Focal Points Blog

Two Outside-the-Box Questions About Egypt

1. Due to a ban on cameras enforced by pro-Mubarak forces, CNN and MSNBC aired no video from Tahir Square last night. Though I didn’t check the major networks, presumably that was true of them as well. Yet they could have cobbled together videos from the cellphones of reporters or protesters, or, perhaps, from YouTube.

At the very least they could have worked out an agreement with other news sources and run arrays of still photographs. (The Daily Mail, of all news outlets, has been incomparable in its photographic coverage. Try these, for instance.)

Is the work of citizen journalists beneath them? If that’s the case, journalism is passing TV news by. Time may not be on Mubarak’s side, but neither would it seem to be on the side of TV news.

2. Doesn’t the Obama administration’s proposed plan to replace President Mubarak with Vice President — and former renditioner-in-chief as head of intelligence — Omar Suleiman remind you to some extent of a scenario in which Bush had been successfully impeached and then replaced by Cheney?

Fear of the Muslim Brotherhood Trumps Western Wishes for Democracy in Egypt

Muslim Brotherhood(Pictured: The Muslim Brotherhood.)

It might suit such pundits as Blair, Bolton and Netanyahu to pretend that Egyptians are too uneducated and ignorant to be trusted with democracy, but I would put my money on the political literacy of the Egyptians en masse over Americans any day.

One cannot help but suspect that what they mean by “ignorant” is that they support the Palestinians. That is not to say that they necessarily want to rush to war, but certainly the unholy tradeoffs in enforcing the blockade on Gaza are deeply unpopular. The rising was certainly inspired by domestic concerns, economic and democratic, but the delegitimizing effect of pro-Israeli support for the regime should not be underestimated, not least inside the Army, which after all has fought Israel repeatedly.

That is not to say a future regime would declare war or rip up Camp David. Rather it would probably emulate Turkey, and maintain polite but chilly relations with Israel. Cairo will be less biddable, whether from Israel or the US. While Bolton, a deep harborer of grudges, reviles Mohamed El Baradei, it is worth remembering that the present government, along with him, and indeed putative rival Amr Al-Moussa, are all on the record as wanting Israel to sign the nuclear Non-Proliferation Treaty.

Who can oppose a call for democracy? Well, John Bolton, Peres and Netanyahu can, not to mention Tony Blair, who described Mubarak as “immensely courageous, and a force for good,” even as his mercenary thugs brought blood and mayhem to the streets of Cairo. And of course the time-expired President of Palestine, Mohamed Abbas.

The outright support of Netanyahu and his friends for the alleged stability of the Mubarak regime certainly tempers the enthusiasm of many others in the chattering classes in the US, for toppling the regime in Cairo, including the Obama administration. Ironically their various pronouncements in favor of Mubarak and his anointed deputy Omar Suleiman are very effective stakes through the heart of the regime.

However, Netanyahu, Peres and Blair are following a long tradition of American policy towards Egypt that has for long time been effectively amoral, with no ethical dimension at all. It did not care what happened to Egyptians as long their government did what it was told.

Consistently, from Sandy Berger and Clinton and even before, democracy has been sidelined as a US policy in the Arab world. Originally, any Arab regime that did not threaten Israel had a free pass for torture and repression, but after 9-11, Muslims, Arabs, terrorists all became blurred in the popular mind – and even in Washington policy-making circles.

So for Egypt, democracy would all be fine, if there weren’t a strong chance that the Muslim Brothers would be elected and at least share power. People who are quite happy to respect Catholic dominated Christian Democrats across Europe, rabbi-led parties in Israel, and dare one add, Evangelical dominated Republicans in the US, confess to frissons of fear at the thought that the Muslim Brotherhood will play a large part in a new reformed Egyptian administration.

Just as everybody knows that every Catholic is an inquisitor waiting with a box of matches next to the stake, viscerally, Americans know every Muslim is a terrorist. Fortunately, the images of the peaceful, articulate and passionate demonstrators in Tahrir Square belied that.

It is an ironic comment on consistently failed US policy that if Washington had not stopped the funding for the Aswan Dam under Nasser, the total of $35 billion in military aid, which began as a bribe to wean Cairo away from the Soviets, might have been unnecessary, let alone if the US had maintained its principles. Remember, back in 1956, the US had threatened to crash the currencies of its two biggest allies, Britain and France, and Israel if the three conspirators did not pull out from the Sinai they had just occupied.

Of course the US could withhold aid to Egypt if it elected a new government that was, shall we say, less amenable to Israeli wishes. However, since most of this money is immediately recycled to American weapons makers and does not impinge on ordinary citizens, it is hardly a potent threat to the nation. But if Obama is serious about democratization, he could mention the possibility of stopping the dollars flowing to the Egyptian high command who along with Mubarak, are the major beneficiaries of this largesse.

In fact, there is some doubt whether the bulk of the Army would actually obey orders to move against the demonstrators. Its popular legitimacy derives from its wars against invaders, which is somewhat challenged when the President is endorsed by those who most Egyptians, military and civilian see as the enemy. Perhaps the most potent images which demoralized the police and security forces and deprived them and the regime of legitimacy were the water cannons deployed against praying demonstrators.

The absence of the uniformed security forces and indeed their visible reluctance to stand their ground against demonstrators suggests that demoralization has already set in, while the unleashing of paid thugs that we have seen is reminiscent of the last days of the Indonesians in East Timor, Ceausescu in Romania and other crumbling regimes.

Indeed Mubarak might want to check over the reports of the downfall of the Romanian dictator, where it was the army that decided, under cover of popular protest, the best way to calm things down was to put him in front of kangaroo court and shoot him.

Obama cannot claim non-interference. Washington’s financial, military and diplomatic support for Mubarak are already an intervention. A clear signal that it was all ending could motivate the armed forces leaders to seek a Mubarak-free accommodation with the opposition and ensure an orderly transition to democracy.

