Iraq's Most Fearsome Militia, the U.S. military, on the Offensive
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By Michael Schwartz
In early April, General David Petraeus, the flavor of the year in American military officers, will return to Washington to report to President Bush and the Democratic Congress on the state of post-surge Iraq. His report will be upbeat, with cautious notes thrown in, and the reception will be warm. The Republicans will congratulate the President, hoping that Americans will stop complaining and finally learn to tolerate, if not love, his war; the Democrats will be quietly unhappy because they would like Iraq to remain a major election issue.
In the meantime, the Iraqis will continue to endure the results of the surge, yet another brutal chapter in the endless war that once promised them liberation.
Over the course of five years, Baghdad, the capital city of Iraq, has been transformed from a metropolis into an urban desert of half-destroyed buildings and next to no public services, dotted by partially deserted, mutually hostile mini-ghettos that used to be neighborhoods, surrounded by cement barriers reminiscent of medieval fortifications. The most prominent of these ghettos is the heavily fortified city-inside-a-city dubbed the Green Zone, where Iraq's most fearsome militia, the United States military, is headquartered. It is governed by the Americans and by the American-sponsored Iraqi government, headed by Prime Minister Nouri al Maliki.
The remaining ghettos, large and small, are governed by local militias, most of them sworn enemies of the United States and the Maliki regime. In the expanding Shia areas of the capital, the local guardians are often members of the Mahdi Army, the militia of cleric Moqtada al-Sadr that has opposed the American presence since the occupation began. In the shrinking Sunni-controlled parts of the city, the local guardians are usually members of the Sahwa forces (the "Awakening" or, in U.S. military jargon, "Concerned Local Citizens"). The Americans have ceded to them control of their cement-enclosed domains as long as they discontinue insurgent attacks elsewhere.
As Baghdadi citizens continue to flee the threat of violence, ethnic cleansing, and economic destitution, the city waits -- whether for a definitive military confrontation or some less violent change that will bring its long ordeal to an end.
How did this all come to be?
Ethnic Cleansing Arrives in Baghdad
When the American occupation of Baghdad began in April 2003, about half of the city's neighborhoods had no particular ethnic character. In late 2004, however, thousands of Sunnis, driven out of Falluja and other insurgent strongholds by American offensives, began arriving in Baghdad. In increasingly crowded neighborhoods, ethnic friction rose, as did Sunni anger at a Shia-dominated government that sent its troops into battle beside American ones.
Sunni militias, originally organized to deal with local crime (after the Americans dismantled the Iraqi police force) began to turn on Shia residents in some of the capital's 200 mixed neighborhoods. Eventually, scattered acts of harassment were transformed into systematic campaigns of expulsion, justified by the housing needs of a rapidly growing multitude of Sunni refugees, and as retaliation for government-supported assaults on Sunni cities. During 2005, the first stream of displaced Shia began arriving in Baghdad's vast, already overcrowded Shia slum of Sadr City and in the Shia cities of southern Iraq.
In January 2006, the bombing of the revered Shia shrine, the Golden Dome mosque in Samarra, triggered sweeping Shia reprisals against Sunni communities. In the capital, a struggle for the dominance of mixed neighborhoods began. Deadly battles between Shia and Sunni militias featured all weapons and methods of slaughter available, including car bombs and death squads. Whichever side expelled the other, minority groups including Christians, Kurds, and Palestinians found themselves unwelcome and began to flee (or die). Ethnic cleansing now lay at the center of the spiraling violence in Baghdad.
The Americans Enter the Battle
In May 2006, American forces first joined "the battle for Baghdad" in a significant way. With the initiation of Operation Together Forward, the U.S. military began transferring combat brigades to the capital in an attempt to take control of Sunni and Shia militia strongholds.
This strategy, however, quickly proved itself ineffective. In August 2006, the New York Times reported that sectarian violence was "spiraling out of control." By the fall, the number of insurgents attacks in Baghdad had increased by 26%, and violent deaths reported at the city morgue had quadrupled. The seeming paradox of an American pacification campaign generating more violence can be explained by looking at the mechanics of the offensive.
Despite their involvement in ethnic violence, the Sunni and Shia militias that the Americans sought to root out were also the forces of law and order in Baghdad's otherwise lawless neighborhoods. They directed traffic, arrested and/or punished common criminals, and mediated disputes. They also protected neighborhoods from outsiders, including American or Iraqi soldiers, suicide bombers, death squads, and criminal gangs.
Before the Americans entered the fray, the militia strongholds had been the least vulnerable to sectarian attack. After all, their streets were saturated with armed men on the lookout for their enemies. Ethnic violence was largely taking place in contested mixed neighborhoods.
In entering these strongholds, the U.S. military won tactical victories, chasing surviving militia members off the streets or even out of neighborhoods, which, without their local police and defense forces, were suddenly vulnerable to sectarian attack.
This vulnerability was all-too-vividly illustrated in Sadr City, the stronghold of the Sadrist movement. As the home base of the Mahdi Army, this city-within-a-city had not experienced a car bomb attack in two years until American troops sealed it off, set up check points at key entrance and exit points, and began patrols aimed at hunting down Mahdi Army leaders they suspected of participating in death squads and of kidnapping an American soldier. Local residents told New York Times reporter Sabrina Tavernise that the operation had "forced Mahdi Army members who were patrolling the streets to vanish." Soon after, the first car bombs were detonated.
The violence reached a crescendo in November 2006, when a coordinated set of five car bombs killed at least 215 and wounded 257. Qusai Abdul-Wahab, a Sadrist member of parliament, spoke for many residents of the community when he told the Associated Press that the "occupation forces are fully responsible for these acts."
Such events generated immense bitterness among Shia, who took them as proof that the Americans and the Iraqi government were concerned only with attacking the Mahdis, not suppressing jihadist attacks. This encouraged their support of the death squads, which sought to exact retribution on the Sunni communities they believed were harboring the bombers.
The Americans had also facilitated these retaliatory attacks. Sunni insurgents in the Baghdad suburbs of Balad and Duluiyah, for example, were suspected of slaughtering 17 Shia workers in a particularly well publicized instance of sectarian brutality. American troops and their Iraqi allies cordoned off the two districts and invaded the neighborhoods. The invading forces quickly silenced the insurgent militias, leaving the streets unpatrolled. Soon after, Shia death squads made their appearance. Some of them had apparently been organized inside (Shia) Iraqi military units that accompanied the Americans into the Sunni communities. According to the Washington Post, "A police officer in Duluiyah, Capt. Qaid al-Azawi, accused American forces of standing by in Balad while [Shia] militiamen in police cars and police uniforms slaughtered Sunnis." In the face of these attacks, large numbers of residents began to flee.
And so the cycle of slaughter escalated on all sides, while neighborhoods began to be emptied of the members of whichever sect was losing ground locally. As with many other developments in the war, this unmitigated disaster for Baghdad residents was only a partial one for the American occupation. For the Bush administration, the storm of violence in the Iraqi capital had at least one silver lining: the occupation's two main enemies were now at each other's throats. As an American intelligence official told investigative reporter Seymour Hersh, "The White House believes that if American troops stay in Iraq long enough -- with enough troops -- the bad guys will end up killing each other."
The Surge
As Operation Together Forward continued, intense violence spread across the city. American combat fatalities reached a two-year high of 113 in November 2006, not in itself surprising since American troops were entering militia strongholds. Other statistics, however, defied American expectations.
The number of insurgent attacks, which should have declined, increased dramatically. A little under 100 a day through the first half of 2006, they jolted up to 140 a day soon after the offensive started, and then hovered between 160 and 180 for the rest of the year. The number of lethal bombings, a main target of the offensive, also rose. According to U.S. military statistics published by the Brookings Institution, in late 2005 they rose from under 20 to over 40 per month, and then started upward again as the American offensive began in the late spring of 2006, reaching 69 in December of that year. Deaths associated with these bombings soared from under 500 per month in early 2006 to almost 1,000 in the second half of the year. Population displacement also reached new heights -- especially in communities where the Americans were most active.
In response, the Americans sought a new plan for pacifying Baghdad. It would become known as "the surge." Rather than altering the fundamental premises of Operation Together Forward, it diagnosed the ferocious response as evidence that insufficient force had been applied.
Now, tens of thousands of new American troops would be poured into Baghdad, and to Operaton Together Forward's strategy would be added tactics from the 2004 assault on the Sunni city of Falluja. Each target area would now first be surrounded to prevent insurgents from escaping. Then, once the battle was joined, overwhelming firepower would be brought to bear. As Captain Paul Fowler had explained to Boston Globe reporter Anne Barnard during the Falluja fighting, ''The only way to root out [the insurgents] is to destroy everything in your path."
As in Falluja, the new surge plan also called for the Americans to remain in the community to prevent the insurgents from returning and to supervise the Iraqi army units they had led into battle.
The Battle of Haifa Street
Even before the surge strategy was announced by President Bush, even before the new troops arrived, the first battle was launched. Before dawn on January 9, 2007, the Americans and Iraqis attacked a Sunni insurgent stronghold on Haifa Street just outside the Green Zone. Washington Post reporters Sudarsan Raghavan and Joshua Partlow described the kind of firepower brought to bear once the battle for the street began:
"From rooftops and doorways, the gunmen fired AK-47 assault rifles and machine guns. Snipers also were targeting the U.S. and Iraqi soldiers. U.S. soldiers started firing back with 50-caliber machine guns mounted on their Stryker armored vehicles. They used TOW missiles and Mark-19 grenade launchers. The F-15 fighter jets strafed rooftops with cannons, while the [Apache helicopters] fired Hellfire missiles."
After 11 hours of death and devastation, 1,000 American and Iraqi troops were able to begin house-to-house searches, arresting or killing suspected insurgents.
One week later, McClatchy News reporters Nancy Youssef and Zaineb Obeid visited Haifa Street. They found massive destruction, omnipresent U.S. military forces locking down virtually all activity, widespread suffering among residents, and ongoing fighting. Elements of the Shia-dominated Iraqi army had already begun a systematic campaign to push the Sunni majority from the neighborhood:
"A 44-year-old Haifa Street resident, who asked to be identified only as Abu Mohammed for security reasons, said that only three or four [Sunni] families of an estimated 60 families remained on his block. He said no vehicles were allowed to drive through the area and that there was no electricity, kerosene or running water. [U.S.] Snipers have taken positions on the rooftops."
To the fleeing Sunnis, it seemed the Americans were sponsoring ethnic cleansing. A resident commented: "The Americans are doing nothing, as if they are backing the militias. If this plan continues for one more week, I don't think you will find one family left on Haifa Street."
By the end of January, before the first surge reinforcements even arrived, the battle of Haifa Street was over. A large contingent of American soldiers would remain in the area, while a vast cement barrier with a handful of heavily armored gates would be put in place, effectively separating the community from the rest of the city. The dislodged insurgents retreated into intermittent guerrilla war, organizing some 20 attacks on the Americans each month -- a sharp reduction from the 74 much larger battles they had fought in January. U.S. forces would mount an average of 34 combat patrols each day aimed at capturing or suppressing them. In January 2008, plans for an American departure from Haifa Street were still tentative.
The Results of the Surge
Haifa Street would become typical of many Baghdad communities that soon felt the full impact of the surge offensive. A year later, the neighborhood would still bear all the marks of battle. There had been no effort to restore public services, including the electrical grid or the system that should have supplied potable water; there were no medical services, nor was there any public transportation.
The New York Post's Ralph Peters summarized the posture of the Maliki government inside the Green Zone bluntly: "Iraq's government isn't much help -- none, as far as Haifa Street's revival is concerned." The American military commander on Haifa Street told him that the U.S. was relying on "spontaneous economic development" -- local citizens were expected to develop the area through their own efforts, with the help of a limited number of "micro-loans" (a few hundred dollars each) from the military's meager non-combat funds. It was no surprise, then, that, aside from a few food markets, there was no economy to speak of.
In the meantime, tens of thousands of mainly Sunni residents had left, with large parts of the area transformed from Sunni to Shia, and smaller sections moving in the other direction.
In January 2008, Lieutenant Colonel Tony Aguto, the U.S. commander in Haifa Street, estimated that some 50,000 of the area's 150,000 residents had been displaced in the previous year. In Baghdad as a whole, the United Nations High Commissioner on Refugees would estimate that the heavy surge fighting in the first half of 2007 was producing 90,000 refugees a month, the bulk from Baghdad; the 2007 total reached 800,000.
As ethnic cleansing in Haifa Street and elsewhere was completed, the rate of refugee production began to drop, declining to 30,000 by December 2007. Displaced Baghdadis searching desperately for places to settle faced the overwhelming challenge of supporting families in a largely dormant economy with dwindling government support. This was not, commented Lt. Col. Aguto, a problem the Americans needed to address. "It is," he said, "the job of the Iraqi government to sort this out." The Iraqi government remained mute on the subject.
The Ebb of the Surge
As the battle of Haifa Street illustrated, the surge amplified violence in the capital significantly, as for six months the Americans moved in on one neighborhood after another, using all the firepower at their command. When the heavy fighting ended in an invaded neighborhood, the Americans sought to consolidate their military victory by erecting those now-ubiquitous concrete barriers, ensuring the ethnic segregation of each neighborhood or partial neighborhood. These became demarcation lines and no-go boundaries in the city's civil war, the borders of a dis-integrated city.
