Thursday, December 28, 2006

In Somalia, a reckless U.S. proxy war

Salim Lone
Tribune Media Services
Tuesday, December 26, 2006

Undeterred by the horrors and setbacks in Iraq, Afghanistan and Lebanon, the Bush administration has opened another battlefront in the Muslim world. With full U.S. backing and military training, at least 15,000 Ethiopian troops have entered Somalia in an illegal war of aggression against the Union of Islamic Courts, which controls almost the entire south of the country.

As with Iraq in 2003, the United States has cast this as a war to curtail terrorism, but its real goal is to obtain a direct foothold in a highly strategic region by establishing a client regime there. The Horn of Africa is newly oil-rich, and lies just miles from Saudi Arabia, overlooking the daily passage of large numbers of oil tankers and warships through the Red Sea. General John Abizaid, the current U.S. military chief of the Iraq war, was in Ethiopia this month, and President Hu Jintao of China visited Kenya, Sudan and Ethiopia earlier this year to pursue oil and trade agreements.

The U.S. instigation of war between Ethiopia and Somalia, two of world's poorest countries already struggling with massive humanitarian disasters, is reckless in the extreme. Unlike in the run-up to Iraq, independent experts, including from the European Union, were united in warning that this war could destabilize the whole region even if America succeeds in its goal of toppling the Islamic Courts.


U.S. Scolds Israel on Plan for West Bank Settlement

December 28, 2006

WASHINGTON, Dec. 27 — In a rare public rebuke to Israel, the Bush administration said Wednesday that an Israeli plan to construct a Jewish settlement in the occupied West Bank for the first time in 10 years could violate the terms of an American-backed peace proposal.

“We are aware of reports about the Maskiot settlement,” said Gonzalo Gallegos, director of the State Department’s Office of Press Relations. “The establishment of a new settlement or the expansion of an existing settlement would violate Israel’s obligations under the road map.”


A Look Back and Ahead In An Age of Neocon Rule

Wednesday, December 27, 2006

by Stephen Lendman

Borrowing the opening line from Dickens' Tale of Two Cities - "It was the best of times, it was the worst of times...." He referred to the French Revolution promising "Liberte, egalite and fraternite" that began in 1789, inspired by ours from 1775 - 1783. It ended a 1000 years of monarchal rule in France benefitting those of privilege and established the nation as a republic the way ours did for us here a few years earlier.

That was the good news. The bad was the wrong people came to power. They were the Jacobins who at first were revolutionary moderates and patriots until they lost control to extremists like Maximilien Robespierre who ushered in a "reign of terror" (The Great Terror sounding a lot like today's "war on terror") characterized by brutal repression against perceived enemies from within the Revolution who didn't get a chance to prove they weren't. In the name of defending it, individual rights were denied and civil liberties suspended. Laws were passed that allowed charging those designated counter-revolutionaries or enemies of the state with undefined crimes against liberty.

It resulted in justice being meted out to thousands for what Orwell called "thoughtcrimes" or for their freely expressed opinions and actions judged hostile to the state under a system of near-vigilante justice by the Paris Revolutionary (kangaroo) Tribunal with no right of appeal. It led to the public spectacle of an inglorious trip to and quick ending from the death penalty method of choice of the times - the guillotine that was barbaric but quick, and a much easier, less painful way to die for its victims than the use of state-inflicted torture-murder in the commonly drawn out lethal injection process used in 37 of the 38 death penalty states and by the federal government making the condemned endure a slow agonizing death unable to cry out while they're being made to suffer during their last moments of life. Instances of this barbarity aren't exceptions. They're the rule, the exception being this time a report or two of what really happens slipped out and made news.

Fast forward to the past year and the previous five under George Bush and ask: sound familiar? French Revolutionary laws during the "reign of terror," like the Law of Suspects, were earlier versions of our Patriot I and II and Military Commission Acts today. The Revolutionary Tribunal, with no chance for justice or right of appeal, was no different than our military courts today, and too many civil ones, in which any US citizen may now be tried anywhere in the world, with no habeas right of appeal or hope for due process and from which those sent there won't fare any better than the French did, doomed to meet their unjust fate - even though much in these laws today is unconstitutional and one day will be reversed by a High Court upholding the law instead of the extremist rogue one now empowered that scorns it.

What May Lie Ahead As the New Year Approaches

At the end of the sixth horrific year under the reign of the Bush modern-day extremist Jacobin-neocons, we can now look ahead, but to what. We have an administration in charge for another two years one longtime analyst characterizes as "a bunch of crooks, incompetents and perverts" with the president's approval rating plunging as low as 28% in some independent polls and a growing number of people in the country demanding his impeachment and removal from office.

It's not likely from the new Democrat-led Congress arriving in January, as their DLC leadership took it off the table and so far only promises more of the same failed policy other than some minor tinkering around the edges to create an illusion of change no different than the deceptive kind of course correction proposed by the Baker "Gang of Ten" Iraq Study Group (ISG) that guarantees none at all. It doesn't leave members of the body politic with much hope for the new year that will likely just deliver more of the same rogue leadership and policy engendering growing public discontent and anger but not at a level so far to scare the those in power enough to want to address it.

The heart of the problem is the unpopular illegal war of aggression in Iraq, the cesspool of corruption and scorn for the law in Washington, and the assault on human rights and civil liberties in the country justified by the so-called "war on terror" now rebranded a "long war" against "Islamofascism" and "radicals and extremists" (who happen to be Muslims.) It's the same failed policy using the kind of deliberately provocative language intended to deceive the public to think a threat great enough exists to justify any state action in the name of national security including waging wars of aggression and all the horrors associated with them at home and abroad.

After the Baker "bob and weave,'' the now you see a change of course and now you don't, disingenuously suggesting a drawdown and exit strategy, the New York Times on December 16 reports "Military planners and White House budget analysts have been asked to provide President Bush with options for increasing American forces in Iraq by 20,000 or more."

The article goes on to say one option is to boost the force level by up to 50,000 even though any increase greater than 20 - 30,000 would be "prohibitive" - but it won't deter the Pentagon, on administration orders, from extending tours of duty even longer for forces now there and calling up thousands of reservists and greatly extended National Guard units to get into this quagmire even though it's recognized their presence will only make things worse as well as place an unfair burden on those called up, who've served before, and their families.

As of December 27, it's somewhat less clear what Iraq troop strength policy will emerge in January following comments by incoming Democrat chairman of the Senate Foreign Relations Committee, Joseph Biden, who just stated "I totally oppose this surging of additional American troops into Baghdad. It's contrary to the overwhelming body of informed opinion, both inside and outside the administration." Senator Biden will hold hearings on Iraq on January 9, and at that time things may heat up a bit at least in rhetoric if not in final policy.

Additional heat may be created in January after George Bush admitted for the first time on December 19 that the US isn't winning the war even though two weeks before the November mid-term elections he said emphatically "absolutely, we're winning in Iraq." He wouldn't acknowledge what most every honest observer knows including the Pentagon Joint Chiefs - that the wars in Iraq and Afghanistan are lost. They can't be won and won't be. No military solution is possible now or any time ahead.

