Moon of Alabama Brecht quote
February 28, 2009

Public Service Announcement

Reading Malooga's critizism makes me kind of sad. MoA is open to many opinions, though it generally keeps with a lefty (in the European sense) and anti-imperialist trend.

My personal opinion though, expressed in my posts, are not as left sided as some seem to think. I am a social-democrat and realist.

If you carry other opinions you are not only free to expand on those in the comments.

I lift and front-page longer comments even when I do not agree with them. But I only do so if I see them timely enough to make them relevant. As I once a while sleep, a long comment that already attracted several other comments and was posted half a day ago or so will usually not get such a lift.

If you want to publish something here on the front page, to refute my arguments or for other means, feel free to send your piece per email. If it is reasonably argued, I'll post it without much regard to the ideological content or opinion.

Posted by b on February 28, 2009 at 03:56 PM | Permalink | Comments (67)

Billmon: Chocolate Covered Cotton: An Update

So pieces of paper rated AAA by the credit rating agencies (implying virtually no risk of default loss) and sold for a 100 cents on the dollar (or more) are now worth a nickel -- a 95% haircut. Something like $150 billion in the stuff was issued in the last two years of the bubble alone. Another $300 billion in slightly higher quality AAA-rated debt is probably worth 35-40 cents -- at best.

As the FT notes, this kind of thing doesn't exactly inspire investor confidence:

I would hazard a guess that this is easily the worst outcome for any assets that have ever carried a "triple A" stamp. No wonder so many investors are now so utterly cynical about anything that bankers or rating agencies might say these days.

Which in turn suggests that sooner or later Milo Minderbinder and company are going to have to go back to the drawing board and figure out a better way to dispose of Big Shitpile than coating it in chocolate.

Billmon: Chocolate Covered Cotton: An Update

Posted by b on February 28, 2009 at 08:22 AM | Permalink | Comments (5)

February 27, 2009

Obama the CinC

Lauding Obama? Me? Yes.

Not 'brilliant' - too much U.S. centric propaganda for that attribute - but a good speech and clear intentions:

Let me say this as plainly as I can: by August 31, 2010, our combat mission in Iraq will end.
After we remove our combat brigades, our mission will change from combat to supporting the Iraqi government and its security forces as they take the absolute lead in securing their country.
Through this period of transition, we will carry out further redeployments. And under the status of forces agreement with the Iraqi government, I intend to remove all US troops from Iraq by the end of 2011. We will complete this transition to Iraqi responsibility, and we will bring our troops home with the honour that they have earned.

I see no if's and maybe's. Good for Iraq, maybe very bad for Pakistan.

Towards the U.S. domestic realm: Well done. With that speech Obama has made himself Commander in Chief that will be respected by the U.S. forces. Not a small achievement. Some generals might revolt over this.

Posted by b on February 27, 2009 at 03:38 PM | Permalink | Comments (77)

On 4th GW, COIN And History

There is this little exchange I had with Jeremiah here, here, here and here about Counter Insurgency (COIN) and 4th Generation warfare.

It starts with Jeremiah quoting John Robb:

... [G]iven our experience with the recent punctuated evolution of warfare, that isn't likely to last given the depth/scale of the current crisis. As we have seen in recently (from Iraq to Nigeria to Mexico), the targeting of corporations is now a fixture of modern conflict (please read). The targeting of banks would be a natural extension of this trend line given the following: ...

The 4th generation warfare crowd and the COIN promoters are the same phenomenon. People who have either not read history and believe they just invented the wheel and people who have learned from history but clad it into new soundbites to sell their books.

There is nothing new with insurgencies fighting against occupiers or people going on a rampage for some political aim. There is nothing new or special in any of the tactics and counter-tactics applied by them or against them.

Robb writes: "the targeting of corporations is now a fixture of modern conflict"

The targeting of corporations has been a fixture of ALL conflicts since the . When Jesus threw the money-changers out of the temple, that terrorist was targeting his times equivalent of corporations. The terrorists who committed the Boston tea party were targeting the British East India Company. In the 70s and 80s the RAF guerrilla in Germany targeted the big banks and corporations by shooting or kidnapping the CEOs.

I have read a lot of this 4GW stuff from Robb and others and find little new in there.Technology has evolved, the numbers of humans has grown, but the methods of fighting and surviving have not changed. If you want to know about 'resilient communities', on of Robb's current themes, read up on the Thirty Years' War, look for communities that survived the rampage intact and copy their behavior. Or simply reread the short version of it in Mother Courage.

The COIN stuff is nothing new either. Pat Lang says:

COIN is a specific form of warfare developed in the 20th Century for the purpose of defeating insurgent campaigns. Political Action + Nation Building + counter-guerrilla operations would be shorthand for the method.

I agree with the definition but "developed in the 20th Century?"

What did the Romans do in Europe 2,000 years ago when insurgencies fought their occupation? Political Action + Nation Building + counter guerrilla operations.

The Romans were really good at that most of the time. They installed political and justice systems more capable and just than the existing ones. They bribed tribes to fight other tribes instead of them. They build lots of roads throughout Europe, (something Tom Ricks just somewhat "invented" as a COIN tool for Afghanistan.) They built schools and marketplaces. They did military counter-guerrilla operations, did win some and lost some quite badly.

But the Romans did understand one thing better than some folks today do. Wars must pay.

Pat Lang points out that COIN can work, but is very expensive. Anna missed puts the finger into that wound:

The COIN strategy is controversial not so much because it’s methods and objectives are suspect, but because it is so expensive, as the 5 billion per month in Iraq would attest. And it’s expensive because creating alternative new realities is expensive. Normal modes of culture, commerce, and politics need to be replaced with an entirely new set of imposed political/economic structure, rules, regulations, and checkpoints.
COIN works only as long as you’re willing to carry the costs of artificially maintaining the alternative reality at a sustainable level. Because as (it always will be) the COIN lock down is eventually dissembled, the host nation will usually assume their previous original disposition and demands for redress - as can be seen all over Central and South America recently. Even in supposed COIN success El Salvador, the FMLN has recently gained control of the legislature and looks forward to winning the presidency in March.

COIN is not a solution, and it doesn’t win wars. At best it is a temporary holding action not unlike a prison lock down. Unless of course, keeping an occupation going indefinitely and without purpose is the objective.

Which would be an insane objective unless the occupation is profitable for the occupier.

The Romans found ways to let the countries they occupied pay for their occupation and the COIN operations needed to keep them occupied.

Not only took they money and demanded tribute and taxes. They captured people and used or sold them as slaves. There armies were filled with cheap poor folks from the Italian countryside and the slums of Rome. For quite some years that business case worked out well. 

But the Roman people later lost the knack for war and the emperors had to hire expensive mercenaries into their legions. With the additional costs the business case broke apart:

The year 476 is generally accepted as the formal end of the Western Roman Empire. That year, Orestes refused the request of Germanic mercenaries in his service for lands in Italy. The dissatisfied mercenaries, led by Odoacer, revolted, and deposed the last western emperor, Romulus Augustus.

The "business case" for further occupying Iraq would have made sense if the U.S. army were cheap. But the U.S. army is the most expensive of the world and applying COIN for a longer time in Iraq is not justifiable in terms of available loot.

In the case of Afghanistan there never was a "business case" that would make any sense. There is nothing to win there and applying the most expensive type of warfare there is just a waste of money and lives.

Again - all of this is nothing new. The human motives of rebels, insurgencies and the powers that fight them have not changed. The ingenuity in the fighters on both sides has not changed either. Some technical tools have evolved and they are the reason why the fighting looks a bit different today. The involved numbers on both sides and of the people in-between those sides are now also bigger.

But at the tactical basics the fighting and the methods of fighting, occupation and survival are no different than they ever were.

All the 4thGW and COIN propagandists should read Thucydides or Caesar or Tacitus or Mao and the about fights, fighters and methods they describe. Instead they reinvent wheels or sell the old wheels the read about as new.

Posted by b on February 27, 2009 at 02:56 PM | Permalink | Comments (29)

Stuff I Agree With

Barry Ritholtz says:

If Obama continues to listen to the god-awful advice of Larry Summers and Tim Geithner, he will doom his presidency, and finish marginally ahead of George W. Bush on the list of worst presidents.

Yep - here is but one reason - NYT:

After two multibillion-dollar lifelines failed to shore up Citigroup, the government will increase its stake to 36 percent from 8 percent.
Citgroup shares were down 26 percent, to $1.80, at midmorning on Friday.

Under the deal, the Treasury Department agreed to convert up to $25 billion of its preferred stock investment in Citigroup into common stock, giving taxpayers more risk, but more potential for profit if the company recovers.
The bank has offered to exchange up to $27.5 billion of preferred stock into common shares at a price of $3.25 a share, a 32 percent premium over Thursday’s close.

So the Obama administration just exchanged $25 billion worth of dividend paying preferred stock for not dividend paying common stock paying $3.25 a share while the market price for Citi common stock is $1.80.

Somehow that deal does not make sense to me ...

Posted by b on February 27, 2009 at 11:02 AM | Permalink | Comments (10)

February 26, 2009

'There will be blood'

There are lots of interesting thoughts in this interview. I especially agree with this part:

Heather Scoffield: Will globalization survive this crisis?

Niall Ferguson: It's a question that's well worth asking. Because when you look at the way trade has collapsed in the world in the last quarter of 2008 – countries like Taiwan saw their exports fall 45 per cent – that is a depression-style contraction, and we're in quite early stages of the game at this point. This is before the shock has really played out politically. Before protectionist slogans have really established themselves in the public debate. Buy America is the beginning of something I think we'll see a lot more of. So I think there's a real danger that globalization could unravel.

Part of the point I've been making for years is that it's a fragile system. It broke down once before. The last time we globalized the world economy this way, pre-1914, it only took a war to cause the whole thing to come crashing down. Now we're showing that we can do it without a war. You can cause globalization to disintegrate just by inflating a housing bubble, bursting it, and watching the financial chain reaction unfold.”

Heather Scoffield: Is a violent resolution to this crisis inevitable?

Niall Ferguson: “There will be blood, in the sense that a crisis of this magnitude is bound to increase political as well as economic [conflict]. It is bound to destabilize some countries. It will cause civil wars to break out, that have been dormant. It will topple governments that were moderate and bring in governments that are extreme. These things are pretty predictable. The question is whether the general destabilization, the return of, if you like, political risk, ultimately leads to something really big in the realm of geopolitics. That seems a less certain outcome.

Posted by b on February 26, 2009 at 08:13 AM | Permalink | Comments (47)

Arab 'Fear' Of 'Nuclear Iran'?

There is 'western' meme, which was pushed by the Bush administration, that Arab countries fear a 'nuclear Iran'. How real is that?

A few days ago Reuters cited one non-government Arab source and several anonymous 'western' diplomats when it wrote on how Gulf Arabs fear U.S.-Iran diplomacy at their expense:

Gulf Arab states are beginning to worry that any U.S. rapprochement with Iran could ultimately lead to their worst nightmare -- a nuclear-armed, non-Arab, Shi'ite Muslim superpower in their neighborhood.
"We have no objection to Iranian-American negotiations. On the contrary, we encourage this kind of dialogue as a way of avoiding taking the region into military action," said Mustafa Alani, at the Dubai-based Gulf Research Center.

"At the same time we have huge concerns that the Americans could give concessions to the Iranians which would undermine our security and be unacceptable to us," he said.

A few days later AP wrote with same theme also quoting Mustafa Alani. Mustafa Alani of the Gulf Research Center was born in Iraq and studied and worked extensively in the U.K. Der Spiegel talked with him too:

When asked about Iran's nuclear program, Arab politicians' official answer is that Israel should also get rid of its nuclear weapons. But that, says Alani, is not the real problem, because the region has had experiences with both Iran and Israel. "The Arabs have waged wars against Israel. Israel has never used its nuclear weapons. The Arabs trust the Israelis, but they don't trust the Iranians."

Last July the Guardian also quoted Mustafa Alani in the 'Arabs fear Iran' context. It also quoted one Abdullah Alshayji, introduced as a "Kuwaiti analyst". Well - Alshayji is also a Foundation Council Member of the Gulf Research Center.

In December 2007 the LA Times headlined Arabs fear Iran may now up the ante in the Mideast. The first quoted 'expert' on such such 'fear' is "Christian Koch, research director for international studies at the Gulf Research Center in Dubai, United Arab Emirates."

The Gulf Research Centers was founded and is financed by the Saudi businessman Abdulaziz Sager of the Sager Group:

When and where an added value is deemed necessary the Sager Group selectively represents some multinational corporations and assists them in selling their products and services throughout the Kingdom of Saudi Arabia both in the government and private sectors.

Sager Group also provides security services. (And also prime London real estate?)

To me it seems that all the 'reporting' of Arab 'fear' uses exactly one Arab source - the foundation of the Saudi businessman Abdulaziz Sager and its 'experts'. Note that Sager also argued for military rule in Iraq.

But what is the realist Arab opinion? Marc Lynch reports:

This afternoon I attended a fascinating conversation with Arab League Secretary-General Amr Moussa hosted by the Carnegie Endowment and moderated by the Washington Post's David Ignatius.
Moussa didn't bite when Ignatius suggested that Arab leaders were urging the U.S. to be tougher on Iran and to hold off on the promised dialogue. On the contrary, he responded, for the last few years it has been the Americans coming to the Arabs and talking up the Iran threat and not the other way around. He acknowledged Arab concerns about Iran, but concluded that the Arabs and Iran would have to learn how to co-exist. As to the Iranian nuclear program, Moussa would only talk about the double-standard surrounding Israeli nuclear weapons.

Will 'official' media, Reuters, AP, LA Times, now report Amr Moussa's take or will the continue to promote the  'fear' theme a Saudi businessman with interest in security services is selling them?

