The Politics of Culture!

Zeihan on Russia. (See 1 below.)

Investor's Daily on Obama. (See 2 below.)

Israeli political intrigue begins. (See 3 below.)

Wurmser tells Keinon, GW will not hit Iran before he leaves office. (See 4 below.)

One has every right to ask whether the U.S. is broke and, under most normal accounting principles whereby all one's obligations are put on one's financial statement and listed against one's obligations, statistically speaking, we are. Future obligations number in the trillions - some estimates they are as high as 70.

But unlike people, governments do not go bankrupt. They do not file for Chapter 11, or any other number. They generally inflate their way out of their fiscal morass and their citizens' standard of living declines. Government promises generally either go unmet or are fulfilled far below previous commitment levels.

A nation's assets are: its people, natural resources, leadership that moves the beyond the problems and the peoples' will to do so. We possess may of these asset attributes.

There are still more shoes to fall but three comfort take aways are in evidence :

a) The financial melt down has gotten the attention of everyone world wide who has any involvement.

b) The world community, - Fed, Treasury and Central Bankers - have a vested interest in avoiding a world wide depression and/or a severe and sustained recession.

c) Liquidity is being injected into the system and energy prices are in decline as economic activity falters.

That said, I do not see a return to economic normalcy for at least a year and even then progress should be labored.

Out nation's financial markets have been dealt serious blows and are not likely to recover swiftly. What must be avoided, at all costs, are heavy handed attempts on the part of Congress and an incoming administration to knee jerk react, make matters worse by throwing money at the problem and burden the markets with unnecessary and over-regulation efforts.

Greed and fear are human attributes and will always be present - they cannot be legislated away. Heavy penalties should be levied against those who abuse the markets and full disclosure of executive compensation, which has reached outrageous proportions, should be a minimum expectation.

Recently Lee Siegel wrote an excellent article entitled "The Triumph of Culture over Politics." His thesis was: "Liberals think there is something broken in politics and conservatives think there is something wrong with the culture." I believe both are correct.

As the candidates get serious and engage in focused campaign rhetoric one can only hope they will clue us in on what specific actions they will implement to address our many problems. However, I would not counsel you to hold your breath since petty shallowness is politically acceptable and will remain so until we demand otherwise.

Dick


1) The Russian Resurgence and the New-Old Front: Graphic for Geopolitical Intelligence Report
By Peter Zeihan

Russia is attempting to reforge its Cold War-era influence in its near abroad. This is not simply an issue of nostalgia, but a perfectly logical and predictable reaction to the Russian environment. Russia lacks easily definable, easily defendable borders. There is no redoubt to which the Russians can withdraw, and the only security they know comes from establishing buffers — buffers which tend to be lost in times of crisis. The alternative is for Russia to simply trust other states to leave it alone. Considering Russia’s history of occupations, from the Mongol horde to Napoleonic France to Hitler’s Germany, it is not difficult to surmise why the Russians tend to choose a more activist set of policies.

As such, the country tends to expand and contract like a beating heart — gobbling up nearby territories in times of strength, and then contracting and losing those territories in times of weakness. Rather than what Westerners think of as a traditional nation-state, Russia has always been a multi-ethnic empire, heavily stocked with non-Russian (and even non-Orthodox) minorities. Keeping those minorities from damaging central control requires a strong internal security and intelligence arm, and hence we get the Cheka, the KGB, and now the FSB.
Nature of the Budding Conflict

Combine a security policy thoroughly wedded to expansion with an internal stabilization policy that institutionalizes terror, and it is understandable why most of Russia’s neighbors do not like Moscow very much. A fair portion of Western history revolves around the formation and shifting of coalitions to manage Russian insecurities.

In the American case specifically, the issue is one of continental control. The United States is the only country in the world that effectively controls an entire continent. Mexico and Canada have been sufficiently intimidated so that they can operate independently only in a very limited sense. (Technically, Australia controls a continent, but with the some 85 percent of its territory unusable, it is more accurate in geopolitical terms to think of it as a small archipelago with some very long bridges.) This grants the United States not only a potentially massive internal market, but also the ability to project power without the fear of facing rearguard security threats. U.S. forces can be focused almost entirely on offensive operations, whereas potential competitors in Eurasia must constantly be on their guard about the neighbors.

The only thing that could threaten U.S. security would be the rise of a Eurasian continental hegemon. For the past 60 years, Russia (or the Soviet Union) has been the only entity that has had a chance of achieving that, largely due to its geographic reach. U.S. strategy for coping with this is simple: containment, or the creation of a network of allies to hedge in Russian political, economic and military expansion. NATO is the most obvious manifestation of this policy imperative, while the Sino-Soviet split is the most dramatic one.

Containment requires that United States counter Russian expansionism at every turn, crafting a new coalition wherever Russia attempts to break out of the strategic ring, and if necessary committing direct U.S. forces to the effort. The Korean and Vietnam wars — both traumatic periods in American history — were manifestations of this effort, as were the Berlin airlift and the backing of Islamist militants in Afghanistan (who incidentally went on to form al Qaeda).

