“I wasn’t a person… I was an object.”
Australian TV was thoughtful enough to ignore the embarrassing fact that at the time Lord Greville Jenner allegedly slept with young kids in his marital bed, he was also the Chairman of the BOD, a body that claims to represent British Jewry.
“We are under pressure from the Treasury to justify our budget, and commercial espionage is one way of making a direct contribution to the nation’s balance of payments” – Sir Colin McColl, former MI6 Chief
For years public figures have condemned cyber espionage committed against the United States by intruders launching their attacks out of China. These same officials then turn around and justify America’s far-reaching surveillance apparatus in terms of preventing terrorist attacks. Yet classified documents published by WikiLeaks reveal just how empty these talking points are. Specifically, top-secret intercepts prove that economic spying by the United States is pervasive, that not even allies are safe, and that it’s wielded to benefit powerful corporate interests.
At a recent campaign event in New Hampshire Hillary Clinton accused China of “trying to hack into everything that doesn’t move in America.” Clinton’s hyperbole is redolent of similar claims from the American Deep State. For example, who could forget the statement made by former NSA director Keith Alexander that Chinese cyber espionage represents the greatest transfer of wealth in history? Alexander has obviously never heard of quantitative easing (QE) or the self-perpetuating “global war on terror” which has likewise eaten through trillions of dollars. Losses due to cyber espionage are a rounding error compared to the tidal wave of money channeled through QE and the war on terror.
When discussing the NSA’s surveillance programs Keith Alexander boldly asserted that they played a vital role with regard to preventing dozens of terrorist attacks, an argument that fell apart rapidly under scrutiny. Likewise, in the days preceding the passage of the USA Freedom Act of 2015 President Obama advised that bulk phone metadata collection was essential “to keep the American people safe and secure.” Never mind that decision makers have failed to provide any evidence that bulk collection of telephone records has prevented terrorist attacks.
If American political leaders insist on naming and shaming other countries with regard to cyber espionage perhaps it would help if they didn’t sponsor so much of it themselves. And make no mistake, thanks to WikiLeaks the entire world knows that U.S. spies are up to their eyeballs in economic espionage. Against NATO partners like France and Germany, no less. And also against developing countries like Brazil and news outlets like Der Spiegel.
These disclosures confirm what Ed Snowden said in an open letter to Brazil: terrorism is primarily a mechanism to bolster public acquiescence for runaway data collection. The actual focus of intelligence programs center around “economic spying, social control, and diplomatic manipulation.” Who benefits from this sort of activity? The same large multinational corporate interests that have spent billions of dollars to achieve state capture.
Why is the threat posed by China inflated so heavily? The following excerpt from an intelligence briefing might offer some insight. In a conversation with a colleague during the summer of 2011 the EU’s chief negotiator for the Trans-Pacific Partnership, Hiddo Houben, described the treaty as an attempt by the United State to antagonize China:
“Houben insisted that the Trans-Pacific Partnership (TPP), which is a U.S. initiative, appears to be designed to force future negotiations with China. Washington, he pointed out, is negotiating with every nation that borders China, asking for commitments that exceed those countries’ administrative capacities, so as to ‘confront’ Beijing. If, however, the TPP agreement takes 10 years to negotiate, the world–and China–will have changed so much that that country likely will have become disinterested in the process, according to Houben. When that happens, the U.S. will have no alternative but to return to the WTO.”
American business interests are eager to “open markets in Asia” and “provide the United States with unprecedented opportunities for investment.” At least, that’s how Hillary Clinton phrased it back when she was the Secretary of State. China represents a potential competitor and so American political leaders need an enemy that they can demonize so that they can justify massive intelligence budgets and the myriad clandestine operations that they approve. The American Deep State wishes to maintain economic dominance and U.S. spies have been working diligently to this end.
As a result of my inquiry for the article “What you didn’t know about a doctor’s stance on the HPV vaccine,” the medical journal Lancet has now issued a correction to its publication.
The correction acknowledges formerly undisclosed financial conflicts of interest between the article’s lead author and makers of the controversial human papillomavirus (HPV) cervical cancer vaccine.
The article by Dr. Sharon J. B. Hanley defended the vaccine and criticized the Japanese government’s decision to stop promoting the vaccine amid concerns about injuries. It also implied patients are incorrectly blaming the HPV vaccine for unrelated ills.
Hanley did not disclose in the original version that she receives funding from entities supported by makers of both HPV vaccines: Gardasil and Cevarix. In addition, she has previously said the vaccine makers are among those who have paid her “lecture fees.” But Hanley implied the lecture fee disclosure was not required for the recent article because Lancet only asks publishers to account for monetary gain in the most recent three year period.
Critics said it’s an example of hidden cronyism among physicians and corporations who use medical journals to influence public policy.
Read Lancet’s correction in full.
If the neoconservatives have their way again, U.S. ground troops will reoccupy Iraq, the U.S. military will take out Syria’s secular government (likely helping Al Qaeda and the Islamic State take over), and the U.S. Congress will not only kill the Iran nuclear deal but follow that with a massive increase in military spending.
Like spraying lighter fluid on a roaring barbecue, the neocons also want a military escalation in Ukraine to burn the ethnic Russians out of the east and the neocons dream of spreading the blaze to Moscow with the goal of forcing Russian President Vladimir Putin from the Kremlin. In other words, more and more fires of Imperial “regime change” abroad even as the last embers of the American Republic die at home.
Much of this “strategy” is personified by a single Washington power couple: arch-neocon Robert Kagan, a co-founder of the Project for the New American Century and an early advocate of the Iraq War, and his wife, Assistant Secretary of State for European Affairs Victoria Nuland, who engineered last year’s coup in Ukraine that started a nasty civil war and created a confrontation between nuclear-armed United States and Russia.
Kagan, who cut his teeth as a propaganda specialist in support of the Reagan administration’s brutal Central American policies in the 1980s, is now a senior fellow at the Brookings Institution and a contributing columnist to The Washington Post’s neocon-dominated opinion pages.
On Friday, Kagan’s column baited the Republican Party to do more than just object to President Barack Obama’s Iranian nuclear deal. Kagan called for an all-out commitment to neoconservative goals, including military escalations in the Middle East, belligerence toward Russia and casting aside fiscal discipline in favor of funneling tens of billions of new dollars to the Pentagon.
Kagan also showed how the neocons’ world view remains the conventional wisdom of Official Washington despite their disastrous Iraq War. The neocon narrative gets repeated over and over in the mainstream media no matter how delusional it is.
For instance, a sane person might trace the origins of the bloodthirsty Islamic State back to President George W. Bush’s neocon-inspired Iraq War when this hyper-violent Sunni movement began as “Al Qaeda in Iraq” blowing up Shiite mosques and instigating sectarian bloodshed. It later expanded into Syria where Sunni militants were seeking the ouster of a secular regime led by Alawites, a Shiite offshoot. Though changing its name to the Islamic State, the movement continued with its trademark brutality.
But Kagan doesn’t acknowledge that he and his fellow neocons bear any responsibility for this head-chopping phenomenon. In his neocon narrative, the Islamic State gets blamed on Iran and Syria, even though those governments are leading much of the resistance to the Islamic State and its former colleagues in Al Qaeda, which in Syria backs a separate terrorist organization, the Nusra Front.
But here is how Kagan explains the situation to the Smart People of Official Washington: “Critics of the recent nuclear deal struck between Iran and the United States are entirely right to point out the serious challenge that will now be posed by the Islamic republic. It is an aspiring hegemon in an important region of the world.
“It is deeply engaged in a region-wide war that encompasses Syria, Iraq, Lebanon, the Gulf States and the Palestinian territories. It subsidizes the murderous but collapsing regime of Bashar al-Assad in Syria, and therefore bears primary responsibility for the growing strength of the Islamic State and other radical jihadist forces in that country and in neighboring Iraq, where it is simultaneously expanding its influence and inflaming sectarian violence.”
The Real Hegemon
While ranting about “Iranian hegemony,” Kagan called for direct military intervention by the world’s true hegemonic power, the United States. He wants the U.S. military to weigh in against Iran on the side of two far more militarily advanced regional powers, Israel and Saudi Arabia, whose combined weapons spending dwarfs Iran’s and includes – with Israel – a sophisticated nuclear arsenal.
Yet reality has never had much relationship to neocon ideology. Kagan continued: “Any serious strategy aimed at resisting Iranian hegemony has also required confronting Iran on the several fronts of the Middle East battlefield. In Syria, it has required a determined policy to remove Assad by force, using U.S. air power to provide cover for civilians and create a safe zone for Syrians willing to fight.
“In Iraq, it has required using American forces to push back and destroy the forces of the Islamic State so that we would not have to rely, de facto, on Iranian power to do the job. Overall, it has required a greater U.S. military commitment to the region, a reversal of both the perceived and the real withdrawal of American power.
