Monday, April 23, 2007

Government Report Slams "Emergency" War Funding Request

Editor's note: I am moving to post at the secondary blog.
Older stories at the overflow blog
03/28/07 FY2007 Supplemental Appropriations for Defense, Foreign Affairs, and Other Purposes -- Updated - PDF

Levin gives Cheney reason to smirk


Never before have I felt such irk from a Cheney smirk -- the one with which he confidently assured CBS's Bob Schieffer on Sunday's "Face the Nation" that the Democrats will continue to vote to fund the war without including serious restrictions.

Cheney referred approvingly to the fact that "Carl Levin, who's chairman of the Senate Armed Services Committee, has indicated that they definitely do want to pass funding for the troops."

Cheney expressed confidence that the Democrats will "not leave America's fighting forces in harm's way without the resources they need to defend themselves." And yes, the vice president went on to reassure viewers, against all evidence to the contrary: "We are making progress."

The administration's main objective could hardly be clearer, even to mainstream pundits allergic to spelling it out. By waving the flag of patriotism, the White House is confident it can continue to intimidate enough Democrats to get the only thing it really wants: enough money to stave off defeat in Iraq until President George W. Bush and Cheney are safely out of office. That, of course, also explains the foredoomed "surge" in troop strength.

But how is it that Cheney can enlist the likes of Carl Levin in a policy built on the backs of American troops? Based on recent casualty rates, some 1,500 American troops already "in harm's way" will die, and several times that number will be wounded before Cheney and Bush leave office -- not to mention the ever mounting casualties among Iraqis.

Is Cheney exaggerating the support he sees in Levin? Apparently not. The senior senator from Michigan seems ready to provide additional funding for the war, no matter what. On April 8, right after Senate Majority Leader Harry Reid announced he would cosponsor legislation cutting off all funding for combat troops after March 31, 2008, Levin undercut him by telling ABC's "This Week": "We're not going to vote to cut the funding, period. ... We're not going to cut off funding for the troops. We shouldn't cut off funding for the troops. ... We're going to vote for a bill that funds the troops, period. We're going to fund the troops. We always have."

Got that?

What would prompt Levin to undermine his own majority leader? Levin was challenged on that point last Sunday at the University of Michigan. He replied that cutting funding for the war is what Rush Limbaugh wants and would play into Bush's hands. The Democrats would probably lose a battle over funding and end up looking "really bad," added Levin.

Not very persuasive, senator -- not when more and more are getting killed in Iraq every day.

Levin may be concerned about things other than looking bad. Those taking part in last month's meeting of the America Israel Public Affairs Committee in Washington heard stern warnings from Israeli Prime Minister Ehud Olmert and Foreign Minister Tzipi Livni that America not show "weakness" on Iraq -- warnings that a U.S. troop withdrawal would make the neighborhood far more dangerous for Israel.

Federal Election Commission records show that Levin has received more money from pro-Israel political action committees than any other senator. But, given his distinguished record, it would seem appropriate to give him the benefit of the doubt. It seems less likely that he is influenced by the money than by his penchant to see little or no daylight between what he perceives to be Israel's interests and those of the United States.

This appears to be the kind of "passionate attachment" against which George Washington warned so strongly in his farewell address more than 200 years ago.

RAY McGOVERN was a CIA analyst for 27 years and is now on the steering group of Veteran Intelligence Professionals for Sanity (VIPS). Write to him in care of the Free Press Editorial Page, 600 W. Fort St., Detroit 48226 or

Copyright © 2007 Detroit Free Press Inc.

Israeli Spying on United States

New Evidence of Security Problems at the White House

Monday, April 23, 2007
Disclosure of CIA Agent Identity

Current and former employees of the White House Security Office have reported to Chairman Waxman that there was a systemic failure at the White House to follow procedures for protecting classified information. According to the security officers, the White House regularly ignored security breaches, prevented security inspections of the West Wing, and condoned mismanagement of the White House Security Office.

U.S. economy poised for nose dive

By Jerome R. Corsi
© 2007

Major recession feared when 'liquidity bubble' bursts

As the dollar sinks to near-record lows against the euro and the British pound, the stock market has returned to record highs, but investors are being advised to anticipate a worldwide downturn and the U.S. economy may have already entered a recession.

An explanation may be found in a private investment letter published by the Carlyle Group to its "professional investors."

WND has obtained a copy of a Jan. 31 letter by the Carlyle Group's founding partner and managing director, William E. Conway, Jr., to the firm's investment professionals worldwide.

In the letter, Conway attributes the continued rise of world stock markets to a glut of liquidity in the world financial system, which he describes as "the availability of enormous amounts of cheap debt.

Conway writes, "This cheap debt has been available for almost all maturities, most industries, infrastructure, real estate and at all levels of the capital structure."

He says there is so much liquidity in world financial systems that "lenders (even 'our' lenders) are making very risky credit decisions."

WND previously reported concern that the decision of the Federal Reserve to quit publishing a traditional index, "M3," a broad measure of the money supply, signaled a decision to pump the economy with excess liquidity.

Since the Fed quit publishing M3 data, economists who have attempted to re-create the index from other available data have estimated M3 data would today be reporting upwards of a 10-percent increase in the money supply, a high level by historical standards.

"Liquidity" is defined by economists as money available in all forms to be given out as debt, ranging from credit card debt to mortgage debt to large quantities of institutional debt typically used in complex financial transactions such as highly leveraged corporate acquisitions.

Excess liquidity, as reflected in the rise of highly leveraged hedge fund accounts, has been widely seen as a major factor in the rise of the stock market in the recovery since 9/11.

Conway cautions that "this liquidity environment cannot go on forever." He warns that "the longer it lasts, the worse it will be when it ends."

Looking on the bright side of what could be a major recession when the liquidity bubble bursts, Conway advises, "And of course when [the liquidity bubble] ends the buying opportunity will be once in a lifetime."

He adds, "But I do not know when it will end."

Bob Chapman, who publishes a bi-weekly Internet newsletter, The International Forecaster, has issued his reconstructed M3 estimate to100,000 subscribers.

"The world is awash in money and credit," Chapman said. "My numbers show M3 increasing at about a 10-percent rate right now."

Chapman has spent 45 years in the finance and investment business, including 28 years as a stockbroker specializing in gold and silver shares. He publishes his newsletter from an undisclosed address outside the U.S.

In his April 14 newsletter, Chapman wrote, "The effort to save the American economy, which began in 2001, has finally come full circle and the Ponzi scheme is coming unraveled. The overextension of credit, outrageously low interest rates and loans to the totally unqualified have finally come home to roost."

For months, Chapman has been warning that the U.S. economy entered a downturn in February 2006. Chapman expects it will develop into a prolonged recession caused largely by the bursting of the housing bubble and the weakness in the dollar attributable to the United States' large federal budget deficit and international trade imbalance.

At the same time, Chapman has been predicting for months that the dollar will challenge the technical support point of $USD 80 on the world currency markets.

On Thursday, the dollar index closed at $USD 81.64 in a steady decline that began at the end of February.

The euro late last week was trading as high as $1.3576, near its December 2004 record of $1.3539. At the same time, the pound rose to $1.9938, its highest point since September 1992. The pound last reached the $2 mark 14 years ago, when the UK was ousted from the European Exchange Rate Mechanism.

Chapman has argued the U.S. Treasury and Federal Reserve have been trying to manage a gradual devaluation of the U.S. dollar.

Chapman expects the dollar could lose as much as an additional 20 percent of its value this year alone. In the last five years, the dollar has lost 35 percent of its value against the euro.

Still, until debt defaults force a crisis in the world debt markets, Chapman agrees with the Carlyle Group that excess liquidity will continue to buoy the world stock markets, including the New York Stock Exchange, to new highs.

Chapman also agrees with Conway that when the liquidity bubble bursts, the decline in world stock markets could be sharp and severe, possibly even reaching crash magnitudes on the downside.

"Tens of billions of dollars have already been lost in the U.S. sub-prime lending market and the contagion is spreading as the media tries to cover-up what is really going on," Chapmen wrote in his March 28 newsletter. "We are watching the disintegration to an extent of the entire mortgage market, which encompasses 25 percent of all outstanding credit."

Chapman continued: "We predicted this three years ago and those who believe they are savvy discovered the problem a couple of months ago. This is a general meltdown and do not think it isn't, and it has several years to go until the real estate sector is purged."

The Carlyle Group, a large Washington, D.C., private equity firm headquartered founded in 1987, has close ties to the administration of President George H.W. Bush.

WND also reported the Carlyle Group has established a new team to invest in Mexico. The team includes Mark McLarty, president of Kissinger McLarty Associates and former chief of staff and special envoy to the Americas for President Bill Clinton.

