Tuesday, March 25, 2008

Interview - Rape in the Congo

Interview with Lisa F. Jackson, Producer & Director of the documentary film "The Greatest Silence: Rape in the Congo"

Mosaic News - 3/24/08: World News from the Middle East

When America Can’t Handle the Truth

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By Pierre Tristam

The word, attributed to the late writer Saul Bellow, is “angelization” — willfully putting someone beyond blame. Angelizing America is the common tongue of all national politicians, the oath candidates implicitly take when running for president. It’s what the most sentimental people on Earth expect. It’s what enables a country that committed its share of atrocities in the past and is committing more than its share of moral degradations today to look itself in the mirror and see something exceptional looking back, rather than just another empire trampling down its march of folly, as the great historian Barbara Tuchman called it. Angelizing America is the unspoken, self-evident pledge of allegiance. Someone didn’t tell the Obamas.

First, there was Michelle Obama: “For the first time in my adult life, I am really proud of my country. Not just because Barack is doing well, but I think people are hungry for change.”

Then there was Barack Obama’s spiritual adviser, the fascinating Jeremiah Wright — not the outright lies about Wright’s black separatism, which is bunk (although to most classically illiberal whites any black who adopts the fervor of Emersonian self-sufficiency is suddenly a separatist), but this, from a 2003 sermon: “The government gives (blacks) the drugs, builds bigger prisons, passes a three-strike law and then wants us to sing ‘God Bless America.’ No, no, no, God damn America, that’s in the Bible for killing innocent people. God damn America for treating our citizens as less than human. God damn America for as long as she acts like she is God and she is supreme.”

Then there was Obama himself, insolently ripping the halo off the romanticized iconography of race in America and returning the matter to the reality of a job undone. That he did so in a 37-minute speech more powerfully essential than anything the incumbent nullity has managed in seven years was bound to inflame those commentators — Shelby Steele, William Kristol, Kathleen Parker, any lips that move at the Fox network — who’ve been outdoing themselves to dig up hollowness at Obama’s core. What they’re digging up instead is his disarming arsenal, an ability to face up to national blights without, like Wright, stopping at the diagnosis.

Obama offers a path to conciliation. The path begins with a willfulness exactly opposite angelization. It begins more along the lines of where a truth commission might begin. That’s Obama’s problem. It’s doubtful whether this country can, in its lethargy for social justice at home and its trances for wars abroad, handle the truth.

Nothing in what Michelle Obama or Wright said was inaccurate or unfamiliar. But it had rarely been heard in more pale-faced circles unfiltered by the media’s angelizing translators, or so intimately attached to a man who could be elected to do something about it. His critics have been reduced to the odd position of defending an America that systematically enslaved a whole race for 300 years then terrorized, dehumanized and repressed it for another hundred because, as Parker wrote last week, “our progress since the twin blights of slavery and Jim Crow isn’t insignificant.” Insignificant? No. But the double-negative leaves that other elephant hanging, the significant progress that could rightly have been expected of the most self-congratulatory country on Earth, the kind of progress that should by now have made the sex and race of a candidate for the White House a nonissue, but instead keeps it the issue of this campaign even as the opposition has managed to field nothing more pulsing than the Arizonan equivalent of Leonid Brezhnev.

Pride in the United States? In these circumstances? Assume that dreamy racial progress the neo-Confederates are celebrating. It’s still not the country most of us knew even 35 years ago, when a proven anti-Semite and pathological liar occupied the White House and nearly got away with his crimes. But he didn’t. The one in there now gets away with it every day: Torture. Extraordinary rendition. Secret prisons. Guantanamo. Domestic spying. Two wars. Abu Ghraib. Haditha. Deaths by the tens of thousands.

Terrorism undermines morality, certainly. A president, however, ought to reinforce it. Not this one. He undermines it more than terrorism could. And that’s without touching on his domestic devolutions — his Taliban-like ban on embryonic stem-cell funding, his daily prayers to Darwinian economics, his devotional tributes to God, gut and graft. Of course, there’s pride in the possibilities of a morally just renewal. That’s also the point of America, isn’t it? A point not yet defeated, a point possibly, hopefully resurgent: truth without angelizing. Precisely, the point Obama was trying to make in his Philadelphia speech, to the furious despair of his detractors who are watching him turn the tables on them and hearing him say the words, without him needing to say them: These colors don’t run.

America’s Ruling Clique

By Charles Sullivan

Neoconservatives derive much of their political strength from the portrayal of big government as the enemy of the people: a belief that plays only too well in America. Big government is indeed the enemy of the people when it does not serve the people’s interests, or when it betrays them.

Where the neoconservatives and the chicken hawks have been spectacularly successful is in the field of perception management. The super rich—or the ruling clique—constitutes no more than 0.1 percent of the US population. Yet they control the mainstream media, every branch government, the electoral process and the country’s major financial institutions.

Thus, 99.9 percent of the people are being manipulated and cannibalized by a tiny but powerful minority. It is the interests of this powerful minority that are served by government and it is their interests that are defined as the national interest or as national security; and it is hardly benign. Robbing the poor to pay the rich causes irreparable harm to the victim.

There is a continual conflict between the super rich and the remaining 99.9 percent of the people in this nation. Not only is democracy subverted when a tiny minority rules over a large majority, the majority is diminished and betrayed, and social and economic servitude is instituted. The relationship is not only adversarial; it is fundamentally unequal and unjust. You have a situation where a large majority suffers all of the hardships and makes all of the sacrifices but the small minority reaps the reward, without incurring any risk themselves. One should never call this intolerable and immoral situation a democracy.

Through subversion, coercion, and intense perception management the ownership class always gets what it wants, and almost always at the expense of the working class. We pay the price and someone else reaps the financial reward.

Consider, for example, the invasion and occupation of Iraq by the United States military and who has benefited financially. The military, comprised almost entirely of working class women and men, is being used to secure Iraq’s nationalized oil fields and turning them over to private firms and foreign investors. Those firms have profited from the theft of Iraqi oil by the United States armed forces without running any risks themselves.

The armed forces ran the risks for them, and turned the profits over to private oil companies who subsequently realized record profits. The entire country has been similarly privatized by a host of corporate predators. War is a form of corporate welfare cloaked in patriotic language. One need only follow the money to understand what it is really about.

Similarly, George Bush is not fighting a war against terrorism as he purports: he is committing unconscionable acts of terrorism against innocent people, and his cohorts in congress are providing him the funds to do so. It is not Islamic terrorists that are spying on law-abiding citizens and intercepting their emails or tapping their phone lines; it is the United States government, authorized by Bush.

The president behaves like a fascist dictator because he is a fascist dictator representing the interests of the ruling clique, while masquerading as a protectorate of the people and the national interest. Never lose sight of the fact that Bush is an emissary for the ruling class to which he belongs and it is on their behalf that he is acting, not ours.

Consider also the fact that thousands of no bid contracts were awarded to private corporations with connections to the Bush White House—such as Halliburton, Bechtel, and Blackwater during the occupation of Iraq. Thus, it is evident that terms such as free trade and free markets are not only misleading, they are disingenuous and fraudulent.

Not only is the ruling clique stealing the wealth of other nations through overt militarism, they are simultaneously bankrupting our nation’s economy. Their intent is to privatize government in hopes of changing it from a service oriented entity into a for profit body. Their goal is to eliminate all social spending in order to further facilitate the ruling clique’s personal wealth creation, and to finance future military invasions; to impose capitalism on the world by means of brute force and coercion.

If they are successful, those with enough money to buy services that are now provided by the government will continue to enjoy those services. Those who cannot afford to pay: the poor, the elderly, the sick or injured, the unemployed and uneducated, will just have to suffer and die. They will be forced to subsist on whatever they can beg, barrow, or steal and slip into the realm of non-persons. It is worth noting that the infrastructure for delivering those goods and services were created with public funds. As always, we are talking about socializing costs and privatizing profits.

Paradoxically, neoconservatives and their media cohorts have succeeded in persuading working class people of modest incomes, conservative and liberal alike, into supporting a wide range of policies that are detrimental to their class, especially those with the lowest incomes.

That is the role that neoconservative icons like Rush Limbaugh plays in the corporate propaganda apparatus. While actually part of the ruling clique, Limbaugh has persuaded his followers that he and his economic brethren are on their side. In reality, Limbaugh and his class are preying upon the fears and prejudices of his followers while accruing tremendous personal wealth from their support, much like George Bush. Such is the power of disinformation, fear, and propaganda.

Limbaugh’s mindless blathering is like the kiss of Judas. He and his kind are impervious to scientific fact and without empathy for the people they so ruthlessly exploit.

Leaving no economic stone unturned, the ruling clique is even privatizing the military. The average soldier assigned the rank of private first class receives a yearly salary of about $40,000; whereas a mercenary working for Blackwater—a private defense contractor—doing the same job in the same place, earns about $400,000. The mercenary soldier costs tax payers ten times more than the government soldier for the same services and is not accountable to anyone.

The privatization of the military began under former Secretary of Defense, Donald Rumsfeld, and it continues to this day. Private contractors have such close ties with government these days that it is difficult to tell where the private sector ends and government begins. There are revolving doors that continuously sweep corporate executives into government and government officials into corporate board rooms. That is how fortunes are made in Washington: through crony capitalism and theft.

Rumsfeld, a man who sanctions torture, has long deified Milton Friedman, of the Chicago School of Economics; and it is Friedman’s economic and social theories that are being put into practice. Lest anyone think that the disciples of capitalism are limited to the neocons, they aren’t. Every contending presidential candidate is a Friedman disciple. The president, his entire cabinet, and virtually every member of congress are disciples of Milton Friedman; and that is why voting does not often significantly change policies: the ideology behind them remains the same, regardless of who is in power.

That is where this country is heading but most Americans are sitting on their hands and allowing it to happen. The people need to know what is being done to them and who is responsible. We the people must organize and mobilize to protect ourselves from the ruling cabal or we will be forever cannibalized by them.

Like it or not, we are all in this together and long term survival will depend upon our ability to organize and to cooperate with one another. It will require long term economic boycotts, strikes, work slow downs, dramatically curtailed consumption, civil disobedience, sustained protests, self-education and personal sacrifice. The key is to get organized as quickly as possible.

The Coming War on Venezuela

Go to Original
By George Ciccariello-Maher

More than a year ago, I attended the official book release for the Venezuelan edition of Eva Golinger's Bush Versus Chávez, published by Monte Avila, and the book had previously been printed in Cuba by Editorial José Martí. I recount this to make the following point: long before the publication of Bush Versus Chávez in the current English-language edition, the book was already a crucial contribution to international debates regarding United States' efforts to destroy Venezuela's Bolivarian Revolution.

In choosing to publish the English edition of the book, Monthly Review Press has opened that debate to an entirely new audience, and for this we should be grateful. Furthermore, in an effort to streamline production, Monthly Review has further made the appendices to Bush Versus Chávez, largely composed of declassified or leaked documents, available publicly on its website, at the address: http://monthlyreview.org/bushvchavez.htm.

A New Toolbox

Golinger, a U.S.-born lawyer who has recently taken up full-time residence in Venezuela (and Venezuelan citizenship), first shot to prominence with her 2005 book The Chávez Code: Cracking U.S. Intervention in Venezuela. There, Golinger drew on a multitude of documents requested via the Freedom Of Information Act (FOIA) to thoroughly and convincingly document the role of the U.S. government in funding and sponsoring those Venezuelan opposition groups that participated in the undemocratic and illegal overthrow of Chávez in April 2002, most of which also signed the interim government's Carmona Decree which dissolved all constitutionally-sanctioned branches of Venezuelan power. All this against Condoleezza Rice's recent claim, patently preposterous, that "we've always had a good relationship with Venezuela."

