Tuesday, September 30, 2008

For U.S. and Sunni Allies, a Turning Point

BAGHDAD -- First Lt. Justin John, 6-foot-4 and built like a linebacker, plopped down on a sofa in front of Ibrahim Suleiman al-Zoubaidi, one of the leaders of the mainly Sunni armed groups that have helped the U.S. military quell violence in Iraq since last year.

Zoubaidi, a small man armed with a revolver, had one thing on his mind: This week officials of Iraq's Shiite-led government will assume authority over the groups, which have been backed by the United States.

"They will kill us," Zoubaidi declared. "One by one."

Across Baghdad, leaders of the groups speak about the transition in similarly apocalyptic terms. Some have left Baghdad, saying they fear that the Iraqi government will conduct mass arrests after the handover. Others are obtaining passports and say they will flee to Syria.

John, a 24-year-old platoon leader, tried to reassure the Iraqi. "It's a new thing," John said. "It's going to take some time to get used to."

Recognizing that the government has been wary from the outset about the creation of armed, mainly Sunni groups under U.S. control, American military officials are taking several steps to prevent their sudden disintegration. American officials see the Sons of Iraq as a central factor in the reduction in violence, along with the temporary increase in U.S. forces, a year-long cease-fire imposed by a Shiite militia leader and the stepped-up assassinations of key insurgents.

John's unit -- 2nd Battalion of the 4th Infantry Regiment, attached to the 1st Brigade Combat Team, 4th Infantry Division -- has set aside funds to pay Sons of Iraq guards for 90 days in case the Iraqi government does not. U.S. soldiers say they will sit in as Iraqi officials hand out salary payments during the first few months. And the Americans have demanded that the Iraqi government refrain from arresting any of the Sunni fighters, many of whom are former insurgents, unless authorities have arrest warrants issued within the past six months. That will make it harder for the Shiite government to arrest Sons of Iraq leaders for acts committed before they joined forces with the Americans.

In recent weeks, U.S. military officials began shrinking the ranks of the Sons of Iraq by offering members micro-grants that amount to early-retirement packages. This month alone John's company has handed out more than 30 grants totaling more than $60,000.

"The big issue that concerns us is what happens if the government drops the ball and stops paying these guys," said Capt. Parsana Deoki, 32, of New York. "You'd have up to 400 SOI without jobs, without an income. That presents a problem. They have military training and access to weapons -- unemployed, with weapons, young men with an established chain of command. You can fill in the blanks."

Dora, a southern Baghdad district that is roughly 75 percent Sunni, was one of the most tattered and dangerous places in the capital in early 2007. Heaps of garbage collected on the sides of streets, making it virtually impossible to detect roadside bombs. Commercial areas and many residential streets were on virtual lockdown. People stopped going to work, fearing kidnapping, an explosion or a sectarian killing.

The Sons of Iraq, also known as Awakening Councils, began in Anbar province in western Iraq in 2006 when tribal leaders joined forces with U.S. troops to fight the growing influence of al-Qaeda in Iraq, a largely homegrown insurgent group that imposed a dogmatic brand of Islam.

Desperate for solutions to curtail the endemic violence that gripped Baghdad and several Iraqi provinces in early 2007, the U.S. military sought to replicate the Anbar model across the country. Awakening groups sometimes formed overnight, especially in places where networks of insurgents had weapons and a chain of command.

Mohamed Abdul Hussein al-Kurtani, a Sons of Iraq leader in Dora, had been running a local cell of the 1920 Revolution Brigades, an insurgent group that opposed the presence of U.S. troops in Iraq and had been dueling with the local cell of al-Qaeda in Iraq.

"He decided it was a fruitless battle to work against us," said Sgt. Brian Bailey, 31, of Holbrook, Mass. "Instead of hiding in the shadows, they came out."

Kurtani, like most leaders, wears civilian clothes. The guards under his command wear tan uniforms and carry battered AK-47 assault rifles. Most Sons of Iraq are assigned to the neighborhoods where they live and earn $300 to $500 a month.

"At first, the SOI were just guys on street corners," said Lt. Col. Bryan Mullins, 39, of Bristol, Va., a brigade operations officer. "We started integrating them into the security program. They knew the bad guys and they knew who was in the community."

As violence declined this year and Iraqis began demanding more control over security matters, U.S. officials began exploring ways of shrinking the Sons of Iraq.

This summer military officials approached the U.S. Agency for International Development, which oversees humanitarian aid programs overseas, and asked if it would be willing to assume responsibility for the program. The discussions didn't go far, according to a U.S. official familiar with them.

"That funding stream comes with restrictions," said the official, who spoke on the condition of anonymity to describe confidential discussions. "SOI is a pseudo-militia."

Getting Iraqi army and police units to work with Sons of Iraq groups was initially impossible and remains difficult, U.S. military officials say. The Iraqi government has pledged to hire at least 20 percent of the guards as soldiers or policemen and has agreed to keep the rest on the payroll until they find other jobs.

Capt. Zaid Ayad Obaidi al-Rubaie, one of the key National Police leaders in Dora, spoke glowingly to a reporter about the Sons of Iraq in his area during a recent visit, as U.S. soldiers listened in.

"They are Iraqi," the captain said, smoking a cigarette in his small office decorated with fake flowers. "We understand each other. From the beginning, the collaboration was very fruitful, and it continues."

But Sons of Iraq leaders say their relationships with police commanders have been forged under heavy U.S. pressure and remain beset by mutual distrust.

"I feel sorry to say this," said Zaied Subhi, a Sons of Iraq leader. "There is no trust between us."

First Lt. Greg Garhart, 26, who supervises more than 400 Sons of Iraq in the Dora area, said the guards who work under him have all but lost hope. None has been admitted into the National Police.

"They kind of see the SOI as a dying organization" he said. "I've had a few quit recently. I don't know if they lost their faith or are afraid of the NP."

Of more than 54,000 Sons of Iraq guards in the Baghdad area, roughly 3,400 have secured jobs in the Iraqi security forces, according to the U.S. military. Despite their misgivings, the vast majority have registered to continue getting paid by the Iraqi government.

U.S. soldiers see Sons of Iraq leaders as extraordinary sources of intelligence, but what makes them so attractive as allies -- their connections to the insurgency -- is also what makes the prospect of their dissolution so alarming.

John recently visited Kurtani to seek information about a Katyusha rocket that narrowly missed the small outpost in Dora where his platoon is assigned.

"How does a [expletive] rocket the size of two of my weapons get into the mahallas without SOI seeing it," John asked teasingly, using the Arabic word for neighborhood.

After a lengthy back-and-forth between Kurtani and his aides, John's interpreter quietly told the lieutenant that a cousin of one of Kurtani's deputies may have been involved.

"Tell him I want addresses for all of his lieutenants," John told the interpreter as they were preparing to leave. "Tell them I'm going to come visit them. And say it with a wink."

The next day, another Sons of Iraq group spotted two men fiddling with a small billboard fixed to a light post along a main road.

Police arrested the men and found, inside the double-paneled billboard, a rocket attached to a triggering device. U.S. military officials later concluded that it could have been used against the gunner in an American vehicle.

Under stern questioning by John, one of the men began to weep and said he knew nothing about the rocket. But field tests for explosives residue on their hands were positive.

"How much did they pay you to do this?" demanded John.

In one of the men's pockets, police found two crisp $50 bills. Later that day, John told his men to keep looking for similar booby traps and found a billboard disguising a mortar launcher.

That night, he met with Subhi, 48, the Sons of Iraq leader whose men had spotted the first billboard.

"Good work today," John said.

"Of course!" Subhi replied.


The next major test for Iraq. What are the odds?

You think these people are going to do what they have always done, sharpen knives?

Or will they take the next step towards modernity?

U.S. Radar, Troops in Israel

U.S. European Command (EUCOM) has deployed to Israel a high-powered X-band radar and the supporting people and equipment needed for coordinated defense against Iranian missile attack, marking the first permanent U.S. military presence on Israeli soil.

More than a dozen aircraft, including C-5s and C-17s, helped with the Sept. 21 delivery of the AN/TPY-2 Transportable Radar Surveillance/Forward Based X-band Transportable (FBX-T), its ancillary components and some 120 EUCOM personnel to Israel's Nevatim Air Base southeast of Beersheba, said sources here and in Stuttgart, Germany.

Among the U.S. personnel is at least one representative from the Missile Defense Agency (MDA), though officials said the agency had little to no say in the deployment decision. MDA involvement has been confined to providing equipment and advice on technical aspects of its deployment, one official said.

The Raytheon-built FBX-T system is the same phased-array radar that was deployed to northern Japan with the U.S. Pacific Air Forces (PACAF) in 2006. The high-powered, high-frequency, transportable X-band radar is designed to detect and trackballistic missiles soon after launch.

Its ancillary gear included cooling systems, generators, perimeter defense weaponry, logistics supplies and dozens of technicians, maintenance specialists and security forces to operate and defend the U.S. installation.

EUCOM has repeatedly deployed troops and Patriot air defense batteries for joint exercises and Iraq-related wartime contingencies, but has never before permanently deployed troops on Israeli soil.

A EUCOM spokesman declined to comment. MDA officials referred questions to the U.S. State Department, which did not provide comment by press time.

An Israeli military spokesman said the Israel Defense Forces (IDF) enjoys long-standing strategic cooperation with all branches of the U.S. military.

"This cooperation is varied and comes in multiple forms, and it is not our practice to discuss details of our bilateral activities," he said.

Nevertheless, in previous interviews, U.S. and Israeli officials confirmed that the X-band deployment plan was approved in July, first by Adm. Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, and his Israeli counterpart, Lt. Gen. Gabi Ashkenazi; and then by U.S. Defense Secretary Robert Gates and Israeli Defense Minister Ehud Barak.

