The failure of neo-liberism: what’s the world’s future?

July 14, 2008 in The wall
Tags: economics, guardian, IMF, iraq, life, neoliberism, news, oil, politics, Stiglitz, sunday-times, usa, war, world-bank

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Joseph E. Stiglitz

Joseph Eugene “Joe” Stiglitz (born February 9, 1943) is an American economist and a member of the Columbia University faculty. He is a recipient of the John Bates Clark Medal (1979) and the The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (2001). Former Senior Vice President and Chief Economist of the World Bank, he is known for his critical view of globalization, free-market economists (whom he calls “free market fundamentalists“) and some international institutions like the International Monetary Fund and the World Bank. In 2000 Stiglitz founded the Initiative for Policy Dialogue (IPD), a think tank on international development based at Columbia University. Since 2001 he has been a member of the Columbia faculty, and has held the rank of University Professor since 2003. He also chairs the University of Manchester‘s Brooks World Poverty Institute and is a member of the Pontifical Academy of Social Sciences. Stiglitz is the most cited economist in the world, as of June 2008.^[1]

For Stiglitz there is no such thing as an “invisible hand“ ^[5].

Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated—markets will not work well. But recent research has shown that these externalities are pervasive, whenever there is imperfect information or imperfect risk markets—that is always.

The real debate today is about finding the right balance between the market and government. Both are needed. They can each complement each other. This balance will differ from time to time and place to place. ^[6]

In the opening remarks for his prize acceptance “Aula Magna” ^[7], Stiglitz said:

“I hope to show that Information Economics represents a fundamental change in the prevailing paradigm within economics. Problems of information are central to understanding not only market economics but also political economy, and in the last section of this lecture, I explore some of the implications of information imperfections for political processes.” Stiglitz, Aula Magna

In an interview, Stiglitz explained further:

“The theories that I (and others) helped develop explained why unfettered markets often not only do not lead to social justice, but do not even produce efficient outcomes. Interestingly, there has been no intellectual challenge to the refutation of Adam Smith’s invisible hand: individuals and firms, in the pursuit of their self-interest, are not necessarily, or in general, led as if by an invisible hand, to economic efficiency.” ^[8]

[…]

Stiglitz resigned a month before his term expired at the World Bank, and left the Bank on January 2000.^[17] The Bank’s president, James Wolfensohn, announced Stiglitz’s resignation in November 1999 and also announced that Stiglitz would stay on as “special advisor to the president”, and would chair the search committee for a successor.

“Joseph E. Stiglitz said today [Nov. 24, 1999] that he would resign as the World Bank’s chief economist after using the position for nearly three years to raise pointed questions about the effectiveness of conventional approaches to helping poor countries”.^[18]

In this role, he continued criticism of the IMF, and, by implication, the US Treasury Department. In April 2000, in an article for the New Republic, he wrote on the IMF:

“They’ll say the IMF is arrogant. They’ll say the IMF doesn’t really listen to the developing countries it is supposed to help. They’ll say the IMF is secretive and insulated from democratic accountability. They’ll say the IMF’s economic ‘remedies’ often make things worse – turning slowdowns into recessions and recessions into depressions. And they’ll have a point. I was chief economist at the World Bank from 1996 until last November, during the gravest global economic crisis in a half-century. I saw how the IMF, in tandem with the U.S. Treasury Department, responded. And I was appalled“.

The article was published a week before the annual meetings of the World Bank and IMF and provoked a strong response. It proved too strong for Summers and, yet more lethally, Stiglitz’s protector-of-sorts at the World Bank, Wolfensohn. Wolfensohn had privately empathised with Stiglitz’s views, yet this time Wolfensohn was worried for his second term, which Summers had threatened to veto. Stanley Fisher, deputy managing director of the International Monetary Fund, called a special staff meeting and informed at that gathering that Wolfensohn had agreed to fire Stiglitz. Meanwhile, the Bank’s External Affairs department told the press that Stiglitz had not been fired, his post had merely been abolished (see US Hegemony and the World Bank, pp 222-223, by Wade in 2002, Review of the International Political Economy). ^[19]

Scarcity in an age of plenty

As food and fuel prices continue to increase the world must look to new patterns of consumption and production

Around the world, protests against soaring food and fuel prices are mounting. The poor – and even the middle classes – are seeing their incomes squeezed as the global economy enters a slowdown. Politicians want to respond to their constituents’ legitimate concerns, but do not know what to do.

In the United States, both Hillary Clinton and John McCain took the easy way out, and supported a suspension of the gasoline tax, at least for the summer. Only Barack Obama stood his ground and rejected the proposal, which would have merely increased demand for gasoline – and thereby offset the effect of the tax cut.

But if Clinton and McCain were wrong, what should be done? One cannot simply ignore the pleas of those who are suffering. In the US, real middle-class incomes have not yet recovered to the levels attained before the last recession in 1991.

When George Bush was elected, he claimed that tax cuts for the rich would cure all the economy’s ailments. The benefits of tax-cut-fuelled growth would trickle down to all – policies that have become fashionable in Europe and elsewhere, but that have failed. Tax cuts were supposed to stimulate savings, but household savings in the US have plummeted to zero. They were supposed to stimulate employment, but labour force participation is lower than in the 1990s. What growth did occur benefited only the few at the top.

Productivity grew, for a while, but it wasn’t because of Wall Street financial innovations. The financial products being created didn’t manage risk; they enhanced risk. They were so non-transparent and complex that neither Wall Street nor the ratings agencies could properly assess them. Meanwhile, the financial sector failed to create products that would help ordinary people manage the risks they faced, including the risks of home ownership. Millions of Americans will likely lose their homes and, with them, their life savings.
At the core of America’s success is technology, symbolised by Silicon Valley. The irony is that the scientists making the advances that enable technology-based growth, and the venture capital firms that finance it were not the ones reaping the biggest rewards in the heyday of the real estate bubble. These real investments are overshadowed by the games that have been absorbing most participants in financial markets.

