Marshall Goldman speaks before packed audience.

War drums continue to beat as Iran hypes its population to win regime support. Should a real war begin and escalate they will need more graves than the below article indicates. (See 1 below.)

And yet Olmert hangs on and though by a thread it appears to be silken and thus strong as he comes us with a new and rational paradigm. Olmert gives his rationale for prisoner swap vote (See 2 and 3 below.)

An examination of whether foreign aid enthuses Palestinian violence. (See 4 below.)

John Bolton is not buying the euphoria over N Korea and neither am I. (See 5 below.)

Democrats keep digging their own political hole regarding energy but find no oil. Their fall back on acreage reserve nonsense and lack of drilling by oil companies, which I wrote about several memos ago, is now the lead editorial in today's Wall Street Journal and is exposed for what it is - a blanket cover for being on the wrong side of the issue.

If Democrats are so Green why do they litter our land with such garbage arguments? (See 6 below.)

I did not catch Gen. Clark's comments regarding McCain's qualification,or lack thereof, to be CIC but Michelle Malkin did. Obviously Gen. Clark is the idiot Malkin suggests but disparaging McCain as Clark did serves not only to highlight Clark's own stupidity but it resurrects the matter of Obama's questionable experience which is NADA! With friends like Clark, Obama would be better off with some other enemies. (See 7)

Last night, before an audience of 163 people, Marshall Goldman reviewed his thoughts regarding the New Russia as a Petrostate and Putin's efforts to bring it about.

In essence, Marshall pointed out, with respect to Putin, timing and luck proved to be everything. The rise in the price of oil occurred as Putin took over the helm of government and he has ridden the price wave ever since to a popularity level of 82%.

Putin did take action against "oligarchs" and others operatives, after privatization, who were stripping assets for their own personal gain from Russia's " National Champions." In this purging process, Putin replaced them with his own bureaucrats, friends and new "oligarchs" and even younger members of their families.

Putin has played the Russian resource chess game well and has tied more and more of Europe to Russia's gas wealth, sole pipeline connections and by using the wealth from GAZPROM's oil (now the second largest capitalized publicly traded company)Putin has elevated Russia to world player status.

Europe is increasingly tied to Russia through the umbilical cord called gas pipelines and Putin has, so far, been effective in blocking alternative routes. Germany is now 42% dependent on Russian gas though it never intended to go beyond 25% dependency and so the story for more and more European nations. Russia is also trying to extend it influence through joint ventures whose goal is to have ownership of connective links into European homes and factories etc.

Goldman reminded the audience, Russia was bankrupt only 10 years ago and now its coffers overflow with dollar, trade reserves and gold all because of its oil wealth. He also pointed out that nations with such dominant resource wealth find it difficult to develop other aspects of their economy. The rise in the Ruble, which once was called the "rubble," has a downside because it raises the price of Russian goods thus making their export less attractive.

Marshall discussed the Putin-Bush relationship and pointed out real chemistry exists between the two but of late Putin was filled with self-confidence and had become a bit more deprecating in his public comments as he felt his oil oats.

Where this all ends Goldman does not know but he did suggest co-operation between Russia and the U.S. had improved, in part because of Russian concern over Islamic Fascism. He also believed our new president would be wise to move quickly to try and establish a working relationship with Russia because of its growing influence and possession of its own nuclear arms.

Russia is now a country whose "National Champions" are virtually all state controlled, a nation with growing wealth whose people and leadership are overcoming the insecurity of being hammered and lectured to only ten years ago. Russia is on the move again.

As we drove home I mentioned to Marshall that I viewed America as a nation which once had exclusive occupation of a room that was now inhabited by at least four other emergents (Russia, China, Brazil and India) and that meant we had to share the oxygen. Marshall agreed and said how we played our cards was increasingly critical in terms of our own economic and social future. He thought the most hopeful sign was the problem of our energy dependency was now front and center and being a resourceful people his hope was we would now get serious. What I hear from the dunces in Conress is not encouraging so I ain't holding my breath.


"Putin Power and The New Russia - Petrostate:" by Marshall Goldman is a must read for those concerned with our nation and the world's future.

Dick

1)Iran sets up 31 martial districts, prepares 320,000 graves for war dead



Iran has divided the country up into 31 military sectors as part of its stepped up preparations for war, Iranian sources report. Sunday, June 29, Brig. Gen. Mir-Faisal Baqerzadeh, head of the Iranian Army’s Foundation for the Remembrance of the Holy Defense and MIAs, said the 320,000 graves were to be dug for enemy forces in case of an attack on Iranian territory.

“We don’t wish the families of enemy soldiers to experience what Americans had to go through in the aftermath of the Vietnam War,” said Baqerzadeh.

Our sources report that it was obvious to the average Iranian that the graves, concentrated in the border regions, were intended for prospective domestic victims of US and Israeli bombardments.

The plan to divide the country into 31 military districts was approved at a top-level consultation at the office of Supreme Ruler Ayatollah Ali Khamenei last week.

Each sector will have its own command center headed by a Revolutionary Guards officer-in command, which in a war contingency will assume control of the district government and keep supplies of food, water, medicines running as well as emergency services for evacuations.

A military force attached to each command will be responsible for maintaining order and responding to problems.

According to military sources, Iran has in effect established a home front command controlled by the Revolutionary Guards and manned by the million- strong Basij volunteer militia, the Guards’ local reserve units. This arrangement guarantees the government regime in Tehran effective control of every part of the country in any war contingency.

2) Editorial:Time for a Miracle



Ehud Olmert’s stock with the Israeli public has fallen so low these days that virtually anything Olmert says or does is taken to be a cynical ploy to save his job. That’s a pity, because the Israeli prime minister has had some very good ideas of late.