“And therefore it has required a reversal of the downward trend in U.S. defense spending, especially the undoing of the sequestration of defense funds, which has made it harder for the military even to think about addressing these challenges, should it be called upon to do so. So the question for Republicans who are rightly warning of the danger posed by Iran is: What have they done to make it possible for the United States to begin to have any strategy for responding?”
In Kagan’s call for war and more war, we’re seeing, again, the consequence of failing to hold neocons accountable after they pushed the country into the illegal and catastrophic Iraq War by selling lies about weapons of mass destruction and telling tales about how easy it would be.
Instead of facing a purge that should have followed the Iraq calamity, the neocons consolidated their power, holding onto key jobs in U.S. foreign policy, ensconcing themselves in influential think tanks, and remaining the go-to experts for mainstream media coverage. Being wrong about Iraq has almost become a badge of honor in the upside-down world of Official Washington.
But we need to unpack the truckload of sophistry that Kagan is peddling. First, it is simply crazy to talk about “Iranian hegemony.” That was part of Israeli Prime Minister Benjamin Netanyahu’s rhetoric before the U.S. Congress on March 3 about Iran “gobbling up” nations – and it has now become a neocon-driven litany, but it is no more real just because it gets repeated endlessly.
For instance, take the Iraq case. It has a Shiite-led government not because Iran invaded Iraq, but because the United States did. After the U.S. military ousted Sunni dictator Saddam Hussein, the United States stood up a new government dominated by Shiites who, in turn, sought friendly relations with their co-religionists in Iran, which is entirely understandable and represents no aggression by Iran. Then, after the Islamic State’s dramatic military gains across Iraq last summer, the Iraqi government turned to Iran for military assistance, also no surprise.
Back to Iraq
However, leaving aside Kagan’s delusional hyperbole about Iran, look at what he’s proposing. He wants to return a sizable U.S. occupation force to Iraq, apparently caring little about the U.S. soldiers who were rotated multiple times into the war zone where almost 4,500 died (along with hundreds of thousands of Iraqis). Having promoted Iraq War I and having paid no price, Kagan now wants to give us Iraq War II. [III!]
But that’s not enough. Kagan wants the U.S. military to intervene to make sure the secular government of Syria is overthrown, even though the almost certain winners would be Sunni extremists from the Islamic State or Al Qaeda’s Nusra Front. Such a victory could lead to genocides against Syria’s Christians, Alawites, Shiites and other minorities. At that point, there would be tremendous pressure for a full-scale U.S. invasion and occupation of Syria, too.
That may be why Kagan wants to throw tens of billions of dollar more into the military-industrial complex, although the true price tag for Kagan’s new wars would likely run into the trillions of dollars. Yet, Kagan still isn’t satisfied. He wants even more military spending to confront “growing Chinese power, an aggressive Russia and an increasingly hegemonic Iran.”
In his conclusion, Kagan mocks the Republicans for not backing up their tough talk: “So, yes, by all means, rail about the [Iran] deal. We all look forward to the hours of floor speeches and campaign speeches that lie ahead. But it will be hard to take Republican criticisms seriously unless they start doing the things that are in their power to do to begin to address the challenge.”
While it’s true that Kagan is now “just” a neocon ideologue – albeit one with important platforms to present his views – his wife Assistant Secretary of State Nuland shares his foreign policy views and even edits many of his articles. As she told The New York Times last year, “nothing goes out of the house that I don’t think is worthy of his talents. Let’s put it that way.” [See Consortiumnews.com’s “Obama’s True Foreign Policy ‘Weakness.’”]
But Nuland is a foreign policy force of her own, considered by some in Washington to be the up-and-coming “star” at the State Department. By organizing the “regime change” in Ukraine – with the violent overthrow of democratically elected President Viktor Yanukovych in February 2014 – Nuland also earned her spurs as an accomplished neocon.
Nuland has even outdone her husband, who may get “credit” for the Iraq War and the resulting chaos, but Nuland did him one better, instigating Cold War II and reviving hostilities between nuclear-armed Russia and the United States. After all, that’s where the really big money will go – toward modernizing nuclear arsenals and ordering top-of-the-line strategic weaponry.
A Family Business
There’s also a family-business aspect to these wars and confrontations, since the Kagans collectively serve not just to start conflicts but to profit from grateful military contractors who kick back a share of the money to the think tanks that employ the Kagans.
For instance, Robert’s brother Frederick works at the American Enterprise Institute, which has long benefited from the largesse of the Military-Industrial Complex, and his wife Kimberly runs her own think tank called the Institute for the Study of War (ISW).
According to ISW’s annual reports, its original supporters were mostly right-wing foundations, such as the Smith-Richardson Foundation and the Lynde and Harry Bradley Foundation, but it was later backed by a host of national security contractors, including major ones like General Dynamics, Northrop Grumman and CACI, as well as lesser-known firms such as DynCorp International, which provided training for Afghan police, and Palantir, a technology company founded with the backing of the CIA’s venture-capital arm, In-Q-Tel. Palantir supplied software to U.S. military intelligence in Afghanistan.
Since its founding in 2007, ISW has focused mostly on wars in the Middle East, especially Iraq and Afghanistan, including closely cooperating with Gen. David Petraeus when he commanded U.S. forces in those countries. However, more recently, ISW has begun reporting extensively on the civil war in Ukraine. [See Consortiumnews.com’s “Neocons Guided Petraeus on Afghan War.”]
So, to understand the enduring influence of the neocons – and the Kagan clan, in particular – you have to appreciate the money connections between the business of war and the business of selling war. When the military contractors do well, the think tanks that advocate for heightened global tensions do well, too.
And, it doesn’t hurt to have friends and family inside the government making sure that policymakers do their part to give war a chance — and to give peace the old heave-ho.
[For more on this topic, see Consortiumnews.com’s “A Family Business of Perpetual War.”]
Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated Press and Newsweek in the 1980s. You can buy his latest book, America’s Stolen Narrative, either in print here or as an e-book (from Amazon and barnesandnoble.com).
Methuen, MA — In what can only be described as a “see, I told you so” moment for those in the police accountability sector, a police department in Massachusetts has been caught in a perfidious hiring scheme. They were giving preference to job candidates who said they wouldn’t arrest fellow cops.
In other words, the Methuen police department was only hiring cops who promised to be corrupt and cover for their fellow corrupt officers.
According to the Boston Globe,
A Civil Service Commission official wrote that he was dismayed to learn that the city gave higher points to applicants who said they wouldn’t arrest a family member or an officer they knew, while docking points from who said they would.
“The City turned the interview process upside down,” wrote Christopher C. Bowman, chairman of the Civil Service Commission, in a July 9 decision. “There is simply no valid basis to award the highest points to candidates who express a willingness to apply one set of rules to strangers and another set of rules to friends and family members.”
Ah, but there is a valid basis to award applicants who promise not arrest their fellow cop. Ever hear of the thin blue line?
In police departments across the country, cops who go against this standard and try to hold their fellow officers accountable, are often the subject of demotions, firings, and have even had their lives threatened.
Of course, the Methuen police are spinning this practice of seeking out those who would protect their fellow law-breaking officers by saying that it helps them assess the honesty of candidates.
“I’m looking for some bearing, some honesty, and how quickly the person can think on their feet,” Police Lieutenant Michael Pappalardo testified.
To Lieutenant Pappalardo, it is called ‘honesty’ when police officers look the other way as their fellow officers break the law. How valiant and noble of them!
“Some of the interview panelists actually heaped high praise on those candidates who stated that they would arrest a stranger but not arrest a friend or family member based on the same facts, citing their understanding of ‘discretion,’” Bowman wrote in his decision.
This special treatment for cops who get caught breaking the law and are not charged is called “professional courtesy.” As the Globe noted in December, it is, in fact, quite rare for cops to be charged when they are caught drinking and driving.
“Every police officer who testified before the commission testified that the routine and customary practice when a stop is made on a fellow police officer, is to show professional courtesy and not call in the stop,” the report said.
The hiring practice of Massachusetts police cherry picking cops who won’t hold their fellow cops accountable seem to have been particularly effective. Cops can rape, kill, drink and drive, steal, and commit a myriad of other crimes and the majority of the time they receive but a small slap on the wrist.
The public recognition of hiring those who will simply act as another brick in the blue wall gives us insight into how and why it is so rare and difficult for police officers to prevent corruption in their own departments.
The next time you see a cop, like Timothy Boling of the LMPD, keep his job after getting caught driving drunk in his police cruiser, or firing at SWAT officers during a standoff in which he’s the bad guy — you’ll know exactly why.
Or, the next time you see a cop, like Officer Dale Reising, keep his job after being caught stealing cars, you’ll know that it’s not the criminal’s fault, he’s just receiving what’s known in the biz as ‘professional courtesy.’
