The Financialization of Capitalism

UPDATE - April 25, 2007 - Editor's note: I am posting at the the primary blog.

See yesterday's stories here below.

April 2007

by John Bellamy Foster

Changes in capitalism over the last three decades have been commonly characterized using a trio of terms: neoliberalism, globalization, and financialization. Although a lot has been written on the first two of these, much less attention has been given to the third.1 Yet, financialization is now increasingly seen as the dominant force in this triad. The financialization of capitalism—the shift in gravity of economic activity from production (and even from much of the growing service sector) to finance—is thus one of the key issues of our time. More than any other phenomenon it raises the question: has capitalism entered a new stage?

I will argue that although the system has changed as a result of financialization, this falls short of a whole new stage of capitalism, since the basic problem of accumulation within production remains the same. Instead, financialization has resulted in a new hybrid phase of the monopoly stage of capitalism that might be termed “monopoly-finance capital.”² Rather than advancing in a fundamental way, capital is trapped in a seemingly endless cycle of stagnation and financial explosion. These new economic relations of monopoly-finance capital have their epicenter in the United States, still the dominant capitalist economy, but have increasingly penetrated the global system.

The origins of the term “financialization” are obscure, although it began to appear with increasing frequency in the early 1990s.³ The fundamental issue of a gravitational shift toward finance in capitalism as a whole, however, has been around since the late 1960s. The earliest figures on the left (or perhaps anywhere) to explore this question systematically were Harry Magdoff and Paul Sweezy, writing for Monthly Review.⁴

As Robert Pollin, a major analyst of financialization who teaches economics at the University of Massachusetts at Amherst, has noted: “beginning in the late 1960s and continuing through the 1970s and 1980s” Magdoff and Sweezy documented “the emerging form of capitalism that has now become ascendant—the increasing role of finance in the operations of capitalism. This has been termed ‘financialization,’ and I think it’s fair to say that Paul and Harry were the first people on the left to notice this and call attention [to it]. They did so with their typical cogency, command of the basics, and capacity to see the broader implications for a Marxist understanding of reality.” As Pollin remarked on a later occasion: “Harry [Magdoff] and Paul Sweezy were true pioneers in recognizing this trend....[A] major aspect of their work was the fact that these essays [in Monthly Review over three decades] tracked in simple but compelling empirical detail the emergence of financialization as a phenomenon....It is not clear when people on the left would have noticed and made sense of these trends without Harry, along with Paul, having done so first.”⁵

From Stagnation to Financialization

In analyzing the financialization of capitalism, Magdoff and Sweezy were not mere chroniclers of a statistical trend. They viewed this through the lens of a historical analysis of capitalist development. Perhaps the most succinct expression of this was given by Sweezy in 1997, in an article entitled “More (or Less) on Globalization.” There he referred to what he called “the three most important underlying trends in the recent history of capitalism, the period beginning with the recession of 1974–75: (1) the slowing down of the overall rate of growth, (2) the worldwide proliferation of monopolistic (or oligipolistic) multinational corporations, and (3) what may be called the financialization of the capital accumulation process.”

For Sweezy these three trends were “intricately interrelated.” Monopolization tends to swell profits for the major corporations while also reducing “the demand for additional investment in increasingly controlled markets.” The logic is one of “more and more profits, fewer and fewer profitable investment opportunities, a recipe for slowing down capital accumulation and therefore economic growth which is powered by capital accumulation.”

The resulting “double process of faltering real investment and burgeoning financialization” as capital sought to find a way to utilize its economic surplus, first appeared with the waning of the “‘golden age’ of the post-Second World War decades and has persisted,” Sweezy observed, “with increasing intensity to the present.”⁶

This argument was rooted in the theoretical framework provided by Paul Baran and Paul Sweezy’s Monopoly Capital (1966), which was inspired by the work of economists Michal Kalecki and Josef Steindl—and going further back by Karl Marx and Rosa Luxemburg.⁷ The monopoly capitalist economy, Baran and Sweezy suggested, is a vastly productive system that generates huge surpluses for the tiny minority of monopolists/oligopolists who are the primary owners and chief beneficiaries of the system. As capitalists they naturally seek to invest this surplus in a drive to ever greater accumulation. But the same conditions that give rise to these surpluses also introduce barriers that limit their profitable investment. Corporations can just barely sell the current level of goods to consumers at prices calibrated to yield the going rate of oligopolistic profit. The weakness in the growth of consumption results in cutbacks in the utilization of productive capacity as corporations attempt to avoid overproduction and price reductions that threaten their profit margins. The consequent build-up of excess productive capacity is a warning sign for business, indicating that there is little room for investment in new capacity.

For the owners of capital the dilemma is what to do with the immense surpluses at their disposal in the face of a dearth of investment opportunities. Their main solution from the 1970s on was to expand their demand for financial products as a means of maintaining and expanding their money capital. On the supply side of this process, financial institutions stepped forward with a vast array of new financial instruments: futures, options, derivatives, hedge funds, etc. The result was skyrocketing financial speculation that has persisted now for decades.

Among orthodox economists there were a few who were concerned early on by this disproportionate growth of finance. In 1984 James Tobin, a former member of Kennedy’s Council of Economic Advisers and winner of the Nobel Prize in economics in 1981, delivered a talk “On the Efficiency of the Financial System” in which he concluded by referring to “the casino aspect of our financial markets.” As Tobin told his audience:

I confess to an uneasy Physiocratic suspicion...that we are throwing more and more of our resources...into financial activities remote from the production of goods and services, into activities that generate high private rewards disproportionate to their social productivity. I suspect that the immense power of the computer is being harnessed to this ‘paper economy,’ not to do the same transactions more economically but to balloon the quantity and variety of financial exchanges. For this reason perhaps, high technology has so far yielded disappointing results in economy-wide productivity. I fear that, as Keynes saw even in his day, the advantages of the liquidity and negotiability of financial instruments come at the cost of facilitating nth-degree speculation which is short-sighted and inefficient....I suspect that Keynes was right to suggest that we should provide greater deterrents to transient holdings of financial instruments and larger rewards for long-term investors.⁸

Tobin’s point was that capitalism was becoming inefficient by devoting its surplus capital increasingly to speculative, casino-like pursuits, rather than long-term investment in the real economy.⁹ In the 1970s he had proposed what subsequently came to be known as the “Tobin tax” on international foreign exchange transactions. This was designed to strengthen investment by shifting the weight of the global economy back from speculative finance to production.

In sharp contrast to those like Tobin who suggested that the rapid growth of finance was having detrimental effects on the real economy, Magdoff and Sweezy, in a 1985 article entitled “The Financial Explosion,” claimed that financialization was functional for capitalism in the context of a tendency to stagnation:

Does the casino society in fact channel far too much talent and energy into financial shell games. Yes, of course. No sensible person could deny it. Does it do so at the expense of producing real goods and services? Absolutely not. There is no reason whatever to assume that if you could deflate the financial structure, the talent and energy now employed there would move into productive pursuits. They would simply become unemployed and add to the country’s already huge reservoir of idle human and material resources. Is the casino society a significant drag on economic growth? Again, absolutely not. What growth the economy has experienced in recent years, apart from that attributable to an unprecedented peacetime military build-up, has been almost entirely due to the financial explosion.¹⁰

In this view capitalism was undergoing a transformation, represented by the complex, developing relation that had formed between stagnation and financialization. Nearly a decade later in “The Triumph of Financial Capital” Sweezy declared:

I said that this financial superstructure has been the creation of the last two decades. This means that its emergence was roughly contemporaneous with the return of stagnation in the 1970s. But doesn’t this fly in the face of all previous experience? Traditionally financial expansion has gone hand-in-hand with prosperity in the real economy. Is it really possible that this is no longer true, that now in the late twentieth century the opposite is more nearly the case: in other words, that now financial expansion feeds not on a healthy real economy but on a stagnant one?

The answer to this question, I think, is yes it is possible, and it has been happening. And I will add that I am quite convinced that the inverted relation between the financial and the real is the key to understanding the new trends in the world [economy].

In retrospect, it is clear that this “inverted relation” was a built-in possibility for capitalism from the start. But it was one that could materialize only in a definite stage of the development of the system. The abstract possibility lay in the fact, emphasized by both Marx and Keynes, that the capital accumulation process was twofold: involving the ownership of real assets and also the holding of paper claims to those real assets. Under these circumstances the possibility of a contradiction between real accumulation and financial speculation was intrinsic to the system from the start.

Although orthodox economists have long assumed that productive investment and financial investment are tied together—working on the simplistic assumption that the saver purchases a financial claim to real assets from the entrepreneur who then uses the money thus acquired to expand production—this has long been known to be false. There is no necessary direct connection between productive investment and the amassing of financial assets. It is thus possible for the two to be “decoupled” to a considerable degree.¹¹ However, without a mature financial system this contradiction went no further than the speculative bubbles that dot the history of capitalism, normally signaling the end of a boom. Despite presenting serious disruptions, such events had little or no effect on the structure and function of the system as a whole.