One of his best ideas surfaced in a June 22 address to the governing board of the Jewish Agency for Israel. In the address, Olmert called for a “new paradigm” in Israeli relations with the Jewish Diaspora. The old paradigm is of plucky Israelis building a new nation from the ashes of the Holocaust, reclaiming the desert and offering refuge to millions of Jews fleeing oppression, all of it financed from afar by adoring American Jews. Today, Olmert told the agency leaders, none of those truths is self-evident. Israel is an economic powerhouse, the in-gathering of the downtrodden is largely done — and American Jews aren’t as adoring as they used to be.

It’s time, Olmert said, for the next great challenge: rescuing Jews in America and the West from assimilation, and restructuring the relationships between the world’s great Jewish communities. That can’t be done by one party acting alone; it will require a genuine partnership between Israel and the Jews of the Diaspora, not the one-sided we-give-you-take relationship of the past.

“For the past 60 years, Israel has been a project for the Jewish people,” Olmert said. “For the next 60 years, the Jewish people will need to be the joint project of Israel and Jewish communities around the world.” He sketched out a massive program to expand Israel travel programs, like Birthright, to dispatch Israeli teachers to far-flung communities and to nurture Jewish learning, culture and values in venues around the globe, including in Israel. Funding, Olmert said, should come jointly from the Israeli government and from Diaspora-federated philanthropies. The Jewish Agency — historically “the outstretched arm of the Jewish people in its central project” of building Israel — would coordinate worldwide implementation.

Olmert’s thesis is a surprising one, particularly coming from the mouth of an Israeli prime minister. After all, Jerusalem has pressing needs of its own. For all its might and resources, Israel is still fighting for survival. Diaspora Jews, many of them, still revel in the vicarious thrill of helping to build and defend the fledgling Jewish state, and they won’t take kindly to the puncturing of their myths. Israeli politicians’ eyes light up when they see all that cash coming in, and they love to rub shoulders with the big donors. Indeed, it’s not entirely clear that the federated philanthropies and the United Jewish Communities could raise the sums they do if building Israel and fighting its enemies were no longer the central message. True, most younger Jews don’t rally to the cause of Israel, but younger Jews don’t sustain the UJC, either.

That said, Olmert’s conclusions are unavoidable. The changes he describes have been building inexorably for decades. A handful of Israeli political leaders noticed the shift in the past and tried to address it — Yossi Beilin by organizing a high-level dialogue, and Benjamin Netanyahu by putting Israeli tax dollars into Birthright, the first time an Israeli government sent money to the Diaspora rather than the opposite. But these and similar initiatives nibbled at the margins. Olmert proposes a historic effort to alter the course of history through what amounts to a Marshall Plan for Jewish identity. He’s right to think in those terms, and the Jewish Agency, the one broadly accepted world Jewish body with massive resources and a global reach, is the right place to begin.

Skeptics say that Olmert no longer has time or sufficient authority to get a project of this magnitude rolling. That may be true, although Olmert has frequently surprised his detractors. It’s also said that Israel won’t be able to find the needed millions in its strapped budget, and that the Jewish Agency is too calcified to transform itself in the manner required. Again, very possibly true, but beside the point. Responsible observers have been predicting for years now that the world’s Jewish community is facing demographic and cultural disintegration in the coming decades, unless something like a miracle occurs. It’s time to start organizing that miracle.

3) Olmert: I voted for swap to prevent another Ron Arad
By Barak Ravid and Yossi Melman

Prime Minister Ehud Olmert's decision to ultimately support the prisoner swap deal with Hezbollah stemmed from his desire to avert another Ron Arad-like saga.

"I didn't want a situation to arise like the one with Ron Arad, where for 20 years we are trying to figure out what happened to him," the premier said on Monday. "It was clear to me that if we didn't approve the deal, the result would be that we would lose touch with them for many years and we would not be able to bring the soldiers to Israel for burial."

Olmert said he believed there is a possibility that the government's move to begin the process of declaring abducted soldiers Eldad Regev and Ehud Goldwasser dead spurred Hezbollah to consummate the deal more quickly.

The prime minister added that he was proud of the decision, which he knew would evoke many dissenting voices, a quality characteristic of the Israeli discourse.

"I hope we will know how to unite," Olmert said. "This is a resolute decision even if there are masses of people before us [in Lebanon] who are celebrating and dancing in the streets with joy. We know that there is only one state that knows how to mourn collectively the loss of one life, a state that has domestic solidarity, which doesn't exist in states that know how to spill blood but don't know how to fight for its life. I'm proud of this and so I am proud of the government's decision."

Olmert added that during the two years since the soldiers were abducted on July 12, 2006, the issue of their return has not left the table. "It is not a good decision. It is not a pleasant matter, it is a subject bound up with pain," he said. He also mentioned that one of the difficulties concerned is the release of Samir Kuntar, in accordance with the prisoner deal.

United Nations hostage negotiator Gerhard Konrad has delivered a message to Israel from Hezbollah saying that missing Israel Air Force navigator Arad is dead. Arad has been missing since his plane went down over Lebanon in 1986.

As part of the second stage of the prisoner swap agreement approved by the cabinet Sunday, Hezbollah will hand over a report, which is said to detail the organization's efforts to obtain information on Arad.

In exchange, Israel will give Hezbollah a report on the fate of four Iranian diplomats kidnapped and murdered during the Lebanon war in the 1980s. Israel has previously said it does not know what happened to the diplomats, who were arrested at a Christian Falange roadblock in 1982 and are believed to have been subsequently executed and buried at a site where construction later obliterated their graves.

Regev and Goldwasser are to be released in the prisoner exchange deal with Hezbollah approved by the cabinet on Sunday.

According to the outlines of the Hezbollah report, Arad ejected from his plane in 1986 and was taken captive by the Shi'ite militant group Amal. Konrad, who has seen the outline of the report but not the report itself, said his impression was that Hezbollah wanted to show it made a serious effort to find out what happened to Arad.

The report is said to contain numerous details on efforts Hezbollah made to ascertain Arad's fate, including the questioning of various individuals. However, Israel also wants the report to explain how Hezbollah concluded that Arad was dead and why it cannot provide proof of what happened to him or locate his remains.

