Friday, December 8, 2006

Productivity slows as factory orders drop

Wages, benefits up at rate that was far below previous estimate
The Associated Press
Updated: 3:42 p.m. MT Dec 5, 2006

WASHINGTON - Growth in worker productivity slowed sharply in the summer while wages and benefits rose at a rate that was far below a previous estimate, a development likely to ease inflation worries at the Federal Reserve.

Productivity edged up at a 0.2 percent annual rate in the July-September quarter, the Commerce Department said Tuesday. That was slightly better than the zero change reported a month ago.

Wages and benefits per unit of output increased at an annual rate of 2.3 percent in the third quarter, much slower than the 3.8 percent advance previously estimated.

Analysts said this downward revision should ease fears at the Fed that wage pressures were threatening to send inflation sharply higher.

“Based on these numbers, the Fed can rest easy about the threat of inflation,” said Nariman Behravesh, chief economist at Global Insight, a private forecasting firm. “The only debate now seems to be about when the Fed will cut” interest rates.

Behravesh said if inflation remains benign and the overall economy continues to show weakness, the central bank might move as soon as March to start cutting rates.

After raising rates for two years to make sure inflation did not get out of hand, the Federal Reserve has left them unchanged since the summer with analysts expecting the Fed to remain on hold next week at its last meeting of the year.

The good news on inflation helped Wall Street rally for a second straight session. The Dow Jones industrial average rose 47.75 points to close at 12,331.60.

In other economic news, the Commerce Department said that orders to U.S. factories plunged 4.7 percent in October, the third decline in the past four months, and the biggest drop in more than six years. The manufacturing sector is starting to experience the adverse impact from this year’s slowdown in the overall economy with auto sales and home construction suffering.

Orders for durable goods, items expected to last at least three years, dropped 8.2 percent, a figure originally reported last week as an 8.3 percent decline. The weakness was led by a plunge in demand for commercial aircraft, but orders for a number of other products from autos to computers also fell. Demand for nondurable goods such as gasoline and food, edged down 0.3 percent.

A third report showed that the service sector of the economy, where most Americans work, grew at a quicker pace in November than in the previous month, shaking off some effects of the housing slump.

The Institute for Supply Management reported that its index of activity in service industries rose to 58.9 in November from 57.1 in October. That performance stood in contrast to the institute’s manufacturing gauge which dipped into recession territory last month.

The 0.2 percent growth rate for productivity followed a much stronger 1.2 percent increase in the spring and was the weakest performance since a 0.1 percent decline in productivity growth in the final three months of last year, a time when the economy was being buffeted by the effects of a string of Gulf Coast hurricanes.

The 2.3 percent increase in labor costs followed a 2.4 percent plunge in the second quarter and a 9 percent surge in the first quarter this year. The quarterly changes have been skewed by the payment of large bonuses at the beginning of the year.

While rising wages are good news for workers, the increases could fuel unwanted inflation when productivity, the amount of output per hour of work, is slowing sharply.

Increases in productivity are the key factor pushing living standards higher because they mean that businesses can pay their workers more because of the increased output without having to raise the price of their products.

However, if labor costs outpace the rise in productivity, it means that businesses either have to raise the cost of their products, which can push inflation higher, or trim profit margins.

Democrats, who are pushing to boost the minimum wage, contend median incomes are growing weakly in this expansion because of faulty economic policies pursued by President Bush.

But administration economists say that wage gains are starting to accelerate as companies begin to pay higher wages by trimming their sizable profit margins. Such an outcome would mean that stronger wage growth could be financed without triggering higher inflation.

URL

Impunity and Immunity: The Bush Administration Enters the Confessional

Tomgram: Greenberg, In a Confessing State of Mind

An early impulse of Bush administration officials after the attacks of September 11, 2001 was to take off "the gloves," or, as CIA Director George Tenet put it (so Ron Suskind tell us in his book, The One Percent Doctrine), "the shackles." Those were the "shackles" that they believed had been placed on the imperial presidency after Richard Nixon came so close to committing the constitutional coup d'état that we have come to call Watergate, but that involved an illegal war (in Cambodia), illegal wiretapping, illegal break-ins, robberies, black-bag jobs and so many other crossing-the-line events. That was the moment that Dick Cheney, Donald Rumsfeld, and all the Bush administration advocates of a "unitary executive theory" wanted to return us to -- the impeachable moment.

