Thursday, September 25, 2008

Drinking at the Public Fountain

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By Alan Snitow and Deborah Kaufman

The New Corporate Threat to Our Water Supplies

In the last few years, the world’s largest financial institutions and pension funds, from Goldman Sachs to Australia’s Macquarie Bank, have figured out that old, trustworthy utilities and infrastructure could become reliable cash cows -- supporting the financial system’s speculative junk derivatives with the real concrete of highways, water utilities, airports, harbors, and transit systems.

The spiraling collapse of the financial system may only intensify the quest for private investments in what is now the public sector. This flipping of public assets could be the next big phase of privatization, and it could happen even under an Obama administration, as local and state governments, starved during Bush’s two terms in office, look to bail out on public assets, employees, and responsibilities. The Republican record of neglect of basic infrastructure reads like a police blotter: levees in New Orleans, a major bridge in Minneapolis, a collapsing power grid, bursting water mains, and outdated sewage treatment plants.

Billions in private assets are now parked in "infrastructure funds" waiting for the crisis to mature and the right public assets to buy on the cheap. The first harbingers of a potential fire sale are already on the horizon. The City of Chicago has leased its major highway and Indiana its toll road. Private companies are managing major ports and bidding for control of local water systems across the country. Government jobs are also up for sale. For the first time in American history, the federal government employs more contract workers than regular employees.

This radical shift to the private sector could become one of history’s largest transfers of ownership, control, and wealth from the public trust to the private till. But more is at stake. The concept of democracy itself is being challenged by multinational corporations that see Americans not as citizens, but as customers, and government not as something of, by, and for the people, but as a market to be entered for profit.

How the Water Revolt Began

And a huge market it is. About 85% of Americans receive their water from public utility departments, making water infrastructure, worth trillions of dollars, a prime target for privatization. To drive their agenda, water industry lobbyists have consistently opposed federal aid for public water agencies, hoping that federal cutbacks would drive market expansion. So far, the strategy has worked. In 1978, just before the Reagan-era starvation diet began, federal funding covered 78% of the cost for new water infrastructure. By 2007, it covered just 3%.

As a result, local and state governments are desperately trying to figure out how to make up the difference without politically unpopular rate increases. A growing number of mayors and governors, Republicans and Democrats, are turning to the industry’s designated solution: privatization.

Providing clean, accessible, affordable water is not only the most basic of all government services, but throughout history, control of water has defined the power structure of societies. If we lose control of our water, what do we, as citizens, really control?

The danger is that most citizens don’t even know there’s a problem. Water systems are generally underground and out of sight. Most of us don’t think about our water until the tap runs dry or we flush and it doesn’t go away. That indifference could cost us dearly, but privatization is not yet destiny.

A citizens’ water revolt has been slowly spreading across the United States. The revolt is not made up of "the usual suspects," has no focused ideology, and isn’t the stuff of headlines. It often starts as a "not-in-my-backyard" movement but quickly expands to encompass issues of global economic justice.

In Lee, Massachusetts, the revolt began against potential water-plant layoffs. In Felton, California, it was initially about rate increases and local control; in Atlanta, broken pipes and sewage lines. In other communities, it focused on corruption, cover-ups, and complicity between politicians and giant corporations.

One of the epicenters of this nascent movement has been Stockton, California, in the heart of the state’s agricultural San Joaquin Valley. A citizens’ group there took on not only the mayor and city council, but also some of the world’s largest private water corporations in a preview of the corporate water wars to come.

When private water companies case a city as a potential privatization target, they look for a "champion" in city government, someone who will take the lead in selling off the city’s water services. In Stockton, they found their champion in Mayor Gary Podesto, a former "big box" grocery store owner. In his view, it was "time that Stockton city government treat its citizens as customers."

But Mayor Podesto had other reasons to privatize. Stockton was already under pressure from state and federal environmental agencies to modernize its sewage plant to reduce San Joaquin River pollution. This was an expensive project, and the mayor thought that a private company could do it cheaper, if not better.