If Konrad approves the reports, the third stage will ensue: Hezbollah will return Goldwasser and Regev or their remains if they are no longer alive, as Prime Minister Ehud Olmert said yesterday was the case "as far as is known." Hezbollah will also hand over the last of the remains of Israeli soldiers in Lebanon.

In exchange, Israel will deliver Kuntar to Hezbollah, along with four Hezbollah militants who were captured in the Second Lebanon War and the remains of a few dozen bodies, including those of eight Hezbollah militants. This phase will take place at Rosh Hanikra under Red Cross auspices.

Sources in Israel said the swap would probably take place by July 12, when Hezbollah is planning a victory ceremony to mark the second anniversary of the Second Lebanon War.

After five hours of tense debate, 22 ministers voted in favor of the deal and three-Finance Minister Roni Bar-On, Justice Minister Daniel Friedmann and Housing and Construction Minister Ze'ev Boim voted against it.

The signing of the deal will be only the first of four stages of the swap, the cabinet decided Sunday. If the signing takes place in Europe, Ofer Dekel, the Israel negotiator for the prisoner release, will head there in two or three days. Otherwise, Konrad will bring the signed document from Israel to Beirut, where it will be signed by Hezbollah.

Meanwhile, the chief military rabbi Brigadier General Avihai Ronsky is to begin coming to conclusions today on the question of declaring Regev and Goldwasser killed in action whose burial place is unknown.

In the final stage, within a month after the swap is made, Israel will release a number of Palestinian prisoners of its choosing. A government official said the list would include about 50 prisoners chosen by the Shin Bet security service. Cabinet members are set to discuss the list in the coming weeks.

At the cabinet meeting on Sunday, Mossad chief Meir Dagan objected to Dekel's statement that he and Konrad believed Hezbollah had no significant information about Arad. Dagan, who said Dekel "did not have the tools" to evaluate this because he lacked all the information, came out strongly against the deal, insisting that it would damage Israel by strengthening Hezbollah.

"Samir Kuntar is the bargaining chip for Ron Arad," said Dagan. "He is a symbol." However, Dagan conceded that leaving Kuntar in jail would not get Israel new information about Arad.

Shin Bet head Yuval Diskin also opposed the swap, noting that the Arad family had been promised that Kuntar would not be released except in exchange for information on the missing airman.

The ministers were said to have been particularly moved to vote for the deal by IDF Chief of Staff Gabi Ashkenazi, who said: "I am the commander of all the soldiers ... of the living and the dead, and therefore I say to you the deal must be approved."

4) Does Foreign Aid Fuel Palestinian Violence?
By Steven Stotsky


On December 17, 2007, eighty-seven countries and international organizations met in Paris and pledged to provide $7.4 billion over three years to the Palestinian Authority[1] (PA), an amount far in excess of any previous level of U.S. or European aid to the Palestinians. The conference participants justified the aid as a means of providing "immediate support to the entire Palestinian population,"[2] and as a reward intended to strengthen those Palestinians who favor peaceful coexistence with Israel.[3]

In the midst of the effort in Paris to bestow unprecedented sums of foreign aid on the Palestinians, there was little discussion of the unintended consequences—often deadly ones—of previous aid regimens. The recent history of foreign assistance shows a distinct correlation between aid and violence. Perhaps aid itself does not cause violence, but there is strong evidence that it contributes to a culture of corruption, government malfeasance, and terrorism that has had lethal consequences for both Israelis and Palestinians over the past decade.

The Paris conference aid package continues fifteen years of international funding that has established the Palestinians as one of the world's leading per capita recipients of foreign support (see Table 1). Figures published by the Organization of Economic Cooperation and Development for 2005 show that Palestinians received $304 per person in foreign aid,[4] second only to the war-torn Republic of Congo among entities with populations larger than one million. Unlike the Congo, though, the Palestinians have received such subsidies for decades.
Table 1

Largest Recipients of Humanitarian Aid per Capita, 2005
(with populations exceeding one million)
Entity Aid per capita (US$)
Republic of Congo 362
West Bank and Gaza 304
Timor-Leste 189
Nicaragua 144
Serbia and Montenegro 140
Jordan 115
Macedonia 113
Source: Calculations based on data from
World Bank Development Indicators Data Base, 2005

Amidst the internal turmoil of 2006 and 2007, aid to the Palestinians increased by more than 50 percent,[5] and in July 2007 the Israeli government handed over $300-400 million in import taxes it had collected on behalf of the PA.[6] This revenue windfall came despite the 2005 warning by George Abed, head of the Palestinian Monetary Authority, that "if you poured in a lot of financing at this time, it would not have a big impact. It would not be very effective … It would be wasted."[7] International organizations and diplomats acknowledge Palestinian misuse and diversion of aid money,[8] but they remain reluctant to study the deeper implications of how such aid affects Palestinian political culture.

An examination of key measures of violence reveals a troublesome correlation between the number of homicides committed by Palestinians and the level of funding provided to the Palestinian Authority. As aid to the Palestinian government increased, there was a corresponding increase in the number of people, both Israeli and Palestinian, killed by Palestinians. The correlation between aid and homicide statistics does not mean that foreign aid causes violence, but it does raise a question about whether the flow of aid to the Palestinian government has helped fuel Palestinian violence and hindered efforts to restore calm.
Correlating Aid and Violence

Figures 1 and 2 (see below) illustrate how the number of homicides[9] and level of donor aid[10] correlate.

The graphs show that increased aid to the PA after the start of the second intifada in September 2000 precipitated an increase in the Palestinian murder rate of both Israelis and Palestinians in 2001 and 2002. After June, 2002, Israeli countermeasures against Palestinian terrorism, such as checkpoints and targeted killings of terrorist leaders, began to reduce the number of Israeli dead. By August 2003, the first portion of Israel's security barrier was in place, leading to a rapid decrease in Israeli fatalities. While Israel's new security measures reduced the number of Israeli victims, factional and societal violence increased the number of Palestinian victims. By counting both Palestinian and Israeli victims, the correlation between increased aid and violence continued into 2007.

