Go to Original
By Christopher Goodwin
As George W Bush prepares to leave the White House, at least one unpleasant episode from his unpopular presidency is threatening to follow him into retirement.
A $70m lawsuit filed by Dan Rather, the veteran former newsreader for CBS Evening News, against his old network is reopening the debate over alleged favourable treatment that Bush received when he served in the Texas Air National Guard during the Vietnam war. Bush had hoped that this controversy had been dealt with once and for all during the 2004 election.
Eight weeks before the 2004 presidential poll, Rather broadcast a story based on newly discovered documents which appeared to show that Bush, whose service in the Texas Air National Guard ensured that he did not have to fight in Vietnam, had barely turned up even for basic duty. After an outcry from the White House and conservative bloggers who claimed that the report had been based on falsified documents, CBS retracted the story, saying that the documents' authenticity could not be verified. Rather, who had been with CBS for decades and was one of the most familiar faces in American journalism, was fired by the network the day after the 2004 election.
He claims breach of contract against CBS. He has already spent $2m on his case, which is likely to go to court early next year. Rather contends not only that his report was true - "What the documents stated has never been denied, by the president or anyone around him," he says - but that CBS succumbed to political pressure from conservatives to get the report discredited and to have him fired. He also claims that a panel set up by CBS to investigate the story was packed with conservatives in an effort to placate the White House. Part of the reason for that, he suggests, was that Viacom, a sister company of CBS, knew that it would have important broadcasting regulatory issues to deal with during Bush's second term.
Among those CBS considered for the panel to investigate Rather's report were far-right broadcasters Rush Limbaugh and Ann Coulter.
"CBS broke with long-standing tradition at CBS News and elsewhere of standing up to political pressure," says Rather. "And, there's no joy in saying it, they caved ... in an effort to placate their regulators in Washington."
Rather's lawsuit makes other serious allegations about CBS succumbing to political pressure in an attempt to suppress important news stories. In particular, he says that his bosses at CBS tried to stop him reporting evidence of torture at Abu Ghraib prison in Iraq. According to Rather's lawsuit, "for weeks they refused to grant permission to air the story" and "continued to raise the goalposts, insisting on additional substantiation". Rather also claims that General Richard Meyers, then head of the Joint Chiefs of Staff, the top military official in the US, called him at home and asked him not to broadcast the story, saying that it would "endanger national security".
Rather says that CBS only agreed to allow him to broadcast the story when it found out that Seymour Hersh would be writing about it in the New Yorker magazine. Even then, Rather claims, CBS tried to bury it. "CBS imposed the unusual restrictions that the story would be aired only once, that it would not be preceded by on-air promotion, and that it would not be referenced on the CBS Evening News," he says.
The charges outlined in Rather's lawsuit will cast a further shadow over the Bush legacy. He recently expressed regret for the "failed intelligence" which led to the invasion of Iraq and has received heavy criticism over the scale and depth of the economic downturn in the United States.
Monday, December 29, 2008
Trickledown meltdown
Go to Original
By DOUG SAUNDERS
A brick works in northeastern Bangladesh is about as far from Wall Street as one can get. Yet the financial crisis is all people here can talk about as jobs disappear, remittances dry up and access to microloans is squeezed.
In this very poor corner of Bangladesh, where rice farmers get by on household incomes of less than $1 a day, where the most popular mode of transportation is the pedal-rickshaw and where life doesn't seem to have changed for centuries, it's hard to believe that anyone could be affected by the crisis that has humbled Wall Street and Canary Wharf.
But the credit crunch is the main topic of conversation in the rice paddies and village bazaars here.
It is hard to find anyone, from vegetable sellers to floor sweepers, whose life has not been affected by the collapse of institutions in New York and London.
Just listen to Laily Begum, a 50-year-old villager who's just lost the $2-a-day brick-making job she's held for years, forcing her to move into her daughter's one-room family shack, and try to live off the pennies a day earned by her son-in-law's rickshaw-pulling job.
“This is the hardest year I've ever experienced, I've lost my job and my house, and it's all because of the global economy,” she says, launching into a surprisingly complex explanation of the series of financial events that led to her job disappearing.
First, the downturn in London hurt Bangladeshi-owned British businesses that had been sending capital to farmer relatives in Sylhet.
Then a plunge in exchange rates and a rise in commodity prices all but killed any demand for bricks or the people who work with them, and a local credit squeeze caused by the crash of interbank lending prevented her from getting a $400 loan to launch a new business.
“Because of what is happening over there in London, a lot of us are having to go back to planting rice and living in small houses,” Ms. Begum says.
In some of the world's lowest-income communities, the effects of the downturn appear to have stalled an entrepreneurial boom.
This is the first major financial crisis to have such a direct and immediate impact on the very poor of the world. The forces that brought down Lehman Brothers and humbled the likes of UBS and Royal Bank of Scotland this year, and killed jobs, savings, property value and business prospects in the wealthy West, are having the same effect, sometimes even more dramatically, in the villages and shantytowns of the developing world.
What has made this financial crisis different are the tight bonds that have developed between the world's financial capitals and poor regions such as this. Places like Bangladesh, Nigeria and Guatemala have dense webs of financial ties to the world's money centres that have made them especially vulnerable to the downturn. Those links typically connect the financial centres not just to the capitals of poor countries, but to their more remote and rural regions.
Here in Sylhet, it is easy to trace the chain of connections that leads from the office towers of London's financial district directly to Laily Begum's shack. Her employment was a product of finance-sector wealth being channelled through immigrants to home countries, a worldwide phenomenon. And her access to tiny amounts of credit was a product of the huge success of the microcredit industry – an industry which, we're learning now, is as vulnerable to a collapse in interbank lending as any other loan-making institution.
Decoupling ‘a myth'
“It is clear that the idea that developing countries would somehow be ‘de-coupled' from the crisis is a myth,” said Supachai Panitchpakdi, head of the United Nations Conference on Trade and Development.
He describes a “triple crisis” in which developing-world unemployment is likely to increase next year by 20 million people, after years of employment growth, and rates of extreme poverty are likely to grow after two decades of shrinkage, at the same time as fuel and food prices rise.
Mr. Panitchpakdi's agency is expecting remittances from workers in the West – after growing by 18 per cent in 2006 and 16 per cent in 2007 – will drop by as much as 6 per cent next year to $265-billion (U.S.). These payments, sent by cash or Western Union to villages in Asia, Africa and South America, account for the largest single source of economic growth in many countries, and outstrip foreign-aid spending.
The World Bank projected in November that remittances next year will fall to 1.8 per cent of the developing world's gross domestic product, down from 2.0 per cent in 2007 – the first such fall in more than a decade, and an income decline that could severely hurt economies of poor regions.
In Bangladesh, remittances amounted to $8-billion, or 11 per cent of the country's GDP, last year, but are expected to drop sharply because of their dependence on London's financial sector.
At the same time, exports from the developing world will drop by a projected $95-billion, almost as much as total foreign-aid spending, according to the World Bank.
Especially hard-hit will be the garment and electronics industries that have been central to the emerging-markets boom.
This is compounded by exchange rate changes that have hurt the poor. While those whose families work in the Persian Gulf haven't been hurt (the incomes there are far lower than those in the West), a large number of the world's migrant labourers are employed in Britain, the U.S. and Russia, countries whose currencies have declined dramatically in recent months.
This has hurt the purchasing power of whatever earnings the poor are able to attract from the wealthy world. In Bangladesh, a British pound in late 2007 purchased 150 taka – enough to feed a poor family for a week. Now it purchases only 100 taka.
And direct foreign investment flows to emerging markets are likely to be down 40 per cent this year, according to a projection by the Organization for Economic Co-operation and Development.
Together, these trends are likely to place enormous pressure on countries like Bangladesh.
The country's garment industry, which has grown rapidly during the past decade because Bangladesh has labour costs lower than those in Chinese cities, is being pummelled by these forces.
“We're really suffering from the international market,” said Abdur Razzak, manager of Dhaka's Starlight Knitwear, which makes clothes for Kmart and other retailers. “The higher commodity prices and bad exchange rate have raised the cost of living for the poor people who usually move to Dhaka to work here, so we're under great pressure to pay them more. At the same time, demand for our products is slowing. We're really getting squeezed.”
Such developing-world downturns have occurred in earlier financial crises. What is unusual this time around is that the victims are not so much the urban elites of the developing world, but the villagers and peasants in some of the poorer regions of those countries.
At root is one of the more interesting and, usually, beneficial effects of globalization. These regions have sent hundreds of thousands of emigrants to work in the Western capitals, in service-industry jobs that have expanded with the financial boom. Many have stayed for generations, their children and grandchildren becoming successful elites in the world's financial capitals. And the money those immigrants and their descendants send back to their families has become the top source of foreign earnings for many countries.
Remittances have been an important form of international development since the 18th century, but they boomed during the 1990s because electronic communication and international banking links made it possible for emigrants in Western capitals to support diverse businesses and building projects in their home countries.
That's the case in Central America and Mexico, which have provided the service workers behind the Wall Street boom; in the countries around the Black Sea, whose workers have staffed Moscow's growth; and in North Africa and South Asia, which have sent hundreds of thousands of people to the Persian Gulf states during the oil boom.
The Sylhet district of northeastern Bangladesh is directly tied to London's financial district. Almost 90 per cent of the 400,000 Bangladeshis in Britain come from this small, entirely rural district, and most live in the neighbourhoods surrounding the London financial district.
Echoes of subprime crisis
These ties have created deep webs of employment and financial dependency.
Here in Sylhet, each “Londoni” house – that is, a family receiving a few hundred dollars a month from relatives in London – manages to employ between 20 and 40 people as farm workers, servants, builders, and small-business employees. Tens of thousands of people have migrated from other, even poorer districts to Sylhet to take advantage of this tide of Londoni money.
Alta Bibi, a 75-year-old grandmother and rice farmer whose farm earnings are less than $1,000 a year, is one of the Londoni beneficiaries who has found herself frozen out.
She used remittances from her grandchildren in England as collateral to secure a loan to build the bottom floors of her house.
Now the house sits vacant, open-roofed and half-completed, a victim of the crunch. Her grandsons, squeezed by the huge drop in British consumer spending and the decline in their own house values, have stopped sending her money, and the microcredit agency has told her they have to withdraw the loan for the house. She, too, is forced to move back into a peasant shack.
Londoni money brought Ms. Begum the brick-maker here. Her skills would have provided intermittent work in her famine-prone northern district of Netrakona. But the London-based money, and the building boom it fuelled, gave her more than 20 years of steady income at twice the rate she'd have earned at home.
She sent more than half of it to family in her home village, seeding more small businesses there.
Such ties have brought about an explosion of property development and small-business growth in formerly destitute regions like Sylhet.
The spread of credit-based small-business financing into the poorest regions of the developing world – often through microfinance loans of a few hundred dollars underwritten by aid agencies and development banks – has turned millions of people living in mud-floor shacks into thriving entrepreneurs. But it's also exposed them for the first time to the vicissitudes of global credit markets.
Those microlenders, who play a central role in peasant communities like this one, are facing the same pressures as lenders everywhere: They're freezing new lending, cutting back their portfolios to eliminate risk, and watching the crisis fill their balance sheets with non-performing credit.
At the local village offices of BRAC, the country's largest microcredit lender, branch manager Pankaj Kumar Roy is telling people that the tiny loans, which were typically used to build a shop, buy a rickshaw or expand a peasant farm into a market-growing operation, simply aren't available any more.
That's because larger banks aren't able to provide reliable interbank financing to microcredit agencies, and because the existing portfolios of tiny loans are becoming plagued with bad debt.
“We are getting a lot of overdue loans,” Mr. Roy said from the simple, computer-free offices of BRAC's Biswanath branch, where 3,720 very poor people hold a total of $680,000 in loans.
“In the past six months, we have the equivalent of $10,000 overdue – before, it was only $2,000. And because credit is hard for us to obtain, we've had to cut back the size of our loan portfolio. It's affecting the whole microfinance and development industry – nobody can make new loans. Our loan portfolio is completely frozen.”
Microcredit experts say the situation could get even worse, because microlenders have long been in the habit of tolerating short- and medium-term lapses in payments from very poor clients. If the very poor begin enduring long-term unemployment and remittance flows dry up for a long time, the agencies may be forced to admit that large parts of their portfolios are non-performing loans.
It's a striking echo, on a far smaller scale, of the subprime loan crises that have hit financiers in the West.
“The crisis is coming from the U.S., and now it is skirting through the developed world, through the major destination countries, to developing countries,” said Dilip Ratha, a senior World Bank economist who specializes in immigrant remittance flows.
“We are in unknown territory now, because both the source countries and the destination countries are not doing very well.”
The chain reaction
To understand how dirt-poor people end up getting hit by an interbank crisis in the wealthy West, it's worth following the rivulets of money that make their way through Sylhet from London's financial district.
Tariq Mia, a 23-year-old peasant from the northern Jamalpur region of Bangladesh, has been coming to Sylhet to harvest rice twice a year, in August and December, for the past several years. His home village is subject to the Monga, a seasonal starvation caused by poor harvests that kills thousands every year. The Sylhet harvest allows him to take home $40 for each of the two months worked, saving his family from the Monga.
This month, he was told by his gang boss, Cherag Ali, that the work could be jeopardized. The owner of the fields, who lives in a handsome blue house nearby, had lost his source of Londoni money and might have to return to farming himself, or stop paying for seeds and fertilizer.
The owner of the house and the fields is 21-year-old Mominul Islam, who lives in the blue house with his mother and sister. In the 1960s, his grandfather emigrated to London, and opened a restaurant there, Bengal Spice, that's popular with bankers in the City of London financial district. His uncle, Sufe Miah, used the restaurant's proceeds to go into the property-development business in England.
The money flowing from these ventures ended up employing dozens of people in Sylhet. Mr. Islam's uncle built himself a huge house, costing at least $100,000 (it would be worth tens of millions in London), which he used for his weeklong visits three or four times a year. Such lavish and largely empty “Londoni houses” dot the landscape in Sylhet and other developing-world remittance strongholds around the world.
In the boom years, the money from London was allowing Mr. Islam to build a small property and business empire in the village of Biswanath. He owned shops in the bazaar, which he rented to merchants; he was building houses, employing scores of builders; and he had just started his own shoe shop, with several employees.
Then, suddenly this autumn, everything went wrong.
“The economic situation is very bad for us,” Mr. Islam said. “For the past several months my uncle just isn't sending the money. He's stopped sending the money because his property-development business just isn't making any money, it's losing money. So I had to close the shoe store.”
He also had to scale back the farm, fire all but two of the servants who take care of the big house, get ready to renegotiate the rent on the shops, and put a halt to all the building projects – the latter because the financing for them had also disappeared with the breakdown in local lending.
He's still able to pay the $180 a month for the two servants who take care of the house – themselves migrants from even poorer regions who send all their money back home – and $60 in utility bills and upkeep costs, and he's been able to keep the farm labourers going, in exchange for half the proceeds from the rice they grow. But he's paying for this using the rent from his shops in the bazaar – an income that could easily be jeopardized if the economy declines any further.
This breakdown in London-financed entrepreneurship and construction has ignited a chain reaction through the Bangladeshi economy.
From Mominul Islam's crumbling Londoni houses, it is possible to trace a direct path to the huge brick-making operation that cost Laily Begum her $2-a-day job this month. In fact, from his blue house on the edge of the rice field, you can see the tall chimneys of the brickworks that now mostly lay idle.
Haji Nurul Hasan is the 75-year-old owner of the Al Fallah Brick Field, and he feels like he's at the receiving end of everything the London and New York financial centres have disgorged this year.
Everything has converged on his company: The disappearance of easy credit, the plunging exchange rates, the sharp decline in property values, the disappearance of remittances from abroad, the increases in the cost of coal and diesel fuel. All have added up to a halt in the Bangladeshi building industry – and in poor districts on three other continents.
“We have no peace here – flood, famine, and now the world economy has struck us, the remittances have dropped away and the property has lost its value, and people can't get loans,” he said. “This has affected my business very badly.”
In 2007, his workers made four million bricks; the 2008 total will be less than three million, and his orders are drying up fast.
As a result, the number of workers who toil in this dusty, sweat-soaked yard has dwindled from 300 to 200.
One of those hundred lost jobs was Laily Begum's 20-year position pressing clay into brick moulds.
Like so many employees of Lehman Brothers, she has had to sell her house, pack up her belongings, and move in with her family. Unlike most of those bankers, that means living with two other adults and four children in a single room and eating 75 cents worth of rice a day.
It is in that shack, a surprisingly optimistic place under the circumstances, that you'll find the tail end of a long chain that began with subprime loans on the other side of the world.
By DOUG SAUNDERS
A brick works in northeastern Bangladesh is about as far from Wall Street as one can get. Yet the financial crisis is all people here can talk about as jobs disappear, remittances dry up and access to microloans is squeezed.
In this very poor corner of Bangladesh, where rice farmers get by on household incomes of less than $1 a day, where the most popular mode of transportation is the pedal-rickshaw and where life doesn't seem to have changed for centuries, it's hard to believe that anyone could be affected by the crisis that has humbled Wall Street and Canary Wharf.
But the credit crunch is the main topic of conversation in the rice paddies and village bazaars here.
It is hard to find anyone, from vegetable sellers to floor sweepers, whose life has not been affected by the collapse of institutions in New York and London.