Posted by b on February 26, 2009 at 03:40 AM | Permalink | Comments (42)

February 25, 2009

The F-22 Overkill

The U.S. has the only 5th generation fighter plane that exists - the F-22 build by Lockheed-Martin. When the current purchase order runs out, 183 of those will have been produced at a cost of $65 billion.

There is currently a discussion to buy more of these and the Obama administration will have to make a decision in April. The new order planes would have a system price of more than $200 million a piece.

These are really good planes. In an exercise against various 4th generation fighters like the F-15 the F-22 really stood out:

In amassing 144 kills to no losses during the first week of the joint-service Northern Edge exercise in Alaska last summer, only three air-to-air "kills" were in the visual arena--two involving AIM-9 Sidewinders and one the F-22's cannon.

The plane is stealthy and can kill any other plane from a distance without being detected.

So how many does the U.S. need? The Air Force's fighter mafia says 381. But what for?

The total number of airplanes in all air forces of this world is 27,489. Of those 3,704 are in the U.S. air force which leaves 23,785 in the rest of the world.

If the F-22 can achieve a kill ration of 144:0 against still quite modern F-15, the worst case one probably has to think of is a 144:1 loss rate - i.e. the 145th enemy got lucky and hit back at the F-22. To shoot down 23,785 other planes with F-22 at a kill ratio of 144:1 would require 165 of them.

Sure, the availability of the F-22 is only 60% because its stealth skin is hard and expensive to maintain. But who would want to shoot down all military planes of the rest of the world within one day? Why not allow for a week to do so?

Some argue that it would be a good economic 'stimulus' to buy these planes. That is wrong. Any Keynesian stimulus must meet the three-T criteria: 'timely, targeted, temporary.'

Ordering more F-22 that take years to be build is not timely. As all military spending is pure consumption, the new planes will never 'produce' anything, the spending is thereby not targeted. The high costs of maintenance and ongoing pilot training for these planes is not temporary.

Additionally any Keynesian program should be as productive as possible in that it creates additional benefit for the society. A new road, healthier or better educated people are good investments. Spend on infrastructure, health care and education gives some real bang for the buck. So why employ people to make unproductive planes when the same money can employ more people in other areas AND create better total return.

What is the real benefit of more fighter planes than are needed to shoot down all of the worlds military air planes? The make U.S. go broke? Then, maybe, I should support the new F-22 buy.

Posted by b on February 25, 2009 at 11:00 AM | Permalink | Comments (32)

Obama Invents Inventions

In yesterday's speech to Congress Obama claimed :

We invented solar technology, but we've fallen behind countries like Germany and Japan in producing it.
And I believe the nation that invented the automobile cannot walk away from it.

Both claims are definitely wrong.

How truthful then was the rest of the speech?

Posted by b on February 25, 2009 at 06:44 AM | Permalink | Comments (78)

February 24, 2009

OT 09-07

MoA lives off comments - feed it.

News & views ...

Posted by b on February 24, 2009 at 11:20 AM | Permalink | Comments (92)

Billmon: Citi to Uncle Sam: For You We Make Special Deal

So swapping $45 billion in preferred stock yielding 8% for $4 billion in common stock yielding a penny a share is "protecting the taxpayers"?

Billmon: Citi to Uncle Sam: For You We Make Special Deal

Citibank, with the help of the democratic senators it bought, wants lots of money for nothing. It is bankrupt and will go down. But Reid and others want to spend taxpayer money to push the inevitable a few month out.

It is not only the U.S. taxpayer Citi wants to screw. Singapur holds a bunch of preferred Citi stock too

Citi is driving the move. It approached regulators yesterday with a plan for the government to convert some of its US$45 billion (S$69 billion) in preferred shares into up to 40 per cent of common equity, according to news reports.
It is now scrambling to stitch together a life-saving deal by asking holders of preferred shares - including the Government of Singapore Investment Corporation (GIC) - to take more direct stakes.

GIC holds convertible preferred shares in Citi that it bought for US$6.88 billion in January last year. It can convert these into ordinary stock, but at a price likely to be more than 10 times Citi's current price. Until then, the preferred shares pay dividends every quarter at a rate of 7 per cent a year for as long as GIC wants to hold them.

Citi hopes to persuade GIC and other preferred stock holders, such as the Abu Dhabi Investment Authority and the Kuwait Investment Authority, to convert some of their stakes into common equity, according to news reports yesterday.

This would give the bank more capital and help it avoid drawing on another government lifeline, a move that would revive fears of nationalisation. If the government nationalises a bank, its common shares become virtually worthless.

There will be a lot of angry background talks between the involved governments.

What would happen if the U.S. takes Citibank into receivership and effectively wipes out the wealth of foreign taxpayers? Could that lead to real international crises which then might develop into something worse?

I fear that.

Posted by b on February 24, 2009 at 08:09 AM | Permalink | Comments (20)

February 23, 2009

Iran Rapprochement Is Coming

Rapprochement between the U.S. and Iran "will happen sooner rather than later" says Parviz.

I agree. There are multiple signs that the powers that be will let it happen this year.

The New York Times prints an op-ed urging for an immediate dialogue with the Ahmadinejad government.

It also sent Roger Cohen, its columnist for foreign affairs, to Iran and in the last three weeks he has written seven columns on Iran, all of them with a very positive tone. The most important one was published today on Iranian Jews:

“Let them say ‘Death to Israel,’ ” he said. “I’ve been in this store 43 years and never had a problem. I’ve visited my relatives in Israel, but when I see something like the attack on Gaza, I demonstrate, too, as an Iranian.”
Perhaps I have a bias toward facts over words, but I say the reality of Iranian civility toward Jews tells us more about Iran — its sophistication and culture — than all the inflammatory rhetoric.

As Cohen is a Jew and usually on Israel's side, the lobby will have difficulties to defame him for these lines.

The NYT editors would not push like this without some background information on coming policy changes.

The Canadian Globe & Mail chips in with a piece on Iran: the enemy that almost isn't debunking the 'nuclear threat' and other issues.

Italy, which is currently leading the G8, invited Iran to a G8+ foreign minister level meeting on Afghanistan.

The Jewish controlled Hollywood did NOT give an Oscar to the Israeli propaganda movie "Waltz With Bashir".

Despite several leaks and pushes by Dennis Ross friendly forces the Obama administration has NOT named him as the official point man for Iran. Ross' plan was to lead negotiations with Iran to let them fail and then to go to war for whatever fake reason. With Chas Freeman, an outspoken critic of Israel likely to be appointed head the National Intelligence Council, it will be difficult for Ross and others to make up a war reasoning out of thin air.

Another factor that will make a rapprochement easier is the presumably very right wing new Israeli government. Within a few month Nethanjahu and Lieberman will make themselves obnoxious in Washington and elsewhere. The Israel Lobby will lose power by supporting these lunatics.

Sure, there will be a public relations war where the lobby will push against rapprochement and the realists will push back. The Israeli government will try all tricks to spoil the party.

But the U.S.' need for Iranian cooperation on Iraq and Afghanistan is huge. The Iranian nuclear know-how ghost can not be put back into the bottle anyway. There is no other real reason to keep the relations as bad as they are.

Get ready for business ...

Posted by b on February 23, 2009 at 02:20 PM | Permalink | Comments (108)

Pressure on Zardari

Secret U.S. Unit Trains Commandos in Pakistan reports the NYT. This on the same day as the Pakistani Foreign Minister comes to Washington for Obama's strategic review, i.e. to receive orders. It comes on top of the recent announcement that U.S. killer drones are launched from Pakistani ground.

All these leaks are done to put pressure on the Pakistani government to go with the U.S. program without regard of its own people. With each day losing more respect in his own country through such leaks Zardari will soon solely depend on U.S. support to survive.

His recent peace offer to opposition fighters in Swat was a smart move. But in the 'west' it was immediately criticized and he will now be pressured to continue the fighting there.

For some background on the complicate sovereign and legal issues in Swat this (pdf) analysis by Sultan-i-Rome, a history Professor in Peshawar, is helpful.

The 'western' interference neglects that the people in Swat do have real grievance with the central government. Swat was a independent state/kingdom within Pakistan until 1969. The area had its own mild version of Sharia, Islam based law, and its own system of courts. The secular justice system the Pakistani government introduced in Swat since 1975 is unworkable as it takes years to get any case through the court system. The laws are unrepresentative:

[T]he area’s constitutional status has also created a sort of diarchy: the area is a Provincially Administered Tribal Area and hence, under the control of the provincial government, which is responsible for the maintenance of law and order. But the provincial government has no authority to make and promulgate laws for the area on its own. This is done with the consent of and by the governor of the province and president of the country; both of whom are neither part of the provincial government nor answerable to it. They are not answerable to the people either.

The fighting over a local justice system has continued since the early 1990s and has little to do with the Taliban issues in Afghanistan. A compromise in Swat could actually help to take away support from Wahabbi/Deobandi hardliners that are at the core of the Taliban.

Even without 'western' interference a compromise as now in negotiation will not be easy to achieve as there are already many other possible spoilers. Pressure on Zardari on this issue can only increase the strife in Pakistan and speed up his downfall.

What is Washington's Plan B when that happens?

Posted by b on February 23, 2009 at 10:52 AM | Permalink | Comments (7)

Billmon: A Mad Tea Party

American tea party? Looks more like the British variety to me.

Billmon: A Mad Tea Party

Posted by b on February 23, 2009 at 03:24 AM | Permalink | Comments (8)

February 22, 2009

Billmon: Generational Theft? Sorry, That Money's Already Been Stolen

Maybe there is no way out of this mess, either practically or politically. Limitless growth, Edward Abbey once wrote, is the ideology of a cancer cell, and the doctrine of endless debt-fueled expansion may have created an economy so riddled with it that any therapy powerful enough to kill the cancer will also kill the patient. In other words, globalized capitalism (or rather, this strange brew of corporate oligopoly and lemon socialism) may have finally dug itself a hole too deep for the traditional neo-Keynesian policy tools (fiscal and monetary policy) to lift it out of. But, if that's true, then our children and our grandchildren may indeed spit on our graves, but it's going to be because we have bequeathed them much bigger nightmares than an increase in the federal debt.

Billmon: Generational Theft? Sorry, That Money's Already Been Stolen

Posted by b on February 22, 2009 at 01:17 PM | Permalink | Comments (41)

February 21, 2009

Some Things Seem Small

The picture is of a nearly perfect miniature model diorama my friend Lucas created.


Or maybe not ...

Someone made a nice music clip using the same technique. A nearly perfect, stop-motion animated, small scale model world - with music - is below the fold.

Fire (Jimmy Edgar Remix) from Erik West on Vimeo.

Posted by b on February 21, 2009 at 03:12 PM | Permalink | Comments (18)

Iran Should Offer Fuel To DESC

A few days ago the U.S. Defense Energy Support Center issued a solicitation for one year of fuel supplies to be used in Afghanistan from July on.

It needs:

  • 67,320,000 U.S. Gallons - Turbine Fuel, Aviation
  • 12,240,000 U.S. Gallons - Fuel Oil, Diesel
  •   1,440,000 U.S. Gallons - Gasoline, Automotive, Unleaded

The total is 80 million gallons or 220,000 gallons per day.

Before the recent "surge" decision Stratfor estimated 75 million as the yearly demand for U.S. and NATO forces in Afghanistan. So the the 80 million gallons request will cover most of what is going to be needed.

The Iranian government should urge one of its oil companies to make an offer to deliver the 80 million gallons at a very favorable, subsidized price. An offer the U.S. would have trouble to refuse. Another offer should be made towards the solicitation for trucking service to transport that fuel to Bagram and other bases in Afghanistan.

The current freight on board price of jet-fuel in Pakistan is $469.58 per metric tonne (about 300 gallons).

Iran could offer that for - lets say - $10 per mt. 

That would of course be a lousy business deal. But such a deal would be a strategic game changer, lead to the lifting of some of the sanctions and alleviate joblessness. Once such a deal is established other deals will follow and the prices will get better.

Isn't there some crooked Revolutionary Guard general who wants to gets his hands into the transport part of such a deal to fill his pockets?

Currently the refinery capacity in Iran is not big enough to deliver that much on such short notice. But many Iranian refineries there are already going through upgrade processes and until they are ready additional imports could make up for the additional exports.

Today 80% of the fuel is coming from refineries in Pakistan and 20% from far away Baku, Azerbaijan, and from Turkmenistan.

A large tank truck carries about 10,000 gallons and smaller ones 5,000 gallons. Large trucks are not  able to negotiate all the high passes routes into Afghanistan, but with a mix of 1/3 large and 2/3 smaller trucks the total necessary delivery per day is 33 truck arrivals. About 15 to 20 times as many trucks have to be on the road continuously and make the round-trip to achieve that.

That is currently quite a fleet of valuable targets on dangerous roads through Pashtunistan and the Khyber pass and a lot of the supply gets pilfered, captured or simply blown up.

Delivery from Iran would be cheaper and much less endangered by Taliban attacks.

But the U.S. will not ask Iran for this - if only to keep its face. But an offer from Iran companies towards the fuel and transport solicitation could be the opener for talks that might lead much further.

Hurry up, the deadline is soon.

earlier coverage of Afghanistan logistics at MoA:
The New Route Plus Iranian Jet Fuel Supply To Afghanistan, Feb 20, 2009
The Pink Route To Afghanistan, Feb 3, 2009
The Costly New Supply Route To Afghanistan, Jan 26, 2009
New Supply Routes To Afghanistan, Nov 19, 2008
Fuel for War in Afghanistan Aug 20, 2008
The Road War in Afghanistan Aug 16, 2008
Fuel Tanker Attacks in Afghanistan Mar 24, 2008

Posted by b on February 21, 2009 at 01:45 PM | Permalink | Comments (15)

February 20, 2009

Markets Today

Today's share price percentage change as of now:

Citigroup Inc.   -25.10 
Bank of America Corporation  -17.05 
Allied Irish Banks, plc. (ADR)  -10.37 
Royal Bank of Scotland Group plc (ADR)  -9.32 
U.S. Bancorp  -7.81 
ICICI Bank Limited (ADR)  -7.79 
Bancolombia S.A. (ADR)  -6.46 
BBVA Banco Frances S.A. (ADR)  -6.28 
The Bank of Nova Scotia (USA)  -6.18 
Deutsche Bank AG (USA)  -5.72 

Finally people start to recognize that these banks, and others, are zombies.