The walls insured that there would be little or no physical, social, or economic contact among ghettoized, ethnically cleansed neighborhoods, even ones that had previously depended upon such intercourse for daily sustenance. The city's already compromised economy thus suffered another body blow. Residents of these newly defined ghettos, unable to get to jobs, became increasingly desperate, and, searching for solutions, lent support to the local militias that spoke and acted on their behalf.
As displacement efforts continued, the Shia militias essentially moved east to west across Baghdad, creating ever more Shia areas from previously mixed and Sunni neighborhoods. Mainly in the western and southern parts of Baghdad, the Sunni militias persevered, consolidating their control in areas that the Americans did not invade.
The ghettoization of Baghdad, which had begun relatively modestly in early 2005, reached a crescendo in early 2007 with the American surge and was largely completed by the fall of 2007. By that time, what had once been a city split between Sunnis and Shia had been transformed into a 75% Shia capital. The American military made its presence felt at checkpoints, at many small bases established around the city, and by patrols into neighborhoods now demarcated by cement barriers. The localities, however, were still governed by the local militias in what was no longer a city, but a ghettoized collection of micro-city-states.
The End of the Surge
After a spring and summer of heavy fighting, however, the Americans were hardly close to pacifying the city. In a way, the surge had worsened the situation. Before it began, in many neighborhoods neither Sunni nor Shia militias were dominant; by the middle of 2007, virtually every community had its own mini-government, usually dominated by a militia that was hostile both to the occupation and the central government. To assert centralized authority over the city, each neighborhood would have had to be invaded again.
Without announcing a change in policy, the Americans functionally abandoned the surge in the late summer 2007 in favor of a "live and let live" program of cooptation. On the Sunni side of the street, the Americans adopted a version of the Sunni "Awakening" movement that had arisen without American encouragement in Anbar Province the previous year, negotiating armed truces with their insurgent adversaries on a community-by-community basis. The Americans conceded to the militias the right to police their own communities, discontinued American offensives aimed at dislodging them, and halted the hated home invasions aimed at arresting or killing suspected insurgents. In exchange, the insurgents were to rein in attacks on American troops and suppress jihadist activity in their neighborhoods, thus curtailing the planning and execution of car bomb and other terrorist attacks on nearby Shia communities.
On the Shia side, the Americans essentially negotiated a ceasefire with the Mahdi Army, announced publicly as a unilateral stand-down by its leader Moqtada Al Sadr. The Sadrists curtailed the planting of lethal roadside bombs against the Americans and no longer sought to ambush American and Iraqi army troops moving through their neighborhoods. The Americans curtailed their raids and offensives in Sadrist neighborhoods and spent far less effort hunting down and arresting Sadrist leaders, except when they specifically broke the ceasefire.
The result of this double détente was a dramatic reduction in violence in Baghdad. With the Americans keeping their side of the bargain, the huge running battles associated with American attacks on Sunni strongholds like Haifa Street disappeared, and even the smaller battles resulting from American attempts to capture specific insurgents subsided. In return, attacks against American forward bases and convoys in Baghdad dwindled, and the jihadists, largely expelled from Sunni insurgent communities, either demobilized or moved to northern Iraq where negotiations with the insurgents had not taken place.
This was, however, little more than an armed truce among enemies, a truce that actually strengthened the militias within their own communities. The Sunni insurgents, now validated as legitimate police and even paid and armed by the Americans, began making political demands for the restoration of services, as well as for infrastructure reconstruction and job-creation programs for their desperate constituents, all the while denouncing the Iraqi government as a creature of U.S. and Iranian policy.
The Mahdi Army militias, having extended their influence into previously mixed neighborhoods, used the truce to spread their own meager but meaningful social service programs and demand increased access to resources that might revive the economy of the city. Their national spokesmen continued to insist that the country could not begin genuine reconstruction until the Americans left, and that the barriers they had played such a role in erecting -- sectarian as well as cement -- were removed.
Though many Baghdad communities are now experiencing their lowest levels of violence in two years, their situations are neither viable, nor stable. The cement barriers, which help to reduce violence, also make social and economic life nearly impossible. Most Baghdadis are now locked into their individual ghettos, terrified of strangers, often afraid to send their children to schools across barriers and neighborhoods, and unable to reach previously held jobs. Employers, deprived of needed workers and customers, have shuttered their establishments. The economy has largely ground to a halt.
For most of Baghdad, the Iraqi government is simply irrelevant. It has no administrative apparatus in any of these communities or the capacity to restore needed services. Its only visible presence, the Iraqi army, is commanded or controlled by American officers; insofar as Iraqi soldiers do act independently, they follow the leadership of Shia militia commanders, not the central government. In neighborhoods even a few hundred feet from the Green Zone, the Iraqi government does not exist.
The Americans remain a major presence, but not a sovereign one. They maintain the most fearsome of the militias in Baghdad, capable of militarily overwhelming any adversary, but incapable of creating stable rule, even in cement-encircled ghost areas like Haifa Street. They cannot deliver electricity, or water, or jobs, or even, often enough, safe passage to the next neighborhood.
As early as May of 2006, Nir Rosen, one of the most informed and insightful journalists writing about Iraq, presciently described the American military's unenviable position in this way: "[T]he American Army is lost in Iraq, as it has been since it arrived. Striking at Sunnis, striking at Shias, striking at mostly innocent people. Unable to distinguish between anybody, certainly unable to wield any power, except on the immediate street corner where it's located… [T]he Americans are just one more militia lost in the anarchy." This description was never truer than today in Baghdad.
The residents of Baghdad are waiting. They are waiting for the walls around their neighborhood to come down, public transportation to be restored, and roads to be re-opened so they can begin to move around the city in something like a normal fashion. They wait for public services to be rebuilt so they can count on turning on the lights, having clean water come out of taps, and perhaps even being able to contribute to "spontaneous economic development." They wait for employers to begin rehiring, so they can begin to support their suffering families.
They wait for the Americans to leave.
In a few weeks, General David Petraeus will tell the President and Congress that violence is dramatically reduced in Baghdad, that there are signs of political progress inside the Green Zone, and that these gains will be lost if the United States does not "stay the course." He will not say that Baghdad is an urban desert of half-destroyed buildings and next to no public services, dotted by partially deserted, mutually hostile mini-ghettos that used to be neighborhoods, surrounded by cement barriers reminiscent of medieval fortifications.
Monday, March 24, 2008
Japan's Okinawans Rally Against US Military Crimes
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By Linda Sieg
Tokyo - Thousands of Okinawans rallied on Sunday to protest crimes by U.S. troops and demand a smaller U.S. military presence on the southern Japanese island after last month's arrest of a Marine on suspicion of raping a schoolgirl.
"Crimes and accidents due to the bases have happened over and over and Okinawa has protested with intense anger to both the U.S. and Japanese governments," Kyodo quoted Okinawa City Mayor Mitsuko Tomon as telling a crowd gathered in heavy rain in the town of Chatan, where the February incident occurred.
"But each time, our voices have been trampled and there has been no end to the heinous crimes," the mayor added.
Organizers estimated about 6,000 people took part in the rally, Kyodo news agency said. Police declined to give an estimate.
The arrest of U.S. Marine Tyrone Hadnott, 38, on suspicion of raping a 14-year-old girl sparked outrage on Okinawa, host to a big chunk of the nearly 50,000 U.S. troops in Japan, and stirred memories of the 1995 rape of a 12-year-old girl that prompted huge anti-base protests and jolted the U.S.-Japan alliance.
The girl, who came under heavy criticism on the Internet, later dropped charges, and Hadnott was released to the custody of U.S. military authorities, who have been investigating the case.
Participants in Sunday's rally adopted a resolution demanding consolidation of the U.S. bases and revisions to a pact governing the status of U.S. military personnel in Japan to give Japanese authorities greater legal jurisdiction.
Both Tokyo and Washington have so far rejected demands to revise the Status of Forces Agreement.
Broader Plans
"The rights of the people of Okinawa continue to be violated by the base-related damage, and we call on both the U.S. and Japanese governments to fundamentally revise the Status of Forces Agreement," Kyodo quoted the resolution as saying.
The pact was not an issue in the Hadnott case since the Marine was arrested off-base by Japanese police.
Organizers, including women's groups, had hoped for a turnout of around 10,000 people but squabbling between conservative politicians and leftist opposition groups undercut their efforts.
The rally comes as Tokyo is trying to persuade local residents to accept a plan to shift key functions of the U.S. Marine's Futenma air station from the crowded central city of Ginowan to the lightly populated coastal town of Nago.
Relocating Futenma is key to a broader plan to shift some 8,000 of the 13,000 Marines now on Okinawa to the U.S. territory of Guam to lighten the presence of the U.S. military on the Japanese island. Nago authorities have agreed to the move but sticky details remain to be worked out.
Anti-base critics argue the consolidation plans will only slightly reduce Okinawa's burden for the U.S.-Japan security alliance, a pillar of Japan's post-World War Two diplomacy.
Friction with local communities near U.S. bases often occurs because of concern about crime, accidents and noise, although sensitivities are greater in Okinawa because of the heavy U.S. presence and the island's long tense relations with the mainland.
On Sunday, the U.S. military said it would cooperate with Japanese police in their investigation of the killing of a taxi driver found stabbed in his cab in Yokosuka, south of Tokyo.
A U.S. credit card apparently belonging to a U.S. sailor who has been charged with desertion was found in the cab.
The sailor, who has been taken into U.S. military custody, has not been named as a suspect but may have information regarding the murder case, the U.S. Navy said in a statement on Saturday. Japanese media said the sailor had denied involvement.
By Linda Sieg
Tokyo - Thousands of Okinawans rallied on Sunday to protest crimes by U.S. troops and demand a smaller U.S. military presence on the southern Japanese island after last month's arrest of a Marine on suspicion of raping a schoolgirl.
"Crimes and accidents due to the bases have happened over and over and Okinawa has protested with intense anger to both the U.S. and Japanese governments," Kyodo quoted Okinawa City Mayor Mitsuko Tomon as telling a crowd gathered in heavy rain in the town of Chatan, where the February incident occurred.
"But each time, our voices have been trampled and there has been no end to the heinous crimes," the mayor added.
Organizers estimated about 6,000 people took part in the rally, Kyodo news agency said. Police declined to give an estimate.
The arrest of U.S. Marine Tyrone Hadnott, 38, on suspicion of raping a 14-year-old girl sparked outrage on Okinawa, host to a big chunk of the nearly 50,000 U.S. troops in Japan, and stirred memories of the 1995 rape of a 12-year-old girl that prompted huge anti-base protests and jolted the U.S.-Japan alliance.
The girl, who came under heavy criticism on the Internet, later dropped charges, and Hadnott was released to the custody of U.S. military authorities, who have been investigating the case.
Participants in Sunday's rally adopted a resolution demanding consolidation of the U.S. bases and revisions to a pact governing the status of U.S. military personnel in Japan to give Japanese authorities greater legal jurisdiction.
Both Tokyo and Washington have so far rejected demands to revise the Status of Forces Agreement.
Broader Plans
"The rights of the people of Okinawa continue to be violated by the base-related damage, and we call on both the U.S. and Japanese governments to fundamentally revise the Status of Forces Agreement," Kyodo quoted the resolution as saying.
The pact was not an issue in the Hadnott case since the Marine was arrested off-base by Japanese police.
Organizers, including women's groups, had hoped for a turnout of around 10,000 people but squabbling between conservative politicians and leftist opposition groups undercut their efforts.
The rally comes as Tokyo is trying to persuade local residents to accept a plan to shift key functions of the U.S. Marine's Futenma air station from the crowded central city of Ginowan to the lightly populated coastal town of Nago.
Relocating Futenma is key to a broader plan to shift some 8,000 of the 13,000 Marines now on Okinawa to the U.S. territory of Guam to lighten the presence of the U.S. military on the Japanese island. Nago authorities have agreed to the move but sticky details remain to be worked out.
Anti-base critics argue the consolidation plans will only slightly reduce Okinawa's burden for the U.S.-Japan security alliance, a pillar of Japan's post-World War Two diplomacy.
Friction with local communities near U.S. bases often occurs because of concern about crime, accidents and noise, although sensitivities are greater in Okinawa because of the heavy U.S. presence and the island's long tense relations with the mainland.
On Sunday, the U.S. military said it would cooperate with Japanese police in their investigation of the killing of a taxi driver found stabbed in his cab in Yokosuka, south of Tokyo.
A U.S. credit card apparently belonging to a U.S. sailor who has been charged with desertion was found in the cab.
The sailor, who has been taken into U.S. military custody, has not been named as a suspect but may have information regarding the murder case, the U.S. Navy said in a statement on Saturday. Japanese media said the sailor had denied involvement.
Qualified Borrowers Face Credit Squeeze
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By Kimberly Blanton
Increased standards lead to more rejections.
Lenders are rejecting more loan applicants with strong credit scores, the latest indication the nation's credit crunch is deepening and further depressing the housing market and the economy.
Mortgage companies are growing more cautious and tightening lending standards for some of their most credit-worthy customers - from increasing down payments for home purchases to requiring higher credit scores for loan approvals.
An applicant has to be a prime borrower to qualify for a mortgage or to refinance a loan, said Thomas Marroni, president of New Boston Mortgage Corp., a loan brokerage firm. Two months ago, one out of every 15 of his top-rated loan applicants was turned down. "Now, it's four out of 15," he said.