Just listen to Laily Begum, a 50-year-old villager who's just lost the $2-a-day brick-making job she's held for years, forcing her to move into her daughter's one-room family shack, and try to live off the pennies a day earned by her son-in-law's rickshaw-pulling job.
“This is the hardest year I've ever experienced, I've lost my job and my house, and it's all because of the global economy,” she says, launching into a surprisingly complex explanation of the series of financial events that led to her job disappearing.
First, the downturn in London hurt Bangladeshi-owned British businesses that had been sending capital to farmer relatives in Sylhet.
Then a plunge in exchange rates and a rise in commodity prices all but killed any demand for bricks or the people who work with them, and a local credit squeeze caused by the crash of interbank lending prevented her from getting a $400 loan to launch a new business.
“Because of what is happening over there in London, a lot of us are having to go back to planting rice and living in small houses,” Ms. Begum says.
In some of the world's lowest-income communities, the effects of the downturn appear to have stalled an entrepreneurial boom.
This is the first major financial crisis to have such a direct and immediate impact on the very poor of the world. The forces that brought down Lehman Brothers and humbled the likes of UBS and Royal Bank of Scotland this year, and killed jobs, savings, property value and business prospects in the wealthy West, are having the same effect, sometimes even more dramatically, in the villages and shantytowns of the developing world.
What has made this financial crisis different are the tight bonds that have developed between the world's financial capitals and poor regions such as this. Places like Bangladesh, Nigeria and Guatemala have dense webs of financial ties to the world's money centres that have made them especially vulnerable to the downturn. Those links typically connect the financial centres not just to the capitals of poor countries, but to their more remote and rural regions.
Here in Sylhet, it is easy to trace the chain of connections that leads from the office towers of London's financial district directly to Laily Begum's shack. Her employment was a product of finance-sector wealth being channelled through immigrants to home countries, a worldwide phenomenon. And her access to tiny amounts of credit was a product of the huge success of the microcredit industry – an industry which, we're learning now, is as vulnerable to a collapse in interbank lending as any other loan-making institution.
Decoupling ‘a myth'
“It is clear that the idea that developing countries would somehow be ‘de-coupled' from the crisis is a myth,” said Supachai Panitchpakdi, head of the United Nations Conference on Trade and Development.
He describes a “triple crisis” in which developing-world unemployment is likely to increase next year by 20 million people, after years of employment growth, and rates of extreme poverty are likely to grow after two decades of shrinkage, at the same time as fuel and food prices rise.
Mr. Panitchpakdi's agency is expecting remittances from workers in the West – after growing by 18 per cent in 2006 and 16 per cent in 2007 – will drop by as much as 6 per cent next year to $265-billion (U.S.). These payments, sent by cash or Western Union to villages in Asia, Africa and South America, account for the largest single source of economic growth in many countries, and outstrip foreign-aid spending.
The World Bank projected in November that remittances next year will fall to 1.8 per cent of the developing world's gross domestic product, down from 2.0 per cent in 2007 – the first such fall in more than a decade, and an income decline that could severely hurt economies of poor regions.
In Bangladesh, remittances amounted to $8-billion, or 11 per cent of the country's GDP, last year, but are expected to drop sharply because of their dependence on London's financial sector.
At the same time, exports from the developing world will drop by a projected $95-billion, almost as much as total foreign-aid spending, according to the World Bank.
Especially hard-hit will be the garment and electronics industries that have been central to the emerging-markets boom.
This is compounded by exchange rate changes that have hurt the poor. While those whose families work in the Persian Gulf haven't been hurt (the incomes there are far lower than those in the West), a large number of the world's migrant labourers are employed in Britain, the U.S. and Russia, countries whose currencies have declined dramatically in recent months.
This has hurt the purchasing power of whatever earnings the poor are able to attract from the wealthy world. In Bangladesh, a British pound in late 2007 purchased 150 taka – enough to feed a poor family for a week. Now it purchases only 100 taka.
And direct foreign investment flows to emerging markets are likely to be down 40 per cent this year, according to a projection by the Organization for Economic Co-operation and Development.
Together, these trends are likely to place enormous pressure on countries like Bangladesh.
The country's garment industry, which has grown rapidly during the past decade because Bangladesh has labour costs lower than those in Chinese cities, is being pummelled by these forces.
“We're really suffering from the international market,” said Abdur Razzak, manager of Dhaka's Starlight Knitwear, which makes clothes for Kmart and other retailers. “The higher commodity prices and bad exchange rate have raised the cost of living for the poor people who usually move to Dhaka to work here, so we're under great pressure to pay them more. At the same time, demand for our products is slowing. We're really getting squeezed.”
Such developing-world downturns have occurred in earlier financial crises. What is unusual this time around is that the victims are not so much the urban elites of the developing world, but the villagers and peasants in some of the poorer regions of those countries.
At root is one of the more interesting and, usually, beneficial effects of globalization. These regions have sent hundreds of thousands of emigrants to work in the Western capitals, in service-industry jobs that have expanded with the financial boom. Many have stayed for generations, their children and grandchildren becoming successful elites in the world's financial capitals. And the money those immigrants and their descendants send back to their families has become the top source of foreign earnings for many countries.
Remittances have been an important form of international development since the 18th century, but they boomed during the 1990s because electronic communication and international banking links made it possible for emigrants in Western capitals to support diverse businesses and building projects in their home countries.
That's the case in Central America and Mexico, which have provided the service workers behind the Wall Street boom; in the countries around the Black Sea, whose workers have staffed Moscow's growth; and in North Africa and South Asia, which have sent hundreds of thousands of people to the Persian Gulf states during the oil boom.
The Sylhet district of northeastern Bangladesh is directly tied to London's financial district. Almost 90 per cent of the 400,000 Bangladeshis in Britain come from this small, entirely rural district, and most live in the neighbourhoods surrounding the London financial district.
Echoes of subprime crisis
These ties have created deep webs of employment and financial dependency.
Here in Sylhet, each “Londoni” house – that is, a family receiving a few hundred dollars a month from relatives in London – manages to employ between 20 and 40 people as farm workers, servants, builders, and small-business employees. Tens of thousands of people have migrated from other, even poorer districts to Sylhet to take advantage of this tide of Londoni money.
Alta Bibi, a 75-year-old grandmother and rice farmer whose farm earnings are less than $1,000 a year, is one of the Londoni beneficiaries who has found herself frozen out.
She used remittances from her grandchildren in England as collateral to secure a loan to build the bottom floors of her house.
Now the house sits vacant, open-roofed and half-completed, a victim of the crunch. Her grandsons, squeezed by the huge drop in British consumer spending and the decline in their own house values, have stopped sending her money, and the microcredit agency has told her they have to withdraw the loan for the house. She, too, is forced to move back into a peasant shack.
Londoni money brought Ms. Begum the brick-maker here. Her skills would have provided intermittent work in her famine-prone northern district of Netrakona. But the London-based money, and the building boom it fuelled, gave her more than 20 years of steady income at twice the rate she'd have earned at home.
She sent more than half of it to family in her home village, seeding more small businesses there.
Such ties have brought about an explosion of property development and small-business growth in formerly destitute regions like Sylhet.
The spread of credit-based small-business financing into the poorest regions of the developing world – often through microfinance loans of a few hundred dollars underwritten by aid agencies and development banks – has turned millions of people living in mud-floor shacks into thriving entrepreneurs. But it's also exposed them for the first time to the vicissitudes of global credit markets.
Those microlenders, who play a central role in peasant communities like this one, are facing the same pressures as lenders everywhere: They're freezing new lending, cutting back their portfolios to eliminate risk, and watching the crisis fill their balance sheets with non-performing credit.
At the local village offices of BRAC, the country's largest microcredit lender, branch manager Pankaj Kumar Roy is telling people that the tiny loans, which were typically used to build a shop, buy a rickshaw or expand a peasant farm into a market-growing operation, simply aren't available any more.
That's because larger banks aren't able to provide reliable interbank financing to microcredit agencies, and because the existing portfolios of tiny loans are becoming plagued with bad debt.
“We are getting a lot of overdue loans,” Mr. Roy said from the simple, computer-free offices of BRAC's Biswanath branch, where 3,720 very poor people hold a total of $680,000 in loans.
“In the past six months, we have the equivalent of $10,000 overdue – before, it was only $2,000. And because credit is hard for us to obtain, we've had to cut back the size of our loan portfolio. It's affecting the whole microfinance and development industry – nobody can make new loans. Our loan portfolio is completely frozen.”
Microcredit experts say the situation could get even worse, because microlenders have long been in the habit of tolerating short- and medium-term lapses in payments from very poor clients. If the very poor begin enduring long-term unemployment and remittance flows dry up for a long time, the agencies may be forced to admit that large parts of their portfolios are non-performing loans.
It's a striking echo, on a far smaller scale, of the subprime loan crises that have hit financiers in the West.
“The crisis is coming from the U.S., and now it is skirting through the developed world, through the major destination countries, to developing countries,” said Dilip Ratha, a senior World Bank economist who specializes in immigrant remittance flows.
“We are in unknown territory now, because both the source countries and the destination countries are not doing very well.”
The chain reaction
To understand how dirt-poor people end up getting hit by an interbank crisis in the wealthy West, it's worth following the rivulets of money that make their way through Sylhet from London's financial district.
Tariq Mia, a 23-year-old peasant from the northern Jamalpur region of Bangladesh, has been coming to Sylhet to harvest rice twice a year, in August and December, for the past several years. His home village is subject to the Monga, a seasonal starvation caused by poor harvests that kills thousands every year. The Sylhet harvest allows him to take home $40 for each of the two months worked, saving his family from the Monga.
This month, he was told by his gang boss, Cherag Ali, that the work could be jeopardized. The owner of the fields, who lives in a handsome blue house nearby, had lost his source of Londoni money and might have to return to farming himself, or stop paying for seeds and fertilizer.
The owner of the house and the fields is 21-year-old Mominul Islam, who lives in the blue house with his mother and sister. In the 1960s, his grandfather emigrated to London, and opened a restaurant there, Bengal Spice, that's popular with bankers in the City of London financial district. His uncle, Sufe Miah, used the restaurant's proceeds to go into the property-development business in England.
The money flowing from these ventures ended up employing dozens of people in Sylhet. Mr. Islam's uncle built himself a huge house, costing at least $100,000 (it would be worth tens of millions in London), which he used for his weeklong visits three or four times a year. Such lavish and largely empty “Londoni houses” dot the landscape in Sylhet and other developing-world remittance strongholds around the world.
In the boom years, the money from London was allowing Mr. Islam to build a small property and business empire in the village of Biswanath. He owned shops in the bazaar, which he rented to merchants; he was building houses, employing scores of builders; and he had just started his own shoe shop, with several employees.
Then, suddenly this autumn, everything went wrong.
“The economic situation is very bad for us,” Mr. Islam said. “For the past several months my uncle just isn't sending the money. He's stopped sending the money because his property-development business just isn't making any money, it's losing money. So I had to close the shoe store.”
He also had to scale back the farm, fire all but two of the servants who take care of the big house, get ready to renegotiate the rent on the shops, and put a halt to all the building projects – the latter because the financing for them had also disappeared with the breakdown in local lending.
He's still able to pay the $180 a month for the two servants who take care of the house – themselves migrants from even poorer regions who send all their money back home – and $60 in utility bills and upkeep costs, and he's been able to keep the farm labourers going, in exchange for half the proceeds from the rice they grow. But he's paying for this using the rent from his shops in the bazaar – an income that could easily be jeopardized if the economy declines any further.
This breakdown in London-financed entrepreneurship and construction has ignited a chain reaction through the Bangladeshi economy.
From Mominul Islam's crumbling Londoni houses, it is possible to trace a direct path to the huge brick-making operation that cost Laily Begum her $2-a-day job this month. In fact, from his blue house on the edge of the rice field, you can see the tall chimneys of the brickworks that now mostly lay idle.
Haji Nurul Hasan is the 75-year-old owner of the Al Fallah Brick Field, and he feels like he's at the receiving end of everything the London and New York financial centres have disgorged this year.
Everything has converged on his company: The disappearance of easy credit, the plunging exchange rates, the sharp decline in property values, the disappearance of remittances from abroad, the increases in the cost of coal and diesel fuel. All have added up to a halt in the Bangladeshi building industry – and in poor districts on three other continents.
“We have no peace here – flood, famine, and now the world economy has struck us, the remittances have dropped away and the property has lost its value, and people can't get loans,” he said. “This has affected my business very badly.”
In 2007, his workers made four million bricks; the 2008 total will be less than three million, and his orders are drying up fast.
As a result, the number of workers who toil in this dusty, sweat-soaked yard has dwindled from 300 to 200.
One of those hundred lost jobs was Laily Begum's 20-year position pressing clay into brick moulds.
Like so many employees of Lehman Brothers, she has had to sell her house, pack up her belongings, and move in with her family. Unlike most of those bankers, that means living with two other adults and four children in a single room and eating 75 cents worth of rice a day.
It is in that shack, a surprisingly optimistic place under the circumstances, that you'll find the tail end of a long chain that began with subprime loans on the other side of the world.
Wall St. faces record losses in last week of 2008
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By JOE BEL BRUNO
Investors are preparing to close out the last three trading days of 2008 with Wall Street's worst performance since Herbert Hoover was president.
The ongoing recession and global economic shock pummeled stocks this year, with the Dow Jones industrial average slumping 36.2 percent. That's the biggest drop since 1931 when the Great Depression sent stocks reeling 40.6 percent.
The Standard & Poor's 500 index is set to record the biggest drop since its creation in 1957. The index of America's biggest companies is down 40.9 percent for the year.
With these statistics ready to play out this week, it is little wonder why investors are all too happy to close the books on 2008. Analysts are already looking toward January as a crucial period for the market as it tries to recover some of the $7.3 trillion wiped from the Dow Jones Wilshire 5000 index, the broadest measure of U.S. stocks.
"It is hard to gauge a recovery because there's so many things out there that are interactive with each other," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. "Nothing is in a vacuum. Anybody who is managing money has to be on the cautious side for at least the first six months of 2009."
He said many analysts are jumping past this week and focusing on next month, especially with Barack Obama set to be sworn in as president on Jan. 20. There is hope that the new administration will deliver another stimulus package, which along with December's interest rate cuts, might help quell the financial crisis.
Trading is expected to remain volatile with many market participants on the sidelines during the holiday-shortened week, but that doesn't mean investors won't be kept busy. With no Santa Claus rally last week, economic data slated for the coming days could sway the market's mood going into 2009.
Investors will be awaiting details about how retailers fared in the post-Christmas sales period, especially since consumer spending drives more than two-thirds of the U.S. economy. The main question is if bargain prices at the malls will be enough to rescue retailers from a bleak holiday shopping season.
Meanwhile, another gauge of how Americans feel about spending money will be released on Tuesday. The Conference Board will issue its December index of consumer confidence, which is expected to rise to a reading of 45.2 for this month, up slightly from 44.9 in November.
The Labor Department will report on weekly jobless claims Wednesday, after a 26-year high of 586,000 initial filings in the week ended Dec. 20.
But the most anticipated economic data will be delivered Friday when investors get a fresh reading on the manufacturing sector. The Institute for Supply Management releases its December survey of purchasing managers.
The index is expected to show a reading of 35.5, down from November's 36.2, according to economists polled by Thomson Reuters. A reading above 50 points to expansion, while a reading below 50 shows a contraction.
There is little in the way of corporate news slated. Though, the final week of the year — when volume is slow and many money managers are on vacation — is often a time when companies slip through lower quarterly forecasts.
Investors were still waiting word if GMAC Financial Services, the financing arm of General Motors Corp., will be eligible for a government bailout. GMAC received the Federal Reserve's approval to become a bank holding company last week, but that was contingent on putting into place a complicated debt-for-equity exchange by 11:59 p.m. EST Friday.
That deadline passed with no word from the company. Analysts have speculated that if GMAC doesn't obtain financial help it would have to file for bankruptcy protection or shut down, which would be a serious blow to parent GM's own chances for survival.
Both General Motors and Chrysler LLC on Monday will receive the first part of the $13.4 billion in emergency loans from the government. Each will receive about $4 billion, then receive the second payment of $5.4 billion on Jan. 16. GM gets a third installment of $4 billion on Feb. 17.
Ford Motor Co. did not participate in the government rescue plan.
IndyMac Bank, one of the most high-profile financial institutions to fail because of the financial crisis, might be close to getting a new owner. The buyers include private equity firms J.C. Flowers & Co. and Dune Capital Management, according to The New York Times, which cited unidentified people close to the matter.
The proposed sale could be announced by Monday morning, the report said.
Meanwhile, Kuwait's government on Sunday scrapped a $17.4 billion joint venture with U.S. petrochemical giant Dow Chemical Co. after criticism from lawmakers that could have led to a political crisis in this small oil-rich state.
The Cabinet, in a statement carried by the state-owned Kuwait News Agency, said the venture, was "very risky" in light of the global financial crisis and low oil prices. Dow Chemical said it was "extremely disappointed" with the Kuwaiti government's decision and was evaluating its options under the joint-venture agreement.
By JOE BEL BRUNO
Investors are preparing to close out the last three trading days of 2008 with Wall Street's worst performance since Herbert Hoover was president.
The ongoing recession and global economic shock pummeled stocks this year, with the Dow Jones industrial average slumping 36.2 percent. That's the biggest drop since 1931 when the Great Depression sent stocks reeling 40.6 percent.