The world needs to rethink the sources of growth. If the foundations of economic growth lie in advances in science and technology, not in speculation in real estate or financial markets, then tax systems must be realigned. Why should those who make their income by gambling in Wall Street’s casinos be taxed at a lower rate than those who earn their money in other ways? Capital gains should be taxed at least at as high a rate as ordinary income. (Such returns will, in any case, get a substantial benefit because the tax is not imposed until the gain is realised.) In addition, there should be a windfall profits tax on oil and gas companies.

Given the huge increase in inequality in most countries, higher taxes for those who have done well – to help those who have lost ground from globalisation and technological change – are in order, and could also ameliorate the strains imposed by soaring food and energy prices. Countries, like the US, with food stamp programmes, clearly need to increase the value of these subsidies in order to ensure that nutrition standards do not deteriorate. Those countries without such programmes might think about instituting them.

Two factors set off today’s crisis: the Iraq war contributed to the run-up in oil prices, including through increased instability in the Middle East, the low-cost provider of oil, while biofuels have meant that food and energy markets are increasingly integrated. Although the focus on renewable energy sources is welcome, policies that distort food supply are not. America’s subsidies for corn-based ethanol contribute more to the coffers of ethanol producers than they do to curtailing global warming. Huge agriculture subsidies in the US and the European Union have weakened agriculture in the developing world, where too little international assistance was directed at improving agriculture productivity. Development aid for agriculture has fallen from a high of 17% of total aid to just 3% today, with some international donors demanding that fertiliser subsidies be eliminated, making it even more difficult for cash-strapped farmers to compete.

Rich countries must reduce, if not eliminate, distortional agriculture and energy policies, and help those in the poorest countries improve their capacity to produce food. But this is just a start: we have treated our most precious resources – clean water and air – as if they were free. Only new patterns of consumption and production – a new economic model – can address that most fundamental resource problem.

Answers:

AaronMuchelle

Jun 16 08, 01:54pm

Dr. Stiglitz,

I find your article to be interesting, but how can one correct the problems, using the tools that helped to create them in the first place?

You proclaim a need for a ‘new economic model’ but then base this ‘new model’ on ‘patterns of consumption and production.’ This assumes that equilibrium in food prices and oil prices is possible. If not, then equilibirum’s deviant cousin raises its head – ‘dis-equilibirum.’

Questions that should be asked: Has there ever been an equilibirum in food prices? If so, how can one measure this equilibirum?

Once we do away with the concepts of equilibirum, patterns of consumption and production, only then will we be able to build a new economic model.

[…]

kikichan

Jun 16 08, 02:17pm

@Ramky:

‘To start with , rich nations can impose a green tax or consumption tax on the natural resources their citizens consume – things like water, oil, coal, et al. The tax could be used to build a fund that will invest in renewable energy sources (solar/wind et al) in poorer nations.’

That’s oversimplistic. There are plenty of poorer people in your ‘rich’ nations who are already unable to afford fuel and transport. A blanket tax would make life much worse for them, and the rich would just be able to get around it by paying their way out. And there are plenty of ‘poorer nations’ which, in their current state, would be absolutely incapable of handling any energy-systems we gave them simply because they are so badly misgoverned.

We need a more multifaceted approach to the whole problem.

As Stiglitz comments, we need brakes on financial markets.

Then we need more rational ways of distributing food – for example, rather than having luxury out-of-season vegetables grown in Africa and feed Africans on imported Chinese rice, we need Africans feeding themselves.

We also need to step on countries like Zimbabwe where it’s futile to bother growing food because it either gets confiscated or burned.

And we need to get rid of the idea that goods should be built shoddily and frequently replaced. That’s one of the main environmental sins of modern commerce.

And finally, we need to make international aid dependent on the acceptance of proper contraceptive education and use.

Joseph Stiglitz talks to the Sunday Times

The winner of the 2001 Nobel prize for economics was in London last week for a financial conference near Paddington – and was decidedly bearish about the US, British and global economies. Here are edited highlights of his conversation with the Sunday Times

From The Sunday Times

June 15, 2008

Richard Woods

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What is the present outlook?

In the US we’ve now had five months of employment going down and the number of hours worked has declined precipitously. If you focus on employment we are already in a downturn [whether or not it is technically yet a recession].

Is it likely that this dynamic is going to turn around in the next six months? Probably not. It’s likely to get worse.

The best estimate on the housing market is that we are only halfway through the declines.

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Will tax cuts and sovereign funds come to the rescue?

Since the introduction of tax cuts in the US in February, the increase in the price of oil has taken out of consumers hands more than twice the amount of the tax decrease.

In the first round of the credit crunch banks could get money from sovereign wealth funds. Now there are stories that sovereign wealth funds feel the problems have been under-represented and that they are less welcome.

They may still be willing to come – but only if they get a good deal. That means dilution of shareholders and loss of control.

What about oil?

The price of oil has gone up fivefold since the Iraq war. But there is little incentive for producers to pump more now. If Goldman Sachs says the price is going to be $200 in a year’s time, you wait for a year and double your money.

There’s another factor. [Producers] can’t really spend all that money that fast. What are you going to do with it? Put in the US, where the value of the dollar is decreasing and your funds may be frozen at any moment if you are declared a terrorist state? Or do you want to keep your money in the ground?

Obviously you should do both, but the answer is pretty clear.

Why were warnings of trouble ignored and who’s to blame?

Too many people were making too much money. Those in the financial and real estate industries were making so much money they wanted to believe they were doing the right thing. There’s been a lot of self-deception.

The Federal Reserve is very guilty. In a myopic way it decided to flood the economy with liquidity. People created a bubble to keep the economy going. It should have been very clear they were creating a bubble: when savings are zero, when people are giving 100% mortgages, when real incomes are going down and house prices are going up – there’s a disjunction there.