It took the rise of monopoly capitalism in the late nineteenth and early twentieth centuries and the development of a market for industrial securities before finance could take center-stage, and before the contradiction between production and finance could mature. In the opening decades of the new regime of monopoly capital, investment banking, which had developed in relation to the railroads, emerged as a financial power center, facilitating massive corporate mergers and the growth of an economy dominated by giant, monopolistic corporations. This was the age of J. P. Morgan. Thorstein Veblen in the United States and Rudolf Hilferding in Austria both independently developed theories of monopoly capital in this period, emphasizing the role of finance capital in particular.

Nevertheless, when the decade of the Great Depression hit, the financial superstructure of the monopoly capitalist economy collapsed, marked by the 1929 stock market crash. Finance capital was greatly diminished in the Depression and played no essential role in the recovery of the real economy. What brought the U.S. economy out of the Depression was the huge state-directed expansion of military spending during the Second World War.¹²

When Paul Baran and Paul Sweezy wrote Monopoly Capital in the early 1960s they emphasized the way in which the state (civilian and military spending), the sales effort, a second great wave of automobilization, and other factors had buoyed the capitalist economy in the golden age of the 1960s, absorbing surplus and lifting the system out of stagnation. They also pointed to the vast amount of surplus that went into FIRE (finance, investment, and real estate), but placed relatively little emphasis on this at the time.

However, with the reemergence of economic stagnation in the 1970s Sweezy, now writing with Magdoff, focused increasingly on the growth of finance. In 1975 in “Banks: Skating on Thin Ice,” they argued that “the overextension of debt and the overreach of the banks was exactly what was needed to protect the capitalist system and its profits; to overcome, at least temporarily, its contradictions; and to support the imperialist expansion and wars of the United States.”¹³

Monopoly-Finance Capital

If in the 1970s “the old structure of the economy, consisting of a production system served by a modest financial adjunct” still remained—Sweezy observed in 1995—by the end of the 1980s this “had given way to a new structure in which a greatly expanded financial sector had achieved a high degree of independence and sat on top of the underlying production system.”¹⁴ Stagnation and enormous financial speculation emerged as symbiotic aspects of the same deep-seated, irreversible economic impasse.

This symbiosis had three crucial aspects: (1) The stagnation of the underlying economy meant that capitalists were increasingly dependent on the growth of finance to preserve and enlarge their money capital. (2) The financial superstructure of the capitalist economy could not expand entirely independently of its base in the underlying productive economy—hence the bursting of speculative bubbles was a recurrent and growing problem.¹⁵ (3) Financialization, no matter how far it extended, could never overcome stagnation within production.

The role of the capitalist state was transformed to meet the new imperatives of financialization. The state’s role as lender of last resort, responsible for providing liquidity at short notice, was fully incorporated into the system. Following the 1987 stock market crash the Federal Reserve adopted an explicit “too big to fail” policy toward the entire equity market, which did not, however, prevent a precipitous decline in the stock market in 2000.¹⁶

These conditions marked the rise of what I am calling “monopoly-finance capital” in which financialization has become a permanent structural necessity of the stagnation-prone economy.

Class and Imperial Implications

If the roots of financialization are clear from the foregoing, it is also necessary to address the concrete class and imperial implications. Given space limitations I will confine myself to eight brief observations.

(1) Financialization can be regarded as an ongoing process transcending particular financial bubbles. If we look at recent financial meltdowns beginning with the stock market crash of 1987, what is remarkable is how little effect they had in arresting or even slowing down the financialization trend. Half the losses in stock market valuation from the Wall Street blowout between March 2000 and October 2002 (measured in terms of the Standard and Poor’s 500) had been regained only two years later. While in 1985 U.S. debt was about twice GDP, two decades later U.S. debt had risen to nearly three-and-a-half times the nation’s GDP, approaching the $44 trillion GDP of the entire world. The average daily volume of foreign exchange transactions rose from $570 billion in 1989 to $2.7 trillion dollars in 2006. Since 2001 the global credit derivatives market (the global market in credit risk transfer instruments) has grown at a rate of over 100 percent per year. Of relatively little significance at the beginning of the new millennium, the notional value of credit derivatives traded globally ballooned to $26 trillion by the first half of 2006.¹⁷

(2) Monopoly-finance capital is a qualitatively different phenomenon from what Hilferding and others described as the early twentieth-century age of “finance capital,” rooted especially in the dominance of investment-banking. Although studies have shown that the profits of financial corporations have grown relative to nonfinancial corporations in the United States in recent decades, there is no easy divide between the two since nonfinancial corporations are also heavily involved in capital and money markets.¹⁸ The great agglomerations of wealth seem to be increasingly related to finance rather than production, and finance more and more sets the pace and the rules for the management of the cash flow of nonfinancial firms. Yet, the coalescence of nonfinancial and financial corporations makes it difficult to see this as constituting a division within capital itself.

(3) Ownership of very substantial financial assets is clearly the main determinant of membership in the capitalist class. The gap between the top and the bottom of society in financial wealth and income has now reached astronomical proportions. In the United States in 2001 the top 1 percent of holders of financial wealth (which excludes equity in owner-occupied houses) owned more than four times as much as the bottom 80 percent of the population. The nation’s richest 1 percent of the population holds $1.9 trillion in stocks about equal to that of the other 99 percent.19 The income gap in the United States has widened so much in recent decades that Federal Reserve Board Chairman Ben S. Bernanke delivered a speech on February 6, 2007, on “The Level and Distribution of Economic Well Being,” highlighting “a long-term trend toward greater inequality seen in real wages.” As Bernanke stated, “the share of after-tax income garnered by the households in the top 1 percent of the income distribution increased from 8 percent in 1979 to 14 percent in 2004.” In September 2006 the richest 60 Americans owned an estimated $630 billion worth of wealth, up almost 10 percent from the year before (New York Times, March 1, 2007).

Recent history suggests that rapid increases in inequality have become built-in necessities of the monopoly-finance capital phase of the system. The financial superstructure’s demand for new cash infusions to keep speculative bubbles expanding lest they burst is seemingly endless. This requires heightened exploitation and a more unequal distribution of income and wealth, intensifying the overall stagnation problem.

(4) A central aspect of the stagnation-financialization dynamic has been speculation in housing. This has allowed homeowners to maintain their lifestyles to a considerable extent despite stagnant real wages by borrowing against growing home equity. As Pollin observed, Magdoff and Sweezy “recognized before almost anybody the increase in the reliance on debt by U.S. households [drawing on the expanding equity of their homes] as a means of maintaining their living standard as their wages started to stagnate or fall.”20 But low interest rates since the last recession have encouraged true speculation in housing fueling a housing bubble. Today the pricking of the housing bubble has become a major source of instability in the U.S. economy. Consumer debt service ratios have been rising, while the soaring house values on which consumers have depended to service their debts have disappeared at present. The prices of single-family homes fell in more than half of the country’s 149 largest metropolitan areas in the last quarter of 2006 (New York Times, February 16, 2007).

So crucial has the housing bubble been as a counter to stagnation and a basis for financialization, and so closely related is it to the basic well-being of U.S. households, that the current weakness in the housing market could precipitate both a sharp economic downturn and widespread financial disarray. Further rises in interest rates have the potential to generate a vicious circle of stagnant or even falling home values and burgeoning consumer debt service ratios leading to a flood of defaults. The fact that U.S. consumption is the core source of demand for the world economy raises the possibility that this could contribute to a more globalized crisis.

(5) A thesis currently popular on the left is that financial globalization has so transformed the world economy that states are no longer important. Rather, as Ignacio Ramonet put it in “Disarming the Market” (Le Monde Diplomatique, December 1997):

Financial globalization is a law unto itself and it has established a separate supranational state with its own administrative apparatus, its own spheres of influence, its own means of action. That is to say, the International Monetary Fund (IMF), the World Bank, the Organization of Economic Cooperation and Development (OECD) and the World Trade Organization (WTO)....This artificial world state is a power with no base in society. It is answerable instead to the financial markets and the mammoth business undertakings that are its masters. The result is that the real states in the real world are becoming societies with no power base. And it is getting worse all the time.

Such views, however, have little real basis. While the financialization of the world economy is undeniable, to see this as the creation of a new international of capital is to make a huge leap in logic. Global monopoly-finance capitalism remains an unstable and divided system. The IMF, the World Bank, and the WTO (the heir to GATT) do not (even if the OECD were also added in) constitute “a separate supranational state,” but are international organizations that came into being in the Bretton Woods System imposed principally by the United States to manage the global system in the interests of international capital following the Second World War. They remain under the control of the leading imperial states and their economic interests. The rules of these institutions are applied asymmetrically—least of all where such rules interfere with U.S. capital, most of all where they further the exploitation of the poorest peoples in the world.

