Archive | June 17th, 2011

Libya meeting


Hi Sammi 

Harpal has just come back from Libya. there is a meeting Friday in London if you could let the other know. Also, ask them if they want to organise a meeting up here in Birmingham, we could ask Harpal or Ella to come and tell us what they saw….


Friday 24 June 2011 7.00pm (follow updates at Red Youth News Service]

Marchmont Centre, 62 Marchmont Street, London, WC1N 1AB [nearest tube Russell Square]

CPGB-ML Chairman Harpal Brar and Vice-Chair Ella Rule have this week returned from Libya. They were invited to visit by the Libyan government and come back with a first hand account of the imperialist terror that has been inflicted upon the people. Make sure you come along to hear what they have to say; and be prepared to take the fight into the anti-war movement which has disgraced itself since the Benghazi contras began their Mi5-backed coup attempt.”


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Freedom of Speech & Zionist Propaganda ‘Shoah’



An Open Letter to Lauren Booth

It was, unfortunately, not a surprise that Lauren Booth, whose main claim to fame is her sister-in-law Cherie Booth’s marriage to war criminal Tony Blair, has come out as a supporter of Gilad Atzmon.

In a report in the Palestine Telegraph of 6th may 20 11 ‘jewishness’, scare tactics and a sense of humour.’ she presented him as a simple supporter of Palestinian rights who has stumbled on the secret of the Palestinian catastrophe – ‘Jewishness’. Quite what one does with this nugget of gold is never revealed. True Booth has converted to Islam, but religious adherents have the odd intellectual amongst their ranks.

It is of course understandable that each national liberation struggle has its own unique features and that of the Palestinians is no exception, but they also have certain things in common, like an oppressor and oppressed. Now if the Palestinians were unique in having been expelled, if Israel was unique in being an apartheid state, if the massacre of indigenous people were patented in Israel, then maybe, just maybe there would be a half justification for the concept that ‘Jewishness’ is to blame.

But of course the history of imperialism is littered with examples. such as South Africa, the United States, Australia and Ireland of settler colonial states. Other examples of straightforward colonisation – Malaya, Kenya, Nigeria, India – where massacre and atrocity were the norm should demonstrate that focussing on the racial characteristics of the invader and settler, as opposed to the socio-economic reasons behind what happened – is the explanation of those without any explanation.

But clearly Lauren Booth, despite her religious conversion (a trait that she shares with Blair) thinks differently.

Tony Greenstein


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Greenstein and his Islamophobic Hysteria


”This is an Islamophobic racist letter send to Ms Booth by Tony Greenstein. As we all know that their is anti-Islamic hyseria taking place in the west. We in Shoah  oppose the growing racism and Islamophobia in UK and Europe. Unfortunate we are facing people like Greenstein who are racist Islamophobic promoting imperialist war’s in Muslim people which encourage racist organisation’s like the BNP and EDL to attacke Moslum’s.”


‘Jewishness’ – the secret ingredient that explains everything and enchants Booth

Dear Ms Booth,

I read with interest your article of 6th May 2011 ‘jewishness’, scare tactics and a sense of humour.’ on Gilad Atzmon’s meeting that was going to be held at Westminster University, not least because of your own determined muddleheadedness. I can well understand that having a sister and brother-in-law as war criminals is likely to produce strange effects, but it doesn’t normally addle the brain.Those anti-Zionist groups and individuals who opposed Atzmon’s meeting at no time called for it to be cancelled. We contented ourselves with persuading the two leading academics who advertised as part of the panel, John Rose and Ghada Karmi, not to participate in an anti-Semitic love fest with your hero.As a convert to Islam you see what happens in Palestine through the lens of religion, i.e. how men 13 centuries or so ago interpreted society.

That means abandoning any rational attempt to explain things like war and expansion. Perhaps you will also learn that religion is a means of rationalising repression – be it in Israel or Iran – the difference being that in Israel religion justifies the oppression of non-Jews, in Iran it justifies the oppression of Muslims.It is unfortunate that you work for the Iran State’s Press TV, whose record includes broadcasting the confessions of torture victims such as Sakineh Mohammadi Ashtiani, the woman condemned to be stoned to death. Of course you have to earn your shilling but it also helps me to understand where you are coming from.You quote Atzmon as saying that Zionism ‘is NOT a colonial enterprise. It is a tribal setting.’ Zionism has nothing to do with class, settler colonialism or western imperialism.

Instead the answer is to be found in this elusive and mysterious elixir called ‘Jewishness’.Having rejected any materialist understanding of the world and retreated into received wisdom, you are left with no alternative but to look for racial explanations. After all religious devotion and class politics rarely go together. But for those who want to understand why the Palestinians were dispossessed, ‘Jewishness’ is not much of an explanation.Or let me put it more simply so that there is no room for misunderstanding.

Do we analyse why up to 10 million Africans were exterminated in the Belgian Congo by analysing Belgianness? Or does Germanness explain the holocaust as Zionist historians like Daniel Goldhagen argue or the genocide of the Armenians by examining Turkishness or Americanness to understand why the Amerindians were massacred? And the murder and torture of thousands in Central and South America by US sponsored death squads and juntas? How then to explain the horrors of Mubarak’s regime and why the USA supports the Saudi regime?‘Jewishness’ explains nothing whatsoever.

If it means Jewish identity, well this identity has changed repeatedly in the past 150 years in different parts of the world – from caste, to a working class, to supporters of Marxism and revolution and now Zionism. Your fascination with Atzmon and ‘Jewishness’ is a mere chasing of your own tail. You will be more likely to find a pot of gold at the end of a rainbow than ‘Jewishness’ as an analytical tool.Or maybe the oppression of Catholics in Ireland lies in the nature of Protestantism rather than the machinations of British colonialism.

Unfortunately the ruling class is not so stupid. Colonial Secretary, Winston Churchill, signed off on both the Partition of Ireland and the beginning of the British Mandate in Palestine. Or to quote the first Military Governor of Jerusalem, Sir Ronald Storres: ‘A Jewish State will be for England a little, loyal Ulster in a sea of potentially hostile Arabism.’ [Orientations p.4l4]In fact the first Zionists weren’t even Jewish but Christian! Having read little about Zionism and understanding even less, you probably weren’t even aware of Zionism’s Christian roots.

Try reading Hani al-Rabeb’s ‘The Zionist Character in the English Novel’ or Non-Jewish Zionism by Regina Sharif. Yes in the 19th Century, the age of imperialism, the idea of a Jewish ‘return’ to Palestine was popular among Christian imperialists and Evangelists (& before them the Puritans) long before it made any impression on Jews. Lord Palmerstone, Ernest Laharanne, Napoleon III, the Earl of Shaftesbury, Gladstone, George Elliot, to say nothing of Lord Balfour, who like many combined anti-Semitism and Zionism.Employing Atzmon’s logic, we should also ask if it is Christianness that explains Zionism.

It should be obvious, even to you, that you are looking down the telescope from the wrong end. You are mistaking cause and effect.So when Atzmon asks ‘‘Is Zionism what it is. Because ‘Jews’ are what they are?’ the answer should be obvious. Even an Islamist should understand that imperialism didn’t depend on personal or racial characteristics (and if you ask what Jews are then you are talking race) of the conqueror. Of course the imperialists rationalised and justified their plunder and murder by explaining that they had to ‘civilise’ the subjugated, who were ‘backward savages’. All in the name of a ‘Christian’ civilisation. Most people called it racism. No doubt Atzmon wil begin a minute examination of the New Testament.That is why historically it has been the oppressed who rejected racism because they understood it was the weapon of those they were fighting against.

In South Africa the ANC emphasised that it was a non-racial organisation which welcomed white opponents of Apartheid. And on occasion, as in the ‘End Conscription’ group white anti-apartheid activists organised separately. Some of the most prominent anti-apartheid Whites – Ruth First, Jo Slovo, Ronnie Kassrills – were Jewish and unsurprisingly it is Kassrills who has been the most ardent advocate of the Boycott of Israel which Atzmon opposes.Atzmon talks of ‘the good Jew’, anti Zionist ‘lite’; willing to condemn acts of the Israeli state but supporting the right of ‘Jews’ to a homeland.

A supporter of the right of Jews, who are not a nation, to a ‘homeland’ is not an anti-Zionist – be they Jewish or non-Jewish. But I seem to recall it is Atzmon who thought that Israel would change with the rise to leader of the Israeli |Labour Party of Amir Peretz, the ‘Defence’ Minister who waged war on Lebanon in 2006 and whobelieved that Zionist hegemony had ended with Obama.In fact it is not the supporters of 2 States who have opposed Atzmon.