It was a massive fraud, a pyramid scheme, arbitrage, financial alchemy, self-deception – call it what you will.

This is the third financial crisis in three decades. The financial institutions argued that their genius in managing risk and increasing efficiency justified their high salaries. Many people are questioning that. They said they deserved to be taxed at low, low rates because they induced benefits that would accrue to all society. That’s being questioned, to put it mildly.

Caught between a downturn and inflationary threats what should we do?

We need to worry about inflation, but we need to recognise that we can’t stop imported inflation [of oil and food prices]. We can get the average inflation number down by killing wages so much that other parts of the economy have falling wages and prices. But that cure is worse than the disease.

In effect what you are doing when you do that is putting the burden of adjustment on workers. [But] in the US real incomes have fallen already since 1999 for more than half of America. It’s extraordinary.

Moderate inflation, under 8% to 10%, does not have any significant effect on growth. I would try to work on the idea of a new social contract.

We are poor because of an increase in the price of oil – how do we share the burden? Let’s try to do it in a way that protects people at the bottom.

Stagflation cometh

The fallout from a combination of rising inflation and global recession seems inevitable: how can the world’s economies survive it?

All comments ()

The world economy has had several good years. Global growth has been strong, and the divide between the developing and developed world has narrowed, with India and China leading the way, experiencing GDP growth of 11.1% and 9.7% in 2006 and 11.5% and 8.9% in 2007, respectively. Even Africa has been doing well, with growth in excess of 5% in 2006 and 2007.

But the good times may be ending. There have been worries for years about the global imbalances caused by America’s huge overseas borrowing. America, in turn, said that the world should be thankful: by living beyond its means, it helped keep the global economy going, especially given high savings rates in Asia, which has accumulated hundreds of billions of dollars in reserves. But it was always recognised that America’s growth under President Bush was not sustainable. Now the day of reckoning looms.

America’s ill-conceived war in Iraq helped fuel a quadrupling of oil prices since 2003. In the 1970s, oil shocks led to inflation in some countries, and to recession elsewhere, as governments raised interest rates to combat rising prices. And some economies faced the worst of both worlds: stagflation.

Until now, three critical factors helped the world weather soaring oil prices. First, China, with its enormous productivity increases – based on resting on high levels of investment, including investments in education and technology – exported its deflation. Second, the US took advantage of this by lowering interest rates to unprecedented levels, inducing a housing bubble, with mortgages available to anyone not on a life-support system. Finally, workers all over the world took it on the chin, accepting lower real wages and a smaller share of GDP.

That game is up. China is now facing inflationary pressures. What’s more, if the US convinces China to let its currency appreciate, the cost of living in the US and elsewhere will rise. And, with the rise of biofuels, the food and energy markets have become integrated. Combined with increasing demand from those with higher incomes and lower supplies due to weather-related problems associated with climate change, this means high food prices – a lethal threat to developing countries.

Prospects for America’s consumption binge continuing are also bleak. Even if the US Federal Reserve continues to lower interest rates, lenders will not rush to make more bad mortgages. With house prices declining, fewer Americans will be willing and able to continue their profligacy.

The Bush administration is hoping, somehow, to forestall a wave of foreclosures – thereby passing the economy’s problems on to the next president, just as it is doing with the Iraq quagmire. Its chances of succeeding are slim. For America today, the real question is only whether there will be a short, sharp downturn, or a more prolonged, but shallower, slowdown.

Moreover, America has been exporting its problems abroad, not just by selling toxic mortgages and bad financial practices, but through the ever-weakening dollar, in part a result of flawed macro- and micro-policies. Europe, for instance, will find it increasingly difficult to export. And, in a world economy that had rested on the foundations of a “strong dollar,” the consequent financial market instability will be costly for all.

At the same time, there has been a massive global redistribution of income from oil importers to oil exporters – a disproportionate number of which are undemocratic states – and from workers everywhere to the very rich. It is not clear whether workers will continue to accept declines in their living standards in the name of an unbalanced globalisation whose promises seem ever more elusive. In America, one can feel the backlash mounting.

For those who think that a well-managed globalisation has the potential to benefit both developed and developing countries, and who believe in global social justice and the importance of democracy (and the vibrant middle class that supports it), all of this is bad news. Economic adjustments of this magnitude are always painful, but the economic pain is greater today because the winners are less prone to spend.

Indeed, the flip side of “a world awash with liquidity” is a world facing depressed aggregate demand. For the past seven years, America’s unbridled spending filled the gap. Now both US household and government spending is likely to be curbed, as both parties’ presidential candidates promise a return to fiscal responsibility. After seven years in which America has seen its national debt rise from $5.6tn to $9tn, this should be welcome news – but the timing couldn’t be worse.

There is one positive note in this dismal picture: the sources of global growth today are more diverse than they were a decade ago. The real engines of global growth in recent years have been developing countries.

Nevertheless, slower growth – or possibly a recession – in the world’s largest economy inevitably has global consequences. There will be a global slowdown. If monetary authorities respond appropriately to growing inflationary pressure – recognising that much of it is imported, and not a result of excess domestic demand – we may be able to manage our way through it. But if they raise interest rates relentlessly to meet inflation targets, we should prepare for the worst: another episode of stagflation.