The president is living in a state of denial, obsessed with his messianic mission fed him by the vice-president and hardest of his hard line neocon allies, and it shows in the outlandish solutions he proposes to an insoluble problem - send in more troops (that will only make things worse) and increase the overall size of the military (that guarantees a permanent state of war).

It also clearly sounds a lot like the first official hint from the chief executive that a draft is needed and will come at some unspecified time ahead - likely following another "made in Washington" 9/11 calamity severe enough to get the public to go along with something now thought intolerable. The president's sentiment was echoed on December 21 by administration Veterans Affairs secretary Jim Nicholson who (incredibly) said that "society would benefit" if the US reinstated the military draft. He didn't say for whom. He did go further when asked in a press conference whether it should include women saying: "I think if we bring back the draft, there should be no loopholes for anybody who happens to be drafted." Maybe, to his thinking, it should include pregnant mothers as well and single ones with small children.

Such openness by the VA secretary apparently was too much, too soon, and too clear for the White House that quickly got the Department of Veterans Affairs to issue a separate follow-up statement from Nicholson saying: "Let me be clear, I strongly support the all-volunteer military and do not support returning to a draft." Let the reader choose which message to believe, but, with the nation in a permanent state of war, it looks like the trial balloon and hint of a draft now being floated is the opening round to instituting one at some designated time ahead. That likelihood looms even greater as the Selective Service System announced it's planning a comprehensive test of the military draft machinery, which it hasn't done since 1998 while, at the same time, saying the agency isn't gearing up for a draft. But what else would they say as they make plans to do this on orders from the administration.

It all amounts to an increasing level of insanity from a power-crazed administration as well as sounding much like Benjamin Franklin's wisdom who said "The definition of insanity is doing the same thing over and over expecting different results." In the case of Iraq, doing it with more troops on the ground is even more insane as a greater occupying force there only guarantees a stronger resistance to it presenting more targets to aim at with virtually no chance for a peaceful resolution of the conflict short of a full unconditional withdrawal of all occupying forces, no strings attached, that won't happen. In the case of a future draft, now seeming more likely, it only guarantees this nation plans to stay in a permanent state of war against future enemies to be chosen with those in or to be included in the "axis of evil" heading the target list at some point ahead.

George Bush and others floating these lunatic schemes have no regard for the lives of those affected, and why should they. For now, their aim is to buy time, and as long as they can get away with it, they and their well-connected cronies and corporate friends stand to gain from the price everyone else has to pay - a huge one including the thousands of lives lost each week and the many more thousands of survivors whose lives will never be the same again.

Think what it means as the new year approaches. The nation is at war on two fronts, it's likely more ahead are contemplated by some in the administration, no substantive effort is being made to change course, and the condition at home is a relentless march toward becoming a full-blown national security police state we're already perilously close to. It's because the neocon-dominated Bush administration is reckless in ambition, out-of-control in policy, and the embodiment of a relentless and ruthless "weapon of mass destruction" unleashed on all humanity in its way.

It's underpinned by an extremist ideology based on rule by savage capitalism that's frighteningly close to and borders on the tipping edge of the classic definition of fascism combining corporatism with strong elements of patriotism and nationalism, a claimed messianic Almighty-directed and blessed mission, and characterized by authoritarian rule backed by the iron fist of militarism and 'homeland security" enforcers, illegally spying on everyone, and intolerant of dissent and opposition in an age where the law is what the chief executive says it is and all semblance of checks and balances no longer exist. In a word - despotism, but cloaked in the deceptive rhetoric of a modern democracy falsely claiming to serve the needs of all its people.

It's also an age of extreme greed and corruption infesting government and corporate boardrooms with the gap between rich and poor at levels greater than since the 19th century "Gilded Age" of the "robber barons." It's something economist Paul Krugman calls "entirely unprecedented" under George Bush that "For the first time in our history, so much (of the nation's economic growth has gone) to a small, wealthy minority" while the great majority can't stay even as inflation-adjusted wages fail to keep up with rising prices and poverty is growing in an age of affluence affecting tens of millions in the richest country ever in the world.

The grossness of this disparity was on the online business pages of the New York Times on Christmas Day in a story titled "Wall St. Bonuses" So Much Money, Too Few ($250,000) Ferraris. The article highlights that "The 2006 bonus gold rush has re-energized some luxury markets" like Manhattan real estate that had softened earlier in the year and echoed the lament of a real estate broker about a "dearth of listings for two clients trying to spend $20 million on Manhattan properties" while mentioning some of the Wall Street wealthy already in their luxury nests are buying $5 million apartments for their children and private resort vacation homes to boot.

The same ugly data is there overall worldwide in a newly released study by the Helsinki-based World Institute for Development Economics Research of the UN University that shows the richest 2% of adults in the world own more than half of its wealth compared, on the other end, with the assets of about half the world's population accounting for barely 1% of global wealth - lumps of coal only for them and a "Ba Humbug" dismissal for their plight by those with everything wanting still more.

The Cost to a Society Based on Predatory Capitalism and Out-of-Control Greed, Corruption and Militarism

The societal breakdown in the US is a national disgrace and affects many millions. A sampling of some of it is listed below:

-- 47 million Americans can't afford basic health insurance.

-- Over 80 million in total have no health coverage during some portion of each year and most of them are employed.

-- The Bush administration just proposed sweeping cuts in payments to pharmacies to reduce the Medicaid benefits 50 million poor in the country rely on, can't afford to make up the difference for on their own, and may have to forego medications they vitally need if pharmacies won't fill prescriptions at lower prices.

-- The US ranks 41st in infant mortality, and the World Health Organization (WHO) ranks the country 37th in the world in "overall health performance" and 54th in the fairness of health care despite spending at a current level overall of around $2 trillion a year or about double the amount per capita of the OECD countries that deliver superior health care overall to their citizens as a national priority.

-- Well over 12 millions Americans struggle daily to feed themselves, and many thousands across the country can't afford housing and are forced to sleep on the streets including in winter cold.

-- A just released December 14 US Conference of Mayors report said these conditions continue to worsen based on a survey of 23 cities showing 7% more requests for food aid in 2006 following a 12% jump in 2005 during a period of economic growth.

-- The same report showed requests for shelter rose 9% in 2006 with requests from families with children rising 5%.

-- Public education is deliberately being eroded with illiteracy in basic reading, math and computer skills shamefully high and rising.

-- The US prison population is the highest in the world at 2.2 million and increasing by 1000 a week, half of those in it are black, and half of the total prison population is there for non-violent offenses half of which are drug-related. The US prison system is a shameful Gulag and an affront to humanity. The appalling conviction and sentencing of first-time drug offender Weldon Angelos is but one of countless examples. He was convicted of three sales of marijuana in 2004 while in possession of a gun unrelated to the sale. Under the insane federal mandatory sentencing laws, he was sentenced to five years for the first offense and 25 years each for the other two totaling 55 years in federal prison or a likely life sentence if he's forced to serve it all because he possessed and sold a few "joints" of a substance less harmful than legal cigarettes that kill millions yearly while it's not known marijuana ever killed anyone using it. Only in America.