The neocons and their patrons, especially our Vice President, wanted to unchain executive power, but that wasn't all. They weren't about to waste perfectly good shackles. Another impulse of theirs after the 9/11 attacks was to capture or kidnap, detain, secretly imprison, shackle, and torture their enemies, picked up on battlefields as well as peaceful city streets around the world. The accumulation of leaked documentation from their secret world has long indicated that they had torture on the brain. The urge to institute a torture regime had, perhaps, less to do with torture itself than with the knowledge that if you somehow gained the right to torture, you could gain the right to do just about anything; you could, in short, unchain the presidency in a major way.

Perhaps the most striking thing about Bush administration officialdom was that, before they reached for their waterboards, they reached for their dictionaries; and so, out of their world of secret imprisonment, humiliation, and pain emerged an unending stream of twisted definitions of otherwise common terms in classified but quickly leaked documents. Karen Greenberg, executive director of NYU's Center for Law and Security and co-author of The Torture Papers (which collected all those grim classified memorials to these last years of excess), now considers the most secret impulse of all revealed by this sordid collection of documents -- the impulse to confess. Tom

Impunity and Immunity

The Bush Administration Enters the Confessional
By Karen Greenberg

Confession, the time-honored, soul-soothing last resort for those caught in error, may not survive the Bush administration. It has, after all, long made a mockery of such revelations by manufacturing an entire lexicon of coercive techniques to elicit often non-existent "truths" that would justify its detention policies. And yet, without being coerced in any way, administration officials have been confessing continually these past years -- in documents that may someday play a part in their own confrontation with justice.

The Bush administration trail of confessions can be found in the most unlikely of places -- the very memos and policy statements in which its officials were redefining reality in their search for the perfect (and perfectly grim) extractive methods that would give them the detainee confessions they so eagerly sought. These were the very documents that led first to Gitmo, then to Abu Ghraib, and finally deep into the hidden universe of pain that was their global network of secret prisons.

Strangely enough, the administration confessional was open for business within weeks of the attacks of September 11th, 2001. It could be found wrapped in persistent assertions of immunity, assertions that none of their acts to come could ever be brought before the bar of justice or the oversight of anyone. The first of these documents was issued on September 25th, 2001. Deputy Assistant Attorney General John Yoo, writing for the Office of Legal Counsel, laid out the reasons for the President of the United States to assume broad executive powers in the war on terror. The last footnote of the memo declared, "In the exercise of his plenary power to use military force, the President's decisions are for him alone and are unreviewable."

This notion of unreviewable behavior, then still buried in the land of footnotes, has characterized the administration's general stance on its war on terror policies. On January 9th, 2002, just as Guantanamo opened for business as a detention facility supposedly beyond the review of American courts, John Yoo and fellow Office of Legal Counsel member Robert Delahunty explained why a breach with international law would not constitute a crime for the Bush administration. In their secret memo, the United States, through the Justice Department, was to exempt itself ahead of time from the laws it was about to break. In essence, it was to give itself the equivalent of a hall pass for future illegal activities in the new policies and practices of detention.

The memo contorted the Geneva Conventions into a pretzel of excuses for America's impunity on the matter of war crimes; it offered tortured reasoning about the inapplicability of Common Article Three of the Conventions -- guaranteeing humane treatment during armed conflict to those individuals who are not engaged in battle (non-combatants, prisoners-of-war, those who have lain down their arms, etc.) -- to the conflicts then at hand. Thus, the Taliban was redefined not as a state but as a failed state; Al Qaeda became a non-state actor; the Conventions, they now claimed, were created largely for civil wars, not for "other types of internal armed conflict." As the memo asserted over and over again, "As a constitutional matter, the President has the power to consider performance of some or all of the obligations of the United States under the Conventions suspended."

In this way, any captives from our Afghan War were redefined as possible subjects for utterly lawless behavior, while the President was given the right not to follow international law. They put the matter this way: "The President could justifiably exercise his constitutional authority over treaties by regarding the Geneva Conventions as suspended in relation to Afghanistan."