The U.S. National Campaign to Impeach President George W. Bush

Video Lecture: The U.S. National Campaign to Impeach President George W. Bush Jr: By International Legal Expert Francis A. Boyle at the the Center for Peace Studies, McMaster University

The Fall of John McCain

Posted Monday, April 23 2007 12:04:00 am

John McCain is no Brian Wilson, and his recent take on the song “Barbara Ann” (which Wilson and the rest of the Beach Boys made famous) highlighted not so much his singing ability, but rather the fact that his best days are as far behind him as those of the 1960s rock band.

At a campaign stop in South Carolina on Wednesday, the Senator answered a question about potential military action by singing “bomb Iran” to the tune of the Beach Boys song. McCain stood alone on the stage, pulling a handkerchief from his pocket and fidgeting with his hands as a man in the audience stood and addressed the room. He softly answered the man’s question, attempting to make a joke but ultimately sounding awkward and unsure. The remark has been fodder for liberals and the media, and for good reason. It is only the latest in a series of missteps that mark the decline of John McCain.

The Senator is scheduled to officially kick off his presidential campaign on Tuesday, but it may already be dead in the water. McCain’s Beach Boy impression follows a string of similar incidents. After an April 1 trip to an outdoor marketplace in Iraq, McCain told reporters of the improving security conditions in the country, and that the area he visited was safe for Americans to travel in. The market was attacked by an ambush of gunfire the next day and 21 people were killed.

That comment came one month after another equally controversial one. On the "Late Show with David Letterman," McCain described the lives of Americans killed in Iraq as “wasted,” even though his support of the war has been steadfast and stubborn. This is yet another example of McCain skimping on the “straight” part of his “straight talk express.”

At some point, the “I misspoke” defense loses its viability and a candidate’s comments become part of a pattern that must be taken at face value. John McCain is at that point. Even worse, his verbal slips have accompanied weak, politically motivated actions, like his Iraq trip and delivering the 2006 commencement address at Reverend Jerry Falwell’s Liberty University.

In the past year, McCain has gone from Republican frontrunner in 2008 to likely also-ran. He has also chosen to wager his entire presidential campaign on an increasingly disastrous and unpopular war. The transformation he has made since his 2000 campaign is remarkable. McCain has gone from a charismatic maverick, a war hero with appeal to members of all parties, to just another politician doing anything he can to get elected. He is not alone in this; all candidates (or at least good ones) put forth their strongest effort to win the office they seek, but rarely do they do it with the insincerity and disregard shown by John McCain.

The 70-year-old Arizona senator has managed to commit the cardinal sin of a candidate: he has made himself appear unfit to lead. For the first time, McCain has shown his wear. He has lost the vibrancy and energy that he possessed when emerging on the national stage seven years ago. He has often said he would rather lose an election than a war, and he is on the verge of realizing the former part of that proclamation.

On some level, McCain’s collapse is a sad after-effect of what should have been: a victory in the 2000 Republican primary. But now, realizing he may be approaching the end of the line, McCain has chosen politics over substance. It may be too late to reverse this trend, as voters watch a once promising candidate fall from grace.

Obama's Ties To Chicago Slum Lord

Obama and his Rezko ties

April 23, 2007

For more than five weeks during the brutal winter of 1997, tenants shivered without heat in a government-subsidized apartment building on Chicago's South Side.

It was just four years after the landlords -- Antoin "Tony'' Rezko and his partner Daniel Mahru -- had rehabbed the 31-unit building in Englewood with a loan from Chicago taxpayers.

Rezko and Mahru couldn't find money to get the heat back on.

But their company, Rezmar Corp., did come up with $1,000 to give to the political campaign fund of Barack Obama, the newly elected state senator whose district included the unheated building.

Obama has been friends with Rezko for 17 years. Rezko has been a political patron to Obama and many others, helping to raise millions of dollars for them through his own contributions and by hosting fund-raisers in his home.

Obama, who has worked as a lawyer and a legislator to improve living conditions for the poor, took campaign donations from Rezko even as Rezko's low-income housing empire was collapsing, leaving many African-American families in buildings riddled with problems -- including squalid living conditions, vacant apartments, lack of heat, squatters and drug dealers.

The building in Englewood was one of 30 Rezmar rehabbed in a series of troubled deals largely financed by taxpayers. Every project ran into financial difficulty. More than half went into foreclosure, a Chicago Sun-Times investigation has found.

"Their buildings were falling apart,'' said a former city official. "They just didn't pay attention to the condition of these buildings.''

Eleven of Rezko's buildings were in Obama's state Senate district.

Obama, now a U.S. senator running for president, has come under fire over his friendship with Rezko, who was charged last fall with demanding kickbacks on state business deals under Gov. Blagojevich.

Much of the criticism has centered on two real estate deals involving Obama's South Side mansion. In the first, Obama paid $300,000 less than the asking price for a doctor's home, while Rezko's wife paid the doctor full price for the vacant lot next door. Then -- a few months before Rezko was indicted -- Obama bought part of that lot from Rezko's wife.

But Obama's ties with Rezko go beyond those two real estate sales and the political support, the Sun-Times found. Obama was an attorney with a small Chicago law firm -- Davis Miner Barnhill & Galland -- that helped Rezmar get more than $43 million in government funding to rehab 15 of their 30 apartment buildings for the poor.

Obama role unclear
Just what legal work -- and how much -- Obama did on those deals is unknown. His campaign staff acknowledges he worked on some of them. But the Rezmar-related work amounted to just five hours over the six years it said Obama was affiliated with the law firm, the staff said in an e-mail in February.

Obama, however, was associated with the firm for more than nine years, his staff acknowledged Sunday in an e-mail response to questions submitted March 14 by the Sun-Times. They didn't say what deals he worked on -- or how much work he did.

"The senator, relatively inexperienced in this kind of work, was assigned to tasks appropriate for a junior lawyer,'' according to an e-mail from Obama spokesman Robert Gibbs. "These tasks would have included reviewing documents, collecting corporate organizational documents, and drafting corporate resolutions.''

In fact, Gibbs wrote, "Senator Obama does not remember having conversations with Tony Rezko about properties that he owned or any specific issues related to those properties.''

Rezko and Mahru had no construction experience when they created Rezmar in 1989 to rehabilitate apartments for the poor under the Daley administration. Between 1989 and 1998, Rezmar made deals to rehab 30 buildings, a total of 1,025 apartments. The last 15 buildings involved Davis Miner Barnhill & Galland during Obama's time with the firm.

Rezko and Mahru also managed the buildings, which were supposed to provide homes for poor people for 30 years. Every one of the projects ran into trouble:

• Seventeen buildings -- many beset with code violations, including a lack of heat -- ended up in foreclosure.

• Six buildings are currently boarded up.

• Hundreds of the apartments are vacant, in need of major repairs.

• Taxpayers have been stuck with millions in unpaid loans.

• At least a dozen times, the city of Chicago sued Rezmar for failure to heat buildings.

For five weeks, the Sun-Times sought to interview Obama about Rezko and the housing deals. His staff wanted written questions. It responded Sunday but left many questions unanswered. Other answers didn't directly address the question.

Among these: When did Obama learn of Rezmar's financial problems? "The senator had no special knowledge of any financial problems,'' Gibbs wrote.

Did the senator ever complain to anyone -- government officials, Rezmar or Rezko -- about the conditions of Rezmar's buildings? "Senator Obama did follow up on constituency complaints about housing as [a] matter of routine,'' Gibbs wrote.

Did the senator ever discuss Rezmar's financial problems with anyone at his law firm? "The firm advises us that it [is] unaware of any such conversations,'' Gibbs wrote.

Turns down Rezmar job
Obama's friendship with Rezko began with a telephone call.

It was 17 years ago. Obama had just become the first black president of the Harvard Law Review. Newspapers wrote about him. One story caught the eye of David Brint, a vice president of Rezmar, a new company that had become the Daley administration's favored developer of low-income housing.

"I just cold-called him," Brint said in an interview.

Brint said he wanted to know if Obama would come work for Rezmar, developing housing for the poor -- something Obama had expressed interest in, according to the story Brint had read. Brint arranged for Obama to meet Rezko, but Obama didn't take the job.

Obama, who has a law degree from Harvard, subsequently returned to Chicago to lead a voter-registration drive in 1992.

The next year, Obama joined Davis Miner Barnhill & Galland, a 12-lawyer firm that specialized in helping develop low-income housing. The firm's top partner, Allison S. Davis, was, and is, a member of the Chicago Plan Commission, appointed by Mayor Daley. Davis was also a friend of Rezko. Davis and Rezko would eventually go into business together, developing homes.

Another firm partner, Judson Miner, ran the city Law Department under Mayor Harold Washington, one of Obama's political idols.

Asked what Rezko cases Obama worked on, Miner told the Sun-Times, "We'll put together a list of the cases he worked on involving Rezko/Rezmar in the next day or two.''

That was March 13. He never provided the information.

While at the law firm, Obama spent much of his time working on issues that would help improve conditions in poor neighborhoods, according to his first book, Dreams from My Father, published in 1996.