A solution I can agree with:

  1. The memo goes out in the AM to every bank in America: No more lies.  If you lie, even once, your bank gets seized and you will be criminally charged personally.  Period.  I am particularly interested in Mr. Lewis' claims on national television (CNBC) that Bank America had a "great" January.  That sounds an awful lot like Dick Fuld who said he was going to "burn the shorts" and was "well-capitalized".  Oh by the way, I'd refer Mr. Fuld's statements over to Justice immediately, along with everyone else who said something similar (Bear Stearns anyone?)
  2. I would then amend OTS and OCC rules: All bank examinations are public data.  All examinations must either have every asset marked to the market or the full model and data inputs must be disclosed, without exception.
  3. Next, I would take the stage and give every bank in America 72 hours to disclose their current Tier Capital numbers under those rules.  They have 'em in the possession of their Risk Manager.  Let's have it.  In public.  You publish it, we print it.  Everyone who is under-capitalized and has been hiding it - your shares are suspended.  We'll get to you.
  4. For those who are under-capitalized: If you have sufficient capital in your debt to be crammed down, that's what happens.  Your common equity is gone.  Preferred is crammed down, if that's insufficient it is gone.  Next we do subordinateds, and repeat until sufficient capital is restored.  End of discussion.
  5. For those who cannot be crammed down we seize you.  Your deposits and good assets are auctioned off to sound institutions, spread among the physical locations of those assets and deposits so no concentration of more than 5% in one bank occurs.  The rest of the assets go the FDIC and are run down or auctioned off as they deem appropriate.
  6. Any bank with more than 5% of the deposit base has 12 months to reduce it to under 5%.  This affects fewer than 20 institutions.
  7. No bank may transact in any instrument that is (1) not a whole loan or (2) is not traded on an exchange.  Period.  Any such "assets" currently held must be disposed of within six months.  No exceptions.  I recognize that this makes banks a "utility" - entities that take deposits and make loans.  So what?  Its a good and profitable business, has been for hundreds of years, and forces proper underwriting since you must retain the risk.
  8. Any bank that finds (7) onerous (and most will) is free to split itself into two firms, one a bank and the second a non-bank affiliate held by the parent.  The affiliate may not utilize depositor capital or otherwise be cross-contaminated with bank assets and support, but is of course free to raise money via debt offerings in the marketplace such as it is.  Said non-bank firm may trade in whatever it would like, however, it will not receive any government support of any kind.  Cross-contamination of any sort between a regulated bank and a non-bank sub will be treated and prosecuted as bank fraud.  Any existing "affiliate" bank credit lines must be extinguished within 90 days and "23A letters" are explicitly disallowed.
  9. Reserve ratios are set at 8% with no exceptions.
  10. Bernanke will do as the above directs without complaint or I will exercise my lawful and Constitutional authority to issue United States Notes, bypassing The Fed entirely.  Ben and The Fed work under my direction, not the other way around.  End of discussion.
  11. Any bank that does not want TARP money may repay it immediately.  If you keep it, no employee may receive total compensation exceeding that of the President of The United States, without exception and in all forms, including stock, options as valued under Black-Scholes, deferred compensation, benefits and cash.  Period.  You are working for us, therefore we set your salaries.

Sounds like what I proposed six month ago and what Helmut Schmidt prescribed with his Six steps to curb speculation. The big point Karl Denninger misses is that this has to be done in concerted international action, not just as a U.S. solution.

Posted by b on February 20, 2009 at 02:35 PM | Permalink | Comments (43)

The New Route Plus Iranian Jet Fuel Supply To Afghanistan

Kyrgyzstan handed the U.S. the eviction note for its airbase in Manas. U.S. activities there will have to close down within 180 days.

The base was important as a relay for troops going to and coming from Afghanistan. Big jets could land there and smaller jets took the troops to their forward bases. Another important function of the base was the refueling of jets flying over Afghanistan by tanker airplanes out of Manas. There is no obvious other base that could fulfill that function.

But there is also good new - mostly for Russia - with a new land supply line activated today from the Baltic Sea to Afghanistan that could replace, at least in part, the endangered supply line through Pakistan. The first train with 100 containers of non-military supplies for U.S. troops in Afghanistan left Riga, Latvia, today. It will travel through Russia and Kazakhstan to Uzbekistan.


If the route is working as planed there will be some 20 to 30 trains per week. At an average 14 metric tons per 20 foot container that will be up to 6,000 tons in supply in some 430 containers per day. A new agreement with Tajikistan will allow for some 30 containers per day to go from Uzbekistan through Tajikistan and over a U.S. built bridge into Afghanistan.

There is no railway system in Afghanistan and the rail route from Latvia ends at Hayratan right behind the friendship bridge that connects Termez in Uzbekistan with Afghanistan. There the 400 containers per day will have to be put onto trucks to be driven over the Hindukush down to Balad Bagram Airbase near Kabul and further south to Kandahar for further distribution.

This is the original supply line the Soviets used when they got stuck in Afghanistan. The Russians build a tunnel at 3,400 m height under the Salang pass to cross the Hindukush and connect north Afghanistan with Kabul and the south:

The tunnel represents the major north-south connection in Afghanistan, cutting travel from 72 hours to 10 hours and saving about 300 km. It reaches an altitude of about 3,400 m and is 2.6 km long. The width and height of the tunnel tube are 7 m. About 1000 vehicles pass through the tunnel daily.

When the new route is establish another 400 vehicles in each direction will have to pass through the tunnel per day, nearly doubling the traffic. When the Soviet supply ran through there, the Salang route was under constant attack by the Mujaheddin.

I expect the same to happen when the majority of goods will pass through the new supply route.

Costs to resupply in Afghanistan are already immense. To keep a brigade in Afghanistan costs twice as much than to keep one in Iraq. On wonders how much of this luxury is sustainable. To bring in supply by air costs $14,000 per ton. For the new railway supply line the costs per ton are expected to be $300 to $500.

We will see if that price is correct. The countries the trains pass through see the wares as pure commercial goods. Thereby the usual custom procedures and tariffs will apply. The trains will stop here and there for various reasons and are not guarded. Pilfering by the local bandits and mafias will occur and the loss rate will likely be high.

The 'western' forces in Afghanistan also need some 3,000 tons of fuel and 250 tons of drinking water per day. With additional U.S. troops arriving those numbers will increase. Most of the diesel fuel comes from Pakistan but curiously some 10,000 tons of jet fuel per month is now said to come from Iran!

Pakistan is exporting about 50 per cent more diesel a month to Afghanistan to 100,000 tons from June to September versus the usual monthly volumes to help in reconstruction works.
But Pakistan has suspended jet fuel exports to Afghanistan since June 25.

“The suspension is indefinite. Afghanistan is drawing jet fuel supplies from Iran,” [the Karachi-based source, who asked not to be named] added.

Pakistan used to send 10,000 tons of jet fuel to Afghanistan every month.

As the supply situation in Pakistan becomes more dire another source for diesel supply will be a major issue. Iran has a good chance to get into some profitable business by offering to supply it. That offer is too good to get refused.

With a veto over vital supply for U.S. forces in Afghanistan Iran, like Russia, would than have a nice ability to politically squeeze the U.S. whenever it needs to.

earlier coverage of Afghanistan logistics at MoA:
The Pink Route To Afghanistan, Feb 3, 2009
The Costly New Supply Route To Afghanistan, Jan 26, 2009
New Supply Routes To Afghanistan, Nov 19, 2008
Fuel for War in Afghanistan Aug 20, 2008
The Road War in Afghanistan Aug 16, 2008
Fuel Tanker Attacks in Afghanistan Mar 24, 2008

Posted by b on February 20, 2009 at 12:58 PM | Permalink | Comments (44)

February 19, 2009

Billmon: Chocolate Covered Cotton

So here we are: The banks are sitting on paper originally valued at 100 cents on the dollar (or even more) which is now worth 20 or 10 or 0 cents. If they sell the stuff at those prices, most of the capital they’ve put behind those assets will be erased, leaving them insolvent, technically and perhaps literally – as in, unable to cover their current liabilities. On the other hand, if they don’t sell their pieces of Big Shitpile, all their capital (including what Uncle Sam has already thrown into the till) will remain frozen in place, blocking them from doing any new lending. Without new lending, they can’t earn the profits they need to make good the losses they are sitting on. Zombies. Night of the Living Dead Banks.
One of the things that creeps me out about the political system’s response to the crisis so far – the insolvency of the banking system in particular – are the increasingly desperate attempts to maintain a phony façade of free markets and private enterprise, in an economy now utterly dependent on the federal safety net. I totally expected that from Hank Paulson and the Cheney Administration, but is Obama’s financial team really pressed from exactly the same Wall Street mold?

It may be best not to think too much about that question. It reminds me too much of the USSR’s fetish for preserving the trappings of socialist "democracy" – a Supreme Soviet, a ministerial government, courts, etc. – even though the actual decisions were all made, behind the scenes, by the party and the Politburo. It’s not a good sign when societies routinely lie to themselves about such big, fundamental truths, which in turn suggests that toxic assets may not be the poison we most need to worry about: The rottenness and decadence of the entire system may do us in first (not exactly a new theme for me.)

Billmon: Chocolate Covered Cotton

Posted by b on February 19, 2009 at 05:09 AM | Permalink | Comments (44)

February 18, 2009

Another Greenspan Trap

Greenspan backs bank nationalisation

That can only mean one thing. Greenspan found a new way to get your money into his and his friends pockets.

In an interview, Mr Greenspan, who for decades was regarded as the high priest of laisser-faire capitalism, said nationalisation could be the least bad option left for policymakers.
The former Fed chairman said temporary government ownership would ”allow the government to transfer toxic assets to a bad bank without the problem of how to price them.”

But he cautioned that holders of senior debt – bonds that would be paid off before other claims – might have to be protected even in the event of nationalisation.

”You would have to be very careful about imposing any loss on senior creditors of any bank taken under government control because it could impact the senior debt of all other banks,” he said.

Ahh - there is the rat I smelled when I read that headline. Greenspan is advising the bond giant PIMCO which is a major holder of bank debt.So according to him:

  • The owners of banks that recklessly lend to people who had little ability to pay back shall now get punished.
  • The taxpayer shall get a "bad bank" with lots of unknown risks and possibly very high future costs attached.
  • The people that recklessly lend to banks who had little ability to pay back shall NOT be punished.

And why? Because Greenspan gets paid by the last group.

No way. Restructure the banks and let those who gave them the money to play in the casino take the losses.

There is no reason that the folks who did not further gaming should pay any a dime for this scheme.

Posted by b on February 18, 2009 at 02:21 PM | Permalink | Comments (15)

Britain Will Lose The Afghan Drugwar

The announcement by her Majesty's Ministry of Defence says:

Waves of helicopter-borne troops caught the Taliban by surprise in a meticulously planned assault which has struck severely at the narcotics industry in Helmand which helps finance the Taliban's insurgency.

Waves of helicopter-born troops ... And I thought Britain rules "the waves" not "in waves"...anyway:

The operation, codenamed 'DIESEL', involved over 700 personnel and resulted in the disruption of enemy command and control, logistics and Improvised Explosive Device (IED) facilities in the Upper Sangin Valley, and the capture of four narcotics factories containing drugs, chemicals and equipment with a UK street value of £50m.

It's a long propaganda piece, with even video and an operation chart, so here's the short version.

The operation took two weeks from planing to success. Four drug labs were destroyed and 1,260 kilogram of raw opium were seized. A bunch of the usual chemicals to convert opium into heroin, Ammonium Chloride and Acetic Anhydride, was found too.

There is no further mentioning of "IED facilities" and "command and control" in the otherwise detailed report so forget-about-that. This was a simple drug raid.

The operation was an enormous undertaking carefully planned and executed with precision and guile. Multiple, co-ordinated attacks by a large number of British and Afghan forces on a totally overmatched enemy were conducted without loss to ISAF or Afghan forces, and with minimal disruption to the local population.

Says Defence Secretary John Hutton:

"The seizure of £50 million worth of narcotics will starve the Taliban of crucial funding preventing the proliferation of drugs and terror on the UK's streets."

Will London's streets now lack heroin supply, will drug-crimes be less and will the Taliban starve? I doubt it.

Consider: In 2007 Afghanistan produced 8,200 tons of opium. The British commandos have now seized 0.015% of that. According to the latest UN Afhanistan Opium Winter Assessment (pdf) the price the opium farmers get for raw opium is in average some $100 per kilogram.

So the actual loss for the drug baron who's labs were destroyed is about $126,000 for the raw opium and some additional thousands for the chemicals and the equipment.

To keep a British soldier and his equipment in Afghanistan costs how much? Let's assume $500 per day. Then 700 people taking part in this operation over 14 days cost the British taxpayer a total of $4,900,000.

With such a 30 to 1 disadvantage between operational cost and inflicted damage, Britain will be broke before the drug barons will start to be bothered. There is no way that this fight will ever be successful.

Ain't there better ways to spend our money?

Posted by b on February 18, 2009 at 01:44 PM | Permalink | Comments (22)

Militia in Afghanistan

Over the years varying policies have been tried in Afghanistan with regards to local militia.