Shaving Minutes From Reaction Time

The radar will be linked to the U.S. Joint Tactical Ground Station (JTAGS), which receives and processes threat data transmitted by U.S. Defense Support System satellites. According to U.S. and Israeli sources, JTAGS will remain in Europe, but its essential cueing data will stream into the forward-deployed X-band radar, where it instantaneously shares information with Israel's Arrow Weapon System.

Once operational, the combined U.S. and Israeli system is expected to double or even triple the range at which Israel can detect, track and ultimately intercept Iranian missiles, according to Lt. Gen. Henry Obering, director of the Pentagon's Missile Defense Agency.

During a visit to Israel in early August, Obering said the X-Band radar could add precious minutes to the time in which Israel has to respond to incoming missile attacks.

"The missile threat from Iran is very real, and we must stay ahead of the threat ... that's why we're working so hard with all our allies to put the most optimized, effective, anti-missile capabilities in place," Obering said.

"In the context of Israel, if we can take the radar out here and tie it into the Arrow Weapon System, they'll be able to launch that interceptor way before they could with an autonomous system," he added.

Ilan Biton, a brigadier general in the Israel Air Force (IAF) reserves and former commander of the nation's air defense forces, could not comment on the latest developments associated with the X-band radar. However, he said that an IAF air defense brigade established during his 2003-06 tenure has continuously demonstrated its ability to interoperate well with American forces.

"We advanced tremendously on multiple levels and have developed very impressive cooperation," Biton said at a Sept. 22 conference in Herzliya. Referring to bilateral Juniper Cobra air defense exercises and the 2003 deployment of Patriot batteries prior to the U.S.-led invasion of Iraq, Biton noted: "At the human level, we've developed a common language and at the technical level, we've put in place the interfaces that allow our systems to speak to one another."

The end result, according to Biton, is a combined ability "to manage battles, execute debriefs and implement corrections, all in real time."

Twin Messages

As U.S. public affairs officers last week mulled whether to publicly disclose the Israel deployment, Iranian President Mahmoud Ahmadinejad, at a U.N. General Assembly meeting in New York, continued to defend his country's nuclear enrichment and missile development program.

"Iran's [nuclear] activities are peaceful," Ahmadinejad said Sept. 23, adding that in Israel, "the Zionist regime is on a definite slope to collapse."

A U.S. government source said the X-band deployment and other bilateral alliance-bolstering activities send parallel messages: "First, we want to put Iran on notice that we're bolstering our capabilities throughout the region, and especially in Israel. But just as important, we're telling the Israelis, 'Calm down; behave. We're doing all we can to stand by your side and strengthen defenses, because at this time, we don't want you rushing into the military option.'"

But in Israel, frustration is mounting at what is roundly perceived as a lack of international resolve to halt Iran's nuclear weapons drive. At a Sept. 21 meeting of the Israeli Cabinet, an Israeli military intelligence officer reported that Iran is accelerating the pace at which it enriches uranium, and that Tehran already possesses possibly half of the fissionable material needed to produce its first nuclear warhead.

Reflecting Israeli concern about the ineffectiveness of sanctions against Tehran, Brig. Gen. Yossi Baidatz, head of Military Intelligence's research department, reported: "The international front against Iran is weak and not consolidated, and isn't putting enough pressure on the regime to stop enriching uranium."

According to selected excerpts from the briefing released by the Israeli Prime Minister's office, Baidatz warned that Iran is "galloping toward a nuclear bomb." He added, "The sanctions have very little influence and are far from bringing to bear a critical mass of pressure on Iran."

Defense News

Trying to Fix Stupid-Crazy

The Burg, like most good Americans, has been discussing the 'Bailout' plan promulgated by Secretary Treasury Hank Paulson. Rantburg University has lived up to its name these past few days as we've all learned about mortgage backed securities, commercial paper, the Libor index and the depths of depravity within the soul of the Democratic Party.

I appreciate what some here have said about how fixing the mess is absolutely required to prevent an economic collapse. I think that's right. I also understand those who are skeptical that we have a real crisis, and if we do, how to fix it.

But I decided to see how bad things really were today in a more personal way. Most investments are continuing the decline that's been going on the last year. Yes, the market is up occasionally, even now, but it could plunge tomorrow. A great depression could on the way. Or not. I can't look at the billions and trillions of dollars being tossed about in this plan or that and not have my eyes glaze over. But I can look at the real world at people like me.

A good test, I thought, would be to see how easily John Q Citizen could get a loan. So I took a look.

To start, I checked eLoan and LendingTree to price rates for a new mortgage for a home in my home county (Will County, Illinois). I put in the median price for a new home here and specified 10% down with an excellent credit rating. No problem. Rates are 5.5 - 6%. I didn't click 'submit' but I'm pretty sure that if I did, a perky eLoan agent would get back to me within the promised fifteen minutes.

Then I looked at auto loans. At Chase, a four year loan is 6.2%. At Bank of America the same loan is 5.8%. Those are reasonable rates by any modern historical standard.

I looked into annunities. Within a half-hour I'd found a dozen annuity offers that would take my hypothetical $100K IRA roll-over and turn it into a perpetual $550 a month for life. That's about 6% a year. Maybe I should retire.

And I threw out, in today's mail, three more unsolicited offers for credit cards.

So in real life, I can get credit, finance things I want to buy, and prepare for the future. I can find banks and investors who are, today at least, more than happy to work with me. So where's the crisis?

To apply the Glenn Reynolds rule: "I'll believe there is a crisis when the people who say that there is a crisis start acting as if there is a crisis."

To their credit, Paulson, Bernanke and Bush seem to be acting as if there is a crisis. But the national banks and lenders that deal with John Q Citizen aren't, at least not yet, the Democrats certainly aren't, and a fair number of Republicans aren't either.

The root core problem of the current panic, as I see it, is that the mortgage-backed securities are illiquid. We know why -- stupid Fannie/Freddie rules, bad, bad Community Reinvestment Act, crooked politicians, con-artists at ACORN and other 'community organizations', greedy investors and bankers, and inadequate oversight by the Fed, pension funds, etc. Okay, that's the problem. Nobody can tell what a typical MBS, particularly the sub-A+ tranches, is worth. So by mark-to-market rules they're worth 'zero', which plainly is stupid -- even if every mortgage in an MBS foreclosed, the homes and land would have residual value. But we have, among other stupidities, stupid accounting rules like that '157B' sucker.

That's it in a nutshell. Paulson is right -- the cure is to put a value on the MBS's so as to make them liquid again. If he'd simply come out with that, and had explained why, and told us with some calm what would happen if we didn't -- and if he'd DONE THIS BEFORE FRIGGIN' SEPTEMBER OF AN ELECTION YEAR -- then we could have had a reasonable debate, no more than the usual political skullduggery, and perhaps had a solution.

But Paulson is an investment banker and an arrogant jerk -- I repeat myself, of course -- so he couldn't do that. He said, "gimme the power and I'll decide what's best." Yeah, sure, Hank, we'll give 700 large to the very people who got us into this mess.

So Paulson went public, and Bush had to back him up, and the press and the markets reacted as you might predict. So did the politicians, particularly the Big O, who saw a 2 point deficit in the national polls become a 5 point lead. And clueless people wonder why San Fran Nan behaved the way she did yesterday on the floor of the House. She and the Big O have what they want and they're going to ride that horse all the way to election day if only they can. The Republicans act as if they were forced to suck a very large lemon, which they did, since as is typical for them, they were completely out-played in the political arena. Whoa, that's never happened before.

Now then, the adults in the room, if any are left, might point out that if we don't fix the MBS mess than the entire commercial paper market just might come down, and when it does companies like Boeing, Cat, GM, etc are going to be in big trouble. It is idiocy that Cat can't float its 30 day paper easily, but right now it can't. So Cat and the other big companies, from Boeing to Xerox, will delay plans, slow purchasing, lay-off employees, and in general conserve cash. So will the main street banks over time as the level of mistrust increases. Sure, I have money and you're my best customer, but that doesn't mean I'll loan it to you at any price, even for a month. That thinking will tank the economy.

So for John Q Ciitzen, let me make it clear: I can find an auto loan today. But I might not be able to find one, for any price, in a few months if we don't fix the problem. Not that I'll be able to afford a car if my employer just laid off me and a thousand other people.

The market is in a panic precisely because it is irrational, and you don't fix stupid-crazy by becoming even more stupid-crazy. Behaving that way leads you to goofy people in black bandannas manning the barricades in our urban centers. Our politicians will be even less well behaved. The authoritarian Left will canoodle with the Wall Street cowards which will be easy since many of the latter are already secret admirers of the former. Or not-so-secret, as the Big O's donation list attests. The end result is liberal fascism, a take over of an increasingly big part of the economy by government to be run as government -- that is, the Big O and his friends -- say. Oh, business will still be 'private', they'll just have to do as they're told.

No, not for me, I'll pass.

So here is what you do to fix the MBS problem and stop the liberal fascists (this time). You fix stupid-crazy by grabbing the attention of the panicked people. You might need to clobber them first -- "thanks, I needed that" -- but you then lead them to an orderly resolution. Yes, assets will be written down, some banks and investment houses will go bankrupt, some investors will go broke, some homes will be foreclosed, a few people will need temporary shelter. You can ease the pain for the small players but you make sure the bigger players remember what it was like to touch that hot stove.

Review each MBS, put it up for auction, put a value on each one, and make sure government is there to grease the skids and buy those securities that no one else wants at some price that makes grown people complain but not scream. Government puts a floor under our fall; that's the key feature of any responsible plan. That ensures that people with money can put a value on illiquid securities and buy the ones they want at a price that doesn't in turn break them. You can do it as 'insurance', you can call it a 'bailout', whatever you like, but you make sure that there is a market for that which can't be marketed today.

And do it now. The longer you wait, the worse it gets. The preferred alternative of conservative purists seems to be to let the markets sort it out amongst themselves. Sure, they'll do that, after a while. A long while. That's called a 'recession', and the sorting could take a few years or more of really painful consequences for John Q Citizen, and in the meantime the liberal fascists are always pointing out to John how they could do it better if he would just gave them more power. That's what they always say, and that's how we got into this mess in the first place.

