Politics, Religion, Science, Culture and Humanities / Politics & Religion / POTH: Tea Party
on: January 15, 2010, 08:40:45 AM
HOLLAND, Pa. — The Tea Party movement ignited a year ago, fueled by anti-establishment anger. Now, Tea Party activists are trying to take over the establishment, ground up.
Across the country, they are signing up to be Republican precinct leaders, a position so low-level that it often remains vacant, but which comes with the ability to vote for the party executives who endorse candidates, approve platforms and decide where the party spends money.
A new group called the National Precinct Alliance says it has a coordinator in nearly every state to recruit Tea Party activists to fill the positions and has already swelled the number of like-minded members in Republican Party committees in Arizona and Nevada. Its mantra is this: take the precinct, take the state, take the party — and force it to nominate conservatives rather than people they see as liberals in Republican clothing.
Here, in a perennial battleground district outside Philadelphia, Tea Party activists are trying to strip the local committee of its influence in choosing the Republican nominee to run against Representative Patrick J. Murphy, a Democrat who won the seat in 2006 by about 1,500 votes.
After the local party said it would stick to its custom of endorsing a candidate rather than holding an open primary, Tea Party groups decided to hold their own candidate forum where people could cast a ballot. If the party does not yield, the groups say they will host a debate, too.
“We kind of changed the rules,” said Anastasia Przybylski, one of the organizers.
The Tea Party movement, named after the original tax revolt in 1773, might be better described as a diverse, rambunctious and Internet-connected network of groups, powered by grass-roots anxiety about the economy, bailouts and increasing government involvement in health care. At one extreme are militia members who have shown up at meetings wearing guns and suggesting that institutions like the Federal Reserve be eliminated. At the other are those like Ms. Przybylski, who describes herself as “just a stay-at-home mom” who became agitated about the federal stimulus package.
And if the Democrats are big-government socialists, the Republicans, in the Tea Party mind, are enablers.
In some recent polls, a hypothetical Tea Party wins more support than Democrats or Republicans, and the most anti-establishment Tea Party activists push to fight as a third party. But as the movement looks toward the midterm elections in November, a growing number of activists argue that the best way to translate anger into influence is to infiltrate the Republican establishment (Democrats being, for the average Tea Partier, beyond redemption).
“If you want to have revenge against the Republican Party for using you for so many years, the best way is to turn around and use the Republican Party to your advantage,” said Eric Odom, a Tea Party activist in Chicago who recently started a political action committee, and on his blog urged Tea Partiers to stop complaining about the Republican Party and “move in and take it over.”
Republican leaders have been trying to harness the Tea Party energy — Michael Steele, the chairman of the Republican National Committee, recently called the Tea Parties “a revelatory moment.”
“It puts in stark relief where the American people are, how they feel and what they feel,” Mr. Steele said. “It’s important for our party to appreciate and understand that so we can move toward it, and embrace it.”
Not all Republicans agree. Some say the party needs to broaden its reach, not cater to the fringe.
The defining experience for many Tea Party groups was the special election in the 23rd Congressional District of New York in November, where party leaders chose a candidate whom conservatives viewed as a Republican in name only — she supported same-sex marriage, abortion rights and the federal stimulus package. After activists flooded the district to support a conservative third-party candidate, the Republican dropped out and endorsed the Democrat, who won.
Conservatives took the Republican retreat as a victory, but also saw the power of the party structure in deciding who the candidates will be. The rallying cry for more local involvement has been “No more NY-23’s.”
“We don’t want to see what happened in New York happen here,” Ms. Przybylski said.
The forum here drew nine candidates and a standing-room crowd in an auditorium built for 1,200. The questions organizers had drawn up for the candidates hinted at the issues important to so called Teapublicans.
Will you pledge to vote against tax increases, even hidden taxes like those in health care reform? Should corporate executives who encourage illegal immigrants to stay because it is good for business be hauled off to jail? Do you believe manmade pollution is a significant contributor to global warming? (“I don’t necessarily think there’s been global warming,” one candidate objected.)
Each was asked to define the 10th Amendment, and to cite examples of where it “might have been violated.” “It’s my favorite amendment in the Constitution,” exclaimed one candidate, Ira Hoffman. “I can’t believe it!”
The amendment declares that powers not granted to the federal government by the Constitution are reserved to the states or the people, and Tea Party activists hold that Congress has overstepped its bounds, particularly by legislating health care. So candidates were asked whether they would support efforts to nullify the health care bill?
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Finally, the moderator asked them if 2010 would be “the year of the Tea Party.” The candidates, and many in the audience, said it would, but only if the Tea Party advocates worked the system.
“I think we can do greater things working in a system that’s established than we ever can being a bunch of anarchists,” said Jennifer Turner Stefano, a vice president of a local Tea Party group who is contesting her local Republican committeeperson.
Ms. Stefano, a stay-at-home mother and former television reporter, will have to get 10 signatures and put her name on the ballot to run. But the National Precinct Alliance estimates that about 60 percent of the roughly 150,000 local Republican committee seats are vacant and can be filled by essentially showing up.
“Even if you’ve got a slight majority, you just need maybe 26 states, then you can have your say in how the party goes,” said Philip Glass, a former commercial mortgage banker in Cincinnati who is the national director of the precinct alliance.
The precinct strategy, like the Tea Party movement itself, has spread via the Internet, on sites like Resistnet.com. A National Tea Party Convention in Nashville next month will feature seminars on how to take over starting at the precinct level.
Advocates hold up the example of Las Vegas, where a group of about 30 people who had become friendly at Tea Party events last spring met to discuss how they could turn their crowds into political influence. One mentioned that there were about 500 open precinct committee positions in the local Republican Party.
They recruited other activists and flooded the committee — the Republican Party says it now has 780 committee people, up from about 300. In July, they approved a new executive committee, and Tony Warren, one of the organizers and a new precinct committeeman himself, said six out of seven executives are “constitutional conservatives,” in keeping with Tea Party ideology.
With the bulk of Nevada’s population in the Las Vegas area, the local committee was able to elect a conservative slate to the state party in December, including a state chairman who has said he wants to make the party “safe” for conservatives.
As recently as last spring, Mr. Warren said, “we didn’t even know how the darn party worked.”
Politics, Religion, Science, Culture and Humanities / Politics & Religion / POTH: Google shows more b*lls than BO
on: January 15, 2010, 08:31:45 AM
By DAVID E. SANGER and JOHN MARKOFF
Published: January 14, 2010
SANTA CLARA, Calif. — Last month, when Google engineers at their sprawling campus in Silicon Valley began to suspect that Chinese intruders were breaking into private Gmail accounts, the company began a secret counteroffensive.
It managed to gain access to a computer in Taiwan that it suspected of being the source of the attacks. Peering inside that machine, company engineers actually saw evidence of the aftermath of the attacks, not only at Google, but also at at least 33 other companies, including Adobe Systems, Northrop Grumman and Juniper Networks, according to a government consultant who has spoken with the investigators.
Seeing the breadth of the problem, they alerted American intelligence and law enforcement officials and worked with them to assemble powerful evidence that the masterminds of the attacks were not in Taiwan, but on the Chinese mainland.
But while much of the evidence, including the sophistication of the attacks, strongly suggested an operation run by Chinese government agencies, or at least approved by them, company engineers could not definitively prove their case. Today that uncertainty, along with concerns about confronting the Chinese without strong evidence, has frozen the Obama administration’s response to the intrusion, one of the biggest cyberattacks of its kind, and to some extent the response of other targets, including some of the most prominent American companies.
President Obama, who has repeatedly warned of the country’s vulnerability to devastating cyberattacks, has said nothing in public about one of the biggest examples since he took office. And the White House, while repeating Mr. Obama’s calls for Internet freedom, has not publicly demanded a Chinese government investigation. Secretary of State Hillary Rodham Clinton, who had been the most senior U.S. official to talk of the seriousness of the breach, discussed it on Thursday with a Chinese diplomat in Washington, however, and a senior administration official said there would be a “démarche in coming days” — a diplomatic move.
On Thursday, China’s Foreign Ministry deflected questions about Google’s charges and dismissed its declaration that it would no longer “self-censor” searches conducted on google.cn, its Chinese search engine. A ministry spokeswoman said simply that online services in China must be conducted “in accordance with the law.”
In interviews in which they disclosed new details of their efforts to solve the mystery, Google engineers said they doubted that a nongovernmental actor could pull off something this broad and well organized, but they conceded that even their counterintelligence operation, taking over the Taiwan server, could not provide the kind of airtight evidence needed to prove the case.
The murkiness of the attacks is no surprise. For years the National Security Agency and other arms of the United States government have struggled with the question of “attribution” of an attack; what makes cyberwar so unlike conventional war is that it is often impossible, even in retrospect, to find where the attack began, or who was responsible.
The questions surrounding the Google attacks have companies doing business in China scrambling to confirm that they were victims. Symantec, Adobe and Juniper Networks acknowledged in interviews that they were investigating whether they had been attacked. Northrop and Yahoo, also described as subjects of the attacks, declined to comment.
Besides being unable to firmly establish the source of the attacks, Google investigators have been unable to determine the goal: to gain commercial advantage; insert spyware; break into the Gmail accounts of Chinese dissidents and American experts on China who frequently exchange e-mail messages with administration officials; or all three. In fact, at least one prominent Washington research organization with close ties to administration officials was among those hacked, according to one person familiar with the episode.
Even as the United States and companies doing business in China assess the impact, the attacks signal the arrival of a new kind of conflict between the world’s No. 1 economic superpower and the country that, by year’s end, will overtake Japan to become No. 2.
It makes the tensions of the past, over China’s territorial claims or even the collision of an American spy plane and Chinese fighter pilots nine years ago, seem as outdated as a grainy film clip of Mao reviewing the May Day parade. But it also lays bare the degree to which China and the United States are engaged in daily cyberbattles, a covert war of offense and defense on which America is already spending billions of dollars a year.
Computer experts who track the thousands of daily attacks on corporate and government computer sites report that the majority of sophisticated attacks seem to emanate from China. What they cannot say is whether the hackers are operating on behalf of the Chinese state or in a haven that the Chinese have encouraged.
The latest episode illuminates the ambiguities.
For example, the servers that carried out many of the attacks were based in Taiwan, though a Google executive said “it only took a few seconds to determine that the real origin was on the mainland.” And at Google’s headquarters in Mountain View, there is little doubt that Beijing was behind the attacks. Partly that is because while Mr. Obama was hailing a new era of cautious cooperation with China, Google was complaining of mounting confrontation, chiefly over Chinese pressure on it to make sure Chinese users could not directly link to the American-based “google.com” site, to evade much of the censorship the company had reluctantly imposed on its main Chinese portal, google.cn.
“Everything we are learning is that in this case the Chinese government got caught with its hand in the cookie jar,” said James A. Lewis, a senior fellow at the Center for Strategic and International Studies in Washington, who consulted for the White House on cybersecurity last spring. “Would it hold up in court? No. But China is the only government in the world obsessed about Tibet, and that issue goes right to the heart of their vision of political survival and putting down the separatists’ movements.”
Over the years, there have been private warnings issued to China, notably after an attack on the computer systems used by the office of the defense secretary two years ago. A senior military official said in December that that attack “raised a lot of alarm bells,” but the attacker could not be pinpointed. The administration cautioned Chinese officials that attacks seemingly aimed at the national security leadership would not be tolerated, according to one American who took part in delivering that message.
David E. Sanger reported from Santa Clara, and John Markoff from San Francisco. Mark Landler contributed reporting from Washington.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Stratfor
on: January 14, 2010, 11:27:06 AM
Israel plans to ask Germany to sell a sixth discounted Dolphin-class diesel submarine when Israeli Defense Minister Ehud Barak and Prime Minister Benjamin Netanyahu visit Berlin on Jan. 18, Reuters reported Jan. 14, citing officials. While Dolphins cost $700 million, the ones currently in Israel’s fleet were sold at a deep discount.
Turkey has accepted Israel’s apology in the diplomatic friction between Israeli Deputy Foreign Minister Daniel Ayalon and Turkish Ambassador Ahmet Oguz Celikkol, a resolution in which Israeli President Shimon Peres played a large part, Ynet reported Jan. 14, citing Turkish Foreign Ministry sources. One source called Peres the wisest man in the Middle East, a reference to his appeal to Israeli Prime Minister Benjamin Netanyahu and Foreign Minister Avigdor Lieberman to secure an apology.
Turkish Prime Minister Recep Tayyip Erdogan warned Lebanon this week that Israel could be planning an attack, Haaretz reported Jan. 14, citing a report in the London-based Arabic-language daily Asharq Al-Awsat. The daily, citing Lebanese sources, reported that Erdogan warned Lebanese leaders about a potential Israeli attack on Lebanon.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Honduras leaves ALBA
on: January 14, 2010, 11:24:41 AM
The Honduran Congress ratified interim President Roberto Micheletti’s decision to leave the Venezuelan-sponsored Bolivarian Alliance for the Americas (ALBA) on Jan. 12. This domestically significant move signals a reversal of the policies of ousted Honduran President Manuel Zelaya, who had built economic and political ties to Venezuela, which was part of his opponents’ motivation behind the June 2009 ouster. However, Honduran dependence on imported fuels means legislators will attempt to keep an oil import initiative implemented under Zelaya intact for now.
The decision to exit ALBA was approved by 122 of 128 congress members, with the six opposing votes coming from five leftist Democratic Unity (UD) legislators and a single National Innovation and Unity Party-Social Democratic Party (PINU-SD) member. ALBA financial aid to Honduras will be terminated as a result of the withdrawal, including $185 million earmarked for social programs to be returned Venezuela. Honduras will keep a donation of 100 tractors. After the congressional vote, an official said Honduras will not dismantle existing crude oil supply agreements with Venezuela under the Petrocaribe oil supply alliance, of which Honduras became a member in March 2008. Petrocaribe offers crude oil to member states, allowing them to cover up to 60 percent of payments up front with shipments of goods.
Venezuelan President Hugo Chavez suspended oil shipments to Honduras, which reportedly totaled 20,000 barrels per day, in July 2009 after demanding Zelaya’s reinstatement. Honduran legislators have made it clear that they expect oil shipments purchased from Venezuela with Petrocaribe credits prior to the political crisis will still be supplied, despite the Venezuelan cutoff — but this situation places any resumption of oil shipments firmly at Venezuela’s discretion. After Zelaya’s ouster, Honduran officials claimed that a rupture with Petrocaribe would not cause fuel shortages in Honduras, saying Mexico and other Caribbean nations could become alternate suppliers. Officials said there had been fuel supply problems before the political crisis, but the interruption of Venezuelan shipments does not seem to have caused significant problems.
The Honduran decision seems likely to heighten already-simmering tensions between the politically isolated Central American nation and ALBA members, particularly Venezuela and Nicaragua. ALBA members have yet to recognize the interim government, and the Honduran rejection of ALBA seems likely to sustain this polarization for the foreseeable future. The decision signals a firm shift away from relations with Venezuela, for now, and reflects the interim Honduran government’s continuing rejection of outside political interference.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Russia-- Europe
on: January 14, 2010, 11:22:33 AM
Spanish Foreign Minister Miguel Angel Moratinos on Jan. 12 praised Russia’s proposal for a new European security treaty as “timely” and in line with Europe’s interests. By putting forth that proposal Russia is not necessarily hoping to get Europe to agree to a particular security arrangement; rather, Moscow is looking to sow discord among European countries, particularly NATO members.
Spanish Foreign Minister Miguel Angel Moratinos visited Moscow on Jan. 12. Moratinos, whose country currently holds the European Union’s rotating presidency, called Russia’s proposal for a new European security treaty “timely” and said its implementation would be in line with Europe’s interests. He also specifically mentioned NATO’s ongoing efforts to create a new “Strategic Concept” document, saying that these efforts manifest “considerable interest” in the Russian security proposal.