The Taliban enforced a ban against local militia. But shortly after 9/11 people re-armed in fear of the coming disorder. After the Taliban's retreat, the UN and the Afghan government ran an expensive disarmament and demobilization program to get rid of armed local groups.

Karzai warned of local militia in 2004 but in 2006 called for installing some. The 'west' was critical of that plan at that time and it was not implemented.

Then in late 2008 the U.S. planed to re-institute local militia. While Karzai is said by 'western' media to have endorsed that, in a recent interview he seems not to do so and he predicts that the program will end in "a disaster." The U.S. is now arming local folks in Afghanistan with Czech weapons.

Some press excerpts documenting the above are below the fold.

One wonders:

  • What is Karzai's real position on militia?
  • Against whom will these weapons be used?
  • How long will it take until the current 'western' pro-militia stand is changed again?

KAMAL HYDER, CNN JOURNALIST: What I can tell you right now in that in the east, most of the population, which is in the rural area of Afghanistan, are seen more and more with weapons, something that the Taliban would not allow in peacetime because they de-weaponized Afghanistan. But there is a feeling among Afghanistan's rural population that the country may be under threat of an attack and people are getting up for a long guerrilla war.
A rare view from inside Afghanistan, CNN, September 25, 2001


President Hamid Karzai said Sunday that Afghanistan's private militias had become the country's greatest danger -- greater than the Taliban insurgency -- and that new action was required to disarm them.
''The frustration that we have in this country is that progress has sometimes been stopped by private militias, life has been threatened by private militias, so it should not be tolerated,'' he said. Without disarmament, ''the Afghan state will have really serious difficulties,'' he said.


The UN Assistance Mission in Afghanistan and the UN Development Program are supporting Afghanistan's New Beginnings Program (ANBP), which is aimed at coordinating [the Disarmament, Demobilization, and Reintegration (DDR)] efforts in the country.

After initial setbacks, the DDR program began its pilot project in the northern Konduz Province in October 2003. By mid-April, nearly 48,000 members of the Afghan Military Forces (AMF) -- the catch-all label for various Afghan militia units -- had been disarmed, according to the ANBP.
Afghanistan: Disarming The Militias -- Which Militias And Which Arms?, RFERL, April 20, 2005


Afghan President Hamid Karzai said Sunday that his government would give weapons to local tribesmen so they could help fight the biggest surge in Taliban violence in years.
Western diplomats briefed on the plan expressed concern that the effort could fuel factional fighting by arming forces loyal to warlords with long histories of factional disputes.
Karzai to Arm Afghan Tribesmen In Bid to Stem Taliban Attacks, WaPo, June 12, 2006


The government of Afghanistan has extended its programme to disband all illegal armed groups by four years, according to officials.
Militia leaders and warlords still try to maintain their dominance over communities through military and violent means,” [Masoum Stanikzai, head of the DIAG commission,] said.

“Additionally, while we collect weapons, terrorist networks which have sources outside Afghanistan continuously re-arm insurgents and other criminal gangs,” he added.
More than US$250 million has been spent on disarmament, demobilisation and reintegration.
AFGHANISTAN: Disarmament programme extended, IRIN, October 31, 2007


The U.S. military will soon launch a pilot program to raise local militias, paid by the Pentagon, in an effort to improve security throughout the country.
The new program in Afghanistan, tentatively dubbed the Afghanistan Social Outreach Program, has a number of backers. Two weeks ago, it was approved by President Karzai, with the endorsement of the ministers of interior and defense."
U.S. Military to Launch Pilot Program to Recruit New Local Afghan Militias, U.S. News, December 16, 2008


Karzai said that merely sending more troops to Afghanistan is not the full answer and disagreed with a plan to concentrate them around the capital. And he added that a U.S.-supported idea to empower militias in Afghanistan—similar to a successful "Sons of Iraq" program in Iraq—would be "a disaster" in Afghanistan, only repeating the mistakes of the past.
Afghan leader Hamid Karzai defends his rule in an exclusive Tribune interview, Chicago Tribune, December 19, 2008


The first stages of a plan to raise militias against the Afghan insurgency will involve giving 1,200 assault rifles to local men with little training, according to documents that reveal fresh details about the controversial program.
A 23-page PowerPoint briefing obtained by The Globe and Mail suggests the Afghan government wants the new militiamen in some districts to vastly outnumber the police.

The document shows the first units will be organized in Saydabad district of Wardak province, southwest of Kabul. They will eventually cover the province with 1,200 uniformed men carrying Czech-made assault rifles and driving white Ford Rangers, dwarfing the province's current police force, officially listed at 688 officers.
Afghan militia gears up to fight the Taliban, Globe & Mail, February 18, 2008

Posted by b on February 18, 2009 at 07:26 AM | Permalink | Comments (9)

February 17, 2009

How A Big State Can Be Trusted

Via Stephen Walt an interesting theory on big state/small state negotiations:

A [...] highlight was Todd Sechsers’s paper “Goliath’s Curse: Asymmetric Power and Effectiveness of Coercive Threats.” Using a simple bargaining model, Sechser (from the University of Virginia) argues that great powers often fail to get their way when they issue coercive threats (which is surprising at first glance), and that this problem may in fact get worse the more powerful they are. The basic logic here concerns reputation: weak states will worry about giving in to a great power’s demands (even when the demands are fairly minor), because they will fear that the great power will just demand more later. So they resist now, to enhance their reputation for being stubborn and to convince the great power to leave them alone in the future. The core of the problem is that a very powerful state can’t make a credible commitment of restraint; it can’t reassure the weak state that it really, truly, wants just a modest concession, one that the weak state might be willing to grant if it were confident that this would be the only demand. And the bigger and stronger the coercing state is, the harder it is for that state to reassure the weak power that its aims are actually limited.

I do not agree with the proposed automatism: big states vs. small, thereby "stubbornness" from the small one. There is of course a way to "reassure the weak power that its aims are actually limited" and that it can be trusted. That would be a consistent adherence to international law and agreements by the big state.

But the U.S. has the bad habit of constantly trying to slip out of these. Bush I promised Russia not to expand NATO. Then the U.S. pressed to expand NATO into east Europe. The U.S. signed the UN Convention Against Torture. Then it tortured. The SOFA agreement with Iraq clearly demands the U.S. forces to leave Iraq by the end of 2011. Next a public campaign is started to stay longer.

So this is not just a theoretical construct and it is not at all inevitable that small states have huge mistrust against any big state demand. They do have such mistrust because the U.S. - at least after the fall of the Soviet Union - made it a habit to break agreements and to demand more and more and more with disregard to law and its own word.

It is not alone in doing such.

We can currently see something similar in Israel's changing position on a truce in Gaza as mediated by Egypt. Israel started out by demanding a 18 month truce when Hamas offered 12 month. When Hamas accepted, the Israeli demand changed. Suddenly the exchange of prisoners, the Israeli soldier Shalit against some Palestinian prisoners held by Israel was put down as a condition for a truce. Then the Israelis again changed their position and now the prisoner exchange seems to be the only issue it wants to negotiate about at all.

To get there it keeps up the blockade of food and other necessary means for 1.5 million people in Gaza: collective punishment in disregard of international law and its own former promises.

In the Algier accords the U.S. agreed not to intervene politically or militarily in Iranian internal affairs. But it kept up and still has a huge secret program to do just that. No wonder then that Iran does not trust any U.S. offer.

But it is not simply the size of the negotiation partners that creates mistrust and lets smaller states resist against demands from bigger ones like the U.S. It is the very real experience of distrustful behavior by the U.S. that creates such resistance in the first place. If there would be experience that the U.S. can be trusted, the situation would likely be much different. 

For a big country that seems to still have the trust of smaller states, and thereby is able to get concessions from these, look at China. It is very concerened to stick to the letter of international law and to keep a non-interventionist stand. That gives it a creadibility the U.S. has lost.

Posted by b on February 17, 2009 at 04:27 AM | Permalink | Comments (26)

February 16, 2009

The Right To Choose

In the thread on Iran's upcoming election (1, 2, 3) Parviz is onto something when he rants (his description) in comment 106:

I despair sometimes at the expectation some posters have of the need for Iran to fight Capitalism and U.S. regional hegemony on its own and ad aeternam. The attitude seems to be: To Hell with your economic development; to Hell with your 25 % unemployment (in one of the world's potentially wealthiest nations); to Hell with 50 % inflation caused by sanctions that have closed many factories and created an annual imported inflation rate of 50 %; to Hell with your underdeveloped South Pars gas field which Qatar is siphoning off at your nation's expense because they are at peace with the U.S. and Iran isn't; to Hell with human rights that would be boosted by peace between the U.S. and Iran resulting in cultural exchanges and the positive influences of a tourist boom; to Hell with your best brains who leave for better job opportunities in Capitalist countries (even China and India) because jobs don't exist at home .......... Further afield, to Hell with Pakistan and India that desperately need funds and peace to develop the IPI natural gas "Friendship Pipeline", and to Hell with Europe that desperately needs a major energy supply alternative to the Big Bad Russian Bear.

NO! Iran, you are expected to remain under-developed, because if you adopt Capitalism and FDI your people will 'suffer' .....

He is right in that some, including me, sometimes forget that while lauding this or that opposition to the empire in some foreign country, we may also seem to argue for the oppression of the people of that country.

It is a people's choice to make what social/economic/political system they want. If they make the wrong choice - as long as it does not lead to war - it is their problem.

For example: We should condemn the delivery, with U.S. support, of heavy weapons to South Sudan and a Darfur rebel leader meeting top Israeli defense official. Those moves will likely lead to further civil war in Sudan. But to condemn that is not a reason to defend the Sudan regime under Omar al-Bashir. The enemy of my enemy is not automatically my friend.

While we laud Iran's independence in foreign policy, we have no right to tell its people what to choose.

While I am a strickt adherer to non-interference by states in other states in the Westphalian sense, I support the right of people everywhere to make their choices on an as-objective-as-possible base.

Posted by b on February 16, 2009 at 11:29 AM | Permalink | Comments (69)

Krugman Is Wrong On WWII

Paul Krugman is planting a very dangerous idea:

If you want to see what it really takes to boot the economy out of a debt trap, look at the large public works program, otherwise known as World War II, that ended the Great Depression. The war didn’t just lead to full employment. It also led to rapidly rising incomes and substantial inflation, all with virtually no borrowing by the private sector.
Since nothing like that is on the table, or seems likely to get on the table any time soon, it will take years for families and firms to work off the debt they ran up so blithely. The odds are that the legacy of our time of illusion — our decade at Bernie’s — will be a long, painful slump.

How will people read the above? "Even Krugman says we need another war. Let's start now!"

But was WWII really a 'public works program' that ended the debt trap? Krugman displays a graph at his blog to justify his opinion.

It shows private debt at 240% of GDP in 1932 while public debt was about 40% of GDP. The private debt came down to a 100% of GDP in 1941 while public debt stayed under 50%. When the U.S. entered WWII private debt came down further to 70% of GDP and public debt went up to 110%.

So most of the necessary debt deflation that followed the big debt bubble of the late 1920s had already taken place when the U.S. entered the war. The argument that WWII was a 'public works program' that ended the Great Depression is false.

Most of the necessary healing of U.S. private balance sheets had already taking place before the war started, Simply continuing FDR's civil public works policies for a few more years would likely have had the same result with regards to private debt than the war had.

To characterize WWII as an alternative to a 'long, painful slump' is ludicrous. The years between 1930 and 1941 were certainly already a 'long, painful slump'. The war years were certainly long and painful for those who got wounded, maimed and had to flee from their homes.

What Krugman does in his column is giving people a very bad idea based on very shallow thought.

Posted by b on February 16, 2009 at 03:13 AM | Permalink | Comments (30)

February 15, 2009

OT 09-06

Your news & views are welcome here.

Open thread ...

Posted by b on February 15, 2009 at 09:52 AM | Permalink | Comments (95)

February 14, 2009

Disintegrating Pakistan

The situation in Pakistan seems to become more complicate and uncontrollable by each day.

Last week Obama's special envoy Holbrooke visited Pakistan. He obviously read the riot act to President Zaradari with regards to the Mumbai bombing. Just after he left the Pakistani government confirmed that 'some' of the Mumbai attack planning had been done on Pakistani ground. That had been rejected so far and the National Security Advisor Durrani had even been fired earlier over confirming that the surviving attacker was indeed Pakistani.

Earlier today an attack by U.S. drones on the tribal areas in Pakistan killed 25 people. A day earlier Senator Feinstein, chairwomen of the Senate Intelligence Committee, said that such drone attacks are flown from bases in Pakistan. This has been rumored for quite sometime and the Pakistani people will certainly take Feinstein's talk as confirmation.

While Prime Minister Gilani and other ministers protested against any drone attacks and denied that they are launched from within Pakistan, President Zardari was silent on the issue. So did he (and the military) knew about these drones being based inside Pakistan and left the cabinet without that knowledge? If Gilani did not know, he might now think of leaving the job to at least keep his public standing intact.

The public, which is to 90% against such U.S. strikes, will now certainly demand more than shallow explanations. I expect some rather fierce demonstrations in the coming weeks.

Most drone strikes so far have been against groups that are active in Afghanistan but have bases in Pakistan, especially the Haqqamni family enterprise which is accused of last weeks attack in Kabul. But according to the NYT today's attack was against Baitullah Mehsud, who leads a Taliban group that fights the Pakistani government in its tribal areas.

Some of the myriad of Taliban groups fighting the Pakistani government are now also in conflict with other groups that are based in Pakistan but only fight in Kashmir and Afghanistan. They put some of their leaders on death lists. They also threatened to start attacks in Islamabad and other Pakistani population centers. Indeed today the Pakistani police found three 'suicide jackets' in Islamabad.

The government in internal strife, the military fighting some of the Pakistani Taliban groups but supporting others that fight in Afghanistan and various Taliban groups fighting each other. What a mess.