In 2002, Podesto sought bids from private water companies to take over the city’s water department. The winner of the bidding war was a consortium of two multinational giants: OMI, the water division of Colorado-based CH2M-Hill, one of the largest engineering firms in the United States, and London’s water company, Thames Water, which was itself a subsidiary of German energy powerhouse RWE. For OMI and RWE/Thames, Stockton was an opportunity to show California, and the country, what a private utility could do. It would be the largest water privatization deal in the western United States--a 20-year, $600 million contract.

But Mayor Podesto and the water giants were in for a surprise.

Water’s Dirty History

Although hidden from sight (and scent), even pipes have a history. In the nineteenth century, water ownership and management in the United States was largely in private hands.

But as populations grew, private water companies did not have the resources or expertise to meet the need. Citizens demanded, and eventually won, modern public water systems, financed through bonds, operated by reliable engineers and experts, and accountable to local governments. The nation built a dazzling system of community waterworks that provided clean, reasonably priced water and sewer systems that still rank among the best in the world.

But in recent years, federal disinvestment in water services has sparked a new era of privatization with contemporary players repeating promises made by nineteenth century entrepreneurs. The world’s largest private water companies have quickly entered the American market: Suez and Veolia from France and Germany’s RWE/Thames. Few Americans have heard of them, but the Big Three have dominated the global water business and are among the world’s largest corporations. Together they control subsidiaries in more than 100 countries.

Relying on free market ideology rather than research, neither government officials nor the media have generally bothered to check the shaky record of these multinationals in cities around the world. Suez and Veolia have had a reputation for influence peddling in France that has reached right into the presidential palace. Suez’s first foray in the United States was in Atlanta, which threw the company out after four years of brown water, low water pressure, and general incompetence.

The companies directly involved in the Stockton deal have also had their share of controversy. OMI was charged with falsifying water quality reports in several small American cities. RWE/Thames had been named "worst polluter" in Britain several years running.

How to Privatize an American City

If Stockton Mayor Podesto had doubts about OMI and RWE/Thames, he didn’t let on, saying only that Suez’s failures in Atlanta would come back to haunt them in the American market. In his view, privatization promised efficiencies of scale, as well as competitive cost cutting, lower water rates, and a business culture that would favor real-estate development.

The argument for marketplace competition should lose all traction with a monopoly service like water, but water companies still contend that the profit motive gives them an incentive to cut costs. However, such efficiencies usually turn out to come from somewhere else -- usually from service cutbacks, staff layoffs, and failures to invest in preventive maintenance.

As for rates, studies from across the country reveal that private water systems charge more -- often much more -- than public systems right next door. But private water operations make their biggest profits by expanding their service areas as cities grow. The industry’s business culture makes it a natural ally of developers and an opponent of citizens’ groups trying to limit growth, preserve agricultural land, or establish greenbelts.

All these political and business considerations make it easy to forget that even when water is public, it is not really our water at all. It is the planet’s circulation and life force. Climate change expresses itself through water or the lack of it. Droughts are a spreading problem across the United States, making conservation of water a high priority. However, private water companies want customers to use more water, not less, in order to maximize profit for their shareholders.

It’s not always easy to define the spark that ignites local rebellion. In Stockton, it was a growing distrust of local government. The Concerned Citizens Coalition of Stockton ("the coalition") had formed in 2001 to monitor and challenge what its members called they mayor’s "political-control machine." For the next six years, fighting water privatization would become its defining cause.

The coalition was unified by the conviction that Mayor Podesto was out to railroad the water privatization plan through the city council without a thorough public hearing and a citywide vote. Coalition members tenaciously confronted the mayor and his allies every step of the way. When it appeared that he still wouldn’t listen, they gathered 18,000 signatures to put an initiative on the ballot to require a citywide vote before privatization could take place.