Moratinos’ comments were not echoed at a Jan. 12 session of a group of experts, led by former U.S. Secretary of State Madeleine Albright, which met in Prague to draft proposals for the new NATO strategy document. Central European delegates at the meeting expressed considerable anxiety over NATO’s future, asking for assurances that NATO’s Article 5 — the very heart of the NATO alliance, which states that attack on one member is attack on the entire alliance — is still alive and well.
At the core of Central Europe’s unease are Russia’s ever-improving relations with Western European states.
NATO is undergoing its most significant strategic mission revamping since 1999, when it last updated its Strategic Concept document. In that update, NATO took into account the Balkan conflicts of the 1990s and outlined the parameters for NATO operations outside its membership zone, paving the way for the alliance’s role in such theaters of operations as Afghanistan. In 2010, the alliance plans to update its strategic vision at a conference to be held in Lisbon at the end of the year, prior to which it will hold a number of meetings such as the one in Prague.
(click here to enlarge image)
Central European NATO member states are well aware that they now form the buffer zone between Western Europe and a resurgent Russia. Ever since the Russia-Georgia conflict in 2008, Central Europe has asked for greater reassurances from the United States that NATO is willing to protect them. Poland, the Czech Republic and most recently Romania have been involved with U.S. ballistic missile defense, while the Baltic states have asked the United States for greater military cooperation on the ground.
The response, however, has not been to their satisfaction. First, Western Europe and the United States stood idly by while Georgia, a stated U.S. ally, lost its brief war with Russia in 2008. Second, Washington decided to (briefly) abandon its BMD plans in Poland and the Czech Republic in the fall of 2009 in an effort to elicit Russia’s cooperation in Afghanistan and on the Iranian nuclear program. While the U.S. eventually amended its decision, Prague and Warsaw got the sense that they were expendable in the grand geopolitical game. Finally, Central Europeans are closely observing Russia’s warming relations with the main Western European states — particularly Germany, France and Italy. The Kremlin is signing energy deals with these states and offering lucrative assets in the upcoming privatizations of state enterprises in Russia.
The last straw for Central Europe may be Russia’s proposed new European security treaty, meant to integrate Russia more into Europe’s security decision-making. Russian President Dmitri Medvedev first hinted at the proposal after the Georgian war. It was then put forward as a slightly less vague — but still unclear — draft at the beginning of December 2009. For Russia the draft and the treaty itself are not important. Moscow understands well that Western Europe has no intention of abandoning NATO. However, the positive response the draft received from Western European nations — such as the Spanish foreign minister’s comments — is exactly what Russia wanted. For Russia, the point is not to sway Western Europe into an unrealistic new security alliance (although it would love to do just that), but rather to sow discord among NATO member states.
The Central Europeans therefore are taking the lead in refocusing the debate about NATO’s new strategy — which until now has been about identifying new global threats such as energy security, cyberwarfare and climate change — toward Russia. They are asking for concrete assurances that Article 5 is alive and well. Czech Foreign Minister Jan Kohout, hosting the Jan. 12 meeting on NATO’s new strategy, explicitly said that “it is critical for us that the level of security is the same for all members, meaning that Article 5 … is somehow re-confirmed.” One of the proposals at the meeting included drafting a clear and precise defense plan in the case of an attack against the region, presumably by Russia.
The question now is how these demands will be met by Western Europe — and Berlin specifically — which is unwilling to upset its relationship with Russia, particularly not for the sake of Central Europeans. While the United States and Western Europe may be willing to grant a token reaffirmation of Article 5, it is unlikely that Berlin would want to get into the specifics of designing a military response to a hypothetical Russian attack, particularly not one that would be publicly unveiled. Washington might be more amenable to such concrete proposals, but with Russian supply lines crucial for U.S. efforts to sustain a troop surge in Afghanistan, it is not certain that even Washington would be able to give a more direct reassurance.
Ultimately, a token reassurance may not be enough for Central Europe. The coming debate over NATO’s 2010 strategic revamp — with the next meeting scheduled for Jan. 14 in Oslo — could therefore open fissures in the alliance, an outcome Moscow had in mind from the start.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Ukraine- part 2
on: January 14, 2010, 11:18:42 AM
On Jan. 17, Ukraine is scheduled to hold a presidential election that will sweep the last remnant of the pro-Western Orange Revolution — Ukrainian President Viktor Yushchenko — from power in Kiev. Yushchenko’s presidency has been marked by pro-Western moves on many levels, including attempts to join the European Union and NATO. However, the next government in Kiev — pro-Russian though it may be — could still have a place for Yushchenko.
Editor’s Note: This is the second part of a three-part series on Ukraine’s upcoming presidential election.
Ukrainian President Viktor Yushchenko is the last remnant of the pro-Western Orange Revolution. Now that his popularity has plummeted and his coalition partner, Prime Minister Yulia Timoshenko, has turned pro-Russian, he is set to be swept aside by Ukraine’s Jan. 17 presidential election.
Yushchenko led the Orange Revolution, and his presidency kept Russia from completely enveloping Ukraine. Although the upcoming presidential election will deliver Ukraine into Russia’s hands, Yushchenko might not be ejected from Kiev altogether.
Yushchenko entered the government in 1999 when he was nominated as prime minister by then-President Leonid Kuchma after a round of infighting over the premiership. As prime minister, Yushchenko — a former central bank chief — helped Ukraine economically and helped keep relative internal stability for two years. Yet even while he served in the government, Yushchenko partnered with Timoshenko — his deputy prime minister — and started a movement against Kuchma. When a vote of no confidence ended Yushchenko’s premiership in 2001, he and his coalition partners accelerated their anti-Kuchma movement, aiming to make Yushchenko president in 2004 with Timoshenko as his prime minister. In the 2004 election, Yushchenko faced another of Kuchma’s prime ministers, Viktor Yanukovich.
Yushchenko became the West’s great hope during the 2004 presidential campaign, as he vowed to integrate Ukraine with the West and seek membership in NATO and the European Union. Although the West fully supported Yushchenko, other parties were not as thrilled with his candidacy. During the campaign, he was poisoned with dioxin, a carcinogenic substance whose outward effects include facial disfigurement. Yushchenko’s camp charged that Russian security services were behind the poisoning.
When the presidential election was held, Yanukovich was declared the winner. However, voter fraud reportedly was rampant, and mass protests erupted across the country in what would become known as the Orange Revolution. Ukraine’s top court nullified the results of the first election, and when a second election was held, Yushchenko emerged victorious.
Yushchenko has acted against Russia on many levels during his presidency — from calling the Great Famine of the 1930s an act of genocide engineered by Josef Stalin to threatening to oust the Russian navy from Crimea and even trying to break the Ukrainian Orthodox Church and Russian Orthodox Church apart. He also tried to fulfill his promises that Ukraine would join NATO and the European Union (but these ideas proved too bold for some Western states, particularly Germany, since accepting Ukraine into either organization would enrage Russia). Most importantly, Yushchenko and his Orange Revolution were able to keep Ukraine from falling completely into Russia’s hands for at least five years. Yushchenko used the president’s control over foreign policy and Ukraine’s secret service and military to stave off Russia’s attempts to assert control over the country.
But all was not well in Kiev during Yushchenko’s presidency. His coalition with Timoshenko collapsed barely nine months after Timoshenko was named prime minister. Furthermore, Yushchenko was feeling the pressure of being a pro-Western leader in a country where much of the population remained pro-Russian or at least ambivalent enough that mere promises of pro-Western reform would not sway their vote. Yushchenko tried to find a balance in his government by naming Yanukovich prime minister in 2006, but this led to a series of shifting coalitions and overall instability in Kiev. It also stripped Yushchenko of much of his credibility as a strong pro-Western leader. His popularity has been in decline ever since.
Even though his polling numbers are currently at 3.8 percent, which places him behind five other candidates at the time of this writing, Yushchenko is trying for re-election. Unless he cancels the election — which would cause a massive uprising — this is the end of his presidency and of the Orange Revolution.
However, it might not be the end of his work inside the government. STRATFOR sources in Kiev have said that Yushchenko, Yanukovich and Russian officials are in talks that could lead Yushchenko to a relatively powerless premiership in Ukraine — a move to block Timoshenko and appease the Western-leaning parts of the country. There are regions in Western Ukraine that feel no allegiance to Russia. The Orange Revolution was strongest in the area around Lviv, a part of Ukraine that feels much more oriented toward neighboring Poland and the West. This region could very well become restive with the reversal of the Orange Revolution. A pro-Russian president, therefore, might have to include Yushchenko in the government to prevent fissures within the country. Though such a decision could create the same kind of political drama Kiev has seen in the past few years, Moscow will want to ensure that if such political chaos does occur Yushchenko will know his — and Ukraine’s — place under Russia.
Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Madison on debt, to Congress, 1790
on: January 14, 2010, 07:54:05 AM
"There is not a more important and fundamental principle in legislation, than that the ways and means ought always to face the public engagements; that our appropriations should ever go hand in hand with our promises. To say that the United States should be answerable for twenty-five millions of dollars without knowing whether the ways and means can be provided, and without knowing whether those who are to succeed us will think with us on the subject, would be rash and unjustifiable. Sir, in my opinion, it would be hazarding the public faith in a manner contrary to every idea of prudence." --James Madison, Speech in Congress, 1790
Politics, Religion, Science, Culture and Humanities / Politics & Religion / WSJ: Stimulus Fraud
on: January 14, 2010, 07:38:03 AM
The piece misses the point that the better strategy would be NOT to have stimulus, but does note the massiveness of the fraud coming down the pike.
By DANIEL J. CASTLEMAN
The Obama administration—and state and local governments—should brace themselves for fraud on an Olympic scale as hundreds of billions of taxpayer dollars continue to pour into job creation efforts.
Where there are government handouts, fraud, waste and abuse are rarely far behind. The sheer scale of the first and expected second stimulus packages combined with the multitiered distribution channel—from Washington to the states to community agencies to contractors and finally to workers—are simply irresistible catnip to con men and thieves.
There are already warning signs. The Department of Energy's inspector general said in a report in December that staffing shortages and other internal weaknesses all but guarantee that at least some of the agency's $37 billion economic-stimulus funds will be misused. A tenfold increase in funding for an obscure federal program that installs insulation in homes has state attorneys general quietly admitting there is little hope of keeping track of the money.
While I was in charge of investigations at the Manhattan District Attorney's office, we brought case after case where kickbacks, bid-rigging, false invoicing schemes and outright theft routinely amounted to a tenth of the contract value. This was true in industries as diverse as the maintenance of luxury co-ops and condos, interior construction and renovation of office buildings, court construction projects, dormitory construction projects, even the distribution of copy paper. In one insurance fraud case, the schemers actually referred to themselves as the "Ten Percenters."
Based on past experience, the cost of fraud involving federal government stimulus outlays of more than $850 billion and climbing could easily reach $100 billion. Who will prevent this? Probably no one, particularly at the state and local level.
New York, for instance, has an aggressive inspector general's office, with experienced and dedicated professionals. But, it is already woefully understaffed—with a head count of only 62 people—to police the state's already existing agencies and programs. There is simply no way that office can effectively scrutinize the influx of $31 billion in state stimulus money.
There is a solution however, which is to set aside a small percentage of the money distributed to fund fraud prevention and detection programs. This will ensure that states and municipalities can protect projects from fraud without tapping already thinly stretched resources.
Meaningful fraud prevention, detection and investigation can be funded by setting aside no more than 2% of the stimulus money received. For example, if a county is to receive $50 million for an infrastructure project, $1 million should be set aside to fund antifraud efforts; if it costs less, the remainder can be returned to the project's budget.
While the most obvious option might be to simply pump the fraud prevention funds into pre-existing law enforcement agencies, that would be a mistake. Government agencies take too long to staff up and rarely staff down.
A better idea is to tap the former government prosecutors, regulators and detectives with experience in fraud investigations now working in the private sector. If these resources can be harnessed, effective watchdog programs can be put in place in a timely manner. Competition between private-sector bidders will also lower the cost.
Some might object to providing a "windfall" to private companies. Any such concern is misplaced. One should not look at the 2% spent, but rather the 8% potentially saved. Moreover, consider the alternative: law enforcement agencies swamped trying to stem the tide of corruption on a shoestring and a prayer.
There will always be individuals who will rip off money meant for public projects. In the aftermath of the 9/11 attacks, and Hurricane Katrina hundreds of people were prosecuted for trying to steal relief funds. But the stimulus funding represents the kind of payday even the most ambitious fraudster could never have imagined
To avoid a stimulus fraud Olympics that will be impossible to clean up, it is better to spend a little now to save a lot later. The savings could put honest people to work and fraudsters out of business.
Mr. Castleman, a former chief assistant Manhattan district attorney, is a managing director at FTI Consulting.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / WSJ: Smart Power in Yemen
on: January 14, 2010, 07:21:33 AM
No opinion on the merits of this piece. I post it simply to begin the conversation on Yemen:
By FREDERICK W. KAGAN AND CHRISTOPHER HARNISCH
President Barack Obama has made it clear that he does not intend to send American ground forces into Yemen, and rightly so. But American policy toward Yemen, even after the Christmas terrorist attempt, remains focused on limited counterterrorist approaches that failed in Afghanistan in the 1990s and have created tension in Pakistan since 2001.
Yemen faces enormous challenges. Its 24 million people are divided into three antagonistic groups: a Zaydi Shiite minority now fighting against the central government (the Houthi rebellion); the inhabitants of the former Yemen Arab Republic (in the north); and the inhabitants of the former Peoples Democratic Republic of Yemen (in the south), many of whom are engaged in a secessionist rebellion. Its government is corrupt, its security forces have limited capabilities, and a large swath of its population is addicted to a drug called qat.
The World Bank estimates that Yemen will stop earning a profit on its oil production by 2017 (oil now accounts for more than half of the country's export income). Only 46% of rural Yemenis have access to adequate water (40% of the country's water goes to growing qat), and some estimates suggest Yemen will run out of water for its people within a decade.
American policy in Yemen has focused heavily on fighting al Qaeda, but it has failed to address the conditions that make the country a terrorist safe haven. Targeted strikes in 2002 killed key al Qaeda leaders in Yemen, and the group went relatively quiet for several years. The U.S. military has been working to build up the Yemeni Coast Guard (to prevent attacks similar to the one on the USS Cole in 2000) and to improve the counterterrorist capabilities of the Yemeni military in general.
But the U.S. has resisted supporting President Ali Abdallah Salah's efforts to defeat the Houthi insurgency, generating understandable friction with our would-be partner. As we have found repeatedly in similar situations around the world (particularly in Pakistan), local governments will not focus on terrorist groups that primarily threaten the U.S. or their neighbors at the expense of security challenges that threaten them directly. A strategy that attempts to pressure or bribe them to go after our enemies is likely to fail.
Mr. Salah is an unpalatable partner, and we don't want to be drawn into Yemen's internal conflicts more than necessary. But he is the only partner we have in Yemen. If we want him to take our side in the fight against al Qaeda, we have to take his side in the fight against the Houthis.
The U.S. must also develop a coherent approach that will help Yemen's government improve itself, address its looming economic and social catastrophes, and improve the ability of its military, intelligence and police organs to establish security throughout the country. The U.S. now maintains an earnest but understaffed and under-resourced USAID mission in the American embassy in Sana, the country's capital. But because of security concerns, U.S. officials are largely restricted to Sana and therefore cannot directly oversee the limited programs they support, let alone help address systemic governance failures.
Yemen received $150 million in USAID funds in 2009—one-tenth the amount dispensed in Afghanistan; less than one-fifth the amount provided to Gaza and the West Bank; and roughly half of what Nigeria received. The Pentagon recently said it would like to double the roughly $70 million Yemen received in security assistance. But the total pool from which that money would come from in 2010 is only $350 million, according to Pentagon spokesman Geoff Morrell, and there are other pressing demands for those funds.
The problems in Yemen will not be solved simply by throwing American money at them. But dollars are the soldiers of the smart power approach. Having a lot of them does not guarantee success, but having too few does guarantee failure.