Egypt: Back Against the Wall, a Tyrant Embraces Anarchy

According to Aristotle there are, as is well known, six forms of government. Three of them are good, three of them are bad. Monarchy is good, or can be good, tyranny is bad. The bad news about monarchy is, that it has a tendency to become tyranny. And so on: aristocracy can be a good form of government, but it tends to become an oligarchy, bad. And finally of course democracy. The bad news about democracy is that it tends to become anarchy. Bad.

The worst case scenario. Nobody wants anarchy, chaos is dangerous for everybody. So, what does that teach us about Egypt? Egypt of course is — you have to be idiotic or hypocritical not to know after thirty years — a tyranny. When the tyrant is in trouble, what can he do? Two options: make tyranny worse by declaring a state of emergency: curfew, suspension of all civil liberties, etc. . . . But when tyranny is really in deep shit because of internal turmoil and uproar, it can enhance anarchy. That is exactly the function of the police forces that were signaled by several sources partaking in the looting in Caïro. Or even being its main perpetrators. So first lesson: tyranny can resort to anarchy to save its skin. The strategy of chaos.

But Hobbes teaches us that anarchy is a dangerous game. It can become a relapse into the state of nature, the war of everybody against everybody. Hobbes himself says that the most concrete example of this relapse in the state of nature is: civil war. Second lesson: Civil War should be avoided at all cost, because it traumatises society for decades, if not forever.

The political theorist Carl Schmitt (who for a while was member of the National-Socialist Party in Germany) teaches us that at the exact opposite of anarchy/state of nature/civil war we find the state of exception/state of emergency/martial law. The state of nature is bottom up implosion of sovereignty, the state of exception is a top-down excess of sovereignty. In the extreme case, not only the state of exception is installed, but the sovereign can resort to what Foucault calls thanatopolitics (deathpolitics): the sovereign exerting his fundamental, defining, ultimate right: to take the life of his subjects. So this is what could happen, that the police or the army or the republican guards unchain a bloodbath. Third lesson: the strategy of death.

Here one of the most brilliant pupils of Schmitt enters the picture, Leo Strauss, the philosophical father of neoconservatives, direct teacher to Wolfowitz and others of the neocon cabal. In On tyranny, a commentary on a dialogue by Xenophon, Strauss points out that tyranny can be good, if and only if the tyrant listens to the advice of ‘wise men’, the philosophers. Strauss in his ‘classical political philosophy’ says that it is the true esoteric doctrine that politics is based on ‘pious lies’ and ‘useful myths’. His philosophy is classical in the sense that it is what empires have done since they came into being. The neoconservatives were claiming that they were promoting democracy to Iraq, but in fact they were bringing anarchy. Or, a truly classic one in American foreign policy — from Pinochet to Mubarak — is preaching about democracy but in reality supporting tyranny. Because, of course, Strauss was right, as long as Mubarak listens to the wise men in Washington who tell him to be a lackey to the US and Israel, he is a ‘good tryant’, meaning reliable.

So Obama is in a tough position, but he could once more since his election be on the good side of history: by being serious about democracy, and not just using it as a useful myth. If he has the courage to whisper in the ear of the tyrant to step down. But alas, this opportunity is also a dilemma. If he supports democracy, foreign policy hawks across the board will nail him, and Israel and the pro-Israel lobby in America will never forgive him. If, on the contrary, he supports the tyrant, he will forever lose his credibility. That is the last and fundamental lesson we can draw from Strauss and against neocon cynicism: if he finds the courage, the turmoil in Egypt is Obama’s chance to once again write history, simply by letting the people of Egypt write history.

Lieven De Cauter is a philosopher, writer and activist. He teaches philosophy of culture (in Leuven, Brussels and Rotterdam). He published several books: on contemporary art, experience and modernity, on Walter Benjamin and more recently on architecture, the city and politics. Beside this he published poems, columns, statements, pamphlets and opinion pieces.

His latest books: The Capsular Civilization. On the City in the Age of Fear (2004) and, as co-editor, Heterotopia and the city (2008); Art and activism in the Age of globalization (2011). He is initiator of the BRussells Tribunal.

Republican Calls to Drain the Pentagon Swamp Provide Window for Democrats to Climb Through

Grover Norquist(Pictured: Grover Norquist.)

Of all the changes one can expect to see in Washington this year, at least one might be welcome. “Divisions have opened among Republicans,” reports the New York Times, “about whether, and how much, to chop Pentagon spending that comes to more than a half trillion dollars a year.”

Irked by an agreement between the Pentagon and President Obama to trim the growth in Pentagon spending by $78 billion over the next five years, Rep. Howard McKeon (R-CA) has announced that he “will not support any measures that stress our forces and jeopardize the lives of our men and women in uniform.” Perhaps not coincidentally, the Times also reports that Rep. McKeon was “the single biggest recipient in the House of campaign contributions from military aerospace companies and their employees” during the 2010 campaign.

In any case, McKeon has encountered an intra-party resistance to his posturing that might have been unthinkable as recently as one Congress ago. Some freshman Tea Party Republicans, notably retired Army colonel Rep. Charles Gibson of New York, have insisted that the defense budget should be no more immune to the austerity fever sweeping through Washington than any other federal department. In word if not yet in deed, they are joined by Reps. John Boehner and Eric Cantor, traditionally pro-military members of the Republican leadership.

The debate is almost entirely over deficits, and it frequently includes unfortunate detours into cries for draconian service and entitlement cuts. But it is a healthy one.

I recently attended a CATO Capitol Hill briefing on the subject of the 112th Congress and the military budget. Sitting under-dressed in a well adorned room full of Blackberry-toting Hill aides, it was easy enough to feel uncomfortable. But the substance of the speakers’ remarks — the need for deep cuts to the military budget and an accompanying strategic adjustment of just how we expect to use our armed forces — was enough to make one feel right at home.