ALBUQUERQUE, N.M. – Standing next to a 12-foot nuclear bomb that looks more like a trim missile than a weapon of mass destruction, engineer Phil Hoover exudes pride. “I feel a real sense of accomplishment,” he said.
But as Hoover knows, looks can be deceiving. He and fellow engineers at Sandia National Laboratories have spent the past few years designing, building and testing the top-secret electronic and mechanical innards of the sophisticated B61-12.
Later, when nuclear explosives are added at the federal Pantex Plant near Amarillo, Texas, the bomb will have a maximum explosive force equivalent to 50,000 tons of TNT – more than three times more powerful than the U.S. atomic bomb dropped on Hiroshima, Japan, 70 years ago this August that killed more than 130,000 people.
The U.S. government doesn’t consider the B61-12 to be new – simply an upgrade of an existing weapon. But some contend that it is far more than that.
Hans Kristensen, a nuclear weapons expert at the nonpartisan Federation of American Scientists in Washington, is resolute that the bomb violates a 2010 Obama administration pledge not to produce nuclear weapons with new military capabilities.
“We do not have a nuclear guided bomb in our arsenal today,” Kristensen said. “It is a new weapon.”
Kristensen’s organization was formed in 1945 by nuclear scientists who wanted to prevent nuclear war. And it’s not the maximum force of the B61-12 that worries him the most on that front.
Instead, he says he fears that the bomb’s greater accuracy, coupled with the way its explosive force can be reduced electronically through a dial-a-yield system accessed by a hatch on the bomb’s body, increases the risk that a president might consider it tame enough for a future conflict.
Congress shared similar concerns in rejecting other so-called low-intensity nuclear weapons in the past. But most of the national criticism of this bomb has focused on its price tag. After it goes into full production in 2020, taxpayers will have spent about $11 billion to build 400 B61-12 bombs. That sum is more than double the original estimate, making it the most expensive nuclear bomb ever.
To Kristensen and others, if President Barack Obama’s pledge was serious, the bomb shouldn’t exist at any price.
How the B61-12 entered the U.S. arsenal of weapons is a tale of the extraordinary influence of the “nuclear enterprise,” as the nuclear weapons complex has rebranded itself in recent years. Its story lies at the heart of the national debate over the ongoing modernization of America’s nuclear weapons, a program projected to cost $348 billion over the next decade.
This enterprise encompasses defense contractors, including the subsidiary of Lockheed Martin Corp. that runs the Sandia labs for the government, as well as the U.S. Department of Energy and the nuclear weapons-oriented wings of the U.S. military – particularly the Air Force and Navy. With abundant jobs and dollars at stake, the nuclear enterprise is backed by politicians of all stripes.
A review of several thousands of pages of congressional testimony, federal budgets and audit reports, plus an analysis of lobbying and campaign contribution data, shows that the four defense contractors running the two New Mexico nuclear weapons labs, Sandia and Los Alamos National Laboratory, enjoy a particularly symbiotic relationship with Congress.
That relationship begins with money.
Since 1998, these four contractors have contributed more than $20 million to congressional campaigns around the nation. Last year alone, they spent almost $18 million lobbying Washington to ensure that funding for nuclear weapons projects continues even as nuclear stockpiles shrink.
Sheila Krumholz, executive director of the Center for Responsive Politics, said the outlay is a bargain considering what’s at stake for the contractors.
“It’s an insignificant cost of doing business relative to the potential income from these contracts,” she said.
In arid, impoverished New Mexico, the nuclear weapons enterprise thrives on particularly close connections between business interests and politicians, doors revolving in both directions and successful efforts to minimize oversight of corporate behavior.
Republican Heather Wilson left Congress in January 2009 after a decade as a New Mexico congresswoman. She had lost her bid to jump up to the Senate seat vacated by her mentor, Pete Domenici.
After losing, she set up a consulting business and, within days of leaving office, Wilson – an Air Force veteran – was consulting mainly for the two New Mexico weapons labs.
Over the next two years, Wilson was paid more than $400,000 by Lockheed’s Sandia Corp. and the consortium of contractors running the Los Alamos lab – to help them extend and expand federal contracts and get more business, according to the first of two scathing inspector general reports. Eventually, the contractors were forced to reimburse the government for the federal funds they used to pay Wilson for her advocacy work.
Asked about the significance of that outcome, the Lockheed communications office responded to Reveal via email: “With regards to the inspector general’s report, Sandia has cooperated with the Inspector General’s review and will continue to do so.” Wilson declined to comment.
Wilson’s support for the labs persisted after she left the consulting business in early 2012 and ran for the Senate again. When the Obama administration cut funding for a Los Alamos lab project, Wilson told the Albuquerque Journal : “Not only is this bad for our country and its national security, it’s bad for New Mexico and our economy.”
For New Mexico, the second-poorest state after Mississippi, nuclear weapons and military bases are undeniably a lifeblood. Out of the $27.5 billion in federal dollars poured into the state in 2013, according to a Pew Charitable Trusts study, about $5 billion went to Los Alamos, Sandia and the Waste Isolation Pilot Plant, the nuclear weapons waste facility east of Carlsbad, where accidents last year exposed dozens of workers to radiation.
Billions more were spent on the state’s four main military bases. The city of Alamogordo, next to Holloman Air Force Base and the Army’s White Sands Missile Range – home of the Trinity Site, where the first atomic bomb was tested in July 1945 – benefits from $450 million a year in military spending, according to the local chamber of commerce.
The labs and bases, and the defense contractors that run or contract with them, also are an integral part of New Mexico’s economic fabric. Los Alamos, Sandia and White Sands are three of the state’s top 10 employers, together providing about 24,000 jobs.
New Mexico politicians helping the labs has a long history in the state, said local political analyst Joe Monahan. It dates back to World War II and the development of the first nuclear bomb under Los Alamos Director J. Robert Oppenheimer.
“The economic impact is the driver of the politics,” Monahan said.
The engineers behind the weapons
At Sandia labs today, engineers such as Hoover and his boss Jim Handrock, director of weapons system engineering, populate the well-paid professional ranks. They turn ideas into weapons.
Nuclear specifications come to them from the two national security physics labs – Los Alamos and Lawrence Livermore National Laboratory in California. They marry those specifications to Pentagon military requirements and design bombs and missile warheads to carry nuclear explosives.
The secrecy of the work is so high that no outside cellphones may be brought into the building, even by Sandia’s public affairs escort. Hoover and Handrock take off their badges before being photographed. National security is their mantra, a value that gained urgency following recent criticism by the National Nuclear Security Administration that Sandia experienced 190 “security incidents” in fiscal year 2014 and the agency’s proposed $577,500 fine for Sandia’s earlier mishandling of classified information.
“We need to make sure that should the president of the United States choose to use the weapons, they will always work, but they will never work in any other situation,” Handrock said.
He joined Sandia labs in 1987 after earning his doctorate in mechanical engineering at the University of Illinois. He has been with the company ever since – first in its small California lab and then in Albuquerque – aside from a several-month special assignment with an Air Force general in Washington in 2008-09.
When Sandia hired Handrock, it was run by a Western Electric Co. subsidiary. He got a new employer in 1993, when Martin Marietta Corp. acquired Sandia Corp. Two years later, Lockheed Corp. and Martin Marietta merged to form the nation’s largest defense contractor.
Similarly influential and powerful companies run New Mexico’s other nuclear facilities. Bechtel Corp., URS Corp. and The Babcock & Wilcox Co. partner with the University of California, Berkeley to operate Los Alamos. URS and Babcock & Wilcox, along with Areva Inc. North America, an offshoot of a large French nuclear company, also manage the Waste Isolation Pilot Plant.
Those four contractors and Areva are heavy hitters in Washington, with a combined 164 lobbyists at their disposal – 70 percent of them former members of Congress, congressional aides or federal officials, according to Reveal’s analysis of Center for Responsive Politics data.
“An army of lobbyists is great,” the center’s Krumholz said. “But an army of insiders who know how to navigate the halls of power, can socialize with politicians on weekends and ultimately play the system like a violin is so much better.”
Lockheed said it simply needs to get its perspectives across to federal officials.
“We routinely communicate our point of view with members of Congress and customers who oversee our programs as well as leaders of congressional districts where Lockheed Martin has a significant business presence,” the company said in its emailed response.
Come campaign season, the contractors remember the New Mexico delegation. In the past two decades, the contractors’ political action committees have donated $430,000 to the state’s senators and members of Congress. Hundreds of company officials chipped in another $350,000. Wilson received more than $250,000 of that between 1998 and 2012, the year she ran for the Senate again – and lost again.
New Mexico senators advocate for labs
New Mexico’s current senators are Democrats Tom Udall and Martin Heinrich. Contributions to their campaigns from defense contractors and company officials fall far short of Wilson’s – less than $100,000 each since 1998. Nonetheless, the two play important roles, sitting on subcommittees that determine funding and policy for the nuclear labs.