(6) What we have come to call “neoliberalism” can be seen as the ideological counterpart of monopoly-finance capital, as Keynsianism was of the earlier phase of classical monopoly capital. Today’s international capital markets place serious limits on state authorities to regulate their economies in such areas as interest-rate levels and capital flows. Hence, the growth of neoliberalism as the hegemonic economic ideology beginning in the Thatcher and Reagan periods reflected to some extent the new imperatives of capital brought on by financial globalization.

(7) The growing financialization of the world economy has resulted in greater imperial penetration into underdeveloped economies and increased financial dependence, marked by policies of neoliberal globalization. One concrete example is Brazil where the first priority of the economy during the last couple of decades under the domination of global monopoly-finance capital has been to attract foreign (primarily portfolio) investment and to pay off external debts to international capital, including the IMF. The result has been better “economic fundamentals” by financial criteria, but accompanied by high interest rates, deindustrialization, slow growth of the economy, and increased vulnerability to the often rapid movements of global finance.²¹

(8) The financialization of capitalism has resulted in a more uncontrollable system. Today the fears of those charged with the responsibility for establishing some modicum of stability in global financial relations are palpable. In the early 2000s in response to the 1997–98 Asian financial crisis, the bursting of the “New Economy” bubble in 2000, and Argentina’s default on its foreign debts in 2001, the IMF began publishing a quarterly Global Financial Stability Report. One scarcely has to read far in its various issues to get a clear sense of the growing volatility and instability of the system. It is characteristic of speculative bubbles that once they stop expanding they burst. Continual increase of risk and more and more cash infusions into the financial system therefore become stronger imperatives the more fragile the financial structure becomes. Each issue of the Global Financial Stability Report is filled with references to the specter of “risk aversion,” which is seen as threatening financial markets.

In the September 2006 Global Financial Stability Report the IMF executive board directors expressed worries that the rapid growth of hedge funds and credit derivatives could have a systemic impact on financial stability, and that a slowdown of the U.S. economy and a cooling of its housing market could lead to greater “financial turbulence,” which could be “amplified in the event of unexpected shocks.”²² The whole context is that of a financialization so out of control that unexpected and severe shocks to the system and resulting financial contagions are looked upon as inevitable. As historian Gabriel Kolko has written, “People who know the most about the world financial system are increasingly worried, and for very good reasons. Dire warnings are coming from the most ‘respectable’ sources. Reality has gotten out of hand. The demons of greed are loose.”²³

Notes

1. Gerald A. Epstein, “Introduction,” in Epstein, ed., Financialization and the World Economy (Northampton, MA: Edward Elgar, 2005), 1.
2. John Bellamy Foster, “Monopoly-Finance Capital,” Monthly Review 58, no. 7 (December 2007), 1–14.
3. The current usage of the term “financialization” owes much to the work of Kevin Phillips, who employed it in his Boiling Point (New York: Random House, 1993) and a year later devoted a key chapter of his Arrogant Capital to the “Financialization of America,” defining financialization as “a prolonged split between the divergent real and financial economies” (New York: Little, Brown, and Co., 1994), 82. In the same year Giovanni Arrighi used the concept in an analysis of international hegemonic transition in The Long Twentieth Century (New York: Verso, 1994).
4. Harry Magdoff first raised the issue of a growing reliance on debt in the U.S. economy in an article originally published in the Socialist Register in 1965. See Harry Magdoff and Paul M. Sweezy, The Dynamics of U.S. Capitalism (New York: Monthly Review Press, 1972), 13–16.
5. Robert Pollin, “Remembering Paul Sweezy: ‘He was an Amazingly Great Man’”; Counterpunch, http://www.counterpunch.org, March 6–7, 2004; “The Man Who Explained Empire: Remembering Harry Magdoff,” Counterpunch, http://www.counterpunch.org, January 6, 2006.
6. Paul M. Sweezy, “More (or Less) on Globalization,” Monthly Review 49, no. 4 (September 1997), 3–4.
7. Paul A. Baran and Paul M. Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966).
8. James Tobin, “On the Efficiency of the Financial System,” Lloyd’s Bank Review, no. 153 (1984), 14–15.
9. In the following analysis I follow a long-standing economic convention in using the term “real economy” to refer to the realm of production (i.e. economic output as measured by GDP), as opposed to the financial economy. Yet both the “real economy” and the financial economy are obviously real in the usual sense of the word.
10. Harry Magdoff and Paul M. Sweezy, Stagnation and the Financial Explosion (New York: Monthly Review Press, 1987), 149. Magdoff and Sweezy were replying to an editorial in Business Week concluding its special September 16, 1985, issue on “The Casino Society.”
11. Paul M. Sweezy, “Economic Reminiscences,” Monthly Review 47, no. 1 (May 1995), 8; Lukas Menkhoff and Norbert Tolksdorf, Financial Market Drift (New York: Springer-Verlag, 2001).
12. The failure of investment banking to regain its position of power at the very apex of the system (as the so-called “money trust”) that it had attained in the formative period of monopoly capitalism can be attributed to the fact that the conditions on which its power had rested in that period were transitory. See Paul M. Sweezy, “Investment Banking Revisited,” Monthly Review 33, no. 10 (March 1982).
13. Harry Magdoff and Paul M. Sweezy, The End of Prosperity (New York: Monthly Review Press, 1977), 35.
14. Sweezy, “Economic Reminscences,” 8–9.
15. This is in line with the financial instability hypothesis of Keynes and Hyman Minsky. See Minsky, Can “It” Happen Again? (Armonk, New York: M. E. Sharpe, 1982).
16. Robert W. Parenteau, “The Late 1990s’ US Bubble,” in Epstein, ed., Financialization and the World Economy, 136–38.
17. Doug Henwood, After the New Economy (New York: The New Press, 2005), 231; Fred Magdoff, “Explosion of Debt and Speculation,” Monthly Review 58, no. 6 (November 2006), 7, 19; Epstein, “Introduction,” 4; Garry J. Schinasi, Safeguarding Financial Stability (Washington, D.C.: International Monetary Fund, 2006), 228–32.
18. Greta R. Krippner, “The Financialization of the American Economy,” Socio-economic Review 3, no. 2 (2005), 173–208; James Crotty, “The Neoliberal Paradox,” in Epstein, ed., Financialization and the World Economy, 77–110.
19. Edward N. Wolff, “Changes in Household Wealth in the 1980s and 1990s in the U.S.” The Levy Economics Institute of Bard College, Working Paper No. 407 (May 2004), table 2, http://www.levy.org.
20. Pollin, “The Man Who Explained Empire.”
21. See Daniela Magalhães Pates and Leda Maria Paulani, “The Financial Globarlization of Brazil Under Lula” and Fabríco Augusto de Loiveira and Paulo Nakatini, “The Brazilian Economy Under Lula,” in Monthly Review 58, no. 9 (February 2007), 32–49.
22. International Monetary Fund, The Global Financial Stability Report (March 2003), 1–3 and (September 2006), 74–75.
23. Gabriel Kolko, “Why a Global Economic Deluge Looms,” Counterpunch, http://www.counterpunch.org, June 15, 2006.

The great divide

As Israel marks its 59th Independence Day, the Arab sector insists it longs for greater inclusion in the state. A view from the Arab side of a widening gulf.
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SHABTAI GOLD, THE JERUSALEM POST

Apr. 23, 2007

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The relationship between the state and its Arab citizens is at its lowest level ever," says Jafar Fareh, of the Haifa-based rights group Mossawa, ahead of Israeli Independence Day.

Fareh is worried about the concept of separation which he feels is becoming more dominant in Israeli society. He, like other Arab citizens of Israel, is concerned that as Israel enters its 59th year, the gulf between Jews and Arabs continues to widen.

Arab intellectuals speak of the "Jewish ghetto" mentality, which, in their view, means Israel is closing itself off from all non-Jewish regional elements, including the Arab citizens. Many are worried that this trend will have negative consequences not only on Israel and its Arab citizens, but on the region as a whole.

Fareh is quick to place a fair amount of the blame for the "ghettoization" on the Left.

"The readiness to talk and negotiate [with the Palestine Liberation Organization] is part of the separation concept, based on the idea of 'We are here, and they are there,'" he says.

The talks with the PLO, he believes, have worsened the situation of Arab citizens in Israel. "Now people in Israel say to us, 'If it's not good for you here, go live in the PA,' implying that in Israel we must behave according to their terms."

Fareh points out that both the Oslo agreements and the disengagement plan went ahead because of the support of Arab MKs. He also blames the PLO, which he says forgot the Arab-Israelis, and says there is a rift between the two.

"Nabli Shaath, from the PLO, said Arabs should be loyal citizens in the Jewish state," Fareh recalls. "A dog is loyal. I want to be a partner, not loyal to Jewish masters."

Aida Touma-Sliman, from Acre, is also in favor of partnership with Israeli Jews, based on a changing of the current rules.

She, like Fareh, was a signatory of the "Future Vision" document, which is an attempt to outline a strategy for autonomy for the Arab citizens of Israel and which has alarmed many Israeli Jews with its blueprint for separatism.