Foreshadowing the infamous "torture memo" of 2002 in which the same group of advisors redefined torture, nearly casting it out of legal existence, this early opinion stated that American officials could only be held accountable in the following circumstances: "causing great suffering or serious bodily injury to POWs, killing or torturing them, depriving them of access to a fair trial, or forcing them to serve in the Armed Forces." The memo concluded with what would become the legal mantra of the Bush administration -- the assertion of immunity, stating that "customary international law has no binding legal effect on either the President or the military because it is not federal law."

As Guantanamo received its first planeloads of prisoners, Alberto Gonzales, then counsel to the President, and William J. Haynes, counsel to the Department of Defense, took the idea of administration immunity for war crimes to a new level. They used their high offices to clear the way for the substandard treatment of detainees. Trusted with the justice and safety of the nation, they both concurred with their colleagues at the Office of Legal Counsel: "We conclude that customary international law does not bind the President or the US Armed Forces in their decisions concerning the detention conditions of al Qaeda and Taliban prisoners."

Though confidently proposing ways that any future prosecution for war crimes could be avoided, these memo-style declarations of immunity proved insufficiently comforting to an administration that had, by its own implicit admission, chosen to take a giant step into realms outside anyone's previous definition of the law.

They soon grasped a simple point: Declaring themselves immune was one thing; ensuring immunity, quite another. To fully protect their clients -- the President of the United States as well as high Pentagon and CIA officials -- administration lawyers confronted the potential problem of domestic legal constraints on the mistreatment of detainees.

Gonzales tried to strengthen the assurances of Bush's legal team by concluding that declaring exemption from the Geneva Conventions in turn "substantially reduces the threat of domestic criminal prosecution." Attorney General John Ashcroft concluded that the President's determination in detention matters "was fully discretionary and will not be reviewed by the federal courts." Ashcroft made the stakes clear: If the prisoners in U.S. hands were considered prisoners of war, American law would "not accord American officials the same protection from legal consequences." Thus it became doubly crucial to redefine them not as POWs but as "enemy combatants."

To the Bush administration, words, it seemed, were everything. And if the laws, domestic and international, depended upon definitions, then the definitions of words would simply have to change across the board. So it was unavoidable that the first casualty in the President's Global War on Terror, which also became his global war for immunity, would be language itself. The captives who arrived at Gitmo were not to be called prisoners, nor was the facility itself to be referred to as a prison; it was a "detention facility" and the inmates were "detainees" and "enemy combatants." If other words were used -- prison, prisoner, prisoner-of-war -- then high officials and members of the Armed Forces would not, as Ashcroft explained, be immune from the law.

In the same vein, torture was to be banned from the premises (but only as a word); instead coercive techniques that for centuries plainly came under the rubric of torture were relabeled "counter-resistant coercive interrogation techniques." The infamous "torture memo" of August, 2002 drew narrow parameters around the definition of torture, which was now to be limited to "serious physical injury such as death." Repeatedly, the memo asserted that other methods "do not amount to torture." And it essentially turned the very definition of torture over to the torturer. Abetted here as elsewhere by the media, the Bush administration also successfully de-legitimized the statements of the detainees themselves, consigning them to the trash heap of history -- all of them were the accounts of well-drilled liars, false accusations inspired by Al Qaeda training manuals.

And yet, even reclassifying words and redrawing the lines of the law did not sufficiently assuage their fears -- and here's where the hidden confessional element of all this crept into play. They were clearly hounded by what can only be called a kind of lurking institutional conscience, a sense that the acts already being committed in their name (or future ones) might someday be declared illegal under laws and agreements they were trying unilaterally to abrogate, resulting in prosecutions.