The only people who seem to live a peaceful life and are not touched by all the trouble are the original Taliban under Mullah Omar in and around Quetta.

I am sure they are laughing about the mess the U.S. is continuing to create in Pakistan and are discussing how they will pick up the broken pieces a few years from now when everyone else is tired of fighting. That once worked well for them in Afghanistan and sometime in the future might also be feasable in Pakistan.

Posted by b on February 14, 2009 at 01:56 PM | Permalink | Comments (23)

The NYT Editors' Consistency On Term Limits

Hugo Chávez apparently doesn’t believe Venezuelan voters, who just more than a year ago rejected his bid to eliminate the term limits that are blocking his continued rule. On Sunday, he is giving them another chance. For the sake of Venezuela’s democracy, they should again vote no on changing the nation’s constitution.
Venezuelans’ Right to Say No, NY Times, Editorial, Feb 13, 2009


[Mr. Chavéz] should abandon for good his push to change the Constitution so that he can run for a third term in 2013. Venezuelans deserve the chance to choose a competent government.
Hugo Chávez’s Choice, NY Times, Editorial, Nov 24, 2008


We supported Mayor Michael Bloomberg’s bid for the right to stand for a third term because we strongly believe that voters deserve as rich a choice as possible on Election Day — and term limits narrow that choice.
Mayor Bloomberg’s Opportunity, NY Times, Editorial, Nov 9, 2008


This page has always strongly opposed term limits, and we continue to oppose them. We believe they infringe a basic American right: the voters’ right to choose who they want in office. If we had our way, the Council would be voting to abolish term limits altogether.

The question of voter choice is particularly relevant now. Although a majority of New Yorkers, according to a recent Quinnipiac poll, oppose changing the term-limits rule, a majority of New Yorkers also strongly approve Mr. Bloomberg’s performance and, more to the point, say they would vote for him given the opportunity.

They should be given that opportunity.
Term Limits and the Council, NY Times, Editorial, Oct 22, 2008


The bedrock of American democracy is the voters’ right to choose. Though well intentioned, New York City’s term limits law severely limits that right, which is why this page has opposed term limits from the outset.
The Limits of Term Limits, NY Times, Editorial, Sep 30, 2008


Mr. Chávez’s approval rating has plunged since December, when he narrowly lost a referendum that would have given him even more power and allowed him to run for re-election indefinitely.
He must stop using the levers of the state to harass his political opposition at home. And he must stop trying to seize by decree powers that voters denied him in December’s referendum.
Hugo Chávez, New and Improved, NY Times, Editorial, Jun 15, 2008


An article in The Times the other day about Mayor Michael Bloomberg’s political ambitions reminded us of how little we like term limits.
We opposed term limits when New York City voters first approved them in 1993. (They were reaffirmed in 1996.) Term limits are undeniably seductive. They seem to promise relief from mediocre, self-perpetuating incumbents and from gridlocked legislatures in places like Albany. They also diminish democracy, arbitrarily deny choice, reduce accountability and squander experience.

The deceptive charm of term limits is that they automatically purge the system of rascally politicians. But democracy vests that power in every citizen who chooses to vote. Meanwhile, of course, term limits automatically retire excellent public servants whose instincts and experience are not easily replaced. Their future should also rest with the voters.
The Seductive Charms of Term Limits, NY Times, Editorial, Jun 9, 2008


[Mr. Chavéz] favorite provisions, of course, would extend the presidential term from six to seven years and remove presidential term limits.
Opponents are calling for a massive “no” vote. For the sake of Venezuela’s battered democracy, voters should heed the call.
Saying No to Chávez, NY Times, Editorial, Dec 1, 2007

Posted by b on February 14, 2009 at 02:15 AM | Permalink | Comments (26)

February 13, 2009

Some Things Should Not Be For Profit

When prisons and the like are run for profit, such is certain to happen:

[T]he judge, Mark A. Ciavarella Jr., and a colleague, Michael T. Conahan, appeared in federal court in Scranton, Pa., to plead guilty to wire fraud and income tax fraud for taking more than $2.6 million in kickbacks to send teenagers to two privately run youth detention centers run by PA Child Care and a sister company, Western PA Child Care.

While prosecutors say that Judge Conahan, 56, secured contracts for the two centers to house juvenile offenders, Judge Ciavarella, 58, was the one who carried out the sentencing to keep the centers filled.

In this case 5,000 juveniles were sentenced while the scheme was run.

How many people are jailed because of similar privatized prison corruption?

Posted by b on February 13, 2009 at 10:23 AM | Permalink | Comments (19)

February 12, 2009

The Real Middle East Nuclear Missile Threat

Despite the 2007 National Intelligence Estimate that said Iran has no nuclear weapon program, the Obama administration is reviving the old and false claim that it has such:

U.S. officials said that although no new evidence had surfaced to undercut the findings of the 2007 estimate, there was growing consensus that it provided a misleading picture and that the country was poised to reach crucial bomb-making milestones this year.
Often overlooked in the NIE, officials said, was that Iran had not stopped its work on other crucial fronts, including missile design and uranium enrichment. Many experts contend that these are more difficult than building a bomb.

Uranium enrichment has of course a perfect civilian application and a missile program is needed if one intends to send a man into space by 2021 as Iran does.

What is always missing in these discussion though is another likely nuclear power with ballistic missiles in the Middle East.

No, I am not talking about Israel.

At the end of the 1980's Saudi Arabia bought some 120 intermediate-range ballistic missile (IRBM) from China. These were modifications of the Chinese nuclear armed DF-3A, but, the Saudis say, only for use with conventional warheads. As these missiles are quite imprecise and two tons of TNT thrown against a big city to possibly hit anywhere in it will not cause much damage, one wonders if that claim is really true.

At the same time Saudi Arabia acquired those missiles Pakistan achieved the capability to detonate a nuclear weapon.

Up to 1991 Saudi Arabia financed the Iraki nuclear program and probably also the Pakistani nuclear weapon program. It is not proven that Saudi Arabia really has nuclear warheads for its missiles, but so far it has not allowed any foreigner or the IAEA to inspect the relevant bases.Even if such inspections would be allowed, nuclear war heads made elsewhere would be hard to detect.

The existence of huge missile bases and launch areas for these missiles in Saudi Arabia is publicly known at least since 2002 when it was reported in Yediot Ahronot.

Sean O'Connor recently published new research based on satellite imagery of the bases in Saudi Arabia where these missiles are hosted.

The picture by O'Conner shows the likely range of these DF-3A missile when fired from those Saudi bases with 2 tons of deadly payload.

With a lighter than 2 tons warhead those missiles could reach half of Europe.

So why do we constantly hear of a nuclear ballistic missile threat from Iran which has neither missiles of intermediate range nor any nuclear weapon program nor financed foreign nuclear programs, while Saudi Arabia has a significant missile capacity and probably (likely) also the nuclear warheads for them?

Why is the relative free Islamic Republic seen as more dangerous than the strict Wahhabi dictatorship on the west side of the Gulf from where 9/11 was financed and staffed?

Posted by b on February 12, 2009 at 02:24 PM | Permalink | Comments (25)

Billmon: Same Day; Different Nations

Billmon: Same Day; Different Nations

Lawmakers' Goal to Cap Executive Pay Meets Resistance
Washington Post
February 12, 2009

Employers Fighting Unemployment Benefits
Washington Post
February 12, 2009

Posted by b on February 12, 2009 at 03:55 AM | Permalink | Comments (38)

February 11, 2009

Who Paid For Mumbai Style Killing in Kabul?

Some 14 hours ago I commented on today's attacks in Afghanistan:

Mumbai tactics in Kabul

Now Reuters agrees:

The militants' aim appeared to be to shoot dead as many people as possible before blowing themselves up, a style of attack with similarities to that seen in the Indian city of Mumbai in November.
"In total, 20 people have been killed, 57 have been wounded," Atmar said.

Taliban spokesmen swiftly claimed the attack, saying it was in revenge for the treatment of jailed insurgents.

Now - which Taliban claimed responsibility?

The 'west' makes the mistake to attach the Taliban label to anything that shoots at its soldiers in Afghanistan. But there are many resistance groups under different commands and with different interests in Afghanistan. The regular Afghan Pashtun Taliban hardly ever use bombs with an attached human guidance system.

This was something different. The style points to the Pakistani Lashkar-e-Taiba who the Indians say was responsible for the Mumbai attacks. But that group is mostly concerned with Kashmir and has not be known for action in Afghanistan.

Did they rent out their capabilities to someone else? If so who paid them? Who has an interest in making the Karzai government look incapable of providing security even at its center?

Posted by b on February 11, 2009 at 02:21 PM | Permalink | Comments (18)

The Iranian Election - An Economic View

In the next Iranian election in June former president Khatami will likely run as a candidate against the current president Ahmadinejad. The 'western' view on the differences between these two men is clouded as it is looking solely at Iran's nuclear project or its rhetoric against U.S. imperialism and Israeli zionism.

The Iranian president is simply not the one deciding about those issues. That is the prerogative of the supreme leader Khamenei and the power structures around him. (For a deeper description of the power structure and his personality this portrait - Reading Khamenei: The World View of Iran's Most Powerful Leader (pdf) may be helpful.)

But the Iranian president can direct interior and economic policies in Iran. So unless distracted by some 'shiny object' conflict the voters will naturally look at those policies to decide whom to give their votes.

I asked Moon of Alabama commentator Parviz, who is an Iranian and lives in Iran, to explain the differences between Khatami and Ahmadinejad in economic policies. Here is his response.

The Iranian Election

by Parviz

If ex-President Khatemi decides to run (which is highly probable now that his pragmatist rival Moussavi has withdrawn) he will almost certainly win the election on June 12th with about 65% of the popular vote, which is less than his astonishing 80% vote in both 1997 and 2001 but nonetheless sufficient to prevent the need for a run-off a week later.

The above prognosis assumes that the U.S. and Israel will keep very, very quiet and not take any dramatic measures to affect the outcome: Ironically, if the U.S. were to make substantial concessions to Iran during the next few months it would merely legitimize Ahmadinejad’s hardline policies of the past 4 years, while if the U.S. were to exhibit increased hostility it would scare the regime into putting its full weight behind Ahmadinejad and possibly even ‘fixing’ the election results in his favor. So any interference of any kind by the U.S., whether positive or negative, will torpedo Khatemi’s election efforts.

Khatemi’s renewed popularity is partly by default, meaning that most of the population is fed up with Ahmadinejad; and partly by design, meaning that Iranians have now come to appreciate the solid economic, social and diplomatic gains achieved during Khatemi’s 8-year presidency.  When Khatemi was elected in 1997 Iran had near-zero growth, a massive short-term debt of $30 billion and only $10 billion annual oil revenues. Non-oil export revenues were a mere $1 billion. 8 years later GDP growth had risen to above 6%, Iran had become a net international creditor to the tune of $30 billion and had repaid its entire foreign debt. True, oil had risen from below $10/bbl in 1998 to around $30/bbl when Ahmadinejad was (s)elected in 2005, but the real reasons behind Khatemi’s success were the solid economic reforms he introduced, whose main features were:

  1. Slashing of the top income tax and corporate tax rates from 55% to 35%.
  2. Ratification in 2002 of the first Foreign Investment Law in Iran’s history, guaranteeing foreign corporations the right to own up to 100% of domestic companies and to repatriate not just the principal investment but all profits, including property appreciation, copyright, goodwill and other value added assets. This boosted foreign direct investment (FDI) from a 20-year annual average of $25 million to a whopping $2 billion in 2003 alone.
  3. Establishment of the Oil Stabilization Fund which in 2005 had reached $40 billion, to provide a cushion against falling oil prices. The Fund was plundered by the Ahmadinejad administration to pay current budget expenses despite massive windfall forex revenues of $100 billion in 2008 and is now close to zero.
  4. Establishment of the first private banks in Iran’s post-Revolutionary history, which within their first 2 years of operation constituted 6% of total banking turnover and which, equally significantly, placed pressure on the state banks to modernize and reform.
  5. Massive investment in the non-oil sector, thereby increasing non-oil forex revenues from petrochemicals, agriculture, manufacturing and the service industry (including income from overseas engineering contracts) from just $1 billion in 1998 to $15 billion in 2005.
  6. Issued the first ever sovereign bond (EUR 500m) in 2002, yielding 8.5%, which was so successfully received that it issued a 2nd bond of EUR 450m just a few months later at a substantially lower yield.

The results of the above economic reforms was that the Iranian Rial strengthened 25% against the U.S. Dollar from 1997 – 2005, inflation was kept at a manageable 13%, Iran’s OECD Investment Risk rating was upgraded from 5 to 4 (with Fitch upgrading to B+) and the Silent Confirmation fee on Letters of Credit dropped from 8% to just 1.5% p.a., dramatically lowering Iran’s import costs (The a/m fee is now 14% p.a., which is what foreign banks charge to ‘guarantee’ payment of Iranian L/Cs to their domestic exporters).

The above summarizes merely Khatemi’s economic reforms. Barflies know what Khatemi achieved politically and culturally from the many posts on this subject, all of which have since been reversed by Ahmadinejad. Even the incumbent’s popularity in the provinces, generated by flooding rural areas with cash and hand-outs, has been tempered by the realization that inflation has risen from 15% to 50%, unemployment has doubled to 25% and corruption has reached unprecedented levels. Drug addiction and prostitution are among the highest levels anywhere on the globe, yet another indictment of the ‘Islamic’ Republic.

Khatemi is now very much appreciated in retrospect, which is why many Iranians disappointed that Khatemi did not change the Islamic system completely now realize that his achievements in the highly restrictive circumstances have been underestimated, and that hostility and pressure by the U.S. in the aftermath of 9/11 (for which Iran was blameless) limited his ability to achieve even more.