Increasingly embattled, Podesto recognized that the coalition’s initiative was a poison pill for privatization. He wasn’t about to be outmaneuvered. In early 2003, less than two weeks before the initiative was to go to the voters, he put the proposed OMI/Thames contract on the city council. A vote by the seven-member council could preempt the 18,000 signers. Hundreds of people came out to protest. The details of the privatization deal itself had become secondary. At the electrifying two-hour meeting, the debate was over the rights of citizens, the value of the ballot, the meaning of representative democracy, and the human right to water.

In the end, Podesto himself cast the deciding vote in a 4 to 3 decision to approve the contract. Days later, Stocktonians voted overwhelmingly to approve the coalition’s initiative, but their votes had been made moot by the council’s action.

The coalition fought back in court. In its rush to approve the privatization, the city had failed to do an environmental impact study. The coalition’s lawyers claimed that was illegal and filed suit to stop privatization.

Podesto and OMI/Thames moved quickly to implement the contract. On July 31, 2003, water department employees turned in their city badges for ones with the OMI/Thames logo. Meanwhile, the coalition’s legal challenge went before superior court judge Robert McNatt, whose record indicated that it would be a hard sell. In October 2003, the judge shocked observers by throwing out privatization and giving the city 180 days to unravel the deal. McNatt wrote that the city’s self-exemption from environmental law was "an abuse of discretion." But the city appealed, setting in motion a multi-year legal battle.

The coalition didn’t leave the battle solely up to its lawyers as appeals continued. Each year of private control, the group issued damning report cards on OMI/Thames’ performance. Mayor Podesto had, for instance, claimed that water rates would rise only 7% over the 20-year life of the contract, but the coalition analysis showed an 8.5% increase in just the first three years. In addition, leakage doubled, maintenance backlogs skyrocketed, and staff turnover was constant.

Some residents of Stockton also noticed a difference when they sniffed the air. Workers at the plant said that OMI/Thames had cut back on odor-control chemicals to save approximately $40,000 a month.

As if that weren’t enough, on the Friday before a hot summer weekend in 2006, the wastewater-treatment plant spilled eight million gallons of sewage into the San Joaquin River, contaminating a mile-long stretch where people normally went swimming. It took 10 hours for managers to notice the problem and another three days to notify the public about the health danger.

In late 2006, the courts finally reaffirmed the coalition’s position that the city had violated California environmental law and, in the spring of 2007, after Mayor Podesto had left office, Stockton’s new city council -- dissatisfied with OMI/Thames’ performance -- voted not to appeal and set March 1, 2008, for Stockton to resume full control of its water system.

Nevertheless, the city faced all kinds of problems taking its water system back from the private consortium. The water department remained understaffed with a huge backlog of maintenance, and it was estimated that it would now take millions of dollars to fix the system.


The events in Stockton were followed by activists around the country and reverberated through the private water industry as well. In September 2005, RWE/Thames cited growing "public resistance to privatization schemes" in its decision to get out of the water business. In leaked minutes from an executive board meeting in Essen, Germany, then CEO Henry Roels complained that the water business required too much long-term investment in plant and equipment and offered little hope for once anticipated quick profits. But there was an ominous note in the RWE minutes. An unidentified board member cited a Goldman Sachs prediction that the "water business would become the oil business of the decade from 2020 to 2030."

And so a new stage in the water privatization wars beckons as Goldman Sachs, Macquarie bank, huge pension funds, and billionaire investors hop on the infrastructure bandwagon.

Will the Democrats -- if elected -- resist the trend? Past history suggests that the Party is deeply split on the issue of privatization and that only public resistance has slowed the fire sale. No matter who is president, the fate of public services and assets is likely to be left to local citizens groups that have cut their teeth on water battles like the one in Stockton.

Those local groups have already coalesced into a national movement for a democratic and sustainable water future. The unanswered question is whether these twenty-first century water wars are merely a last stand against an inevitable corporatized future, or the beginning of a far-reaching revolt to reclaim citizenship, reassert democratic values, and redefine how we interact with our environment.

Bush Withholds Salmon Disaster Money as He Pushes for Corporate Bailouts

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By Dan Bacher

As George Bush pushes Congress to bail out Wall Street corporations, he refuses to immediately release $70 million out of the $170 million appropriated by Congress for disaster relief to salmon fishermen and businesses impacted by this year's salmon closures.