Fifty-five percent of senior loan officers at US banks in January tightened lending standards to prime customers, up from 40 percent in October, according to the latest survey by the Federal Reserve Board. In recent weeks, the situation has deteriorated as mortgage companies worried about a recession have pulled back further on making new loans and refinancing existing mortgages, and have terminated home-equity lines of credit, said lenders, brokers, and borrowers.
Last summer, lenders immediately cut off subprime borrowers - people with credit scores below 620 - when delinquencies on those loans increased. Now, prime customers with scores above 620 - and even those in the 700s - are finding it harder to qualify for loans. Every credit company has a slightly different range of scores for ranking borrowers based on their track record of paying back loans on time. But generally prime borrowers have scores from 700 to about 850. The top score available is 900, but very few borrowers have ever attained that number.
Richard Perlmutter, a Suffolk University Law School professor, has a gold-plated credit history, no car loans, and no credit card balances. He and his wife, an executive at Harvard Business School, hold only a $280,000 mortgage on an upscale Charlestown condominium assessed at $600,000. Last month, Countrywide Home Loans terminated their $100,000 home-equity line of credit, which they tapped for emergency cash but paid off quickly.
While it's legal for lenders to withdraw home-equity lines, it is rare. A loyal customer - the primary mortgage is with Countrywide - Richard Perlmutter was incredulous. Lenders, he said, have "lost any ability to discriminate" between good and bad borrowers.
Freddie Mac and Fannie Mae, the government-backed buyers of mortgages, are tightening standards even as they are investing up to $200 billion more into the loan market. Last week, for example, the agencies increased interest rates for borrowers with credit scores below 700 - previously, a 680 score triggered the higher rate. For borrowers seeking jumbo mortgages, the agencies increased the down payment required in some cases to 10 percent, from 5 percent, said Brian Koss, managing director of Mortgage Network Inc., a Danvers lender. "We call it jumbo light," he said.
During the housing boom, lenders relaxed their standards, allowing homebuyers with bad credit to borrow without a down payment and proof of income. Loose standards fueled the housing boom but now record numbers of delinquencies on subprime mortgages are aggravating the decline in sales and prices. Subprime borrowers could not make their monthly payments when their adjustable interest rates rose, causing foreclosures to soar. Now lenders are tightening credit to prevent more delinquencies in their portfolios, and some economists worry lenders are overcompensating for their past mistakes.
A mortgage-market contraction could prolong the housing slump and hurt the US economy, which most economists believe is already in a recession. If fewer people are able to take advantage of falling mortgage interest rates to refinance and lower their monthly payments or extract home equity, there will be less money circulating in the economy.
"When people with what looks like very good qualifications can't get access to credit, that is the classic credit crunch," said Nigel Gault, senior US economist for Global Insight, a Waltham consulting firm. "If people don't get credit they can't spend, and if they can't spend they don't generate the incomes for other people, and the economy looks worse. Then you're in a very nasty spiral," he said.
Those seeking home-purchase loans are facing higher hurdles. Marroni of New Boston Mortgage said he was shocked when a client who works in the financial industry was denied a mortgage last week to buy a South End condo with a large down payment. The executive, whose salary was in the high $300,000s, was moving to Boston from New York. His credit score was 770 and his wife's was 740, and they had found a buyer for their Brooklyn condo.
The lender, Marroni said, would not approve the couple for a loan even though the executive had a letter confirming his new employment; the lender wanted to see his first paycheck. In the past, Marroni said, "it was no big deal" for relocating executives to qualify for mortgages. "Now, it's a big deal," he said.
Home-equity loans and home-equity lines of credit are also scarcer because home prices are falling. Homeowners use these loans to obtain cash for renovations or other expenditures. They are backed by the equity in the borrower's house, which is equal to the property's market value minus the amount owed on the mortgage. With home prices dropping, banks are skittish about lending against properties that may lose more value in the future.
Countrywide, one of the nation's largest mortgage lenders, recently confirmed it is analyzing its loan portfolio and would cut off lines of credit to some customers. Countrywide said in a statement it is analyzing "the impact of lower property values on existing accounts." Another major lender, Wells Fargo amp; Co., said it is also restricting the use of existing lines of credit "in a small number of instances." Borrowers are finding it hard to refinance because lenders are pressuring appraisers to be conservative in estimating the value of each loan applicant's house. When homeowners want to refinance, lenders require a new appraisal to determine whether the property value can back the loan amount. "People want to refinance from an adjustable mortgage to a fixed rate, but when we do an appraisal of the properties the values aren't there," said Sushil Tuli, president of Leader Bank in Arlington. Matt Varghese has paid the mortgage on his Millis home on time since he bought it in 1993. Varghese, the owner of a medical transcription business, has a 720 credit rating - high by any lender's standard. Until last month, he said he had never been turned down for a loan. Leader Bank rejected Varghese's application to refinance his $417,000, fixed-rate mortgage to reduce his monthly payments. The appraiser came back with an estimate of his home's value that was $80,000 less than an appraisal just over a year ago. It was "not good enough to refinance," Varghese said. Biotech researcher Kerry Sullivan said a Citizens Bank loan officer invited her to apply for a loan and then turned her down. A Citizens spokesman said the bank does not comment on individual customers. Sullivan wanted to refinance and pull another $10,000 out of her Concord condo to pay legal bills from a divorce. She said her credit rating is in the "high 700s" and her property, purchased in 2004, has kept its value. When Citizens rejected her, she said, "I was completely shocked."
By Kimberly Blanton
Increased standards lead to more rejections.
Lenders are rejecting more loan applicants with strong credit scores, the latest indication the nation's credit crunch is deepening and further depressing the housing market and the economy.
Mortgage companies are growing more cautious and tightening lending standards for some of their most credit-worthy customers - from increasing down payments for home purchases to requiring higher credit scores for loan approvals.
An applicant has to be a prime borrower to qualify for a mortgage or to refinance a loan, said Thomas Marroni, president of New Boston Mortgage Corp., a loan brokerage firm. Two months ago, one out of every 15 of his top-rated loan applicants was turned down. "Now, it's four out of 15," he said.
Fifty-five percent of senior loan officers at US banks in January tightened lending standards to prime customers, up from 40 percent in October, according to the latest survey by the Federal Reserve Board. In recent weeks, the situation has deteriorated as mortgage companies worried about a recession have pulled back further on making new loans and refinancing existing mortgages, and have terminated home-equity lines of credit, said lenders, brokers, and borrowers.
Last summer, lenders immediately cut off subprime borrowers - people with credit scores below 620 - when delinquencies on those loans increased. Now, prime customers with scores above 620 - and even those in the 700s - are finding it harder to qualify for loans. Every credit company has a slightly different range of scores for ranking borrowers based on their track record of paying back loans on time. But generally prime borrowers have scores from 700 to about 850. The top score available is 900, but very few borrowers have ever attained that number.
Richard Perlmutter, a Suffolk University Law School professor, has a gold-plated credit history, no car loans, and no credit card balances. He and his wife, an executive at Harvard Business School, hold only a $280,000 mortgage on an upscale Charlestown condominium assessed at $600,000. Last month, Countrywide Home Loans terminated their $100,000 home-equity line of credit, which they tapped for emergency cash but paid off quickly.
While it's legal for lenders to withdraw home-equity lines, it is rare. A loyal customer - the primary mortgage is with Countrywide - Richard Perlmutter was incredulous. Lenders, he said, have "lost any ability to discriminate" between good and bad borrowers.
Freddie Mac and Fannie Mae, the government-backed buyers of mortgages, are tightening standards even as they are investing up to $200 billion more into the loan market. Last week, for example, the agencies increased interest rates for borrowers with credit scores below 700 - previously, a 680 score triggered the higher rate. For borrowers seeking jumbo mortgages, the agencies increased the down payment required in some cases to 10 percent, from 5 percent, said Brian Koss, managing director of Mortgage Network Inc., a Danvers lender. "We call it jumbo light," he said.
During the housing boom, lenders relaxed their standards, allowing homebuyers with bad credit to borrow without a down payment and proof of income. Loose standards fueled the housing boom but now record numbers of delinquencies on subprime mortgages are aggravating the decline in sales and prices. Subprime borrowers could not make their monthly payments when their adjustable interest rates rose, causing foreclosures to soar. Now lenders are tightening credit to prevent more delinquencies in their portfolios, and some economists worry lenders are overcompensating for their past mistakes.
A mortgage-market contraction could prolong the housing slump and hurt the US economy, which most economists believe is already in a recession. If fewer people are able to take advantage of falling mortgage interest rates to refinance and lower their monthly payments or extract home equity, there will be less money circulating in the economy.
"When people with what looks like very good qualifications can't get access to credit, that is the classic credit crunch," said Nigel Gault, senior US economist for Global Insight, a Waltham consulting firm. "If people don't get credit they can't spend, and if they can't spend they don't generate the incomes for other people, and the economy looks worse. Then you're in a very nasty spiral," he said.
Those seeking home-purchase loans are facing higher hurdles. Marroni of New Boston Mortgage said he was shocked when a client who works in the financial industry was denied a mortgage last week to buy a South End condo with a large down payment. The executive, whose salary was in the high $300,000s, was moving to Boston from New York. His credit score was 770 and his wife's was 740, and they had found a buyer for their Brooklyn condo.
The lender, Marroni said, would not approve the couple for a loan even though the executive had a letter confirming his new employment; the lender wanted to see his first paycheck. In the past, Marroni said, "it was no big deal" for relocating executives to qualify for mortgages. "Now, it's a big deal," he said.
Home-equity loans and home-equity lines of credit are also scarcer because home prices are falling. Homeowners use these loans to obtain cash for renovations or other expenditures. They are backed by the equity in the borrower's house, which is equal to the property's market value minus the amount owed on the mortgage. With home prices dropping, banks are skittish about lending against properties that may lose more value in the future.
Countrywide, one of the nation's largest mortgage lenders, recently confirmed it is analyzing its loan portfolio and would cut off lines of credit to some customers. Countrywide said in a statement it is analyzing "the impact of lower property values on existing accounts." Another major lender, Wells Fargo amp; Co., said it is also restricting the use of existing lines of credit "in a small number of instances." Borrowers are finding it hard to refinance because lenders are pressuring appraisers to be conservative in estimating the value of each loan applicant's house. When homeowners want to refinance, lenders require a new appraisal to determine whether the property value can back the loan amount. "People want to refinance from an adjustable mortgage to a fixed rate, but when we do an appraisal of the properties the values aren't there," said Sushil Tuli, president of Leader Bank in Arlington. Matt Varghese has paid the mortgage on his Millis home on time since he bought it in 1993. Varghese, the owner of a medical transcription business, has a 720 credit rating - high by any lender's standard. Until last month, he said he had never been turned down for a loan. Leader Bank rejected Varghese's application to refinance his $417,000, fixed-rate mortgage to reduce his monthly payments. The appraiser came back with an estimate of his home's value that was $80,000 less than an appraisal just over a year ago. It was "not good enough to refinance," Varghese said. Biotech researcher Kerry Sullivan said a Citizens Bank loan officer invited her to apply for a loan and then turned her down. A Citizens spokesman said the bank does not comment on individual customers. Sullivan wanted to refinance and pull another $10,000 out of her Concord condo to pay legal bills from a divorce. She said her credit rating is in the "high 700s" and her property, purchased in 2004, has kept its value. When Citizens rejected her, she said, "I was completely shocked."
Security Is Poor for Personal Data Held by Government
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By Chris Adams
Washington - Government agencies have a long way to go before they can assure taxpayers that the country's secrets - as well as citizens' personal information - are secure, according to recent government reports.
In fact, the Government Accountability Office testified to Congress last week that "poor information security is a widespread problem with potentially devastating consequences."
Among the potential concerns that the GAO identified in testimony to a Senate subcommittee: If systems aren't secure, sensitive information, such as taxpayer data, Social Security records and medical records, could be "inappropriately disclosed, browsed or copied for improper or criminal purposes."
As in the breach of three presidential candidates' passport files, the use of outside contractors has been cited as a possible problem by the GAO and other government investigators.
In a 2005 report, the GAO found that most government agencies have security policies on the books and written in contracts with outside vendors. But those policies often didn't go far enough to properly oversee the work of those contractors, the GAO said.
In the recent GAO testimony, investigators found that the percentage of employees and outside contractors receiving security-awareness training had dropped from 2006 to 2007.
The issue of security for the personal information kept by the federal government has been a major issue since 2006, when a portable hard drive and laptop computer belonging to a Department of Veterans Affairs employee was stolen, putting at risk the personal information of nearly 26 million veterans and military personnel.
The episode resolved itself without any known damage to veterans' personal information, but it did expose holes in VA security.
Although the main episode involved a VA employee, the VA's inspector general subsequently found that the information entrusted to contractors also needed to be protected better. Sensitive information provided to contractors was "not adequately safeguarded," the inspector general wrote, and many contracts didn't consistently include clauses to protect information.
As an example, the inspector general detailed an episode at a medical center in which 29 physicians were access to the VA's medical records system although none had adequate background checks.
Since the 2006 data breach, the VA has significantly strengthened its information policies.
