The Ruthless Truth blog

Stephen Lendman
Palestine Chronicle
Tue, 02 Mar 2010 21:13 EST

Israel is unique as America’s largest aid recipient..

From birth, Israel was a regional menace until America became its benefactor in the late 1960s. Now it’s a global one, powerful with a large standing army and the latest weapons and technology, nuclear armed and ready to use them. It’s belligerent on the slightest pretext or none at all, and a threat to world peace and security because US administrations since Lyndon Johnson supported a nation of 5.6 millions in an area the size of New Jersey, partnering in its worst crimes and abuses.
It’s due largely to the Israeli Lobby’s influence, or as John Mearsheimer and Stephen Walt wrote in their book, "The Israel Lobby and US Foreign Policy," America’s Middle East policy is driven "almost entirely (by) US domestic politics, and especially (because of) the (Lobby’s) activities….This situation has no equal in American political history."
In his book, "The Power of Israel in the United States," James Petras documented its enormous influence, explaining its roots throughout government, the business community, the dominant media, academia, the clergy, and powerful wealthy Jewish families. Broad support comes from thousands of dedicated activists, including doctors, lawyers, accountants, other professionals, philanthropists, and journalists given special prominence and benefits for their unwavering pro-Israeli reporting, suppressing decades of its militarism, belligerence, and illegal occupation while vilifying Israel’s enemies.
As a result, Israel receives enormous benefits, including billions in annual aid, the latest weapons and technology, unrestricted US market access, and free entry of its immigrants. Its imperial wars, illegal occupation, and crimes of war and against humanity are supported. Harmful Security Council resolutions are vetoed and General Assembly ones ignored. As a result, it operates freely, including spying in America by covertly penetrating US military bases, the FBI, CIA, IRS, DHS and many other government agencies, remaining unaccountable for its actions.
Israel is unique as America’s largest aid recipient, on the most favorable terms, and virtually anything more requested, given openly or covertly, in violation of the 1961 US Foreign Assistance Act (as amended), stipulating that no aid be provided to governments that engage:
"in a consistent pattern of gross violations of internationally recognized human rights, including torture or cruel, inhuman, or degrading treatment or punishment, prolonged detention without charges, causing the disappearance of persons by the abduction and clandestine detention of those persons, or other flagrant denial of the right to life, liberty, and the security of person, unless such assistance will directly benefit the needy people in such country."
In 2004, the amended Act let the president provide aid to treat orphans, other vulnerable children, those with HIV/AIDS, and to set up schools and other supportive programs.
US Aid to Israel
In November 2008, Shirl McArthur of the Washington Report on Middle East Affairs (WRMEA) used Congressional Research Report (CRS) data for a "Conservative Estimate of Total Direct US Aid to Israel" since 1949, saying it’s almost $114 billion, but explaining that determining the exact figure is impossible since parts are buried in various agency budgets, mostly the Defense Department’s (DOD) or in forms not easily quantifiable.
He states:
"It must be emphasized that this analysis is a conservative, defensible accounting of US direct aid to Israel, NOT of Israel’s cost to the US or the American taxpayer, not of the benefits to Israel of US aid. The distinction is important, because the indirect or consequential costs suffered by the US as a result of its blind support for Israel exceed by many times the substantial amount of direct aid" provided.
Besides Afghanistan and other Middle East conflicts, excluded from McArthur’s data, is the mounting Iraq invasion and occupation cost, estimated by Joseph Stiglitz and Linda Bilmes to be $3 trillion in their book titled, "The Three Trillion Dollar War: The True Cost of the Iraq Conflict."
They include an extra $2 trillion national debt, ad infinitum interest on it, veterans’ healthcare and disability payments, the economic impact of lives lost and jobs interrupted, the higher cost of oil, the long-term economic impact, and numerous intangibles such as global anti-American sentiment, the near universal Arab world view that Washington attacked Iraq for Israel, and the US’s reduced capability to respond to other global crises and address vital homeland needs.
In his June 2003 WRMEA article titled, "The Cost to American Taxpayers of the Israeli-Palestinian Conflict," Thomas Stauffer conservatively estimated it at around $3 trillion measured in 2002 dollars, nearly four times the amount for the Vietnam war, also in 2002 dollars.
Stauffer said US Israeli aid is way-understated:
"since much is outside of the foreign aid appropriation process or implicit in other programs. It comes to $1.8 trillion, including special trade advantages, preferential contracts, or aid buried in other accounts. In addition to the financial outlay," about 275,000 US jobs are lost annually.
His estimates include:
– multi-fold oil price increases;
– the effect on US jobs and exports;
– economic and military aid,
– special benefits to Israel, including privileged contracts for Israeli firms, legal and illegal weapons and technology transfers, exemption from US trade protection provisions, discounted "surplus" military equipment sales, low or no-interest loans, and other undisclosed costly benefits, exclusively for Israel.
He concluded that Israeli assistance and Middle East unrest "ha(ve) proven to be very expensive for the US," much higher than revealed figures. Their total costs "are some six times the official aid" with all related factors included such as the price of oil and burden on other regional states. "All states – not just the US – have borne the burden of conflicts in the Middle East."
Known US aid includes:
– annual $3 billion direct appropriations;
– undisclosed additional amounts;
– millions annually to resettle immigrants;
– disclosed and unknown billions in loan guarantees;
– since 1981, economic aid in direct cash transfers, and since 1985 military aid the same way;
– Israeli military loans as grants, repayment not required; Israel wants them called loans to avoid US monitoring; according to the Congressional Budget Office (CBO), "Technically, the assistance is called loans, but as a practical matter, the military aid is (given as) grants;"
– economic aid is the same, Israel spending it as it pleases with no required accountability;
– since 1982, Economic Support Fund (ESF) cash transfers come in lump sum form at the beginning of each fiscal year, no strings attached – a benefit afforded no other country, made even greater by investing it in US Treasuries;
– special Foreign Military Sales (FMS) funding is also afforded to purchase American weapons and technology; other countries buy them through the Defense Department (DOD); Israel deals directly with US companies; other countries must comply with minimum purchase amounts; Israel has no such restriction; other countries let DOD disburse funds to suppliers; Israel pays them directly and is reimbursed by the US Treasury; under this arrangement, Israeli officials have committed serious offenses, including embezzlement and improper access to highly classified information on US weapons and technology;