"In my legal practice, I work mostly with churches and community groups, men and women who quietly build grocery stores and health clinics in the inner city, and housing for the poor,'' Obama wrote in the book.

Three community groups represented by Davis Miner Barnhill & Galland were partners with Rezmar in the troubled housing deals.

Rezko offers Obama support
Obama had been at the firm for two years when he began his political career, running to replace state Sen. Alice Palmer.

Rezko became Obama's political patron. Obama got his first campaign contributions on July 31, 1995: $300 from a Loop lawyer, a $5,000 loan from a car dealer, and $2,000 from two food companies owned by Rezko.

Around that time, Rezmar began developing low-income apartments in partnerships with the Chicago Urban League and two other not-for-profit community groups, both founded and run by Bishop Arthur Brazier, pastor of the Apostolic Church of God and a powerful ally of the mayor -- the Woodlawn Preservation and Investment Corp., known as WPIC, and the Fund for Community Redevelopment and Revitalization.

All three community groups were clients of the Davis law firm. Davis himself was treasurer of WPIC when it went into business with Rezmar.

Why go into business with Rezmar? "We thought they were successful,'' Davis said, noting that little development was taking place in Woodlawn.

At the time, Rezmar had been in business for six years and had become one of City Hall's favored developers of low-income housing, managing 600 apartments in 15 buildings it rehabbed with government funding. Teaming now with community development groups, Rezmar rehabbed another 15 buildings, with 400 apartments, between 1995 and 1998. Each deal involved a mix of public and private financing -- loans from the city or state, federal low-income-housing tax credits and bank loans.

By the time Rezmar started working with those community groups, at least two of its earlier buildings were falling into disrepair -- including the Englewood apartment building at 7000 S. Sangamon where the tenants were without heat for five weeks.

The tenants there had no heat from Dec. 27, 1996, until at least Feb. 3, 1997, when the city of Chicago sued to turn the heat on. The case was settled later that month with a $100 fine.

It was during that time that the area's new state senator, Barack Obama, got a $1,000 campaign donation from Rezmar. The date: Jan. 14, 1997.

Obama works on Rezmar deals
Obama spent the next eight years serving in the Illinois Senate and continued to work for the Davis law firm.

Through its partnerships, Rezmar remained a client of the firm, according to ethics statements Obama filed while a state senator.

Davis said he didn't remember Obama working on the Rezmar projects.

"I don't recall Barack having any involvement in real estate transactions,'' Davis said. "Barack was a litigator. His area of focus was litigation, class-action suits.''

But Obama did legal work on real estate deals while at Davis' firm, according to biographical information he submitted to the Sun-Times in 1998. Obama specialized "in civil rights litigation, real estate financing, acquisition, construction and/or redevelopment of low-and moderate income housing,'' according to his "biographical sketch."

And he did legal work on Rezko's deals, according to an e-mail his presidential campaign staff sent the Sun-Times on Feb. 16, in response to earlier inquiries. The staff didn't specify which Rezmar projects Obama worked on, or his role. But it drew a distinction between working for Rezko and working on projects involving his company.

"Senator Obama did not directly represent Mr. Rezko or his firms. He did represent on a very limited basis ventures in which Mr. Rezko's entities participated along with others,'' according to the e-mail from Obama's staff.

Obama buys Rezko land
Over the years, Rezko, Mahru, their wives and businesses have given more than $50,000 to Obama's campaign funds, records show. And Rezko has helped raise millions more.

Rezko was among the people Obama appointed to serve on his U.S. Senate campaign finance committee, the Sun-Times reported in 2003. The committee raised more than $14 million, according to Federal Election Commission records, helping send Obama to Washington in 2004.

As a U.S. senator, Obama grew closer to Rezko.

Two years ago, Obama bought a mansion on the South Side, in the Kenwood neighborhood, from a doctor. On the same day, Rezko's wife, Rita Rezko, bought the vacant lot next door from the same seller. The doctor had listed the properties for sale together. He sold the house to Obama for $300,000 below the asking price. The doctor got his asking price on the lot from Rezko's wife.

Last year, Rita Rezko sold a strip of that vacant lot to Obama for $104,500 -- a deal Obama later apologized for, acknowledging that people might think he got a favor from Rezko. Obama called the episode "boneheaded'' and a "mistake.''

At the time Obama bought that strip of land, it had been reported that Rezko was under federal investigation for influence-peddling involving the administration of Blagojevich, whose campaign also received Rezko's financial support.

Rezko has since been indicted for allegedly demanding kickbacks from companies seeking state business under Blagojevich. Rezko's trial has been postponed while investigators sort through his finances.

'Disenchanted with Rezmar'
Rezmar's final low-income housing deals involving the Davis law firm went bad quickly.

Those deals were supposed to provide affordable housing for at least 25 years. But the first deal Rezmar struck with the Woodlawn Preservation and Investment Corp. collapsed in just six and a half years, when the state sued for foreclosure. WPIC and its sister agency, the Fund for Community Redevelopment and Revitalization, ultimately forced Rezmar to give up control of all 12 buildings they rehabbed together, citing financial troubles and deteriorating conditions of the buildings.

The state foreclosure suit came because Rezmar had stopped making monthly mortgage payments in March 2001 on a state loan to help turn an old nursing home into low-income apartments at 6140 S. Drexel, in Obama's state Senate district.

"WPIC became disenchanted with Rezmar and wanted to get rid of them,'' Brazier said. "They thought the buildings weren't being kept up properly. There were some financial problems.''

Rezmar and WPIC cut all ties last October, when the Chicago City Council agreed to let Rezmar out of a city loan. Rezmar transferred its interest to The Wolcott Group, a management company run by business partners of David Brint -- the man who had introduced Rezko to Obama.

Contributing: Chris Fusco and Art Golab


Staff reporter Tim Novak examines previously unreported government-funded, low-income housing deals involving Antoin "Tony" Rezko, the indicted political fund-raiser.

COMING TUESDAY | Rezmar kept getting city and state funding, even as earlier projects fell into disrepair and financial troubles.

BY TIM NOVAK Staff Reporter/

Israeli Industrialists' Strategy in the Global Supply Chain

By Efraim Davidi

Tuesday, April 17, 2007

The Sewing Factory in Gaza, the Administration in Tel-Aviv, and the Owners in New York

The aim of this paper is to try to understand the Israeli industrialists' strategy in the globalization process in the course of the recent years. The new strategy was implemented in the days of the first Intifada (the Palestinian uprising) in the late 80s. At that time voices were heard in the Association of Israeli Industrialists, the strongest organization of Israeli employers, advocating an agreement with the Palestinians which would not oppose the establishment of an independent Palestinian State, as long as the Palestinian economic dependence on Israel is preserved.

The paradigm of the new strategy can be summed up as follows: "establishing a sewing factory in Gaza (or in Jordan, or in Egypt or in Turkey), administering it from Tel-Aviv, with the owners residing in New York." Of course, the product was not intended for the local Arab market or for Israel, but for the heartland countries of globalization - the U.S.A., Canada, and the European Union. On the Arab side, there were those who regarded this strategy as "a way of enforcing Israeli economic control over the Middle East." However, this was not the intention. Israel cannot control the Middle East economically or even militarily. Last year's events proved that Israel is incapable even of maintaining military control over the Gaza Strip.

On the one hand, Israel was to become integrated into the Middle East as a base for the activities of multinational companies, and, on the other, to establish progressive high-tech industries mainly connected to three branches with enormous development potential - computers, telecommunications, and the Internet - all of which are interdependent and belong to multinational companies, mostly American.

At first sight this strategy appeared to be sound. The agreements signed with the Palestinians in 1993 opened the gates for foreign investment, the takeover of local companies by multinationals, and the merging of local and foreign companies. The privatization process, one of the economic guidelines shared by all Israeli governments in the last two decades, contributed to this strategy.

Since the implementation of the Oslo Accords with the Palestinian Liberation Organization in the late 90s, an impressive growth in the national product per capita in Israel was recorded. This stood at $5,500 in Israel in 1980 - as against $771 in Egypt, Jordan, and Syria - while in the European Union it reached $9,381. In 2003, the figure jumped in Israel to $16,700 per capita, and the prognosis was for $18,000 in the course of 2006. This can be compared to $1,260 in the aforementioned Arab states and $21,242 in Europe. However, the second Intifada and the fall of the Nasdaq (both of them in the last quarter of 2000), combined with the prolonged recession that began when the peace process ran out of steam, led to only a tiny or even negative growth in the gross national product in the years 2001, 2002, 2003, and 2004.

Nevertheless, it would be wrong to assume that the fruits of this considerable growth in the total production and the integration into the globalization process were equally enjoyed by all the residents of Israel. The socio-economic gap grew over the last two decades, particularly in the last five years. The Israeli economy is notable for the increasing concentration of capital in the hands of a few individuals. In the opinion of some experts, the economy is controlled exclusively by 20 to 50 families and multinational companies.

