Interesting history on the rise of the Israeli far-Right

March 14, 2007

In this posting, we're going to delve into the intertwined, and quite convoluted scandals involving, among other things:

• Alleged bribes to Ariel Sharon by Martin Schlaff, an Austrian industrialist, that were used to pay back illegal campaign contributions Sharon used in 1999.
• The scandalous collapse of Refco, the commodity futures giant, and the related collapse of BAWAG, one of Austria's largest banks (Cerberus recently bought BAWAG, BTW).
• Martin Schlaff's investment in Yasser Arafat's "Oasis Casino", and that casino was tied into by the BAWAG/Refco scandals AND Ariel Sharon's right-hand-man Dov Weissman.
• Martin Schlaff's and George "Macaca" Allen's involvement with the "Xybernaut" pump-and-dump stock fraud.
• Martin Schlaff's apparent financier of far-Right Israeli politician Avigdor Lieberman
• and finally, the potential for a crisis in Israel's democracy due to endemic corruption, and the chilling figures that could take advantage of such a crisis.

Get to know your BAWAG
So, let's get started with a look at the BAWAG scandal that rocked Austria's politics:

Austrian Bank Scandal: When Socialists Play With Money
From the desk of Chris Gillibrand on Tue, 2006-04-04 22:53

A major banking scandal is rocking the Austrian political elites – left and right. A bank owned by the Socialist trade union (which is close to the Socialist Party SPÖ, currently in opposition) loses billions in shady hedge deals while the union strike fund evaporates in the Caribbean and the bank gets implicated in a corruption case in Israel. Meanwhile the bank is financed by the European Investment Bank (EIB), and an Austrian Finance Ministry official (married to the Socialist ex-chief of the bank) ignores a crucial report and is appointed to the Executive Board of the European Central Bank (ECB). The Conservative Finance Minister claims to know nothing – after just having sold the Government-owned Post Office Savings Bank (PSK) to the socialist bank. Welcome to Austria, presently presiding the European Union council of ministers.

Let me introduce!

The Bank für Arbeit und Wirtschaft AG, BAWAG or in English, ‘Bank for Employment and Commerce’ was founded in 1922 by the Socialist Chancellor Karl Renner. Up until now the majority stakeholder in the Bank has been the Austrian Trades Union Federation, the ÖGB. With the repurchase of the shares of the Bayerische Landesbank in 2004, it is now wholly-owned by the ÖGB. The bank’s original intent, from which it has strayed far, was to extend cheap credits to the needy.

Almost all of the members of the BAWAG Supervisory Board are fully paid up socialists and trade unionists. The two exceptions are Albert Hochleitner, the ex-CEO of Siemens Austria, and Leo Wallner, the chairman of the state-owned monopoly, Casinos Austria. Günter Weninger, chairman of the Supervisory Board, who has now been forced to resign, also has a day job as the Finance Chief of the ÖGB. He started professional life as an electrician which has given rise to suggestions in the Austrian press that he might have to return to his original trade. The Managing Board has eight members, four of whom have now resigned. The CEO, Johann Zwettler had already resigned in October 2005. He and his predecessor, Helmut Elsner, are now under police investigation.

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Make of note of Casinos Austria's CEO sitting on BAWAG's board, as it will figure in heavily once we get to Arafat's "Oasis Casino".

Continuing...

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BAWAG opened up operations in the Caribbean in 1995 under the direction of Wolfgang Flöttl, the son of the then CEO, Walter Flöttl. The idea was that these investments should hedge risk. When it was made public that the son received $2 billion from BAWAG without the father seeking the formal approval of the Supervisory Board, the Caribbean business got closed after a year. The extent of Supervisory Board knowledge is still questioned.

After the departure of Flöttl Senior, the business was then reopened by Flöttl’s successor, Helmut Elsner, with Supervisory Board approval after only one year. Elsner was already known as Flöttl’s "man for big business." Living well, he enjoyed a service penthouse provided on the top of the BAWAG offices in Vienna as had his predecessor, Flöttl. Also provided with a penthouse was the head of the socialist trade union ÖGB, Fritz Verzetnitsch.