The Standard & Poor's 500 index is set to record the biggest drop since its creation in 1957. The index of America's biggest companies is down 40.9 percent for the year.
With these statistics ready to play out this week, it is little wonder why investors are all too happy to close the books on 2008. Analysts are already looking toward January as a crucial period for the market as it tries to recover some of the $7.3 trillion wiped from the Dow Jones Wilshire 5000 index, the broadest measure of U.S. stocks.
"It is hard to gauge a recovery because there's so many things out there that are interactive with each other," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. "Nothing is in a vacuum. Anybody who is managing money has to be on the cautious side for at least the first six months of 2009."
He said many analysts are jumping past this week and focusing on next month, especially with Barack Obama set to be sworn in as president on Jan. 20. There is hope that the new administration will deliver another stimulus package, which along with December's interest rate cuts, might help quell the financial crisis.
Trading is expected to remain volatile with many market participants on the sidelines during the holiday-shortened week, but that doesn't mean investors won't be kept busy. With no Santa Claus rally last week, economic data slated for the coming days could sway the market's mood going into 2009.
Investors will be awaiting details about how retailers fared in the post-Christmas sales period, especially since consumer spending drives more than two-thirds of the U.S. economy. The main question is if bargain prices at the malls will be enough to rescue retailers from a bleak holiday shopping season.
Meanwhile, another gauge of how Americans feel about spending money will be released on Tuesday. The Conference Board will issue its December index of consumer confidence, which is expected to rise to a reading of 45.2 for this month, up slightly from 44.9 in November.
The Labor Department will report on weekly jobless claims Wednesday, after a 26-year high of 586,000 initial filings in the week ended Dec. 20.
But the most anticipated economic data will be delivered Friday when investors get a fresh reading on the manufacturing sector. The Institute for Supply Management releases its December survey of purchasing managers.
The index is expected to show a reading of 35.5, down from November's 36.2, according to economists polled by Thomson Reuters. A reading above 50 points to expansion, while a reading below 50 shows a contraction.
There is little in the way of corporate news slated. Though, the final week of the year — when volume is slow and many money managers are on vacation — is often a time when companies slip through lower quarterly forecasts.
Investors were still waiting word if GMAC Financial Services, the financing arm of General Motors Corp., will be eligible for a government bailout. GMAC received the Federal Reserve's approval to become a bank holding company last week, but that was contingent on putting into place a complicated debt-for-equity exchange by 11:59 p.m. EST Friday.
That deadline passed with no word from the company. Analysts have speculated that if GMAC doesn't obtain financial help it would have to file for bankruptcy protection or shut down, which would be a serious blow to parent GM's own chances for survival.
Both General Motors and Chrysler LLC on Monday will receive the first part of the $13.4 billion in emergency loans from the government. Each will receive about $4 billion, then receive the second payment of $5.4 billion on Jan. 16. GM gets a third installment of $4 billion on Feb. 17.
Ford Motor Co. did not participate in the government rescue plan.
IndyMac Bank, one of the most high-profile financial institutions to fail because of the financial crisis, might be close to getting a new owner. The buyers include private equity firms J.C. Flowers & Co. and Dune Capital Management, according to The New York Times, which cited unidentified people close to the matter.
The proposed sale could be announced by Monday morning, the report said.
Meanwhile, Kuwait's government on Sunday scrapped a $17.4 billion joint venture with U.S. petrochemical giant Dow Chemical Co. after criticism from lawmakers that could have led to a political crisis in this small oil-rich state.
The Cabinet, in a statement carried by the state-owned Kuwait News Agency, said the venture, was "very risky" in light of the global financial crisis and low oil prices. Dow Chemical said it was "extremely disappointed" with the Kuwaiti government's decision and was evaluating its options under the joint-venture agreement.
Civilian death toll rises after second day of air strikes
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By Hazem Balousha
• Officials in Gaza say nearly 300 killed, 600 injured as survivors call for retaliation
• Calls for investigation after seven students at UN college die in missile attacks
To the doctors at the Shifa hospital in Gaza City it was another body on a chaotically busy day. By early Saturday afternoon the morgue was already overflowing so they laid out the corpse of 20-year-old Ali Abu Rabia on the floor outside. One of the hospital staff pulled out a mobile phone from his pocket, scrolled through the numbers, and called the young man's father.
"I was at work. Someone from the hospital called and said they had found my son," said Marwan Abu Rabia, 44, a plumber. "I went straight to the hospital and found him lying on the floor outside the morgue. There were too many bodies. It looked like a massacre."
The hospital was so crowded staff held back relatives outside the building and turned away the lightly injured. They struggled to treat the seriously hurt, some of whom lay on beds in the corridors because of the congested wards.
Palestinian officials said the death toll from Saturday's air strikes was at least 280, with another 600 people injured. Most are thought to be police or security officials, but among the casualties were many civilians.
Several more Palestinians were killed and injured yesterday, although the Israeli air strikes were less extensive. One Israeli civilian was killed on Saturday by a rocket fired by Palestinian militants from Gaza.
Ali Abu Rabia was a student at a UN vocational college for Palestinian refugees in the Rimal district of Gaza City. He sat an exam on Saturday morning, his father said, and after the first Israeli air strikes decided to go home. He was standing in the street with others when an Israeli missile struck, at around 1.30pm. Reportedly it had been aimed at a policeman seen nearby with a walkie-talkie.
"It was a place full of students. It was not a military base. But in spite of this they still attacked, all because of one policeman," said Ali's father as he greeted mourners at a funeral tent at his home yesterday "Our situation is very bad and the cause is Israel. The response has to be very tough." He said he doubted there would be a peace agreement with Israel in the coming years. "I don't believe they want an independent Palestinian state," he said.
In that single air strike seven students were killed and another 20 were injured. The Guardian has learned of several other civilians who were killed and injured in the same strike on Saturday.
Chris Gunness, a spokesman for the UN Relief and Works Agency, which supports Palestinian refugees and feeds 750,000 Gazans, called for an inquiry into the attack. "Grave question marks hang over this killing ... There must be an investigation and the facts must get out. There must be accountability."
Another funeral tent was put up at a family home a few hundred metres away. Nehru Rayes, 47, was presiding over a funeral for his two sons Hisham, 25, a carpenter, and Alam, 18, who had been at school, and their cousin Abdullah, 21, who ran an internet cafe. All three were killed in the street, in the same air strike.
Rayes, a petrol station attendant, learned from the Shifa hospital that all three were dead, and that two other relatives had been injured. Representatives from the rival Palestinian factions Fatah and Hamas had come to his house offering, as usual, to help with the costs of the funeral. He refused them both. "We've become like the homeless, begging for electricity, cooking gas and food," he said.
He spoke of the "corruption" of the previous Fatah governments and then said of the Hamas leaders: "They have everything they want: cooking gas, generators, and they can move whenever they want. But the Palestinian people are suffering."
Like many in Gaza yesterday, he spoke angrily of a desire for revenge against Israel. "When they fight face to face with armed groups that's OK, but when they attack civilians it's not acceptable," he said. "We need to go back to a ceasefire, eventually, but it has to mean all the crossings are open again and life returning to normal."
As he spoke another relative, Morad Rayes, 46, interrupted: "The disagreement between Hamas and Fatah gave the Israelis the reason to attack Gaza. All the ordinary people are suffering in this bad economic situation. It's just those belonging to the factions who benefit. We are facing a tough enemy. We have to be united."
Inside the Shifa hospital yesterday there were still relatives pouring through the corridors, looking for the injured. Most of the wounded spoke bitterly of their experience.
Mohammad Jahjouh, 21, lay on a hospital bed with cuts to his legs and side. He was injured late on Saturday night when an Israeli missile struck a mosque close to the hospital. "I thought I was dead but then I started to move my hands and legs and I screamed for help," he said. He was carried into the hospital. "It's unjust, unfair and aggression. After this huge number of casualties it would be a sign of weakness for us to ask for a ceasefire."
Gaza's streets were largely empty yesterday, with most shops closed and queues only at local bakers where people were stocking up with supplies.
Mowaffaq Alami, 35, was close to the main security headquarters, the Suraya, in Gaza on Saturday when it was attacked in the first round of Israeli air strikes at around 11am. "People were walking through the streets just like a normal day, children coming home from school. Suddenly, without any warning, the bombing started. We didn't even see the jets in the sky. That's why so many people were killed," he said. He said the first round of attacks was over within a few minutes but left dozens dead.
Alami lives in an apartment nearby and runs the Gaza office of One Voice, an initiative that works to support a two-state solution to the Israeli-Palestinian conflict. "People are following the news, wondering what's coming next," he said. "People are very worried there may be an invasion. We used to plan our lives day by day. Now, it's hour by hour."
By Hazem Balousha
• Officials in Gaza say nearly 300 killed, 600 injured as survivors call for retaliation
• Calls for investigation after seven students at UN college die in missile attacks
To the doctors at the Shifa hospital in Gaza City it was another body on a chaotically busy day. By early Saturday afternoon the morgue was already overflowing so they laid out the corpse of 20-year-old Ali Abu Rabia on the floor outside. One of the hospital staff pulled out a mobile phone from his pocket, scrolled through the numbers, and called the young man's father.
"I was at work. Someone from the hospital called and said they had found my son," said Marwan Abu Rabia, 44, a plumber. "I went straight to the hospital and found him lying on the floor outside the morgue. There were too many bodies. It looked like a massacre."
The hospital was so crowded staff held back relatives outside the building and turned away the lightly injured. They struggled to treat the seriously hurt, some of whom lay on beds in the corridors because of the congested wards.
Palestinian officials said the death toll from Saturday's air strikes was at least 280, with another 600 people injured. Most are thought to be police or security officials, but among the casualties were many civilians.
Several more Palestinians were killed and injured yesterday, although the Israeli air strikes were less extensive. One Israeli civilian was killed on Saturday by a rocket fired by Palestinian militants from Gaza.
Ali Abu Rabia was a student at a UN vocational college for Palestinian refugees in the Rimal district of Gaza City. He sat an exam on Saturday morning, his father said, and after the first Israeli air strikes decided to go home. He was standing in the street with others when an Israeli missile struck, at around 1.30pm. Reportedly it had been aimed at a policeman seen nearby with a walkie-talkie.
"It was a place full of students. It was not a military base. But in spite of this they still attacked, all because of one policeman," said Ali's father as he greeted mourners at a funeral tent at his home yesterday "Our situation is very bad and the cause is Israel. The response has to be very tough." He said he doubted there would be a peace agreement with Israel in the coming years. "I don't believe they want an independent Palestinian state," he said.
In that single air strike seven students were killed and another 20 were injured. The Guardian has learned of several other civilians who were killed and injured in the same strike on Saturday.
Chris Gunness, a spokesman for the UN Relief and Works Agency, which supports Palestinian refugees and feeds 750,000 Gazans, called for an inquiry into the attack. "Grave question marks hang over this killing ... There must be an investigation and the facts must get out. There must be accountability."
Another funeral tent was put up at a family home a few hundred metres away. Nehru Rayes, 47, was presiding over a funeral for his two sons Hisham, 25, a carpenter, and Alam, 18, who had been at school, and their cousin Abdullah, 21, who ran an internet cafe. All three were killed in the street, in the same air strike.
Rayes, a petrol station attendant, learned from the Shifa hospital that all three were dead, and that two other relatives had been injured. Representatives from the rival Palestinian factions Fatah and Hamas had come to his house offering, as usual, to help with the costs of the funeral. He refused them both. "We've become like the homeless, begging for electricity, cooking gas and food," he said.
He spoke of the "corruption" of the previous Fatah governments and then said of the Hamas leaders: "They have everything they want: cooking gas, generators, and they can move whenever they want. But the Palestinian people are suffering."
Like many in Gaza yesterday, he spoke angrily of a desire for revenge against Israel. "When they fight face to face with armed groups that's OK, but when they attack civilians it's not acceptable," he said. "We need to go back to a ceasefire, eventually, but it has to mean all the crossings are open again and life returning to normal."
As he spoke another relative, Morad Rayes, 46, interrupted: "The disagreement between Hamas and Fatah gave the Israelis the reason to attack Gaza. All the ordinary people are suffering in this bad economic situation. It's just those belonging to the factions who benefit. We are facing a tough enemy. We have to be united."
Inside the Shifa hospital yesterday there were still relatives pouring through the corridors, looking for the injured. Most of the wounded spoke bitterly of their experience.
Mohammad Jahjouh, 21, lay on a hospital bed with cuts to his legs and side. He was injured late on Saturday night when an Israeli missile struck a mosque close to the hospital. "I thought I was dead but then I started to move my hands and legs and I screamed for help," he said. He was carried into the hospital. "It's unjust, unfair and aggression. After this huge number of casualties it would be a sign of weakness for us to ask for a ceasefire."
Gaza's streets were largely empty yesterday, with most shops closed and queues only at local bakers where people were stocking up with supplies.
Mowaffaq Alami, 35, was close to the main security headquarters, the Suraya, in Gaza on Saturday when it was attacked in the first round of Israeli air strikes at around 11am. "People were walking through the streets just like a normal day, children coming home from school. Suddenly, without any warning, the bombing started. We didn't even see the jets in the sky. That's why so many people were killed," he said. He said the first round of attacks was over within a few minutes but left dozens dead.
Alami lives in an apartment nearby and runs the Gaza office of One Voice, an initiative that works to support a two-state solution to the Israeli-Palestinian conflict. "People are following the news, wondering what's coming next," he said. "People are very worried there may be an invasion. We used to plan our lives day by day. Now, it's hour by hour."
Under Bush, OSHA Mired in Inaction
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By R. Jeffrey Smith
In early 2001, an epidemiologist at the Occupational Safety and Health Administration sought to publish a special bulletin warning dental technicians that they could be exposed to dangerous beryllium alloys while grinding fillings. Health studies showed that even a single day's exposure at the agency's permitted level could lead to incurable lung disease.
After the bulletin was drafted, political appointees at the agency gave a copy to a lobbying firm hired by the country's principal beryllium manufacturer, according to internal OSHA documents. The epidemiologist, Peter Infante, incorporated what he considered reasonable changes requested by the company and won approval from key directorates, but he bristled when the private firm complained again.
"In my 24 years at the Agency, I have never experienced such indecision and delay," Infante wrote in an e-mail to the agency's director of standards in March 2002. Eventually, top OSHA officials decided, over what Infante described in an e-mail to his boss as opposition from "the entire OSHA staff working on beryllium issues," to publish the bulletin with a footnote challenging a key recommendation the firm opposed.
Current and former career officials at OSHA say that such sagas were a recurrent feature during the Bush administration, as political appointees ordered the withdrawal of dozens of workplace health regulations, slow-rolled others, and altered the reach of its warnings and rules in response to industry pressure.
The result is a legacy of unregulation common to several health-protection agencies under Bush: From 2001 to the end of 2007, OSHA officials issued 86 percent fewer rules or regulations termed economically significant by the Office of Management and Budget than their counterparts did during a similar period in President Bill Clinton's tenure, according to White House lists.
White House officials have dismissed such tallies, emphasizing in recent regulatory overviews that their "objective is quality, not quantity," and that heavy restrictions on corporations harm economic performance. During Bush's presidency, they said in a September report, average annual regulatory costs were kept 24 percent lower than during the previous two decades. OSHA says it has issued many rules of lesser consequence that nonetheless clarified industry responsibilities.
But this record has been controversial among occupational health experts and career OSHA staff.
"The legacy of the Bush administration has been one of dismal inaction," said Robert Harrison, a professor at the University of California at San Francisco and chairman of the occupational health section of the American Public Health Association. It has been "like turning a ketchup bottle upside down, banging the bottom of the container, and nothing comes out. You shake and shake and nothing comes out," Harrison said.
More than two dozen current and former senior career officials further said in interviews that the agency's strategic choices were frequently made without input from its experienced hands. Political appointees "shut us out," a longtime senior career official said.
Among the regulations proposed by OSHA's staff but scuttled by political appointees was one meant to protect health workers from tuberculosis. Although OSHA concluded in 1997 that the regulation could avert as many as 32,700 infections and 190 deaths annually and save $115 million, it was blocked by opposition from large hospitals.
In the summer, the agency decided against moving further toward the regulation of crystalline silica, the tiny fibrous material in cement and stone dust that causes lung disease or cancer. OSHA promised a scientific peer review of the health risks by early 2005 and then by early 2007, but it never acted. Regulating silica exposures would have prevented an estimated 41 silicosis deaths and 20 to 40 lung cancers annually, according to OSHA.
In the spring, political appointees quietly scrapped work on another long-pending regulation of hazardous exposure to ionizing radiation in mailrooms, food warehouses, and hospitals and airports. It cited "resource constraints and other priorities" -- the same reason officials gave for withdrawing more than a dozen regulatory proposals in 2001.
Former OSHA director Edwin G. Foulke Jr. and other Bush appointees dispute the criticisms and say the agency carefully directed its scarce resources at the most dangerous workplaces, notably levying heavy fines after major workplace disasters. Foulke also expressed pride that a drop in reported workplace injuries that began in 1974 continued unabated under Bush and said that "we've done, I think, a really good job of moving things along" in rulemakings that proved to be more complex and time-consuming than he had anticipated.
Labor advocates, academic scholars and some OSHA officials have said that the decline in reported injuries is partly the result of a 14 percent drop in U.S. production and manufacturing jobs since 2001 and a 2002 change in the government's record-keeping rules.