While George W. Bush wants taxpayers to give Treasury Secretary Henry Paulson a $700 billion blank check to bail out Wall Street for its reckless speculation and greed, the administration announced last week that it would release only $100 million of the $170 million appropriated to salmon fishermen and businesses impacted by this year’s salmon fishing closure off the California and Oregon coasts and in Central Valley rivers.

Representatives Peter DeFazio (D-Oregon) and Mike Thompson (D-California), along with ten other members of Congress, wrote to President Bush on September 19 urging him to distribute the full $170 million in disaster aid to fishermen and businesses suffering from the closure of the salmon fishing season on the West Coast caused by the collapse of the Sacramento River fall run Chinook salmon population.

"Playing games with the livelihood of fishers across the Pacific Northwest is yet another sign that the Bush administration has no commitment to protect our valuable river systems, and no interest in helping the fishing communities and economies that rely on them," the letter stated. "It is also completely unacceptable. We insist that you comply with congressional intent and immediately release the full $170 million in federal disaster aid for Pacific Northwest fishers."

The other representatives who signed the letter were Brian Baird (D-Washington), Earl Blumenauer (D-Oregon), Lois Capps (D-California), Anna Eshoo (D-California), Sam Farr (D-California), Darlene Hooley (D-Oregon), Doris Matsui (D-California), Lynn Woolsey (D-California), David Wu (D-Oregon) and George Miller (D-California).

"The Bush administration has once again put politics ahead of people," said North Coast Congressman Thompson. "Because of the administration’s disastrous policies, Pacific Coast fishing families have been devastated. Congress appropriated $170 million in federal disaster relief, but this latest proposal by the Bush administration to withhold a large portion of these funds shows no regard for hardworking fishing families nor their livelihood."

"I am absolutely astounded that the administration is not distributing the full $170 million Congress allocated in the Farm Bill to deal with the salmon disaster," DeFazio said. "Instead, they are trying to steal $70 million from salmon fishermen and give it to an incompetent defense contractor. The fishing community of Oregon is already suffering because of the flawed Bush policies in the Sacramento River basin. They should not have to suffer again because the president has hired people in Florida who can’t count. We’ve been there before."

In a news release, US Commerce Secretary Carlos M. Gutierrez offered no reason the other $70 million owed to the fishermen and businesses wasn’t being released immediately.

"The salmon fishery has been a mainstay of the West Coast’s ocean fishing revenues for many years," said Gutierrez. "This year’s closure left thousands of fishermen and dependent businesses struggling to make ends meet. This disaster aid package of $100 million will help them get back on their feet."

Brian Gorman, spokesman for NOAA Fisheries, said the remaining $70 million of Congressionally appropriated disaster relief money "is expected to become available later in the year as the $100 million is spent.

"The administration requested to transfer $70 million for the Census, but I have no idea if there is support for this in Congress," Gorman added. "If there is no vote to do otherwise, the funds will remain as originally designated and the disaster relief aid will become available after October 1. I expect all of the money to be distributed."

He noted that the agency would provide the money in the form of a grant to the Pacific States Marine Fisheries Commission. The commission will distribute the money, based on the agreements reached with the states, to fishermen and related businesses affected by this year’s closure of the ocean salmon fishing season off California, Oregon and Washington.

The governors of all three West Coast states requested a federal disaster declaration as a result of the closures. The declaration, issued by Gutierrez in May, paved the way for Congress to appropriate the $170 million disaster relief package in July.

The states of Washington, Oregon and California estimated damages to the fishing industry to total $290 million. Of the $100 million released, approximately $63 million will go to California, $25 million to Oregon and $12 million to Washington State. The full disaster aid is needed immediately in order that fishermen can make boat payments, insurance payments, mortgage payments and keep food on the table.

In June, the Office of Management and Budget that puts together the president’s annual budget sent Congress a revised budget request for more funding to carry out the 2010 Census. "The White House is requesting $546 million more for the Census and has proposed using $70 million of the $170 million in salmon disaster money allocated in the Farm Bill to pay for the cost over-runs," according to DeFazio and Thompson.

