Why the European Central Bank’s Trillion Euro Plan will Only Help Keep the Banks Afloat
SHARMINI PERIES: In an effort to relieve some pressure on the struggling European economies, Mario Draghi, president of the European Central Bank, announced a 1 trillion euro quantitative easing package on Monday. Quantitative easing is an unconventional form of monetary policy where a central bank creates new money electronically to buy financial assets like government bonds. And this process aims to directly increase private-sector spending in the economy and return inflation to target.
Well, what does that mean and what might be wrong with it is our next topic with Michael Hudson. Michael Hudson is a distinguished research professor of economics at the University of Missouri-Kansas City. His two newest books are The Bubble and Beyond and Finance Capitalism and Its Discontents. His upcoming book is titled Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy.
Michael, the Fed and some economists will argue that this is what got the U.S. out of its 2008 financial crisis. In fact, they put several QE measures into place. So what’s wrong with quantitative easing?
MICHAEL HUDSON: Well, the cover story is that it’s supposed to help employment. The pretense is an old model that used to be taught in textbooks a hundred years ago: that banks lend money to companies to invest and build equipment and hire people.
But that’s not what banks do. Banks lend money mainly to transfer ownership of real estate. They also lend money to corporate raiders. They lend money to buy assets. But they don’t lend money for companies to invest in equipment and hire more workers. Just the opposite. When they lend money to corporate raiders to take over companies, the new buyers outsource labor, downsize the work force, and try to squeeze out more work. They also try to grab the pensions.
The Fed was pretty open in what quantitative easing is supposed to do since 2008. It’s supposed to lower the interest rates, which raises bond prices and inflates the stock market. Since 2008 they’ve had the largest monetary inflation history – $4 trillion of quantitative easing by the Fed. But it’s gone via the banks into the stock and bond market.
What has this done for the economy as a whole? For starters, it’s obviously helped stock and bond holders get richer. And who are they? They’re the 1 percent and the 10 percent.
People are wringing their hands and saying, why isn’t the economy getting richer? Why is it that since 2008, economic inequality and the distribution of wealth have worsened instead of gotten closer together? Well, it’s largely because of quantitative easing. It’s because quantitative easing has increased the value of the stocks and the bonds that are held mainly by the 1 percent or the 10 percent hold. This hasn’t helped the economy because the Fed is really concerned with its constituency, which are the banks.
Quantitative easing hasn’t helped one class of investors in particular: pension funds. It’s done just the opposite. Pension funds made the assumption a few years ago that in order to break even with the rate of contributions that corporations, states and municipalities are paying, they have to make eight percent or eight and a half percent a year as a rate of return. But quantitative easing lowers the interest rate.
Today’s lower interest rates have made pension funds desperate. The risk-free rate of return is less than 1 percent on short-term Treasury bills. If you buy longer-term treasuries you can make 2 percent, but then if the interest rates ever go up, you’re going to take a loss as the bond price declines. So pension funds have said, “We’re desperate; what are we going to do?”
They’ve turned their money over to Wall Street money managers and hedge funds. The hedge funds take a huge rake off of fees to begin with. But even worse, when hedge funds and the big banks – Goldman Sachs, Citibank – see a pension fund manager coming through the door, they think, “How can I take what’s in his pocket and put it in mine?” So they rip them off. That is why there are so many big lawsuits against Wall Street for mismanaging pension fund money.
To summarize, the effect of the quantitative easing has been to make pension funds desperate, and to support real estate prices, as if higher costs to obtain housing will help recovery. It doesn’t help recovery, because to the extent that quantitative easing supports a re-inflation of housing prices, new homeowners have to pay even more of their income to the banks as mortgage interest. That means they have less money to pay for goods and services, so markets for goods and services continue to shrink.
What the quantitative easing has not been used for is what was promised in 2008. Before President Obama won the election and took office, Congress said that the TARP bailout and TALF were supposed to go for debt reduction. Some was to write down mortgages, so that people could afford to stay in their homes rather than the millions of home owners that have been foreclosed on and thrown out. But even before Obama came into office, Hank Paulson, the Secretary of the Treasury, told Democrats in Congress, yes, we’re willing to write down debts. But as Barney Frank explained in exasperation, Obama said no, he’s not going to do that. Obama ended up supporting the banks. So almost none of the TARP bailout money has been used for debt write-downs.
The same phenomenon is happening in Europe.
PERIES: So, Michael, what’s wrong with what the ECB has announced in terms of a trillion euros worth of quantitative easing for Europe?
HUDSON: They head of the European Central Bank, Mario Draghi, has said that he’ll do whatever it takes to keep banks afloat. He doesn’t say that he’ll do whatever it takes to help economic recovery, or to help labor more. The ECB’s job is to help banks make more money.
Draghi was vice chairman of Goldman Sachs during 2002 to 2005. His view is that of Wall Street. It’s not a vantage point helping labor or helping economies grow. So it’s not surprising that the trillion euros of new money that the eurozone’s central bank is creating hasn’t gone to help Greece, for instance, survive. It hasn’t gone to help Greece, Spain, Italy, or Portugal get out of depression by fueling government spending. It’s simply been given away to the banks to buy bonds and stocks, including buying American stocks and bonds.
Behind this policy is the trickle-down theory that if you can make the financial sector richer, if you can make the one percent and the 10 percent richer, it’s all going to trickle down. This is the view of Paul Krugman, and it’s the view of the advisers that Obama has had. But instead of trickling down, the stock and bond price gains by the 1% and 10% drive a wedge in the economy, by increasing the value of stocks and bonds and real estate and wealth against labor. So quantitative easing is largely behind the fact that the distribution of wealth has become worse rather than better since 2008.