– US weapons suppliers provide offsets by purchasing Israeli products and services;
– Israel may use over 26% of its aid to buy weapons, munitions and other equipment from its own companies; no other nation has this benefit; as a result, its arms industry is one of the world’s largest and most sophisticated; in 2007, it was the 8th largest supplier to developing countries;
– aid finances Israel’s defense industry;
– state-of-the-art weapons and technology are provided; and
– America guarantees Israel’s access to oil and finances its settlements – illegal under international law.
In April 1998, Washington designed Israel a "major non-NATO ally," qualifying it to receive Excess Defense Articles (EDA) under Section 516 of the Foreign Assistance Act and Section 23(a) of the Arms Export Control Act. As a strategic US ally, it gets unmatched preferential treatment.
In FY 2009, the If Americans Knew web site said America gave Israel $7 million or more daily. Palestinians got nothing, except to police their own people, strengthen Fatah against Hamas and other competing parties, some economic aid benefitting Israel and the West, and spotty amounts through USAID and to UNRWA and US-based NGOs for projects called "humanitarian."
In their above-mentioned book, Mearsheimer and Walt said:
"Since the October (1973) War, Washington has provided Israel with a level of support dwarfing the amounts (given) any other state. It has been the largest annual recipient of direct US economic and military assistance since 1976 and the largest total recipient since World War II. Total direct US aid to Israel amounts to well over $140 billion in 2003 dollars….In per capita terms, the United States gives each Israeli a direct subsidy worth about $500 per year."
Over the last 20 years, Washington focused mainly on military aid, increasing it by $150 million annually since FY 2007, plus additional amounts for Israeli incursions, planned jointly with Washington.
Before 1998, Israel annually received military grants of $1.8 billion and economic ones totaling $1.2 billion. Beginning in FY 2009, by mutual agreement, economic aid is being reduced by $120 million and military grants increased by $60 million annually over 10 years. In August 2007, a memorandum of understanding afforded Israel $30 billion in aid for 10 years, plus later discovered undisclosed amounts, totaling billions.
Budgeted amounts go mostly for specific projects, such as Israel’s Merkava tank, its Arrow anti-missile missile, other anti-missile systems, and the cancelled Lavi attack fighter. Grants also go to US – Israeli scientific and business cooperation organizations, the two largest being the BIRD (Binational Research & Development) Foundation and the BARD (Binational Agriculture and Research and Development) Fund.
Congressional Research Service (CRS) Report on Aid to Israel – December 4, 2009
Its latest report affirms Israel as "the largest cumulative recipient of US foreign assistance since World War II," saying it gets nearly $3 billion annually, mainly as military assistance.
In August 2007, the Bush administration incrementally increased it by $6 billion over the next decade. For FY 2010, the Obama administration requested $2.775 billion in Foreign Military Financing (FMF). Congress provided $555 million of Israel’s total FY 2010 FMF in PL (Public Law) 111-32, in the FY 2009 Supplemental Appropriations Act. HR 3081 and S 1434 contain the remaining funds.
On July 9, 2009, HR 3160 was introduced, the Israeli Foreign Assistance Appropriations Act, 2010. The bill was referred to committee and awaits further action.
Recent possible military sales include:
– on September 29, 2008, the F-35 Joint Strike Fighter with associated equipment and training, a deal, if consummated, worth up to $15.2 billion; Israel wants up to 75 depending on the cost; negotiations continue, but reported disagreement was reported over its right to customize aircraft to its needs and the final per plane cost, from $100 – $200 million depending on the degree of customization;
– on September 9, 2008, Patriot Missile Fire Unit upgrades, 1,000 GBU-39 small diameter guided bombs, and 28,000 M72A7 light anti-armor weapons, in total worth about $330 million; Israel already has US-supplied Hawk and Patriot missiles as well as its own defense systems; since 1988, both countries have been developing the Arrow Anti-Missile system, a weapon with theater ballistic missile capability; Arrow became operational in 2000; Arrow II is designed to deter longer-range conventional ballistic missiles, and other systems are under development, including Arrow III;
– on July 30, 2008, nine C-130 J-30 aircraft with associated equipment and training, worth up to $1.9; billion; and
– on July 15, 2008, four Littoral combat ships, worth up to $1.9 billion, and JP-8 aviation jet fuel worth up to $1.3 billion; in 2009, Israel declined to purchase these ships over cost concerns.
American Israeli aid began in 1949 with a $100 million Export-Import Bank loan and continued modestly for the next two decades. In 1962, Israel bought its first advanced weapons system, Hawk anti-aircraft missiles. In 1968, a year after the Six Day War, the Johnson administration assured Israel’s regional military superiority. Since 1970, large-scale aid followed. In 1971, it was $545 million, and by 1974 Israel became America’s largest aid recipient, two-thirds for military purposes.
After the 1979 Camp David Accords and Israel – Egypt Peace Treaty, Washington gave both sides $7.5 billion under the 1979 Special International Security Assistance Act, allocated 3 – 2 favoring Israel. Thereafter, regular and emergency economic and military aid followed. Today, Israeli allocations far exceed amounts given Egypt or any other nation.
In 1985, Congress appropriated special economic assistance of $1.5 billion under terms of a US – Israel Joint Economic Development Group (JEDG), calling for neoliberal reforms and empowering Israel’s Finance Ministry and national Bank.
Washington and Tel Aviv colluded for two goals:
– balancing Israel’s budget; and
– cutting wages, prices, credit, public benefits, pensions, and the currency’s value as well as curbing union power and establishing an exploitable temporary worker market.
It began Israel’s race to the bottom by mass privatizations, welfare and social benefit cuts, and wealth shifted to the top as in America, the result being growing Jewish poverty, hunger and homelessness to the present.
In 1985, all US military aid became grants, what began for economic aid in 1981. Thereafter, generous supplemental aid followed, including after the Gulf and 2003 Iraq wars. The FY 2003 Emergency Supplemental Appropriations Act included $9 billion in loan guarantees over three years and $1 billion in military grants. Other amounts came earlier. They’ve continued ever since, some open, others covert, affording Israel exclusive preferential treatment.
The "special relationship" remains fixed under Obama, what he affirmed at the June 2008 AIPAC meeting that he’s "a true friend of Israel," felt he was "among friends," stressed that "the bond between the United States and Israel is unbreakable today, tomorrow and forever," and, in fact, "as president, I will work with you to ensure that this bond is strengthened." He hasn’t disappointed.
- Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He contributed this article to PalestineChronicle.com. Contact him at: lendmanstephen@sbcglobal.net.