This time around, Flöttl Junior invested in high-risk funds and the business clocked up a massive loss of almost €1 billion which threatened the solvency of BAWAG in 2000. The Bank was only saved by a guarantee from the ÖGB (trade union dues amount to 1% of members salaries, so they have accumulated quite a lot of money to play with). The losses themselves were systematically covered up in offshore accounts in the Caribbean and accounts at a US futures broker called REFCO. The union strike fund went walkabouts as collateral in the Caribbean and disappeared.
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There's much more interesting info on BAWAG in that article, so be sure to check it out.

BAWAG, Refco, Martin Schlaff, PIPEs, and George Allen's Xybernaut scandal
Before we move on to look at how BAWAG and Refco were used for money-laundering by Yasser Arafat(with a great deal of intertwined involved by Ariel Sharon's clique), we should note that BAWAG was sold to Cerberus back in December. One of its new board members includes Former Treasury Secretary John Snow. The purchase of a financial behemoth like BAWAG isn't the only major purchase Cerberus has made recently. In addition to the Bank Leumi takeover, Cerberus acquired a majority stake in GMAC last year, and is reportedly eyeing Chrysler.

These kinds of mega deals pretty amazing when you consider that Cerberus, starting with $10 million in capital in 1992 started off investing the high-risk corporate debt market, moving into outright acquisitions and management of small distressed companies. The purchase of the ailing BAWAG by Cerberus is also somewhat ironic given that BAWAG, in coordination with Refco, was a significant player in the PIPE (Private Investment in Public Equity) market. The PIPE market often act as a source of last resort role for small-cap companies in need of a capital infusion.

And, it turns out, one of the figures involved in with the BAWAG/Refco dealings in the PIPE Market, is the Austrian billionaire Martin Schlaff that will come up quite a bit in Ariel Sharon's scandals.

One of Schlaff's companies used in the PIPE market was Balmore, a British Virgin-Islands-based hedge fund. But Balmore has some other interesting history, as an investor in Xybernaut, a tech company that had George Allen on its board from form August 1998-Dec 2000. Like just about every corporation we're looking at here, Xybernaut's managers, "improperly used substantial company funds for personal expenses" and faces multiple class-action lawsuits. For more Balmore's role in Xybernaut, let's take at look at this Sept 2006 article from the American Prospect:

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Starting in 2000, however, Xybernaut increasingly turned to a newly popular financial instrument to keep growing -- and going: so-called PIPE deals, short for "private investments in public equity." In such deals, private investors are granted warrants or convertible debentures for stock at below-market rates in exchange for financing. All the investor has to do to make money is sell the stock. But some sleazy PIPE financiers go a step further by shorting the stock of the companies they finance, driving down share prices, diluting the shares of other investors, and even -- in a particularly egregious form of illegal short selling known as the "death spiral finance scheme" -- driving the company into bankruptcy through aggressive rounds of financing and short selling. Between March and November 2000, Xybernaut went from 1 percent to more than 15 percent owned by institutional investors who acquired their stock in the company through private deals, according to media reports.

"It really rode the Internet bubble, and it was real hot stuff," recalls Gregory Sichenzia, of Sichenzia Ross Friedman Ference LLP, a law firm that specializes in securities and PIPE transactions, which he described as an increasingly traditional financing mechanism. "It’s not the fault of the financing that the company collapsed."

Several firms that financed Xybernaut during Allen’s tenure on its board, however, have since been linked to a complicated international network of troubled financers and brokers. For example, in April 1998, Balmore Funds SA and Liechtenstein-based Austost Anstalt Schaan signed a private placement deal with Xybernaut granting the firm up to $11 million. One of their registrations of stock for sale came April 4, 2000 -- shortly after the March price peak and a period of unusually high volume trading, which was followed by yet another "going concern letter," in mid-March, and a decline in the stock price. The signatory for Austost Anstalt Schaan was Thomas Hackl, who was from 1991 to 2002 head of treasury at BAWAG, the fourth largest Austrian bank (itself somewhat controversial for losing millions in the financing of Yasir Arafat’s casino outside Jericho). TheStreet.com has linked BAWAG to Austost and also to the hedge fund Alpha Capital Aktiengesellschaft, which invested in Xybernaut in 2001. Last year Hackl became a major figure in the collapse of Wall Street brokerage the Refco Corp., where he was executive vice president, in an accounting scandal that wiped out more than $1 billion in shareholder value.
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Despite the plethora of dubious characters surrounding Xybernaut, the true identity of many of the company’s financiers remains obscure. In the company’s heyday, its officers claimed to have the support of major Wall Street firms, but that was more hype. What SEC records show instead is that during the company’s 16-year history, it relied heavily on offshore firms for financing. And during Allen’s board tenure, it received the vast bulk of its money from outfits based in the most notorious havens for tax cheats and money launderers: the Turks and Caicos, the Cayman Islands, the British Virgin Islands, the Bahamas, Liechtenstein, and Israel.
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So that's the interesting set up connections between BAWAG, Refco, Martin Schlaff, and George Allen. And if you're interesting a very long read on BAWAG, the Refco collapse, how this all relates to the Enron scandal, and the dangers associated with the unregulated explosion in the use of derivatives and hedge fund go here and here.