PERIES: One of the things that has happened in Europe that you wrote to me actually in an email was the disappearing central banks’ role in stimulating economies. Why is this an issue?
HUDSON: Central banks originally were designed to monetize government deficits. Governments are supposed to spend money into the economy, because that helps economies grow. But in Europe the Lisbon agreements say governments can’t run a deficit more than 3 percent of national income.
Furthermore, the role of the European Central Bank is not to give a penny to governments. They say that if you give a penny to government, you’ll have hyperinflation like you had in Weimar. So the central bank can only give money to banks – to invest in stocks and bonds. But the ECB won’t buy fresh bonds to finance new government spending. The result of this policy of not funding government deficits is that if the economy is to grow, it has to be entirely dependent on commercial banks for credit.
We had this situation in the United States in the last few years of the Clinton administration when the United States actually ran a budget surplus instead of a deficit. Now, how do you think the United States could grow when there’s a budget surplus sucking money out of the economy?
The answer is that commercial banks and bondholders have to supply the money. But the banks only supplied money in the form of junk mortgages and other forms of an economic bubble, such as takeover loans and a stock market bubble.
The interest of banks is not to help economies grow; it’s to extract interest from the economy. The financial sector uses part of its rising wealth to lobby for privatization sell-offs. The problem with this is that when you privatize a public utility, you give away a monopoly – and if you deregulate the economy, you let the monopoly set up tollbooths over the economy, for toll roads, communications or whatever is being privatized.
The ECB is telling Greece to privatize to raise the money to pay its bondholders, the ECB and IMF. So you have quantitative easing going hand-in-hand with the insistence on privatization. The result is debt deflation as the economy is forced to depend more and more on banks for the money to grow, instead of on government spending into the economy. You’re having the governments not being able to spend on infrastructure, letting it fall apart, as is happening with bridges and tunnels in the United States.
The next step is for the government to say, “I’m sorry, the central bank doesn’t have enough money to help us build new infrastructure. So we’ve got to sell it off to private investors who do have the money.” The next thing you know, you have the economy ending up looking like Chicago. That city sold off its sidewalks and its parking meters to Goldman Sachs and to other Wall Street firms. All of a sudden the prices of parking, driving, and living in Chicago went way, way up instead of lowering the costs as privatization promised.
You have the same phenomenon here that England suffered under Margaret Thatcher: costs for hitherto public services go up. Transportation costs go way up. Road costs go up. Communications, internet costs, telephone costs, everything that is privatized goes way up. Financialization leads to a rent-extractive, almost neo-feudal economy.
In that sense, quantitative easing and the refusal of central banks to fund governments (except to pay bondholders and bail out commercial banks) is a new kind of class war. It’s not the old kind of class war, which was between employers and their workforce over what wages will be. It’s by the financial sector trying to take over the economy, and especially to take over the public sector, to take over the public domain, to take over public utilities and whatever assets a government has. If governments cannot borrow from central banks, they have to begin selling off property.
PERIES: Michael, this is exactly what’s happening in Greece right now. The SYRIZA government is somewhat forced to continue privatization as a part of the agreement of the loans that they have been given by European banks. What could they do in this situation?
HUDSON: This is really a scandal, because most privatizations are corrupt insider dealings. The SYRIZA Party came in and said, wait a minute, the privatizations that have been done are by governmental officials to their own cronies at a giveaway price. How can we balance the budget if we’re giving away the public utilities instead of getting a fair price for them?
The European Central Bank said, no, you have to give away privatization to cronies at pennies on the dollar just like Russia did under Yeltsin, just like the United States did with the railroad giveaways of the 19th century.
Remember, the American privatization to the railroad barons and their financial backers created essentially the ruling class of the 20th century. It created the American stock market. The same thing is happening in Greece. It’s being told to continue the former politicians’ drive to endow a new oligarchy, a new kind of a feudal monopoly lord, by these privatization giveaways. The ECB says that if you don’t do that, we’re going to bankrupt the banking system.
Yanis Varoufakis went back to the party congress in Parliament and asked whether they would approve this. The left wing in Greece has said, no, we won’t approve the giveaways.
The pretense is that privatization is to make money, but the European Central Bank is saying, no, you can’t make money; you have to give it away to our cronies. It’s all one happy financial family. This is escalating financial warfare.
I can assure you that neither Varoufakis nor SYRIZA has any interest in this kind of privatization giveaway. It’s trying to figure out some way of perhaps prosecuting the cronies for bribery, for internal connections, or figuring out some way of legally stopping the rotten policies that they’re told to follow by the European Central Bank – which isn’t giving a single euro to help Greece get over the economic depression that debt deflation has brought on. The euros are only given to the financial sector, basically to help declare war on the Greek government, the Spanish government, the Italian government.
This financial warfare is trying to achieve the same thing that military warfare did in the past. It’s aim is to grab the land, to grab control of the public infrastructure, to grab control of governments themselves. But it’s doing it financially rather than militarily.
PERIES: Right. The SYRIZA Party last week did agree to the conditions of privatization, that they would not roll back on the existing agreements that had been made by previous government. They agreed to not roll back on ones that are underway, and that they’re actually not even averse to privatization as a statement by Yanis Varoufakis. What does all this mean for Greece?
HUDSON: The financial gun was put to their head. If they wouldn’t have said that, there would have been a total breakdown, and the European Central Bank would have tried to bankrupt the Greek banks. So he didn’t have much of a choice. Everything that Varoufakis has written, and all that the political leader of SYRIZA has said, has been exactly the opposite. But they had to give lip service to what they were told to do, and any agreement that’s made has to be ratified by Parliament. So, what they’ve said is, okay, we’re going to play good cop, bad cop. We’ll be the good cops with you, and let Parliament and our left wing be the bad cops and say that we’re not going to stand for this.