Developing a coherent strategy focused on the right objectives is important, and hard to do. The country team in any normal American embassy (like the one in Sana) does not have the staff, resources or experience to do so. The limited American military presence in Yemen does not either. Despite years of talk about the need to develop this kind of capability in the State Department or elsewhere in Washington, it does not exist. It must be built now, and quickly.
The president could do that by instructing Secretary of State Hillary Clinton to form a Joint Interagency Task Force on Yemen. Its mission would be to develop and implement a strategy to improve the effectiveness of the Yemeni government and security forces, re-establish civil order, and eliminate the al Qaeda safe haven. Its personnel should include the Yemen country team, headed by the ambassador, and experts from other relevant U.S. agencies as well as sufficient staff to develop and execute programs. An immediate priority must be to provide security to American officials in Yemen that will enable them to travel around, even though there will not be American forces on the ground to protect them.
This strategy will require helping Yemen defeat the Houthi insurgency and resolve the southern secessionist tensions without creating a full-blown insurgency in the south. It will also require a nuanced strategy to help the Yemeni government disentangle al Qaeda from the southern tribes that now support or tolerate it.
One of the key errors the Bush administration made in Afghanistan and Iraq was to focus excessively on solving immediate security problems without preparing for the aftermath. Too narrow a focus on improving counterterrorist strikes in Yemen without addressing the larger context of the terrorist threat growing in that country may well lead to similar results. If the Obama administration wants to avoid sending troops to Yemen, it must act boldly now.
Mr. Kagan is resident scholar and director of the Critical Threats Project at the American Enterprise Institute. Mr. Harnisch is a researcher and the head of the Gulf of Aden Team at the Critical Threats Project.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / AQ, Drugs, Guns, West Africa, Venezuela-2
on: January 14, 2010, 07:04:53 AM
In December, Antonio Maria Costa, the executive director of the UN Office on
Drugs and Crime, told a special session of the UN Security Council that
drugs were being traded by "terrorists and anti-government forces" to fund
their operations from the Andes, to Asia and the African Sahel.
"In the past, trade across the Sahara was by caravans," he said. "Today it
is larger in size, faster at delivery and more high-tech, as evidenced by
the debris of a Boeing 727 found on November 2nd in the Gao region of
Mali -- an area affected by insurgency and terrorism."
Just days later, U.S. Drug Enforcement Administration officials arrested
three West African men following a sting operation in Ghana. The men, all
from Mali, were extradited to New York on December 16 on drug trafficking
and terrorism charges.
Oumar Issa, Harouna Toure, and Idriss Abelrahman are accused of plotting to
transport cocaine across Africa with the intent to support al Qaeda, its
local affiliate AQIM and the FARC. The charges provided evidence of what the
DEA's top official in Colombia described to a Reuters reporter as "an unholy
alliance between South American narco-terrorists and Islamic extremists."
Some experts are skeptical, however, that the men are any more than
criminals. They questioned whether the drug dealers oversold their al Qaeda
connections to get their hands on the cocaine.
In its criminal complaint, the DEA said Toure had led an armed group
affiliated to al Qaeda that could move the cocaine from Ghana through North
Africa to Spain for a fee of $2,000 per kilo for transportation and
Toure discussed two different overland routes with an undercover informant.
One was through Algeria and Morocco; the other via Algeria to Libya. He told
the informer that the group had worked with al Qaeda to transport between
one and two tons of hashish to Tunisia, as well as smuggle Pakistani, Indian
and Bangladeshi migrants into Spain.
In any event, AQIM has been gaining in notoriety. Security analysts warn
that cash stemming from the trans-Saharan coke trade could transform the
organization -- a small, agile group whose southern-Sahel wing is estimated
to number between 100 and 200 men -- into a more potent threat in the region
that stretches from Mauritania to Niger. It is an area with huge foreign
investments in oil, mining and a possible trans-Sahara gas pipeline.
"These groups are going to have a lot more money than they've had before,
and I think you are going to see them with much more sophisticated weapons,"
said Douglas Farah, a senior fellow at the International Assessment Strategy
Center, a Washington based security think-tank.
NARCOTIC INDUSTRIAL DEPOT
The Timbuktu region covers more than a third of northern Mali, where the
parched, scrubby Sahel shades into the endless, rolling dunes of the Sahara
Desert. It is an area several times the size of Switzerland, much of it
beyond state control.
Moulaye Haidara, the customs official, said the sharp influx of cocaine by
air has transformed the area into an "industrial depot" for cocaine.
Sitting in a cool, dark, mud-brick office building in the city where nomadic
Tuareg mingle with Arabs and African Songhay, Fulani and Mande peoples,
Haidara expresses alarm at the challenge local law enforcement faces.
Using profits from the trade, the smugglers have already bought "automatic
weapons, and they are very determined," Haidara said. He added that they
"call themselves Al Qaeda," though he believes the group had nothing to do
with religion, but used it as "an ideological base."
Local authorities say four-wheel-drive Toyota SUVs outfitted with GPS
navigation equipment and satellite telephones are standard issue for
smugglers. Residents say traffickers deflate the tires to gain better
traction on the loose Saharan sands, and can travel at speeds of up to 70
miles-per-hour in convoys along routes to North Africa.
Timbuktu governor, Colonel Mamadou Mangara, said he believes traffickers
have air-conditioned tents that enable them to operate in areas of the
Sahara where summer temperatures are so fierce that they "scorch your
shoes." He added that the army lacked such equipment. A growing number of
people in the impoverished region, where transport by donkey cart and camel
are still common, are being drawn to the trade. They can earn 4 to 5 million
CFA Francs (roughly $9-11,000) on just one coke run.
"Smuggling can be attractive to people here who can make only $100 or $200 a
month," said Mohamed Ag Hamalek, a Tuareg tourist guide in Timbuktu, whose
family until recently earned their keep hauling rock salt by camel train,
using the stars to navigate the Sahara.
Haidara described northern Mali as a no-go area for the customs service.
"There is now a red line across northern Mali, nobody can go there," he
said, sketching a map of the country on a scrap of paper with a ballpoint
pen. "If you go there with feeble means ... you don't come back."
Speaking in Dakar this week, Schmidt, the U.N. official, said that growing
clandestine air traffic required urgent action on the part of the
"This should be the highest concern for governments ... For West African
countries, for West European countries, for Russia and the U.S., this should
be very high on the agenda," he said.
Stopping the trade, as the traffickers are undoubtedly aware, is a huge
challenge -- diplomatically, structurally and economically.
Venezuela, the takeoff or refueling point for aircraft making the trip, has
a confrontational relationship with Colombia, where President Alvaro Uribe
has focused on crushing the FARC's 45-year-old insurgency. The nation's
leftist leader, Hugo Chavez, won't allow in the DEA to work in the country.
In a measure of his hostility to Washington, he scrambled two F16 fighter
jets last week to intercept an American P3 aircraft -- a plane used to seek
out and track drug traffickers -- which he said had twice violated
Venezuelan airspace. He says the United States and Colombia are using
anti-drug operations as a cover for a planned invasion of his oil-rich
country. Washington and Bogota dismiss the allegation.
In terms of curbing trafficking, the DEA has by far the largest overseas
presence of any U.S. federal law enforcement, with 83 offices in 62
countries. But it is spread thin in Africa where it has just four offices --
in Nigeria, Ghana, Egypt and South Africa -- though there are plans to open
a fifth office in Kenya.
Law enforcement agencies from Europe as well as Interpol are also at work to
curb the trade. But locally, officials are quick to point out that Africa is
losing the war on drugs.
The most glaring problem, as Mali's example shows, is a lack of resources.
The only arrests made in connection with the Boeing came days after it was
found in the desert -- and those incarcerated turned out to be desert nomads
cannibalizing the plane's aluminum skin, probably to make cooking pots. They
were soon released.
Police in Guinea Bissau, meanwhile, told Reuters they have few guns, no
money for gas for vehicles given by donor governments and no high security
prison to hold criminals.
Corruption is also a problem. The army has freed several traffickers charged
or detained by authorities seeking to tackle the problem, police and rights
Serious questions remain about why Malian authorities took so long to report
the Boeing's discovery to the international law enforcement community.
What is particularly worrying to U.S. interests is that the networks of
aircraft are not just flying one way -- hauling coke to Africa from Latin
America -- but are also flying back to the Americas.
The internal Department of Homeland Security memorandum reviewed by Reuters
cited one instance in which an aircraft from Africa landed in Mexico with
passengers and unexamined cargo.
The Gulfstream II jet arrived in Cancun, by way of Margarita Island,
Venezuela, en route from Africa. The aircraft, which was on an aviation
watch list, carried just two passengers. One was a U.S. national with no
luggage, the other a citizen of the Republic of Congo with a diplomatic
passport and a briefcase, which was not searched.
"The obvious huge concern is that you have a transportation system that is
capable of transporting tons of cocaine from west to east," said the
aviation specialist who wrote the Homeland Security report.
"But it's reckless to assume that nothing is coming back, and when there's
terrorist organizations on either side of this pipeline, it should be a high
priority to find out what is coming back on those airplanes."
(Additional reporting by Tiemoko Diallo in Mali, Alberto Dabo in Guinea
Bissau and Hugh Bronstein in Colombia, editing by Jim Impoco and Claudia
Politics, Religion, Science, Culture and Humanities / Politics & Religion / AQ, Drugs, Guns, West Africa, Venezuela
on: January 14, 2010, 07:03:58 AM
Al Qaeda linked to rogue aviation networkhttp://www.reuters.com/article/idUSTRE60C3E820100113
TIMBUKTU, Mali (Reuters) - In early 2008, an official at the U.S. Department
of Homeland Security sent a report to his superiors detailing what he called
"the most significant development in the criminal exploitation of aircraft
The document warned that a growing fleet of rogue jet aircraft was regularly
crisscrossing the Atlantic Ocean. On one end of the air route, it said, are
cocaine-producing areas in the Andes controlled by the leftist Revolutionary
Armed Forces of Colombia. On the other are some of West Africa's most
The report, a copy of which was obtained by Reuters, was ignored, and the
problem has since escalated into what security officials in several
countries describe as a global security threat.
The clandestine fleet has grown to include twin-engine turboprops, executive
jets and retired Boeing 727s that are flying multi-ton loads of cocaine and
possibly weapons to an area in Africa where factions of al Qaeda are
believed to be facilitating the smuggling of drugs to Europe, the officials
Al Qaeda in the Islamic Maghreb (AQIM) has been held responsible for car and
suicide bombings in Algeria and Mauritania.
Gunmen and bandits with links to AQIM have also stepped up kidnappings of
Europeans for ransom, who are then passed on to AQIM factions seeking ransom
The aircraft hopscotch across South American countries, picking up tons of
cocaine and jet fuel, officials say. They then soar across the Atlantic to
West Africa and the Sahel, where the drugs are funneled across the Sahara
Desert and into Europe.
An examination of documents and interviews with officials in the United
States and three West African nations suggest that at least 10 aircraft have
been discovered using this air route since 2006. Officials warn that many of
these aircraft were detected purely by chance. They caution that the real
number involved in the networks is likely considerably higher.
Alexandre Schmidt, regional representative for West and Central Africa for
the UN Office on Drugs and Crime, cautioned in Dakar this week that the
aviation network has expanded in the past 12 months and now likely includes
several Boeing 727 aircraft.
"When you have this high capacity for transporting drugs into West Africa,
this means that you have the capacity to transport as well other goods, so
it is definitely a threat to security anywhere in the world," said Schmidt.
The "other goods" officials are most worried about are weapons that militant
organizations can smuggle on the jet aircraft. A Boeing 727 can handle up to
10 tons of cargo.
The U.S. official who wrote the report for the Department of Homeland
Security said the al Qaeda connection was unclear at the time.
The official is a counter-narcotics aviation expert who asked to remain
anonymous as he is not authorized to speak on the record. He said he was
dismayed by the lack of attention to the matter since he wrote the report.
"You've got an established terrorist connection on this side of the
Atlantic. Now on the Africa side you have the al Qaeda connection and it's
extremely disturbing and a little bit mystifying that it's not one of the
top priorities of the government," he said.
Since the September 11 attacks, the security system for passenger air
traffic has been ratcheted up in the United States and throughout much of
the rest of the world, with the latest measures imposed just weeks ago after
a failed bomb attempt on a Detroit-bound plane on December 25.
"The bad guys have responded with their own aviation network that is out
there everyday flying loads and moving contraband," said the official, "and
the government seems to be oblivious to it."
The upshot, he said, is that militant organizations -- including groups like
the FARC and al Qaeda -- have the "power to move people and material and
contraband anywhere around the world with a couple of fuel stops."
The lucrative drug trade is already having a deleterious impact on West
African nations. Local authorities told Reuters they are increasingly
outgunned and unable to stop the smugglers.
And significantly, many experts say, the drug trafficking is bringing in
huge revenues to groups that say they are part of al Qaeda. It's swelling
not just their coffers but also their ranks, they say, as drug money is
becoming an effective recruiting tool in some of the world's most
desperately poor regions.
U.S. President Barack Obama has chided his intelligence officials for not
pooling information "to connect those dots" to prevent threats from being
realized. But these dots, scattered across two continents like flaring
traces on a radar screen, remain largely unconnected and the fleets
themselves are still flying.
THE AFRICAN CONNECTION
The deadly cocaine trade always follows the money, and its cash-flush
traffickers seek out the routes that are the mostly lightly policed.
Beset by corruption and poverty, weak countries across West Africa have
become staging platforms for transporting between 30 tons and 100 tons of
cocaine each year that ends up in Europe, according to U.N. estimates.
Drug trafficking, though on a much smaller scale, has existed here and
elsewhere on the continent since at least the late 1990s, according to local
authorities and U.S. enforcement officials.
Earlier this decade, sea interdictions were stepped up. So smugglers
developed an air fleet that is able to transport tons of cocaine from the
Andes to African nations that include Mauritania, Mali, Sierra Leone and
Guinea Bissau.What these countries have in common are numerous disused
landing strips and makeshift runways -- most without radar or police
presence. Guinea Bissau has no aviation radar at all. As fleets grew, so,
too, did the drug trade.
The DEA says all aircraft seized in West Africa had departed Venezuela. That
nation's location on the Caribbean and Atlantic seaboard of South America
makes it an ideal takeoff place for drug flights bound for Africa, they say.
A number of aircraft have been retrofitted with additional fuel tanks to
allow in-flight refueling -- a technique innovated by Mexico's drug
smugglers. (Cartel pilots there have been known to stretch an aircraft's
flight range by putting a water mattress filled with aviation fuel in the
cabin, then stacking cargoes of marijuana bundles on top to act as an
improvised fuel pump.)
Ploys used by the cartel aviators to mask the flights include fraudulent
pilot certificates, false registration documents and altered tail numbers to
steer clear of law enforcement lookout lists, investigators say. Some
aircraft have also been found without air-worthiness certificates or log
books. When smugglers are forced to abandon them, they torch them to destroy
forensic and other evidence like serial numbers.
The evidence suggests that some Africa-bound cocaine jets also file a
regional flight plan to avoid arousing suspicion from investigators. They
then subsequently change them at the last minute, confident that their
switch will go undetected.
One Gulfstream II jet, waiting with its engines running to take on 2.3 tons
of cocaine at Margarita Island in Venezuela, requested a last-minute flight
plan change to war-ravaged Sierra Leone in West Africa. It was nabbed
moments later by Venezuelan troops, the report seen by Reuters showed.
Once airborne, the planes soar to altitudes used by commercial jets. They
have little fear of interdiction as there is no long-range radar coverage
over the Atlantic. Current detection efforts by U.S. authorities, using
fixed radar and P3 aircraft, are limited to traditional Caribbean and north
Atlantic air and marine transit corridors.
The aircraft land at airports, disused runways or improvised air strips in
Africa. One bearing a false Red Cross emblem touched down without
authorization onto an unlit strip at Lungi International Airport in Sierra
Leone in 2008, according to a U.N. report.
