Focal Points Blog

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.

As Egypt Protesters Look to U.S. in Vain, Remembering Another Lost Opportunity

China v Japan(Pictured: China fighting Japan in World War II.)

The official response of the White House and State Department to the ongoing protests in Egypt has sparked a much-needed discussion about the contradictions between U.S. avowals of democracy and support for its authoritarian allies in the Middle East.

This is not by any means a new phenomenon nor is it particular to Middle East policy. At this critical juncture, it is worth reflecting on another moment and region where senior policymakers faced a choice between democracy and stability.

As the Second World War drew to a close in Asia, the old colonial and authoritarian regimes were withering in the face of new forces and leadership. The emerging leaders in China and Vietnam sought support from a United States that, against the crusty position of Britain and France, had styled itself as a friend of democratic and anti-colonial movements. While the Chinese Nationalist forces had been lackluster during the war and the French government in Indochina had capitulated to the Japanese occupation, both the Chinese Communists (CCP) and the Indochina Communist Party (ICP) had fought valiantly against the Japanese.

In January 1945, Zhou Enlai and Mao Zedong sent a joint message to President Truman expressing their desire to travel to the United States to discuss the future of China. One year later, Ho Chi Minh sent a telegram to Truman urging the president and the American people to “interfere urgently in support of our independence.” Both of these letters went unanswered.

We will never know what might have happened had these gestures been taken more seriously. But we do know how much was lost in the subsequent hot wars that was the Cold War in Asia. Not only in terms of lives, which realists will readily shrug off,

but also in terms of the ever-so-important “prestige” in the eyes of the world, which, in the modern era, has been a priority for even the most cynical of American foreign policymakers.

Admittedly, the situation in the Middle East in 2011 is different than Asia in 1945. Egypt is not China or Vietnam and the protesters flowing into the streets in Cairo are not the CCP or the ICP. Notably, they are not the Muslim Brotherhood either. In fact, there is no evidence that there is any particular leader, radical or otherwise, pulling the strings. One would be hard-pressed to find a more liberal-secular-democratic appeal than the kind being articulated on the streets of Cairo.

Another key difference between these two moments involves how much we in the United States actually know about them while they are happening. The letters from Mao and Ho were safely guarded from the public for decades. This made it possible for Truman and subsequent administrations to characterize the People’s Republic of China and the Democratic Republic of Vietnam as anti-American regimes whose rule posed a worldwide threat to freedom and democracy.

In contrast, thanks to camera phones, Twitter, Facebook, and Al Jazeera, which has been broadcasting the protests in Egypt despite verbal and physical threats, we can see the protesters as well as the government’s crackdown on them. Seeing these images makes it harder to buy the notion that supporting the protests could pave the way for a more radical regime in Egypt, posing a danger to security and freedom in the Middle East. If such a regime actually does assume power, then decades from now, we can once again wonder what might have been different if, rather than cast its lot with unpopular regimes, the United States had actually supported an organic democratic movement in the Middle East.

Iran, the New York Times and the Laws of Physics

Iran nuclearWhy is the New York Times claiming the laws of physics are different in Iran then they are anywhere else? Well, the tip off to that answer is the word “Iran.”

First, a few basics:

The thing about physics is that it is black and white: things happen or they don’t. Want to live forever? The Second Law of Thermodynamics says, nope, can’t do that (unless you can get rid of entropy, and you can’t). Want to rocket off to the nearest star a la Star Trek? Well, okay, but it is going to take a really, really long time to get there because you can’t go faster than the speed of light (and inertia would kill you long before you got close to 186,000 miles per second).

Back to the Times.

For the past several weeks the Times has been claiming that Iran is very close to producing weapons-ready nuclear fuel. On Jan. 23, Steven Erlanger, in an article entitled “Talks on Iran’s Nuclear Program Close With No Progress,” wrote that Iran is stepping up its production of enhanced uranium and has “enriched about 90 pounds of it to 19.75 percent, which is more than halfway to the level required for a bomb.”

Not close. Again, a little physics.

Uranium occurs naturally as U-238. In order to make a bomb you have to turn U-238 into U-235 or Plutonium 239. “Enrichment” is used for a lot of things besides obliterating cities. Uranium enhanced to 3 percent can run a power plant. Uranium enhanced to 19.75 percent can be used for medical purposes, like zapping cancer. For a nuclear weapon, however, uranium must be enhanced to between 80 percent and 90 percent.