Dov Lautman, the former president of the Association of Israeli Industrialists and one of the owners of "Delta-Galil Industries,"1 stated in a meeting with Palestinian manufacturers in 1993: "The important issue is not whether a Palestinian state, an autonomy, or a Palestinian-Jordanian state is established, the important thing is that the economic borders between Israel and the territories remain open."2 For Lautman, and many others, economic relations between the states of Israel and Palestine should be modeled after "the free trade agreement that exists between Mexico and the U.S." For him (and others), there was no doubt as to who would play the role of the United States and who, the role of Mexico. Former Prime Minister and now vice-premier and Minister of Regional Cooperation Shimon Peres met with the Mexican President Carlos Salinas de Gortari in September 1994 "to learn about the NAFTA model."3

What Is a Free Trade Agreement?

A free trade agreement (FTA) is an agreement between two or more countries to allow uninterrupted trade in commodities produced in each country, such as the North American Free Trade Agreement (NAFTA) concluded between the U.S., Canada, and Mexico. This trade policy holds only for goods produced within the signatory states, which are allowed to pass freely across the internal borders of the FTA. Goods produced outside the FTA have to cross trade barriers corresponding to the external borders of the parties.

Since these trade barriers for different external borders may not be identical (customs rates on the same item may differ for each partner), all goods have to be screened at an internal border, in order to ascertain their origin: from inside or outside the FTA.

The only trade policy enabling the abolition of internal trade borders between partners is a customs union. A customs union extends the free flow of goods beyond those produced by the FTA partners to goods produced in "the rest of the world." This is done by means of an agreement between the partners to apply identical barriers to trade with other parties, i.e., third parties. This obviates the need for checking the origin of goods after they have passed the national internal borders.

NAFTA, Israel, and Palestine

According to a team of Israeli economists, "many of the economic ratios between Israel and the Palestinian economy are of the same order of magnitude as those between the U.S. and Mexico. The total GNP in Israel is approximately 18-20 times larger than that of the combined Palestinian territories; GNP per capita is six times larger in Israel than in the Palestinian territories. By way of comparison, the U.S. GNP is twenty-five times larger than that of Mexico. Other features in the U.S. and Mexico are also comparable to the relations between Israel and the Palestinian territories: Mexico suffers from low wages and an excess supply of labor, and workers from Mexico attempt to find work in the U.S."4

For more than ten years (between the first Intifada and the second one), numerous conferences were held in Israel with titles such as "The Future Economic Relations between Israel and the Territories," usually sponsored by the Association of Israeli Industrialists, the Chambers of Commerce, or universities. Meetings between Israeli and Palestinian manufacturers were also held, mostly behind closed doors. The meetings, studies, official pronouncements, and seminars reveal a growing anxiety about the economic implications of Palestinian independence considered by Israel's ruling class to be only a matter of time.

Why this anxiety? Maintaining economic relations with the territories is very important to Israel. Most of the Palestinian territories' trade is with Israel: some 80-90 percent of all imports to the Palestinian territories originate in Israel, and similar ratios of their exports are sold in Israel. "Israel is thus by far the largest partner of the Palestinian territories. The Palestinian territories also represent an important trading partner for Israel, being the second-largest export market for Israeli products (after the United States)."5 The exports from Israel to the territories grew by 80% in ten years, from US $961 million in 1987 before the first Intifada to US $1800 million in the eve of the second Intifada.

As a result of the first Intifada, the Israeli bourgeoisie has come to recognize that there is no alternative to some degree of Palestinian political independence. An entire generation of Israeli manufacturers have tried to ruin every chance of capitalist industrial development in the territories. The Israeli occupation authorities operated as the long arm of the Israeli bourgeoisie, making it impossible for any Palestinian capitalist to obtain the thousand-and-one approvals required for establishing any large business without producing a document stating that he would not be competing with an Israeli company.6 In this manner, the authorities prevented the establishment of dairies, cement factories, food factories, and textile plants. A team of Israeli economists described the situation of industry in the territories in the following words: "These are extremely low levels of industrialization, probably lower than in most countries in the world."7 On the other hand, "for several years, restrictions in the form of trade barriers prevent Palestinian agriculture from competing in the Israeli market."8

At the same time, the Israeli economy has been the source of a sizeable portion of the territories' income. In the late 80s, about one half of the national income of the Gaza Strip reportedly came from the labor of Gaza workers in Israel, and this situation has remained unchanged ever since. According to the figures of the Economic Branch of the Israeli Coordination Office of Government Activities in the Territories after the second Intifada, 42% of income in Gaza derived from work in Israel. In the West Bank, 47% of income derived from work in Israel.9

Palestinian independence, a total and immediate loss of the West Bank and Gaza markets, would probably cause heavy losses to many Israeli businessmen in the fields of construction, hotels, imports, and manufacturing.

Is MEFTA Viable?

Is an agreement like NAFTA - MEFTA (Middle East Free Trade Agreement) - viable in the region? If the question is posed to a member of the American administration, the response will be positive. According to Robert Rubin, the former United States Secretary of the Treasury:

Israel has been moving in the right direction by making reforms to open its economy... Economies that are relatively open to trade tend to enjoy superior economic performance. I think all countries should make it a priority to actively participate in the multilateral free-trade process sponsored by the WTO (the World Trade Organization). But, with that said, it could certainly be to Israel's advantage to take part in a regional free trade agreement. Regional agreements can facilitate movements towards a free-trading world, as long as they cover substantially all trade among participants and do not raise barriers against third-party countries in the process. For example, since the free trade agreement between Israel and the United States took effect more than ten years ago, trade between our two countries has more that tripled.10

But, the trade policy that has existed between Israel and the Palestinian economy since 1967 is best described as an involuntary, one-sided, impure, customs union. Exchange between Israeli and Palestinian traders was ostensibly free and the geographical area comprising Israel and the West Bank and Gaza Strip had no internal trade borders, or trade barriers. Trade with the rest of the world was carried out under the Israeli trade regime and according to Israel's (changing) policies. Thus, Israel customs and other barriers to trade operated along the external borders of the combined area. Since there was no Palestinian (economic) authority and Palestinians did not participate in policy-making, all decisions were made by the Israeli authorities.11

MEFTA and the Sub-contracting Scenario

The relocation of Israeli industries especially in the field of textile began in the last 10 years (after the Oslo Accords and the Jordan-Israel Peace Accord signed in 1995). One of the leading textile companies is "Delta-Galil," which owns industrial plants in Jordan and Egypt. In recent years, Delta has bought other plants, in Turkey, Central America, Thailand, and in Romania. The former CEO of "Delta-Galil," Arnon Tiberg, said that "the critiques that we are relocated in other countries and thus we contribute to the growing unemployment in Israel, are not fair. In Israel we employ 3,200 workers. In Jordan and Egypt we employ 3,000 workers. The plants in Jordan and Egypt make it possible to work on management in Israel as well as development, design and marketing - all the capital intensive activities."12 The owner of "Delta-Galil" Lautman said in an Israeli-Palestinian Businessmen Meeting held in Tel-Aviv in June 1999 under the title "Doing Business in Peace": "Jordan and Egypt are a strategic step for 'Delta'. The territories can become another such step. It's not easy to open a factory in France or in the United States, but it is much easier to open a factory in Gaza." Lautman in this meeting returned to his old idea and proposed to adopt the NAFTA model for the Middle East with Israel in the role of the United States and the Palestinians in that of Mexico. "Our mission is not to make peace. Our mission is to make money," emphasized Lautman.13

Another leading textile company "Polgat" has opened a plant in Jordan. In Egypt and the territories, "Polgat" worked through subcontracting local plants.14 Rimon Ben-Shaul, former CEO of "Clal" (owner of "Polgat") said that "Polgat has become a multinational company. We produce where cheap labor is available." For years, "Polgat" has employed hundreds of Palestinians in the company plants situated in Kyriat Gat, a "development town" 60 km. south of Tel-Aviv. The third leading textile company, "Kitan," has closed the Levi's jeans plant in Nazareth and has opened a new jeans plant in Jordan. Today, 50 percent of the Kitan's textile production originates in Jordan or in subcontracting Palestinian companies.15

This relocation is part of Israel's government policy and causes massive layoffs of workers in the Galilee and the South of Israel, especially the female workforce of Arab, Druze, and Jewish-Oriental (Mizrahi) origins. This policy is not an Israeli invention - the "subcontracting scenario" is very common throughout the world, in the economic relationships between the "First World" (the United States, Europe and Japan) and the "Third World" (Asia, Africa, and Latin America). One of the most developed models of the "subcontracting scenario" is Mexico. "Between 1980 and 1994, the number of Mexican workers employed in the maquiladora industry (subcontracting factories) grew from 119,546 to 583,044; an increase of 387,72 percent. . . . The workers' hourly wage in the United States was 9,84 dollars in 1980 and 17,30 in 1994. In Mexico the workers' hourly wage was 2,16 dollars in 1980, 1,64 dollars in 1990 and 2,60 dollars in 1994. . . . This evolution in the workers' hourly wage in the United States and in Mexico is the 'secret' of the maquiladora industry's success."16

In fact, the "maquiladora scenario" was established even before the signing of the agreements between Israel and the PLO. For about 8 to 9 years, Israeli companies have worked through Palestinian subcontracting plants. But, in recent years this scenario has included the Palestinian territories, Jordan, and Egypt. The Israeli ruling class regards itself as a regional economic power, concentrating on high-tech industries. In its vision, labor-intensive industries are to be located in the periphery of Israel and the Israeli high-tech industries are to be dependent on foreign markets (the United States and Europe) and operate under foreign ownership or joint-ventures between Israeli industrialists and foreign investors. In the words of the vice-premier and the Minister of Regional Cooperation Peres: "The world is organized like a house with two floors: in the basement, the regional agreements; and on the top floor, multinational groups of companies."17 In other words: "We do not want peace between nations. We want peace between markets."18


  1. "Delta-Galil" employs 14,000 workers in 40 factories in 11 countries. Each month the company produces ten million pieces. The sales of "Delta-Galil" in 2005: 684 million dollars.