It is those who oppose Zionism root and branch and have been integrally involved with BDS. Not because of any ‘presumption of superiority’ but because we recognise that there is no greater gift to Zionism than for Palestinian solidarity to be redefined in racist and racial terms. Anti-Semitism poses no threat to Jews today but it is dangerous to Palestinians and Palestine solidarity. Without anti-Semitism there would have been no Zionism. Atzmon, half fool, half charlatan that he is, wishes to replay history as a farce.The question is cui bono – who benefits from Atzmon’s forays into Jewish conspiracy theory?

I first came across him when he defended Israel Shamir, an open holocaust denier. Shamir is widely believed to be linked to the Russian internal security police, FSB. Everything about Atzmon’s behaviour and his efforts to divide the Palestinian solidarity movement, suggests that he also may have links to Mossad.There is no dispute that most acts of ‘anti-Semitism’ are a result of the atrocities of Israel and claims that Israel is acting on behalf of all Jews. In fact Zionism has always welcomed such anti-Semitism as a means of stimulating emigration to Palestine.

By supporting Atzmon, this is something you are also, no doubt unwittingly, are helping in. However the idea that you cannot be an anti-Semite because Jews are not a race is the kind of absurd question that I once had to put down from Oliver Kamm. Accordingly there is no such thing as racism against the Palestinians. After all they are not a race. And the Nazis weren’t racist either. Since there are no races there is no racism according to this logic!You say that ‘The concept of ‘Jewish’ labelled, pro Palestinian groups, really gets under Atzmon’s skin.

Why again, he argues, this need to be ‘special’ or ‘separate’ from other solidarity groups.’ Atzmon isn’t an activist. Nor are you. Jewish anti-Zionist groups don’t act separately from other solidarity groups. Quite the contrary. Only Boycott Divestment and Sanctions has forced Israel and Zionism on to the defensive. Nothing that Atzmon says is of the slightest concern to Israel’s supporters.So what was Atzmon’s reaction to the academic boycott which triggered off the boycott campaign of the past 6 years? In an interview ‘Tangling with the Oppressor’ Atzmon makes his position very clear:

‘interfering with academic freedom isn’t exactly something I can blindly advocate. Unlike some of my best enlightened friends, I am against any form of gatekeeping or book burning. But it goes further, I actually want to hear what Israelis and Zionists have to say. I want to read their books. I want to confront their academics. If justice is on our side we should be able to confront them…. to impose a boycott is to employ a boycotter.’

And why was Atzmon opposed to the Academic Boycott? Because his critics, not least Jewish critics, led the campaign! But according to him, ‘we are crypto-Zionists’!There is a very good reason for Jews to organise as such. Not because of any desire to organise separately on ‘racial or ethnic grounds;’ (Atzmon doesn’t use the term ‘race’!) but because we are most effective when we do. It also helps deflect the charge that supporting the Palestinians is anti-Semitic. That was why at the national conference of UNISON I was deliberately chosen to speak in support of Boycott in order to counter the Zionists. The same happened in the University & College lecturers Union. It seems a price worth paying, even if it does get under Atzmon’s skin. But to Atzmon the academic boycott is the equivalent of ‘book burning’.You finish with Atzmon’s quip that ‘’The real genius of the Jews is that they made God into an estate agent and the Bible into a land registry’. It is anti-Semitic because it attributes what Zionism did to every Jew. It also holds true for many other religions.If Atzmon is correct and it is all about ‘Jewishness’ then we should give up on solidarity.

Instead the focus should be on Jews outside Israel who, Atzmon holds, control Israel. Instead of demonstrating outside Ahava we should be picketing synagogues and Jewish restaurants. And abandon Palestine solidarity work (as some of his supporters argue) Which I suspect is the real reason for Atzmon’s obsessions.And if you want any further proof of Atzmon’s anti-Semitism then one only has to read his latest epic ‘Jewish Clandestine Operation Exposed’ about a meeting to discuss the issues above. In fact a number of those taking part, including London ISM, are non-Jewish. But why spoil a good conspiracy?It’s a great pity that you have chosen to hitch your wagon to this particular carthorse.


Tony Greenstein

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Lauren Booth: ‘jewishness’, scare tactics, and a sense of humour

05 MAY 2011


London, (Pal Telegraph)- Cloak and dagger antics outside a campus in central London, Tuesday night. As, the University of Westminster, caved into threats of disturbance, from UK based Zionists. Why? Because, Gilad Atzmon, world renowned saxophonist, author and anti Zionist racconteur had put together a panel to debate the following; ‘Jewishness and Israeli criminality.’

To a packed venue just round the corner from the campus the discussion, began with breathtakingly robust opening statements. Consider, as you read, the immense pressure not to take part placed on each panellist. The threats against the university of Westminster of disturbance or even violence if the talk took place. And, should you read a hackneyed report (in the Jewish Chronicle or some such useless organ). Return to this page to revisit the precise nature of the debate.

Alongside Gilad Atzmon, the panel consisted of Alan Hart, author, former Middle East Chief Correspondent for Independent Television News and former BBC Panorama presenter, specialising in the Middle East. And Karl Sabbagh, author, TV producer and publisher.

Gilad began his talk by reminding the audience that causing Zionists to feel outraged; ‘Makes me cheerful’. He has not struggled with his own identity he says accepting with a shrug of his irascible shoulders titles such as ‘proud self-hating Jew.’ His first riff, for that is how he talks, in dramatic sequences, was on the nitty question ‘What is Judaism?’

This, in literal terms is the religion of the Jews. Although, this cannot aptly define the large number of secular Jews. What is Zionism then? Zionism, Atzmon contends is NOT a colonial enterprise. It is a tribal setting.

It has nothing whatever to do with Jewish traditions nor Judaism. It is a political cause which cynically uses faith for its ends. Thus Zionism dupes followers of Judaism and secular ‘Jews’ who identify with these traditions, by getting them to emotionally invest into a violent expansionist project, which they would otherwise find repugnant.

Atzmon plunged headlong into a question that few others would consider anything but career suicide.

‘Is Zionism what it is. Because ‘Jews’ are what they are?’ Gilad Atzmon, comes from a secular Jewish family. He was born and raised in Israel. Until his late teens his big dream was to have a shining career in Israeli Defence Force. What he saw in his time in the army as a teenager serving in Lebanon, was enough, he has said, to make him ‘change sides completely.’ He is uniquely placed to ask the unaskable and to say the unsayable.

‘Judaism,’ he said ‘I don’t deal with this as religion. ‘It’ (Judaism) doesn’t kill. People kill in the name of religions’.

‘But what is Jewishness? It is a supremacy. A Chosenness.’

A decade ago, Gilad remembers being something of a ‘darling’ of the UK anti Zionist movement. But he refused to play what he calls ‘the good Jew’. Namely, to become an anti Zionist ‘lite’; A Jewish person willing to condemn certain acts of the Israeli state. Whilst contradictorily arguing the right of ‘Jews’ to have a homeland. On Palestinian land. Such activists often avoid making or worse still retract, important, statements due to social pressure on their families. This works in Israel’s favour and to the detriment of the anti Zionist movement as a whole.
Think Goldstone.

As Gilad continued to insist on his right, as a former Israeli, an academic and a member of a democracy, to look into the darker psychological recesses of the Israeli Jewish mindset, he went from darling to demon. For going on ten years, a number of Jewish anti Zionist (softly, softly) types, have been campaigning hard to black ball Atzmon from events and debates. Atzmon puts this effort squarely down to the topic of this evening, his contention, his amuse bouche; that Jewishness itself means a presumption of superiority that can only inevitably lead to violent tribal expansionism. And Apartheid.

A member of a Palestinian solidarity group made an interesting point telling the hall that,
‘Jews For Justice for Palestinians, wanted to be called; Jews for Justice for Palestine. They binned that idea when members found the word Palestine ‘too difficult’.

Atzmon vehemently  denies the accusation that he is an anti-semite. In no small part because he denies the existence of anti-semitism. In 2003, he wrote in an essay; ‘There is no anti-Semitism any more. In the devastating reality created by the Jewish state, anti-Semitism has been replaced by political reaction’. This is a point he returns to this evening.

‘How do you become and anti Semite? Easy upset a Jew. They don’t even need to tell you how you upset them.  ‘Anti semitism’ what does it mean? The dictionary tells us its a loathing of Jews, just because they are Jews.’

