Iran, the US, and the Nuclear Non-Proliferation Treaty

Iran, the US, and the Nuclear Non-Proliferation Treaty

By Daniel Robicheau MA, Philippa Winkler PhD

Daniel Robicheau was associate editor of Hidden Casualties, The Environmental, Health and Political Consequences of the Persian Gulf War (London: Earthscan, 1994). Philippa Winkler is Assistant Visiting Professor in Political Science at Northern Arizona University, and was chief editor of Hidden Casualties.

The Bush Administration has repeatedly threatened to keep "all options" on the table, including the possibility of using nuclear weaponry against Iran's nuclear facilities. In addition, through the pronouncements of Prime Minister Ehud Olmert, Israel has directly threatened to use tactical nuclear weapons (mini-nukes) and conventional bombs to destroy Iran's underground nuclear facilities.

Following these threats, Olmert let slip that Israel has its own nuclear capability, a rare public admission that has slipped out before in tense situations between Israel and its neighboring countries.

Given that Israel bombed Iraq's Osirak nuclear reactor in 1982, and given that alarm bells about a nuclear Iraq, including fabrications of evidence, led to the U.S. invasion of that country, such threats would not seem to be idle. Iran practices military exercises in the Persian Gulf, while US naval battle groups assemble there.

This stand-off appears to be spiraling down to war. A nuclear attack by the US, Israel, or both, against Iranian territory would be the second time nuclear weapons will have been used in history.

Iran lies between two wars - to its west in Iraq and to its east in Afghanistan. Brinksmanship could easily turn the stand-off into real war involving a third front: Iran.

Iran's Counter-Arguments

While the media's focus is on conflict, Iran's actual arguments regarding its nuclear program are being brushed aside. However, they resonate deeply in a Middle East that has experienced constant interventions by the US and Western Europe during past colonization and wars. A new Non-Aligned Movement (NAM) of non-western countries is listening to Iran's charges of being treated by "double standards" in the current stand-off. This nod to Iran's claim is sympathetic despite the majority vote against Iran by the UN Security Council in its resolution for economic sanctions.

Several times during 2006, President Mahmoud Ahmadinejad and the former president, Muhammad Khatami, referred to Iran being treated with "double-standards" in its current nuclear stand-off with the United States and Europe. Aljazeera News on the Internet (3/4/2006) reported former President Muhammad Khatami's mention of "regional powers that possess nuclear arms," a thinly veiled reference to Israel, the only Middle Eastern state with nuclear weapons. In terms of Iran's perception that it is being treated differently from Israel by the US and key European countries, Khatami stated that Iran is the victim of "double standards": "How come these powers do not face the wrath or pressure from Europe or the US in order to make the Middle East free of such weapons?"

The US media portray the conflict in terms of an intransigent Iran unwilling to open up its nuclear program to the world. Nevertheless, 1) Iran has long been a signatory to the NPT, and 2) has allowed IAEA inspectors into its nuclear facilities for some time, whereas inspectors have not been allowed into Israeli nuclear facilities since the 1960s.

Iran's allegation of "double standards" has several aspects. One is the contrast between Iran's treatment and that of Israel, whose own nuclear program has continued unimpeded to the point that it is now a middle-tiered, nuclear-armed country. Policies toward Iraq have been very different; from 1980 to 1990, the US-led West freely transferred non-conventional technology to Saddam Hussein's regime. A second aspect involves what Iran sees as its right to pursue nuclear technology in conformity with the NPT.

Complicity in Israel's Pursuit of Nuclear Weapons

The history of Israel's nuclear program reveals intense Western involvement. Beginning in the 1950s, France clandestinely assisted Israel's construction of the Dimona nuclear facility in the Negev Desert, sending hundreds of French workers and technicians to work on the site. Since then, Israel has aggressively pursued a nuclear weapons program with the aid of western powers, especially the United States, covering up Israel's activities. From 1958 to 1960, US U2 aerial reconnaissance and British ground-based photography both monitored the construction of the Negev facility. Seeing purposes beyond nuclear energy production, Michigan scientist Henry Gomberg noted Israel's production of weapons grade plutonium at Dimona. By December, 1960, the British and US media were reporting that Israel was acquiring a nuclear weapons capability.

Israel entered an affirmative vote at the IAEA general conference in September 1960 agreeing to "safeguards," which would allow for inspections of nuclear facilities. Yet Israel's words would not be followed by deeds, in the end only allowing private inspections by the US. The first such visits were to be inadequate for determining the exact nature of the activities at Dimona, since the inspectors were not previously given photographic evidence of the U2 flights that showed the existence of a reprocessing plant - a prerequisite to the production of weapons grade plutonium.

After this first inspection by the US, seven more teams would conclude that there was no evidence of a nuclear weapons program, having consistently been denied access to aerial or ground-based photography of Dimona. Israel, now given a clean slate regarding its activities, would continue to issue public statements describing Dimona as "a textile plant," "agricultural experimental station." or a "desalinization plant." If the ruse was intended as a public relations ploy, by 1963 the US also acknowledged in CIA reports that Dimona would go "critical" within a year or two. France, through the Marcel Dassault company, was then building a delivery system for Israel known as the "Jericho" missile. From the Kennedy Administration onward, attempts to rein in Israel's development of a nuclear arsenal would prove futile.1

 Israel has sidestepped scrutiny of its nuclear program for decades. It gained nuclear cooperation without supervision, in exchange for services to major foreign powers. Certain elements of the French government, which included high-ranking military officials, supported Israel's nuclear program in exchange for information on the relationship between Egypt and the independence movement within its Algerian colony the '50s and '60s.2

The US had more general objectives. Since WWII, it had sought regional influence. During the Eisenhower Administration, information about a reprocessing facility for plutonium production was kept from scientists inspecting Dimona. Meanwhile, Israel firmly rejected the placement of Atomic Energy Agency "safeguards" on its nuclear facilities, despite the push from the Johnson Administration to do so. This situation has continued because Israel is seen as important to US interests in the Middle East. Internally, US presidents have been under pressure as well from pro-Israel advocates like Abe Feldman, as well as lobbying groups, to not reveal Israel's nuclear arms program. As Yair Evron noted in his book, Israel's Nuclear Dilemma: "Indeed, the American commitment to Israel is perceived in Washington as having priority over the interest in nonproliferation."3

A Nuclear-Armed Israel: A 'Fait Accompli'

When US legislation was drafted regarding non-proliferation, Israel's nuclear arms program was treated as a fait accompli, as for example in the Glenn Amendment to the International Security Act of 1977. It stipulated that US economic and military aid be cut off to countries that imported either nuclear enrichment or reprocessing plants. Israel, of course, had imported the technology from France for both enrichment and reprocessing. However, it had done so prior to 1977 and was not affected by the legislation. Still, the Glenn Amendment included an "escape clause," as pointed out by investigative reporter Seymour Hersh, whereby the US could still provide economic and military assistance if the cut-off to the country would "be seriously prejudicial to the achievement of United States non-proliferation objectives or otherwise jeopardize the common defense and security...As long as the President and Congress define the survival and security of Israel as a US national interest , the escape clause could apply to the Israeli case."4

Since the late 1960s, Israel's nuclear arms capabilities have become widely known. Yet Israel has maintained a studied ambiguity about its nuclear arms program. Repeatedly it stated that it would not be the first country to introduce nuclear weapons into the Middle East. However, a 1968 exchange between US Deputy Secretary of the Defense Paul Warnke and Israeli Ambassador to the US Yitchak Rabin shows Israel openly confronting any challenges to its program. Rabin defended Israel's ambiguous position by arguing that current nuclear-armed powers were defined as such because they had openly tested their weapons, which Israel said it had not. Warnke countered that the physical presence of weapons, even if components were disassembled into parts, still meant that nuclear weapons had been introduced into the region. Despite the word games, Israel was defiantly maintaining nuclear weapons capability without declaring it.5 Subsequent US leaders played along with this ruse rather than acknowledge having provided economic and military aid to a nuclear armed Israel. This acknowledgment would have forced them to explain why Israel as a nuclear state could never join the NPT. The next question would have been: Why should other countries with nuclear ambitions adhere to IAEA safeguards under the NPT, but not Israel? Still maintaining its public posture of ambiguity, Israel claims that it will not be the first to introduce weapons into the Middle East. Soon after Ehud Olmert let it slip that Israel had a nuclear arms capability, he reverted to the same line as before.