The correlation between aid and terrorism murders becomes even stronger when the amount of aid given in one year is compared to the number of terrorist murders the following year (Figure 2). The lag between increased aid and increased homicides suggests a cause and effect association. However, when comparing the number of attempted terrorist attacks against Israelis with the level of aid, the correlation is stronger, without introducing any time lag (Figure 3).[11]

To investigate the possible linkage between aid and violence, it is useful to examine changes in how foreign aid was distributed during the second intifada.
Funding the Palestinian Authority

Prior to the outbreak of the second intifada, donors directed nearly all foreign aid to the Palestinians to economic and infrastructure development programs, so that by 1999 the Palestinian Authority could raise enough revenue through taxation and private borrowing to pay its bills. This era of relative self-sufficiency would not last long, however. The Palestinian terror campaign launched against Israel in 2000 disrupted the three main PA revenue sources—clearance taxes collected by Israel, taxes on wages earned by Palestinians working in Israel, and domestic tax revenue. Israel Defense Forces (IDF) measures against terrorists interfered with commerce in the West Bank and Gaza and led to a 40 percent decline in domestic tax revenues between 1999 and 2002.[12] At the same time, the Israeli government curtailed the number of Palestinians working within its borders, reducing a lucrative source of tax revenue for the PA.[13] The Israeli government also decided to withhold tax receipts it collected for the PA in response to the failure of Palestinian leaders to make a serious effort to halt terrorism.

The international community responded to the ensuing Palestinian financial crisis by replacing much of the lost revenue. Foreign donations to the Palestinians nearly doubled, from $482 million in 2000 to $929 million in 2001.[14] The changes in how the aid was distributed were even more dramatic: In 1999, no foreign aid went directly into the Palestinian Authority budget; by 2001, 58 percent of it went to the government budget and less than 20 percent to development programs.[15]

In a classic example of the creation of perverse incentives, the decision to fund the government budget made the Palestinian Authority less dependent on revenue derived from commerce, detaching the PA's solvency from the health of the economy. Thus, while the intifada sent the Palestinian economy into free fall, the PA's coffers swelled. The conditions were thus established that ensured the separation of Palestinian governance from responsibility for the economic health of the Palestinian people.

A comparison of the proportion of aid allocated to the government budget with the number of homicides yields a correlation similar to the previously discussed correlation of aid and homicides. (See Figures 4 and 5.)

By 2003, the ratio began to shift so that aid was more evenly distributed between the PA budget and development programs. However, the proportion of aid allocated to the government began to rise again in 2005, so that by January 2008, Palestinian economist Samir Barghouthi estimated that the Paris conference aid package would commit 70 percent of donations to paying the wages and pensions of Palestinian employees.[16] In other words, a higher proportion of aid will be allocated to the government and a lower proportion to development programs than even at the height of the terrorist violence of the intifada.

The new flow of funding to the Palestinian government will likely replicate the dynamics of the past decade: In 1999, the PA had 98,500 on its payroll; by 2002, the payroll had grown to nearly 125,000, and by 2007, it stood at 168,319.[17] Rising Palestinian government employment was reflected in the proportionate growth of the security services, which accounted for nearly half of all government wage earners. Security personnel on the PA payroll grew from 44,400 in 1999, to 53,600 in 2002, to 78,000 in mid-2006.[18] In addition, the Jordanian foreign ministry has confirmed plans to increase the Palestinian police force in the West Bank from 7,000 to 50,000 men, an increase that will create an unprecedented police presence and require an investment of several billion dollars beyond what was promised at the Paris conference.[19] These dramatic increases in the number of security personnel have never resulted in a reduction in terror attacks against Israelis—and as the history of the intifada shows, such attacks in fact increased from 1999 to 2002.
Palestinian Security Forces' Terrorist Ties

Not only did the security forces fail to prevent terrorist attacks, in many cases they colluded with terrorist groups and sometimes perpetrated attacks themselves. For example, on January 30, 2004, a Palestinian policeman belonging to the Al-Aqsa Martyrs' Brigades boarded a crowded bus in Jerusalem and detonated a bomb strapped to his body, killing ten Israelis.[20] The Palestinians responded that they could not prevent terrorism because the Israeli military had destroyed their capacity to do so.[21]

In A Police Force without a State, Brynjar Lia, a Norwegian Defense Research Establishment analyst, suggests that the Palestinian leadership gave preference in police recruitment to those who had served prison terms in Israeli jails for terror-related offenses.[22] This, he argues, allowed terrorists to shape the police force "as a vehicle for achieving national independence [rather] than as a non-political law and order agency."[23] Fatah paramilitaries, he contends, "made themselves indispensable as popular forces in anti-Israeli riots and clashes."[24]

Lia offers a plausible path by which foreign aid ended up in the hands of terrorists. As early as 2003, the World Bank recognized there was a problem with how aid was used, noting in its annual report on the West Bank and Gaza that "donors should have spent more on oversight mechanisms in 2001 and early 2002, thereby, putting themselves in a better position to answer questions about the diversion of funds to support terrorism."[25] Still, the World Bank justified the redirection of funds for emergency aid in the belief that donors "had no choice if they wanted to keep alive the hope of reconciliation, since a collapse of the PA service structure and the further radical impoverishment of the population would have vitiated this."[26]

The Israeli government and military watched the diversion of funds but could not change donor practices. On June 5, 2002, the IDF published a document calculating that the Palestinian Authority only needed 55 to 65 percent of its budget to fund legitimate government activities and estimated that the Palestinian Authority siphoned off $100 million a year to fund terrorism.[27] The estimates of need versus budget are consistent with more recent news accounts.[28]