  2. Efraim Davidi, "Israel's Economic Strategy for Palestinian Independence," Middle East Report 184 (September-October 1993), p. 24.

  3. The former Israel Ambassador to the United Nations, Gad Yaacobi, described the meeting between Peres and Salinas de Gortari in New York: "We met with the President of Mexico Salinas and with the Mexican Foreign Affairs Minister, the former Mexican Ambassador to the United Nations. Salinas is a very small man and very nervous (in one month he must leave the presidency and in his country there have been a series of murders, among them: the official candidate to the presidency and the Secretary General of the ruling party). Peres heaped praise upon the achievements of the Mexican economy under Salinas (we later learned hat some of those achievements were no more than illusions). . . . Peres talked about the NAFTA agreement as one of these achievements and as a positive model for a regional economy and as a success for the theory of economic globalization" (Gad Yaacobi's, New York Diary - The Story ofthe Israeli Ambassador to the United Nations, Tel-Aviv: Miskal-Yedioth Aharonoth Books and Chemed Books, 1997, p. 254). The original in Hebrew. After his resignation, Salinas de Gortari escaped to exile, under accusations of participation in the murder of leading politicians of the PRI ruling party. The same day when the NAFTA agreement took effect, in the Mexican State of Chiapas, the "Ejercito Zapatista de Liberaci?n Nacional" began its fight, under the leadership of Subcomandante Marcos.

  4. Arie Arnon, et al., The Palestinian Economy - Between Imposed Integration and Voluntary Separation (Leiden: Brill, 1997), p. 21.

  5. Arie Arnon, 1997, p. 18; and Efraim Davidi (ed.), Anti-Globalization: Criticism of Late Capitalism (Tel-Aviv: Resling Publishing, 2003), pp. 106-110. In Hebrew.

  6. Davidi, 1993, p. 25.

  7. Arnon, 1997, p. 5.

  8. Ibid.

  9. Coordination of Government Activities in the Territories / Economic Branch, "Measures Supporting and Promoting the Palestinian Economy" (Tel-Aviv: Ministry of Defense, 1999).

  10. Robert Rubin in an interview with Hillel Kuttler in "Israel - Fifty Years of Finance & Industry," supplement to the Jerusalem Post, May 5, 1998.

  11. Arnon, 1997, p. 88.

  12. Haaretz, August 8, 1999.

  13. After the election of the Labor Party leader Ehud Barak as Prime Minister of Israel in May 1999, three conferences took place at short intervals in June and the beginning of July, all dealing with the future economic relations between Israel and the Palestinian territories. First, the Israeli-Palestinian Businessmen Meeting entitled "Doing Business in Peace" in the Tel-Aviv Sheraton Hotel ("Politicians Get Out of the Way - the Business Community Can Do It Better" was how Oren Most, Deputy CEO of "Cellcom Israel Ltd.," put it). Next, the Tel-Aviv College and the Economic Quarterly organized a conference of economists. A third event was held, this time in Beit Jala in Palestinian territory - the founding conference of PRIME (Peace Research Institute in the Middle East), held under the auspices of the World Bank and attended by its Vice President, the Turkish economist Prof. Kemal Dervis. There was a clear continuity between all three events: an ongoing debate concerning Palestinian economic dependence on Israel and whether or not it should continue after the end of the military occupation and the achievement of political independence. The dimensions of this dependence were described in the Sheraton Hotel meeting by Palestinian minister Nabil Sha'ath: "Every year we buy Israeli products, and foreign products imported via Israel, at between 2.5 and 3 billion dollars. . . . The Palestinian economy is just 7 percent the size of the Israeli one, and still we are the second-largest market for Israeli products." Most Israeli participants in the three conferences, industrialists or economists, saw nothing wrong with such relations continuing to exist after Palestinian independence. Palestinians were disappointed to hear Prof. Dervis of the World Bank declaring himself in favor of the Palestinians giving up the economic aspects of their sovereignty "as France and Germany did" - protesting that France and Germany entered into an economic union from a more or less equal starting point, which is not the case with regard to Israel and Palestine. A refreshing point of view was presented in the economists conference held in Tel-Aviv by Prof. Arie Arnon of Ben-Gurion University (a prominent economist and leading member of "Peace Now"). On the basis of his research, Prof. Arnon argued that the deteriorating state of the Palestinian economy is attributable to its dependence on Israel and could only be healed by the end of that dependence, whereas the viability of the Palestinian economy is an indispensable prerequisite for stable peace. Another well-known economist, Prof. Ezra Sadan attacked Prof. Arnon and said that "independence can never work as in Nicaragua at the time of the Sandinistas."

  14. Yediot Aharonot, August 13, 1999; and: Efraim Davidi, "The Israeli Economy and the Challenges of Globalization," Palestine-Israel Journal of Politics, Economics and Culture, Vol. VIII, No. 2, 2001, pp. 104-110.

  15. Haaretz, August 16, 1999.

  16. "La sous-traitance en peripherie, practique economique et rapport social d'exploitation,"Alternatives Sud Vol. VI, No. 1 (1999), p. 8.

  17. Shimon Peres, The New Middle East - A Framework and Processes towards an Era of Peace (Tel-Aviv: Steimatzky Publishers, 1997), p. 90. In Hebrew.

  18. These are the words of Peres at a meeting with the journalists staff of the daily newspaper Davar in 1992. This was an "off the record" meeting. See Efraim Davidi, "Globalization and the Economy in the Middle East - A Peace of Markets or a Peace of Flags," Palestine-Israel Journal of Politics, Economics and Culture, Vol. VII, No.1& 2, 2000, p. 34.

* Efraim Davidi is a member of the Histadrut (Labor Federation in Israel) Executive Committee. On 10-11 May 2006, the Global Union Research Network (GURN) organized at Hague (in the Netherlands) a special international research conference on "The Impact of Global Production Systems on Trade Union Strategies" with the support of the Institute of Social Studies (ISS), the International Labor Office (ILO) and the FNV (Dutch unions). This paper was delivered at the conference.

Stiglitz Tells It Like It Is: Deficit Mania’s Got To Stop

Jared Bernstein

Perhaps, given my bias, I should recuse myself from the argument I’m about to make. You see, on our first date, I impressed the woman who is now my wife by convincing her conservative brother-in-law that budget deficits are not always a problem. Such is DC romance.

That was over a decade ago, but the issue remains both contentious and misunderstood. That’s why I was so interested in the recent talk given at the Economic Policy Institute by Joseph Stiglitz, Nobel Laureate economist and all around interesting guy. What’s unique about Stiglitz is not that he always rejects conventional wisdom—he doesn’t. It’s that he looks at in the context of the real world, and often finds it lacking.

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Both in his talk and his writings, he seems genuinely and appropriately worried about a mania for balancing budgets. If I could summarize his message in one over-arching thought, it would be: too often, our budget debates mindlessly assume that deficit reduction is the best option, both for us and for other countries with whom we do business. This simplistic, reductionist view is leading both political parties toward a philosophy of fiscal austerity which will have very negative consequences.

The debate is far from academic. Misguided thinking about deficits has led to the two options that form the core of the fiscal debate between Democrats and Republicans: the D’s want to balance the budget by holding down spending and letting (some of) the Bush tax cuts expire, the R’s want to do so by extending the Bush tax cuts and cutting spending, big time. Make no mistake, when John McCain says in a recent speech that he wants to “save entitlements,” he means he wants to save them by shrinking them. These two options have crowded out the third: raise the revenue we need to support that which will make our economy and country stronger.

Stiglitz framed the issue in terms of two pressing problems: a short-term and a long-term one.

First, there’s the fact that the economy is currently growing about one point below its trend (with real GDP growth around 2-2.5% per year instead of 3-3.5%), a problem Stiglitz attributed mostly to the slump in housing and the loss of stimulus from this sector. In this context, taking money out of the economy by pursuing deficit reduction would do more harm than good.