-- The true state of things overall is suppressed by the dominant corporate-controlled media (including the NPR and PBS parts of it) functioning as a national thought-control police controlling all mass communication and depriving the public of any real information vital to a healthy democracy and their welfare.

-- Racial segregation is as great as in the 1960s, and the national sport almost is demonizing Muslims as "terrorists, radicals, extremists and Islamofascists" and impoverished "people the color of the earth" Mexicans and Latin Americans as "illegal immigrant invaders polluting" our white western European society and culture, mindless that they only come el norte in desperate search of work because of the devastating effects of NAFTA on their lives that destroyed their ability to support their families.

Data from the Oakland Institute think tank specializing in social, economic and environmental issues shows that heavily subsidized US corn exports to Mexico have tripled since NAFTA came into force forcing two million Mexican corn farmers out of business, something that was predicted in advance but allowed to happen anyway. It also led to suicides but at a rate nowhere near the level globalized trade US-style had on farmers in India where as many as 100,000 of them have taken their own lives because "New World Order" indebtedness caused them to lose their farms and then everything else.

-- Childhood poverty in the US ranks 22nd and next to last among developed nations when there should be virtually none tolerated in the richest country in the world or toleration of any of the other listed abuses.

-- An alarming number of high-paying and other jobs have been exported abroad in a process that's gone on for decades but picked up in momentum since the 1980s and especially in recent years. Mckinsey Global Institute estimates the volume will grow 30 - 40% a year for the next five years. Forrester Research estimates 3.3 million white-collar jobs will be lost by 2015 with most affected areas in financial services and information technology, and University of California researchers estimate that "up to 14 million American jobs are at risk to outsourcing."

It adds up to a nation in decline, losing its industrial base and becoming primarily a service-oriented economy mainly offering low-skill, low-pay jobs with the better, higher-paying ones growing scarcer, making a college degree in areas outside of critical skills almost worthless. Exporting jobs to low-wage countries is a boon for corporate bottom lines in an age of "globalized free trade" never characterized as fair for the harm it does to millions of wage earners at home or in the developing countries on the receiving end being exploited by capital that sucks out their wealth and impoverishes their people, many of whom work for near-slave-rate wages in a modern era of serfdom in countries around the world in Asia, Africa, Eastern Europe and Latin and Central America.

-- Worker outrage around the world in protest is growing in response to these abuses (unreported in the US) because most governments are doing little or nothing to ameliorate them. It showed up on November 22 in South Korea when over 200,000 workers belonging to the Korean Confederation of Trade Unions (KCTU) staged a general strike protesting in 17 cities against the bilateral US-Korea Free Trade Agreement currently being negotiated that will do to their members and farmers what NAFTA did to Mexicans and India's agricultural trade policies did to their small farmers. It continued on the streets in the days following and spilled over to the Big Sky Ski Resort in Big Sky, Montana where negotiations are being held in seclusion but are still unable to escape the daily protests held against them there.

-- It happened as well in Cebu City, Philippines where President Gloria Macapagal-Arroyo (closely allied to the failed Bush agenda and elected through fraud) had to cancel two Association of Southeast Asian Nations (ASEAN) meetings in December attended by 19 countries including the US and Canada. It was an abrupt ending to the meeting held to ratify trade and security agreements because of the mass protests by workers, farmers and others against their harmful effects forcing thousands in the country to leave daily to go abroad for work paying enough to support their families at home.

-- Workers almost everywhere have been harmed, including in the US, as union clout and worker rights here have declined in an age where the social contract government once had with its working people has been dismantled with less than 13% of the work force (the lowest in the industrialized world) unionized today compared to one-third of it in 1958. In an age of modern-day "robber barons," the middle class bedrock of a democratic state is slowly disappearing as the nation moves closer to becoming a banana republic at a time when 51 of the world's largest economies are corporate giants, most of them US-based.

It all goes on with no redress or sign of change in an age of out-of-control militarism and outlandish budgets supporting it that began ratcheting up under Ronald Reagan, along with big budget deficits to pay for it, and have gone wild under George Bush. The White House just approved a fiscal year 2008 near $470 billion Pentagon budget on top of an additional $100+ billion off-the-books amount minimum more that will boost this year's war budget for Iraq and Afghanistan to a yearly record of about $170 billion. It also needs tens of billions annually for "Homeland Security" and tens of billions more for the "spy agencies" totaling numbers in the range of well over $700 billion a year and rising - while social spending continues to be slashed to pay for it all in a heartless society scorning its people and their essential needs as long as the interests of capital are served along with the militarists in it profiting from its blood money.

Since WW II, when the US emerged as the only dominant nation left standing, Washington, instead of disarming and fostering peace, embarked on a now long-running program of militarization to maintain the country's political, economic and military preeminence over all others. It takes a lot of military spending to do it, that could have been used far more productively investing in human capital (like health and education) and physical capital (like essential infrastructure) as well as promoting non-military related business and industry that over time pay back far greater dividends than the short-term gains from building weapons and having large standing armies, navies and air forces that only exist to kill and destroy.

Productive spending also pays off in creating a society free from a dominant military culture like now exists out-of-control and hard to contain in the Pentagon that scorns civil liberties and democratic principles and values that have nearly vanished. The course this nation chose 60 years ago led to today's corrupted society armed to the teeth for endless wars with the most destructive weapons in human history deployed on over 800 known military bases in about 155 of the 192 countries of the world. It cost an unimaginable amount creating this monster as documented by the Center for Defense Information. It reported this country spent an estimated $21 trillion in constant dollars since 1945 on defense, the numbers continue to rise sharply, and the mindset of most of the nation's leaders, especially George Bush, is when you've got the might, you have to throw it around to prove it as well as scare off potential challengers.

Shamefully the US stands as a modern-day Sparta glorifying war and those put in charge to wage it. Witness the retirement ceremony for Army Major General Geoffrey Miller last summer when Army Vice Chief of Staff General Richard Cody awarded the man who supervised the infamous US Guantanamo and Abu Ghraib torture-prisons with the Distinguished Service Medal (DDSM). This award was established by Richard Nixon in 1970 so the Secretary of Defense could reward officers of the US Armed Forces "whose exceptional performance of duty and contributions to national security or defense have been at the highest levels."

Witness also the December 16 retirement ceremony at the Pentagon for unindicted war criminal and torture-authorizer Donald Rumsfeld complete with pomp and circumstance, George Bush and Dick Cheney in attendance for the spectacle, and a 19 round cannon salute that might have been better aimed. In open defiance of growing public anger over the war, speakers, including the president, shamelessly lauded Rumsfeld for the war of aggression he directed and his leadership in doing it. The galling scene showed Bush hugging Rumsfeld saying: "This man knows how to lead, and he did. And the country is better off for it." He failed to say for whom, but it got worse with Dick Cheney saying: "I believe the record speaks for itself - Don Rumsfeld is the finest Secretary of Defense this nation ever had."