Documents captured during Operation Defensive Shield in 2002 detail security forces involvement in terrorist operations.[29] An Israeli document describing the interrogation of Fatah leader Nasser Aweis in 2002 revealed the links between Tanzim operatives and the PA national security apparatus and showed not only how Palestinian security officers instructed Tanzim operatives in bomb-making, but also how they regularly updated Palestinian Authority leader Yasser Arafat.[30] Other documents detailed Palestinian Authority salary payments to terrorists in the employ of security service officials.[31]

The correlation between donor aid and violence becomes murky when examining the affiliations of the terrorists. Palestinian terrorism is conducted by a variety of organizations, many of which derive their support from foreign sources separate from Western government aid.[32] Islamist groups such as Hamas and Islamic Jihad, which have carried out the majority of attacks against Israel,[33] have had an uneasy and frequently adversarial relationship with Fatah-dominated Palestinian governments. Groups directly linked to Fatah, such as Al-Aqsa Martyrs' Brigades and Tanzim, account for only about 20 percent of the suicide bombings against Israel. Suicide bombings have been responsible for more than half of all Israeli fatalities since 2000. These circumstances make it difficult to understand why the correlation between aid to the Palestinians and terror homicides appears so strong.

The organizational affiliations of terrorists, however, may be multiple. Despite their strong internal differences, Fatah and the Islamists enjoy a high degree of cooperation in terrorism against Israel.[34] The Palestinian Authority's Preventive Security Apparatus, for example, supported both Hamas and Islamic Jihad in Jenin.[35] Fatah's Al-Aqsa Martyrs' Brigades and one or the other Islamist groups have carried out a number of joint operations.[36] These collaborative relationships continue. There remains ongoing concern that donor funds given to Palestinian Authority leader Mahmoud Abbas are subsidizing Hamas members on government ministry payrolls. And then there is the larger problem of the fungibility of money: Every dollar Hamas saves on having to fund jobs and programs unrelated to security is a dollar the organization can devote to terrorism. While collusion is clear, fully explaining the correlation requires better data on funds supplied covertly by Iran and sources within Saudi Arabia and better understanding of the role of tacit support from the Palestinian security services.

Perhaps U.S. and European officials still believe that supporting those suffering from the Palestinians' damaged economy outweighs the negative effect of the diversion of funds to terrorists. While international officials often say they seek to promote a more moderate political culture among Palestinians, the Hamas victory in the January 2006 elections suggests such hope may be misplaced. At the time, the Palestinian economy had begun to improve. Similarly, in 1998 and 1999, the two years immediately preceding the second intifada Palestinian gross domestic product increased by 7 and 6 percent respectively.[37] Perhaps the bitterness of conflict outweighed the moderating influence of the aid—or, perhaps, the theory that aid moderates is itself flawed.[38]
What Changed between 2000 and 2007?

The aid windfall promised at the Paris conference will seek to strengthen the Palestinians' West Bank leadership in the wake of Hamas' violent expulsion of Fatah from Gaza in June 2007.[39] Western officials regard the Palestinians' West Bank leadership as moderate[40] while Prime Minister Salam Fayyad is viewed as a technocrat who will ensure fiscal transparency in the PA. Nevertheless, the West Bank leadership retains armed militias incorporating terrorists. How much control Abbas and Fayyad have over these armed elements remains unclear. The commander of Israeli forces in the West Bank, Major General Gadi Shamni, recently told Israeli president Shimon Peres that "without the massive presence of the IDF in the West Bank, Hamas would take over the institutions and apparatuses of the Palestinian Authority within days." [41]

The aid windfall comes amid the PA's refusal to take responsibility for Palestinian rocket fire on Israeli towns. In 2006 and 2007, 1,719 rockets launched from Gaza hit Israeli territory.[42] On January 3, 2008, an upgraded 122 mm rocket fired from Gaza reached the major Israeli city of Ashkelon.[43] Nor has any Palestinian leader repudiated terrorism. Attacks by Fatah continue.[44] While the security barrier has curtailed terrorist attacks, the terrorist groups have not stopped trying.

Yet even some prominent Palestinians are troubled by the current determination to fund the Palestinian Authority. Abed of the Palestinian Monetary Authority, although supportive of financial assistance to the Palestinians, has spoken openly of the futility of providing donor aid, asserting that what is needed is investment. This view was echoed by James Prince, consultant to the Palestinian Investment Fund, who cautioned that "many of the donor programs have not only been ineffective, they have harmed the economy."[45]

Infusions of foreign funds into the Palestinian Authority budget from late 2000 through 2002 correlated with increased violence. Increased aid in 2005 and 2006 corresponded to increasing internal violence, which is consistent with the fact that money was still finding its way to militant groups to purchase weapons and pay the salaries of the expanding militias.

Although the correlation does not prove cause and effect or provide irrefutable evidence of a direct link, it seems likely that increased aid helps sustain Palestinian violence in several ways: by creating the opportunity to divert funds for militant activities; by insulating the Palestinian leadership from the fiscal consequences of the economic fallout from terrorism; and by creating a revenue surplus that allows the Palestinian government both to pay for salaries and programs and to funnel money to terrorists. As Western donors prepare to pour unprecedented amounts of money into the PA, more discussion is needed to explain what controls will be imposed to ensure that the aid is not diverted to terrorists or used to fund a broader conflict with Israel.

Steven Stotsky is a senior research analyst at the Committee for Accuracy in Middle East Reporting in America (CAMERA).

