Thursday, November 20, 2008

Lawmaker accuses Bush of secrecy over Iraq deal

Go to Original
By Ross Colvin

The U.S. government is refusing to make public the security pact it has signed with Iraq, even though it has already been published in full in an Iraqi newspaper, a congressional hearing was told on Wednesday.

Defense Secretary Robert Gates and Secretary of State Condoleezza Rice were holding a closed briefing for U.S. House of Representatives members on the pact signed on Monday that sets a 2011 deadline for U.S. troops to withdraw from Iraq.

Rep. Bill Delahunt, chairman of the Foreign Affairs Subcommittee on International Organizations and Human Rights, before the closed briefing called it "insulting and an after-thought," after the Bush administration earlier rebuffed calls for Congress to be consulted during year-long negotiations on the agreement.

The administration has said it will not seek congressional approval for the deal. It has been in a hurry to finalize the pact, which Iraqi lawmakers still must approve, before the U.N. mandate under which U.S. troops operate expires on December 31.

Delahunt, who has urged President George W. Bush to renew the U.N. mandate rather than sign a bilateral agreement with Iraq, held the eighth in a series of hearings on the Status of Forces Agreement.

He said the Bush administration had turned down an invitation to attend the open hearing, saying it was a "sensitive time." Experts testifying before his subcommittee were forced to rely on an unofficial English translation of the security deal.

"Even now the National Security Council has requested that we do not show this document to our witnesses or release it to the public. Now that's incredible -- meantime the Iraqi government has posted this document on its media website," Delahunt, a Massachusetts Democrat, said.

He was referring to the Iraqi government-funded al-Sabah newspaper, whose Arabic version of the deal is also the source of the only known unofficial English translation, by the anti-war American Friends Service Committee.

"There is something bizarre about the text being disseminated to the Iraqi people and we are being told we cannot distribute the English-language version of the agreement," said Rep. Howard Berman, a California Democrat who chairs the House Foreign Affairs Committee.


According to the unofficial version, the United States and Iraq are to set up a joint committee to oversee and coordinate all offensive U.S. military operations.

"All such military operations that are carried out pursuant to this agreement shall be conducted with the agreement of the government of Iraq. Such operations shall be fully coordinated with Iraqi authorities," the translated document says.

Oona Hathaway, a law professor at the University of California, Berkeley, said it appeared the agreement would give the joint committee operational control over U.S. military operations. If so, that would be "unprecedented and extremely unusual," she said.

"The president can enter into agreements on his own but this agreement goes far beyond the president's independent constitutional powers," Hathaway said.

She said challenging the legality of the agreement was compounded by the vagueness of much of its wording. She said standard SOFAs are several hundred pages, but the Iraqi one was a little over 20 pages.

On the controversial issue of Iraqi criminal jurisdiction over U.S. soldiers, the unofficial English version says Iraq will have that right "when such crimes are committed outside agreed facilities and outside duty status." It does not define "duty status."

But any U.S. service members arrested or detained by Iraqi forces will be kept in U.S. custody pending trial, it says.

In the future, U.S. forces will not be able to arrest Iraqis without Iraqi approval, and those detained must be handed over to Iraqi authorities within 24 hours, requirements that could potentially complicate military operations, Michael Matheson, a former State Department legal adviser told the hearing.

Arraignment set for Cheney, Gonzales in Texas

Go to Original

A Texas judge has set a Friday arraignment for Vice President Dick Cheney, former U.S. Attorney General Alberto Gonzales and others named in indictments accusing them of responsibility for prisoner abuse in a federal detention center.

Cheney, Gonzales and the others will not be arrested, and do not need to appear in person at the arraignment, Presiding Judge Manuel Banales said.

In the latest bizarre development in the case, the lame-duck prosecutor who won the indictments was a no-show in court Wednesday. The judge ordered Texas Rangers to go to Willacy County District Attorney Juan Guerra's house, check on his well-being and order him to court on Friday.

Half of the eight high-profile indictments returned Monday by a Willacy County grand jury are tied to privately run federal detention centers in the sparsely populated South Texas county. The other half target judges and special prosecutors who played a role in an earlier investigation of Guerra.

One indictment charges Cheney and Gonzales with engaging in organized criminal activity. It alleges that the men neglected federal prisoners and are responsible for assaults in the facilities.

The grand jury accused Cheney of a conflict of interest because of his influence over the county's federal immigrant detention center and his substantial holdings in the Vanguard Group, which invests in private prison companies.

The indictment accuses Gonzales of stopping an investigation into abuses at the federal detention center.

An attorney for the private prison operator The GEO Group filed motions accusing Guerra of "prosecutorial vindictiveness."

One motion said Guerra had hijacked "the grand jury process and disregarded the requirements of the Code of Criminal Procedure designed to protect defendants' due process rights."

Some attorneys argued that Banales may not have the authority to schedule an arraignment because the indictments were invalid. One lawyer said Guerra never should have been allowed to present the cases to the grand jury because at least four of the indictments deal with people who had some role in the investigation of his office last year.

"He is the witness, the victim and the prosecutor," said the attorney for Mervyn Mosbacker Jr., a former U.S. attorney who was appointed special prosecutor to investigate Guerra.

District Clerk Gilbert Lozano, District judges Janet Leal and Migdalia Lopez, and special prosecutors Mosbacker and Gustavo Garza, a longtime political opponent of Guerra, were all indicted on charges of official abuse of official capacity and official oppression.