She says the document, which was mainly intended to be an internal document aimed at starting a dialogue among Arabs, was translated into Hebrew because "we want to talk with the Jews. This document is not at all a sign of separatism."

Touma-Sliman, a member of the Hadash political party, notes that a recent survey shows that some 80 percent of Arabs in Israel support the concepts the document puts forward.

"This document says we want this place to be a homeland for Jews and Arabs who are here. We want equality for all citizens."

Touma-Sliman also wants recognition of the Arabs in Israel as a national collective. "The state wants to divide us into groups. However, we are not Druse, Beduin, Christian or whatever. We are all part of the Palestinian-Arab people."

Author Salman Natour traces the separation problem to the British Mandate. "The problem of separation has been around since the beginning. This goes back to the British policy of divide and conquer. In the State of Israel, the Ashkenazi elite controls, and the others are controlled."

For Natour, from Daliat al-Carmel in the Galilee, the problem of separation hits close to home. "I am Druse. We are supposed to have equal rights, according to the Israeli criteria. Most Druse serve in the army. Yet we don't have full rights or equality."

Natour sees the ruling elite of European Jews as responsible for the generally lower social status of Mizrahim, or, in his words, "Arab Jews."

"The Ashkenazi elite looks down on all things Arab. The eyes of Israel are to the West, especially culturally, and it rejects the East, to an extent."

Natour, who wrote the cultural section of the Future Vision document, views himself as an "Arab-Palestinian from the Druse community. I am not Israeli, but a citizen of Israel. Israel, as a Jewish state, prevents me from having a full Israeli identity."

Like many other signatories of the Future Vision document, he wants to break the old mold of Arab-Jew relations through dialogue with the Jews. "This is not a final document, but a basis for dialogue."

He uses his own community as an example for the change he wishes to see. In the future, "Druse can choose to serve in the army if they want, but not because they have to. After we break the mold, the old treaty, we can think about how to build a new relationship."

Ghaleb Majadle, the new minister of science and culture and the only Arab minister in the current government, sees things differently. He thinks the document doesn't deal with the real issues affecting the Arabs in Israel, and that the group that wrote it is not representative of the Arab sector.

He says the Arab public is too concerned with making ends meet and other basic needs, and it is not free to deal with weighty issues like those raised by the document. Those basic needs, he says, include more classrooms, more economic opportunities, better planning for houses, and a generally better quality of life.

The Jews in Israel, Majadle says, are not yet ready for the document either, noting that it lacks widespread support. More public debate of the document is needed before it can be considered for presentation to the coalition, he says.

Majadle partly blames past governments for the Arab sector's socioeconomic problems, saying the distribution of wealth was not equal, and that government policies contributed to widening social and economic gaps.

He points out that not one new Arab village was founded by the state since its inception, while it strives to create more and more Jewish towns. "Fifty percent of Arabs are below the poverty line. When we close the gaps in the Israeli society between Jews and Arabs, I am convinced that the Arab population will be free to deal with these important questions."

MK Dov Khenin (Hadash) also believes that more attention needs to be paid to issues that are of greater concern to the Arabs in Israel, like improved social services and economic opportunities, and less on symbols, like the anthem and the flag.

Khenin says the Israeli establishment focuses on symbols in order to rally the Jewish public together. "Separation is a bad characteristic of the Israeli society, dangerous to the whole society."

Because the major afflictions of the country's Arab citizens are a troubled economic situation and social discrimination, Khenin explains, the government would rather not deal with those issues.

While Khenin agrees with Majadle that the Future Vision document needs more public debate - "among all Israelis, not just Jews or Arabs" - he says that nationalist political aspirations of many Arab Israelis can exist simultaneously with the desire to improve socioeconomic levels, and one is not dependent on the other.

But Majadle's views are seen by many emerging political voices as of the older generation, one that didn't strive to fully achieve the multifaceted objectives of the Arab minority in Israel.

Haneen Zoabi, a member of the political bureau of Balad, says the Israelization process that the Arabs in Israel underwent necessitated the emergence of a more Arab-nationalist line, such as that of her party.

She talks about the older generation, the "bent generation," that lived through the 1948 war and gave in to the Israeli establishment, and the younger generation, the "upright generation," that emerged in the late 1960s with a more rebellious nature.

WHILE MOST Jewish Israelis will celebrate their victory in the 1948 war, many Arabs see it quite differently.

The 10th annual March of Return will take place this Independence Day. It is an event organized by the Association for the Defense of the Rights of the Internally Displaced. The protesters, including Jews from organizations like Zochrot, will march to the abandoned northern village of al-Lajun; most of the village's former residents live in Israeli-Arab areas like Umm el-Fahm.

About one quarter of Israeli Arabs, according to some estimates, are internal refugees. Although citizens of the state, they are not allowed to return to the land which they lost as a result of the war.

Daoud Bader is one such displaced person. He was born and raised in al-Ghabisiyya, a village with about 800 residents at the time of the 1948 war. The villagers left during the war, but were allowed to return based on a High Court of Justice decision from 1951. However, the army declared the area a closed military zone, thereby preventing their return. The village was then razed by security forces. Only the mosque, which Bader says is 230 years old, remains standing. He now lives in the village of Sheikh Dannun, near Acre.

Khenin says that Israel should recognize its part in the plight of Arabs created by the 1948 war. "It won't hurt Independence Day if we were to recognize the pain caused [to the Arabs] in 1948," he says, adding that "the day will have a positive connotation for Arabs citizens when they feel the state cares about them, and stops viewing them as a threat."

While it might be true that the politicization of the Arabs in Israel has led to a greater divide between them and the Jewish citizens, Zoabi blames the Zionist parties, from the Left and the Right, for creating the separation.

She says at first, right after Oslo, Israel felt it needed peace with the Arabs to live in the region. Now, she says, Israel feels it can exist without peace with the Arabs, including the Arabs in Israel. This, she declares, will "strengthen the concept of the Jewish ghetto, the concept of separation."

Fareh, although not in full agreement with Zoabi, is also deeply concerned. His litmus test for judging the situation is a statistic that says that in the last six years, 35 Arab citizens were killed by Israeli police, while not a single Jew died at the authorities' hands. "Even during the disengagement and evacuations of settlements, when the settlers threw stones and blocks," the security forces did not respond with lethal force, he notes.

"If the Jews fail to live with the Arabs in Israel, we will pay the price in the short term. But in the long run, the whole Middle East will suffer as a result. The status of relations between the Jews and Arabs in Israel is a good measuring stick for regional peace. We are the face of the Middle East in Israel. We are the ones with the potential to make this place normal," Fareh says.

"There is a two-year window," he cautions, referring in part to the Arab Peace Initiative re-launched in Riyadh last month. "If nothing is solved by then, there will be a catastrophe.

"But I am an optimist," he adds.

The Legend of the Removed Checkpoints

Ran HaCohen, The Electronic Intifada, 24 April 2007

Israel's wall in the West Bank village of Al-Ram, north of Jerusalem, 20 February 2007. (Moti Milrod/MaanImages)

Last Monday's paper gave us a small reason to be happy. Israeli Prime Minister Ehud Olmert met with Palestinian Chairman Mahmoud Abbas for the second time in just a few weeks. Reporting the meeting -- described by Palestinian sources as "fruitless" -- Ha'aretz noted:

"An IDF lieutenant-colonel also attended the meeting. The officer briefed the Palestinians on the plan to remove IDF roadblocks in the West Bank. According to the officer, the IDF has so far removed 44 roadblocks. He added that the IDF was planning to remove an additional 17 in the next stage of the plan. The sources said that the Palestinian delegation requested the removal of more roadblocks, and that Olmert expressed his willingness."

Good News, Isn't It?!

Hear, hear: the IDF removed 44 roadblocks! This may not be much, given the rather extensive list of restrictions imposed on Palestinians, i.e.:

Standing prohibitions

Palestinians from the Gaza Strip are forbidden to stay in the West Bank.

Palestinians are forbidden to enter East Jerusalem.

West Bank Palestinians are forbidden to enter the Gaza Strip through the Erez crossing.

Palestinians are forbidden to enter the Jordan Valley.

Palestinians are forbidden to enter villages, lands, towns, and neighborhoods along the 'seam line' between the separation fence and the Green Line (some 10 percent of the West Bank).

Palestinians who are not residents of the villages Beit Furik and Beit Dajan in the Nablus area, and Ramadin, south of Hebron, are forbidden entry.

Palestinians are forbidden to enter the settlements' area (even if their lands are inside the settlements' built area).

Palestinians are forbidden to enter Nablus in a vehicle.

Palestinian residents of Jerusalem are forbidden to enter area A (Palestinian towns in the West Bank).

Gaza Strip residents are forbidden to enter the West Bank via the Allenby crossing.

Palestinians are forbidden to travel abroad via Ben-Gurion Airport.

Children under age 16 are forbidden to leave Nablus without an original birth certificate and parental escort.