Both voted for a December budget bill that funds the labs even though it also waters down campaign finance controls and Wall Street reforms they had embraced.
“Udall and Heinrich are both incredibly liberal in their own way on some issues,” said New Mexico-based political analyst Heath Haussamen. “But they still have to balance that with what people in New Mexico want as far as those jobs and research.”
Jennifer Talhelm, Udall’s spokeswoman, described the budget vote as difficult, given the conflicting priorities
“There’s no question that the labs are a major portion of the economy, especially in Albuquerque and northern New Mexico,” she said. “They employ thousands of people.”
She said Udall also has been a strong supporter of the B-61 bomb program both because of the jobs it brings to New Mexico and its role in national security, though she emphasized that he does not get involved in contract funding decisions.
“You could say he is a big part of why the B-61 program still exists,” Talhelm said.
Heinrich, while a congressman from 2009 to 2013, routinely pressed the Obama administration and Republican leaders to spare the labs from budget cuts and government shutdowns. After he joined the Senate in 2013, he advocated for the extension of a Sandia Corp. federal contract during confirmation hearings for a new energy secretary, Ernest Moniz.
“It is now almost a certainty that the current contract will need to be extended further,” Heinrich wrote in a question submitted to the nominee. “This protracted uncertainty, is beginning to impact Sandia’s leadership and ability to fill key management positions.”
In an email to Reveal, Heinrich’s office said the senator is committed to making sure the labs get full funding.
“The labs also strengthen New Mexico’s economy by providing high-paying, high-skilled technology jobs in our state and Senator Heinrich will always fight to protect their missions,” the statement said.
Another New Mexico lawmaker, Democratic Rep. Ben Ray Luján, formed a congressional caucus with three other representatives in 2012 specifically to look out for the interests of the national labs. He has received $32,000 in donations since 2008 from the contractors’ PACs and company officials. Luján’s office did not respond to requests for comment.
The contractors and labs gain influence and access in other ways as well.
Pete Lyons, a top science adviser to Domenici when he was senator in the mid-1990s, came from the Los Alamos lab, where he was an associate director of various programs. Lyons initially was kept on the Los Alamos payroll and assigned to Domenici as a congressional fellow, according to the news release published when he was named a top Energy Department official.
The Los Alamos lab provided the last two science advisers to New Mexico’s governor, too. Current Gov. Susana Martinez’s office did not respond to requests for comment.
Haussamen, the analyst, said such cozy business-political arrangements are not unusual in New Mexico. “Our state ethics laws are weaker than the federal ones. It’s easier to move back and forth between jobs on the state level.”
Energy Department faces congressional criticism
At Sandia, sand-colored office buildings and an array of laboratories and test facilities dot a 22-square-mile area of Kirtland Air Force Base. Most are identified only by numbers. Building 898 is an exception, its big silver letters spelling out: Pete V. Domenici National Security Innovation Center.
Domenici was a patron of the New Mexico weapons labs and renowned as the Senate’s strongest champion of nuclear weapons for more than three decades, until his 2009 retirement.
His support was crucial in the 1990s after the Cold War ended and the United States and Russia focused on reducing their huge nuclear weapons arsenals.
At the time, many analysts – including Ash Carter, then an assistant secretary of defense and now the secretary – challenged the need for the traditional triad of nuclear weapons delivery systems, which relies on airplanes, intercontinental ballistic missiles and submarines. Many considered nuclear-armed submarines, invulnerable when launched, sufficient to deter the Russians or anyone else from launching a first strike.
During the Cold War, the weapons labs had designed and engineered new nuclear bomb and warhead models almost as fast as Detroit released new car models. After the 1992 U.S. moratorium on explosive nuclear testing, they were instructed to shift their focus to keeping weapons in the nuclear stockpile reliable.
The change at the labs was just one challenge for the Energy Department, which had been reeling since the 1980s from charges that it was mismanaging the nuclear weapons complex – highlighted by the extraordinary FBI raid on the Rocky Flats plutonium bomb factory near Denver in 1989.
Congressional criticism grew as the department closed production plants, shrank its bureaucracy and cut jobs.
In 1999, in the wake of a well-publicized but ultimately unsubstantiated security breach at Los Alamos, Domenici championed a bill to create a new agency to oversee nuclear plants and labs: the National Nuclear Security Administration. An independent agency would give the nuclear enterprise more autonomy.
Domenici tangled with then-Energy Secretary Bill Richardson, a Democrat and former New Mexico congressman, over the department’s role. Richardson, who would become New Mexico’s governor four years later, argued that the Energy Department was addressing its problems and that a new agency was unnecessary.
In the end, a compromise was reached. The new agency became semiautonomous, with its own bureaucracy but Energy Department oversight.
Domenici declined to comment. Robert Alvarez, then a senior policy adviser to Richardson, told Reveal that even though Domenici succeeded in establishing the national nuclear agency, “it didn’t work out so well for Domenici, because he had an archenemy running the House energy and water subcommittee – David Hobson.”
Hobson was a conservative Ohio Republican who shot down several nuclear weapons enterprise proposals before leaving office. “He didn’t have any (Department of Energy) facilities in his backyard, and he was basically being fiscally responsible,” Alvarez said.
Foreshadowing the current B61-12 program, the national nuclear agency proposed new warheads and a new plant at Los Alamos to replace Rocky Flats, the by-then-closed bomb factory near Denver. Hobson led a congressional charge that at first seemed to derail the proposal.
“We cannot advocate for nuclear nonproliferation around the globe and pursue more usable nuclear options here at home,” he said in August 2004.
But Hobson’s concerns proved no match for the nuclear enterprise.
Defense contractors assail oversight agency
Eventually, the national nuclear agency came under fire from the defense contractors, which claimed that it was stifling and nitpicking by, for instance, micromanaging lab decisions.
The Energy Department’s inspector general, Gregory Friedman, laid out the problems to a House oversight committee in September 2012. The lab directors complained that “the effectiveness and efficiency of their operations” were being impeded, he told the committee.
“The heart of these assertions,” he continued, “is that oversight of contractors has been excessive, overly prescriptive and burdensome.”
Three months later, Tom Udall – the New Mexico senator – co-sponsored an amendment to the defense budget with Sen. Jon Kyl, R-Ariz., to create a 12-member congressional advisory panel to overhaul lab oversight. Jennifer Talhelm, Udall’s spokeswoman, said he wanted to address what he considered legitimate concerns about oversight.
The measure passed as part of the defense spending bill, the piece of legislation most lobbied by Lockheed that year. Half of the panel members eventually appointed by Congress had connections to the nuclear labs.
One of the panel’s co-chairmen was the former chairman of Lockheed, and its other co-chairman was on the board of Babcock & Wilcox. Heather Wilson was appointed, too, even as the audits scrutinizing her consulting work continued.
Others included a former Los Alamos executive director, a member of the Sandia Corp. board and a former California congresswoman, Ellen Tauscher, a member of the Los Alamos Board of Governors.
As the panel deliberated over the next year and a half, Lockheed and Babcock & Wilcox together spent $16 million lobbying the federal government and donated $3 million to members of Congress.
The panel’s report, issued late last year, blasted the national nuclear agency, calling it dysfunctional because, among other things, it lacked “proven management practices.” It said the agency’s oversight of the labs had generated “misunderstanding, distrust, and frustration.” The report called for the Energy Department to reduce the agency’s lab audits, inspections and general oversight.
Energy Department officials did not respond to requests for information on whether any changes have occurred.
Inspector general’s second audit
While that panel was finishing up its report, a second special audit of Wilson’s contract work by the inspector general delved into the question of whether taxpayer dollars had been used illegally for lobbying. In outlining its findings, the audit offered a rare behind-the-scenes look at pressure from Lockheed and Sandia officials to get their federal contract extended without an open bidding process.
In September 2012, the Sandia labs’ federal contract had been set to expire, and the Energy Department already had signaled that it would open it for bids.
Three years earlier, the audit found, a team of Lockheed and Sandia officials had come up with a detailed plan that included enlisting the New Mexico congressional delegation to pressure then-Energy Secretary Steven Chu to extend the contract by lobbying the chairmen and members of key committees.
One memo advised Sandia officials to tell members of the New Mexico delegation to contact Chu directly and let him know that they expect “a contract extension and will follow the matter with personal interest,” the inspector general wrote.
Another memo described a meeting with the national nuclear agency administrator. It said the administrator told company officials that he “has no problem interfacing with Congress and committees on the matter of a Sandia contract extension.”
Other documents showed that one Lockheed official had sent a memo to Chu saying the company wanted the contract extended under the “same terms and conditions,” and another official recommended “if the answer was not in the affirmative, then Lockheed Martin/Sandia should seriously consider initiating some heavy Congressional support.”