The first NPT was signed by 65 countries in 1968. The last US visit to Israel's Dimona facility was the following year. Since then, there have been Non-Proliferation Treaty Review Conferences every five years. Non-Proliferation Treaty definitions are inadequate as to what constitutes a nuclear weapons state. To say that a state to be a nuclear weapon state must have exploded a device prior to the 1968 start of the NPT, is to ignore the possibility that Israel may have tested its weapons through another party (e.g. South Africa).6 Israel's status as a special case has not gone unnoticed by the rest of the world, especially when approximately 180 other non-nuclear states have acceded to the NPT.

"No Cookie Cutter Policy"

"I am often asked..., 'Well, how come you deal with that country and you don't deal with this one?' My answer is that you can't have a cookie-cutter approach to foreign policy"7- Madeleine Albright, US Secretary of State, 2000.

During the eighties the US chose to support the Ba'ath party until the 1991 Gulf War as a way of countering the potential threat of fundamentalist Islamic Iran. Known as the "Iraqi tilt," the policy began officially in 1982 when the US removed Iraq from its State terrorist list. According to a 2001 article in the Washington Post,

"U.S. intelligence and logistical support played a crucial role in shoring up Iraqi defenses against the 'human wave' attacks by suicidal Iranian troops. The administrations of Ronald Reagan and George H.W. Bush authorized the sale to Iraq of numerous items that had both military and civilian applications, including poisonous chemicals and deadly biological viruses, such as anthrax and bubonic plague." 8

As a result of the Iraqi tilt, governments worldwide were given the green light to provide Saddam Hussein with military-related dual use technology, much of which was unconventional. The US loaned agricultural credits to Iraq and provided material applying to Iraq's nuclear program, as did Britain and other countries until Iraq invaded Kuwait in 1990. In 1991, the US was ranked number one worldwide in arms sales.9 Today, the US remains silent about its contribution to the military build up of the Ba'ath Party. This policy was consistent with the goal of containing Iran - an objective promoted by neoconservatives as well as Israel.

Double Standards vs. The Right to Pursue Nuclear Technology

On the other hand, as a signatory to the Non-Profileration Treaty (NPT) as far back as 1970 ,10 Iran has consistently argued its right to pursue nuclear research for peaceful purposes - a right guaranteed it under Article IV of the NPT Treaty. In fact, Iran's first small nuclear research reactor had been bought from the US in 1959, with Shah Reza Pahlavi planning to construct 23 nuclear reactors by the 1990s . Article IV of the Treaty stipulates that a signatory has the right to either produce its own enriched uranium or purchase it on the international market, as long as the enriched uranium is used for peaceful purposes; for example, as fuel in energy production. A signal that could indicate an attempt to use enriched uranium for weapons production would occur when a country pulls out of the NPT, which only one country, North Korea, has done. Iran, on the other hand, has remained within the NPT regime, giving IAEA inspectors allowed access to Iran's nuclear facilities since February 1992.

Fair International Law

Only recently has Iran threatened and then stopped implementing the "Additional -Protocol" to the NPT, which allowed for short-notice inspections of its nuclear facilities, which it had signed in late 2003. It did so in retaliation for the IAEA Board of Governors' recommendation that Iran's case be sent to the UN Security Council. Yet, even in this case, from a purely international legal standpoint, Iran was within its rights to withdraw from the Additional Protocol, which had been signed by the previous government but never ratified by the Iranian Parliament or Majlis.

Iran would also be within its rights to withdraw from the NPT altogether, as North Korea did. Article X of the NPT stipulates that it give three months notice before pulling out of the NPT on grounds of protecting its national sovereignty. Two wars are being waged on Iran's borders, in Iraq and Afghanistan, by the Bush administration, which is threatening to bomb Iran's nuclear facilities. In such a hostile climate President Almadinejad could be seen as justified in perceiving threat to Iran's national sovereignty. Nevertheless, Iran has continued its membership.

There appears to be a glaring contradiction between "real politique" and the neutral application of international law in nuclear policy as promoted through the NPT. International law must be seen as neutral and even-handed in its relations with all nations. Instead, certain nations are allowed to sidestep legal frameworks, while others adhering to these frameworks are punished. This is the point of Iran's argument of being treated with "double-standards."

A similar lack of coherence exists with respect to the Bush administration's new acceptance of India, which also has never signed the NPT. The recent agreement between the US and India will allow civilian nuclear trade between the two countries, despite the stated policy of the NPT to discourage such activity. The deal includes safeguards and inspections of India's fourteen civilian nuclear power plants, but at the same time acquiesces to its already existing stockpile of nuclear weapons.

Here again is a contradiction between the application of international law and the political expediency of geopolitical goals. The deal will be viewed as a reward for India's participation in applying pressure on Iran. Ultimately, the same preferential treatment may be awarded to Pakistan, another non-signatory of the NPT that possesses a burgeoning nuclear weapons program.

The US policy may be leading the rest of the world onto a slippery slope of non-compliance with the NPT. Such nuclear trade deals with non-signatories of the NPT undermines the legitimacy of the NPT. A return to the spirit and intent of the Nuclear Non-Proliferation Treaty is needed, rather than bellicose statements and threats. A beginning point might be the return of nuclear arms reduction talks between the major powers, as stipulated under Article VI of the NPT.

Text taken here.

War Is Personal

War Is Personal
by EUGENE RICHARDS

Documentary photojournalist Eugene Richards has a long career of producing powerful projects on social issues such as drug abuse, mental illness and aging. He is now working on a project on the impact of the Iraq war titled "War is Personal."

Sgt. José Pequeño / Age 34 / Sugar Hill, New Hampshire

José was the youngest police chief in the state of New Hampshire, forever. But then he was in the National Guard, and they asked for volunteers. It was on March 1, 2006. They were guarding an Iraqi police station and got a tip it was going to be hit. One of the bombers' cars hit the police station, blew it up, and my son was calling in to base when they threw a grenade through the open part of the Humvee. The driver died instantly. When they found José, the lower part of his body was still inside the Humvee but the explosion had gone under his helmet and the left part of his brain was out in the sand.

I used to work nights. I got home at 7 am, couldn't sleep, when there was a phone call. "We need to notify you that your son had an accident and is in surgery." But they couldn't give me any news how bad he was. I hung up, called my daughter and his dad, then kept calling Casualty Affairs every fifteen minutes. "As soon as we know, ma'am." Then, "They're flying him into Germany." Finally, when he got to Germany, they told me it was an injury on the head. "How bad is it?" "He's getting cleaned up, but we don't know the extent of the injury." I finally got to a nurse. "You tell me." "I'll have a neurosurgeon call." Two o'clock in the morning, I got a call from the neurosurgeon. "I'm still evaluating your son. I'll call you when I'm done." "How long?" "I've got like twenty minutes to go." And I said, "You've got twenty-two minutes. I'm his mom, for God's sake."

Twenty-five minutes later I got a call. A voice said, "Is this your son?" "Yes." "Such a beautiful son," he said. "What a terrible waste, a young man with such a life ahead of him, and he's going to die." Right there, a piece of me just left. "You're such a liar!" I yelled. "Of course my son is going to make it." After that, I asked, "Are you finished with your evaluation? Tell me exactly what's wrong with my son. Please." And he said, "He has a severe brain injury, severe bleeding; he's lost the bottom two lobes of his brain." And at that time, my daughter's boyfriend heard me scream and fall off the bed. I started throwing things. My next-door neighbor came running, and I sat down and cried and said, "I can't do this."

The photo above was taken by Eugene Richards as part of a series he is developing with The Nation Institute. Sgt. José Pequeño suffered a devastating brain injury from a grenade tossed into his Humvee in March 2006.

In his mother's arms, I hardly recall a more visceral sensation of the senselessness of the Iraq campaign. Given the angle, Pequeno's brain injury draws an unavoidable analogy between war and the capacity for thought. Ultimately, there is no rationalizing or comparing one devastating form of injury with another. In Sgt. Pequeno's case, however, the war has literally caused him to lose his mind.