The recent GAO testimony also highlighted a separate stolen laptop issue at the Centers for Medicare and Medicaid Services. There, a contractor reported that a laptop containing personal information on nearly 50,000 Medicare beneficiaries was stolen.
"It is a serious problem," said Marc Rotenberg, executive director of the Washington-based Electronic Privacy Information Center. He said growing use of outside contractors, as well as questions over what legal responsibility they have over private information, makes the issue one that the presidential candidates should address.
"They now know what it means to have their private information improperly accessed," he said.
By Chris Adams
Washington - Government agencies have a long way to go before they can assure taxpayers that the country's secrets - as well as citizens' personal information - are secure, according to recent government reports.
In fact, the Government Accountability Office testified to Congress last week that "poor information security is a widespread problem with potentially devastating consequences."
Among the potential concerns that the GAO identified in testimony to a Senate subcommittee: If systems aren't secure, sensitive information, such as taxpayer data, Social Security records and medical records, could be "inappropriately disclosed, browsed or copied for improper or criminal purposes."
As in the breach of three presidential candidates' passport files, the use of outside contractors has been cited as a possible problem by the GAO and other government investigators.
In a 2005 report, the GAO found that most government agencies have security policies on the books and written in contracts with outside vendors. But those policies often didn't go far enough to properly oversee the work of those contractors, the GAO said.
In the recent GAO testimony, investigators found that the percentage of employees and outside contractors receiving security-awareness training had dropped from 2006 to 2007.
The issue of security for the personal information kept by the federal government has been a major issue since 2006, when a portable hard drive and laptop computer belonging to a Department of Veterans Affairs employee was stolen, putting at risk the personal information of nearly 26 million veterans and military personnel.
The episode resolved itself without any known damage to veterans' personal information, but it did expose holes in VA security.
Although the main episode involved a VA employee, the VA's inspector general subsequently found that the information entrusted to contractors also needed to be protected better. Sensitive information provided to contractors was "not adequately safeguarded," the inspector general wrote, and many contracts didn't consistently include clauses to protect information.
As an example, the inspector general detailed an episode at a medical center in which 29 physicians were access to the VA's medical records system although none had adequate background checks.
Since the 2006 data breach, the VA has significantly strengthened its information policies.
The recent GAO testimony also highlighted a separate stolen laptop issue at the Centers for Medicare and Medicaid Services. There, a contractor reported that a laptop containing personal information on nearly 50,000 Medicare beneficiaries was stolen.
"It is a serious problem," said Marc Rotenberg, executive director of the Washington-based Electronic Privacy Information Center. He said growing use of outside contractors, as well as questions over what legal responsibility they have over private information, makes the issue one that the presidential candidates should address.
"They now know what it means to have their private information improperly accessed," he said.
US Pushed Allies on Iraq, Diplomat Writes
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By Colum Lynch
Chilean envoy to UN recounts threats of retaliation in run-up to invasion.
United Nations - In the months leading up to the U.S.-led invasion of Iraq, the Bush administration threatened trade reprisals against friendly countries who withheld their support, spied on its allies, and pressed for the recall of U.N. envoys that resisted U.S. pressure to endorse the war, according to an upcoming book by a top Chilean diplomat.
The rough-and-tumble diplomatic strategy has generated lasting "bitterness" and "deep mistrust" in Washington's relations with allies in Europe, Latin America and elsewhere, Heraldo Munoz, Chile's ambassador to the United Nations, writes in his book "A Solitary War: A Diplomat's Chronicle of the Iraq War and Its Lessons," set for publication next month.
"In the aftermath of the invasion, allies loyal to the United States were rejected, mocked and even punished" for their refusal to back a U.N. resolution authorizing military action against Saddam Hussein's government, Munoz writes.
But the tough talk dissipated as the war situation worsened, and President Bush came to reach out to many of the same allies that he had spurned. Munoz's account suggests that the U.S. strategy backfired in Latin America, damaging the administration's standing in a region that has long been dubious of U.S. military intervention.
Munoz details key roles by Chile and Mexico, the Security Council's two Latin members at the time, in the run-up to the war: Then-U.N. Ambassadors Juan Gabriel Vald¿s of Chile and Adolfo Aguilar Zinser of Mexico helped thwart U.S. and British efforts to rally support among the council's six undecided members for a resolution authorizing the U.S.-led invasion.
The book portrays Bush personally prodding the leaders of those six governments -- Angola, Cameroon, Chile, Guinea, Mexico and Pakistan -- to support the war resolution, a strategy aimed at demonstrating broad support for U.S. military plans, despite the French threat to veto the resolution.
In the weeks preceding the war, Bush made several appeals to Chilean President Ricardo Lagos and Mexican President Vicente Fox to rein in their diplomats and support U.S. war aims. "We have problems with your ambassador at the U.N.," Bush told Fox at a summit of the Asia-Pacific Economic Cooperation in Los Cabos, Mexico, in late 2002.
"It's time to bring up the vote, Ricardo. We've had this debate too long," Bush told the Chilean president on March 11, 2003.
"Bush had referred to Lagos by his first name, but as the conversation drew to a close and Lagos refused to support the resolution as it stood, Bush shifted to a cool and aloof 'Mr. President,' " Munoz writes. "Next Monday, time is up," Bush told Lagos.
Senior U.S. diplomats sought to thwart a last-minute attempt by Chile to broker a compromise that would delay military action for weeks, providing Iraq with a final chance to demonstrate that it had fully complied with disarmament requirements.
On March 14, 2003, less than one week before the invasion, Chile hosted a meeting of diplomats from the six undecided governments to discuss its proposal. But then-U.S. Ambassador John D. Negroponte and then-Secretary of State Colin L. Powell moved quickly to quash the initiative, warning them that the effort was viewed as "an unfriendly act" designed to isolate the United States. The diplomats received calls from their governments ordering them to "leave the meeting immediately," Munoz writes.
Aguilar Zinser, who died in 2005, was forced out of the Mexican government after publicly accusing the United States of treating Mexico like its "back yard" during the war negotiations. Vald¿s was transferred to Argentina, where he served as Chile's top envoy, and Munoz, a Chilean minister and onetime classmate of Condoleezza Rice at the University of Denver, was sent to the United Nations in June 2003 to patch up relations with the United States.
In the days after the invasion, the National Security Council's top Latin American expert, John F. Maisto, invited Munoz to the White House to convey the message to Lagos, that his country's position at the United Nations had jeopardized prospects for the speedy Senate ratification of a free-trade pact. "Chile has lost some influence," he said. "President Bush is truly disappointed with Lagos, but he is furious with Fox. With Mexico, the president feels betrayed; with Chile, frustrated and let down."
Munoz said relations remained tense at the United Nations, where the United States sought support for resolutions authorizing the occupation of Iraq. He said that small countries met privately in a secure room at the German mission that was impervious to suspected U.S. eavesdropping. "It reminded me of a submarine or a giant safe," Munoz said in an interview.
The United States, he added, expressed "its displeasure" to the German government every time they held a meeting in the secure room. "They couldn't listen to what was going on."
Munoz said that threats of reprisals were short-lived as Washington quickly found itself reaching out to Chile, Mexico and other countries to support Iraq's messy postwar rehabilitation. It also sought support from Chile on issues such as peacekeeping in Haiti and support for U.S. efforts to drive Syria out of Lebanon. The U.S.-Chilean free trade agreement, while delayed, was finally signed by then-U.S. Trade Representative Robert B. Zoellick in June 2003.
Munoz said that Rice, as secretary of state, called him to ask for help on a U.N. resolution that would press for Syrian withdrawal from Lebanon. The United States had secured eight of the nine votes required for adoption of a resolution in the Security Council. Munoz had received instructions to abstain. "I talked to [Lagos], and he listened to my argument, and we gave them the ninth vote," he said.
By Colum Lynch
Chilean envoy to UN recounts threats of retaliation in run-up to invasion.
United Nations - In the months leading up to the U.S.-led invasion of Iraq, the Bush administration threatened trade reprisals against friendly countries who withheld their support, spied on its allies, and pressed for the recall of U.N. envoys that resisted U.S. pressure to endorse the war, according to an upcoming book by a top Chilean diplomat.
The rough-and-tumble diplomatic strategy has generated lasting "bitterness" and "deep mistrust" in Washington's relations with allies in Europe, Latin America and elsewhere, Heraldo Munoz, Chile's ambassador to the United Nations, writes in his book "A Solitary War: A Diplomat's Chronicle of the Iraq War and Its Lessons," set for publication next month.
"In the aftermath of the invasion, allies loyal to the United States were rejected, mocked and even punished" for their refusal to back a U.N. resolution authorizing military action against Saddam Hussein's government, Munoz writes.
But the tough talk dissipated as the war situation worsened, and President Bush came to reach out to many of the same allies that he had spurned. Munoz's account suggests that the U.S. strategy backfired in Latin America, damaging the administration's standing in a region that has long been dubious of U.S. military intervention.
Munoz details key roles by Chile and Mexico, the Security Council's two Latin members at the time, in the run-up to the war: Then-U.N. Ambassadors Juan Gabriel Vald¿s of Chile and Adolfo Aguilar Zinser of Mexico helped thwart U.S. and British efforts to rally support among the council's six undecided members for a resolution authorizing the U.S.-led invasion.
The book portrays Bush personally prodding the leaders of those six governments -- Angola, Cameroon, Chile, Guinea, Mexico and Pakistan -- to support the war resolution, a strategy aimed at demonstrating broad support for U.S. military plans, despite the French threat to veto the resolution.
In the weeks preceding the war, Bush made several appeals to Chilean President Ricardo Lagos and Mexican President Vicente Fox to rein in their diplomats and support U.S. war aims. "We have problems with your ambassador at the U.N.," Bush told Fox at a summit of the Asia-Pacific Economic Cooperation in Los Cabos, Mexico, in late 2002.
"It's time to bring up the vote, Ricardo. We've had this debate too long," Bush told the Chilean president on March 11, 2003.
"Bush had referred to Lagos by his first name, but as the conversation drew to a close and Lagos refused to support the resolution as it stood, Bush shifted to a cool and aloof 'Mr. President,' " Munoz writes. "Next Monday, time is up," Bush told Lagos.
Senior U.S. diplomats sought to thwart a last-minute attempt by Chile to broker a compromise that would delay military action for weeks, providing Iraq with a final chance to demonstrate that it had fully complied with disarmament requirements.
On March 14, 2003, less than one week before the invasion, Chile hosted a meeting of diplomats from the six undecided governments to discuss its proposal. But then-U.S. Ambassador John D. Negroponte and then-Secretary of State Colin L. Powell moved quickly to quash the initiative, warning them that the effort was viewed as "an unfriendly act" designed to isolate the United States. The diplomats received calls from their governments ordering them to "leave the meeting immediately," Munoz writes.
Aguilar Zinser, who died in 2005, was forced out of the Mexican government after publicly accusing the United States of treating Mexico like its "back yard" during the war negotiations. Vald¿s was transferred to Argentina, where he served as Chile's top envoy, and Munoz, a Chilean minister and onetime classmate of Condoleezza Rice at the University of Denver, was sent to the United Nations in June 2003 to patch up relations with the United States.
In the days after the invasion, the National Security Council's top Latin American expert, John F. Maisto, invited Munoz to the White House to convey the message to Lagos, that his country's position at the United Nations had jeopardized prospects for the speedy Senate ratification of a free-trade pact. "Chile has lost some influence," he said. "President Bush is truly disappointed with Lagos, but he is furious with Fox. With Mexico, the president feels betrayed; with Chile, frustrated and let down."
Munoz said relations remained tense at the United Nations, where the United States sought support for resolutions authorizing the occupation of Iraq. He said that small countries met privately in a secure room at the German mission that was impervious to suspected U.S. eavesdropping. "It reminded me of a submarine or a giant safe," Munoz said in an interview.
The United States, he added, expressed "its displeasure" to the German government every time they held a meeting in the secure room. "They couldn't listen to what was going on."
Munoz said that threats of reprisals were short-lived as Washington quickly found itself reaching out to Chile, Mexico and other countries to support Iraq's messy postwar rehabilitation. It also sought support from Chile on issues such as peacekeeping in Haiti and support for U.S. efforts to drive Syria out of Lebanon. The U.S.-Chilean free trade agreement, while delayed, was finally signed by then-U.S. Trade Representative Robert B. Zoellick in June 2003.
Munoz said that Rice, as secretary of state, called him to ask for help on a U.N. resolution that would press for Syrian withdrawal from Lebanon. The United States had secured eight of the nine votes required for adoption of a resolution in the Security Council. Munoz had received instructions to abstain. "I talked to [Lagos], and he listened to my argument, and we gave them the ninth vote," he said.
Saturday, March 22, 2008
Cuba:The Accidental Revolution
Cuba:The Accidental Revolution examines Cuba's response to the food crisis created by the collapse of the Soviet Bloc in 1989. At one time Cuba's agrarian culture was as conventional as the rest of the world. It experienced its first "Green Revolution" when Russia was supplying Cuba with chemical and mechanical "inputs." However, the collapse of the Soviet Union in 1989 ended all of that, and almost overnight threw Cuba's whole economic system into crisis. Factories closed, food supplies plummeted. Within a year the country had lost over 80% of its foreign trade. With the loss of their export markets and the foreign exchange to pay for imports, Cuba was unable to feed its population and the country was thrown into a crisis. The average daily caloric intake of Cubans dropped by a third.