CATO scholars Benjamin Friedman and Chris Preble discussed recommendations from their 2010 report “Budgetary Savings from Military Restraint,” in which they outline more than $1 trillion worth of cuts over the next years. Friedman noted that there are three ways to seek cuts in military spending.

The first way is to identify those ubiquitous “efficiencies,” i.e., cutting a handful of needless procurements to reinvest money in “boots on the ground.” This is the preferred approach of Robert Gates and indeed receives a great deal of bipartisan lip service — which is precisely why it is least likely to be effective. Such an approach is merely a bureaucratic contrivance to stave off more meaningful cuts.

The second way is what Friedman calls the “Nike” approach: just do it. We might look upon President Obama’s proposed $78 billion in diminished growth as following this tack: if cuts are imposed, the armed services will simply have to identify their true priorities. Austerity is, after all, a fine auditor.

But the only truly effective way to achieve meaningful spending reductions, and the way advocated by Friedman and Preble, is to advocate a more restrained foreign policy. They note the litany of expectations that American policymakers have of the armed forces: “containing” China, building democracies in failed states (not to mention toppling them in the first place), providing for defense commitments to economically developed states in Western Europe and Northeast Asia, protecting sea lanes, and so forth.

Friedman and Preble posit that if we were to reevaluate what was actually necessary for a secure country, even one that remains very much engaged with the international community, we could very well determine that most of these undertakings are unnecessary, and — though they didn’t use the word — imperial. Our delusions of grandeur have become shockingly expensive in recent decades, and taxpayer-funded power projection no longer seems like a sustainable investment.

Also speaking at the event was the famed (and perhaps notorious) tax reform advocate Grover Norquist. Though Norquist devoted a sizable portion of his remarks to off-hand deadpanning about “liberals” and “the left,” he eventually made his way toward an incredibly salient point: in order to achieve serious progress toward cutting the military budget, such a conversation needs to penetrate into Republican circles.

Citing the unfortunate but not altogether inaccurate perception that so-called “moderate” voters are more inclined to take Republicans seriously on national security matters than Democrats, Norquist argued that Democrats have failed to tackle defense spending precisely because they fear Republican attacks on the issue. Implicitly, in order for Democrats to get serious about slashing the Pentagon budget, they need to be provided the space afforded by a real Republican debate on the subject. And that is what may finally be happening, even if it looks a tad like a circus.

What regrettable moments we might avoid if future Democrats actually perceive this space! No more Hillary Clintons casting cynical votes to authorize wars of aggression. No more John Kerrys complementing “anti-war” platforms with calls to increase force strength. No more awkward after-the-fact arguments from progressives about how we should have had more troops, better equipment, an actual exit strategy, a more battle-ready military, or whatever other inane thing. Maybe next time they’ll just say NO.

So, Democrats, be advised: Republicans are having this discussion, and some of them may even be more serious about it than you are. In an age where bipartisan consensus dwells chiefly in federal pay freezes and corporate tax cuts, it’s refreshing to note that a credible left-right nexus exists on the imperative of draining the Pentagon swamp. Moreover, this nexus lies not only in reducing the deficit but, somewhere at least, in reining in an imperial war machine that threatens our democracy and imperils the planet.

Why Washington Clings to a Failed Middle-East Strategy

(Cross-posted from FireDogLake.)

The death throes of the Mubarak regime in Egypt signal a new level of crisis for a U.S. Middle East strategy that has shown itself over and over again in recent years to be based on nothing more than the illusion of power. The incipient loss of the U.S. client regime in Egypt is an obvious moment for a fundamental adjustment in that strategy.

But those moments have been coming with increasing regularity in recent years, and the U.S. national security bureaucracy has shown itself to be remarkably resistant to giving it up. The troubled history of that strategy suggests that it is an expression of some powerful political forces at work in this society, as former NSC official Gary Sick hinted in a commentary on the crisis.

Ever since the Islamic Republic of Iran was established in 1979, every U.S. administration has operated on the assumption that the United States, with Israel and Egypt as key client states, occupies a power position in the Middle East that allows it to pursue an aggressive strategy of unrelenting pressure on all those “rogue” regimes and parties in the region which have resisted dominance by the U.S.-Israeli tandem: Iran, Iraq, Syria, Hezbollah and Hamas.

The Bush administration’s invasion of Iraq was only the most extreme expression of that broader strategic concept. It assumed that the United States and Israel could establish pro-Western regime in Iraq as the base from which it would press for the elimination of resistance from any of their remaining adversaries in the region.

But since that more aggressive version of the strategy was launched, the illusory nature of the regional dominance strategy has been laid bare in one country after another.

  • The U.S. invasion and occupation of Iraq merely empowered Shi’a forces to form a regime whose geostrategic interests are far closer to Iran than to the United States;
  • The U.S.-encouraged Israeli invasion of Lebanon in 2006 only strengthened the position of Hezbollah as the largest, most popular and most disciplined political-military force in the country, leading ultimately the Hezbollah-backed government now being formed.
  • Israeli and U.S. threats to attack Iran, Hezbollah and Syria since 2006 brought an even more massive influx of rockets and missiles into Lebanon and Syria which now appears to deter Israeli aggressiveness toward its adversaries for the first time.
  • U.S.-Israeli efforts to create a client Palestinian entity and crush Hamas through the siege of Gaza has backfired, strengthening the Hamas claim to be the only viable Palestinian entity.
  • The U.S. insistence on demonstrating the effectiveness of its military power in Afghanistan has only revealed the inability of the U.S. military to master the Afghan insurgency.

And now the Mubarak regime is in its final days. As one talking head after another has pointed out in recent days, it has been the lynchpin of the U.S. strategy. The main function of the U.S. client state relationship with Egypt was to allow Israel to avoid coming to terms with Palestinian demands.