Undoubtedly the Islamic Republic is a 7th century anachronism that hinders Iran’s economic, social and political progress, but if the choice is between Ahmadinejad and Khatemi the populace will choose the lesser of two evils.

Posted by b on February 11, 2009 at 08:05 AM | Permalink | Comments (111)

February 10, 2009

Geithner's No-plan

This is just insane:

Mr. Geithner, who will announce the broad outlines of the plan on Tuesday, successfully fought against more severe limits on executive pay for companies receiving government aid.

He resisted those who wanted to dictate how banks would spend their rescue money. And he prevailed over top administration aides who wanted to replace bank executives and wipe out shareholders at institutions receiving aid.

Fought, resisted, prevailed - the NYT writer obviously adores Geithner. But what is the result of Geithner's 'great victory'?

Because of the internal debate, some of the most contentious issues remain unresolved

The "plan" which is none, calls for spending between $1,200 and 1,900 billion of taxpayer money plus uncounted thousands of billions from the Fed and FDIC (government guaranteed) to make bankrupt banks whole without asking their shareholders or unsecured debt holders to take a haircut.

You might wonder why I - not being a U.S. taxpayer - am furious about this. Well - lots of people with 'special interest' in other countries will point to this insanity as an example of how their government should rescue their banks. I therefore hope and believe that U.S. taxpayers will fight, resist and prevail against this no-plan.

If Obama really tries to get this through, he will burn up most of his political capital in a very short time over a really stupid issue.

The well known alternative: Take the banks into formal bankruptcy and open their books to the public. Fire the management, wipe out the shareholders and the unsecured debt holders, auction off their bad assets and than offer what is left of the bank in a fresh IPO to new private holders.

What is not to like with that for 99% of the people?

Posted by b on February 10, 2009 at 08:37 AM | Permalink | Comments (53)

February 09, 2009

Elections in Israel

Tomorrow Israel will elect a new parliament and thereby a new government.

Gabriel of Jews sans frontieres has posted a good primer on the various race/class/religious constituencies, their parties and election chances.

He summarizes:

The secular Ashkenazi founders of Zionism built a racist society based on their own political, economic and cultural domination. Since the seventies, that domination has been increasingly challenged by Jews of lower status and different backgrounds. Because racism against Palestinians is the glue that holds the nation together, all Jewish challenges to the founders' hegemony are expressed as a competition in racism. Parties step in front of the electoral mirror and ask,

mirror mirror on the wall, who's the most racist of us all.
The only restraining factor is the fear of alienating the Western alliance that support Israel. The rise of the "extreme" right (as if Labor isn't extreme) expresses a number of trends: 1) the continuing assertion of Palestinian presence in the land 2) an intensification of the internal social struggle among Jewish Israelis 3) the continuing decline of the secular Israeli block and 4) the growing confidence that Israel need not worry about negative repercussions from the U.S. and Europe.

Some say that this confidence is a misreading of the international moment. I hope so but I wouldn't be so sure.

The election result will likely be a decisive move to the far right.

That could well undermine the 'western' support for Israel. So far every Israeli government after 1968 faked to bow more or less to 'western' demand of a two state solution and negotiated in bad faith with the Palestinian site while at the same time silently expanding the colonization of the West Bank.

The far right politicians that may now lead the government, Nethanyahu and Lieberman, have spoken out against any two state solution or giving up the Golan heights to make peace with Syria. They want to 'transfer' the non-Jewish Arabs out of 'greater Israel.'

With them in the lead it may be much more difficult to play the old negotiations-for-show game with the 'west'. That could well undermine 'western' support for their 'project'.

At least that is what I hope for.

Posted by b on February 9, 2009 at 01:57 PM | Permalink | Comments (31)

'Wilsonianism' - The Imperial Selling Point?

The piece below on 'Wilsoniansim' and U.S. foreign policy is an excerpt from a post at the Friday Lunch Club which probably stole it from Oxford Analytica.

While interesting and certainly worth a discussion, it misses the imperial-greed motive that is behind the liberal internationalists/neo-con mainstream in U.S. foreign policy. 'Wilsonianism' is, in my view, only the selling point. It is not the actual product. Am I right?

UNITED STATES: 'Wilsonianism' drives US policy abroad

SUBJECT: The resilience of 'Wilsonianism' in US foreign policy -- what it means and why it matters.
SIGNIFICANCE: As President Barack Obama begins his first days in office, many academic and media commentators are urging him to close the supposedly wide partisan fissures over foreign policy. However, these apparent divisions are much less significant than they seem: US foreign policy has long been dominated by a sclerotic 'Wilsonian' consensus, which may have inhibited debate and contributed to recent strategic setbacks.
CONCLUSION: Wilsonianism will continue to be the worldview that shapes US foreign policy under Obama. While a Wilsonian approach is not inapposite, the new administration could opt deliberately to seek out strong dissenting voices that favour alternative policy frameworks, in order to avoid the dangers of unchallenged assumptions.
ANALYSIS: The intellectual framework for US foreign policy defined by former President Woodrow Wilson in 1917-18 ('Wilsoniansim') continues to hold a dominant position in official Washington. Therefore, while there is sometimes fierce debate over particular policy choices (eg the decision to invade Iraq without specific UN authorisation), US policymakers share a worldview that broadly supports the same long-term strategic objectives, values and sense of history. Although there is nothing inherently fallacious about Wilsonianism -- its basic assumptions may be correct -- the weakness or absence of alternative perspectives in Washington may have been a contributing factor in recent foreign policy setbacks.
  • A single theoretical framework dominates foreign policy thinking in official Washington -- Wilsonianism.
  • While liberal internationalists and neo-conservatives disagree over the utility of multilateralism, they mostly share a common Wilsonian perspective and assumptions.
  • The only serious challenger to Wilsonianism as a US foreign policy-making framework is realism.
  • However, the realist challenge has faded, producing a powerful Wilsonian consensus.
  • This consensus may not be conducive to effective policy-making.


The Wilsonian consensus.
This broad consensus is attributable to the fact that the two most influential frameworks for post-Cold War US foreign policy, 'liberal internationalism' and 'neo-conservatism' share a common intellectual ancestor -- Wilsonianism. Liberal internationalists and neo-conservatives disagree fiercely about certain US policy approaches, particularly the utility of multilateral diplomacy. However, the rancour of their clashes on such issues has disguised how much they have in common.
The Wilsonian creed. Wilsonianism took shape in a particular time and place (during and immediately after the First World War) in response to a specific problem (Wilson's attempt to define the US role on the global stage). Yet it was also couched in a much more profound belief in long-term historical 'progress', which critics then and now incorrectly label as naive: ...


Competing 'realist' framework.
Although US politicians often raise the spectre of a return to isolationism -- as former President George Bush did last year a speech to the Israeli Knesset -- the policies of the 1930s remain thoroughly discredited. Wilsonianism and its offshoots have only one rival as a framework for US policy in official Washington -- 'realism':


Contemporary Wilsonian thinking (as practiced by liberal internationalists or neo-cons) has several distinct political advantages, in a US context, over realism:
  • It embodies the notion that US political and economic principles have universal appeal and relevance, which helps secure public support for an active US role in global affairs.
  • It proved to be a much more adaptable framework than realism, in the face of changes wrought by globalisation.
However, it has problematic policy implications:
  • Wilsonianism is not easily exportable or explicable to other powers; it has often caused other states (including US allies) to assume that Washington's policies are either naive or duplicitous, when in fact Wilson's approach combines both altruism and self-interest.
  • Its moralist tone can inhibit constructive engagement with non-democratic states (eg China prior to Kissinger).
  • In the post-Cold War context, it may have contributed to an unhealthy degree of US triumphalism.
Dangers of Wilsonian consensus.
His appointments and rhetoric (eg frequent references to the 'arc of history') suggest that President Barack Obama is a liberal internationalist. This is not an inapposite approach, but it there are several potential policy pitfalls:
  • Unchallenged assumptions. Wilsonian dominance in Washington can lead to 'groupthink', where consensus allows weak analytical assumptions to go unchallenged. This risk might be reduced were the Obama administration deliberately to include people who favour different frameworks (such as realism) in policy discussions.
  • Unpleasant democratic 'surprises'. The assumption that democratisation will invariably produce outcomes congenial to the United States leaves policymakers unprepared when this is not the case. For example, the 2006 Palestinian Legislative Council elections resulted in a clear mandate for Hamas, which Washington regards as a terrorist organisation.
  • Susceptibility to manipulation. Foreign governments, political parties and exile movements are aware of the dominance of Wilsonian thinking in Washington, and policymakers' preference for historicist language. Therefore, they often couch their appeals to US policymakers in similar terms, even when their intentions, or the political or social systems in their countries, are far from conducive to the growth of liberal democracy. Policymakers tend to place too much store in such individuals' views, a tendency that was particularly egregious in 2002-03, prior to the Iraq War.
  • Knowledge shortfalls obscured. Wilsonianism is a general policy framework and worldview, not a specific guide to short-term political and economic developments in particular societies. It is striking that in both the Vietnam and Iraq Wars, policy decisions sometimes appeared to rely on Wilsonian assumptions, when empirical knowledge of the particular society, culture and political environment was lacking.

Posted by b on February 9, 2009 at 02:18 AM | Permalink | Comments (29)

February 08, 2009

Congressional Research Service Reports Leaked

The U.S. Congressional Research Service provides reports at the request of lawmakers on about every issues Congress decides on.

The Federation of American Scientists has pressed to get these released as they are paid for with $100 million tax dollars per year and are thought to be of decent quality. At least they tell what congress might think about an issue. But except for a few that got leaked to Open CRS most of them so far were kept secret.

Today Wikileak published copies of 6,731 CRS reports spanning over several years and current up to this month.

If you want to know what the CRS teaches lawmakers about China's Holdings of U.S. Securities: Implications for the U.S. Economy, Income Inequality and the U.S. Tax System or Africa Command: U.S. Strategic Interests and the Role of the U.S. Military in Africa and a thousand other issues it is now all out there for everyone to read and assess.

The reports by date list is good starting point.

Have at it!

Posted by b on February 8, 2009 at 01:12 PM | Permalink | Comments (9)

Another Scary Iran Story

Haaretz had this funny tale a few days ago and it is now spreading in U.S. media via UPI. Haaretz wrote:

Greece has been holding a ship bound for Iran for more than a month because its cargo was found to contain components for surface-to-surface missiles.
The detention of the Iran-bound ship was reported in the Greek paper Elefterotipia. According to the paper, the Susanna arrived at a port near Athens on December 10 and has been held ever since due to suspicions that it was carrying components for ballistic missiles. An Israeli government source confirmed the report, but declined to elaborate due to the sensitivity of the issue.

The Susanna departed from Slovenia in November, and its final destination was Bandar Abbas in Iran. The Greeks detained it due to intelligence from UN agencies indicating that it was carrying illegal cargo.

Wow - really a big find. That will certainly stop the Iranians from making some bad-ass missiles.

But parts to make ballistic rockets? What parts? Guidance systems? Special rocket motors?

A search of the ship found 80 tons of CK22 steel, which can be used to make warheads or fuel pods for surface-to-surface missiles.


CK 22 steel is a simple standardized product. The EU norm number for it is EN 10083, the U.S. equivalent is SAE 1020, 1023. Any decent steel mill produces these. Its application:

Plain carbon steel for mechanical engineering and automotive components.

As a carbon steel CK22 is corrosive and would therefore not be used to hold chemically aggressive rocket fuel. Moreover, why would one use heavy steel tanks in a rocket instead of some lighter material like coated aluminum?

And the really big question is why would Iran import such dangerous stuff when it has a steel output of some 10 million tons per year on its own and even offers CK22 and similar products for export from companies like the Khouzestan Steel Company?

The original Greek report (Google translation) has a nice scare graphic showing steel-plates and missiles. If I understand the report correctly the ship, unlike Haaretz claims, was not detained.

So this is just another story to scare little children.

Posted by b on February 8, 2009 at 12:00 PM | Permalink | Comments (12)

February 07, 2009

U.S. Foreign Policy - "Here we go again."

VP Biden today gave the first outlook on the Obama administration's foreign policy in a speech at the current Security Conference in Munich. The short version:

No change


- Missile defense in Europe will continue to be build.

We will continue to develop missile defenses to counter a growing Iranian capability, provided the technology is proven to work and cost effective.

The Iran line is pure bullshit. The missile defense the U.S. plans is to enable a nuclear first strike capability against Russia. Russia will have to fight this.

- On Iran the Bush policy of uncompromising non-talks will continue:

We are willing to talk to Iran, and to offer a very clear choice: continue down your current course and there will be pressure and isolation; abandon your illicit nuclear program and support for terrorism and there will be meaningful incentives.

- On Afghanistan this gem:

... the imperative of stopping the mountains between Afghanistan and Pakistan from providing a haven for terrorists.

These mountains are either in Afghanistan or in Pakistan. To define them as "between" makes them some extraterritorial neverland where no laws apply. A verbal trick to allow for unlimited war on the area.

- In general:

When it comes to radical groups that use terror as a tool, radical states that harbor extremists, undermine peace and seek or spread weapons of mass destruction and regimes that systematically kill or ethnically cleanse their own people - we must stand united and use every means at our disposal to end the threat they pose.

The sentence is no different than anything Cheney would have said.

So on all major foreign policy issues there will be no change at all. As William Pfaff recently commented:

The institutional rigidity of U.S. foreign policy has been locked in place. The ideas – there are many – about negotiations, local, regional, or multinational, seem ruled out. Here we go again.

Posted by b on February 7, 2009 at 11:11 AM | Permalink | Comments (102)

February 06, 2009

Scary Economic News

So far I was on the opinion side of 'a big global recession'. I now officially move into the 'massive global depression' camp. These numbers are huge. But what is really scary are not the huge numbers but the speed at which the occcure. That speed is unprecedented. It may turn this beast globally into something very different, i.e. much worse, than the Great Depression the U.S. had in the 1930s.