"War all comes down to these little tiny stories about people's lives that will never be the same."  -  Eugene Richards

All Sgt. Ryan John Baum wanted to do was come home and put his daughter, Leia, on his chest. Born 11 days after his death in Iraq on May 18, 2007, the placement of the baby photo during visitation addresses that wish.

For more of the visual, visit BAGnewsNotes.com

Will American Assign Iran to Israel?

Earlier this month, Israel sent more than 100 warplanes on military maneuvers across the Eastern Mediterranean. An unnamed U.S. official described the exercise as practice toward honing the skills for a long-range strike. The assumption is that the maneuvers signal an Israeli willingness and capability to strike Iran’s nuclear facilities, if all other measures to stop Iran’s program fail.

Israel’s well-publicized war game in the Eastern Mediterranean was a classical signaling stratagem. The message to the European Union and the United States is: “Unless you get serious about real sanctions, we’ll go the Samson route. We’ll throw some 100 F-15s and F-16s against the Iranians, and we don’t care what they do to the rest of the Middle East. Whatever they do, escalation dominance is ours because we have the nukes and they don’t. And our threat would be credible because our existence is at stake.”

This Schellingesque game (”if you don’t do what we want, we’ll lose control over ourselves and take the plunge”) makes perfect sense for the Israelis, being the only nation on earth that is existentially threatened by the Khomeinists. It also makes some sense for the United States to have Israel strain against its chain in order to soften up Iran. But it does not make sense to “delegate” Israel or to let it strike on its own. Here is why.

The basic problem is the divergence of interest once you go beyond the shared loathing of the Tehran regime and the common U.S.-Israeli abhorrence of Iranian nukes. Since these threaten Israel’s existence, other items like oil fields in Saudi Arabia, tanker traffic in the Gulf or terror in Iraq are logically secondary concerns. For the United States, on the other hand, these “secondary” concerns are primary ones. In the war in Iraq, it matters a great deal how the Iranians would respond on that front line. Forget the Mahdi Army; even Moqtada Sadr is not a flunky for the “Supreme Leader.” But how about a straightforward lunge of the Revolutionary Guards into the Basra province—oil wells and all?

For the world’s economic Number One, it matters whether burning oil fields and sinking tankers add up to short-term oil prices of $300 or $400 per barrel. So Israeli and U.S. interests on these “secondary” items are not alike, whence two conclusions follow.

First, the global power can’t “delegate” to its “continental sword” in the Middle East. If you’re in on the crash, you want to be in on the take-off. The idea that the United States could pretend non-involvement is absurd. At a minimum, the United States would have to give overflight permission for Iraq as the Israelis would hardly fly around the Arabian Peninsula to strike Iran from the sea. To permit is to condone, and to condone is to be in cahoots. “Who, me?” is not an American option in this highest-stakes game. As predestined target of retaliation, the United States would want to be in the cockpit ab initio—especially since this has to be done right the first time round.

Hence the second and properly strategic reason why the United States can’t outsource this act of pro-active de-proliferation. This would not be a one-afternoon cakewalk as against Iraq’s Osirak reactor in 1981. This would have to be a massive and sustained air campaign the Israeli air force could not prosecute (though it is larger than the German or French air forces). And it would have to be flanked by a serious naval engagement, which only the United States can mount.

The war, given those crucial American “secondary” interests, would have to consist of three parts.

One, lasting, say, a week or even two, would take out all of Iran’s air defenses. The drill is well-known, it has been executed twice over Iraq and once over Serbia. But remember: we could never detect, let alone destroy, all of Saddam’s mobile missile launchers.

The second campaign would have to proceed almost simultaneously. Its purpose would be the elimination of all Iranian assets—naval or air—that could threaten tanker traffic in the Gulf. This is where the U.S. Navy comes in. Before that first cruise missile is launched against Bandar Abbas, the United States would want to establish an intimidating (or shall we say: terrorizing?) presence in the Gulf so as to sharpen Iranian risk assessments.

The third campaign would be launched consecutively against those nuclear targets proper. This author does not believe that we don’t know where all of these targets are; the Israelis for sure know the addresses and ZIP codes. But some of them are hardened, and others are located within cities. So the bombing will have to be smart, surgical and repetitive. Again, it is better to think in terms of weeks rather than days.

The Israeli air force cannot stage such a three-pronged campaign. Nor would it have to because even $300 oil pales in significance to national survival. For the United States as the global power, however, Iranian retaliation in Iraq or against oil assets matters greatly. Therefore, these threats would have to be eliminated along with the Bushehr reactors and the enrichment and reprocessing plants.

Hence, it is either a real war or none at all. Israel cannot be “delegated.” Nor should it be.

Text taken from here.

In another report, U.S. congressional leaders agreed late last year to President George W. Bush's funding request for a major escalation of covert operations against Iran aimed at destabilizing its leadership The article by reporter Seymour Hersh, from the magazine's July 7 and 14 issue, centers on a highly classified Presidential Finding signed by Bush which by U.S. law must be made known to Democratic and Republican House and Senate leaders and ranking members of the intelligence committees. Hersh has written previously about possible administration plans to go to war to stop Tehran from obtaining nuclear weapons, including an April 2006 article in the New Yorker that suggested regime change in Iran, whether by diplomatic or military means, was Bush's ultimate goal. Funding for the covert escalation, for which Bush requested up to $400 million, was approved by congressional leaders, according to the article, citing current and former military, intelligence and congressional sources.

Other News
Israel to attack Iran unless enrichment stops
Israel warns Iran ahead of 'routine' emergency drill
Iran vows to rain missiles on Israel if nuke plants attacked
Israel, Iran, and the US: Nuclear War, Here We Come
Israel, Iran Practically At War
Israel has a year to destroy Iran's nuclear programme: ex-spy chief

What About Peace As An Alternative?

What About Peace As An Alternative?

A rational response to the alleged Iranian missile threat, would be to change the prevailing paradigm completely, and introduce a positive one. Instead of discussing the merits and demerits of MD and/or nuclear deterrents, why not explore the ways and means of establishing durable peace in the entire region? To do so would require solving the 60-year-old Palestinian-Israeli conflict, which is the festering sore of the entire body. This was laid out in some detail by H.H. Prince Torki M. Saud Al-Kabeer, Deputy Minister for Multilateral Relations of the Saudi Kingdom. Declaring that the Arabs had chosen peace as a strategic option back in the 1991 Madrid conference, Prince Torki reviewed the Saudi initiative, endorsed by the Arab League in 2002, which calls for the establishment of normal diplomatic ties with Israel in exchange for a return to the 1967 borders. But Israel must cease activities which change the situation on the ground and impede talks, like erecting new settlements, building a wall, blockading Gaza and so forth. The same point was made quite forcefully by Prof. Dr. Judith Palmer-Harik, president of Matn Univeristy in Beirut. Her speech reviewed the reasons why Hezbollah and Hamas had taken up arms against Israel, and argued that the illegal occupation of Palestinian lands must be terminated in a negotiated peace. Such a comprehensive peace constitutes also the only reliable guarantee of security for Israel, although this thought seems to have escaped the notice of the Israeli speakers present. Dr. Pedatzur said that, since the conference title did not refer to peace, it was off the agenda.

A prerequisite for finally achieving a durable peace, bolstered by regional economic cooperation agreements to build basic infrastructure, is untying the knot of the so-called Iranian nuclear threat. The two Iranian representatives in Berlin spelled out how far their country is willing to go to make talks possible. What Dr. Larijani in particular emphasized was the need for a new paradigm in the attitudes of the interlocutors. His "first principle," was that one must "abandon the hostile paranoid attitude towards Iran for a while, and replace it with a mindset that goes for realistic interaction." 

This means speaking to one another as equals. "Let us acknowledge each other," he said; "Europe and the U.S. are major players, but they are not omnipotent." Iran, he added, is not omnipotent either, but must be recognized as a major player in the region. Dealing with the nuclear dispute per se, Larijani listed three catchwords, NPT, transparency and mutual commitment.

Dr. Hans Blix, former General Director of the IAEA, and former Swedish Foreign Minister, reflected similar thinking, when he urged that the Iran case be approached in a manner akin to that of the six-party talks on North Korea, i.e. that one should not demand suspension as a pre-condition, but rather offer security guarantees (no war and no regime change).