In Bush Versus Chávez, Golinger continues this diabolical narrative, this time relying less on FOIA requests than on a series of other key documents and bits of testimony gleaned from anonymous sources. After the failed 2002 coup, Golinger documents how the United States changed its tack slightly, drawing upon the variety of experiences gained in the military overthrow of Salvador Allende in Chile and the electoral overthrow of the Nicaraguan Sandinistas. While it would be easy to say that this represented a "Nicaraguanization" of U.S. policy in the aftermath of the botched coup, in reality this new policy draws equally heavily on the many other elements that constituted the multifaceted war against Allende, and hence the thesis of the "Chileanization" of Venezuela remains all-too-relevant.

The key institutional devices deployed by the U.S. in its covert support for the coup remained the same in its aftermath: the neoconservative National Endowment for Democracy (NED) and the U.S. Agency for International Development (USAID), both convenient mechanisms for bypassing Congressional oversight. What was new on this front, as Golinger demonstrates, was the establishment by USAID in the months following the coup of a sinister-sounding Office of Transition Affairs (OTI). Both the NED and USAID (via the OTI) immediately began to shift strategies, providing covert support for the opposition-led bosses lockout of the oil industry which crippled the Venezuelan economy for two months in late 2002 and early 2003, and when this failed, by providing direct support for efforts to unseat Chávez electorally (a là Nicaragua) in a 2004 recall referendum spearheaded by opposition "civil society" organization Súmate. Needless to say, doing so entailed continuing to support those very same organizations who had proven their anti-democratic credentials in 2002, but such things are hardly scandalous these days.

Through the popular and military support enjoyed by the Chávez government, all these efforts failed, which is unprecedented in and of itself. In response to the emptying of its traditional toolbox, the U.S. government has been forced to diversify its tactics even more drastically than ever before, and this is where Bush Versus Chávez comes in.

Domestic Continuity

In her analysis of contemporary U.S. strategies to unseat Chávez, Golinger speaks of three broad fronts: the financial, the diplomatic, and the military (43-48). But we should be extremely wary of distinguishing too cleanly between such tightly-interwoven categories: the "financial front" remains largely in the hands of the NED and USAID, agencies directly controlled by the U.S. government and the embassy in Caracas, funding the domestic side of the equation through support for destabilizing opposition organizations and even psychological operations (psyops) targeting the Venezuelan press and military.

Since 2004, the NED and USAID have seen massive budgets earmarked for activities in Venezuela: currently, some $3 million for the former and $7.2 million for the latter's OTI operation (77). Of the NED funds, most went to the very same groups that participated in the 2002 coup, the 2003-4 oil lockout, and the 2004 recall referendum. Súmate, which headed up the recall effort, and whose spokesperson and Bush confidant Maria Corina Machado had signed the Carmona Decree, was granted more than $107,000 in 2005 alone. Súmate, to which Golinger devotes a chapter, had also received $84,000 in 2003 from USAID and $53,000 in 2003 and $107,000 in 2004 from the NED, as well as an inexplicable $300,000 from the U.S. Department of Health and Human Services (90). All of which demonstrates, for Golinger, that "Súmate is and continues to be Washington's main player in Venezuela" (91).

While USAID's funding structure has become more secretive, a turn that Golinger deems illegal, one project in particular has been publicly discussed: the establishment of "American Corners" throughout Venezuela, institutions which even the U.S. Embassy deem "satellite consulates" (145). Aside from the patent illegality of such underground U.S. institutions, Golinger points out that their primary function is the distribution of pro-U.S. propaganda to the Venezuelan population.

Perhaps most frightening on the domestic front is the strategic transformation that such U.S. funding has undergone. Specifically, such funding has increasingly begun to target what had previously been considered core Chavista constituencies, such as the nation's Afro and Indigenous populations (77-78). What Golinger doesn't emphasize is the fact that this has occurred alongside a concerted effort by opposition political parties, notably the NED-funded Primero Justicia, to penetrate the poorest and most dangerous Venezuelan barrios, like Petare in eastern Caracas.

While this domestic element has remained shockingly continuous, with the U.S. continuing to directly fund the groups involved in Chávez's 2002 overthrow, the military and diplomatic fronts are where Golinger reveals some veritably frightening new developments.

Asymmetrical Aggression

Perhaps the most intriguing and frightening revelation in Bush Versus Chávez surrounds a 2001 NATO exercise carried out in Spain under the title "Plan Balboa." Here we should bear in mind the open support provided by then Popular Party Prime Minister José Maria Aznar for the brief coup against Chávez. And while we might be struck by the irony of naming a NATO operation after the Spanish conquistador who invaded Panama, the name is far more accurate than we might initially believe.

Plan Balboa was, in fact, a mock invasion plan for taking over the oil-rich Zulia State in western Venezuela. In thinly veiled code-names (whose coded nature is undermined by the satellite imagery showing the nations involved), it entailed a "Blue" country (the U.S.) launching an invasion of the "Black" zone (Zulia) of a "Brown" country (Venezuela), from a large base in a "Cyan" country (Howard Air Force Base, in Panama) with the support of an allied "White" country (Colombia) (95-98). The fact that a trial-run invasion was carried out less than 11 months before the 2002 coup against Chávez should further convince us that this was mere contingency planning.

But Plan Balboa would be only the beginning, and Golinger deftly documents a series of increasingly overt military maneuvers carried out in recent years by the U.S. government in an effort to intimidate the Chávez government while preparing for any necessary action. Here, Golinger rightly trains her sights on the small Dutch Antillean island of Curaçao, which she deems the U.S.'s "third frontier." Curaçao hosts what is nominally a small U.S. Forward Operating Location (FOL) as well as, not coincidentally, a refinery owned by Venezuelan national oil company PDVSA. Furthermore, it sits fewer than 40 miles off Venezuela's coast, and more specifically, off the coast of the oil-rich "Black Zone" of Plan Balboa that is Zulia State.

Until February 2005, Curaçao probably seemed to be of little concern to Venezuelan security, given that its FOL housed only 200 U.S. troops. But this all changed when the U.S.S. Saipan made its unannounced arrival. The United States' premier landing craft for invasion forces, the Saipan arrived in Curaçao with more than 1,400 marines and 35 helicopters on board (104). When the Venezuelan government responded to the hostile gesture, U.S. Ambassador William Brownfield claimed there had been a "lack of communication," while simultaneously declaring that "it is our desire to have more visits by ships to Curaçao and Aruba [only 15 miles off the Venezuelan coast] in the coming weeks, months, and years" (105).

This veiled threat would come to fruition with Operation Partnership of the Americas in April 2006. In that instance, which dwarfed the Saipan's visit, the aircraft carrier U.S.S. George Washington arrived in Curaçao with three warships. The total strength of the force was of 85 fighter planes and more than 6,500 marines (106). Were this not worrying enough, then-intelligence chief and Latin American Cold Warrior par excellence John Negroponte admitted around the same time that the U.S. had deployed a nuclear sub to intercept communications off the Venezuelan coast (100). When we factor in the Curaçao-based Operation Joint Caribbean Lion, carried out in June 2006 with the goal of capturing the mock-terrorist rebel leader "Hugo Le Grand," there can remain little doubt that at the very least, the United States is keen to prepare for the possibility of a direct invasion of Venezuelan territory.

Of Terror and Dictators

But, one might ask, what are the chances that the U.S. would actually invade Venezuela, given the predictably harsh international rebuke that such an invasion would earn? It is here that another aspect, what Golinger loosely characterizes the "diplomatic front," comes into play, and it is here that U.S. policies and strategies have seen the most striking innovations.

Here Golinger cites a document by retired U.S. Army Colonel Max G. Manwaring published by the Army's Institute for Strategic Studies in 2005 (112). This document represents above all an inversion of strategies applied to Venezuela, and one which drastically complicates the military picture: Manwaring advocates appropriating the concept of "asymmetrical warfare" that many guerrillas and rebel movements have historically used with success against the United States, and converting it into an explicit U.S. strategy. Somewhat bizarrely, Manwaring compares this employment of asymmetric warfare to the "Wizard's Chess" of Harry Potter, deeming Chávez a "true and wise enemy" who must be dealt with by a panoply of maneuvers on all levels (112-113. Central to this strategy is the deployment of psychological operations (psyops), which had been previously focused on the Venezuelan press (toward the objective of justifying a coup or electoral removal of Chávez) to the international and diplomatic arena (toward what one could presume to be an objective of direct or indirect military action).

While domestic psyops have continued, notably in the 2005 deployment of "Gypsy" (JPOSE, Joint Psychological Operations Support Element) teams to Venezuela with the objective of spreading propaganda among the Venezuelan military and keeping tabs on radical Chavista organizations (117), much of their focus has been the spreading of news stories in the international arena. These stories, as Golinger astutely documents, tend to follow "three major lines of attack":

1.) Chávez is an anti-democratic dictator
2.) Chávez is a destabilizing force in the region
3.) Chávez harbors and supports terrorism (125).

Even the briefest of glances at any mainstream newspaper in the United States, or many other countries for that matter, will show to what degree this mediatically-constructed image has been a success.

New Strategies Unfold

This international effort to discredit the Chávez regime, thereby clearing the way for future intervention, brings us to a series of recent events that have transpired since Golinger first published Bush Versus Chávez.

The first was the sudden rebirth of the Venezuelan "student movement" in early 2007, nominally in response to the non-renewal of the broadcasting license for opposition television station RCTV. I have documented elsewhere the fact that this "student movement" was by and large supported if not directed by the traditional opposition parties, but what is more relevant here is that the strategies and even imagery of the movement were adapted directly from those used in countries such as Serbia and the Ukraine. These strategies, consisting largely of "non-violent" direct action, have been formulated and disseminated through institutions such as the Albert Einstein Institution which, in an irony of ironies, Golinger shows to be directly supported by the State Department (135), and linked to prior attempts to train Colombian paramilitaries to assassinate President Chávez (136-137).

Here again we have an inversion, in which the U.S. government has adopted the very strategies that had previously been deployed against it, and in this case the audience was international: the foreign press was so eager to show a violent repression of the students that it exaggerated the response of the largely unarmed police and, in an infamous incident, transformed an armed attack by opposition students against Chavistas at the Central University into just the opposite. The objective? To discredit and isolate the Chávez regime internationally, clearing the way for more directly offensive action.

Secondly, we have seen a concrete example of such offensive action in Colombia's recent illegal cross-border raid into Ecuador. The particular players involved should not distract our attention: this was a test-run, both militarily and diplomatically, for future U.S. interventions in the region. With Colombia standing in as proxy for the U.S. and the more recently-established Correa government standing in as proxy for the Chávez government, this was above all a test of the international response.

While that response was overwhelming in Latin America, with the OAS and even right-leaning governments condemning the Colombian raid as a violation of sovereignty, the U.S.'s international psyops campaign seems to have been overwhelmingly effective within its own borders. Rather than being presented as an instance of Colombian aggression, the initial raid was immediately erased from the picture in much of the international press, with the focus being diverted to what was perceived as Venezuela's bellicose response. But such a response was a strategic necessity aimed at discouraging any possible future intervention.

