dictators, except that my money is my own and the money that the feds use has been taken from American taxpayers? It’s the feds, not me, who deserve to be here in the dock for the holocaust they have brought to Iraq, a holocaust that has killed hundreds of thousands of Iraqi people, including Iraqi children, not to mention the destruction of the entire country.”

Mr. Hornberger is founder and president of The Future of Freedom Foundation.

MIDDLE EAST: Slim chances for post-Annapolis talks

President George Bush is meeting Israeli Prime Minister Ehud Olmert and Palestinian National Authority President Mahmoud Abbas today both separately and together to launch the peace negotiations inaugurated at yesterday's Annapolis conference. At the conference, Olmert and Abbas committed themselves to a negotiating process designed to yield a peace treaty by the end of 2008. If, contrary to expectations, the negotiating process does make significant progress in the coming months, it will run up against major political challenges. These include the ability of Abbas and Olmert to sell concessions domestically, assuming they are both still in power, and the necessity to bring Hamas and Gaza into the frame.

Ideology Was Bush's Undoing 11/27/07

U.S. and Iraq Agree on Long-Term Relations
The White House reached a formal agreement Monday with the Iraqi government on long-term relations between the two nations. The pact does not specify, however, the eventual number of American troops nor the length of their deployment. Cato scholar Ted Galen Carpenter has argued "The notion that Iraq would become a stable, united, secular democracy and be the model for a new Middle East was always an illusion. We should not ask more Americans to die for that illusion."

• Cato research on Iraq

f Iran’s Revolutionary Guards Strike Back: The Case of Iraq


Nov. 26, 2007 - By Hussain Mousavi (from Terrorism Monitor, November 26) - The recent move by the U.S. government to designate Iran’s most powerful military unit, the Islamic Revolutionary Guard Corps (IRGC), as a terrorist organization reflects a tougher U.S. stance towards Tehran in response to its controversial nuclear program and military reach in the Middle East. Though largely aimed at weakening the IRGC’s global business operations and financial network, the new sanctions are the most aggressive form of U.S. policy in confronting Iran’s growing influence in Iraq, where U.S. military officials accuse the Guard of supplying weapons and military expertise to Shiite militias (AP, September 24). With the IRGC as the first national military organization sanctioned by the United States, Washington and Tehran have now moved another step closer to a possible military showdown. In light of the unfolding crisis, it remains unclear what could happen in a military conflict between Iran and the United States. A basic scenario involves a comprehensive U.S. attack on Iran’s nuclear facilities, naval forces, information and technology support system (especially those linked to nuclear sites in Bushehr, Isfahan and Tehran) and finally the bombing of IRGC ground force units stationed near the strategic cities of Abadan, Ahvaz, Chah Bahar, Dezful, Hamadan, Khoramshahr and Mashahd. The United States, possibly with the help of Israel, could help stave off Iranian retaliation by destroying Iran’s command air base where Iranian fighter jets are kept on daily readiness against potential attacks by American forces.

Wednesday, November 28, 2007 Al Qaeda's Propaganda
Press reports indicate that a new tape from Osama bin Laden is about to be released. This account from Adnkronos International (AKI) provides an interesting detail about how the video will be distributed:

A new al-Qaeda video containing Osama Bin Laden's latest message "must be posted to Western websites," the terror network's media arm as-Sahab has ordered cyber jihadists.

"You must spread the new message from Sheikh Osama bin Laden in every way, especially via Western websites," said As-Sahab, which produces al-Qaeda's videos and audiotapes.

In a web message announcing the imminent posting of bin Laden's new message, entitled "To the European people", As-Sahab also gives instructions on how best to distribute the new video.

"Any means of distributing the video should be used in order to get the truth across to them about their war which they are losing and reveal to them the reality which they ignore," said As-Sahab. …

That is, al Qaeda is giving explicit orders for how its propaganda should be spread. But we shouldn’t accept any part of it at face value.

This seems obvious enough, but still many commentators and analysts are citing al Qaeda’s propaganda as if it says something meaningful about our nation. This is especially true when it comes to our foreign policy. How many times in the wake of the September 11 attacks and the conflicts that followed were we told by pundits that America’s foreign policy was to blame? This school of “thought” is propounded by people like former CIA analyst Michael Scheuer, who reads bin Laden’s statements and takes at face value polling done in the Middle East (while ignoring that Arab regimes pump out propaganda of their own on a daily basis to demonize America and America’s “policies,” thereby shaping public opinion) and <a href="http://www.harpers.org/archive/2006/08/sb-seven-michael-scheuer-1156277744" target="_blank">concludes: “We need to acknowledge that we are at war, not because of who we are, but because of what we do. We are confronting a jihad that is inspired by the tangible and visible impact of our policies.”

Al Qaeda is happy to play along. For more than a decade now, bin Laden has repeatedly pointed out our supposed flaws and that his terror is really all our fault. I am sure the latest tape will have a healthy dose of this rhetoric as well as the usual conspiratorial nonsense. (Remember, for example, that bin Laden told us back in September how President Kennedy was assassinated because he wanted to end the Vietnam war and this “angered the owners of the major corporations who were benefiting from its continuation.”)