The costs of the illusory quest for dominance in the Middle East have been incalculable. By continuing to support Israeli extremist refusal to seek a peaceful settlement, trying to prop up Arab authoritarian regimes that are friendly with Israel and seeking to project military power in the region through both airbases in the Gulf States and a semi-permanent bases in Iraq and Afghanistan, the strategy has assiduously built up long-term antagonism toward the United States and pushed many throughout the Islamic world to sympathize with Al Qaeda-style jihadism. It has also fed Sunni-Shi’a tensions in the region and created a crisis over Iran’s nuclear program.

Although this is clearly the time to scrap that Middle East strategy, the nature of U.S. national security policymaking poses formidable obstacles to such an adjustment Bureaucrats and bureaucracies always want to hold on to policies and programs that have given them power and prestige, even if those policies and programs have been costly failures. Above all, in fact, they want to avoid having to admit the failure and the costs involved. So they go on defending and pursuing strategies long after the costs and failure have become clear.

An historical parallel to the present strategy in the Middle East is the Cold War strategy in East Asia, including the policy of surrounding, isolating and pressuring the Communist Chinese regime. As documented in my own history of the U.S. path to war in Vietnam, Perils of Dominance, the national security bureaucracy was so committed to that strategy that it resisted any alternative to war in South Vietnam in 1964-65, because it believed the loss of South Vietnam would mean the end of Cold War strategy, with its military alliances, client regimes and network of military bases surrounding China. It was only during the Nixon administration that the White House wrested control of national security policy from the bureaucracy sufficiently to scrap that Cold War strategy in East Asia and reach an historic accommodation with China.

The present strategic crisis can only be resolved by a similar political decision to reach another historical accommodation – this time with the “resistance bloc” in the Middle East. Despite the demonization of Iran and the rest of the “resistance bloc”, their interests on the primary issue of al Qaeda-like global terrorism have long been more aligned with the objective security interests of the United States than those of some regimes with which the United States has been allied (e.g., Saudi Arabia and Pakistan).

Scrapping the failed strategy in favor of an historic accommodation in the region would:

  • reduce the Sunni-Shi’a geopolitical tensions in the region by supporting a new Iran-Egypt relationship;
  • force Israel to reconsider its refusal to enter into real negotiations on a Palestinian settlement;
  • reduce the level of antagonism toward the United States in the Islamic world and
  • create a new opportunity for agreement between the United States and Iran that could resolve the nuclear issue.

It will be far more difficult, however, for the United States to make this strategic adjustment than it was for Richard Nixon and Henry Kissinger to secretly set in motion their accommodation with China. Unconditional support for Israel, the search for client states and determination to project military power into the Middle East, which are central to the failed strategy, have long reflected the interests of the two most powerful domestic U.S. political power blocs bearing on national security policy: the pro-Israel bloc and the militarist bloc. Whereas Nixon and Kissinger were not immobilized by fealty to any such power bloc, both the pro-Israel and militarist power blocs now dominate both parties in the White House as well as in Congress.

One looks in vain for a political force in this country that is free to press for fundamental change in Middle East strategy. And without a push for such a change from outside, we face the distinct possibility of a national security bureaucracy and White House continuing to deny the strategy’s utter failure and disastrous consequences.

Will Computer Virus Stuxnet Sow Not Only Destruction, But Death?

Last week, in the Nation, Eric Alterman hailed Stuxnet, the computer virus that struck Iran’s Russian-built reactor at Bushehr.

Now that a “number of technological challenges and difficulties” have beset Iran’s program, Moshe Yaalon, Israel’s minister of strategic affairs, explains, Iran’s nuclear timetable has been “postponed.” This development ought to be a cause for joy among all people outside the Iranian leadership’s [foot-in-mouth alert — RW] anti-Semitic, Holocaust-denying circles. A military attack, whether American or Israeli, might have postponed the timetable as well, but at a horrific cost in human and strategic terms. . . . The Stuxnet worm has helped to save the world from the horrific consequences [of Iran developing nuclear weapons and attacking Israel — RW].

Fellow Nation writer Robert Dreyfuss responded:

. . . make no mistake, unleashing a computer worm against a country whose leaders have committed no aggressive act against either the United States or Iran’s neighbors is an act of war

But is Stuxnet the neat, clean computer-killing machine that does no harm to humans — sort of the opposite of a neutron bomb? Dreyfuss again:

. . . a worm—once created—can take on a life of its own. It can infect unintended locations, as Stuxnet already has, and even spread uncontrollably. And it can be copied and engineered by others, for other purposes. It’s like biological warfare: once uncorked, there’s no putting the germs back in the bottle.

Last week we wrote about a Reuters article in which Dmitry Rogozin, Russia’s ambassador to NATO, was quoted

“This virus, which is very toxic, very dangerous, could have very serious implications,” he said, describing the virus’s impact as being like explosive mines.

“These ‘mines’ could lead to a new Chernobyl,” he said, referring to the 1986 nuclear accident at a plant in Ukraine, then part of the Soviet Union.

Because of the role Russia played in constructing Bushehr, Rogozin was just fear-mongering to get the West to back off, right? Uh, maybe not. Yesterday the Associated Press reported that, according to “a foreign intelligence report,” with

. . . control systems disabled by the virus, the reactor would have the force of a “small nuclear bomb,” . . . “The minimum possible damage would be a meltdown of the reactor. . . . However, external damage and massive environmental destruction could also occur … similar to the Chernobyl disaster.”

But then the AP quotes German cybersecurity expert Ralph Langner, “who has led research into Stuxnet’s effects on the Siemens equipment running Iran’s nuclear programs.”

“Bottom line: A thermonuclear explosion cannot be triggered by something like Stuxnet.”

Whatever the case — warning: dueling clichés ahead — it’s still uncharted waters and the West is playing with fire.