You don’t hit someone when they’re down, and you don’t pursue deficit reduction when the economy is already stressing out. As Stiglitz noted, “The idea that deficit reduction leads to a strong economy was an idea that Andrew Mellon tried in the midst of the Great Depression…the effect, of course was not positive. Then came Keynesian economics.”

In the current context, this is hopefully a short-term problem and one that even some pretty hawkish folks on the deficit will be okay with. The more important question is the longer-term one: what’s the proper role of deficit spending in good times?

Here’s where reductionism—a zombie-like allegiance to balancing the budget—is your enemy. Stiglitz argued “that we should never focus just on deficits, but on broader economic concepts.” What’s the magnitude of the deficit relative to GDP (it’s now a very manageable 2%)? What are we spending it on (we’re wasting far too much of it on the war and tax cuts for the rich instead of accumulating worthwhile assets)? Are we, in the interest of balancing the budget, ignoring important investments that the private sector won’t make?

It’s on this last point where I thought Stiglitz’s message was most important, and it’s where we’re furthest off track. We have large and growing needs for investments that market forces simply won’t make.

We would be much wiser to focus on these deficits: early childhood development and education; access to higher ed for those who ought to be there but can't pull it off; our public health care system, which will absolutely need to expand in coming years as the private, employer-based system unravels; safety nets: programs like unemployment insurance and job training that can help those displaced by globalization; and, one Stiglitz emphasized, environmental policy.

Yet, even the most progressive budget alternatives, such as that of the Progressive Caucus, brag on the fact their budget gets to balance before all the others. This is a disheartening example of Bob Kuttner’s observation about deficits and Democrats: they’ve elevated a defensive tactic—hawkishness on deficits to stave off wasteful tax cuts—to a principle: balance budgets regardless of whether you’re foregoing short-term stimulus or needed investments.

Which brings us to politics.

Since when did Democrats become slavishly committed to fiscal austerity? As Kuttner explains in a recent critical piece about Bob Rubin, much of this comes from the belief that balancing the budget in the Clinton years drove the 1990s boom. When asked about this at EPI, Stiglitz explained that in his view deficit reduction had little to do with it: the boom was more of function of unique conditions in the banking sector that made borrowing cheap and financed an investment boom (that ultimately became a bubble).

Alan Blinder and Janet Yellin (both were top Clinton economists; Blinder was vice-chair at the Fed; Yellin’s there now) take the closest analytic look and are unable to pin the Clinton boom on deficit reduction. Instead, lower health care and energy costs boosted the economy, and, most importantly, productivity accelerated, facilitating both low inflation and interest rates. It was the revenue growth from these developments that balanced the budget, not the other way around.

But urban legends die hard, and Rubinomics, with its emphasis on balanced budgets, still holds sway in the top reaches of Democratic power. Word is that both Hillary Clinton and Obama are listening more closely to Bob than to Joe.

This is too bad, because more than any prominent economist, he understands the damaging limits of fiscal austerity, and the extent to which it undercuts our ability to tackle the big problems of today and tomorrow, from frayed safety nets to depleted ozone, from the war on poverty to the war in Iraq.

So move over Bob, and make room for Joe. We need him, or at least his ideas, at the table too.

Jared Bernstein joined the Economic Policy Institute in 1992. He is the author of the new book, "All Together Now: Common Sense for a Fair Economy." His areas of research include income inequality and mobility, trends in employment and earnings, low-wage labor markets and poverty, international comparisons, and the analysis of federal and state economic policies. Between 1995 and 1996, he held the post of deputy chief economist at the U.S. Department of Labor. He is the co-author of eight editions of the book The State of Working America and has published extensively in popular and academic venues. He holds a Ph.D. in Social Welfare from Columbia University

UN Official Says Humanitarian Crisis in Palestine

22 April 2007

By Sonia Nettnin

Chicago- Director of the Representative Office of UNRWA, Andrew Whitley spoke about the humanitarian crisis in Gaza and the West Bank.

This week a number of governments, led by the Canadians, will meet in Berlin where they will discuss political futures and options for refugees. Whitley talked about the living conditions of Palestinian refugees.

Who is Andrew Whitley? He works for UNRWA, the United Nations Relief and Works Agency for Palestinian Refugees in the Near East, located in New York. For over three years Whitley lived in Gaza, and he has worked on the subject of the Occupied Palestinian Territories for over 25 years. In Tehran and New York he worked as an academic; as a foreign correspondent specializing in Middle East, South Asia and Latin America, with the BBC and the Financial Times; and in human rights. He was the founding director of Middle East Watch – now Human Rights Watch/Middle East and North Africa.

The theme for his lecture, “Humanitarian Crisis in Palestine: A Gathering Storm,” focused on Gaza, which is one of the 59 officially-recognized refugee camps.

“We have become very alarmed by the fragmentation of Palestinian society particularly in the West Bank,” Whitley said.

With at least 530 barriers and checkpoints in place, peoples’ lives are completely disrupted. Moreover, Palestinian villages have been torn asunder by movement restrictions because they do not have normal economic life. He compared the size of the West Bank to the state of Connecticut, and with words he painted a picture of people living in atomized areas. Israel’s construction of a wall that is projected to be 700 km is 60 per cent complete. There is a degree of permanence to the sectioning because the Jordan Valley has been carved off for Israeli settlements and the West Bank has been divided into a northern and a southern area. As a result, the West Bank is now a trisection containing enclaves of Palestinian cities and villages.

Although the Israeli Army established checkpoints in the name of security, “I would argue the means to tackle these threats…leads to a sense of nihilism, pent up anger that …brings about the results they are trying to avoid,” Whitley explained.

Palestinians are Hungry – Weak Blood and Eyes Hurting

For the Palestinians, the situation is grave. In Gaza there are an estimated 1.4 million Palestinians and approximately 80 per cent of the population lives below the official poverty line at US $2.05 per day per capita. The Palestinian Gross Domestic Product collapsed by 23 per cent in the last year. One million, or 70 per cent of these people, are registered as refugees and 1.05 million people depend on international assistance.

“We keep (including the World Food Program) these people alive these days and the degree they have become dependent on the international community for lack of resources is troubling indeed,” Whitley said.

Since the parliamentary elections in January 2006, the Palestinians have been placed under economic siege. The strategy is to inflict political defeat on Hamas by inflicting the Palestinian population.

On February 16, 2006 it was Israeli Prime Ministerial Advisor Dov Weisglass who said: “The idea is to put the Palestinians on a diet, but not to make them die of hunger.”

According to Whitley, an estimated 40 per cent of Gaza’s population does not get an adequate supply of food, even with international assistance. The hospitals are approximately 20 per cent short of the necessary drugs and supplies needed for medical treatment. Although malnutrition has been a long-term problem with women and children, growth stunting and a worsening diet means “…children are not growing normally in all of their faculties…we will see long-term results within a decade but evidence is quite clear,” Whitley added.

In a video shot in Gaza recently, the UN conducted interviews with the people.

“Most children have bad health kids have weak blood they are weak and their eyes are hurting,” one man says.

Within the last year an estimated 450 business owners closed down. People try to trade their gold for cash, but they are turned away because there is no cash.

“People don’t have food. Life is difficult. People need food but they are hungry,” another person said.

One girl explained that she can see her father cannot bring home food.

Another boy said: “I feel all this but no one cares about us.”

In March 2006, Erez border crossing was closed to Palestinian laborers who work in Israel. The Israeli Government has imposed a gradual policy of zero Palestinian laborers in Israel.

The Karni border crossing closures have caused the delay of goods and cargo from moving in and out of Gaza. In 2006, Israel closed Karni 50 per cent of the working days. This means the thrust of the Palestinian economy in Gaza - agricultural products such as fruits, vegetables and flowers – rotted at the border crossing. In 2006 the UN paid one million in fees to Israeli companies because of the Karni crossing closures. Most of this one million came from European and US taxpayers.

Why did the UN have to pay these fees? Hundreds of full and empty shipping containers move in and out of Gaza. If the border crossing closes, cargo and goods are stored at Israeli ports and terminals. Therefore, trucks sit in park.

When the UN was trying to move their goods, they experienced the same situation and paid fees for crossing closures out of their control.

The overall impression is that the UN faces an acute moral dilemma. They want to help the refugees, but there are many political, social and economic factors preventing them from doing so. Perhaps the organization is being used. Although the humanitarian organization works in highly-politicized environments, one of their challenges is to preserve political neutrality.

When asked what he would say if he had the chance to talk with world leaders, Whitley made several statements. One of them was: “I would tell them that their policies are counterproductive.”