The grand jury tied all of their charges to an earlier investigation of Guerra's office.

Banales dismissed an indictment against Guerra last month charging him with extorting money from a bail bond company and using his office for personal business. An appeals court had earlier ruled that a special prosecutor was improperly appointed to investigate Guerra.

After Guerra's office was raided as part of the investigation early last year, he camped outside the courthouse in a borrowed camper with a horse, three goats and a rooster. He threatened to dismiss hundreds of cases because he believed local law enforcement had aided the investigation against him.

Guerra has been in office nearly 20 years, but was defeated in the March Democratic primary.

Cheney charged over jail 'abuses'

Go to Original

A Texas grand jury has charged US Vice-President Dick Cheney for "organised criminal activity" related to alleged abuse of private prison inmates.

The indictment says Mr Cheney - who has invested $85m (£56m) in a company that holds shares in for-profit prisons - conspired to block an investigation.

The indictment has not been seen by a judge, who could dismiss it.

Mr Cheney's spokeswoman declined to comment, saying his office had not yet received a copy of the charges.

One Texas lawyer said the charges were politically motivated.

'Conflict of interest'

The indictment was overseen by county District Attorney Juan Guerra, an outgoing prosecutor at the end of his term of office.

He cites the case of Gregorio De La Rosa, who died on 26 April, 2001 inside a private prison in Willacy County, Texas.

The grand jury in Willacy County, near the US-Mexico border, accuses Mr Cheney of committing "at least misdemeanour assaults" of inmates by allowing other inmates to assault them.

It said there was a "direct conflict of interest" because Mr Cheney had influence over federal contracts awarded to prison companies.

US grand juries weigh evidence to decide whether a case is worthy of being sent for a full trial, before issuing formal charges known as indictments.

The three-page indictment also alleges that former US Attorney General Alberto Gonzales "used his stop the investigations as to the wrong doings."

The grand jury wrote that it made its decision "with great sadness," but said they had no other choice but to indict Mr Cheney and Mr Gonzales "because we love our country."

Several other related indictments were brought against a host of public officials in what one lawyer called a circus act by the outgoing prosecutor, Mr Guerra, who he said was seeking revenge in his final weeks in office.

Taxpayers will pay for Gonzales' private attorney

Go to Original
By Marisa Taylor

The Justice Department has agreed to pay for a private lawyer to defend former Attorney General Alberto Gonzales against allegations that he encouraged officials to inject partisan politics into the department's hiring and firing practices.

Lawyers from the Justice Department's civil division often represent department employees who're sued in connection with their official actions. However, Gonzales' attorney recently revealed in court papers that the Justice Department had approved his request to pay private attorney's fees arising from the federal lawsuit.

Dan Metcalfe, a former high-ranking veteran Justice Department official who filed the suit on behalf of eight law students, called the department's decision to pay for a private attorney rather than rely on its civil division "exceptional."

"It undoubtedly will cost the taxpayers far more," he said.

According to a person with knowledge of the case, the Justice Department has imposed a limit of $200 an hour or $24,000 a month on attorneys' fees. Top Justice Department attorneys generally earn no more than $100 per hour. The person spoke on the condition of anonymity because of the sensitivity of the case.

Asked why Gonzales made the request, Gonzales spokesman Robert Bork Jr. said that his client "values the work that the department's civil attorneys do in all cases" but thinks that "private counsel can often be useful where (department) officials are sued in an individual capacity, even where the suit has no substantive merit."

Charles Miller, a Justice Department spokesman, said the department wouldn't have any comment on the reasons for the approval and wouldn't answer questions about the cost to taxpayers.

The lawsuit accuses Gonzales and four other former and current Justice Department officials of instituting hiring practices that blocked liberal-leaning applicants from two department programs for law students. Gonzales resigned last year amid a controversy over the alleged hiring practices and over the firings of nine U.S. attorneys.

George J. Terwilliger III, a former deputy attorney general under President George H.W. Bush, is listed in court papers along with two other attorneys from his firm as representing Gonzales in the lawsuit.

It's unclear, however, whether Terwilliger will continue to represent Gonzales or whether another private attorney will take over the case. In court papers, he indicated that the department had to approve Gonzales' choice of an attorney, but added that the department generally defers to the defendant.

Miller wouldn't say whether other defendants in the suit have asked the department to pay for private attorneys. So far, other officials named in the lawsuit haven't indicated to the court whether they've made similar requests.

Metcalfe filed the lawsuit after Justice Department watchdog reports found that department officials under Gonzales weeded out liberal-leaning applicants in favor of conservative ones for various jobs ranging from internships to prosecutor slots and immigration judgeships. In a separate but related report, the two watchdog agencies detailed "substantial evidence" that Republican politics had played a role in several of the firings of the Bush-appointed U.S. attorneys.

The applicants who've sued are all from top-tier law schools, and they allege that their careers were irreparably harmed because they were rejected by the department's honors and summer internship programs. Metcalfe, who's now the executive director of American University Washington College of Law's Collaboration on Government Secrecy, is seeking class action status for the suit.

Attorney General Michael Mukasey, who took over the department after Gonzales resigned during the controversy, has conceded that high-ranking Justice Department officials failed to stop what he described as a "systemic" hiring problem within the department.

Mukasey, however, rejected what he described as "drastic steps" such as prosecuting department lawyers singled out in the reports. He said he'd put a stop to the practices and would attempt to contact applicants who'd been rejected for political reasons and encourage them to reapply for other jobs.