Without fertilizer and pesticides, Cubans turned to organic methods. Without fuel and machinery parts, Cubans turned to oxen. Without fuel to transport food, Cubans started to grow food in the cities where it is consumed. Urban gardens were established in vacant lots, school playgrounds, patios and back yards. As a result Cuba created the largest program in sustainable agriculture ever undertaken. By 1999 Cuba's agricultural production had recovered and in some cases reached historic levels.
Without fertilizer and pesticides, Cubans turned to organic methods. Without fuel and machinery parts, Cubans turned to oxen. Without fuel to transport food, Cubans started to grow food in the cities where it is consumed. Urban gardens were established in vacant lots, school playgrounds, patios and back yards. As a result Cuba created the largest program in sustainable agriculture ever undertaken. By 1999 Cuba's agricultural production had recovered and in some cases reached historic levels.
The four ‘new sheriffs’ of Wall Street
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The Federal Reserve and Treasury are playing a dominant day-to-day role in overseeing Wall Street following this week’s rescue of Bear Stearns, raising the prospect that the central bank might be given more permanent authority over securities firms.
Bankers say the greater authority is a direct consequence of the Fed’s extraordinary decisions to extend a $30bn credit line to help JPMorgan Chase’s takeover of Bear and to lend emergency funds to securities houses for the first time in more than 70 years.
“There is a new sheriff in town,” said a senior banker. “The Bear situation changed everything: people saw death before their eyes. The Fed and Treasury are in charge now and are not going to let go”.
Under a regulatory regime dating back to the 1930s, the Fed oversees commercial banks, but investment banks are primarily regulated by the Securities and Exchange Commission.
But as the credit crunch deepened, Ben Bernanke, Fed chairman, Tim Geithner, president of the New York Fed, Hank Paulson, Treasury secretary, and Robert Steel, his number two, have been in unusually close contact with Wall Street executives.
People close to the situation said the Fed and Treasury feared further problems among securities firms could destabilise the financial system and expose US taxpayers to sizeable losses on the new Fed loans.
Their stance has triggered talk of new financial services legislation, with bankers and politicians, including Barney Frank, House financial services committee chairman, asking whether investment banks should be regulated by the SEC or the Fed.
An extension of the Fed’s powers to investment banks might force them to reduce risk and leverage in order to comply with the tougher requirements faced by deposit-taking banks.
However, any change would require legislative action, which looks increasingly difficult ahead of the November presidential election, and could be even more problematic under a new Administration.
The SEC said different agencies were functioning as “equal partners at the regulatory forefront”.
The Federal Reserve and Treasury are playing a dominant day-to-day role in overseeing Wall Street following this week’s rescue of Bear Stearns, raising the prospect that the central bank might be given more permanent authority over securities firms.
Bankers say the greater authority is a direct consequence of the Fed’s extraordinary decisions to extend a $30bn credit line to help JPMorgan Chase’s takeover of Bear and to lend emergency funds to securities houses for the first time in more than 70 years.
“There is a new sheriff in town,” said a senior banker. “The Bear situation changed everything: people saw death before their eyes. The Fed and Treasury are in charge now and are not going to let go”.
Under a regulatory regime dating back to the 1930s, the Fed oversees commercial banks, but investment banks are primarily regulated by the Securities and Exchange Commission.
But as the credit crunch deepened, Ben Bernanke, Fed chairman, Tim Geithner, president of the New York Fed, Hank Paulson, Treasury secretary, and Robert Steel, his number two, have been in unusually close contact with Wall Street executives.
People close to the situation said the Fed and Treasury feared further problems among securities firms could destabilise the financial system and expose US taxpayers to sizeable losses on the new Fed loans.
Their stance has triggered talk of new financial services legislation, with bankers and politicians, including Barney Frank, House financial services committee chairman, asking whether investment banks should be regulated by the SEC or the Fed.
An extension of the Fed’s powers to investment banks might force them to reduce risk and leverage in order to comply with the tougher requirements faced by deposit-taking banks.
However, any change would require legislative action, which looks increasingly difficult ahead of the November presidential election, and could be even more problematic under a new Administration.
The SEC said different agencies were functioning as “equal partners at the regulatory forefront”.
Cheney: US will not pressure Israel
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Dick Cheney, the US vice president, has said that Washington will not pressure Israel to take steps that will threaten its security and expressed hope for a "new beginning" for the Palestinian people in their own state.
Cheney, who is on a 10-day trip to the Middle East, arrived in Jerusalem on Saturday after spending two days in Saudi Arabia.
"America's commitment to Israel's security is enduring and unshakable, as is our commitment to Israel's right to defend itself always against terrorism, rocket attacks and other forces dedicated to Israel's destruction,'' Cheney told reporters shortly after arriving in Jerusalem.
George Bush, the US president, has dispatched Cheney to meet with Israeli and Palestinian leaders over the next two days to try to move forward rocky peace talks, despite recent violence.
At US brokered talks at Annapolis, Maryland, in November both Ehud Olmert, the Israeli prime minister, and Mahmoud Abbas, the Palestinian president, pledged to forge a peace deal by the end of this year when Bush leaves office.
However, there has been little visible progress because of ongoing violence and Israel's construction of new settlements on land which the Palestinians claim for a future state.
Israel is conducting peace negotiations with Abbas' West Bank-based government whilst fighting Hamas, which controls the Gaza Strip.
Scores of civilians were killed when Israel retaliated to rockets fired by Hamas into Israeli communities in southern Israel.
However, Egyptian efforts to broker a truce have created a recent lull in violence in Gaza.
Regional agenda
In Jerusalem on Saturday, Cheney reaffirmed Washington's commitment to the establishment of a Palestinian state.
He assured Palestinian leaders that "they, too, can be certain of America's goodwill'' as it tries to help Israelis and Palestinians reach an accord.
"We want to see a resolution to the conflict, an end to the terrorism that has caused so much grief to Israelis, and a new beginning for the Palestinian people," Cheney said.
The vice president also said "we must not and will not ignore darkening shadows of the situation in Gaza, in Lebanon, in Syria and in Iran, and the forces there that are working to derail the hopes of the world."
Olmert said that he intends to speak to Cheney about Iran.
Israel considers Iran to be a security threat and rejects Tehran's claims that its nuclear programme is not designed to produce arms.
Olmert also said the two would discuss peacemaking and Hezbollah, the Lebanese group that fought Israel in 2006.
The White House has said Bush asked Cheney to visit Israel to discuss the peace process and other regional issues in advance of Bush's trip in May to mark the 60th anniversary of the modern state of Israel.
Dick Cheney, the US vice president, has said that Washington will not pressure Israel to take steps that will threaten its security and expressed hope for a "new beginning" for the Palestinian people in their own state.
Cheney, who is on a 10-day trip to the Middle East, arrived in Jerusalem on Saturday after spending two days in Saudi Arabia.
"America's commitment to Israel's security is enduring and unshakable, as is our commitment to Israel's right to defend itself always against terrorism, rocket attacks and other forces dedicated to Israel's destruction,'' Cheney told reporters shortly after arriving in Jerusalem.
George Bush, the US president, has dispatched Cheney to meet with Israeli and Palestinian leaders over the next two days to try to move forward rocky peace talks, despite recent violence.
At US brokered talks at Annapolis, Maryland, in November both Ehud Olmert, the Israeli prime minister, and Mahmoud Abbas, the Palestinian president, pledged to forge a peace deal by the end of this year when Bush leaves office.
However, there has been little visible progress because of ongoing violence and Israel's construction of new settlements on land which the Palestinians claim for a future state.
Israel is conducting peace negotiations with Abbas' West Bank-based government whilst fighting Hamas, which controls the Gaza Strip.
Scores of civilians were killed when Israel retaliated to rockets fired by Hamas into Israeli communities in southern Israel.
However, Egyptian efforts to broker a truce have created a recent lull in violence in Gaza.
Regional agenda
In Jerusalem on Saturday, Cheney reaffirmed Washington's commitment to the establishment of a Palestinian state.
He assured Palestinian leaders that "they, too, can be certain of America's goodwill'' as it tries to help Israelis and Palestinians reach an accord.
"We want to see a resolution to the conflict, an end to the terrorism that has caused so much grief to Israelis, and a new beginning for the Palestinian people," Cheney said.
The vice president also said "we must not and will not ignore darkening shadows of the situation in Gaza, in Lebanon, in Syria and in Iran, and the forces there that are working to derail the hopes of the world."
Olmert said that he intends to speak to Cheney about Iran.
Israel considers Iran to be a security threat and rejects Tehran's claims that its nuclear programme is not designed to produce arms.
Olmert also said the two would discuss peacemaking and Hezbollah, the Lebanese group that fought Israel in 2006.
The White House has said Bush asked Cheney to visit Israel to discuss the peace process and other regional issues in advance of Bush's trip in May to mark the 60th anniversary of the modern state of Israel.
Recessionary trends deepen, sparking gyrations on stock, commodities markets
Go to Original
By Barry Grey
In the wake of the bailout of Bear Stearns, brokered and largely financed by the US Federal Reserve Board, fears of a deepening recession and continuing uncertainties over the solvency of major finance houses fueled a week of wild gyrations on American stock exchanges.
On Tuesday, one day after the Fed engineered the takeover of Bear Stearns by JPMorgan Chase and announced that it would extend unlimited credit for six months to investment banks and brokerage houses—a measure without precedent since the Great Depression of the 1930s—the Dow Jones Industrial Average soared by 420 points. The jump was led by financial stocks, which benefited from the Fed’s agreement to swap Treasury bonds for illiquid and dubious mortgage-backed securities.
The next day, the Dow plummeted by 293 points, buffeted by a sudden sell-off of commodities.
On Thursday, the final trading day in a week shortened by the Good Friday holiday, the Dow shot up again, closing with a gain of 261 points, despite a continued fall on commodities indexes.
The extreme market volatility was driven in large measure by growing indications that the US has slid into a recession and that the slumping American economy is leading to a global slowdown.
On Thursday, the US Labor Department reported that jobless claims jumped by 22,000 last week over the previous week, reaching its highest level in nearly two months. The Labor Department said applications for jobless benefits totaled 378,000 for the week, far more than had been expected. The four-week average for new claims rose to 365,250, the highest level since a wave of claims caused by the 2005 Gulf Coast hurricanes. The number of people on benefit rolls reached its highest level since August 2004.
The jobless claims report came on the heels of monthly employment reports for February and January which saw net declines in payroll jobs of 63,000 and 22,000 respectively.
Citigroup, the largest US commercial bank, announced that it was laying off 2,000 employees in its markets and banking unit. The layoffs, to take effect by the end of this month, bring the total job cuts announced by the bank since the mortgage crisis began last summer to more than 6,000—about 10 percent of the firm’s global workforce. Citigroup said the layoffs would be concentrated in New York and London.
The Wall Street giant has written down the value of its assets by over $20 billion in the last year, and is expected to report billions more in losses from subprime and other risky investments in the coming months.
Since the eruption of the subprime crisis and credit crunch in mid-2007, US financial services companies had shed over 60,000 jobs.
The Conference Board, a New York research firm, reported that its index of leading economic indicators declined 0.3 percent in February, its fifth straight monthly drop, and the Philadelphia Federal Reserve said its factory index had declined in March, the fourth consecutive monthly fall in the index. Nationwide, manufacturing declined last month at the fastest pace in almost five years, according to a survey by the Institute for Supply Management.
Auto industry spokesmen projected a sharp decline in vehicle sales for 2008, foreshadowing more layoffs and plant closures. J.D. Powers & Associates issued a forecast putting US industrywide sales of light trucks and cars at 14.95 million, the lowest level since 1994.
In yet another report pointing to a continuing slump in the housing market and rise in home loan defaults and foreclosures, the US Census Bureau said the national homeowner vacancy rate rose to 2.8 percent in the fourth quarter of 2007. That was up from 2.7 percent in the previous quarter and equaled the record set in the first quarter of 2007.
The global impact of the US financial crisis and recession was indicated by a report showing a virtual standstill in world trade over the new year. The Bureau for Economic Policy Analysts, a Dutch research institute, reported that in the three months to January, world trade in goods rose at an annualized rate of 0.2 percent over the previous three months.
“This is a substantial deceleration,” the institute said. “World trade volume growth is on a downward trend.”
The growing signs of economic slump, combined with the impact of the credit crunch and investor fears about new bank failures, sparked the broad sell-off on commodity markets that began on Wednesday and continued Thursday. Crude oil and gold prices nosedived from record highs set at the start of the week.
Oil prices fell by 6.9 percent over the two days, while most other commodities fell by 7 percent. Wheat prices plummeted by 15 percent. Overall, the decline in commodities prices for the week was the biggest in a half-century.
The sell-off was evidently sparked by the decision of the Fed, announced Tuesday, to cut its federal funds target interest rate by 0.75 percent, rather than the 1 percent expected by commodities speculators. That bolstered the US dollar on world currency markets and led to a sharp decline in the euro, the yen and the Swiss franc from record highs recorded earlier in the week. The British pound, Australian dollar and Canadian dollar also fell sharply.
Big investors, including hedge funds, which had bid down the value of the US currency and bid up the price of key commodities, in part to recoup losses on stock, bond and derivative investments, panicked and began unloading their commodity holdings. But the commodity sell-off was also fueled by fears of a global recession, which would deflate commodity prices.