Contrast those spectacles with the fate of extraordinary people like Lynne Stewart prosecuted for her crime of courage, honor and resisting tyranny. She was unjustly charged under the 1996 Antiterrorism Act with four counts of aiding and abetting a terrorist organization and violating Special Administration Measures (SAMS) imposed by the US Bureau of Prisons, which included a gag order on Sheik Abdel Rahman whom she represented as counsel for the defense in his 1995 trial because former US Attorney General Ramsey Clark asked her to take the case.

Lynne took it in the same spirit she spent her entire 30 year professional life as a courageous champion for the rights of the poor, underprivileged and those in society never afforded due process unless they're lucky enough to have an advocate like her. She broke no law, and her trial was a gross miscarriage of justice. Still, the Justice Department asked for a harsh 30 year sentence. It wasn't for any crime committed. It was to send a clear message to all in the legal community not to represent "unpopular clients" and not to afford them their legal right of due process with competent counsel when the government wants them put away.

Lynne for the present had the last word being vindicated in court on October 17 when Judge John G. Koeltl rejected the prosecution's case in the 28 month sentence he handed down allowing Lynne to remain free pending her appeal to a higher court, acknowledging it might overturn her conviction and effectively rebuking the Justice Department for their prosecution of a courageous woman who spent a lifetime fighting for justice.

The outcome was painfully different in an age of Muslim demonization and persecution shown in the prosecution of Dr. Rafil Dhafir, a Muslim American of Iraqi descent and practicing oncologist until his license was unjustly revoked as a prelude to the greater outrage committed against him. Dr. Dhafir was charged and tried in another US "kangaroo court" for what Katherine Hughes called and wrote his "crime of compassion." Katherine followed the trial daily in court for 17 weeks and remains his champion, continuing to work tirelessly for his vindication and release.

Dr. Dhafir was convicted and is now serving a 22 year sentence in federal prison for violating the Iraqi Sanctions Regulations (the IEEPA) having used his own funds and what he could raise from others to bring desperately needed humanitarian aid, including food and medical supplies, to Iraqi people unable to get them because of the punitive, harsh and unjust sanctions imposed prior to the 2003 war. He did it through his Help the Needy charity, and for it was convicted of violating the sanctions, tax fraud, money laundering, and mail and wire fraud - a total of 60 counts and found guilty on 59 of them.

The verdict sent another chill through the Muslim community, and as Katherine explained on her web site - - "If we can get Rafil Dhafir, we can get anyone." Not quite, as Lynne Stewart's vindication proves. But it proves something else too. In the age of George Bush, the chance of prevailing against injustice as a white American is a lot better than for a "not-as-white" Arab Muslim, even an American one, especially one courageous enough to take on a mission of mercy in defiance of state policy unjustly prohibiting it.

Dr. Dhafir was confined at the federal prison in Fairton, NJ until December when he was transfered further away from his family, who weren't told. He's now at what's been described as the hellhole in Terre Haute, IN, in an area of right wing extremism and KKK influence, in a deliberate act of further barbaric vengeance to break his spirit, restrict his access to legal help and his family, and cause him undue pain and suffering in an age of US-sanctioned and authorized torture as a method of social control and inhumanity and because no dissenting authority has the courage to challenge Washington's willingness to go against the most basic principles of equity and justice.

A Look Back to Find Direction Ahead

A look back to an important anniversary just reached should have been duly noted and reflected on in the major media, but it passed nearly unnoticed. It was the December 15 anniversary of the Bill of Rights of 1791 to the Constitution framed in 1787. It gave us unimaginable freedoms up to that time written into the law of the land that overall was a great democratic experiment never tried before outside of ancient Athens for a few decades before it ended. It gave people the rights of free expression, religion and peaceable assembly; protection from illegal searches and seizure; the right of due process, against double jeopardy and to remain silent if accused; to a speedy trial by jury if charged with the right to counsel and to be able to call witnesses; protection from any cruel and unusual punishment and more.

Most of the credit for this historic achievement goes to James Madison who drafted the first 10 amendments and with his perseverance got the other Framers to go along. He then managed to get the needed two-thirds vote from both Houses of Congress and ratification by the required three-fourths of the states in 1791 to have them become the law of the land - a major landmark achievement today being defiled by those in power who have contempt for the freedoms the Founders gave us.

Madison is thought of by some to be the "Father of the Constitution," but it's more accurate to call him its Godfather as he had a lot of help from the other 54 Founders who met in the Philadelphia State House, where the Declaration of Independence was signed 11 years earlier, to frame this historic document for the new republic they hoped would last into "remote futurity" - if we could keep it as Ben Franklin warned at the time and would shudder now at how things turned out and condemn those in power responsible.

Two future presidents, Thomas Jefferson and John Adams were serving abroad as envoys to France and Britain and weren't in Philadelphia for this historic gathering. When they were back later on, Jefferson and Madison wanted twelve initial amendments to the Constitution instead of the original 10 that were adopted. Federalists John Adams and Alexander Hamilton, however, opposed the Bill of Rights entirely and managed to exclude from them the other two that included "freedom from monopolies in commerce," or what are now giant corporate predators, and "freedom from a permanent military," or today's standing armies waging wars of illegal aggression.

Imagine what might have been, what was lost, and how the country might be governed today had Jefferson and Madison prevailed. Still they deserve our gratitude for what they accomplished, and it's disconcerting at the least to wonder how much worse off we'd be now if they hadn't gotten any of the Bill of Rights freedoms in our founding law that although lost under neocon rule may one day be restored if we can survive in the meantime.

A Look Ahead In An Age of State-Sponsored Terror Under Neocon Rule

It's time to pause at year's end to give thanks for our blessings but reflect that the spirit of the season demands that the madness of Bush neocon rule be stopped and ended before it's too late. Six years is more than enough to know the administration's agenda at home and abroad is roguish, corrupted by greed and contempt for the law, ruthless in its pursuit of world dominance through the barrel of a gun, and arrogant enough to think it can get away with it because who'll challenge those in charge.

Internally, there no longer are checks and balances as the three branches of government under Republicans and Democrats are united for a common purpose, and their agenda to carry it out is hostile to the public interest. It's the ultimate expression of Lord Acton's dictum that "power corrupts, and absolute power corrupts absolutely." Positively it does in the age of George Bush and a culture obsessed with power, the lust for more of it, and the worship of the wealth and privilege that comes with it. It wreaks of the Vince Lombardi philosophy that "Winning isn't everything; it's the only thing," and the only rules are the ones those now in power make up as they go along justifying whatever they choose to do, regardless of its consequences always harmful to the great majority.