You fix stupid-crazy by stripping what is irrational out of the problem. You save the economy, and perhaps our country, by doing it quickly. That's being responsible. That's what adults do when confronted with panic. Are we that responsible?


I see a bright side to this whole mess. less money is going to go to the terrorist! And the enemy has no doubt by now realized that he has stuck his dick in a beehive.

The Man Behind the Curtin

"I’ve gotten a few emails and comments on the new picture. Yes, that picture is the same picture in Fobbits Need Ice Cream Too. By the way, if you are not reading Joe’s blog, you should. Joe is a real infantryman that actually leaves the wire. I just watch the radios and try to fuck a female lieutenant. Or maybe I’m not trying. It all depends on if you are reading this and happened to be in my chain of command.

Anyway, I took the picture as a joke for Joe to use on his site. Yes, the man in the picture is me. If you look closely at my hands, you will see a CAO Brazilia cigar."
Big Tabacco

Iraqi Leaders Closely Watching US Elections

"I mentioned this past summer that pressing priorities in Iraq made Iraqis show little if any interest in the upcoming U.S. election. That was the case when November seemed too far to worry about. We’re almost in October now and things are changing.

Comments made by MP Sami al-Askari are evidence of such a trend. As an adviser to Prime Minister Maliki and member of his Da’wa Party, al-Askari’s comments are definitely indicative of what’s being discussed in that small circle and probably reflect Maliki’s own viewpoints.
As recent as June, al-Askari’s position echoed Maliki’s approval of a 16-month timetable for withdrawal. But three months can indeed make a difference, “Iraqis are better off with Republicans.” al-Askari said in an email to Kathleen Parker at NRO last week.

What I understood from the MP’s statement is that the Da’wa Party now thinks it would be better off with Republicans. As for ordinary Iraqis, they have always been in favor of determined allies who want to correct the mistakes of the past and help Iraq pass the bottleneck — quitters have never been popular.
The difference in the tempo of developments that I pointed out above is not the only reason behind such shifts in the Maliki team’s rhetoric with respect to the U.S. presence and future relations with the next U.S. administration."

Hong Kong says Cadbury melamine levels acceptable

HONG KONG (AP) - Hong Kong authorities said Tuesday the amount of melamine found in two samples of chocolate made at British candy maker Cadbury's Beijing factory was legally acceptable for human consumption, a day after the company recalled 11 items sold in parts of Asia and the Pacific.

Hong Kong's Center for Food Safety said it tested six Cadbury chocolate samples, including two made at Cadbury's Beijing plant, and found them to contain less than 2.5 parts per million legally considered acceptable here. It did not say whether it was testing the other nine products being recalled.

The Food and Drug Administration has said that no level of melamine deliberately added to a food product is legal in the United States.

Cadbury said the Hong Kong test results did not change their decision to recall the products from the Beijing plant.

"It was tested as satisfactory but we are still withdrawing it," said Simon Taylor, head of corporate relations and communications at Cadbury. "That makes no change from what Cadbury announced on Monday."

Baby formula containing melamine has been blamed for killing four babies and sickening over 50,000 in mainland China. The state-run China News Service says 27 people have been arrested so far in connection with the scandal.

Since melamine-tainted infant formula was uncovered in China, the banned chemical as been found in an array of food products forcing a wave of recalls, mostly in Asia.

Hong Kong authorities said it had found four other Cadbury products produced at plants outside of China also contained "satisfactory levels" of melamine.

Experts say some amount of melamine, which is used to make plastics and fertilizers, may be transferred from the environment during food processing.

But in China's case, suppliers trying to boost output are believed to have diluted their milk, adding melamine because its nitrogen content can fool tests aimed at verifying protein content.

On Tuesday, China's President Hu Jintao made his strongest public comments yet regarding the scandal

"We need to ensure that all products on the market are up to standard, so that consumers don't have to worry," Hu said during a tour of dairy farms broadcast on China Central Television's evening news.

The Dutch food safety watchdog announced Tuesday it had found slightly elevated levels of the industrial chemical melamine in cookies imported from China and sold under the "Koala" brand.

The cookies have been pulled from shelves in the Netherlands and the chance they have made anybody sick is "extremely small," the agency said.

Also Tuesday, Anglo-Dutch food giant Unilever said it was recalling its Lipton-brand 3-in-1 milk tea powder in Hong Kong and Macau after it was found to contain melamine.

Last week, Unilever recalled Lipton Green Milk Tea from the Taiwan market because the product used Chinese-made milk.

Hong Kong authorities also said they had found unacceptably high levels of melamine in Pocky Men's coffee cream coated biscuit stick, produced by Japan's Ezaki Glico Co. Ltd. The company had no immediate comment on the reported contamination.

Two samples of coconut and walnut cakes manufactured by Tian Le Yuan Foods Co. Ltd. in southern China were also found to contain unacceptably high levels of melamine, authorities said.

The South Korea Food and Drug Administration said Tuesday melamine had been found in Nabisco Ritz cracker cheese sandwiches and in rice crackers made by Danyang Day Bright Co.

The maker of Nabisco Ritz crackers, Northfield, Illinois-based Kraft Foods Inc. (KFT), did not immediately return messages left seeking comment.

Melamine has now been found in six products imported to South Korea and the country has banned imports of all Chinese-made food products containing powdered milk.


Gorbachev to form political party in Russia

MOSCOW (AP) - A Russian billionaire said Tuesday he is teaming up with former Soviet President Mikhail Gorbachev to form a new political party that will challenge the country's recent steps away from democracy.

Alexander Lebedev, a former lawmaker who has built a fortune in business and investment, said he and Gorbachev would work together in a political movement tentatively named the Independent Democratic Party.

Kremlin critics say that during his eight years as president, current Prime Minister Vladimir Putin reversed Russia's post-Soviet movement toward democracy and enhanced state control over the economy, courts and media.

Gorbachev could not immediately be reached for comment and it wasn't clear if the 77-year-old planned to seek an active political role more than 17 years after the Soviet Union collapsed around him, costing him his job as its last leader.

It would be an uphill battle: Gorbachev is popular abroad, but is reviled by many Russians who blame him for the Soviet breakup. He won less than 1 percent of the votes in the 1996 presidential election and has not run since.

In a statement on his Web site, Lebedev said the new party was Gorbachev's idea. "The initiative belongs to President Gorbachev. He gave our people freedom, but we have not learned how to use it."

Lebedev said the party would advocate a "return to a normal electoral system," calling for the restoration of gubernatorial elections, a stronger parliament, independent courts and media, and a smaller state role in the economy.

Gorbachev has generally praised Putin for lifting the nation out of the post-Soviet troubles that many Russians blame on the late Boris Yeltsin, a longtime rival of Gorbachev who replaced him in the Kremlin.

But he has cautiously criticized the political system put in place by Putin. The United Russia party of the immensely popular Putin dominates parliament and regional governments while Kremlin critics have been sidelined, sometimes though force.

Earlier this year, Gorbachev suggested that United Russia was in danger of becoming like the all-powerful Soviet-era Communist Party and called for major changes in the electoral system.

Lebedev, a major private shareholder in the Russian airline Aeroflot, joined with Gorbachev in 2006 to buy 49 percent of Novaya Gazeta, an independent newspaper that has challenged the Kremlin with penetrating investigative reporting. Anna Politkovskaya, a prominent investigative reporter murdered that year, worked for Novaya Gazeta.

In June, Gorbachev and Lebedev urged the creation of a national museum and memorial to honor victims of Soviet-era repression - a move seen as a challenge to the government, which critics say has glossed over the crimes of Josef Stalin to justify its own retreat from democracy.


Bailout marks Karl Marx's comeback

In his Communist Manifesto, published in 1848, Karl Marx proposed 10 measures to be implemented after the proletariat takes power, with the aim of centralizing all instruments of production in the hands of the state. Proposal Number Five was to bring about the “centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.”

If he were to rise from the dead today, Marx might be delighted to discover that most economists and financial commentators, including many who claim to favour the free market, agree with him.

Indeed, analysts at the Heritage and Cato Institute, and commentators in The Wall Street Journal and on this very page, have made declarations in favour of the massive “injection of liquidities” engineered by central banks in recent months, the government takeover of giant financial institutions, as well as the still stalled US$700-billion bailout package. Some of the same voices were calling for similar interventions following the burst of the dot-com bubble in 2001.
“Whatever happened to the modern followers of my free-market opponents?” Marx would likely wonder.

At first glance, anyone who understands economics can see that there is something wrong with this picture. The taxes that will need to be levied to finance this package may keep some firms alive, but they will siphon off capital, kill jobs and make businesses less productive elsewhere. Increasing the money supply is no different. It is an invisible tax that redistributes resources to debtors and those who made unwise investments.

So why throw this sound free-market analysis overboard as soon as there is some downturn in the markets?

The rationale for intervening always seems to centre on the fear of reliving the Great Depression. If we let too many institutions fail because of insolvency, we are being told, there is a risk of a general collapse of financial markets, with the subsequent drying up of credit and the catastrophic effects this would have on all sectors of production. This opinion, shared by Ben Bernanke, Henry Paulson and most of the right-wing political and financial establishments, is based on Milton Friedman’s thesis that the Fed aggravated the Depression by not pumping enough money into the financial system following the market crash of 1929.

It sounds libertarian enough. The misguided policies of the Fed, a government creature, and bad government regulation are held responsible for the crisis. The need to respond to this emergency and keep markets running overrides concerns about taxing and inflating the money supply. This is supposed to contrast with the left-wing Keynesian approach, whose solutions are strangely very similar despite a different view of the causes.

But there is another approach that doesn’t compromise with free-market principles and coherently explains why we constantly get into these bubble situations followed by a crash. It is centered on Marx’s Proposal Number Five: government control of capital.