Furthermore, the revelations gleaned from the FARC's magic laptop, which allegedly implicate Chávez himself in funding the FARC (a charge which Colombia, not coincidentally, eventually decided not to pursue), are also drawn straight from the playbook of Plan Balboa, which was premised upon the threat posed by an alliance between the radical sectors of the "Brown" and "White" countries. The U.S. seems to be preparing to put that plan into motion with its recent legal gestures toward declaring Venezuela a supporter of terrorism, and given recent evidence of a massive influx of Colombian paramilitaries into the "Black Zone" of western Venezuela, the danger that Plan Balboa might become a reality should not be underestimated.

What would be the international response to such an incursion? Here there is little ground for optimism. After all, during the 2002 coup against Chávez, that bastion of the American left celebrated the maneuver, declaring that "Venezuelan democracy is no longer threatened by a would-be dictator." And all this before the concerted psyops campaign deployed against the Venezuelan government in recent years. Now, one democratic candidate spurns facts to declare Chávez a "dictator" while the other, eager to demonstrate his leftist credentials, deems the massively-popular Venezuelan leader a "despotic oil tyrant," and is promptly pilloried for his soft line.

Supreme Court Allows Retiree Benefit Cuts

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By David G. Savage

Employers may coordinate with Medicare on healthcare provisions for seniors. An AARP legal challenge is turned away.

Washington - The Supreme Court on Monday gave employers a green light to reduce health benefits for millions of retirees who turn 65 and become eligible for Medicare. The justices turned away a legal challenge from AARP, the nation's leading senior citizens lobby, which had contended these lower benefits for older retirees violated the federal law against age discrimination.

The court's action upholds, in effect, a rule adopted last year by federal regulators that says the "coordination of retiree health benefits with Medicare" is exempt from the anti-age-bias law.

Advocates for companies and labor unions openly disagreed with AARP and applauded the outcome. They said this compromise rule will encourage employers to maintain health coverage for their retirees. Otherwise, employers might drop all benefits for their former employees, they said.

They said it will prove especially helpful to those younger retirees who were offered continued healthcare when they left full-time work.

In 2004, a survey cited by AARP found 49% of retirees age 55 to 64 had health insurance coverage from a former employer. Benefits experts for private employers say the proportion is lower. A survey in 2005 found only 13% of those who retired from private companies were promised continued healthcare.

Employers in California, large and small, say benefits for retirees already have become a casualty of soaring medical costs.

"In some cases, it's become a millstone around their necks," said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp. "Corporations aren't all heartless, but in many cases, you're competing with multinational corporations that don't have quite the obligations that domestic firms have."

A survey completed this month by the Employers Group found that 10% of California firms with 300 to 600 employees offered health coverage to retirees, and 5% of firms with 100 to 300 employees.

The legal dispute highlights what some say is a gap in the law. Employers are not required by law to pay for health benefits for their employees or their retirees. And in most instances, they are free to change their benefit policies or to drop coverage they had previously offered.

Over the last decade, many employers have pulled back from providing these continued benefits to their retirees because of the high cost. But until Monday it had been unclear whether it was illegal to use a worker's age - in this instance, 65 - to trigger a reduction in benefits.

"This is good news because it clears up the lingering doubts about the law," said Rae Vann, general counsel for the Equal Employment Advisory Council, which represents large companies. "From a practical point of view, it is also good for retiree health benefits. It means more employers will continue to provide these benefits."

Bill Raabe, director of collective bargaining for the National Education Assn., agreed that employers needed the freedom to adjust benefits for retirees who qualify for Medicare. "The practical effect of any law that requires employers to provide identical benefits for pre- and post-Medicare-eligible retirees would be the erosion of post-retirement healthcare benefits for all," he said.

AARP, which claims 39 million members, said it was "deeply disappointed" by the court's rejection of its appeal. It predicted the decision will encourage more cutbacks by employers. The court's action "clears the way for employers to discriminate by reducing or terminating benefits for older retirees simply because they've turned 65 years old," AARP said in a statement.

David Sloane, AARP's senior vice president, said the court battle shows a need for Congress to take up healthcare reform. "We have an entirely voluntary system" where employers provide healthcare if they choose to, he said. "This is the fundamental problem we are dealing with. One way to solve the problem would be for Congress to pass comprehensive healthcare legislation."

Monday's one-line order from the high court ends a legal battle that stretched over eight years. It began when retired county workers in Erie, Pa., won a ruling in 2000 that barred officials from reducing their health benefits when they reached 65. The U.S. appeals court in Philadelphia said this amounted to illegal age discrimination.

That ruling set off alarms among employers. Many had devised benefit policies that provided "bridge" coverage until their workers reached 65 and qualified for Medicare.

This nearly became a national rule when the Equal Employment Opportunity Commission moved to adopt it as federal policy. However, after studying the issue, the agency reversed course in 2003 and concluded that this all-or-nothing benefits rule would create an incentive to cut benefits for retirees, not raise them.

The law permits the EEOC to adopt "reasonable exemptions" to the federal anti-discrimination laws if doing so will promote the "public interest." The agency proposed a "narrow" exception to the anti-age-bias law to permit employers to coordinate their health benefits with Medicare.

In 2005, AARP sued to strike down the exemption adopted by the EEOC. The senior citizens lobby was opposed by a broad coalition of groups, including the U.S. Chamber of Commerce and major unions that represented teachers, autoworkers, firefighters and government employees.

Last June, the U.S. court of appeals in Philadelphia, also reversing course, upheld the EEOC's new policy as legal and reasonable. "Over time, it will likely benefit all retirees," the three-judge panel said.

AARP appealed to the Supreme Court, arguing that 10 million retirees 65 and older could be threatened with lower benefits since they are eligible for Medicare.

On Monday, the justices dismissed the appeal in AARP vs. EEOC without comment.

Chevron Reportedly in Talks to Tap Iraq's Oil

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By David R. Baker

Chevron Corp. and other international oil companies are negotiating with the Iraq Ministry of Oil to begin tapping into some of the country's largest oil fields, according to published reports.

Specifically, the companies are negotiating for two-year contracts that would help Iraq boost production at existing oil fields.

For years, the companies have had their eyes on long-term contracts to find and develop new oil fields in Iraq, which is believed to hold the world's third-largest oil reserves. The contracts under discussion are far more limited than that, but they represent an important step in opening Iraq's oil industry to foreign involvement after years of state control.

San Ramon's Chevron already has held discussions with the Iraqi Oil Ministry about one of the short-term contracts, according to reports in the Associated Press, Dow Jones, Reuters and United Press International news services. BP, Exxon Mobil, Shell and Total also are pursuing the contracts.

Chevron won't confirm or deny those reports, a company spokesman said Monday. But Chevron has repeatedly expressed an interest in Iraq. The company has provided free technical training to Iraqi oil engineers in the five years since the U.S.-led invasion ousted Saddam Hussein.

"Generally, Chevron is interested in helping Iraq develop its industry, and we'd very much like to partner with them to help fulfill the government's production objectives," said spokesman Kurt Glaubitz.

The country's state-run oil industry has struggled with aging machinery and insurgent attacks on oil facilities since the invasion. Production averaged 2.4 million barrels per day in February, according to the Platts energy information service. Before the invasion, production averaged 2.5 million barrels per day.

But efforts to increase production and develop new fields have been stymied by Iraqi politics, as well as the widespread belief among Iraqis that the United States toppled Hussein to gain control of the country's oil.

Most of Iraq's known oil fields lie in the Kurdish north or the Shiite south. As a result, Sunnis who live in central Iraq worry that they could be cut out of any future oil boom. For several years, legislators from the three groups have argued over a proposed law that would divide oil revenue among the country's regions and set ground rules for foreign oil companies that want to work in Iraq.

The short-term contracts, called technical support agreements, may be an attempt by the Oil Ministry to make an end-run around legislators. The Iraqi Cabinet reportedly approved the move.

"It was a way to get things going without calling it a production agreement," said Frank Verrastro, director of the energy program at the Center for Strategic and International Studies. "They've been sitting in abeyance for two years while oil prices have gone up. I think there's a growing realization (in the Iraqi government) that, 'Had we done this sooner, we'd be a lot better off today.'"

Under the technical support agreements, the oil companies would be providing studies, analysis, equipment and expertise at existing fields - not hunting for new ones. Exploring and developing new oil fields would require passage of the long-stalled oil law.

Chevron reportedly is negotiating for an agreement to help expand production at the West al-Qurna oil field, near Basra in southern Iraq. The ministry also wants to sign technical support agreements for the Rumaila and Zubair fields nearby, as well as the Kirkuk oil field in the north. And in what could be an effort to appease Sunnis, the ministry also said last weekend that it wants to develop the Akkas natural gas field in a Sunni-dominated corner of western Iraq.

The proposed oil law has often come under criticism from anti-war activists, who fear that the Iraqi government will be pressured into handing over too much control of its oil. The short-term agreements may not assuage those fears.

"My concern with these agreements is that they appear to be more than anything else a foot in the door, an opening for the oil companies while debate rages on over the long-term contracts," said Antonia Juhasz, author of "The Bush Agenda: Invading the World One Economy at a Time."

"It's for the Iraqis to decide the appropriate role of U.S. oil corporations in Iraq," she said. "The only time to be able to have this kind of negotiation is when there's no longer an occupation."

4,000 Dead, Zero Accountability

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By Robert Parry

Passing the grim milestone of 4,000 dead American soldiers in Iraq -- not to mention hundreds of thousands of dead Iraqis -- George W. Bush can now see a clear path to the finish line of his presidency, with no accountability lurking in the shadows and almost no chance that he will be forced to relent on his “stay-the-course” strategy.

Plus, with Hillary Clinton continuing her trench-warfare battle for the Democratic nomination – even knowing it could damage Barack Obama’s chances against John McCain – President Bush may end up with the happy opportunity to hand over the White House to a Republican successor who has promised to keep U.S. troops in Iraq for possibly a hundred years.

Indeed, the only marginal hope for Bush facing any accountability at all – for deceiving the American people into an unprovoked war in Iraq and abusing his constitutional powers – may be the diminishing chance that a battered Obama survives Clinton and manages to defeat McCain.

Then, at least, Bush would be forced to relinquish the presidency to a politician in Obama, who spoke out against invading Iraq in 2002, who said that to attack a non-threatening nation in the Middle East and to risk bloody sectarian chaos across the region would be “dumb.” (By contrast, Clinton voted to authorize the war and remained a staunch supporter until she began preparing to run for the Democratic presidential nomination.)

If Obama does recover from his bruising nomination fight against Clinton and somehow wins in November, Bush would have to shake the hand of the first black president in U.S. history, a liberal Democrat to boot. He would have to face the fact that his failed leadership had contributed to an extraordinary repudiation of his party by the American people.

Yet, as the ugly Democratic primary fight grinds on, the odds of an Obama victory continue to slide, albeit not to the near-zero level of other potential means of imposing accountability on Bush.

Congressional Democrats, who don’t hold firm on much, have stuck with their determination to keep impeachment “off the table,” defying the demands of many rank-and-file Democrats.

Though winning House and Senate majorities in 2006, Democratic leaders also have resisted investigative hearings on the Iraq War, turning their backs on the precedent of Sen. William Fulbright’s examination of the Vietnam War four decades ago. They have not even released a long-overdue report by the Senate Intelligence Committee on how the White House misused U.S. intelligence information to build the bogus case about Iraq's WMD.