If such a new paradigm can be introduced, anything is possible. Larijani here repeated Iran's offer in its recent letter to Russia, China, the EU, UN and others (read here): that all crises in the region, from Afghanistan (which he characterized as a situation worse than Iraq), to Iraq, Lebanon, and the Palestinian-Israeli conflict, can be dealt with as "in a parcel," with the constructive contribution of Tehran. "We have already had some indulgence," he noted, "in the issue of Lebanon," pointing to Iran's role in breaking the deadlock around the presidential election. And, U.S.-Iranian talks have already taken place on Iraq.

At present, Iran is considering the proposal of the 5+1 group, delivered by EU Foreign Policy representative Javier Solana. Although the proposal speaks of suspension of uranium enrichment as a precondition for talks, Joschka Fischer’s remarks indicate they may be thinking in terms of a freeze. Foreign Minister Manuchehr Mottaki stated that Tehran preferred to identify the common points between that proposal and the one Iran sent out, and to enter concrete talks on that basis. A vigorous and urgent diplomatic offensive must be launched now, taking advantage of the new specifications provided by Iran. If not, as IAEA Director General Mohammad ElBaradei recently warned, a military attack against the Islamic Republic would turn the entire region into a "ball of fire."

Article taken from here.

Other News.

Iran vows to rain missiles on Israel if nuke plants attacked
Iran threat to close oil strait
Former Mossad chief: Israel has 1 year to stop Iran
Iran ready to strike at Israel’s nuclear heart

STOP AIPAC NOW!

For Peace in the Middle East, Stop AIPAC Now! (Website here)

The AIPAC Annual Conference. A gathering supporting war with Iran, continued occupation of Palestine, and the continued intimate relationship with the extremist "Christian" Right. See the details here....

A special page to discuss AIPAC's push for the next war, this time with Iran. Read about the Iran War Resolution.

Excerpt from Resolution supported by America's Pro-Israel Lobby (AIPAC):

...demands that the President initiate an international effort to immediately and dramatically increase the economic, political, and diplomatic pressure on Iran to verifiably suspend its nuclear enrichment activities by, inter alia, prohibiting the export to Iran of all refined petroleum products; imposing stringent inspection requirements on all persons, vehicles, ships, planes, trains, and cargo entering or departing Iran...

Such a blockade imposed without United Nations authority (which the resolution does not call for) would be seen as an act of war. Congressional sources say the House will likely vote on the resolution, H.Con.Res. 362 (see full resolution here), probably after the 4th of July recess (House votes resumes the 9th) . As of June 27, it already has 220 cosponsors in the House. Current list of cosponsors here. Click here for latest status.

Congressional leaders seem to have assumed that there would be little opposition to this punitive measure against Iran, and they have put it on a fast track to passage. But due to the threat of war, many organizations and reasonable Members of Congress are working overtime to stop this bill.

Please join Stop AIPAC and go to the Just Foreign Policy website and tell your Representative to oppose this dangerous path that could lead directly to war with Iran. Go Now. This may be the most important action alert of the year. This is the centerpiece of AIPAC's current political action. Can it be defeated?

Source from here.

Further articles

War Lobbies unite in push for $200 MILLION campaign for war against Iran. Read about "Freedom Watch".
The extreme Christian Right & AIPAC. A dangerous symbiosis. More
Israel Lobby working to promote military confrontation with Iran, part of AIPAC'S spy scandal.
See Article "Enforced orthodoxies and Iran" by Glenn Greenwald, author of the Best-Selling book, How Would A Patriot Act?
How Does AIPAC & the Israel Lobby promote US aggression in the Middle East? Mazin Qumsiyeh (author- Sharing the Land of Canaan, Human Rights and the Israeli-Palestinian Struggle) shares his views. See "Israeli lobbies and the upcoming war on Iran"

Simply Sheer Lie

Professor Muhammad Sahimi of the University of Southern California wrote:

Iran's pursuit of nuclear weapons
There is not a shred evidence that Iran has a nuclear weaponization program. The International Atomic Energy Agency has certified time and again that it has found no evidence for a nuclear weapon program.

Regional hegemony.
Regional hegemony with a 3rd-rate army, an obsolete airforce that belongs to museums, a navy that is no match for the Y.S. naval forces in the Persian Gulf? How is this "hegemony" going to be achieved?

Iran's manifest efforts to destabilize and reshape the Middle East
Iran provided crucial support for the U.S. when it invaded and overthrew the Talibans. Then, Iran played a fundamental role in helping the National Unity Government of President Hamid Karzai to emergy in 2001. Iran has done more for rebuilding of Afghanistan than any other country, with the exception of the U.S.

The Shi'ite groups in Iraq that are now part of the gobvernment spent years in exile in Iran. They were funded, trained, and armed by the Iranian government. Prime Minister Nouri al-Maliki and his predecesor, Ebrahim al-Jafari, both have excellent relations with Iran. In recent months, when forces of Muqtada al Sadr wanted to rebel against the government, it was Iran that prevented that.

So, how is Iran trying to destabilize that region?
The means to produce enriched uranium, the key to producing nuclear weapons.
The enriched uranium that Iran has been producing is at 3.8%. To make a nuclear weapon, the uranium must be enriched to 90%. Although the technology is the same for both, one cannot simply convert the present technology to bomb making. In addition, all of Iran's enrichment facilities are safeguarded by the IAEA. There is no way to divert the facilities to bomb making, so long as they are safeguarded.

Iran is backing and arming militias and terrorists fighting the United States and our allies in both Iraq and Afghanistan
There has never been any evidence that Iran is either arming the militia or the terrorists. The United Stsates Military has never presented any concrete evidence to establish the connection between Iran's military and what is happening in Iraq or Afghanistan. Once in a while, a claim is made to provoke the public, but the claim is usually refuted quickly, and then retracted. As an example, the Pentagon has promised several times to present to reporters the evidence for the alleged interference, and each time it has either cancelled the press conference, or backtracked completely.

It is the proud patron of both the Hamas take-over in Gaza and the Hezbollah insurrection against the Lebanese government
It was not Hezbollah that insurrected against the Lebanese government; rather, it was the government that, with the support of the Bush administration, blocked Hezbollah's optical communication network. And, then, in Qatar last month, and with the mediation of our ally Qatar, the Lebanese government and Hezbollah reached agreement. In addition, Lebanon's new president, Michele Suleiman, has actually had a good working relationship with Hezbollah for a long time.

Concerning Hamas, Iran's support for Hamas, which is financial, pales compared with what Saudi Arabia provides Hamas with. Wealthy Palestinians and Arabs in the Persian Gulf area also provide Hamas with Cash. But, the Bush administration keeps quiet about these, for the obvious reason.

It is the major funding source for numerous terrorist groups
Which groups? Name them.

And increasingly, its fellow state-sponsor of terrorism, Syria
With Turkey's mediation, Syria and Israel have been negotiating for a peace deal. So, does that mean that Israel is also negotiating with a terrorist state?

It is supporting Islamist sectarian groups in places like Kuwait, Bahrain and Yemen
Which groups in Kuwait and Yemen? Name them. Both countries have excellent relations with Iran. As for Bahrain, the big majority of the population is Shi'ite, even though the ruling family belongs to the Sunni minority. So, it is natural for the Shi'ite political groups in Bahrain to have relations with Iran, just as all the Iraqi Shi'ite groups that are also part of the Government, have had close relations with Iran for decades.

And, it is radically reorienting regional security calculations (e.g., the sudden interest among Sunni Arabs in commercial nuclear power)
The United States has agreed to sell up to $50 billion in weapons to Saudi Arabia, the Arab States of the Persian Gulf, and Israel over the next 10 years. Therefore, it is the Bush administration that is "radically reorienting the regional security calculations."

Moreover, if the United States is worried about nuclear reactors for Saudi Arabia, then, why does it not use the same "logic" that it uses with Iran: Tell Saudi Arabia that it has the largest oil reserves in the world (twice as much as Iran), and a small population (three times smaller than Iran's). Therefore, it does not need any other sources of energy for decades.