Late last year a Boeing 727 landed on an improvised runway using the
hard-packed sand of a Tuareg camel caravan route in Mali, where local
officials said smugglers offloaded between 2 and 10 tons of cocaine before
dousing the jet with fuel and burning it after it failed to take off again.
For years, traffickers in Mexico have bribed officials to allow them to land
and offload cocaine flights at commercial airports. That's now happening in
Africa as well. In July 2008, troops in coup-prone Guinea Bissau secured
Bissau international airport to allow an unscheduled cocaine flight to land,
according to Edmundo Mendes, a director with the Judicial Police.
"When we got there, the soldiers were protecting the aircraft," said Mendes,
who tried to nab the Gulfstream II jet packed with an estimated $50 million
in cocaine but was blocked by the military.
"The soldiers verbally threatened us," he said. The cocaine was never
recovered. Just last week, Reuters photographed two aircraft at Osvaldo
Vieira International Airport in Guinea Bissau -- one had been dispatched by
traffickers from Senegal to try to repair the other, a Gulfstream II jet,
after it developed mechanical problems. Police seized the second aircraft.
One of the clearest indications of how much this aviation network has
advanced was the discovery, on November 2, of the burned out fuselage of an
aging Boeing 727. Local authorities found it resting on its side in rolling
sands in Mali. In several ways, the use of such an aircraft marks a
significant advance for smugglers.
Boeing jetliners, like the one discovered in Mali, can fly a cargo of
several tons into remote areas. They also require a three-man crew -- a
pilot, co pilot and flight engineer, primarily to manage the complex fuel
system dating from an era before automation.
Hundreds of miles to the west, in the sultry, former Portuguese colony of
Guinea Bissau, national Interpol director Calvario Ahukharie said several
abandoned airfields, including strips used at one time by the Portuguese
military, had recently been restored by "drug mafias" for illicit flights.
"In the past, the planes coming from Latin America usually landed at Bissau
airport," Ahukharie said as a generator churned the feeble air-conditioning
in his office during one of the city's frequent blackouts.
"But now they land at airports in southern and eastern Bissau where the
judicial police have no presence."
Ahukharie said drug flights are landing at Cacine, in eastern Bissau, and
Bubaque in the Bijagos Archipelago, a chain of more than 80 islands off the
Atlantic coast. Interpol said it hears about the flights from locals,
although they have been unable to seize aircraft, citing a lack of
The drug trade, by both air and sea, has already had a devastating impact on
Guinea Bissau. A dispute over trafficking has been linked to the
assassination of the military chief of staff, General Batista Tagme Na Wai
in 2009. Hours later, the country's president, Joao Bernardo Vieira, was
hacked to death by machete in his home.
Asked how serious the issue of air trafficking remained for Guinea Bissau,
Ahukharie was unambiguous: "The problem is grave."
The situation is potentially worse in the Sahel-Sahara, where cocaine is
arriving by the ton. There it is fed into well-established overland
trafficking routes across the Sahara where government influence is limited
and where factions of al Qaeda in the Islamic Maghreb have become
The group, previously known as the Salafist Group for Preaching and Combat,
is raising millions of dollars from the kidnap of Europeans.
Analysts say militants strike deals of convenience with Tuareg rebels and
smugglers of arms, cigarettes and drugs. According to a growing pattern of
evidence, the group may now be deriving hefty revenues from facilitating the
smuggling of FARC-made cocaine to the shores of Europe.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Hit complicates negotiations
on: January 14, 2010, 06:41:37 AM
Iranian Attack Complicates Nuclear Negotiations
MASSOUD ALI-MOHAMMADI, an Iranian physics professor at Tehran University, died early Tuesday when an improvised explosive device detonated outside his home as he pulled out of the driveway to go to work.
Ali-Mohammadi had been described by most media as a nuclear physicist. Since bombings in Tehran are quite rare and Iranian nuclear physicists are a bit of a hot commodity in the Islamic Republic, speculation quickly spread that the attack was the work of a foreign intelligence organization –- like the Israeli Mossad — to decapitate Iran’s nuclear program. Reports from the Iranian state press and Iranian officials propagated this idea, claiming that the Iranian Foreign Ministry had evidence that the bomb was planted by “Zionist and American agents.”
But upon further investigation, we found quite a few holes in that theory. For one thing, Israel would only target Ali-Mohammadi if he were a major figure in the Iranian nuclear establishment. From what we were able to discern, Ali-Mohammadi did not appear to be more than an academic who wrote frequently on theoretical physics, an area that has little direct applicability to the development of a weapons program. His apparently marginal role in Iranian nuclear affairs, along with the fact that he was a supporter of the Green Movement and was not living under the type of strict security one would expect of a nuclear scientist working on a sensitive operation for the state, led us to doubt claims that this was a Mossad operation.
“There are no clear answers as to who murdered Ali-Mohammadi, but the implications of the attack are easier to discern.”
Obscure Iranian dissident groups have thrown out other highly dubious claims, while some of our sources indicate that the attack was orchestrated by the regime itself to strengthen its position at home. There are no clear answers as to who murdered Ali-Mohammadi and for what purpose, but the implications of the attack are easier to discern.
Regardless of whether this attack was committed by Israel, a hard-line faction of the Iranian regime or a dissident group, Iran has portrayed the incident as an attack by a foreign intelligence organization on Iranian soil. That is a claim that resonates deeply inside the Islamic Republic. It also puts on the spot many of the opposition figures who don’t want to be accused of acting as enemies of the state when the state is claiming it is under siege by foreign rivals.
The attack consequently spells trouble for negotiations between the West and Iran over the latter’s nuclear program. Whether or not this result was intended by the regime, it will now be difficult –- at least in the short term — for Iran to publicly engage with the United States over the nuclear issue without losing face at home. Iran — by claiming its own scientists are under attack — now has added political justification to become more obstinate in those negotiations.
That could present an opportunity for Israel. Israel has kept quiet in recent weeks as yet another U.S. deadline has come and gone for Iran to respond to the West’s nuclear proposal to ship the bulk of Iran’s low-enriched uranium abroad for further enrichment. Iran has been increasingly cooperative in the past several days in entertaining the proposal and demonstrating its interest in the diplomatic track, while maintaining its own demand to swap the nuclear fuel in batches. The U.S. administration has continued resisting this demand, but has been making a concerted effort to demonstrate that it is making real progress with the Iranians to fend off an Israeli push for military action.
Israel, however, doesn’t have much faith in the current diplomatic process, which it sees as another Iranian maneuver to keep the West talking while Tehran buys time in developing its nuclear capability. As a result, Israel has made clear to the United States that it will not tolerate another string of broken deadlines. If Iran becomes more inflexible in the nuclear negotiations, Israel will have a stronger argument to make to the United States that the diplomatic course with Iran has expired. And should the United States be driven by the Israelis to admit the futility of the diplomatic course, the menu of choices in dealing with Iran could narrow considerably.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Well, that didn't take long , , ,
on: January 14, 2010, 06:39:01 AM
This from POTH
Justice Dept. Fights Bias in Lending Recommend
By CHARLIE SAVAGE
Published: January 13, 2010
WASHINGTON — The Justice Department is beginning a major campaign against banks and mortgage brokers suspected of discriminating against minority applicants in lending, opening a new front in the Obama administration’s response to the foreclosure crisis.
Tom Perez, the assistant attorney general for the department’s Civil Rights Division, is expected to announce Thursday in New York that the administration is creating a new unit that will focus exclusively on unfair lending practices.
“We are looking at any and every practice in the industry,” Mr. Perez said in a recent interview.
As part of an expansion of the Civil Rights Division approved by Congress last year, the Justice Department is hiring at least four lawyers and an economist for the new unit, while about half a dozen current staff members will transfer into it.
Mr. Perez plans to formally announce the new unit at the “Wall Street Project” conference organized by the Rev. Jesse Jackson’s Rainbow/PUSH Coalition. He characterized the effort as a major turnaround, and criticized the previous administration as failing to scrutinize lending practices amid the subprime mortgage boom.
While past lending discrimination cases primarily focused on “redlining” — a bank’s refusal to lend to qualified borrowers in minority areas — the new push will instead center on a more recent phenomenon critics have called “reverse redlining.”
In reverse redlining, a mortgage brokerage or bank systematically singles out minority neighborhoods for loans with inferior terms like high up-front fees, high interest rates and lax underwriting practices. Because the original lender would typically resell such a loan after collecting its fees, it did not care about the risk of foreclosure.
It is a rarely used theory, and it carries political risks. Some critics have contended that government rules pushing banks to lend to minority and low-income borrowers contributed to the financial meltdown. The campaign could rekindle that debate.
“They encourage lenders to make risky loans for reasons such as diversity, and then when lenders have a problem because they made too many risky loans, they condemn them for that,” said Ernest Istook, a fellow at the conservative Heritage Foundation and a former Republican congressman from Oklahoma.
Still, Mr. Istook emphasized that he was “not defending anybody who engages in wrongful redlining practices.”
A representative of the Mortgage Bankers Association, the lobbying arm of the real estate finance industry, did not respond to a request for comment.
Under federal civil rights laws, a lending practice is illegal if it has a disparate impact on minority borrowers, and the Obama administration is signaling that it intends to make the enforcing of fair lending laws a signature policy push in 2010.
The division has already opened 38 investigations into accusations of lending discrimination. Under federal lending laws, it can seek compensation for borrowers who were victimized by any illegal conduct, as well as changes in a lender’s practices.
John Relman, a housing lawyer, said there was plenty of evidence that some banks violated fair housing laws during the subprime boom.
Mr. Relman has helped the Cities of Baltimore and Memphis sue Wells Fargo over the costs taxpayers incurred because of foreclosures. As part of those lawsuits, he obtained affidavits from former Wells Fargo loan officers who said the bank had systematically singled out minority borrowers for high-interest, high-fee mortgages, bypassing its own underwriting rules. The State of Illinois has also sued the bank.
Wells Fargo has denied any wrongdoing. Last week, a judge dismissed Baltimore’s lawsuit, saying there were too many other causes of the damage to inner-city neighborhoods to blame the bank. Mr. Relman said the city intended to file a new complaint that focused more narrowly on recouping costs associated with specific properties.
But it is much easier for the federal government to sue banks like Wells Fargo. Mr. Relman said he hoped the Justice Department decided to join the cases.
“Not only would we welcome them; we encourage them to get involved,” Mr. Relman said. “It’s long overdue.”
Mr. Perez has hired Eric Halperin as a special counsel for fair lending. Mr. Halperin, a career lawyer in the division from 1998 to 2004, is currently the Washington director and head litigator for the Center for Responsible Lending, a nonprofit group that focuses on financial products it deems predatory.
The division has also gained access to data the Treasury Department is collecting from banks about loan modifications for people seeking to avoid foreclosure. It intends to search for signs of any disparate impact on minorities.
The Justice Department is also working with several state attorneys general who have taken an interest in bringing potential lawsuits over banks’ subprime lending practices.
Richard Cordray, the attorney general of Ohio, said federal and state officials were sharing information and helping one other develop potential legal theories about how to go after reverse redlining.
“We are looking at a common problem and a common pattern to determine what can be done about it,” Mr. Cordray said.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Greg Mortenson on Bill Moyers
on: January 13, 2010, 01:28:48 PM
Greg Mortenson (author "Three Cups of Tea" - which I have read- and "Stones into Schools") has tremendous right to his opinions. He has lived and put his butt on the line opening schools, including for girls, in Afg and Pak:
I will be watching this show:
Bill Moyers Journal | Peace Through Education
truthout - Bill Moyers - 53 minutes ago
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Politics, Religion, Science, Culture and Humanities / Politics & Religion / IBD: Afghan Love
on: January 13, 2010, 12:59:02 PM
Posted 01/12/2010 06:36 PM ET
Liberation: Nearly seven out of 10 Afghans support the U.S. presence in their country, and 61% favor the president's military expansion there. Among congressional Democrats, the results would likely be reversed.
ABC News, the BBC and ARD German TV announced their fifth survey of Afghan citizens since 2005. The national random sample of 1,534 Afghan adults between Dec. 11 and Dec. 23 shows a huge turnaround from last year — a 30% increase in favorability toward the American troop presence.
The Afghan Center for Socio-Economic and Opinion Research in Kabul, part of Vienna, Va.-based D3 Systems Inc., conducted the field research.
The poll also registered a new high in Afghans expecting to live improved lives a year from now: 71%, a 20-percentage-point jump from a year ago. Added to that, 61% think their children will enjoy life quality superior to their own — a 14% increase from last year.
This doesn't fit the paradigm of colonizer oppressing the downtrodden. Afghans just aren't acting like those weird blue pagans on the planet Pandora that the U.S. is stealing minerals from in the movie "Avatar."
Indeed, the Taliban have only 10% support, according to the ABC poll. Some 42% blame them for the violence that plagues Afghanistan, a gain of 27% from the last poll a year ago, while only 17% blame the U.S., NATO, the Karzai government or the Afghan security forces. That's a drop of 36% from last January.
In light of such numbers, the opposition from Democrats in Congress to finishing the job in Afghanistan strikes us as obscene.
House Appropriations Committee Chairman David Obey, D-Wis., and Senate Armed Services Committee Chairman Carl Levin, D-Mich., have both tried to impose war taxes, a thinly veiled attempt to fiscally starve the U.S. war effort.
Rep. John Murtha, D-Pa., who tried his best to cut and run in the Iraq War during the Bush administration, is similarly trying to use congressional funding ploys to abandon the struggle against terrorism in Afghanistan.
Such remarkable Afghan public support should be a lesson to policymakers as terrorists contemplate a renewed onslaught against the U.S. and the free world.
No matter what Third World U.N. diplomats may tell you, when Americans and Westerners spend resources and spill blood giving those in other countries — Muslim ones included — the chance for freedom, we can and will be viewed as popular liberators.
The commander of our forces in Afghanistan, Gen. Stanley McChrystal, on Monday linked public opinion there to an ultimate U.S. victory. If Afghans had lost confidence in the coalition forces' military effort, "then I think that I would sense that this would not be possible," McChrystal said. "I don't feel that now."
But the people will only love us if they believe we are willing to win, a U.S. commitment Afghans now seem sure of.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / I'm shocked! Absolutely shocked!
on: January 13, 2010, 12:56:20 PM
No Shock: Stimulus Is A Money Loser
Posted 01/12/2010 06:36 PM ET
Economic Recovery: The results are in, and last year's $787 billion stimulus not only failed to do what it was supposed to do, but it has also turned out to be one of the worst investments in economic history.
Remember the debate in 2008 over the bailouts then being put together by the Treasury, the Fed and the Democratic Congress? Proponents often raised the possibility that any bailout would make money for taxpayers.
Didn't work that way. As we've discovered, the American people aren't just saddled with the ongoing costs of the various and sundry stimulus programs. They're also taking huge losses in doing so.
On Tuesday, the Treasury estimated that taxpayers had lost $68.5 billion in the fiscal year ended Sept. 30, 2009, on the Troubled Asset Relief Program and that the losses could go as high as $120 billion.
That isn't imaginary cash stuffed under some government cushion. It's a tax on you that comes straight out of your pocket. It's money that won't be used to fund private-sector jobs or pay for a child's education or a new house. It's gone.
Meanwhile, the Federal Reserve says it earned $45 billion last year — the largest one-year profit in its 96-year history.
As the Washington Post points out, that will easily eclipse "the expected profits of Bank of America, Goldman Sachs and JPMorgan Chase combined."
Why the big Fed profit? Basically, it printed money, bought Treasuries and private bonds with what it printed (we called it a bailout), then watched as interest on the investments flowed in. At year-end, the Fed held $1.8 trillion in U.S. government debt and mortgage securities, up from $497 billion a year earlier.
Don't worry, though. The Fed doesn't keep the money. It goes to the Treasury — which will just spend the money on something else.