In 2006, a key Democratic election argument was that the Republican-controlled Congress had let Bush and the Executive Branch operate with virtually no oversight. But the Democratic-controlled Congress has done only slightly better.

While Democratic leaders have stood firm against public demands for holding Bush accountable, they have caved in to Bush's demands for more Iraq War money with no strings attached. After declaring they would not give Bush another “blank check” for the Iraq War, they repeatedly have done just that – and plan to do so again this spring.

Bush also has signaled that after the 30,000-troop “surge,” which began in February 2007, ends in July 2008, troop levels for the remainder of the election year will stay at about the same number or slightly higher than when the Democrats took control of Congress, at about 140,000 after the “surge” versus 132,000 before.

In other words, whatever its short- or long-term achievements inside Iraq, the “surge” accomplished an important political success for Bush back in the United States. It put the Democrats on the defensive for much of 2007 and bought Bush time to continue the war through 2008.

‘Not Lost in Vain’

Acknowledging the 4,000th U.S. military death in Iraq, Bush promised to continue the war for the rest of his presidency and employed the same kind of emotional phrasing that has driven the conflict for more than five years.

“I will vow so long as I am president to make sure that those lives were not lost in vain; that, in fact, there is an outcome that will merit the sacrifice that civilian and military alike have made; that our strategy going forward will be aimed at making sure that we achieve victory,” Bush said on March 24.

So, U.S. policy is back to the status quo ante, the same situation that existed before the “surge,” an open-ended war in Iraq in pursuit of a vaguely defined mission, “victory.”

Surely, too, the rest of 2008 will be filled with rhetoric reminiscent of the attacks on the patriotism of Americans who objected to the invasion in 2002-03 or who urged that the conflict be brought to an early conclusion.

Whenever some political candidate urges troop withdrawals from Iraq, there will be accusations of “surrender,” “betrayal,” and “clutching defeat out of the jaws of victory.” One can even expect more neoconservative calls for expanding the war to Iran.

The specter of that wider war with Iran returned with the recent resignation of Admiral William Fallon as the chief of U.S. Central Command, which is responsible for the Middle East. Fallon had been a major obstacle to neocon hawks in the Bush administration who believe that a bombing campaign against Iran is the only way to curtail the country’s nuclear ambitions.

Fallon resisted this war fever, but other military commanders favored by the White House have resumed the tough talk against Teheran.

For instance, when a rocket barrage hit the heavily fortified Green Zone on March 23, U.S. Gen. David Petraeus quickly put the blame on Iran.

Petraeus alleged that the attack was made with “Iranian-provided, Iranian-made rockets” and represented a “complete violation of promises made by [Iran’s] President Ahmadinejad and the other most senior Iranian leaders to their Iraqi counterparts.”

Iran has routinely denied responsibility for such attacks, although Teheran’s Islamic government is known to have close ties to leading Shiite politicians in Iraq, including anti-U.S. Shiite militia leader Moqtada al-Sadr and U.S.-backed Iraqi Prime Minister Nouri al-Maliki.

Most likely, the rocket barrage, which reportedly killed 15 Iraqi civilians, was a reaction to U.S.-backed raids on al-Sadr's stronghold of Sadr City, atttacks that disrupted a long-standing suspension of hostilities that al-Sadr proclaimed in 2007. That unilateral truce has been credited with helping to bring about a substantial drop in violence inside Iraq.

Though many U.S. military observers believe that the likelihood of Bush ordering air strikes against Iran’s nuclear facilities in the final year of his presidency remains low, it does appear that the chances for that wider war have not disappeared.

They also are likely greater than either the chances for ending the U.S. occupation of Iraq in the near future or for the president to face meaningful accountability for his actions.

Day of Infamy: The March 20, 2008 US Declaration of War on Iran

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By John McGlynn

March 20, 2008, destined to be another day of infamy. On this date the US officially declared war on Iran. But it's not going to be the kind of war many have been expecting.

No, there was no dramatic televised announcement by President George W. Bush from the White House oval office. In fact on this day, reports the Washington Post, Bush spent some time communicating directly with Iranians, telling them via Radio Farda (the US-financed broadcaster that transmits to Iran in Farsi, Iran's native language) that their government has "declared they want to have a nuclear weapon to destroy people." But not to worry, he told his listeners in Farsi-translated Bushspeak: Tehran would not get the bomb because the US would be "firm."

Over at the US Congress, no war resolution was passed, no debate transpired, no last-minute hearing on the Iran "threat" was held. The Pentagon did not put its forces on red alert and cancel all leave. The top story on the Pentagon's website (on March 20) was: "Bush Lauds Military's Performance in Terror War," a feel-good piece about the president's appearance on the US military's TV channel to praise "the performance and courage of U.S. troops engaged in the global war on terrorism." Bush discussed Iraq, Afghanistan and Africa but not Iran.

But make no mistake. As of Thursday, March 20 the US is at war with Iran.

So who made it official?

A unit within the US Treasury Department, the Financial Crimes Enforcement Network (FinCEN), which issued a March 20 advisory to the world's financial institutions under the title: "Guidance to Financial Institutions on the Continuing Money Laundering Threat Involving Illicit Iranian Activity."

FinCEN, though part of the chain of command, is better known to bankers and lawyers than to students of US foreign policy. Nevertheless, when the history of this newly declared war is someday written (assuming the war is allowed to proceed) FinCEN's role will be as important as that played by US Central Command (Centcom) in directing the wars in Afghanistan and Iraq.

In its March 20 advisory FinCEN reminds the global banking community that United Nations Security Council Resolution (UNSC) 1803 (passed on March 3, 2008) "calls on member states to exercise vigilance over the activities of financial institutions in their territories with all banks domiciled in Iran, and their branches and subsidiaries abroad."

UNSC 1803 specifically mentions two Iranian state-owned banks: Bank Melli and Bank Saderat. These two banks (plus their overseas branches and certain subsidiaries), along with a third state-owned bank, Bank Sepah, were also unilaterally sanctioned by the US in 2007 under anti-proliferation and anti-terrorism presidential executive orders 13382 and 13224.

As of March 20, however, the US, speaking through FinCEN, is now telling all banks around the world "to take into account the risk arising from the deficiencies in Iran's AML/CFT [anti-money laundering and combating the financing of terrorism] regime, as well as all applicable U.S. and international sanctions programs, with regard to any possible transactions" with – and this is important – not just the above three banks but every remaining state-owned, private and special government bank in Iran. In other words, FinCEN charges, all of Iran's banks – including the central bank (also on FinCEN's list) – represent a risk to the international financial system, no exceptions. Confirmation is possible by comparing FinCEN's list of risky Iranian banks with the listing of Iranian banks provided by Iran's central bank.

The "deficiencies in Iran's AML/CFT" is important because it provides the rationale FinCEN will now use to deliver the ultimate death blow to Iran's ability to participate in the international banking system. The language is borrowed from Paris-based Financial Action Task Force (FATF), a group of 32 countries and two territories set up by the G-7 in 1989 to fight money laundering and terrorist financing. As the FinCEN advisory describes, in October 2007 the FATF stated "that Iran's lack of a comprehensive anti-money laundering and combating the financing of terrorism (AML/CFT) regime represents a significant vulnerability in the international financial system. In response to the FATF statement, Iran passed its first AML law in February 2008. The FATF, however, reiterated its concern about continuing deficiencies in Iran's AML/CFT system in a statement on February 28, 2008."

Actually, the February 28 FATF statement does not comment on Iran's new anti-money laundering law. The statement does say, however, that the FATF has been working with Iran since the October 2007 FATF statement was issued and "welcomes the commitment made by Iran to improve its AML/CFT regime." Moreover, the February 28 statement, for whatever reason, drops the "significant vulnerability" wording, opting instead to reaffirm that financial authorities around the world should "advise" their domestic banks to exercise "enhanced due diligence" concerning Iran's AML/CFT "deficiencies." In linking its March 20 advisory to the recent FATF statements, apparently FinCEN cannot wait for FATF or anyone else to evaluate the effectiveness of Iran's brand new anti-financial crime laws.

Anyway, the "deficiencies in Iran's AML/CFT" is probably the main wording FinCEN will use to justify application of one its most powerful sanctions tools, a USA Patriot Act Section 311 designation (see below).

Hammering away at Iran's state-owned banks is central to US efforts to raise an international hue and cry. Through its state-owned banks, FinCEN states, "the Government of Iran disguises its involvement in proliferation and terrorism activities through an array of deceptive practices specifically designed to evade detection." By managing to get inserted the names of two state-owned banks in the most recent UN Security Council resolution on Iran, the US can now portray the cream of Iran's financial establishment (Bank Melli and Bank Saderat are Iran's two largest banks) as directly integrated into alleged regime involvement in a secret nuclear weaponization program and acts of terrorism.

To inject further alarm, FinCEN accuses Iran's central bank of "facilitating transactions for sanctioned Iranian banks" based on evidence (which for various reasons appears true) gathered by Treasury and other US agencies that the central bank has facilitated erasure of the names of Iranian banks "from global transactions in order to make it more difficult for intermediary financial institutions to determine the true parties in the transaction." The central bank is also charged with continuing to "provide financial services to Iranian entities" (government agencies, business firms and individuals) named in two earlier UN Security Council resolutions, 1737 and 1747. In defense, Iran's central bank governor recently said: "The central bank assists Iranian private and state-owned banks to do their commitments regardless of the pressure on them" and charged the US with "financial terrorism."

So what does all this bureaucratic financial rigmarole mean?

What it really means is that the US, again through FinCEN, has declared two acts of war: one against Iran's banks and one against any financial institution anywhere in the world that tries to do business with an Iranian bank.

To understand how this works requires understanding what FinCEN does. This means going back in history to September 2005, when the US Treasury Department, based on the investigatory work of FinCEN, sanctioned a small bank in Macau, which in turn got North Korea really upset.

FinCEN's mission "is to safeguard the financial system from the abuses of financial crime, including terrorist financing, money laundering, and other illicit activity" (FinCEN website).

Under Section 311 of the USA Patriot Act the US Treasury Department, acting through FinCEN, has been provided with "a range of options that can be adapted to target specific money laundering and terrorist financing concerns." Specifically, Section 311 contains six "special measures" to significantly increase the powers of the Treasury (and other US government agencies) to block alleged terrorist financing activities. As explained by a Treasury official during April 2006 testimony before Congress, the most punitive measure requires:

"U.S. financial institutions to terminate correspondent relationships with the designated entity. Such a defensive measure effectively cuts that entity off from the U.S. financial system. It has a profound effect, not only in insulating the U.S. financial system from abuse, but also in notifying financial institutions and jurisdictions globally of an illicit finance risk."

On September 20, 2005 FinCEN issued a finding under Section 311 that Banco Delta Asia (BDA), a small bank in the Chinese territory of Macau, was a "primary money laundering concern." BDA was alleged to have knowingly allowed its North Korean clients to use the bank to engage in deceptive financial practices and a variety of financial crimes (such as money laundering of profits from drug trafficking and counterfeit US $100 "supernotes").

By publicizing its allegations, FinCEN let the world know that BDA was now at risk of having all "correspondent relationships" with US banks severed, a disaster for any bank wanting to remain networked to the largest financial market in the world. Frightened BDA customers reacted by staging a run on the bank's assets.

In the interest of self-preservation, BDA was forced to act. After a quick conference with Macau financial authorities the bank decided to freeze North Korean funds on deposit.