Recent Report on the Situation:

Oxfam survey: Financial boycott pushes Palestinians into poverty, April 13, 2007

FDA Was Aware of Dangers To Food

Outbreaks Were Not Preventable, Officials Say

By Elizabeth Williamson
Washington Post Staff Writer
Monday, April 23, 2007; A01

The Food and Drug Administration has known for years about contamination problems at a Georgia peanut butter plant and on California spinach farms that led to disease outbreaks that killed three people, sickened hundreds, and forced one of the biggest product recalls in U.S. history, documents and interviews show.

Overwhelmed by huge growth in the number of food processors and imports, however, the agency took only limited steps to address the problems and relied on producers to police themselves, according to agency documents.

Congressional critics and consumer advocates said both episodes show that the agency is incapable of adequately protecting the safety of the food supply.

FDA officials conceded that the agency's system needs to be overhauled to meet today's demands, but contended that the agency could not have done anything to prevent either contamination episode.

Last week, the FDA notified California state health officials that hogs on a farm in the state had likely eaten feed laced with melamine, an industrial chemical blamed for the deaths of dozens of pets in recent weeks. Officials are trying to determine whether the chemical's presence in the hogs represents a threat to humans.

Pork from animals raised on the farm has been recalled. The FDA has said its inspectors probably would not have found the contaminated food before problems arose. The tainted additive caused a recall of more than 100 different brands of pet food.

The outbreaks point to a need to change the way the agency does business, said Robert E. Brackett, director of the FDA's food-safety arm, which is responsible for safeguarding 80 percent of the nation's food supply.

"We have 60,000 to 80,000 facilities that we're responsible for in any given year," Brackett said. Explosive growth in the number of processors and the amount of imported foods means that manufacturers "have to build safety into their products rather than us chasing after them," Brackett said. "We have to get out of the 1950s paradigm."

Tomorrow, a House Energy and Commerce subcommittee will hold a hearing on the unprecedented spate of recalls.

"This administration does not like regulation, this administration does not like spending money, and it has a hostility toward government. The poisonous result is that a program like the FDA is going to suffer at every turn of the road," said Rep. John D. Dingell (D-Mich.), chairman of the full House committee. Dingell is considering introducing legislation to boost the agency's accountability, regulatory authority and budget.

In the peanut butter case, an agency report shows that FDA inspectors checked into complaints about salmonella contamination in a ConAgra Foods factory in Georgia in 2005. But when company managers refused to provide documents the inspectors requested, the inspectors left and did not follow up.

A salmonella outbreak that began last August and was traced to the plant's Peter Pan and Great Value peanut butter brands sickened more than 400 people in 44 states. The likely cause, ConAgra said, was moisture from a roof leak and a malfunctioning sprinkler system that activated dormant salmonella. The plant has since been closed.

The 2005 report shows that FDA inspectors were looking into "an alleged episode of positive findings of salmonella in peanut butter in October of 2004 that was related to new equipment and that the firm didn't react to, . . . insects in some equipment, water leaking onto product, and inability to track some product."

During the inspection, the report says, ConAgra admitted it had destroyed some product in October 2004 but would not say why.

"They asked for some of our documentation and we made the request to them that they put it in writing due to concerns about proprietary information," ConAgra spokeswoman Stephanie Childs said last week. "We did not receive a written request, . . . they filed the report and that was that."

Until February of this year. That's when the Centers for Disease Control and Prevention notified the FDA of a spike in salmonella cases in states near the ConAgra plant. The agencies contacted the company, which initiated a recall and shut the plant for upgrades.

Brackett said that if the FDA inspector had seen anything truly dangerous the agency would have taken further action. But, he said, the agency cannot force a disclosure, a recall or a plant closure except in extreme circumstances, such as finding a hazardous batch of product.

The problem in 2005, he added, "doesn't necessarily connect to the salmonella outbreak right now. It's not unusual to have it in raw agricultural commodities."

The FDA has known even longer about illnesses among people who ate spinach and other greens from California's Salinas Valley, the source of outbreaks over the past six months that have killed three people and sickened more than 200 in 26 states. The subsequent recall was the largest ever for leafy vegetables.

In a letter sent to California growers in late 2005, Brackett wrote, "FDA is aware of 18 outbreaks of foodborne illness since 1995 caused by [E. coli bacteria] for which fresh or fresh-cut lettuce was implicated. . . . In one additional case, fresh-cut spinach was implicated. These 19 outbreaks account for approximately 409 reported cases of illness and two deaths."

"We know that there are still problems out in those fields," Brackett said in an interview last week. "We knew there had been a problem, but we never and probably still could not pinpoint where the problem was. We could have that capability, but not at this point."

According to Caroline Smith DeWaal, who heads the Center for Science in the Public Interest, a consumer-advocacy group, "When budgets are tight . . . the food program at FDA gets hit the hardest."

In next year's budget, passed amid discovery of contamination problems in spinach, tomatoes and lettuce, Congress has voted the FDA a $10 million increase to improve food safety, DeWaal said. The Agriculture Department, which monitors meat, poultry and eggs and keeps inspectors in every processing plant, got an increase 10 times that amount to help pay for its inspection programs. The FDA visits problem food plants about once a year and the rest far less frequently, Brackett said.

William Hubbard, who retired as associate commissioner of the FDA in 2005 and founded the advocacy group Coalition for a Stronger FDA, said that when he joined the agency in the 1970s, its food safety arm claimed half its budget and personnel.

"Now it's about a quarter . . . at a time in which the problems have grown, the size of the industry has grown and imports of food have skyrocketed," Hubbard said.

Theory suggests we're heading for a depression

ON 13 March 2003, the FTSE All-Share index hit 1,676.6, the IT-driven peaks of three years before a distant and frustrating memory.

Just a few days ago this key benchmark broke through to more than 3,380, a rise of 100 per cent.

True, this advance has not been without interruption, punctuated, in fact, by two particularly sharp corrections, in May last year and February this year, but these were as short-lived as that most spectacular of all "panics" in recent memory, that of October 1987.

To an extent, market trends are the source rather than as the result of opinion, extending onwards until reality is suspended, at which point, like that cartoon Coyote suspended over the canyon pedalling furiously, a glance below triggers nemesis.

Although I am no chartist, the structure of a market often follows a distinct pattern, an initial sharp reaction followed by an equally robust change in direction, which persuades the majority that the original trend has been re-established and then a more sustained secondary pattern which, in turn, carries the conviction of permanence.

In truth, there are two fundamental aspects of any market trend.

One is the belief by the majority that "this time is different" and two, that it is not.

In fact, the phrase "this time is different" is almost as depressing as Evelyn Waugh's dislike of "red or white?" or "shall we go straight in?"

Personally, I suffer a serious nervous reaction to the news from my IT department that "we have upgraded your systems".

The trouble with cycles is that one is never very sure when they started and, as a result, they can only really be judged retrospectively.

In 1923, Joseph Kitchen announced his discovery of a 41-month cycle, while the French economist Clement Juglar, who died in 1905, identified a seven to 11-year business evolution.

Perhaps the most famous was the Kondratieff theory on wave cycle, "discovered" by the Russian Professor Nikolai Kondratieff and whose cycles are supposed to last anything between 45 to 60 years.

Prof Kondratieff helped to develop the first post-revolutionary Soviet five-year plan.

In his findings, he suggested that there were four distinct phases: beneficial inflation; stagflation; beneficial deflation and deflation.

Unfortunately - for him - his work and conclusions were seen as a criticism of Joseph Stalin and he ended up dying in a gulag in 1938.

Based on his theories, however, there was a period of beneficial inflation between 1949 to 1966, stagflation between 1966 and 1982, and beneficial deflation between 1982 and 2000.

We are now in that fourth stage, a deflation cycle which should lead to a depression.

Prof Kondratieff was building on the premise promoted by Juglar, who suggested that growth periods usually ended in a spectacular collapse of the proverbial bubble, with the consequential need of a purging of the system to restore reason.

It seems to me that we are depressingly close to just such a climax, depressing, that is, for one who makes a living out of investment markets; as Butch Cassidy said to the Sundance Kid: "You know kid, for a gun fighter you're a helluva pessimist!"

The human condition is prone to irrational enthusiasm, which can overwhelm anything from a playground to a lynch mob.

Peering into the investment market pond today suggests that the entire piscatorial shoal is engaged in a cycle of mutual ingestation, which can only lead to an acute attack of indigestion.

I am not saying there are no investment opportunities to be had but, when you have central bankers still obsessed by inflationary pressures which are as much as anything else a consequence of political initiatives or acts of the Almighty - high oil prices (Iraq and tax) - high food prices (hot weather) - and not from avaricious wage demands or spectacular speculative consumption binges, then there are problems on the horizon for us all, and especially for those who succumb to banks lending mortgages on an income multiple of six.

As Euripides said: "Whom the Gods would destroy, they first make mad."

• Bryan Johnston is a director of Bell Lawrie in Edinburgh.

Last updated: 21-Apr-07 01:00 BST

BBC Conspiracy Files 9/11

21 min 35 sec - 23-Apr-2007

BBC investigation into the events of September 11th 2001 points to the conclusion that there was complicity in the attacks reaching to the very highest levels of the US administration.