Palestinians with permits to enter Israel are forbidden to enter through the crossings used by Israelis and tourists.

Gaza residents are forbidden to establish residency in the West Bank.

West Bank residents are forbidden to establish residency in the Jordan Valley, seam-line communities, or the villages of Beit Furik and Beit Dajan.

Palestinians are forbidden to transfer merchandise and cargo through internal West Bank checkpoints.

Periodic prohibitions

Residents of certain parts of the West Bank are forbidden to travel to the rest of the West Bank.

People of a certain age group -- mainly men from the age of 16 to 30, 35, or 40 -- are forbidden to leave the areas where they reside (usually Nablus and other cities in the northern West Bank).

Private cars may not pass the Swahara-Abu Dis checkpoint (which separates the northern and southern West Bank). This was canceled for the first time two weeks ago under the easing of restrictions.

Travel permits required

A magnetic card (intended for entrance to Israel, but eases the passage through checkpoints within the West Bank).

A work permit for Israel (the employer must come to the civil administration offices and apply for one).

A permit for medical treatment in Israel and Palestinian hospitals in East Jerusalem (The applicant must produce an invitation from the hospital, his complete medical background, and proof that the treatment he is seeking cannot be provided in the occupied territories).

A travel permit to pass through Jordan Valley checkpoints.

A merchant's permit to transfer goods.

A permit to farm along the seam line requires a form from the land registry office, a title deed, and proof of first-degree relations to the registered property owner.

Entry permit for the seam line (for relatives, medical teams, construction workers, etc. Those with permits must enter and leave via the same crossing even if it is far away or closing early).

Permits to pass from Gaza, through Israel to the West Bank.

A birth certificate for children under 16.

A long-standing resident identity card for those who live in seam-line enclaves.

Checkpoints and barriers

There were 75 manned checkpoints in the West Bank as of January 9, 2007.

There are on average 150 mobile checkpoints a week (as of September 2006).

There are 446 obstacles placed between roads and villages, including concrete cubes, earth ramparts, 88 iron gates, and 74 kilometers of fences along main roads.

There are 83 iron gates along the separation fence, dividing lands from their owners. Only 25 of the gates open occasionally.

Main roads closed to Palestinians, officially or in practice

Road 90 (the Jordan Valley thoroughfare).

Road 60, in the North (from the Shavei Shomron military base, west of Nablus and northward).

Road 585 along the settlements Hermesh and Dotan.

Road 557 west from the Taibeh-Tul Karm junction (the Green Line) to Anabta (excluding the residents of Shufa), and east from south of Nablus (the Hawara checkpoint) to the settlement Elon Moreh.

Road 505, from Zatara (Nablus junction) to Ma'ale Efraim.

Road 5, from the Barkan junction to the Green Line.

Road 446, from Dir Balut junction to Road 5 (by the settlements Alei Zahav and Peduel).

Roads 445 and 463 around the settlement Talmon, Dolev, and Nahliel.

Road 443, from Maccabim-Reut to Givat Ze'ev.

Streets in the Old City of Hebron.

Road 60, from the settlement of Otniel southward.

Road 317, around the south Hebron Hills settlements."

So, given this list, as I was just saying, removing 44 roadblocks may not be much, but nevertheless, it is good news. Isn't it?

Back in December 2006 ...

Let's refresh our memory. It all started last December, when Olmert met Abbas. Olmert promised to remove checkpoints in the West Bank: "I intend to personally supervise it," he told Abbas, "so that the Palestinian society would feel the relief" (Ha'aretz, Dec. 24, 2006). The same day, Ha'aretz reported that Defense Minister Amir Peretz and his deputy Ephraim Sneh were actually working on a plan to facilitate Palestinian movement in the West Bank.

The two must have spent the whole night in their office, devising a plan for dismantling not less than "45 out of approximately 400 checkpoints." At dawn, just as they intended to retire for a short nap, they found Ha'aretz at the doorstep, the top of which headline read: "IDF Opposes Olmert Plan to Dismantle West Bank Checkpoints."

This sounded like a story worth following. In a democracy, the government sets the policy, the army carries it out. In other kinds of regimes, the army sets the policy, the government nods. Which regime is Israel's?

Olmert Withdraws

A few days later (Ha'aretz, Dec. 27, 2006) the prime minister indeed ordered the army to dismantle scores of checkpoints -- but "in a second phase, dependent on an additional decision of the political echelon." So at the first stage, no checkpoints will be removed (and then we'll see). This, as some Israeli sociologists claim, has always been Israel's regime: instead of risking a dispute with the army, the government complies with the army's demands.

Meanwhile, Aluf Benn of Ha'aretz revealed that the "new" plan to dismantle 45 checkpoints was nothing but an old document, prepared by the Israeli army originally in English -- an "export product" for American eyes -- back in 2005. And never implemented, of course. So much for the sleepless night of Olmert's aides: all they did was feed the media with an old army document.

The Army Rewards

Anyway, the prime minister gave the army a green light not to dismantle any checkpoint. The army, for its part, did not leave this ministerial gesture unrewarded. On Jan. 17 Ha'aretz reported that the Israeli army finally complied.

"The Israel Defense Forces announced yesterday that it recently removed 44 dirt barriers that were located near Palestinian villages in the West Bank. In recent years, the army established nearly 400 barriers and permanent roadblocks. The move is one of a series of steps aimed at easing restrictions on the Palestinians that were announced following the December 24 meeting between Prime Minister Ehud Olmert and PA Chairman Mahmoud Abbas."

So you see: Olmert did keep his solemn promise, and the Israeli army did carry it out and did dismantle 44 checkpoints. At least, that's what the army announced, and the Israeli army always tells the truth. Well, almost always.

Oops ...

In this exceptional case, it took less than a week to expose the dirty deal between the government and the army. Scores and dozens of such deals -- among the government, the army, and the settlers -- are never exposed; the entire Israeli colonial project is based on such deals, made behind the back of all democratic mechanisms. But this was an exception. On Jan. 22, following an embarrassing UN report, the army had to admit:

The Israel Defense Forces admitted yesterday that the 44 dirt obstacles it said had been removed from around West Bank villages did not actually exist.

Last Tuesday, the IDF announced that it had removed 44 dirt obstacles that blocked access roads to West Bank villages, to fulfill promises made by Prime Minister Ehud Olmert to Palestinian Authority Chairman Mahmoud Abbas during their meeting a month ago. Olmert had pledged measures to ease the lives of Palestinian civilians.

However, a military source admitted yesterday that these obstacles 'had either been removed before the political level decided on the alleviations or had been bypassed by Palestinians earlier, and a decision had been made not to rebuild them.'

So the 44 "removed" checkpoints, or dirt obstacles, didn't exist in the first place. The Israeli lie probably counted on Israel's information superiority: after all, who could count all those checkpoints better than the Israeli army? Alas, the UN turned out as an unexpected party-pooper.

Yesterday's Lie Is Today's Truth

But why bother to tell the truth when a lie is just as good? Three months later, Israel is again counting on our short memory. In an official meeting between the Israeli prime minister and the Palestinian president, no less, the army airs once again the legend about the 44 "removed checkpoints." The lie exposed in January is recycled as truth in April, and everybody is happy: Israel can claim it kept its promise, the Americans can claim progress in the "peace process," even President Mahmoud Abbas can claim an achievement.

Who would bother to remind us that all this is nothing but a lie? The abused Palestinians haven't felt any relief whatsoever, but have been cynically cheated once again. And all of us media consumers have been duped along with them.

Remember this next time the Palestinians show their inexplicable ingratitude.

Remember this next time you hear an official Israeli announcement.

Dr. Ran HaCohen was born in the Netherlands in 1964 and grew up in Israel. He has a B.A. in Computer Science, an M.A. in Comparative Literature, and his PhD is in Jewish Studies. He is a university teacher in Israel. He also works as a literary translator (from German, English and Dutch), and as a literary critic for the Israeli daily Yedioth Achronoth. Mr. HaCohen's work has been published widely in Israel. "Letter from Israel" appears occasionally at Antiwar.com. This article, which first appeared on Antiwar.com, is republished with the author's permission.

Sly like a fox

Darth Vader outfoxed Kucinich today. He played the doctor trick(remember the fuss about Nixon's knee at the time of his incoming impeachment?), gaining sympathy, so Kucinich had to cancel the formal announcement at noon today submitting Cheney to an impeachment investigation.

Rove Investigator Being, Ahem... Investigated

The guy's a ringer, another Bush fox guarding the hen house.

Related
LA Times: Rove Under Investigation
"We will take the evidence where it leads us," Scott J. Bloch, head of the Office of Special Counsel and a presidential appointee, said in an interview Monday. "We will not leave any stone unturned."
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Special Counsel Accused Of Intimidation in Probe
Contact With Investigators Controlled, Employees Say

By Elizabeth Williamson
Washington Post Staff Writer
Friday, February 16, 2007; A21

A trouble-plagued whistle-blower investigation at the Office of Special Counsel -- whose duties include shielding federal whistle-blowers -- hit another snag this week when employees accused the special counsel of intimidation in the probe.