What’s the punishment for a 300 million euro tax fraud? If you are in Italy and your name is Silvio Berlusconi it is about a week hanging out with people your age.
A court in Milan ruled earlier this week that as his sentence the 77-year-old billionaire media mogul and thrice Italian PM would be performing community service in the small northern town of Cesano Boscone – “once a week and for a period of no less than four consecutive hours” – in a centre for the elderly and disabled.
The ruling came eight months after his conviction for tax fraud was made definitive by Italy’s supreme court. In August last year the country’s top court had found him guilty of having had a role in allowing his Mediaset company – which has a virtual private terrestrial TV monopoly in Italy – to fraudulently lower its tax bill by buying US film and television rights at inflated prices.
Last August, the supreme court judges handed down a four-year sentence, but immediately commuted it to a year.
Under this week’s ruling, the poor ex-premier will be subject to a curfew of 11pm and will not be able to leave the region of Lombardy.
Except, that is, to go to his home in the centre of Rome. And he will be able to do that every week from Tuesday to Thursday, providing he is back at his vast Arcore palace – the venue of his bunga bunga parties located just 40 kilometres down the road – by 11pm on the Thursday.
Furthermore, the sentence could be further cut for good behaviour to nine months.
It is not just the punishment that is scandalously soft.
Just how appropriate is it? His job may entail entertaining the elderly guests of the home – and his past life as a cruise ship crooner will no doubt help.
But according to Article 47 of the Prison Administration Act community service should only be offered to the criminal “in cases where it can be assumed that the measure…contributes to the rehabilitation of the offender and ensures the prevention of the danger of committing other crimes,” Rossella Guadagnini highlights in the Italian journal Micromega.
As Al Jazeera points out Berlusconi claims total innocence of any crime he has ever been charged with. And he is currently involved in two other court cases.
In a trial set to start on June 20, he will appeal a seven-year prison sentence and lifetime ban from parliament for having sex with an underage 17-year-old prostitute and abusing his official powers. He is also a defendant in a trial for allegedly paying a $4m bribe to get a centre-left senator to join his party in 2006 in a move that helped bring down a rival government.
As a indicator of the seriousness of the crime of robbing a heavily indebted state blind, the punishment speaks for itself. Tax dodging – running at 130 billion euros annually officially but double that figures according to some sources – is bleeding the public coffers dry. The result is two trillion euros in public debts, which are being used as the excuse for swinging cuts to welfare and public services, privatisation, roll back of labour rights, and attacks on public servants’ wages.
Italian businessmen with access to expensive lawyers and good political links (any serious player in Italy has them) will have been taking due note of Berlusconi’s case.
The worst of it is that, as the Guardian reports, although he has been booted out of the Senate and is now banned from office, he’ll still be ‘allowed time’ to continue his political activities – nominally behind the scenes but no doubt very visible on Italians’ screens – as head of Forza Italia.
The party is the third largest political force in the country, behind PM Matteo Renzi’s centre-left Democratic Party and Beppe Grillo’s anti-establishment Five Star Movement, according to recent polls. The first appointment is the European elections next month.
Italy has lost two decades under the rule of Berlusconi, who entered politics in person in 1994 when his political protectors – notably former right-wing Socialist PM Bettino Craxi – melted away under the scrutiny of the same ‘communist’ judges Berlusconi has so long railed against. But if this is the best the toghe rosse can do, it can only be said that communism is well and truly dead in Italy.
People in Venice and its surrounding region have voted in an online poll to split from the rest of Italy and establish their own independent state.
More than two million residents of the Veneto region participated in the week-long survey, with 89 percent voting in favor of secession from Italy.
The online vote, organized by local pro-independence parties, is not legally binding but is only meant to muster support for a bill calling for a referendum.
The Indipendenza Veneta party behind the bill says the separatist campaign is driven by the Italian government’s alleged inability to stem corruption, protect Venice’s citizens from a debilitating recession and control waste water in the poorer south.
Supporters say the new Republic of Veneto would be inspired by the ancient Venetian Republic, which existed from the seventh century until its fall to Napoleon in 1797.
Critics argue that an attempt to break away from Italy could be unconstitutional.
Everyday communications of Italians are also on the watch list of the US National Security Agency, a new report has revealed. While an Italian parliamentary committee seeks clarification of NSA activities, local security sources defend the snooping.
Italy’s spy watchdog COPASIR has recently learned details of large-scale monitoring of Italians by the US intelligence agency NSA, according to a report published by Corriere della Sera.
COPASIR stands for Parliamentary Committee for the Intelligence and Security Services and for State Secret Control, and is tasked with overseeing the activities of Italy’s own spy agencies. The body has free access to intelligence agencies’ offices and documents and has the authority to overcome judicial and banking secrecy.
In order to confirm the snooping on Italians, the committee members had to go to the United States and meet with US intelligence agency directors, as well as with congressional committee chairs.
A delegation of parliamentarians from the COPASIR confirmed their concerns regarding the extent of the NSA’s PRISM surveillance program during an official visit to the US three weeks ago, the media said. As part of the program, phone calls and computer communications of “millions of Italians” are reportedly being gathered.
Moreover, Corriere della Sera added that the implications extended to “a monitoring network that started years ago and is still active,” of which the Italian government and spy agencies might have been well aware of.
Such discoveries have prompted uneasy questions to officials, with leading members of COPASIR now seeking clarification from the government, and reportedly awaiting the junior minister for the intelligence services, Marco Minniti, to visit the committee’s offices on Wednesday afternoon.
