Audacious reality? You decide!

From a fellow memo reader, friend and delightful curmudgeon. Is this sour grapes or unveiled 'audacious' reality? You decide. (See 1 below.)

If the world demands unilateralism from Israel then this is the unilateralsim I propose they offer:

Israel should inform Hamas for every rocket sent into Israel, a building in Gaza will be destroyed. If rockets continue beyond a week then add another building for each week rocketing persists.

Hamas is the elected government of Gaza. If Palestinianians want to live under attack that is their democratic choice and they should pay the consequences. If the Governor of Texas allowed rockets to be sent into Mexico I doubt the Mexcican Government would stand for it and I doubt the world would say a damn thing.

Furthermore, if Mexico sent rockets into Texas , Mexico would soon be a wasteland or the then sitting U.S. president would be hung from the rafters along with Texas' governor, U.N. or no U.N.

Pacification and appeasement encourages victimhood, pain and consequences reaches the mind and body and produces a call for change.

When Israel defends itself, however, double standards begin to apply. Why is this?
Several differing views. Again, you decide. (See 2, 2a and 2b below.)

Why not one more try? If it does not work then we can try again like we have been doing in N Korea! De ja vu all over again with a Clinton now heading up the charade?
(See 3 and 3a below.)

A 'sober' look at the Bush Economy. Did we suffer from too much success while the 'bar tender' Fed mostly failed to curb the consequent excesses?

Bail outs have morphed into infrastructure enhancements. Symantics only goes so far. You decide.(See 4 below.)

Dick

1)Read this and then ask yourself what Nancy Pelosi meant when she talked
about draining the swamp of the culture of corruption? Was she talking
about Al Franken et al?


We have a President Elect who has never run anything, not even a
'haberdashery.' Don't tell me he ran his campaign, because he didn't, he showed up and gave speeches. The candidate doesn't have time to run the campaign.

We have a Vice President Elect who thinks FDR was President when
America had TV and when the stock market crashed in 1929, (Herbert Hoover
was in office and Television didn't become widely used until the
'50's). Biden is also well known for his plagiarism in the late '80s.

We have a Secretary of State nominee, who has never run anything either
Her claim to fame is that she is the wife of a former President, who had sex in the Oval Office, disgraced the Presidency, was impeached and let bin Laden off the hook.

We have a CIA Director nominee who has never worked in the intelligence field and is expected to take over during the most dangerous times we have ever faced.

We have a Democrat Governor of Illinois who is being impeached for trying to sell the Senate seat held by the president elect. This Governor named Obama's replacement and initially Demcrats refused to seat the man.

Now we have someone that is expected to replace Hillary Clinton as the Junior Senator from New York, who has never held office, has never run anything, not even a corner store, and whose only claim to fame is that she is worth over 100 million dollars and her father was once President and was assassinated 45 years ago.

Finally, though I don't think that this is the end, we have a nominee for Treasury Secretary who failed to pay taxes he knew he owed.

Only someone with their head firmly where the sun doesn't shine could think this is a positive situation.

Not sure I like the 'Change'.

And don't forget Gov. Bill Richardson, the nominee for Commerce
Secretary who withdrew his name when the corruption investigation continued to bubble.

And don't forget self identified socialist, Carla Browner, the new climate czar who favors world government.

They'll all fit in the the current cast of change agents like Charlie
(I don't have to pay taxes either) Rangel, Barney, "Banking Queen,"
Franks, Chris "Countrywide" Dodd (one of Angelo's friends), Franklin
"Fannie Mae" Raines, . . . this sounds like a list of Mafiosi,
instead of the champions of hope and change.

2) Go your own way
By Yossi Sarid




Recently, 200 American historians were asked to sum up the term of their 43rd president and to rank him on the scale of presidents. He was ranked last, at the end of a close race with James Buchanan, leaving behind him a shorn superpower.

Four days from now the 44th president will be sworn in and the entire world has sky-high expectations; but not in Israel. Here they expect him to follow in the footsteps of his predecessor, to go nowhere, to stagnate. President George W. Bush liked to drag his feet, to chew gum, without being preoccupied with superfluous thoughts.

You, Barack Hussein Obama, are our last chance, and if that too fades - and evil is determined against us, all hope is lost.


We are the prisoner who is stuck in a cell; without the help of others, we will never succeed in extricating ourselves from the bonds of our natural fear and the historical accounting. And there are no "others" except for America, for which no substitute has been found, even in its time of weakness.

The Israeli politicians - the singers of all the wars - will try to feed you "direct negotiations" and "without external pressure;" these refrains are groundless. Ask your advisers, Dennis Ross and Dan Kurtzer and Martin Indyk, and they will tell you.