An Oasis of naughtiness
Now let's move on and take closer look at the Oasis Casino in Jericho and it's complicated dealings with the BAWAG, Refco, and figures close to Ariel Sharon with this June, 2006 Bloomberg article:

Refco Bank Hid $1 Billion Loss From Hedge Funds, Arafat Casino

June 22 (Bloomberg) -- At the Israeli army checkpoint on the edge of Jericho, gamblers from Jerusalem and Tel Aviv streamed into the West Bank town to wager on blackjack, play poker and face off with slot machines at the Palestinian-run Oasis Hotel Casino Resort. The casino was open 24 hours a day, seven days a week.

The party that started in September 1998 ended when a Palestinian uprising scared away customers in October 2000, forcing the casino to close within a month.

The Israeli shells that punched holes in the Oasis's stucco- and-black-glass facade also struck a financial blow to one of the casino's investors, Vienna-based Bawag PSK Bank -- the same bank that backed Refco Inc., the New York-based brokerage that collapsed last October after belatedly reporting $430 million in hidden losses.

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Drexel Burham Lambert, BTW, is where Cerberus found Stephen Feinberg got his start in the 80's. Skipping down in this lengthy and excellent article, we'll see how Martin Schlaff helped bring together BAWAG and Yasser Arafat in the Casino deal. Keep in mind that, as we're going to see, Schlaff is also a primary figure in the Ariel Sharon bribery scandal ...

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Risky Ventures
Following the probe, Walter Flottl retired in 1995, handing the bank's leadership to Elsner. The new CEO expanded Bawag's relationship with Refco and started other risky ventures.

Elsner found such an investment in the Palestinian territories. Arafat, as president of the Palestinian Authority, was on the hunt for ways to develop the local economy after the 1993 Oslo Accord created the framework for Palestinian autonomy in the West Bank and Gaza, former Finance Minister Salam Fayyad says.

Austrian investor Martin Schlaff helped bring Bawag together with Arafat's advisers to build a casino in Jericho, according to Palestinian Authority records that list Schlaff as a board member and officer of the casino.

Schlaff was one of Bawag's biggest customers. Schlaff declined to answer written questions submitted to Michael Fink, his spokesman in Vienna.

On Dec. 17, 1996, Palestine Commercial Services Co., an investment company controlled by Arafat, signed an agreement with a group of Austrian investors, including Bawag, according to a report on the investment's history and financial value commissioned by the Palestinian Authority.

Oasis

The casino would be owned by CAP Holding AG, a Liechtenstein- based company whose shareholders were Bawag, with 11 percent; Vienna-based Casinos Austria International, with 16.5 percent; Palestine Commercial Services, with 23.1 percent; and a company called MS Privatstiftung -- controlled by Schlaff -- with 49.5 percent, according to Palestinian Authority and Casinos Austria documents.

Casinos Austria ran the Oasis, along with 62 other casinos in 17 countries and nine gambling ships.

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Seven months later, on Sept. 28, violence erupted in Jerusalem as Ariel Sharon, then head of Israel's opposition Likud Party, visited the plaza that contains al-Aqsa Mosque, the third- holiest site in Islam, and the Western Wall, the most sacred location in Judaism.

Casino Closed

An uprising spread throughout the West Bank and Gaza, and in the following month, the casino closed. The hotel stayed open, with managers herding guests, including women and children, into the basement for hours at a time during gun battles.