It just so happened that the day before the FinCEN finding was made public the US and North Korea, working through the Six-Party talks process (also involving host China, Russia, South Korea and Japan), had formally agreed on a new diplomatic roadmap that promised to lead to a denuclearized and permanently peaceful Northeast Asia. But because of Treasury's BDA sanctions, North Korea was now labeled an international financial outlaw and the Six Party process stalled.

Other banks began severing their business ties with North Korea, leaving the country more isolated than ever from global commerce and finance. These other banks had no choice. Treasury repeatedly made clear that any bank that continued to do business with North Korea was another potential Patriot Act Section 311 target.

In anger, North Korea withdrew from the Six-Party process. It required 18 months of negotiations before a diplomatic and financial approach was devised that left BDA blacklisted but allowed North Korea to regain access to its frozen funds and rejoin Six Party negotiations.

Neither FinCEN nor anyone else at Treasury has ever publicly produced any evidence in support of the financial crime allegations against BDA and North Korea (articles by this author on BDA, North Korea and Treasury's lack of proof can be found at the Japan Focus website).

If Treasury was eventually forced to back off in the BDA case (apparently because the Bush administration changed its policy priorities), it had discovered that Patriot Act Section 311 could really shake things up.

The "real impact" of the BDA-North Korea sanctions, as Treasury undersecretary Stuart Levey told members of the American Bar Association in early March 2008, was that "many private financial institutions worldwide responded by terminating their business relationships not only with [BDA], but with North Korean clients altogether." Levey and his Treasury colleagues had come up with a way to go beyond governments to use the global banking sector to privatize banking sector sanctions against an entire country (this, by the way, is presidential candidate John McCain's proposed strategy for dealing with Iran as described in the Nov/Dec 2007 issue of the journal Foreign Affairs ). This "key difference" in the "reaction by the private sector" was an exciting revelation. Through a little extraterritorial legal arm-twisting of the international banking community the US was able to put "enormous pressure on the [North Korean] regime – even the most reclusive government depends on access to the international financial system," said Levey. Washington now had "a great deal of leverage in its diplomacy over the nuclear issue with North Korea." Turning to the present, Levey informed the gathering of US lawyers that "we are currently in the midst of an effort to apply these same lessons to the very real threat posed by Iran." However, "Iran presents a more complex challenge than North Korea because of its greater integration into the international financial community."

Stuart Levey

Over the past two years Levey and other Treasury officials have been crisscrossing the globe to make it abundantly clear in meetings (described by Treasury as opportunities to "share information") with banking and government officials in the world's key financial centers that dealing with Iran is risky business. Levey frequently claims that major European and Asia banks, once they hear the US pitch, freely decided to cooperate with anti-Iran banking sanctions for reasons of "good corporate citizenship" and a "desire to protect their institutions' reputations."

But these meetings include quite a bit of browbeating. This can be deduced from some of Levey's public statements, such as his testimony to Congress. On March 21, 2007 Levey told the Senate Committee on Banking, Housing and Urban Affairs that unilateral US financial sanctions "warn people and businesses not to deal with the designated target. And those who might still be tempted to work with targeted high risk actors get the message loud and clear: if they do so, they may be next." Also, the possibility of becoming a Patriot Act Section 311 sanctions victim (which means exclusion from the US market) probably comes up at the meetings, as this part of his testimony indirectly suggests: "Our list of targeted proliferators is incorporated into the compliance systems at major financial institutions worldwide, who have little appetite for the business of proliferation firms and who also need to be mindful of U.S. measures given their ties to the U.S. financial system."

Reportedly, Treasury Secretary Henry Paulson has also been involved in high-level meetings around the world concerning Iran, which presumably includes presentations on the arsenal of US financial sanctions. The message he imparts is unknown, but hints of the likely content can be found in public statements. Among Treasury officials Paulson has used the most dramatic language by making the argument that not only is Iran a danger to the international community but that this danger permeates virtually all of Iranian society. In a June 14, 2007 speech to the Council on Foreign Relations he first makes the point that Iran's Revolutionary Guard Corps (IRGC) is a "paramilitary" organization "directly involved in the planning and support of terrorist acts, as well as funding and training other terrorist groups." Then he offers the alarming revelation that the IRGC "is so deeply entrenched in Iran's economy and commercial enterprises, it is increasingly likely that if you are doing business with Iran, you are somehow doing business with the IRGC." With such language, Treasury lays the groundwork for applying financial sanctions against the entirety of Iran. All this makes clear that the growing coalition of bankers against Iran the US likes to trumpet may not be such a willing group.

Some indication of how unwilling can be found in the pages of Der Spiegel (English edition). In July 2007 the German news magazine reported that "anyone wishing to do business in the United States or hoping to attract US investors had best tread softly when it comes to Iran. Germany's Commerzbank stopped financing trade with Iran in US dollars in January, after the Americans piled on the pressure." One German banker interviewed said: "German financial institutions feel the United States government has been engaging in 'downright blackmail'." The magazine goes on to report: "Anti-terror officials from the US Treasury are constantly showing up to demand they cut their traditionally good relations with Iran. The underlying threat from the men from Washington is that they wouldn't want to support terrorism, would they?"

Also, an April 2007 report from the UK's House of Lords Economic Affairs Committee states that the Confederation of British Industry indicated "strong concern" about Patriot Act provisions and other US extra-territorial sanctions. The Committee recognized the need for "vigorous action" in response to terrorist threats but also "endorse[d] the condemnation by the EU of the extra-territorial application of US sanctions legislation as a violation of international law."

Thus the US will need help from European government leaders to overcome resistance among major European financial institutions to US-led financial sanctions. Such help has already come from German Chancellor Angela Merkel. During her recent state visit to Israel, Merkel told the Knesset that Iran was global enemy number one. "What do we do when a majority says the greatest threat to the world comes from Israel and not from Iran?" she asked. "Do we bow our heads? Do we give up our efforts to combat the Iranian threat? However inconvenient and uncomfortable the alternative is, we do not do that." Iran is public enemy #1 in the world, and everyone – including the European banking establishment it would seem – has to accept that.

To summarize to this point: (1) the March 20 advisory represents a US declaration of war by sanctions on Iran and a sanctions threat to the international banking community, (2) the US has various unilateral financial sanctions measures at its command in the form of executive orders and Patriot Act Section 311 and (3) the BDA-North Korea sanctions were, at least in retrospect, a test run for Iran.

If the US succeeds, an international quarantine on Iran's banks would disrupt Iran's financial linkages with the world by blocking its ability to process cross-border payments for goods and services exported and imported. Without those linkages Iran is unlikely to be able to engage in global trade and commerce. As 30% of Iran's GDP in 2005 was imports of goods and services and 20% was non-oil exports (World Bank and other data), a large chunk of Iran's economy would shrivel up. The repercussions will be painful and extend well beyond lost business and profits. For example, treating curable illnesses will become difficult. According to an Iranian health ministry official, Iran produces 95% of its own medicines but most pharmaceutical-related raw materials are imported.

With a financial sanctions war declared, what happens next? There have been some hints.

On February 25 the Wall Street Journal reported that Treasury was considering sanctioning Iran's central bank (known as Bank Markazi). "The central bank is the keystone of Iran's financial system and its principal remaining lifeline to the international banking system," explains the Journal. "U.S. sanctions against it could have a severe impact on Iranian trade if other nations in Europe and Asia choose to go along with them." In anticipation of future events, the Journal notes: "U.S. officials have begun trying to lay the groundwork for a move against the central bank in public statements and meetings with key allies."

So look for the following to happen in the coming weeks: FinCEN will probably issue a Patriot Act Section 311 finding that Iran's central bank is a "primary laundering concern." The "deficiencies in Iran's AML/CFT" wording lifted from the FATF statement will be a key reason for that finding. The finding may be accompanied by a formal decision to cut off Iran's central bank from the US financial market, or such a decision could come later. Of course, an actual or threatened cut-off has no immediate financial implications for Iran since no Iranian-flagged bank is doing business in the US, except possibly to allow shipments from the US of humanitarian provisions of food and medicine, which, if they exist, probably terminate with the March 20 FinCEN announcement.

But a Section 311 designation of Iran's central bank would have a powerful coercive effect on the world's banks. For any bank in Europe, Asia or anywhere else that goes near the central bank once the 311 blacklist is on, it would be the kiss of death for that bank's participation in the international banking community, as it was (and remains today) for BDA. Not only would that bank be barred from the US financial market, it would also be shunned by European and Japanese financial markets, as government and private banking officials in those markets are likely to cooperate with Washington's intensifying sanctions campaign.

What about China, now one of the world's major financial centers (two Chinese banks ranked among the top 25 in The Banker's 2007 survey of world banks) and a major trading partner for Iran?

China and Japan "were the top two recipients of exports from Iran, together accounting for more than one-quarter of Iran's exports in 2006," according to an analysis of International Monetary Fund (IMF) trading statistics contained in a December 2007 US Government Accountability Office (GAO) report on Washington's anti-Iran sanctions regime. On the import side, the GAO found that in 2006 "Germany and China were Iran's largest providers of imports, accounting for 23 percent of Iran's imports." Airtight global banking sanctions imposed on Iran would presumably make the financial administration of this trade next to impossible.

Will China bend to US sanctions wishes? Early signs suggest the answer is yes.

In December 2007 ArabianBusiness.com reported that Chinese banks were starting to decline to open letters of credit for Iranian traders. Asadollah Asgaroladi, head of the Iran-China chamber of commerce, was quoted as saying that China's banks did not explain the refusal but "if this trend continues it will harm the two countries' economic cooperation and trade exchange." In February, ArabianBusiness.com found that China's cutbacks in its banking business with Iran was affecting a joint automobile production arrangement.

Such disruptions in the Chinese-Iranian banking relationship are minor. Meanwhile, Beijing keeps insisting that peaceful diplomacy with Iran is the best policy and that the only sanctions needed are those mandated under the three UN Security Council resolutions already on the books. Thus, to make China cooperate with Washington's unilateral banking sanctions, the US and the EU, reports the Financial Times, are apparently using a tag-team strategy.

On February 12 the FT told readers that "the US believes that tighter EU sanctions will put pressure on other nations that do more business with Iran - China for example - to curb their activities." Therefore, explained an anonymous diplomat apparently from the US: "We will be pushing the EU to go further than the Security Council," a move intended, the diplomat said, to "gold plate" Security Council requirements.

To explain this move the FT provided an example of "gold plating" from 2007, when the EU implemented UN Security Council resolutions 1737 and 1747 on Iran.

In similar language to the current text on Banks Saderat and Melli, the UN had called for "vigilance and restraint" concerning the movements of individuals linked to Iran's nuclear and missile programmes and members of its Revolutionary Guard. But in implementing the resolutions, the EU subjected all the named individuals to a travel ban - a much tougher measure.

Reading between the lines, the intention behind "gold plating" Security Council resolutions is to put pressure on China to bow to a more aggressive US-EU sanctions program. In the case of the most recent Security Council resolution on Iran, 1803, which put sanctions on two Iranian banks, FinCEN rolled two "gold plating" actions into one. It combined the Security Council's naming of the two banks with the October and February FATF statements to justify its March 20 warning to the world that Iran's entire banking system is a danger. Whether the EU will follow FinCEN's action, and how China will respond to any of this, remains to be seen.