So, to ensure that their legal reasoning and linguistic demands would hold sway in the policy world, Bush administration officials found they had to go even further. They determined to find a way to control the environment of detention as completely as possible. First, of course, they chose an American base in Cuba to be the jewel in the crown of the detention system they were putting in place globally because it seemed to lie "in legal limbo" outside any international or domestic legal system. Second, "ghost prisons," some in facilities borrowed from allies known to employ torture themselves, were established so that the techniques for extracting confessions, even though no longer defined as torture, could not be seen or known about. Third, just to be sure about things, the United States launched a campaign to free itself from any future international prosecution for war crimes under the auspices of the new International Criminal Court (ICC). In return for money and services, after cases of remarkable diplomatic arm twisting, 102 countries agreed, one by one, to an American demand for immunity from future ICC prosecution.

Then, the Bush administration charged ahead, convinced that it had addressed its legal liabilities and given itself that eternal hall pass. In truth, however, it had been confessing all along, laying out a remarkable record of tacit admission to criminal activity. The administration had, for example, informed the military commanders at Gitmo that they should consider themselves to be "guided by the Geneva Conventions but not bound by them." At Guantanamo and Abu Ghraib, interrogation needs took precedence over matters of detention -- and it was all on the official record.

The administration's urge to claim immunity, which is, in essence, the confession of crimes about to be committed (or already committed), has not waned over the years. If anything, it has gotten stronger. Only recently, for instance, John Yoo, now a law professor at the University of California, Berkeley, insisted once again that extralegal measures were necessary in the war on terror. "Is a second [9/11] attack," he wrote, "an acceptable price to pay for rejecting coercive interrogation?" He then suggested, among other ways of avoiding prosecution for such acts, a possibility that may loom ever larger before George W. Bush's second term in office is over -- the issuing of presidential pardons.

The President has weighed in aggressively on the issue as well, publicly embracing the idea of immunity. Twice, in his not-to-be-overlooked September 6th speech on the existence of the CIA "program" for "high-value detainees," the President insisted upon immunity for those involved in detention and interrogation. In this speech, in which he announced his intention to submit the Military Commissions Bill to Congress, he explained, "[S]ome believe our military and intelligence personnel involved in capturing and questioning terrorists could now be at risk of prosecution under the War Crimes Act -- simply for doing their jobs in a thorough and professional way. This," he declared, "is unacceptable." Moments later he reiterated his firm opposition to any such prosecutions. "I'm asking that Congress make it clear that captured terrorists cannot use the Geneva Conventions as a basis to sue our personnel in courts -- in U.S. courts. The men and women who protect us should not have to fear lawsuits filed by terrorists because they're doing their jobs."

What more could a prosecutor want than a trail of implicit confessions, consistent with one another, increasingly brazen over time, and leading right into the Oval Office? For five years now, the Bush administration has given itself an inviolable command: declare immunity for what you have done, what you are doing, and what you are about to do. When the President's Military Commission Bill did pass, its many astounding "reforms" actually codified immunity retroactively for a range of abuses against detainees.

To overlook the trail of confessions that is part and parcel of the administration's torture narrative is to perform an act of extraordinary rendition not just on the truth but also on the importance of confessions themselves. Professional interrogators, priests, psychiatrists, and others who deal with confession regularly say that people normally want to talk, that they want to tell you their story, that confession is a deep and satisfying part of all our lives.

In the case of the Bush administration, it is the documents themselves that seem to want to confess, that are bursting with the desire to talk, to tell the story of these last years of illegality. Americans, and the Congress they have just elected, should take heed. The time has come, after five years, to restore language, law, and accountability to the American ethos by insisting that declarations of immunity be seen for what they are: Confessions about actions that are both reviewable and unpardonable.

Karen J. Greenberg is the Executive Director of the Center for Law and Security at the NYU School of Law and is the co-editor of The Torture Papers: The Road to Abu Ghraib. She also edited The Torture Debate in America.

Copyright 2006 Karen Greenberg

They Told You So: PAUL KRUGMAN

THE COMPLETE ARTICLE
The New York Times

OP-ED COLUMNIST
They Told You So
By PAUL KRUGMAN

Published: December 8, 2006

I’d like to offer some praise to those who correctly predicted the folly of the Iraq war.

Shortly after U.S. forces marched into Baghdad in 2003, The Weekly Standard published a jeering article titled, "The Cassandra Chronicles: The stupidity of the antiwar doomsayers." Among those the article mocked was a "war novelist" named James Webb, who is now the senator-elect from Virginia.