'It Was Window Dressing'
The agency's first director under Bush, John L. Henshaw, startled career officials by telling them in an early meeting that employers were OSHA's real customers, not the nation's workers. "Everybody was pretty amazed," one of those present recalled. "Our purpose is to ensure employee safety and health. . . . He just looked at things differently."
Within two years, Henshaw, an industrial hygienist who had worked for Monsanto and another chemical firm, withdrew 26 draft regulations on OSHA's public calendar, including rules meant to limit workplace exposure to air contaminants, highly hazardous chemicals, and shipyard and scaffolding hazards.
In many cases, the agency cited "resource constraints" as the reason. But Charles Gordon, a Labor Department lawyer who worked on OSHA regulations in the solicitor's office from 1975 until January, said that "all the work had been done" on many of the rules, including laborious, peer-reviewed risk assessments and economic analyses.
Henshaw, acting in concert with legislation passed by the Republican majority in Congress, quickly withdrew a proposed regulation -- drawn up during the Clinton administration -- meant to curtail ergonomic problems, which OSHA studies have said cause 60 percent of workplace injuries. He promised, instead, to issue nonmandatory guidelines and to cite violations under a general OSHA statute promoting safety.
But Richard Soltan, who retired from OSHA in 2006 after seven years as the Philadelphia regional administrator and 11 years as a deputy administrator, called Henshaw's promise "a sham." "I don't think we prosecuted two cases," Soltan said. "It was window dressing."
"I took the agency where I could take it," Henshaw said in an interview. "I had a fairly good control on the enforcement side, and we tried to do everything we could to enhance the enforcement," partly by partnering with the Environmental Protection Agency and the Justice Department to pressure or punish willful, chronic violators.
But Henshaw said that "there wasn't a whole lot of political will for more rules and burdens on industry," either in the Bush administration or among congressional Republicans. Instead, there was "some interest in improving existing rules on the books," he said. "We focused on improving what we had."
Under Bush, the agency was reluctant even to issue health warnings that fall short of regulations, if doing so might make it easier for workers to collect damages for diseases. In the draft beryllium bulletin, for example, the key dispute concerned OSHA's endorsement of a blood test that detected sensitization to beryllium, a precursor to disease -- and to lawsuits.
In the end, OSHA added a footnote casting doubt on the test's validity, a decision that Lee S. Newman, a beryllium expert at the University of Colorado, called "profoundly disappointing" and part of a larger effort by Brush Wellman, the beryllium manufacturer invited to comment, "to try to mitigate" the test's use.
Patrick Carpenter, a spokesman for Brush Wellman, said that the draft "contained factual errors" and expressed satisfaction at the outcome. Infante, the epidemiologist, said the episode was "the last straw" that provoked him to resign in 2002.
Battle Over Asbestos Bulletin
That year, Ira Wainless, a senior industrial hygienist at OSHA, finished drafting a warning to auto mechanics that brake linings contained dangerous asbestos fibers. Health experts and lawmakers had called for such a bulletin, but attorneys for major car and brake manufacturers worried that it would be cited in lawsuits by mechanics seeking damages for asbestos-related disease.
Although Wainless's draft was approved by all of OSHA's directorates by mid-2003, Richard Fairfax, director of enforcement programs, was mindful of industry concerns. "Our recommendation is not to go forward," he said in a note to the head of the agency's science and technology office. "With the various asbestos litigation in progress and the compensation issues, the issuance of this may complicate matters."
A senior OSHA health enforcement official told Wainless's boss in an internal note that year that "we are under the understanding . . . it was NOT supposed to be going out." Wainless persisted, however, and over the next two years sent four drafts to Henshaw's office to meet what another OSHA official described in an internal e-mail as "requests for minor changes" by the agency's deputy director.
Before the bulletin's eventual publication in July 2006, which occurred after heavy pressure by Sen. Patty Murray (D-Wash.), OSHA omitted a statement that brake-lining imports commonly contained asbestos. It also modified its warning that linings were "a substantial source of exposure," referring instead to "potential exposure."
Days after publication and seven months after Henshaw's retirement from OSHA, he sent its science director an e-mail demanding that the warning be withdrawn and redone to express a "more balanced" view. Henshaw did not tell the career official that he had since been employed as a $350-an-hour courtroom witness on behalf of an asbestos-products firm and had testified for companies in two other asbestos lawsuits filed by auto mechanics.
In a subsequent deposition, Henshaw said he had contacted the agency to complain "as a private citizen." He also said a lawyer representing asbestos and auto firms -- who subsequently hired him as a consultant -- had contacted him about the OSHA bulletin's language.
Wainless's boss, David Ippolito, responded to Henshaw's complaint by proposing to suspend Wainless for 10 days without pay because the bulletin had not referenced an industry-financed study, which concluded that auto mechanics were typically exposed to asbestos levels below OSHA's workplace limits. Wainless had told his supervisors that the study had been disputed by other scientists.
Plans to revise the bulletin and act against Wainless were dropped after an account of the suspension proposal appeared in the Baltimore Sun. But the Labor Department maintains that the health bulletin "was not needed and could have confused the affected public," spokesman David James said recently.
Dissatisfaction With Leadership
In 2006, Henshaw was replaced by Edwin G. Foulke Jr., a South Carolina lawyer and former Bush fundraiser who spent years defending companies cited by OSHA for safety and health violations.
Foulke quickly acquired a reputation inside the Labor Department as a man who literally fell asleep on the job: Eyewitnesses said they saw him suddenly doze off at staff meetings, during teleconferences, in one-on-one briefings, at retreats involving senior deputies, on the dais at a conference in Europe, at an award ceremony for a corporation and during an interview with a candidate for deputy regional administrator.
His top aides said they rustled papers, wore attention-getting garb, pounded the table for emphasis or gently kicked his leg, all to keep him awake. But, if these tactics failed, sometimes they just continued talking as if he were awake. "We'll be sitting there and things will fall out of his hands; people will go on talking like nothing ever happened," said a career official, who spoke on the condition of anonymity because he was not authorized to talk to a reporter.
In an interview, Foulke denied falling asleep at work, although he said he was often tired and sometimes listened with his eyes closed. His goal, he said, was to create the best agency he could, partly by putting in place "performance metrics" not previously used at OSHA.
Foulke said his senior staff appeared "pretty enthusiastic," but he acknowledged that there were grounds for tension with others. Leadership, he said, is "taking people down a path they don't want to go, until you get them to a place where they realize this is where they need to be."
A $112-an-Hour Consultant
The agency's budget and its field staff declined during the Bush administration, even as its responsibilities -- and the total number of workers -- grew.
The gap caused some inspectors to complain that they lacked adequate gear to monitor workplace chemicals and other hazards. Efficiency became a key agency buzzword and, to help improve it, Foulke arranged for OSHA to hire Randy Kimlin, an acquaintance from South Carolina, as a $112-an-hour consultant beginning in 2006.
The work was lucrative for Kimlin, a former employee of Union Carbide -- a firm that frequently clashed with OSHA -- and a former president of a Greenville-based chemical firm. For his part-time advice over a 22-month period beginning in May 2006, OSHA paid Kimlin $513,403, a salary higher than that received by Vice President Cheney, any member of Congress and Foulke himself during that period.
Kimlin was paid an additional $97,730 in reimbursements for nearly weekly flights back to South Carolina and for a hotel room on Capitol Hill, all granted under a subcontract with Washington-based TATC Consulting that was awarded without competition.
Kimlin did not return calls to his office and home. But Brian Peters, who oversaw the contract for TATC, said Kimlin's role was to help arrange staff meetings and shift OSHA from a culture of inspections to less confrontational "compliance assistance." Others at OSHA said Kimlin played a large role in day-to-day operations and personnel decisions.
The arrangement attracted criticism inside and outside the agency because Kimlin lacked experience in regulating or meeting planning. Half a dozen officials also privately questioned two retreats that he organized at a cost of at least a half-million dollars and that resulted in a 22-word change to the agency's mission. Instead of fulfilling a longstanding pledge to "assure the safety and health of America's workers," the new mission would be to "promote" safety and health, with employers "responsible" for providing safe workplaces.
Asked why the agency did not hire Kimlin as a full-time federal employee, at a lower cost, Foulke said he left that issue to others. He was, he said, just an OSHA lawyer, not a personnel specialist. Foulke also said that "in the private sector" it is common to have staff retreats to discuss mission statements.
"This is critical," Foulke said, "to the company." He paused briefly before clarifying, "to the country." Foulke resigned Nov. 9 and the next day began work at an Atlanta law firm that represents companies accused of workplace safety violations.
By R. Jeffrey Smith
In early 2001, an epidemiologist at the Occupational Safety and Health Administration sought to publish a special bulletin warning dental technicians that they could be exposed to dangerous beryllium alloys while grinding fillings. Health studies showed that even a single day's exposure at the agency's permitted level could lead to incurable lung disease.
After the bulletin was drafted, political appointees at the agency gave a copy to a lobbying firm hired by the country's principal beryllium manufacturer, according to internal OSHA documents. The epidemiologist, Peter Infante, incorporated what he considered reasonable changes requested by the company and won approval from key directorates, but he bristled when the private firm complained again.
"In my 24 years at the Agency, I have never experienced such indecision and delay," Infante wrote in an e-mail to the agency's director of standards in March 2002. Eventually, top OSHA officials decided, over what Infante described in an e-mail to his boss as opposition from "the entire OSHA staff working on beryllium issues," to publish the bulletin with a footnote challenging a key recommendation the firm opposed.
Current and former career officials at OSHA say that such sagas were a recurrent feature during the Bush administration, as political appointees ordered the withdrawal of dozens of workplace health regulations, slow-rolled others, and altered the reach of its warnings and rules in response to industry pressure.
The result is a legacy of unregulation common to several health-protection agencies under Bush: From 2001 to the end of 2007, OSHA officials issued 86 percent fewer rules or regulations termed economically significant by the Office of Management and Budget than their counterparts did during a similar period in President Bill Clinton's tenure, according to White House lists.
White House officials have dismissed such tallies, emphasizing in recent regulatory overviews that their "objective is quality, not quantity," and that heavy restrictions on corporations harm economic performance. During Bush's presidency, they said in a September report, average annual regulatory costs were kept 24 percent lower than during the previous two decades. OSHA says it has issued many rules of lesser consequence that nonetheless clarified industry responsibilities.
But this record has been controversial among occupational health experts and career OSHA staff.
"The legacy of the Bush administration has been one of dismal inaction," said Robert Harrison, a professor at the University of California at San Francisco and chairman of the occupational health section of the American Public Health Association. It has been "like turning a ketchup bottle upside down, banging the bottom of the container, and nothing comes out. You shake and shake and nothing comes out," Harrison said.
More than two dozen current and former senior career officials further said in interviews that the agency's strategic choices were frequently made without input from its experienced hands. Political appointees "shut us out," a longtime senior career official said.
Among the regulations proposed by OSHA's staff but scuttled by political appointees was one meant to protect health workers from tuberculosis. Although OSHA concluded in 1997 that the regulation could avert as many as 32,700 infections and 190 deaths annually and save $115 million, it was blocked by opposition from large hospitals.
In the summer, the agency decided against moving further toward the regulation of crystalline silica, the tiny fibrous material in cement and stone dust that causes lung disease or cancer. OSHA promised a scientific peer review of the health risks by early 2005 and then by early 2007, but it never acted. Regulating silica exposures would have prevented an estimated 41 silicosis deaths and 20 to 40 lung cancers annually, according to OSHA.
In the spring, political appointees quietly scrapped work on another long-pending regulation of hazardous exposure to ionizing radiation in mailrooms, food warehouses, and hospitals and airports. It cited "resource constraints and other priorities" -- the same reason officials gave for withdrawing more than a dozen regulatory proposals in 2001.
Former OSHA director Edwin G. Foulke Jr. and other Bush appointees dispute the criticisms and say the agency carefully directed its scarce resources at the most dangerous workplaces, notably levying heavy fines after major workplace disasters. Foulke also expressed pride that a drop in reported workplace injuries that began in 1974 continued unabated under Bush and said that "we've done, I think, a really good job of moving things along" in rulemakings that proved to be more complex and time-consuming than he had anticipated.
Labor advocates, academic scholars and some OSHA officials have said that the decline in reported injuries is partly the result of a 14 percent drop in U.S. production and manufacturing jobs since 2001 and a 2002 change in the government's record-keeping rules.
'It Was Window Dressing'
The agency's first director under Bush, John L. Henshaw, startled career officials by telling them in an early meeting that employers were OSHA's real customers, not the nation's workers. "Everybody was pretty amazed," one of those present recalled. "Our purpose is to ensure employee safety and health. . . . He just looked at things differently."
Within two years, Henshaw, an industrial hygienist who had worked for Monsanto and another chemical firm, withdrew 26 draft regulations on OSHA's public calendar, including rules meant to limit workplace exposure to air contaminants, highly hazardous chemicals, and shipyard and scaffolding hazards.
In many cases, the agency cited "resource constraints" as the reason. But Charles Gordon, a Labor Department lawyer who worked on OSHA regulations in the solicitor's office from 1975 until January, said that "all the work had been done" on many of the rules, including laborious, peer-reviewed risk assessments and economic analyses.
Henshaw, acting in concert with legislation passed by the Republican majority in Congress, quickly withdrew a proposed regulation -- drawn up during the Clinton administration -- meant to curtail ergonomic problems, which OSHA studies have said cause 60 percent of workplace injuries. He promised, instead, to issue nonmandatory guidelines and to cite violations under a general OSHA statute promoting safety.
But Richard Soltan, who retired from OSHA in 2006 after seven years as the Philadelphia regional administrator and 11 years as a deputy administrator, called Henshaw's promise "a sham." "I don't think we prosecuted two cases," Soltan said. "It was window dressing."
"I took the agency where I could take it," Henshaw said in an interview. "I had a fairly good control on the enforcement side, and we tried to do everything we could to enhance the enforcement," partly by partnering with the Environmental Protection Agency and the Justice Department to pressure or punish willful, chronic violators.
But Henshaw said that "there wasn't a whole lot of political will for more rules and burdens on industry," either in the Bush administration or among congressional Republicans. Instead, there was "some interest in improving existing rules on the books," he said. "We focused on improving what we had."
Under Bush, the agency was reluctant even to issue health warnings that fall short of regulations, if doing so might make it easier for workers to collect damages for diseases. In the draft beryllium bulletin, for example, the key dispute concerned OSHA's endorsement of a blood test that detected sensitization to beryllium, a precursor to disease -- and to lawsuits.
In the end, OSHA added a footnote casting doubt on the test's validity, a decision that Lee S. Newman, a beryllium expert at the University of Colorado, called "profoundly disappointing" and part of a larger effort by Brush Wellman, the beryllium manufacturer invited to comment, "to try to mitigate" the test's use.
Patrick Carpenter, a spokesman for Brush Wellman, said that the draft "contained factual errors" and expressed satisfaction at the outcome. Infante, the epidemiologist, said the episode was "the last straw" that provoked him to resign in 2002.
Battle Over Asbestos Bulletin
That year, Ira Wainless, a senior industrial hygienist at OSHA, finished drafting a warning to auto mechanics that brake linings contained dangerous asbestos fibers. Health experts and lawmakers had called for such a bulletin, but attorneys for major car and brake manufacturers worried that it would be cited in lawsuits by mechanics seeking damages for asbestos-related disease.
Although Wainless's draft was approved by all of OSHA's directorates by mid-2003, Richard Fairfax, director of enforcement programs, was mindful of industry concerns. "Our recommendation is not to go forward," he said in a note to the head of the agency's science and technology office. "With the various asbestos litigation in progress and the compensation issues, the issuance of this may complicate matters."
A senior OSHA health enforcement official told Wainless's boss in an internal note that year that "we are under the understanding . . . it was NOT supposed to be going out." Wainless persisted, however, and over the next two years sent four drafts to Henshaw's office to meet what another OSHA official described in an internal e-mail as "requests for minor changes" by the agency's deputy director.
Before the bulletin's eventual publication in July 2006, which occurred after heavy pressure by Sen. Patty Murray (D-Wash.), OSHA omitted a statement that brake-lining imports commonly contained asbestos. It also modified its warning that linings were "a substantial source of exposure," referring instead to "potential exposure."
Days after publication and seven months after Henshaw's retirement from OSHA, he sent its science director an e-mail demanding that the warning be withdrawn and redone to express a "more balanced" view. Henshaw did not tell the career official that he had since been employed as a $350-an-hour courtroom witness on behalf of an asbestos-products firm and had testified for companies in two other asbestos lawsuits filed by auto mechanics.
In a subsequent deposition, Henshaw said he had contacted the agency to complain "as a private citizen." He also said a lawyer representing asbestos and auto firms -- who subsequently hired him as a consultant -- had contacted him about the OSHA bulletin's language.
Wainless's boss, David Ippolito, responded to Henshaw's complaint by proposing to suspend Wainless for 10 days without pay because the bulletin had not referenced an industry-financed study, which concluded that auto mechanics were typically exposed to asbestos levels below OSHA's workplace limits. Wainless had told his supervisors that the study had been disputed by other scientists.
Plans to revise the bulletin and act against Wainless were dropped after an account of the suspension proposal appeared in the Baltimore Sun. But the Labor Department maintains that the health bulletin "was not needed and could have confused the affected public," spokesman David James said recently.