They were sold the same stories for too many years. Have they learned their lesson? I wish I was sure of that. After all, under their noses settlements and outposts cropped up and multiplied like poison mushrooms after a shower of government promises. And if it turns out as time goes on that those advisers haven't learned anything and have forgotten everything, you will be better off doing without their services before they cause you to fail as well, and rush to write their belated memoirs and insights.

And don't get too upset by the Israeli lobby in Washington, whose voice is that of Benjamin Netanyahu and not necessarily the voice of Jacob, nor is it the representative voice of the large Jewish community in America. It is hard to be black, who knows as well as you; it is hard to be a Jew, we know; and it's somewhat easier to be a professional Jew in the Diaspora of Washington, D.C., who is more of an Israeli patriot than many Israelis, and no less of one than Evangelist clerics, who are preparing from afar for Armageddon.

In any case, you have no chance of being considered a friend of Israel for long, unless you become a lifelong slave of the next Israeli prime minister. Look what happened this week to U.S. Secretary of State Condoleezza Rice, who faithfully stuck to former prime minister Ariel Sharon and incumbent Prime Minister Ehud Olmert, and when she dared to abstain in a vote after eight years of being under the thumb, suddenly turned into the friend of the Palestinians, just like our Channel 2 news presenter Yonit Levy, whom you don't know yet. Our prime minister hastened like a spoiled brat to embarrass her in public, as though he had never placed a masterful hand on Condi's shoulder, as is his wont when it comes to leaders, and never patted her lightly on the shoulder with arrogant chumminess.

That's what will happen to you when you don't agree to wag like a tail; you will also be interrupted in the middle of a meeting in Philadelphia and reprimanded, when you announce your intention of talking to Iran and Syria, and perhaps to Hezbollah and Hamas as well. On the contrary, follow your own path and talk to them, talk to everyone, talk to anyone who is willing to talk. For eight years they didn't talk, they only tried to educate the entire world using sanctions and the sword, and this is the result.

2a) Editor's Notes: Tunnel Vision
By David Horovitz


Israel's deference to Egyptian sensitivities enabled Hamas to build up its military strength. If the diplomats fail again, the next confrontation will be far worse.

In late December 2007, at a meeting with a very senior Israeli defense official , I was told about a videotape, compiled by the security establishment, which documented Egypt's failure to effectively seal its border with Gaza.

The tape, featured evidence of Egyptian assistance in arms smuggling and included footage of Egyptian security personnel aiding Hamas terrorists crossing illegally into Gaza. At one point, Egyptian border policemen were seen helping a group of some 80 Hamas personnel slip into the Strip through a hole cut in the border fence.

The tape was being sent to the Israeli Embassy in Washington, and we reported this. The security establishment's intention and expectation was that the tape would be made available on Capitol Hill. The aim was to encourage Congress to use the leverage of US financial aid to Egypt to press for more effective controls.

In the previous four months alone, according to information then compiled by the IDF, more than 100 tons of explosives had been smuggled into the Strip, as well as 20,000 rifles, 6,000 anti-tank missiles and immense supplies of ammunition. Only days earlier, Israel had also filed an official complaint with Cairo for unilaterally opening the Rafah crossing - ostensibly for Palestinians travelling to the Haj. In fact, Israel charged, this freedom of access was abused by a significant number of Hamas personnel to travel to Lebanon and Iran for military training.

Egypt ridiculed the IDF's arms smuggling figures.

"To get those quantities [of weaponry] into Gaza," scoffed an Egyptian official at the time, "you would need to have a tunnel every 10 meters."

Despite the extraordinary gravity of the arms smuggling, and despite the most senior defense echelon's profound interest in alerting US legislators to the danger in the hope of prompting economic pressure on Cairo, the security establishment's videotape was not, in fact, swiftly made available in Washington.

Reading the Post's report on the tape, several US legislators contacted Israeli diplomats to ask why they hadn't received it. In response, in some cases, they were told that there was no such tape, and that the Post's story was untrue.

In fact, the tape was shown only to some US administration officials and not made available to Congress because Israel's political and diplomatic leaders decided it did not want to infuriate the Egyptians by distributing it more widely.

A senior defense official had noted that "if key congressmen and senators see this, then it will provide a clear picture of the situation and ensure that [part of] the [US military aid] money is withheld. When this happens, [Egypt's President Hosni] Mubarak will feel that he has no choice but to stop the smuggling."

The political-diplomatic echelon thought differently. As we reported, "The perception that won the day this time was that over-involvement would be seen by Cairo as an infringement of certain diplomatic 'rules' between the two countries and could lead to a major crisis."