For decades, Austrian School economists have warned against the dire consequences of having a central banking system based on fiat money, money that is not grounded on any commodity like gold and can easily be manipulated. In addition to its obvious disadvantages (price inflation, debasement of the currency, etc.), easy credit and artificially low interest rates send wrong signals to investors and exacerbate business cycles.

Not only is the central bank constantly creating money out of thin air, but the fractional reserve system allows financial institutions to increase credit many times over. When money creation is sustained, a financial bubble begins to feed on itself, higher prices allowing the owners of inflated titles to spend and borrow more, leading to more credit creation and to even higher prices.

As prices get distorted, malinvestments, or investments that should not have been made under normal market conditions, accumulate. Despite this, financial institutions have an incentive to join this frenzy of irresponsible lending, or else they will lose market shares to competitors. With “liquidities” in overabundance, more and more risky decisions are made to increase yields and leveraging reaches dangerous levels.

During that manic phase, everybody seems to believe that the boom will go on. Only the Austrians warn that it cannot last forever, as Friedrich Hayek and Ludwig von Mises did before the 1929 crash, and as their followers have done for the past several years.

Now, what should be done when that pyramidal scheme starts crashing to the floor, because of a series of cascading failures or concern from the central bank that inflation is getting out of control? It’s obvious that credit will shrink, because everyone will want to get out of risky businesses, to call back loans and to put their money in safe places. Malinvestments have to be liquidated; prices have to come down to realistic levels; and resources stuck in unproductive uses have to be freed and moved to sectors that have real demand. Only then will capital again become available for productive investments.
Friedmanites, who have no conception of malinvestments and never raise any issue with the boom, also cannot understand why it inevitably leads to a crash.
They only see the drying up of credit and blame the Fed for not injecting massive enough amounts of liquidities to prevent it.

But central banks and governments cannot transform unprofitable investments into profitable ones. They cannot force institutions to increase lending when they are so exposed. This is why calls for throwing more money at the problem are so totally misguided. Injections of liquidities started more than a year ago and have had no effect in preventing the situation from getting worse. Such measures can only delay the market correction and turn what should be a quick recession into a prolonged one.

Friedman — who, contrary to popular perception, was not a foe of monetary inflation, but simply wanted to keep it under better control in normal circumstances — was wrong about the Fed not intervening during the Depression. It tried repeatedly to inflate but credit still went down for various reasons. This is a key difference in interpretation between the Austrian and Chicago schools.

As Friedrich Hayek wrote in 1932, “Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion. ... To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about ...”

The confusion of Chicago school economics on monetary issues is so profound as to lead its adherents today to support the largest government grab of private capital in world history. By adding their voices to those on the left, these confused free-marketeers are not helping to “save capitalism”, but contributing to its destruction.


Monday, September 29, 2008

A True Image from False Kiva

I just heard Obama say that he would examine the bill as soon as he is president?? How about he examine it as Senator, which he is now!!

I must have gone insane last week and never noticed.

Bush's letter to Iraqi leaders

"if it was written by Thomas Friedman:

"It’s not the stakes that have changed. It is the fact that you are now going to have to step up and finish this job. You have presumed an endless American safety net to permit you to endlessly bargain and dicker over who gets what. I’ve been way, way too patient with you. That is over. We bought you time with the surge to reach a formal political settlement and you better use it fast, because it is a rapidly diminishing asset.

You Shiites have got to bring the Sunni tribes and Awakening groups, who fought the war against Al Qaeda of Iraq, into the government and Army. You Kurds have got to find a solution for Kirkuk and accept greater integration into the Iraqi state system, while maintaining your autonomy. You Sunnis in government have got to agree to elections so the newly emergent Sunni tribal and Awakening groups are able to run for office and become “institutionalized” into the Iraqi system.

So pass your election and oil laws, spend some of your oil profits to get Iraqi refugees resettled and institutionalize the recent security gains while you still have a substantial U.S. presence. Read my lips: It will not be there indefinitely — even if McCain wins.

Our ambassador, Ryan Crocker, has told me your problem: Iraqi Shiites are still afraid of the past, Iraqi Sunnis are still afraid of the future and Iraqi Kurds are still afraid of both.

Well, you want to see fear. Look in the eyes of Americans who are seeing their savings wiped out, their companies disappear, their homes foreclosed. We are a different country today. After a decade of the world being afraid of too much American power, it is now going to be treated to a world of too little American power, as we turn inward to get our house back in order.

I still believe a decent outcome in Iraq, if you achieve it, will have long-lasting, positive implications for you and the entire Arab world, although the price has been way too high. I will wait for history for my redemption, but the American people will not. They want nation-building in America now. They will not walk away from Iraq overnight, but they will not stay there in numbers over time. I repeat: Do not misread this moment. God be with you."

George W. Bush."
Iraqi Mojo

Spending the Night With an Iraqi Friend

BAGHDAD — Like other Western correspondents, I’ve forged some close friendships with Iraqis I’ve met here. But because being seen with Americans is so dangerous, it has been difficult or impossible to share the normal social exchanges of friendship like visits to people’s homes.

So when an Iraqi woman friend, inspired by the drop in violence and her move to a new apartment, invited me to come over for dinner and spend the night with her family in a conservative, mostly-Shia area of Baghdad during Ramadan, I was thrilled.

Even six months ago, my friend’s neighborhood was a killing ground for Shiite militias; bombings and assassinations were frequent. Several months ago, a car bomb killed dozens of people there.

Many residents in the area remain suspicious of Westerners, so I dressed in a black abaya, the long robe worn by religious women, and wrapped a black hijab around my head. Not wanting to draw attention with an American-made backpack, I packed my overnight things in a plastic bag from an Iraqi store. The situation is still precarious enough that I cannot use my friend’s name.

At 4 p.m., my friend’s brother picked me up at an intersection not far from where they lived, and we drove to the apartment building and walked quickly inside. The lights were turned out in the staircase, a precaution so that the neighbors would not look too closely at a visitor, and we negotiated the rough cement steps in darkness.

I was greeted by my friend, her husband and a pretty, mischievous 3-year old girl, who ran to me, gave me a kiss on the cheek and said, “Ahebich!” – “I love you.”

I had long ago fallen for this small child from afar, through photos and videos my friend had shown me. I’d given her, through her mother, small presents, and received presents in return. But I never dared hope to meet her in person, particularly at her home, in her own familiar surroundings

The apartment was small but cozy and spotless, its walls painted in dark pastels — orange, lilac, green. On a late afternoon when the temperature outside hovered at 114 degrees Fahrenheit, it was also swelteringly hot – the national electricity required to power the air conditioner worked only sporadically, at most 4 hours a day, my friend said — and their small generator is turned off during the day to save gasoline, which is expensive and difficult to get.

But as we walked into the main bedroom, the air conditioner suddenly switched on. “It is a gift from Allah!” my friend said, insisting that I sit on the bed in front of the blower to receive the strongest blasts of cold air. About 15 minutes later, the power shut off again, a pattern that was repeated several times that evening.

My friend and her husband, who had been fasting since 4 a.m., neither eating nor drinking liquids, plied me with cold juice and glasses of cool water. They gave me a tour: the living room; two other smaller bedrooms – one for their daughter, the other a storage room they hoped to someday turn into a guest room; a tiny hallway area that served as a kitchen, with a four-burner stove top but no oven and a small porcelain sink; an Eastern style, cement-floored bathroom. As in many Arab homes, the living room was empty of furniture except for a round plastic table and chairs – pallets on the tiled floor provided the setting for much of the family’s social life. A gold scroll with three verses from the Koran –one to protect against envy, another against black magic, my friend said — hung on one wall, a giant plastic Mickey Mouse watch on another.

I saw a door to the outside and asked if the apartment had a balcony. “We have only the letters ‘b’ and ‘a’ but not the rest of it,’’ she said jokingly. I wanted to go and look, but it was still light out and I might be spotted — too risky for my friends.

The electricity shortage, they said, is a problem not just for comfort but for the refrigerator in the bedroom, which goes off and on all day, making it difficult to store food. The water in the sink and shower, too, is unpredictable, sometimes working, sometimes not.

To pass the time until the fast ended at 6:45 p.m., we sat in the bedroom and talked about learning foreign languages (my friend’s husband was trying to learn English), about the security situation – there more people on the streets after dark in the neighborhood now, they said, more people in the park – and other topics to take their minds off the cold bottles of water that were still an hour away. When the small generator went on and the swamp cooler, which requires less energy than an air conditioner, kicked into life in the living room, we moved there.

I helped the 3-year old open a package of clay in small colored tablets that her father had bought and, while my friend cooked, the three of us shaped the sticky colored tablets into animals – a bird, a bear, an octopus. My friend’s daughter spoke only a few words of English and I speak little Arabic, but “Can I squish it now?” seemed to require no translation. I said that she could.

It had been a difficult fasting day for my friend and her husband. She had the day off, spending it cooking and preparing for my visit. But it was too hot to sleep in the apartment and too hot to spend much time outdoors. Her husband worked all day and then ran errands, shopping for bread and buying other supplies. The batteries in my camera were starting to run out and twice, he went out to he buy new ones, but the batteries were cheaply made and didn’t work.

While the old ones lasted, I took photos of my friend’s daughter and her husband, but my friend did not want me to photograph her without her hijab on – religious law forbids women to reveal their hair to men outside the family.

The heat was making my friend’s thirst almost intolerable, but she said that fasting during Ramadan was a lesson from God, teaching patience and restraint and reminding them that there were others in the world who suffered and who did not have food or water. Still, she joked, she was going to delay drinking past the appointed time a bit because the water had humiliated her by sitting so temptingly in front of her.