Sandia also hired two former employees of the National Nuclear Security Administration as consultants, at least one of whom previously had oversight authority at the lab, according to the full version of the inspector general’s internal report. Their names were redacted from the report, released to The Center for Public Integrity earlier this month.
The investigation also unearthed notes from a meeting during which Wilson’s firm advised that “Lockheed Martin should aggressively lobby Congress, but keep a low profile.”
The contract, giving Sandia Corp. control of an annual lab budget of about $2.4 billion, was extended four times, initially for a year and then twice more for three months each. Finally, in March 2014, it was extended for two more years with the possibility of a third year.
The approach was nothing new: The inspector general unearthed an earlier Sandia Corp. memo that said similar tactics had been used in 2003 to secure a no-bid extension.
The inspector general’s report also exposed details of the relationship between the labs and New Mexico politicians, noting that the delegation routinely received legislative wish lists from Sandia.
“Specifically, each year the New Mexico Congressional Delegation requested that SNL (Sandia National Laboratories) provide them with information on ongoing and future national security and science research,” the report said. “Included in this package was a ‘Next Steps’ or ‘What Could Congress Do’ section, which sometimes included funding requests or expressed an opinion on a Congressional matter.”
This, the inspector general said, could be construed as using federal funds for lobbying activity.
After the audit’s release in November, Wilson issued a statement denying that she lobbied any federal officials to extend the contract and called the report wrong.
Sandia Corp. said it took “these allegations seriously” and was confident it could work out the issues with the Energy Department.
But in its email to Reveal, the Lockheed communications department said such efforts are part of its job. “Sandia routinely provides the New Mexico delegation with information concerning the labs,” it responded. “As a federally funded research and development center, an aspect of Sandia’s performance of its mission encompasses providing information to the federal government including Congress.”
Initially, the inspector general’s report stirred up some public furor, recalled political analyst Joe Monahan, but it quickly died down.
“There is a long leash on this stuff because, again, money talks,” he said. “You’re talking about billions of dollars, thousands of employees, and no one wants to see the egg crack.”
U.S., Russia agree to reduce stockpile
The nuclear weapons enterprise has had plenty at stake in recent years.
In Prague in 2009, Obama called for the elimination of nuclear weapons. A year later, he and Russian leader Dmitry Medvedev signed the New Strategic Arms Reduction Treaty calling for each country to reduce its deployed strategic warheads to 1,550 by 2018, down from estimates of more than 1,900 for the United States and more than 2,400 for Russia.
Ratification of the treaty required a two-thirds majority vote in the Senate, which followed in December 2010 after considerable debate and negotiation. Defense hawks and their allies exacted a price for the treaty vote: an Obama administration agreement to support $85 billion in nuclear weapons modernization over a decade.
That number has more than quadrupled since to $348 billion, according to the Congressional Budget Office. Other studies say the cost of nuclear weapons could top $1 trillion over the next 30 years, not counting hundreds of billions of dollars for related projects, such as the cleanup of former nuclear weapons production sites.
Sandia and Los Alamos benefited greatly from the Capitol Hill bargaining. Ten of the 19 modernization capital projects approved by the national nuclear agency and 15 of the 36 proposed capital projects for the nuclear security system are based at the two labs, according to the Government Accountability Office.
The B61-12 bomb’s Life Extension Program at Sandia is among those projects. This year, the $643 million for that program accounts for more than a third of Sandia’s $1.8 billion Energy Department budget.
“It’s the largest nuclear weapons program we have going on at Sandia currently,” said Jim Handrock, the lab’s weapons systems director.
But the program hasn’t experienced perfectly smooth sailing in Congress.
A 2012 Pentagon study concluded that the B61-12 bombs would cost $10.4 billion for development and production, excluding at least $1 billion for the new tail kit, more than double the national nuclear agency’s original estimate. That overrun influenced the Senate Appropriations Committee’s vote the following year to chop by one-third the Obama administration’s $537 million budget request for fiscal year 2014, over strong objections from committee member Udall.
House-Senate negotiations on the omnibus budget bill at the end of 2013 restored the full amount for the B61-12. Udall trumpeted the outcome.
“I’m also very pleased that we were able to reverse an attempt to cut funding for the B61” Life Extension Program, his news release said. “A cut would have harmed our effort to keep our nuclear weapons stockpile safe and secure, and it would have put jobs at risk at our national labs.”
Concern over bomb’s capabilities
The bomb’s name, B61-12, reflects its position as the 12th model of what the government calls a family of bombs. It is descended from the first U.S. hydrogen bomb tested in the Marshall Islands in 1952, which used a plutonium bomb to detonate a thermonuclear explosion 520 times more powerful than the plutonium bomb tested seven years earlier at the remote Trinity Site south of Albuquerque.
Today’s stockpile contains five B61 models, including three tactical versions intended for short-range warfighting. The new B61-12 will consolidate those three models and one more highly explosive strategic bomb, using the nuclear package from one of the existing models.
Unlike the free-fall gravity bombs it will replace, the B61-12 will be a guided nuclear bomb. Its new Boeing Co. tail kit assembly enables the bomb to hit targets precisely. Using dial-a-yield technology, the bomb’s explosive force can be adjusted before flight from an estimated high of 50,000 tons of TNT equivalent force to a low of 300 tons.
And that’s where the debate over the B61-12 moves beyond cost overruns, zeroing in on the granular details of its capabilities.
Congress rejected funding for similar nuclear weapons at least twice during the past 25 years, saying enhanced precision coupled with less force would lead to less collateral damage – such as radiation fallout that could harm allies – and thus a greater likelihood that the military would recommend that the president use the weapons.
Obama, following the lead of Presidents Bill Clinton and George W. Bush, laid out the role of nuclear weapons in U.S. strategy in an April 2010 document entitled the “Nuclear Posture Review Report.” It stated that the fundamental role of nuclear forces is to deter nuclear attack.
“Indeed, as long as nuclear weapons exist, the United States will sustain safe, secure, and effective nuclear forces,” the review said. “These nuclear forces will continue to play an essential role in deterring potential adversaries and reassuring allies and partners around the world.”
Obama pledged that the United States would produce no new nuclear warheads and that life extension programs of existing weapons would not provide “new military capabilities.”
Officials from the Obama administration, Pentagon and Energy Department continue to argue that the B61-12 stays within the bounds of that pledge by modernizing an aging family of bombs and in the process ensuring a reliable nuclear arsenal to scare off adversaries.
Air Force Gen. C. Robert Kehler, then the commander of the U.S. Strategic Command, testified about the B61-12 program at an October 2013 congressional subcommittee hearing.
“This consolidation offers opportunities for cost savings and significant stockpile reductions while maintaining U.S. national security objectives and extended deterrence commitments,” Kehler said.
After that hearing, subcommittee member Rep. Jim Cooper, D-Tenn., submitted a written question to Assistant Secretary of Defense Madelyn R. Creedon, who also had testified at the hearing. He noted that the administration had pledged to add no new nuclear weapon capabilities.
“Specifically on the B61, the lower yield is being compensated by higher accuracy provided by a new tailkit … would this provide new capability?” Cooper asked.
Creedon responded in writing that “the B61-12 tail-kit assembly (TKA) does not provide a new capability to the weapon. The TKA simply improves the reliability of the bomb.”
Today, Cooper indicates he was satisfied with that response.
“Ms. Creedon is a dedicated public servant who testifies before our subcommittee in both public and classified hearings,” he told Reveal in an email. “The transition of the B-61 from a gravity bomb to one with a tail kit should make it a more reliable weapon without changing its basic nature.”
Back at Sandia, engineer Phil Hoover is the one in charge of integrating the tail kit instruments with those inside the footwide weapon’s body, which includes more than 30 major components such as radar along with thousands of other parts.
“The tail kit provides the ability to get more accuracy,” he said. “We’re reducing the potential for collateral damage.” This kind of guided system, he continued, is “consistent with our digital aircraft today.”
High on the list of aircraft that could carry the bomb is Lockheed’s new F-35 fighter jet. This stealth plane, designed to evade radar, is a $400 billion weapon delivery system that has been plagued by technical problems and cost overruns.
The idea of stealth fighters carrying B61-12 nuclear bombs worries some outside experts, including Hans Kristensen of the Federation of American Scientists.
“If the Russians put out a guided nuclear bomb on a stealthy fighter that could sneak through air defenses, would that add to the perception here that they were lowering the threshold for the use of nuclear weapons?” he asked. “Absolutely.”
Hoover said questions about warfighting scenarios involving the B61-12 are not his purview.
“It’s something the Air Force and the warfighters should address,” he said. “It’s really not for us to comment on.”