The department sent out letters notifying applicants of the opportunity, but gave them only weeks to respond, according to its Web site. The Web site said that applicants were interviewed last month, but Miller wouldn't say how many people responded.

In court papers, Metcalfe criticized the department's handling of the letters. Several of the rejected applicants contacted him after receiving them, worried that if they agreed to be re-interviewed they might lose their right to participate in a class action lawsuit. Metcalfe questioned why the department hadn't informed the applicants about the suit.

Treasury Denounced Over Bailout

Go to Original

The Treasury secretary, Henry M. Paulson Jr., on Tuesday rejected pleas to use money from the $700 billion bailout program to help homeowners avoid foreclosure or to stave off bankruptcy by Detroit’s Big Three automakers.

Facing a barrage of complaints from Democratic lawmakers that he was ignoring the will of Congress, Mr. Paulson dug in his heels and said he wanted to put money only into financial institutions.

“The primary purpose of the bill was to protect our financial system from collapse,” Mr. Paulson told the House Financial Services Committee. “The rescue package was not intended to be an economic stimulus or an economic recovery package.”

Democrats pummeled the Treasury secretary in response, with some accusing him of carrying out a “bait and switch” by discarding his original plan and others expressing fury that the Treasury had allocated $290 billion for banks and insurance companies but nothing for individual homeowners.

“The bill is replete with authorization to you, not simply to buy up mortgages, but in effect to do some spending,” said Representative Barney Frank, citing a four-page list of provisions. “Clearly part of this was not just to stabilize, but to reduce the number of foreclosures, for good macroeconomic reasons.”

The clash took place as Democratic leaders in Congress remained deadlocked with Republicans and President Bush over a $25 billion rescue package for Detroit and a broader $100 billion economic stimulus package.

Mr. Bush and Republican lawmakers oppose the measures, and Senate Democrats do not appear to have enough votes to override a filibuster.

As a result, Democratic lawmakers increasingly predict that they will have to wait until January, when President-elect Barack Obama takes office and Democrats attain a nearly filibuster-proof majority in the Senate.

Since Mr. Bush passed the bailout law six weeks ago, the Treasury has allocated about $250 billion for banks and $40 billion as part of the bailout for the American International Group, the insurance conglomerate.

Mr. Paulson acknowledged that he had the authority to use bailout money for homeowners, but he insisted that the money should go toward “investment” in financial institutions rather than “spending” on rescue efforts.

“We have seen that capital purchases are clearly powerful in terms of impact for dollar of investment,” he said in his prepared testimony.

But Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corporation, warned that the country could expect a tidal wave of up to five million foreclosures over the next two years if the government took no additional action.

“The stakes are too high and the time is too short to rely on voluntary agreements,” Ms. Bair told lawmakers.

Ms. Bair, who has publicly broken ranks with the Bush administration, is proposing that the Treasury use $24.4 billion from the bailout program to help refinance and reduce the mortgage obligations of people who are delinquent on their payments and in danger of losing their homes.

Her proposal is based on a program that the F.D.I.C. already put in place for people with loans at IndyMac, the failed California bank that the agency took over this summer.

Under her plan, the Treasury would refinance mortgages for people if it is possible to reduce their monthly payments to about 32 percent of their monthly income. To encourage existing mortgage lenders to settle for lower payments, the government would accept responsibility for half of the losses if the homeowner defaults a second time.

Democratic leaders have strongly endorsed the idea. “Further delay in implementing these solutions is unacceptable,” said the House speaker, Nancy Pelosi of California. Mr. Obama has called for a mortgage-relief program as well.

The other major point on which Mr. Paulson clashed with the lawmakers was the rescue of the car companies.

Representative Paul E. Kanjorski, Democrat of Pennsylvania, expressed bewilderment that Mr. Paulson would bail out banks but not carmakers.

“Do you consider the loss of an automobile company a systemic risk, or don’t you?” Mr. Kanjorski said.

“I think it would be something to be avoided,” Mr. Paulson responded.

On the Senate side of Capitol Hill, the chairmen of General Motors, Ford and Chrysler pleaded before the Senate banking committee for a $25 billion rescue package that would come on top of a $25 billion loan program that is aimed at financing the production of energy-efficient vehicles.

White House and Treasury officials said that the companies should make do with the loans, which would be made through the Energy Department.

Republican lawmakers are opposed to the Democratic efforts, but they gave Mr. Paulson a hard time as well.

Representative Spencer Bachus, Republican of Alabama, complained that Mr. Paulson was unclear about his goals and did not have an “exit strategy” for the government. Representative Steven C. LaTourette, Republican of Ohio, lambasted the Treasury secretary for “picking winners and losers” and using the bailout program to force the recent merger between PNC Financial Services and the National City Corporation.

Mr. Paulson defended his strategy, but said he hoped to avoid committing any more of the bailout money, from the troubled asset relief program, before Mr. Bush’s term ends in January.

“We have learned that this financial crisis is unpredictable and difficult to counteract,” Mr. Paulson said. “We concluded that it was only prudent to reserve our TARP capacity, maintaining not only our flexibility, but that of the next administration.”

Ben S. Bernanke, the chairman of the Federal Reserve, testified alongside Mr. Paulson and Ms. Bair. All three officials agreed that the financial and credit crisis was far from over.

Mr. Bernanke said there were some signs that the credit markets were improving, but he cautioned that “over all, credit conditions are still far from normal, with risk spreads remaining very elevated and banks reporting that they continued to tighten lending standards.”

