Laissez-faire capitalism has failed

It is now clear that this is the worst financial crisis since the Great Depression and the worst economic crisis in the last 60 years. While we are already in a severe and protracted U-shaped recession (the deluded hope of a short and shallow V-shaped contraction has evaporated), there is now a rising risk that this crisis will turn into an uglier, multiyear, L-shaped, Japanese-style stag-deflation (a deadly combination of stagnation, recession and deflation).

The latest data on third-quarter 2008 gross domestic product growth (at an annual rate) around the world are even worse than the first estimate for the U.S. (-3.8%). The figures were -6.0% for the euro zone, -8% for Germany, -12% for Japan, -16% for Singapore and -20% for Korea. The global economy is now literally in free fall as the contraction of consumption, capital spending, residential investment, production, employment, exports and imports is accelerating rather than decelerating. [continued…]

Greenspan backs temporary state control of banks

The US government might have to nationalise some banks on a temporary basis to fix the financial system and restore the flow of credit, Alan Greenspan, the former Federal Reserve chairman, has told the Financial Times.

In an interview, Mr Greenspan, who for decades was regarded as the high priest of laisser-faire capitalism, said nationalisation could be the least bad option left for policymakers.

“It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring,” he said. “I understand that once in a hundred years this is what you do.” [continued…]

Europe opens covert talks with ‘blacklisted’ Hamas

European nations have opened a direct dialogue with Hamas as the US intensifies the search for Middle East peace under Barack Obama.

In the first meeting of its kind, two French senators travelled to Damascus two weeks ago to meet the leader of the Palestinian Islamist faction, Khaled Meshal, The Independent has learned. Two British MPs met three weeks ago in Beirut with the Hamas representative in Lebanon, Usamah Hamdan. “Far more people are talking to Hamas than anyone might think,” said a senior European diplomat. “It is the beginning of something new – although we are not negotiating.”

Mr Hamdan said yesterday that since the end of last year, MPs from Sweden, the Netherlands and three other western European nations, which he declined to identify, had consulted with Hamas representatives. [continued…]

Article 51: Israel’s false claim

The right to self-defence – as recognized by Article 51 of the Charter – is a right attributable to “States” only in their “international” relations. A State is allowed to recourse to self-defence if it is subject to another State’s unlawful use of force. The situation must involve:

a) An armed attack (of sufficient gravity);

b) Conducted between States (or from one State territory) – as main subjects of international law;

c) And be of an international character.

Article 51 does not apply to a situation that involves an Occupying Power (the State of Israel) acting within occupied territories under its own authority and responsibility. In legal terms, Israel cannot invoke the right to self-defence under Article 51 to justify the use of military force in territories on which Israel itself exercises effective control, at least since 1967. (Although Israel withdrew its troops from Gaza under the “disengagement plan” in 2005, Israel’s relocation of its troops from the occupied land does not end its status as the “Occupying power”. Israel continuously maintained control over Gaza’s borders, air and sea space, water, electricity, sewage and telecommunication systems and because of that, Gaza remains an occupied territory as defined in international law. In fact, UN Security Council resolution 1860 (pdf) issued on January 8, 2009 clearly notes that: “the Gaza Strip constitutes an integral part of the territory occupied in 1967”.)

Indeed, it would be inconceivable for most of us to imagine any other country barricading a city or a district within a territory under its own watch, then use F-16 fire jets, high-tech Cobra helicopters, ground troops, cluster bombs, white phosphorus and depleted uranium ammunition, killing thousands of its inhabitants under the pretext of combating, for instance, street gang criminality. It would be even more absurd if that country justified all that by invoking an extraneous right under the UN Charter. Yet, this is exactly what Israel has done in Gaza. [continued…]

Livni to Kadima: We’re going to the opposition

“Today the foundation was laid for an extreme right-wing government led by [Likud Chairman Benjamin] Netanyahu. This is not our way, and there is nothing for us in such a government,” Kadima leader Tzipi Livni told party members on Thursday, after 65 MKs announced their decision to support Netanyahu for the post of prime minister-designate.

Kadima edged out Likud in the Feb. 10 election, capturing 28 seats compared to 27 for Likud. But in the 120-seat Knesset, Likud is in a better position to put together a coalition because of gains by extreme right-winger Avigdor Lieberman’s Yisrael Beiteinu and other hard-line parties. It could be several weeks before a coalition is finally formed.

The candidate chosen to form the new government will have to recruit a majority of at least 61 MKs in the Knesset to his or her coalition, in order to establish a stable government. [continued…]

Netanyahu, put your money where your mouth is

Why isn’t Benjamin Netanyahu setting up a right-wing government? Why isn’t he carrying out the voters’ will to position the right wing in power? Why isn’t he taking the opportunity that fell into his hands to form a government in tune with his doctrine? [continued…]

PA says Barghouti release could divide Fatah

The Palestinian Authority has warned jailed Fatah operative Marwan Barghouti not to criticize President Mahmoud Abbas or the veteran leadership of Fatah when he is released from prison, a Fatah official said on Wednesday. [continued…]

Google Earth reveals secret history of US base in Pakistan

The US was secretly flying unmanned drones from the Shamsi airbase in Pakistan’s southwestern province of Baluchistan as early as 2006, according to an image of the base from Google Earth.