The article's title was more revealing than its authors knew. People forget the nature of Cassandra's curse: although nobody would believe her, all her prophecies came true. And so it was with those who warned against invading Iraq. At best, they were ignored. A recent article in The Washington Post ruefully conceded that the paper's account of the debate in the House of Representatives over the resolution authorizing the Iraq war — a resolution opposed by a majority of the Democrats — gave no coverage at all to those antiwar arguments that now seem prescient.

--MORE--

The neocons have finished what the Vietcong started

Vietnam traumatised the US but left its power intact; Iraq, however, will be far more serious for the superpower

Martin Jacques
Friday December 8, 2006
The Guardian


Just a month after the American electorate delivered a resounding rebuff to the Bush Iraq policy, the great and the good - in the guise of the Iraq Study Group (ISG) - have subjected that policy to a withering critique. The administration has had the political equivalent of a car crash. George Bush is being routinely condemned as one of the worst presidents ever, and his Iraq policy no longer enjoys the support of a large swath of the American establishment. The neoconservatives suddenly find themselves isolated and embattled: Rumsfeld has been sacked, Cheney has gone quiet, the likes of Richard Perle are confined to the sidelines. The president is on his own and it is difficult to see how Bush can avoid moving towards the ISG position. The political map is being redrawn with extraordinary alacrity.

Before our eyes, the neoconservative position is disintegrating. Its foreign-policy tenets have been shown to be false. As is now openly admitted, they have brought the US to the verge of disaster in Iraq, which is why the American version of the "men in grey suits" has ridden to the rescue. After less than six years in office, elected at a time when the US was unchallenged as the sole superpower, the Bush administration has managed to deliver the country to the edge of what can only be compared to a Vietnam moment: the political and military defeat of the central and defining plank of American foreign policy.

Of course, in one sense it is quite unlike Vietnam. In 1975 the Americans suffered a spectacular military defeat at the hands of North Vietnam and the Vietcong, with US helicopters seeking to rescue leading US personnel from the tops of buildings as Vietnamese guerrillas closed in on the centre of Saigon. It was to shape American foreign policy - in particular, a desire to avoid overseas military entanglements - for decades. Indeed, the rise of the neoconservatives was partly predicated on a rejection of what they saw as American defeatism during and after the Vietnam war. Iraq is very different. There is no single enemy with a clear military strategy. Baghdad will not be Saigon. This is a case of an endless, bloody and unwinnable quagmire rather than any spectacular denouement in waiting.

But the Iraq moment is far more dangerous for the US than the Vietnam moment. Although one of the key justifications for the Vietnam war was to prevent the spread of communism, the US defeat was to produce nothing of the kind: apart from the fact that Cambodia and Laos became embroiled, the effects were essentially confined to Vietnam. There were no wider political repercussions in east Asia: ironically, it was China that was to invade North Vietnam in 1979 (and deservedly got a bloody nose).

The regional consequences of the Iraq imbroglio are, in comparison, immediate, profound and far-reaching. The civil war threatens to unhinge more or less the entire Middle East. The neoconservative strategy - to remake the region single-handedly (with the support of Israel, of course) - has been undermined by its own hubris. The American dilemma is patent in some of the key recommendations of the ISG report: to involve Iran and Syria in any Iraqi settlement (including the return of the Golan Heights to Syria) and to seek a new agreement between Israel and Palestine. In short, it proposes a reversal of the key strands of Bush's foreign policy

From a longer-term perspective, moreover, it is already clear that it will be impossible for the Americans to restore the status quo ante in the region. The failure of the occupation has shown the limitations of its power - which every country, from Iran and Syria to Israel and Saudi Arabia (not to mention Hizbullah and Hamas), will have noted. The US has been the decisive arbiter in the Middle East since the end of the Suez crisis in 1956, albeit with the Soviet Union playing a secondary role until 1989. The American era is now over.

In future the US will be forced to share its influence with regional powers such as Iran, with the EU - and no doubt in time, with emerging global players such as China and perhaps even Russia. Such a scenario may well mean that the key alliance that has shaped the Middle East since 1956 - between the US and Israel - will no longer be so pivotal and could be increasingly downgraded. From a regional standpoint, it is clear that the Iraq moment is far more serious for the US than the Vietnam moment.