Meanwhile, Italian intelligence sources quoted in the report rushed to justify the surveillance activities of their partners.
The acquisition of the sensitive private information “has as its sole aim the fight against terrorism,” one source was quoted as saying, while another denied that the NSA’s spying ever breached Italy’s sovereignty.
“We have never had any evidence that this kind of monitoring might have involved political spying on Italian public figures. All our investigations into any such eventuality have proved negative,” the source maintained.
However, such explanations did not satisfy COPASIR, nor did the NSA deputy director’s promise of “a complete overview of communications to and from the United States.”
According to the Italian media, the committee member Claudio Fava from Left Ecology Freedom (SEL) party, was “openly perplexed” as he commented on such statements.
“It’s a data trawling system based on various sensors. US intelligence experts explained that their main concern was to comply with American data protection laws and intervene to safeguard national security. Whether this conflicts with other countries’ laws is of no concern to them but it should be to us,” Fava was quoted as saying.
Another COPASIR member, Felice Casson of the Democratic Party (PD), said that the replies the committee received from top Italian intelligence officials were “far from reassuring.”
“It is clear that the United States has acquired information on individuals and institutions across Europe. What concrete elements exist to rule out that this has happened to politicians and institutions in Italy?” Casson questioned.
Leading Democratic Party (PD) politician Ettore Rosato also demanded an explanation from the government, saying that “a few months ago, when the first [NSA whistleblower Edward Snowden’s] revelations emerged, both the prime minister, Enrico Letta, and the foreign minister, Emma Bonino, professed astonishment at what came out.”
So far, the documents obtained by various world media from the former NSA contractor Snowden have revealed that the Italian embassy in Washington was subject to spying along with the diplomatic missions of other countries. Italian intelligence sources have been careful to deny the claims only “off the record,” Corriere della Sera says.
Right before the NSA scandal emerged, the collaboration between Italian and American intelligence services was “at its peak,” and, according to the media, included sharing of communications through the SIGINT interception system. However, such cooperation appeared to have been justified by the ongoing allied wars in Iraq and Afghanistan and the search for western hostages there, the media adds.
But in the wake of recent revelations on the US spying activities in France, which triggered a media frenzy and public outrage, the media speculates Italy may find it difficult to maintain the same “stance” towards the NSA programs.
The Pentagon Is Using Your Tax Dollars to Turn Italy into a Launching Pad for the Wars of Today and Tomorrow
The Pentagon has spent the last two decades plowing hundreds of millions of tax dollars into military bases in Italy, turning the country into an increasingly important center for U.S. military power. Especially since the start of the Global War on Terror in 2001, the military has been shifting its European center of gravity south from Germany, where the overwhelming majority of U.S. forces in the region have been stationed since the end of World War II. In the process, the Pentagon has turned the Italian peninsula into a launching pad for future wars in Africa, the Middle East, and beyond.
At bases in Naples, Aviano, Sicily, Pisa, and Vicenza, among others, the military has spent more than $2 billion on construction alone since the end of the Cold War—and that figure doesn’t include billions more on classified construction projects and everyday operating and personnel costs. While the number of troops in Germany has fallen from 250,000 when the Soviet Union collapsed to about 50,000 today, the roughly 13,000 U.S. troops (plus 16,000 family members) stationed in Italy match the numbers at the height of the Cold War. That, in turn, means that the percentage of U.S. forces in Europe based in Italy has tripled since 1991 from around 5 percent to more than 15 percent.
Last month, I had a chance to visit the newest U.S. base in Italy, a three-month-old garrison in Vicenza, near Venice. Home to a rapid reaction intervention force, the 173rd Infantry Brigade Combat Team (Airborne), and the Army’s component of the U.S. Africa Command (AFRICOM), the base extends for a mile, north to south, dwarfing everything else in the small city. In fact, at over 145 acres, the base is almost exactly the size of Washington’s National Mall or the equivalent of around 110 American football fields. The price tag for the base and related construction in a city that already hosted at least six installations: upwards of $600 million since fiscal year 2007.
There are still more bases, and so more U.S. military spending, in Germany than in any other foreign country (save, until recently, Afghanistan). Nonetheless, Italy has grown increasingly important as the Pentagon works to change the make-up of its global collection of 800 or more bases abroad, generally shifting its basing focus south and east from Europe’s center. Base expert Alexander Cooley explains: “U.S. defense officials acknowledge that Italy’s strategic positioning on the Mediterranean and near North Africa, the Italian military’s anti-terrorism doctrine, as well as the country’s favorable political disposition toward U.S. forces are important factors in the Pentagon’s decision to retain” a large base and troop presence there. About the only people who have been paying attention to this build-up are the Italians in local opposition movements like those in Vicenza who are concerned that their city will become a platform for future U.S. wars.
Most tourists think of Italy as the land of Renaissance art, Roman antiquities, and of course great pizza, pasta, and wine. Few think of it as a land of U.S. bases. But Italy’s 59 Pentagon-identified “base sites” top that of any country except Germany (179), Japan (103), Afghanistan (100 and declining), and South Korea (89).
Publicly, U.S. officials say there are no U.S. military bases in Italy. They insist that our garrisons, with all their infrastructure, equipment, and weaponry, are simply guests on what officially remain “Italian” bases designated for NATO use. Of course, everyone knows that this is largely a legal nicety.