Virtually all nuclear warheads currently use uranium that is 90 percent enhanced, although it is possible to produce a weapon with as little as 80. To detonate a weapon using U-235, all you need to do is blast two pieces of sub-critical fuel into one another. Two sub-criticals equal one critical, you achieve “fission” and a really big “bang!” The so-called “nuclear gun” is virtually foolproof and was the design of the Hiroshima bomb. In fact scientists were so confident it would work that they never bothered to test it.

Plutonium is trickier. The “gun” method doesn’t work because of the unique properties of Pu-239. You have to wrap plutonium with an explosive, and then implode it. The result is called “fusion.” The Nagasaki bomb (Fat Man) was composed of both U-235 and Pu-239, and it was the device that was tested at White Sands New Mexico in 1945. Today almost all nuclear weapons in the world are fusion devices, because fusion is more efficient than fission.

The Hiroshima bomb carried 64.1 kg of U-235 enhanced to 80 percent. The South Africans also produced at least six nuclear weapons that worked on the “gun” model, and those were enhanced to between 80 percent and 93 percent. The greater the enhancement, the less fuel you have to use. U-235 makes a perfectly serviceable nuke, but plutonium gives you more bang for the buck. The Department of Energy estimates that you can make a small nuclear weapon with a little as 4 kg of plutonium, and some scientists say you can make a nuke with as little as 1 kg of plutonium.

Keep in mind what they mean by “small.” The Hiroshima bomb—“Little Boy”—had an explosive force of between 12 and 15 kilotons of TNT. It killed over 70,000 people in the initial blast, and more than 30,000 in the weeks and years that followed. Its fireball reached 6,000 degrees centigrade at ground zero, and it utterly destroyed 62,000 buildings. Today “Little Boy” would be considered a tactical nuclear weapon.

Here is “big”:

  • The W76 warhead: 100 kt
  • The B61 warhead: 350 kt
  • The W88 warhead: 475 kt
  • The B53 warhead: 9,000 kt
  • The B41warhead: 25 megatons
  • The Tsar Bomba (Russian): 50 megatons.

What the laws of physics tell us is that 19.75 percent enhancement is not even a quarter of the way toward producing fuel that could be turned into a weapon. It is not nice stuff, mind you. Do not hug a container of 19.75 percent fuel. Radiation poisoning is really not the way you want to go.

The problem with the Times’s error (and it was repeated several times in other articles) is that it makes it sound like the Iranians are on the threshold of producing weapons-grade fuel. By virtually every account, they are not. Even Israeli military intelligence says Teheran is not currently working on producing a nuclear weapon, although it adds that Iran could produce the requisite fuel within two years if it wanted to.

According to Agence France Presse, Israeli Brigadier General Aviv Kochavi told the Knesset’s foreign affairs and defense committee that “it was unlikely that Iran, which currently enriches uranium to 20 percent, would start enriching it to the 90 percent level needed for a bomb, because it would be an open breach of the Nuclear Non-Proliferation Treaty, exposing it to harsher sanctions or even a U.S. or Israeli military strike.”

But the Times has Teheran more than halfway there—providing you ignore those annoying laws of physics. It is one thing to get someone’s name wrong, or misspell a word. Getting things about nuclear weapons wrong can have very dire consequences in the real world.

The Jerusalem Post reports that Israel has just acquired a new mid-air fuel tanker from the U.S. that would make an attack on Iran easier. The Israeli daily Ha’aretz says the Israeli Prime Minister Binyamin Netanyahu and his defense secretary Ehud Barak are seriously considering a strike at Iran. And according to UPI, the new Israeli chief of staff, Lt. Gen. Yoav Galant, also favors attacking Iran. If Iran is “more than half way to the level required for a bomb,” why not?

In the real world bad science has the potential to produce dangerous politics.

More of Conn Hallinan’s work can be found at Dispatches From the Edge.

Egypt Protests Shine Light on How U.S. Profits From Foreign Aid

Egypt democracy(Pictured: Anti-Mubarak protesters in 2006.)

Cross-posted from the Dissent Magazine blog Arguing the World.

If you have to shut down Internet access and texting for your whole country, that’s a pretty good sign that your regime is not legitimate. It’s also a good sign that your regime is in big trouble.

Such is the situation right now in Egypt. And the Mubarak government is not the only one in the region that is panicking. Following a democratic uprising in Tunisia that unseated the notoriously corrupt and repressive regime there, mass protests have spread to Yemen and Jordan—and who knows where they will end?