http://www.sott.net/articles/show/203974-Funding-Israeli-Militarism-and-Occupation

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by Robin Beste

Global Research, February 16, 2010

Stop the War Coalition (UK)

The civilian deaths in Kandahar and Marjah are a brutal reminder of the heavy price many Afghans will pay in the months and years to come to save the face of those responsible for prosecuting a futile and unjustifiable war.

NATO’s current offensive in the Afghan town of Marjah is being portrayed as a low casualty mission in the "good war" to get rid of the Taliban.

If you were to believe the news broadcasts, it’s already a success.

Since the assault was always intended to be as much a publicity stunt as serving any military objective, Barack Obama and Gordon Brown will certainly be pleased at how the media has snapped into line and acted as stenographers for Nato press releases.

The truth is, most of the few hundred Taliban fighters in Marjah vanished well before the much touted offensive began, not being stupid enough to face up to 15,000 of the most heavily armed troops on the planet.

Much of what we’ve seen on the TV screens looks like random firing into empty space to give the cameras footage for the evening news bulletins.

But, with very few enemy to engage, it wasn’t long — two days in fact– before tragedy struck when a missile attack looking for Taliban to kill managed to slaughter 12 civilians, five of them children — the very people this war was supposedly tailored to keep out of harm’s way.

The attack on Marjah is no different from the numerous other Nato "clear, hold and build" missions — except in the number of troops and the amount of media ballyhoo.

And there’s no reason why this should be different in the outcome, with the Taliban withdrawing tactically and biding its time, before infiltrating back into the town once the overblown Operation Moshtarak and its accompanying media circus, has moved on to some other flashpoint of resistance to foreign occupation.

The only reason the invading armies continue fighting a war that cannot be won is in the hope that some escape route can be found from Obama and Brown’s "war of necessity" that restores Western powers’ credibility for invading other countries with impunity.

While the media concentrated all its resources on reporting the instant "success" in Marjah, yet another act of mass murder took place in the Kandahar province, with five civilians killed by a Nato air strike when they were assumed to be "persons planting an IED explosive device", recalling another "regretable incident" last August in the same region, when a group of farmers were killed loading cucumbers onto a lorry, which were mistaken to be munitions.

The civilian deaths in Kandahar and Marjah are a brutal reminder of the heavy price many Afghans will pay in the months and years to come to save the face of those responsible for prosecuting a futile and unjustifiable war.

Global Research Articles by Robin Beste

http://www.globalresearch.ca/index.php?context=va&aid=17639

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Giordano Bruno

Neithercorp Press – 01/12/10

Many researchers, including those here at Neithercorp, have projected that the third and final stage of the economic collapse will begin sometime in 2010. Barring some kind of financial miracle, or the complete dissolution of the Federal Reserve, a snowballing implosion should become visible by the end of this year. Data indicates that the dollar and the Dow are running on nothing but false promises and fiat bailouts, and that this game is slowly winding down. The Fed cannot sustain its current rate of liquidity injections without raising the ire of foreign nations heavily invested in U.S. debt, especially when banks have refused to loosen their lending practices as promised, thereby hoarding all bailout funds made available to them and stifling any chance of a credit market recovery.