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With no customers at the gaming tables, the value of the casino plummeted. Still, Bawag engineered a transaction that -- for accounting purposes anyway -- transformed a stricken investment into one worth 120 million euros, Bawag's nonprosecution agreement says.

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The article goes on to provide further details on the financial trickery employed to hide the BAWAG's losses in Oasis Casino.

Sharon's campaign finance fun
Now we're going to move on, and take a look at Ariel Sharon's campaign loan scandal with this May 2004 Jpost article:

Sunday, May 9, 2004
Weisglass pushed Sharon to reopen Jericho casino
Yaakov Katz The Jerusalem Post May 6, 2004

During negotiations with the Labor Party in October 2000 over the
possibility of the Likud joining a national unity government, Ariel Sharon
was asked by attorney Dov Weisglass, today his bureau chief, to speak with then premier Ehud Barak over the possibility of reopening the casino in Palestinian-controlled Jericho, The Jerusalem Post has learned.

The casino is jointly owned by the Palestinian Authority, Casinos Austria,
the Austrian bank BAWAG, and Austrian-Jewish businessman Martin Schlaff, a
key figure in the ongoing police investigation of the prime minister and his son, Gilad. "At the time I did not think anything was too strange with Weisglass's request, since at the time we knew that he was an attorney for the casino," said one of the participants at a meeting in October 2000 at the Sharon ranch. "But now, with the allegations that Sharon may have received bribes from Schlaff, the meeting and the request seem suspicious."

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Following his victory in the 1999 Likud Party leadership primaries, Sharon went into debt to repay NIS 4.7 million in illegal campaign contributions. Gilad Sharon received a $1.5 million loan, originating in Austria, from South Africa-based businessman Cyril Kern in order to repay another loan the family had taken out in order to return the illegal donations.
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The illegal campaign contributions in question funnelled to Sharon via Annex Research, a company set up in 1999 by Sharon's close aide Dov Weisglass in concert with Sharon's son, Omri. Weisglass also happens to be the lawyer for Martin Schlaff's investments in Israel as well as Casino Austria's Israeli investments. Weisglass was also reportedly in daily contact with Condoleeza Rice.

One of the fellows that is believed to be a funder Annex Research is Arie Genger. Genger acted as a private back channel between Sharon and the Bush administration, and also reportedly worked freqently with Condoleeza Rice.

Continuing...

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The police are investigating the possibility that Kern served as a front man for Schlaff, another friend of Sharon's, and a businessman heavily invested in Israel, who could have made the loan in the hope that Sharon would make decisions favorable to his business interests, including the reopening of the Jericho casino.

"We met to talk about whether Sharon should join a unity government with
Barak, and Weisglass told Arik to pressure Barak into reopening the casino," the source said. "They agreed that if Sharon joined the coalition, then they would ease restrictions on the Palestinians in Jericho in order to inadvertently allow for the casino to reopen."
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A quick summary

The article goes on to provide many other details on this case, but let's just summarize some of what we've seen thus far regarding this Casino:

So Martin Schlaff, and Austrian billionaire and friend of Sharon, invested heavily in a casino venture in Jericho along with Yasser Arafat. Another investor in the casino was BAWAG, the bank of the Austria trade unions that imploded in the joint Refco and embezzlement scandals. Both Schlaff and Casinos Austria were major investors in BAWAG.

Sharon's close adviser and chief of staff Dov Weisglass. Weisglass was also involved in setting up some shell companies used to funnel campaign money to Sharon back in 1999. When Sharon was forced to pay back that money, he received a $1.5 million loan from a South African, Cyril Kern, that was believed to be acting as a front man for Martin Schlaff. The loan, with flowed through BAWAG accounts, is believed that the loan represented a bribe to encourage Sharon to allow the reopening of the Oasis Casino, which had been closed down due to the the second Intifada.

Oh, and Cerberus, the large hedge fund that is a major force in Israel's economy, recently bought BAWAG, which was put up for sale by the Austrian trade unions in order to cover their losses over the BAWAG/Refco twin implosions.