Iftar, the meal that breaks the fast, was laid out on a tablecloth on the floor, a feast of lamb kabobs, homemade babaganoush and dolma, grape leaves wrapping rice flavored with chickpeas and strips of lemon, yoghurt with cucumbers. We drank fruit juice and bottled water – even when there is tap water, it is not potable.

After dinner, my friend’s mother, her 16-year old brother and a 4 year-old niece dropped by and the party moved once more to the bedroom, where the air conditioning had decided to make a final brief appearance. While the teenager watched television – a popular show satirizing Iraqi politicians – and the small girls whispered secrets together, my friend’s mother began asking me questions about the United States. What was New York like? How much did it cost to live in America? What was the government like there? I told her that it was as difficult to describe my country to someone in Baghdad as it was to convey what life is like here to someone in the United States.

We talked about the nearby neighborhood where she and her husband lived. For several years there were killings and other violence every day – “like you cannot imagine,” she said. But now, after months of relative quiet, the government had finally put up a long blast wall, forcing her to walk 5 kilometers to work, rather than the 1 kilometer she walked before. “Why did they put it up now, why not before?” she asked.

After the visitors left, I snuck out on the partial balcony – a stone railing enclosing a narrow space – and stood behind a pillar, a borrowed hijab covering my head, peering at the largely deserted street. A police car whizzed by, its siren wailing A few men hurried along, carrying packages or smoking cigarettes. The lights in most apartments were already out.

For an hour or so, my friend and I sat on the bed – as if we were anywhere – and spoke about our lives, about religion, about the future of her country and mine. Then we joined her husband and daughter, already asleep on mats on the living room floor, the swamp cooler humming gently. I woke up only briefly at 3 a.m., when my friend and her husband got up to eat breakfast, pray and prepare for another day of fasting.

Baghdad Bureau

IRAN: If no sanctions and no war, then what?

Iran has managed to escape sanctions, but it didn't walk away completely unscathed from the latest United Nations General Assembly meeting.

The U.N. Security Council over the weekend passed a largely symbolic resolution against Iran for its refusal to stop producing enriched uranium, a key step in a certain type of nuclear weapons program, as well as in producing fuel for peaceful power generation.

The five-paragraph resolution reaffirmed four previous resolutions containing three sets of sanctions and urged Iran to comply with U.N. demands "without delay."

Of course Iran was flabbergasted.

Its office at the U.N. issued a news release calling the unanimous move "unfortunate" and an "unpleasant surprise" for the whole world. Iran downgraded its participation in an International Atomic Energy Agency conference set to begin today, a reminder that it could also boot U.N. arms inspectors out of the country if it's pushed too hard.

But the resolution fell far short of the harsh punitive sanctions the U.S. and Israel wanted. With veto-wielding Russia virtually ruling out the possibility of even mild sanctions, it was the best deal they could get, affirming the Bush administration's ninth-inning conversion to the type of painstaking multilateral consensus-building it decried during its first years in power.

There are other considerations and dynamics at work. All the Europeans keep talking about maintaining a united front yada, yada, yada. Fact is, they're still doing a lot of business with Iran. France's mammoth Total energy conglomerate and Austria's OMV are among the lead sponsors of an upcoming gas exploration conference in Tehran.

France's Danone yogurt company (called Dannon in the U.S.) has begun doing business in Iran, as has the mega-retailer Carrefour, which is a French version of Wal-Mart but with a better selection of cheeses.

That's not to mention the unabated presence of European automakers such as Renault, Peugeot and BMW.

There are also signs that the Bush administration is toning down the war talk in its final months. The Guardian, citing unnamed sources, reported last week that the Bush administration nixed any possible Israeli attack on Iran.

The Bush administration's decision to install advanced radar technology in Israel is likely a better weather vane of where all of this is probably headed.

Despite the position of the Bush administration, both U.S. presidential candidates and European leaders that a nuclear-armed Iran is "unacceptable," the West and Israel appear to be preparing the framework to live in a future with an Iran that might obtain nuclear weapons capability.

Babylon & Beyond

D.C. To The U.S. Economy: Drop Dead

"Congress just fucked up. Big time.

No surprise, though. Congress could fuck up a wet dream.

Here's what's happening: Your average Congressman is a backslapping idiot. You don't make it to Congress understanding the machinations of the world of finance and credit. You make it to Congress by reading the will of the people and surfing that wave. The "bailout" package is unpopular with Americans because few Americans understand where a dollar comes from.

Phone lines have been lighting up with popular opposition to a Wall Street bailout from conservative and liberal populists alike. None of these yokels understand that even in good times, a dollar in deposits is perched precariously on an upside-down pyramid point of four to six cents in actual liquidable assets.

Fewer still understand that the reason their employer didn't send them home today is because the company they work at, or the city or state office they work at, is able to make their payroll because they are able to float commercial and high-grade short-term paper on the money markets for a 1-day to 90-day loan. That is why they have spending money now, and why they had it last week. Americans take it for granted that that is going to be the case next week. (If your employer doesn't borrow in the money markets, you can be assured that your customers do, or the employers of your customers do, somewhere upstream from you!)"

Private Company Launches Its Rocket Into Orbit

A privately financed company launched a rocket of its own design successfully into orbit on Sunday night, ushering in what the company’s founders hope will be a new era of spaceflight.

It was the fourth launching attempt by the company, Space Exploration Technologies Corporation, which was founded by Elon Musk, an Internet entrepreneur born in South Africa.

“We’ve made orbit!” Mr. Musk exclaimed to his employees at the company’s headquarters in Hawthorne, Calif., proclaiming the moment “awesome.”

“There were a lot of people who thought we couldn’t do it — a lot, actually,” he said after thanking his employees. “But, you know, the saying goes, fourth time’s the charm.”

Mr. Musk, 37, founded SpaceX in 2002 after selling the online payment company he helped found, PayPal, to eBay for $1.5 billion.

SpaceX, which has more than 500 employees, captured one of the most coveted prizes of the new space industry: a commercial orbital transportation services contract worth as much as $100 million. Known by its acronym, Cots, the program encourages private-sector alternatives to the space shuttle.

The company is developing a larger rocket, the Falcon 9, to provide cargo services to the International Space Station for NASA after the shuttle program winds down in 2010. The company also hopes to adapt its technology to carry people to the station, which could help bridge the gap until the debut of the next generation of NASA spacecraft, planned for 2015.

“This is just the first step in many,” Mr. Musk told his team.

His relief was obvious. The first three efforts by SpaceX had ended in failure. The first, in March 2006, failed about a minute into the ascent because of a fuel line leak. A second rocket, launched in March 2007, made it to space but was lost about five minutes after launching.

In the most recent flight, on Aug. 2, mission control lost contact with the craft shortly after the separation of the first stage. That third flight carried three small satellites for NASA and the Defense Department, as well as small amounts of the cremated remains of 200 people, including Gordon Cooper, one of the original seven Mercury astronauts, and James Doohan, who played the character Montgomery Scott on the original “Star Trek” television series.

Engineers identified the problem as a small amount of residual thrust from the first stage after the engine was cut off; the first stage rear-ended the second after separation. Mr. Musk said the company had fixed the problem by telling the rocket to wait a few more seconds after cut-off before jettisoning the first stage, a change that required rewriting a single line of computer code.

This time around, SpaceX took no chances with a customer’s payload and instead launched what it called a payload mass simulator — a 364-pound weight — from the Kwajalein Atoll in the central Pacific Ocean at 7:16 p.m., Eastern time.

Those at headquarters cheered lustily at the launching, and even more so when the first and second stages separated successfully on live video that was also shown on the company’s Web site, spacex.com. There was a long moment of concern as mission control lost contact with the craft as it neared orbital velocity, its engine nozzle glowing bright red. But the image reappeared, and the cheers resumed.

In a news conference after the launching, Mr. Musk told reporters, “It’s great to have this giant monkey off my back.”

Michael Griffin, the administrator of the NASA, said in an e-mail message in response to a request for comment on the launch, said "I am tremendously pleased for them." He added, "Practical commercial spaceflight remains a difficult goal, but one brought much closer with this step."


Just amazing!! A private US citizen has now achieved what till now only a handful of governments could do.

Cadbury pulls melamine-laced chocolate from China

HONG KONG (AP) - British candy maker Cadbury announced a recall Monday of chocolate made in its Beijing factory after it was found to contain melamine, the industrial chemical that has sickened tens of thousands of Chinese children.

The 11 recalled items were sold in parts of Asia and the Pacific, the company said in a statement. Cadbury's chocolates sold in the United States were not affected, said a spokesman for Hershey's, Cadbury's sole U.S. distributor.

Meanwhile, Kraft Foods, the maker of Oreo cookies, and Mars, the maker of M&Ms and Snickers candy, questioned the findings of Indonesian tests that identified melamine in samples of their products made in China.

Both Kraft Foods and Mars said they would comply with an Indonesian recall but planned to conduct their own tests and look into the possibility the tainted products were counterfeits.

Melamine-laced baby formula and other dairy products in China have been blamed for sickening nearly 54,000 children and leading to four infant deaths. The industrial chemical, which is high in nitrogen, is believed to have been added to watered-down milk to mask the resulting protein deficiency and fool quality tests.

Preliminary tests showed melamine in Cadbury chocolates produced at the candy maker's Beijing factory, but it was too early to say how much of the chemical was in them, said a Cadbury spokesman who declined to be identified because of company policy.

Another official reached through the company's London office said there was no way the contaminated chocolate could find its way into other countries because the Chinese factory only supplies Australia, Taiwan, Nauru, Hong Kong and Christmas Island.

"That factory in Beijing only exports to those markets. It's only a small factory," said the official. He said Chinese production makes up only 0.5 percent of Cadbury's global sales, and the recalled items are "less than that because it's only chocolate."

The recalled products included Cadbury Dark Chocette, Cadbury Eclairs, Cadbury Dairy Milk Chocolate, Cadbury Dairy Milk Hazelnut Chocolate, Cadbury Dairy Milk Cookies Chocolate and Cadbury Hazelnut Praline Chocolate.