Dissatisfaction With Leadership
In 2006, Henshaw was replaced by Edwin G. Foulke Jr., a South Carolina lawyer and former Bush fundraiser who spent years defending companies cited by OSHA for safety and health violations.
Foulke quickly acquired a reputation inside the Labor Department as a man who literally fell asleep on the job: Eyewitnesses said they saw him suddenly doze off at staff meetings, during teleconferences, in one-on-one briefings, at retreats involving senior deputies, on the dais at a conference in Europe, at an award ceremony for a corporation and during an interview with a candidate for deputy regional administrator.
His top aides said they rustled papers, wore attention-getting garb, pounded the table for emphasis or gently kicked his leg, all to keep him awake. But, if these tactics failed, sometimes they just continued talking as if he were awake. "We'll be sitting there and things will fall out of his hands; people will go on talking like nothing ever happened," said a career official, who spoke on the condition of anonymity because he was not authorized to talk to a reporter.
In an interview, Foulke denied falling asleep at work, although he said he was often tired and sometimes listened with his eyes closed. His goal, he said, was to create the best agency he could, partly by putting in place "performance metrics" not previously used at OSHA.
Foulke said his senior staff appeared "pretty enthusiastic," but he acknowledged that there were grounds for tension with others. Leadership, he said, is "taking people down a path they don't want to go, until you get them to a place where they realize this is where they need to be."
A $112-an-Hour Consultant
The agency's budget and its field staff declined during the Bush administration, even as its responsibilities -- and the total number of workers -- grew.
The gap caused some inspectors to complain that they lacked adequate gear to monitor workplace chemicals and other hazards. Efficiency became a key agency buzzword and, to help improve it, Foulke arranged for OSHA to hire Randy Kimlin, an acquaintance from South Carolina, as a $112-an-hour consultant beginning in 2006.
The work was lucrative for Kimlin, a former employee of Union Carbide -- a firm that frequently clashed with OSHA -- and a former president of a Greenville-based chemical firm. For his part-time advice over a 22-month period beginning in May 2006, OSHA paid Kimlin $513,403, a salary higher than that received by Vice President Cheney, any member of Congress and Foulke himself during that period.
Kimlin was paid an additional $97,730 in reimbursements for nearly weekly flights back to South Carolina and for a hotel room on Capitol Hill, all granted under a subcontract with Washington-based TATC Consulting that was awarded without competition.
Kimlin did not return calls to his office and home. But Brian Peters, who oversaw the contract for TATC, said Kimlin's role was to help arrange staff meetings and shift OSHA from a culture of inspections to less confrontational "compliance assistance." Others at OSHA said Kimlin played a large role in day-to-day operations and personnel decisions.
The arrangement attracted criticism inside and outside the agency because Kimlin lacked experience in regulating or meeting planning. Half a dozen officials also privately questioned two retreats that he organized at a cost of at least a half-million dollars and that resulted in a 22-word change to the agency's mission. Instead of fulfilling a longstanding pledge to "assure the safety and health of America's workers," the new mission would be to "promote" safety and health, with employers "responsible" for providing safe workplaces.
Asked why the agency did not hire Kimlin as a full-time federal employee, at a lower cost, Foulke said he left that issue to others. He was, he said, just an OSHA lawyer, not a personnel specialist. Foulke also said that "in the private sector" it is common to have staff retreats to discuss mission statements.
"This is critical," Foulke said, "to the company." He paused briefly before clarifying, "to the country." Foulke resigned Nov. 9 and the next day began work at an Atlanta law firm that represents companies accused of workplace safety violations.
Paul: No such thing as an independent Israel
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By Jihan Hafiz
Ron Paul, House representative of the 14th district of Texas, believes that US foreign policy must be reformed to avoid conflicts around the world.
The interview was conducted outside the Foreign Relations Committee.
Press TV: What is your opinion on the idea of the US blocking Iran's oil exports and preventing its gasoline imports from reaching the country (based on H. Con. Res. 362 previously sought by US congressmen)?
Paul: I think it is an outrage I think it is a blockade. It is the use of force to stop the inflow of petroleum products and people and goods, banking, trains, cars, trucks, cargos. It's all prohibited. How can we stop that without the use of the navy and without the use of force? This idea is not a blockade it is just pure silliness on their part [US senators and congressmen].
If we bomb them, that's the start of hostilities. They (US policy makers) are never willing to take anything off the table, which includes a nuclear-first strike. So, if they do that do you think the Iranians are going to sit still? They are going to react!
The opposition said that, well, we don't want them to block the Strait of Hormuz [the Persian Gulf waterway which allows the passages of a third of the world's daily oil supply]. They ought to change their policy because they are more likely to get the Strait of Hormuz blocked if we persist on this. If we do any bombing or we put on a blockade, it's going to lead to big trouble.
Press TV: There has been a lot of speculation that Israel may act on its own and conduct an independent air strike on Iran's nuclear facilities. Do you think that's possible?
Paul: I don't think there is such a thing as an independent Israel doing anything, because I think no matter what they do its our money, its our weapons, and their not going to do it without us approving it and if they get into trouble we're going to bail them out, so there is no separation between the two.
Press TV: During your line of questioning at the Foreign Relations Committee you mentioned the Seymour Hersh article, which was among the articles that revealed that the Congress had awarded the Bush administration hundreds of millions of dollars for a covert operation to overthrow the Iranian government. Why did you mention those stories?
Paul: Well it's something that I have known about and heard about and it does go on. It goes on all around the world. To me it was a surprise that it was news, because we have been doing that and people do talk about it. I think it's an outrage. How would we react if somebody did it to us? We would be infuriated, willing to go to war. The fact that somebody came and tried to undermine our government.
By Jihan Hafiz
Ron Paul, House representative of the 14th district of Texas, believes that US foreign policy must be reformed to avoid conflicts around the world.
The interview was conducted outside the Foreign Relations Committee.
Press TV: What is your opinion on the idea of the US blocking Iran's oil exports and preventing its gasoline imports from reaching the country (based on H. Con. Res. 362 previously sought by US congressmen)?
Paul: I think it is an outrage I think it is a blockade. It is the use of force to stop the inflow of petroleum products and people and goods, banking, trains, cars, trucks, cargos. It's all prohibited. How can we stop that without the use of the navy and without the use of force? This idea is not a blockade it is just pure silliness on their part [US senators and congressmen].
If we bomb them, that's the start of hostilities. They (US policy makers) are never willing to take anything off the table, which includes a nuclear-first strike. So, if they do that do you think the Iranians are going to sit still? They are going to react!
The opposition said that, well, we don't want them to block the Strait of Hormuz [the Persian Gulf waterway which allows the passages of a third of the world's daily oil supply]. They ought to change their policy because they are more likely to get the Strait of Hormuz blocked if we persist on this. If we do any bombing or we put on a blockade, it's going to lead to big trouble.
Press TV: There has been a lot of speculation that Israel may act on its own and conduct an independent air strike on Iran's nuclear facilities. Do you think that's possible?
Paul: I don't think there is such a thing as an independent Israel doing anything, because I think no matter what they do its our money, its our weapons, and their not going to do it without us approving it and if they get into trouble we're going to bail them out, so there is no separation between the two.
Press TV: During your line of questioning at the Foreign Relations Committee you mentioned the Seymour Hersh article, which was among the articles that revealed that the Congress had awarded the Bush administration hundreds of millions of dollars for a covert operation to overthrow the Iranian government. Why did you mention those stories?
Paul: Well it's something that I have known about and heard about and it does go on. It goes on all around the world. To me it was a surprise that it was news, because we have been doing that and people do talk about it. I think it's an outrage. How would we react if somebody did it to us? We would be infuriated, willing to go to war. The fact that somebody came and tried to undermine our government.
Drillers eye oil reserves off California coast
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By Jane Kay
The federal government is taking steps that may open California's fabled coast to oil drilling in as few as three years, an action that could place dozens of platforms off the Sonoma, Mendocino and Humboldt coasts, and raises the specter of spills, air pollution and increased ship traffic into San Francisco Bay.
Millions of acres of oil deposits, mapped in the 1980s when then-Interior Secretary James Watt and Energy Secretary Donald Hodel pushed for California exploration, lie a few miles from the forested North Coast and near the mouth of the Russian River, as well as off Malibu, Santa Monica and La Jolla in Southern California.
"These are the targets," said Richard Charter, a lobbyist for the Defenders of Wildlife Action Fund who worked for three decades to win congressional bans on offshore drilling. "You couldn't design a better formula to create adverse impacts on California's coastal-dependent economy."
The bans that protected both of the nation's coasts beginning in 1981, from California to the Pacific Northwest to the Atlantic Coast and the Straits of Florida, ended this year when Congress let the moratorium lapse.
President-elect Barack Obama hasn't said whether he would overturn President Bush's lifting last summer of the ban on drilling, as gas prices reached a historic high. Sen. Ken Salazar, D-Col., Obama's pick as interior secretary and head of the nation's ocean-drilling agency, hasn't said what he would do in coastal waters.
The Interior Department has moved to open some or all federal waters, which begin 3 miles from shore and are outside state control, for exploration as early as 2010. Rigs could go up in 2012.
National marine sanctuaries off San Francisco and Monterey bays are off-limits in California. Areas open to drilling extend from Bodega Bay north to the Oregon border and from Morro Bay south to the U.S.-Mexico border.
Drilling foes say the impacts of explosive blasts from seismic air guns that map rock formations, increased vessel traffic and oil spills should be enough to persuade federal agencies to thwart petroleum exploration. California's treasured coast, with its migrating whales, millions of seabirds, sea otters, fish and crab feeding grounds, beaches and tidal waters, are at risk, Charter and other opponents say.
According to the Interior Department, coastal areas nationwide that were affected by the drilling ban contain 18 billion barrels of oil and 76 trillion cubic feet of natural gas in what the agency called yet-to-be-discovered fields. The estimates are conservative and are based on seismic surveys in the late 1970s and early 1980s, before the moratorium went into effect.
California's share
The agency's last estimate puts about 10 billion barrels in California, enough to supply the nation for 17 months. That breaks down to 2.1 billion barrels from Point Arena in Mendocino County to the Oregon border, 2.3 billion from Point Arena south to San Luis Obispo County and 5.6 billion between there and Mexico.
"If you were allowed to go out and do new exploration, those numbers could go up or down. In most cases, you would expect them to go up," said Dave Smith, deputy communications officer of the Interior Department's Minerals Management Service, which oversees energy development in federal waters.
In California, any exploration and drilling would be close to shore, experts say. In contrast to the Gulf of Mexico, where drilling could occur in waters 10,000 feet deep, California's holdings lie on its narrow, shallow continental shelf, the underwater edge of land where creatures died over the millennia to produce the oil.
If the Interior Department decides to explore off California's coast, it could probably do so, some attorneys say. If a state objects to a lease plan, the president has the final say.
Once an area has been leased, the California Coastal Commission may review an oil company's plan to explore or extract resources to assess if it is consistent with the state's coastal management program. Conflicts can end up in court, said Alison Dettmer, the commission's deputy director.
Californians have generally opposed drilling since a platform blowout in 1969 splashed 3 million gallons of black, gooey crude oil on 35 miles of beaches around Santa Barbara, killing otters and seabirds. The destruction of shoreline and wildlife sparked activism and led to the creation of the Coastal Commission.
But when gas prices peaked a few months ago amid cries of "drill, baby, drill" at rallies for GOP presidential candidate John McCain and running mate Sarah Palin, 51 percent of Californians said they favored more offshore drilling, according to a survey by the Public Policy Institute of California.
In July, Interior Secretary Dirk Kempthorne jump-started the development of a new oil and natural gas leasing program and pushed up possible new coastal activity by two years.
The Interior Department is reviewing comments about which coastal areas to include in the next five-year leasing plan. Oil companies want all of the nation's coastal areas open and say they can produce oil offshore in a way that protects the environment. Gov. Arnold Schwarzenegger, who opposes new offshore development, has offered comments, as have environmental groups.
Obama's energy plans
Obama's administration and Congress will have the final say over which regions, if any, would be put up for possible lease sales. In Congress earlier this year, Salazar, Obama's nominee for interior secretary, supported a bipartisan bill allowing exploration and production 50 miles out from the southern Atlantic coast with state approval. The bill died.
"We've been encouraged that the president-elect has chosen Sen. Salazar," said Dan Naatz, vice president for federal resources with the Independent Petroleum Association of America, a group with 5,000 members that drill 90 percent of the oil and natural gas wells in the United States. "He's from the West, and he understands federal land policy, which is really key."
During this year's presidential campaign, Obama was bombarded by questions about high gas prices and said new domestic drilling wouldn't do much to lower gasoline prices but could have a place in a comprehensive energy program.
After introducing his green team of environment and energy chiefs recently, Obama said the foundation of the nation's energy independence lies in the "power of wind and solar, in new crops and new technologies, in the innovation of our scientists and entrepreneurs and the dedication and skill of our workforce."
He spoke of moving "beyond our oil addiction," creating "a new, hybrid economy" and investing in "renewable energy that will give life to new businesses and industries."
Obama didn't mention oil drilling. When a reporter asked him if he would reinstate the moratorium, he said he wasn't happy that the moratorium was allowed to lapse in Congress without a broader thought to how the country was going to reduce dependence on fossil fuels.
He reiterated his campaign position that he was open to the idea of offshore drilling if it was part of a comprehensive package, adding that he would turn over the question to his team.
In the 1970s and 1980s, before the moratorium on offshore drilling fully took effect, the federal government produced a series of maps showing areas in California of prospective interest to the oil industry. Those maps offer clues to where oil companies would bid if they had the opportunity.
North Coast
The last proposed lease sale in 1987, thwarted by the moratorium, would have opened 6.5 million acres off the North Coast. Off Mendocino and Humboldt counties, the tracts for sale lay from 3 to 27 miles offshore, and some of the 24 planned platforms, some of them 300 feet tall and each with dozens of wells, would have been visible from land.
Tourism and commercial fisheries would have been affected, according to an environmental review then, while as many as 240 new oil tanker trips from Fort Bragg and Eureka to San Francisco Bay refineries were predicted under the full development scenario. The probability of one or more spills occurring would be 94 percent for accidents involving 1,000 barrels or more, according to documents.
Rep. Lois Capps, D-Santa Barbara, a member of the House Natural Resources Committee, recently said oil drilling will be part of a comprehensive energy policy focusing on renewable sources, but she would like to see drilling occur only on land and in the Gulf of Mexico where infrastructure is in place.
Capps well remembers the Santa Barbara spill almost 40 years ago.
"I was living in Goleta. I just had two children, and my husband was a young professor at UC Santa Barbara. It was a devastating experience," she said. "The birds and other animals got trapped in the oil. So many people waded out in boots just inch by inch trying to rescue our wildlife. It ruined our tourism for many years.
"I think about it all the time, especially last week when we had had a spill at the same platform. It was a small spill, 1,000 gallons, but it was a wake-up call."
By Jane Kay
The federal government is taking steps that may open California's fabled coast to oil drilling in as few as three years, an action that could place dozens of platforms off the Sonoma, Mendocino and Humboldt coasts, and raises the specter of spills, air pollution and increased ship traffic into San Francisco Bay.
Millions of acres of oil deposits, mapped in the 1980s when then-Interior Secretary James Watt and Energy Secretary Donald Hodel pushed for California exploration, lie a few miles from the forested North Coast and near the mouth of the Russian River, as well as off Malibu, Santa Monica and La Jolla in Southern California.
"These are the targets," said Richard Charter, a lobbyist for the Defenders of Wildlife Action Fund who worked for three decades to win congressional bans on offshore drilling. "You couldn't design a better formula to create adverse impacts on California's coastal-dependent economy."
The bans that protected both of the nation's coasts beginning in 1981, from California to the Pacific Northwest to the Atlantic Coast and the Straits of Florida, ended this year when Congress let the moratorium lapse.
President-elect Barack Obama hasn't said whether he would overturn President Bush's lifting last summer of the ban on drilling, as gas prices reached a historic high. Sen. Ken Salazar, D-Col., Obama's pick as interior secretary and head of the nation's ocean-drilling agency, hasn't said what he would do in coastal waters.
The Interior Department has moved to open some or all federal waters, which begin 3 miles from shore and are outside state control, for exploration as early as 2010. Rigs could go up in 2012.
National marine sanctuaries off San Francisco and Monterey bays are off-limits in California. Areas open to drilling extend from Bodega Bay north to the Oregon border and from Morro Bay south to the U.S.-Mexico border.
Drilling foes say the impacts of explosive blasts from seismic air guns that map rock formations, increased vessel traffic and oil spills should be enough to persuade federal agencies to thwart petroleum exploration. California's treasured coast, with its migrating whales, millions of seabirds, sea otters, fish and crab feeding grounds, beaches and tidal waters, are at risk, Charter and other opponents say.
According to the Interior Department, coastal areas nationwide that were affected by the drilling ban contain 18 billion barrels of oil and 76 trillion cubic feet of natural gas in what the agency called yet-to-be-discovered fields. The estimates are conservative and are based on seismic surveys in the late 1970s and early 1980s, before the moratorium went into effect.
California's share
The agency's last estimate puts about 10 billion barrels in California, enough to supply the nation for 17 months. That breaks down to 2.1 billion barrels from Point Arena in Mendocino County to the Oregon border, 2.3 billion from Point Arena south to San Luis Obispo County and 5.6 billion between there and Mexico.