WikiLeaks: Venezuela’s Crude Awakening

PDVSA(Pictured: Venezuela’s national oil company PDVSA.)

We’re honored to have Michael Busch dissecting the latest WikiLeaks document dump for Focal Points. This is the thirty-eighth in the series.

A number of insights into the Venezuelan oil sector were revealed this week in a chain of embassy cables WikiLeaked by the Norwegian newspaper Aftenposten.

The cables focus predominantly on the dealings of the Norwegian oil company Statoil, which possesses a considerable share of control over Venezuela’s oil in the famed Orinoco belt, considered by experts to be home to the largest crude reserves in the world. The first cable, dating from early 2007, details conversations between US embassy officials and Statoil Venezuela President Thore Kristiansen, colorfully described as “an urbane man who looks like he just stepped out of a Brooks Brother catalogue.” Kristiansen describes his early negotiations with the Venezuelan government in the lead-up to what would be a dramatic nationalization of Venezuela’s oil fields by Hugo Chavez.

Kristiansen pooh-poohed American concerns that Chavez would seek as much as a 60 percent share in oil extraction projects in the country, noting that the Venezuelans would take care not to alienate private investment too dramatically in their take-back scheme. The oil executive “said he firmly believed that XXXXXXXXXXXXX realizes that [Venezuela] needs the private sector to run” the nation’s energy industry. Moreover,

although he did not specifically say it, he appeared to believe that the BRV [Venezuelan government] was willing to negotiate on the size of PDVSA’s [Venezuela’s national oil company] stake, based on discussions with [government] officials. Kristiansen later added that senior BRV and PDVSA officials do not really understand the oil and gas policies that they are supposed to be implementing.

The Americans shared the view that a mild chaos was rattling the internal workings of Venezuelan state decision-making, noting that

it is clear that at this point even senior officials within the MEP and PDVSA have no idea what the BRV’s policy is regarding the migration of the strategic associations to PDVSA controlled ventures.

Of course, Chavez did exactly as the Americans feared just months later, ordering that foreign firms hand over operational control of their holdings to PDVSA and accept a 60 percent share of revenue from any oil extraction on Venezuelan soil.

But Statoil was hardly unnerved. In a meeting with US embassy officials a few months after Chavez’s nationalization push, a smug Kristiansen told the Americans that his company “had received a good deal under the circumstances,” and that contrary to Venezuelan claims that foreign firms had lost their equity in their partnerships, Statoil had been handsomely compensated for their losses. “Although he would not state the amount of the compensation, he implied that it was well above book value” and that the company had the option to accept payment in cash or crude. Not only that, but the Americans also learned that while Venezuela proudly announced that foreign companies would experience reduced zones of operation, Statoil’s actually increased following the nationalization.

A cable early in 2008 returns to Staoil’s compensation following the nationalization. In a meeting that Febraury, Kristiansen again refused to disclose precise details of the agreement reached with the Chavez regime, but admitted that the monies received far exceeded the $130 million as had been reported in the Wall Street Journal. Interestingly, in view of recent revelations that Norway has exercised admirable business ethics in its foreign dealings, “Kristiansen also added the deal had caused some problems,” because although the company “had a policy of trying to be as transparent as possible with its shareholders…it did not believe that it could release details of it to the shareholders due to [Venezuelan government] sensitivities.”

Seeking to press its advantage further, Kristiansen boasted to American diplomats that Statoil’s operations in Venezuela looked as if they would expand still further in the near future. The Norwegians had recently won the right to expand their scouting missions in Venezuela’s Faja strip, an oil field that likely possesses upwards of a billion barrels of valuable crude, and secured the possibility of exploiting new finds following future negotiations. Kristiansen’s optimistic forecast was based on Venezuela’s seriousness “about raising oil production” and recognition that private actors were critical to this process. Kristiansen also highlighted a “final piece of evidence that justifies Statoil’s optimism”: the recent performance of Venezuelan oil executives at an industry conference.

Unlike other conferences, all of the scheduled PDVSA speakers showed up and gave presentations that actually contained details. Kristiansen stated it was clear that PDVSA’s senior management is clearly wrestling with the best way to develop the Faja. In addition, PDVSA speakers consistently stressed the need for private sector participation.

Still, Kristiansen did warn that his projections were not entirely secure against the volatility of Venezuelan politics—a system often rent by efforts at meeting the challenges of social revolution in an unforgiving reality. One such example was Chavez’s recent threat to apply windfall profit taxes to corporate earnings, a policy proposal Kristiansen labeled “ridiculous” but nevertheless troubling. “Since Chavez did not provide any specifics on his proposed tax, his comments raised the level of risk for companies operating in Venezuela.”

By 2010, the sheen of confidence had been largely rubbed away in Statoil’s private conversations with American diplomats. A cable from nearly a year ago related embassy meetings with representative from both British Petroleum and Statoil concerning ongoing efforts to land rights to development projects in Faja. The Chavez regime had still not clarified details of its proposed windfall profits tax, uncertainty that dissuaded both companies from submitting bids on the projects. The two companies apparently had wagered that none of their rival competitors would submit proposals either, which it was hoped would force Bolivarian government to moderate its stance. But it wasn’t to be: Chevron and the Spanish Repsol corporation seized the initiative and placed bids to the displeasure of Statoil in particular. The Norwegian representative “was specifically upset with the Chevron bid…as he believed it appeared to provide a degree of credibility to the [Venezuelan government] that is not warranted.” As for Repsol, the representative couldn’t care less, arguing that he doubted “the Repsol-led consortium has the technical expertise and experience to execute” a successful project.

Beyond relating the whining of disgruntled Norwegians at a deal gone bad, the cable discusses in detail the struggling Venezuelan oil sector. Citing an unnamed source, the embassy reported on the poverty of Venezuela’s industrial infrastructure.