The Office of Personnel Management's inspector general has been investigating allegations by current and former OSC employees that Special Counsel Scott J. Bloch retaliated against underlings who disagreed with his policies -- by, among other means, transferring them out of state -- and tossed out legitimate whistle-blower cases to reduce the office backlog. Bloch denies the accusations, saying that under his leadership the agency has grown more efficient and receptive to whistle-blowers.

The probe is the most serious of many problems at the agency since Bloch, a Kansas lawyer who served at the Justice Department's Task Force for Faith-based and Community Initiatives, was appointed by President Bush three years ago. Since he took the helm in 2004, staffers at the OSC, a small agency of about 100 lawyers and investigators, have accused him of a range of offenses, from having an anti-gay bias to criticizing employees for wearing short skirts and tight pants to work.

The 16-month investigation has been beset by delays, accusations and counter-accusations. The latest problem began two weeks ago, when Bloch's deputy sent staffers a memo asking them to inform OSC higher-ups when investigators contact them. Further, the memo read, employees should meet with investigators in the office, in a special conference room. Some employees cried foul, saying the recommendations made them afraid to be interviewed in the probe.

This week, Public Employees for Environmental Responsibility, the Project on Government Oversight, the Government Accountability Project and Human Rights Campaign and a lawyer for the OSC employees protested in a letter to legislators and to Clay Johnson III, the Office of Management and Budget deputy who ordered the OSC probe.

The OSC's memo, the group said, "was only the latest in a series of actions by Bloch to obstruct" the investigation. "Other actions have included suggestions that all witnesses interviewed . . . provide Bloch with affidavits describing what they had been asked and how they responded."

Bloch's office responded with a statement: "Due to the fact that this is an ongoing investigation, OSC cannot comment on it other than to say we look forward to the speedy resolution. Special Counsel Bloch has been and continues to be recused from any decision-making in this investigation. The Office of Special Counsel has fully cooperated in the investigation, and any information to the contrary is reckless speculation."

But the same day the organizations went to the OMB and Congress, Bloch's new deputy, Jim Byrne, issued another employee memo -- not inspired by the complaint, he said.

"All OSC Employees: This e-mail communicates new procedures that will be used . . . in conducting the remainder of its investigative work in our agency. . . . The [investigators] will schedule interviews by directly contacting the employee with whom they wish to speak. The date, time, and place of the interviews will be arranged between the OIG and the employee. There is no longer a requirement to use OSC facilities for the interview. . . ." he wrote.

"All employees who are contacted by the OIG should cooperate fully with the investigators and provide information and testimony unless disclosure of the information is prohibited by law, regulation, or policy. All employees are permitted to be represented by personal counsel during their interview. . . .

"And, you are also welcome to directly contact me with any questions that you may have. We have nothing to hide."

View all comments that have been posted about this article.

REAL CRIMES OF WOLFOWITZ IGNORED

Wolfie’s recent influence peddling scandal nothing compared to history of spying

Paul Wolfowitz, the head of the World Bank, is on the hotseat after reports revealed his sweetheart deal for his sweetheart. But this latest sordid scandal pales in comparison to charges that Wolfie spied for a foreign power in the 1980s while he was a U.S. official. Read correspondent Michael Collins Piper’s behindthe- scenes look at this neo-con’s crimes.

See TOP NEO-CON, Page 10

Page 10, AMERICAN FREE PRESS * April 23 & 30, 2007 Behind the Scenes with Michael Collins Piper

Top Neo-Con Spied for Israel And Got Away With the Crime

Wolfowitz `gal pal' scandal nothing compared to charges of treason

By Michael Collins Piper

Piper

.IT MADE THE NEWS when World Bank President Paul Wolfowitz was caught arranging a sweet deal for his mistress with World Bank funds, but the fact that Wolfowitz was once investigated for spying for a foreign government has kept under wraps by the mass media in America.

Those who make it their business to know about the doings of intriguers such as the big man at the World Bank recognize that Wolfowitz is a traitor who once engaged in espionage on behalf of Israel—and got away with it. However, the much bigger scandal, dating back to 1978, has never been plastered across the front pages of newspapers or slavered over by grinning media personalities.

While the employees of the World Bank are up in arms and have publicly hissed him and called for his ouster, Wolfowitz is still hanging on at the World Bank with the support of the Israel-controlled Bush administration.

That many are reveling in the scandal surrounding Wolfowitz is not surprising. Not only is Wolfowitz a “neo-con” (that is, one of the famous neo-conservatives) but he is also, as brash commentator Maureen Dowd has noted, a “con,” in the classic sense of the word: a con-man, a crook, evidenced by his influence-peddling on behalf of his mistress. However, in addition, one might suggest, Wolfowitz should also be considered a “con” in another sense of the word: short for “convict”—as in prison convict, which is where Wolfowitz might have ended up if he had been charged with spying for Israel as some federal agents believe he is guilty of having done.
For many years, Wolfowitz has engaged in dubious affairs on behalf of the interests of Israel. Like many others in his circle of friends and political associates, Wolfowitz—both in private life, as a well-paid academic between stints in government, and in government, most lately as number two man in the Defense Department under the unlamented Donald Rumsfeld— was a key player at the highest level in a relentless, well-funded and carefully orchestrated campaign of lies and disinformation—acting in concert with Israeli intelligence and the Israeli lobby in America—to embroil the United States in the war against Iraq. Many call Wolfowitz a “war criminal.” At the very least, he’s a liar.
_____________________

“Forget about Wolfowitz and his mistress. But don’t forget about Wolfowitz and his spying for Israel.”

_____________________

But Wolfowitz, as we’ve seen, can also be pondered as a possible traitor—if then-ranking people in our FBI and the Justice Department were to be believed.

Back in 1978, Wolfowitz was under investigation, as an official of the U.S. Arms Control & Disarmament Agency, for having passed a classified U.S. document to an Israeli government official.

The purloined material related to the proposed sale of U.S. weapons to an Arab government, something always of concern to fanatic Israeli loyalists like Wolfowitz, who, although American born, has always placed Israel’s needs first and foremost in his policymaking ventures.
Wolfowitz utilized the good offices of an operative of the pro-Israel lobby, the American Israel Public Affairs Committee, as the intermediary in handing over the stolen document to Wolfowitz’s friends in Israel (where, by the way, his sister lives).

It is this same AIPAC that, even now, is in the midst of a nasty criminal spy scandal relating, once again, to the illegal acquisition of classified U.S. defense information. Two former top AIPAC officials will soon stand trial in federal court for their pro-Israel misdeeds.

In any event, although Wolfowitz was never prosecuted for espionage, that doesn’t mean that there wasn’t evidence to indict him.

Several long-time close Wolfowitz associates (all now-infamous “neo-conservative” armchair intriguers for Israel)—ranging from Richard Perle to Stephen Bryen to Michael Ledeen to Douglas Feith, who served as Wolfowitz’s deputy in the Defense Department— have all been under FBI scrutiny at one time or another on suspicion of espionage on behalf of Israel.
It often surprises many Americans, who hear in the media that Israel is such a great ally of the United States, to learn that there are good patriotic Americans in the FBI who don’t like the idea of American public officials, like the aforementioned neo-conservatives, passing classified defense material to this dubious ally.

None of these neo-cons was ever indicted. However, in the case of Bryen, one dedicated federal prosecutor (who happened to be Jewish) pushed hard to indict Bryen, only to have the Israeli lobby put pressure on the Reagan administration to force the Justice Department (ruled by a series of notably corrupt and Israeli-influenced attorneys general during the Reagan years) to abandon the Bryen investigation.

Forget about Wolfowitz and his mistress. Don’t forget about Wolfowitz and his spying for Israel.

Deaths mount as fighting rages in Mogadishu

Related

Somalia chaos- Video
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Bombs, shelling rock Somali capital

By SALAD DUHUL, Associated Press Writer 43 minutes ago

Car bombs exploded in Somalia's capital Tuesday and fighting raged for a seventh straight day, with Ethiopian and Somali government troops making a final push to wipe out an insurgency ahead of a peace conference.

Several large shipments of food for the tens of thousands of people who have fled Mogadishu have been turned back because there was no clearance from the Somali government, aid workers and diplomats said. The government has demanded to inspect all aid deliveries despite the worst humanitarian crisis in the country's recent history.

Islamic insurgents clashed with Ethiopian troops backing Somali government forces, using mortars and rocket-propelled grenades against tanks and artillery positions in the north of the battle-scarred coastal city.

A car bomb exploded outside the Ambassador Hotel, which is used by government lawmakers, said Somali presidential spokesman Hussein Mohamoud Hussein. Seven people were killed, said eyewitness Abdu-Kadir Mohamud.

A suspected suicide car bombing injured three civilians outside an Ethiopian military base 18 miles from the capital, said resident Mayow Mohamed. Troops opened fire on the minibus as it sped toward the base, he said.