All of this only underscores how badly the so-called stimulus has turned out. After trillions of dollars in outlays by the Fed, Treasury and Congress, the U.S. has zero net new jobs to show for it. Zip.
In fact, jobs at private businesses shrank by 4 million in 2009.
Nor have banks started lending to small and midsize businesses. Commercial and industrial loans, the lifeblood of U.S. industry, fell $252 billion, or nearly 16%, from January through November.
Why aren't profitable banks lending to businesses? Good question. For one thing, like the Fed, banks have found a sure thing in round-tripping bailout funds provided at virtually zero interest into Treasuries yielding 3%. No risk, all gain.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Stem Cells
on: January 13, 2010, 12:53:53 PM
California's Proposition 71 Failure
Posted 01/12/2010 06:36 PM ET
Bioethics: Five years after a budget-busting $3 billion was allocated to embryonic stem cell research, there have been no cures, no therapies and little progress. So supporters are embracing research they once opposed.
California's Proposition 71 was intended to create a $3 billion West Coast counterpart to the National Institutes of Health, empowered to go where the NIH could not — either because of federal policy or funding restraints on biomedical research centered on human embryonic stem cells.
Supporters of the California Stem Cell Research and Cures Initiative, passed in 2004, held out hopes of imminent medical miracles that were being held up only by President Bush's policy of not allowing federal funding of embryonic stem cell research (ESCR) beyond existing stem cell lines and which involved the destruction of embryos created for that purpose.
Five years later, ESCR has failed to deliver and backers of Prop 71 are admitting failure. The California Institute for Regenerative Medicine, the state agency created to, as some have put it, restore science to its rightful place, is diverting funds from ESCR to research that has produced actual therapies and treatments: adult stem cell research. It not only has treated real people with real results; it also does not come with the moral baggage ESCR does.
To us, this is a classic bait-and-switch, an attempt to snatch success from the jaws of failure and take credit for discoveries and advances achieved by research Prop. 71 supporters once cavalierly dismissed. We have noted how over the years that when funding was needed, the phrase "embryonic stem cells" was used. When actual progress was discussed, the word "embryonic" was dropped because ESCR never got out of the lab.
Prop 71 had a 10-year mandate and by 2008, as miracle cures looked increasingly unlikely, a director was hired for the agency with a track record of bringing discoveries from the lab to the clinic. "If we went 10 years and had no clinical treatments, it would be a failure," says the institute's director, Alan Trounson, a stem cell pioneer from Australia. "We need to demonstrate that we are starting a whole new medical revolution."
The institute is attempting to do that by funding adult stem cell research. Nearly $230 million was handed out this past October to 14 research teams. Notably, only four of those projects involve embryonic stem cells.
Among the recipients, the Los Angeles Times reports, is a group from UCLA and Children's Hospital in Los Angeles that hopes to cure patients with sickle cell disease by genetically modifying their own blood-forming stem cells to produce healthy red blood cells. Researchers at Cedars-Sinai Medical Center will use their grant to research injecting heart-attack patients with concentrated amounts of their own cardiac stem cells that naturally repair heart tissue.
DBMA Martial Arts Forum / Martial Arts Topics / Hours?
on: January 13, 2010, 11:22:36 AM
We are thinking of:
The idea is to allow everyone a good night's sleep, to begin lunch after the lunch rush hour, have a leisurely lunch, and have a fine day full of training.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Stratfor: Upcoming elections, part 1
on: January 13, 2010, 09:31:15 AM
Ukraine’s next presidential election is scheduled for Jan. 17. All of the leading candidates are pro-Russian. This means that the last vestiges of pro-Western government brought on by the 2004 Orange Revolution will be swept away and Russia’s ongoing consolidation of power will become evident in Kiev.
Editor’s Note: This is the first part of a three-part series on Ukraine’s upcoming presidential election.
Ukraine: More than a Religious Schism
STRATFOR’s 2010 Annual Forecast said, “For Russia, 2010 will be a year of consolidation — the culmination of years of careful efforts.” Moscow will purge Western influence from several countries in its near abroad while laying the foundation of a political union enveloping most of the former Soviet Union. Although that union will not be completed in 2010, according to our forecast, “by year’s end it will be obvious that the former Soviet Union is Russia’s sphere of influence and that any effort to change that must be monumental if it is to succeed.”
Ukraine is one country where Russia’s consolidation will be obvious, mainly because the most important part of reversing the 2004 pro-Western Orange Revolution will occur: the return of a pro-Russian president in Kiev. Ukraine’s presidential election is slated for Jan. 17, and all the top candidates in the race are pro-Russian in some way.
Russia considers Ukraine to be vital to its national interests; indeed, of all the countries where Moscow intends to tighten its grip in 2010, Ukraine is the most important. Because of its value to Moscow, Ukraine has been caught for years in a tug-of-war between Russia and the West. Since the Orange Revolution, Russia has used social, media, energy, economic and military levers — not to mention Federal Security Service assets — to break the Orange Coalition’s hold on Ukraine and the coherence of the coalition itself. Russia even managed to get a pro-Russian prime minister placed in Kiev for more than a year. However, the presidency remained in the hands of pro-Western Viktor Yushchenko. And in Ukraine, it is the president who controls the military (including the military-industrial sector and its exports), the secret services (which, while littered with Russian influence, are still controlled by a pro-Western leader) and Ukraine’s foreign policy.
Typically, STRATFOR does not focus on personalities because long-term trends in geopolitics act as constraints on human agency, limiting the value of individual-level analysis in forecasting. However, the Ukrainian election is a critical part of Russia’s resurgence, and STRATFOR will shed light on the colorful and complicated world of Ukrainian politics and offer clarity on the personalities that will lead Ukraine back into the Russian fold — and explain how Moscow has ensured their loyalty.
The candidates STRATFOR will examine are not all front-runners, necessarily, but they are the most important candidates in the race. Yushchenko is running for re-election but, according to polls from the past year, has support from only 3.8 percent of Ukrainian voters, which is little more than the margin of error. Former Ukrainian Prime Minister Viktor Yanukovich — who won Ukraine’s initial 2004 presidential election but was swept from power in the re-vote sparked by the Orange Revolution — has always been staunchly pro-Russian and stands a good chance of victory on Jan. 17. Current Ukrainian Prime Minister Yulia Timoshenko is also in the running. She was Yushchenko’s partner in the Orange Revolution, but Russia’s growing influence in Ukraine persuaded her to make a deal with Moscow, and she is now running on a relatively pro-Russian platform. The last candidate we will examine is Arseny Yatsenyuk, a young politician once thought to be free of both pro-Western and pro-Russian ties. However, STRATFOR sources have said that Yatsenyuk is not exactly what he seems, and that much more powerful forces — with Russian ties — are behind this Ukrainian wild card.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Stratfor: The Khost Attack and the Intel War Challenge
on: January 13, 2010, 08:08:41 AM
The Khost Attack and the Intelligence War Challenge
January 11, 2010
By George Friedman and Scott Stewart
As Khalil Abu-Mulal al-Balawi exited the vehicle that brought him onto Forward Operating Base (FOB) Chapman in Khost, Afghanistan, on Dec. 30, 2009, security guards noticed he was behaving strangely. They moved toward al-Balawi and screamed demands that he take his hand out of his pocket, but instead of complying with the officers’ commands, al-Balawi detonated the suicide device he was wearing. The explosion killed al-Balawi, three security contractors, four CIA officers and the Jordanian General Intelligence Department (GID) officer who was al-Balawi’s handler. The vehicle shielded several other CIA officers at the scene from the blast. The CIA officers killed included the chief of the base at Khost and an analyst from headquarters who reportedly was the agency’s foremost expert on al Qaeda. The agency’s second-ranking officer in Afghanistan was allegedly among the officers who survived.
Al-Balawi was a Jordanian doctor from Zarqa (the hometown of deceased al Qaeda in Iraq leader Abu Musab al-Zarqawi). Under the alias Abu Dujanah al-Khurasani, he served as an administrator for Al-Hesbah, a popular Internet discussion forum for jihadists. Jordanian officers arrested him in 2007 because of his involvement with radical online forums, which is illegal in Jordan. The GID subsequently approached al-Balawi while he was in a Jordanian prison and recruited him to work as an intelligence asset.
Al-Balawi was sent to Pakistan less than a year ago as part of a joint GID/CIA mission. Under the cover of going to school to receive advanced medical training, al-Balawi established himself in Pakistan and began to reach out to jihadists in the region. Under his al-Khurasani pseudonym, al-Balawai announced in September 2009 in an interview on a jihadist Internet forum that he had officially joined the Afghan Taliban.
A Lucky Break for the TTP
It is unclear if al-Balawi was ever truly repentant. Perhaps he cooperated with the GID at first, but had a change of heart sometime after arriving in Pakistan. Either way, at some point al-Balawi approached the Tehrik-i-Taliban Pakistan (TTP), the main Pakistani Taliban group, and offered to work with it against the CIA and GID. Al-Balawi confirmed this in a video statement recorded with TTP leader Hakeemullah Mehsud and released Jan. 9. This is significant because it means that al-Balawi’s appearance was a lucky break for the TTP, and not part of some larger, intentional intelligence operation orchestrated by the TTP or another jihadist entity like al Qaeda.
The TTP’s luck held when a group of 13 people gathered to meet al-Balawi upon his arrival at FOB Chapman. This allowed him to detonate his suicide device amid the crowd and create maximum carnage before he was able to be searched for weapons.
In the world of espionage, source meetings are almost always a dangerous activity for both the intelligence officer and the source. There are fears the source could be surveilled and followed to the meeting site, or that the meeting could be raided by host country authorities and the parties arrested. In the case of a terrorist source, the meeting site could be attacked and those involved in the meeting killed. Because of this, the CIA and other intelligence agencies exercise great care while conducting source meetings. Normally they will not bring the source into a CIA station or base. Instead, they will conduct the meeting at a secure, low-profile offsite location.
Operating in the wilds of Afghanistan is far different from operating out of an embassy in Vienna or Moscow, however. Khost province is Taliban territory, and it offers no refuge from the watching eyes and gunmen of the Taliban and their jihadist allies. Indeed, the province has few places safe enough even for a CIA base. And this is why the CIA base in Khost is located on a military base, FOB Chapman, named for the first American killed in Afghanistan following the U.S. invasion. Normally, an outer ring of Afghan security around the base searches persons entering FOB Chapman, who the U.S. military then searches again at the outer perimeter of the U.S. portion of the base. Al-Balawi, a high-value CIA asset, was allowed to skip these external layers of security to avoid exposing his identity to Afghan troops and U.S. military personnel. Instead, the team of Xe (the company formerly known as Blackwater) security contractors were to search al-Balawi as he arrived at the CIA’s facility.
A Failure to Follow Security Procedures
Had proper security procedures been followed, the attack should only have killed the security contractors, the vehicle driver and perhaps the Jordanian GID officer. But proper security measures were not followed, and several CIA officers rushed out to greet the unscreened Jordanian source. Reports indicate that the source had alerted his Jordanian handler that he had intelligence pertaining to the location of al Qaeda second-in-command Ayman al-Zawahiri. (There are also reports that al-Balawi had given his handlers highly accurate battle damage assessments on drone strikes in Pakistan, indicating that he had access to high-level jihadist sources.) The prospect of finally receiving such crucial and long-sought information likely explains the presence of the high-profile visitors from CIA headquarters in Langley and the station in Kabul — and their exuberance over receiving such coveted intelligence probably explains their eager rush to meet the source before he had been properly screened.
The attack, the most deadly against CIA personnel since the 1983 Beirut bombing, was clearly avoidable, or at least mitigable. But human intelligence is a risky business, and collecting human intelligence against jihadist groups can be flat-out deadly. The CIA officers in Khost the day of the bombing had grown complacent, and violated a number of security procedures. The attack thus serves as a stark reminder to the rest of the clandestine service of the dangers they face and of the need to adhere to time-tested security procedures.
A better process might have prevented some of the deaths, but it would not have solved the fundamental problem: The CIA had an asset who turned out to be a double agent. When he turned is less important than that he was turned into — assuming he had not always been — a double agent. His mission was to gain the confidence of the CIA as to his bona fides, and then create an event in which large numbers of CIA agents were present, especially the top al Qaeda analyst at the CIA. He knew that high-value targets would be present because he had set the stage for the meeting by dangling vital information before the agency. He went to the meeting to carry out his true mission, which was to deliver a blow against the CIA. He succeeded.
The Obama Strategy’s Weakness
In discussing the core weakness in the Afghan strategy U.S. President Barack Obama has chosen, we identified the basic problem as the intelligence war. We argued that establishing an effective Afghan army would be extremely difficult, if not impossible, because the Americans and their NATO allies lacked knowledge and sophistication in distinguishing friend from foe among those being recruited into the army. This problem is compounded by the fact that there are very few written documents in a country like Afghanistan that could corroborate identities. The Taliban would seed the Afghan army with its own operatives and supporters, potentially exposing the army’s operations to al Qaeda.
This case takes the problem a step further. The United States relied on Jordanian intelligence to turn a jihadist operative into a double agent. They were dependent on the Jordanian handler’s skills at debriefing, vetting and testing the now-double agent. It is now reasonable to assume the agent allowed himself to be doubled in an attempt to gain the trust of the handler. The Jordanians offered the source to the Americans, who obviously grabbed him, and the source passed all the tests to which he was undoubtedly subjected. Yet in the end, his contacts with the Taliban were not designed to provide intelligence to the Americans. The intelligence provided to the Americans was designed to win their trust and set up the suicide bombing. It is therefore difficult to avoid the conclusion that al-Balawi was playing the GID all along and that his willingness to reject his jihadist beliefs was simply an opportunistic strategy for surviving and striking.
Even though encountering al-Balawi was a stroke of luck for the TTP, the group’s exploitation of this lucky break was a very sophisticated operation. The TTP had to provide valuable intelligence to allow al-Balawi to build his credibility. It had to create the clustering of CIA agents by promising extraordinarily valuable intelligence. It then had to provide al-Balawi with an effective suicide device needed for the strike. And it had to do this without being detected by the CIA. Al-Balawi had a credible cover for meeting TTP agents; that was his job. But what al-Balawi told his handlers about his meetings with the TTP, and where he went between meetings, clearly did not indicate to the handlers that he was providing fabricated information or posed a threat.
In handling a double agent, it is necessary to track every step he takes. He cannot be trusted because of his history; the suspicion that he is still loyal to his original cause must always be assumed. Therefore, the most valuable moments in evaluating a double agent are provided by intense scrutiny of his patterns and conduct away from his handlers and new friends. Obviously, if this scrutiny was applied, al-Balawi and his TTP handlers were still able to confuse their observers. If it was not applied, then the CIA was setting itself up for disappointment. Again, such scrutiny is far more difficult to conduct in the Pakistani badlands, where resources to surveil a source are very scarce. In such a case, the intuition and judgment of the agent’s handler are critical, and al-Balawi was obviously able to fool his Jordanian handler.
Given his enthusiastic welcome at FOB Chapman, it would seem al-Balawi was regarded not only as extremely valuable but also as extremely reliable. Whatever process might have been used at the meeting, the central problem was that he was regarded as a highly trusted source when he shouldn’t have been. Whether this happened because the CIA relied entirely on the Jordanian GID for evaluation or because American interrogators and counterintelligence specialists did not have the skills needed to pick up the cues can’t be known. What is known is that the TTP ran circles around the CIA in converting al-Balawi to its uses.
The United States cannot hope to reach any satisfactory solution in Afghanistan unless it can win the intelligence war. But the damage done to the CIA in this attack cannot be underestimated. At least one of the agency’s top analysts on al Qaeda was killed. In an intelligence war, this is the equivalent of sinking an aircraft carrier in a naval war. The United States can’t afford this kind of loss. There will now be endless reviews, shifts in personnel and re-evaluations. In the meantime, the Taliban in both Pakistan and Afghanistan will be attempting to exploit the opportunity presented by this disruption.