XXXXXXXXXX provided several examples of the ongoing challenges confronted in the Venezuelan petroleum industry. He noted that PDVSA recently has removed gas compressor units from the PDVSA-BP mixed company-operated Boqueron oil field from use elsewhere in Eastern Venezuela, thus limiting the amount of natural gas that could be reinjected into the oil field. In October 2009, a BP proposal to install a 100MW electricity generating plant, a $150 million investment, to service Petromonagas Jose upgrader and its related oil fields was rejected by the PDVSA members of the Petromonagas board of directors. [Note: Venezuela is in the midst of an electricity crisis and many of its oil fields rely on the national electricity grid…] The PDVSA board members told BP that some oil fields would be shut-in as a result of the electricity crisis and thus, the timing of this proposal did not make sense.

The cable concludes that

as the energy crisis develops, any reduction of production of crude petroleum will reduce government revenues…accounts of events such as the cannibalizing of gas compressors from installations from elsewhere and procurement problems all indicate PDVSA will find it difficult to maintain current production levels.

As it happens, the cable’s author offered prescient analysis. The country suffered major production slowdowns in 2010 which lead Caracas to demand at the end of the year that foreign oil companies draw up new plans to boost production. Apparently tired of waiting for levels to rise, the government rattled their cages again last week. Energy Minister Rafael Ramirez announced to reporters that foreign firms failing to raise output would face the immediate possibility of being tossed from the country. Said Ramirez, “If they don’t comply with their plans, I would have good reason to review the rights they have.”

The government may be flexing its muscles after Chavez’s announcement last week that his country now possesses the largest proven oil reserves on earth, surpassing Saudi Arabia. But as Jorge Pinon at Florida International University points out, “You can be sitting on the world’s largest oil reserves but if you do not have … capital, technology, know-how, and most important, stewardship of the enterprise, they are worthless.”

U.S. Policy Exposed by Mid-East Protests

Denver Tunisia(Pictured: Denver protesters.)

It is not just the governments of different Arab countries that are in crisis as the media would have us believe. U.S. and European Middle East Policy is also suffering from the events. For Washington, London, Paris and Berlin, the current upsurge of region-wide protests in the Middle East is something between a setback and a debacle, the extent of which remains to be seen.

And right now the Obama Administration is scrambling to scratch together a policy to keep up with events, that change daily.

Protests that began in Tunisia with the immolation of Mohammed Bouazizi, a university graduate reduced to selling fruit and vegetables in Tunisia’s interior city of Sidi Bouzid, have now spread like wildfire throughout the Middle East.

As I write:

  • Demonstrations are taking place for the third consecutive Friday in Jordan demanding the prime minister, Samir Rafai to step down; a slogan emerging from the street is “Rafai go away; prices are on fire and so are the Jordanians.”
  • In Yemen’s capitol, Sana’a, for the second time in a week thousands are protesting against President Ali Abdullah Saleh, demanding an end to his rule of three decades.
  • And in Egypt, the government of Hosni Mubarek has called out the army to quell angry demonstrations that the New York Times describes in a headline as ‘a fury that has smoldered beneath the surface for decades. Building on the unprecedented Tunisian protest movement, Egyptians are calling for Mubarek’s removal from power; they are also opposed to his son taking over the presidency in his stead. Some news reports suggest that already thousands of people have been arrested.
  • In Algeria and Libya protests erupted targeting socio-economic conditions – promises for public housing made a long time ago.
  • There were even protests in Saudi Arabia against the presence of deposed Tunisian president Zine Ben Ali and his wife Leila Trabelsi.

Obama rides…and tries to shape the democratic wave

In the past few days, U.S. President Barack Obama has made several statements praising the Tunisian democratic upsurge, including a few sentences in his state of the union message, giving the impression that the protests are in line with calls for greater democratization throughout the region made over the past ten years from different U.S. administrations.

Tonight (Friday, January 28), he continued along these lines making remarks suggesting that the U.S. supports the democratic wave and making mild criticisms of Egypt’s president Hosni Mubarek.

But one senses an American malaise and the mood in Washington is far from joyous as this ‘democratic wave’ extends throughout the region. Whatever Obama’s public pronouncements, under the surface, it is not just Middle Eastern geriatric authoritarian regional leaders who are nervous, but policy makers in Washington DC as well.

Tunisia, Egypt, a setback for U.S. foreign policy

While many here in the United States greeted Obama’s blessing of the Tunisian events as evidence of the administration’s backing for democratic change, actually, the Tunisian protests represent nothing short of a setback for U.S. foreign security and economic policy.

His Tunisia remarks could be interpreted as little more than Obama’s Mayaguez speech, a form of ‘damage control’, his attempt to spin economic and political rejection of U.S. policies into some kind of victory. Facing defeat, declare victory and move on as fast as possible. Blame it on our geriatric Middle East allies rather than on policies that emanate from Washington. One notes, to date, very little sense of self criticism of Washington’s partial responsibility for the current mess.

What is it in U.S. foreign policy that is being rejected from Tunis to San’aa that to date the U.S. media tends to skirt?

  • Economically, the whole region is rejecting the results of nearly 30 years of U.S. supported World Bank/IMF structural adjustment programs that have not produced growth but social polarization, growing impoverishment, bankruptcy of domestic economic enterprises and now higher prices for basic goods. It was rather amusing and pathetic to see both Ben Ali in Tunisia and now Mubarek in Egypt offering their people ‘reverse structural adjustment policies’ (re-instituting subsidies on basic foods, government jobs programs) in an effort to retain power.
  • While singing democracy’s song, U.S. policy in the Middle East as in fact supported authoritarian regimes and autocracy, and has done so consistently since World War II. It is only changing gears now, ever so gingerly, due to unprecedented mass pressure from below, that it has always essentially ignored or downplayed.
  • The United States has long opposed all manifestations of Arab Nationalism, which it first mistakenly interpreted as “pro-Communist” and now confuses with radical Islamic fundamentalism.
  • Because its analysis of the crisis in the region is off base – exaggerating the breadth of Islamic fundamentalism – the United States did not see or appreciate either the scope or nature of the crisis until Washington got hit square in the face with it.
  • The United States anticipated an Islamic fundamentalist-led uprising that would call for the institution of shari’a. This Washington was preparing to crush with the aid of the same local allies it is now criticizing and abandoning left and right. Instead it is facing essentially secular movements against high unemployment, inflation, corruption and repression.
  • The United States has ignored, almost completely, or written off as irrelevant those few critical voices here in the United States and elsewhere who ‘saw what was coming’ and now Washington is paying the price.