Congress Blames Treasury as Foreclosures Mount

Go to Original
By Adrianne Appel

A congressional banking leader Tuesday blew hot air and blame at the U.S. treasury secretary about the ongoing home foreclosure crisis, but neither made a commitment to help stressed homeowners.

Congress is officially out of session, except for this week, and has no plan to address the looming problem of foreclosures until it returns in January, when Pres.-elect Barack Obama takes office.

Congress would have full authority to do so.

Instead, Rep. Barney Frank, chair of the House Financial Services Committee, told Treasury Secretary Henry Paulson that he should address the foreclosure problem and direct money from a special 700-billion-dollar fund to homeowners in trouble.

'It is essential that we do something, that we use some of the [funds] toward foreclosure reduction,' Frank said.

Paulson, a lame-duck secretary who will leave in January when Pres.-elect Obama appoints a new secretary, said he knows how he is going to spend the remaining funds, and foreclosure assistance and an auto industry bailout is not part of his plan.

Congress has been apprised of Paulson's spending, has vast authority over it, and could have directed him to intervene on behalf of homeowners.

Congress handed the 700 billion dollars to Paulson on Oct. 3, after Paulson said the emergency money was urgently needed to prevent a wholesale collapse of the U.S. banking system and economy. The U.S. public was highly critical of the plan, and called Congress by the thousands, but legislators, led by Frank and other Democrat leaders, authorised the money.

Without help, five million U.S. homes will be lost to foreclosure in the next two years, according to the Federal Deposit Insurance Corporation. Two million have already been foreclosed on.

Committee member Maxine Waters expressed anger that she helped win votes for the 700 billion dollars, which she said she thought would be spent on foreclosure assistance.

'I worked very hard to pass this [bailout] legislation. I was looked at with suspicion when I sold this to the Congressional Black Caucus. I am disappointed you have just divorced yourself from dealing with foreclosures,' Waters told Paulson.

Paulson, formerly of Goldman Sachs, has spent the funds directly on financial firms, and spent hundreds of millions to hire financial firms to disperse the money, and track it.

'We are turning the corner. We have stabilised the system and prevented a collapse. We have a lot of work ahead. It's a lot of work to get the markets going again,' Paulson said.

Paulson has given 125 billion dollars in cash to nine of Wall Street's largest firms, in exchange for limited stock, and 148 billion dollars so far to other smaller banks.

'You, Secretary Paulson, took it upon yourself to ignore the authority and direction that Congress gave you. I couldn't believe it when I heard that you abandoned the foreclosure effort,' Waters said.

Paulson expects to spend up to 350 billion dollars before he leaves office, and said the remainder will be directed to credit card companies, and businesses that make auto and education loans.

None will go toward foreclosure assistance or the auto industry, he said.

'I feel a great responsibility to stick with the purpose of the [fund], to stabilise and strengthen the financial system. Auto companies fall outside that purpose,' Paulson said.

'Why are foreclosures still increasing, in light of the 700 billion dollars spent at taxpayers' expense?' Rep. Nydia Velazquez asked Paulson.

'It's hard to imagine we're not going to have a large number of foreclosures when you look at what we've gone through, and the shoddy lending practices,' Paulson said.

Sheila Bair, chairwoman of the Federal Deposit Insurance Corporation, has a plan in hand to help homeowners, and told Frank and Paulson she needs 24 billion dollars to get it started. It appears homeowners may have to wait until January for Congress or the Treasury to consider funding it.

None of the powerful congressional leaders nor Paulson has stepped forward to propose funding for it.

Frank told Paulson that he should address the foreclosure problem.

'The fundamental policy issue is our disappointment that funds are not being used out of the 700 billion dollars to supplement mortgage foreclosure reduction,' Frank said.

Waters expressed frustration that Paulson has refused so far to fund Bair's plan, and said it is badly needed. Mortgage holders are not voluntarily trying to re-negotiate their unfair loans, she said.

Waters' office is trying to help 26 homeowners to re-negotiate lower interest rates on unfair loans.

'It is absolutely ridiculous. One of the banks is Wells Fargo. I've had to go all the way to the chairman. I stay on the line for one hour just trying to get to a servicer. Then when you talk to the servicer, they don't even know enough to evaluate the incomes of the owners,' she said.

The foreclosures are at the centre of the financial meltdown, and unless stemmed, will continue to drag down the U.S. and global economy, economists told the panel.

'Stopping the financial crisis and getting credit flowing again requires ending the spiral of mortgage foreclosures and the expectation of very deep further house price declines,' said Martin Feldstein, of Harvard University.

Alan Blinder, an economist at Princeton University, painted a bleak picture of the next year.

'The hope that we might avoid a serious recession is now gone,' he said.

Blinder said that if the U.S. takes aggressive action by spending billions on infrastructure and other projects, the country may be able to hold unemployment at 8 percent. It currently stands at 6.5 percent.

Builders Index Hits New Low, Housing Starts Plunge Again

Go to Original
By Dean Baker

"Falling construction will lead to a large drop in 4th quarter GDP."

The National Association of Home Builders' housing market index fell to a new low of 9 in October, dropping 5 points from the September level. The Census Bureau reported that housing starts dropped 4.5 percent in October to an annual rate of 791,000. Construction of single-family homes fell by 3.3 percent to a 531,000 annual rate. The construction rate on single-family homes is the lowest since October of 1981, when it was at a 523,000 annual rate. The overall rate is the lowest since at least 1959.