The Georgian war in August was simply the first effort by a resurging Russia to pulse out, expand its security buffer and, ideally, in the Kremlin’s plans, break out of the post-Cold War noose that other powers have tied. The Americans (and others) will react as they did during the Cold War: by building coalitions to constrain Russian expansion. In Europe, the challenges will be to keep the Germans on board and to keep NATO cohesive. In the Caucasus, the United States will need to deftly manage its Turkish alliance and find a means of engaging Iran. In China and Japan, economic conflicts will undoubtedly take a backseat to security cooperation.

Russia and the United States will struggle in all of these areas, consisting as they do the Russian borderlands. Most of the locations will feel familiar, as Russia’s near abroad has been Russia’s near abroad for nearly 300 years. Those locations — the Baltics, Austria, Ukraine, Serbia, Turkey, Central Asia and Mongolia — that defined Russia’s conflicts in times gone by will surface again. Such is the tapestry of history: the major powers seeking advantage in the same places over and over again.
The New Old-Front

But not all of those fronts are in Eurasia. So long as U.S. power projection puts the Russians on the defensive, it is only a matter of time before something along the cordon cracks and the Russians are either fighting a land war or facing a local insurrection. Russia must keep U.S. efforts dispersed and captured by events as far away from the Russian periphery as possible — preferably where Russian strengths can exploit American weakness.

So where is that?

Geography dictates that U.S. strength involves coalition building based on mutual interest and long-range force projection, and internal U.S. harmony is such that America’s intelligence and security agencies have no need to shine. Unlike Russia, the United States does not have large, unruly, resentful, conquered populations to keep in line. In contrast, recall that the multiethnic nature of the Russian state requires a powerful security and intelligence apparatus. No place better reflects Russia’s intelligence strengths and America’s intelligence weakness than Latin America.

The United States faces no traditional security threats in its backyard. South America is in essence a hollow continent, populated only on the edges and thus lacking a deep enough hinterland to ever coalesce into a single hegemonic power. Central America and southern Mexico are similarly fractured, primarily due to rugged terrain. Northern Mexico (like Canada) is too economically dependent upon the United States to seriously consider anything more vibrant than ideological hostility toward Washington. Faced with this kind of local competition, the United States simply does not worry too much about the rest of the Western Hemisphere — except when someone comes to visit.

Stretching back to the time of the Monroe Doctrine, Washington’s Latin American policy has been very simple. The United States does not feel threatened by any local power, but it feels inordinately threatened by any Eastern Hemispheric power that could ally with a local entity. Latin American entities cannot greatly harm American interests themselves, but they can be used as fulcrums by hostile states further abroad to strike at the core of the United States’ power: its undisputed command of North America.

It is a fairly straightforward exercise to predict where Russian activity will reach its deepest. One only needs to revisit Cold War history. Future Russian efforts can be broken down into three broad categories: naval interdiction, drug facilitation and direct territorial challenge.

Naval Interdiction

Naval interdiction represents the longest sustained fear of American policymakers. Among the earliest U.S. foreign efforts after securing the mainland was asserting control over the various waterways used for approaching North America. Key in this American geopolitical imperative is the neutralization of Cuba. All the naval power-projection capabilities in the world mean very little if Cuba is both hostile and serving as a basing ground for an extra-hemispheric power.

The U.S. Gulf Coast is not only the heart of the country’s energy industry, but the body of water that allows the United States to function as a unified polity and economy. The Ohio, Missouri, and Mississippi river basins all drain to New Orleans and the Gulf of Mexico. The economic strength of these basins depends upon access to oceanic shipping. A hostile power in Cuba could fairly easily seal both the Straits of Florida and the Yucatan Channel, reducing the Gulf of Mexico to little more than a lake.

Building on the idea of naval interdiction, there is another key asset the Soviets targeted at which the Russians are sure to attempt a reprise: the Panama Canal. For both economic and military reasons, it is enormously convenient to not have to sail around the Americas, especially because U.S. economic and military power is based on maritime power and access. In the Cold War, the Soviets established friendly relations with Nicaragua and arranged for a favorable political evolution on the Caribbean island of Grenada. Like Cuba, these two locations are of dubious importance by themselves. But take them together — and add in a Soviet air base at each location as well as in Cuba — and there is a triangle of Soviet airpower that can threaten access to the Panama Canal.

Drug Facilitation

The next stage — drug facilitation — is somewhat trickier. South America is a wide and varying land with very little to offer Russian interests. Most of the states are commodity providers, much like the Soviet Union was and Russia is today, so they are seen as economic competitors. Politically, they are useful as anti-American bastions, so the Kremlin encourages such behavior whenever possible. But even if every country in South America were run by anti-American governments, it would not overly concern Washington; these states, alone or en masse, lack the ability to threaten American interests … in all ways but one.

The drug trade undermines American society from within, generating massive costs for social stability, law enforcement, the health system and trade. During the Cold War, the Soviets dabbled with narcotics producers and smugglers, from the Revolutionary Armed Forces of Colombia (FARC) to the highland coca farmers of Bolivia. It is not so much that the Soviets encouraged the drug trade directly, but that they encouraged any group they saw as ideologically useful.