The US Congress was already deeply concerned by the scale of the smuggling. The foreign aid bill it sent to President George W. Bush that month, unprecedentedly, conditioned $100 million of the $1.3 billion in Egyptian military aid on Cairo's efforts to crack down on smuggling into Gaza and improve its human rights record. But the incontrovertible filmed evidence of how profoundly Egypt was failing itself, Israel and indeed Gaza by enabling Hamas to significantly bolster its military capability, evidence painstakingly compiled by the Israeli security establishment, was denied the US legislators.

On December 24, 2007, at a meeting of the Knesset's Foreign Affairs and Defense Committee, the Likud's Yuval Steinitz directly challenged Foreign Minister Tzipi Livni on the issue, asking why her ministry had intervened to block distribution of the tape. "Israel could have scored a major victory with the US Congress, and persuaded them that Egypt is incapable of defending the border," said Steinitz.

Livni was unmoved. Egypt's "performance on the Gaza border is awful and problematic," she acknowledged. "The weapons smuggling lowers the chances that pragmatic factions in Gaza and the West Bank will regain control."

But some things are "done behind the scenes," she declared. "Every move needs to be calculated. To take an extreme scenario, would you sever relations with Egypt over weapons smuggling?"

LIVNI'S COLLEAGUES in the security establishment were clearly not suggesting that Israel move anywhere near the extreme scenario of breaking ties with Egypt. They were, rather, desperate to raise awareness of the scale of the danger, and thus to ratchet up the pressure on Egypt to thwart it.

And the security establishment's prime concern was not, as Livni put, that the smuggling reduced the prospects of "pragmatic factions" regaining control of Gaza from the Islamists. Rather, the defense establishment was bitterly aware that the explosives and rockets being smuggled in, and the military commanders coming home from terror training in Iran and Lebanon, had Israel in their sights. The porous Gaza-Egypt border spelled an inevitable bloody military confrontation for Israel - an intensification of the rocket attacks that had been blighting the "Gaza envelope" communities for seven years, and, sooner or later, counter-measures from the IDF.

And so it came to pass.

By last month, the Hamas smuggling apparatus had expanded considerably. Numerous additional terror leaders had gone out to training camps and returned home to disseminate their murderous expertise.

Israel found itself under escalated Hamas attack, with rockets no longer merely capable of terrorizing the civilian areas immediately adjacent to Gaza, but a full million Israelis in cities as distant as Ashkelon, Beersheba, Ashdod and Kiryat Gat.

Over the past three weeks, the IDF has carried out repeated bombing attacks on the tunnel network beneath the Philadelphi Corridor, destroying dozens upon dozens of smuggling routes. But the challenge is considerable. It is estimated that no fewer than 300 tunnels were operating at the start of Operation Cast Lead, many of them coming up to air inside Palestinian homes that had encroached ever closer to the border. This weekend, IDF sources said many of the tunnels were still operating, and that Hamas was still able to import further weaponry even as the fighting raged.

Quite unrepentant, Egypt's Foreign Minister Ahmed Aboul Gheit twice this week dismissed Israeli complaints about the tunnels. As far as he knew, only food and other essential supplies were being spirited into the Israeli-blockaded Strip. How, he asked aloud, could Egypt intervene to stop such essential supplies reaching the Palestinian people?

Arms were reaching Hamas, Aboul Gheit allowed, but from the sea, where it was Israel's responsibility to intercept them.

ISRAEL'S POLITICAL and diplomatic emissaries were scurrying as the weekend loomed to try to put together a package of carrots and sticks, via Washington, to persuade Egypt to oversee a more effective anti-smuggling mechanism once the fighting ended. Amid reports that Germany was offering technical assistance and the US intelligence input to intercept weapons shipments long before they get to the Sinai, Egypt plainly remains the key player, and its need to both seal its Gaza border more effectively, and closely monitor a security zone en route to the border, paramount. But leverage on Cairo is in short supply.

Israel's leaders said they believed the dramatic resort to force had already succeeded in deterring Hamas from attempting further rocket fire, but they had also conditioned an end to Operation Cast Lead on the establishment of that viable border mechanism.

Unfortunately, in contrast to last year, the new US aid appropriation features no provision for the withholding of funds over Egypt's dismal performance at the Philadelphi Corridor. Evidently, US legislators were not alerted by Israel to the possibility that such leverage might be useful.

Livni presided over the diplomatic process that ended the Second Lebanon War with a resolution that signally failed to prevent Hizbullah rearming across the Syria-Lebanon border. Having exploited that deficient diplomacy, Hizbullah today poses a greater military threat to Israel than it did in 2006. Two and a half years later, in utter contrast, Livni has for several days now been urging a unilateral Israeli halt to the assault on Hamas - without a formal diplomatic resolution, and without even an agreed mechanism in place to prevent Hamas rearming via Egypt.