Since the beginning of 2008, demand for oil in the US has fallen 2.4 percent compared with the same period last year.
The commodity plunge is also the result of increasing demands from hard-pressed creditors for commodity speculators to increase their margins in collateral and cash.
The Wall Street Journal on Friday described the mechanism as follows: “Investors with losing trades in credit markets—mortgage bonds or collateralized debt obligations, for example—are being required by banks and others to set aside more cash to cover the money they borrowed to make trades, a process called ‘deleveraging.’ To raise the cash, some investors and hedge funds have sold some of their commodity winners.”
The Journal went on to explain that the process is an expression of the generalized crisis of the financial system, centered in the big banks and investment houses. It quoted Rich Feltes, director of commodity research at MF Global Ltd. in Chicago, as saying, “This is all related to the liquidity crisis. As assets at banks are written down, they need to shore up their portfolios by bringing in more cash from hedge funds that are trading in commodities.”
Heavily leveraged hedge funds and other investors also dumped commodity holdings because they were compelled to sell liquid assets in order to make up for losses from bad bets on other forms of speculation.
As Mark Wilson, vice president and senior credit officer at Moody’s Investors Service, put it: “We are in an environment where there is uncertainty all around.”
In an attempt to fend off a financial meltdown, the Fed has taken unprecedented measures, including pumping hundreds of billions of dollars into credit markets and taking onto its own balance sheet mortgage-backed securities, loans used to finance leveraged corporate takeovers and other failing assets that are weighing on commercial banks and investment houses and threatening them with bankruptcy, a la Bear Stearns.
This can only weaken global confidence in the Fed’s own solvency and further undermine the position of the US dollar. Ultimately, the cost will be born by the US government, either in the form of curtailed remittances from the Fed to the US Treasury, as a result of losses suffered by the US central bank, or a direct government bailout of Wall Street.
The US government took another step in this direction on Wednesday when the regulatory body that oversees Fannie Mae and Freddie Mac, the government-chartered mortgage finance firms, agreed to allow the two companies to reduce their capital requirements from 30 percent to 20 percent. This move, reportedly taken under intense pressure from the Bush administration, will enable the two mortgage finance companies to pump an additional $200 billion of liquidity into the US mortgage market. The aim is to bolster the distressed market for so-called “jumbo” mortgages greater than $417,000 and increase the firms’ capacity to refinance more subprime home loans.
Since the US government ultimately stands behind Fannie Mae and Freddie Mac, both of which recorded record fourth-quarter losses, the expansion of their lending facility represents yet another step toward a direct government rescue of the banking and mortgage industries.
The loosening of capital requirements for the two firms helped spark the stock market rally on Thursday, raising hopes that it will help stanch the fall in home prices and the spread of mortgage defaults and home foreclosures, thereby shoring up the balance sheets of the banks and investment houses.
That the fallout from the US housing collapse and failure of mortgage-linked investments continues was underscored by the announcement Thursday from Credit Suisse, the Swiss Banking giant, that it was likely to record a loss for the first quarter of 2008. The bank also admitted that it had mispriced the value of some of its securities and said it would write down its assets by $2.83 billion and cut its profit results for 2007 by 6 percent, or $7.8 billion.
Another ominous sign was the announcement from CIT, a major lender based in New York, that it had drawn down its entire $7.3 billion line of backup credit because it could not get credit from its usual sources. CIT stock plunged by 17 percent on Thursday. “It’s a ripple effect,” said Michael Taiano, an analyst at Sandler O’Neill & Partners. “CIT gets squeezed, the people they lend to get squeezed and end up maybe defaulting on their loans. It kind of goes down the food chain.”
Comparing the current crisis to the process that produced the Great Depression, economist and New York Times columnist Paul Krugman wrote Friday: “The financial crisis currently underway is basically an updated version of the wave of bank runs that swept the nation three generations ago. People aren’t pulling cash out of banks to put it in their mattresses—but they’re doing the modern equivalent, pulling their money out of the shadow banking system and putting it into Treasury bills. And the result, now as then, is a vicious circle of financial contraction.”
Former Federal Reserve Board Chairman Paul Volcker suggested in a television interview that the Fed was taking inordinate risks and cautioned that its policy of cutting interest rates could lead to an explosion of inflation. He said on PBS’s Charlie Rose program: “We have seen the Federal Reserve take more extreme measures in some respects than any that have been taken in the past to deal with the financial crisis.”
He went on to say that the Fed was not a place “where you put in bad assets, possibly bad assets,” and warned that the weakening of the dollar “begins to raise questions” as to its role as a world currency.
By Barry Grey
In the wake of the bailout of Bear Stearns, brokered and largely financed by the US Federal Reserve Board, fears of a deepening recession and continuing uncertainties over the solvency of major finance houses fueled a week of wild gyrations on American stock exchanges.
On Tuesday, one day after the Fed engineered the takeover of Bear Stearns by JPMorgan Chase and announced that it would extend unlimited credit for six months to investment banks and brokerage houses—a measure without precedent since the Great Depression of the 1930s—the Dow Jones Industrial Average soared by 420 points. The jump was led by financial stocks, which benefited from the Fed’s agreement to swap Treasury bonds for illiquid and dubious mortgage-backed securities.
The next day, the Dow plummeted by 293 points, buffeted by a sudden sell-off of commodities.
On Thursday, the final trading day in a week shortened by the Good Friday holiday, the Dow shot up again, closing with a gain of 261 points, despite a continued fall on commodities indexes.
The extreme market volatility was driven in large measure by growing indications that the US has slid into a recession and that the slumping American economy is leading to a global slowdown.
On Thursday, the US Labor Department reported that jobless claims jumped by 22,000 last week over the previous week, reaching its highest level in nearly two months. The Labor Department said applications for jobless benefits totaled 378,000 for the week, far more than had been expected. The four-week average for new claims rose to 365,250, the highest level since a wave of claims caused by the 2005 Gulf Coast hurricanes. The number of people on benefit rolls reached its highest level since August 2004.
The jobless claims report came on the heels of monthly employment reports for February and January which saw net declines in payroll jobs of 63,000 and 22,000 respectively.
Citigroup, the largest US commercial bank, announced that it was laying off 2,000 employees in its markets and banking unit. The layoffs, to take effect by the end of this month, bring the total job cuts announced by the bank since the mortgage crisis began last summer to more than 6,000—about 10 percent of the firm’s global workforce. Citigroup said the layoffs would be concentrated in New York and London.
The Wall Street giant has written down the value of its assets by over $20 billion in the last year, and is expected to report billions more in losses from subprime and other risky investments in the coming months.
Since the eruption of the subprime crisis and credit crunch in mid-2007, US financial services companies had shed over 60,000 jobs.
The Conference Board, a New York research firm, reported that its index of leading economic indicators declined 0.3 percent in February, its fifth straight monthly drop, and the Philadelphia Federal Reserve said its factory index had declined in March, the fourth consecutive monthly fall in the index. Nationwide, manufacturing declined last month at the fastest pace in almost five years, according to a survey by the Institute for Supply Management.
Auto industry spokesmen projected a sharp decline in vehicle sales for 2008, foreshadowing more layoffs and plant closures. J.D. Powers & Associates issued a forecast putting US industrywide sales of light trucks and cars at 14.95 million, the lowest level since 1994.
In yet another report pointing to a continuing slump in the housing market and rise in home loan defaults and foreclosures, the US Census Bureau said the national homeowner vacancy rate rose to 2.8 percent in the fourth quarter of 2007. That was up from 2.7 percent in the previous quarter and equaled the record set in the first quarter of 2007.
The global impact of the US financial crisis and recession was indicated by a report showing a virtual standstill in world trade over the new year. The Bureau for Economic Policy Analysts, a Dutch research institute, reported that in the three months to January, world trade in goods rose at an annualized rate of 0.2 percent over the previous three months.
“This is a substantial deceleration,” the institute said. “World trade volume growth is on a downward trend.”
The growing signs of economic slump, combined with the impact of the credit crunch and investor fears about new bank failures, sparked the broad sell-off on commodity markets that began on Wednesday and continued Thursday. Crude oil and gold prices nosedived from record highs set at the start of the week.
Oil prices fell by 6.9 percent over the two days, while most other commodities fell by 7 percent. Wheat prices plummeted by 15 percent. Overall, the decline in commodities prices for the week was the biggest in a half-century.
The sell-off was evidently sparked by the decision of the Fed, announced Tuesday, to cut its federal funds target interest rate by 0.75 percent, rather than the 1 percent expected by commodities speculators. That bolstered the US dollar on world currency markets and led to a sharp decline in the euro, the yen and the Swiss franc from record highs recorded earlier in the week. The British pound, Australian dollar and Canadian dollar also fell sharply.
Big investors, including hedge funds, which had bid down the value of the US currency and bid up the price of key commodities, in part to recoup losses on stock, bond and derivative investments, panicked and began unloading their commodity holdings. But the commodity sell-off was also fueled by fears of a global recession, which would deflate commodity prices.
Since the beginning of 2008, demand for oil in the US has fallen 2.4 percent compared with the same period last year.
The commodity plunge is also the result of increasing demands from hard-pressed creditors for commodity speculators to increase their margins in collateral and cash.
The Wall Street Journal on Friday described the mechanism as follows: “Investors with losing trades in credit markets—mortgage bonds or collateralized debt obligations, for example—are being required by banks and others to set aside more cash to cover the money they borrowed to make trades, a process called ‘deleveraging.’ To raise the cash, some investors and hedge funds have sold some of their commodity winners.”
The Journal went on to explain that the process is an expression of the generalized crisis of the financial system, centered in the big banks and investment houses. It quoted Rich Feltes, director of commodity research at MF Global Ltd. in Chicago, as saying, “This is all related to the liquidity crisis. As assets at banks are written down, they need to shore up their portfolios by bringing in more cash from hedge funds that are trading in commodities.”
Heavily leveraged hedge funds and other investors also dumped commodity holdings because they were compelled to sell liquid assets in order to make up for losses from bad bets on other forms of speculation.
As Mark Wilson, vice president and senior credit officer at Moody’s Investors Service, put it: “We are in an environment where there is uncertainty all around.”
In an attempt to fend off a financial meltdown, the Fed has taken unprecedented measures, including pumping hundreds of billions of dollars into credit markets and taking onto its own balance sheet mortgage-backed securities, loans used to finance leveraged corporate takeovers and other failing assets that are weighing on commercial banks and investment houses and threatening them with bankruptcy, a la Bear Stearns.
This can only weaken global confidence in the Fed’s own solvency and further undermine the position of the US dollar. Ultimately, the cost will be born by the US government, either in the form of curtailed remittances from the Fed to the US Treasury, as a result of losses suffered by the US central bank, or a direct government bailout of Wall Street.
The US government took another step in this direction on Wednesday when the regulatory body that oversees Fannie Mae and Freddie Mac, the government-chartered mortgage finance firms, agreed to allow the two companies to reduce their capital requirements from 30 percent to 20 percent. This move, reportedly taken under intense pressure from the Bush administration, will enable the two mortgage finance companies to pump an additional $200 billion of liquidity into the US mortgage market. The aim is to bolster the distressed market for so-called “jumbo” mortgages greater than $417,000 and increase the firms’ capacity to refinance more subprime home loans.
Since the US government ultimately stands behind Fannie Mae and Freddie Mac, both of which recorded record fourth-quarter losses, the expansion of their lending facility represents yet another step toward a direct government rescue of the banking and mortgage industries.
The loosening of capital requirements for the two firms helped spark the stock market rally on Thursday, raising hopes that it will help stanch the fall in home prices and the spread of mortgage defaults and home foreclosures, thereby shoring up the balance sheets of the banks and investment houses.
That the fallout from the US housing collapse and failure of mortgage-linked investments continues was underscored by the announcement Thursday from Credit Suisse, the Swiss Banking giant, that it was likely to record a loss for the first quarter of 2008. The bank also admitted that it had mispriced the value of some of its securities and said it would write down its assets by $2.83 billion and cut its profit results for 2007 by 6 percent, or $7.8 billion.
Another ominous sign was the announcement from CIT, a major lender based in New York, that it had drawn down its entire $7.3 billion line of backup credit because it could not get credit from its usual sources. CIT stock plunged by 17 percent on Thursday. “It’s a ripple effect,” said Michael Taiano, an analyst at Sandler O’Neill & Partners. “CIT gets squeezed, the people they lend to get squeezed and end up maybe defaulting on their loans. It kind of goes down the food chain.”
Comparing the current crisis to the process that produced the Great Depression, economist and New York Times columnist Paul Krugman wrote Friday: “The financial crisis currently underway is basically an updated version of the wave of bank runs that swept the nation three generations ago. People aren’t pulling cash out of banks to put it in their mattresses—but they’re doing the modern equivalent, pulling their money out of the shadow banking system and putting it into Treasury bills. And the result, now as then, is a vicious circle of financial contraction.”
Former Federal Reserve Board Chairman Paul Volcker suggested in a television interview that the Fed was taking inordinate risks and cautioned that its policy of cutting interest rates could lead to an explosion of inflation. He said on PBS’s Charlie Rose program: “We have seen the Federal Reserve take more extreme measures in some respects than any that have been taken in the past to deal with the financial crisis.”