The image — that is no longer on the site but which was obtained by The News, Pakistan’s English language daily newspaper — shows what appear to be three Predator drones outside a hangar at the end of the runway. The Times also obtained a copy of the image, whose co-ordinates confirm that it is the Shamsi airfield, also known as Bandari, about 200 miles southwest of the Pakistani city of Quetta.

An investigation by The Times yesterday revealed that the CIA was secretly using Shamsi to launch the Predator drones that observe and attack al-Qaeda and Taleban militants around Pakistan’s border with Afghanistan. [continued…]

Pakistan lends support for U.S. military strikes

Maj. Gen Akhtar Abbas, a spokesman for the military, said Pakistan and the U.S. “have a long history of military cooperation and intelligence sharing.” But he said it doesn’t include the missiles strikes. “We have made our opposition clear,” he said. “The strikes are counterproductive.”

But other Pakistani officials say there has been a shift in Pakistan’s private response to U.S. insistence the strikes go ahead. Initially, Pakistani complaints were genuine, these officials say, and reflected widespread discontent with the U.S.-led war on terror.

But after Pakistan’s complaints were repeatedly rebuffed by the U.S. and with the Taliban making gains against the Pakistani military and the police, these officials say President Asif Ali Zardari and top military leaders decided in recent months to aid the American effort in the hopes it will help them regain control over the tribal areas. The Taliban and al Qaeda have flourished in those areas bordering Afghanistan since 2001. The cooperation also could prove as a counterbalance to U.S. displeasure over a peace deal announced Monday with a Taliban faction in Swat Valley.

The protests are “really for the sake of public opinion,” said one Pakistani official. “These operations are helping both sides. We are partners on this.” [continued…]

Rescue or surrender? Local hero brings sharia law to troubled region

With his long, flowing white beard and black turban, Sufi Muhammad cut an imposing figure as he walked through the crowds in Mingora town, north-west Pakistan yesterday. Tribesmen and mullahs jostled to be at his side, then raised him aloft. All around, black-and-white flags fluttered – flags of the religious group founded by Muhammad, the Tehreek Nifaz-e-Shariat Mohammadi.

The organisation was banned in 2002 after Muhammad led hundreds of young men across the border to fight alongside the Taliban against the US-led coalition. He was jailed and only freed last year. Yesterday though, Muhammad was hailed as the man who brought peace to Pakistan’s Swat region – by securing the official imposition of Islamic law. Muhammad has persuaded the government of Pakistan to agree to the enforcement of sharia for the vast Malakand area, which includes Swat.

Desperate for a respite from violence, thousands turned out in Mingora, Swat’s main city, to greet him. A ceasefire was announced by the local Taliban in response to Muhammad’s deal, which was unveiled on Monday. And that has made this Islamist something of a local hero. Sweets were distributed in the town as people flocked on to the previously deserted streets. For the first time in months, all the shops opened, the bazaars were busy and even schools suddenly started teaching again. [continued…]

Pakistani reporter is killed after celebration of truce

A rally to celebrate a day-old peace deal between the government and a hard-line Islamic cleric in the Swat Valley ended ominously Wednesday when a Pakistani television journalist was shot and killed after covering the march.

The body of the journalist, Musa Khan Khel, 28, was found in an area controlled by the Taliban, according to Imran Aslam, president of Geo Television Network, Mr. Khel’s employer.

The rally was staged in Swat by the cleric, Maulana Sufi Muhammad, after the government agreed to a truce to end hostilities between the Pakistani Army and the insurgents in exchange for the acceptance of Islamic law in Swat, a region about 100 miles north of Islamabad, the capital. [continued…]

Afghanistan: Slipping out of control

A grim picture of spiralling violence and a disintegrating society has emerged in Afghanistan in a confidential Nato report, just as Barack Obama vowed to send 17,000 extra American troops to the country in an attempt to stem a tide of insurgency.

Direct attacks on the increasingly precarious Afghan government more than doubled last year, while there was a 50 per cent increase in kidnappings and assassinations. Fatalities among Western forces, including British, went up by 35 per cent while the civilian death toll climbed by 46 per cent, more than the UN had estimated. Violent attacks were up by a third and roadside bombings, the most lethal source of Western casualties, by a quarter. There was also a 67 per cent rise in attacks on aircraft from the ground, a source of concern to Nato which depends hugely on air power in the conflict. [continued…]

Obama, Osama and Medvedev

For those who harbored any doubts, the Barack Obama administration’s adoption of the George W Bush framework of the “war on terror” – it does feel like a back-to-the-future “continuity” – here are two key facts on the ground.