If central banks go down this path, they will no doubt eventually succeed in wringing inflation out of the system. But the cost – in lost jobs, lost wages, and lost homes – will be enormous.

press-freedom, liberties, Stiglitz, politics, news, life, neoliberism, usa, war, iraq, guardian, sunday-times, economics, oil, IMF, world-bank

State-Sponsored Terror: British and American Black Ops in Iraq

June 26, 2008 in I doubt, I think, The wall
Tags: iraq, life, news, oil, politics, usa, war

by Andrew G. Marshall

Global Research, June 25, 2008

Shining Light on the “Black World”

In January of 2002, the Washington Post ran a story detailing a CIA plan put forward to President Bush shortly after 9/11 by CIA Director George Tenet titled, “Worldwide Attack Matrix,” which was “outlining a clandestine anti-terror campaign in 80 countries around the world. What he was ready to propose represented a striking and risky departure for U.S. policy and would give the CIA the broadest and most lethal authority in its history.” The plan entailed CIA and Special Forces “covert operations across the globe,” and at “the heart of the proposal was a recommendation that the president give the CIA what Tenet labeled “exceptional authorities” to attack and destroy al Qaeda in Afghanistan and the rest of the world.” Tenet cited the need for such authority “to allow the agency to operate without restraint — and he wanted encouragement from the president to take risks.” Among the many authorities recommended was the use of “deadly force.”

Further, “Another proposal was that the CIA increase liaison work with key foreign intelligence services,” as “Using such intelligence services as surrogates could triple or quadruple the CIA’s effectiveness.” The Worldwide Attack Matrix “described covert operations in 80 countries that were either underway or that he was now recommending. The actions ranged from routine propaganda to lethal covert action in preparation for military attacks,” as well as “In some countries, CIA teams would break into facilities to obtain information.”[1]

P2OG: “Commit terror, to incite terror… in order to react to terror”

In 2002, the Pentagon’s Defense Science Board (DSB) conducted a “Summer Study on Special Operations and Joint Forces in Support of Countering Terrorism,” portions of which were leaked to the Federation of American Scientists. According to the document, the “War on Terror” constitutes a “committed, resourceful and globally dispersed adversary with strategic reach,” which will require the US to engage in a “long, at times violent, and borderless war.” As the Asia Times described it, this document lays out a blueprint for the US to “fight fire with fire.” Many of the “proposals appear to push the military into territory that traditionally has been the domain of the CIA, raising questions about whether such missions would be subject to the same legal restraints imposed on CIA activities.” According to the Chairman of the DSB, “The CIA executes the plans but they use Department of Defense assets.”

Specifically, the plan “recommends the creation of a super-Intelligence Support Activity, an organization it dubs the Proactive, Preemptive Operations Group (P2OG), to bring together CIA and military covert action, information warfare, intelligence and cover and deception. For example, the Pentagon and CIA would work together to increase human intelligence (HUMINT) forward/operational presence and to deploy new clandestine technical capabilities.” The purpose of P2OG would be in “‘stimulating reactions’ among terrorists and states possessing weapons of mass destruction, meaning it would prod terrorist cells into action, thus exposing them to ‘quick-response’ attacks by US forces.”[2] In other words, commit terror to incite terror, in order to react to terror.

The Los Angeles Times reported in 2002 that, “The Defense Department is building up an elite secret army with resources stretching across the full spectrum of covert capabilities. New organizations are being created. The missions of existing units are being revised,” and quoted then-Defense Secretary Donald Rumsfeld as saying, “Prevention and preemption are … the only defense against terrorism.”[3] Chris Floyd bluntly described P2OG in CounterPunch, saying, “the United States government is planning to use “cover and deception” and secret military operations to provoke murderous terrorist attacks on innocent people. Let’s say it again: Donald Rumsfeld, Dick Cheney, George W. Bush and the other members of the unelected regime in Washington plan to deliberately foment the murder of innocent people–your family, your friends, your lovers, you–in order to further their geopolitical ambitions.”[4]

“The Troubles” with Iraq

On February 5, 2007, the Telegraph reported that, “Deep inside the heart of the “Green Zone” [in Iraq], the heavily fortified administrative compound in Baghdad, lies one of the most carefully guarded secrets of the war in Iraq. It is a cell from a small and anonymous British Army unit that goes by the deliberately meaningless name of the Joint Support Group (JSG).” The members of the JSG “are trained to turn hardened terrorists into coalition spies using methods developed on the mean streets of Ulster during the Troubles, when the Army managed to infiltrate the IRA at almost every level. Since war broke out in Iraq in 2003, they have been responsible for running dozens of Iraqi double agents.” They have been “[w]orking alongside the Special Air Service [SAS] and the American Delta Force as part of the Baghdad-based counter-terrorist unit known as Task Force Black.”

It was reported that, “During the Troubles [in Northern Ireland], the JSG operated under the cover name of the Force Research Unit (FRU), which between the early 1980s and the late 1990s managed to penetrate the very heart of the IRA. By targeting and then “turning” members of the paramilitary organisation with a variety of “inducements” ranging from blackmail to bribes, the FRU operators developed agents at virtually every command level within the IRA.” Further, “The unit was renamed following the Stevens Inquiry into allegations of collusion between the security forces and protestant paramilitary groups, and, until relatively recently continued to work exclusively in Northern Ireland.”[5]

Considering that this group had been renamed after revelations of collusion with terrorists, perhaps it is important to take a look at what exactly this “collusion” consisted of. The Stevens Inquiry’s report “contains devastating confirmation that intelligence officers of the British police and the military actively helped Protestant guerillas to identify and kill Catholic activists in Northern Ireland during the 1980s.” It was, “a state policy sanctioned at the highest level.” The Inquiry, “highlighted collusion, the willful failure to keep records, the absence of accountability, the withholding of intelligence, and the extreme of agents being involved in murder,” and acknowledged “that innocent people had died because of the collusion.” These particular “charges relate to activities of a British Army intelligence outfit known as the Force Research Unit (FRU) and former Royal Ulster Constabulary (RUC) police officers.”[6]

In 2002, the Sunday Herald reported on the allegations made by a former British intelligence agent, Kevin Fulton, who stated that, “he was told by his military handlers that his collusion with paramilitaries was sanctioned by Margaret Thatcher herself.” Fulton worked for the Force Research Unit (FRU), and had infiltrated the IRA, always while on the pay roll of the military. Fulton tells of how in 1992, he told his FRU and MI5 intelligence handlers that his IRA superior was planning to launch a mortar attack on the police, yet his handlers did nothing and the attack went forward, killing a policewoman. Fulton stated, “I broke the law seven days a week and my handlers knew that. They knew that I was making bombs and giving them to other members of the IRA and they did nothing about it. If everything I touched turned to shit then I would have been dead. The idea was that the only way to beat the enemy was to penetrate the enemy and be the enemy.”[7]