The cars of that time made some 30 miles per hour. The recent modern globalized economy car, financed by zero-rate credit, made some 200+ miles per hour. It now ran into a human wall at full speed. While the modern car has some safety belts that protect the drivers, the damage for the crowd the car ran into will  likely be much bigger than in the earlier crash.

Kenya hit by drought, food prices and grain shortage

Field after field of maize across the marginal agricultural areas of Kenya stands blitzed by the tropical sun, unable to mature after the rains failed. For many, this is the third consecutive failed harvest.

Cancellations exceed orders at both Airbus and Boeing

Both Airbus and Boeing have dipped into negative net orders for the year to date, having suffered more cancellations than secured sales.

South Korean Exports Fall by Record, China Manufacturing Slumps

South Korea’s shipments fell 32.8 percent from a year earlier, the Ministry of Knowledge Economy said. Manufacturing in China shrank for a sixth month, the CLSA China Purchasing Managers’ Index showed.

Japan output falls at record pace, unemployment rises

The government also said that production is expected to decrease 9.1% in January and 4.7% in February, according to its Survey of Production Forecast in Manufacturing.

If the projected cuts materialize, Japan's industrial output would have shrunk by one-third over the space of a year, according to calculations by J.P. Morgan. The contraction effectively knocks Japan's industrial economy back to roughly the size it was in the mid-to-late 1980s.

German industrial orders fall sharply

Germany’s economic ministry reported orders fell by 6.9 per cent in December, extending a 5.3 per cent fall in November. It was the fourth consecutive monthly fall and much larger than expected. December’s industrial orders from within the eurozone were tumbled by more than 15 per cent.
Earlier, Spain had reported a record 19.6 per cent fall in industrial output in the year to December as businesses and households reeled from the collapse of the country’s housing bubble.

Payrolls plunge by 598,000, the most since 1974

Nonfarm payrolls fell by a seasonally adjusted 598,000 in January, on the heels of a revised loss of 577,000 in December, the [U.S.] government said.


The number of laid-up container ships reached 255 vessels by mid-January as the global economic downturn forces carriers to continue to retrench. The idle ships have a capacity of 675,000 TEUs. That represents 5.5 percent of the world container shipping fleet by capacity, according to AXS-Alphaliner, a Paris-based consultant.
The situation will only get worse for the carriers as deliveries of new ships will swell the world fleet about 14 percent this year, Alphaliner said.

China suffering worst drought in 50 years

Since November northern and central China has had little rain. Many places have not had rainfall for more than 100 days.
"The extent of drought is quite extensive, the impact is quite great," forecaster Zhang Peiqun said in an interview with state television CCTV. "Rainfall on average has been 50 to 80 percent less than that of last year."

Posted by b on February 6, 2009 at 02:28 PM | Permalink | Comments (61)

February 05, 2009

Trust And Interest Rates on Treasuries

Obama has an op-ed in the Washington Post promoting his 'stimulus' package. Boilerplate bipartisan stuff David Broder could have written.

The package is getting bigger by the day, but the effective part of - timely, temporary and targeted measures - is shrinking.

The economic team Obama assembled is certainly proving that it is as bad as many have feared. 'Bad bank' plans and buying up 'troubled assets' are simply the wrong measures.

Temporarily nationalize the banks under some bankruptcy rule. Write down their 'assets' to some realistic value, make the shareholders and debt-holders take the necessary big haircuts and in two a three years privatize those banks again.

Willem Buiter compares the U.S. and the UK's economies to emerging market economies in trouble. The only plus side the U.S. still has above an emerging market in trouble is the reserve status of the dollar.  But that status depends on trust. The U.S. and Obama's administration now have little credibility and doing all the wrong stuff risks a rout in treasuries and the dollar value. There are signs that the process already started:

The US Treasury on Wednesday opened the floodgates of government bond issuance, revealing plans for a record debt sale in February and more frequent auctions in the months to come.

The announcement came amid growing fears about US government deficits and sent the yield on the benchmark 10-year Treasury note rising to 2.95 per cent, up from just over 2 per cent at the end of December.

Buiter therefore now argues against any 'stimulus'. Better do nothing than all the wrong stuff.

Nouriell Roubini compares the U.S. to Japan in the 1990s and sees a repeat of all mistakes the Japanese made. Especially not cleaning up the banks will turn out to be disastrous.

In short: The Obama administration is trying its best to turn a sharp recession that could recover into a prolonged period of no or lower growth that will for many feel like a depression.

There is one guy who is supposed to advice Obama that still has international credibility. That would be Paul Volkers. But Obama's National Economic Council Director Lawrence Summers is shutting him out.

With trillions of new treasuries on offer this year but decreasing trust in the ability of an Obama administration do the right things now to later increase taxes to pay back all the new debt, interest rates might get out of hand pretty fast.

Posted by b on February 5, 2009 at 09:34 AM | Permalink | Comments (77)

February 04, 2009

The New World Order

Malooga asks everyone to read this (also here as the Feb 2 entry titled A Brief History of the New World Order).

Long and conspirish, but an interesting take of history since 1900.

Posted by b on February 4, 2009 at 02:08 AM | Permalink | Comments (73)

February 03, 2009

Congratulations to the People of Iran

Iran today successfully launched a small telecommunication satellite. To do so is a great engineering achievement for any nation. Especially when under sanctions and thereby restricted in sourcing.

Including Iran only nine nations so far succeeded in launching satellites at all.

Dear Iranis, not that I like your government, I do not like mine either, but here are my very congrats to the People of Iran! The Arms Control Wonks congratulate too

Links: launch video, launch animation

Posted by b on February 3, 2009 at 03:12 PM | Permalink | Comments (56)

The Pink Route To Afghanistan

(UPDATED with new Kyrgyzstan development at 2pm est)

"[In Afghanistan] a small army would be annihilated and a large one starved."
Duke of Wellington (1769-1852) (source)

A new supply route into Afghanistan is getting more urgent by the day. Russia is squeezing the U.S.' balls in negotiations over a route through its country. Now Iran might get the chance to do the same.

Today an important bridge in Pakistan went down:

The bridge in the Khyber district was blown up at 0600 local time (0100 GMT) and all traffic on the road had been suspended, news agency AFP quoted key official, Tariq Hayat, as saying.
The 30-metre (100-foot) iron bridge is 23km (15 miles) west of Peshawar.

To repair a 30 meter steel bridge in the volatile area will require some time, possibly weeks.

Some stuff was already missing in the mess halls and PX shops on U.S. bases in Afghanistan:

The milk is now pulled from the mess hall by 9 a.m., to ration the limited supply.
At the Camp Phoenix base store nearby, the shelves look bare. There's no Irish Spring Body Wash, no Doritos, no Tostitos Scoops, no Bayer Aspirin.
"I've never seen the store this empty, ever," said Ula Loi, the store manager.

Early last year 600 to 800 trucks per day were going from Karachi through Peshawar and the Khyber pass to Kabul and the U.S. main base in Bagram. After several attacks the traffic on that route had already been reduced to some 300-400 trucks per day with another 100+ per day going from Karachi through Torkham to Kandahar.

Even with those 500+ trucks per day, the PX had empty shelfs and the mess hall lacked milk. With 300-400 trucks less per day now military operations will have to be reduced.

The U.S. also has an air-base in Kyrgyzstan for flying supplies to Afghanistan which is also in trouble:

The base, located on the outskirts of Bishkek and home to over 1,000 military personnel, was established in 2001 after the start of the U.S-led military operation in Afghanistan. Recent media reports said the Kyrgyz government was considering to shut it down.

It may be that Russia has a hand in this:

Russia is offering the indebted ex-Soviet state a grant of 150 million dollars and a loan of 300 million dollars and is lining up major investment in return for closure of the US airbase in Kyrgyzstan, Kommersant reported.

In an earlier piece I said Russia "has the U.S. by the balls." Now it is squeezing.

UPDATE (2pm est): Just in: NYT Kyrgyzstan Said to Deny Base to U.S.

Kyrgyzstan is ending U.S. use of a key airbase that supports military operations in Afghanistan, Kyrgyzstan's president was quoted as saying Tuesday.


Five possible routes into Afghanistan have been discussed.


The blue line is the exiting and endangered route through Pakistan. The green line through China is unlikely to happen as China prefers to stay out of imperial adventures. The red line is the Caspian route the U.S. would prefer (also as a pipeline route) but which is blocked due to Russian influence on Turkmenistan, Kazakhstan and Uzbekistan. The yellow line is under negotiation and will have a heavy political price.

Petraeus' premature announcement that the yellow route through through Russia had been secured increased the price the U.S. will have to pay for it. Next to lots of money Russia wants:

  • a renewed START strategic arms reduction treaty
  • no further NATO expansion in Eastern Europe or Central Asia
  • no missile defense in Eastern Europe

The U.S. is desperate over the logistic situation in Afghanistan and the Russians know it:

U.S. Secretary of State Hillary Clinton and her Russian counterpart Sergei Lavrov agreed on Tuesday to work more closely on key strategic issues, Russia's Foreign Ministry said.
The two foreign ministers spoke by telephone at the request of Washington, the ministry said in a statement.
"Especially noted was the importance of strengthening bilateral cooperation, including questions of strategic dialogue and economic cooperation, as well as current international problems such as the resolution of (the situation in) Afghanistan," the statement said.

Note the sequence of Lavrov's points. For Russia the route to Afghanistan is at the end of other issues.

There is of course the pink route left. Supply through Iran was unthinkable so far, but the urgency of the situation makes the earlier unthinkable possible:

NATO would not oppose individual member nations making deals with Iran to supply their forces in Afghanistan as an alternative to using increasingly risky routes from Pakistan, the alliance's top military commander said Monday.

Gen. John Craddock's comments came just days after NATO's secretary general, Jaap de Hoop Scheffer, urged the U.S. and other members of the Western military alliance to engage with Iran to combat Taliban militants in Afghanistan.

I can hear the alarms bells in Tel Aviv going off over this. A U.S. ally (Germany, Canada?) or the U.S. itself supplying through Iran's port Char Bahar makes an Israeli or U.S. attack on Iran politically at least much more difficult if not impossible.

Iran said earlier it would prefer that the U.S. pulls out of Afghanistan.

But it may want to wait and see what the Russians will get for their route and then rethink its position.

Having a U.S. ally or the U.S. itself depend on Iran for supply in Afghanistan could be a major diplomatic asset and open up new possibilities.

Without Russia's and without Iran's help, the U.S. is unlikely to succeed in Afghanistan.

Russia is using its ability to squeeze the empire's ball over logistic lines to Afghanistan. Iran should think about gaining that capability and opportunity too.

earlier coverage of Afghanistan logistics at MoA:
The Costly New Supply Route To Afghanistan, Jan 26, 2009
New Supply Routes To Afghanistan, Nov 19, 2008
Fuel for War in Afghanistan Aug 20, 2008
The Road War in Afghanistan Aug 16, 2008
Fuel Tanker Attacks in Afghanistan Mar 24, 2008

Posted by b on February 3, 2009 at 10:50 AM | Permalink | Comments (59)

Provincial Elections In Iraq

An election under occupation is always a very dubious endeavor. In most cases the outcome is shaped by those in power and under the protection of the occupier. The provincial elections in Iraq again show this.

Preliminary results get leaked and shape the expectation and analysis in the west. I doubt that these results reflect the reality. But after successfully shaping the expectations through leaks and propaganda, the outcome is easier to arranged to fit those. Allegations of fraud will be dismissed because the results are already known to the public due to the expectation shaping.

The Washington Post writes:

The Supreme Council's dominance may give way to Dawa, which was winning the largest number of votes in all but one of southern Iraq's nine provinces, according to party activists, election officials and observers.

Hmmm - according to 'party activists, election officials and observers'. Not one of these persons is named. Could these folks have special interests in leaking specific trends? You bet.

Yesterday the NYT headlined: Secular Parties and Premier Lead in Iraq

Mr. Maliki’s Dawa Party drew strong support in Basra and Baghdad, two of Iraq’s largest and most politically important provinces, according to political parties and election officials who spoke on the condition of anonymity because they were not authorized to discuss preliminary tallies.

The relative success of the secular parties may be a sign that a significant number of Iraqis are disillusioned with the religious parties that have been in power but have done little to deliver needed services.

Again - anonymous sources. How many of those were from the U.S. government or military?

And why is stated that secular parties were successful when Dawa is said to get so many votes?

Patrick Cockburn of The Independent also falls into the secular trap:

The Iraqi Prime Minister, Nouri al-Maliki, who seemed weak and isolated a year ago, appears to have won a sweeping victory in the Iraqi provincial elections that will strengthen his hold on central government. For the first time since the fall of Saddam Hussein, according to preliminary results, Iraqi voters chose secular and nationalist parties over their religious rivals.

Uhh - what nonsense. The full name of Maliki's Dawa party is Ḥizb al Daʿwa al-Islāmiyya:

The political ideology of al-Da'wa is heavily influenced by work done by Baqr al-Sadr who laid out four mandatory principles of governance in his 1975 work, Islamic Political System. These were:

  1. Absolute sovereignty belongs to God.
  2. Islamic injunctions are the basis of legislation. The legislative authority may enact any law not repugnant to Islam.
  3. The people, as vice-regents of Allah, are entrusted with legislative and executive powers.
  4. The jurist holding religious authority represents Islam. By confirming legislative and executive actions, he gives them legality."

Dawa, the Islamic Call Party long headquarter in and supported by Tehran, is now said to have won 50% of the votes in Basra and other provinces. We are now told to believe that this is a secular and nationalist victory?

Oh my ...

Posted by b on February 3, 2009 at 02:59 AM | Permalink | Comments (13)

February 02, 2009

"Thirst No More" Is Who?