Understandably, an important question has arisen among those people who are trying to prepare for the event; When EXACTLY will the collapse occur?

Of course, we aren’t psychic, and narrowing down the final trigger to the exact day, or even the exact month, would be extremely difficult. However, what we can do is explain what signs to look for, how to look for them, and what dangers they foretell. Economics gives the appearance of a complex and confusing science, but most economic indicators taught in business schools are really hollow background noise, designed to do nothing more than make television investment analysts seem more intelligent than they really are. All we need to know are the fundamentals, the unchangeable concrete factors that all economies operate on, and how to tell when they are beginning to falter. The following list is composed of signs anyone with a little work and a little vigilance can keep track of, giving them an even greater edge in knowing when the house of cards is really about to topple…

Gold And Dollar Decoupling

Although U.S. Treasury markets and the dollar are currently being manipulated by the Federal Reserve’s fiat purchasing of T-bonds, watching the Dollar index in comparison with gold can give a good indication of when the final drop will occur. Over the past decade, the dollar has lost around 40% of its value, while gold has increased 400% in value. Gold’s increase is due in very large part to the devaluation of the Greenback, but it also indicates a surging international interest in precious metals, especially in Asia. Traditionally, when the dollar decreases in value, gold moves up, and when the dollar increases in value, gold falls. However, over the past four months, there have been sporadic incidences in which gold’s price has increased even though the dollar gained in value. These incidences have lasted only a day or two at a time, but they show that gold is starting to move on its own accord, slowly decoupling from the dollar and even being used as a competing form of currency in some places.

The Vietnamese Government, for instance, recently threatened to shut down all gold bullion trade in the country by the end of March, because Vietnamese merchants and consumers are abandoning their own inflated currency and using gold instead. The Vietnamese have also stopped using American dollars, once considered a safe store of value:

http://www.google.com/hostednews/afp/article/ALeqM5i2CFXWwN6o8w7nn9GqYjOZ2dHNwA

Banking elites in Western nations have been short selling gold for decades in order to keep the price down, and obstruct gold from becoming a competing alternative to the Dollar. Now, we are beginning to see gold move despite banker manipulation. Just before the onset of a dollar implosion, one should watch for gold to begin jumping steeply higher regardless of the behavior of currency markets. Any reports that blocs of foreign nations are increasing the exchange of U.S. Treasuries (beyond what they have done already) and buying large stores of gold would also signal a dollar collapse. In the event that average Americans begin considering the use of gold and silver in place of the dollar, as in Vietnam, you know the final downturn has begun.

Price Inflation Of Oil

For a long time, oil has been traded on the world markets exclusively in U.S. Dollars. Oil and the dollar are therefore intimately connected. Oil will be the first commodity to reveal any inflation (or hyperinflation) in the dollar during a breakdown. Currently, oil is steadily gaining, now hovering around $80 a barrel, or nearly $3 a gallon. Some in the MSM claim this is due to harsh winter conditions around the world, while others say it is due to the weakness and distrust in the Greenback. Not too long ago, oil prices were manipulated upwards by speculators to the tune of $150 a barrel:

http://money.cnn.com/2008/07/24/markets/cftc/index.htm

I suspect that this manipulation was not just an act of greed, but part of a larger strategy by the financial elite to acclimate Americans to the idea of gas price inflation, so that when it occurs again Americans will not be as quick to react, once again blaming speculators, instead of the real cause; a dollar implosion.

Another oil price increase anywhere near the $150 mark is an implicit warning that the economy is about to falter, especially if that increase continues on through summer months.

Dollar Loses World Reserve Currency Status

An announcement by any foreign nation, especially those that hold large stores of U.S. debt, that they will be dropping the dollar and trading in a different currency is a tremendous warning. The dollar is a very weak currency. It’s only saving grace, the thread it hangs by, is the fact that it still has world reserve status, meaning, it is a trade currency accepted by all nations. If BRIC nations, or OPEC oil producers, were to announce that they will no longer trade goods using dollars, expect an immediate tanking of our currency, along with treasury markets. Those that catch this news as it starts will probably have a month or maybe two to get all their preparations in order and distance themselves from any potential danger areas. Hyperinflation has the distinct ability to bring out the worst in a society. People can handle a Dow collapse, or even deflation, but when a currency is destroyed, all possible means of self support are lost unless one was prepared. Those who are not will lose the whole of their life savings in one fell swoop.