In all his years, speaking on the subject of Jewishness, Israeli war crimes, Zionism, he has, he has ‘Never met an anti-semite.’ How is this possible you may ask? Atzmon seeks to put clear intellectual water between the actions of ‘race’ hatred (Jews are not a race), and an oppostion to Israeli Apratheid policies that lead to frustrated acts of say, grafitti.

Atzmon continues; ‘ Yes I have met those who object to Israeli policy. To those who objected to Lord (cashpoint) Levi and his role. But this is not anti- semitism.’

What is it then?
“It is an objection to political lobbying.’

Recent figures seem to bare this stance out. Tel Aviv University researchers has released some startling new figures. These reveal that 2010 saw a 46 percent drop in the number of violent incidents targeting Jews relative to 2009 — from 1,129 to 614. Clearly, attacks on Jewish property or persons in 2009 can be seen, not as actions related solely to followers of an Abrahamic faith. But, in response to the violence of Israeli Zionism; A frustrated backlash against a criminal, political movement. Such findings, instead of reassuring Jewish communities, act as an unsettling factor to the pro Israel lobby within them. For without Jewish victimhood, how can the human rights violations of the Jewish State be justified?

On the question of identity for secular Jews, Atmon had this to say;
‘Ask a secular Jew what (does) it mean to be Jewish. They will list what they aren’t. It leads to strange ideas that all come down to chicken soup!’ The audiences laughs.

Some academics, find Gilad’s playfulness troubling. Audiences like the one this evening, enjoy his cerebral shadow boxing.

He continues.

‘Like the Muslims, who have ‘salam’ as a greeting, the Jews greet one another with Shalom – also a greeting of peace.

Says Atzmon

‘Shalom doesn’t mean peace though. It means security. For Jews’. That peace, (it means) peace for them only’.

“Jewishness tends towards segregation. Living in a ghetto. Look at the (Israeli Apartheid) wall. Is it really for security? No it’s to keep Jew and gentile separate’.
‘If you are not Jewish, you are not due the same treatment. You are lesser.’

Atzmon moves onto the controversial ‘hate crime’ of talking of a Jewish world wide conspiracy. So does one exist? Gilad is semi serious when he says;

“No Jews do not run the world. They get others to do it for them.’

As for who stops the media from fully exploring the real situation for the Palestinian people. From revealing crimes against humanity such as the massacre in Deir Yassin. Gilad rejects the idea of media executives refusing to engage with news from Middle East- to a degree.

‘The world’ he says, ‘self-censors. ‘Jews’ are not forcing the end of debate. We (the rest of the world) do it ourselves!” Goyim tolerance is seen as weakness. As stupidity yes!’

This argument is not without example. In 2001 Israeli Prime Minister Netanyahu, made unguarded comments, about relations with the United States and the peace process.

“I know what America is,” he told a group of terror victims, apparently not knowing his words were being recorded. “America is a thing you can move very easily, move it in the right direction. They won’t get in their way.”

The Israeli leader went on to boast about how he undercut the peace process when he was prime minister during the Clinton administration. “They asked me before the election if I’d honour [the Oslo accords],” he said. “I said I would, but … I’m going to interpret the accords in such a way that would allow me to put an end to this galloping forward to the ’67 borders. How did we do it? Nobody said what defined military zones were. Defined military zones are security zones; as far as I’m concerned, the entire Jordan Valley is a defined military zone. Go argue!’ This is a fine example, Gilad would contend, in which, Israeli negotiators, playing political games, find the ‘Goys’ in the White House, easily tricked and manipulated.

Alan Hart doesn’t blame Zionism for having global power either. He blames America for being intellectually weak at its heart (land) and easily financially manipulated in its political terrain.

Whilst Atzmon sums up the entire multi billion dollar Christian Zionist movement, in his usual pithy way.

‘Goys are stupid’.

Can Atzmon have his Kosher cake and eat it too? He began the evening by stating squarely that Israel was a state NOT built on Jewish principles, but on the expansionist lusts of a secular movement from Eastern Europe. Why, then in relation to what is going on, say in Gaza, does he return time and again to the question of ‘Jewishness’?

‘Because the bombs that fall on Gaza night after night, are all decorated with Jewish symbols.’

The concept of ‘Jewish’ labelled, pro Palestinian groups, really gets under Atzmon’s skin. Why again, he argues, this need to be ‘special’ or ‘separate’ from other solidarity groups. The idea has been, he contends that words of condemnation against Israel, are stronger coming from ‘Jews.’ That Jewish outrage holds more weight than any other. Isn’t this itself a supremacist concept, elevating Jewish suffering and understanding of pain above all others? The irony, which Atzmon relishes sharing, is that a Palestinian wishing to protest against Israeli policies in his homeland, would be excluded from joining Jews for Justice for Palestinians, on racial or ethnic grounds.

Alan Hart, author of an epic trilogy on the nature and history of Zionism, finds a pause in which to interject; ‘Nakba denial is as offensive as Holocaust denial.’ This is the comment of the evening which is met with a unanimous cheer.

Karl Sabbagh has a deep knowledge of modern Palestinian history upto and including the Nakba of 1948. He has come to the debate to discuss such tetchy issues as who ‘owns’ the land of Historic Palestine

Sabbagh prefers historical facts to rhetoric.

However, he too relates his frustration, as a historian, when he has made efforts to talk facts with Jewish colleagues and friends.

‘You cannot argue with people from a position of logic when they come from a position of no logic.’ For an example he describes the old lie that the Nakba was in fact the time, in 1948, when a small group of brave Jewish Holocaust survivors, fought against the might, cruelty and brutality of the surrounding Arabs. In fact, Sabbagh who specialises in this era of history reports that when the British mandate ended in ignominy;

‘Ninety thousand well-armed, highly trained Jews, went against, twenty thousand, poorly motivated, badly trained ill equipped Arabs! You tell them this (British Jews who support Israel) and they say it didn’t happen’.

The hall then heard from Sameh Habeeb. A young man from Gaza in his twenties. The founder and editor of the online newspaper the Palestine Telegraph, says he finds it hard to cope with the way his efforts to share his first hand experience of life under Israeli occupation has been met with attempts to frighten him from speaking out.

‘I Come from the Middle East’ he says, ‘A region which has been authoritarian. I looked forward to living In a democracy. But once you discuss Israel you are called an anti semite and you no longer can enjoy democracy and free speech’.

The Palestine Telegraph published articles apparently linking Israeli groups with organ theft. Some of these sources were taken from the Israeli Ha aretz newspaper. Yet he was targeted by aggressive UK Zionist groups, he and his family threatened with violence and court cases.

‘I was immediately accused of being an anti Semite. Although I am very semite’ he says. of his Palestinian semitic, roots.

Gilad ends the night with his trade mark frippery.

‘The real genius of the Jews’ he says ‘Is that they made God into an estate agent and the Bible into a land registry’.

The debate about whether or not this sort of language constitutes anti-Jewishness should continue. What must also continue, freely and without hindrance are debates into the British Jewish communities role in funding the ethnic cleansing of the West Bank and East Jerusalem via such bodies as the Jewish National Fund (patron, one D.Cameron).

The question hanging in the air for the British Jewish community at the end of the event, was this ‘ Do you know what is really being done by the Jewish State in the name of the ‘Jewish People’. And do you care?’


See: The Palestine Telegraph

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Nato chief Anders Fogh Rasmussen–UN ‘must be ready’ to step in when Gaddafi falls



Nato’s secretary general has warned that continued disparity in US and European defence spending might lead to a “two-tiered alliance” in which American and European troops would not be able to fight effectively together.

In a Guardian interview, Anders Fogh Rasmussen echoed the fears expressed last week by the US defence secretary, Robert Gates, about the strains being put on Nato by unequal burden-sharing.

“Ten years ago US defence investment represented almost half of all defence expenditure in the whole alliance. Today it is 75%,” Rasmussen said. “This increasing economic gap may also lead to an increasing technology gap which will almost hamper the inter-operability between our forces. The Americans provide … still more advanced military assets and equipment; the Europeans are lagging behind. And eventually it will be difficult to co-operate even if you had the political will to co-operate because of the technological gap.”

He added: “All this may in the long run weaken our alliance.”

Rasmussen said such a decline in Nato was not inevitable, expressing the hope that European nations would “step up to the plate” to increase defence spending. He also said the pooling of resources in bilateral and multilateral arrangements could make up for the decline in defence spending in difficult economic times.