No one visiting the new base in Vicenza could doubt that it’s a U.S. installation all the way. The garrison occupies a former Italian air force base called Dal Molin. (In late 2011, Italian officials re-branded it “Caserma Del Din,” evidently to try to shed memories of the massive opposition the base has generated.) From the outside, it might be mistaken for a giant hospital complex or a university campus. Thirty one box-like peach-and-cream-colored buildings with light red rooftops dominate the horizon with only the foothills of the Southern Alps as a backdrop. A chain link fence topped by razor wire surrounds the perimeter, with green mesh screens obscuring views into the base.
If you manage to get inside, however, you find two barracks for up to 600 soldiers each. (Off base, the Army is contracting to lease up to 240 newly built homes in surrounding communities.) Two six-floor parking garages that can hold 850 vehicles, and a series of large office complexes, some small training areas, including an indoor shooting range still under construction, as well as a gym with a heated swimming pool, a “Warrior Zone” entertainment center, a small PX, an Italian-style café, and a large dining facility. These amenities are actually rather modest for a large U.S. base. Most of the newly built or upgraded housing, schools, medical facilities, shopping, and other amenities for soldiers and their families are across town on Viale della Pace (Peace Boulevard) at the Caserma Ederle base and at the nearby Villaggio della Pace (Peace Village).
A Pentagon Spending Spree
Beyond Vicenza, the military has been spending mightily to upgrade its Italian bases. Until the early 1990s, the U.S. air base at Aviano, northeast of Vicenza, was a small site known as “Sleepy Hollow.” Beginning with the transfer of F-16s from Spain in 1992, the Air Force turned it into a major staging area for every significant wartime operation since the first Gulf War. In the process, it has spent at least $610 million on more than 300 construction projects (Washington convinced NATO to provide more than half these funds, and Italy ceded 210 acres of land for free.) Beyond these “Aviano 2000” projects, the Air Force has spent an additional $115 million on construction since fiscal year 2004.
Not to be outdone, the Navy laid out more than $300 million beginning in 1996 to construct a major new operations base at the Naples airport. Nearby, it has a 30-year lease on an estimated $400 million “support site” that looks like a big-box shopping mall surrounded by expansive, well-manicured lawns. (The base is located in the Neapolitan mafia’s heartland and was built by a company that has been linked to the Camorra.) In 2005, the Navy moved its European headquarters from London to Naples as it shifted its attention from the North Atlantic to Africa, the Middle East, and the Black Sea. With the creation of AFRICOM, whose main headquarters remain in Germany, Naples is now home to a combined U.S. Naval Forces Europe-U.S. Naval Forces Africa. Tellingly, its website prominently displays the time in Naples, Djibouti, Liberia, and Bulgaria.
Meanwhile, Sicily has become increasingly significant in the Global War on Terror era, as the Pentagon has been turning it into a major node of U.S. military operations for Africa, which is less than 100 miles away across the Mediterranean. Since fiscal year 2001, the Pentagon has spent more on construction at the Sigonella Naval Air Station—almost $300 million—than at any Italian base other than Vicenza. Now the second busiest naval air station in Europe, Sigonella was first used to launch Global Hawk surveillance drones in 2002. In 2008, U.S. and Italian officials signed a secret agreement formally permitting the basing of drones there. Since then, the Pentagon has put out at least $31 million to build a Global Hawk maintenance and operations complex. The drones provide the foundation for NATO’s $1.7 billion Alliance Ground Surveillance system, which gives NATO surveillance capabilities as far as10,000 miles from Sigonella.
Beginning in 2003, “Joint Task Force Aztec Silence” has used P-3 surveillance planes based at Sigonella to monitor insurgent groups in North and West Africa. And since 2011, AFRICOM has deployed a task force of around 180 marines and two aircraft to the base to provide counterterrorism training to African military personnel in Botswana, Liberia, Djibouti, Burundi, Uganda, Tanzania, Kenya, Tunisia, and Senegal.
Sigonella also hosts one of three Global Broadcast Service satellite communications facilities and will soon be home to a NATO Joint Intelligence, Surveillance & Reconnaissance deployment base and a data analysis and training center. In June, a U.S. Senate subcommittee recommended moving special operations forces and CV-22 Ospreys from Britain to Sicily, since “Sigonella has become a key launch pad for missions related to Libya, and given the ongoing turmoil in that nation as well as the emergence of terrorist training activities in northern Africa.” In nearby Niscemi, the Navy hopes to build an ultra high frequency satellite communications installation, despite growing opposition from Sicilians and other Italians concerned about the effects of the station and its electromagnetic radiation on humans and a surrounding nature reserve.
Amid the build-up, the Pentagon has actually closed some bases in Italy as well, including those in Comiso, Brindisi, and La Maddalena. While the Army has cut some personnel at Camp Darby, a massive underground weapons and equipment storage installation along Tuscany’s coast, the base remains a critical logistics and pre-positioning center enabling the global deployment of troops, weapons, and supplies from Italy by sea. Since fiscal year 2005, it’s seen almost $60 million in new construction.
And what are all these bases doing in Italy? Here’s the way one U.S. military official in Italy (who asked not to be named) explained the matter to me: “I’m sorry, Italy, but this is not the Cold War. They’re not here to defend Vicenza from a [Soviet] attack. They’re here because we agreed they need to be here to do other things, whether that’s the Middle East or the Balkans or Africa.”
Location, Location, Location
Bases in Italy have played an increasingly important role in the Pentagon’s global garrisoning strategy in no small part because of the country’s place on the map. During the Cold War, West Germany was the heart of U.S. and NATO defenses in Europe because of its positioning along the most likely routes of any Soviet attack into Western Europe. Once the Cold War ended, Germany’s geographic significance declined markedly. In fact, U.S. bases and troops at Europe’s heart looked increasingly hemmed in by their geography, with U.S. ground forces there facing longer deployment times outside the continent and the Air Force needing to gain overflight rights from neighboring countries to get almost anywhere.