In various public statements, Iranian leaders proudly take ownership of these policies and promise more of the same.
Give one example in which, for example, Iran has threatened Saudi Arabia, Kuwait, United Arab Amirates, Bahrain, Iraq, Afghanistan, Oman, etc. Just one example.

This is simply sheer lie.

Letter written in response to Congress Members Gary L. Ackerman and Mike Pence: Take a Stand Against Iranian Bullying: Co-Sponsor H. Con. Res. 362 May 28, 2008.

Does United States Supposed to be Different.

Defending the President as Tyrant

By Robert Parry
June 27, 2008

All over the world down through history, political leaders who have engaged in torture and other grotesque crimes of state have justified their actions as necessary to protect their governments or their people or themselves.

It was true when England’s King Edward I had William Wallace – “Braveheart” – drawn and quartered in 1305 for resisting the crown’s rule in Scotland, and a gruesome death was what King George III foresaw for America’s Founding Fathers in 1776 when they stood up to his abuses in the Colonies.

Kings and tyrants often inflicted special pain on people they viewed as challenging their authority and – at such times – they wiped away the rules of justice.

But the United States was supposed to be different. Is it?

Read further here.

“WE WENT TO WAR FOR THE OIL COMPANIES” Kucinich Tells Congress

“WE WENT TO WAR FOR THE OIL COMPANIES” Kucinich Tells Congress
Submitted by davidswanson on Thu, 2008-06-26 16:06. Congress
Demands Bush Administration and Oil Company Execs be Held Accountable

US Representative Dennis J. Kucinich, in a speech to the House of Representatives today, tied the secret meetings of the Cheney Energy Task Force to the recent award of non-competitive oil contracts in Iraq and said that both the Bush Administration and the oil company executives who participated in those meetings in 2001 should be held criminally liable for an illegal war and extortion of Iraq’s oil.

“In March of 2001, when the Bush Administration began to have secret meetings with oil company executives from Exxon, Shell and BP, spreading maps of Iraq oil fields before them, the price of oil was $23.96 per barrel. Then there were 63 companies in 30 countries, other than the US, competing for oil contracts with Iraq.

“Today the price of oil is $135.59 per barrel, the US Army is occupying Iraq and the first Iraq oil contracts will go, without competitive bidding to, surprise, (among a very few others) Exxon, Shell and BP.

Read further here.

So says Constitutional law expert Jonathan Turley in an interview with MSNBC’s Keith Olbermann about Congressman Dennis Kucinich’s 35 Articles of Impeachment against President George W. Bush – a document that Olbermann calls “a remarkably lengthy and thorough record of high crimes and misdemeanors."

Watch the clip.

Article of Impeachment taken from Kucinich's website.

Mahmoud Abbas' Time Has Passed

Mahmoud Abbas' Time Has Passed
by John Taylor

Mahmoud Abbas, president of the Palestinian Authority, is a collaborator with the his peoples' chief tormentors, Israel and the United States. Without Israeli and American support, Abbas would be gone in an instant. The general commanding Israeli forces on the West Bank, Gadi Shamni, put it best: "He's a joke, a nothing. We are the only force propping him up. Should we withdraw from the cities, Hamas will sweep him and his men away as they did in Gaza."

To be fair, Abbas' predecessor as president of the Palestinian Authority, Yasir Arafat, Mr. Palestine himself, made huge mistakes dealing with the Israelis, perhaps the result of his addiction to the trappings of power and statehood. Arafat loved to jet around the world, meet kings and presidents, and pretend to govern Palestine, which he had in no way liberated from Israeli occupation. Not only did Arafat indemnify the Israelis in the Oslo Accords for everything they had done in the West Bank, Gaza, and East Jerusalem since the 1967 war, he became the first leader of a national liberation movement to sign an agreement with an occupier to keep its occupation in place. What Arafat received from Israel was authority over a few non-contiguous strips of land, but no control over borders, air space, water resources, or Israeli settlements already dotting the occupied territories.

Mahmoud Abbas went Arafat one better: he tried to stamp out Palestinian armed resistance to the Israeli occupation. Abbas demanded "an end to all military action, full calm, a full end to violence." Thus Abbas called on the Palestinians to cease doing what is legal under international law, resisting an occupation, and accept what is illegal under national law, the colonizing of an occupied territory by the occupying power. Settling the West Bank is so much easier when the natives don't fight back. No wonder Abbas is beloved in Washington and Tel Aviv!

Just what have Abbas and his cronies brought the Palestinians? Over the last few years the Palestinian economy shrunk by over a third and the number of Palestinians living below the poverty line rose from 20 to 40 percent. The number of Israeli settlements on the West Bank now total 160, and their inhabitants have increased from 150,000 to 250,000. Palestinian East Jerusalem, the center of Palestinian intellectual, social, and political life, has been cut off by Israeli settlements from the West Bank. Worst of all, Israeli settlements, military zones, Israeli-only roads, and the Separation Wall have reduced land available for a Palestinian state by about 50 percent. And yet at the summons of George Bush, Abbas dutifully turned up last November at the sham Annapolis peace conference, right after the Israelis announced a major expansion of the Har Homa settlement in East Jerusalem.

For Abbas to rely on the most pro-Israel administration in U.S. history, and that is saying a lot, to bring justice to the Palestinians, is absurd in the extreme. Condi Rice may claim the shape of an Israeli/Palestinian peace is "to be settled in direct talks between the parties," but the reality is quite different. Not only has the Bush administration done nothing to restrain Israeli colonization of the occupied territories, it has publicly accepted the de facto annexation of large portions of the West Bank: "In light of new realities on the ground, including already existing major Israeli population centers, it is unrealistic that the outcome of final status negotiations will be a full and complete return to the armistice lines of 1949…."

Mahmoud Abbas may have been able to delude himself into thinking that the so-called Road Map to Peace, pushed hard by the Bush administration, was something other than a final surrender of the Palestinian patrimony to a relentless and wel-funded Israeli plan to take over all of Palestine, but his people were not fooled. In January 2006 Abbas' Fatah Party was badly defeated in elections for the Palestine Legislative Council, winning only 45 seats to Hamas' 74.

Conventional wisdom holds that the Islamists of Hamas won the election because they were honest and able to provide welfare services that the Fatah Party had neglected. A more accurate conclusion would be that the Palestinians supported Hamas because Abbas has been unable to stop Israeli settlement growth and the destruction of the Palestinian economy. How could Abbas be expected to wring a viable Palestinian state from the Israelis if he was unable to convince them to remove any of the 400 roadblocks strangling economic and community life on the West Bank?

Palestinian President Mahmoud Abbas (R), Hamas leader Khaled Meshaal (C|) and Palestinian Prime Minister Ismail Haniyeh walk inside the Grand Mosque in Mecca on February 9, 2007.

For the United States, Hamas' overwhelming election victory was anathema. Hamas is on the State Department's list of terrorist organizations and remains an advocate of armed resistance to the occupation. Further, Hamas refuses to recognize Israel and rejects all the damaging agreements that Arafat and Abbas signed that have corralled the Palestinians into the desperate situation in which they now find themselves.

In the wake of the Hamas victory, the pliable Abbas embraced Israeli and American policy ever more tightly in a desperate effort to cling to power. First, Abbas acquiesced to the Israeli seizure of the customs revenue it collects on behalf of the Palestinians and refused to share critical cabinet positions with Hamas. Second, Abbas was a party to the planning with Israel's longtime advocate on the U.S. National Security Council, Elliott Abrams, of a coup against the Hamas leadership in Gaza. Unfortunately for Abbas and Abrams, the coup, which was to employ Fatah security forces in Gaza loyal to Mohammed Dahlan, was the worst-kept secret and the most ill-conceived plot in recent diplomatic history. In June 2007 Hamas struck first and quickly disposed of Abbas' supporters in Gaza.

After Hamas' takeover of Gaza, the Israelis, with the approval of Abbas, began to arrest Hamas legislators on the West Bank, ultimately jailing 45 of them. Abbas, now utterly without a legitimate mandate of any sort, appointed a new cabinet and began to rule by decree. Meanwhile, the Israeli army tightened its control of West Bank cities to keep Abbas' supporters in power and started to detain Hamas activists.