In the short-term, he said the US had stepped in to provide more ammunition for the campaign in Libya in the face of the rapidly dwindling supplies of its European allies, and insisted that Nato now had everything it needed to maintain the campaign at “high tempo” for the next three months.

Beyond that, Rasmussen vowed that the alliance was “prepared to continue as long as it takes to accomplish our mission”, to protect Libyan civilians and ultimately force Muammar Gaddafi out of office. But he admitted concerns about the sustainability of operations carried out by a minority of Nato members.

“Of course it is a matter of concern that only eight allies are conducting air-to-ground strikes. If we are to ensure the long-term sustainability of the operation we should also broaden the support for the operation,” Rasmussen, a former Danish prime minister, said.

“The American people ask, and legitimately so, why should we carry the heavy burden to ensure international peace and stability. You also profit from it, so you should also take your share in the burden. That’s Secretary Gates’s message. I share that message.”

However, Rasmussen argued that after two and a half months of intensifying Nato air strikes and deepening political isolation, the Gaddafi regime was facing collapse. “It may take some time but it could also happen tomorrow and we have to be prepared for that.” Once Gaddafi fell, he said, the United Nations should be ready to take the lead in managing the transition and be prepared to do so without Nato ground troops.

“Firstly we do not envisage a leading Nato role in that. On the contrary we want to see the UN co-ordinate and lead the post-Gaddafi effort,” he said. “Actually I can’t imagine Nato troops on the ground and I think it’s also important to send that very clear message to the UN and other organisations right now so that appropriate plans can be in place in due time and the Gaddafi regime can collapse soon.”

Nato officials are increasingly concerned that the UN is not ready to take responsibility for the transition, and worry that UN officials assume that Nato, having led the military campaign, will continue to take lead responsibility by default. “The UN normally take three months to plan for this kind of transition and we don’t see much activity so far,” one official said.

Rasmussen said Nato could support a UN-led post-Gaddafi transition, logistically and from the air, but he laid down three conditions for such support: there had to be a demonstrable need for a Nato role, there had to be a clear legal mandate and there had to be Arab support for a continued Nato presence.

Jan Techau, head of the European office of the Carnegie Endowment for International Peace, said European and other states were making individual plans for assisting any transition, but he warned that the assumption that the Gaddafi regime was on the point of collapse might be premature.

“We are increasingly hearing sceptical voices over whether this military operation can be brought to a successful conclusion. That is the biggest nightmare at the moment,” he said, adding that the constraints on the UN mandate for the Nato role and a lack of ammunition were the main problems.

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U.S.-Pakistan relations “on a collision course”



The U.S.-Pakistani relationship has been going downhill ever since Navy SEALS flew in –without permission — to get Osama bin Laden.

Tuesday’s news managed to make things worse, when it was announced that Pakistan has rounded up several informants who helped the CIA find bin Laden.

Relations with Pakistan have gotten so bad since the raid on bin Laden’s compound, the deputy director of the CIA told a closed door hearing on Capitol Hill it’s a 3 on a scale of 10. According to Republican Senator Lindsey Graham, relations are close to the breaking point.

“We’re at a crossroads with Pakistan. We’re on a collision course with Pakistan,” Graham said.

While the U.S. wants Pakistan to go after the support network which allowed bin Laden to hide in plain sight, Pakistan instead has arrested and interrogated 5 people suspected of helping the CIA pull off the raid.

It is all part of a spy versus spy game the U.S. plays with one of its most important allies, and Defense Secretary Robert Gates told Democratic Senator Patrick Leahy to get used to it.

“Based on 27 years in CIA and four and a half years in this job, most governments lie to each other. That’s the way business gets done,” Gates said.

Although CIA drone strikes against terrorist safe havens in Pakistan’s border area continue without let up, Pakistani intelligence at the same time actually protects some of the terrorist groups.

The CIA gave Pakistan the location of two compounds where the explosives smuggled across the border to kill American soldiers in Afghanistan are manufactured. Someone in Pakistani intelligence apparently alerted the terrorists who immediately emptied out the compounds.

But for all the double dealing, the chairman of the Pentagon’s Joint Chiefs of Staff says the U.S. cannot afford to turn its back on a country that has both terrorists and nuclear weapons on its soil.

“If we walk away from it, it’s my view it will be a much more dangerous place a decade from now and we’ll be back,” Adm. Mike Mullen said.

Right now, Pakistan is pushing the U.S. away. They have kicked out virtually all the Americans who were training their military.

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Kucinich, other House members file lawsuit against Obama on Libya military mission




By Felicia Sonmez

Ten House members led by Rep. Dennis Kucinich (D-Ohio) are filing a complaint in federal court against President Obama for taking military action in Libya without first seeking congressional approval.

Kucinich and Reps. Walter Jones (R-N.C.), Howard Coble (R-N.C.), John Duncan (R-Tenn.), Roscoe Bartlett (R-Md.), John Conyers (D-Mich.) Ron Paul (R-Texas), Michael Capuano (D-Mass.), Tim Johnson (R-Ill.) and Dan Burton (R-Ind.) filed the complaint Wednesday at the U.S. District Court for the District of Columbia.

“With regard to the war in Libya, we believe that the law was violated,” Kucinich said in a statement. “We have asked the courts to move to protect the American people from the results of these illegal policies.”

The House members argue that the Obama administration overstepped its constitutional authority by authorizing the use of U.S. military force abroad without first receiving approval from Congress. U.S. forces have been involved in the campaign against Libyan leader Moammar Gaddafi for 88 days.

Critics argue that Obama violated the 1973 War Powers Resolution by failing to seek congressional approval for the mission.

Earlier this month, the House approved a resolution disapproving of the president’s action on Libya and calling on the administration to provide further details on its goals. Since then, several committee chairmen have sent letters to Obama seeking greater clarity, and the House on Monday passed another rebuke of Obama over the conflict.

On Tuesday, House Speaker John Boehner (R-Ohio) sent a stern letter to Obama warning that any failure to comply with the House’s resolution on Libya would “appear” to be a violation of the War Powers Resolution.

Meanwhile, efforts n the Senate to introduce a resolution authorizing the Libyan mission have failed so far. The White House has said that it plans to issue a response as soon as today that would include a legal analysis making the case for the intervention.

According to a release from Kucinich’s office, the lawsuit “calls for injunctive and declaratory relief to protect the plaintiffs and the country from the (1) policy that a president may unilaterally go to war in Libya and other countries without a declaration of war from Congress, as required by Article I, Section 8, Clause 11 of the United States Constitution; (2) the policy that a president may commit the United States to a war under the authority of the North Atlantic Treaty Organization (NATO) in violation of the express conditions of the North Atlantic Treaty ratified by Congress; (3) the policy that a president may commit the United States to a war under the authority of the United Nations without authorization from Congress; (4) from the use of previously appropriated funds by Congress for an unconstitutional and unauthorized war in Libya or other countries; and (5) from the violation of the War Powers Resolution as a result of the Obama Administration’s established policy that the President does not require congressional authorization for the use of military force in wars like the one in Libya.”

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Neocons Losing Hold Over Republican Foreign Policy?



by Jim Lobe


Nearly ten years after seizing control of Republican foreign policy, neoconservatives and other hawks appear to be losing it.

That is at least the tentative conclusion of a number of political analysts following Monday’s first nationally televised debate of the party’s declared Republican candidates — none of whom defended the current U.S. engagement in Libya, while several suggested it was time to pare down Washington’s global military engagements, including in Afghanistan.

“This sure isn’t the Republican Party of George Bush, [former Vice President] Dick Cheney, and [former Pentagon chief] Donald Rumsfeld,” exulted one liberal commentator, Michael Tomasky, in the Daily Beast. “The neocons are gone.”

“Is the Republican party turning isolationist for 2012?” asked Washington Post columnist Jackson Diehl, a liberal interventionist who has often allied himself with neoconservatives in support of “regime change” against authoritarian governments hostile to the U.S. or Israel.

“All in all, this first Republican debate offered a striking change of tone for a party that a decade ago was dominated, in foreign policy, by the neoconservative movement, which favored [and still does favor] aggressive American intervention abroad,” Diehl wrote on his blog.

Of particular note during the debate was a comment about Afghanistan by former Massachusetts Governor Mitt Romney, who is widely acknowledged to be the current front-runner in the Republican field.