It's also based on might making right but not the way Abe Lincoln meant it when he said in his February, 1860 Cooper Union speech prior to his July presidential nomination that year: "Let us have faith that right makes might, and in that faith, let us, to the end, dare to do our duty as we understand it." He later expressed a spirit of reconciliation with the South and kind of humanity George Bush has contempt for in his second inaugural address in March, 1865 when he spoke of "malice toward none (and) charity for all" only weeks before his life was taken by an assassin's bullet. Imagining that language from George Bush, and meaning it, would be to imagine the unimaginable from a man who likely doesn't even understand it.

What is imaginable in the year ahead and thenceforth is a world without George Bush and his neocon extremist administration leading the nation on a path to hell. Those wanting justice demand the Congress act to impeach him and the vice-president and then remove them from office allowing for the chance charges will be brought against them both and others in their administration so they'll be held to account in the International Criminal Court (ICC) in the Hague or another judicial venue where officials may be prosecuted for war crimes, crimes against humanity and genocide. They committed them all and more against the people of Iraq, at least two of the three in Afghanistan, and a legion of others against the people of the United States and its Constitution.

It'll only happen if it comes from the bottom up, from enough public outrage bubbling to the surface vocally demanding justice be served and the rule of law restored and again respected. No one at any level in public or private life should ever be allowed to get away with the kind of reckless and gross criminality that's been rampant and out-of-control in Washington for the past six years under Republican neocon rule.

It's long past time to put an end to this criminal class of rogues in charge, running the country like their private fiefdom in a culture of galling corruption and scorn for the law that exceeds anything here ever preceding their tenure. Already there's a groundswell of growing outrage slowly building in size and intensity. As the new year approaches, it remains to be seen if a combination of those people of conscience can unite with enough others in the body politic to give us all what everyone should want and demand - an end to wars, a renewed respect for the law, accountability for those in government who violated it, and a commitment to serve the public interest with equity and equal justice for all in the true spirit of a real democracy restored from the grave and once again respected and cherished.

Stephen Lendman lives in Chicago and can be reached at Also visit his blog site at
posted by SteveLendman @ 6:51 AM

Why Condemning Israel and the Zionist Lobby is so Important

Dec 28, 2006

By James Petras

“It’s no great secret why the Jewish agencies continue to trumpet support for the discredited policies of this failed administration. They see defense of Israel as their number-one goal, trumping all other items on the agenda. That single-mindedness binds them ever closer to a White House that has made combating Islamic terrorism its signature campaign. The campaign’s effects on the world have been catastrophic. But that is no concern of the Jewish agencies.” December 8, 2006 statement by JJ Goldberg, editor of Forward (the leading Jewish weekly in the United States)

Many Jewish writers, including those who are somewhat critical of Israel, have raised pointed questions about our critique of the Zionist power configuration (ZPC) in the United States and what they wrongly claim are our singular harsh critique of the state of Israel. Some of these accusers claim to see signs of ‘latent anti-Semitism’, others, of a more ‘leftist’ coloration, deny the influential role of the ZPC arguing that US foreign policy is a product of ‘geo-politics or the interests of big oil. With the recent publication of several widely circulated texts, highly critical of the power of the Zionist ‘lobby’, several liberal pro-Israel publicists generously conceded that it is a topic that should be debated (and not automatically stigmatized and dismissed) and perhaps be ‘taken into account.’

ZPC Deniers: Phony Arguments for Fake Claims

The main claims of ZPC deniers take several tacks: Some claim that the ZPC is just ‘another lobby’ like the Chamber of Commerce, the Sierra Club or the Society for the Protection of Goldfish. Others claim that by focusing mainly on Israel and by inference the ‘Lobby’, the critics of Zionism ignore the equally violent abuses of rulers, regimes and states elsewhere. This ‘exclusive focus’ on Israel, the deniers of ZPC argue, reveals a latent or overt anti-Semitism. They propose that human rights advocates condemn all human rights abusers everywhere (at the same time and with the same emphasis?). Others still argue that Israel is a democracy – at least outside of the Occupied Territories (OT) – and therefore is not as condemnable as other human rights violators and should be ‘credited’ for its civic virtues along with its human rights failings. Finally others still claim that, because of the Holocaust and ‘History-of-Two-Thousand-Years-of-Persecution’, criticism of Jewish-funded and led pro-Israel lobbies should be handled with great prudence, making it clear that one criticizes only specific abuses, investigates all charges – especially those from Arab/Palestinian/United Nations/European/Human Rights sources -- and recognizes that Israeli public opinion, the press and even the Courts or sectors of them may also be critical of regime policies.

These objections to treating the Israeli-Palestinian-Arab conflict and the activities of Zionist Lobbies as central to peace and war serve to dilute, dissipate and deflate criticism and organized political activity directed at the ZPC and its directors in Israel.

The response of the critics of Israel and the ZPC to these attacks has been weak at best and cowardly at worst. Some critics have responded that their criticism is only directed toward a specific policy or leader, or to Israeli policies in the OT and that they recognize Israel is a democracy, that it requires secure borders, and that it is in the interests of the Israeli ‘people’ to lower their security barriers. Others argue that their criticism is directed at securing Israeli interests, influencing the Zionist Lobby or to opening a debate. They claim that the views of ‘most’ Jews’ in the US are not represented by the 52 organizations that make up the Presidents of the Major Jewish Organizations of America, or the thousands of PACs, local federations, professional associations and weekly publications which speak with one voice as unconditional supporters of every twist and turn in the policy of the Zionist State.

There are numerous similar lines of criticism, which basically avoid the fundamental issues raised by the Israeli state and the ZPC, and which we are obliged to address. The reason that criticism and action directed against Israel and the ZPC is of central importance today in any discussion of US foreign policy, especially (but not exclusively) of Middle East policy and US domestic policymaking is that they play a decisive role and have a world-historic impact on the present and future of world peace and social justice. We turn now to examine the ‘big questions’ facing Americans as a result of the power of Israel in the United States.

The Big Questions Raised by the ZPC and Israeli Power in the USA:

War or Peace:

Critical study of the lead up to the US invasion of Iraq, US involvement in providing arms to Israel (cluster bombs, two-ton bunker buster bombs and satellite surveillance intelligence) prior to, during and after Israel’s abortive invasion of Lebanon, Washington’s backing of the starvation blockade of the Palestinian people and the White House and Congress’ demands for sanctions and war against Iran are directly linked to Israeli state policy and its Zionist policy-makers in the Executive branch and US Congress. One needs to look no further than the documents, testimony and reports of AIPAC and the Presidents of the Major American Jewish Organizations to observe their claims of success in authoring legislation, providing (falsified) intelligence, engaging in espionage (AIPAC) and turning documents over to Israeli intelligence (now dubbed ‘free speech’ by liberal Zionists).