In 1998, Northern Ireland experienced its “worst single terrorist atrocity,” as described by the BBC, in which a car bomb went off, killing 29 people and injuring 300.[8] According to a Sunday Herald piece in 2001, “Security forces didn’t intercept the Real IRA’s Omagh bombing team because one of the terrorists was a British double-agent whose cover would have been blown as an informer if the operation was uncovered.” Kevin Fulton had even “phoned a warning to his RUC handlers 48 hours before the Omagh bombing that the Real IRA was planning an attack and gave details of one of the bombing team and his car registration.” Further, “The man thought to be the agent is a senior member of the [IRA] organization.”[9]

In 2002, it was revealed that, “one of the most feared men inside the Provisional IRA,” John Joe Magee, head of the IRA’s “internal security unit,” commonly known as the IRA’s “torturer- in-chief,” was actually “one of the UK’s most elite soldiers,” who “was trained as a member of Britain’s special forces.” The Sunday Herald stated that, “Magee led the IRA’s internal security unit for more than a decade up to the mid-90s – most of those he investigated were usually executed,” and that, “Magee’s unit was tasked to hunt down, interrogate and execute suspected British agents within the IRA.”[10]

In 2006, the Guardian reported that, “two British agents were central to the bombings of three army border installations in 1990.” The claims included tactics known as the ‘human bomb’, which “involved forcing civilians to drive vehicles laden with explosives into army checkpoints.” This tactic “was the brainchild of British intelligence.”[11]

In 2006, it was also revealed that, “A former British Army mole in the IRA has claimed that MI5 arranged a weapons-buying trip to America in which he obtained detonators, later used by terrorists to murder soldiers and police officers,” and “British intelligence co-operated with the FBI to ensure his trip to New York in the 1990s went ahead without incident so that his cover would not be blown.” Further, “the technology he obtained has been used in Northern Ireland and copied by terrorists in Iraq in roadside bombs that have killed British troops.”[12]

Considering all these revelations of British collusion with IRA terrorists and complicity in terrorist acts in Northern Ireland through the FRU, what evidence is there that these same tactics are not being deployed in Iraq under the renamed Joint Support Group (JSG)? The recruits to the JSG in Iraq are trained extensively and those “who eventually pass the course can expect to be posted to Baghdad, Basra and Afghanistan.”[13]

P2OG in Action

In September of 2003, months after the initial invasion of Iraq in March 2003, Iraq’s most sacred Shiite mosque was blown up, killing between 80 and 120 people, including a popular Shiite cleric, and the event was blamed by Iraqis on the American forces.[14]

On April 20, 2004, American journalist in Iraq, Dahr Jamail, reported in the New Standard that, “The word on the street in Baghdad is that the cessation of suicide car bombings is proof that the CIA was behind them.” Jamail interviewed a doctor who stated that, “The U.S. induces aggression. If you don’t attack me, I will never attack you. The U.S. is stimulating the aggression of the Iraqi people!” This description goes very much in line with the aims outlined in the Pentagon’s P2OG document about “inciting terror,” or “preempting terror attacks.”[15]

Weeks after the initial incident involving the British SAS soldiers in Basra, in October of 2005, it was reported that Americans were “captured in the act of setting off a car bomb in Baghdad,” as, “A number of Iraqis apprehended two Americans disguised in Arab dress as they tried to blow up a booby-trapped car in the middle of a residential area in western Baghdad on Tuesday. … Residents of western Baghdad’s al-Ghazaliyah district [said] the people had apprehended the Americans as they left their Caprice car near a residential neighborhood in al-Ghazaliyah on Tuesday afternoon. Local people found they looked suspicious so they detained the men before they could get away. That was when they discovered that they were Americans and called the … police.” However, “the Iraq police arrived at approximately the same time as allied military forces – and the two men were removed from Iraq custody and whisked away before any questioning could take place.”[16]

It was reported that in May of 2005, an Iraqi man was arrested after witnessing a car bombing that took place in front of his home, as it was said he shot an Iraqi National Guardsman. However, “People from the area claim that the man was taken away not because he shot anyone, but because he knew too much about the bomb. Rumor has it that he saw an American patrol passing through the area and pausing at the bomb site minutes before the explosion. Soon after they drove away, the bomb went off and chaos ensued. He ran out of his house screaming to the neighbors and bystanders that the Americans had either planted the bomb or seen the bomb and done nothing about it. He was promptly taken away.”

Further, another story was reported in the same month that took place in Baghdad when an Iraqi driver had his license and car confiscated at a checkpoint, after which he was instructed “to report to an American military camp near Baghdad airport for interrogation and in order to retrieve his license.” After being questioned for a short while, he was told to drive his car to an Iraqi police station, where his license had been forwarded, and that he should go quickly. “The driver did leave in a hurry, but was soon alarmed with a feeling that his car was driving as if carrying a heavy load, and he also became suspicious of a low flying helicopter that kept hovering overhead, as if trailing him. He stopped the car and inspected it carefully. He found nearly 100 kilograms of explosives hidden in the back seat and along the two back doors. The only feasible explanation for this incident is that the car was indeed booby trapped by the Americans and intended for the al-Khadimiya Shiite district of Baghdad. The helicopter was monitoring his movement and witnessing the anticipated ‘hideous attack by foreign elements.”[17]