Bill Moyers Journal: Buying the War | Excerpt

Bill Moyers Journal: Buying the War | Excerpt | PBS


Buying the war

Red Rag

Red Rag - Dr Azmi Bishara

By Gideon Spiro

Friday, April 20, 2007

For the past couple of weeks the Israeli media have been full of stories about MK Dr Azmi Bishara. Everybody knows that the Shabak [Israel's internal security service] is stitching a case against Bishara, but there's a gag order on details of the investigation. The daily Haaretz and Bishara's party Balad have petitioned the Court to lift the gag order, but Judge Lia Lev-On - whom we remember well as a docile servant of the Shabak in the case of Tali Fahima - stayed true to herself and left the gag order in place. As a gesture to freedom of the press, she permitted the publication of what the whole country knew anyway - that an investigation was being conducted against MK Bishara... Thank you, your honor!

The gag order, however, doesn't prevent the Shabak from orchestrating a vicious campaign against Bishara, and there is no shortage of Shabak collaborators in the media. For example, Maariv's Dror Yemini, who relishes being the Shabak's rottweiler, inciting against Bishara like a racist hoodlum, and all in the name of looking after the interests of the Arabs. Reminds me of the antisemites who advised the Jews how to behave, so that they wouldn't be persecuted.

We've been around long enough to know what is meant by the coded message, "the Shabak is investigating" MK Bishara. The Shabak was permitted - probably by a Supreme Court judge - to listen to Bishara's telephones. The tap has been going on for over a year, and the intention couldn't be plainer - the Shabak sees Bishara as spearheading Israel's Arab citizens' awareness of their democratic and civil rights, their wish to exercise their rights on the personal and the national levels. The head of the Shabak stated publicly that his organisation would "take care" of the Arabs who challenge the concept of "a Jewish democratic state" - even if they don't break the law! - Meaning, that the Shabak is a political police, of the sort operated by totalitarian states.

Nothing is easier than making up charges of "endangering the security of the State", as we saw in the case of Tali Fahima. Azmi speaks on the phone with the whole Arab world - openly, politically. The Shabak can accuse him of "contact with a foreign agent" at any time. "On such-and-such date you talked with that Lebanese national, who is a Hizballah agent"... Now wait a minute - how is Bishara or anyone else to know this? Does he, or anyone else, have a way of checking it? Is it up to Bishara to interrogate every non-Israeli citizen to see if he or she is "a foreign agent"?

Such is the Israeli law, that a foreign agent is someone whom the Shabak decides to call a foreign agent, and it's up to you to prove otherwise. This way they can charge Bishara with whatever they like, and there's no shortage of dirty tricks. For instance (an actual case) - they patch a sentence from a telephone conversation made this morning with another sentence spoken last week, re-tape them, and there you have it - "aiding and abetting the enemy in wartime". Which is a capital offence.

The aim of the Shabak is obvious - to intimidate the Arab citizens and deter them from trying to exercise their civil and national rights. But even if the Shabak succeeds in harming Balad or Azmi Bishara, there is no going back to the days in the 1950s and half the 1960s, when the Arab population of Israel lived under martial law. The horses are out of the stable, and they're galloping towards a democratic society. A recent petition to the High Court of Justice by the Human Rights organisation Adala demonstrated it by calling for an investigation of the war crimes committed in Gaza in 2004, when hundreds of Palestinians were killed, including 44 children, and hundreds injured, hundreds of houses destroyed and thousands left homeless. Well done, Adala!

I don't agree with every word Azmi Bishara says, but overall we are allies in the struggle to lead Israel from being a Jewish state to being a democratic one. The Shabak investigation against Bishara is another proof that there is a fundamental contradiction between a Jewish state and a democratic one.

Even when you disagree with Bishara, it's a pleasure to dispute with him. He's a polymath, a thinker, a man of wide horizons and wide reading, and a good writer. In the Knesset he is a Gulliver amongst most members of Israel's parliament, who are narrow-minded Liliputians.

I don't know if Azmi Bishara will return to Israel or will find himself a niche elsewhere. If I were in his situation and with his health problems (a transplanted kidney), knowing that the Shabak is eager to put me in prison for the rest of my life, I'd certainly consider staying away. On the other hand, he is a political leader with a responsibility to his party and voters, so it's a difficult decision.

No Business Like Shoah Business

Every year the Shoah entrepreneurs come up with a new gimmick to mass-market it. This year they invented the "Witnesses in Uniform" - Israeli soldiers in uniform to visit Auschwitz. Great! Just the other day these same soldiers shelled civilian areas in Lebanon with thousands of cluster-bombs (a war crime), and only yesterday killed Palestinian children, road-blocked pregnant Palestinian women on their way to hospital, night-raided homes and wrecked them, forced at gunpoint two million Palestinians to live in walled ghettos assigned them by the occupation forces, held thousands of guerrilla fighters (including boys armed with catapults) in open-ended administrative detentions... Perhaps it was one of these "uniformed witnesses" who set a dog trained to kill Arabs in the Occupied Territories to attack a Palestinian woman (the photograph shocked some Holocaust survivors). What did these soldiers look for in Auschwitz? What lessons did they learn there? Studies made at Israeli universities have shown that the Auschwitz expeditions organised by the State of Israel intensify the racist outlook of the participants, strengthen their motivation to join the forces of the occupation, and provide them with a rationalization of their military crimes. In the present Israeli juncture, Auschwitz helps keep Israel vicious and racist.

Instead of sending uniformed soldiers to Auschwitz, and instead of holding numerous official ceremonies overflowing with self-righteousness and hypocrisy, it would be more appropriate to take better care of the thousands of remaining Holocaust survivors who live in squalid poverty, to increase their pensions, give them free medications - as is done in Germany - and allow them to end their lives in dignity. Yosef Lapid, the man who heads [the Holocaust memorial institution] "Yad Vashem", was Minister of Justice in Sharon's government, and could have pushed a law to protect the rights of the survivors, but he had little interest in those poor wretches, whose lives lie outside the sphere of the plutocratic elite which hands out grants and donations.

It's not as if money is unavaiable! - Just the other day the Government decided to add another billion shekels to the evacuated Gaza settlers, who had already received billions in over-generous compensation. But money can't be found for the Holocaust survivors, and the bureaucracy humiliates and abuses them. A survivor of Nazi persecution can't get money for dentures, because he can't prove to the satisfaction of the Treasury officials that he lost his teeth because of the Holocaust. The Israeli government makes these old and ailing survivors fill numerous questionnaires and produce various medical certificates to show that their illnesses and disabilities originate in the Holocaust. And these people in their seventies, eighties and nineties are crushed by the abusive pettiness and retreat into their misery. The admirers of the Nazis would no doubt grin with satisfaction at the bureaucratic nastiness of the Israeli government and its officials.

As the representative of the Jews who perished and the survivors, the State of Israel received vast sums in reparations from Germany, but instead of applying the funds generously to those who deserve them, the State spends them on settlements and on handouts to millionaires. Shoah business is rife with corruption. Billions have flowed and are still flowing through what is known as the Claims Conference - Jewish organisations (together with the Israeli Government and the Jewish Agency) who appointed themselves the heirs of the dead, and instead of providing the money primarily to the survivors, spend it on fat salaries, lawyers, grand offices, first-class travel... - anything but the needy survivors.

"Yad Vashem" is shockingly indifferent. Recently the grandson of a "Righteous Gentile" was thrown out of his apartment, because he failed to meet his mortgage payments. "Yad Vashem" said it was not their responsibility. Some cases are horrifying - one 85-year old survivor, living in a squalid one-room flat, subsisting on a 1,300 shekels monthly allowance, told the interviewer she was used to going hungry.

While case after case of corruption in the highest echelons of government and the dominant elite surface in the media, the Holocaust has become a highly profitable enterprise. Now we hear that an attorney named Gideon Fischer is about to present a class action in Germany for funds to pay for psychological assistance to the "second generation" of the Holocaust, the children of the survivors.

Prime Minister Olmert said at this year's ceremony at "Yad Vashem" that only a small minority in the world have comprehended and internalized the Holocaust. He's right, but he is not one of that minority. He is one of the great majority who have learned nothing. Instead of heading a global campaign against racism and fascism, Israel has become a hothouse for these evils. The State uses its awesome military might to protect fascistic racists in the occupied territories, and Israel's parliament passes laws reminiscent of the racist Nuremberg Laws passed by the Nazi regime - for example, the recent law barring Palestinians who are Israeli citizens from living with their Palestinian spouses from the occupied territories.

As a child, I witnessed the so-called Kristalnacht in Berlin in November 1938, and it fills me with shame to see what the State of Israel has become. So long as Israel continues being racist, continues to occupy neighbouring lands, violate human rights, commit war crimes and mistreat Holocaust survivors, I cannot stand up when the siren sounds on Holocaust Memorial Day.