But while bin Laden and al Qaeda say one thing to us, they say something entirely different in their missives to Muslims. This is the essential lesson of Raymond Ibrahim’s excellent book, The Al Qaeda Reader. Three key paragraphs from Ibrahim’s Foreword explain this difference:



Continue reading "Al Qaeda's Propaganda" »

The Soldier and the Student
by Aaron Glantz, The Nation
Today's military education benefit is not your grandfather's GI Bill.

Consumerism Killing Democracy
by Terrence McNally, AlterNet
Americans want low prices, but oppose the corporate behaviors that make them possible.

End of the Middle Class
by Peter Stern, The Baltimore Chronicle
Our middle class is as much an endangered species as the spotted owl.

WHAT'S LATIN AMERICA WORTH? (The Miami Herald) By Carlos Alberto Montaner

13 November 2007


There's an old saying that children come to the world with a loaf of bread under an arm. It's the other way around. Every creature who opens his eyes, in any society in the world, immediately receives a virtual gift. Potentially, a certain amount of accumulated capital awaits him. What does that capital amount to? Naturally, it depends on the country.


The World Bank has dared to quantify it, utilizing a team of fine economists who researched 120 countries. They called their report ''Where Is the Wealth of Nations?'' It is worth reading.

According to the study -- and the premise is persuasive -- wealth comprises three key elements: the natural capital (forests, minerals, aquifers, fertile land, etc.), the produced capital (factories, industrial and urban infrastructure, services, machines, etc.) and the intangible capital (education, quality of the institutions, the rule of law, transparency, stability, beliefs and attitudes, etc.)

Of those three factors, the decisive one is the intangible capital, the equivalent of four-fifths of the total capital. Why? Because it allows the conversion of natural wealth into created wealth. An oil well is worthless if managed by a group of incompetent people in a chaotic society.

A potentially wealthy country with a huge natural capital, such as Venezuela, nevertheless is home to a poor society, because its intangible capital is minimal and is gradually reduced by every stupidity committed by its rulers.

The nation that has accumulated the most capital per capita in the world is Switzerland with $648,241. The poorest is Ethiopia, with only $1,965.

Switzerland is followed by Denmark ($575,138), Sweden ($513,424), the United States ($512,612) and Germany ($496,447).

Nine of the world's 10 most miserable nations are African.

Accumulated percapita wealth in Latin America is most notable in the southern cone: Argentina ($139,932), Uruguay ($118,463), Brazil ($86,922) and Chile ($77,726). (In Paraguay, however, it drops to $35,600). But although these countries -- with the exception of Paraguay -- are the wealthiest in Latin America, they're barely one half of what Spain is worth per capita: $261,205.

The Andean strip is even poorer: Venezuela, $45,196 (three times less than Argentina, a fact that fails to explain why President Hugo Chávez bought $5 billion worth of Argentine debt bonds to help its mismanaged neighbor); Colombia, $44,660; Peru, $39,046; Ecuador, $33,745, and Bolivia, the poorest country in South America, barely $18,141. That figure casts doubt on Evo Morales' assertion that in a decade (or did he say two?) his country would be at the level of Switzerland.

Three Mesoamerican countries have a level of wealth that's higher than the Andean region but lower than the southern cone: Mexico ($61,872), Costa Rica ($61,611) and Panama ($57,663). But the other Central American countries are remarkably poor: Guatemala ($30,480), Nicaragua ($13,214) and Honduras ($11,567).

In the Caribbean, the Dominican Republic ($33,410), although a nation with little accumulated per-capita capital, holds four times the wealth of Haiti ($8,235), the Western Hemisphere's failed country. That relationship guarantees a constant illegal migratory flow from the most wretched corner of the island to the most buoyant.

In general, when comparing the economic fate of the territories colonized by Britain -- other than the United States and Canada -- with the situation in countries with a Spanish tradition, we find that the economic results are somewhat better on the British side. Barbados, with $146,737 of accumulated capital per capita, surpasses Argentina, the most developed country in Spanish America, while almost all the British-background islands are wealthier than the independent, Spanish-speaking Antilles (Cuba and the Dominican Republic, inasmuch as Puerto Rico is a U.S. commonwealth.)

Although Cuba does not appear on the study, because of the scant reliability of its statistical data and the paranoid secrecy of its government, it is believed that its accumulated capital today is smaller than its counterparts in the Dominican Republic and Jamaica ($47,796).

From the World Bank study we also derive some valuable lessons: the value of savings, the role of investment in education, the importance of plugging into the great commercial and financial circuits and the imperative need to strengthen institutions and property rights if we want to advance in the direction of progress.

Nothing this study says can surprise us, other than the elegant and well-reasoned manner in which it documents its arguments and confirms the intuition of giants like Adam Smith. In 1776, this brilliant Scot, an observer and moralist, wrote his memorable An Inquiry into the Nature and Causes of the Wealth of Nations. The World Bank has finally attached numbers to it.