In the United States, Hershey's spokesman Kirk Saville said the Cadbury distributor "has never purchased milk, including powdered milk, from China," and that he was "positive" no Hershey's suppliers receive milk products from the country.

Indonesia's Food and Drug Monitoring Agency said tests last week found melamine in a dozen products distributed nationwide, including M&Ms, Snickers bars and Oreo wafers.

Manufacturers Kraft and Mars questioned the findings.

"We don't use any milk ingredients from China in any Oreo products, no matter where they are made or sold," said Kraft spokeswoman Claire Regan.

Tod Gimbel, Kraft's director of corporate affairs for the Asia Pacific, said the company "was trying to understand what methodology was used" in Indonesia's testing.

Mars, in a statement on its Web site, called the Indonesian results "completely inconsistent" with test findings from other government and independent labs in Asia and Europe.

"The vastly different results give Mars significant reason to question the validity of the Indonesian laboratory results," the company said.

So far, only a local agency has checked the products for melamine, but the levels found were considered very high.

No level of melamine deliberately added to a food product is legal in the United States, according to the Food and Drug Administration.

But the agency said it is conducting a health risk assessment to try to determine if there is a minimal amount that would be acceptable in cases where the chemical finds its way into a product through some other means. For example, melamine could be present in the meat or milk of an animal that was fed tainted feed or it could find its way into food processed in a factory.

Some experts in Asia say small amounts of melamine, which is used to make plastics, may be transferred during food processing.

Guidelines in Hong Kong and New Zealand say melamine in food products is considered safe at 2.5 parts per million or less, though Hong Kong has lowered the level for children under 3 and pregnant or lactating women to 1 part per million.

In China, the government continued its investigation into questionable milk sources.

Police raided dairy farms and milk purchasing stations in northern China, detaining 22 people accused of being involved in a network that manufactured, sold and added melamine to milk, the official Xinhua News Agency reported Monday. Police also seized more than 485 pounds of the chemical.

Chinese officials had previously arrested at least 18 people and detained more than two dozen suspects.

Asian countries continued to tighten controls on Chinese dairy products.

Myanmar's Commerce Ministry said all Chinese dairy imports had been barred since last week, according to the government affiliated weekly Myanmar Times - a significant move because China is the country's biggest trade partner. Chinese dairy products are widely sold in impoverished Myanmar, though there have been no reported cases of illnesses.

If the Government buys mortgages, and then reduces the interest on the paper they hold, so home owners can make their payments, and hold off foreclosure.

My only question is, How do I get "my" mortgage in front of the Government mortgage buyer?
By defaulting on my lone?

Al-Maliki says security pact in US, Iraqi interest

BAGHDAD (AP) - Prime Minister Nouri al-Maliki said Monday that the government is ready to compromise to reach a security accord with the United States because Iraq still needs American troops despite the drop in violence.

In an interview with The Associated Press, al-Maliki said neither he nor Iraq's parliament will accept any pact that fails to serve the country's national interests. A poorly constructed plan would provoke so much discord in Iraq that it could threaten his government's survival, he said.

Al-Maliki said, however, that he is firmly committed to reaching an accord that would allow U.S. troops to remain in the country beyond next year.

"We regard negotiating and reaching such an agreement as a national endeavor, a national mission, a historic one. It is a very important agreement that involves the stability and the security of the country and the existence of foreign troops. It has a historic dimension," al-Maliki said.

The Iraqi prime minister spoke at length about the difficulty he faces in trying to negotiate the accord that would set the terms for the U.S. presence in Iraq for years to come. Supporters of anti-American cleric Muqtada al-Sadr oppose the accord, arguing U.S. forces should leave Iraq as soon as possible. Neighboring Iran also has been speaking out vociferously against a long-term U.S. presence in Iraq.

"Pressures are coming from east and west and north and south, but we are determined to rise above all these difficulties and pressures because we want this agreement to be passed," al-Maliki said, "and we will go ahead despite all that is being said."

The prime minister also noted with gratitude the high cost paid by American taxpayers, the U.S. military and the forces of other coalition members to secure Iraq's freedom over the past five years.

"We appreciate and we respect their sacrifices," he said of the U.S. troops killed, adding that their deaths would act as a bridge between the two countries.

Answering questions in his office in Baghdad's heavily guarded Green Zone, in an ornate room once used by Saddam Hussein's son Odai, al-Maliki said a compromise was near on the thorny issue of legal jurisdiction over U.S. forces. He said it would involve an offer of limited immunity for American forces.

"We have proposed that the legal jurisdiction would be ... with the Americans ... when the troops are performing military operations," he explained.

"When they are not performing a military operation, they are outside their camps, the legal jurisdiction would be in the hands of the Iraqi judiciary."

He added: "I think we are getting near to a compromise on this issue. I think the atmosphere is positive and once we manage to find a solution for this issue, other issues will be easy to deal with."

He said the deal has been slowed by electoral politics in the United States and also in Iraq, where provincial elections are due to take place by Jan. 31.

"Unfortunately, the negotiations were held in an atmosphere that is exhausted with the election debate, both in America and also to a certain extent here. You know, sometimes the election debate and the electoral campaigns can sometimes move away from objectivity," he said.

If the talks fail, or if parliament eventually refused to approve the accord, the U.S. fallback likely would be to seek a resolution at the U.N. Security Council authorizing a renewal of the mandate for coalition troops to operate in Iraq. The current U.N. mandate expires Dec. 31.

But al-Maliki said his government would oppose another U.N. resolution because it would infringe on Iraqi sovereignty.

He also said new tensions between Russia and the United States over last month's Russia-Georgia war would complicate any U.S. attempt to get Security Council approval for an extended mandate.

"If we don't reach an agreement by the 1st of January 2009, the (U.S.) troops will have to remain in their bases," al-Maliki said, "and then there should be a plan for a quick withdrawal.

"This would not be in the interests of Iraq nor in the interests of the United States. Our need for coalition forces is decreasing - but it still exists," he said.

Al-Maliki said Americans may not be fully aware of the accomplishments brought about by the U.S. intervention in Iraq.

He listed those as - "Establishing a national government following a dictatorship and spreading freedoms inside Iraq after decades of oppression; establishing a constitutional structure inside the country; creating a friendly people toward the United States - the people of Iraq; and probably the most important achievement was to defeat the extremists from al-Qaida and the militias, people who threaten humanity in general. And America has seen the results of what happens when those people are not confronted."

"Unfortunately Iraq cannot solve America's economic problems, but what Iraq can do is take up more responsibility security-wise here inside Iraq," al-Maliki said.

"And I have told the Americans repeatedly that we are ready to take up responsibility here in Iraq so there are less losses and a decreased number of American lives lost," he said.


Maybe the rumors are true, and even the Sadrist are ready to deal.

Central banks pump in $620bn as shares plummet

Central banks around the world unveiled a plan to pump massive amounts of cash into the global banking system in a concerted effort to boost market confidence and inject liquidity into the global markets.

The move followed a fall in the Dow Jones of nearly 300 points in morning trade to 10,869 as the market took fright at several bank nationalisations in Europe and the US despite the approval of the "son of Tarp" — the Troubled Asset Relief Programme —bailout. The FTSE 100 index of leading shares was down almost 5 per cent, taking it to a new low for the year and below the psychologically significant threshold of 5,000.

As nine central banks used currency swaps to oil the wheels of dollar liquidity in the money markets, sterling plunged and was on course for its steepest one-day drop against the dollar for at least a decade and a half.

This was in response to the nationalisation of Bradford & Bingley (B&B), the stricken UK mortgage bank, which fuelled markets' fears over Britain's battered banking sector and the fallout for its economic prospects.

In the US, the Dow Jones fell nearly 300 points in morning trade to 10,869 as the market took fright at several bank nationalisations in Europe and the US despite the approval of the "son of Tarp" — the Troubled Asset Relief Programme —bailout.

US Treasury debt staged a meteoric rally as investors scrambled for the safe haven of American government securities. The 30-year Treasury bond’s price rose more than three points. The flight to safety was even after the Federal Reserve said it would substantially increase currency swap limits to $620 billion (£342 billion ) with nine leading central banks in response to short-term strains in the money markets.

In its latest severe sell-off, the already sharply weaker pound plummeted by almost 5 cents against the dollar today compared with its level at the close of New York trading on Friday.

The fall of more than 2.5 per cent in sterling saw it tumble from $1.8445 to levels below $1.80, taking it to a 10-day low of $1.7962. The pound has now shed almost 11 per cent against the greenback from peaks above the watershed of $2 reached at this time last year.

The price of Brent crude fell more than $5 a barrel to $98.05, its lowest level for almost six months.

Markets were anxious about Britain's fast deteriorating economic outlook and the stability of its banking sector as B&B followed Northern Rock in being nationalised. The worries followed the fire sale of HBOS, the nation's biggest mortgage lender to Lloyds TSB, and led to the London stock market succumb to a fresh hammering of its leading shares.

The FTSE 100 index of British blue chip stocks closed down by 253 points, or 4.97 per cent, taking it below the psychologically significant threshold of 5,000 to 4,835.45 and to a new low for the year, down 28 per cent from the 6,730.71 level it reached on October 12, 2007.

The steep sell off of sterling and London shares came as agreement reached on Capitol Hill on a proposed $700 billion rescue plan for the US banking system was overshadowed by the latest woes for British and continental European banks. As well as B&B, the Belgian, Dutch and Luxembourg Governments nationalised parts of Fortis, the European banking and insurance giant, and agreed to inject €11.2 billion into the group.

Iceland's government also took control of Glitnir, that country's third biggest bank.

Analysts said the developments switched attention back to the international nature of the banking and financial upheavals spawned by the credit crisis.

"I think there has been a very lax attitute over the last couple of weeks ... [suggesting] it's been seen as a purely US-centric problem," Jeremy Stretch, of Rabobank, said.