If, as the overwhelming evidence indicates, the ZPC played a major role in the major wars of our time, wars capable of igniting new armed conflicts, then it ill behooves us to dilute the role of the Zionist/Jewish Lobby in promoting future US wars. Given Israel’s militarist-theocratic approach to territorial aggrandizement and its announced plans for future wars with Iran and Syria, and given the fact that the ZPC acts as an unquestioning and highly disciplined transmission belt for the Israeli state, then US citizens opposed to present and future US engagement in Middle East wars must confront the ZPC and its Israeli mentors. Moreover, given the extended links among the Islamic nations, the Israel/ZPC proposed ‘new wars’ with Iran will result in Global wars. Hence what is at stake in confronting the ZPC are questions which go beyond the Israeli-Palestine peace process, or even regional Middle East conflicts: it involves the big question of World Peace or War.

Democracy or Authoritarianism

Without the bluster and public hearings of former Senator Joseph McCarthy, the Jewish Lobby has systematically undermined the principal pillars of our fragile democracy. While the US Congress, media, academics, retired military and public figures are free to criticize the President, any criticism of Israel, much less the Jewish Lobby, is met with vicious attacks in all the op-ed pages of major newspapers by an army of pro-Israeli ‘expert’ propagandists, demands for firings, purges and expulsions of the critics from their positions or denial of promotions or new appointments. In the face of any prominent critic calling into question the Lobby’s role in shaping US policy to suit Israel’s interests, the entire apparatus (from local Jewish federations, AIPAC, the Presidents of Major American Jewish Organizations etc) go into action – smearing, insulting and stigmatizing the critics as ‘anti-Semites’. By denying free speech and public debate through campaigns of calumny and real and threatened repercussions the Jewish Lobby has denied Americans one of their more basic freedoms and constitutional rights.

The massive, sustained and well-financed hate campaigns directed at any congressional candidate critical of Israel effectively eliminates free speech among the political elite. The overwhelming influence of wealthy Jewish contributors to both parties – but especially the Democrats – results in the effective screening out of any candidate who might question any part of the Lobby’s Israel agenda. The takeover of Democratic campaign finance by two ultra-Zionist zealots, Senator Charles Schumer and Israeli-American Congressman Rahm Emanuel ensured that every candidate was totally subordinated to the Lobby’s unconditional support of Israel. The result is that there is no Congressional debate, let alone investigation, over the key role of prominent Zionists in the Pentagon involved in fabricating reports on Iraq’s ‘weapons of mass destruction’, and in designing and executing the war and the disastrous occupation policy. The Lobby’s ideologues posing as Middle East ‘experts’ dominate the op-ed and editorial pages of all the major newspapers (Wall Street Journal, New York Times, Los Angeles Times, Washington Post). In their pose as Middle East experts, they propagandize the Israeli line on the major television networks (CBS, NBC,ABC, Fox, and CNN) and their radio affiliates. The Lobby has played a prominent role in supporting and implementing highly repressive legislation like the Patriot Act and the Military Commission Act as well as modifying anti-corruption legislation to allow the Lobby to finance congressional ‘educational’ junkets to Israel. The head of Homeland Security with its over 150,000 functionaries and multi-billion dollar budget is none other than Zionist fanatic Michael Chertoff, head persecutor of Islamic charity organizations, Palestinian relief organizations and other ethnic Middle Eastern or Moslem constituencies in the US, which potentially might challenge the Lobby’s pro-Israel agenda.

The biggest threat to democracy in its fullest sense of the word – the right to debate, to elect, to legislate free of coercion – is found in the organized efforts of the Zionist lobby, to repress public debate, control candidate selection and campaigning, direct repressive legislation and security agencies against electoral constituencies opposing the Lobby’s agenda for Israel. No other lobby or political action group has as much sustained and direct influence over the political process – including the media, congressional debate and voting, candidate selection and financing of congressional allocation of foreign aid and Middle East agendas as the organized Zionist Power Configuration (ZPC) and its indirect spokespeople heading key Congressional positions. A first step toward reversing the erosion of our democratic freedoms is recognizing and publicly exposing the ZPC’s nefarious organizational and financial activities and moving forward toward neutralizing their efforts.

Their Foreign Policy or Ours?

Intimately and directly related to the loss of democratic freedoms and a direct consequence of the Jewish lobby’s influence over the political process is the making of US Middle East policy and who benefits from it. The entire political effort of the Lobby (its spending, ethnic baiting, censorship and travel junkets) is directed toward controlling US foreign policy and, through US power, to influence the policy of US allies, clients and adversaries in Europe, Asia and the Middle East. The Lobby’s systematic curtailment of our democratic freedoms is intimately related to our own inability to influence our nation’s foreign policy. Our majoritarian position against the Iraq War, the repudiation of the main executioner of the War (the White House) and our horror in the face of the Israeli invasion of Lebanon and destruction of Gaza are totally neutralized by Zionist influence over Congressional and White House policymakers. The recently victorious Congressional Democrats repudiate their electorate and follow the advice and dictates of the pro-Zionist leadership (Nancy Pelosi, Harry Reid, Rahm Emmanuel, Stephan Israel and others) by backing an escalation of troops and an increase in military spending for the war in Iraq. Bush follows the war policy against Iran proposed by the zealous Zionist fanatics in the American Enterprise Institute, repudiating the diplomatic proposals of the bi-partisan Baker Commission. Congress quadruples US arms stored in Israel (supposedly for dual use) in the aftermath of Israel’s bombing of Southern Lebanon with one million anti-personnel bomblets from cluster bombs in direct defiance of US electoral opinion. While hundreds of millions of undernourished women and children suffer and die in Africa, Latin America and Asia, the Lobby ensures that over half of US foreign aid goes to Israeli Jews with per capita incomes of over $22,000 USD.

No other organized political action group or public relations firm acting on behalf of the Cuban and Venezuelan exiles or Arab, African, Chinese or European Union states comes remotely near the influence of the Zionist lobby in shaping US policy to serve the interest of Israel.

While the Lobby speaks for less than 2% of the US electorate, its influence on foreign policy far exceeds the great majority who have neither comparable organizational nor financial muscle to impose their views.

Never in the history of the US republic or empire has a powerful but tiny minority been able to wield so much influence in using out nation’s military and economic power and diplomatic arm-twisting in the service of a foreign government. Neither the Francophiles during the American Revolution, the Anglophiles in the Civil War and the German Bund in the run-up to World War Two, nor the (anti-China) Nationalist Taiwan Lobby possessed the organizational power and sustained political influence that the ZPC has on US foreign and domestic policy at the service of the State of Israel.

Confronting the Lobby Matters

The question of the power of the Lobby over US policies of war or peace, authoritarianism or democracy and over who defines the interests served by US foreign policy obviously go far beyond the politics of the Middle East, the Israeli-colonial land grabs in Palestine and even the savage occupation of Iraq. The playing out of Zionist influence over the greatest military power in the world, with the most far-reaching set of client states, military bases, deadly weapons and decisive voice in international bodies (IMF/World Bank/United Nations Security Council) means that the Lobby has a means to leverage its reach in most regions of the world. This leverage power extends over a range of issues, from defending the fortunes of murderous Russian-Jewish gangster oligarchs, to bludgeoning European allies of the US to complicity with Israel’s ethnic cleansing of Palestine.