What is true regionally is also the case globally. We are reminded of how even the most powerful and, indeed, the most knowledgeable can get things profoundly wrong. It is worthwhile recalling the longer-term global context of the American defeat in Vietnam. It did not signal any serious upturn in the fortunes of the Soviet Union; this was already in a state of economic stagnation and growing political paralysis that was to become terminal in the 80s, leaving the US as the sole superpower. It was this that encouraged the neoconservatives to utterly misread the historical runes at the end of the 90s. They believed that the world was ripe for a huge expansion of American power and influence.

A few years later we can see the full absurdity of this position. Far from the US being in the ascendant, deeper trends have moved in the opposite direction. The US might enjoy overwhelming military advantage, but its relative economic power, which in the long run is almost invariably decisive, is in decline. The interregnum after the cold war, far from being the prelude to a new American age, was bearing the signs of what is now very visible: the emergence of a multipolar world. By misreading global trends, the Bush administration's embrace of unilateralism not only provoked the Iraq disaster but also hastened American decline.

An increasingly multipolar world requires an entirely different kind of US foreign policy: far from being unilateralist, it necessitates a complex form of power-sharing on both a global and regional basis. This is not only the opposite to neoconservative unilateralism, it is also entirely different from the simplicities of superpower cooperation and rivalry in the bipolar world of the cold war. The new approach is implicit in the ISG report, which recognises that any resolution of the Iraq crisis depends on the involvement of Iran and Syria. Elements of this approach are already apparent on the Korean peninsula and in Latin America. The ramifications of the Iraq moment will surely influence US foreign policy for decades to come.

· Martin Jacques is a visiting research fellow at the Asia Research Centre, London School of Economics

Martinjacques1@aol.com

50 articles posted at the other blog

Yesterday:

CRIMES AND CORRUPTION OF THE NEW WORLD ORDER NEWS

Alaska Lawmaker Arrested in FBI Probe

Friday December 8, 2006 11:31 AM

ANCHORAGE, Alaska (AP) - A state legislator was arrested on a federal bribery warrant, three months after federal agents raided the offices of at least six Alaska lawmakers in an investigation into a large oil field services company.

Rep. Tom Anderson was arrested Thursday at his Anchorage home and was being held at the city jail, FBI Special Agent Eric Gonzalez told The Associated Press.

Anderson's name had not appeared on a list of offices raided in late August and early September. Agents were searching for possible ties between the lawmakers and VECO Corp., officials and aides have said.

A copy of one of the search warrants obtained by the AP at the time linked the investigation to a new petroleum profits tax and a proposed natural gas pipeline contract.

No other arrests were made Thursday. Gonzalez said the investigation was ongoing and referred questions to the Department of Justice.

A message left late Thursday with Justice Department officials was not immediately returned.

Anderson, who was elected to the state House four years ago, did not seek re-election. He leaves office this month.

There was no home listing for him. His father, Tom Anderson, former director of the Alaska State Troopers, declined to comment on the arrest.

During the raids, about 20 warrants were executed across Alaska, but federal authorities would not say who received them.

VECO pledged to cooperate with the investigation.

``VECO was disappointed by the suggestion that there had been illegal or improper conduct on the part of the company or its executives,'' the company said on its Web site at the time.

The Baker Boys: Stay Half the Course

Iraq Study Group or Saudi Protection League?

by Greg Palast

They’re kidding, right?

James Baker III and the seven dwarfs of the “Iraq Study Group” have come up with some simply brilliant recommendations. Not.

Baker’s Two Big Ideas are:

1. Stay half the course. Keeping 140,000 troops in Iraq is a disaster getting more disastrous. The Baker Boys’ idea: cut the disaster in half — leave 70,000 troops there.

But here’s where dumb gets dumber: the Bakerites want to “embed” US forces in Iraqi Army units. Question one, Mr. Baker: What Iraqi Army? This so-called “army” is a rough confederation of Shia death squads. We can tell our troops to get “embedded” with them, but the Americans won’t get much sleep.