Hoover referred Reveal to the U.S. Strategic Command, or STRATCOM, a command of the Defense Department that is in charge of nuclear weapons. After requesting written questions, STRATCOM referred Reveal to the Air Force.
Maj. Kelley Jeter, an Air Force spokeswoman, declined Reveal’s interview request but agreed to answer questions via email. Asked what effect stealth fighter jets carrying low-yield B61-12 nuclear bombs would have on an adversary during a conflict, she responded: “To effectively deter potential adversaries, the weapons and platforms fielded by the Air Force must credibly provide options for the President to demonstrate U.S. resolve and support deterrence options for the President to deal with emerging crises.”
But, she added, “the B61-12 will not provide new military capabilities.”
This story was edited by Amy Pyle and copy edited by Sheela Kamath and Nikki Frick.
Len Ackland can be reached at firstname.lastname@example.org, and Burt Hubbard can be reached at email@example.com.
In recent weeks, there has been much discussion about what to do about Greece. These questions become all the more relevant as the country attempts to float a multibillion-euro bond issue later this week. The Financial Times has called this fund-raising a critical test of Greece’s credibility in financial markets as it battles with a spiraling debt crisis and strikes. The “credibility” of the financial markets is an important consideration in a country which has functionally ceded its sovereign ability to create currency, and thus remains dependent on the vagaries of the very banking institutions which helped create the mess in the first place.
Maybe Greece should secede from the European Union and default on its euro debt? Or go hat-in-hand to the International Monetary Fund (IMF) to beg for loans while promising to clean up its act? Or to the stronger Euro nations, hoping for charitable acts of forgiveness? Unfortunately, all of these options are going to mean a lot of pain and suffering for an economy that is already sinking rapidly.
And it is questionable whether any of them provide long term viable answers. Polls show that given the perception of fiscal excesses of Greece and the other countries on the periphery, the public in Germany opposes a bailout of these countries at its expense by a significant margin. Periphery countries such as Ireland that have already undertaken harsh austerity measures also oppose the notion of a bailout, despite-nay, because of — the tremendous pain already inflicted on their own respective economies (in Ireland’s case, the banks are probably insolvent as well). The IMF route is also problematic, given that Greece probably doesn’t qualify under normal IMF standards, and many euro zone nations would find this unpalatable from an ideological standpoint, as it would mean ceding control of EU macro policy to an external international institution with strong US influence.
The Wall Street Journal recently highlighted an article by Simon Johnson and Peter Boone, lamenting that the demands being foisted on Greece and other struggling Euronations would “massively curtail demand, lower wages and reduce the public sector workforce. The last time we saw this kind of precipitate fiscal austerity — when nations were tied to the gold standard — it contributed to the onset of the Great Depression in the 1930s”. Where we disagree with Johnson and Boone is the suggestion that the IMF be brought in to craft a solution. Any help from this organization will come with tight strings attached — indeed, with a noose around Greece’s neck. Germany and France would be crazy to commit their scarce euros to a bail-out of Greece since they face both internal threats from their own taxpayers and external threats from financial vampires who are looking for yet another nation to attack.
Here’s a more appropriate action: declare war on Goldman Sachs and other global financial firms that created this mess. Send the troops, the planes, the tanks, and the ships. Attack every outpost of the saboteurs on European soil. Blockade the airports and ports. Make Wall Street traders and CEOs fear for their lives, or at least for their freedom to travel. Build some Guantanamo-like facility to hold these enemy financial combatants until they can be tried, convicted, and properly punished.
OK, if a literal armed attack on Goldman is too far-fetched, then go after the firm using the full force of the regulatory and legal systems. Close the offices and go through the files with a fine-tooth comb. Issue subpoenas to all non-clerical staff for court appearances. Make the internal emails public. Post the names of all managers and traders on Interpol. Arrest anyone who tries to board a plane, train, or boat; confiscate their passports; revoke their visas and work permits; and put a hold on their bank accounts until culpability can be assessed. Make life at least as miserable for them as it now is for Europe’s tens of millions of unemployed workers.
We know that the Obama administration will not go after the banksters that created this global financial calamity. It has been thoroughly co-opted by Wall Street’s fifth column-who hold most of the important posts in the administration. Europe has even more at stake and has shown somewhat more willingness to take action. Perhaps our only hope for retribution lies there.
Some might believe the term “banksters” is too mean. Surely Wall Street was just doing its job-providing the financial services wanted by the world. Yes, it all turned out a tad unfortunate but no one could have foreseen that so many of the financial innovations would turn into black swans. And hasn’t Wall Street learned its lesson and changed its practices? Fat chance. We know from internal emails that everyone on Wall Street saw this coming-indeed, they sold trash assets and placed bets that they would crater. The crisis was not a mistake-it was the foregone conclusion. The FBI warned of an epidemic of fraud back in 2004-with 80% of the fraud on the part of lenders. As Bill Black has been warning since the days of the Saving and Loan crisis, the most devastating kind of fraud is the “control fraud”, perpetrated by the financial institution’s management. Wall Street is, and was, run by control frauds. Not only were they busy defrauding the borrowers, like Greece, but they were simultaneously defrauding the owners of the firms they ran. Now add to that list the taxpayers that bailed out the firms. And Goldman is front and center when it comes to bad apples.
Lest anyone believe that Goldman’s executives were somehow unaware of bad deals done by rogue traders, William Cohan reports that top management unloaded their Goldman stocks in March 2008 when Bear crashed, and again when Lehman collapsed in September 2008. Why? Quite simple: they knew the firm was full of toxic waste that it would not be able to continue to unload on suckers-and the only protection it had came from AIG, which it knew to be a bad counter-party. Hence on March 19, Jack Levy (co-chair of M&As) sold over $5 million of Goldman’s stock and bet against 60,000 more shares; Gerald Corrigan (former head of the NY Fed who was rewarded for that tenure with a position as managing director of Goldman) sold 15,000 shares in March; Jon Winkelried (Goldman’s co-president) sold 20,000 shares. After the Lehman fiasco, Levy sold over $6 million of Goldman shares and Masanori Mochida (head of Goldman in Japan) sold $56 million worth. The bloodletting by top management only stopped when Goldman got Geithner’s NYFed to produce a bail-out for AIG, which of course turned around and funneled government money to Goldman. With the government rescue, the control frauds decided it was safe to stop betting against their firm. So much for the “savvy businessmen” that President Obama believes to be in charge of Wall Street firms like Goldman.
From 2001 through November 2009 (note the date-a full year after Lehman) Goldman created financial instruments to hide European government debt, for example through currency trades or by pushing debt into the future. But not only did Goldman and other financial firms help and encourage Greece to take on more debt, they also brokered credit default swaps on Greece’s debt-making income on bets that Greece would default. No doubt they also took positions as the financial conditions deteriorated-betting on default and driving up CDS spreads.
But it gets even worse: An article by the German newspaper, Handelsblatt, (”Die Fieberkurve der griechischen Schuldenkrise”, Feb. 20, 2010) strongly indicates that AIG, everybody’s favorite poster boy for financial deviancy, may have been the party which sold the credit default swaps on Greece (English translation here).
Generally, speaking, these CDSs lead to credit downgrades by ratings agencies, which drive spreads higher. In other words, Wall Street, led here by Goldman and AIG, helped to create the debt, then helped to create the hysteria about possible defaults. As CDS prices rise and Greece’s credit rating collapses, the interest rate it must pay on bonds rises-fueling a death spiral because it cannot cut spending or raise taxes sufficiently to reduce its deficit.
Having been bailed out by the Obama Administration, Wall Street firms are already eying other victims (and for allowing these kinds of activities to continue, the US Treasury remains indirectly complicit, another good reason why one shouldn’t expect any action coming out of Washington). Since the economic collapse is causing all Euronations to run larger budget deficits and at the same time is raising CDS prices and interest rates, it is easy to pick off nation after nation. This will not stop with Greece, so it is in the interest of Euroland to stop the vampires now.
With Washington unlikely to do anything to constrain Goldman, it looks like the European Union, which is launching a major audit, just might banish the bank from dealing in government debt. The problem is that CDS markets are essentially unregulated so such a ban will not prevent Wall Street from bringing down more countries-because they do not have to hold debt in order to bet against it using CDSs. These kinds of derivatives have already brought down an entire continent — Asia — in the late 1990s , and yet authorities are still standing by and basically doing nothing when CDSs are being used again to speculatively attack Euroland. The absence of sanctions last year, when we had a chance to deal with this problem once and for all, has simply induced even more outrageous and fundamentally anti-social behavior. It has pitted neighbor against neighbor-with, for example, Germany and Greece lobbing insults at one another (Greece has requested reparations for WWII damages; Germany has complained about subsidizing what it perceives to be excessive social spending in Greece).