Casualties happen in war, and casualties are not an argument against war. However, when the center of gravity in a war is intelligence, and an episode like this occurs, the ability to prevail becomes a serious question. We have argued that in any insurgency, the insurgents have a built-in advantage. It is their country and their culture, and they are indistinguishable from everyone else. Keeping them from infiltrating is difficult.
This was a different matter. Al-Balawi was Jordanian; his penetration of the CIA was less like the product of an insurgency than an operation carried out by a national intelligence service. And this is the most troubling aspect of this incident for the United States. The operation was by all accounts a masterful piece of tradecraft beyond the known abilities of a group like the TTP. Even though al-Balawi’s appearance was a lucky break for the TTP, not the result of an intentional, long-term operation, the execution of the operation that arose as a result of that lucky break was skillfully done — and it was good enough to deliver a body blow to the CIA. The Pakistani Taliban would thus appear far more skilled than we would have thought, which is the most important takeaway from this incident, and something to ponder.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Patriot Post Brief
on: January 13, 2010, 07:49:00 AM
Brief · Monday, January 11, 2010
"Resolve to perform what you ought. Perform without fail what you resolve." --Benjamin Franklin
"The fact is that post-Umar Farouk, post-Richard Reid, and eight years post-9/11, this country is still flying blind when it comes to airline security. Another young male Islamic extremist tries to kill hundreds of innocent people, and the response is the same: Heightened airport security for travelers of all ages, nationalities, and religious backgrounds -- instead of increased focus on those who look, act, worship, and travel like terrorists. Even worse, this is the second major vulnerability revealed inside of a few weeks. Remember the embarrassment of the leaked 93-page TSA Standard Operating Procedures manual? Most reports focused on the fact that the document revealed how certain government or law enforcement credentials looked. Or that only 20 percent of checked bags are given a 'full open-bag search.' Or that disabled individuals' wheelchairs, casts, and orthopedic shoes are potentially exempt from explosives screening. But most frightening to me was that while the leaked document deemed that holders of passports from Cuba, Iran, North Korea, Libya, Syria, Sudan, Afghanistan, Lebanon, Somalia, Iraq, Yemen, and Algeria should be subjected to additional screening, no such special attention was given to holders of passports from Saudi Arabia -- the home of 15 of the 9/11 hijackers. And now it's worth noting that the list doesn't include Pakistan or Nigeria -- Umar Farouk's home -- either. At the time of the memo's leak, Michael Scheuer, the former head of the CIA unit tasked with tracking Osama bin Laden, told me that the federal government 'knows without question that al-Qaeda and its allies pore over the U.S. media for operationally applicable information.' There was 'no chance' that the misstep had gone unnoticed by our enemies, he said. Nor, I suspect, will the fact that in the wake of this latest attempted act of Islamic terrorism, the United States will keep refusing to apply the most invasive screening techniques to travelers with the most in common with the 9/11 attackers." --columnist Michael Smerconish
Re: The Left
"President Obama, Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi -- all of whom have in recent years promised unprecedented levels of transparency in government -- are flouting their own words by meeting in secret to write the final version of Obamacare. They are doing this to avoid the public meetings of a bipartisan conference committee representing the Senate and House and the multiple, on-the-record roll call votes required in both chambers on a conference committee report. The most radical expansion of central government power in American history is happening right under journalists' noses, and yet they raise not a peep of protest when the doors close, effectively barring them from doing their jobs at a critical juncture. ... It's time for a sit-down protest by journalists whose first job is to uphold the public's right to know what its government is doing. Invite readers to come join them in demanding open meetings. The last thing Reid and Pelosi want is the spectacle of the Capitol Hill Police dragging protesting journalists away from the closed doors. It's time to show some cojones, people." --The Washington Examiner
"President Obama is a great admirer of the Mayo Clinic. Time and again he has extolled it as an outstanding model of health-care excellence and efficiency. ... They 'offer the highest quality care at costs well below the national norm,' he wrote. 'We need to learn from their successes and replicate those best practices across our country.' On the White House web site, you can find more than a dozen other instances of Obama's esteem. So perhaps the president will give some thought to the Mayo Clinic's recent decision to stop accepting Medicare payments at its primary care facility in Glendale, Ariz. More than 3,000 patients will have to start paying cash if they wish to continue being seen by doctors at the clinic; those unable or unwilling to do so must look for new physicians. For now, Mayo is limiting the change in policy to its Glendale facility. But it may be just a matter of time before it drops Medicare at its other facilities in Arizona, Florida, and Minnesota as well. Why would an institution renowned for providing health care of 'the best quality and the lowest cost' choose to sever its ties with the government's flagship single-payer insurance program? Because the relationship is one it can't afford. Last year, the Mayo Clinic lost $840 million on its Medicare patients. At the Glendale clinic specifically, a spokesman told Bloomberg, Medicare reimbursements covered only 50 percent of the cost of treating elderly primary-care patients. Not even the leanest, most efficient medical organization can keep doing business with a program that compels it to eat half its costs. In breaking away from Medicare, the Mayo Clinic is hardly blazing a trail. Back in 2008, the independent Medicare Payment Advisory Commission reported that 29 percent of Medicare beneficiaries -- more than 1 in 4 -- have trouble finding a primary-care doctor to treat them. A survey by the Texas Medical Association that year found that only 38 percent of that state's primary-care physicians were accepting new Medicare patients. But if you think things are bad now, just wait until Congress enacts the president's health care overhaul." --columnist Jeff Jacoby
For the Record
"For those of you who may have been off the grid over the weekend the big news was an item in a new book by Mullpal Mark Halperin and John Heilemann titled 'Game Change' in which Majority Leader Harry Reid was quoted as using inappropriate language when describing then-Senator Barack Obama. According to the reporting: 'Reid said Obama could fare well nationally as an African-American candidate because he was "light-skinned" and didn't speak with a "Negro dialect unless he wanted to have one."' Ok. The whole double standard thing was duly marinated over the weekend -- if this had been an Republican would Al Sharpton have given him/her a pass as he did to Reid? And so on. ... President Obama issued a statement forgiving Harry Reid before the ink had even dried on the pages of the book. Yet it took him three days to figure out what to say about the guy who tried to blow up that plane on Christmas Day. Second, according to the reporting, Reid made those statements to 'a group of reporters.' Whoa! Check, please! To a group of reporters? None of whom thought this was newsworthy? For whom did those reporters write, 'My Weekly Reader'? If not evidence of a double standard, then it is certainly evidence of journalistic incompetence." --political analyst Rich Galen
Faith & Family
"The secular left -- and some self-described Christians -- criticize Brit Hume, the Fox News commentator, for suggesting that the solution to Tiger Woods' problems is a relationship with Jesus Christ. Hume made his remarks on 'Fox News Sunday.' Disclosure: I also appear on Fox News. Hume said, 'My message to Tiger would be: Tiger, turn to the Christian faith and you can make a total recovery and be a great example to the world.' That is a message shared for 2,000 years by those who follow Jesus of Nazareth. It apparently continues to escape the secular left that Christians feel compelled to share their faith out of gratitude for what Jesus has done for them (dying in their place on a cross and offering a new life to those who repent and receive Him as savior). In a day when some extremists employ violence to advance their religion, it is curious that many would save their criticism for a truly peace-bringing message such as the one broadcast by Brit Hume. Criticism of Hume has taken two forms. One is that it is hubris to presume the Christian faith is superior to other faiths. The other criticism is that Hume used Fox as a pulpit and if he wants to preach he should resign from the network and go door to door like a Jehovah's Witness. ... Christians like Hume are not trying to impose anything on anyone. They know the difference Jesus has made in their lives and they care enough about others to want to share His message in the hope that other lives will be similarly transformed." --columnist Cal Thomas
Opinion in Brief
"If there is any lesson in the history of ideas, it is that good intentions tell you nothing about the actual consequences. But intellectuals who generate ideas do not have to pay the consequences. Academic intellectuals are shielded by the principles of academic freedom and journalists in democratic societies are shielded by the principle of freedom of the press. Seldom do those who produce or peddle dangerous, or even fatal, ideas have to pay a price, even in a loss of credibility. ... Even political leaders have been judged by how noble their ideas sounded, rather than by how disastrous their consequences were. ... It may seem strange that so many people of great intellect have said and done so many things whose consequences ranged from counterproductive to catastrophic. Yet it is not so surprising when we consider whether anybody has ever had the range of knowledge required to make the sweeping kinds of decisions that so many intellectuals are prone to make, especially when they pay no price for being wrong. Intellectuals and their followers have often been overly impressed by the fact that intellectuals tend, on average, to have more knowledge than other individuals in their society. What they have overlooked is that intellectuals have far less knowledge than the total knowledge possessed by the millions of other people whom they disdain and whose decisions they seek to override. We have had to learn the consequences of elite preemption the hard way -- and many of us have yet to learn that lesson." --economist Thomas Sowell
"Since when do we in America believe that our society is made up of two diametrically opposed classes -- one rich, one poor -- both in a permanent state of conflict and neither able to get ahead except at the expense of the other? Since when do we in America accept this alien and discredited theory of social and class warfare? Since when do we in America endorse the politics of envy and division?" --Ronald Reagan
"A Wall Street Journal/NBC poll taken in mid-December showed that 55 percent of Americans believed the country was headed in the wrong direction. Just 47 percent approved of the job Obama was doing as president. Twenty-two percent approved of the job Congress was doing. And a whopping 35 percent have positive feelings toward the Democratic Party. And yet the public seems to like Republicans even less. Just 28 percent have positive feelings toward the GOP -- a rating lower than poll results just before the party's defeats in 2006 and 2008. You can't make as many mistakes as Republicans did and expect to be forgiven quickly. That could lead to a dilemma for voters next November. Many will be fully ready to vote Democrats out of office but will not be fully ready to vote in Republicans. Faced with an either/or choice, they will weigh whether they want to get rid of Democrats more than they want to stay away from Republicans. That dilemma could have been avoided. A slightly less disastrous end to the Republican reign might well have resulted in one or two additional GOP senators this year. And that, in turn, might have prevented some of the runaway Democratic excesses we've seen. Republicans think about that a lot these days, as Democrats overreach in ways that could burden the country for generations. All GOP lawmakers can do now is to oppose. But in their heart of hearts, they know they share some of the blame." --columnist Byron York
"Well, there's something known as American conservatism, though it does not even call itself that. It's been calling itself 'voting Republican' or 'not liking the New Deal.' But it is a very American approach to life, and it has to do with knowing that the government is not your master, that America is good, that freedom is good and must be defended, and communism is very, very bad." --National Review founder William F. Buckley Jr. (1925-2008)
Politics, Religion, Science, Culture and Humanities / Politics & Religion / AQ's new strategy
on: January 13, 2010, 07:40:44 AM
Al-Qaeda has a new strategy. Obama needs one, too.
By Bruce Hoffman
Bruce Hoffman is a professor of security studies at Georgetown University
and a senior fellow at the U.S. Military Academy's Combating Terrorism
Sunday, January 10, 2010; B01
In the wake of the failed Christmas Day airplane bombing and the killing a
few days later of seven CIA operatives in Afghanistan, Washington is, as it
was after the Sept. 11, 2001, attacks, obsessed with "dots" -- and our
inability to connect them. "The U.S. government had sufficient information
to have uncovered this plot and potentially disrupt the Christmas Day
attack, but our intelligence community failed to connect those dots," the
president said Tuesday.
But for all the talk, two key dots have yet to be connected: Umar Farouk
Abdulmutallab, the alleged Northwest Airlines Flight 253 attacker, and Humam
Khalil Abu-Mulal al-Balawi, the trusted CIA informant turned assassin.
Although a 23-year-old Nigerian engineering student and a 36-year-old
Jordanian physician would seem to have little in common, they both exemplify
a new grand strategy that al-Qaeda has been successfully pursuing for at
least a year.
Throughout 2008 and 2009, U.S. officials repeatedly trumpeted al-Qaeda's
demise. In a May 2008 interview with The Washington Post, then-CIA Director
Michael Hayden heralded the group's "near strategic defeat." And the
intensified aerial drone attacks that President Obama authorized against
al-Qaeda targets in Pakistan last year were widely celebrated for having
killed over half of its remaining senior leadership.
Yet, oddly enough for a terrorist movement supposedly on its last legs,
al-Qaeda late last month launched two separate attacks less than a week
apart -- one failed and one successful -- triggering the most extensive
review of U.S. national security policies since 2001. Al-Qaeda's newfound
vitality is the product of a fresh strategy that plays to its networking
strength and compensates for its numerical weakness. In contrast to its plan
on Sept. 11, which was to deliver a knock-out blow to the United States,
al-Qaeda's leadership has now adopted a "death by a thousand cuts" approach.
There are five core elements to this strategy.
First, al-Qaeda is increasingly focused on overwhelming, distracting and
exhausting us. To this end, it seeks to flood our already
information-overloaded national intelligence systems with myriad threats and
background noise. Al-Qaeda hopes we will be so distracted and consumed by
all this data that we will overlook key clues, such as those before
Christmas that linked Abdulmutallab to an al-Qaeda airline-bombing plot.
Second, in the wake of the global financial crisis, al-Qaeda has stepped up
a strategy of economic warfare. "We will bury you," Soviet Premier Nikita
Khrushchev promised Americans 50 years ago. Today, al-Qaeda threatens: "We
will bankrupt you." Over the past year, the group has issued statements,
videos, audio messages and letters online trumpeting its actions against
Western financial systems, even taking credit for the economic crisis.
However divorced from reality these claims may be, propaganda doesn't have
to be true to be believed, and the assertions resonate with al-Qaeda's
Heightened security measures after the Christmas Day plot, coupled with the
likely development of ever more sophisticated passenger-screening and
intelligence technologies, stand to cost a lot of money, while the war in
Afghanistan constitutes a massive drain on American resources. Given the
economic instability here and abroad, al-Qaeda seems to think that a
strategy of financial attrition will pay outsize dividends.
Third, al-Qaeda is still trying to create divisions within the global
alliance arrayed against it by targeting key coalition partners. Terrorist
attacks on mass-transit systems in Madrid in 2004 and London in 2005 were
intended to punish Spain and Britain for participating in the war in Iraq
and in the U.S.-led war on terrorism, and al-Qaeda continues this approach
today. During the past two years, serious terrorist plots orchestrated by
al-Qaeda's allies in Pakistan, meant to punish Spain and the Netherlands for
participating in the war on terrorism, were thwarted in Barcelona and
Meanwhile, in Afghanistan, suicide bombers and roadside explosives target
contingents from countries such as Britain, Canada, Germany and the
Netherlands, where popular support for deployments has waned, in hopes of
hastening their withdrawal from the NATO-led coalition.
Fourth, al-Qaeda is aggressively seeking out, destabilizing and exploiting
failed states and other areas of lawlessness. While the United States
remains preoccupied with trying to secure yesterday's failed state --
Afghanistan -- al-Qaeda is busy staking out new terrain. The terrorist
network sees failing states as providing opportunities to extend its reach,
and it conducts local campaigns of subversion to hasten their decline. Over
the past year, it has increased its activities in places such as Pakistan,
Algeria, the Sahel, Somalia and, in particular, Yemen.
Once al-Qaeda has located or helped create a region of lawlessness, it
guides allies and related terrorist groups in that area, boosting their
local, regional and -- as the Northwest Airlines plot demonstrated --
international attack capabilities. Although the exact number of al-Qaeda
personnel in each of these areas varies, and in some cases may include no
more than a few hard-core terrorists, they perform a critical
force-multiplying function. Their help to indigenous terrorist groups
includes support for attacks -- by providing weapons, training and
intelligence -- and, equally critical, assistance in disseminating
propaganda, such as by building Web sites and launching online magazines
modeled on al-Qaeda's.