[1] The New York Times, Dec. 18, 2007.
[2] Nicolas Sarkozy, president of France, speech to International Donors' Conference for the Palestinian State, France Diplomatie, French Ministry of Foreign and European Affairs, Dec. 17, 2007.
[3] Condoleezza Rice, U.S. secretary of state, remarks at the International Donors' Conference for the Palestinian State, U.S. Department of State, Dec. 17, 2007.
[4] Calculations from World Bank Development Indicators Data Base, 2005 and Recipient Aid Charts, Development Cooperation Directorate, Organisation for Economic Co-operation and Development (OECD), Jan 1, 2006.
[5] USA Today, Dec. 17, 2007; The Washington Post, Oct. 31, 2007; International Middle East Media Center (West Bank and Gaza), Dec. 15, 2007.
[6] Reuters, July 1, 2007.
[7] The San Francisco Chronicle, Sept. 4, 2005.
[8] West Bank and Gaza: Economic Performance and Reforms under Conflict Conditions (Washington, D.C.: International Monetary Fund [IMF], Sept. 2003), pp. 87-98.
[9] Anti-Israeli Terrorism, 2006: Data, Analysis and Trends, Intelligence and Terrorism Information Center, Israel Intelligence Heritage and Commemoration Center (IICC), Gelilot, Mar. 2007, p. 62; The Status of Palestinian Citizens' Rights, 5th through 12th annual reports, The Palestinian Independent Commission for Citizens' Rights (PICC), Ramallah, West Bank, 1999-2007; Associated Press, Oct. 6, 2005; "Palestinians Killed by Palestinians in the Occupied Territories," B'Tselem, Jerusalem, accessed Feb. 29, 2008; "OCHA-Opt Protection of Civilians," United Nations Office for the Coordination of Humanitarian Affairs, Dec. 2006; "OCHA-Opt Protection of Civilians," United Nations Office for the Coordination of Humanitarian Affairs, Aug. 2007; Reuters, June 8, 2007.
[10] Four Years: Intifada, Closures and Palestinian Economic Crisis (Washington, D.C.: World Bank, Oct. 2004), p. 6; "West Bank and Gaza: Fiscal Performance in 2006," International Monetary Fund, Washington, D.C., Mar. 2007, p. 4.
[11] Anti-Israeli Terrorism, 2006, IICC, p. 16.
[12] West Bank and Gaza: Economic Performance and Reforms, IMF, p. 71; Four Years: Intifada, World Bank, p. 20.
[13] West Bank and Gaza: Economic Performance and Reforms, IMF, pp. 34, 71.
[14] Four Years: Intifada, World Bank, p. 66.
[15] Ibid., pp. 65- 6.
[16] The Christian Science Monitor, Jan. 4, 2008.
[17] West Bank and Gaza: Economic Performance and Reforms, IMF, p. 92; "Two Years after London: Restarting the Palestinian Economic Recovery," World Bank, London, Sept. 24, 2007, p. 10; "West Bank and Gaza Update," World Bank Group, Gaza and West Bank Office, Mar. 2007, p. 10.
[18] West Bank and Gaza: Economic Performance and Reforms, IMF, p. 92; author's calculation from data in West Bank and Gaza: Recent Fiscal and Financial Developments, IMF, Washington, D.C., Oct. 2006, p. 7, ftnt. 8, p. 10, Table 3; James D. Wolfensohn, Quartet special envoy for disengagement, testimony to the Foreign Relations Committee, U.S. Senate, Mar. 15, 2006, p. 3.
[19] Reuters, Feb. 9, 2008; The Jordan Times (Amman), Feb. 27, 2008.
[20] CNN News, Jan. 30, 2004.
[21] Saeb Erekat, interview, CNN, Sept. 19, 2002.
[22] Brynjar Lia, A Police Force without a State: A History of the Palestinian Security Forces in the West Bank and Gaza (Reading, U.K.: Ithaca Press, 2006), p. 137.
[23] Ibid., pp. 429-31.
[24] Ibid., p. 432.
[25] Twenty-Seven Months, Intifada, Closure and Palestinian Economic Crisis (Washington, D.C.: World Bank, May. 2003), p. 88.
[26] Ibid., p. 52.
[27] "International Financial Aid to the Palestinian Authority Redirected to Terrorist Elements," Israel Defense Forces Military Intelligence, Israel Ministry of Foreign Affairs (MFA), June 5, 2002; Rachel Ehrenfeld, "Eurocash," National Review Online, Dec. 10, 2003.
[28] The Christian Science Monitor, Jan. 4, 2008.
[29] "The Involvement of Arafat, PA Senior Officials and Apparatuses in Terrorism against Israel," Israel Ministry of Foreign Affairs, May 6, 2002.
[30] "Senior Fatah Leaders Describe Arafat's Link to Terrorism," Israel Ministry of Foreign Affairs, May 2, 2002.
[31] "Palestinian Authority Security Services Supplied Guidance, Weapons and Funds to Al-Aqsa Martyrs' Brigades in Order to Perpetrate Terrorist Attacks," Embassy of Israel, Washington, D.C., Israel Ministry of Foreign Affairs, May 2002.
[32] Rachel Ehrenfeld and Sarah Zebaida, "EU and the PA Money Trail," National Review Online, Jan. 27, 2003; Jonathan D. Halevi, "What Drives Saudi Arabia to Persist in Terrorist Financing," Jerusalem Viewpoints, Jerusalem Center for Public Affairs, Jerusalem, June 1, 2005.
[33] "Suicide and Other Bombing Attacks since the Declaration of Principles (Sept. 1993)," Israel Ministry of Foreign Affairs, accessed Feb. 13, 2008.
[34] "The Involvement of Arafat," MFA, May 6, 2002.
[35] "Palestinian Authority Security Services," MFA, May 2002.
[36] "Documents Seized during Operation Defensive Shield Linking Yasser Arafat to Terrorist Activities," doc. no. 6, Israel Ministry of Foreign Affairs, Apr. 15, 2002, accessed Feb. 13, 2008; The New York Times, Jan. 14, 2005; "Suicide and Other Bombing Attacks in Israel," MFA, accessed Feb. 13, 2008.
[37] Four Years: Intifada, World Bank, p. 20; "Report No. 23820," An Evaluation of Bank Assistance, World Bank, Washington D.C., Mar. 7, 2002, p. 2, Table 1.1.
[38] Claude Berrebi, "Evidence about the Link between Education, Poverty and Terrorism among Palestinians," Peace Economics, Peace Science, and Public Policy, Rand Corporation, Jan. 2007; Alan B. Krueger and Jitka Maleckova, "Education, Poverty and Terrorism: Is There a Causal Connection," Journal of Economic Perspectives, Fall 2003; Jean Paul Azam and Alexandra Delacroix, "Aid and the Delegated Fight against Terrorism," Review of Development Economics, May 2006, pp. 330-44.
[39] Associated Press, Nov. 24, 2007.
[40] USA Today, June 19, 2007.
[41] The Jerusalem Post, Feb. 27, 2008.
[42] "Rocket Threat from Gaza," Israel Ministry of Foreign Affairs, Dec. 16, 2007.
[43] "Katyusha Rocket Fired at Ashkelon," Israel Ministry of Foreign Affairs, Jan. 3, 2008.
[44] The Jerusalem Post, Jan. 1, 2008.
[45] The San Francisco Chronicle, Sept. 5, 2005.