Of course, as far as Greece goes, the claim now is that these types of off balance sheet transactions in which Goldman and others engaged were not strictly “illegal” under EU law. But these are precisely the kinds of “shadow banking transactions” that almost brought down the global financial system 18 months ago. Literally a year after the Lehman bankruptcy — MONTHS after Goldman itself was saved from total ruin, it was again engaging in these kinds of deals.
And it wasn’t exactly a low-level functionary or “rogue trader” who was carrying out these transactions on behalf of Goldman. Gary Cohn is Lloyd “We’re doing God’s work” Blankfein’s number 2 man. So it’s hard to believe that St. Lloyd did not sanction the activities as well in advance of collecting his “modest” $9m bonus for last year’s work.
If these are examples of Obama’s “savvy businessmen“, then heaven help the global economy. The transaction highlighted, if reported that way in the private sector, would be accounting fraud. Fraud – “Go to jail, do not pass Go” fraud. That senior bankers had no problem in structuring/recommending/selling such deals to cash-strapped governments should probably not surprise us at this point. However, it would be interesting to know if the prop trading desks of those same investment banks, purely by coincidence of course, then took long CDS (short the credit) positions in the credit of the countries doing the hidden swaps. A proper legal investigation by the EU could reveal this and certainly help to uncover much of the financial chicanery which has done so much destruction to the global economy over the past several years.
In this country, we have had a “war on terror” and a “war on drugs” and yet we refuse to declare war on these financial weapons of mass destruction. We all remember Jimmy Carter’s “MEOW”-the attempt to attack creeping inflation that was said to sap the strength of the US economy in the late 1970s. But Europe-and indeed the entire globe-faces a much more dangerous and immediate threat from Wall Street’s banksters. They created this mess and are not only profiting from it, but are actively preventing recovery. They are causing unemployment, starvation, destruction of lives, and even violence and terrorism across the world. They are certainly more dangerous than the inflation of the 1970s, and arguably have disrupted more lives than Osama bin Laden-whose actions led the US to undertake military actions in at least three countries. That should provide ample justification for Greece’s declaration of figurative war on Manhattan.
However, in an ironic twist of fate, it was just announced that Petros Christodoulou will take over as the head of Greece’s national debt management agency. He worked as the head of derivatives at JP Morgan, and also previously worked at Goldman-the firm that got Greece into all this trouble!
Dimitri Papadimitriou has recently made what we consider to be an important plea for moderation of the hysteria about Greece’s debt. Writing in the Financial Times, he complained that “The plethora of articles in your pages and others, some arguing in favour and other against a bail-out, contribute to market confusion and drive the country’s financing costs to record levels. It is not yet clear that a bail-out is even needed, but this market confusion is rendering the government’s ability to achieve its deficit goals ever more difficult.”
Indeed, we suspect that the same financial firms that helped to get Greece into its predicament are profiting from — and stoking the fires of — the hysteria. He goes on, “what Greece really needs now is a holiday from further market confusion being created by contradictory, alarmist public commentary”.
Greece, Euroland in general, and the rest of the world all need a holiday from the manipulation and destruction of our economies by Wall Street firms that profit from speculative bubbles, from burying firms, households, and governments under mountains and debt, and even from the crises that they create. Governments all over the globe should use all legal means at their disposal to ferret out the bad faith and even fraudulent deals that global financial behemoths are foisting on us.
Roosevelt Institute Braintruster Marshall Auerback is a market analyst and commentator.
L. Randall Wray is Professor of Economics at the University of Missouri-Kansas City.
Psychologists colluded with CIA to keep ethics code in line with post 9/11 torture needs – damning report
The US’s leading professional psychologists’ organization helped justify CIA and Pentagon torture programs, a new 542-page report shows. The psychologists involved later profited from torture-related contracts.
The report, concluded this month, examined the involvement of the American Psychological Association (APA) in the validation of the so-called program of enhanced interrogation, under which terror suspects were subjected to torture at CIA black cites and at the Pentagon’s Guantanamo Bay prison facility.
The document prepared by a former assistant US attorney, David Hoffman, says some of the APA’s senior figures, including its ethics director, pushed to keep the association’s ethics code in line with DoD’s interrogation policies. Other prominent external psychologists took actions that aided the CIA’s torture practices, defending it from growing dissent among its own psychologists.
“The evidence supports the conclusion that APA officials colluded with DoD officials to, at the least, adopt and maintain APA ethics policies that were not more restrictive than the guidelines that key DOD officials wanted,” the report published on Friday by the New York Times said. “APA chose its ethics policy based on its goals of helping DoD, managing its PR, and maximizing the growth of the profession.”
The Hoffman report focuses on the APA’s close ties with the Pentagon and can be viewed as complimentary to last December’s Senate report that exposed the brutality of post 9/11 CIA tactics towards terror detainees, the NYT said. It also gives additional details about how the intelligence agency adopted the enhanced interrogation program and solicited outside advice to stem concerns among its own medical professionals.
The report also describes several instances in which senior figures involved in the program moved into the private sector to get lucrative contracts from the CIA and the Pentagon. For instance, Joseph Matarazzo, a former president of the psychological association and a member of the CIA advisory committee, was asked by Mr Kirk Hubbard (CIA psychologist who was chairman of the agency advisory committee), to provide an opinion about whether sleep deprivation constituted torture. The conclusion was that it did not.
Later, Matarazzo became a partner in Mitchell Jessen and Associates, a contracting company created by James Mitchel and Bruce Jessen to consult with the CIA on their interrogation program. They were instructors for the Air Force’s SERE (survival, evasion, rescue and escape) program, in which US troops are subjected to simulated torture to prepare them for possible capture. They adapted the program’s techniques for use against terror detainees, the report said.
After the Hoffman report was made public, the American Psychological Association issued an apology.
“The actions, policies and lack of independence from government influence described in the Hoffman report represented a failure to live up to our core values,” Nadine Kaslow, a former president of the organization, said in a statement. “We profoundly regret and apologize for the behavior and the consequences that ensued.”
One of the more immediate consequences of the report was the resignation of the APA’s ethics chief, Stephen Behnke, according to the Guardian. The psychologists coordinated the group’s public policy statements on interrogations with a top military psychologist, the report said. He later received a Pentagon contract for training interrogators, without notifying the American Psychological Association’s board.
Kaslow told the newspaper that Behnke’s last day at the APA was July 8, after the association received Hoffman’s report, and that further resignations were likely to follow.
A similarly damning report on the APA’s involvement in US government torture programs was published in April.
Ukrainian Economic Development Minister Aivaras Abromavicius clarified exactly how many state companies would be offered up for sale to US and European investors at the upcoming Ukrainian-American investment conference in Washington D.C on Monday, stating that 345 state-run firms would be put on offer to the highest bidder.
Speaking before reporters on Thursday, Abromavicius noted that the 345 firms offered for sale “will be included in the first wave of privatizations,” which he earlier confirmed would begin in the fourth quarter of this year.
Kiev’s effort is ostensibly aimed at raising billions of dollars for the country’s cash-strapped budget, as the economy, hit by a decline in trade with Russia, financial panic, and civil war, lies in tatters and on the verge of default.
Companies on the docket include the electricity generation firm Tsentrenergo and six of its regional distributors, gas transportation companies, the Odessa Port Plant, mining operations and agricultural holdings, which together are projected to bring 17 billion hryvnia (about $790 million) into the country’s coffers.
Earlier this year, Ukrainian officials held similar conferences in Washington, Berlin and Paris. As late as last month, Prime Minister Arseniy Yatsenyuk met with Ukrainian-Americans in Washington, telling them that his government wants “to see American owners on the territory of Ukraine,” stating that “they will bring not only investment, but also new standards, new ways of managing the companies, and a new investment culture.”
But with the IMF (conservatively) projecting a 9 percent decline in Ukraine’s GDP in 2015, with inflation hitting nearly 50 percent and the country approaching debt levels amounting to 100 percent of GDP, analysts warn that the present may be the worst possible time for Kiev to sell off its large, state-owned firms. The country’s economic decline, political instability and the war in the east have hit property values hard, which means that Kiev is unlikely to collect significant sums for the large, valuable, strategic assets offered up for sale.
Analysts also suggest that Western investors will have little appetite for the purchase of the unwieldy, heavily-indebted state firms, many operating at a loss since the collapse of the Soviet Union, noting that the most profitable companies were already bought up in crooked schemes by the country’s oligarchs a long time ago. In this connection, AFP recently reported that Rada MPs connected with the country’s oligarchic clans are likely to use their influence to prevent the sale of the profitable state assets under oligarchs’ influence. Moreover, Frankfurter Allgemeine Zeitung columnist Konrad Schuller recently poured cold water on the entire privatization initiative, noting that in an environment of speedy, murky, clan-dominated privatization, Western investors will have no time to assess whether the state companies offered up for sale are truly lucrative or not.