Fifth and finally, al-Qaeda is covetously seeking recruits from non-Muslim
countries who can be easily deployed for attacks in the West. The group's
leaders see people like these -- especially converts to Islam whose
appearances and names would not arouse the same scrutiny that persons from
Islamic countries might -- as the ultimate fifth column. Citizens of
countries that participate in the U.S. visa-waiver program are especially
prized because they can move freely between Western countries and blend
easily into these societies.
Al-Qaeda has become increasingly adept at using the Internet to locate these
would-be terrorists and to feed them propaganda. During the past 18 months,
American and British intelligence officials have said, well over 100
individuals from such countries have graduated from terrorist training camps
in Pakistan and have been sent West to undertake terrorist operations.
In adopting and refining these tactics, al-Qaeda is shrewdly opportunistic.
It constantly monitors our defenses in an effort to identify new gaps and
opportunities that can be exploited. Its operatives track our congressional
hearings, think-tank analyses and media reports, all of which provide
strategic intelligence. By coupling this information with surveillance
efforts, the movement has overcome many of the security measures we have put
in its path.
A survey of terrorist incidents in the past seven months alone underscores
the diversity of the threats arrayed against us and the variety of tactics
al-Qaeda is using. These incidents involved such hard-core operatives as
Balawi, the double agent who played American and Jordanian intelligence to
kill more CIA agents than anyone else has in more than a quarter-century.
And sleeper agents such as David Headley, the U.S. citizen whose
reconnaissance efforts for Lashkar-i-Taiba, a longtime al-Qaeda ally, were
pivotal to the November 2008 suicide assault in Mumbai. And motivated
recruits such as Abdulmutallab, the alleged Northwest Airlines bomber, and
Najibullah Zazi, the Afghan-born U.S. resident arrested in New York last
September and charged with plotting a "Mumbai on the Hudson" suicide
terrorist operation. And "lone wolves" such as Maj. Nidal Hassan, accused of
killing 13 people at Fort Hood in November, and Abdulhakim Muhammad, a
convert to Islam who, after returning from Yemen last June, killed one
soldier and wounded another outside an Army recruiting center in Little
But while al-Qaeda is finding new ways to exploit our weaknesses, we are
stuck in a pattern of belated responses, rather than anticipating its moves
and developing preemptive strategies. The "systemic failure" of intelligence
analysis and airport security that Obama recently described was not just the
product of a compartmentalized bureaucracy or analytical inattention, but a
failure to recognize al-Qaeda's new strategy.
The national security architecture built in the aftermath of Sept. 11
addresses yesterday's threats -- but not today's and certainly not
tomorrow's. It is superb at reacting and responding, but not at outsmarting.
With our military overcommitted in Iraq and Afghanistan and our intelligence
community overstretched by multiplying threats, a new approach to
counterterrorism is essential.
"In the never-ending race to protect our country, we have to stay one step
ahead of a nimble adversary," Obama said Thursday. He spoke of the need for
intelligence and airport security reform, but he could have, and should
have, been talking about the need for a new strategy to match al-Qaeda's.
Remarkably, more than eight years after Sept. 11, we still don't fully
understand our dynamic and evolutionary enemy. We claim success when it is
regrouping and tally killed leaders while more devious plots are being
hatched. Al-Qaeda needs to be utterly destroyed. This will be accomplished
not just by killing and capturing terrorists -- as we must continue to do --
but by breaking the cycle of radicalization and recruitment that sustains
Bruce Hoffman is a professor of security studies at Georgetown University
and a senior fellow at the U.S. Military Academy's Combating Terrorism
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Pending Treasury Deficit numbers
on: January 13, 2010, 07:25:08 AM
The consensus expects the Treasury deficit to fall from $120 billion in November to $92 billion in December. The estimate is in-line with the latest Congressional Budget Office forecast.
The CBO puts together a monthly budget preview based upon daily Treasury estimates. The CBO's estimate of a $92 billion deficit is $40 billion higher than what was recorded in December 2008. When adjusted for timing changes, the deficit only increased by $11 billion.
Federal tax receipts are expected to decline by $18 billion from December 2008 to $220 billion. Half of the drop in receipts is attributed to holiday timing changes and the rest is due to tax relief provided by the American Recovery and Reinvestment Act of 2009.
Outlays are expected to increase $22 billion from December 2008 to $312 billion. Most of the increase was due to shifting of payments due to holidays and a $13 billion payment to Fannie Mae.
The market generally does not trade on the deficit numbers, but the steady decline in the value of the dollar over the last few months may accelerate if the deficit comes in much wider than expected.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / The Ali Mohammadi hit
on: January 13, 2010, 07:22:20 AM
Iranian security guards, firemen and municipal workers outside the home of Massoud Ali-Mohammadi on Jan. 12An improvised explosive device (IED) detonated in the Qeyterieh district of Tehran at approximately 8:05 a.m. on Jan. 12, killing University of Tehran physics professor Massoud Ali-Mohammadi in front of his home. Ali-Mohammadi’s association with the Iranian opposition movement and possible participation in the country’s nuclear program have led to a host of possible suspects in the attack, but details remain murky, and who was behind the attack remains unclear. However, a close examination of photographs and video of the blast scene reveals the sequence of events and clues to the type of IED employed in this attack.
The IED detonated as Ali-Mohammadi exited the driveway of his gated home and turned left on the street in front of the residence. Several reports have stated that the IED was remotely detonated, and the precision timing involved in this attack supports these reports and indicates that there was at least one spotter that had a line of sight to the target. There would have been an approximately two- to three-second window as Ali-Mohammadi exited his driveway for this attack to have been successful. A timing device would not be dynamic enough to detonate the IED at the specific time or account for possible delays. A remotely detonated device and an eyes-on spotter would provide the precision needed for this type of attack to be successful, and the largely residential area where the attack took place offers ample places for a spotter to hide in wait.
The photos and video of the site also demonstrate that the IED was located to the left of the exit of Ali-Mohammadi’s driveway along the street in front of his home, either placed in a garbage can or on a motorcycle parked along the road. The damage to the left side of Ali-Mohammadi’s vehicle and to the motorcycle indicates the IED was located outside the vehicle, as does the pattern of fragmentation at the scene.
The damage caused by the IED appears to be consistent with that of a low-velocity explosive packed with a form of shrapnel (perhaps something like ball bearings) — similar to a shotgun blast. Low explosives, like gunpowder or perchlorate mixtures, tend to heave and propel objects, while high explosives, such as RDX and PETN, tend to shatter and cut objects. The IED was located only a few feet from Ali-Mohammadi’s vehicle, but the metal frames of the vehicle and the motorcycle and Ali-Mohammadi’s body were intact – noticeably absent the type of blast effects normally associated with high explosives. There also was consistent 1-inch to 1.5-inch fragmentation damage all around the blast scene, indicative of some form of shrapnel being packed into the IED to make the device more lethal.
The use of a low-explosive device does not fit the typical modus operandi of a national intelligence agency. If an intelligence agency was involved, it is possible that such a device was used in order to conceal the author of the attack, or the attack could have been subcontracted out to a local organization. The materials used in this device likely were readily available and procured locally in Tehran. The fact that the device functioned as planned shows a degree of expertise, but that is not necessarily indicative of the involvement of a national intelligence agency.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / WSJ: Geithner & AIG deal
on: January 13, 2010, 06:30:52 AM
Timothy Geithner is back in piñata mode, with House Oversight Chairman Edolphus Towns asking him to testify next week about bailout giant AIG. By all means Members should swing away at the Treasury Secretary, but only if they focus on the right questions.
The trigger for the Towns hearing is the release of emails between the Federal Reserve Bank of New York and AIG in November and December 2008. The New York Fed urged AIG to limit disclosure of its deal to buy out derivative trading partners at 100 cents on the dollar. But since AIG went ahead and disclosed it anyway, this line of inquiry doesn't get to the heart of the taxpayer interest.
Likewise, asking if Mr. Geithner helped write the emails to AIG will simply allow him to continue avoiding the bigger questions: Why did he believe AIG could not fail? Why should he receive more authority to declare firms systemically important, when he will still not fully explain his previous multibillion-dollar judgments in the name of countering "systemic risk"?
Mr. Geithner was president of the New York Fed when it began sending what has become $182.3 billion in taxpayer assistance to AIG in September 2008. Much of this money was used to meet collateral calls from big banks that had bought AIG's credit default swaps. AIG had resisted handing over more collateral. But once Mr. Geithner was in charge of AIG, the cash flowed freely to these bank counterparties.
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Treasury Secretary Timothy Geithner
.The Fed and AIG ultimately bought the underlying securities at par. This was not only much more than the counterparties might have received from a bankrupt AIG, but even a healthy AIG would never have handed over so much cash in the midst of a panic in which cash was king. Mr. Geithner's New York Fed demanded the 100-cents on the dollar deal for these counterparties, and it demanded that their identities be kept secret. The Journal nonetheless reported this sweet deal and the names of some beneficiaries, including Goldman Sachs, in early November 2008, but taxpayers had to wait months before AIG finally released the full story.
Given the sweet deal and the fact that Mr. Geithner sought to keep secret the identities of the beneficiaries, logic would suggest that the AIG intervention was intended as a bailout for these counterparties. Supporting this conclusion is the fact that Mr. Geithner has sold his plan to regulate derivatives as a way to prevent such problems in the future. Yet when asked directly by the inspector general for the Troubled Asset Relief Program why he opted to buy out the counterparties at par, Mr. Geithner said "the financial condition of the counterparties was not a relevant factor."
OpinionJournal Related Stories:
•Review & Outlook: Spitzer's AIG Emails
•Review & Outlook: Banker Baiting
•Review & Outlook: Saying No to Spitzer, Four Years Later
.Then last November, he suggested that the systemic risk was in AIG's traditional insurance business. "AIG was providing a range of insurance products to households across the country. And if AIG had defaulted, you would have seen a downgrade leading to the liquidation and failure of a set of insurance contracts that touched Americans across this country and, of course, savers around the world," he said. So which was it?
Taxpayers also still haven't been told why there couldn't have been any sunshine on Mr. Geithner's beloved AIG counterparties. If some of them really would have failed, with systemic consequences, why not announce that they were all getting a deal to bolster liquidity and allow them to resume lending? That is exactly what regulators had just done in October 2008 by naming recipients of TARP capital injections.
On the other hand, if the counterparties weren't the systemic risk, then what's the argument for regulating derivatives?
The evidence builds that AIG's "systemic risk" wasn't a mathematical answer to a rigorous and thoughtful review of data, but rather a seat-of-the-pants judgment by regulators in a panic. If that is the case, someone should ask Mr. Geithner why the American people should give him even more authority to make more such judgments from his hip pocket—with little public scrutiny.
Under the House regulatory reform, Mr. Geithner would chair a new Financial Services Oversight Council. The council could declare virtually any company in America a systemic risk, making them eligible for intervention on the taxpayer's dime. The law firm Davis Polk reports that since this council is not an agency, it will not be subject to the Administrative Procedure Act, the Freedom of Information Act or the Sunshine Act, among other laws intended to allow citizens to scrutinize government.
It's difficult to learn and apply the lessons of AIG because the New York Fed has done so much to conceal them. Mr. Towns appears to be getting closer to the truth, deciding yesterday to issue subpoenas focused on the New York Fed's decision-making, as opposed to whatever it told AIG to say in public. Let's hope lawmakers explore what the "systemic risk" actually was—and why Mr. Geithner should get nearly open-ended power to define it again.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Part 2 on Homeland Infiltration
on: January 13, 2010, 06:24:28 AM
and here's this strange developing detail in the Salahi affair, which no doubt will be ignored by the MSM:
DOES ANY HERE LOOK ILLEGAL?
DOES ANYONE HERE LOOK FAMILIAR??
I knew there was a “Paul Harvey” version to this story!!! (you know the line.....and NOW the rest of the story)
See the white guy in the white suit? Now see the blond with the white dress! See the guy in the middle huuuummmm.
This picture was taken 6/9/05. It seems Obama has known these two phoneys for awhile, at least when he was a Senator.
They’re getting all this press now as “party crashers” and the secret service is taking heat. Funny how this has not come out in the press isn’t it!
No wonder the couple who crashed Obama’s State dinner keep insisting they were invited guests. They know Barry from way back when he was still an Illinois Senator. Is Obama trying to throw the Secret Service under the bus?
Tareq and Michaele Salahi snapped the pic above with Obama at a “Rock The Vote” event on June 9, 2005
Michaele Salahi is getting quite a ribbing in the press for lying about being a Redskins cheerleader, but Tareq is the more interesting of the two to me.
He has ties to Palestinian terrorists.
Tareq is a board member of the ATFP- American Task Force on Palestine, which has quickly scrubbed it’s site of the fact. Thank the Lord for Google cache.
And just who are the ATFP?
The ATFP has ties to Chicago, ties to Muslim radicals, ties to Hamas, and ties to Saudi Wahhabists. It is arguably the American wing of Hamas. The group’s co-founder is Rashid Khalidi, the guy purported to have helped finance Obama’s Harvard education and who was also instrumental in getting Mahmoud Ahmadinejad to speak at Columbia University.
During the Beruit war, Khalidi was a PLO spokesperson. After the war, he came back to teach at the University of Chicago. He is a virulent critic of Israel, and a strong supporter of Fatah terrorist Yassar Arafat. Obama has referred to Khalidi as someone who challenges his “own biases.”
Why do the same dubious tentacles seem to continually surround Obama? The fact that the ATFP is scrubbing information on Salahi from their website suggests possible damage control coordination between the ATFP and the White House. If the ATFP was acting independently, there would be no reason to scrub Salahi’s name from their site. It looks like Salahi was an invited guest to the dinner, that he was “outed” and the administration had to come up with a rational excuse for his presence.
The Secret Service has already apologized for the incident, but they may clear their names if the Salahis start singing. If someone with ties to the American wing of Hamas can get face to face with the President without the Secret Service realizing it that is a major security lapse. However, if Obama’s people knowingly allowed Salahi in and are now throwing the Secret Service under the bus to cover themselves, that would be a major scandal.
Some in Congress are calling for an investigation Something is VERY fishy in the White House.
snopes reveals: http://www.snopes.com/politics/obama/photos/crashers.asp
Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Jefferson to Madison, 1789
on: January 13, 2010, 06:19:34 AM
"But with respect to future debt; would it not be wise and just for that nation to declare in the constitution they are forming that neither the legislature, nor the nation itself can validly contract more debt, than they may pay within their own age, or within the term of 19 years." --Thomas Jefferson, letter to James Madison, 1789
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Stratfor: Turkish-Russian Struggle over the Caucasus
on: January 13, 2010, 05:56:49 AM
The Turkish-Russian Struggle Over the Caucasus
TURKISH PRIME MINISTER RECEP TAYYIP ERDOGAN travels to Moscow Tuesday for a two-day trip in which he will meet with Russian Prime Minister Vladimir Putin and President Dmitri Medvedev. Although Erdogan and Putin are chummier with each other than they are with most world leaders, this meeting has been planned and postponed a number of times in recent months.
The relationship began to decline last summer as Turkey’s ruling Justice and Development (AK) Party continued pushing for a peace deal with Armenia that would open up another major outlet for Turkish expansion in the Caucasus, a mountainous region that encompasses the states of Azerbaijan, Armenia and Georgia. Russia, however, had been busy building up clout in this region long before the Turks started focusing on neighborhood relations again. Since Armenia is essentially a client state of the Russians, it was Moscow that was calling the shots every time Turkey attempted a dialogue with Yerevan.
Russia has been happy to chaperone these negotiations for Ankara while seizing the opportunity to get on the good side of a critical rival in the Black Sea region. At the same time, Russia was not about to grant Turkey its wish of an Armenian rapprochement that would encroach on Russia’s own sphere of influence in the Caucasus. Moreover, Russia had a golden opportunity at hand to encourage Turkey to alienate Azerbaijan, its tightest ally in the region. Azerbaijan sees Turkey’s outreach to Armenia –- an enemy of Azerbaijan that occupies disputed territory inside of Azerbaijan in the Nagorno-Karabakh region –- as an outright betrayal to the historic brotherly alliance between Turkey and Azerbaijan. While keeping Georgia in a vice and Armenia’s moves in check, Russia strategically coaxed Turkey’s allies in Azerbaijan into an alliance that would provide Moscow with a crucial lever to control the flow of energy to Europe. Turkey, meanwhile, has been left empty-handed: no deal with Armenia and very angry allies in Azerbaijan.