U.S. Treasury Dump

This is a little more difficult to track, simply because most foreign creditors do not want to announce openly that they are dumping their U.S. Treasuries. Such incidences can cause war, among other things. What can be tracked easily is the amount of treasuries being sold to other countries. Currently, other nations have nearly frozen their investment in our debt:

http://market-ticker.denninger.net/archives/1730-TIC-Data-Confirms-Foreign-Appetite-Gone.html

The U.S. deficit for the fiscal year 2009 came in at a record $1.42 trillion, more than triple the record set in 2008. The total national debt (according to the government) is now at a whopping $12 trillion and climbing! This debt cannot be sustained without a constant flow of money from other countries. If these countries stop purchasing our debt, then our Treasury will become insolvent. The country will be bankrupt. The Federal Reserve is currently trying to stave off this event by purchasing U.S. debt; basically legalized currency manipulation, much like paying off one credit card bill with yet another credit card. According to reports, the Fed now accounts for 91% of all U.S. debt purchases. This is a very bad sign:

http://www.zerohedge.com/article/ultimate-shell-game-federal-reserve-funds-us-deficit

Eventually, we will hear reports that foreign holders of treasury debt have not only stopped buying new treasuries, but are also dumping the treasuries they already have because of the Fed’s extreme devaluation policies. If this happens on a large scale, a collapse is about to take place.

Simultaneous Dow / Dollar Drop

Normally, when the Dow loses value and investors pull their savings out of stocks, they tend to put those savings into dollar backed securities or treasuries as a “safe haven”. This causes the value of the dollar to increase whenever the Dow falls, but the balancing act is beginning to change. One clear indication of a collapse would be the simultaneous fall of the Dow and the Dollar over a moderate period. This would denote a loss of safe haven status in the dollar as well as uncertainty among investors in stocks. A double whammy like this could prove to be an alert of impending disintegration.

A good time to watch for this signal would be around June or July, when it is rumored the Fed will begin raising interest rates from near zero.

Jobs And Housing

As we predicted recently, job loss which was hidden by the Labor Department in November is now beginning to show in December. We expect that job loss numbers will begin to grow more aggressive from this point on, as companies that hired temporary workers for the Christmas season proceed with layoffs in February and March.

Real unemployment, counting the U-6 measurement, is around 20%. When this measurement reaches between 25% and 30% (Great Depression levels), the country may be on the edge of final collapse.

Also, watching the small and medium sized business sector will help in discovering when job markets will completely tank. Small and medium businesses support around two thirds of all U.S. jobs, but these companies are now in dire straights:

http://www.cnbc.com/id/34825943

http://finance.yahoo.com/news/Job-openings-drop-as-hiring-apf-2800514981.html?x=0&sec=topStories&pos=8&asset=&ccode=

Most of these firms say they will be cutting even more jobs in 2010, not hiring.

Another important factor is the housing market and what are called “Option ARM Mortgages.” ARM mortgages are basically what created the housing bubble in the first place, by offering loans at artificially low interest rates which then increase after a set time period. Millions of people have home payments based on ARM mortgages, and many of these contracts are about to expire, meaning their payments will mushroom, and they will go bankrupt. California alone has hundreds of thousands of homes with ARM mortgages ready to expire in the next year:

http://www.cnbc.com/id/34729005

Watch closely for announcements of mass ARM mortgage resets, which could herald even greater losses in housing, as well as an increase in the homeless population.

Grocery Store Peculiarities

Wholesale prices of goods have recently been increasing far beyond what mainstream economists had predicted, hinting at the first steps towards inflation:

http://finance.yahoo.com/news/Spike-in-wholesale-inflation-apf-2682030532.html?x=0

Grocery store chains tend to “absorb” the extra cost of their stock in the hope that wholesale prices will soon drop again, and in order to keep from losing customers due to high prices, but this has the added effect of hiding true inflation from the public. Eventually, stores and manufacturers can no longer absorb the inflation, and either raise their prices, or diminish their volume. Keep careful note of your local grocery stores. Are items being “repackaged” by manufacturers to hold less for the same price? Is your $4, twenty ounce box of cereal now $4.50 and only fifteen ounces? Are items beginning to disappear entirely from the stores stock, especially foreign made goods? Are base goods such as rice or bread increasing in price weekly or bi-weekly? This may be due to an explosion in wholesale inflation, as well as financial weakness in the general economy.

Bank Holiday

A bank holiday is essentially the government closure of all banks and financial instruments dealing with banks for a set period of time. This means you will not be able to pull money from your account, you will not be able to make deposits, and you will not be able to use checks or debit cards, or even use an ATM. If you have no cash (or other valuables) on hand, you are in big trouble. A bank holiday is often announced in response to out of control bank closures, and is supposed to give banks time to shore up funds, as well as keep you from pulling all your money out at once. A bank holiday could also occur in the event that the FDIC is about to crumble, which is very likely. The FDIC is already broke, and is drawing on fiat currency from the Fed and the Treasury in order to continue covering the accounts of shut down banks. Over 140 banks closed last year. If this rate continues, or expands this year, then the FDIC will no longer be able to operate. If a bank holiday is announced, an announcement of Treasury insolvency is also likely.

Terror Attack / New War

The world is on the brink as it is. If a terrorist attack (false flag attack), or a new war arises, it is time to collect your gear, your family, your friends, and make for the hills (if that’s where you plan to go). Any new and extended threat of conflict in 2010 will be used as an excuse to institute martial law and subjugation of civil liberties, not to mention trigger a financial meltdown. Is the morning news reporting an attack on Iran, or the bombing of a New York subway? It’s time.