The administration entered into a contract with the Harris Corporation, a Florida defense contractor, to conduct the Census, but the contractor has run into serious cost over-runs amounting to hundreds of millions of dollars. Congressmen DeFazio and Thompson and 13 other members of Congress sent President Bush a letter at that time they say was "largely ignored" by the administration.

The refusal to disburse the $70 million in salmon aid relief now is particularly outrageous because the Bush and Schwarzenegger administrations are largely responsible for the unprecedented fishery collapse. The Sacramento fall run Chinook salmon population has declined from over 800,000 in 2002 to fewer than 60,000 fish this year.

The Bush and Schwarzenegger administrations claim "ocean conditions" are responsible for the collapse, but all of the available evidence demonstrates that it is water policies that favor agribusiness and corporate water developers over fish, the environment and local communities that caused the dramatic decline. The collapse undoubtedly occurred because of record water exports from the California Delta by the state and federal projects to drainage-impaired land in the San Joaquin Valley during the years returning salmon were supposed to go to sea. For example, 2005 was a record export year with 6.4 million acre-feet of water diverted from the estuary.

It is believed many salmon never made it out of the Bay-Delta estuary, but were instead chopped up in the Delta pumps, disoriented and stranded in dead end sloughs because of reverse flows caused by pumping, and deprived of forage. At the same time, the state of California failed to put its hatchery salmon into salt water acclimation pens, as they had done previously, during 2005 and 2006. This resulted in increasing loss of salmon to predators when the stunned salmon were released into San Pablo Bay.

I believe that you can’t fully understand the Central Valley Chinook salmon collapse without understanding the dramatic decline of four California Delta pelagic species-delta smelt, longfin smelt, juvenile striped bass and threadfin shad. A team of federal and state scientists has pinpointed water exports as the number one cause of the "Pelagic Organism Decline," followed by toxic chemicals and invasive species.

As Peter Moyle, prominent U.C. Davis fishery scientist, recently stated, "Overall, blaming ’ocean conditions’ for salmon declines is a lot like blaming Hurricane Katrina for flooding New Orleans, while ignoring the many human errors that made the disaster inevitable, such as poor construction of levees or destruction of protective salt marshes. The listings of the winter and spring runs of Central Valley Chinook as endangered species were warnings of likely declines on an even larger scale. Continuing on our present course will result in the permanent loss of a valuable and iconic fishery unless we start taking corrective action soon."

Meanwhile, the Bush administration, while trying to steal money allocated to the victims of a fishery collapse engineered by the Bush and Schwarzenegger administrations, wants to soak the taxpayers for another $700 billion for corporate criminals who should be in jail, not receiving another handout. That’s on top of $1.1 trillion for other recent bailouts, including A.I.G., Fannie Mae, Freddie Mac and Bear Stearns. Just when you think the Bush regime has sunk to a new low, it will always find a way to reach a lower level of criminality in its policy of "socialism for the rich."

Note: The House Committee on Oversight and Government Reform held a hearing on the Harris Corporation and the problems with the Census on June 11, 2008.

* * *

The text of the letter sent to President Bush is below:

September 18, 2008
The Honorable Jim Nussle, Director
Office of Management and Budget
Washington, DC 20503

Dear Director Nussle:

We write with increasing concern regarding full disbursement of the $170 million appropriated by Congress to compensate fishers for the unprecedented closure of the West Coast salmon fishery.

Earlier this week, NOAA Fisheries (NOAA) indicated that it would be dispersing $100 million of the $170 million appropriated by Congress to provide aid to affected fishers. NOAA further indicated that the remaining $70 million may be disbursed if further need was demonstrated, and "if Congress did not act to rescind the funds.’ We have been informed that NOAA is not dispersing the full amount now because OMB has not yet released the funds. We find this unconscionable.