Real change or makeup on a corpse?

Obama’s support for the democratic upsurge cannot wipe away with yet another fine speech that has no teeth 65 years of a policy that went in the opposite direction and that contributed greatly to the crisis that has exploded in its face.

The path now taken appears to one of damage control. Obama has decided simply to face reality – to ride the democratic wave sweeping the region but at the same time try to maintain U.S. strategic and economic interests in the region. Change might be in the offing, but perhaps the changes can be tailored to suit U.S. policy. That appears to be the approach taken in Tunisia, and it seems also now in Egypt.

But is it supporting the kind of deep-going needed changes that can lead to both greater development and more democracy…or rather is simply an exercise of putting make up on the corpse that has been 65 years of post World War II foreign policy?

Rob Prince is the publisher of the Colorado Progressive Jewish News.

On the Wrong Side of History in the Middle East

For over sixty years, the U.S. and the West wanted stability in the Middle East while dividing and conquering the area. They installed and supported puppets, despots, and corrupt and totalitarian regimes as long as they did our bidding. The West had no plans to bring freedom and democracy to Middle Eastern countries. Granting sovereignty to Middle Eastern countries was furthest from the minds of Western leaders.

The immolation of a street merchant December 28 last year brought Tunisia to the front of the line of Arab countries trying to break free. Now people around the Arab world are lighting fires to the powder keg of Middle Eastern misery: abject poverty, corruption, and violation of rudimentary elements of human rights.

The brush fire spread to Egypt, Jordan, Algeria and Yemen with thousands of young and old demonstrators, not belonging to any specific group, demanding the ouster of their corrupt regimes. In Jordan, the demonstrators demanded that the Prime Minister step down. In Yemen, the demonstrators demanded the ouster of the corrupt President ruling the country for three decades.

Egypt, the center of gravity for Arabs, has had the most vociferous demonstrations. In cities across Egypt, Egyptians are demanding the ouster of Hosni Mubarak – their ruthless ruler for three decades. Mubarak’s answer was to send his goons of security forces to intimidate the demonstrators without success. Mubarak’s final gambit was to appoint former top military professionals and loyal supporters such as Omar Suleiman as Vice-President. Suleiman’s brutality as the former head of security services known for the torture and rape of political prisoners helped to spawn large numbers of al-Qaeda leadership.

As an Arab-American raised in Middle East, I was always baffled by America’s claim of being the beacon of freedom and democracy while consistently supporting regimes in the Middle East headed by kings and dictators who killed, imprisoned, starved, tortured and on occasion raped their people in order to stay in power. Unfortunately, this policy remains the same today. The American people are ill-informed about the Middle East because of scant and biased reporting. So, it is not surprising that some of the mainstream media is surprised at the events in Middle East. At present, our media portrays the U.S. policy as balancing stability and support of corrupt regimes with instituting some reforms. But we need to recognize the need for true change in these regimes.

For decades, the pundits in America belittled the Arab streets’ reaction to political events. But, they are now silent since they never understood or did not want to understand the extent of oppression the Arab people are under with our active support. We gave these regimes massive military hardware; we trained their security services; and we provided them with intelligence information to suppress their people and remain in power. Today we are doing the same thing. If the U.S. policy towards Middle Eastern countries truly is changing, we need to have overt and covert operations congruent in goals and practice. For decades, the Arab streets were aware of our support of their regimes, and have held us complicit. This is the root of anti-American sentiment. We are reaping the results of seeds we planted long ago.

The Obama administration’s policy towards Middle East and Muslims in general has been slightly better than Bush’s policies in tone and substance since Obama’s speech at Cairo University in 2009. Secretary Clinton’s first reactions to the event in Egypt were muted and tilted towards stability. She shifted her rhetoric slowly to acknowledge the struggle of the Egyptian people and on Sunday (1-30-11) talk shows she actually admitted the need for a plan to “transition to a democratic regime.” President Obama gave mild support and later on a YouTube interview Mr. Obama’s position became more assertive as the events unfolded. The least helpful and inappropriate comment came from Vice-President Biden claiming that Mubarak is not a dictator. The Egyptian demonstrators are now demanding that the White House condemn Mubarak.

Our policies towards the Middle East are shaped by strategic needs, oil, and support for our friendly countries – primarily Israel, Egypt, Jordan and Saudi Arabia. After 9/11, our rhetoric and actions became even more abhorrent, as we labeled any Arab not in agreement with our policies in the Middle East as terrorists, in order to mute free-flowing discussions regarding our policies in the region. Our policy since 9/11 has added the requirement of collaboration with us against the terrorists as a litmus test to the strength of our relationship. Thus, regimes that are helping us weed out the terrorists receive strong support from us to help stabilize and remain in power by covert and overt means. Our policy is contradictory. The mere support of these corrupt regimes creates terrorists against the United States. Somehow we think if we perform these activities covertly and lie about it, the Arab people would not know about it. Of course, the unconditional U.S. support of Israel towards the Palestinians adds another complicating and negative dimension.