In Gaza itself conditions went from bad to desperate. The Israeli government severely restricted supplies, with the exception of limited amounts of food and fuel. As Israeli official Dov Weisglass heartlessly put it, "It's like a meeting with a dietitian. We need to make the Palestinians lose weight, but not to starve to death." For lack of raw materials all industry in the Strip collapsed, unemployment soared, and everyday life became a struggle. But while 1.5 million Palestinians were on the brink of starvation in Gaza, Abbas continued to talk with Israel and the United States about the so-called peace process.

Despite having to cope with the collective punishment of a million and a half residents of Gaza, Hamas has been able to move forward with its political objectives. Gaza security forces were entirely rebuilt with emphasis on loyalty to the Hamas political leadership. With the United States doing its utmost to deprive Gaza of financial aid from the West, assistance from the Gulf region and Iran went directly to the Hamas leadership and served to strengthen the party's political control. And resistance to Israel continued, albeit in a rather desultory manner in which crude rockets were fired at Israeli towns close to Gaza. Damage in Israel was limited, and Gazans suffered perhaps 50 casualties for every one inflicted on the Israelis.

And now, a severe body blow for Abbas and his rump regime: de facto Israeli recognition of Hamas as Israel and Hamas agree to a cease-fire without preconditions. In return for an end to the firing of rockets, Israel promises to increase the range and quantity of goods allowed into Gaza.

Whether the cease-fire will hold and the economy of Gaza will revive is uncertain, but the Israelis apparently decided trying to starve Hamas out of power was not going to work. So Mahmoud Abbas' policy of shunning the rejectionists of Hamas, dictated by the United States and Israel, has been undercut by the Israelis themselves, undoubtedly hastening the day Abbas ceases to be president of the Palestinian Authority and becomes a resident of one of the little Arab towns the Israelis maintain for the protection of Palestinian collaborators whose usefulness is at an end.

Text taken from here.

Pointing Fingers : Is it Greedy Arabs or Fabrication of Oil Speculators?

Oil prices climbed to their highest level ever, reaching over $140 per barrel this week. An analysis released by the investment firm Goldman Sachs suggested that oil prices might soar to $200 per barrel.

Does this make sense? Some say it is because the Opec cartel is unwilling to boost its supply levels. Others say it is because of fears about supplies from other countries such as Nigeria and Venezuela.

Consider the remarks of Philip Davis in a recent post at Seeking Alpha:

Now we have the Saudi oil summit this weekend and Saudi Arabia took 1.5M barrels a day off-line since July of ‘05 in a series of cuts and is currently producing just over 8Mbd out of their estimated 10.5Mbd maximum capacity. It is forecast by the EIA that next year OPEC alone will have over 3Mbd of spare capacity so this would be a terrible time for global demand to take a nose dive or there are going to be a lot of idle wells… Should global demand drop another 5% in the next 12 months, we could be looking at 8Mbd less demand than there was just a year ago.

As the London Telegraph points out, not only does OPEC have a current production surplus of 2M barrels a day but that surplus will rise to 3.5M barrels a day BY NEXT YEAR. Also, non-OPEC production is rising fast with a 1.5Mb gain in non-OPEC production coming down the pike next year. …Iraq, by the way, is no longer included as OPEC or non-OPEC production, a very clever way to hide 2.4 million barrels of production by the energy apologists.

There’s no shortage, no scarcity. (Not yet, at least) In fact, oil is being deliberately kept off the market to keep prices high. Consider this: if supply isn’t keeping up with demand then why aren’t there any lines at the gas stations like there were during the ’70s?

Here’s what Saudi Arabia’s King Abdullah’s said on Sunday: “Among other factors behind this unjust increase in oil prices is the abhorrent acts of speculators seeking to undermine the market.” That’s why he called the meeting to begin with. The King insists that “speculators” have played a key role.” (AFP)

How about Kuwait?

The Kuwaiti Oil Minister Mohammed al-Olaim insisted that “there is enough oil to supply the market. . . . We believe that the market is in equilibrium. The price is disconnected from fundamentals. It is not a problem of supply. Why would you have a supply problem WHEN DEMAND IS GOING DOWN.” (AP)

What about Libya?

“We believe speculation has its impact,” the OPEC chief said. Libya may reduce its oil production because THERE IS MORE THAN ENOUGH OIL ON THE MARKET Oil Minister Shokri Ghanem said. “We may have to cut production…. We don’t see any need for more oil. There is plenty of oil in the market,” Ghanem said, commenting on Saudi Arabia’s decision. (Bloomberg News)

Saudi Arabia has increased oil production by 300,000 barrels a day in May, and a Saudi official confirmed another increase of 200,000 in July, making the total output to 9.7 million barrels a day to fill the demand needs. At a recent summit in Saudi Arabia between oil-producing and oil-consuming nations, Saudi King Abdullah said his country was not to blame for soaring oil prices.

Watch the clip.



The World oil production was up 2.5 percent in the first quarter of 2008 over the same period in 2007 while world oil consumption rose by just 2 percent. In fact, world production is projected to be 3.3 percent higher in the second quarter and 4.1 percent higher in the third quarter than the same periods a year ago. On the other hand, world demand is projected to rise by just 1.6 percent over the next six months.

In fact, demand is falling in some countries. According to economist John Kemp at the commodities firm Sempra Metals, the U.S. consumed 4 percent less petroleum in January 2008 than it did the year before. Evans agrees, noting that the U.S. demand for petroleum products began falling off last July. Interestingly, this drop in U.S. oil consumption began before crude prices turned vertical and before we began to see weakness in the broader economy. Even China's thirst for oil is abating somewhat. Its demand for oil, which once rose at 10 percent per year, has now dropped to 6 percent per year. In addition, world surplus oil production capacity has gone from a very tight 1.5 million barrels per day a couple of years ago to more than 3 million barrels today, says petroleum economist Michael Lynch.

So supply is up; relative demand is down and yet, the price of oil is soaring. What's going on? Last week, Exxon Mobil CEO Rex Tillerson blamed a third of the recent run up in oil prices on the weak dollar, another third on geopolitical uncertainty, and the rest on market speculation.

Let's start with geopolitical uncertainties. Last year, oil consumers watched warily as unrest in Nigeria's oil fields, the possibility of war between the U.S. and Iran, and the antics of Venezuela's Hugo Chavez threatened to disrupt oil supplies. That analysis may have once made sense, but most of those tensions have abated in recent months. Nevertheless, it remains true that most of the world's oil is produced in volatile regions and by erratic governments, so the price of crude must still include some kind of political risk premium.

What effect does the falling dollar have on the price of crude? Most oil price contracts are denominated in dollars. The dollar has fallen in value by more than 30 percent against a Federal Reserve index of major currencies since 2002. This means that the price of imports, including oil, have gone up. To some extent, the chief of the Organization of Petroleum Exporting Countries (OPEC) Chakib Khelil was correct when he said earlier this week, "What's happening in the oil market is due to the mismanagement of the U.S. economy." Continuing U.S. trade and fiscal deficits along with lower interest rates are stoking inflationary fears.

That brings us to speculation. Evans observes that since September 2003, the total number of open crude oil futures and options contracts rose by 364 percent. Meanwhile the global demand for petroleum rose by just 8.2 percent. "So the futures and options market has become more important than the physical supplies in driving the price," concludes Evans. "We are seeing investment flows into the oil market that don't have anything to do with the demand and supply of oil."

Investors are treating oil as a hedge against inflation and a falling dollar. Oil markets are part of a positive feedback loop in which higher oil prices contribute to higher inflation, which in turn lowers the value of the dollar, which boosts oil prices, and so forth. In other words, the oil market is coming to resemble the gold market (which has also been soaring). Evans notes that most gold traders don't even ask the question of how much gold was mined last year or how much spare gold mining capacity there is.

The price of crude oil today is not made according to any traditional relation of supply to demand. It’s controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. 

The crucial role of the international oil exchanges in London and New York is crucial to the game. Nymex in New York and the ICE Futures in London today control global benchmark oil prices which in turn set most of the freely traded oil cargo. They do so via oil futures contracts on two grades of crude oil—West Texas Intermediate and North Sea Brent.

A third rather new oil exchange, the Dubai Mercantile Exchange (DME), trading Dubai crude, is more or less a daughter of Nymex, with Nymex President, James Newsome, sitting on the board of DME and most key personnel British or American citizens.