Troops based in Italy, by contrast, have direct access to the international waters and airspace of the Mediterranean. This allows them to deploy rapidly by sea or air. As Assistant Secretary of the Army Keith Eastin told Congress in 2006, positioning the 173rd Airborne Brigade at Dal Molin “strategically positions the unit south of the Alps with ready access to international airspace for rapid deployment and forced entry/early entry operations.”
And we’ve seen the Pentagon take advantage of Italy’s location since the 1990s, when Aviano Air Base played an important role in the first Gulf War and in U.S. and NATO interventions in the Balkans (a short hop across the Adriatic Sea from Italy). The Bush administration, in turn, made bases in Italy some of its “enduring” European outposts in its global garrisoning shift south and east from Germany. In the Obama years, a growing military involvement in Africa has made Italy an even more attractive basing option.
“Sufficient Operational Flexibility”
Beyond its location, U.S. officials love Italy because, as the same military official told me, it’s a “country that offers sufficient operational flexibility.” In other words, it provides the freedom to do what you want with minimal restrictions and hassle.
Especially in comparison to Germany, Italy offers this flexibility for reasons that reflect a broader move away from basing in two of the world’s wealthiest and most powerful nations, Germany and Japan, toward basing in relatively poorer and less powerful ones. In addition to offering lower operating costs, such hosts are generally more susceptible to Washington’s political and economic pressure. They also tend to sign “status of forces agreements”—which govern the presence of U.S. troops and bases abroad—that are less restrictive for the U.S. military. Such agreements often offer more permissive settings when it comes to environmental and labor regulations or give the Pentagon more freedom to pursue unilateral military action with minimal host country consultation.
While hardly one of the world’s weaker nations, Italy is the second most heavily indebted country in Europe, and its economic and political power pales in comparison to Germany’s. Not surprisingly, then, as that Pentagon official in Italy pointed out to me, the status of forces agreement with Germany is long and detailed, while the foundational agreement with Italy remains the short (and still classified) 1954 Bilateral Infrastructure Agreement. Germans also tend to be rather exacting when it comes to following rules, while the Italians, he said, “are more interpretive of guidance.”
War + Bases = $
The freedom with which the U.S. military used its Italian bases in the Iraq War is a case in point. As a start, the Italian government allowed U.S. forces to employ them even though their use for a war pursued outside the context of NATO may violate the terms of the 1954 basing agreement. A classified May 2003 cable sent by U.S. Ambassador to Italy Melvin Sembler and released by WikiLeaks shows that Prime Minister Silvio Berlusconi’s government gave the Pentagon “virtually everything” it wanted. “We got what we asked for,” wrote Sembler, “on base access, transit, and overflights, ensuring that forces… could flow smoothly through Italy to get to the fight.”
For its part, Italy appears to have benefited directly from this cooperation. (Some say that shifting bases from Germany to Italy was also meant as a way to punish Germany for its lack of support for the Iraq War.) According to a 2010 report from Jane’s Sentinel Security Assessment, “Italy’s role in the war in Iraq, providing 3,000 troops to the U.S.-led effort, opened up Iraqi reconstruction contracts to Italian firms, as well as cementing relations between the two allies.” Its role in the Afghan War surely offered similar benefits. Such opportunities came amid deepening economic troubles, and at a moment when the Italian government was turning to arms production as a major way to revive its economy. According to Jane’s, Italian weapons manufacturers like Finmeccanica have aggressively tried to enter the U.S. and other markets. In 2009, Italian arms exports were up more than 60 percent.
In October 2008, the two countries renewed a Reciprocal Defense Procurement Memorandum of Understanding (a “most favored nation” agreement for military sales). It has been suggested that the Italian government may have turned Dal Molin over to the U.S. military—for free—in part to ensure itself a prominent role in the production of “the most expensive weapon ever built,” the F-35 fighter jet, among other military deals. Another glowing 2009 cable, this time from the Rome embassy’s Chargé d’Affaires Elizabeth Dibble, called the countries’ military cooperation “an enduring partnership.” It noted pointedly how Finmeccanica (which is 30 percent state-owned) “sold USD 2.3 billion in defense equipment to the U.S. in 2008 [and] has a strong stake in the solidity of the U.S.-Italy relationship.”
Of course, there’s another relevant factor in the Pentagon’s Italian build-up. For the same reasons American tourists flock to the country, U.S. troops have long enjoyed la dolce vita there. In addition to the comfortable living on suburban-style bases, around 40,000 military visitors a year from across Europe and beyond come to Camp Darby’s military resort and “American beach” on the Italian Riviera, making the country even more attractive.
The Costs of the Pentagon’s Pivots
Italy is not about to take Germany’s place as the foundation of U.S. military power in Europe. Germany has long been deeply integrated into the U.S. military system, and military planners have designed it to stay that way. In fact, remember how the Pentagon convinced Congress to hand over $600 million for a new base and related construction in Vicenza? The Pentagon’s justification for the new base was the Army’s need to bring troops from Germany to Vicenza to consolidate the 173rd brigade in one place.
And then, last March, one week after getting access to the first completed building at Dal Molin and with construction nearly finished, the Army announced that it wouldn’t be consolidating the brigade after all. One-third of the brigade would remain in Germany. At a time when budget cuts, unemployment, and economic stagnation for all but the wealthiest have left vast unmet needs in communities around the United States, for our $600 million investment, a mere 1,000 troops will move to Vicenza.