These events and triggers represent a “litmus test” for the economy that anyone can apply without spending every day in front of a computer screen tracking stock yields, hedge funds, or Federal Reserve press releases. Many people have already made extensive preparations, knowing that a breakdown is imminent, but with a little extra knowledge and effort, their edge on the collapse can be made ever sharper. No amount of preparation will stave off the psychological shock of sudden economic implosion if one does not keep alert to the prerequisite signs. Watching the simple indicators listed above can help in affording you every opportunity, giving you the ability to see the wreck before it even happens.

. http://neithercorp.us/npress/?p=223

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Alison Fitzgerald, Jason Gale and Helen Murphy
Bloomberg
Thu, 15 May 2008 06:40 EDT

Fidencio Alvarez abandoned his bean and corn farm in southern Honduras because of the rising cost of seeds, fuel and food. After months of one meal a day, he hiked with his wife and six children to find work in the city.
”We would wake up with empty stomachs and go to bed with empty stomachs,” said Alvarez, 37, who sought help from the Mission Lazarus aid group in Choluteca in January. ”We couldn’t afford the seeds to plant food or the bus fare to buy the food.”
Honduran farmers like Alvarez can’t compete in a global marketplace where the costs of fuel and fertilizer soared and rice prices doubled in the past year. The former breadbasket of Central America now imports 83 percent of the rice it consumes — a dependency triggered almost two decades ago when it adopted free-market policies pushed by the World Bank and other lenders.
The country was $3.6 billion in debt in 1990. In return for loans from the World Bank, Honduras became one of dozens of developing nations that abandoned policies designed to protect farmers and citizens from volatile food prices. The U.S. House Financial Services Committee in Washington today explored the causes of the global food crisis and possible solutions.
The committee examined whether policies advocated by the bank and the International Monetary Fund contributed to the situation. Governments from Ghana to the Philippines were pressured to cut protective tariffs and farm supports and to grow more high-value crops for export, reports by the Washington-based World Bank show.
Haiti Pressure
The IMF pressed Haiti, as a condition of a 1994 loan, to open its economy to trade, Raj Patel, a scholar at the Center for African Studies in the University of California at Berkeley told the committee. When trade barriers fell, imports of subsidized rice from the U.S. surged, devastating the local rice farmers, Patel said.
”That is very odd,” said committee chair Barney Frank, a Massachusetts Democrat. ”For anyone to have looked at Haiti at that time and thought that it was a functioning economy is a sign I think of ideology going rampant.”
”Of course they got it wrong,” said Robert S. Zeigler, director-general at the International Rice Research Institute, southeast of Manila. ”It will work if you’re an extremely wealthy country and you can import rice at any price. But if you’re not an extremely wealthy country, I think that’s very poor advice.”
‘Command and Control’
The bank’s strategy — summed up in a 1989 article by its chief economist for South Asia, John Williamson –became known as ”The Washington Consensus.”
”The focus of the liberalization was on lowering domestic food prices,” said Mark Plant, the IMF’s deputy director of policy development in Washington. Governments’ ”command and control” policies increased consumer costs and cut farmer income, he said.
Williamson, now affiliated with the Peterson Institute for International Economics in Washington, said in a May 9 interview that the ideas are still sound, though they may have been pushed too hard by the World Bank.
”My own view is that all those things are good for countries,” he said. ”But I’m not terribly sympathetic with the World Bank going in and laying down a list of things countries have to do.”
Highest Tariffs
Honduran agriculture stagnated through the 1980s because of subsidies and market controls, prompting the bank to recommend economic changes, said Adrian Fozzard, the institution’s manager for Honduras.
Rice farmers in Honduras were protected by the highest import tariffs in Central America when former president Rafael Callejas took office in 1990 with the economy stalled. The trade barriers that helped the country meet more than 90 percent of domestic demand were dismantled under an agreement for a World Bank loan in September that year, allowing cheaper imports to flood the market.
The requirements for the loan included eliminating import restrictions and surcharges and reorganizing the agricultural finance system, according to Eurodad, a network of 54 European non-governmental organizations that was granted access to the World Bank’s loan database to monitor loan conditions.
Prices Plunge
Prices paid to farmers fell by 13 percent in 1991 and 30 percent more in 1992, according to the Food and Agriculture Organization in Rome.
In August 1993, the World Bank advised Honduras to adopt a second round of economic changes as part of another loan, according to Eurodad. Those conditions included eliminating all price controls and cutting tariffs further.
”Remaining trade and price controls should be eliminated,” bank officials said in a 1994 internal report. ”The program of privatization of state silos should be completed; and the use of a grain reserve for price stabilization should not be reinstated.”
The report’s author, Daniel Cotlear, now a World Bank economist for Latin American and the Caribbean, declined to comment for this story.
The bank pushed the policies because food prices fell in real terms for at least two decades, and few economists expected that to change, said Mark Cackler, manager of its Agriculture and Rural Development Department. Free trade and open markets remain the best path to competitiveness, he said.
”There are actually opportunities to reduce protectionism that have a beneficial impact,” Cackler said.
World Bank Reaction
World Bank spokesman Sergio Jellinek said it’s impossible to connect today’s food price crisis with 20-year-old free-trade policies.
”The price of food, especially grains, is determined in the international market and not in the local markets,” he said. ”So if a country such as Mexico, or Colombia, or El Salvador or Honduras would have multiplied by three or four its grain production, that would not have significantly affected world supply. And food prices in local markets would be as high as they are today.”
There now are 1,300 rice farmers in Honduras, compared with more than 20,000 in 1989, according to human rights group FIAN.
”The international lending agencies have destroyed the basic grains industry in Honduras,” said Gilberto Rios, executive secretary of FIAN Honduras. ”The best land now produces things like African palms, which are not for consumption.”
Last month, thousands of activists, students and farmers blocked highways and rallied in the capital, Tegucigalpa, to protest food prices and policies that made their country the most open to free trade in Latin America — and one of the poorest in the Western Hemisphere.
Not ‘a Boon’
Per capita income rose by 0.5 percent a year from 1990 to 2004, one of the slowest growth rates in Latin America, a January report by the International Food Policy Research Institute found.
”Trade liberalization does not appear to have been much of a boon to the Honduran economy,” the Washington-based institute said in the report.
In the Philippines, the World Bank encouraged the country, the world’s biggest importer of rice, to stop striving for self- sufficiency and instead to diversify into crops like tropical fruits which have greater export value.
It approved a $60 million loan in 2004 to help the Philippines’ Department of Agriculture become more market- oriented, diversify crops and stimulate private investment.
A World Bank Group technical working paper in June 2007 said the government shouldn’t stockpile grain to stabilize prices. Rather, it should keep enough on hand for disasters and social welfare programs. It also advocated opening the domestic market to competition by cutting tariffs.
Philippines Reverses Course
Philippine President Gloria Arroyo now says the country has to change course toward being able to feed itself.
”We must move toward more self-sufficiency, not necessarily 100 percent, but more self-sufficiency, less import dependence on rice,” she said last month.
African nations including Ghana and Mali similarly followed World Bank advice. In 1992, the bank required Ghana to cut tariffs on rice to 20 percent from 100 percent, leading to a tripling of cheap rice imports, Patel said.
In 2004, the bank advised Ethiopia to stop providing fertilizer and credit to small farmers as part of a debt relief package, and it persuaded Indonesia to dismantle its rice marketing board, according to Elizabeth Stuart in Washington, who is the head of relations with the World Bank and IMF for Oxfam International, the U.K.-based alliance fighting poverty.
Cheap Loans
Now farmers are asking the Honduran government to reverse policy and provide cheap, long-term loans to buy the seeds and fertilizers they need to survive.
The government of Honduras yesterday asked the IMF to send a team to the country to examine how the rising food and fuel prices are affecting the economy and whether they should reconsider some aspects of a current economic program, the IMF said in a press release.
”We haven’t seen the worst of it yet; that’s to come,” said Jarrod Brown, president of the Mission Lazarus. ”They need help now.”
For Alvarez and his family, help can’t come quickly enough.
”We want to go back to our land, it’s all we have,” he said.