Brent is used in spot and long-term contracts to value as much of crude oil produced in global oil markets each day. The Brent price is published by a private oil industry publication, Platt’s. Major oil producers including Russia and Nigeria use Brent as a benchmark for pricing the crude they produce. Brent is a key crude blend for the European market and, to some extent, for Asia.

All this is well and official. 

But how today’s oil prices are really determined is done by a process so opaque only a handful of major oil trading banks such as Goldman Sachs or Morgan Stanley have any idea who is buying and who selling oil futures or derivative contracts that set physical oil prices in this strange new world of “paper oil.”

With the development of unregulated international derivatives trading in oil futures over the past decade or more, the way has opened for the present speculative bubble in oil prices.

Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street.

The large purchases of crude oil futures contracts by speculators have, in effect, created an additional demand for oil, driving up the price of oil for future delivery in the same manner that additional demand for contracts for the delivery of a physical barrel today drives up the price for oil on the spot market. As far as the market is concerned, the demand for a barrel of oil that results from the purchase of a futures contract by a speculator is just as real as the demand for a barrel that results from the purchase of a futures contract by a refiner or other user of petroleum.

Perhaps 60% of oil prices today pure speculation

Goldman Sachs and Morgan Stanley today are the two leading energy trading firms in the United States. Citigroup and JP Morgan Chase are major players and fund numerous hedge funds as well who speculate.

In June 2006, oil traded in futures markets at some $60 a barrel and the Senate investigation estimated that some $25 of that was due to pure financial speculation. One analyst estimated in August 2005 that US oil inventory levels suggested WTI crude prices should be around $25 a barrel, and not $60.

That would mean today that at least $50 to $60 or more of today’s $115 a barrel price is due to pure hedge fund and financial institution speculation. However, given the unchanged equilibrium in global oil supply and demand over recent months amid the explosive rise in oil futures prices traded on Nymex and ICE exchanges in New York and London it is more likely that as much as 60% of the today oil price is pure speculation. No one knows officially except the tiny handful of energy trading banks in New York and London and they certainly aren’t talking.

By purchasing large numbers of futures contracts, and thereby pushing up futures prices to even higher levels than current prices, speculators have provided a financial incentive for oil companies to buy even more oil and place it in storage. A refiner will purchase extra oil today, even if it costs $115 per barrel, if the futures price is even higher.

As a result, over the past two years crude oil inventories have been steadily growing, resulting in US crude oil inventories that are now higher than at any time in the previous eight years. The large influx of speculative investment into oil futures has led to a situation where we have both high supplies of crude oil and high crude oil prices.

Compelling evidence also suggests that the oft-cited geopolitical, economic, and natural factors do not explain the recent rise in energy prices can be seen in the actual data on crude oil supply and demand. Although demand has significantly increased over the past few years, so have supplies.

Over the past couple of years global crude oil production has increased along with the increases in demand; in fact, during this period global supplies have exceeded demand, according to the US Department of Energy. The US Department of Energy’s Energy Information Administration (EIA) recently forecast that in the next few years global surplus production capacity will continue to grow to between 3 and 5 million barrels per day by 2010, thereby “substantially thickening the surplus capacity cushion.”

Dollar and oil link

A common speculation strategy amid a declining USA economy and a falling US dollar is for speculators and ordinary investment funds desperate for more profitable investments amid the US securitization disaster, to take futures positions selling the dollar “short” and oil “long.”

For huge US or EU pension funds or banks desperate to get profits following the collapse in earnings since August 2007 and the US real estate crisis, oil is one of the best ways to get huge speculative gains. The backdrop that supports the current oil price bubble is continued unrest in the Middle East, in Sudan, in Venezuela and Pakistan and firm oil demand in China and most of the world outside the US. Speculators trade on rumor, not fact.

In turn, once major oil companies and refiners in North America and EU countries begin to hoard oil, supplies appear even tighter lending background support to present prices.

Because the over-the-counter (OTC) and London ICE Futures energy markets are unregulated, there are no precise or reliable figures as to the total dollar value of recent spending on investments in energy commodities, but the estimates are consistently in the range of tens of billions of dollars.

The increased speculative interest in commodities is also seen in the increasing popularity of commodity index funds, which are funds whose price is tied to the price of a basket of various commodity futures. Goldman Sachs estimates that pension funds and mutual funds have invested a total of approximately $85 billion in commodity index funds, and that investments in its own index, the Goldman Sachs Commodity Index (GSCI), has tripled over the past few years.

Because it’s all a fabrication. Prices are up because of speculation, that’s all

Sources

Oil Price Bubble?

‘Perhaps 60% of today’s oil price is pure speculation’

Bush's Middle East Legacy

Explosively False Propaganda
Bush's Middle East legacy
by Muhammad Sahimi

No part of the world, not even the United States, has been more deeply affected by George W. Bush's presidency than the Middle East. From the lofty goals of starting a "democratic revolution," making a "new Middle East," and helping the Palestinians to have their own independent state, to the bogus "war on terror," invasions of Iraq and Afghanistan, and meddling in Lebanon, Bush's Middle East policy has been simply one disaster after another.

Iraq

If there is one minor positive outcome of Bush's Middle East policy, it has to be the removal of Saddam Hussein and his Ba'ath Party from power. But at what price?

1. Iraq has effectively been partitioned among the Shi'ites, Sunnis, and Kurds.
   
2. Iraq became a vast training ground for extremists from Saudi Arabia, Egypt, Jordan, Pakistan, and Kuwait.
   
3. Iraq's infrastructure has been damaged greatly. It would take decades to put Iraq back to where it was before the war.
   
4. Much of Iraq's cultural heritage was looted from museums.
   
5. Iraqi prisoners were tortured at Abu Ghraib and elsewhere.
   
6. Two million Iraqis have left their country. Clearly, they are the highly educated (at least 3,000 of them professors), professionals, and the affluent, and, therefore, their departure is a great brain drain. Proportionally, it would be equivalent to 24 million Americans leaving the U.S.
   
7. Close to 2.5 million Iraqis have been displaced within Iraq. Proportionally, it would be equivalent to 30 million American refugees within the U.S.
   
8. As many as 1.1 million Iraqis may have been killed. Proportionally, it would as if over 13 million Americans had been killed, a staggering number. Notable among the dead are at least 230 Iraqi professors, with another 60 missing, presumably dead.
   
9. At least 1 million Iraqi children have become orphans.
   
10. Seventy percent of Iraqi children suffer from mental stress disorder.
    
11. Joseph Stiglitz of Columbia University, the 2001 Nobel laureate in economics, and Linda Bilmes of Harvard University estimated that the eventual cost of the war may reach $2 trillion. If, for a period of 10 years, the funding for cancer research were doubled, every American with diabetes or heart disease were treated, and a global immunization campaign that could save millions of children were carried out, the total cost would be about $600 billion.

Palestine/Israel

When Bill Clinton left the White House in 2001, the Israelis and the Palestinians were tantalizingly close to a peace agreement. Today, the probability of peace is practically nil. No other U.S. president has supported Israel as blindly and one-sidedly. He is also the first U.S. president who actually recognized Israel's policy of building and annexing settlements in the West Bank, giving Israel a secret letter committing the U.S. to such a policy.

With Bush's support, Israel "evacuated" Gaza but created the largest jail on Earth: Gaza's land, sea, and air borders are all controlled by Israel. It attacks Gaza at will, and when it kills innocent women, children, and old men, what does Bush say? "Israel must defend itself."

Bush and Rice pushed for democratic elections among Palestinians. The radicals actually wanted such elections too! What happened? The elections were held and certified as democratic by Jimmy Carter, but Hamas won. It received more votes than any other group, including Fatah, and took control of the Palestinian parliament.

As usual, Rice was shocked. "Nobody saw it coming," she declared. (No secretary of state has made more trips to Israel and Palestine than Rice without having anything to show for it.) So what happened? Instead of trying to work with Hamas, which has never been a threat to the U.S., Bush began punishing the Palestinians by cutting off all aid and pressuring others to follow the U.S. lead. Hamas responded to this by routing the Fatah forces in Gaza, taking full control there.