Our policy towards the Middle East should take a 180 degree turn. We should support, without any qualifications, the Arab people’s yearning for freedom and democracy. We should not support the corrupt regimes regardless of the short-range benefits. In the short run, we may not get every free Arab country’s friendship but in the long run we will get their friendship and will serve our strategic goals. For example, we react negatively to the Hezbollah-supported newly designated Prime Minister but in the long run we plant the seed of respect to the people of Lebanon to work out their differences. More importantly, the policy of supporting the people is the right policy consistent with our American values.

The time for mere reforms in the Middle East has past. The choice is between lack of freedom and democracy, police-state, torture and rape on one side and the respect of human values that encompass freedom, democracy and sovereignty on the other. The U.S. has one choice to make of supporting the inevitable rise of the people for self-government. The U.S. must change its policy for our sake and the sake of the Middle East and more importantly it must be on the right side of history. The revolution may not succeed, or may get co-opted, or it may fail today but surely will succeed tomorrow.

WikiLeaks: Hamas Passes Along Its Financial Problems to Gazans

Khaled Meshaal(Pictured: Hamas leader Khaled Meshaal.)

We’re honored to have Michael Busch dissecting the latest WikiLeaks document dump for Focal Points. This is the thirty-seventh in the series.

In the face of the bombshell Palestine Papers published this week by al Jazeera and the Guardian, today’s offering from WikiLeaks of a single cable examining the situation in Gaza will doubtlessly be seen as weak tea.

Still, where the Palestine Papers succeed in demonstrating Palestinian Authority weakness, the cable just WikiLeaked shows rival Hamas to be no less insecure. The 2010 Jerusalem embassy dispatch reports rumors from trusted contacts which suggest that the organization suffers from a liquidity crisis which, if true, would certainly undermine prospects for the group’s long-term popular support.

Most alarmingly, embassy contacts in Gaza reported to American diplomatic officers that

Hamas was late in paying January salaries to civil servants on its payroll, and has not yet paid those salaries in full. While Hamas salary payments are typically available on the first day of every month, employees of the de facto Hamas government did not line up at post offices or the Islamic National Bank…until February 8 when, according to contacts, Hamas paid low-level employees with salaries up to NIS 1,500 (USD 400) per month.

One source reported overhearing an employee at Hamas’s Ministry of the Interior

complain on the phone that his salary was late and he would only receive a portion of it. The employee further complained that this was at least the third month he had received only a “portion.”

If true, Hamas has a problem on its hands. The group reportedly employees some 34,000 workers on a payroll that pays out roughly $16 million in monthly salaries, on top of the $9 million allotted for other operational costs. One source confided to embassy personnel that Hamas only collects between $3.5 and $4 million a month in levied taxes and other fees and thus relies heavily on outside assistance to make up the difference.

For instance, XXXXXXXXXXXXXXX employee salaries at Hamas’s “Ministry of Education”—except those receiving salaries from the Palestinian Authority in Ramallah are covered by Qatari donations.

Recently, however, Israeli and Egyptian crackdowns on entry and exit to the Strip compromised Hamas’s ability to capitalize on foreign largesse. Contacts reported that tighter Egyptian restrictions were especially deleterious to the organization’s checking account,

Including increased interference with smuggling operations. Gaza contacts note that Egypt has also cracked down on travel of Hamas officials outside Gaza by restricting their access through the Rafah crossing. In particular, Egypt reportedly no longer tolerates “Hamas VIP bags,” a reference to suitcases of cash transported across the Rafah border into Gaza.

But the cable notes also that while all of the American embassy’s contacts inside Gaza reported Hamas’ financial troubles, they “interpret the nature and depth of the problem differently.” One contact speculated that Hamas indeed possessed enough money to cover all of its various expenses at the moment, but was “protecting its fiscal position by holding back on payments. ” Another asserted that Hamas has plenty of cash on hand, but instead of honoring the payment schedules of its employees, chooses to invest it in real estate accumulation in Gaza. The source provided intelligence that Hamas was offering “bids on properties…well above market prices,” and speculated that “purchasing real estate is a sustainable investment for Hamas, a money laundering scheme, and/or part of a strategy to strengthen its financial position (or physical presence) in Gaza as a bulwark against future events.”

At the same time, Hamas was reported to have been not only cutting costs but also accelerating its efforts at rent-seeking.

According to multiple contacts, municipalities in Gaza are stepping up the collection of electricity and water bills. Hamas-run ministries also charge fees for various services, like the issuance of official documents. The first-time “registration” fee for a car is USD 12,000…Gazans must also pay an annual fee to renew their car or motorcycle. New traffic signs are being installed, and traffic laws are being aggressively enforced by the police. For an infraction, according to a Gazan contact, police typically confiscate a driver’s license or car documents and require the driver to retrieve his documents at a police station, where he will likely pay a penalty fee.

If the reports are to be believed, some cases are outright predatory:

In one anecdotal account…a man who used his van to transport children to school was confronted by Hamas authorities and instructed to register his van as a school bus, and then pay requisite taxes.

The attack on education isn’t relegated solely to making transportation difficult. “Another contact said that Hamas now demands private school to pay taxes based on tuition fees, and threatens to shut down schools for non-compliance.” Purported school taxing would be of a piece with other reports that increased taxes and fees were also being levied against local businesses.

The fact that Hamas is unable, or unwilling, to pay salaries, combined with its practice of increased taxes and random fees cannot have positively contributed to the party’s already sagging popularity in Gaza. Despite claims that the Gazan economy is improving, Hamas’s favorable ratings currently remain at less than half of what they were five years ago when they assumed power of the territory, numbers that dropped precipitously in 2010. This is surely in large part due to the organization’s difficulties staking out political positions on the continuum between rhetoric and responsibility since 2006. And needless to say, worsening humanitarian conditions on account of the Israeli blockade haven’t helped. But until Hamas learns that candy and greeting cards are no replacement for basic attempts at effective governance—especially as the wealth of a new political elite within the organization grows—the party’s goal of securing its political future through ballots, not bullets, will remain elusive.

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