http://www.sott.net/articles/show/156479-World-Bank-Destroyed-Basic-Grains-in-Honduras-Haiti

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Turkmenistan commits its gas exports to China, Russia & Iran

by Amb. M K Bhadrakumar

Global Research, January 12, 2010

Asia Times – 2010-01-08

The inauguration of the Dauletabad-Sarakhs-Khangiran pipeline in early January connecting Iran’s northern Caspian region with Turkmenistan’s vast gas field may go unnoticed amid the Western media cacophony that it is "apocalypse now" for the Islamic regime in Tehran.
The event sends strong messages for regional security. Within the space of three weeks, Turkmenistan has committed its entire gas exports to China, Russia and Iran. It has no urgent need of the pipelines that the United States and the European Union have been advancing. Are we hearing the faint notes of a Russia-China-Iran symphony?
The 182-kilometer Turkmen-Iranian pipeline starts modestly with the pumping of 8 billion cubic meters (bcm) of Turkmen gas. But its annual capacity is 20bcm, and that would meet the energy requirements of Iran’s Caspian region and enable Tehran to free its own gas production in the southern fields for export. The mutual interest is perfect: Ashgabat gets an assured market next door; northern Iran can consume without fear of winter shortages; Tehran can generate more surplus for exports; Turkmenistan can seek transportation routes to the world market via Iran; and Iran can aspire to take advantage of its excellent geographical location as a hub for the Turkmen exports.
We are witnessing a new pattern of energy cooperation at the regional level that dispenses with Big Oil. Russia traditionally takes the lead. China and Iran follow the example. Russia, Iran and Turkmenistan hold respectively the world’s largest, second-largest and fourth-largest gas reserves. And China will be consumer par excellence in this century. The matter is of profound consequence to the US global strategy.