Bush has paid lip service to the establishment of an independent Palestinian state. In his recent speech before the Knesset, Israel's parliament, Bush promised the Palestinians that they would have a state of their own "over the next 60 years." Some promise.

Bush's Israel/Palestine legacy? Peace between Israel and the Palestinians is more farfetched than ever.

Read further here on Lebanon, Iran, Afghanistan and general Middle East.

The Game is Over

Michael Hudson (his website here) is a former Wall Street economist specializing in the balance of payments and real estate at the Chase Manhattan Bank (now JPMorgan Chase & Co.), Arthur Anderson, and later at the Hudson Institute (no relation). In 1990 he helped established the world’s first sovereign debt fund for Scudder Stevens & Clark. Dr. Hudson was Dennis Kucinich’s Chief Economic Advisor in the recent Democratic primary presidential campaign, and has advised the U.S., Canadian, Mexican and Latvian governments, as well as the United Nations Institute for Training and Research (UNITAR).

How serious is the current crisis in the financial markets and housing and what steps do you think Obama or McCain should take to stabilize the markets, reduce the deficits, strengthen the dollar, increase employment, and put the economy on solid footing? Is it possible to have a strong economy without policies that distribute the nation’s wealth more equitably? As chief economic adviser to Rep Dennis Kucinich, what one bit of advice would you give to Obama to restore America’s economic vitality and put the country on the right path again?

His answer to the question above;

In economic terms America today is in as optimum a position as it is can be. That’s actually bad news because an optimum position is, mathematically speaking, one in which you can’t move without making your situation worse. This is the position we’re in now, and it’s already as good as it can get. There’s nowhere to move, at least within the existing structure. The market can’t be stabilized, because it was based on fictitious prices to begin with. It’s hard to impose fiction on reality for very long. The rest of the world has woken up although not Congress, it seems. In times past, bankruptcy would have wiped out the bad debts. The problem with such write-offs is that bad the savings that have been steered into bad loans must follow suit and go by the boards. But today, the very wealthy hold most of the savings, so the government doesn’t want to let them take a loss. It would rather wipe out pensioners, consumers, workers, industrial companies and foreign investors. So debts will be kept on the books and the economy will slowly be strangled by debt deflation. The U.S. can¹t reduce its balance-of-payments deficit without scaling back its military spending. Meanwhile, Congress is refusing to let foreign governments invest in much besides overpriced junk here, so central banks are treating the dollar like a hot potato, trying to buy foreign assets that can play a role in their own future economic development. At a point these actions threaten to leave the United States economically isolated as foreign economies protect themselves from U.S. credit creation out of thin air to buy their exports and companies. The question is, will Obama and other politicians be willing to tell the public the bad news that restoring vitality will take radical measures? The way to do this is to present it as good news. There ARE reforms that can help matters, and they are reforms that Americans have endorsed for a century, ever since the Progressive Era. One problem is that lobbyists for the vested interests are so powerful that they probably can get Congress to water down any real so much that the economic situation will to keep on getting worse and worse before the needed reforms can be enacted. On the other hand, only in such a situation CAN they be enacted. I think that Mr. Obama would be wise to explain this before taking office. As president, he will have to do what FDR did, and challenge the financial oligarchy with new regulatory agencies, staffed with real regulators, not deregulators as under the Bush-Clinton-Bush regime. His political hope to avoid being blamed for the economic problems in which 16years of Clinton and Bush policies have pushed the United States is to come out in the fall probably after the election and blame the Republicans for their regressive tax policies. This would help bring pressure on the new Democratic Congress to back a return to progressive taxation and serious financial restructuring. For starters, Mr. Obama should repeal the Clinton repeal of Glass-Steagall. And he should make large depositors and savers take the losses on their bad bets. Most of all, he will have to make the tax system back progressive again if the domestic market is to recover. Also, a good tax code should encourage equity financing instead of debt pyramiding as is now the case, thanks to the banking lobby. This winding down of U.S. debt can best be achieved by removing the tax-deductibility of interest payments, and do what the original 1913 income tax did: tax capital gains at normal income rates rather than subsidizing speculation. The great majority of such gains accrue to real estate speculators, not to industrial entrepreneurs. Mr. Obama can help revive the middle class by paying Social Security and medical care out of the general budget, not as user fees borne by the lowest wealth brackets as at present. Until this change is made, FICA withholding should be levied on total income, without any upper cut-off point. If there is a cut-off point, it should be to exempt people who earn LESS than $60,000 a year. This would end up being fairly revenue-neutral. Pres. Obama should explain that his policy is not to soak the rich. It is to make them pay their way once again, by favoring a strong middle class as the tax code was meant to do prior to the 1980s.Unless Mr. Obama does this, what used to be a democracy will be turned into an oligarchy. The problem with oligarchies is that historically they are so shortsighted that they stifle the domestic economy, driving enterprise and emigration abroad. This threatens to reverse America’s long-term affluence. The word means literally a flowing-in an inflow of capital, of skilled immigrants and other labor, of technology, and of foreign support. All this has now been put in danger by the policies pursued since the 1980s. Industry and savings already have begun to flow abroad. Skilled labor and technology is next, while domestic infrastructure is sold off to foreigners. Free roads will be turned into toll-roads, and the fees, interest and profits sent abroad. If this trend cannot be reversed in the present economic squeeze, U.S. living standards and the domestic market will be subject to IMF-style austerity and shrink.

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It is not so much that oil prices are going up however. It is actually the slumping American dollar which has dropped in value internationally by 18% in the last year against other major currencies.

The American dollar is becoming worthless, and unlike a normal recession the US economy is still growing in GDP. In 2007 the American Gross Domestic Product grew 2.2% to $13.8 trillion, but since the American dollar is worth 18% less than last year in reality the American economy actually took a huge hit. So when you think about it the US economy actually shrunk by roughly 16% in 2007 compared to the rest of the world.

The US now has a trade deficit with every part of the world. In 2006 (the latest annual data), the US had a trade deficit totaling $838,271,000,000.

The US trade deficit with Europe was $142,538,000,000. With Canada the deficit was $75,085,000,000. With Latin America it was $112,579,000,000 (of which $67,303,000,000 was with Mexico). The deficit with Asia and Pacific was $409,765,000,000 (of which $233,087,000,000 was with China and $90,966,000,000 was with Japan). With the Middle East the deficit was $36,112,000,000, and with Africa the US trade deficit was $62,192,000,000.

Public worry for three decades about the US oil deficit has created a false impression among Americans that a self-sufficient America is impaired only by dependence on Middle East oil. The fact of the matter is that the total US deficit with OPEC, an organization that includes as many countries outside the Middle East as within it, is $106,260,000,000, or about one-eighth of the annual US trade deficit.

Moreover, the US gets most of its oil from outside the Middle East, and the US trade deficit reflects this fact. The US deficit with Nigeria, Mexico, and Venezuela is 3.3 times larger than the US trade deficit with the Middle East despite the fact that the US sells more to Venezuela and 18 times more to Mexico than it does to Saudi Arabia.

What is striking about US dependency on imports is that it is practically across the board. Americans are dependent on imports of foreign foods, feeds, and beverages in the amount of $8,975,000,000.

Americans are dependent on imports of foreign Industrial supplies and materials in the amount of $326,459,000,000 -- more than three times US dependency on OPEC.

Americans can no longer provide their own transportation. They are dependent on imports of automotive vehicles, parts, and engines in the amount of $149,499,000,000, or 1.5 times greater than the US dependency on OPEC.

In addition to the automobile dependency, Americans are 3.4 times more dependent on imports of manufactured consumer durable and nondurable goods than they are on OPEC. Americans no longer can produce their own clothes, shoes, or household appliances and have a trade deficit in consumer manufactured goods in the amount of $336,118,000,000.

The US “superpower” even has a deficit in capital goods, including machinery, electric generating machinery, machine tools, computers, and telecommunications equipment.

What does it mean that the US has a $800 billion trade deficit?

It means that Americans are consuming $800 billion more than they are producing.

How do Americans pay for it?

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The American Economy is Destroying Itself
American Economy Collapsing
Economy on brink of recession, Greenspan says

Peace deal without Jerusalem.

A cartoon from the Jordanian paper, al-Dustour. It reads: "Peace deal without Jerusalem."