"We've gone from a piecemeal response in the US to something more substantive with the bailout package. Whether it works or not is a different matter."

The euro also fell heavily against the dollar amid concern over the eurozone's banking strife and the adequacy of arrangements for bank rescues in the 15-nation bloc. The euro lost as much as 1.8 per cent against the dollar, falling to levels of about $1.4340 from a US close of $1.4613 on Friday.

Tokyo’s Nikkei 225 index was down 1.3 per cent at 11,743.61, and Hong Kong’s Hang Seng Index shed 2.1 per cent to 18,286.90.

“They’re worried that another fire is starting in Europe,” said Castor Pang, an analyst at Sun Hung Kai Financial in Hong Kong.


Shit, socialism isn't working for the Europeans, what makes the idiots on the hill, and the Bush administration think it will work for us here?

I would not trust this administration with $7.00, much less $700 BILLION. What drugs are these people on, and why aren't they sharing?

Why not suspend the Payroll tax for six months, and pump money into peoples pockets, and not guarantee golden parachutes for the wealthiest bunch of absolute thieves this country and world has ever seen.

Sunday, September 28, 2008

Islamists plunder weapons from hijacked ship in Somalia

Islamist extremists prepared last night to unload rocket-propelled grenades and anti-aircraft guns from a Ukrainian freighter seized by Somali pirates even as foreign warships surrounded the vessel.

A US destroyer and submarine from an international taskforce set up to patrol the Gulf of Aden and Indian Ocean and two European-flagged ships were reported to be tracking the freighter that had anchored off the southern Somali coast.

The ship's captain contacted media outlets by satellite phone to say that one of his crew had died during the hostage drama.

The pirates were demanding a $20 million (£10.8 million) ransom for the release of the MV Faina, its 20 surviving crew and cargo of weapons, which include 33 Russian tanks. It was seized on Thursday as it neared the Kenyan port of Mombasa.

“The Islamists have sent pick-ups from Mogadishu to go and collect the gear,” said an analyst with a network of Somali informers. “There's not much they can do with the tanks — they can't get them off — but the rest of the weapons they are trying to move ashore.”

Somalia's insurgents have made a series of impressive gains in recent weeks. They now control the port city of Kismayo and have armed and equipped pirate gangs as part of a campaign to control the seas.

Kenya's Government said that it was awaiting the weaponry aboard the ship, but similar shipments in the past have been sent on to southern Sudan.

Witnesses on the Somali coast said that the navy ships were using loudspeakers warning the pirates not to attempt to unload the cargo. A tribal chief and local fishermen about 250 miles north of Mogadishu said that they had seen the MV Faina near at least two ships.

“The pirates are now surrounded near the village of Hinbarwaqo by Western ships. They asked individuals in charge of the hijacking of the Ukrainian ship to come aboard the navy ship for talks,” said a local clan elder.

Piracy has flourished around Somalia's lawless coast since the mid-1990s. It was briefly stamped out by the Union of Islamic Courts which took control of the country in 2006. The trade returned when the Islamists were defeated by an Ethiopian assault.

In the past the trade was directed at earning hard currency. However, this year the pirates have acquired an ideological dimension. Bruno Schiemsky, a Somali analyst based in Kenya, said that Somalia's al-Shabaab militia — the youth wing of the Islamist movement — had joined forces with the pirates, offering weapons training in return for lessons in plundering at sea.

“This has now gone beyond money. The Shabaab are now at sea looking for Israelis, Americans and other Westerners,” he said. “This is getting very nasty now.”


Blogs of Note

"I've never been a big reader of military blogs. I started this one two years ago when I barely knew what a blog actually was, and I never thought there was a military subsection. The first time I ever heard of the biggest one, Blackfive, was from a Playboy article I read at my outpost in Diyala Province.

Now that I've been out of the deployed loop for awhile now, I've started to read more and more milblogs to satisfy my hunger for first person perspectives in Iraq, Afghanistan and the home front. The media has fallen flat on its face on covering the wars, from the bird's eye view to the grunt's eye view. Milbloggers have become the best reporters in the field, for good reason.

I've always thought it was a good thing to be proactive and spread the good word, so today I'll be starting a feature called Blogs of Note. Every so often, I'll link to deserving blogs, hoping to boost their traffic just a little. I'll try to keep it varied, from infantryman to sailors to just regular folks.

This week: Fobbits Need Ice Cream Too"
Army of Dude

EGYPT: Sunni scholar reignites sectarian tensions

"By questioning the faith of Shiites and warning against their attempts at invading Sunni countries, prominent religious scholar Yusuf Qaradawi reignited a new sectarian war of words across the Middle East.
Earlier this month, the Egyptian-born scholar said in an interview with a local newspaper: "Shiites are Muslims but they are heretics. The threat they pose lies in their attempts to invade the Muslim world."

His statement provoked ripostes from top Shiite clerics in Lebanon and Iran. In the meantime, the sectarian rift was furiously played out in cyberspace. On the website of the Arabic Radio of Iran, several respondents voiced their outrage."
Babylon & Beyond

The U.S. accepted the French advice on SOFA

"This is the 12 time Iraq’s foreign minister Zebari says “The United States and Iraq are close to reaching a long-delayed security deal“.

Assafir reporter in France said today that the U.S. adopted an advice of the French diplomat who is in charge with the Iraqi affairs to solve the two obstacles:

- Provide a time table for the U.S. forces withdrawal.

- Immunity of the U.S. soldiers.

The advice is:"
Roads to Iraq

Poor Worm! Thou Art Infected!

"I wrote this while smoking a La Gloria Cubana Wavel.

It’s my birthday today.

I have no cake. I have no candles. I don’t want to be around anybody.

I sit smoking in the dark on my porch. It is 0300 and it is cool outside. My laptop is open.

I hear it before I see it.

A quiet rumbling starts in the south. The sound approaches. A convoy draws near. By a sick twist of fate, my building overlooks The Road. I see convoys come and go all day, a constant reminder that I will never again leave The Little FOB for anything more important than a fuel run. I should consider myself lucky. Not every man gets to open his window in the morning and see his disappointment every day.

The trucks roll north. A heavily armored MRAP rolls past, looking like a vehicle prop from a long-forgotten apocalyptic movie. The tractor trailers follow. One, two, three, fourteen, fifteen, sixteen. Another MRAP moves past, followed by more tractor trailers. I lose count. Is it forty? Is it eighty?"
Big Tabacco

Seapower: Medical Diplomats

"Note: I’m posting the entire text of my latest story for Seapower Magazine. Normally I only excerpt a story and provide links to the rest over at the publisher’s Website, but Seapower uses one of those proprietary Web platforms with no ability to link in. Still, pay Seapower a visit and check out the great offerings in the latest issue, including a thorough brief on Navy shipbuilding issues."
War is Boring

Amb. Crocker, Bucking the Bureaucratic Trend, Calls for 'Strategic Patience' in Iraq

"As some of the regulars here may know, I've never been a major fan of Amb. Ryan Crocker (...or of Gen. David Petraeus, for that matter), but Crocker's statements today are very reasonable, and they represent a sharp break with the State Department's conventional wisdom on the Middle East. Crocker is asking the American public to think of what the mission in Iraq can achieve in 10-20 years. Problem is, apart from Senators McCain and Lieberman and a few others, no one seems to be thinking that far ahead.

Here are some of the highlights:"
Talisman Gate


"Wed Sept 24 2008 14:58:02 ET

MCCAIN: America this week faces an historic crisis in our financial system. We must pass legislation to address this crisis. If we do not, credit will dry up, with devastating consequences for our economy. People will no longer be able to buy homes and their life savings will be at stake. Businesses will not have enough money to pay their employees. If we do not act, ever corner of our country will be impacted. We cannot allow this to happen.

Last Friday, I laid out my proposal and I have since discussed my priorities and concerns with the bill the Administration has put forward. Senator Obama has expressed his priorities and concerns.This morning, I met with a group of economic advisers to talk about the proposal on the table and the steps that we should take going forward.I have also spoken with members of Congress to hear their perspective.

It has become clear that no consensus has developed to support the Administration' proposal. I do not believe that the plan on the table will pass as it currently stands, and we are running out of time.

Tomorrow morning, I will suspend my campaign and return to Washington after speaking at the Clinton Global Initiative. I have spoken to Senator Obama and informed him of my decision and have asked him to join me.

I am calling on the President to convene a meeting with the leadership from both houses of Congress, including Senator Obama and myself. It is time for both parties to come together to solve this problem.

We must meet as Americans, not as Democrats or Republicans, and we must meet until this crisis is resolved.I am directing my campaign to work with the Obama campaign and the commission on presidential debates to delay Friday night's debate until we have taken action to address this crisis.

I am confident that before the markets open on Monday we can achieve consensus on legislation that will stabilize our financial markets, protect taxpayers and homeowners, and earn the confidence of the American people. All we must do to achieve this is temporarily set politics aside, and I am committed to doing so.

Following September 11th, our national leaders came together at a time of crisis. We must show that kind of patriotism now. Americans across our country lament the fact that partisan divisions in Washington have prevented us from addressing our national challenges. Now is our chance to come together to prove that Washington is once again capable of leading this country.


John McCain crosses the Rubicon!

((( WoW! )))

Obama, proposes they issue a joint statement?
In other words he proposes they vote (P)resent, and move on.

not so wow

$300 to make you hollar

"So right after getting back from Qatar, we were thrown out on a bridge overwatch mission, which I actually enjoy. It's the closest thing on this deployment that utilizes the hundreds of hours and hundreds of thousands of dollars the Army spent training me to be an Infantryman. We basically secure a bridge in our AO that all of our convoys pass through, and deter bombers, hijackers, and other whippersnappers from fucking with the precious supply line of Sherbert ice cream and Rockstar energy drinks. We interact with a lot of locals, which is a good chance to practice some Arabic and also do some do-goodering. The kids asked for "Joose" the past few times we were here and this time we brought some cases of juice boxes from the class 1 yard. The kids gave us puzzled, sad looks. "No, no, JOOSE...JOO-OO-SEEE" scolds one of the kids. Then she points to her feet. "Oh, shoes?" "Yes, yes! JOOSE". Oh. Next time we'll bring shoes I guess."
Fobbits need Ice Cream

Saturday, September 27, 2008

Iran solves centrifuge issues, could have nuke capability by March

WASHINGTON -- Iran has significantly enhanced its gas centrifuge fleet, despite assertions to the contrary, according to a new report.