Stratfor expects future Russian involvement in such activities to eclipse those of the past. After the Soviet fall, many FSB agents were forced to find new means to financially support themselves. (Remember it was not until 1999 that Vladimir Putin took over the Russian government and began treating Russian intelligence like a bona fide state asset again.) The Soviet fall led many FSB agents, who already possessed more than a passing familiarity with things such as smuggling and organized crime, directly into the heart of such activities. Most of those agents are — formally or not — back in the service of the Russian government, now with a decade of gritty experience on the less savory side of intelligence under their belts. And they now have a deeply personal financial interest in the outcome of future operations.

Drug groups do not need cash from the Russians, but they do need weaponry and a touch of training — needs which dovetail perfectly with the Russians’ strengths. Obviously, Russian state involvement in such areas will be far from overt; it just does not do to ship weapons to the FARC or to one side of the brewing Bolivian civil war with CNN watching. But this is a challenge the Russians are good at meeting. One of Russia’s current deputy prime ministers, Igor Sechin, was the USSR’s point man for weapons smuggling to much of Latin America and the Middle East. This really is old hat for them.

U.S. Stability

Finally, there is the issue of direct threats to U.S. stability, and this point rests solely on Mexico. With more than 100 million people, a growing economy and Atlantic and Pacific ports, Mexico is the only country in the Western Hemisphere that could theoretically (which is hardly to say inevitably) threaten U.S. dominance in North America. During the Cold War, Russian intelligence gave Mexico more than its share of jolts in efforts to cause chronic problems for the United States. In fact, the Mexico City KGB station was, and remains today, the biggest in the world. The Mexico City riots of 1968 were in part Soviet-inspired, and while ultimately unsuccessful at overthrowing the Mexican government, they remain a testament to the reach of Soviet intelligence. The security problems that would be created by the presence of a hostile state the size of Mexico on the southern U.S. border are as obvious as they would be dangerous.

As with involvement in drug activities, which incidentally are likely to overlap in Mexico, Stratfor expects Russia to be particularly active in destabilizing Mexico in the years ahead. But while an anti-American state is still a Russian goal, it is not their only option. The Mexican drug cartels have reached such strength that the Mexican government’s control over large portions of the country is an open question. Failure of the Mexican state is something that must be considered even before the Russians get involved. And simply doing with the Mexican cartels what the Soviets once did with anti-American militant groups the world over could suffice to tip the balance.

In many regards, Mexico as a failed state would be a worse result for Washington than a hostile united Mexico. A hostile Mexico could be intimidated, sanctioned or even invaded, effectively browbeaten into submission. But a failed Mexico would not restrict the drug trade at all. The border would be chaos, and the implications of that go well beyond drugs. One of the United States’ largest trading partners could well devolve into a seething anarchy that could not help but leak into the U.S. proper.

Whether Mexico becomes staunchly anti-American or devolves into the violent chaos of a failed state does not matter much to the Russians. Either one would threaten the United States with a staggering problem that no amount of resources could quickly or easily fix. And the Russians right now are shopping around for staggering problems with which to threaten the United States.

In terms of cost-benefit analysis, all of these options are no-brainers. Threatening naval interdiction simply requires a few jets. Encouraging the drug trade can be done with a few weapons shipments. Destabilizing a country just requires some creativity. However, countering such activities requires a massive outlay of intelligence and military assets — often into areas that are politically and militarily hostile, if not outright inaccessible. In many ways, this is containment in reverse.
Old Opportunities, New Twists

In Nicaragua, President Daniel Ortega has proven so enthusiastic in his nostalgia for Cold War alignments that Nicaragua has already recognized Abkhazia and South Ossetia, the two territories in the former Soviet state (and U.S. ally) of Georgia that Russia went to war to protect. That makes Nicaragua the only country in the world other than Russia to recognize the breakaway regions. Moscow is quite obviously pleased — and was undoubtedly working the system behind the scenes.

In Bolivia, President Evo Morales is attempting to rewrite the laws that govern his country’s wealth distribution in favor of his poor supporters in the indigenous highlands. Now, a belt of conflict separates those highlands, which are roughly centered at the pro-Morales city of Cochabamba, from the wealthier, more Europeanized lowlands. A civil war is brewing — a conflict that is just screaming for outside interference, as similar fights did during the Cold War. It is likely only a matter of time before the headlines become splattered with pictures of Kalashnikov-wielding Cochabambinos decrying American imperialism.

Yet while the winds of history are blowing in the same old channels, there certainly are variations on the theme. The Mexican cartels, for one, were radically weaker beasts the last time around, and their current strength and disruptive capabilities present the Russians with new options.

So does Venezuelan President Hugo Chavez, a man so anti-American he seems to be even a few steps ahead of Kremlin propagandists. In recent days, Chavez has already hosted long-range Russian strategic bombers and evicted the U.S. ambassador. A glance at a map indicates that Venezuela is a far superior basing point than Grenada for threatening the Panama Canal. Additionally, Chavez’s Venezuela has already indicated both its willingness to get militarily involved in the Bolivian conflict and its willingness to act as a weapons smuggler via links to the FARC — and that without any heretofore detected Russian involvement. The opportunities for smuggling networks — both old and new — using Venezuela as a base are robust.