The sharpest falloff in starts in October was in the Northeast, where they declined by 31.0 percent from the September level. The decline was entirely in multi-unit structures as there was no change in starts in 1-unit structures. Starts of 1-unit structures in the Northeast are down 40.6 percent from their year ago level, while starts in multi-unit buildings are down 51.6 from year ago level. While the Northeast has experienced the sharpest drop in starts over the last year, this is mostly due to the fact that starts had held up better in the region through 2006 and most of 2007.

The fall-off in building permits was even sharper than the decline in starts. Overall permits fell by 12.0 percent, with permits for 1-unit structures falling by 14.5 percent. The sharpest decline in permits was also in the Northeast, with overall permits down by 23.7 percent from the September level and by 51.0 percent from October of 2007.

The drop in permits for single-family homes was somewhat less steep, 16.4 percent compared with September and 39.5 percent compared with November of 2007. The South saw the next sharpest drop in permits, with an overall decline of 13.5 percent compared with September and a drop of 14.4 percent in permits for single-family homes.

The sharp decline in permits is noteworthy since it likely indicates that builders are having difficulty getting credit. This is another case where business problems due to a fall in demand can wrongly be attributed to a credit crunch. Most builders have taken large losses in the last two years. With record inventories of unsold homes and rapidly falling house prices, there is little prospect in most areas of making substantial profits on new residential units. Given these conditions, even well-capitalized banks would be reluctant to make loans for new construction. The problem is the condition of the housing market, not access to credit.

There is no reason to think that the housing market will turn around any time soon, although the continued decline in starts is a good sign from this vantage point. The enormous over-supply of homes on the market will be absorbed more quickly if builders stop adding to the inventory.

However, there will continue to be large numbers of homes put on the market through foreclosure and other distress sales. The pressure from this direction is likely to worsen in the months ahead given the sharp jump in job loss that we have seen the last two months. There may be important questions about preventing a downward spiral of house prices as falling prices lead to more foreclosures while at the same time reducing the number of potential buyers by destroying home equity. Unfortunately, it is not possible to have a serious discussion of appropriate policies to stabilize prices without distinguishing between bubble and non-bubble markets, something that policymakers and economists find difficult to do.

The data on starts and permits suggest that residential construction is likely to continue to slow in the months ahead. The decline in residential construction subtracted 0.72 percentage points from GDP growth in the third quarter. The data on starts and permits suggest that it may have a comparable effect on 4th quarter GDP. With non-residential construction also falling, and consumer expenditures likely to show a sharp decline and the big jump in defense spending likely to be reversed, the 4th quarter may show one of the worst growth figures on record.

On Top of Humanitarian Disaster, A News Blackout

Go to Original
By Cherrie Heywood

Israel has imposed a virtual news blackout on the Gaza Strip. For the last ten days no foreign journalists have been able to enter the besieged territory to report on the escalating humanitarian crisis caused by Israel's complete closure of Gaza's borders for the last two weeks.

Steve Gutkin, the AP bureau chief in Jerusalem and head of Israel's Foreign Press Association, said that he personally "knows of no foreign journalist that has been allowed into Gaza in the last week."

Gutkin said that "while Israel has barred foreign press from entering Gaza in the past, the length of the current ban makes it unprecedented." He added that he has received no "plausible or acceptable" explanation for the ban from the Israeli government.

AP has relied on reports from two of its journalists who were able to enter Gaza days before the closure began and are currently stuck there.

A delegation of European Union parliamentarians was also prevented from entering Gaza to assess the situation on the ground and to hold talks with Hamas leaders. They subsequently broke the naval siege of Gaza by entering the coast's territorial waters from Cyprus by boat, defying the Israeli navy.

During talks held with Hamas, the EU parliamentarians were able to get a historic commitment from the Islamic organisation to recognise Israel's right to exist within the internationally recognised 1967 borders. Hamas further offered a long-term ceasefire in return for Israel legitimising Palestinian rights.

Israel also prevented 20 European Union consul-generals from entering Gaza on Thursday. On Sunday Israeli border police prevented 15 trucks loaded with medication from entering the Gaza Strip.

EU commissioner for external relations and European neighbourhood policy, Bentita Ferrero-Waldner, has expressed strong reservations. "I am profoundly concerned about the consequences for the Gazan population of the complete closure of all Gaza crossings for deliveries of fuel and basic humanitarian assistance," Ferrero-Waldner said in a statement Friday.

Karen AbuZayd, head of the UN Relief and Welfare Agency (UNRWA) which cares for Palestinian refugees, added that it was unusual for Israel not to let basic food and medicines in. "This has alarmed us more than usual because it's never been quite so long and so bad, and there has never been so much negative response on what we need," she said.

Israel closed the borders following a barrage of rockets fired by Palestinian resistance fighters at Israeli towns bordering the Gaza Strip.

The tit-for-tat violence began on Nov. 4 when the Israeli Defence Forces (IDF) launched a cross-border raid into Gaza, breaking a shaky five-month ceasefire with Hamas. The purpose was ostensibly to destroy a tunnel built by Palestinians allegedly to smuggle captured Israeli soldiers.

More than 20 Palestinians were killed in Israeli raids. Two Israelis were lightly injured in the subsequent rocket attacks.

The timing of Israel's breach of the ceasefire is curious in that hundreds of these smuggling tunnels have existed ever since Hamas took over the strip in June last year. They have been used to smuggle everyday necessities as well as arms because the territory is hermetically sealed by Israel.