The situation is very dynamic, with live coverage available here. You can hear commentary from Middle East experts Juan Cole and Stephen Zunes. I also found this first-hand account of protests in Cairo by Yasmine El Rashidi at the New York Review of Books blog to be very interesting.

At this point, I would add just a few comments.

First, the situation in Egypt is helpful in making clear how U.S. foreign aid functions. In international development circles, there’s a debate about whether foreign aid actually works. On the political scene, a variety of doubters, especially those on the right, rail against corruption, mismanagement, and dependency—arguing that aid sent abroad is a giant liberal boondoggle.

But a huge percentage of U.S. foreign aid is not meant to ease poverty or foster humane development, nor is it backed by any progressive intention. Rather, it is given out basically in the form of bribes to various regimes so that they will align themselves with U.S. geopolitical interests. As Juan Cole further notes in his Democracy Now interview, a large amount of aid money meant for foreign countries actually serves to subsidize U.S. corporations, which are contracted to produce goods or services (or armaments or farm surplus) that are then sent abroad. The actual utility of these things for aid recipients is questionable, and any benefits to the poor in recipient countries are at best indirect.

Aid to the Egyptian government is a nice case in point. Even though it is notoriously undemocratic, the Mubarak regime has for decades received a massive amount of U.S. aid, both military and non-military. We’re talking billions of dollars per year, regularly placing Egypt just behind Israel on lists of top recipients. But the United States has no incentive to demand any sort of accountability for the aid. On the contrary, our leaders have incentives to use aid flows as pork for our corporations and to allow the Egyptian government to siphon off the remaining largess however it wishes. An attitude of permissiveness makes the aid all the more effective as a means of ingratiation.

Since the protests have erupted in Egypt, the Obama administration has put on a sorry display of standing by its man (just as the Bush administration no doubt would have). Vice President Biden has gone to bat for the regime, resulting in headlines reading, “Joe Biden says Egypt’s Mubarak no dictator, he shouldn’t step down…

But if you look at what Biden actually says, it’s sort of comical—and fairly honest. He never asserts that Mubarak isn’t a dictator; he just admits that, since he wants the current Egyptian regime to remain an ally, he’s not in any position to come out and say it. Biden stated:

Mubarak has been an ally of ours in a number of things. And he’s been very responsible on, relative to geopolitical interest in the region, the Middle East peace efforts; the actions Egypt has taken relative to normalizing relationship with—with Israel. … I would not refer to him as a dictator.

Well, of course he wouldn’t call Mubarak a dictator! As he just explained, the regime is a vital ally of the United States in the region, and he has no interest in alienating it.

President Obama has tried to have it both ways by at once supporting the regime and telling it to use the protests as occasion to implement reforms. “[T]he government has to be careful about not resorting to violence, and the people on the streets have to be careful about not resorting to violence,” he said. “And I think that it is very important that people have mechanisms in order to express legitimate grievances.” But even as the Egyptian state began to crack down, the White House wouldn’t speak of curtailing military aid. It has been practicing realpolitik, plain and simple.

(Although, as the situation rapidly develops, there are signs that the Obama administration might be changing its position—something that is surely a grim sign for Mubarak.)

The other point I would make is that when demonstrations like these erupt, they’re inevitably labeled “spontaneous uprisings.” However, that characterization is usually more a product of previous media neglect and ignorance than it is an accurate description of protest activity. If you’re not paying any attention to a country’s politics and only swoop in when things have reached a crisis point, events will invariably look out-of-the-blue. Yet that’s hardly the whole story.

Yes, there are extraordinary moments when public demonstrations take on a mass character and people who would otherwise not have dreamed of taking part in an uprising rush onto the streets. But these protests are typically built upon years of organizing and preparation on the part of social movements.

I haven’t seen great backgrounders out yet detailing movement activity in Egypt and Tunisia, but there have been some signs of foresight and preparation. In Cairo, for example, polished manuals have been passed from hand-to-hand among protesters, serving as guidebooks for action:

Anonymous leaflets circulating in Cairo also provide practical and tactical advice for mass demonstrations, confronting riot police, and besieging and taking control of government offices.

Signed ‘long live Egypt’, the slickly produced 26-page document calls on demonstrators to begin with peaceful protests, carrying roses but no banners, and march on official buildings while persuading policemen and soldiers to join their ranks.

Well-produced twenty-six-page booklets—reflecting a lot of careful thought—do not exactly fit within the image of “spontaneous uprising.” As we continue to watch this story, I’ll be eager to see pro-democracy organizers who have been at it over the long haul get their due.