The foreign minister argues credibly that Israel should not be concluding cease-fire deals with a terrorist group, legitimating its rule. But it is not clear why she does not share her other leadership colleagues' awareness of the imperative to attain a viable, enforceable anti-smuggling regimen as a central condition for ending the fighting.

On this vital point, as when preventing defense chiefs from highlighting the danger 13 months ago with the videotape, Livni again finds herself at odds with much of the Israeli security establishment.

OPERATION CAST LEAD intensified on Thursday, with IDF forces striking deeper into Gaza City. The widespread expectation, however, was that it was nearing its end. A new US president is about to take office. The government has hesitated and ultimately seems disinclined to order a greatly escalated "Phase Three" ground offensive. Key figures in the Likud opposition, including party leader Binyamin Netanyahu and the would-be defense minister Moshe Ya'alon, strikingly, are not pushing for "Phase Three" either.

International criticism is growing still louder. A veteran BBC reporter's assertion to Channel 2 on Wednesday night that "the numbers speak for themselves" - 1,000 dead Palestinians and "only" 13 Israelis - serves to underline the refusal of many journalists and political leaders to look more closely at the root causes of this conflict, and identify who really bears responsibility for Palestinian civilian deaths.

In several interviews this week, I was asked by foreign reporters about the "disproportion" of Israel's response; if only a few hundred Israelis had been killed too, it appeared, everything would have been all right. But hundreds of Israelis have not been killed, despite Hamas's best efforts, because Israel builds bomb shelters and alarm systems for its people. Gaza civilians have died, terribly, because Hamas has chosen to fire and fight from their homes and schools and mosques, to deliberately place them in harm's way, even as the IDF tries to avoid them.

Unsatisfied with my response, I was asked, then, whether Israel's purported indifference to the deaths of so many Palestinians was a consequence of under-reporting of Gaza's bleak and bloody reality in the Israeli media. Was it that unbalanced reporting, it was speculated, that enabled the government to maintain such wide public support for the operation?

But Israel's media has not under-reported the impact on Gaza of Israel's decision to confront Hamas. The prime time nightly news shows have been full of harrowing reports from the Strip; so, too, our newspapers. A country that can produce Waltz with Bashir does not shirk from soul-searching. Israel, I would venture, feels deep sorrow for Gaza's innocents, but not guilt. Guilt lies with Hamas, for premeditatedly bringing violence down upon civilians on either side of what should have been a tranquil border.

Even as they publicly accuse Israel of genocide and war crimes, Arab leaders know all this. Loyalists of Mahmoud Abbas's Palestinian Authority, routed from Gaza 19 months ago by the same vicious Hamas, know it best of all. Yet they, too, persist in misrepresenting this conflict as the repression of Palestine, the deepening of occupation. Hamas, it should not need repeating, regards the PA as traitorous and Israel's very existence as profane. It seeks not the liberation of Gaza, already Judenrein, as many Palestinian spokespeople have risibly claimed these past three weeks, but the eclipse of Fatah in the West Bank and the elimination of Israel.

THAT THIS overt agenda is so widely overlooked in the international interpretation of this conflict is only one of what Hamas is confident will be many cease-fire victories.

It will delight in the international upsurge of anti-Semitism, and the deepening challenges to Israel's legitimacy. It will smirk at the criticism of Israel's heavy hand, and marvel at the watching world's capacity to forget the violence it unleashed against its own people when taking power in June 2007.

It will assert victory in its survival, and in the intensification of hostility to Israel among a Gaza population that already gave two-thirds support to Hamas in the parliamentary elections three years ago. Hamas's political leaders fled and hid; its fighting forces looted the international humanitarian supplies and booby-trapped the schools. Daily life in the West Bank, with Hamas kept in check, is starting to improve. But it is a sadly safe bet that Gazans will draw no self-serving conclusions and turn against the Islamists.

Hamas, in "victory," will depict Israel's disinclination to cause further civilian anguish by eschewing a lengthy battle in the heart of the refugee camps as evidence of Israel's gutlessness and of its fighters' heroism. The failure of Hizbullah, Syria and Iran to provide any assistance and the betrayal of the rest of the Arab world, Hamas will crow from amid Gaza's ruins, merely render its "resistance" all the more admirable.

But these "successes" will only have real value for Hamas if, after the guns fall silent, it can emulate its tenacious big brother to the north. For while Hamas may be deterred from provoking another round of conflict with Israel so long as it is weakened, its response will be simply to ensure it is stronger next time.