Not all changes since the Cold War are good for Russia, however. Cuba is not as blindly pro-Russian as it once was. While Russian hurricane aid to Cuba is a bid to reopen old doors, the Cubans are noticeably hesitant. Between the ailing of Fidel Castro and the presence of the world’s largest market within spitting distance, the emerging Cuban regime is not going to reflexively side with the Russians for peanuts. In Soviet times, Cuba traded massive Soviet subsidies in exchange for its allegiance. A few planeloads of hurricane aid simply won’t pay the bills in Havana, and it is still unclear how much money the Russians are willing to come up with.

There is also the question of Brazil. Long gone is the dysfunctional state; Brazil is now an emerging industrial powerhouse with an energy company, Petroleo Brasileiro, of skill levels that outshine anything the Russians have yet conquered in that sphere. While Brazilian rhetoric has always claimed that Brazil was just about to come of age, it now happens to be true. A rising Brazil is feeling its strength and tentatively pushing its influence into the border states of Uruguay, Paraguay and Bolivia, as well as into regional rivals Venezuela and Argentina. Russian intervention tends to appeal to those who do not feel they have meaningful control over their own neighborhoods. Brazil no longer fits into that category, and it will not appreciate Russia’s mucking around in its neighborhood.

A few weeks ago, Stratfor published a piece detailing how U.S. involvement in the Iraq war was winding to a close. We received many comments from readers applauding our optimism. We are afraid that we were misinterpreted. “New” does not mean “bright” or “better,” but simply different. And the dawning struggle in Latin America is an example of the sort of “different” that the United States can look forward to in the years ahead. Buckle up.

2) Barack Obama's Stealth Socialism
From INVESTOR'S BUSINESS DAILY

Before friendly audiences, Barack Obama speaks passionately about something called "economic justice." He uses the term obliquely, though, speaking in code — socialist code.

During his NAACP speech earlier this month, Sen. Obama repeated the term at least four times. "I've been working my entire adult life to help build an America where economic justice is being served," he said at the group's 99th annual convention in Cincinnati .

And as president, "we'll ensure that economic justice is served," he asserted. "That's what this election is about." Obama never spelled out the meaning of the term, but he didn't have to. His audience knew what he meant, judging from its thumping approval.

It's the rest of the public that remains in the dark, which is why we're launching this special educational series.

"Economic justice" simply means punishing the successful and redistributing their wealth by government fiat. It's a euphemism for socialism.

In the past, such rhetoric was just that — rhetoric. But Obama's positioning himself with alarming stealth to put that rhetoric into action on a scale not seen since the birth of the welfare state.

In his latest memoir he shares that he'd like to "recast" the welfare net that FDR and LBJ cast while rolling back what he derisively calls the "winner-take-all" market economy that Ronald Reagan reignited (with record gains in living standards for all).

Obama also talks about "restoring fairness to the economy," code for soaking the "rich" — a segment of society he fails to understand that includes mom-and-pop businesses filing individual tax returns.

It's clear from a close reading of his two books that he's a firm believer in class envy. He assumes the economy is a fixed pie, whereby the successful only get rich at the expense of the poor.

Following this discredited Marxist model, he believes government must step in and redistribute pieces of the pie. That requires massive transfers of wealth through government taxing and spending, a return to the entitlement days of old.

Of course, Obama is too smart to try to smuggle such hoary collectivist garbage through the front door. He's disguising the wealth transfers as "investments" — "to make America more competitive," he says, or "that give us a fighting chance," whatever that means.

Among his proposed "investments":

• "Universal," "guaranteed" health care.

• "Free" college tuition.

• "Universal national service" (a la Havana ).

• "Universal 401(k)s" (in which the government would match contributions made by "low- and moderate-income families").

• "Free" job training (even for criminals).

• "Wage insurance" (to supplement dislocated union workers' old income levels).

• "Free" child care and "universal" preschool.

• More subsidized public housing.

• A fatter earned income tax credit for "working poor."

• And even a Global Poverty Act that amounts to a Marshall Plan for the Third World, first and foremost Africa .

His new New Deal also guarantees a "living wage," with a $10 minimum wage indexed to inflation; and "fair trade" and "fair labor practices," with breaks for "patriot employers" who cow-tow to unions, and sticks for "nonpatriot" companies that don't.

That's just for starters — first-term stuff.

Obama doesn't stop with socialized health care. He wants to socialize your entire human resources department — from payrolls to pensions. His social-microengineering even extends to mandating all employers provide seven paid sick days per year to salary and hourly workers alike.

You can see why Obama was ranked, hands-down, the most liberal member of the Senate by the National Journal. Some, including colleague and presidential challenger John McCain, think he's the most liberal member in Congress.

But could he really be "more left," as McCain recently remarked, than self-described socialist Sen. Bernie Sanders (for whom Obama has openly campaigned, even making a special trip to Vermont to rally voters)?

Obama's voting record, going back to his days in the Illinois statehouse, says yes. His career path — and those who guided it — leads to the same unsettling conclusion.