On October 4, 2005, it was reported by the Sydney Morning Herald that, “The FBI’s counterterrorism unit has launched a broad investigation of US-based theft rings after discovering some vehicles used in deadly car bombings in Iraq, including attacks that killed US troops and Iraqi civilians, were probably stolen in the United States, according to senior US Government officials.” Further, “The inquiry began after coalition troops raided a Falluja bomb factory last November and found a Texas-registered four-wheel-drive being prepared for a bombing mission. Investigators said there were several other cases where vehicles evidently stolen in the US wound up in Syria or other Middle Eastern countries and ultimately in the hands of Iraqi insurgent groups, including al-Qaeda in Iraq.”[18]

In 2006, the Al-Askariya mosque in the city of Samarra was bombed and destroyed. It was built in 944, was over 1,000 years old, and was one of the most important Shi’ite mosques in the world. The great golden dome that covered it, which was built in 1904, was destroyed in the 2006 bombing, which was set off by men dressed as Iraqi Special Forces.[19] Former 27-year CIA analyst who gave several presidents their daily CIA briefings, Ray McGovern, stated that he “does not rule out Western involvement in this week’s Askariya mosque bombing.” He was quoted as saying, “The main question is Qui Bono? Who benefits from this kind of thing? You don’t have to be very conspiratorial or even paranoid to suggest that there are a whole bunch of likely suspects out there and not only the Sunnis. You know, the British officers were arrested, dressed up in Arab garb, riding around in a car, so this stuff goes on.”[20]

Death Squads for “Freedom”

In January of 2005, Newsweek reported on a Pentagon program termed the “Salvador Option” being discussed to be deployed in Iraq. This strategy “dates back to a still-secret strategy in the Reagan administration’s battle against the leftist guerrilla insurgency in El Salvador in the early 1980s. Then, faced with a losing war against Salvadoran rebels, the U.S. government funded or supported “nationalist” forces that allegedly included so-called death squads directed to hunt down and kill rebel leaders and sympathizers.” Updating the strategy to Iraq, “one Pentagon proposal would send Special Forces teams to advise, support and possibly train Iraqi squads, most likely hand-picked Kurdish Peshmerga fighters and Shiite militiamen, to target Sunni insurgents and their sympathizers, even across the border into Syria, according to military insiders familiar with the discussions.”[21]

The Times reported that, “the Pentagon is considering forming hit squads of Kurdish and Shia fighters to target leaders of the Iraqi insurgency in a strategic shift borrowed from the American struggle against left-wing guerrillas in Central America 20 years ago. Under the so-called ‘El Salvador option’, Iraqi and American forces would be sent to kill or kidnap insurgency leaders.” It further stated, “Hit squads would be controversial and would probably be kept secret,” as “The experience of the so-called “death squads” in Central America remains raw for many even now and helped to sully the image of the United States in the region.” Further, “John Negroponte, the US Ambassador in Baghdad, had a front-row seat at the time as Ambassador to Honduras from 1981-85.”[22]

By June of 2005, mass executions were taking place in Iraq in the six months since January, and, “What is particularly striking is that many of those killings have taken place since the Police Commandos became operationally active and often correspond with areas where they have been deployed.”[23]

In May of 2007, an Iraqi who formerly collaborated with US forces in Iraq for two and a half years stated that, “I was a soldier in the Iraqi army in the war of 1991 and during the withdrawal from Kuwait I decided to seek asylum in Saudi Arabia along with dozens of others like me. That was how began the process whereby I was recruited into the American forces, for there were US military committees that chose a number of Iraqis who were willing to volunteer to join them and be transported to America. I was one of those.” He spoke out about how after the 2003 invasion, he was returned to Iraq to “carry out specific tasks assigned him by the US agencies.” Among those tasks, he was put “in charge of a group of a unit that carried out assassinations in the streets of Baghdad.”

He was quoted as saying, “Our task was to carry out assassinations of individuals. The US occupation army would supply us with their names, pictures, and maps of their daily movements to and from their place of residence and we were supposed to kill the Shi’i, for example, in the al-A’zamiyah, and kill the Sunni in the of ‘Madinat as-Sadr’, and so on.” Further, “Anyone in the unit who made a mistake was killed. Three members of my team were killed by US occupation forces after they failed to assassinate Sunni political figures in Baghdad.” He revealed that this “dirty jobs” unit of Iraqis, Americans and other foreigners, “doesn’t only carry out assassinations, but some of them specialize in planting bombs and car bombs in neighborhoods and markets.”

He elaborated in saying that “operations of planting car bombs and blowing up explosives in markets are carried out in various ways, the best-known and most famous among the US troops is placing a bomb inside cars as they are being searched at checkpoints. Another way is to put bombs in the cars during interrogations. After the desired person is summoned to one of the US bases, a bomb is place in his car and he is asked to drive to a police station or a market for some purpose and there his car blows up.”[24]

Divide and Conquer?

Craig Murray, former British Ambassador to Uzbekistan, wrote in October of 2006, that, “The evidence that the US directly contributed to the creation of the current civil war in Iraq by its own secretive security strategy is compelling. Historically of course this is nothing new – divide and rule is a strategy for colonial powers that has stood the test of time. Indeed, it was used in the previous British occupation of Iraq around 85 years ago. However, maybe in the current scenario the US just over did it a bit, creating an unstoppable momentum that, while stalling the insurgency, has actually led to new problems of control and sustainability for Washington and London.”[25]

Andrew G. Marshall contributed to breaking the Climate Change consensus in a celebrated 2006 article entitled Global Warming A Convenient Lie, in which he challenged the findings underlying Al Gore’s documentary.  According to Marshall, ‘as soon as people start to state that “the debate is over”, beware, because the fundamental basis of all sciences is that debate is never over’. Andrew Marshall has also written on the militarization of Central Africa, national security issues and the process of integration of North America. He is also a contributor to GeopoliticalMonitor.com
He is currently a researcher at the Centre for Research on Globalization (CRG) in Montreal and is studying political science and history at Simon Fraser University, British Columbia.

