Thursday, January 5, 2012
Arms and the World
Democracies cannot dispense with hypocrisy any more
than dictatorships can with cynicism.
— Georges Bernanos, We FrenchArms sales are not as straightforward as one might think. For one thing, Russia and the United States are both eager to maintain their respective positions as the most successful merchants of death dealing devices. That causes them to sacrifice principle to expediency. And there’s a good reason why they are eager to sell lots of arms. It boosts their respective economies. And times were bad in 2010 and needed a boost in 2011.
In 2010 worldwide arms sales dropped by 38 percent from their 2009 levels to the lowest levels since 2003. In 2009 $65.2 billion in worldwide arms sales agreements were signed compared with $40.4 billion in 2010. Of those amounts the U.S. had $21.3 billion in arms sales whereas Russia had only $7.8 billion. Happily, 2011 turns out to have been a much better year. Projections for Russian arms sales for 2011 were more than $9 billion and by year’s end it had contracts to sell approximately $3.8 billion in arms to Syria.
The United States is not happy that Russia is supplying arms to Syria, a country of whose leader, Bashar al-Assad, the United States and other Western leaders strongly disapprove. Commenting on Russia’s selling arms to Syria, Secretary of State Clinton said in August 2011: “We want to see Russia cease selling arms to the Assad regime.” Russia is unaffected by her comments. It knows that to remain competitive with the United States in the arms sale competition it needs to sell arms wherever there’s a market. Since the United States is more principled than Russia, it does not sell arms to Syria. Instead it sells them to countries that it thinks are in tune with its goals on the international stage-like Iraq.
Iraq is the country the United States devastated in order to help it out. Nuri Kamal al-Maliki is its Prime Minister and we are happy to sell him arms. At the end of December 2011 it was disclosed that we were selling the Iraqi military about $11 billion worth of arms and training. We sell to Iraq because it is our friend. We refuse to sell to Mr. Assad because he is not our friend. Mr. Maliki, has let it be known that he supports President Assad even though Mr. Assad is busy slaughtering his citizens in order to keep them in line. Mr. Maliki supports Mr. Assad because Iran, a country to which the United States has not sold arms since Mr. Reagan was president, encouraged Mr. Maliki to befriend Syria. So now the United States is arming Iraq which is allying itself with Iran and supports Syria whom the U.S. thinks Russia should not arm.
A few weeks ago it was disclosed that that United States had put on hold a planned sale of $53 million of arms to the Kingdom of Bahrain. Bahrain has proved itself a good friend of the United States since it is home to the U.S. Navy’s 5th Fleet. Bahrain’s ruthless ruler is King Hamad bin Isa Al Khalifa. He brutally put down an Arab spring uprising that took place in Bahrain beginning on Valentine’s Day in 2011. More than 40 of those participating in the uprising were killed by the King’s forces. Thousands more were imprisoned and brutalized. When news of the proposed arms sale reached members of the United States Congress, they demanded that the sale be put on hold pending a detailed report of what went on during the uprising to determine whether an arms sale to Bahrain was appropriate. As a result, the arms sale has not yet taken place.
King Hamad was aided by Saudi Arabia in putting down the uprising. According to a March 15, 2011 report in the Los Angeles Times, one month after the revolt began, “hundreds of troops from Saudi Arabia and police officers from the nearby United Arab Emirates. . . entered Bahrain at the request of the ruling family. . . .” to help put down the uprising.
On Christmas Eve it was announced that the administration would sell $30 billion in fighter jets and other arms to Saudi Arabia. This was part of a $60 billion arms sale that was approved by Congress in October 2010. Although the sale to Bahrain was put on hold, there was no need to put the sale to Saudi Arabia on hold since it is a REALLY good friend to the U.S. even though it helped King Hamad put down the uprising in his country.
There are some countries to which the United States will not sell arms-like Syria or Bahrain. It does not hesitate, however, to sell arms to their supporters-like Iraq and Saudi Arabia. Go figure.
Wednesday, December 21, 2011
The Drone, the Secretary and the Seven Dwarfs
Finder’s Keepers, Losers Weepers.