In short, the US has in effect declared war on Iran. No bombs need fall as long as the US strategy relies solely on financial sanctions. But if the US Section 311 designates Iran's central bank as a financial criminal, the impact will be the financial equivalent to the first bombs falling on Baghdad at the start of the US-UK invasion of Iraq in March 2003.

In a 1996 publication written for the National Defense University, Harlan Ullman and James Wade introduced a military doctrine for "affecting the adversary's will to resist through imposing a regime of Shock and Awe to achieve strategic aims and military objectives."

Former US defense secretary Donald Rumsfeld made Shock and Awe famous by invoking it as the US strategy in the attack on Iraq in March 2003 (though weeks later Ullman was claiming Rumsfeld was misapplying the doctrine).

But Shock and Awe's authors (apparently with something like Vietnam or the 1993-1994 Somalia fiasco in mind) also envisioned that "[i]n certain circumstances, the costs of having to resort to lethal force may be too politically expensive in terms of local support as well as support in the U.S. and internationally." Consequently, they wrote:

"Economic sanctions are likely to continue to be a preferable political alternative or a necessary political prelude to an offensive military step . . .In a world in which nonlethal sanctions are a political imperative, we will continue to need the ability to shut down all commerce into and out of any country from shipping, air, rail, and roads. We ought to be able to do this in a much more thorough, decisive, and shocking way than we have in the past . . . Weapons that shock and awe, stun and paralyze, but do not kill in significant numbers may be the only ones that are politically acceptable in the future."

It was only a matter of finding a sanctions strategy systematic enough to make this more obscure portion of the Shock and Awe doctrine operational. What Ullman and Wade could not have imagined was that Washington's global planners would use extraterritorial legal powers and its financial clout to coerce the global banking industry into accepting US foreign policy diktat. North Korea was a test-run for the new strategy of Shock and Awe financial sanctions. As Washington Post columnist David Ignatius put it in February 2007, "[t]he new sanctions are toxic because they effectively limit a country's access to the global ATM. In that sense, they impose -- at last -- a real price on countries such as North Korea and Iran."

What then will the impact be of this US-Iran banking standoff? For the US, almost no impact at all. Treasury bureaucrats will spend some time and a little taxpayer money making phone calls, checking computer screens and paper trails to monitor global banking compliance with sanctions. The cost of financially ostracizing Iran will be a bargain for US taxpayers compared with the eventual $3 trillion cost of the Iraq and Afghanistan wars estimated by Nobel prize-winning economist Joseph Stiglitz and Harvard financial expert Linda Bilmes.

Iran, however, will become another Gaza or Iraq under the economic sanctions of the 1990s, with devastating impact on economy and society. That Iran's complete financial and economic destruction is the goal of US policy was spelled out by the State Department the day before the FinCEN announcement.

During a daily press meeting with reporters on March 19, the State Department's spokesperson was asked about a deal recently signed between Switzerland and Iran to supply Iranian natural gas to Europe. After condemning the deal, the spokesperson explained that the US is opposed to any "investing in Iran, not only in its petroleum or natural gas area but in any sector of its economy" and questioned rhetorically the wisdom of doing business with Iranian "financial institutions that are under UN sanctions or could become under sanctions if it's found that they are assisting or aiding or abetting Iran's nuclear program in any way." A clearer expression of US desires is hardly possible.

"Mortgage Rescue" Scams Hit Close to Home

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By Pierre Thomas, Jack Date and Theresa Cook

Authorities report a spike in scams targeting homeowners facing foreclosure.

As the mortgage crisis continues to unfold, the FBI says incidents of suspicious financial activity banks reported to the bureau has skyrocketed, jumping from 28,000 cases in 2005 to 48,000 last year.

Among the factors fueling this two-year, 71 percent increase is a spike in scams targeting citizens facing foreclosure, one of which is known as the "home foreclosure rescue scam."

Watch "World News with Charles Gibson" TONIGHT at 6:30 p.m. ET for the full report.

It's a familiar story, according to state and federal authorities, as well as homeowners interviewed by ABC News. In the scheme, predatory con artists promise financially strapped homeowners a lifeline, but it's a ruse. Sometimes they charge a fee and then disappear. And sometimes they push homeowners over the cliff into financial ruin.

Pamela Fowler, 49, found herself in such a position after she bought her dream home in Richmond, Va.

"The house was perfect," Fowler said, describing the four-bedroom brick house she shared with her daughter. It had ample space for her arts and crafts projects, a huge lot in a great location and "really good neighbors."

"I thought that was where we would spend the rest of our lives," she said.

But after a foot injury forced Fowler to leave her job with the State Police for three months, the Navy veteran and single mom was in financial crisis, sliding toward foreclosure.

With bills piling up, Fowler tried to refinance her home. Her bank said no. Then a mortgage firm offered what appeared to be a way out.

"These people came to me as my guardian angels to save me and I listened to them because I was desperate at that point in time," she said. "When you reach a point to where you can't see the light at the end of the tunnel, you think these people are gonna be your light."

But the people from the mortgage firm were no angels. Fowler says they told her they would buy the house and let her live in it for a year - rent free - until she could rebuild her credit and buy it back. She says she signed off on their paperwork, but instead of honoring their agreement with Fowler, she says they sold the house to another party and Fowler was forced out.

After the property was sold, Fowler says the mortgage company kept all the equity out of the home. As part of the FBI investigation into the scheme, a Virginia woman, Anna Essex Thorne, pleaded guilty to conspiracy to commit wire fraud in connection with the mortgage documents she executed to buy the home.

Fowler's entire life savings, which was tied up in her home, is gone. She moved to North Carolina, where she lives in a mobile home. Fowler hopes to someday see the restitution money the defendant in the case is supposed to pay her as part of the plea agreement.

"I worked hard my whole life. I came from poverty and I had achieved the American Dream, and I feel they ripped it away from me," she said, tears welling up in her eyes. "I mean they took my future, my daughter's future & all that work, and now I feel like such a failure. I feel my whole life has been a failure."

With more than two million Americans facing the possibility of foreclosure, authorities say so-called rescue scams are on the rise.

Authorities say con artists are using the Internet, mailings and television to prey on homeowners facing financial ruin in the mortgage crisis.

Jackie Felton, chief of the FBI's Economic Crimes Unit, acknowledges that "everyone wants to be a homeowner," but that when those homeowners start to fall behind in payments, they become vulnerable.

"And when these fraudsters come in and they take advantage of those people who are in crisis mode, it's very disturbing," she said.

"It's unfortunate at that time when you are in crisis mode, most of us panic and that's the worst time to actually try to make a decision," she added.

And Felton doesn't believe the problem of mortgage scams is going to slow down any time soon. "Across the country, as these market conditions continue, I'm afraid we'll see more," she said.

To cope with rescue scams and other forms of mortgage fraud, the FBI has set up 35 mortgage fraud task forces across the country. A number of states, including California, Florida, Washington and Texas, have targeted firms exploiting homeowners drowning in the volatile housing market.

"Our office has more than a thousand complaints and we have prosecuted numerous companies dealing with thousands of people just here in the state of Texas and I know that this has been replicated across the country," Texas Attorney General Greg Abbott told ABC News.

"As they are facing one of the most challenging issues in their entire lives, they are thrown a life preserver, in the form of foreclosure rescue," Abbott said. "And it turns out to be nothing more than an anchor that pulls them under the tide and leads them to ruin.

"These scam artists that prey upon people who are going through the foreclosure process are the worst of the worst," he added. "They are not only robbing people of their money but they are robbing people of their dreams, which is why we are so aggressively prosecuting these scam artists across the state and country."

Fowler knows full well of the pain of losing her dream, and says she hopes other homeowners don't fall for the same kind of scheme she did.

"Don't believe it," she said. "No one's gonna come rescue you. Do not depend on somebody else to come in and rescue you, because they're not gonna rescue you; they're gonna take what you have. They will take advantage."

Banks in Question

Go to Original
By Jean-Pierre Balligand

Virtually each week we see central banks - with the American Federal Reserve in the lead - injecting hundreds of millions of dollars to increase the liquidity of financial markets threatened by the crisis. Despite some people's reassuring projections, that they should be brought in this way to play fireman - on a grand scale and with great urgency - shows that this crisis and the risks it brings to bear on the global economy are far from extinguished.

The central banks' interventions amount to helping out the actors - that is, the banks - that to differing degrees are the cause of the present crisis. From that perspective, and although the means they use are very different, one may compare the US initiative to the British Treasury's temporary nationalization of the Northern Rock bank. Both sets of decisions were based on the old "too big to fail" principle, which maintains that when the consequences that certain banks' failure could provoke are too significant, it's necessary to socialize their losses.

This necessity to alleviate banks' problems with the public's money may understandably surprise when we compare it to the customary litany of profits the major banks realize. To take French examples only: BNP, the Crédit mutuel, Société générale, Dexia and the Banque populaire, Caisse d'épargne and Crédit agricole groups posted cumulative net profits from 2004 to 2006 of close to $75 billion.

Privatization of the profits when all goes well and socialization of the losses when all goes badly raises four questions. First of all, are banks businesses like any other? Some are rediscovering that banks are not businesses like any other: unlike businesses, they are the object of special regulation and must respect specific rules with respect to their capitalization.

We no longer count the number of internal as well as external (public agencies) bank controllers. This special status derives from their place in the economy. Through their lending activity, the banks are at the heart of what makes our market economies work: confidence. Without confidence, the system is blocked and no one can plan for the future any more.

Secondly, have the banks forgotten their calling? In any case, supervision does not prevent them from chronically underestimating risks and succumbing to frequently catastrophic vogues. Take, for example, securitization. The fundamental calling of a bank is to evaluate the risks of the loans it grants and to follow the approved loans throughout their duration. Securitization has led to an overall rejection of responsibility and accountability by banks in favor of techniques designed to transfer risks "repackaged" by rating agencies to investors.

A sad record in the end: close to $400 billion of losses, enormous difficulties in identifying and locating the risks, American borrowers forced to sell their discounted homes at a loss. The crisis is so severe that it has become an issue in the American primaries, with some candidates demanding a return to the regulation of lending.

Third, may investment banks replace commercial banks? It is customary to present bank income as having two components: on the one hand, the so-called recurrent, i.e. stable, activities, for example, retail banking; on the other hand, the so-called sporadic, more volatile activities, those investment banking activities that depend on the development of interest rates or security prices. And we've discovered that the share of non-recurrent activities could represent as much as nearly half of the profits at one of the principal French banks.

The fact that no one is unsettled by such a proportion allows us to discover all the market actors' overestimation of the stability of income actually vulnerable to market hijacking.

It is undoubtedly time to question the balance between different sources of income. It is also undoubtedly time to restore their patents of nobility to the banker's mission: distributing loans and following them during their lifetime without delegating that responsibility to others.

Finally, can we avoid similar dysfunctions recurring in the future? It is urgent that we reflect for good on the future of our banks and their role in financing the French economy. It is difficult to decree a complete scission between commercial and investment banking.

But shouldn't banks' ratios promote their financing of the real economy more, to the detriment of activities such as trading? In this regard, we must urgently question the connections between banking and industry in France, while we continue to deplore the absence of financial accompaniment for small and medium-sized companies.

We would consequently be wrong to cut short debate on the real health of the banks, their strategies, their shareholders and the role of all stakeholders, including bank employees, who, in some cases are their companies' primary shareholders.