Andrew G. Marshall is a frequent contributor to Global Research. Global Research Articles by Andrew G. Marshall

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Coming war against Iran: Increasing Anglo-American pressure on Turkey

June 24, 2008 in I doubt, I think, The wall
Tags: iran, life, news, oil, politics, usa, war

by Cem Ertür

Global Research, June 21, 2008

Covering the period of March-June 2008, this article will try to highlight the political pressure applied by the US and UK governments on Turkey in view of their war plans against Iran. It is complementary to an earlier article titled “Will Turkey be Complicit in Another War Against Another Neighbour?” [1]

“[The Middle East] is capable of a very bright future:… a place of innovation and discovery, driven by free men and women. In recent years, we’ve seen hopeful beginnings toward this vision. Turkey, a nation with a majority Muslim population, is a prosperous modern democracy. Afghanistan under the leadership of President Karzai is overcoming the Taliban and building a free society. Iraq under the leadership of Prime Minister Maliki is establishing a multi-ethnic democracy.” — US President George W. Bush (World Economic Forum, Sharm el Sheikh, 18 May 2008) [2]

Turkey was the last stop of US Vice President Dick Cheney’s tour in the Middle East in March. Coverage of the event by the Turkish press gave the impression that Mr Cheney did not make any demands from Turkey’s President, Prime Minister or Chief of General Staff, concerning the US foreign policy in the Middle East and/or Afghanistan. Given the increasingly evident Anglo-American hostility against Iran on all fronts, this wasn’t very plausible. In fact, all the evidence since then suggests otherwise.

Shortly after Mr Cheney’s visit, the US-based RAND Corporation published a report on the US-Turkish relations:

“Given its growing equities in the Middle East, as well as the current strains in U.S.-Turkish relations, Turkey will be even more reluc-tant to allow the United States to use its bases in the future, particu-larly the [U.S.] airbase at Incirlik, to undertake combat operations in the Middle East… Turkey is unlikely to support U.S. policies aimed at isolating Iran and Syria or overthrowing the regimes in either country.” [3]

Frequent visits by senior US officials continued after Mr Cheney. In April, US Ambassador to the International Atomic Energy Agency (IAEA) Gregory Schulte commented on Iran’s Shahab-3 ballistic missile:

“Shahab-3 could strike most of Turkey and the Middle East, and the longer-range missiles would reach deeper into Europe.” [4]

The following month, in a conference held in Washington, Ambassador of Turkey to the US Nabi Sensoy echoed Mr Schulte:

“Iran has run ‘clandestine (nuclear) programs for more than two decades,’ and those programs are ‘a threat to Turkey as well as to the U.S.’ ” [5]

QUEEN ELIZABETH’S IMPERIAL VISIT

In a press conference with his Turkish counterpart Ali Babacan in April in London, UK Foreign Secretary David Miliband said:

“Bilateral relations are deep, excellent and sincerely felt… Turkey had a pivotal role to play on regional issues, such as the conflict in Iraq and concern over Iran’s nuclear programme.” [6]

The following month, Queen Elizabeth II and Mr Miliband held a state visit to Turkey. On May 13, she gave a speech at the state banquet in Ankara:

“For us, Turkey is as important now as it has ever been… Abroad, Turkey is uniquely positioned as a bridge between East and West at a crucial time for the European Union and the world in general… [Mr President Abdullah Gul], you are playing a key role in promoting peace, political stability and economic development in some of the world’s most unsettled areas.” [7]

Both statements were eerily reminiscent of Tony Blair’s speech three months before officially launching the ultimate invasion on Iraq:

“I think this is a very important and exciting moment for the European Union and for Turkey and I believe we have an historic opportunity to send the clearest possible signal that the European Union wants Turkey inside the European family as a full partner.” [8]

Yet again, according to the Turkish and international media, this was just a friendly visit by the Queen which had no agenda other than supporting Turkey’s accession to the European Union. Listening to a Quran recital with her head covered in a mosque located in Bursa (which is the first capital of the Ottoman Empire), moved even those who are otherwise deeply anti-religious.

Equally symbolic, but more revealing was the reception she held for Turkish President Abdullah Gul [9] on board of a Royal Navy aircraft carrier in Istanbul [10]. In fact, HMS Illustrious was on its way back from the ‘Operation Orion 08’, which was a multi-national naval exercise conducted in the Persian Gulf to rehearse a possible war on Iran. [11] [12]

Back in October 2007, Turkish Prime Minister Recep Tayyip Erdogan and his British counterpart Mr Gordon Brown had signed the ‘Turkey-UK Strategic Partnership Agreement’. The following items on this document reveal the striking similarity between the UK and US foreign policy on Turkey:

· “Enhanced co-operation on the terrorist threat posed by PKK, … Al-Qaida and other associated extremist groups.” · “Support for the UN Security Council process on Iran, including for full implementation of any measures imposed.” · “Further co-operation between the UK and Turkish armed forces and mutual support in NATO fora.” · “Co-operation… to ensure that NATO can fully implement the deliverables agreed at the 2006 Riga Summit.” [13]

It is also important to remember what the UK Foreign Secretary David Miliband, who is widely considered as the successor to Mr Brown, said on the fifth anniversary of invasion of Iraq in March 2003:

“I think the war itself was a remarkable victory. It went better than most people expected.” [14]

The following statement a month earlier makes his stance on prospective Anglo-American wars crystal clear:

“I believe discussion about the Iraq war has clouded the debate about promoting democracy around the world. I understand the doubts about Iraq and Afghanistan, and the deep concerns at the mistakes made. But my plea is that we do not let divisions over those conflicts obscure our national interest, never mind our moral impulse, in supporting movements for democracy… In the 1990’s … the left seemed conflicted between the desirability of the goal and its qualms about the use of military means. In fact, the goal of spreading democracy should be a great progressive project; the means need to combine soft and hard power.” [15]