He went on to say that the Fed was not a place “where you put in bad assets, possibly bad assets,” and warned that the weakening of the dollar “begins to raise questions” as to its role as a world currency.
Five Years On, How to Leave Iraq
Go to Original
By Ivan Eland
Editor’s Note: George W. Bush, John McCain and other Iraq War hawks are crediting the "surge" for a decline in violence in Iraq, even though other factors appear to have been more important including the outrageous actions of the hyper-violent al-Qaeda group which produced a predictable backlash among Sunnis.
The other chief consequence of the "surge" has been to buy the Bush administration time to run out the clock, as the Independent Institute's Ivan Eland notes in this guest essay:
As the fifth anniversary of the United States’ second-longest (next to Vietnam) and second-costliest (next to World War II) war passes, the good news is that the counterinsurgency strategy of Gen. David Petraeus and Lt. Gen. Raymond Odierno seems to be working. The bad news is that it will probably not save Iraq.
Although the U.S. troop “surge” has had some effect, it is probably not the most important factor dampening violence back down to the levels of mid-2004.
The United States had comparable force levels in Iraq (about 155,000 troops) in 2005, but the mayhem was worse than now and was increasing.
Furthermore, the carnage in Iraq started dropping even before the United States began the surge (and temporarily increased again as U.S. troops were being added).
In part, prior ethnic cleansing that had more cleanly separated hostile Shiite and Sunni populations has likely caused the reduction. Even more important was probably Petraeus’s and Odierno’s exploitation of the fissure between mainline Sunni insurgents and al-Qaeda in Iraq.
Al-Qaeda in Iraq’s blindingly incompetent slaughter of fellow Muslim civilians, which brought rebuke even by al-Qaeda’s central leadership, caused Sunni insurgents to get fed up and turn against the group. [See Consortiumnews.com's 2006 article, "Al-Qaeda's Fragile Foothold."]
Petraeus and Odierno cleverly exploited this fissure by driving a wedge between the two factions. Although guerrilla operations are the most successful form of warfare in human history and counterinsurgency forces seldom win over the long term, they do best when they can divide the rebel movement.
The United States was able to defeat the Greek communist insurgents during the 1947-49 period and Filipino rebels from 1900 to 1902 by splitting the insurgencies. In the latter case, the United States was able to persuade Emilio Aguinaldo, the most prominent rebel commander—perhaps by a cash payment—to surrender his forces.
In Iraq, the United States is now essentially paying off former Sunni guerrillas in the “Awakening Councils” by funding, equipping and training them to fight al-Qaeda in Iraq and working with the formerly hostile Shiite Mahdi militia.
Although this strategy has merits by attenuating violence in the short term, it will likely exacerbate Iraq’s larger problems, thus eventually leading to a full-blown civil war.
The Petraeus and Odierno strategy makes sense if the objective is to keep a lid on the violence until President Bush leaves office.
When the tar baby is successfully passed onto the next president, Bush can then rerun the “Kissinger” argument from Vietnam. That argument goes something like this: “The United States would have won the Vietnam War if the Democratic Congress hadn’t cut off funding for it.”
In Iraq, the similar Bush administration refrain will be: “The situation in Iraq was improving until we left office and handed over to power to President X.”
But Bush’s short-term strategy would likely aggravate Iraq’s central underlying problem—ethno-sectarian hostility.
Had the Bush administration made a serious effort to consult experts on the Arab world before invading Iraq, it would have discovered that the country was one of the most fractured in the Arab world and would be one of the least likely to support and sustain a liberal democratic federation.
Prior to supporting former Sunni guerrillas, the administration was only funding, equipping and training two sides—the Kurds and Shiites—in the ongoing civil war. Now the administration is supporting all three sides.
The Shiite/Kurdish-controlled government is opposed to the U.S. program to support the Sunnis and has been reluctant to let them in the security forces.
Such deep underlying ethno-sectarian suspicions and fissures have been around for centuries in what is now Iraq and are unlikely to be rectified by passing a few benchmark laws.
Given the history of Iraq—in which one group controlled the central government and oppressed the other groups—all groups, even including the formerly ruling Sunnis, are suspicious of central authority and will fight for control of it.
Thus, societal cooperation, of which Iraq has little, must precede legislation or the laws will be disregarded. Even less credibility will accrue to laws passed under pressure from an outside occupying power.
The only way the United States can pull its finger out of the dike without the dam crashing down is to use the threat of withdrawal—pulling the backstop out from the corrupt Shiite/Kurdish government—to get the Shiites, Sunnis and Kurds to agree to formally decentralize the country.
If the central government has only limited power, the groups would fear its potential oppression less and attenuate their fight for control of it.
In a decentralized, loosely confederated Iraq, their militias could provide security over members of the their own groups in new autonomous regions (the country would probably have three or more of these regions based on ethno-sectarian or tribal affiliation).
Also, judicial, resource (oil) management and most other government functions could reside at the regional level. The central government would be responsible only for diplomatic representation overseas and negotiating trade agreements with other countries and among regions.
Heretofore, the major sticking point in getting the three groups to support such a decentralization scheme was Sunni worries about meager oil resources in their region.
The Kurds have had a de facto state in northern Iraq since the end of the Persian Gulf War in 1991. Many Shiite leaders also favor setting up an autonomous region, the possibility of which is guaranteed in Iraq’s constitution.
Even the Sunnis, finally disabused of the fantasy that they are strong enough to once again rule all of Iraq, and having tasted oppression at the hands of the Shiite-dominated security forces, are becoming more favorable to decentralization.
To push the Shiite/Kurdish-dominated Iraqi government into gerrymandering regional borders—giving territory containing oil to the Sunnis to ensure their acceptance of decentralization—any new U.S. president must establish a timetable for the rapid withdrawal of U.S. forces, which prop up that dysfunctional government.
Because the Shiite have roughly 60 percent of the oil and about 60 percent of the population, the only border that might need to be gerrymandered is near the northern oil fields by Kirkuk between Kurdistan (about 20 percent of the population and approximately 40 percent of the oil) and Sunni-dominated areas (roughly 20 percent of the population and little oil).
The historical record on partitions illuminates dos and don’ts for any soft partition of Iraq into a loose confederation—the most important of which is that the Iraqis must do the dividing themselves for it to have crucial legitimacy in their eyes.
In 1947, in partitioning India and Pakistan, Britain found out the hard way that the location of the partition line is vitally important and that an outside power drawing such a border arbitrarily can have disastrous and violent consequences.
Thus, the United States should avoid getting involved in the details of creating borders between regions, but some general lessons can be learned from past partitions.
First, regional boundaries don’t have to exactly mirror ethno-sectarian areas, but they should come as close as possible.
The case of Northern Ireland shows that a large minority (Catholics), which could be perceived as a threat by the majority (Protestants), should not be stranded on the other side of the borderline. A small minority on the other side of the line will probably experience little violence (Protestants in Ireland).
Second, the case of Kosovo demonstrates that boundaries must consider ethno-sectarian or tribal shrines and sites.
Third, although drawing borders along ethno-sectarian divides should minimize population movements, some migration will likely be necessary. Such movements must be voluntary, can be encouraged through incentives and must be protected (as the violence in Indian-Pakistan in 1947 showed).
Although a U.S. withdrawal and soft partition is not a perfect solution, Iraq is in some sense already partitioned, with forces primarily loyal to ethno-sectarian groups providing security.
U.S. policy training of such armed organizations is merely reinforcing this de facto partition. Such an unratified partition is very dangerous and will likely lead to a full-blown civil war.
Only a new American president signaling a rapid U.S. withdrawal could motivate the parties to formalize, adjust and make permanent the decentralized Iraq that already exists.
By Ivan Eland
Editor’s Note: George W. Bush, John McCain and other Iraq War hawks are crediting the "surge" for a decline in violence in Iraq, even though other factors appear to have been more important including the outrageous actions of the hyper-violent al-Qaeda group which produced a predictable backlash among Sunnis.
The other chief consequence of the "surge" has been to buy the Bush administration time to run out the clock, as the Independent Institute's Ivan Eland notes in this guest essay:
As the fifth anniversary of the United States’ second-longest (next to Vietnam) and second-costliest (next to World War II) war passes, the good news is that the counterinsurgency strategy of Gen. David Petraeus and Lt. Gen. Raymond Odierno seems to be working. The bad news is that it will probably not save Iraq.
Although the U.S. troop “surge” has had some effect, it is probably not the most important factor dampening violence back down to the levels of mid-2004.
The United States had comparable force levels in Iraq (about 155,000 troops) in 2005, but the mayhem was worse than now and was increasing.
Furthermore, the carnage in Iraq started dropping even before the United States began the surge (and temporarily increased again as U.S. troops were being added).
In part, prior ethnic cleansing that had more cleanly separated hostile Shiite and Sunni populations has likely caused the reduction. Even more important was probably Petraeus’s and Odierno’s exploitation of the fissure between mainline Sunni insurgents and al-Qaeda in Iraq.
Al-Qaeda in Iraq’s blindingly incompetent slaughter of fellow Muslim civilians, which brought rebuke even by al-Qaeda’s central leadership, caused Sunni insurgents to get fed up and turn against the group. [See Consortiumnews.com's 2006 article, "Al-Qaeda's Fragile Foothold."]
Petraeus and Odierno cleverly exploited this fissure by driving a wedge between the two factions. Although guerrilla operations are the most successful form of warfare in human history and counterinsurgency forces seldom win over the long term, they do best when they can divide the rebel movement.
The United States was able to defeat the Greek communist insurgents during the 1947-49 period and Filipino rebels from 1900 to 1902 by splitting the insurgencies. In the latter case, the United States was able to persuade Emilio Aguinaldo, the most prominent rebel commander—perhaps by a cash payment—to surrender his forces.
In Iraq, the United States is now essentially paying off former Sunni guerrillas in the “Awakening Councils” by funding, equipping and training them to fight al-Qaeda in Iraq and working with the formerly hostile Shiite Mahdi militia.
Although this strategy has merits by attenuating violence in the short term, it will likely exacerbate Iraq’s larger problems, thus eventually leading to a full-blown civil war.
The Petraeus and Odierno strategy makes sense if the objective is to keep a lid on the violence until President Bush leaves office.
When the tar baby is successfully passed onto the next president, Bush can then rerun the “Kissinger” argument from Vietnam. That argument goes something like this: “The United States would have won the Vietnam War if the Democratic Congress hadn’t cut off funding for it.”
In Iraq, the similar Bush administration refrain will be: “The situation in Iraq was improving until we left office and handed over to power to President X.”
But Bush’s short-term strategy would likely aggravate Iraq’s central underlying problem—ethno-sectarian hostility.
Had the Bush administration made a serious effort to consult experts on the Arab world before invading Iraq, it would have discovered that the country was one of the most fractured in the Arab world and would be one of the least likely to support and sustain a liberal democratic federation.
Prior to supporting former Sunni guerrillas, the administration was only funding, equipping and training two sides—the Kurds and Shiites—in the ongoing civil war. Now the administration is supporting all three sides.
The Shiite/Kurdish-controlled government is opposed to the U.S. program to support the Sunnis and has been reluctant to let them in the security forces.
Such deep underlying ethno-sectarian suspicions and fissures have been around for centuries in what is now Iraq and are unlikely to be rectified by passing a few benchmark laws.
Given the history of Iraq—in which one group controlled the central government and oppressed the other groups—all groups, even including the formerly ruling Sunnis, are suspicious of central authority and will fight for control of it.
Thus, societal cooperation, of which Iraq has little, must precede legislation or the laws will be disregarded. Even less credibility will accrue to laws passed under pressure from an outside occupying power.
The only way the United States can pull its finger out of the dike without the dam crashing down is to use the threat of withdrawal—pulling the backstop out from the corrupt Shiite/Kurdish government—to get the Shiites, Sunnis and Kurds to agree to formally decentralize the country.
If the central government has only limited power, the groups would fear its potential oppression less and attenuate their fight for control of it.
In a decentralized, loosely confederated Iraq, their militias could provide security over members of the their own groups in new autonomous regions (the country would probably have three or more of these regions based on ethno-sectarian or tribal affiliation).
Also, judicial, resource (oil) management and most other government functions could reside at the regional level. The central government would be responsible only for diplomatic representation overseas and negotiating trade agreements with other countries and among regions.
Heretofore, the major sticking point in getting the three groups to support such a decentralization scheme was Sunni worries about meager oil resources in their region.
The Kurds have had a de facto state in northern Iraq since the end of the Persian Gulf War in 1991. Many Shiite leaders also favor setting up an autonomous region, the possibility of which is guaranteed in Iraq’s constitution.
Even the Sunnis, finally disabused of the fantasy that they are strong enough to once again rule all of Iraq, and having tasted oppression at the hands of the Shiite-dominated security forces, are becoming more favorable to decentralization.
To push the Shiite/Kurdish-dominated Iraqi government into gerrymandering regional borders—giving territory containing oil to the Sunnis to ensure their acceptance of decentralization—any new U.S. president must establish a timetable for the rapid withdrawal of U.S. forces, which prop up that dysfunctional government.
Because the Shiite have roughly 60 percent of the oil and about 60 percent of the population, the only border that might need to be gerrymandered is near the northern oil fields by Kirkuk between Kurdistan (about 20 percent of the population and approximately 40 percent of the oil) and Sunni-dominated areas (roughly 20 percent of the population and little oil).