On a tangential note, while the involvement of Sharon's close aide in a business deal with Yasser Arafat may seem like an example of strange bedfellows, it's not quite as unusual an arrangement as one might think. Take, for example, Silvio Berlusconi, a major Bush backer and Iraq war supporter: His Swiss-investment adviser, Pier Felice Barchi, doubled as the lawyer for the al-Taqwa, the Muslim Brotherhood's bank! (More on that here) And then there's the GOP's own Muslim-Brotherhood-linked Get-out-the-vote operation.

So now that we're sort of caught up with all this, let's complicate it some more!

Uncooperative Austria

So, adding scandal to scandal, it looks like Austria's government may have jumped into the Sharon bribery game too!

Austrian MP Calls for Inquiry Into Sharon’s Vienna Dealings

Marc Perelman, With Reporting by Chemi Shalev in Jerusalem. | Fri. Aug 08, 2003

An Austrian lawmaker is calling for a formal inquiry into charges that Vienna is blocking an Israeli investigation of alleged campaign finance violations by Prime Minister Sharon — purportedly in exchange for Jerusalem’s agreement to restore diplomatic ties with the alpine nation.

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Pilz said further investigations could be on the way. He said Justice Ministry officials had told him they were considering launching further investigations into allegations that the Austrian government had used money channeled via Austria to Sharon from a South African businessman, Cyril Kern, to influence Israeli policy. He did not specify what sort of influence his government might have been seeking.

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Speculation has been rife in the Israeli press in recent days that Sharon agreed to restore ties with Vienna only after an Austrian judge rejected several requests from Israeli police to subpoena bank records related to the Sharon investigation. Israeli police have asked to see records of a possible transfer of funds from Vienna’s Bawag Bank to a Tel Aviv bank account owned by the prime minister’s sons.

An Austrian judge has twice rejected Israeli requests to examine the bank records. The first request was rejected because the Israeli request came in an incorrect format. The second was rejected on grounds that foreign campaign financing is not a criminal offense in Austria. There were reports that a third request had been made on Wednesday, but it could not be confirmed by press time.

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Israeli newspaper reports have suggested that Justice Ministry officials connected to the far-right Freedom Party might have played a role in Austria’s rejection of the Israeli subpoena requests. Pilz noted that the rejection had come from a judge, not a ministry official.

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Sources in Jerusalem told the Forward that Sharon had been personally involved in calling for an upgrade of diplomatic relations with Austria. Moreover, the sources said, the decision was pushed by the political appointees within the Foreign Ministry rather than by the professional staff, which had allegedly rejected the restoration of ties last November and eventually acceded two weeks ago.

Israel downgraded its ties with Austria in 2000, together with members of the European Union, after the Freedom Party, then led by far-right activist Jorg Haider, was brought into the governing coalition. Haider has since resigned from the party leadership, leading European countries to restore ties. However, the Freedom Party remains in the coalition, which Israel had until last week cited as a reason for continuing the chill. Critics have called on the government to explain its shift.
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Two years after these suspicions, the Austrian government launched a probe of the whole bribery affair, while asserting that it was the Israeli police that were lackluster in their pursuit of evidence. So now that it's all nice and extra confusing, let's add another figure to this whole mess.

Avigdor Friedman, a far-Rightist friend of Martin Schlaff
While Mr. Schlaff may claim his investment in the Oasis Casino was intended to promote peace between the Israelis and Palestinians, his investment in Avigdnor Friedman probably doesn't fall in the category of peace-promotion:

Police probing Lieberman on suspicion of illegal business ties
By Baruch Kra

The police have been conducting a lengthy inquiry into suspicions that Transportation Minister Avigdor Lieberman has an illegal business relationship with Austrian businessman Martin Schlaff, who has substantial business interests in Israel.
...
Haaretz has learned that several years ago, during a special session of an Austrian parliamentary committee investigating that country's intelligence services, information came up regarding business connections between Martin Schlaff, the Austrian businessman who is believed to own 50 percent of the Jericho casino, and Lieberman, and how money was transferred to the political party Lieberman established, Yisrael Beitenu.
...

One of the main constituents for the Yisrael Beitenu party that Liberman formed are disaffected Likudniks that feel Likud just isn't right-wing enough.