The last seven days of clashes have killed 358 people, including at least 29 civilians and 36 insurgents who died Tuesday, according to Somalia's Elman Human Rights Organization.

Bodies lay rotting on the streets for days — too dangerous to retrieve.

Most of the fighting was around front line positions and weary Mogadishu residents said it was not as fierce as in previous days.

"The sides have got tired so they need breathing space to replace their men and repair their damaged equipment," said Abdi Ahemd Shoma.

The latest fighting flared seven days ago after Ethiopian and Somali government troops made a final push to wipe out the insurgency, Western diplomatic and Somali government sources told The Associated Press on condition of anonymity because they were not authorized to speak to the media.

Facing international pressure over the mounting death toll, the government and its Ethiopian appeared determined to bring order before a national reconciliation conference in June. Clan and warlord militia have also joined the fight against the Ethiopians and government forces.

A bid earlier this month to wipe out the insurgency left more than 1,000 people dead, many of them civilians.

More than 320,000 Somalis have fled the capital since February, streaming to squalid camps with little to eat and no shelter. Tens of thousands of others remain trapped by the fighting.

In a letter obtained by the AP on Tuesday, Somali Interior Minister Mohamed Mohamud Guled told the World Food Program that the government must inspect any goods being sent to Somalia.

Soldiers at a military checkpoint outside Mogadishu turned back a World Food Program shipment that would have benefited 32,000 people because the government had not given clearance, Graham Farmer, the U.N. humanitarian coordinator for Somalia, said in an April 12 letter to Gedi.

In a letter to President Abdullahi Yusuf last week, U.S. Ambassador Michael Ranneberger called on the government to stop "halting distribution of food aid for unspecified inspections."

He also said at least one government-appointed regional governor "required payment for the transit of relief goods on top of payments already made to militia checkpoints. These practices are unacceptable and undermine the legitimacy of your government."

The letters were provided to the AP by an aid official who asked not to be named for fear of being fired.

Somalia's transitional government was formed in 2004 with U.N. help, but has struggled to extend its control over the country.

___

Associated Press writers Elizabeth A. Kennedy and Mohamed Olad Hassan contributed to this report from Nairobi, Kenya.

AIPAC Trial Likely to be Postponed

The unprecedented trial of two former officials of the American Israel Public Affairs Committee, who are charged under the Espionage Act with unlawful receipt and disclosure of national defense information, is likely to be postponed from its scheduled start date on June 4.

The need to resolve disagreements between the parties over the handling of classified information involved in the case will "knock the trial date into a cocked hat," said Judge T.S. Ellis, III at an April 19 hearing.

The Judge gave prosecutors until May 2 to decide whether they will propose a new set of "substitutions" for classified evidence, which would then need to be reviewed by the defense and the court under the provisions of the Classified Information Procedures Act.

Alternatively, prosecutors may decide to stand fast with their previous proposal to bar public access to the classified evidence, a position that the judge has already rejected, thereby setting the stage for an appeal.

Judge Ellis issued a detailed memorandum opinion (pdf) on April 19 to explain why he concluded that the prosecution proposal to exclude public access to classified evidence is not authorized by statute or precedent.

The memorandum opinion advised the government that any proposal to exclude public access to classified evidence would have to be thoroughly supported by "a highly detailed explanation of the ensuing harms to national security... [since] much of the classified information at issue [here] is not self-evidently damaging to national security."

Posted by Steven Aftergood on April 24, 2007 12:03 PM | Permalink

Editor's note: also see yesterday's articles at the other blogs

And more coming up here.

The primary blog.

The secondary blog.

Maliki withdraws statement, wall construction continues

Related
Work on Baghdad wall continues
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Original in Arabic

Machine translation

Maliki backtrack on his statements (orders) to continue building the wall in sectarian hung history 23 / 04 / 2007 9:39:22 | section : policy-our sources that Nouri Al-Malki retreat from his earlier statements and is moving ahead with the construction of the wall that separates the area from the rest hung areas of Baghdad, sources reported that telephone call today Maliki and library in Baghdad gave orders to build the wall falls down yesterday to the Secretary-General of the League Arab and to the entire world, which was heard across the screens

The American, Israeli, and Palestinian Triangle

4/16/2007

Video link for Amb. Afif Safieh's Harvard Lecture

Chertoff Uses Totalitarian Comparisons To Defend War on Terror

April 23, 2007

Ivan Eland

Michael Chertoff, President Bush’s secretary of Homeland Security, desperately tried to refute Zbigniew Brzezinski’s cogent charge that the administration has hyped the “war on terror” to promote a “culture of fear,” in a recent Washington Post op-ed. In addition to shamefully smearing Brzezinski, Jimmy Carter’s former National Security Advisor, by associating him with the fringe opinion that the administration plotted the 9/11 terrorist acts, Chertoff also declared, “Al-Qaeda and its ilk have a world vision that is comparable to that of historical totalitarian ideologues but adapted to the 21st–century global network.” This rhetoric makes it seem as if al-Qaeda is more dangerous than Adolf Hitler or Joseph Stalin. When comparisons are made to these villainous titans, we should be suspicious.

The same kinds of comparisons have been used before. When Bill Clinton wanted to bomb Slobodan Milosevic in Serbia and Saddam Hussein in Iraq, he compared both leaders to Hitler. In the lead up to the invasion of Iraq, President George W. Bush also used the same comparison. Yet, the small countries of Serbia and Iraq, as well as the rag-tag group al-Qaeda, have nowhere near the resources of a Nazi Germany and have not tried to completely overrun an important and wealthy continent.

Chertoff’s overheated rhetoric doesn’t stop there. He adds yet another implicit comparison—to communism. He opined, “Today’s extreme Islamist groups such as al-Qaeda do not merely seek political revolution in their own countries. They aspire to dominate all countries. Their goal is a totalitarian, theocratic empire to be achieved by waging perpetual war on soldiers and civilians alike.” Here the implicit comparison is to the universal communist movement, which tried to spread its revolution around the world.

Although Osama bin Laden does try to kill both soldiers and civilians—and is justifiably deemed a vicious terrorist—his real objective is not to dominate “all countries” by fomenting an Islamist revolution. If bin Laden had this as a genuine goal, it would be laughable to think that he could get any significant public support in Jewish, Christian, Buddhist, or Hindu countries for a revolution to convert them to draconian Islamic rule. In fact, his officially stated goal of recreating a caliphate that would put all of the diverse Islamic countries under one ruler is preposterous enough on its own. Even Chertoff admits that the Islamist extremists’ intent is “grandiose.” Should bin Laden ever create such a caliphate, it would not have the economic or military power of Nazi Germany or the Soviet Union. Chertoff himself acknowledges that his own comparison is weak: “To be sure, as Brzezinski observes, the geographic reach of this network does not put them [sic] in the same group as the Nazis or Stalinists when they achieved first-class military power.”

Despite bin Laden’s inflated rhetoric, his real aims—which are also supported by many mainstream Muslims—are to remove a non-Muslim military presence from Islamic lands and compel the United States to stop supporting what bin Laden sees as corrupt regimes in the Middle East. Most mainstream Muslims, however, reject bin Laden’s despicable means of targeting civilians to achieve his goals.

Non-Muslim intervention in and occupation of Muslim lands has driven Islamist violence in Chechnya, Somalia, Iraq, Afghanistan (during both the Soviet and current U.S. occupations), and Lebanon (during Israeli invasions and the U.S. nation-building mission during the Reagan administration). The U.S. military presence in the Persian Gulf initially motivated bin Laden to strike U.S. targets, eventually resulting in the horror of 9/11.

The 9/11 attacks were treacherous acts of terrorism, but Chertoff and the Bush administration, the U.S. foreign policy establishment, and the American media act as if they were the beginning of history. Only in religion and quantum physics are there events without cause. Most Americans are unaware of their government’s history of unnecessary and profligate meddling in the affairs of countries throughout the Middle East. For their own safety and security, Americans cannot continue to ignore that the Islamist venom resulting in 9/11 was rooted in this U.S. interventionist and quasi-imperial foreign policy.

Instead of perpetuating the myth that the United States is at war with “fanatics” who have a reflexive hatred of America, the nation’s homeland security chief could better spend his time examining the real motivator for such terrorism—U.S. foreign policy—and recommending a policy of military restraint in the Middle East to reduce the chances of terrorist attacks at home. If there is any doubt that this strategy would work, the case of Lebanon during the early 1980s should be examined. After the bombing of the Marine barracks and Ronald Reagan’s withdrawal of U.S. forces from that country, the number of anti–U.S. attacks by the Islamist group Hezbollah plummeted. But perhaps creating a “culture of fear,” as Brzezinski put it, is more politically useful to the Bush administration than actually carrying out what should be the first and foremost responsibility of any government—the protection of its people.