The historical record on partitions illuminates dos and don’ts for any soft partition of Iraq into a loose confederation—the most important of which is that the Iraqis must do the dividing themselves for it to have crucial legitimacy in their eyes.
In 1947, in partitioning India and Pakistan, Britain found out the hard way that the location of the partition line is vitally important and that an outside power drawing such a border arbitrarily can have disastrous and violent consequences.
Thus, the United States should avoid getting involved in the details of creating borders between regions, but some general lessons can be learned from past partitions.
First, regional boundaries don’t have to exactly mirror ethno-sectarian areas, but they should come as close as possible.
The case of Northern Ireland shows that a large minority (Catholics), which could be perceived as a threat by the majority (Protestants), should not be stranded on the other side of the borderline. A small minority on the other side of the line will probably experience little violence (Protestants in Ireland).
Second, the case of Kosovo demonstrates that boundaries must consider ethno-sectarian or tribal shrines and sites.
Third, although drawing borders along ethno-sectarian divides should minimize population movements, some migration will likely be necessary. Such movements must be voluntary, can be encouraged through incentives and must be protected (as the violence in Indian-Pakistan in 1947 showed).
Although a U.S. withdrawal and soft partition is not a perfect solution, Iraq is in some sense already partitioned, with forces primarily loyal to ethno-sectarian groups providing security.
U.S. policy training of such armed organizations is merely reinforcing this de facto partition. Such an unratified partition is very dangerous and will likely lead to a full-blown civil war.
Only a new American president signaling a rapid U.S. withdrawal could motivate the parties to formalize, adjust and make permanent the decentralized Iraq that already exists.
Pentagon Rules Out Fallon Testimony
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Washington - The Pentagon on Friday ruled out including Adm. William Fallon as a witness before Congress when the top U.S. military and diplomatic officials in Baghdad testify next month on the way ahead in Iraq.
Fallon's abrupt announcement March 11 that he was resigning, effective March 31, as chief of U.S. Central Command overseeing the wars in Iraq and Afghanistan triggered accusations by Democrats in Congress that he was being forced out for publicly opposing launching a war against Iran.
In declaring that Fallon would not join Gen. David Petraeus and Ambassador Ryan Crocker as witnesses before Congress next month, Pentagon press secretary Geoff Morrell said the decision had nothing to do with Fallon's views on Iran or the reasons for his unexpected resignation and retirement.
"I know there have been requests, in fact, from members of Congress to have Adm. Fallon testify with Gen. Petraeus and Ambassador Crocker, and I can tell you that Adm. Fallon will not be testifying" with them, Morrell told a Pentagon news conference.
Fallon was at the Pentagon on Thursday to join Gates in a video-teleconference meeting with Petraeus in which Fallon and Petraeus gave their views on troop reductions and other issues in Iraq, Morrell said. He said Gates met Friday morning with the chiefs of the Army, Navy, Air Force and Marine Corps, as well as Adm. Michael Mullen, chairman of the Joint Chiefs, to hear their views on Iraq.
The White House has said Bush plans to come to the Pentagon next week to consult with the Joint Chiefs, in the same manner as he did last summer and in the fall of 2006 prior to major Iraq war decisions.
Petraeus and Crocker are due to testify on Capitol Hill on April 8 and 9, and shortly after that, Bush is expected to publicly announce his decision on how to proceed with troop withdrawals in the second half of the year.
Although he is giving up his command, Fallon will remain on active duty until his retirement later this spring. His deputy, Lt. Gen. Martin Dempsey, is scheduled to become acting Central Command commander when Fallon leaves March 31. No permanent replacement has been nominated, and Morrell said Friday that a successor is unlikely to be in place before May.
"We're at the very beginning stages of that process," the spokesman said.
Morrell said he did not know if Gates personally objects to having Fallon testify alongside Petraeus and Crocker.
Fallon is known to have differed with Petraeus over the pace and scope of U.S. troop drawdowns this year in Iraq, although Petraeus said after Fallon's resignation that they had recently come to a common view.
Petraeus is expected to recommend to Bush that after completing the current scheduled reduction of U.S. combat brigades in Iraq from the peak of 20 last year to 15 by the end of July, there should be a "period of assessment" before resuming the drawdown.
Morrell said Gates and Fallon have both endorsed that concept, although the details are not settled. Administration officials have said the pause in troop withdrawals likely would be at least a month or two, with the expectation that the drawdown would resume before Bush leaves office in January.
There are now about 158,000 U.S. troops in Iraq. The number is expected to fall to about 140,000 by the end of July.
Washington - The Pentagon on Friday ruled out including Adm. William Fallon as a witness before Congress when the top U.S. military and diplomatic officials in Baghdad testify next month on the way ahead in Iraq.
Fallon's abrupt announcement March 11 that he was resigning, effective March 31, as chief of U.S. Central Command overseeing the wars in Iraq and Afghanistan triggered accusations by Democrats in Congress that he was being forced out for publicly opposing launching a war against Iran.
In declaring that Fallon would not join Gen. David Petraeus and Ambassador Ryan Crocker as witnesses before Congress next month, Pentagon press secretary Geoff Morrell said the decision had nothing to do with Fallon's views on Iran or the reasons for his unexpected resignation and retirement.
"I know there have been requests, in fact, from members of Congress to have Adm. Fallon testify with Gen. Petraeus and Ambassador Crocker, and I can tell you that Adm. Fallon will not be testifying" with them, Morrell told a Pentagon news conference.
Fallon was at the Pentagon on Thursday to join Gates in a video-teleconference meeting with Petraeus in which Fallon and Petraeus gave their views on troop reductions and other issues in Iraq, Morrell said. He said Gates met Friday morning with the chiefs of the Army, Navy, Air Force and Marine Corps, as well as Adm. Michael Mullen, chairman of the Joint Chiefs, to hear their views on Iraq.
The White House has said Bush plans to come to the Pentagon next week to consult with the Joint Chiefs, in the same manner as he did last summer and in the fall of 2006 prior to major Iraq war decisions.
Petraeus and Crocker are due to testify on Capitol Hill on April 8 and 9, and shortly after that, Bush is expected to publicly announce his decision on how to proceed with troop withdrawals in the second half of the year.
Although he is giving up his command, Fallon will remain on active duty until his retirement later this spring. His deputy, Lt. Gen. Martin Dempsey, is scheduled to become acting Central Command commander when Fallon leaves March 31. No permanent replacement has been nominated, and Morrell said Friday that a successor is unlikely to be in place before May.
"We're at the very beginning stages of that process," the spokesman said.
Morrell said he did not know if Gates personally objects to having Fallon testify alongside Petraeus and Crocker.
Fallon is known to have differed with Petraeus over the pace and scope of U.S. troop drawdowns this year in Iraq, although Petraeus said after Fallon's resignation that they had recently come to a common view.
Petraeus is expected to recommend to Bush that after completing the current scheduled reduction of U.S. combat brigades in Iraq from the peak of 20 last year to 15 by the end of July, there should be a "period of assessment" before resuming the drawdown.
Morrell said Gates and Fallon have both endorsed that concept, although the details are not settled. Administration officials have said the pause in troop withdrawals likely would be at least a month or two, with the expectation that the drawdown would resume before Bush leaves office in January.
There are now about 158,000 U.S. troops in Iraq. The number is expected to fall to about 140,000 by the end of July.
White House: Computer Hard Drives Tossed
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By Pete Yost
Older White House computer hard drives have been destroyed, the White House disclosed to a federal court Friday in a controversy over millions of possibly missing e-mails from 2003 to 2005.
The White House revealed new information about how it handles its computers in an effort to persuade a federal magistrate it would be fruitless to undertake an e-mail recovery plan that the court proposed.
"When workstations are at the end of their lifecycle and retired ... the hard drives are generally sent offsite to another government entity for physical destruction," the White House said in a sworn declaration filed with U.S. Magistrate Judge John Facciola.
It has been the goal of a White House Office of Administration "refresh program" to replace one-third of its workstations every year in the Executive Office of the President, according to the declaration.
Some, but not necessarily all, of the data on old hard drives is moved to new computer hard drives, the declaration added.
In proposing an e-mail recovery plan Tuesday, Facciola expressed concern that a large volume of electronic messages may be missing from White House computer servers, as two private groups that are suing the White House allege.
Facciola proposed the drastic approach of going to individual workstations of White House computer users after the White House disclosed in January that it recycled its computer backup tapes before October 2003. Recycling - taping over existing data - raises the possibility that any missing e-mails may not be recoverable.
At a House committee hearing last month, a computer expert who previously worked at the White House called the e-mail system "primitive" and said it was set up in a way that created a high risk that data would be lost from White House servers where it was being archived.
Under pressure to provide details about its computer system, the White House told the congressional committee that it never completed work that began in 2003 on a planned records management and e-mail archiving system. The White House canceled the project in late 2006 and says it is still working on a new version.
In the absence of a permanent archiving system, the White House has been archiving e-mails on White House servers since early in the administration.
The White House says it does not know if any e-mails are missing, but is looking into the matter.
It would be costly and time-consuming for the White House to institute an e-mail retrieval program that entails pulling data off each individual workstation, the court papers filed Friday state.
By Pete Yost
Older White House computer hard drives have been destroyed, the White House disclosed to a federal court Friday in a controversy over millions of possibly missing e-mails from 2003 to 2005.
The White House revealed new information about how it handles its computers in an effort to persuade a federal magistrate it would be fruitless to undertake an e-mail recovery plan that the court proposed.
"When workstations are at the end of their lifecycle and retired ... the hard drives are generally sent offsite to another government entity for physical destruction," the White House said in a sworn declaration filed with U.S. Magistrate Judge John Facciola.
It has been the goal of a White House Office of Administration "refresh program" to replace one-third of its workstations every year in the Executive Office of the President, according to the declaration.
Some, but not necessarily all, of the data on old hard drives is moved to new computer hard drives, the declaration added.
In proposing an e-mail recovery plan Tuesday, Facciola expressed concern that a large volume of electronic messages may be missing from White House computer servers, as two private groups that are suing the White House allege.
Facciola proposed the drastic approach of going to individual workstations of White House computer users after the White House disclosed in January that it recycled its computer backup tapes before October 2003. Recycling - taping over existing data - raises the possibility that any missing e-mails may not be recoverable.
At a House committee hearing last month, a computer expert who previously worked at the White House called the e-mail system "primitive" and said it was set up in a way that created a high risk that data would be lost from White House servers where it was being archived.
Under pressure to provide details about its computer system, the White House told the congressional committee that it never completed work that began in 2003 on a planned records management and e-mail archiving system. The White House canceled the project in late 2006 and says it is still working on a new version.
In the absence of a permanent archiving system, the White House has been archiving e-mails on White House servers since early in the administration.
The White House says it does not know if any e-mails are missing, but is looking into the matter.
It would be costly and time-consuming for the White House to institute an e-mail retrieval program that entails pulling data off each individual workstation, the court papers filed Friday state.
Israeli and US officers stage four-day training exercise
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JERUSALEM: The Israeli military said Thursday that around 200 U.S. and Israeli officers had staged a computer-based battle simulation designed to improve coordination between the two countries' armed forces.
The four-day exercise, codenamed "Juniper Falcon" was part of a standing agreement between the two strategic allies to hold regular joint training to boost "interoperability, understanding and cooperation" a military statement released on Thursday said.
The statement stressed that the exercise, which ended on Wednesday, had been planned a year in advance and was not related to actual events.
Defense officials said that in addition the Israeli military's southern command held a separate simulation based on a scenario of an escalated conflict in Gaza. They said that the drill, codenamed "Coiled Spring" should not be seen as a precursor to a real offensive into the Gaza Strip.
Israel has been battling the Hamas movement in Gaza since the Islamic militant group violently seized control of the strip from the forces of moderate Palestinian President Mahmoud Abbas last June.
The violence has however eased somewhat in recent weeks as Egypt pressed Hamas to stop its rocket fire and Israel to halt military strikes. The truce efforts intensified after a fierce round of fighting that began in late February and killed more than 120 Palestinians, including dozens of civilians, as well as three Israelis.
JERUSALEM: The Israeli military said Thursday that around 200 U.S. and Israeli officers had staged a computer-based battle simulation designed to improve coordination between the two countries' armed forces.
The four-day exercise, codenamed "Juniper Falcon" was part of a standing agreement between the two strategic allies to hold regular joint training to boost "interoperability, understanding and cooperation" a military statement released on Thursday said.
The statement stressed that the exercise, which ended on Wednesday, had been planned a year in advance and was not related to actual events.
Defense officials said that in addition the Israeli military's southern command held a separate simulation based on a scenario of an escalated conflict in Gaza. They said that the drill, codenamed "Coiled Spring" should not be seen as a precursor to a real offensive into the Gaza Strip.
Israel has been battling the Hamas movement in Gaza since the Islamic militant group violently seized control of the strip from the forces of moderate Palestinian President Mahmoud Abbas last June.
The violence has however eased somewhat in recent weeks as Egypt pressed Hamas to stop its rocket fire and Israel to halt military strikes. The truce efforts intensified after a fierce round of fighting that began in late February and killed more than 120 Palestinians, including dozens of civilians, as well as three Israelis.
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