The seeds of his far-left ideology were planted in his formative years as a teenager in Hawaii — and they were far more radical than any biography or profile in the media has portrayed.

A careful reading of Obama's first memoir, "Dreams From My Father," reveals that his childhood mentor up to age 18 — a man he cryptically refers to as "Frank" — was none other than the late communist Frank Marshall Davis, who fled Chicago after the FBI and Congress opened investigations into his "subversive," "un-American activities."

As Obama was preparing to head off to college, he sat at Davis ' feet in his Waikiki bungalow for nightly bull sessions. Davis plied his impressionable guest with liberal doses of whiskey and advice, including: Never trust the white establishment.

"They'll train you so good," he said, "you'll start believing what they tell you about equal opportunity and the American way and all that sh**."

After college, where he palled around with Marxist professors and took in socialist conferences "for inspiration," Obama followed in Davis ' footsteps, becoming a "community organizer" in Chicago .

His boss there was Gerald Kellman, whose identity Obama also tries to hide in his book. Turns out Kellman's a disciple of the late Saul "The Red" Alinsky, a hard-boiled Chicago socialist who wrote the "Rules for Radicals" and agitated for social revolution in America .

The Chicago-based Woods Fund provided Kellman with his original $25,000 to hire Obama. In turn, Obama would later serve on the Woods board with terrorist Bill Ayers of the Weather Underground. Ayers was one of Obama's early political supporters.

After three years agitating with marginal success for more welfare programs in South Side Chicago, Obama decided he would need to study law to "bring about real change" — on a large scale.

While at Harvard Law School , he still found time to hone his organizing skills. For example, he spent eight days in Los Angeles taking a national training course taught by Alinsky's Industrial Areas Foundation. With his newly minted law degree, he returned to Chicago to reapply — as well as teach — Alinsky's "agitation" tactics.

(A video-streamed bio on Obama's Web site includes a photo of him teaching in a University of Chicago classroom. If you freeze the frame and look closely at the blackboard Obama is writing on, you can make out the words "Power Analysis" and "Relationships Built on Self Interest" — terms right out of Alinsky's rule book.)

Amid all this, Obama reunited with his late father's communist tribe in Kenya , the Luo, during trips to Africa .

As a Nairobi bureaucrat, Barack Hussein Obama Sr., a Harvard-educated economist, grew to challenge the ruling pro-Western government for not being socialist enough. In an eight-page scholarly paper published in 1965, he argued for eliminating private farming and nationalizing businesses "owned by Asians and Europeans."

His ideas for communist-style expropriation didn't stop there. He also proposed massive taxes on the rich to "redistribute our economic gains to the benefit of all."

"Theoretically, there is nothing that can stop the government from taxing 100% of income so long as the people get benefits from the government commensurate with their income which is taxed," Obama Sr. wrote. "I do not see why the government cannot tax those who have more and syphon some of these revenues into savings which can be utilized in investment for future development."

Taxes and "investment" . . . the fruit truly does not fall far from the vine.

(Voters might also be interested to know that Obama, the supposed straight shooter, does not once mention his father's communist leanings in an entire book dedicated to his memory.)

In Kenya 's recent civil unrest, Obama privately phoned the leader of the opposition Luo tribe, Raila Odinga, to voice his support. Odinga is so committed to communism he named his oldest son after Fidel Castro.

With his African identity sewn up, Obama returned to Chicago and fell under the spell of an Afrocentric pastor. It was a natural attraction. The Rev. Jeremiah Wright preaches a Marxist version of Christianity called "black liberation theology" and has supported the communists in Cuba , Nicaragua and elsewhere.

Obama joined Wright's militant church, pledging allegiance to a system of "black values" that demonizes white "middle classness" and other mainstream pursuits.

(Obama in his first book, published in 1995, calls such values "sensible." There's no mention of them in his new book.)

With the large church behind him, Obama decided to run for political office, where he could organize for "change" more effectively. "As an elected official," he said, "I could bring church and community leaders together easier than I could as a community organizer or lawyer."

He could also exercise real, top-down power, the kind that grass-roots activists lack. Alinsky would be proud.

Throughout his career, Obama has worked closely with a network of stone-cold socialists and full-blown communists striving for "economic justice."

He's been traveling in an orbit of collectivism that runs from Nairobi to Honolulu , and on through Chicago to Washington .

Yet a recent AP poll found that only 6% of Americans would describe Obama as "liberal," let alone socialist.

Public opinion polls usually reflect media opinion, and the media by and large have portrayed Obama as a moderate "outsider" (the No. 1 term survey respondents associate him with) who will bring a "breath of fresh air" to Washington .

The few who have drilled down on his radical roots have tended to downplay or pooh-pooh them. Even skeptics have failed to connect the dots for fear of being called the dreaded "r" word.

But too much is at stake in this election to continue mincing words.

Both a historic banking crisis and 1970s-style stagflation loom over the economy. Democrats, who already control Congress, now threaten to filibuster-proof the Senate in what could be a watershed election for them — at both ends of Pennsylvania Avenue .

A perfect storm of statism is forming, and our economic freedoms are at serious risk.