The Turkmen-Iranian pipeline mocks the US’s Iran policy. The US is threatening Iran with new sanctions and claims Tehran is "increasingly isolated". But Mahmud Ahmadinejad’s presidential jet winds its way through a Central Asian tour and lands in Ashgabat for a red-carpet welcome by his Turkmen counterpart, Gurbanguly Berdymukhammedov, and a new economic axis emerges. Washington’s coercive diplomacy hasn’t worked. Turkmenistan, with a gross domestic product of US$18.3 billion, defied the sole superpower (GDP of $14.2 trillion) – and, worse still, made it look routine. 
There are subplots, too. Tehran claims to have a deal with Ankara to transport Turkmen gas to Turkey via the existing 2,577km pipeline connecting Tabriz in northwestern Iran with Ankara. Indeed, Turkish diplomacy has an independent foreign-policy orientation. Turkey also aspires to be a hub for Europe’s energy supplies. Europe may be losing the battle for establishing direct access to the Caspian.
Second, Russia does not seem perturbed by China tapping into Central Asian energy. Europe’s need for Russian energy imports has dropped and Central Asian energy-producing countries are tapping China’s market. From the Russian point of view, China’s imports should not deprive it of energy (for its domestic consumption or exports). Russia has established deep enough presence in the Central Asian and Caspian energy sector to ensure it faces no energy shortage.
What matters most to Russia is that its dominant role as Europe’s No 1 energy provider is not eroded. So long as the Central Asian countries have no pressing need for new US-backed trans-Caspian pipelines, Russia is satisfied.
During his recent visit to Ashgabat, Russian President Dmitry Medvedev normalized Russian-Turkmen energy ties. The restoration of ties with Turkmenistan is a major breakthrough for both countries. One, a frozen relationship is being resumed substantially, whereby Turkmenistan will maintain an annual supply of 30bcm to Russia. Two, to quote Medvedev, "For the first time in the history of Russian-Turkmen relations, gas supplies will be carried out based on a price formula that is absolutely in line with European gas market conditions." Russian commentators say Gazprom will find it unprofitable to buy Turkmen gas and if Moscow has chosen to pay a high price, that is primarily because of its resolve not to leave gas that could be used in alternative pipelines, above all in the US-backed Nabucco project.

Third, contrary to Western propaganda, Ashgabat does not see the Chinese pipeline as a substitute for Gazprom. Russia’s pricing policy ensures that Ashgabat views Gazprom as an irreplaceable customer. The export price of the Turkmen gas to be sold to China is still under negotiation and the agreed price simply cannot match the Russian offer.
Fourth, Russia and Turkmenistan reiterated their commitment to the Caspian Coastal Pipeline (which will run along the Caspian’s east coast toward Russia) with a capacity of 30bcm. Evidently, Russia hopes to cluster additional Central Asian gas from Turkmenistan (and Kazakhstan).
Fifth, Moscow and Ashgabat agreed to build jointly an east-west pipeline connecting all Turkmen gas fields to a single network so that the pipelines leading toward Russia, Iran and China can draw from any of the fields.
Indeed, against the backdrop of the intensification of the US push toward Central Asia, Medvedev’s visit to Ashgabat impacted on regional security. At the joint press conference with Medvedev, Berdymukhammedov said the views of Turkmenistan and Russia on the regional processes, particularly in Central Asia and the Caspian region, were generally the same. He underlined that the two countries were of the view that the security of one cannot be achieved at the expense of the other. Medvedev agreed that there was similarity or unanimity between the two countries on issues related to security and confirmed their readiness to work together.
The United States’ pipeline diplomacy in the Caspian, which strove to bypass Russia, elbow out China and isolate Iran, has foundered. Russia is now planning to double its intake of Azerbaijani gas, which further cuts into the Western efforts to engage Baku as a supplier for Nabucco. In tandem with Russia, Iran is also emerging as a consumer of Azerbaijani gas. In December, Azerbaijan inked an agreement to deliver gas to Iran through the 1,400km Kazi-Magomed-Astara pipeline.
The "big picture" is that Russia’s South Stream and North Stream, which will supply gas to northern and southern Europe, have gained irreversible momentum. The stumbling blocks for North Stream have been cleared as Denmark (in October), Finland and Sweden (in November) and Germany (in December) approved the project from the environmental angle. The pipeline’s construction will commence in the spring.
The $12-billion pipeline built jointly by Gazprom, Germany’s E.ON Ruhrgas and BASF-Wintershall, and the Dutch gas transportation firm Gasunie bypasses the Soviet-era transit routes via Ukraine, Poland and Belarus and runs from the northwestern Russian port of Vyborg to the German port of Greifswald along a 1,220km route under the Baltic Sea. The first leg of the project with a carrying capacity of 27.5bcm annually will be completed next year and the capacity will double by 2012. North Stream will profoundly affect the geopolitics of Eurasia, trans-Atlantic equations and Russia’s ties with Europe.
To be sure, 2009 proved to be a momentous year for the "energy war". The Chinese pipeline inaugurated by President Hu Jintao on December 14; the oil terminal near the port city of Nakhodka in Russia’s far east inaugurated by Prime Minister Vladimir Putin on December 27 (which will be served by the mammoth $22-billion oil pipeline from the new fields in eastern Siberia leading to China and the Asia-Pacific markets); and the Iranian pipeline inaugurated by Ahmadinejad on January 6 – the energy map of Eurasia and the Caspian has been virtually redrawn.
The year 2010 begins on a fascinating new note: will Russia, China and Iran coordinate future moves or at least harmonize their competing interests?
Ambassador M K Bhadrakumar was a career diplomat in the Indian Foreign Service. His assignments included the Soviet Union, South Korea, Sri Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey.

M K Bhadrakumar is a frequent contributor to Global Research. Global Research Articles by M K Bhadrakumar

http://www.globalresearch.ca/index.php?context=va&aid=16932

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