The Washington-based Institute for Science and International Security stated that Teheran has resolved many of the technical flaws in its 4,000 centrifuges being used in Iran's uranium enrichment program. The institute, headed by former United Nations nuclear inspector David Albright, said Teheran was enriching uranium at a rate that would enable nuclear weapons capacity by March 2009.

"The centrifuges now appear to be running at approximately 85 percent of their stated target capacity, a significant increase over previous rates," the report said.

The report, released on Sept. 15, was based on information by the International Atomic Energy Agency. In early 2008, the agency indicated that Iran was operating its centrifuge fleet at 50 percent capacity.

Titled "Centrifuge Operation Significantly Improving," the U.S. institute said Iran has now intensified uranium enrichment. The institute cited an IAEA finding that from May 7 to Aug. 30, 2008, Iran fed 3,630 kilograms of uranium hexafluoride into the cascades at the Natanz plant, "a significant increase over previous rates."

"Whatever the actual amount of LEU [low-enriched uranium], Iran is progressing toward this [nuclear weapons] capability and can be expected to reach it in six months to two years," the report said.

The institute's assessment appeared to differ with that of IAEA. On Sept. 15, an agency briefer told the board of governors that Iran was operating much of its centrifuge fleet at 20 percent capacity.

But Albright, along with report co-authors Jacqueline Shire and Paul Brannan, determined that Iran has overcome difficulties in operating its P-1 centrifuge cascades. The researchers said that until mid-2008 Iran lost a significant amount of uranium because of breakdowns in Pakistani-designed P-1 centrifuges.

"This latest [IAEA] report, however, shows that Iran has largely overcome these problems, which is reflected in the increased feed rates and LEU production," the institute said. "One official close to the agency stated that Iran may have reached a point where its cascades are operating in a stable manner, noting that fewer centrifuges are breaking."

The institute said Iran has assembled 18 cascades that comprise 3,000 P-1 centrifuges. At the same time, Iran was installing a second module of 3,000 centrifuges.

Iran has also been accelerating tests of its advanced IR-2 centrifuge. The institute said Iran has installed two or three models of what was termed "next-generation" centrifuges, including IR-2, IR-3 and "possibly a longer centrifuge."

"During this reporting [May to August 2008] period, Iran has significantly increased the feed rate into its IR-2 centrifuges," the report said. "This development appears to reflect Iran's goal of developing a more advanced centrifuge that can be deployed in the FEP [fuel enrichment plant] instead of its P1 centrifuges. It is unknown how long Iran intends to test these new designs or when they could be deployed in large numbers in the underground halls."


And you wonder what Bush might want with 700 billion.

Chinese regulator says US lending was 'ridiculous'

TIANJIN, China (AP) - U.S. lending standards before the global credit crisis were "ridiculous" and the world can learn from China's more cautious system as it considers financial reforms, the top Chinese bank regulator said Saturday at an economic forum.

The global financial crisis was a hot topic at the World Economic Forum - the Chinese leg of the forum based in Davos, Switzerland. Despite the global turmoil, China's Premier Wen Jiabao said China still has "huge potential for growth" because of its large labor pool, vast domestic market and the improved competitiveness of its companies.

Wen gave no growth forecast. But China's bank regulator said the annual growth rate should fall from last year's 11.9 percent to between 9 percent and 9.5 percent.

Liu Mingkang, chairman of the Chinese Banking Regulatory Commission, said his country's prudent approach to banking had enabled the country to avoid the credit crunch so far.

Beijing curbed mortgage lending in 2003 and 2006 to keep debt manageable amid a real estate boom, while American regulators responded to a similar situation by letting credit grow, Liu said.

"When U.S. regulators were reducing the down payment to zero, or they created so-called 'reverse mortgages,' we thought that was ridiculous," Liu said at a World Economic Forum conference in the eastern Chinese city of Tianjin.

He said debt in the United States and elsewhere rose to "dangerous and indefensible" levels.

Liu's comments were unusually pointed criticism of U.S. financial regulation for a Chinese official. They added to suggestions by countries that are under U.S. pressure to liberalize their financial markets that Washington's model might not be ideal.

China has based its reforms on the U.S. system but has moved gradually. It has kept its financial markets isolated from global capital flows, prompting complaints by its trading partners.

As China made changes, "a lot of the time, we learned that what we had learned from our teacher the day before was wrong," Liu said, referring to the U.S.

China's state-owned banks have avoided the turmoil roiling Western markets. Chinese banks hold bonds from failed Wall Street house Lehman Brothers, but they are a tiny fraction of their vast assets.

Liu called for governments to create international standards and regulatory systems for globalized financial markets. He said Beijing has signed information-exchange agreements on financial regulation with 32 other countries since the turmoil began.

Liu pointed to China's experience with real estate and the collapse of a stock market boom.

As stock prices in China soared, banks were ordered to make sure customers were not using loans or credit cards to finance speculation. As a result, Liu said banks have suffered no rise in loan defaults even though stock prices have plummeted 63 percent since the October 2007 peak.

"We Chinese can share our own experiences with all the market practitioners," Liu said. "Maybe our experience cannot be applicable to developed markets fully. But still, I think it might be useful and helpful to those in emerging markets."

Chinese and foreign businesspeople at the forum said the credit crisis is likely to increase the influence of China and other emerging economies in the world financial system, though Wall Street will retain its leading role.

The crisis is also likely to reduce resistance in the West to investments by government funds as companies urgently seek capital, said Thomas Enders, CEO of the European aircraft producer Airbus Industrie.

However, European Union trade commissioner Peter Mandelson defended the global capital markets structure, warning that drastic change might hurt prosperity.

"The capital market system, fundamentally, is not flawed," Mandelson said. "We are not looking for some alternative, and I hope that people in the emerging markets, in China for example, are not looking for an alternative to properly functioning capital markets."


The one home policy

Iraq hopes economic crisis won't affect US troops

UNITED NATIONS (AP) - Iraq's foreign minister says "there is a new world now" because of the global financial crisis and he hopes it won't lead to an immediate withdrawal of the 146,000 American troops in his country.

In an interview with The Associated Press, Iraqi Foreign Minister Hoshyar Zebari said a precipitous withdrawal could have consequences for the country and the region that everyone would regret afterward.

Zebari is due to meet Saturday with Secretary of State Condoleezza Rice in New York, where he was attending the U.N. General Assembly's annual ministerial meeting.

He said he didn't have any indications that the U.S. administration was thinking about pushing for a speedier exit from Iraq, where it has spent more than $550 billion, because of the financial meltdown.

"But this is the logic of the dance," Zebari told the AP on Friday. "Nobody anticipated this major crisis, and still there are ongoing efforts to overcome it, to contain its impact, bail out some of these companies with a huge infusion of cash. But the crisis is evident everywhere."

"This has nothing to do with liking this administration or that administration, or this president or that president, something has landed uninvited," he said. "I think there is a new world now after this crisis, and one has to be realistic about changes in attitudes and policies due to this huge crisis that has affected the world economy."

President Bush's administration is seeking a $700 billion bailout - the largest in U.S. history - which has raised widespread concern in Congress and fears that the United States is on the verge of a major recession.

Asked whether he was concerned that the current financial crisis might lead the U.S. government to push for a speedier exit than Iraq might want, as a cost-saving measure, Zebari said: "I don't know."

"We hope it would not have a dramatic impact to cause ... drastic and calculated decisions that everybody would regret afterwards," he said.

By drastic and calculated, was he referring to an immediate withdrawal?

"Exactly, immediate precipitous withdrawal irrespective of any consequences," Zebari said. "I think there is high stakes for everybody involved in the region, that every administration will take account of."

Iraq's top diplomat said the government still hopes to sign a long-term security pact with the United States before the U.S. presidential election on Nov. 4.

"We are talking, the Iraqi and American side, and I think the draft agreement is almost done. What needs to be done is some political decisions by the leadership," Zebari said. "The window time is closing because we were hoping to get this agreement by the end of July and now we are in September. We haven't given up hope at all, but really still there is no final agreement."

The proposed agreement, which has been under negotiation for most of this year, would replace the U.N. mandate. Any agreement must be ratified by the Iraqi parliament.

The main sticking points include Iraqi objections to blanket immunity for U.S. troops and private contractors and demands for oversight over American forces during raids and detentions.

Zebari said that if it's not possible to reach agreement by the election the alternative is to go back to the U.N. Security Council to extend the mandate of the U.S.-led multinational force in Iraq, which expires on Dec. 31.

Asked whether the U.S. election was playing into the long-term strategic framework agreement with the United States, Zebari chuckled and said "I think it's present. Even if it's not in person, its soul is there."

Zebari said he told the two presidential candidates - Democratic Sen. Barack Obama and Republican Sen. John McCain - that "it would have been in our interest to conclude this agreement before the end term of this administration and that was the whole plan."

He said he explained to both candidates that "as long as this agreement would not be binding for any future administration, that administration will benefit from having something at hand when it takes office."

Zebari described the security situation in Iraq as "fragile."

"We've turned the corner against terrorism, against preventing the country from falling into civil war or sectarian war or division. I think we've passed that," he said.

But he said the security gains must be augmented by political reconciliation, economic benefits for the people, provision of services and better governance.

"And the pace is slow, as you've seen in the past, so that's why people think they are not solid enough and they could be reversed."