“It’s time for us to bring our troops home as soon as we possibly can, consistent with the word that comes to our generals that we can hand the country over to the [Afghan] military in a way that they’re able to defend themselves,” Romney said, adding, perhaps fatefully, “I also think we’ve learned that our troops shouldn’t go off and try and fight a war of independence for another nation.”

What precisely he meant by the latter sentence was left unclear, but it was sufficiently negative for one prominent neoconservative, Danielle Pletka, to tell Politico that her inbox had been flooded Tuesday morning with emails calling Romney’s remarks a “disaster.”

“I’d thought of Romney as a mainstream Republican — supporting American strength and American leadership, but this doesn’t reflect that,” Pletka, who heads the foreign policy and defense division of the American Enterprise Institute (AEI), told Politico, adding that perhaps the front-runner was “a little bit of a weathervane.”

Whatever Romney meant, Monday’s debate — and the candidates’ apparent lack of enthusiasm for the military adventures of the near-decade that followed the 9/11 attacks — marked at least an “incremental… shift,” as the New York Times put it, in the party’s foreign-policy stance from “the aggressive use of American power around the world” to a “new debate over the costs and benefits” of deploying that power, particularly in a time of “extreme fiscal pressure.”

Since the mid-1970′s, Republicans have been divided between aggressive nationalists, like Cheney, and Israel-centered neoconservatives — who also enjoyed the support of the Christian Right — on the one hand, and isolationists and foreign-policy realists on the other.

The balance of power between the two groups has shifted more than once in the nearly four decades since. Under most of President Ronald Reagan’s tenure, for example, the nationalists and neoconservatives largely prevailed until they were overcome by the combination of the Iran-Contra scandal, Secretary of State George Shultz, and Soviet President Mikhail Gorbachev. Under President George H.W. Bush, the realists gained virtually total control.

The two factions spent much of President Bill Clinton’s eight years fighting each other. Indeed, it was during that period that the nationalists, neoconservatives, and Christian Rightists formed the Project for the New American Century (PNAC) — initially to counteract what they saw as growing isolationism and anti-interventionism among Republican lawmakers in Congress.

PNAC’s founders, neoconservatives Robert Kagan and Bill Kristol, backed John McCain in the 2000 Republican primaries, against George W. Bush — whose calls for a “more humble” and “modest” foreign policy conjured bad memories of his father.

Once in office, however, President George W. Bush chose leaders of both factions as his main advisers — most importantly Cheney and Rumsfeld, both nationalists surrounded by neoconservatives; and Colin Powell, a classic realist, as his secretary of state. For the first eight months, the two sides locked horns on virtually every major foreign-policy issue.

But the 9/11 attacks changed the balance of power decisively in favor of the hawks who, even as they gradually lost influence to the realists within the administration during Bush’s second term, retained the solid support of Republicans in Congress for all eight years. The fact that McCain, whose foreign-policy views were distinctly neoconservative, won the party’s presidential nomination in 2008 testified to the hawks’ enduring strength.

But the Sep 2008 financial crisis — and the economic distress it caused — laid the groundwork for the resurgence of the party’s realist-isolationist wing, according to political analysts.

“The economic duress is undermining the national greatness project of Bill Kristol and the neocons,” according to Steve Clemons, a national-security expert at the New America Foundation (NAF), whose blog is widely read here.

“What we are seeing evolve among Republicans is a hybrid realism with some isolationist strains that believes the costs of American intervention in the world at the rate of the last decade simply can’t be sustained,” wrote Clemons.

That evolution has gained momentum in the past few months, particularly since President Barack Obama yielded to pressure from a coalition of neoconservatives, liberal interventionists, and nationalists like McCain, to intervene in Libya, and, more importantly since the May 2 killing by U.S. Special Forces of the al-Qaeda chief in Pakistan. The killing of Osama bin Laden, according to Charles Kupchan of the Council on Foreign Relations (CFR), “symbolized a closure in some ways to the wars that began after the 9/11 attacks.”

Indeed, in just the last month, 26 Republican congressmen deserted their leadership and joined a strong majority of Democrats in calling for an accelerated withdrawal from Afghanistan, while last week, in an action that drew charges of “isolationism” from the neoconservative Wall Street Journal, 87 Republicans voted for a resolution that would require Obama to end military action in Libya within 15 days. And each new day seems to offer a story about yet another Republican insisting that the defense budget should not be exempt from major cuts to reduce the yawning federal deficit.

“The party was moving in this direction quite decidedly before 9/11, and then 9/11 silenced the voices of restraint and neo-isolationism,” Kupchan told IPS. “And now, they are finally coming back with a vengeance.”

“That emergence may make for some interesting alliances across partisan lines where you have left- leaning Democrats uncomfortable with the use of force lining up with Republicans interested in bringing down the deficit,” Kupchan noted.

Tomasky observed, Republican candidates might now be changing their tune not so much out of conviction as out of the desire to win elections.

Just last week, the Pew Research Center released its latest poll on U.S. foreign policy attitudes which found that “the current measure of isolationist sentiment is among the highest recorded” in more than 50 years.

While, for much of the Bush administration, only one in four Republicans said the U.S. should “mind its own business” internationally, that percentage has nearly doubled since Bush left office. The Pew survey also found a 50 percent increase in Republican support for “reducing [U.S.] military commitments overseas” — from 29 percent in 2008, to 44 percent in May, 2011. Moreover, 56 percent of Republicans said they support reducing those commitments as a way to cut the budget deficit.

Similarly, Republicans appear to have lost virtually all interest in promoting Bush’s and the neoconservatives’ “Freedom Agenda” abroad. According to the Pew poll, only one in ten Republicans said they believe democracy-promotion should be a long-term U.S. priority.

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Could Romney’s Attack on Obama’s Jobs Record Backfire?



Mandi Wright/Zuma

Why the candidate’s new ad criticizing the president on unemployment may end up highlighting his own corporate-raider past.

— By David Corn

Certain political ads are hard to fact-check—but that doesn’t make them accurate.

Before the Republican presidential debate in New Hampshire on Monday night, Mitt Romney’s campaign released a spiffy campaign video/ad that had all the politico wags going gaga. It was a slap at Obama—but it also provided Romney’s fellow GOP presidential wannabes with ammo to use against him.

The less-than-two-minute-long spot notes that “millions have lost their jobs under President Obama” and jabs at the president for recently stating, after the release of a lousy jobs report, that “there’s always going to be bumps on the road to recovery.” The video then shows about 15 people—of all shapes, sizes, and colors—lying, face-up, on a desert highway in what appears to be the middle of nowhere. One by one they rise, stare into the camera and hold up a Romney campaign placard with a shorthand description of their particular plight handwritten on it. “Mark” notes, “I want a job when I graduate.” “Shirley” reports, “Over 50, starting over.” “Kevin” proclaims, “The company I worked for just went bankrupt.” And each of them solemnly intone, “I’m an American, not a bump in the road.”

When the non-bumps finish, the music swells, the camera pans toward the heavens, and these words appear: “Believe in America. November 6, 2012.”

The message: Obama doesn’t care about you; Romney does. And at the debate on Monday night, Romney proclaimed that Obama has “failed the American people on jobs creation.”

This is all in keeping with the general notion sweeping GOP circles that the best way to beat the president next year is to not be the president. That is, any GOP nominee who can pose credibly as the non-Obama—without having to defend a boatload of negatives about him- or herself—will have a decent shot. Which may well be true.

Yet there might be some restraints on how far any candidate can depart from his or her own background to assail the president. This Romney video implies that he gives a damn about the “bumps in the road”—meaning typical American workers. His record as a former head of Bain Capital, a private equity firm that bought and sold firms, though, is at odds with this characterization. Here’s how the conservative New York Post recently characterized his tenure at Bain:

The former private equity firm chief’s fortune—which has funded his political ambitions from the Massachusetts statehouse to his unsuccessful run for the White House in 2008—was made on the backs of companies that ultimately collapsed, putting thousands of ordinary Americans out on the street. That truth if it becomes widely known could become costly to Romney, who, while making the media rounds recently, told CNN’s Piers Morgan that “People in America want to know who can get 15 million people back to work,” implying he was that person.

Romney’s private equity firm, Bain Capital, bought companies and often increased short-term earnings so those businesses could then borrow enormous amounts of money. That borrowed money was used to pay Bain dividends. Then those businesses needed to maintain that high level of earnings to pay their debts.

In 2007, the Los Angeles Times reported:

From 1984 until 1999, Romney led Bain Capital, a Boston-based private equity group that earned jaw-dropping profits through leveraged buyouts, debt hedge funds, offshore tax havens and other financial strategies. In some cases, Romney’s team closed U.S. factories, causing hundreds of layoffs, or pocketed huge fees shortly before companies collapsed.