"If you were allowed to go out and do new exploration, those numbers could go up or down. In most cases, you would expect them to go up," said Dave Smith, deputy communications officer of the Interior Department's Minerals Management Service, which oversees energy development in federal waters.
In California, any exploration and drilling would be close to shore, experts say. In contrast to the Gulf of Mexico, where drilling could occur in waters 10,000 feet deep, California's holdings lie on its narrow, shallow continental shelf, the underwater edge of land where creatures died over the millennia to produce the oil.
If the Interior Department decides to explore off California's coast, it could probably do so, some attorneys say. If a state objects to a lease plan, the president has the final say.
Once an area has been leased, the California Coastal Commission may review an oil company's plan to explore or extract resources to assess if it is consistent with the state's coastal management program. Conflicts can end up in court, said Alison Dettmer, the commission's deputy director.
Californians have generally opposed drilling since a platform blowout in 1969 splashed 3 million gallons of black, gooey crude oil on 35 miles of beaches around Santa Barbara, killing otters and seabirds. The destruction of shoreline and wildlife sparked activism and led to the creation of the Coastal Commission.
But when gas prices peaked a few months ago amid cries of "drill, baby, drill" at rallies for GOP presidential candidate John McCain and running mate Sarah Palin, 51 percent of Californians said they favored more offshore drilling, according to a survey by the Public Policy Institute of California.
In July, Interior Secretary Dirk Kempthorne jump-started the development of a new oil and natural gas leasing program and pushed up possible new coastal activity by two years.
The Interior Department is reviewing comments about which coastal areas to include in the next five-year leasing plan. Oil companies want all of the nation's coastal areas open and say they can produce oil offshore in a way that protects the environment. Gov. Arnold Schwarzenegger, who opposes new offshore development, has offered comments, as have environmental groups.
Obama's energy plans
Obama's administration and Congress will have the final say over which regions, if any, would be put up for possible lease sales. In Congress earlier this year, Salazar, Obama's nominee for interior secretary, supported a bipartisan bill allowing exploration and production 50 miles out from the southern Atlantic coast with state approval. The bill died.
"We've been encouraged that the president-elect has chosen Sen. Salazar," said Dan Naatz, vice president for federal resources with the Independent Petroleum Association of America, a group with 5,000 members that drill 90 percent of the oil and natural gas wells in the United States. "He's from the West, and he understands federal land policy, which is really key."
During this year's presidential campaign, Obama was bombarded by questions about high gas prices and said new domestic drilling wouldn't do much to lower gasoline prices but could have a place in a comprehensive energy program.
After introducing his green team of environment and energy chiefs recently, Obama said the foundation of the nation's energy independence lies in the "power of wind and solar, in new crops and new technologies, in the innovation of our scientists and entrepreneurs and the dedication and skill of our workforce."
He spoke of moving "beyond our oil addiction," creating "a new, hybrid economy" and investing in "renewable energy that will give life to new businesses and industries."
Obama didn't mention oil drilling. When a reporter asked him if he would reinstate the moratorium, he said he wasn't happy that the moratorium was allowed to lapse in Congress without a broader thought to how the country was going to reduce dependence on fossil fuels.
He reiterated his campaign position that he was open to the idea of offshore drilling if it was part of a comprehensive package, adding that he would turn over the question to his team.
In the 1970s and 1980s, before the moratorium on offshore drilling fully took effect, the federal government produced a series of maps showing areas in California of prospective interest to the oil industry. Those maps offer clues to where oil companies would bid if they had the opportunity.
North Coast
The last proposed lease sale in 1987, thwarted by the moratorium, would have opened 6.5 million acres off the North Coast. Off Mendocino and Humboldt counties, the tracts for sale lay from 3 to 27 miles offshore, and some of the 24 planned platforms, some of them 300 feet tall and each with dozens of wells, would have been visible from land.
Tourism and commercial fisheries would have been affected, according to an environmental review then, while as many as 240 new oil tanker trips from Fort Bragg and Eureka to San Francisco Bay refineries were predicted under the full development scenario. The probability of one or more spills occurring would be 94 percent for accidents involving 1,000 barrels or more, according to documents.
Rep. Lois Capps, D-Santa Barbara, a member of the House Natural Resources Committee, recently said oil drilling will be part of a comprehensive energy policy focusing on renewable sources, but she would like to see drilling occur only on land and in the Gulf of Mexico where infrastructure is in place.
Capps well remembers the Santa Barbara spill almost 40 years ago.
"I was living in Goleta. I just had two children, and my husband was a young professor at UC Santa Barbara. It was a devastating experience," she said. "The birds and other animals got trapped in the oil. So many people waded out in boots just inch by inch trying to rescue our wildlife. It ruined our tourism for many years.
"I think about it all the time, especially last week when we had had a spill at the same platform. It was a small spill, 1,000 gallons, but it was a wake-up call."
Two Dangerous Bush-Cheney Myths
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By Robert Parry
By Robert Parry
As George W. Bush and Dick Cheney make their case for some positive legacy from the past eight years, two arguments are playing key roles: the notion that torturing terror suspects saved American lives and the belief that Bush’s Iraq troop “surge” transformed a disaster into something close to “victory.”
Not only will these twin arguments be important in defining the public’s future impression of where Bush should rank on the presidential list, but they could constrain how far President Barack Obama can go in reversing these policies. In other words, the perception of the past can affect the future.
Though most current thinking holds that George W. Bush might want to trademark the slogan “Worst President Ever,” America’s powerful right-wing media (and its many allies in the mainstream press) will surely seek to rehabilitate Bush’s reputation as much as possible.
Even elevating Bush to the status of a presidential mediocrity might open the door for a revival of the Bush Dynasty with brother Jeb already eyeing one of Florida’s U.S. Senate seats and possibly harboring grander ambitions.
And even if another Bush in the White House is not realistic, a kinder-gentler judgment on George W. Bush at least could help the Republican Party rebound in 2010 and 2012. So evaluating the Bush-Cheney torture policies and how successful the “surge” are not just academic exercises.
Two recent articles by people with first-hand knowledge also shed important new light on these issues: one by a lead U.S. interrogator in Iraq and the other by former Defense Secretary Donald Rumsfeld.
The interrogator – using the pseudonym “Matthew Alexander” for an article in the Washington Post’s Outlook section on Nov. 30 – wrote that the practice of humiliating and abusing prisoners had proved counterproductive, not only violating U.S. principles and failing to extract reliable intelligence but fueling the Iraqi insurgency and getting large numbers of U.S. soldiers killed.
Indeed, “Alexander,” a U.S. Air Force special operations officer, argued that it was his team’s abandonment of those harsh tactics that contributed to the tracking down and killing of the murderous al-Qaeda in Iraq leader Abu Musab al-Zarqawi in June 2006, an important turning point in reducing levels of violence in Iraq.
“Alexander” said he arrived in Iraq in March 2006, amid the bloody civil war that Sunni extremist Zarqawi had helped provoke a month earlier with the bombing of the golden-domed Askariya mosque in Samarra, a shrine revered by Iraq’s majority Shiites.
“Amid the chaos, four other Air Force criminal investigators and I joined an elite team of interrogators attempting to locate Zarqawi,” he wrote. “What I soon discovered about our methods astonished me. The Army was still conducting interrogations according to the Guantanamo Bay model. … These interrogations were based on fear and control; they often resulted in torture and abuse.
“I refused to participate in such practices, and a month later, I extended that prohibition to the team of interrogators I was assigned to lead. I taught the members of my unit a new methodology -- one based on building rapport with suspects, showing cultural understanding and using good old-fashioned brainpower to tease out information.”
Breakthroughs
By getting to know the captives and negotiating with them, his team achieved breakthroughs that enabled the U.S. military to close in on Zarqawi while also gaining a deeper understanding of what drove the Iraqi insurgency, “Alexander” wrote.
“Over the course of this renaissance in interrogation tactics, our attitudes changed. We no longer saw our prisoners as the stereotypical al-Qaeda evildoers we had been repeatedly briefed to expect; we saw them as Sunni Iraqis, often family men protecting themselves from Shiite militias and trying to ensure that their fellow Sunnis would still have some access to wealth and power in the new Iraq.
“Most surprisingly, they turned out to despise al-Qaeda in Iraq as much as they despised us, but Zarqawi and his thugs were willing to provide them with arms and money,” the interrogator wrote, noting that this understanding played a key role in the U.S. military turning many Sunnis against the hyper-violent extremism of Zarqawi’s organization.
“Alexander” added that the new interrogation methods “convinced one of Zarqawi’s associates to give up the al-Qaeda in Iraq leader’s location. On June 8, 2006, U.S. warplanes dropped two 500-pound bombs on a house where Zarqawi was meeting with other insurgent leaders.”
Despite the success in killing Zarqawi, “Alexander” said the old, harsh interrogation methods continued. “I came home from Iraq feeling as if my mission was far from accomplished,” he wrote. “Soon after my return, the public learned that another part of our government, the CIA, had repeatedly used waterboarding to try to get information out of detainees.”
“Alexander” found that the engrained support for using “rough stuff” against hardened jihadists was difficult to overcome despite the successes from more subtle approaches.
“We turned several hard cases, including some foreign fighters, by using our new techniques,” he wrote. “A few of them never abandoned the jihadist cause but still gave up critical information. One actually told me, ‘I thought you would torture me, and when you didn’t, I decided that everything I was told about Americans was wrong. That’s why I decided to cooperate.’"
From hundreds of these interrogations, “Alexander” said he learned that the images from Guantanamo Bay and Abu Ghraib were actually getting American soldiers killed by drawing angry young Arabs into the Iraq War.
“Torture and abuse cost American lives,” the interrogator wrote. “I learned in Iraq that the No. 1 reason foreign fighters flocked there to fight were the abuses carried out at Abu Ghraib and Guantanamo. Our policy of torture was directly and swiftly recruiting fighters for al-Qaeda in Iraq. The large majority of suicide bombings in Iraq are still carried out by these foreigners. They are also involved in most of the attacks on U.S. and coalition forces in Iraq.
“It’s no exaggeration to say that at least half of our losses and casualties in that country have come at the hands of foreigners who joined the fray because of our program of detainee abuse. The number of U.S. soldiers who have died because of our torture policy will never be definitively known, but it is fair to say that it is close to the number of lives lost on Sept. 11, 2001.
"How anyone can say that torture keeps Americans safe is beyond me -- unless you don’t count American soldiers as Americans.”
Nevertheless, in a series of candid “exit interviews,” Vice President Cheney – and to a lesser degree President Bush – have defended their actions that included sanctioning brutal methods of interrogation, such as the simulated drowning of “waterboarding.” [See Consortiumnews.com’s “Cheney Defends Waterboarding Order.”]
The ‘Surge’
To this day, the belief that subjecting “bad guys” to physical and psychological abuse makes them crack -- and thus saves American lives -- remains a central myth that the departing Bush administration won’t abandon. A parallel myth is the notion of the “successful surge.”
It holds that Bush’s brave decision to go against the prevailing political winds in early 2007 and escalate U.S. military involvement in Iraq – with a 30,000-troop “surge” – saved the day. News stories and opinion articles across the U.S. news media, including the New York Times and the Washington Post, have transformed this argument into “conventional wisdom.”
However, as we have pointed out in other stories, the reality is far more complex, with several other key reasons contributing to the drop in Iraqi violence, many predating or unrelated to the “surge,” including:
--The decision by Sunni tribes to turn against al-Qaeda and accept U.S. financial support, the so-called “Anbar Awakening” that began in 2006. Zarqawi’s extremism contributed to this shift, which in turn was a factor in his isolation and death in June 2006.
--Vicious ethnic cleansing had separated Sunnis and Shiites to such a degree that there were fewer targets to kill. Several million Iraqis fled as refugees either into neighboring countries or within their own.
--Concrete walls built between Sunni and Shiite areas made “death-squad” raids more difficult but also “cantonized” much of Baghdad and other Iraqi cities, making everyday life for Iraqis even more exhausting as they sought food or traveled to work.
--An expanded U.S. policy of rounding up so-called “military age males” locked up tens of thousands in prison.
--Awesome U.S. firepower, concentrated on Iraqi insurgents and civilian bystanders for more than five years, had slaughtered countless thousands of Iraqis and intimidated many others to look simply to their own survival.
--With the total Iraqi death toll estimated in the hundreds of thousands and many more Iraqis horribly maimed, the society was deeply traumatized. As tyrants have learned throughout history, at some point violent repression does work.
However, in Washington political circles, it was all about the “successful surge.”
There also was little concern about the 1,000 additional U.S. soldiers who have died in Iraq since President Bush started the “surge” in 2007. The Americans killed during the “surge” represent roughly one-quarter of the total war dead whose numbers have now passed the 4,200 mark.
Rumsfeld’s Doubts
Surprisingly to some Iraq War critics, one of the chief obstacles to Bush’s “surge” was the widely despised Defense Secretary, Donald Rumsfeld, who – in fall 2006 – pushed for a strategy that would have slashed the U.S. military presence in Iraq dramatically by mid-2007.
On Nov. 6, 2006, Rumsfeld sent a memo to the White House, in which he listed his preferred – or “above the line” – options as "an accelerated drawdown of U.S. bases … to five by July 2007" and withdrawal of U.S. forces "from vulnerable positions — cities, patrolling, etc. … so the Iraqis know they have to pull up their socks, step up and take responsibility for their country."
Two days later, Rumsfeld was forced to submit his resignation and Bush announced Robert Gates as the new Defense Secretary. Not aware of Rumsfeld’s memo, Washington pundits and many leading Democrats misinterpreted the personnel shift as a reaction to the Democratic congressional election victory on Nov. 7, 2006.
The consensus view was that the “realist” Gates would oversee a rapid U.S. military drawdown in Iraq. However, the opposite occurred. Gates became Bush’s front man for the “surge.” [For details, see Consortiumnews.com’s “Robert Gates: As Bad as Rumsfeld?”]
The subsequent conventional wisdom about the “successful surge” catapulted Gates from the ranks of the departing Bush administration into those of the arriving Obama administration, where he will remain Defense Secretary.
On Nov. 23, 2008, less than three weeks after Obama’s Nov. 4 election victory as it was becoming clear that Obama would retain Gates, Rumsfeld shed more light on his own Iraq War strategy in an op-ed for the New York Times.
While bowing to the prevailing conventional wisdom about the “successful surge,” Rumsfeld defended his pre-surge thinking, explaining that a number of factors had set up the “tipping point” that enabled the “surge” to be successful.
Though using more positive language about those preconditions (than we did), Rumsfeld made essentially the same points, adding that previous increases in U.S. troop levels – to numbers comparable to the “surge” levels – had achieved minimal effect in containing the violence.
“As one who is occasionally — and incorrectly — portrayed as an opponent of the surge in Iraq, I believe that while the surge has been effective in Iraq, we must also recognize the conditions that made it successful,” Rumsfeld wrote.
“By early 2007, several years of struggle had created the new conditions for a tipping point:
“--Al Qaeda in Iraq’s campaign of terrorism and intimidation had turned its Sunni base of support against it. The result was the so-called Anbar Awakening in the late summer of 2006, followed by similar awakening movements across Iraq.
“--From 2003 through 2006, United States military forces, under the leadership of Gen. John Abizaid and Gen. George Casey, inflicted huge losses on the Baathist and Qaeda leadership. Many thousands of insurgents, including the Qaeda chief in Iraq, Abu Musab al-Zarqawi, were captured or killed and proved difficult to replace.
“--The Iraqi Security Forces had achieved cohesion, improved operational effectiveness and critical mass. By December 2006, some 320,000 Iraqis had been trained, equipped and deployed, producing the forces necessary to help hold difficult neighborhoods against the enemy. By 2007, the surge, for most Iraqis, could have an Iraqi face.
“--And the political scene in Iraq had shifted. Moktada al-Sadr, the firebrand cleric, declared a cease-fire in February 2007. The government of Prime Minister Nuri Kamal al-Maliki, seated in May 2006, moved against militias and Iranian-backed militias and has imperfectly, but notably, rejected narrow sectarian policies.
“The best indication that timing is everything may be that there had been earlier surges without the same effect as the 2007 surge. In 2005, troop levels in Iraq were increased to numbers nearly equal to the 2007 surge — twice. But the effects were not as durable because large segments of the Sunni population were still providing sanctuary to insurgents, and Iraq’s security forces were not sufficiently capable or large enough.”
In other words, even Rumsfeld would agree that the simplistic conventional wisdom of Washington – that Bush’s “surge” turned everything around and that everyone, including Barack Obama, must accept that “fact” – doesn’t square with the more complex reality.
Still, as Americans should have learned over the past three decades of image-managing – from Ronald Reagan to Karl Rove – perceptions can be a powerful thing. Perception may not be the same as reality but it can become a very dangerous substitute both in defining the present and charting the future.
'Gaza strike is not against Hamas, it's against all Palestinians'
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By Amira Hass
At 3:19 P.M. Sunday, the sound of an incoming missile could be heard over the telephone. And then another, along with the children's cries of fear. In Gaza City's Tel al-Hawa neighborhood, high-rise apartment buildings are crowded close together, with dozens of children in every building, hundreds in every block.
Their father, B., informs me that smoke is rising from his neighbor's house and ends the call. An hour later, he tells me that two apartments were hit. One was empty; he does not know who lives there. The other, which suffered casualties, belongs to a member of a rocket-launching cell, but no one senior or important.