John Ging, director of UNRWA in Gaza, who has lived there for the past three years, questioned the alleged security reasoning behind the closure. Since the ceasefire went into place this summer, Ging said, fewer supplies have passed through the crossing than in the beginning of 2006, when the western Negev in Israel suffered incessant rocket fire from Gaza.

At that time the Palestinian Authority (PA), which is supported by Israel and the international community, was ruling Gaza in a unity government with Hamas.

"Last week we were unable to feed 60,000 of Gaza's neediest refugees due to our warehouses running out of food. UNRWA supplies half of Gaza's population of 1.5 million people with emergency rations, and 20,000 people are fed per day when there are adequate supplies," Ging told IPS.

Seventy percent of Gaza experienced electricity blackouts after Israel prevented deliveries of diesel fuel, forcing Gaza's main power plant to close down.

"The Israelis were only allowing 2.2 to 2.5 million litres of fuel in per week prior to the closure, which was the minimum required to operate the power plant. The plant has a capacity for 20 million litres and this would last two months under normal circumstances and tide over emergency periods. But this has all run out," Ging said.

Kan'an Ubeid, deputy chief of the Palestinian Energy Authority, said at a press conference in Gaza that in addition to the shutdown of the diesel-fuelled power plant, the electric network bringing in power from Israel collapsed due to increased pressure on the system.

Gazans also ran out of cooking gas while Gaza's Coastal Municipalities Water Utility (CMWU) was forced to pump tonnes of untreated sewage into the ocean due to fuel shortages and the lack of spare parts for equipment in need of repairs and new parts.

Much of this will flow back into Gaza's underground water table, and the threat of contaminated drinking water spreading diseases has increased.

Meanwhile, the emergency and ambulance services director-general, Mu'awiyya Hassanein, says Gaza's health ministry is short of more than 300 types of necessary medication.

Sammy Hassan, a spokesman from Gaza city's main Shifa hospital said only urgent surgery was being carried out. "We have delayed all non-urgent surgery as our small generator has stopped working, as we can't import a vital spare part.

"We are down to 30,000 litres of fuel left to run the larger generator which is used when electricity is cut. Under the current circumstances with no electricity we require 10,000 litres per day," Hassan told IPS.

Philip Luther, deputy director of Amnesty International's Middle East programme, said that Israel's latest tightening of the blockade had "made an already dire humanitarian situation markedly worse. This is nothing short of collective punishment on Gaza's civilian population, and it must stop immediately."

Following international pressure and protests from the EU, Israel allowed 30 trucks of humanitarian aid to enter the strip Monday. "It will last a matter of days," said UNRWA spokesman Christopher Gunness. "But then what?"

Oxfam's spokesman in Jerusalem Michael Bailey, who coordinates a number of humanitarian projects in Gaza, said this response was entirely inadequate.

"Thirty trucks of aid after a closure of 10 days is insufficient. What we need is a complete revision of the embargo on Gaza. Dialogue with the relevant political leaders is the only way forward," Bailey told IPS.

"Both Israel and Gaza's other neighbours need to put the human rights and essential needs of Gazans above all considerations if there is to be a way out of this quagmire."

Why We Shouldn't Bail Out GM

Go to Original
By Nicholas von Hoffman

Now it is the auto parts suppliers who want government money. They employ 600,000 people, more than work for the automobile companies themselves.

If the standard for giving out money to companies is the threat of lost jobs, the auto parts suppliers’ claim is as good as that of General Motors. The argument against subsidizing money-losing companies to preserve employment is that it would be impossible to think up a more expensive way of helping people.

There ought to be another way -- and there is. Unemployment compensation should be expanded to ensure those losing their jobs will not lose their houses or their health insurance. Helping people on that scale will not be cheap, but helping them by propping up corporate losers is infinitely more costly: sooner or later people will find other employment, but the automobile companies will never turn a profit.

They have been steadily losing money for a generation. Their predicament has nothing to do with today’s credit crunch or the stock market crash. It has to do with their being incorrigible foul-ups.

Their record for money-losing is beyond comprehension. David Yermack, professor of finance at New York University’s Stern School of Business, has calculated how much capital the car companies have destroyed over the last few decades.

He writes, "General Motors and Ford...between them...destroyed $110 billion in capital between 1980 and 1990.... GM has invested $310 billion in its business between 1998 and 2007. The total depreciation of GM’s physical plant during this period was $128 billion, meaning that a net $182 billion of society’s capital has been pumped into GM over the past decade -- a waste of about $1.5 billion per month of national savings. The story at Ford has not been as adverse but is still disheartening, as Ford has invested $155 billion and consumed $8 billion net of depreciation since 1998. As a society, we have very little to show for this $465 billion."

Having eaten its way through almost a half-trillion dollars, the American car industry will gulp down the $25 billion now proposed to save it faster than most of us can swallow. The Democratic leaders in Congress think they can prevent that and force a turnaround by attaching some kind of government oversight board to the financial aid. Such a board might make sure that executives do not draw down indefensibly high salaries, but any such arrangement will make it doubly certain the companies will not find their way back to prosperity.

Not that revivals are impossible. General Motors teetered on the edge of bankruptcy once before, in 1920. Then, as now, the cause was incompetent management. At that time one of GM’s biggest stockholders was the du Pont family, who realized that its investment was in danger of evaporating. To save its holdings the family put its most talented member, Pierre S. du Pont, on a train to Detroit.