During the 2008 campaign, CNN noted,

Critics note that Romney’s tenure as CEO of the leveraged buyout firm Bain Capital resulted in the loss of thousands of jobs through layoffs and bankruptcies. Romney, the wealthiest candidate in the 2008 presidential race, ran Bain Capital from 1984 to 1999, during which time he earned the bulk of his fortune.

Bain Capital specialized in buying companies in distress and revamping them, often by cutting jobs and closing plants. Some of Bain’s purchases became more efficient and successful businesses, while others, loaded with debt from Bain’s fees, were forced into bankruptcy, costing more jobs.

That same year, the Boston Globe reported on a Bain deal involving a firm named Ampad, noting that Bain Capital

slashed jobs at the office supply manufacturer stands in marked contrast to his recent pledges to beleaguered auto workers in Michigan and textile workers in South Carolina to “fight to save every job.”

Throughout his 15-year career at Bain Capital, which bought, sold, and merged dozens of companies, Romney had other chances to fight to save jobs, but didn’t. His ultimate responsibility was to make money for Bain’s investors, former partners said.

Much as he did when running for Massachusetts governor, Romney is now touting his business credentials as he campaigns for president, asserting that he helped create thousands of jobs as CEO of Bain. But a review of Bain’s investments during Romney’s tenure indicates that job growth was not a particular priority.

When Romney was in the public sector, as governor of Massachusetts, his record on jobs creation was not much better. After he claimed during a GOP primary debate in 2008 that while he was governor, “we kept adding jobs every single month,” noted “that’s just not true.” Moreover, the political fact-vetting site reported:

Romney’s job record provides little to boast about. By the end of his four years in office, Massachusetts had squeezed out a net gain in payroll jobs of just 1 percent, compared with job growth of 5.3 percent for the nation as a whole.

Romney’s latest ad, an impressionistic powerhouse, cannot be vetted in similar fashion, for it asserts no facts about Romney or his past actions while in the executive suite at Bain or in the state house in Boston. Team Romney is delighted with the spot, believing that this sort of attack will force the Obama crowd to respond by contending that the economy isn’t that bad or that things could be worse—assertions that turn off already skeptical and anxious independent voters.

But the video does depict Romney as something that is out of sync with his history: a champion of jobs creation. And this is a claim that can be used by his GOP rivals (when they tire of bashing Romney for enacting a health care insurance mandate in the Bay State). Their oppo research folks can read the above-mentioned stories and formulate the easy criticism: when he had the chance, Romney did not evince concern for the “bumps.” A prominent challenge for Romney, the supposed frontrunner, has been authenticity, as he has flip-flopped on critical issues (gay rights, gun rights, abortion) to better position himself to win a GOP contest. Yet as he tries to exploit the issue of jobs, he risks drawing attention to his own past as a corporate bulldozer who rode over bumps in the road on the way to profits. In fact, there’s an ad just waiting to be made: real people who lost their jobs, on a desert highway, noting that Romney and Bain stranded them.

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The Financial Road to Serfdom


How Bankers use the Debt Crisis to Roll Back the Progressive Era

By Prof. Michael Hudson

Global Research

Financial strategists do not intend to let today’s debt crisis go to waste. Foreclosure time has arrived. That means revolution – or more accurately, a counter-revolution to roll back the 20th century’s gains made by social democracy: pensions and social security, public health care and other infrastructure providing essential services at subsidized prices or for free. The basic model follows the former Soviet Union’s post-1991 neoliberal reforms: privatization of public enterprises, a high flat tax on labor but only nominal taxes on real estate and finance, and deregulation of the economy’s prices, working conditions and credit terms.

What is to be reversed is the “modern” agenda. The aim a century ago was to mobilize the Industrial Revolution’s soaring productivity and technology to raise living standards and use progressive taxation, public regulation, central banking and financial reform to distribute wealth fairly and make societies more equal. Today’s financial aim is the opposite: to concentrate wealth at the top of the economic pyramid and lower labor’s returns. High finance loves low wages.

The political lever to achieve this program is financial. The European Union (EU) constitution prevents central banks from financing government deficits, leaving this role to commercial banks, paying interest to them for creating credit that central banks readily monetize for themselves in Britain and the United States. Governments are to go into debt to bail out banks for loans gone bad – as do more and more loans as finance impoverishes the economy, stifling its ability to pay. Yet as long as we live in democracies, voters must agree to pay. Governments are sovereign and debt is ultimately a creature of the law and courts.

But first they need to understand what is happening. From the bankers’ perspective, the economic surplus is what they themselves end up with. Rising consumption standards and even public investment in infrastructure are seen as deadweight. Bankers and bondholders aim to increase the surplus not so much by tangible capital investment increasing the overall surplus, but by more predatory means, headed by rolling back labor’s gains and stiffening working conditions while gaining public subsidy. Banks “create wealth” by providing more credit (that is, debt leverage) to bid up asset prices for real estate and enterprises already in place – assets that either are being foreclosed on or sold off under debt pressure by private owners or governments. One commentator recently characterized the latter strategy of privatization as “tantamount to selling the family silver only to have to rent it back in order to eat dinner.”[1]

Fought in the name of free markets, this counter-revolution rejects the classical ideal of markets free of unearned income paid to special interests. The financial objective is to squeeze out a surplus by maximizing the margin of prices over costs. Opposing government enterprise and infrastructure as the road to serfdom, high finance is seeking to turn public infrastructure into rent-extracting tollbooths to extract economic rent (the “free lunch economy”), while replacing labor unions with non-union labor so as to work it more intensively.

This new road to neoserfdom is an asset grab. But to achieve it, the financial sector needs a political grab to replace democracy with financial technocrats. Their job is to pretend that there is no revolution at all, merely an increase in “efficiency,” “creating wealth” by debt-leveraging the economy to the point where the entire surplus is paid out as interest to the financial managers who are emerging as Western civilization’s new central planners.

Frederick Hayek’s Road to Serfdom portrayed a dystopia of public officials seeking to regulate the economy. In attacking government so one-sidedly, his ideological extremism sought to replace the checks and balances of mixed economies with a private sector “free” of regulation and consumer protection. His vision was of a post-modern economy “free” of the classical reforms to bring market prices into line with cost value. Instead of purifying industrial capitalism from the special rent extraction privileges bequeathed from the feudal epoch, Hayek’s ideology opened the way for unchecked financial power to make a travesty of “free markets.”

The European Union’s financial planners claim that Greece and other debtor countries have a problem that is easy to cure by imposing austerity. Pension savings, Social Security and medical insurance are to be downsized so as to “free” more debt service to be paid to creditors. Insisting that Greece only has a “liquidity problem,” European Central Bank (ECB) extremists deem an economy “solvent” as long as it has assets to privatize. ECB executive board member Lorenzo Bini Smaghi explained the plan in a Financial Times interview:

FT: Otmar Issing, your former colleague, says Greece is insolvent and it “will not be physically possible” for it to repay its debts. Is he right?

LBS: He is wrong because Greece is solvent if it applies the programme. They have assets that they can sell and reduce their debt and they have the instruments to change their tax and expenditure systems to reduce the debt. This is the assessment of the IMF, it is the assessment of the European Commission.

Poor developing countries have no assets, their income is low, and so they become insolvent easily. If you look at the balance sheet of Greece, it is not insolvent.
The key problem is political will on the part of the government and parliament. Privatisation proceeds of €50bn, which is being talked about – some mention more – would reduce the peak debt to GDP ratio from 160 per cent to about 140 per cent or 135 per cent and this could be reduced further.[2]

A week later Mr. Bini Smaghi insisted that the public sector “had marketable assets worth 300 billion euros and was not bankrupt. ‘Greece should be considered solvent and should be asked to service its debts,’ … signaling that the bank remained firmly opposed to any plan to allow Greece to stretch out its debt payments or oblige investors to accept less than full repayment, a so-called haircut.”[3] Speaking from Berlin, he said that Greece “was not insolvent.” It could pay off its bonds owed to German bankers ($22.7 billion), French bankers ($15 billion) and the ECB (reported to be on the hook for $190 billion) by selling off public land and ports, water and sewer rights, ownership of the telephone system and other basic infrastructure. In addition to getting paid in full and receiving high interest rates reflecting “market” expectations of non-payment, the banks would enjoy a new credit market financing privatization buy-outs.