Those who care less about looking politically correct than preserving the free-market individualism that's made this country great have to start calling things by their proper name to avert long-term disaster.

3)Ex-PMs Barak and Netanyahu in secret power-sharing talks as Kadima votes for next leader

September 16, 2008, 6:43 PM (GMT+02:00)
Livni, Mofaz's PM bid ambushed by Barak-Netanyahu's secret scheme

Livni, Mofaz's PM bid ambushed by Barak-Netanyahu's secret scheme

Defense minister Ehud Barak of Labor and opposition leader Binyamin Netanyahu of Likud are in advanced negotiations to rotate the premiership between them in order to cut the ground from under ruling Kadima which votes for a new chairman Wednesday, Sept. 17. The ultra-religious Shas is in on the plan.

This is reported by DEBKAfile’s political circles.

Foreign minister Tzipi Livni and transport minister Shaul Mofaz are front-runners for the post to succeed Ehud Olmert, who is committed to step down after the primary and face the corruption probes mounting up against him.

Barak’s Labor and Netanyahu’s Likud combined with Eli Yishai’s Shas hold more Knesset seats – 43, than Kadima’s 27.

They are in a position to prevent the winner of the Kadima primary automatically taking over from Olmert as head of the incumbent government coalition. If they finalize their pact, they plan to ask the president to accept their alternative bid to head the government.

Without Labor, neither Livni nor Mofaz has the numbers to form a viable coalition government.

Netanyahu and Barak are close to accord on the general principles of their partnership but are still working on details.

They have agreed that -

1. Netanyahu will take over the present government as prime minister and serve up to an early general election at the end of 2009.

2. Should the vote take place on time in late 2010, Netanyahu will serve in 2009 and hand over to Barak the following year.

3. Ex-PMs Barak and Netanyahu in secret power-sharing talks as Kadima votes for next leader

Their rotation agreement will apply to the post-election government as well – each of the party leaders serving a two-year term. This power-sharing arrangement worked in the mid-1980s, when Likud’s Yitzhak Shamir and Labor leader Shimon Peres took turns as head of government.

Political sources stress Labor leader Barak manipulated Olmert into retiring and his Kadima party into holding a primary for his successor by threatening to quit the coalition and bringing the government down.

Kadima accepted the deal, taking it for granted that that Olmert’s successor as party chairmanship would automatically accede to the premiership as well.

Livni went along with Barak’s scheme because she was sure that by ousting Olmert she would land both jobs and that Barak was on her side.

Mofaz’s guilty secret is his deal with Barak for the use of the pro-Labor Histadrut Trade Union Federation’s electoral resources, including help from the influential secretary general Ofer Eini, to support his bid for the party leadership.

In the meantime, Barak and Netanyahu have agreed to block the path to the prime minister’s office in Jerusalem to both Kadima leaders.

The Labor leader switched his support to Mofaz when he saw opinion polls showing that Livni as Kadima leader and prime minister would be hard to beat in a general election, whereas Mofaz would be less of a challenge.

Barak believes he can use his pact with Netanyahu to continue to push Kadima’s buttons and at the right moment, take the party over and form a left-of-center Labor-Kadima bloc to fight his current partner, head of the right-of-center Likud.

Only after the Kadima primary, will Barak find out if his complicated machinations work or go askew.

Kadima is a relatively new arrival on Israel’s political scene, an amalgam of loyalists of the former prime minister Ariel Sharon who followed him from different parties three years ago. They went along with his policy of a two-state solution of the Israel-Palestinian conflict separating the two peoples.

Olmert and Livni were part of Sharon’s coterie. With his disappearance, there is not much holding Kadima together. Just 74,000 voters are registered for its first primary Wednesday. Livni leads in the poll, challenged closely by Mofaz whereas the two other contenders, Avi Dichter and Meir Sheetrit, both cabinet members, trail far behind.

Their support will be critical if a run-off becomes necessary.

4) Ex-Cheney aide: Bush won't hit Iran before end of term
By HERB KEINON


US President George W. Bush will not attack Iran to halt its nuclear weapons program before his term ends in January, David Wurmser, a key national security adviser to Vice President Dick Cheney up until last year, has told The Jerusalem Post.
Iranian President Mahmoud...

Iranian President Mahmoud Ahmadinejad speaks in a ceremony at Iran's uranium enrichment facility in Natanz.
Photo: AP
Slideshow: Pictures of the week

"No, Bush won't go," Wurmser said when asked whether he thought the US president would want to take military action before he left office.

Wurmser's comments came after a day-long roundtable this week in Brussels on nuclear nonproliferation sponsored by the European Jewish Congress.

"Two things have to be in place for there to be an attack," Wurmser said. "That time has run out, and that diplomacy has run out. The feeling to a large extent now is that diplomacy is working, that there is a trend in the regime toward moderation, that pressure is building on the regime."

Wurmser said his certainty that no US action was in the works had to do with the fact that US Secretary of State Condoleezza Rice now clearly had the upper hand in the administration in her struggle with Cheney. Rice and Cheney have represented two different schools of thought in the Bush administration, with Cheney advocating a tough line against Iran, often brandishing the possibility of a military strike, while Rice advocated letting the diplomatic process and sanctions run their course.