2. “Engage” Iran. This is a good one. How can we get engaged when George Bush hasn’t even asked them out for a date? What will induce the shy mullahs of Iran to accept our engagement proposal? Answer: The Bomb.

Let me explain. To get the Iranians to end their subsidizing the Mahdi Army and other Shia cut-throats, the Baker bunch suggest we let the permanent members of the UN Security Council — plus, Germany — decide the issue of Iran’s nukes. Attaching Germany is the signal. These signers of the Non-Proliferation Treaty (NPT) agree that Iran should be allowed a “peaceful” nuclear power program.

Now, I am absolutely wary of neo-con nuts who want to blow Iran to Kingdom-come over its nuclear ambitions. But that doesn’t mean we should kid ourselves. Iran has zero need of “peaceful” nuclear-generated electricity. It has the second-largest untapped reserve of natural gas on the planet, a clean, safe, cheap source of power. There’s only one reason for a “nuclear” program, and it’s not to light Mahmoud Ahmadinejad’s bedside lamp.

Here’s the problem with Baker’s weird combo of embedding our boys with Iraq’s scary army while sucking up to the Iranians: it won’t work. The mayhem will continue, with Americans in the middle, because the Baker brigade dares not mention two words: “Saudi” and “Arabia.”

Saudi Arabia is the elephant in the room (camel in the tent?) that can’t be acknowledged — and the reason Baker is so desperately anxious to sell America on keeping half our soldiers in harm’s way.

James III wants to seduce or bully Iran into stopping their funding of the murderous Shia militias. But the Shias only shifted into mass killing mode in response to the murder spree by Sunni “insurgents.”

Where do the Sunnis get their money for mayhem? According to a seething memo by the National Security Agency (November 8, 2006), the Saudis control the, “public or private funding provided to the insurgents or death squads.” Nice.

Baker wants us to bribe or blackmail Iran into stopping one side in Iraq’s uncivil war, the Shia. Yet we close our eyes to the Saudis acting as a piggy bank for the other side, the Sunni berserkers. (The House of Saud follows Wahabi Islam, a harsh, fundamentalist sect of Sunnism.)

Why is Baker, ordinarily such a tough guy, so coy with the Saudis? Baker Botts, the law firm he founded, became a wealthy powerhouse by representing Saudi Arabia. But don’t worry, the Iraq Study Group is balanced by Democrats including Vernon Jordan of the law firm of Akin, Gump which represents … Saudi royals.

Of course, the connections between Baker, the Bush Family and the Saudis go way beyond a few legal bills. (See, “The Best Little Legal Whorehouse in Texas” in my book Armed Madhouse.

Baker is more than aware that, two weeks ago, Dick Cheney dropped his Thanksgiving turkey to fly to Riyadh, at the demand of the Saudis, for a dressing down by King Abdullah. The King wants US forces to stay to baby-sit the Shias in Iraq’s army. The Saudis have made it clear that, if the US pulls out our troops, Saudi Arabians will crank up payments to their brothers, the Sunni warlords in Iraq, and Baghdad, or the entire region, will run with blood.

The outcome was foregone: King Abdullah’s wish is Cheney’s command — and Baker’s too. And so 70,000 of our soldiers will stay.

What gives King Abdullah the power to ghost-write the Iraq Study Group recommendations? It’s not because the Saudis sell us broccoli.

And therein lies the danger. Behind the fratricidal fracas in Iraq is something even more dangerous than civil war — a proxy war between Iran and Saudi Arabia over control of Iraq’s pivotal position in OPEC, the oil cartel.

Because what is painted by Baker’s Iraq Study Group as an ancient local clash between Shia and Sunni over the Kingdom of God, is, in fact, a remote control war between Iran and Saudi Arabia over the Kingdom of Oil.

*******

Greg Palast is the author of the New York Times bestseller, “Armed Madhouse” which includes Palast’s investigation, conducted for Harper’s Magazine, of the secret role of James Baker III and Saudi Arabia in the forming of US plans for Iraq’s oil.

Get a signed copy of Armed Madhouse for the holidays or browse for other signed gifts at www.PalastInvestigativeFund.org