First, as we expressed to you in June, it is unacceptable that the Administration has proposed-and now seems to be trying to implement-a plan to take disaster aid from the fishing communities of California, Oregon and Washington to pay for cost overruns associated with this Administration’s questionable contract with the Harris Corporation to complete the 2010 census. Indeed, the reason why Congress had to step up to provide this emergency aid to fishers in our states is because of this Administration’s unlawful and shortsighted policies regarding the Pacific Northwest’s rivers.

Second, we have received no satisfactory explanation for why OMB can legally withhold funds that Congress has appropriated for a specific purpose such as this. The states of Oregon, Washington, and California have followed the process set out in the Magnuson-Stevens Act, which provides for emergency assistance. Now that NOAA has accepted the application from Pacific Fishery Management Council, and has approved the $170 million grant to the states, OMB is legally obligated to release the funds so that affected fishers may receive the aid they desperately need. The law provides for no further "assessment of need,’ and we are aware of no precedent for OMB’s alleged "phased’ disbursement of these funds.

To us, the fact that OMB is withholding $70 million, when it proposed in June to reprogram this exact same amount to pay for the Administration’s mistakes with its census contract, smacks of political gamesmanship. Playing games with the livelihood of fishers across the Pacific Northwest is yet another sign that the Bush Administration has no commitment to protect our valuable river systems, and no interest in helping the fishing communities and economies that rely on them. It is also completely unacceptable. We insist that you comply with congressional intent and immediately release the full $170 million in federal disaster aid for Pacific Northwest fishers.


Brian Baird (D-Washington), Earl Blumenauer (D-Oregon), Lois Capps (D-California), Peter DeFazio (D-Oregon), Anna Eshoo (D-California), Sam Farr (D-California), Darlene Hooley (D-Oregon), Doris Matsui (D-California), Mike Thompson (D-California), Lynn Woolsey (D-California), David Wu (D-Oregon), George Miller (D-California)

Israel Asked US for Green Light to Bomb Nuclear Sites in Iran

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By Jonathan Steele

US president told Israeli prime minister he would not back attack on Iran, senior European diplomatic sources tell Guardian

Israel gave serious thought this spring to launching a military strike on Iran’s nuclear sites but was told by President George W Bush that he would not support it and did not expect to revise that view for the rest of his presidency, senior European diplomatic sources have told the Guardian.

The then prime minister, Ehud Olmert, used the occasion of Bush’s trip to Israel for the 60th anniversary of the state’s founding to raise the issue in a one-on-one meeting on May 14, the sources said. "He took it [the refusal of a US green light] as where they were at the moment, and that the US position was unlikely to change as long as Bush was in office", they added.

The sources work for a European head of government who met the Israeli leader some time after the Bush visit. Their talks were so sensitive that no note-takers attended, but the European leader subsequently divulged to his officials the highly sensitive contents of what Olmert had told him of Bush’s position.

Bush’s decision to refuse to offer any support for a strike on Iran appeared to be based on two factors, the sources said. One was US concern over Iran’s likely retaliation, which would probably include a wave of attacks on US military and other personnel in Iraq and Afghanistan, as well as on shipping in the Persian Gulf.

The other was US anxiety that Israel would not succeed in disabling Iran’s nuclear facilities in a single assault even with the use of dozens of aircraft. It could not mount a series of attacks over several days without risking full-scale war. So the benefits would not outweigh the costs.

Iran has repeatedly said it would react with force to any attack. Some western government analysts believe this could include asking Lebanon’s Shia movement Hizbollah to strike at the US.

"It’s over ten years since Hizbollah’s last terror strike outside Israel, when it hit an Argentine-Israel association building in Buenos Aires [killing 85 people]", said one official. "There is a large Lebanese diaspora in Canada which must include some Hizbollah supporters. They could slip into the United States and take action".

Even if Israel were to launch an attack on Iran without US approval its planes could not reach their targets without the US becoming aware of their flightpath and having time to ask them to abandon their mission.

"The shortest route to Natanz lies across Iraq and the US has total control of Iraqi airspace", the official said. Natanz, about 100 miles north of Isfahan, is the site of an uranium enrichment plant.