Furthermore, while Yatsenyuk recently announced that over 150 major investors have already RSVP’d to attend the Washington conference, he has already been hit by dissension from within his own cabinet, with officials from the Energy Ministry and the State Property Fund challenging the pace and scale of privatization.
In April of this year, Ukraine agreed to an International Monetary Fund-monitored austerity program, which called for the shedding of 24,000 government jobs, higher taxes, privatization of state assets and the withdrawal of subsidies on utilities in exchange for a total of about $40 billion in IMF-led foreign assistance over the coming four years.
During his term, former President George W. Bush sent US troops to Iraq under what later turned out to be false pretenses. Since then, over 50,000 US soldiers have been wounded, with many struggling to acclimate to life back home. And while the former president has pledged his support to these veterans, he apparently won’t do it for free.
Two weeks ago, at a Chamber of Commerce event, former President Bush touted his support for veterans, saying “I’ve decided to dedicate the rest of my life to helping out vets, to helping those with whom I was honored to serve.”
A noble pledge, perhaps, but it also comes with a fee.
According to ABC News, the former president has charged $100,000 for a speech at a gala fundraiser hosted by the Texas-based Helping a Hero charity for veterans who have lost limbs in Iraq and Afghanistan – the very same countries Bush sent troops to. At an additional cost of $20,000, the former president was also provided with a private jet to fly him to the event.
Members of Helping a Hero also told ABC News that former First Lady Laura Bush also charged a fee of $50,000 for a speech at a gala event the year before for the same organization.
The charity’s chairman was quick to come to the former president’s defense, saying in a statement that Bush’s appearance helped raise “significant funds” for the organization, and that he further reduced his fees from $250,000 to $100,000 for their benefit.
However, according to Politico, the former president’s typical speaking fee is between $100,000 and $175,000, which means Bush may not have been as gracious with his speaking fee as indicated by the charity’s chairman.
Further, ABC reported that both Bill Clinton and Jimmy Carter have never taken money to speak at a veteran’s group in the past. Robert Gates, Secretary of Defense under Bush’s administration, also did not charge a fee for speaking at the same Helping a Hero fundraiser.
The revelation has sparked public outrage, with the former president under fire from both public officials and military veterans. Many drew attention to the irony of a president capitalizing on the soldiers injured in the very wars he created. […]
Some even demanded that Bush return the money, with others noting that the former president and his wife have earned much more from their speeches than those who have gone to fight the wars.
Paid speeches by former presidents have been the subject of intense controversy for years, as they have become a major source of income for their post-presidential years. By 2013, Bill Clinton brought home over $106 million on the lecture circuit, and according to CNN, makes $500,000 per speech.
Toward the end of his presidency, Bush reportedly told author Robert Draper that he intended to “replenish the ol’ coffers” after leaving office and make a “ridiculous” amount of money with his speeches. And apparently, even supporting soldiers he had sent to war won’t come in the way of that money making.
According to a letter from Hillary Clinton to pro-Israel donor, Haim Saban, she wants to be the top pro-Israel candidate in the race for the Democratic presidential nomination. More specifically, Clinton pledges her opposition to the BDS (Boycott, Divest, Sanction) movement. According to McClatchy,
“I know you agree that we need to make countering BDS a priority… we can work together…to reverse this trend with information and advocacy, and fight back against further attempts to isolate and delegitimize Israel… from Congress and state legislatures to boardrooms and classrooms, we need to engage all people of good faith, regardless of their political persuasion or their views on policy specifics, in explaining why the BDS campaign is counterproductive to the pursuit of peace and harmful to Israelis and Palestinians alike.”
It is no secret that Hillary Clinton is the Wall Street-sponsored candidate in the Democratic primary race. Data from Open Secrets for the 1999-2016 election cycles shows that three of her top five contributors were Wall Street firms (Citigroup, Goldman Sachs, and J.P. Morgan Chase). It seems that Clinton now wants to become the undisputed pro-Israel candidate, as well.
In the United States presidential elections, all major party candidates are obliged to show their loyalty to the state of Israel. In return, wealthy pro-Israel donors fill their election campaign coffers with much needed cash. In 2008, for example, the top three candidates in both parties (Obama, Clinton, McCain) were also the top three recipients of donations from pro-Israel groups and individuals. In 2012, history repeated itself with Mitt Romney and Barack Obama, the top two recipients of campaign cash from pro-Israel individuals and groups. While it is too early to tell, it is highly likely that the top two candidates from the two major parties will also be the top two recipients of pro-Israel campaign contributions.
Haim Saban, a billionaire who made his fortune in the entertainment industry, is a long time Democrat and ally of Hillary Clinton. He will likely promote pro-Israel, anti-BDS discourse in the Democratic Party. Sheldon Adelson, also a billionaire, is a long-time Republican whose job is to enforce pro-Israel, anti-BDS discourse in the Republican Party. According to The Times of Israel,
“Adelson said his prime focus… was to reverse the inroads being made by what he called ‘the BDS (Boycott, Divestment and Sanctions) and company… the anti-Israel and anti-Semitic organizations [that] are making a lot of headway on the campuses in the United States.’ He said he would encourage Jewish groups to work to have boycott decisions taken by student campus groups reversed… Saban made clear that he intended to fight back against any business groups inclining to boycott Israel, and create a climate in which they were deterred from doing so.”
The success of the BDS movement is becoming an issue for Israel—so much so, that Saban and Adelson held a secret summit in Las Vegas last month to address the matter. The two billionaires invited 50 pro-Israel groups and pledged to fund their efforts to fight BDS on American college campuses with the hope of branding the movement anti-Semitic. According to Haaretz,
”…of millions of dollars were raised to combat campus campaigns to boycott, divest from and sanction Israel — or BDS, as the movement is known… both [Adelson and Saban] stressed their view that BDS — a form of nonviolent protest promoted by a diverse array of groups opposed to Israel’s policies toward the Palestinians — as simply a form of anti-Semitism.”
With Hillary Clinton officially on board and the two billionaires raising $20 million for the anti-BDS cause, American college campuses will be interesting centers of debate this fall.
A Black Agenda Radio Commentary Bruce A. Dixon – July 8, 2015
Last month, Talking Points Memo noted that the Democratic National Committee or DNC, the recipients of tens of millions of dollars in legal bribes (campaign contributions, they’re called under US law) from Big Oil, Big Ag, Big Pharma, Wall Street, the military contractors and more every year, the DNC was featuring Bernie Sanders on the mass fundraising mailings it sent to thousands of likely Democrat donors.
At first glance this does seem quite strange. While Bernie Sanders does talk and vote like many other pro-war liberal Democrats, while official Democrats across the country think he’s Democrat enough to run in Democratic primaries and caucuses, and while Bernie’s even pledged to support the eventual Democratic party nominee, pointing out to George Stephanopoulos that he does that every election anyhow, Bernie Sanders describes himself as a socialist, and talks about what he calls “a political revolution.”
So what’s happening here? There’s no question that the Democratic National Committee is the subservient tool of its ruling class donors, and of their candidate Hillary Clinton. TPM’s Josh Marshall explains that although Hillary remains the official candidate of the DNC and its donors, they need an official opposition to make the year-long run up to the Democratic nominating convention a year from now look less like a coronation.
Bernie’s presence, and his half-hearted pro-war brand of socialism, as Paul Street also explained in Black Agenda Report a few weeks ago doesn’t further any “political revolution” at all. What it does is make Hillary’s absolutely certain Democratic party nomination look almost legit, as though she emerged from some kind of process where the Democrats’ base voters actually get to have their say. It makes sense, if only a profoundly dishonest kind of sense.
But the cynicism of corporate Democrats runs much deeper than this. Immediately after President Obama muscled fast track legislation needed to pass his so-called trade bills though Congress without the bother of legislators being able to amend them, or even see what’s in them, the California Democratic party was emailing thousands of likely small and medium sized donors with the promise that it would “continue the fight” against “unfair trade agreements” like the TPP.
The California Democratic Party being effectively the local branch of the DNC chose not to remind prospective donors that their Democratic president forced TPP’s fast-track provision through Congress, that their Democratic president is hounding, harassing convening secret grand juries and jailing on espionage and terrorism charges Wikileaks and other persons for revealing parts of the so-called trade agreements, which are really corporate power grabs.
The California Democratic Party isn’t about to fight the Democrat in the White House over TPP, the privatization of schools, cutting the military budget, rolling back the prison state or anything else. Their feeble and hypocritical pretense of opposing TPP is aimed at the most deluded and gullible among their donor base, in the same spirit that the DNC uses Bernie Sanders to supplement fundraising. It’s a measure of how uninformed and stupid Democratic party leaders on the state and national level imagine Democratic donors and voters to be, another marker of the boundless contempt that Democratic party leaders have for ordinary Democrats, and ordinary people.
Contact Bruce Dixon at bruce.dixon(at)blackagendareport.com.