The ZPC represents a basic threat to our existence as a sovereign state and our ability to influence whom we elect and what agendas and interests our representatives will pursue. Even worse, by serving Israeli interests, we are becoming complicit with a State whose Supreme Court legalizes political assassinations across national boundaries, torture, systematic violations of international law and a regime which repudiates United Nations resolutions and unilaterally invades and bombs its neighbors and practices military colonist expansionism. In a word Israel resonates and feeds into the most retrograde tendencies and brutal practices of contemporary American politics. In this sense the Lobby through its media, Congressional influence and think tanks is creating an Israeli look-alike. Like Israel, the US has established its own Pentagon assassination teams; like Israel, it invades and colonizes Iraq; like Israel, it violates and rejects any constitutional or international legal restraints and systematically tortures accused but untried prisoners.

Because of these fundamental considerations, we cannot oblige our Jewish ‘progressive’ colleagues and compatriots and refrain from confronting the Zionist Lobby with force and urgency. Too many of our freedoms are at stake; too little time is left before they succeed in securing a greater military escalation; too little of our sovereignty remains in the face of the concerted effort by the Lobby and its Middle Eastern ‘expert-ideologues’ to push and shove us into a new and more devastating war with Iran at the behest of Israel’s pursuit of Middle East dominance.

No other country, abuser or not, of human rights, with or without electoral systems, has the influence over our domestic and foreign policy as does the state of Israel. No other Lobby has the kind of financial power and organizational reach as the Jewish Lobby in eroding our domestic political freedoms or our war-making powers. For those reasons alone, it stands to reason, that we American have a necessity to put our fight against Israel and its Lobby at the very top of our political agenda. It is not because Israel has the worst human rights agenda in the world – other states have even worst democratic credentials – but because of its role in promoting its US supporters to degrade our democratic principles, robbing us of our freedom to debate and our sovereignty to decide our own interests. The Lobby puts the military and budgetary resources of the Empire at the service of Greater Israel – and that results in the worst human rights in the world.

Democratic, just and peaceful responses to the Big Questions that face Americans, Europeans, Muslims, Jews and other peoples of the world passes through the defeat and dismantlement of the Israeli-directed Zionist Power Configuration in America. Nothing less will allow us to engage in an open debate on the alternatives to repression at home and imperialism abroad.

James Petras, a former Professor of Sociology at Binghamton University, New York, owns a 50-year membership in the class struggle, is an adviser to the landless and jobless in Brazil and Argentina, and is co-author of Globalization Unmasked (Zed Books). His latest book is "The Power of Israel in the United States" (Clarity Press, 2006). He can be reached at:

Joseph Stiglitz: Will the dam break in 2007?

The world survived 2006 without a major economic catastrophe but the year produced warning signs for the future of the global economy.

December 27, 2006 12:30 PM

Joseph Stiglitz

The world survived 2006 without a major economic catastrophe, despite sky-high oil prices and a Middle East spiralling out of control. But the year produced abundant lessons for the global economy, as well as warning signs concerning its future performance.

Unsurprisingly, 2006 brought another resounding rejection of fundamentalist neo-liberal policies, this time by voters in Nicaragua and Ecuador. Meanwhile, in neighbouring Venezuela, Hugo Chávez won an overwhelming electoral: at least he had brought some education and healthcare to the poor barrios, which previously had received little of the benefits of the country's enormous oil wealth.

Perhaps most importantly for the world, voters in the United States gave a vote of no confidence to President George W Bush, who will now be held in check by a Democratic Congress.

When Bush assumed the presidency in 2001, many hoped that he would govern competently from the centre. More pessimistic critics consoled themselves by questioning how much harm a president can do in a few years. We now know the answer: a great deal.

Never has America's standing in the world's eyes been lower. Basic values that Americans regard as central to their identity have been subverted. The unthinkable has occurred: an American president defending the use of torture, using technicalities in interpreting the Geneva Conventions and ignoring the Convention on Torture, which forbids it under any circumstances. Likewise, whereas Bush was hailed as the first "MBA president," corruption and incompetence have reigned under his administration, from the botched response to Hurricane Katrina to its conduct of the wars in Afghanistan and Iraq.

In fact, we should be careful not to read too much into the 2006 vote: Americans do not like being on the losing side of any war. It was this failure, and the quagmire into which America had once again so confidently stepped, that led voters to reject Bush. But the Middle East chaos wrought by the Bush years also represents a central risk to the global economy. Since the Iraq war began in the 2003, oil output from the Middle East, the world's lowest-cost producer, has not grown as expected to meet rising world demand. Although most forecasts suggest that oil prices will remain at or slightly below their current level, this is largely due to a perceived moderation of growth in demand, led by a slowing US economy.

Of course, a slowing US economy constitutes another major global risk. At the root of America's economic problem are measures adopted early in Bush's first term. In particular, the administration pushed through a tax cut that largely failed to stimulate the economy, because it was designed to benefit mainly the wealthiest taxpayers. The burden of stimulation was placed on the Federal Reserve Board, which lowered interest rates to unprecedented levels. While cheap money had little impact on business investment, it fuelled a real estate bubble, which is now bursting, jeopardising households that borrowed against rising home values to sustain consumption.

This economic strategy was not sustainable. Household savings became negative for the first time since the Great Depression, with the country borrowing $3 billion a day from foreigners. But households could continue to take money out of their houses only as long as prices continued to rise and interest rates remained low. Thus, higher interest rates and falling house prices does not bode well for the American economy. Indeed, according to some estimates, roughly 80% of the increase in employment and almost two-thirds of the increase in GDP in recent years stemmed directly or indirectly from real estate.

Making matters worse, unrestrained government spending further buoyed the economy during the Bush years, with fiscal deficits reaching new heights, making it difficult for the government to step in now to shore up economic growth as households curtail consumption. Indeed, many Democrats, having campaigned on a promise to return to fiscal sanity, are likely to demand a reduction in the deficit, which would further dampen growth.

Meanwhile, persistent global imbalances will continue to produce anxiety, especially for those whose lives depend on exchange rates. Though Bush has long sought to blame others, it is clear that America's unbridled consumption and inability to live within its means is the major cause of these imbalances. Unless that changes, global imbalances will continue to be a source of global instability, regardless of what China or Europe do.

In light of all of these uncertainties, the mystery is how risk premiums can remain as low as they are. Especially with the dramatic reduction in the growth of global liquidity as central banks have successively raised interest rates, the prospect of risk premiums returning to more normal levels is itself one of the major risks the world faces today.

© Project Syndicate, 2006

Joseph Stiglitz is University Professor at Columbia University. In 2001, he was awarded the Nobel Prize in economics.

Joseph Stiglitz's work for CIF is copyright Project Syndicate/Institute for Human Sciences, 2006.