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Ivan Eland
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Ivan Eland is Director of the Center on Peace & Liberty at The Independent Institute and Assistant Editor of The Independent Review. Dr. Eland is a graduate of Iowa State University and received an M.B.A. in applied economics and Ph.D. in national security policy from George Washington University. He has been Director of Defense Policy Studies at the Cato Institute, Principal Defense Analyst at the Congressional Budget Office, Evaluator-in-Charge (national security and intelligence) for the U.S. General Accounting Office, and Investigator for the House Foreign Affairs Committee.
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The state has 266 ways to enter your home

UK
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By Philip Johnston, Home Affairs Editor

Last Updated: 6:49am BST 24/04/2007

The state now has 266 powers to draw upon when its agents want to enter homes, according to research.

A report from the Centre for Policy Studies says that an Englishman's home is less his castle and more "a right of way'' for police, local government officials and other bureaucrats.

English law has traditionally regarded a citizen's home as a privileged space

In the 1950s just 10 new powers of entry were granted by statute. In the 1980s and 1990s an extra 60 were added.

For the first time, Harry Snook, a barrister and the author of the study, Crossing the Threshold, has drawn together the full list of entry powers in the state's possession.

Force can be used in most cases.

The research comes at a time of heightened concern over the lengthening arm of the state, with ID cards around the corner and more sophisticated surveillance equipment being used to watch people.

Mr Snook says: "The state today enjoys widespread access to what was previously considered to be the private domain. Entry powers - some of which have their origins in EU legislation - have proliferated over recent decades.''

One of the most powerful bodies is HM Revenue and Customs whose officers can exercise a "writ of assistance" with almost unlimited rights of access.

Its holders can break into any private house to seize any goods which the customs officers believes are liable to be forfeit without seeking prior judicial approval.

However, Mr Snook discovered that HM Revenue and Customs does not keep a regular record of the use of this entry power.

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Under English law, a citizen's home has traditionally been regarded as a privileged space. Courts have insisted that servants of the state cannot enter a private home without the occupier's permission unless a specific law authorises them to do so.

However as the state's role in society has expanded so have the number of statutes that allow forcible entry.

"As a result of the proliferation and variety of entry powers, a citizen cannot realistically be aware of the circumstances in which his home may be entered by state officials without his consent, or what rights he has in such circumstances," says the report.

"Force can be used in the exercise of almost all these powers. In part this is due to its specific authorisation by law; in part to the courts' readiness to imply a right to use force on grounds of necessity."

It adds: "In many cases, discretion as to what is considered as reasonable behaviour in exercising an entry power is left to the judgment of those wielding the entry power.''

Laws now going through Parliament will give bailiffs additional powers to enter homes in pursuit of traffic penalty debts.

But Mr Snook says: "Many powers are drafted so broadly that the citizen has little or no protection if officials behave officiously or vindictively. Some carry draconian penalties for obstruction, including heavy fines and prison sentences of up to two years.''

His report says the disparate provisions should be harmonised under a new Act.

This should make clear that officials should always seek permission to enter a home; a reasonable time for entry should be specified; and state officials should always have to get a warrant before they can force entry to a private home.

When given coercive, government-like power, good people turn bad

From the Los Angeles Times

BOOK REVIEW

'The Lucifer Effect' by Philip Zimbardo

Where does evil come from? Look in the mirror, the author says.

By Alan Zarembo

Alan Zarembo is a Times staff writer.

April 22, 2007

DURING the Rwandan genocide, the level of participation by ordinary, normally peaceful citizens was greater than the world had ever seen. I spent time there as a reporter in the mid-1990s, just after the slaughter of 800,000 members of the Tutsi minority, largely by their Hutu neighbors. I tried to imagine how I would have acted if I had been born a Hutu in Rwanda and had grown up in a culture that put a high value on pleasing authority, demonizing Tutsis and planning their extermination.

What would I have done? Maybe I would have been a killer too.

This is the kind of admission that Philip Zimbardo, a longtime psychology professor at Stanford University, wants all of us to make. In "The Lucifer Effect: Understanding How Good People Turn Evil," he styles himself a tour guide of the dark side. The book is built on his well-known Stanford Prison Experiment, which is a standard lesson in many Psych 101 courses. Full disclosure: I have written about the study for the Los Angeles Times; Zimbardo references my article in his notes.

In the summer of 1971, Zimbardo placed a want ad in local newspapers seeking test subjects for a two-week study. Offering $15 a day, he sought psychologically stable young men to be randomly selected to serve as inmates or guards in a mock prison set up in the basement of the Stanford psychology department building. Six days into the study, the professor called it off, because some of the guards had become mildly sadistic, forcing prisoners to embrace each other, play leapfrog, defecate in buckets and do push-ups as punishment for defying orders.

Three decades later, that project stands as one of the seminal studies on the nature of evil. Its lesson is that, in the wrong situation, seemingly good people can turn bad. Zimbardo is not talking about individuals with pathologies who unravel in fits of psychotic rage (as appears to be the case with the shooter in last week's tragedy at Virginia Tech), but of rational, stable people. Some of the study's acclaim has to do with Zimbardo's relentless self-promotion. When the project was barely underway, he convinced Palo Alto police to stage the "arrests" of the students and then called in a San Francisco TV station to tape them for the evening news. The public relations push has rarely let up over the years.

So what else is there to say about the study now? For Zimbardo, a lot. Even the first 250 pages of "The Lucifer Effect" are not enough; he often refers readers to his various websites to read more details about those six days in the basement. The book jacket promises the "full story" for "the first time and in vivid detail," but too often this amounts to giving readers large blocks of transcribed interviews and diaries.

The occasion for this latest revival of the famous study is Abu Ghraib. After the scandal broke in 2004, Zimbardo made the interview rounds as a talking head. He has also served as an expert witness in the legal defense of Ivan "Chip" Frederick, an Army reservist who worked at Abu Ghraib. Zimbardo repeatedly highlights the parallels between his study and the abuses of Abu Ghraib: that much of the mistreatment was sexual in nature, that the worst abuses happened on the night shift and that most of the guards were untrained. But the real-life details of Frederick's story — how a flag-flying, churchgoing husband from small-town Maryland wound up attaching an electrode to the hand of a hooded prisoner standing on a box, and then had the now-infamous photo taken as a souvenir — is more powerful evidence of the Stanford Prison Experiment's conclusions than what happened in the actual study.

The chapters on Abu Ghraib are the most compelling part of "The Lucifer Effect": Zimbardo builds a persuasive case for why the prison had all the ingredients necessary to bring out the worst in humans. Guards, who covered their name tags for anonymity, were unsupervised. The rising American death toll outside the prison helped feed an atmosphere in which the prisoners came to be viewed as less than human. The prisoners became mere playthings for the guards. It was as if the guards didn't realize they were doing wrong.

The Stanford Prison Experiment is really misnamed. "Demonstration" seems an appropriate description — or perhaps even television-reality-show precursor, since Zimbardo and his assistants filmed and recorded much of it through hidden cameras and microphones. Originally, the researchers were curious about how the prisoners would adapt to a state of powerlessness. In a meeting with the guards before the prisoners arrived, Zimbardo told them: "We cannot physically abuse or torture them. We can create boredom. We can create a sense of frustration. We can create fear in them, to some degree…. We're going to take away their individuality in various ways." With so many variables and no control group, it is hard to know exactly what was being measured. Obedience? A desire to please authority? The BBC later tried to concoct its own version of the study, with entirely different results: The guards and prisoners formed a peaceful commune. Zimbardo dismissively calls theirs a "pseudoexperiment."

This doesn't mean that the lessons Zimbardo derives from his study are wrong. Throughout history, philosophy and literature, there is ample evidence that he is right. On a hopeful note, though, Zimbardo coins a new phrase — "the banality of heroism" — because ordinary people are capable of great acts. Veering into the self-help genre, he also develops a "10-step program" for resisting the power of situations. Even the Stanford Prison Experiment had a hero: Christina Maslach, who had recently received her doctorate under Zimbardo and was dating him (today they are married; Zimbardo dedicates "The Lucifer Effect" to her), witnessed the guards' behavior and urged him to end the study.

At Abu Ghraib, there was Joe Darby, a young Army reservist who blew the whistle on the abuses. Was there something about his inner core that inclined him to risk his military standing and arguably his life? Zimbardo doesn't think so: He argues that there was little in his background or psychological makeup to distinguish him from Frederick and the other abusers.

The defense of Frederick failed and he pleaded guilty and was sentenced to eight years in prison. Zimbardo does not argue that he did not deserve to be punished but asserts that situational factors should have mitigated his sentence. He extends blame up the chain of command to President Bush and key Bush administration officials for creating "the System" that facilitated the abuses. An obsession with national security, Zimbardo explains, created an "administrative evil."

"This ideological foundation," he writes, "has been used by virtually all nations as a device for gaining popularity and military support for aggression, as well as repression."

This begs a question that goes largely unanswered in the book. Does Zimbardo's thesis — that evil is a product of circumstance rather than character — also apply to those at the highest ranks of power?