  • Obama has officially started his much-touted Afghanistan surge, authorizing the deployment of 17,000 US troops (8,000 marines, 4,000 army and 5,000 support) mostly to the Pashtun-dominated, southern Helmand province. Justification: “The situation in Afghanistan and Pakistan demands urgent attention.” The marines start arriving in Afghanistan in May. Their mission is as hazy as it is hazardous: eradication of the poppy culture, the source of heroin (which accounts for almost 40% of Afghanistan’s gross domestic product). There are already 38,000 US troops in Afghanistan, plus 18,000 as part of the North Atlantic Treaty Organization’s 50,000 contingent.
  • Obama administration nominees, in confirmation testimony that seemed to have disappeared in a black hole, stressed they are in favor of continuing the Central Intelligence Agency’s extraordinary rendition practices and detaining – ad infinitum – “terror” suspects without trial, even if they were captured far, far away from a war zone. (Considering the Pentagon’s elastic definition of an “arc of instability”, this means anywhere from Somalia to Xinjiang.) That has prompted New York Times writers to come up with a delightful headline: “Obama’s War on Terror May resemble Bush’s in some Areas.”


Court blocks release of 17 Uighurs into U.S.

A federal appeals court yesterday blocked the transfer to the United States of a small band of Chinese Muslims held at the U.S. military prison at Guantanamo Bay, Cuba.

The decision by a three-judge panel reversed a lower court ruling that ordered the government to release the 17 Uighurs and resettle them with Uighur families in the Washington region.

The government no longer considers the Uighurs to be enemy combatants and has been trying to find nations willing to take them in. U.S. authorities do not want to send the men home to China, where they are considered terrorists and may be tortured. [continued…]

Iraq’s Kurdish-Arab tensions threaten to escalate into war

At the headquarters of the Kurdistan Democratic Party in Mosul, Khasro Goran, the deputy governor of Iraq’s Nineveh province, is worried about the future.

Iraq’s Jan. 31 provincial elections have been hailed as a sign that the country is putting its violent past behind it, is moving toward democracy and no longer is in need of a large U.S. military force. Along a 300-mile strip of disputed territory that stretches across northern Iraq, however, the elections have rekindled the longstanding hostility between Sunni Muslim Arabs and Sunni Kurds, and there are growing fears that war could erupt.

Al Hadbaa, an Arab nationalist party with some Kurdish and other members that vowed to retake disputed territory from the Kurdish security forces; halt Kurdish expansion and eject Kurdish militias, won 47 percent of the vote in predominantly Arab Nineveh, according to the preliminary election results. That means the Kurds will lose control of the provincial council. [continued…]

Reading Khamenei in Tehran

No Iranian puzzle frustrates America and its allies as much as how to reach Ayatollah Ali Khamenei, the supreme leader who sets the country’s direction.

When I asked one veteran Iran hand how old Khamenei is, the answer was: “Not old enough.” Years of probing have failed to unearth a conduit to the man with the white beard and outsized glasses whose image, often smiling, dots the billboards of Tehran. The guy’s a mystery.

Solving it lies at the heart of the Iranian challenge facing President Obama because although Khamenei’s authority is not absolute, his veto power is. He can no more be bypassed than the Great Recession.

Khamenei, imprisoned and tortured under the shah, will be 70 in July. He’s led Iran for two decades, since the death of Ayatollah Ruhollah Khomeini. His vast authority includes the right to name the heads of the elite Republican Guards, the armed forces, the judiciary and state television. He has indirect power to vet parliamentary candidates. Yet he cloaks his absolutism in the mild garb of the arbiter. [continued…]

We are all extremists now

For most of the past century, Britain’s secret state bugged, blacklisted and spied on leftists, trade unionists and peace campaigners, as well as Irish republicans and anyone else regarded as a “subversive” threat to the established order.

That was all supposed to have been brought to a halt in the wake of the end of the cold war in the early 1990s. MI5 now boasts it has ended its counter-subversion work altogether, having other jihadist fish to fry (it will have soon doubled its staffing and budget on the back of the 9/11 backlash).

Whether those claims should be taken at face value must be open to question. But it now turns out that other arms of the secret state have in any case been stepping up to the plate to fill the gap in the market. [continued…]

What will Obama do with KBR?

President Obama will almost certainly touch down in Baghdad and Kabul in Air Force One sometime in the coming year to meet his counterparts in Iraq and Afghanistan, and he will just as certainly pay a visit to a U.S. military base or two. Should he stay for breakfast, lunch, dinner, or midnight chow with the troops, he will no less certainly choose from a menu prepared by migrant Asian workers under contract to Houston-based KBR, the former subsidiary of Halliburton.

If Barack Obama takes the Rhino Runner armor-plated bus from Baghdad Airport to the Green Zone, or travels by Catfish Air’s Blackhawk helicopters (the way mere mortals like diplomats and journalists do), instead of by presidential chopper, he will be assigned a seat by U.S. civilian workers easily identified by the red KBR lanyards they wear around their necks.

Even if Obama gets the ultra-red carpet treatment, he will still tread on walkways and enter buildings that have been constructed over the last six years by an army of some 50,000 workers in the employ of KBR. And should Obama chose to order the troops in Iraq home tomorrow, he will effectively sign a blank check for billions of dollars in withdrawal logistics contracts that will largely be carried out by a company once overseen by Dick Cheney. [continued…]

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