In this context Iran would be bound to assume Bush had approved it, even if the White House denied fore-knowledge, raising the prospect of an attack against the US.

Several high-level Israeli officials have hinted over the last two years that Israel might strike Iran’s nuclear facilities to prevent them being developed to provide sufficient weapons-grade uranium to make a nuclear bomb. Iran has always denied having such plans.

Olmert himself raised the possibility of an attack at a press conference during a visit to London last November, when he said sanctions were not enough to block Iran’s nuclear programme.

"Economic sanctions are effective. They have an important impact already, but they are not sufficient. So there should be more. Up to where? Up until Iran will stop its nuclear programme," he said.

The revelation that Olmert was not merely sabre-rattling to try to frighten Iran but considered the option seriously enough to discuss it with Bush shows how concerned Israeli officials had become.

Bush’s refusal to support an attack, and the strong suggestion he would not change his mind, is likely to end speculation that Washington might be preparing an "October surprise" before the US presidential election. Some analysts have argued that Bush would back an Israeli attack in an effort to help John McCain’s campaign by creating an eve-of-poll security crisis.

Others have said that in the case of an Obama victory, the vice-president, Dick Cheney, the main White House hawk, would want to cripple Iran’s nuclear programme in the dying weeks of Bush’s term.

During Saddam Hussein’s rule in 1981, Israeli aircraft successfully destroyed Iraq’s nuclear reactor at Osirak shortly before it was due to start operating.

Last September they knocked out a buildings complex in northern Syria, which US officials later said had been a partly constructed nuclear reactor based on a North Korean design. Syria said the building was a military complex but had no links to a nuclear programme.

In contrast, Iran’s nuclear facilities, which are officially described as intended only for civilian purposes, are dispersed around the country and some are in fortified bunkers underground.

In public, Bush gave no hint of his view that the military option had to be excluded. In a speech to the Knesset the following day he confined himself to telling Israel’s parliament: "America stands with you in firmly opposing Iran’s nuclear weapons ambitions. Permitting the world’s leading sponsor of terror to possess the world’s deadliest weapon would be an unforgivable betrayal of future generations. For the sake of peace, the world must not allow Iran to have a nuclear weapon.’’

Mark Regev, Olmert’s spokesman, tonight reacted to the Guardian’s story saying: "The need to prevent Iran from obtaining nuclear weapons is raised at every meeting between the prime minister and foreign leaders. Israel prefers a diplomatic solution to this issue but all options must remain on the table. Your unnamed European source attributed words to the prime minister that were not spoken in any working meeting with foreign guests".

Three weeks after Bush’s red light, on June 2, Israel mounted a massive air exercise covering several hundred miles in the eastern Mediterranean. It involved dozens of warplanes, including F-15s, F-16s and aerial refueling tankers.

The size and scope of the exercise ensured that the US and other nations in the region saw it, said a US official, who estimated the distance was about the same as from Israel to Natanz.

A few days later, Israel’s deputy prime minister, Shaul Mofaz, told the paper Yediot Ahronot: "If Iran continues its programme to develop nuclear weapons, we will attack it. The window of opportunity has closed. The sanctions are not effective. There will be no alternative but to attack Iran in order to stop the Iranian nuclear programme."

The exercise and Mofaz’s comments may have been designed to boost the Israeli government and military’s own morale as well, perhaps, to persuade Bush to reconsider his veto. Last week Mofaz narrowly lost a primary within the ruling Kadima party to become Israel’s next prime minister. Tzipi Livni, who won the contest, takes a less hawkish position.

The US announced two weeks ago that it would sell Israel 1,000 bunker-busting bombs. The move was interpreted by some analysts as a consolation prize for Israel after Bush told Olmert of his opposition to an attack on Iran. But it could also enhance Israel’s attack options in case the next US president revives the military option.

The guided bomb unit-39 (GBU-39) has a penetration capacity equivalent to a one-tonne bomb. Israel already has some bunker-busters.

Iran nuclear map Map showing nuclear activity in Iran