Mark Engler is a senior analyst with Foreign Policy In Focus and author of How to Rule the World: The Coming Battle Over the Global Economy (Nation Books, 2008). He can be reached via the website Democracy Uprising.

How Lebanon Got So Complicated

Col. Hassan(Pictured: Colonel Wissam Hassan, head of Lebanese intelligence.)

Viewed through the prism of the American mainstream media, Lebanon always appears a place that best defines the term Byzantine: a bewildering mélange of different religions, rival militias, cagey politicians, and shadowy regional proxies taking orders from Teheran, Tel Aviv, Damascus, Riyadh, and Ankara.

Lebanon is a complex place indeed, but it is not quite the labyrinth it is made out to be, and, if France, the United States, and Israel would stop putting their irons in the fire, the country’s difficulties are wholly resolvable. But solutions will require some understanding of the pressures that have forged the current crisis, forces that lie deep in Lebanon’s colonial past. While history is not the American media’s strong suit, to ignore it in Lebanon is to misunderstand the motivations of the key players.

Lebanon, like a number of other countries in the region—Iraq, Saudi Arabia, Syria and Israel, to name a few—is a child of colonialism, created from the wreckage of the World War I and the collapse of the Ottoman Empire. The colonial power in Lebanon was France, although Paris’ interest in the area goes back to 1861. In that year the French helped Maronite Christians establish a “sanjack,” or separate administrative region around Mt. Lebanon within the Ottoman Empire.

Christian Maronites and French Catholics were natural allies, and the French saw the potential of controlling traffic going from the Mediterranean coast to inland Mesopotamia. For their part, the Maronites had picked up a powerful ally for their dreams of creating a “Greater Lebanon” that would take in not only the mountains they lived in, but the fertile Bakaa Valley to the east and the rich coastline to the west.

Lebanon’s mountains are mostly Christian dominated, though not all Christians are Maronites. There are also Greek and Syrian Orthodox, Armenians, Copts, and Roman Catholics. But the Bakaa—the northern extension of Africa’s Great Rift Valley—is mostly Muslim, as is much of the coastal plain. The Muslims themselves are divided between Shiites and Sunnis. As in much of the Middle East, Shiites have been marginalized politically and economically.

Those divisions were set in stone when the great imperial powers carved up the corpse of the Ottoman Empire at San Remo in 1920. France got “Greater Lebanon,” while the British seized oil-rich Mesopotamia—modern Iraq, Kuwait, Jordan and Israel. Since Britain already had Egypt, it now dominated the Persian Gulf, and hence Iran’s oil, as well as the Red Sea. While Lebanon may have seemed small potatoes in that exchange, it was the gateway to Damascus and the easiest land route for land-based goods going east and west. It also became the banking capital of the Middle East, with the French skimming off the cream. Manufactured goods flowed east, raw materials and gold flowed west.

“Greater Lebanon,” however, was formed by slicing off a big hunk of western Syria. Indeed, many Syrians still think of Lebanon as “occupied.” Since the Maronites were France’s allies, they got to run the place, and the Sunnis and Shiites—particularly the Shiites—took the hindmost. The latter became day laborers and peasants, squeezed by absentee landlords and taxed and exploited by the colonial government.

In many ways, Lebanon resembled Ireland, where religion was used to drive a wedge between landless Catholics and privileged Protestants. In reality, Protestants were also exploited, but the fact that they also had rights and privileges denied the Catholics—including the right to own land— kept the two communities divided and easily manipulated by the British.

And so it was in Lebanon. There the religious mix was more complex—it also included a sizable minority of Druze—but the strategy of divide and conquer through the use of religious and ethnic divisions was much the same. Those divisions pretty much defined the country until two great catastrophes befell Lebanon: the 1975-1990 civil war and the 1982 Israeli invasion and occupation.

It was the Israeli invasion that ignited the Shiite community and led to the creation of Hezbollah. And it was Hezbollah that finally drove Israel out of southern Lebanon, though it took 18 years of ambushes and roadside bombs to make the price of occupation unacceptable. And, for the first time in Lebanese history the Shiite community had a voice. It is the sound of that voice we are hearing these days.

Shiites are not a majority in Lebanon, but they may be a plurality. Christian communities likely make up about 32 percent of the population, and the Druze 5 percent, although no one actually knows how large each community is. There has not been a census since 1932, because the Christians, in particular, are nervous about what it would show. Political power in Lebanon is divided up on the basis of ethnicity.