According to Wurmser, who served as Cheney's senior adviser on national security affairs, specializing in the Middle East, terrorism, proliferation and strategy from 2003-2007, the prevalent feeling toward Iran now was that diplomacy and sanctions were working, and that this was creating a trend toward moderation in Teheran. He said the thinking in Washington had gone from advocating regime change to advocating Iranian "behavior modification."

Wurmser, once considered one of the key neo-conservative voices in the administration, and who now heads Delphi Global Analysis, a firm that conducts political risk analysis for financial institutions, said that currently the hope in the administration was not to replace the rule of the ayatollahs, but rather that a "Gorbachev" might emerge in Iran who - like Mikhail Gorbachev did in the Soviet Union - would substantially change the regime's polices from within.

And as far as the timeline was concerned, Wurmser said Bush did not feel the urgency to strike Iran now, believing that there was still sufficient time before Teheran achieved nuclear capabilities.

According to Wurmser, "Rice, the British and others" believe that to a large extent, recent US successes in Iraq were attributable to the fact that "Iran has acquiesced" and were not as involved in Iraq as they were previously.

He said that Rice feared that if the US or Israel attacked, all that would "unravel." What Rice did not take into consideration, he said, was that Iran's allies have been defeated in Iraq and don't have the ability to cause problems for the US to the same degree they did in the past.

Wurmser also said that Iran's military might, and its capacity to respond to any attack, was overblown. He said the present regime was marked by "tremendous weakness, and tremendous nervousness. They are flying on the edge. The Shi'ite world is bubbling under their feet, their situation in Lebanon is not that solid, and this government has little else other than its nuclear program."

Wurmser was one of 12 academics and policy shapers from Israel, Europe and the US who took part in the symposium, initiated by the European Jewish Congress's president Moshe Kantor. Kantor said the conference was held in Brussels to raise the profile of this issue and impact decision makers in Europe. While Iran was obviously on the top of the agenda in Israel, the issue was much less pressing in Europe, he said.

According to Kantor, some 10,000 European companies continue to do business with Iran, to the tune of some $100 billion a year.

Shmuel Bar, director of studies at the Interdisciplinary Center in Herzliya, agreed with Wurmser that Iran's threat of response to military action needed to be taken with large doses of skepticism.

"Iranians are masters of bluff," he said during the symposium. "They said they have 30,000 suicide bombers ready to be deployed, but when was the last time there was an Iranian suicide bomber. They will use Lebanese and Arabs, because they are expendable, but not one Iranian."

Bar did not discount that the Iranians could respond, but said their ability to do so needed to be placed in perspective. If, in response to an attack, they lashed out at Saudi Arabia, they would invite an even larger American response, he said. As to Iranian threats to close the straits of Hormuz, he said the US was clearly planning for this eventuality, and how to prevent it.

"An Iranian response would not be as terrible as the reality which would ensue from an Iranian nuclear capability," he said.

Another participant at the symposium, Maj.-Gen. (ret.) Vladimir Dvorkin, a researcher on international relations at the Russian Academy of Science and a senior advisor at the PIR think-tank in Moscow, presented four scenarios for action against Iran, and roughly drew the broad strokes of possible Iranian responses.

The first option, said Dvorkin, would be a fairly limited air strike by Israel or the US, either alone or in tandem, against nuclear sites, air defense systems, weapons silos, airports, and key military installations throughout the country. One variation of this scenario, he said, would be an Israeli attack, followed by US involvement after Israel declared its inability to deal with Teheran's retaliatory measures.

Dvorkin, who for nearly a decade headed a research institution in the Russian Defense Ministry and was also intricately involved in formulating the Soviet and then Russian position at the negotiations on strategic arms control and reduction, said another option would be more extensive bombing of Iran, something he called the Yugoslavian option, after the extended NATO bombings there in 1999.

Either option, the limited strike or the Yugoslavian option, were "fairly realistic," he said, and would likely lead to a rally-around-the-flag reaction by the Iranian people.


"Iran sees efforts to stop its nuclear program as attempts by infidels to keep it from advancing its technology and science, and even those [Iranians] who oppose the ayatollahs support the nuclear program. There is no disagreement on the issue, regardless of [what people think of] the political regime," he said.

If there were a limited strike, Dvorkin said that Iran's nuclear program would stop operating for a short period, and that the country would then divert its resources to getting it back up to speed.

"We assume that the rank and file would make donations to restore the nuclear program," he said, and also predicted intensified terrorist activity within the region and beyond, including the possibility of using so-called "dirty bombs." Two other options, he said, were very unlikely: a large-scale military operation similar to the invasion of Iraq, and regime change.

Dvorkin let Moscow off the hook for not supporting more forceful sanctions, saying that while he did not know how long it would take for Iran to create a prototype nuclear weapon, it was "certainly less time than it would take to apply collective or individual sanctions. That is the problem, incompatibility of time frames. The hopes of a Russian role in this are therefore not well founded."

He added that in addition to Russian economic interests, which made Russian pressure on Iran improbable, the current tensions with the West following the war in Georgia made cooperation even less likely.