Even with those troops staying in Germany, Italy is fast becoming one of several new pivot points for U.S. warmaking powers globally. While much attention has been focused on President Obama’s “Asia pivot,” the Pentagon is concentrating its forces at bases that represent a series of pivots in places like Djibouti on the horn of Africa and Diego Garcia in the Indian Ocean, Bahrain and Qatar in the Persian Gulf, Bulgaria and Romania in Eastern Europe, Australia, Guam, and Hawai’i in the Pacific, and Honduras in Central America.
Our bases in Italy are making it easier to pursue new wars and military interventions in conflicts about which we know little, from Africa to the Middle East. Unless we question why we still have bases in Italy and dozens more countries like it worldwide—as, encouragingly, growing numbers of politicians, journalists, and others are doing—those bases will help lead us, in the name of American “security,” down a path of perpetual violence, perpetual war, and perpetual insecurity.
Copyright 2013 David Vine
The Israeli regime has produced 690-950 kg of plutonium and continued to build from 10 to 15 nuclear bombs of the Nagasaki type each year, a report says.
Israel, which also develops very sophisticated chemical weapons in addition to biological and nuclear weapons, refuses to sign any international treaty to allow UN to inspect its nuclear, chemical and biological arsenals, Jane’s Defense Weekly reported.
The report added that Israel, the only nuclear power in the Middle East, has 100 to 300 nuclear warheads and their appropriate vectors (ballistic and cruise missiles and fighter-bombers).
According to Stockholm International Peace Research Institute (SIPRI) estimates, Israel has produced 690-950 kg of plutonium, and continues to produce as much as necessary to make from 10 to 15 bombs of the Nagasaki type each year.
Israel has not signed the Nuclear Non-Proliferation Treaty (NPT), nor the Convention Banning Biological Weapons, and has signed but not ratified the Convention Banning Chemical Weapons.
The entrance of the Israel Institute for Biological Research, Ness- Ziona is the cover for the research and manufacturing of Israeli chemical and biological weapons.
Israel also produces tritium, a radioactive gas with which neutron warheads are made, which causes minor radioactive contamination but higher lethality.
According to various international reports, also quoted by the Israeli newspaper Ha’aretz, biological and chemical weapons are developed at the Institute for Biological Research, located in Ness- Ziona, near Tel Aviv.
Officially, 160 scientists and 170 technicians are part of the staff, who for five decades have performed research in biology, chemistry, biochemistry, biotechnology, pharmacology, physics and other scientific disciplines.
The Institute, along with the Dimona nuclear center, is “one of the most secretive institutions in Israel” under direct jurisdiction of the prime minister.
The greatest secrecy surrounds research on biological weapons, bacteria and viruses that spread among the enemy and can trigger epidemics. Among them, the bacteria of the bubonic plague (the ”Black Death” of the Middle Ages ) and the Ebola virus, contagious and lethal, for which no therapy is available.
With biotechnology, one can produce new types of pathogens which the target population is not able to resist, not having the specific vaccine. There is also strong evidence of research to develop biological weapons that can destroy the human immune system. Officially the Israeli Institute conducts research on vaccines against bacteria and viruses, such as anthrax funded by the Pentagon, but it is obvious that they can develop new pathogens for war use.
The same expedient is used in the United States and in other countries to get around the conventions prohibiting biological and chemical weapons. In Israel, the screed secret was partially torn by the inquiry that was conducted, with the help of scientists, by the Dutch journalist Karel Knip.
It has also come out that toxic substances developed by the Institute have been used by the Mossad to assassinate Palestinian leaders.
Medical evidence indicates that in Gaza and Lebanon, Israeli forces used weapons of a new design: they leave the body intact outside but, upon penetration, devitalize tissues, carbonize liver and bones, and coagulate the blood. This is possible with nanotechnology, the science that casts microscopic structures by building them atom by atom.
Italy also participates in the development of these weapons, linked to Israel by a military cooperation agreement and being its number one European partner in research and development. In the last Finance Act, Italy provided an annual allocation of €3 million for projects of Italian- Israeli joint research. Like the one indicated in the last notice of the Farnesina (Italian Ministry of Foreign Affairs), “new approaches to combat pathogens resistant to treatment.”
Thousands of people in Italy’s Sicily have staged a protest against the US military plans to build a satellite communication system on the Italian island.
The protesters marched on Saturday through the southern city of Niscemi opposing the construction of US military facility, which will include some large radar and tens of radio antennas. The city already hosts 46 US military satellites.
At least one officer was reported injured after police clashed with a number of protesters.
During the past two years, residents have repeatedly complained about an alleged rise in health problems caused by the radiation.
They are also concerned about the environmental consequences especially for the eco-system of the historic Sughereta cork forest as well as the effect on local agricultural produce.
The United States reportedly holds eight military bases in Italy, including its latest military installation in Europe Caserma Renato Del Din, which opened last month in the Italian city of Vicenza.
Egyptian cleric Hassan Mustafa Osama Nasr, also known as Abu Omar
Italy’s President Giorgio Napolitano has pardoned, without presenting a justifiable reason, a US Air Force colonel, who has been convicted in absentia of the abduction and illegal imprisonment of an Egyptian Muslim cleric.
Napolitano’s office said in a statement on Friday that the president had granted the pardon “in hopes of giving a solution to a situation to an affair considered by the United States to be without precedent because of the aspect of convicting a US military officer of Nato for deeds committed on Italian soil.”
Napolitano said he had pardoned Joseph Romano because the US and Italy are close allies and share the ‘common goal of promoting democracy.’ This is while the move to pardon the US convict is believed to be unjustifiable in concrete terms.
Romano was one of the 23 Americans tried and sentenced by Italian courts over the operation to kidnap Egyptian cleric Hassan Mustafa Osama Nasr, also known as Abu Omar, in 2003.