US PRESSURE SHIFTING INTO HIGH GEAR

In early June, ‘The U.S.-Turkey Agreement for Cooperation Concerning Peaceful Uses’ came into force:

“The Agreement provides a comprehensive framework for peaceful nuclear cooperation between the United States and Turkey under agreed non-proliferation conditions and controls.” [16]

On June 5, The White House announced the nomination of the Deputy National Security Advisor James Franklin Jeffrey as US Ambassador to Turkey. In his earlier capacity as the principal deputy assistant secretary of state for Near Eastern Affairs, Mr Jeffrey had a prominent role on Iraq policy and was co-chairing the now defunct Iran-Syria Policy and Operations Group [17]:

“The infamous Iran-Syria Policy and Operations Group (ISOG) created in early 2006, integrated by officials from the White House, the [US] State Department, the CIA and the Treasury Department, had a mandate to destabilize Syria and Iran, and bring about ‘Regime Change’. ” [18]

The same day, during his visit to the US, which also included his participation to the Bilderberg Meeting (for the fifth time [19] ), Turkish Foreign Minister Ali Babacan held a press conference with his US counterpart Condaleezza Rice:

“Question: Madame Secretary, what do you expect Turkey to do — increase pressure on Iran beyond the UN sanctions?

Rice: All member states have an obligation to carry out the terms of those resolutions and to use whatever offices they have with the Iranians to insist that the Iranians carry out the obligations that the UN Security Council has imposed.

Babacan: Turkey is implementing the relevant United Nations Security Council resolutions. As long as the international community has one unified stance, Turkey [would also be] implementing those decisions.” [20]

Again on the same day, back in Turkey, the Chief of General Staff of the Turkish Armed Forces Yasar Buyukanit’s opening speech at an international symposium in Istanbul, titled “The Middle East: Its Uncertain Future and Security Problems”, was even more straightforward:

“Until mid-2003, Iran has built nuclear installations and conducted uranium enrichment work secretly from the International Atomic Agency (IAEA). It approved inspections by the IAEA, but didn’t implement this through a constitutional process. Iran needs to inspire trust that its nuclear program is for peaceful purposes entirely. Iran’s adoption of sensible policies, which will prevent new problems arising in the region, is very important in terms of restoring a peaceful and stable Middle East.” [21]

However, Mr Buyukanit was not forthcoming when asked a question about a recent press report on Turkish Armed Forces’ plans to extend the scope of “Irregular Warfare Units”, which function as a “counter-guerrilla” force. The report reveals “highly secret preparations on covert struggle methods to be used in an operation which will be conducted together with our armed forces in the event of a violation of our country’s territorial integrity by an enemy force”. [22] Mr Buyukanit replied:

“This is a very old concept from the Cold War Era which is no longer valid: If, within the context of NATO-Warsaw Pact, Turkey were to be invaded by the Soviets, then there would be resistance in occupied areas. This is over, we currently don’t have such structure as there is no need for it. In fact, who would invade Turkey?” [23]

Despite the evasive language, it is clear that Mr Buyukanit is referring to Article V of the NATO Charter, [24] which states that the members of the Alliance must consider coming to the aid of an ally under attack. According to the RAND Corporation report cited earlier:

“Turkey is the only NATO member that faces the threat of outside attack (Iran, Syria). It is thus very concerned that Article 5 (collective defense) remains a core Alliance mission and that emphasis on crisis management [does] not weaken the Alliance’s commitment to collective defense.” [3]

Whether Article V will be resorted as a justification for war is yet to be seen… Another RAND Corporation report released as early as 1992 reveals how old and consistent such propaganda is:

“The [1991] Gulf war and its aftermath have simply confirmed and re-inforced emerging perceptions about the regional ambitions and ex-panding arsenals across Turkey’s borders, not least the growing threat from weapons of mass destruction… The prospect of a revived Iraq posing a conventional and unconven-tional threat to Turkey is an obvious source of concern in light of Turkey’s prominent role in the coalition against Baghdad… Above all, Turkey faces longer-term security risks from Iran, with its competing aims in Azerbaijan and active interest in nuclear and bal-listic missile technology, and Syria… The United States, both bilaterally and through its role in NATO, will remain the best guarantor of Turkish security in relation to the most dangerous risks facing Turkey over the longer term…” [25]

On June 17, Turkish daily Hurriyet reported the following exchange:

“Recently [outgoing] U.S. Ambassador to Turkey Ross Wilson visited the Turkish Minister of Energy [Hilmi Guler] asking him to discontinue the energy projects with Iran. The Minister of Energy rejected the request on the basis of a lack of an alternative source. When Wilson suggested buying energy from Iraq, the Turkish minister expressed his pessimistic opinion about Iraq being an alternative, indicating that Iraq had no gas reserves. He said, ‘A bird in the hand is better than two birds on a tree.’ In response, Ambassador Wilson stated ‘in a short time, the bird may burn with the branch it is sitting on’ ” [26]

Two days later, in an interview with the Turkish daily Aksam, Israel’s Ambassador to Turkey Gabby Levy claimed that Iran’s weapons is a threat to the entire Middle East. [27]

On the other hand, in another recent interview with the same newspaper, US Congressman Mark Kirk presented a different strand of disinformation which aims to comfort an ever more anxious and sceptical public in Turkey. He argued that since the rejection of the March 2003 parliamentary motion (allowing US troops to use Turkish soil to invade Iraq), Turkey’s significance has decreased by 90%. When asked what the US would expect from Turkey in the event of an attack on Iran, he said:

“The US would expect Turkey not to interfere with anything. Just like Belgium.” [28]

Meanwhile, a US-sponsored political engineering process has entered its last phase, warning the entire political spectrum in Turkey to toe the line. It is relentlessly trying to ensure that a fully compliant government is in power before launching the next Anglo-American war on Iran and possibly on Syria.

Global Research Articles by Cem Ertür

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