Israel Survey Results Shock

Thu, Dec 28, 2006
Home News National

By TJ Reporter - Thursday 28th of December 2006

Nearly 70 percent of respondents to a survey conducted by a leading Christian publication believe in disinvestment from companies whose products are used by the Israeli government in the territories.

The poll of more than 2,800 people, conducted on The Tablet website, pointed to the widespread existence of anti-Israel sentiment among respondents and a suspicion of the Jewish State's actions.
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Despite a reduction in terror attacks since the creation of the security fence, nearly 80 per cent felt the security fence was not needed to protect the population of Israel from suicide bombers and nearly as many advocated that Churches campaign for its dismantling.

Three quarters of people who answered the survey agreed that the churches should call for the removal ofJewish West Bank settlements and that the institution should support Palestinian calls for an "independent homeland within the borders that existed before the 1967 Arab-Israel war".

On the other hand, just 21.2 percent agreed that the churches should acceptIsrael "is engaged in a struggle for its survival and support its efforts toroot out its enemies".

And perhaps most worryingly, only 57.3 percent agreed that the Church should appeal for Palestinians to renounce violence and recognise Israel's right to exist.

Respondents to the survey included Christians from several denominations, Muslims and atheists, while 10 percent were Jewish.

Claiming the results revealed a "worrying trend", Alan Aziz, Executive Director of the Zionist Federation, told TJ:"These statistics are very distressing and it is sad that people don't understand that what the situation in Israel needs more than anything is positive dialogue and not retribution".

ZF President Eric Moonman said he was "disturbed that a magazine like The Tablet should perpetuate a survey which appears to be riddled with prejudice".

The report coincided with theArchbishop of Canterbury's pilgrimage to the Holy Land along with other church leaders.

Speaking to the BBC Radio 4's Today programme last weekend,he said:"It is undoubtedly a fact that suicide bombing attacks have gone down since the barrier was erected but the human cost that we have seen has to raise the question: what alternative is there now? How does the long-term security implication of the barrier work out?"

Dollar Slides Most In A Week Versus Euro

Europe will not escape the impact of dollar depreciation
Dollar May Drop Versus Yen Before U.S. Consumer, Housing Data
Dollar Slides; U.A.E. Says Selling U.S. Currency, Buying Euros

By Kabir Chibber

Dec. 27 (Bloomberg) -- The dollar dropped the most in a week against the euro as the United Arab Emirates said it will convert some of its reserves of U.S. assets into the European currency.

The dollar also had its biggest decline versus the yen this month before a U.S. report that may show consumer confidence fell for a third straight month, fueling bets the Federal Reserve will lower interest rates next year. The U.S. currency has slipped 9.9 percent versus the euro this year, its first slide since 2004.

``The U.A.E.'s decision to relocate its reserves is part of a theme that means that U.S. dollar holdings in global currency reserves are decreasing,'' said Hans Guenter Redeker, head of currency strategy in London at BNP Paribas SA. ``The dollar is going to lose support as we see Fed rate cuts next year.''

The dollar fell to 118.63 yen at 7:17 a.m. in New York, from 119.15 late yesterday. The currency slid to $1.3158 versus the euro, from $1.3098. The euro traded at 156.09 yen, from 156.04, after touching a record 156.43 on Dec. 21. The dollar has risen 0.8 percent against the Japanese currency this year.

The U.A.E. will switch 8 percent of its reserves from dollars into euros before September, Sultan Bin Nasser al-Suwaidi said in a Dec. 24 interview in Abu Dhabi. The U.A.E. has started ``in a limited way'' to sell its dollar reserves, he said.

The Gulf state is among oil exporters including Iran, Venezuela and Indonesia that are looking to shift their currency reserves into euros or price their oil products in the 12-nation currency.

U.S. Slowdown

The U.S. Conference Board's index of sentiment due tomorrow will probably drop to 102 this month from 102.9 in November, according to the median forecast of 48 economists surveyed by Bloomberg News. MasterCard Advisors also said holiday retail sales this year grew at a slower pace this year than in 2005.

``The data are likely to add to an economic slowdown scenario that may prompt a rate cut in the first quarter,'' said Masashi Kurabe, a currency manager in Tokyo at Bank of Tokyo- Mitsubishi UFJ Ltd., a unit of Japan's largest lender by assets. ``The bias is to sell the dollar.''

The Fed has left borrowing costs at 5.25 percent for the past four policy meetings, after a two-year cycle of rate increases. The European Central Bank has raised rates six times in a year, to 3.5 percent. The Bank of Japan lifted its benchmark in July for the first time in almost six years, to 0.25 percent.

Interest-rate futures show traders see a 28 percent chance the Fed will lower its overnight target lending rate between banks by a quarter point to 5 percent in March, up from a 17 percent likelihood a week ago.

Japanese Rates

The yen's gains accelerated against the dollar after a Jiji Press report suggested the BOJ will push rates higher at its January meeting because of better-than-expected data yesterday.

Japan's government bonds fell the most in three weeks after the Jiji article. Reports yesterday showed an unexpected fall in the unemployment rate and a smaller-than-expected decline in household spending.

``The Jiji report is spurring yen buying,'' said Nobuo Ibaraki, deputy general manager of foreign exchange at Nomura Trust & Banking Co. Ltd., a unit of Japan's largest brokerage. ``Expectations for an interest-rate hike had receded. So the Jiji report will have a big impact on the yen.'' Japan's currency may strengthen to 118 per dollar today, he said.

Jiji correctly predicted 10 days before the BOJ's meeting last week that policy makers would keep rates unchanged. The central bank will consider lifting the benchmark to 0.5 percent from 0.25 percent when it announces its next decision on Jan. 18, Jiji Press reported, citing unnamed sources.

Retail Sales

Governor Toshihiko Fukui told business leaders on Dec. 25 that the central bank will adjust policy if prices and the economy perform in line with forecasts.

Gains in the yen may be limited after a government report showed retail sales rose less than expected last month.

The currency is set for a second straight annual decline as interest rates in Japan, which are the lowest among major economies, prompt investors to seek higher returns offshore.

Traders have still cut bets that the Japanese central bank will raise borrowing costs in January. The household spending report showed an 11th month of declines and gains in consumer prices failed to beat forecasts.

``It's hard to find a reason to buy the yen,'' said Stephen Halmarick, co-head of economic and market analysis at Citigroup Australia in Sydney. ``This is yet another set of disappointing numbers out of Japan.''

The dollar may extend declines after MasterCard Advisors said retail sales in the holiday season rose 3 percent, a slower pace than last year's 5.2 percent increase, as a cooling housing market and higher energy costs cut into spending.

The National Association of Manufacturers in the U.S. predicts slower economic growth will prompt the Fed to lower rates by a half-percentage point by the middle of 2007, the Wall Street Journal reported yesterday on its Web site, citing the Associated Press.

To contact the reporters on this story: Kabir Chibber in London at .

Last Updated: December 27, 2006 07:23 EST