Having said that, Dvorkin added that in his mind, while all the options for stopping Iran were bad, the prospect of a nuclear Iran was still worse.

Uzi Arad, a professor at the IDC in Herzliya and a foreign policy adviser to Likud head Binyamin Netanyahu, came out against the feeling that a nuclear Iran was inevitable.

"We have to be very self-critical and not describe things as inevitable," he said. "They can be affected by actions."

He said that so far too little has been done, too late.

For instance, he said that had the relatively mild sanctions adopted by the UN Security Council in 2006 been adopted in 2003, things might have looked different. At that time Russia was in a more cooperative mood with the West, and the US invasion of Iraq was fresh in everyone's mind, especially the Iranians. "The right moves at the right time would have made a big difference," he said.

Arad recommended putting into action immediately "a persuasive body of inducement or dis-inducements" that would include "the full, intensive activation of non military sanctions," including those targeted at the energy sector.

According to Arad, sanctions aimed at the Iranian energy sector, sanctions not yet employed, "do bite," and would show the Iranians that the international community was serious. "If they see that there are cuts in oil exports or imports, that carries weight," he said, adding that there must also be a "credible" military option on the table "so they know that if they don't agree, there is a military action."

5) Government bails out AIG with $85 billion loan
By JEANNINE AVERSA, IEVA M. AUGSTUMS and STEPHEN BERNARD

WASHINGTON - For the second time this month, the U.S. government put taxpayer money on the hook to rescue a private financial company, saying the failure of the huge insurer American International Group Inc. would further disrupt markets and threaten the already fragile economy.


The Federal Reserve said Tuesday it would provide up to $85 billion in an emergency, two-year loan to rescue AIG, which teetered on the edge of failure because of stresses caused by the collapse of the sub-prime mortgage market and the credit crunch that ensued. In return, the government will get a 79.9 percent stake in AIG and the right to remove senior management.

The move was similar to government's seizure on Sept. 7 of mortgage giants Fannie Mae and Freddie Mac, where the Treasury Department said it was prepared to put up as much as $100 billion over time in each of the companies if needed to keep them from going broke.

Both moves were bound to raise questions about the use of taxpayer money to bail out private firms.

The Fed said it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy. Although little known off Wall Street, AIG does business with almost every financial institution in the world and insures $88 billion worth of assets including mortgages and corporate loans.

Its failure could also "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said in a statement.

The decision to help AIG reversed the government's stance over the weekend, when it refused to use taxpayer money to bail out Lehman Brothers Holdings Inc. Lehman, which filed for bankruptcy protection Monday, collapsed under the weight of mounting losses related to its real estate holdings.

The White House said it backed the Fed's decision Tuesday.

"These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy," White House spokesman Tony Fratto said.

After meeting with Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke in a late-night briefing on Capitol Hill, Congressional leaders said they understood the need for the bailout.

"The administration is approaching an unprecedented step, but unfortunately we are living in unprecedented times." said Sen. Charles Schumer, D-N.Y. "Hearing of these plans, you have to stop to catch your breath. But upon reflection, the alternatives are much worse."

New York officials said the deal helps stave off a fiscal crisis for the state.

"Policy holders will be protected, jobs will be saved," New York Gov. David Paterson said Tuesday night.

The Fed's move was part of a concerted push to help calm jittery markets and investors around the world.

On Tuesday, the Fed decided to keep its key interest rate steady at 2 percent, but acknowledged stresses in financial markets have grown and hinted it stood ready to lower rates if needed.

The central bank also pumped $70 billion into the nation's financial system to help ease credit stresses. In emergency sessions over the weekend, the Fed expanded its loan programs to Wall Street firms, part of an ongoing effort to get credit flowing more freely.

The stock market, which Monday had its worst session since the Sept. 11 attacks, recovered Tuesday after the Fed's decision on interest rates. The Dow Jones industrials rose 141 points after losing 500 points on Monday.

AIG's shares swung violently, though, as rumors of potential deals involving the government or private parties emerged and were dashed. By late Tuesday, its shares had closed down 20 percent — and another 45 percent after hours.

The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn't make good on its promise to pay back soured debt, investors feared the consequences would pose a greater threat to the U.S. financial system than this week's collapse of the investment bank Lehman Brothers.

The worries were heightened Monday after Moody's Investor Service and Standard and Poor's lowered AIG's credit ratings, forcing AIG to seek more money for collateral against its insurance contracts. Without that money, AIG would have defaulted on its obligations and the buyers of its insurance — such as banks and other financial companies — would have found themselves without protection against losses on the debt they hold.

"It might not just bring down other financial institutions in the U.S. It could bring down overseas financial institutions," said Timothy Canova, a professor of international economic law at Chapman University School of Law. "If Lehman Brother's failure could help trigger AIG's going down, who knows who AIG's failure could trigger next."

New York-based AIG operates an insurance and financial services businesses ranging from property, casualty, auto and life insurance to annuity and investment services. Those traditional insurance operations are considered healthy and the National Association of Insurance Commissioners said "they are solvent and have the capability to pay claims."