At noon Sunday, the Israel Air Force bombed a compound belonging to Gaza's National Security Service. It houses Gaza City's main prison. Three prisoners were killed. Two were apparently Fatah members; the third was convicted of collaborating with Israel. Hamas had evacuated most of the Gaza Strip's other prisons, but thought this jail would be safe.
At 12 A.M. on Sunday, a phone call roused S. "I wasn't sleeping anyway," he said. "I picked up the receiver and heard a recorded announcement in Arabic: 'This is to warn you that we will bomb the house of anyone who has arms or ammunition at home.'"
Three members of one neighboring family were killed, all young men in their twenties. None of them owned arms or ammunition; they were simply walking down the street when the IAF bombed a passing car. Another neighbor lost a 16-year-old daughter, and her sister was seriously wounded. The IAF had bombed a building that formerly housed the Palestinian Authority's Preventive Security Service, and their school was located next door.
S. saw the results of some of Saturday's bombings when he visited a friend whose office is located near Gaza City's police headquarters. One person killed in that attack was Hassan Abu Shnab, the eldest son of former senior Hamas official Ismail Abu Shnab.
The elder Abu Shnab, whom Israel assassinated five years ago, was one of the first Hamas politicians to speak in favor of a two-state solution. Hassan worked as a clerk at the local university and played in the police band for fun. He was performing at a police graduation ceremony on Saturday when the bomb struck.
"Seventy policemen were killed there, not all Hamas members," said S., who opposes Hamas. "And even those who supported Hamas were young men looking for a job, a salary. They wanted to live. And therefore, they died. Seventy in one blow. This assault is not against Hamas. It's against all of us, the entire nation. And no Palestinian will consent to having his people and his homeland destroyed in this way."
By Amira Hass
At 3:19 P.M. Sunday, the sound of an incoming missile could be heard over the telephone. And then another, along with the children's cries of fear. In Gaza City's Tel al-Hawa neighborhood, high-rise apartment buildings are crowded close together, with dozens of children in every building, hundreds in every block.
Their father, B., informs me that smoke is rising from his neighbor's house and ends the call. An hour later, he tells me that two apartments were hit. One was empty; he does not know who lives there. The other, which suffered casualties, belongs to a member of a rocket-launching cell, but no one senior or important.
At noon Sunday, the Israel Air Force bombed a compound belonging to Gaza's National Security Service. It houses Gaza City's main prison. Three prisoners were killed. Two were apparently Fatah members; the third was convicted of collaborating with Israel. Hamas had evacuated most of the Gaza Strip's other prisons, but thought this jail would be safe.
At 12 A.M. on Sunday, a phone call roused S. "I wasn't sleeping anyway," he said. "I picked up the receiver and heard a recorded announcement in Arabic: 'This is to warn you that we will bomb the house of anyone who has arms or ammunition at home.'"
Three members of one neighboring family were killed, all young men in their twenties. None of them owned arms or ammunition; they were simply walking down the street when the IAF bombed a passing car. Another neighbor lost a 16-year-old daughter, and her sister was seriously wounded. The IAF had bombed a building that formerly housed the Palestinian Authority's Preventive Security Service, and their school was located next door.
S. saw the results of some of Saturday's bombings when he visited a friend whose office is located near Gaza City's police headquarters. One person killed in that attack was Hassan Abu Shnab, the eldest son of former senior Hamas official Ismail Abu Shnab.
The elder Abu Shnab, whom Israel assassinated five years ago, was one of the first Hamas politicians to speak in favor of a two-state solution. Hassan worked as a clerk at the local university and played in the police band for fun. He was performing at a police graduation ceremony on Saturday when the bomb struck.
"Seventy policemen were killed there, not all Hamas members," said S., who opposes Hamas. "And even those who supported Hamas were young men looking for a job, a salary. They wanted to live. And therefore, they died. Seventy in one blow. This assault is not against Hamas. It's against all of us, the entire nation. And no Palestinian will consent to having his people and his homeland destroyed in this way."
Was the 'Credit Crunch' a Myth Used to Sell a Trillion-Dollar Scam?
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By Joshua Holland
By Joshua Holland
There is something approaching a consensus that the Paulson Plan -- also known as the Troubled Asset Relief Program, or TARP -- was a boondoggle of an intervention that’s flailed from one approach to the next, with little oversight and less effect on the financial meltdown.
But perhaps even more troubling than the ad hoc nature of its implementation is the suspicion that has recently emerged that TARP -- hundreds of billions of dollars worth so far -- was sold to Congress and the public based on a Big Lie.
President George W. Bush, fabulist-in-chief, articulated the rationale for the program in that trademark way of his -- as if addressing a nation of slow-witted 12-year-olds -- on Sept. 24: "Major financial institutions have teetered on the edge of collapse ... [and] began holding onto their money, and lending dried up, and the gears of the American financial system began grinding to a halt." Bush said that if Congress didn’t give Treasury Secretary Hank Paulson the trillion dollars (give or take) for which he was asking, the results would be disastrous: "Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And ultimately, our country could experience a long and painful recession."
For the most part, the press has continued to echo Bush’s central assertion that there’s a "credit crunch" preventing even qualified borrowers -- that’s the key point -- from getting loans, and it’s now part of the conventional wisdom.
But a number of economists are questionioning the factual basis of the credit crunch narrative. Columnist David Sirota recently looked at those claims and concluded that Americans "had been punk’d" -- that "the major claims about a credit crisis that justified Congress cutting a trillion-dollar blank check to Wall Street were demonstrably false," and the threat of a systemic banking crash was used by the Bush administration to overcome popular resistance to the "bailout."
It’s a reasonable conclusion; this is an administration that used the threat of thousands of al-Qaida sleeper cells in the United States to sell Congress on the Patriot Act, the specter of mushroom clouds rising over American cities to push through the Iraq war resolution and the supposedly imminent crash of the Social Security system to push for privatizing Americans’ retirement savings.
But the question comes down to what they knew and when they knew it. The analyses that suggest the whole credit crunch narrative is false are based on data that lagged behind the numbers that policymakers had available, in real time, back in September. So the question -- probably unanswerable at this point -- comes down to whether or not they looked at the situation and in good faith believed that pumping hundreds of billions of dollars into the banking system would contain the damage and save an economy teetering on the brink of collapse.
What Else Could Be Happening?
Of course, no one disputes the fact that as the economy has tanked, the number of new loans being issued to American families and businesses has plummeted. But is because credit has dried up for qualified borrowers?
Economist Dean Baker doesn’t think so. He explains the situation in simple terms: The media, he argues, "are blaming the economic collapse on a ’credit crunch’ instead of the more obvious problem that consumers just lost $6 trillion of housing wealth and another $8 trillion of stock wealth." It’s a commonsense argument: much of the economic growth of the Bush era existed on paper only, built on the rise of a massive bubble in real estate values rather than growth in productive industries. When all that ephemeral wealth vaporized -- and with the economy shedding jobs like a dog with dermatitis -- consumers stopped buying, and businesses, anticipating a long slowdown, stopped seeking the loans that they might have otherwise tapped to expand their operations.
Whether good borrowers can’t get credit from banks because the latter are hoarding cash or lending has stopped because of a drop-off in demand for new loans is not some wonky academic debate; it’s of crucial significance. Because if lending to qualified parties has truly frozen, then even if the specific implementation of the Paulson Plan was deeply flawed, its broad approach -- "recapitalizing" banks in various ways, buying up some of their crappy paper and guaranteeing some of their transactions -- is fundamentally sound.
If, on the other hand, the primary problem is that people are broke and maxed out on debt, and firms aren’t looking for money to expand, then the kind of massive stimulus package being considered by the Obama transition team and congressional Dems -- largely designed to stimulate demand from the bottom up, with public works projects, tax cuts for working families, aid to tapped-out state and municipal governments and new money for unemployment and food stamps -- is obviously the best approach to take.
Broadly speaking, these are the parameters of the debate in Washington, and that means that properly diagnosing the underlying problem is crucially important.
Is the Credit Crunch a Big Lie?
There’s plenty of evidence that Baker’s right. He points out that even though mortgage rates have plummeted, the number of applications for new loans has dropped to very low levels and argues it’s "the most glaring refutation of the claim that people are unable to get credit." If creditworthy applicants were being denied loans by banks unable or unwilling to lend, Baker explains, "then the ratio of mortgage applications to home sales should be soaring" as qualified homebuyers apply to multiple banks for a loan. "Since there is no notable increase in this ratio, access to credit is obviously not an issue."
Again, this is common sense. Consumer spending drives about 70 percent of the U.S. economy, and in recent years, much of that spending was financed by people taking chunks of home equity out of their properties -- people might have been eating in fancy restaurants, but they were essentially eating their living rooms to do so.
That the American people don’t have the appetite to go deeper into debt than they already are in order to make new purchases is hard to dispute. In November, consumer prices across the board fell at a record rate for the second month in a row. And even with mortgage rates plummeting, so many homeowners are "underwater" -- owing more on their homes than they’re worth -- that they’re unable to refinance because the equity isn’t there. Paul Schuster, a vice president at Marketplace Home Mortgage, told the St. Paul Pioneer Press, "What I’m really concerned about is the job picture ... If (people) don’t feel good about their jobs, rates aren’t going to matter."
The National Federal of Independent Business’ November survey of small-business owners found no evidence of a credit crunch to date, concluding that if "credit is going untapped, it’s largely because company operators are not choosing to pursue the credit. It’s not that companies can’t get the extra money, it’s that they don’t want or need it because of the broader slowdown in economic activity."
The credit crunch narrative -- and the justification for creating Paulson’s $700 billion TARP honeypot -- is built on three related assertions: 1) banks, fearing that they’ll be unable to meet their own financial obligations, aren’t lending money to one another; 2) they’re also not lending to the public at large -- neither to firms nor individuals; and 3) businesses are further unable to raise money through ordinary channels because investors aren’t eager to buy up corporate debt, including commercial paper issued by companies with decent balance sheets.
Economists at the Federal Reserve Bank of Minnesota’s research department -- V.V. Chari and Patrick Kehoe of the University of Minnesota, and Northwestern University’s Lawrence Christiano -- crunched the Fed’s numbers in an examination of these bits of conventional wisdom (PDF), and concluded that all three claims are myths.
The researchers found that "interbank lending is healthy" and "bank credit has not declined during the financial crisis"; that they’ve seen "no evidence that the financial crisis has affected lending to non-financial businesses" and that "while commercial paper issued by financial institutions has declined, commercial paper issued by non-financial institutions is essentially unchanged during the financial crisis." The researchers called on lawmakers to "articulate the precise nature of the market failure they see, [and] to present hard evidence that differentiates their view of the data from other views."
That finding was backed up by a study issued by Celent Financial Services, a consulting firm, again using the Treasury Department’s own data. According to a story on the report by Reuters, Celent’s researchers concluded that the "data actually suggest world credit markets are functioning remarkably well." Rather than a widespread banking problem, Celent found that the rot was limited to "a few big, vocal banks and industries such as car manufacturing, which would be in difficulty anyway."
There are also some important caveats. Economists at the Boston Federal Reserve responded to the Minnesota Fed’s research (PDF), arguing that the use of aggregate data doesn’t fully reflect the dysfunction in specific subsectors of the economy, nor does it adequately reflect the decline in new loans.
It’s also the case that single-cause explanations for complex crises usually fail to hit the mark. Banks, having fueled the housing bubble (and similar bubbles before that) with the creation of ever-shadier "exotic" securities, are probably erring on the side of caution in writing new loans. They’re looking at their balance sheets as quarterly reports approach, and the number of foreign investment dollars coming into the U.S. has declined, meaning that some qualified firms may, indeed, have trouble raising cash in the near future.
Dean Baker, while arguing that "the main story is that people don’t have money and therefore want to spend," acknowledged that "some banks are undoubtedly anticipating more write-offs from other loans going bad, so they will hang on to their capital now rather than make new loans." And, as Sirota notes, some of the institutions that are relatively healthy are reportedly holding cash in anticipation of picking up weaker banks on the cheap.
But one thing is clear: the economic crisis may have woken up Washington’s political class when it hit the banks, but it remains a product of long-term imbalances in the economy, and the idea that it’s primarily a pathology of the banking system in isolation is a misdiagnosis that, if uncorrected, can only result in a longer, deeper and more painful recession than might otherwise be the case.
Iranians Ponder Their Future With an Obama Administration
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By Ann Wright
Traveling to Iran as a Citizen Diplomat for Peace
By Ann Wright
Traveling to Iran as a Citizen Diplomat for Peace
Just a month ago, while Israeli Prime Minister Ehud Olmert and US President George Bush met for the last time as heads of state in late November 2008 in Washington and continued their relentless bellicose rhetoric toward Iran, I and three activists from the United States were in Iran as citizen diplomats talking with Iranians on their views of a new American presidential administration and their hopes for their country.
We went to Iran with no illusions. We knew well the history of United States involvement in Iran. We knew of Iranian support for organizations U.S. administrations have labeled as "terrorist" groups. And we were very familiar with international concerns about Iran’s nuclear enrichment program and human rights record.
We wanted to talk with members of the Iranian government as well as with ordinary Iranians. We ended up meeting with officials in the Iranian president’s office and the Ministry of Foreign Affairs and with two women members of the Iranian Parliament (Majles). We also spoke with businesspersons, members of nongovernmental organizations, writers, filmmakers and university students and faculty.
Writing about the concerns of the Iranians we met leaves one open to comments of being one-sided, not speaking with enough Iranians to provide the "real" voices and of picking and choosing voices to record. I acknowledge the possible criticism in advance, but believe our discussions are worthy of presentation to those who have not been so fortunate to have traveled to Iran to see and hear for themselves. So here goes.
Iranians Want Peace, Not War
Codepink Women for Peace co-founders Jodie Evans and Medea Benjamin, Fellowship of Reconciliation Iran program director Laila Zand and I were reminded in virtually every conversation that Iranians want peace with the United States, not war. Not one person in Iran told us that first, she believed her country would begin a war with the United States or any other country, to include Israel, and second, that if the United States initiated military actions against Iran, that those actions would resolve problems in Iran or with the United States.
They reminded us that, unlike the United States, which has invaded and occupied Iran’s neighbors Iraq and Afghanistan, Iran has not attacked any country in the last 200 years. They reminded us that Iran was the victim of an eight-year war in the 1980’s when Iraq invaded Iran and the United States and European countries provided Iraq with military equipment, intelligence and chemical weapons that were used at least 50 times against Iranian civilians and military forces. We learned that during the eight-year war the Revolution’s Supreme Leader Ayatollah Khomeini had mandated that it would be against Islamic precepts to bomb Iraqi cities or use chemical or unconventional weapons on Iraq - and Iranian military forces complied - even though the Iraqi military bombed Iranian cities, including Tehran, and used chemical weapons on Iranians.
Most Iranians Have Issues With Their Government, as Most Americans Have Issues With Theirs
Iran is a county with a population of about 70 million (two and one-half times as many people as Iraq) and a geographic area about the size of Alaska (four times as large as Iraq). Tehran, the Iranian capital, has 7.5 million people in the urban area and 15 million in surrounding areas. It is a modern city, with a beautiful subway and cosmopolitan shops, as well as a huge traditional bazaar and an incredible number of cars, trucks and motorcycles. Tehran and Iran have recovered from the Iraq war that ended 20 years ago and are holding up remarkably well to US and international sanctions.
Most Iranians with whom we talked openly said they have issues with many aspects of their government. Many said the Iranian people share a common dislike with Americans - dislike of their government - noting that President Bush’s and the US Congress’s approval ratings with the American people are extremely low, as is Iranian President Mahmoud Ahmadinejad’s ratings, particularly in urban areas. But, they strongly said they do not want outside interference in the internal political events of their country and definitely do not want a political system and government installed by invasion and occupation. Their democracy, even with its flaws, is better than a US-enforced democracy, they said.
America’s best policy would be to treat Iran with respect and not with threats of military action. Any attempt to overthrow the Iranian government would be met with stiff opposition, even from those who don’t like the government, they repeated. "Regime change" will come in due time and in an Iranian manner.
US Interference in Iran’s Internal Affairs
Several reminded us that in January 1981, the United States signed the Algiers Accord, in which the US agreed "not to intervene directly or indirectly, politically or militarily, in Iran’s internal affairs." The Algiers Accord was the agreement signed by the United States and Iran to end the 444-day US Embassy hostage crisis.
However, this Accord has been violated numerous times by the United States. Investigative journalist Seymour Hersh wrote that, in late 2007, President Bush requested and received from Democratic Congressional leadership $400 million reprogrammed from previous authorizations to fund a presidential finding that substantially increased covert activities designed to destabilize Iran’s religious leadership. These covert actions involved support for the Ahwazi Arab and Baluchi groups and other dissident organizations. Hersh also revealed that United States Special Operations Forces had been conducting cross-border operations from southern Iraq, with presidential authorization, since 2007, including seizing members of Al Quds, the commando arm of the Iranian Revolutionary Guard and taking them to Iraq for interrogation, and the pursuit of "high-value targets" who could be captured or killed. Hersh said operations by the Central Intelligence Agency and the Joint Special Operations Command (JSOC) were significantly expanded in 2007 by this authorization.