Once settled in at GM, du Pont installed Alfred P. Sloan as its new president. Together these two business geniuses created the single greatest industrial organization of the last century. At its apogee under Sloan, General Motors became the model for creative and effective corporate management. Quite literally, the world had seen nothing like it.

This is the inheritance that the epigones running Detroit’s today have ruined. What they have done is a crime against their stockholders, employees of the Big Three, their customers and the nation.

Now we are amid these splendid corporate ruins. The best hope -- and it is only a hope -- is bankruptcy. With bankruptcy comes the chance of reorganization, the breaking of the anachronistic union contracts and the possibility of new and effective management. A modern version of du Pont and Sloan is asking too much, but surely somewhere in the three major car companies there are more effective and courageous executives than those now them.

The Republicans are against a bailout for the usual doctrinaire reasons -- free market blah-blah, creeping (or galloping) socialism. Such meaningless abstractions aside, the reality is that a society pockmarked by large, losing, subsidized corporations is a society on the way to the poorhouse. By propping up GM and saving some jobs now, we will see many more lost just down the road.

Report: U.S. Uses Aid to Promote Non-Humanitarian Goals

Go to Otiginal
By Colum Lynch

Survey Respondents Say Military Objectives Prioritized Over Humanitarian Ones

The United States, the world's largest international aid donor, is among the worst at promoting the independence, impartiality and neutrality of humanitarian aid deliveries to needy populations, according to a survey by a Madrid-based nonprofit group that monitors donors' performance.

The Development Assistance Research Associates (DARA) Humanitarian Response Index 2008 measures how effectively the world's 23 largest donors deliver aid. The United States ranked 15th in overall effectiveness and only 13th in the level of generosity measured by the size of its economy.

But it ranked near the bottom, 22nd, when it came to adherence to principles and guidelines established by the Organization for Economic Cooperation and Development to ensure that political considerations don't exclude worthy recipients of aid.

DARA's findings reflect what it called the United States' use of humanitarian assistance to achieve military or political goals in eight crisis zones the group studied, including Afghanistan, Colombia and the Palestinian territories.

The "assessment challenges the view of the United States, deeply embedded in the American psyche and regularly reinforced in the rhetoric of public officials, as the world's pre-eminent humanitarian actor, the paragon of global compassion," Larry Minear, a retired professor at Tufts University, wrote in the report.

Silvia Hidalgo, DARA's executive director and co-founder, urged President-elect Barack Obama to improve the U.S. approach. "American leadership in the field of humanitarian relief would improve the perception that people around the world have of the United States and would also inspire other donor countries to do their best on behalf of the world's least fortunate," Hidalgo said.

DARA's survey is based on interviews with more than 350 humanitarian aid agencies in 11 crisis areas -- Afghanistan, Bangladesh, the Central African Republic, Chad, Colombia, Congo,Nicaragua, the occupied Palestinian territories, Peru, Sri Lanka and Sudan. Sweden, Norway and Denmark were the highest performers, while France, Austria, Italy, Portugal, and Greece received the lowest marks.

The findings echo concerns by humanitarian aid workers that American strategy subordinates humanitarian considerations to the need to achieve military objectives. During the past decade, the Pentagon's share of the U.S. overseas development assistance budget has grown from 3.5 percent to 18 percent, said George Rupp, the president of the International Rescue Committee.

For instance, the United States and its NATO partners channel much of their aid dollars in Afghanistan through Provincial Reconstruction Teams(PRTs), military groups that oversee military and civilian activities in the country's conflict zones. The report said that placing NATO forces in charge of some relief and development operations has "blurred" the line between civilian and military activities, threatening to expose humanitarian aid workers to attacks by Taliban militants.

The United States and other aid donors say that it is essential to use humanitarian assistance to win over the hearts and minds of the population. They have criticized DARA's index, saying it relies too heavily on the perceptions of aid workers in the field. A call to the U.S. mission at the United Nations was not immediately returned.

Rupp said his organization has refused to participate in the PRT program in Afghanistan because it "decreases the security of our humanitarian workers on the ground." Rupp said his organization delivered assistance in the Afghan town of Gardez for more than 15 years without incident. But he said locals began to "call into question our impartiality" when they saw NATO military vehicles and soldiers distributing aid and rebuilding schools in the area.

Rupp said his organization also has declined U.S. funding in Colombia because it was channeled through an anti-narcotics programs that would have made it difficult to "observe our principle of impartiality. It puts you so clearly on one side of the divide," he said.

GM, Ford, Chrysler Depart From Congress Empty-Handed

Go to Original
By John Hughes and Jeff Green

U.S. lawmakers deadlocked on a plan to bail out the Big Three automakers, leaving General Motors Corp. facing the prospect it could run out of cash before a new Congress can come to the rescue next year.

Democratic congressional leaders disagreed with Republicans and President George W. Bush's administration over how to provide $25 billion in aid to GM, Ford Motor Co. and Chrysler LLC. Only two days remain in a lame-duck session for lawmakers to resurrect a compromise.

Senate Majority Leader Harry Reid, a Nevada Democrat, suggested yesterday the situation was dire and refused to set aside time today to debate a compromise proposed by Senator Kit Bond, a Missouri Republican. Reid said Bond's plan hasn't been put in writing and the House of Representatives is about to adjourn.

``We have to face reality,'' he said. ``The reality is that we tried a number of different approaches.''

Bond and fellow Republican George Voinovich of Ohio insisted they weren't giving up on their proposal to speed up and broaden access to $25 billion already approved for fuel- efficient vehicle development that was a compromise.