A child’s saying
I hope Secretary of State Clinton is not too disappointed. If she’d asked me I could have told her how it was going to come out. Indeed, had someone reminded her of Qatar, she wouldn’t have even bothered to ask. The Qatar incident goes back to the mid-1980s and explains why Iran’s answer should have come as no surprise.
In 1985, a year when the United States was supporting the Afghan rebels led by Osama bin Laden instead of bombing them, the United States supplied the rebels with a bunch of Stinger missiles to use against the Soviet forces who were at that time engaged in the same kind of operation in Afghanistan in which the United States is now engaged. In 1987some of those missiles ended up in Iran. There were conflicting reports as to whether the Iranians bought them from the Afghan rebels who no longer needed them or whether the Iranians captured them in a cross border skirmish with Afghan forces. How they were obtained is irrelevant. Once Iran had them it could not get them to work. Accordingly Iran put the Stingers on Craig’s list and in 1988 they were purchased by the sheikdom of Qatar.
Qatar is not a very big country so a logical question is why did it need Stinger missiles? The answer is it needed them in order to defend itself from Bahrain. That is because in 1987 Bahrain bought 70 Stinger missiles from the United States to defend itself against Iran, a country that had been secretly armed by the Reagan administration during the Iran-Iraq war. Qatar was afraid that some day Bahrain might forget that the missiles it bought were to be used against Iran and might use them against Qatar. Qatar thought if it had Stingers they would help Bahrain remember against whom it was supposed to use the Stingers it had acquired and not accidentally use them against Qatar. (The Obama administration is about to decide whether to sell another $53 million in arms to Bahrain, a country ruled by a brutal despot who makes up for his shortcomings by give the U.S. Navy’s 5th Fleet a home. To date Qatar has not asked for an offsetting gift from the U.S.)
In March 1988 Qatar had a really neat parade and one of the things the parade announcer told folks was that a missile that was in the parade was a Stinger missile. The purchase of Stinger missiles was then illegal under U.S. law (unless the U.S. was the vendor) and the assistant secretary of state for Near Eastern and South Asian affairs told the Crown Prince of Qatar some months later that the United States wanted immediate access to the Stingers to see where they came from and wanted them back. Qatar demurred and as far as this writer knows, Qatar still has the Stingers. All of which is simply leading up to the latest kerfuffle over something Iran has that the United States wants.
In early December a stealth reconnaissance drone known as the “Bat-winged RQ-170 Sentinel” landed in Iran. To the outside observer it is not known whether it crashed or was hijacked by Iranians. The administration has asked Iran to return the drone which is not much different from telling Qatar to return the Stinger missiles it bought on the open market. Some of the seven dwarfs seeking the Republican presidential nomination think it was silly to ask for the return of the drone. During a Fox News Republican debate Mr. Romney scoffed at what he called “Foreign policy based on ‘pretty please.’ You have to be kidding.” (He probably was unaware that that was what Mr. Reagan did when he learned Qatar had Stingers.)
Rick Perry also thought asking for them back was dumb. Of course his proposal was even dumber. He suggested destroying or capturing the drone in order to prevent Iran from obtaining sensitive information. He didn’t say how that was to be accomplished but he was probably contemplating a raid similar to the one that resulted in Osama bin Laden’s death. The dumbest cluck of all, to no one’s surprise, came from Dick Cheney whose profound wisdom resulted in more than 100,000 Iraqis killed in the last 10 years, more than 4000 U.S military persons killed and more than 20,000 grievously wounded U.S. military persons and a highly unstable country. If that doesn’t establish his credentials as a great thinker it’s hard to know what would. He thinks that the fact that the drone was engaged in hostile activity over Iran’s sovereign territory is no reason for Iran to be churlish when asked to return it and suggested conducting an airstrike over Iran to destroy the drone. That would presumably not offend the Iranians who could easily have avoided such an airstrike by simply being polite and returning the drone to its rightful owners.
Since none of the proposals to retrieve the drone had a chance of success, it’s a good thing that the Secretary chose to simply request the return of the drone. The request did not start a war.
Thursday, December 15, 2011
Corzine Meets Madoff
It is with a pious fraud as with a bad action. It begets a calamitous necessity of going on.