In 2002, Lieberman called for the bombing of Palestinian gas stations, banks, and commercial centers in response to suicide bombings. In 2004, he pitched the "Lieberman Plan" that essentially involved complete separation of Arab and Jewish populations. In October 2006, Lieberman joined Ehud Olmert's cabinet in the position of "Minister of Strategic Threats", which was created primarily to deal with Iran's nuclear ambitions.

Along with Schlaff, another figure that has assisted Lieberman and his party is top GOP strategist Arthur Finklestein.

And perhaps most chillingly of all, Lieberman is seen as a rising star in Israel's politics:

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Far from his nakedly anti-Arab approach disqualifying him from the political mainstream, Lieberman is today its rising star. He was welcomed into the ruling coalition in October as "minister for strategic threats" and is now the main ally and crutch of faltering Prime Minister Ehud Olmert.

An immigrant from the former Soviet Union who lives in the illegal West Bank settlement of Nokdim, Lieberman is stoking anti-Arab sentiment and exploiting insecurity and disillusionment after the fiasco of last summer's Lebanon war. Top office, or at least the Defense Ministry, is a realistic goal for Lieberman, a shrewd political tactician who helped Benjamin Netanyahu gain election as Prime Minister in 1996 and served in Ariel Sharon's Cabinet. "If elections were held now, based on the polls, he could presumably be either prime minister or demand any other ministry he wanted," says Yossi Alpher, former director of the Jaffee Center for Strategic Studies.

If Lieberman's pronouncements are to be taken seriously--and there is no obvious reason they should not be--a Lieberman government would exclude some Arab citizens from Israel, would expel others who refuse to sign a loyalty-to-Zionism oath, would turn Gaza into Grozny and would execute Arab members of the Knesset who talk to Hamas or mark Israel Independence Day as the anniversary of the displacement of the Palestinians in 1948.

Many Israelis--and many Americans--are sleeping through the rise of Lieberman. Others are through their actions facilitating the ascendance of fascist ideas in Israel. Lieberman is more than kosher as far as Washington is concerned. Secretary of State Condoleezza Rice welcomed him at the State Department on December 11, a day after he was featured at a forum, sponsored by the Brookings Institution's Saban Center, that also included Bill Clinton, Senator Hillary Rodham Clinton and several other members of Congress.
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So yeah, fascism appears to be on the rise in Israel as the public turns sour on corruption. Whoopy! And neither is Lieberman the only proto-fascist whose star is rising...

Arkady Gaydamak, a well-armed rising star
now let's take a look at Israel's wannabe kingmaker:

My clout will make Netanyahu PM says Israel's wannabe kingmaker
BEN LYNFIELD IN JERUSALEM

A RUSSIAN-BORN billionaire wanted by French authorities for alleged arms trafficking yesterday positioned himself as potential kingmaker of Israel by announcing a new "social movement" that will give expression to his growing political clout.

Arkady Gaydamak - who has gained a degree of popularity in Israel with a series of high-profile philanthropy projects amid deepening public disgust with established politicians - told The Scotsman last night that his "Social Justice Movement" would enable him to influence politicians without holding public office.

Mr Gaydamak, 54, says he does not have the experience or desire to hold high office. He says the person best suited to be prime minister is Benjamin Netanyahu, leader of the right-wing Likud party.
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A 2002 study by the non-profit Centre for Public Integrity, based in Washington, described Mr Gaydamak as "an entrepreneur with global ties to arms smuggling, resource exploitation and private military companies".
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We should note that one of the conflicts in which Mr. Gaydamak sold his wares was the diamond-fueled Angolan civil war in the 90's. And while Gayadamak was selling his arms to the Angolan government, it was none of than arms-smuggler extraordinaire Victor Bout that was selling to the UNITA rebels. (For more on the most mysterious and important Bout empire, go here and skip down to the section "What the arms trade is all about")

Continuing...

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Israeli analysts see Mr Gaydamek's alliance with Mr Netanyahu as a milestone in the country's politics. Approval ratings for the prime minister, Ehud Olmert, are plummeting after the debacle of last summer's Lebanon war and corruption scandals, while the right wing is rising in popularity. Mr Gaydamek, they say, can deliver to Mr Netanyahu a large chunk of the crucial Russian-speaking immigrant vote, while Mr Netanyahu can offer Mr Gaydamak access to the pinnacle of power.