Italian courts convicted 22 CIA personnel in the Abu Omar case. The CIA agents are believed to be living in the United States. They are unlikely to serve their sentences.
Romano was the only American convicted who was not a CIA employee.
Abu Omar, who was abducted in a joint operation by the CIA and the Italian military intelligence agency SISMI, enjoyed political asylum in Italy at the time.
He was allegedly taken to a US air base in northeastern Italy and then transferred to a US base in Germany and subsequently to Cairo.
Romano was the security chief of northern Italy’s Aviano airbase, where Abu Omar was taken to.
The Muslim cleric, who was released in 2007, says he was tortured in prison by his kidnappers.
- Italy Imprisons Military Intelligence Chief for Helping CIA Kidnap Egyptian Cleric (alethonews.wordpress.com)
Video clip (apparently filmed in 2002) demonstrates clearly how agent provocateur-police officers frame peaceful demonstrators to get them arrested.
On this video, an undercover cop pushes a non-violent bystander (a journalist according to the video) against uniformed police officers to get him arrested, and then the masked provocateur leaves the scene without the cops bothering him/her.
Police (at least) in the UK, Canada, US, Italy, Greece have been caught using provocateurs at demonstrations. This is done to get an excuse to put an end to the demonstration, and to restrict people’s right to protest in the future.
You can find videos of some of these events by searching the internet, use the words “police agent provocateurs + name of the country”.
Not every police officer is in on this. This is mainly being orchestrated by a relatively small group of corrupt insiders who in reality work for high-level organized crime, usually called the “shadow government” or “deep state”.
“Police agent provocateurs” are also the reason why violent-activism is counter productive: If there isn’t enough radical behavior at demonstrations, the police might actually stage some. So if there is a far-right/left group willing to stage riots against the establishment, the “deep state” controlling the establishment is getting just what THEY WANT out of the these extreme-groups.
- Undercover ‘agent provocateurs’ assault man at Montreal protest (alethonews.wordpress.com)
Unable to imprison the Americans behind the kidnapping of an Egyptian cleric, Italy has successfully jailed five Italians who took part in the 2003 controversy, including the government’s former military intelligence chief.
Niccolò Pollari was sentenced to 10 years in prison for complicity in the Central Intelligence Agency’s (CIA) abduction of Abu Omar (Hassan Mustafa Osama Nasr). His former deputy, Marco Mancini, received nine years, and three Italian secret service officials were sentenced to six years each.
In November 2009, an Italian court tried 23 Americans (all but one of whom worked for the CIA) in absentia for the Abu Omar kidnapping. All of the convicted received jail sentences of seven years, except for Robert Seldon Lady, the former Milan CIA station chief, who had his sentence increased to nine years after appealing. During the original trial, Lady told an Italian newspaper he was not guilty—but also indicated he may have been involved in the abduction. “I’m only responsible for carrying out orders that I received from my superiors,” he told Il Giornale. The U.S. government has refused to turn over any of those convicted.
After being abducted, Abu Omar was transferred to U.S. military bases in Italy and Germany and eventually shipped to Egypt, where he says he was tortured. “You cannot imagine,” he told Human Rights Watch. “I was hung up like a slaughtered sheep and given electric shocks…. I could hear the screams of others who were tortured too.”
The CIA later allowed him to be released after determining that he was not actually a part of a terrorist organization.
To Learn More:
Italy’s Ex-Intelligence Chief Given 10-Year Sentence For Role In CIA Kidnapping (by Glenn Greenwald, The Guardian)
Jeff Castelli was found guilty along with two other agents, who were each given six years for abducting Osama Moustafa Hassan Nasr, also known as Abu Omar, as part of the CIA’s ‘extraordinary rendition’ program in 2003.
The trio had been acquitted at their first trial in 2009 due to diplomatic immunity but prosecutors had appealed against the verdict.
Abu Omar, who was kidnapped in a joint operation by the CIA and the Italian military intelligence agency SISMI, enjoyed political asylum in Italy at the time.
He was allegedly taken to a US air base in northeast Italy and then transferred to a US base in Germany and subsequently to Cairo.
The Muslim Cleric, who was released in 2007, claims he was tortured in prison by his kidnappers.
Last year, Italy’s Court of Cassation upheld the convictions of 23 CIA agents over the same incident and ordered new appeals trials for five Italian intelligence agents, including Italy’s top two former military intelligence officers, Nicola Pollari and his ex-deputy Marco Mancini.
The Italian Supreme Court ordered the 23 CIA agents to pay one million euros in damages to Abu Omar and 500,000 euros to his wife.
The ‘extraordinary rendition’ program was launched by former US president George W. Bush after the 9/11 attacks as an operation for the global apprehension and incarceration of suspected terrorists.
Originally aired on BBC2 in 1992, Operation Gladio reveals Gladio, the secret state-sponsored terror network operating in Europe. This BBC series is about a far-right secret army, operated by the CIA and MI6 through NATO, which killed hundreds of innocent Europeans and attempted to blame the deaths on Baader Meinhof, Red Brigades and other left wing groups.
Known as stay-behinds these armies were given access to military equipment which was supposed to be used for sabotage after a Soviet invasion. Instead it was used in massacres across mainland Europe as part of a CIA Strategy of Tension. Gladio killing sprees in Belgium and Italy were carried out for the purpose of frightening the national political classes into adopting U.S. policies.
- The Strategy of Tension (alethonews.wordpress.com)
- Former Italian President: CIA & Mossad Behind 9/11 Terror Attacks! (socioecohistory.wordpress.com)