Warning that failure to pay would create windfall gains for speculators who had bet that Greece would default, Mr. Bini Smaghi refused to acknowledge the corollary: to pay the full amount would create windfalls for those who bet that Greece would be forced to pay. He also claimed that: “Restructuring of Greek debt would … discourage Greece from modernizing its economy.” But the less debt service an economy pays, the more revenue it has to invest productively. And to “solve” the problem by throwing public assets on the market would create windfalls for distress buyers. As the Wall Street Journal put matters bluntly: “Greece is for sale – cheap – and Germany is buying. German companies are hunting for bargains in Greece as the debt-stricken government moves to sell state-owned assets to stabilize the country’s finances.”[4]

Rather than raising living standards while creating a more egalitarian and fair society, the ECB’s creditor-oriented “reforms” would roll the time clock back to oligarchy. Not the post-feudal oligarchy of landlords owning land conquered militarily, but a financial oligarchy accumulating banking claims and bonds growing inexorably and exponentially, leaving little over for the rest of the economy to invest or consume.

The distinction between illiquidity and insolvency
If a homeowner loses his job and cannot pay his mortgage, he must sell the house or see the bank foreclose. Is he insolvent, or merely “illiquid”? If he merely has a liquidity problem, a loan will help him earn the funds to pay down the debt. But if he falls into the negative equity that now plagues a quarter of U.S. real estate, taking on more loans will only deepen his net deficit. Ending this process by losing his home does not mean that he is merely illiquid. He is in distress, and is suffering from insolvency. But to the ECB this is merely a liquidity problem.

The public balance sheet includes land and infrastructure as if they are surplus assets that can be forfeited without fundamentally changing the owner’s status or social relations. In reality it is part of the means of survival in today’s world, at least survival as part of the middle class.
For starters, renegotiating his loan won’t help an insolvency situation such as the jobless homeowner above. Lending him the money to pay the bank interest (along with late fees and other financial penalties) or stretching out the loan merely will add to the debt balance, giving the foreclosing bank yet a larger claim on whatever property the debtor may have available to grab.
But the homeowner is in danger of being homeless, living on the street. At issue is whether solvency should be defined in the traditional common-sense way, in terms of the ability of income to carry one’s current obligations, or a purely balance-sheet approach taken by creditors seeking to extract payment by stripping assets. This is Greece’s position. Is it merely a liquidity problem if the government is told to sell off $50 billion in prime tourist sites, ports, water systems and other public assets in order to pay foreign creditors?

At issue is language regarding the legal rights of creditors vis-à-vis debtors. The United States has long had a body of law regarding this issue. A few years ago, for instance, the real estate speculator Sam Zell bought the Chicago Tribune in a debt-leveraged buyout. The newspaper soon went broke, wiping out the employees’ stock ownership plan (ESOP). They sued under the fraudulent conveyance law, which says that if a creditor makes a loan without knowing how the debtor can pay in the normal course of business, the loan is assumed to have been made with the intent of foreclosing on property, and is deemed fraudulent.

This law dates from colonial times, when British speculators eyed rich New York farmland. Their ploy was to extend loans to farmers, and then call in the loans when the farmer’s ability to pay was low, before the crop was harvested. This was indeed a liquidity problem – which financial opportunists turned into an asset grab. Some lenders, to be sure, created a genuine insolvency problem by making loans beyond the ability of the farmers to pay, and then would foreclose on their land. The colonies nullified such loans. Fraudulent conveyance laws have been kept on the books since the United States won its independence from Britain.

Creditors today are using debt leverage to force Greece to sell off its public domain – having extended credit beyond its ability to pay. So the question now being raised is whether the nation should be deemed “solvent” if the only way to carry its public debt (that is, roll it over by replacing bad old loans with newer and more inexorable obligations) is to forfeit its land and basic infrastructure. This would fundamentally alter the relationship between public and private sectors, replacing its mixed economy with a centrally planned one – planned by financial predators with little care that the economy is polarizing between rich and poor, creditors and debtors.

The financial road to serfdom
Financial lobbyists are turning the English language – and economic terminology throughout the world – into a battlefield. Creditors are to be permitted to take the assets of insolvent debtors – from homeowners and companies to entire nations – as if this were a normal working of “the market” and foreclosure was simply a way to restore “liquidity.” As for “solvency,” the ECB would strip Greece clean of its public sector’s assets. Bank officials have spoken of throwing potentially 150 billion euros of property onto the market.

Most people would think of this as a solvency problem. Solvency means the ability to maintain the kind of society one has, with existing public/private checks and balances and living standards. It is incompatible with scaling down pensions, Social Security and medical insurance to save bondholders and bankers from taking a loss. The latter policy is nothing less than a political revolution.
The asset stripping that Europe’s bankers are demanding of Greece looks like a dress rehearsal to prevent the “I won’t pay” movement from spreading to “Indignant Citizens” movements against financial austerity in Spain, Portugal and Italy. Bankers are trying to block governments from writing down debts, stretching out loans and reducing interest rates.

When a nation is directed to replace its mixed economy by transferring ownership of public infrastructure and enterprises to a financial class (mainly foreign), this is not merely “restoring solvency” by using long-term assets to pay short-term debts to maintain its balance-sheet net worth. It is a radical transformation to a centrally planned economy, shifting control out of the hands of elected representatives to those of financial managers whose time frame is short-term and extractive, not long-term and protective of social equity and basic needs.

Creditors are demanding a political transformation to replace democratic lawmakers with technocrats appointed by foreign bankers. When the economic surplus is pledged to bankers rather than invested at home, we are not merely dealing with “insolvency” but with an aggressive attack. Finance becomes a continuation of war, by economic means that are to be politicized. Acting on behalf of the commercial banks (from which most of its directors are drawn, and to which they intend to “descend from heaven” to take their rewards after serving their financial class), the European Central Bank insists on a political revolution to replace democratic government by a technocratic elite – not of industrial engineers, but of “financial engineers,” a polite name for asset stripping financial warriors. If Greece does not comply, they threaten to wreak domestic financial havoc by “pulling the plug” on Greek banks. This “carrot and stick” approach threatens that if Greece does not sign on, the ECB and IMF will withhold loans needed to keep its banking system solvent. The “carrot” was provided on May 31 they agreed to provide $86 billion in euros if Greece “puts off for the time being a restructuring, hard or soft,” of its public debt.[5]

It is a travesty to present this revolution simply as a financial exercise in solving the “liquidity problem” as if it were compatible with Europe’s past four centuries of political and classical economic reforms. This is why the Syntagma Square protest in front of Parliament has been growing each week, peaking at over 70,000 last Sunday, June 5.

Some protestors drew a parallel with the Wisconsin politicians who left the state to prevent a quorum from voting on the anti-labor program that Governor Walker tried to ram through. The next day, on June 6, thirty backbenchers of Prime Minister George Papandreou’s ruling Panhellenic Socialist party (Pasok) were joined by some of his own cabinet ministers threatening “to resign their parliamentary seats rather than vote through measures to cut thousands of public sector jobs, increase taxes again and dispose of €50bn of state assets, according to party insiders. ‘The biggest issue for the party is stringent cuts in the public sector … these go to the heart of Pasok’s model of social protection by providing jobs in state entities for its supporters,’ said a senior Socialist official.”[6]
Seeing the popular reluctance to commit financial suicide, Conservative Opposition leader Antonis Samaras also opposed paying the European bankers, “demanding a renegotiation of the package agreed last week with the ‘troika’ of the EU, IMF and the European Central Bank.” It was obvious that no party could gain popular support for the ECB’s demand that Greece relinquish popular rule and “appoint experienced technocrats to half a dozen essential ministries to implement the EU-IMF programme.”[7]

ECB President Trichet depicts himself as following Erasmus in bringing Europe beyond its “strict concept of nationhood.” This is to be done by replacing elected officials with a bureaucracy of cosmopolitan banker-friendly planners. The debt problem calls for new “monetary policy measures – we call them ‘non standard’ decisions, strictly separated from the ‘standard’ decisions, and aimed at restoring a better transmission of our monetary policy in these abnormal market conditions.” The task at hand is to make these conditions a new normalcy – and re-defining solvency to reflect a nation’s ability to pay debts by selling the public domain.

The ECB and EU claim that Greece is “solvent” as long as it has assets to sell off. But if populations in today’s mixed economies think of solvency as existing under existing public/private proportions, they will resist the financial sector’s attempt to proceed with buyouts and foreclosures until it possesses all the assets in the world, all the hitherto public and corporate assets and those of individuals and partnerships.