"Gaydamek has huge resources and can buy up Israeli politics and politicians," says Danny Gutwein, a historian at Haifa University. "He will enlist the Russian vote for Netanyahu. Basically, capitalism will replace democracy."
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Capitalism will replace democracy, eh? Its sounds kind of a like fascism. It also sounds in keeping with what's been taking place across in democratic countries across the world. But as this recent article suggests, Israel's march toward fascism and into the embrace of oligarchic right-wing ideologues just might happen sooner rather than later:

Is Israel Falling Apart?
By Dror Wahrman

Mr. Wahrman is Ruth N. Halls Professor of History and Director of the Center for Eighteenth-Century Studies at the Indiana University History Department (adjunct in English, Jewish Studies, Cultural Studies).

Foreign observers of Israel tend to focus so intently on the dangers the country faces from its Arab neighbours that they have largely missed an astonishing story that has been accelerating over the past few months: that of the Jewish state’s possible move toward internal collapse. If you consider this an exaggeration, just take note of what the past couple of weeks have brought about. A few days ago the chief of the Israeli police resigned after an investigation that found several of Israel’s highest police officers guilty of corruption and negligence. This came within a week of the forced resignation of Israel’s Chief of Staff from the military because of the fiascos of the second Lebanon war. It was also some ten days after Israel’s minister of justice was convicted of sexual assault while on duty, and a couple of weeks after Israel’s president – who holds a largely symbolic position – resigned temporarily following charges of rape and sexual misconduct. It was also the same day that the head of Israel’s tax authority resigned because of possible corruption charges. In the meantime, several other investigations are still pending, not least two or three directed at the Prime Minister himself, Ehud Olmert, concerning corruption and favoritism. And an appeal to the Supreme Court has already been filed against the minister of police’s choice for a new police chief – again, because of old charges of corruption of which the nominee had been acquitted only through a particularly narrow benefit of the doubt.
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One of the corruption probes involving Ehud Omert just happens to involves charges of favoritism in the privatization of Bank Leumi while he was Minister of Finance.

Former Prime Minister Shimon Peres is also facing investigations over some campaign contributions from three foreign contributors, one of which includes Swiss business Bruce Rappaport. Mr. Rappaport also happens to have an interesting history with the Iran Contra, BCCI, and October Surprise affairs.

Continuing...

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Do these events really presage the collapse of the Israeli system of governance and democracy? There certainly has never been such a deep crisis of leadership in the country that touts itself as the only democracy in the Middle East. The leader of the ruling parliamentary coalition, Avigdor Yitzhaki, said so publicly a few days ago. And the Minister of Education has suggested that all schools devote special classes to the "government crisis", so that children can speak out about what might well seem to them like a total collapse of all systems that control their lives. Suddenly the Palestinians and the Hizbullah, and even Iranian nukes, have taken a back seat: Israel does indeed seem in danger of imploding from within, at least as a viable democracy.
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We're going to end this random walk through corrupt history with a couple more interesting links on the topic of the fascist elements in not only Israel's politics and a plug for a public radio fundraiser :-P.

The first link is to a one minute video clip by anti-fascist researcher Dave Emory on the topic of the fascist elements of Zionism. It's a excerpt from The First Refuge of a Scoundrel - The Relationship Between Fascism and Religion, a two hour talk on the topic of religion and fascism he recently gave. The video is available as part of the fund drive for WFMU, a non-commercial, freeform radio station broadcasting at 91.1 FM in Jersey City, NJ. If you tune in during the today (Tuesday, March 13), from 6-7 PM EST (which you can do online here), and make a $75 dollar donation to the station, you can a DVD of the talk thrown in as "swag". Yay!

And the second link is to another Dave Emory show from back in November of 1998, The Republican Party and International Fascism (audio here). It's a half hour show cover the GOP's very real history of working with fascists. It also discusses, ~18 minutes into the show, an interesting 1998 meeting of far-Rightists in Italy that include not only American far-Rightists, but Israeli far-Rightists. It's a useful reminder that, when we're talking about fascism and its history, we inevitably are talking about a larger global movement with cooperation that transcends borders and religions. Authoritarian thugishness, it appears, is a powerful unifying force.

By ftr23532@yahoo.com