``We've made great progress,'' Bond said. ``We are down to the point now where wording challenges are about the only remaining things to deal with.''

Plunging Shares

GM's German-traded shares fell 7.9 percent to the equivalent of $2.57 as of 11:09 a.m. in Frankfurt. GM has plunged 89 percent this year in New York trading. Ford shares rose 3.2 percent in Germany. The stock has declined 81 percent this year in the U.S.

A Democratic plan to help the automakers with funds from the recently approved $700 billion bank-rescue package stalled in the face of Republican opposition and a Bush veto threat. It may be revived next year after President-elect Barack Obama takes office in January and Democrats install a strengthened majority in both houses.

GM Chief Executive Officer Richard Wagoner said automakers would like action before Obama takes over because a global credit crunch that has slammed sales in the U.S. is spreading to global auto markets.

GM, the biggest U.S. automaker, said Nov. 7 it may run short of the $11 billion minimum cash it needs to pay its bills each month by the end of this year and will fall ``significantly'' short of that level by the middle of next year.

Cash Augmentation

The Detroit automaker burned through $6.9 billion in cash in the third quarter and had $16.2 billion on Sept. 30. Wagoner said yesterday he expects the automaker to slow its cash use to the $3.6 billion a quarter rate of the first half of this year.

``We're continuing to do everything we can to augment our cash position,'' Wagoner said in an interview yesterday after eight hours of testimony split between the U.S. House and Senate over two days.

``We've been stretched to do stuff that we thought was very difficult and painful to do already this year,'' he said. ``People are thinking every day of new ideas.''

Wagoner, Ford CEO Alan Mulally and Chrysler CEO Robert Nardelli left the Capitol after two days of appeals for help were rejected.

The companies are seeking aid as industry-wide sales have plummeted to a 17-year low. GM this month said it lost $4.2 billion in the third quarter and almost $73 billion since the end of 2004.

One Chance for Aid

Senate Republican leader Mitch McConnell of Kentucky urged lawmakers to let automakers shift the previously approved loans intended to promote fuel efficiency for day-to-day operations instead.

``It is the only proposal now being considered that has a chance of actually becoming law,'' he said.

White House spokeswoman Dana Perino endorsed the Bond- Voinovich plan yesterday. ``If the Congress fails to act, the most logical interpretation would be that they don't agree that an additional $25 billion needs to be given to the auto industry,'' she said.

Reid responded that the White House has authority to funnel the financial-rescue money to car companies without congressional action.

``No one should be overly concerned if we are unable to reach agreement,'' Reid said in a statement. ``It will still be up to the White House and the Treasury Department to take the steps that I believe are necessary.''

Environmental Initiatives

``There will be a great deal of resistance in the House'' to redirecting the fuel-efficiency loans without previously approved environmental safeguards, said House Financial Services Chairman Barney Frank, a Massachusetts Democrat.

Wagoner wouldn't rule out shifting the previously approved funds to keep his company afloat. ``It could work,'' he said.

Representatives including Democrats Gary Ackerman of New York and Bradley Sherman of California criticized the auto chiefs for taking private jets to Washington to plead their case.

``Couldn't you all have downgraded to first class?'' Ackerman said. Added Sherman, ``I don't know how I go back to my constituents and say the auto industry has changed.'' The auto chiefs didn't talk about their jet use in response.

Representative Peter Roskam, an Illinois Republican, challenged Wagoner and Mulally to forgo pay for a year, saying he understood Nardelli was agreeable to the idea.

Wagoner said he had ``no position'' on that. Mulally said, ``I think I'm OK where I am.''

Jets and Salaries

The GM CEO got $14.4 million in compensation in 2007, including a salary of $1.56 million. Mulally received $21.7 million for 2007, including $2 million in salary.

Wagoner said he recognizes the government will play a greater role in telling the automakers how to run their business in the future, if aid is approved.

``Certainly at minimum they are going to want to look at your future plans and how are you delivering against those future plans as steward for the taxpayers,'' he said.

``In a certain way, being able to lay out the business issues as we see them, in some sort of setting where confidential data can be shared, I think people would understand our business and maybe that in the end would be helpful.''

The Canadian divisions of all three automakers have asked for loans or loan guarantees from that country's government, the Globe and Mail reported. Chrysler is seeking C$1 billion ($797 million) in aid, the newspaper said, citing people familiar with the discussions.

`Back at the Trough'

U.S. federal aid for the Big Three would remove much of the urgency for tough restructuring decisions, said Representative Michele Bachmann, a Minnesota Republican.

``It's easy to predict that you will be back at the taxpayers' trough in no time at the rate that money is being burned in Detroit,'' she said.

Carmakers are cutting production to cope with declining demand, including a 33 percent reduction in North American output by Ford this quarter. GM said today it's suspending production of cars and trucks in Thailand for a month and cutting 8 percent of the workforce there because of falling demand in Asia.

Wagoner said the trip to Washington taught him that Detroit's plight isn't translating well outside the Midwest.

``What I learned, I think we get out and tell our story pretty well, and then something like this happens and you say `Well geesh' it's like nobody knows what we did,'' Wagoner said in the interview. ``Well, then, it has to start with us. We have to do a better job, a more regular job, of keeping people update, listening to their concerns, trying to respond to them.''

Before calling it quits for the year, the Senate plans to approve a seven-week extension of unemployment insurance benefits that would cost around $6 billion.