The Israelis characterize Hezbollah as an Iranian proxy, and the Americans dismiss the organization as terrorist. Indeed, U.S. Secretary of State Hillary Clinton recently warned that the U.S. would cut off aid to Lebanon if a government friendly to Hezbollah emerges from the current crisis. The Americans are currently backing away from that threat.

But Hezbollah is not al-Qaeda, it is a homegrown organization that represents the long pent-up frustrations of the Shiite community, nor is it a cat’s paw for Iran, and any thought that the organization would go to war because Teheran ordered it to is just silly. For starters, Lebanese Shiites are very different than their Iranian counterparts. The latter come from a strain of Shiism that believes clerics and religious figures should govern directly. Lebanese Shiites think political power eventually corrupts religion, which is why they are backing Sunni Najib Mikati for the post of prime minister. Under Lebanon’s ethnic-driven system, that office must go to a Sunni.

As for the “terrorism” charge: That all depends on how you define the term. There is no question that Hezbollah has used assassinations and bombs to deal with its enemies, but then so have Israel and the U.S. In any case, Hezbollah is a major player in Lebanese politics, and any attempt to sideline it is the one thing that actually might touch off a civil war.

The current uproar was sparked by the refusal of former Prime Minister Saad Hariri to reject the findings of a United Nations-backed Special Tribunal for Lebanon (STL) investigating the death of Hariri’s father, Rafik al-Hariri, in a massive bomb attack in 2005. The bombing led to the so-called “Cedar Revolution” that pushed Syria out of Lebanon and brought Saad Hariri into power.

The STL investigation is apparently ready to pin the blame for the attack on Hezbollah, and when Hariri backed the Tribunal’s findings, Hezbollah withdrew its allies and the government collapsed.

Reading U.S. press accounts, one would assume that an unbiased investigation found Hezbollah the guilty party and that the Shiite organization ignited the crisis to avoid getting blamed. But a closer look suggests that the STL’s case is less than a slam-dunk. An investigation by the Canadian Broadcasting Company (CBC) late last year found several key witnesses had apparently lied to the Tribunal, including the man responsible for Hariri’s security that day, Lebanese Colonel Wissam Hassan.

The Tribunal started off blaming the Syrians, then jailed four Lebanese generals—after four years, the generals were released for lack of evidence—and finally settled on the Shiite organization. Hezbollah presented documents to the STL this past summer indicating that the Israelis were monitoring Hariri the day of the assassination and may have been behind the bombing. If so it would not be the first time that Tel Aviv has resorted to assassination in Lebanon. But the STL has not questioned any Israeli officials to date, nor has it examined Hassan’s alibi, one that the CBC called “flimsy, to put it mildly.”

Chief UN inspector Garry Loeppky considered Hassan a suspect in the murder, but the Tribunal refused to investigate his alibi because, according to the CBC investigation, he was considered “too valuable to alienate.” Hariri says Hassan’s loyalty is “beyond question.”

Hezbollah and its allies are also upset that the STL leaked its investigation to the Israeli Chief of Staff, General Gabi Ashkenazi, as well as the CBC, Der Spiegel, and the French newspaper Le Figaro.

It may be that Hezbollah—or a rogue element within the organization—is behind the bombing, but the STL’s consistent missteps have lost it a good deal of credibility, and many in the region view it as deeply politicized, and little more than a way for France and the U.S. to pressure Syria and Hezbollah.

In any case, the crisis in Lebanese politics is not over “terrorists” seizing a government. Hezbollah leader Hassan Nasrallah said in a speech Jan. 23 that his organization wanted a national unity government and that “We are not seeking authority.” A U.S. effort to influence who governs in Beirut has not been well received. “Mikati is not coming to power by force of a coup or by civil unrest,” said Hassan Khalil, publisher of the Lebanese daily Al-Akhbar. “Mikati is coming to power by the parliamentary system of Lebanon.”

Nor is this a proxy war between Iran and Israel. It is an attempt by Lebanese players to rebalance and reconfigure a political system that has long favored a rich and powerful minority at the expense of the majority. The U.S., France and others may want to turn this into an international crisis—Israeli Vice Prime Minister Silvan Shalom called it an “Iranian government” on Israel’s northern border— but its roots and solutions are local.

Certainly there is a role for regional powers, including Turkey, Syria, Qatar, and Saudi Arabia. But talk of proxy wars or a triumph for “terrorists” is the language of war and chaos, something the Lebanese are heartily sick of.