5) OPINION:The Tragic End of Bush's North Korea Policy
By JOHN R. BOLTON

Maskirovka – the Soviet dark art of denial, deception and disguise – is alive and well in Pyongyang, years after the Soviet Union disappeared. Unfortunately, the Bush administration appears not to have gotten the word.

With much fanfare and choreography, but little substance, the administration has accepted a North Korean "declaration" about its nuclear program that is narrowly limited, incomplete and almost certainly dishonest in material respects. In exchange, President Bush personally declared that North Korea is no longer a state sponsor of terrorism or an enemy of the United States. In a final flourish, North Korea has undertaken a reverse Potemkin Village act, destroying the antiquated cooling tower of the antiquated Yongbyon reactor. In the waning days of American presidencies, this theater is the stuff of legacy.

North Korea has consecutively broken every major agreement with the U.S. since the North's creation. The Bush administration provides no reason why this one will not be added to that long list except the audacity of hope. Where have we heard that recently? Barack Obama and John Kerry both announced support for the deal, and Mr. Obama said he intended to apply Bush's policy to other rogue states, thus confirming the early start of the Obama administration.

The Feb. 13, 2007, agreement states explicitly that North Korea was to provide "a complete declaration of all nuclear programs" within 60 days. This it manifestly did not do, either in timing or substance. The declaration, more than 14 months overdue, and which is not yet public, has long been forecast not to include information on weaponization, uranium enrichment, or proliferation activities such as cloning the Yongbyon reactor in Syria. Although the North provided less than it agreed 16 months ago, we compensated by giving up more than we agreed, which is typical of decades of U.S. negotiation with the North.

The extent to which Yongbyon's aggregate plutonium production has been weaponized and concealed is one critical unresolved issue. Moreover, analysis of the much-touted 18,000 pages of Yongbyon documentation previously turned over has uncovered significant gaps in information, especially concerning the reactor's early years of operation, that preclude making a truly accurate calculation. This is essentially the same problem that the International Atomic Energy Agency faced during its years of monitoring Yongbyon under the failed 1994 Agreed Framework, showing that the North is nothing if not consistent in its cover-up strategy.

Ironically, the documents themselves are contaminated with particles of highly enriched uranium, probably from that enrichment program North Korea still denies. This program's extent is crucial, because if it is production scope, the North will still have a route to fissile material no matter what Yongbyon's ultimate fate, proving yet again that leveling those aged facilities was a nonconcession.

Bush administration officials contend on this and other unresolved issues that they will insist on verification, but inside the government there is little or no planning on what that means precisely, let alone agreement on the details with North Korea. Given the North's record of maskirovka, the extent of open and intrusive verification we should demand would likely undermine the very foundations of the regime itself, which Kim Jong Il will obviously not accept.

The North's proliferation, such as the now-flattened Yongbyon twin in Syria, are important not only for what they prove about the North's ongoing duplicity, but for their potentially central place in the North's continuing nuclear weapons program. This is emphatically not, therefore, merely a matter of filling out the historical record, but rather an avenue of inquiry that focuses directly on the North's current capabilities and intentions. Pooh-poohing proliferation in this way, as the administration has done, is evidence of its desperation not to allow the deal to come unstuck.

The administration argues that these criticisms are unwarranted because it has always contemplated that the North's denuclearization would play out in phases. This is no answer at all. Instead, it graphically reveals one of the deal's central problems. There is no advantage to the U.S. in proceeding by phases. To the contrary, North Korea alone benefits by phasing, by stretching out a process that enables Kim Jong Il to stay in power and to maximize the political and economic benefits he can extract through each excruciatingly lengthy and painful phase.

Consider, moreover, the deal's corrosive impact on the very concept of the U.S. list of state sponsors of terrorism. Removing North Korea from the list for political reasons unrelated to terrorism simply provides ammunition for those who argue that the existence of the list itself is purely political. Critically, since the North's nuclear and ballistic missile programs materially assisted Syria and Iran, two other states on the terrorism honor roll, it is hard to see what remains of President Bush's doctrine that those who support terrorists will be treated as terrorists.

Consider also the palpable damage our mishandling of the terrorism issues has caused to our alliance with Japan, whose citizens, along with many South Koreans, were abducted by Pyongyang's agents. One might quibble that this is not state sponsorship of terrorism, but rather direct state terrorism. (Perhaps we should create a new list for North Korea.) It is hardly a reason to remove Japan's most effective leverage to get a straight accounting from the North about its citizens. Of course, why should we expect North Korea to be any more honest on the abductee issue than on anything else?

The only good news is that there is little opportunity for the Bush administration to make any further concessions in its waning days in office. But for many erstwhile administration supporters, this is a moment of genuine political poignancy. Nothing can erase the ineffable sadness of an American presidency, like this one, in total intellectual collapse.