To minimize opposition to this dynamic the financial sector’s pet economists understate the debt burden, pretending that it can be paid without disrupting economic life and, in the Greek case for example, by using “mark to model” junk accounting and derivative swaps to simply conceal its magnitude. Dominique Strauss-Kahn at the IMF claims that the post-2008 debt crisis is merely a short-term “liquidity problem” and one of lack of “confidence,” not insolvency reflecting an underlying inability to pay. Banks promise that everything will be all right when the economy “returns to normal” – as if it can “borrow its way out of debt,” Bernanke-style.

This is what today’s financial warfare is about. At issue is the financial sector’s relationship to the “real” economy. From the latter’s perspective the proper role of credit – that is, debt – is to fund productive capital investment and spending, because it is out of the economic surplus that debts are paid. This requires a financial regulatory system and tax system to maximize growth. But that is precisely the fiscal policy that today’s financial sector is fighting against. It demands preferential tax-deductibility for interest to encourage debt financing rather than equity. It has disabled truth-in-lending laws and regulations to keeping interest rates and fees in line with costs of production. And it blocks governments from having central banks to freely finance their own operations and provide economies with money. And to cap matters it now demands that democratic society yield to centralized authoritarian financial rule.

Finance and democracy: from mutual reinforcement to antagonism
The relationship between banking and democracy has taken many twists over the centuries. Earlier this year, democratic opposition to the ECB and IMF attempt to impose austerity and privatization selloffs succeeded when Iceland’s President Grímsson insisted on a national referendum on the Icesave debt payment that Althing leaders had negotiated with Britain and the Netherlands (if one can characterize abject capitulation as a real negotiation). To their credit, a heavy 3-to-2 majority of Icelanders voted “No,” saving their economy from being driven into the debt peonage.
Democratic action historically has been needed to enforce debt collection. Until four centuries ago royal treasuries typically were kept in the royal bedroom, and loans to rulers were in the character of personal debts. Bankers repeatedly found themselves burned, especially by Habsburg and Bourbon despots on the thrones of Spain, Austria and France. Loans to such rulers were liable to expire upon their death, unless their successors remained dependent on these same financiers rather than turning to their rivals. The numerous bankruptcies of Spain’s autocratic Habsburg ruler Charles V exhausted his credit, preventing the nation from raising funds to defeat the rebellious Low Countries to the north.

The problem facing bankers was how to make loans permanent national obligations. Solving this problem gave an advantage to parliamentary democracies. It was a major factor enabling the Low Countries to win their independence from Habsburg Spain in the 16th century. The Dutch Republic committed the entire nation to pay its public debts, binding the people themselves, through their elected representatives who earmarked taxes to their creditors. Bankers saw parliamentary democracy as a precondition for making sound loans to governments. This security for bankers could be achieved only from electorates having at least a nominal voice in government. And raising war loans was a key element in military rivalry in an epoch when the maxim for survival was “Money is the sinews of war.”

As long as governments remained despotic, they found that their ability to incur more debt was limited. At this time “the legal position of the King qua borrower was obscure, and it was still doubtful whether his creditors had any remedy against him in case of default.”[8] Earlier Dutch-English financing had not satisfied creditors on this count. When Charles I borrowed 650,000 guilders from the Dutch States-General in 1625, the two countries’ military alliance against Spain helped defer the implicit constitutional struggle over who ultimately was liable for British debts.

The key financial achievement of parliamentary government was thus to establish nations as political bodies whose debts were not merely the personal obligations of rulers, but truly public and binding regardless of who occupied the throne. This is why the first two democratic nations, the Netherlands and Britain after its 1688 dynastic linkage between Holland and Britain in the person of William I, and the emergence of Parliamentary authority over public financing. They developed the most active capital markets and became Europe’s leading military powers. “A funded debt could not be formed so long as the King and Parliament were fighting for the mastery,” concludes the financial historian Richard Ehrenberg. “It was only after the [1688] revolution that the English State became what the Dutch Republic had long been – a real corporation of individuals firmly associated together, a permanent organism.”[9]

In sum, nations emerged in their modern form by adopting the financial characteristics of democratic city‑states. The financial imperatives of 17th-century warfare helped make these democracies victorious, for the new national financial systems facilitated military spending on a vastly extended scale. Conversely, the more despotic Spain, Austria and France became, the greater the difficulty they found in financing their military adventures. Austria was left “without credit, and consequently without much debt” by the end of the 18th century, the least credit-worthy and worst armed country in Europe, as Sir James Steuart noted in 1767.[10] It became fully dependent on British subsidies and loan guarantees by the time of the Napoleonic Wars.

The modern epoch of war financing therefore went hand in hand with the spread of parliamentary democracy. The situation was similar to that enjoyed by plebeian tribunes in Rome in the early centuries of its Republic. They were able to veto all military funding until the patricians made political concessions. The lesson was not lost on 18th-century Protestant parliaments. For war debts and other national obligations to become binding, the people’s elected representatives had to pledge taxes. This could be achieved only by giving the electorate a voice in government.

It thus was the desire to be repaid that turned the preference of creditors away from autocracies toward democracies. In the end it was only from democracies that they were able to collect. This of course did not necessarily reflect liberal political convictions on the part of creditors. They simply wanted to be paid.

Europe’s sovereign commercial cities developed the best credit ratings, and hence were best able to employ mercenaries. Access to credit was “their most powerful weapon in the struggle for their freedom,” notes Ehrenberg, in an age whose “growth in the use of fire‑arms had forced them to surround themselves with stronger fortifications.”[11] The problem was that “Anyone who gave credit to a prince knew that the repayment of the debt depended only on his debtor’s capacity and will to pay. The case was very different for the cities, who had power as overlords, but were also corporations, associations of individuals held in common bond. According to the generally accepted law each individual burgher was liable for the debts of the city both with his person and his property.”
But the tables are now turning, from Icelandic voters to the large crowds gathering in Syntagma Square and elsewhere throughout Greece to oppose the terms on which Prime Minister Papandreou has been negotiating an EU bailout loan for the government – to bail out German and French banks. Now that nations are not raising money for war but to subsidize reckless predatory bankers, Jean-Claude Trichet of the ECB recently suggested taking financial policy out of the hands of democracy.
But if a country is still not delivering, I think all would agree that the second stage has to be different. Would it go too far if we envisaged, at this second stage, giving euro area authorities a much deeper and authoritative say in the formation of the country’s economic policies if these go harmfully astray? A direct influence, well over and above the reinforced surveillance that is presently envisaged? …

At issue is sovereignty itself, when it comes to government responsibility for debts. And in this respect the war being waged against Greece by the European Central Bank (ECB) may best be seen as a dress rehearsal not only for the rest of Europe, but for what financial lobbyists would like to bring about in the United States.



[1] Yves Smith, “Wisconsin’s Walker Joins Government Asset Giveaway Club (and is Rahm Soon to Follow?)” Naked Capitalism, February 22, 2011.

[2] Ralph Atkins, “Transcript: Lorenzo Bini Smaghi,” Financial Times, May 30, 2011.

[3] Jack Ewing, “In Asset Sale, Greece to Give Up 10% Stake in Telecom Company,” The New York Times, June 7, 2011.

[4] Christopher Lawton and Laura Stevens, “Deutsche Telekom, Others Look to Grab State-Owned Assets at Fire-Sale Prices,” Wall Street Journal, June 7, 2011.

[5] Landon Thomas Jr., “New Rescue Package for Greece Takes Shape,” The New York Times, June 1, 2011.

[6] Kerin Hope, “Rift widens on Greek reform plan,” Financial Times, June 7, 2011.

[7] Ibid. See also Kerin Hope, “Thousands protest against Greek austerity,” Financial Times, June 6, 2011: “‘Thieves, thieves … Where did our money go?’ the protesters shouted, blowing whistles and waving Greek flags as riot police thickened ranks around the parliament building on Syntagma square in the centre of the capital. … Banners draped nearby read ‘Take back the new measures’ and ‘Greece is not for sale’ – a reference to the government’s plans to include state property and real estate for tourist development in the privatisation scheme.”

[8] Charles Wilson, England’s Apprenticeship: 1603-1763 (London: 1965), p. 89.

[9] Richard Ehrenberg, Capital and Finance in the Age of the Renaissance (1928), p. 354.

[10] James Steuart, Principles of Political Oeconomy (1767), p. 353.

[11] Ehrenberg, op. cit., pp. 44f., 33.

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