More of Conn Hallinan’s work can be found at Dispatches from the Edge.

Discouraging Civilian Cooperation With Counterterrorism, Part 963

Thanks to the Progressive Realist, we were alerted to this piece at UN Dispatch, where Daniel J. Gerstle writes:

The Moscow Airport Bombing, which killed 35 people on Monday and injured over 100, provides evidence yet again that the Kremlin’s security policies continue to fail.

Why are Russia’s security forces unable to protect their people? Gerstle supplies one reason:

As I wrote in my story about Chechnya and Ingusetia in the Guardian Weekly, many moderate believers in peace in the Muslim Caucasus region would be happy to support efforts to take on radicals and reduce violence, except that they fear bringing information to the authorities will be met with violent over-reaction.


I’ve experienced this personally. I was working with Chechen and Ingush humanitarians to help rebuild and restore stability in the war-ravaged region when co-workers told me a refugee camp had been attacked by the government. Ingush government security forces acting on Kremlin policy pursued a lone suspected militant into the [camp, which was inhabited by the elderly, women, and children. . . . When the suspect hid in a family shelter, security forces locked all the civilians in the camp into a laundry and washroom and then began raining mortars and bullets onto the shelter until the suspect was dead.

Enlisting civilian aid in halting terrorism isn’t only a problem in the Middle East. Apparently, forced to choose between the disease or the cure, Russians, too, are likely to choose the former.

WikiLeaks: For Norway, Oil Wealth and Humanitarianism Go Hand in Hand

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

Most variations of international-relations realism include some notion of states sacrificing ethical considerations at the altar of national interest. It’s never been completely clear, of course, whether this is a descriptive claim, or a prescriptive one — whether, in other words, the idea is that states should behave this way, or that they in fact do.

Those pondering this question ought to consider the case of Norway. In a brief but revealing cable included in the vast WikiLeaks “CableGate” trove and published last week by the Norwegian paper Aftenposten, US embassy officials report that the Nordic nation opted to divest its sovereign wealth holdings from companies violating “humanitarian principles” and “fundamental ethical norms.”

In case you are thinking that major global corporations aren’t exactly quaking in their boots at the prospect of divestiture by Norway, think again. Built on the healthy revenues of Norway’s thriving oil sector, the country’s sovereign fund invests its considerable wealth in over 7,000 corporations worldwide. In fact, the fund is the largest single investor in Europe.

To judge from the WikiLeaked cable, the combination of Norway’s financial heft with its righteous ethical stance concerned American diplomats because, well, it disproportionately affects US corporations — specifically, America’s highly profitable and politically influential arms manufacturers.

The cable notes that according to the ethical guidelines governing Norway’s sovereign wealth fund, the country is not to invest in “companies who handle ‘weapons that through their normal use may violate fundamental humanitarian principles'” which Norway’s minister of finance “identified as weapons such a [sic] cluster munitions or nuclear weapons.” According to the cable, “it is as a result of this screening that Norway divested from several American arms manufacturing companies.”

American companies are hardly alone in courting the disapproval of Norway’s ethical watchdogs. According to the embassy dispatch, the Norwegian Ethics Council, the agency tasked with reviewing the behavior of companies, “has determined that if companies build large gas pipelines in Burma they will likely be involved with the Burmese Armed Forces and thus probably undermine human rights. Thus, if a company builds a pipeline in Burma, the stage is set for possible divestiture from that company. The companies at risk include Total, Daewoo and PetroChina.”

And it’s not just the American military-industrial complex or authoritarian regimes that Norway wants nothing to do with. The country also severed ties with a global behemoth of a different kind: Walmart. Norway washed its hands of Sam Walton and friends after determining that the company “is considered to have ‘serious violations of fundamental ethical norms.'” The minister of finance made clear to the Americans and others that “exclusions only happen after the Ethical Council tries and fails to get the company to change its practices.” In the case of Walmart, the cable admits that it was not clear if Walmart ever tried to address Norway’s concerns, but posits that the Norwegians simply might have thought any effort at doing so “would be fruitless.”

In point of fact, Norway did reach out to Walmart, asking for the company’s response to allegations that the world’s largest company “consistently and systematically employs minors in contravention of international rules, that working conditions at many of its suppliers are dangerous or health-hazardous, that workers are pressured into working overtime without compensations, [and] that the company systematically discriminates against women in pay.”

The country’s central bank reported that Walmart never responded.

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