“Gazprom’s chief said Baku was considering a deal in which all of Azerbaijan’s natural gas could be sold to Russia.”
Just one day prior to Erdogan’s trip to Moscow, the Russians decided to flaunt their rapidly developing relationship with Azerbaijan. Following a meeting between Russia’s natural gas behemoth, Gazprom, and the State Oil Company of Azerbaijan (SOCAR), Gazprom’s chief Alexei Miller said Monday that Baku was considering a deal in which all of Azerbaijan’s natural gas — present and future — could be sold to Russia. This would in effect allow Moscow to sabotage any plans by Turkey and Europe to diversify energy flows away from Russia.
Azerbaijan has already been prodding Turkey with its blossoming relationship with Russia, throwing out threats here and there of sending more of its natural gas to Russia instead of Turkey. But if Azerbaijan has actually agreed to such a deal with Moscow to send not just some, but all of its natural gas to Russia, then a major shift has taken place in the Caucasus — one in which the Turks cannot afford to remain complacent.
Azerbaijani national security rests on its ability to diversify its trade and political alliances to the greatest extent possible. If Azerbaijan entered into a committed relationship with the Russians, however, it would be just as vulnerable as Georgia, Ukraine, Belarus, Turkmenistan or any other state in the Russian periphery that is frequently subjected to Russian economic and military pressure tactics to fit Moscow’s political agenda. What, then, would encourage such a fundamental shift in Azerbaijani foreign policy?
Our first task is to verify with the Azerbaijanis whether the Gazprom chief is speaking the truth in claiming such a deal. Miller, after all, has been known to spin a few tales from time to time when it comes to Russian energy politics. If the story is true, then we need to nail down what caused the shift in Baku to sacrifice its energy independence to Moscow. Russia would have to pay a hefty price for such a deal, and that price could very well be tied to Azerbaijan’s territorial obsession: Nagorno-Karabakh.
If Azerbaijan is prepping its military to settle the score with Armenia over Nagorno-Karabakh, and we have heard rumors building to this effect, it would want guarantees from Moscow to stay out of the fray. We have no evidence of this hypothesis as of yet, but it is some serious food for thought for Erdogan as he makes his way to Moscow.
Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Re: Race, religion, ethnic origin
on: January 12, 2010, 12:27:34 PM
BTW, I am feeling very prescient with my post of August 18
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Top SA scholar: AQ un-Islamic
on: January 12, 2010, 12:22:17 PM
Saudi Arabia: Top Scholar Calls Al Qaeda Membership Un-Islamic
January 12, 2010
A senior Saudi cleric declared that joining al Qaeda is forbidden by Islam, Middle East Online reported Jan. 12. Speaking to the Okaz newspaper, Sheikh Abdul Mohsen al-Obeikan, a leading religious scholar and adviser in King Abdullah’s court, reiterated the official Saudi stance that al Qaeda’s philosophy is one of “takfirism,” or accusing others of apostasy. “Takfir thinking” is forbidden in Islam, he said.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Intel Matters
on: January 12, 2010, 10:11:19 AM
According to widespread rumors in the United States, Pakistan’s Inter-Services Intelligence had a hand in the Dec. 30, 2009, attack in Khost, Afghanistan, which killed several CIA agents. While luck played a definite role in the attack, the skill in preparing the double agent who detonated the suicide bomb used in the attack has lead some to see a state role. Such a role is unlikely, however, as Pakistan has little to gain by enraging the United States. Even so, the rumors alone will harm U.S.-Pakistani relations, perhaps giving the Taliban some breathing room.
Speculation is rife in the United States about the possible role played by the Inter-Services Intelligence (ISI) directorate, Pakistan’s foreign intelligence service, in the Dec. 30, 2009, suicide attack on Forward Operating Base Chapman in eastern Afghanistan that killed multiple CIA agents. Much of this discussion traces back to a report citing unnamed U.S. and Afghan government sources as saying a chemical analysis of explosive residue suggesting the use of military-grade equipment points to ISI involvement in the incident.
This is a faulty basis to establish an ISI link, as the Pakistani Taliban have used military-grade explosives in numerous attacks against the Pakistani security establishment since late 2006. Still, rumors alone of ISI involvement will suffice to harm U.S.-Pakistani relations, which will serve the jihadists’ ends quite nicely.
To a large extent, chance aided the Tehrik-i-Taliban Pakistan (TTP) in carrying out the attack. Khalil Abu-Mulal al-Balawi’s arrival gave the group the opportunity to carry out an attack at a heavily fortified facility belonging to the world’s most powerful intelligence organization. That said, the preparation of the double agent for the attack showed definite skill. While it has shown a great degree of skill in pulling off attacks against major army, intelligence and other security installations in Pakistan, the TTP previously has not been seen as being capable of handling a foreign double agent for a complex operation outside Pakistan.
In this incident, the TTP managed to conceal al-Balawi’s true activities while in Pakistan. Admittedly, keeping close track of al-Balawi in Pakistan would have been a challenge to the CIA due to the agency’s fairly weak humint capabilities there, and because his jihadist hosts would have been extremely cautious about using communications devices that would show up on sigint monitoring. And while remaining below the radar while in jihadist country in the Pakistani northwest is one thing, circumventing all CIA countermeasures is quite another — and is something previously thought beyond the TTP’s known capabilities. Such sophistication rises to the level of the skills held by a national-level intelligence organization with tremendous resources and experience at this kind of tradecraft.
However, even this does not mean the ISI was involved in the attack.
The ISI falls under the control of the Pakistani army and the government, and the Pakistani state has no interest in carrying out actions against the United States, as this could seriously threaten Pakistani national interests. Also, it is clear that the ISI is at war with the TTP. For its part, the main Pakistani Taliban rebel group has specifically declared war on the ISI, leveling three key ISI facilities in the last eight months. It is therefore most unlikely this could have been an officially sanctioned Pakistani operation.
The possibility that jihadist sympathizers in the lower ranks of the Pakistani intelligence complex may have offered their services to the TTP cannot be ruled out, however. Given its history of dealing with Islamist nonstate proxies, the Pakistani intelligence apparatus is penetrated by the jihadists, which partially explains the ability of the TTP to mount a ferocious insurgency against the state.
Even though there is no clear smoking gun pointing at the ISI, rumors of its involvement alone will harm the already-fragile U.S.-Pakistani relationship. Concerns similar to those in the aftermath of the November 2008 Mumbai attack — that the situation in Pakistan has reached a point where the state no longer has control over its own security apparatus and now represents an intolerable threat to U.S. national security — will emerge again.
While the situation in Islamabad might not be dire, a U.S.-Pakistani and Indian-Pakistani breakdown is exactly what that the jihadists want so they can survive the U.S. and Pakistani offensives they currently face.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Nuclear War, WMD issues
on: January 12, 2010, 10:07:44 AM
Iran: Nuclear Scientist Killed
Stratfor Today » January 12, 2010 | 1041 GMT
The scene of the explosion that killed Iranian nuclear scientist Massoud Ali-Mohammadi outside his home Jan. 12 in TehranAn Iranian nuclear scientist was killed Jan. 12 in an IED explosion in the Iranian capital. According to the early details, Massoud Ali-Mohammadi was killed around 7:30 a.m. local time near his home in northern Tehran’s upscale district of Qeyterieh with a bomb that some report was hidden in a trashcan and others state was part of a booby-trapped motorcycle. Authorities in Tehran identified Ali-Mohammadi as a professor of nuclear physics at Tehran University. There are reports he may have been affiliated with the country’s controversial nuclear program, but his exact importance with respect to the nuclear program remains unclear.
This is also not the first time that an Iranian nuclear scientist has been killed in mysterious circumstances. Three years ago, a noted Iranian nuclear scientist, Ardeshir Hassanpour, was killed. At the time, STRATFOR had learned that the Israeli intelligence service Mossad was behind the assassination. Indeed, even this time around, Iranian officials have pointed fingers at the Jewish state. It is, however, too early to tell if that is the case.
Assassinations of individual scientists and even defection or kidnapping of others are not unprecedented. Furthermore, there have been bombings in recent months that have targeted senior military commanders of the country’s elite military force, the Islamic Revolutionary Guard Corps. The timing of this attack (the first involving the use of an IED against a nuclear scientist), however, comes at a time of considerable domestic unrest and increasing international pressure on Iran to accept an enrichment compromise or face potential military action on the part of the United States or Israel.
Today’s attack will provide the pretext for Iranian authorities to crack down even harder on opponents at home who are already accused of collaborating with foreign enemies of the state. More importantly, it will make Tehran even more intransigent on the nuclear issue as the Islamic republic cannot be seen as caving into pressure, especially not from the West and Israel. The killing of the scientist also places considerable pressure on Iran to engage in retaliatory action.
DBMA Martial Arts Forum / Martial Arts Topics / Re: Crimes using knives
on: January 12, 2010, 08:33:59 AM
January 11, 2010
OTTAWA – As Constable Eric Czapnik lay dying from a mortal knife wound to the throat, he spoke two final and poignant words to his paramedic rescuers.
The patrolman had been writing case notes inside his cruiser, parked outside the emergency department of The Ottawa Hospital’s Civic campus, when a man approached and attacked him with a knife.
Four paramedics, none yet publicly identified, ran from the emergency room to help. It wasn’t until a male paramedic grabbed the attacker in a headlock from behind, that they realized the assailant had a knife.
As the attacker tried to reach around and stab the male paramedic, a petite female paramedic wrestled the weapon from his hand. A second female paramedic kicked him in the groin, and all three wrestled him to the ground. Another female paramedic attended to Const. Czapnik.
As he lay dying from the random attack, Const. Czapnik, 51, uttered his last words to the paramedics, according to police sources.
“Thank you,” he said.
That his very final act was an expression of gratitude to others is a powerful testament of a man who, as his mourners heard last week, cared deeply about others and about this community.
The first police officers to arrive on the scene found the suspect restrained with Const. Czapnik’s handcuffs, sitting in the back seat of his cruiser.
None of the paramedics were physically injured. But the incident is reviving debate whether paramedics should wear body armour and possibly even carry arms of some sort.
Kevin Gregson, 43, an RCMP officer on suspension from the force since 2006, is charged with first-degree murder. His next court appearance is on Jan. 19.
Politics, Religion, Science, Culture and Humanities / Science, Culture, & Humanities / Jefferson to Eppes, 1813
on: January 12, 2010, 07:15:28 AM
"It is a wise rule and should be fundamental in a government disposed to cherish its credit, and at the same time to restrain the use of it within the limits of its faculties, never to borrow a dollar without laying a tax in the same instant for paying the interest annually, and the principal within a given term; and to consider that tax as pledged to the creditors on the public faith." --Thomas Jefferson, letter to John Wayles Eppes, 1813
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: Afghanistan-Pakistan
on: January 12, 2010, 07:01:07 AM
I have no idea if such is feasible or not, but I do like that we include thinking outside of the box.
I am but a beginning student in these things, but the idea that the Durand line is but a fiction to which only we pay attention seems pretty sound to me. The idea of abanding it and allowing the unification of Pashtunland seems pretty intriguing to me.
Politics, Religion, Science, Culture and Humanities / Politics & Religion / Re: US Dollar; Monetary Policy
on: January 12, 2010, 06:55:01 AM
Federal Reserve earned $45 billion in 2009
By Neil Irwin
Wall Street firms aren't the only banks that had a banner year. The Federal Reserve made record profits in 2009, as its unconventional efforts to prop up the economy created a windfall for the government.
The Fed will return about $45 billion to the U.S. Treasury for 2009, according to calculations by The Washington Post based on public documents. That reflects the highest earnings in the 96-year history of the central bank. The Fed, unlike most government agencies, funds itself from its own operations and returns its profits to the Treasury.
The numbers are good news for the federal budget and a sign that the Fed has been successful, at least so far, in protecting taxpayers as it intervenes in the economy -- though there remains a risk of significant losses in the future if the Fed sells some of its investments or loses money on its stakes in bailed-out firms.
This turn of events comes as the banks that benefited from the Fed's actions are under the microscope. Starting at the end of the week, major banks are expected to announce significant earnings and employee bonuses. Anger in Washington is at such a high boil that the Obama administration will probably propose a fee on financial firms to recoup the cost of their bailout, officials confirmed Monday.
As it happens, the Fed's earnings for the year will dwarf those of the large banks, easily topping the expected profits of Bank of America, Goldman Sachs and J.P. Morgan Chase combined.
Much of the higher earnings came about because of the Fed's aggressive program of buying bonds, aiming to push interest rates down across the economy and thus stimulate growth. By the end of 2009, the Fed owned $1.8 trillion in U.S. government debt and mortgage-related securities, up from $497 billion a year earlier. The interest income on those investments was a major source of Fed profits -- though that income comes with risks, as the central bank could lose money if it later sells those securities to reduce the money supply.
The Fed also made money on its emergency loans to banks and other firms and on special programs to prop up lending, such as one that supports credit cards, auto loans, and other consumer and business lending. Those programs impose interest and fees on participants, with the aim of ensuring that the Fed does not lose money.
And while the central bank in its most recent financial report had recorded a $3.8 billion decline in the value of loans it made in bailing out the investment bank Bear Stearns and the insurer American International Group, the Fed also logged $4.7 billion in interest payments from those loans. Further losses -- or gains -- on the two bailouts are possible as time goes by. The Fed also charges fees for operating the plumbing of the financial system, such as clearing checks and electronic payments between banks.
From its revenue, the Fed deducts operating expenses, such as employee salaries, then returns to the Treasury almost all of the earnings that remain. The largest previous refund to the Treasury was $34.6 billion, in 2007.
"This shows that central banking is a great business to be in, especially in a crisis," said Vincent Reinhart, a resident scholar at the American Enterprise Institute and a former Fed official. "You buy assets that have a nice yield, and your cost of funds is very low. The difference is profit."
The Fed plans to release its estimate of 2009 earnings Tuesday. The Post's calculation is based on combining data through September from the Fed's monthly balance sheet report with more recent data from the Treasury's daily budget statement.
Fed officials do not make policy with an eye toward maximizing profits. They are charged by law with managing the nation's money supply to keep employment high and prices stable, and earnings fluctuate depending on a wide range of factors as they pursue that goal. In the crisis, the central bank's policy has been to create money and use it to buy a wide variety of assets, which in turn pay interest.
In effect, the unprecedented range of actions taken to address the crisis has made the Fed's balance sheet more like that of a private bank. A firm such as Bank of America takes money from depositors, whom it pays little or nothing in interest, and lends it out at significantly higher rates. The Fed, similarly, takes money that banks keep on deposit, at a rate of 0.25 percent, and lends it to the U.S. government by buying Treasury securities and, lately, to home buyers and other private borrowers though more exotic investments.
While that resulted in higher earnings in 2009, it exposes the Fed to more risks down the road. "They've moved up the risk-return curve, as they have more long-term assets and more things that involve credit risk," said Diane Swonk, chief economist at Mesirow Financial.
If the price of Treasury bonds or mortgage-related securities issued by Fannie Mae and Freddie Mac were to fall in the years ahead, and Fed leaders decided they need to drain money from the financial system by selling off some of their portfolio, the central bank would lose money. "If they do enough asset sales and rates go high enough, that could eat into future profits pretty substantially," said Michael Feroli, an economist at J.P. Morgan Chase.
Even as the Fed comes to resemble private banks in terms of its balance sheet and its earnings power, there remains one big difference. The CEO of the Federal Reserve, Chairman Ben S. Bernanke, received a modest cost-of-living raise for 2010, despite the record earnings: He now makes $199,700, with no bonus at all.