6) REVIEW & OUTLOOK:Obama's Dry Hole


"I want you to think about this," Barack Obama said in Las Vegas last week. "The oil companies have already been given 68 million acres of federal land, both onshore and offshore, to drill. They're allowed to drill it, and yet they haven't touched it – 68 million acres that have the potential to nearly double America's total oil production."

Wow, how come the oil companies didn't think of that?

Perhaps because the notion is obviously false – at least to anyone who knows how oil and gas exploration actually works. Predictably, however, Mr. Obama's claim is also the mantra of Nancy Pelosi, Barbara Boxer, John Kerry, Nick Rahall and others writing Congressional energy policy. As a public service, here's a remedial education.

Democrats are in a vise this summer, pinned on one side by voter anger over $4 gas and on the other by their ideological opposition to carbon-based energy – so, as always, the political first resort is to blame Big Oil. The allegation is that oil companies are "stockpiling" leases on federal lands to drive up gas prices. At least liberals are finally acknowledging the significance of supply and demand.

To deflect the GOP effort to relax the offshore-drilling ban – and thus boost supply while demand will remain strong – Democrats also say that most of the current leases are "nonproducing." The idea comes from a "special report" prepared by the Democratic staff of the House Resources Committee, chaired by Mr. Rahall. "If we extrapolate from today's production rates on federal lands and waters," the authors write, the oil companies could "nearly double total U.S. oil production" (their emphasis).

In other words, these whiz kids assume that every acre of every lease holds the same amount of oil and gas. Yet the existence of a lease does not guarantee that the geology holds recoverable resources. Brian Kennedy of the Institute for Energy Research quips that, using the same extrapolation, the 9.4 billion acres of the currently nonproducing moon should yield 654 million barrels of oil per day.

Nonetheless, the House still went through with a gesture called the "use it or lose it" bill, which passed on Thursday 223-195. It would be pointless even if it had a chance of becoming law. Oil companies acquire leases in the expectation that some of them contain sufficient oil and gas to cover the total costs. Yet it takes years to move through federal permitting, exploration and development. The U.S. Minerals Management Service notes that only one of three wells results in a discovery of oil that can be recovered economically. In deeper water, it's one of five. All this involves huge risks, capital investment – and time.

If anything, the Democrats ought to be dancing in the streets about "idle" leases. It means fewer rigs. The days of hit-or-miss wildcatting have been relegated to the past by new, more efficient technologies, such as seismic imaging, directional drilling (wells that are "steered" underground) and multilateral drilling (multiple underground offshoots from a single wellbore).

At the same time, finding new reservoirs has become far more complex. Except for a few very large fields discovered decades ago like Prudhoe Bay, most recent discoveries have been smaller, deeper and less concentrated. The U.S. needs a continuous supply of discoveries to replace declining wells.

Yet companies are not allowed to explore where the biggest prospects for oil and gas may exist – especially on the Outer Continental Shelf. Seven of the top 20 U.S. oil fields are now located in analogous deepwater areas (greater than 1,000 feet) in the Gulf of Mexico. In 2006, Chevron discovered what is likely to be the largest American oil find since Prudhoe, drilled in 7,000 feet of water and more than 20,000 feet under the sea floor. The Wilcox formation may have an upper end of 15 billion barrels of recoverable oil and should begin producing by 2014 – perhaps ushering in a new ultradeepwater frontier.

Likewise, in April, the U.S. Geological Survey revised its estimate for the Bakken Shale, underneath the badlands of North Dakota and Montana. The new assessment – as much as 4.3 billion barrels of oil – is a 25-fold increase over what the Survey believed in 1995. Such breakthroughs confirm that very large reserves exist, if only Congress would let business get at them.

All of which has Democrats sweating bullets. The leadership is desperate to avoid debating a Department of Interior spending bill, because they know Republicans will offer amendments lifting the drilling moratorium that may peel off some Democrats. Last week, Chairman David Obey shut down the Appropriations Committee rather than countenance more domestic energy production. Given Democratic energy illiteracy, this is a fight the GOP can win if it keeps up the pressure.

7) Confirmed: Wesley Clark is an idiot
By Michelle Malkin

If Gen. Wesley Clark had vice presidential aspirations, they went out the window yesterday when he opened his mouth and removed any lingering doubt about his idiocy. Here’s what he said in case you missed it doing something more important than watching windbags deflate on a Sunday morning:

Retired Gen. Wesley Clark, a key military adviser for Barack Obama, dismissed John McCain’s war record as a qualification for readiness to be president.

Appearing on CBS’ “Face the Nation,” Clark downplayed the plane crash that led to McCain’s captivity during the Vietnam War, and said the squadron McCain commanded “wasn’t a wartime squadron.”

“He has been a voice on the Senate Armed Services Committee. And he has traveled all over the world. But he hasn’t held executive responsibility,” Clark said.

And Barack Obama’s “executive responsibility” would be…what exactly? Oh, yeah. Conducting leadership training seminars for ACORN shakedown artists!

When asked by host Bob Schieffer how he came to describe McCain as “untested and untried,” Clark said it was “because in the matters of national security policy-making, it’s a matter of understanding risk. It’s a matter of gauging your opponents and it’s a matter of being held accountable. John McCain’s never done any of that in his official positions,” adding, “He hasn’t made the calls.”

When Schieffer noted Obama has not had wartime experiences, Clark said: “Well, I don’t think riding in a fighter plane and getting shot down is a qualification to be president.”

Well, it beats riding in…bumper cars and pretending to be Superman.

McQ adds:

A squadron command doesn’t become “executive experience” only if the squadron is in a combat situation. It is either an executive experience or it’s not executive experience whether at war or during peace.

Does commanding NATO not count as executive experience if NATO isn’t at war? And btw, does getting fired from his NATO command negate Clark’s claim to executive experience?

…if the willingness to fight for your country, put your life on the line and suffer the brutality McCain suffered as a POW doesn’t make the cut as far as qualifications go, how far below that does a “community organizer” show up on the list of non-qualifications?