Taking Stock of the War on Terror

A Defeat Only American Power Could Have Brought About

Go to Original
By Mark Danner

[This essay was adapted from an address first delivered in February at the Tenth Asia Security Conference at the Institute for Security and Defense Analysis in New Delhi.]

To contemplate a prewar map of Baghdad -- as I do the one before me, with sectarian neighborhoods traced out in blue and red and yellow -- is to look back on a lost Baghdad, a Baghdad of our dreams. My map of 2003 is colored mostly a rather neutral yellow, indicating the "mixed" neighborhoods of the city, predominant just five years ago. To take up a contemporary map after this is to be confronted by a riot of bright color: Shia blue has moved in irrevocably from the East of the Tigris; Sunni red has fled before it, as Shia militias pushed the Sunnis inexorably west toward Abu Ghraib and Anbar province, and nearly out of the capital itself. And everywhere, it seems, the pale yellow of those mixed neighborhoods is gone, obliterated in the months and years of sectarian war.

I start with those maps out of a lust for something concrete, as I grope about in the abstract, struggling to quantify the unquantifiable. How indeed to "take stock" of the War on Terror? Such a strange beast it is, like one of those mythological creatures that is part goat, part lion, part man. Let us take a moment and identify each of these parts. For if we look closely at its misshapen contours, we can see in the War on Terror:

Part anti-guerrilla mountain struggle, as in Afghanistan;

Part shooting-war-cum-occupation-cum-counterinsurgency, as in Iraq;

Part intelligence, spy v. spy covert struggle, fought quietly -- "on the dark side," as Vice President Dick Cheney put it shortly after 9/11 -- in a vast territory stretching from the southern Philippines to the Maghreb and the Straits of Gibraltar;

And finally the War on Terror is part, perhaps its largest part, Virtual War -- an ongoing, permanent struggle, and in its ongoing political utility not wholly unlike Orwell's famous world war between Eurasia, East Asia, and Oceania that is unbounded in space and in time, never ending, always expanding.

Snowflakes Drifting Down on the War on Terror

President Bush announced this virtual war three days after September 11, 2001, in the National Cathedral in Washington, appropriately enough, when he told Americans that "our responsibility to history is already clear: to answer these attacks and rid the world of evil."

Astonishing words from a world leader -- declaring that he would "rid the world of evil." Just in case anyone thought they might have misheard the sweep of the President's ambition, his National Security Strategy, issued a few months later, was careful to specify that "the enemy is not a single political regime or person or religion or ideology. The enemy is terrorism -- premeditated, politically motivated violence perpetrated against innocents."

Again, a remarkable statement, as many commentators were quick to point out; for declaring war on "terrorism" -- a technique of war, not an identifiable group or target -- was simply unprecedented, and, indeed, bewildering in its implications. As one counterinsurgency specialist remarked to me, "Declaring war on terrorism is like declaring war on air power."

Six and a half years later, evil is still with us and so is terrorism. In my search for a starting point in taking stock of those years, I find myself in the sad position of pondering fondly what have become two of the saddest words in the English language: Donald Rumsfeld.

Remember him? In late October 2003, when I was in Baghdad watching the launch of the so-called Ramadan Offensive -- five simultaneous suicide bombings, beginning with one at the headquarters of the Red Cross, the fiery aftermath of which I witnessed -- then Secretary of Defense Rumsfeld was in Washington still denying that an insurgency was underway in Iraq. He was also drafting one of his famous "snowflakes," those late-night memoranda which he used to rain down on his terrorized Pentagon employees.

This particular snowflake, dated October 16, 2003 and entitled "Global War on Terrorism," reads almost poignantly now, as the Defense Secretary gropes to define the war that it has become his lot to fight: "Today we lack metrics to know if we are winning or losing the global war on terror," he wrote. "Are we capturing, killing or deterring and dissuading more terrorists every day than the madrassas and the radical clerics are recruiting, training and deploying against us?"

Rumsfeld asks the right question, for beyond the obvious metrics like the number of terrorist attacks worldwide -- which have gone up steadily, and precipitously since 9/11 (for 2006, the last year for which State Department figures are available, by nearly 29%, to 14,338); and the somewhat subtler ones like the percentage of those in the Middle East and the broader Muslim world who hold unfavorable opinions of the United States (which soared in the wake of the invasion of Iraq and have fallen back just a bit since) -- apart from these sorts of numbers which, for various and obvious reasons, are problematic in themselves, the key question is: How do you "take stock" of the War on Terror? At the end of the day, as Secretary Rumsfeld perceived, this is a political judgment, for in its essence it has to do with the evolution of public opinion and the readiness of those with certain political sympathies to move from holding those opinions to taking action in support of them.

What "metrics" do we have to take account of the progress of this "evolution"? Well, none really -- but we do have the guarded opinions of intelligence agencies, notably this rather explicit statement from the U.S. government's National Intelligence Estimate (NIE) of April 2006, entitled "Trends in Global Terrorism: Implications for the United States," which reads in part: "Although we cannot measure the extent of the spread with precision" -- those metrics again -- "a large body of all-source reporting indicates that activists identifying themselves as jihadists, although still a small percentage of Muslims, are increasing in both number and geographic distribution. If this trend continues, threats to U.S. interests at home and abroad will become more diverse, leading to increasing attacks worldwide."

Dark words, and yet that 2006 report looks positively sanguine when set beside two reports from a year later, both leaked in July 2007. A National Intelligence Estimate entitled "The Terrorist Threat to the US Homeland" noted that al-Qaeda had managed -- in the summary in the Washington Post -- to reestablish "its central organization, training infrastructure and lines of global communication," over the previous two years and had placed the United States in a "heightened threat environment… The U.S. Homeland will face a persistent and evolving terrorist threat over the next three years."

This NIE -- the combined opinion of the country's major intelligence agencies -- only confirmed a report that had been leaked a couple days before from the National Counterterrorism Center, grimly entitled "Al Qaeda Better Positioned to Strike the West." This report concluded that al-Qaeda, in the words of one official who briefed its contents to a reporter for the Christian Science Monitor, was "considerably operationally stronger than a year ago," "has regrouped to an extent not seen since 2001," and has managed to create "the most robust training program since 2001, with an interest in using European operatives." Another intelligence official, summarizing the report to the Associated Press, offered a blunt and bleak conclusion: al-Qaeda, he said, is "showing greater and greater ability to plan attacks in Europe and the United States."

Given these grim results, one must return to one of the more poignant passages in Secretary Rumsfeld's "snowflake," released to flutter down on his poor Pentagon subordinates back in those blinkered days of October 2003. Having wondered about the metrics, and what could and could not be measured in the War on Terror, the Secretary of Defense posed a critical question: "Does the U.S. need to fashion a broad, integrated plan to stop the next generation of terrorists?"

For me, the poignancy comes from Mr. Rumsfeld's failure to see that, in effect, he and his boss had already "fashioned" the "broad, integrated plan" he was asking for. It was called the Iraq War.

General Bin Laden

That the Iraq War is "fueling the spread of the jidahist movement," as the 2006 National Intelligence Estimate put it, has been a truism of intelligence reporting from the war's beginning; indeed, from before it began. "[T]he Iraq conflict has become the cause célèbre for jihadists, breeding a deep resentment of U.S. involvement in the Muslim world and cultivating support for the global jihadist movement" -- this point from the 2006 NIE is truly an example of a "chronicle of a war foretold" (to borrow from Garcia Marquez). In fact, that NIE cites the "Iraq jihad" as the second of four factors "fueling the jihadist movement," along with "entrenched grievances, such as corruption, injustice, and fear of Western domination, leading to anger, humiliation, and a sense of powerlessness"; "the slow pace of real and sustained economic, social, and political reforms in many Muslim majority nations"; and "pervasive anti-US sentiment among most Muslims."

Any attempt to "take stock of the War on Terror" must begin with the sad fact that the story of that war has largely become the story of the war in Iraq as well, and the story of the Iraq War (all discussion of the so-called Surge aside) has been pretty much an unmitigated disaster for U.S. security and for the United States position in the Middle East and the world. Which means that telling the story of the War on Terror, a half dozen years on -- and "taking stock" of that War -- merges inevitably with the sad tale of how that so-called war, strange and multiform beast that it is, became subsumed in a bold and utterly incompetent attempt to occupy and remake a major Arab country.

That broader story comes down to a matter of two strategies and two generals: General Osama bin Laden and General George W. Bush. General bin Laden, from the start, has been waging a campaign of indirection and provocation: that is, bin Laden's ultimate targets are the so-called apostate regimes of the Muslim world -- foremost among them, the Mubarak regime in Egypt and the House of Saud on the Arabian peninsula -- which he hopes to overthrow and supplant with a New Caliphate.

For bin Laden, these are the "near enemies," which rely for their existence on the vital support of the "far enemy," the United States. By attacking this far enemy, beginning in the mid-1990s, bin Laden hoped both to lead vast numbers of new Muslim recruits to join Al Qaeda and to weaken U.S. support for the Mubarak and Saud regimes. He hoped to succeed, through indirection, in "cutting the strings of the puppets," eventually leading to the collapse of those regimes.

In this sense, 9/11 proved the culmination of a long-term strategy, following on a series of attacks of increasing lethality during the mid to late 1990s in Riyadh, Nairobi, Dar es Salaam, and Aden. The 9/11 attackers used as their climactic weapon not transcontinental airliners or box cutters but the television set -- for the image was the true weapon that day, the overwhelmingly powerful image of the towers collapsing -- and used it not only to "dirty the face of imperial power" (Menachim Begin's description of what terrorists do), but also to provoke the United States to strike deep into the Islamic world.

It is clear from various documents and from the assassination, days before 9/11, of Afghan Northern Alliance leader Ahmed Shah Masood, that bin Laden expected this American counter-strike to come in Afghanistan, which would have given al-Qaeda the opportunity to do to the remaining superpower what it had done -- so the myth went, anyway -- to the Soviet Union a dozen years before: trap its arrogant, hulking military in a quagmire and, through patient, unrelenting guerrilla warfare, force it to withdraw in ignominious defeat. In the event, of course, the Americans, by relying on air bombardment and on the ground forces of their Afghan allies in the Northern Alliance, avoided the quagmire of Afghanistan -- at least in that initial phase in the fall of 2001 -- and instead offered bin Laden a much greater gift. In March 2003, they invaded Iraq, a far more important Islamic country and one much closer to the heart of Arab concerns.

General Bush

Why did General George W. Bush do it? Lacking in legitimacy and on the political defensive, the President and his administration moved instantly to transform the War on Terror into an ideological crusade, one implicitly crafted as a New Cold War.

"They hate our freedoms," Bush told Congress and the nation a few days after the 9/11 attacks. "Our freedom of speech, our freedom to vote and assemble and disagree with one another... We are not deceived by their pretenses to piety. We have seen their kind before. They are the heirs of all the murderous ideologies of the 20th century. By sacrificing human life to serve their radical visions -- by abandoning every value except the will to power -- they follow in the path of fascism, and Naziism, and totalitarianism. And they will follow that path all the way, to where it ends: in history's unmarked grave of discarded lies."

Drawing a lurid picture of a New Cold War, with terrorists playing the role of communists, Bush rallied the country behind the War on Terror, obliterating the subtleties of the struggle against al-Qaeda and with them the critique of U.S. Middle East policy implicit in the assault. "This is not about our policies," as Henry Kissinger put it soon after the attack. "This is about our existence." In this view, the attack came not because of what the United States actually did in the Middle East -- what regimes it supported, for example -- but because of what it stood for: the universalist aspirations it symbolized. Iraq quickly became part of this crusade, the great struggle to protect, and now to spread, freedom and democracy.