Reuters headlines: Sudan expels US aid group over bibles - state media:

A United States aid group has been thrown out of Sudan's Darfur region after officials found thousands of Arabic-language bibles stacked in its office, state media reported on Saturday.

Sudanese authorities told the state Suna news agency they found 3,400 copies of Christianity's sacred book in the office run by water charity Thirst No More in North Darfur, a region that is almost entirely Muslim.
Thirst No More country director Charlie Michalik, speaking to Reuters in Khartoum, confirmed officials were carrying out an investigation into his organisation's work, but declined to go into further detail.

Thirst No More's website describes its work in Darfur as focused on repairing and drilling water wells and makes no mention of evangelism or other faith-based work.

The vast majority of aid groups in Darfur, including ones with religious foundations, voluntarily sign up to a Red Cross code of conduct that says aid should not be used "to further a particular political or religious standpoint".

The website consists mainly of "Coming Soon" items. Even the "About" section is 'Coming Soon' -  apparently since 2006.

It is registered to one Craig Miller under a PO box in Briggs, Texas. His email address domain,, is registered by one Evie Wilson, Vision Design, at a PO box in Kaysville, Utah. There seems to be no trace of Vision Design on the web.

Thirst No More claims to have done some operation within the U.S. and in South America. But on their site are only a bunch of seemingly agency pictures.

It's blog carries only 17 entries since October 2006.

One website of anonymous origin, Art For Darfur, says:

Thirst No More is a global organization that builds and repairs water pumps in crisis areas. Sudan Project coordinator, Charlie Michalik, is a U.S. Army veteran of the first Gulf War and has extensive experience in the Mid-East. For the past three years he has been restoring broken water wells in Darfur and laying the groundwork for a water drilling operation that will begin shortly. Paulette and Bob met up with Charlie and his family in El Fashir, where they began traveling to villages, meeting with Darfuri people and even repairing a few wells with their own hands.

As regular readers here will know, I do have a bit of experience in sleuthing around the web. The 'Thirst No More' thingy seems to me to be a quite untraceable entity. There is little, or nothing, about Charlie Michalik or others involved. Why?

Who is running this and for what reason?

Posted by b on February 2, 2009 at 03:29 PM | Permalink | Comments (23)

OT 09-05

Open thread ... news and views ...

Posted by b on February 2, 2009 at 08:17 AM | Permalink | Comments (84)

February 01, 2009

The "Iranian" Weapon Ships

There seems to be some confusion in the media about ships from Iran that allegedly transport Iranian weapons to Gaza and elsewhere. bea asked to look into it.

Israels aim is to further isolate Iran by any means and to use the U.S. and other countries to do their  bidding. To that end it alleges Iranian support for its enemies, currently especially Hamas, and its propaganda machine is doing a hell of a job to confuse the world with disinformation about this.

For starters, let us note that there is no proof at all for any Iranian weapons used by Hamas in defense against the latest assault against Gaza. Over to a former director of the U.S. Defense Intelligence Agency, Colonel Pat Lang:

It is claimed by the agitpropers that Hamas is a satellite organization of Iran. If that is so, then Iran has done a poor job of supplying their Palestinian subsidiary. Where are the Iranian product improved and manufactured weapons that Hizbullah possessed in numbers in '06? Where are they? Impossible to deliver? All of them?

It would seem that political support and encouragement is one thing. Supply is another.

The best rockets Hamas used so far, says Israeli intelligence, are from China, not Iran. Such weapons get stolen from the Egyptian army or bought from international weapon dealers and smuggled for a profit by Bedouin nomads through the Sinai and through tunnels into Gaza. There is no proof of any Iranian supply of weaponry to Gaza at all.

Onto those ships. There are two in question that are mentioned, and mixed up, in recent news reports.

An Iranian ship with Red Crescent humanitarian goods which was denied access to Gaza and to Egypt and is now in Beirut. That ships name is Iran Shahid, IMO 9184591 (Picture)

A Russian container ship that is transporting some stuff from Iran to Syria and elsewhere and was searched last week by the U.S. Navy. There is yet no proof that it carries any weapon or ammunition at all. It is now in Cyprus. Here is a picture of the Monchegorsk, IMO 8013039.

On December 10 the Iranian Red Crescent announced to send 1,000 tons of humanitarian goods as relief to Gaza:

The official did not disclose the nationality of the ship, but said the cargo will include 500 tonnes of wheat, 200 tonnes of sugar, 200 tonnes of rice, 50 tonnes of cooking oil and 50 tonnes of medical supplies.

The text to a Getty/AFP image late December says:

Iranian Red Crescent workers pack medical aid into boxes before uploading them onto the 'Iran Shahed' ship to send to Gaza Strip in the southern port city of Bandar Abbas on December 28, 2008.

On January 14 the Red Crescent said that the ship was turned back by the Israeli Navy and would try to land its load in the Mediterranean Egypt port of el-Arish to be trucked into Gaza. Egypt denied the ship access to el-Arish and on January 30 it arrived in Beirut. The name of the captain is Qaleh-Golab.

Of course if you believe the Israeli disinformation service Debka:

the vessel has been converted into a floating logistical headquarters for the Hamas leadership, with Hamas frogmen using fishing boats to keep them connected.

Hamas frogmen ....

Now onto the second ship. Here the reporting is fudged incredibly by Israeli disinformation.

Like this report today from the Jerusalem Post:

[T]he American Aviation Week magazine reported Sunday that the US prevented Israel from raiding an Iranian ship believed to be carrying weaponry and explosives for Hamas.

According to the report, the Americans stopped the operation because they wanted to avoid an Iranian-Israeli confrontation.

Aviation Week reporting on naval issues? But indeed the usually reliable Aviation Week blog for military issues Ares gives it a sad try:

The Cypriot Navy has stopped an Iranian ship, believed to be carrying weapons for Hamas, on its way to Syria, Israeli security officials told The Jerusalem Post last Thursday night.
According to unofficial intelligence reports, the Iran Shahed set out from the Iranian port of Bandar Abbas Dec. 29, the second day of the Gaza conflict, changing its identity several times until hoisting a Cypriot flag. The vessel was stopped by the US Sixth Fleet in the Gulf of Aden on its way to Egypt, where it was believed to have planned to unload its cargo, which was then to be smuggled into the Gaza Strip.
According to unconfirmed reports, the Israelis tried to seize the boat in the Red Sea (...). But the Americans decided not to give the Israeli Navy a chance to seize the vessel and tow it to Eilat for fear of a Tehran ultimatum to Jerusalem, followed by Iranian attacks on Israeli and US naval craft patrolling the Gulf of Aden and Red Sea.

Lots of nonsense in those two graphs and the rest of it is only worse. The Red Crescent goods ship is named Iran Shahed, not the allegedly weapon carrying ship. And why would the U.S. Navy "tow" a ship that can drive by itself?

Notice that the blog entry is by one David Eshel - a retired Colonel of the Israeli army.

Another Debka piece has a sentences that reappears word for word in the Aviation Week blog entry.

The Americans decided not to give the Israeli Navy a chance to seize the vessel and tow it to Eilat ...

So that's how the circle goes. The Jerusalem Post report above is based on an Aviation Week blog entry from a retired Israeli officer who's sources are Debka and the Jerusalem Post.

The same Jerusalem Post article includes this:

The Cyprus Mail newspaper quoted military officials as saying that the boat was carrying hundreds of tons of explosives and that authorities were considering moving the vessel to Larnaca Port.

The Cyprus Mail did not do so. It wrote:

High-ranking army and police officers, however, conducted an initial search to the cargo and reportedly found over hundreds of tons of explosives, reports said.

Cyprus Mail says "reportedly". It did not quote officials. But who "reported" this? Debka? The Jerusalem Post? We don't know, but I suspect it is wrong as the ship, according to the Cyprus Mail, has not even started to unload yet.

The ship in question is a Russian container ship Monchegorsk that sails under the flag of Cyprus. On January 19 the U.S. Navy stopped the ship in the Red Sea and requested to search it. The master, says the U.S. navy, agreed to the search.

On January 20 DEBKA alleged:

US and Egyptian warships were scouring the Gulf of Aden and Red Sea Tuesday, Jan. 20 to waylay an Iranian freighter carrying scores of heavy rockets for delivery to Hamas. DEBKAfile's exclusive sources report they were acting on intelligence that a ship loaded with an estimated 60 tons of arms to replenish Hamas' depleted war stocks had set out from the Iranian Persian Gulf port of Bandar Abbas on Jan. 17.

Our sources reveal that the arms-smuggling vessel started its voyage as the Iran-Hedayat and changed its name in mid sea to Famagustus registered to Panama. The captain was ordered by the Iranian Revolutionary Guards to unload its cargo at a smugglers cove on the southeastern coast of Sinai opposite the Gulf of Suez, to be picked up by armed Bedouin gangs and moved to El Arish in northern Sinai. From there the contraband rockets were to be slipped gradually into the Gaza Strip.

Hmm - smuggler coves ... ?

On January 22 AP reported:

The U.S. military intercepted and searched an Iranian-owned ship that officials feared was carrying arms to the militant group Hamas, but two officials said it was unclear Thursday whether those suspicions were founded.
One official said the two-day search turned up ammunition that included artillery shells; and since Hamas is not known to use artillery, officials are now uncertain who the intended recipient was.

This "two officials" "one official" thingy is curious.

AP later said:

The Navy searched the ship with permission of the captain and found small munitions, military officials said.

So one "official" alleges artillery shells, while later "military officials" only talk about small munitions. The AP should straighten up its reporting ...

Point 5 of UN resolution 1747 (pdf) prohibits Iranian arms exports.

If the U.S. would have found anything but a few small weapons or munitions (btw - quite usable against pirates said to be in that area) from Iran on board of that ship it would have had reason to detain it or to seize the cargo.

But even Admiral Mullen said there was not enough evidence to do so:

QUESTION: Tal Schneider from Maariv newspaper, Israel. I want to ask about the anti-smuggling efforts that the U.S. Navy has done in Suez Canal, stopping an Iranian ship that was smuggling probably weapons. And is the U.S. intention to convene a conference about anti-smuggling to Gaza Strip in the near future?

ADM MULLEN: Actually, it was a Cypriot-flagged ship that was boarded by a U.S. Navy boarding team after requesting permission from the master and receiving permission to go aboard to inspect for weapons which were – which were considered – which were considered to go against the UN Security Council resolution which banned these kinds of weapons from being shipped from Iran, which is where they came from, to Syria, which is where we believe they’re headed and, in fact, will probably get there in the next day or so.

The United States did as much as we could do legally. There are authorities, limitations in complying with this particular UN resolution, and we basically went right up to the edge of that and we couldn't do anything else. So we were not authorized to seize the weapons or do anything like that.

So the navy found nothing that would be against the prohibitions in UN resolution 1747. If you reread the above you will find that Mullen does not even confirm that the navy found anything at all.

He also had this gem:

... shipping weapons to Syria that we think, quite frankly, are going to end up in Gaza.

Could the Admiral please check a map? What countries lie between Syria and Gaza? Would they allow weapons transfer from Syria to Gaza? Duh.

The ship was stopped and searched in the Red Sea by the U.S. amphibious transport dock ship USS San Antonio, which is currently supposed to hunt pirates with task force 151 at the Somali coast. Instead it is pirating Russian ships.

The Monchegorsk then passed through the Suez Channel and was greeted in the Mediterranean by the U.S. Navy.

According to the Cyprus Mail:

‘Monchegorsk,’ a Russian-owned ship was yesterday docked at Limassol, a day after the US navy intercepted the vessel at the Suez Canal and led it to Cyprus.

The US and Israel believe the ship, which set off from Iran, was carrying arms, weaponry and explosives for Hamas and Hezbollah, although Russia insists it is a commercial vessel which was carrying cargo from Iran to Syria.
Washington has asked the Cypriot authorities to hold the vessel and its crew, thoroughly check its cargo and ensure all its documents are in order.

A later Cyprus Mail report says:

The vessel is being investigated after the US and Israel said it was suspected of carrying Iranian weapons to Gaza.

Russia, on the other hand, says it is a completely legal and commercial container.

The US government has asked for the ship to be investigated and its documents examined.

The ship, which according to reports was heading from Iran to Syria, was forced by the US navy to moor in Cyprus.

According to CyBC, the vessel is expected to remain off the coast for the next two days, until a decision is taken on the matter.

Yesterday Haaretz cited "Israeli officials" saying the Cypriot inspectors found tank ammunition for T-72 tanks and various mortar rounds on the ship.

Maybe in those "secret holds" Debka phantazises about?"

Whatever: Neither Hezbollah nor Hamas have T-72 tanks. The Syrian army has Russian build T-72 tanks. A Russian ship carrying T-72 shells to Syria should not surprise anyone.

But where is the load - if it exists - from?

No source gives any proof that the ammunition, if it exist at all, is actually from Iran or even destined for Syria. Container ships usually load and unload at several harbors along a fixed circle route. That a ship carries something after having visited port C does not mean that the stuff was loaded there and is destined for port D. The stuff might have been loaded at port A or B and be destined for port E or F.

So let us summarize:

One Iranian ship with a humanitarian load was not allowed to land that load in Gaza or Egypt and therefore carried it to Beirut. Good food for poor Shiites in South-Lebanon I guess.

A Russian ship under Cyprus flag and on the way from Iran to Syria was held up and searched  by the U.S. Navy, with permission from the master. The U.S. Navy did not find anything that would have allowed it to act under UN Resolution 1747 but escorted the ship to Cyprus for whatever.

The Russians say the ship carries only legitimate load.

All reports about anything more than a few small weapons on that ship are solely based on Israeli reports based on dubious sources.

There is a quite extensive effort by the Israeli disinformation circles to fudge these issue and to thereby make Iran look bad.

Posted by b on February 1, 2009 at 11:47 AM | Permalink | Comments (46)