Iran’s Nuclear Program
Iran has had a nuclear program for almost 50 years, having purchased a research reactor from the United States in 1959 during the Shah’s reign. The Iranian government states that its nuclear energy program will allow increased electricity generation to reduce consumption of gas and oil to allow export of more of its fossil fuels. The US National Intelligence Estimate (NIE) made public December 3, 2007, concluded with "high confidence" that the military-run Iranian nuclear weapons program had been shut down in 2003, but that Iran’s enrichment program could still provide enough enriched uranium to produce a nuclear weapon by the middle of the next decade, a time frame unchanged from previous estimates.
Virtually everyone with whom we spoke said they believe that their country has a right to have a nuclear enrichment program and to produce nuclear energy. Many questioned why Iran would ever need a nuclear weapons program, unless as leverage against the United States’ 30-year antagonism toward their country. They reminded us that Iran is a member of the Non-Proliferation Treaty (unlike nuclear states Israel, India and Pakistan, which refused to join the NPT and developed nuclear weapons purposefully outside the treaty.) Additionally, they insist that Iran is in compliance with the IAEA standards, according to the November 2008 IAEA report, despite interpretations of the report by the United States and Israel.
Some reminded us that on August 9, 2005, at the IAEA meeting in Vienna, 60 years after the US atomic bombing of Japan, Iran’s Supreme Leader Ayatollah Khamenei announced that he had issued a fatwa, or religious mandate, forbidding the production, stockpiling and use of nuclear weapons. Importantly, the Supreme Leader controls the Iranian military and the nuclear program of Iran, not the President of the country, Mr. Ahmadinejad.
Iran, Israel and the United States
Iran, Israel and United States have had a disturbing, but fascinating, history over the past 30 years. Iran’s current relationship with Israel and Western countries seems to be defined by President Ahmadinejad’s October 2005 statement - widely reported, but tragically and dangerously mistranslated and misinterpreted - that "Israel should be wiped off the face of the earth." According to highly respected Middle Eastern scholar Juan Coles, Ahmadinejad was "not making a threat, but was quoting a saying of Ayatollah Khomeini that urged pro-Palestinian activists in Iran not give up hope - that the occupation of Jerusalem was no more a continued inevitability than had been the hegemony of the Shah’s government. Whatever this quotation from a decades-old speech of Khomeini may have meant, Ahmadinejad did not say that "Israel must be wiped off the map" with the implication that phrase has of Nazi-style extermination of a people.
But the history of Iranian-Israeli relationships is more than just Ahmadinejad’s misinterpreted statement. Israel, like the United States, had a long history of selling arms to the Shah, which Iran’s revolutionary government was willing to exploit secretly, despite its public animosity toward the state of Israel. In the early years (1980-82) of the Iranian Revolution and during the war with Iraq, Ayatollah Khomeini’s government sold oil to Israel in exchange for weapons and spare parts. Even during the American hostage crisis (1979-1981) in which 52 US diplomats were held for 444 days, Israel made weapons deals with Iran. Ronald Reagan’s Secretary of State Alexander Haig gave permission to Israel to sell US-made military spare parts for fighter planes to Iran in early 1981.
In another remarkable relationship known as the Iran-Contra affair, funds from Israel’s sale to Iran of US weapons in 1985-1986 were used by U.S. Defense Secretary Caspar Weinberger, National Security Adviser Adm. John Poindexter, National Security Adviser Robert McFarlane (President Reagan’s first National Security Adviser) and National Security Council staffer US Marine Lt. Col. Oliver North to fund the Contras’ war against the revolutionary government in Nicaragua. This was in violation of a Congressional ban on funding the Contras and took place during the Iraq-Iran war when the US was also providing military equipment including chemical weapons to Iraq, Iran’s opponent in the war. Iranians remember that those convicted for their actions, including Weinberger, Poindexter, McFarlane and North, were pardoned by President George H.W. Bush, who was vice president during the period of criminal actions conducted by government officials during the illegal Contra affair.
Iranian Support for Hamas and Hezbollah
When asked about one of the most contentious points in US-Israeli-Iranian relationships - the Iranian government’s support for Hamas in Palestine and Hezbollah in southern Lebanon - Iranians pointed out that the US has consistently and heavily funded Israel during its 62-year existence (US provides about $4 billion per year to the Israeli government and the Israeli Defense Forces.) Many Iranians suggested that Palestinians who have lived in refugee camps during those 62 years must be provided assistance. Hezbollah began in 1982 as a small militia fighting against the Israeli invasion of Lebanon, and is now not only a military group but a political organization that won seats in the Lebanese government, has a radio and satellite television station and provides social development and humanitarian assistance for much of southern Lebanon. Iranians strongly felt that Hamas, the elected (and they emphasize elected) government of Gaza, needs financial support, particularly now in current extraordinary humanitarian crisis due to the lengthy Israeli blockade of foods and services into Gaza.
Iraq
On the question of Iraq, many Iranians who lived in the border regions with Iraq during the eight-year war said they personally knew the agony of deaths, injuries, destruction and other costs of war and do not wish that on their former enemies. They talked of the irony of the political outcome of the US invasion and occupation of Iraq, in which many Shi’a Iraqis, who lived in exile in Iran during Saddam’s regime and have long-standing ties to the Iranian government, are now in leadership positions in the new US-backed Iraqi government.
Afghanistan
Other Iranians reminded us of Iran’s help to the US in 2001 and 2002 in the early days of the US military action in Afghanistan. When we asked about recent United States intelligence analysis that indicated Iranian support for the Taliban, we were met with laughs. The Taliban are of the Sunni branch of Islam, while Iranians are of the Shi’a branch. They reminded us that in 1998 the Taliban murdered 11 Iranian diplomats and one Iranian newsperson at the Iranian consulate in Afghan northern city of Mazar-i-Sharif, an incident which Iranians have not forgotten. The Iranians consider the Taliban their adversaries and feel that a Taliban government in Afghanistan would make the region more unstable.
Sanctions Are Drying Up Lines of Credit for Businesses
We found that Iranians are proud of their creativity to outwit the 29 years of various sanctions the US has placed on their country. They say the US has only isolated itself commercially by its sanctions, as Iran trades with many other nations. Europeans, Chinese, Russians and Indians have had flourishing businesses with Iran. However, the recent international sanctions clampdown on lines of credit for Iranian banks has had a rippling effect into the business community, where money for loans to Iranian businesses for purchase of materials is drying up. Oil dollars that paid for an incredible amount of imports are drying up with the downturn in oil prices, and the government is beginning to reevaluate the large subsidizes given to the population for food, gasoline and services.
We spoke with four businesswomen (an architect, a chemist, a business consultant and an agricultural professional) who said each of their businesses had been affected negatively with the shrinking of money available for purchase of materials from outside the country and for continuation of current levels of operation or expansion of their business.
One of the most incredible stories we heard about the effect of the sanctions was on the alternative energy sector. Since there is so much rhetoric in the US about the dangers of the Iranian nuclear program, we decided to see if there were alternative energy companies in the country. On the aircraft flying into Iran, we met a European businessman who said he would put us in touch with the director of a wind energy company. He introduced us by telephone to the director of Saba Niroo, an Iranian company that makes wind turbines and is the largest regional wind power manufacturer . We met with the director and staff at the modern state-of-the-art factory in south Tehran. Saba Niroo has installed some of the 143 wind turbines planned for the wind farm in Manjil, Guillan Province and the 43 wind turbines planned for the Binalood wind farm in Khorasan Razavi Province. They have installed four wind turbines in the Pushkin Pass wind farm in Armenia.
However, the director told us that because of US sanctions pressure, Vestas, a Danish wind energy company with whom the Iranian company has had a contractual relationship has now refused to honor its 15-year contract to furnish critical parts for the wind turbines.
As a result, Saba Niroo has 50 huge 70-foot-long wind blades and corresponding chassis and installation towers lying useless in its warehouse and warehouse yard. Saba Niroo may go bankrupt in six months if it is unable to complete and sell the wind turbines - all because of US sanctions and pressure.
As a part of citizen diplomacy, we decided to defy sanctions and show our support of alternative energy programs, by purchasing shares in Saba Niroo. We have also decided to purchase shares in the Danish company Vestas, which has a big US headquarters in Portland, Oregon. As shareholders, we could put shareholder pressure on Vestas to honor its contract with the Iranian company.
Human Rights in Iran
On the question of human rights in Iran, executions, political prisoners and rights of gays and lesbians, many Iranians strongly want changes in their government’s policies. In response to a question on September, 24, 2007, from an audience at Columbia University in New York, President Ahmadinejad drew widespread criticism when his answer was translated as "In Iran, we don’t have homosexuals in our country, we do not have this phenomenon. I don’t know who told you that we have it." In October 2007, one of Ahmadinejad’s media advisers said that the President had meant that "compared to American society, we don’t have many homosexuals - in Iran, we don’t have homosexuals like in your country."
Homosexual acts are punishable by law: sodomy (defined as "sexual intercourse with a male) is punishable by execution and punishment for "lesbian acts" is 100 lashes. However, conviction takes the testimony of four witnesses and if the accused recants before witnesses testify, the accused will not be punished. The discussion of human rights of youth and gay youth combined in the much-publicized 2005 execution by hanging of two young men in Iran. Some say they were executed because they were solely because they were gay and others say the two young men - minors - were convicted and hanged because they criminally sexually assaulted another youth.
Interestingly, sex change is legal in Iran and there are more sex change operations in Iran than any other country except Thailand. The Iranian government provides grants up to $4,500 for the operation and further funding for hormone therapy on the theory that persons wanting a sex change have a "treatable disorder."
Iranians want change to come from within their society, not imposed by another government, especially one, as we were reminded, that has its own human rights issues, including incarceration of the highest percentage of its citizenry of any country in the world, high rates of execution (Texas in particular), state-sponsored kidnapping from other countries (known in the Bush administration as extraordinary rendition), imprisonment without due process, extrajudicial courts and a military and an intelligence agency that are notorious for torture.
Women’s Issues
When thinking of women in Iran, many in the West immediately respond with comments about the clothing women must wear. Few realize that 70 percent of all university students are women, 30 percent of doctors in Iran are women, 80 percent of women are literate (88 percent of men can read), women receive 90 days of maternity leave at two-thirds pay and right to return to their jobs, and the number of children per woman has declined from seven in 1979 to 1.7 now. Abortions are illegal in Iran, but it’s the only country I know of where couples must take a class on modern contraception before being issued a marriage license. It has the only state-supported condom factory in the Middle East, and it produces 45 million condoms a year in 30 different colors, shapes and flavors.
In one of the most successful instances of women’s grassroots organizational pressure on the government, in September 2008, over 100 advocates for women’s rights successfully lobbied against proposed changes to marriage laws which were detrimental to women and forced the Iranian Parliament to drop the regressive amendments.
Clothing Restrictions
Yes, there are mandatory clothing rules for women, including wearing a scarf and clothing that covers the arms to the wrists and legs to the ankles, and they are cited by Western women as a form of human rights concern. In fact, as our aircraft arrived at the Tehran International Airport terminal, the aircraft crew announced "By the law of the country of Iran, women cannot leave the aircraft without a scarf on their heads - and there will be an Iranian official outside the aircraft to return women who are not properly covered." While some Iranian women say wearing the scarf is burdensome, others are comfortable with the dress code. In any case, clothing restrictions are not the main focus of women’s rights advocates. Rights to custody of children and property after divorce, right to education and health care are more important than mandatory wearing of a scarf.
In the Month Since Our Visit
Sparks Fly Over Iranian President’s BBC Christmas message - "Jesus Christ Would Stand Up to Bullying, Ill-Tempered and Expansionist Powers"
In what they surely knew would be a very controversial request, the British Broadcasting Company (BBC) asked Iranian President Ahmadinejad to deliver the BBC channel 4’s traditional "alternative Christmas message" to the Queen’s Christmas address.
The head of BBC News and Current Affairs said the decision to ask President Ahmadinejad was because "As the leader of one of the most powerful states in the Middle East, President Ahmadinejad’s views are enormously influential. As we approach a critical time in international relations, we are offering our viewers an insight into an alternative world view. Channel 4’s role is to allow viewers to hear directly from people of world importance with sufficient context to enable them to make up their own minds."
It turned out that Ahmadinejad’s short, 36-second message in Farsi with English subtitles broadcast on Christmas Day 2008, probably resonated with much of the world, but predictably provoked a British government hornet’s nest with his comment that if Jesus Christ lived today he would stand up against bullying powers. "If Christ were on earth today, undoubtedly he would stand with the people in opposition to bullying, ill-tempered and expansionist powers." Ahmadinejad, a devout Muslim, criticized the "indifference of some governments and powers" towards the teachings of the "divine prophets, including Jesus Christ" and said that "the general will of nations" was for a return to "human values." He declared, "The crises in society, the family, morality, politics, security and the economy ... have come about because the prophets have been forgotten, the Almighty has been forgotten and some leaders are estranged from God."
Ahmadinejad’s remarks received very little media coverage in the United States, minuscule when compared to the news story of the month - President Bush’s encounter with the Iraqi shoe thrower. However, a spokeswoman for the UK’s Foreign and Commonwealth Office, in predicting anticipated Bush administration displeasure, said: "President Ahmadinejad has during his time in office made a series of appalling anti-Semitic statements. The British media are rightly free to make their own editorial choices, but this invitation will cause offense and bemusement not just at home but amongst friendly countries abroad."
Labor Member of Parliament (MP) Louise Ellman, chairwoman of the Labor Jewish Movement, said: "I condemn Channel 4’s decision to give an unchallenged platform to a dangerous fanatic who denies the Holocaust, while preparing for another, and claims homosexuality does not exist while his regime hangs gay young men from cranes in the street." Conservative MP Mark Pritchard, a member of the Commons all-party media group, said: "Channel 4 has given a platform to a man who wants to annihilate Israel and continues to persecute Christians at Christmas time."
Media Relations Not a Strong Suit of the Iranian Government
It’s almost as if Iranian President Ahmadinejad, who is up for re-election in summer 2009, has hired lame ducks US Vice President Dick Cheney and Israeli Prime Minister Olmert as his foreign policy, national security and media consultants. How else could the Iranian government have come up with so many incidents in the past weeks that give ammunition to those in the United States and Israel who do not want dialogue with Iran on nuclear and regional security issues, who want human rights issues to publicize and who wish ill to the Iranian government and people?
For example, on December 22, 2008, the Iranian government closed down two human-rights organizations headed by 2005 Nobel Peace Prize winner Shirin Ebadi. The government accused the organization of carrying out illegal activities, such as publishing statements, writing letters to international organizations and holding news conferences. The Center for Participation in Clearing Mine Areas helps victims of landmines in Iran and Defenders of Human Rights Center reports human rights violations in Iran, defends political prisoners and supports families of those prisoners. Ebadi was also taken into police custody briefly following the raids.
The first week in December 2008, in a campaign against Western cultural influence in Iran, Qaemshahr city police arrested 49 people during a crackdown on "satanic" fashions and unsuitable clothing and closed five barbershops for "promoting Western hairstyles."
And now, there is the predictable increased international criticism about the Russian government providing the Iranian government with S-300s, anti-aircraft and anti-missile defense systems, triggered by the Bush administration’s decision to put a "missile shield" in Poland and the Czech Republic. On December 23, 2008, United Press International reported that the Russian government had begun delivery to the Iranian government of some of its most modern anti-aircraft and anti-missile defense systems, the S-300s. These missile systems can shoot down ballistic missiles and aircraft at low and high altitudes as far away as 100 miles. Iran conducted well-publicized air force and ballistic missile defense exercises in September 2008.
The Bush administration’s ballistic poke in the eye of Russia and Iran by the deployment of ballistic missiles in Poland and a radar in the Czech Republic "to protect against attacks from rogue states" is perceived by many Iranians as a strategy to ensure that tensions in the region continue to escalate. The United States is planning to deploy 10 Ground-based Mid-course Interceptors in Poland and batteries of shorter-range Patriot PAC-3 anti-ballistic missiles to protect the Interceptors.
Iranians Not Optimistic About Future Relations with the United States Under an Obama Administration
Despite President-elect Barack Obama’s comments during the presidential campaign that he would have dialogue with the Iranian government without preconditions, many Iranians with whom we spoke are not optimistic that there will be meaningful change in US policy during an Obama administration. Citing appointments of former Israeli Defense Force member and US Congressman Rahm Emanuel as chief of staff; Hillary Clinton, who during the summer campaign said she would "obliterate" Iran if Iran used nuclear weapons against Israel (a statement that Iranians find incomprehensible since it is Israel that has nuclear weapons, not Iran, and Israel continues to threaten Iran), and Dennis Ross, the Middle East negotiator during the Clinton and Bush administrations, Iranians said they hoped the AIPAC lobby in the United States had not already determined Obama’s agenda toward Iran.
Iranians Want Peace
To emphasize again, the overwhelming comment from Iranians during our visit was that they want peace with the United States. They hope that the new president of the United States will talk with their government to resolve issues, instead of resorting to the threat, much less the use, of military action.
Our Future With Iran - a Hope for Diplomacy, Not Military Action
As we have seen from the American invasion and occupation of Afghanistan and Iraq, the use of our military to resolve security issues kills and injures innocent civilians, destroys cities and villages, creates more people who dislike/hate our country and who may be willing to use violence against us, and jeopardizes, not enhances, the security of the United States.
As a retired US Army colonel and a former US diplomat, I hope that the Obama administration will throw away the old template of 30 years of crisis, threats of military action, vindictiveness and retaliation and look to diplomacy to develop a peaceful future with Iran!
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