One can argue long and hard about the roots of the Iraq War, but in the end one must tease out a set of realist compulsions (centrally concerned with the restoration of American credibility and American deterrent power) and idealist aspirations (shaped around the so-called Democratic Domino effect). The realist case was well summarized, once again, by Henry Kissinger, who, when asked by a Bush speechwriter why he supported the Iraq War, replied: "Because Afghanistan wasn't enough." In the conflict with radical Islam, he went on, "They want to humiliate us and we have to humiliate them." The Iraq war was essential in order to make the point that "we're not going to live in the world that they want for us."

Ron Suskind, in his fine book The One Percent Doctrine, puts what is essentially the same point in "geostrategic" terms, reporting that, in meetings of the National Security Council in the months after the 9/11 attacks, the main concern "was to make an example of [Saddam] Hussein, to create a demonstration model to guide the behavior of anyone with the temerity to acquire destructive weapons or, in any way, flout the authority of the United States."

Set alongside this was the "democratic tsunami" that was to follow the shock-and-awe triumph over Saddam. It would sweep through the Middle East from Iraq to Iran and thence to Syria and Palestine. ("The road to Jerusalem" -- so ran the neoconservative gospel at the time -- "runs through Baghdad.") As I wrote in October 2002, five months before the Iraq War was launched, this vision was detailed and well elaborated:

"Behind the notion that an American intervention will make of Iraq 'the first Arab democracy,' as Deputy Defense Secretary Paul Wolfowitz put it, lies a project of great ambition. It envisions a post-Saddam Hussein Iraq -- secular, middle-class, urbanized, rich with oil -- that will replace the autocracy of Saudi Arabia as the key American ally in the Persian Gulf, allowing the withdrawal of United States troops from the kingdom. The presence of a victorious American Army in Iraq would then serve as a powerful boost to moderate elements in neighboring Iran, hastening that critical country's evolution away from the mullahs and toward a more moderate course. Such an evolution in Tehran would lead to a withdrawal of Iranian support for Hezbollah and other radical groups, thereby isolating Syria and reducing pressure on Israel. This undercutting of radicals on Israel's northern borders and within the West Bank and Gaza would spell the definitive end of Yasir Arafat and lead eventually to a favorable solution of the Arab-Israeli problem.

"This is a vision of great sweep and imagination: comprehensive, prophetic, evangelical. In its ambitions, it is wholly foreign to the modesty of containment, the ideology of a status-quo power that lay at the heart of American strategy for half a century. It means to remake the world, to offer to a political threat a political answer. It represents a great step on the road toward President Bush's ultimate vision of 'freedom's triumph over all its age-old foes.'"

One can identify two factors underlying this vision: first, the great enthusiasm for a moralistic foreign policy based on universalized principles and democratic reform that dated back to containment's main rival, the "rollback" movement of the 1950s, and that had been revivified by the thrilling series of Eastern European revolutions of the late 1980s and by scenes of popular, American-aided democratic triumph (as it was then thought to be) in Afghanistan; and, second, the recognition that terrorism, at the end of the day, was a political problem that arose from a calcified authoritarian order in the Middle East and that only a dose of "creative destabilization" could shake up that order. "Transforming the Middle East," in Condoleezza Rice's words, "is the only guarantee that it will no longer produce ideologies of hatred that lead men to fly airplanes into buildings in New York and Washington."

The latter perception -- that terrorism as it struck the United States arose from political factors and that it could only be confronted and defeated with a political response -- strikes me as incontestable. The problem the administration faced, or rather didn't want to face, was that the calcified order that lay at the root of the problem was the very order that, for nearly six decades, had been shaped, shepherded, and sustained by the United States. We see an explicit acknowledgment of this in the "Bletchley II" report drafted after 9/11 at Defense Department urging by a number of intellectuals close to the administration: "The general analysis," one of its authors told the Washington Post's Bob Woodward, "was that Egypt and Saudi Arabia, where most of the hijackers came from, were the key, but the problems there are intractable. Iran is more important… But Iran was similarly difficult to envision dealing with. But Saddam Hussein was different, weaker, more vulnerable…"

A Very Complicated War

In this sense, many of the Bush administration's leading Iraq War backers comprised a kind of guerrilla force within the U.S. government, fighting against a longstanding strategic alignment in the Middle East. This guerrilla status, which defined many of the government's most knowledgeable Middle East hands as enemies to be isolated and ignored, helps to account, at least in part, for a great many of the extraordinary incompetencies and disasters of the war itself. That the roots of the war lie in stark opposition to established U.S. policy also helps explain the central conundrum of the current U.S. strategic position in Iraq and the Middle East. This was defined for me with typical concision and aplomb by Ahmed Chalabi in Baghdad last year. "The American tragedy in Iraq," said Chalabi, "is that your friends in Iraq are allied with your enemies in the region, and your enemies in Iraq are allied with your friends in the region."

Chalabi's concision and wit are admirable (and typical); but his point, once you look at the map, is obvious. The United States has made possible the rise to power in Iraq of a Shiite government which is allied with its major geopolitical antagonist in the region, the Islamic Republic of Iran. And the United States has been fighting with great persistence and distinctly mixed results a Sunni insurgency which is allied with the Saudis, the Jordanians, and its other longtime friends among the traditional Sunni autocracies of the Gulf.

This is another way of saying that the U.S. policy built on the famous meeting between President Franklin D. Roosevelt and King ibn Saud aboard Roosevelt's cruiser on the Great Bitter Lake near the end of World War II -- a policy that envisioned a vital, mutually beneficial, and enduring alliance between the Saudis and the Americans -- having been put in grave question by the Saudi insurgents at the controls of those mighty airliners of September 11th, now smashed full on into the strategic assault perpetrated by the Bush administration insurgents led by Paul Wolfowitz and his associates. Their "creative destabilization" was aimed not just at Saddam Hussein's Iraq, but at more than a half century of American policy in the Middle East.

Al-Qaeda, opportunistic as always, was willing to play this game, seizing on the occupation of Iraq as the golden opportunity it most certainly was and focusing on the Shiite-Sunni divide on which U.S. policy was foundering. The late Abu Musab al-Zarqawi's famous intercepted letter to Ayman al-Zawahiri and bin Laden, in which the insurgent leader of al-Qaeda in Mesopotamia told the al-Qaeda potentates -- the front office, as it were -- that his aim in Iraq was to "awaken the sleeping Sunnis" by launching a vast bombing campaign against the "Shiite heretic," describes precisely both the national and regional strategy: "If we manage to draw them into the terrain of partisan war, it will be possible to tear the Sunnis away from their heedlessness, for they will feel the weight of the imminence of danger."

This is a strategy that, after the bombing of the revered al-Askari mosque and shrine in Samarra in February 2006, bore terrible fruit. My map that shows divisions running through Baghdad will show, if you zoom out, those same divisions running through Iraq and beyond its borders. Like the former Yugoslavia, Iraq is a nation that gathers within itself the cultural and sectarian fault lines of the region; the Sunni-Shia divide running through Iraq in effect runs through the entire Middle East. The United States, in choosing this place to stage its Democratic Revolution, could hardly have done al-Qaeda a better favor.

At this moment, the Iraq War is at a stalemate. Confronted with a growing threat from those "enemies allied with its friends in the region," the Sunni insurgents, the Bush administration has adopted a practical and typically American strategy: it has bought them. The Americans have purchased the insurgency, hiring its foot soldiers at the rate of $300 per month. The Sunni fighters, once called insurgents, we now refer to as "tribesmen" or "concerned citizens."

This has isolated al-Qaeda, a tactical victory. But because these purchased Sunni fighters have not been accepted by the Shiite government -- the allies of our enemies -- the United States has set in motion a policy that will require, to keep violence at current levels, its own permanent presence in the country. This at a time when two in three Americans think the war was a mistake and when both surviving Democrat candidates vow to begin bringing the troops home "on day one" of a Democratic administration.

On the horizon, after such a withdrawal, is a re-ignition of the civil war at an even more brutal level, helped by the American rearming of the Sunni forces -- and indeed the American arming of Shia government forces as well. It is a curious reality, if we look again at the regional map, that the current geostrategic situation in the Middle East resembles nothing so much as the Iraq-Iran War of the 1980s, in which the United States, along with Egypt, the Saudis, and the Jordanians supported Saddam Hussein's Iraq in its great war against Ayatollah Khomeini's Iran. We see a similar array of forces today, with these two differences: First, we must move the line of conflict about two hundred miles west, shifting it from the Iraq-Iran border to a line running through Baghdad along the Tigris River. Second, the United States is now arming and supporting both sides. And behind the current configuration and the supposed "success of the Surge" looms the darkening threat of regionalization -- a region-wide struggle fought over the body of Iraq in the wake of an American withdrawal. It has become, to appropriate a phrase, a Very Complicated War.

A Defeat Only American Power Could Have Brought About

Whether or not this darkest of dark visions comes to pass, that very complicated war in Iraq, as the intelligence analysts and our own eyes tell us, will continue to pay vast dividends into the account of political grievances with which terrorist groups recruit. This has only partly to do with the original al-Qaeda itself (or "al Qaeda prime," as some analysts now call it); for however much it has managed to "reconstitute" itself, the true game has moved elsewhere, toward "viral al-Qaeda" -- "spontaneous groups of friends," in the words of former CIA analyst and psychiatrist Marc Sageman, "as in [the] Madrid and Casablanca [bombings], who have few links to any central leadership, [who] are generating sometimes very dangerous terrorist operations, notwithstanding their frequent errors and poor training."

While U.S. and allied intelligence agencies have had considerable success attacking the various formal nodes of al-Qaeda prime on the Arabian peninsula and elsewhere, those struggles have about them the air of the past; we have really passed into a different era, the era of the amateurs. Today's network is self-organized, Internet reliant, and decentralized, dependent not on armies, training, or even technology but on desire and political will. And we have ensured, by the way we have fought this forever war, that it is precisely these vital qualities our enemies have in large and growing supply.

So how, finally, do we "take stock of the War on Terror"? Let me suggest three words:

1. Fragmentation -- brought about by "creative destabilization," as we see it not only in Iraq but in Lebanon, Palestine, and elsewhere in the region;

2. Diminution -- of American prestige, both military and political, and thus of American power;

3. Destruction -- of the political consensus within the United States for a strong global role.

Gaze for a moment at those three words and marvel at how far we have come in a half-dozen years.

In September 2001, the United States faced a grave threat. The attacks that have become synonymous with that date were unprecedented in their destructiveness, in their lethality, in the pure apocalyptic shock of their spectacle. But in their aftermath, American policymakers, partly through ideological blindness and preening exaggeration of American power, partly through blindness brought about by political opportunism, made decisions that led to a defeat only their own actions -- that only American power itself -- could have brought about.

A small coven of America's enemies, using the strategy of provocation so familiar in guerrilla warfare, had launched in spectacular fashion on that bright September morning a plan to use the superpower's strength against itself. To use a different metaphor, they were trying to make good on Archimedes' celebrated boast: having found the perfect lever and place to stand, they proposed to move the Earth. To an extent I am sure even they did not anticipate, in their choice of opponent -- an evangelical, redemptive regime scornful of history and determined to remake the fallen world -- lay the seeds of their success.