— Thomas Paine, The Age of Reason
A number of people have begun wondering what the difference is between Jon Corzine and Bernie Madoff. The answer is that Mr. Madoff knew exactly where his clients’ missing billions of dollars went. Mr. Corzine is still trying to figure that out. Mr. Madoff had to keep track of more money that didn’t exist than did Mr. Corzine. Bernie’s clients lost at least $20 billion whereas the money belonging to clients that cannot be located at MF Global just yet is only $1.2 billion.
To use the word “lost” in connection with monies belonging to Mr. Madoff’s clients is not appropriate since it was only lost, in the technical sense of the word, unless you were one of his clients. It found homes in yachts, houses and other indicia of great wealth that were the hallmark of Mr. Madoff’s life style until he exchanged it for the more modest confines of the United States Penitentiary in Atlanta and later the Federal Correction Complex in Butner, North Carolina. Another difference between the two men is that Mr. Madoff would appear to be considerably more competent than Mr. Corzine. Although he was neither U.S. Senator nor a governor of New Jersey, Mr. Madoff managed to keep his Ponzi scheme going for 16 years whereas Mr. Corzine brought MF Global to bankruptcy within 18 months after taking it over. Mr. Madoff knew how to juggle books to keep his Ponzi scheme afloat; Mr. Corzine testified before the House Agricultural Committee that: “I simply do not know where the money is, or why the accounts have not been reconciled to date. I do not know which accounts are unreconciled or whether the unreconciled accounts were or were not subject to the segregation rules.” Had those, or similar words come out of Mr. Madoff’s mouth, his Ponzi scheme would not have enjoyed success for 16 years.
Given Mr. Corzine’s background, his befuddlement at the absence of $1.2 billion from the company books comes as a bit of a surprise. He was hardly a newcomer to the world of finance when he joined MF Global. He started his career as a bond trader at Goldman Sachs in 1976. From December 1994 to June 1998 he was Co-Chairman and Senior Partner of the Goldman Sachs Group, L.P. During his years at Goldman Sachs he reportedly earned close to $400 million, a smaller sum than the amount Bernie made, but nothing to be ashamed of and an amount that one would expect would have been paid to someone who was really good at what he did (although recent examples from the world of business show that that is rarer than the public would have believed before the financial crash.)
In testifying before the House Agricultural Committee about MF Gloabal’s problems Mr. Corzine said: “I tried to exercise my best judgment on behalf of MF Global’s customers, employees and shareholders.” Mr. Madoff could not have said that.
Since the loss of customers’ funds may be attributable to using customers’ funds to cover the firm’s own investments losses, Mr. Corzine was asked whether he authorized such transfers. He said he was not one of the people who transferred funds. He said that he “never intended to authorize anyone” to use customer funds. If someone thought he had that was a misunderstanding. I do not know . . .whether there were operational errors at MF Global or elsewhere, or whether banks and counterparties have held onto funds that should rightfully have been returned to MF Global.”
Mr. Corzine’s appearance before Congress and Mr. Madoff’s appearance before criminal investigators were quite different events. When Mr. Corzine was testifying before the Agricultural Committee, Rep. Tim Johnson, (R-Il.) showed a bit of professional courtesy to someone who was a former colleague in the U.S. Congress, saying: “I haven’t done a net-worth analysis of individuals who have testified before this committee but at least according to any [public] accounts, you’re a person of substantial wealth, and I congratulate you on your acquisitions.” I doubt whether anyone congratulated Mr. Madoff on his acquisitions
Some folks on Wall Street have reportedly begun floating a theory that Mr. Madoff and the firm over which Mr. Corzine presided may have more in common than was first thought. According to a report on CNBC, an executive at one Wall Street firm says that some of the folks in his firm think that the missing funds had a Madoff-like quality-they never existed. The theory is that the $1.2 billion that’s gone missing were simply phony trading profits that were realized from trades that never took place and were used to demonstrate to customers that their money was being ably managed. The executive was quoted by CNBC as suggesting that “Maybe there’s a mini-Madoff inside of MF Global. A guy who just faked the trades.” Time will tell whether that was idle speculation or perceptiveness. I hope they remember to let Mr. Corzine know when time has spoken.