And if a repeat of Israeli diplomatic foolishness, and misplaced deference to Egypt, facilitate a Hizbullah-style enhancement of Hamas's capacity to kill, then the numbers, next time, really will speak for themselves.

2b) UN General Assembly adopts resolution urging immediate Gaza cease-fire
By Shlomo Shamir


The UN General Assembly called in a nonbinding resolution on Friday for an immediate, durable cease-fire in Gaza, rejecting a more radical text proposed by a group of Muslim and Latin American states.

Although the resolution has no teeth, diplomats who supported it said the overwhelming majority in favor presented a cohesive moderate world viewpoint that would strengthen Egyptian mediating efforts in the Gaza crisis.



The assembly's electronic scoreboard showed 142 countries in favor, four opposed and eight abstaining. But the exact figures were not immediately clear as several countries said their votes had not registered due to electrical faults.

Voting against were Israel, the United States and the Pacific island of Nauru, which believed the resolution was biased against Israel. Venezuela, which thought it was too soft on Israel, was also shown by the board as voting against although the country's delegate said he abstained.

The assembly's resolution followed closely the text of a Security Council resolution adopted last week. The council's cease-fire call has not been heeded either by Israel, which attacked the Gaza Strip on Dec. 27 to try to stamp out rocket fire by Palestinian militants, or by Israel's Hamas foes.

Like the council's text, Friday's resolution calls for "an immediate, durable and fully respected cease-fire, leading to the full withdrawal of Israeli forces from the Gaza Strip."

The adopted text was hammered out in negotiations between the European Union and the Palestinian Authority's ambassador, Riyad Mansour, and was supported by moderate Arab states.

Its backers narrowly headed off an attempt by a small group of radical Muslim and Latin American states, headed by Ecuador, to have the assembly vote on a text sharply critical of Israel.

Mansour told the session that resolution would have split the assembly and made a "gift" to Israel.

The EU-Palestinian text included a phrase, opposed by the radicals that "the Palestinian and Israeli civilian populations must be protected and their suffering must end."

The deputy head of Israel's mission to the United Nations, Dan Carmon, said the resolution was another General Assembly sitting used by the Arab states as a platform for slandering Israel.

"The resolution that was passed does not promote any solution and will not help bring about an improvement in the condition of the Palestinian people," Carmon said.

U.S. envoy Alejandro Wolff said the resolution was "neither necessary nor helpful" because the Security Council had already spoken and peace efforts were under way.

Syrian Ambassador Bashar Ja'afari, one of the radical group, said the majority that supported the adopted resolution "is not the one that the Palestinian people need."

Turkish PM: Ban Israel from the UN over Gaza operation

Turkey's prime minister on Friday said Israel should be barred from the United Nations while it ignores the international body's calls to stop fighting in Gaza.

"How is such a country, which does not implement resolutions of the UN
Security Council, allowed to enter through the gates of the UN [headquarters]?" Recep Tayyip Erdogan said.

Erdogan spoke before UN Secretary General Ban Ki-moon was to arrive in Ankara to discuss the conflict. His comments reflected a growing anger in Turkey, Israel's closest ally in the Muslim world, over Israel's Gaza operation.

Erdogan accused Israel of attacking civilians under the pretext of targeting the Islamic militant group of Hamas.

Erdogan has previously defended his outspoken criticism of Israel's Gaza offensive, saying it did not mean he was anti-Semitic. However, the Turkish prime minister also remarked that the "Jewish-backed media" was falsely suggesting that Hamas uses civilians as human shields in the Gaza Strip.

Israel's offensive in Gaza entered day 21 on Friday, as the Israel Air Force attacked close to 40 targets in the coastal strip, while rockets fired from Gaza kept pounding southern Israel.

Turkish president Abdullah Gul on Friday renewed calls for an immediate cease-fire and also urged U.S. President-elect Barack Obama to focus on a comprehensive, long-lasting and fair solution once in office.

3) Iran, Iran, Iran
By William Luers, Thomas R. Pickering and Jim Walsh


Three of the most pressing national security problems facing the Obama administration - nuclear proliferation, the war in Iraq and the deteriorating situation in Afghanistan - have one thing in common: Iran.

All three challenges are, in principle, amenable to diplomatic solution, but only if we give it a try. Success on any of the three will not be possible without serious engagement with Iran.

We propose coordinating and integrating policies on these three security challenges with a regional diplomatic strategy that includes Iran.

The United States should seek to open talks with Iran without preconditions. On the nuclear dispute, we propose that the United States and its European allies present a plan for Iran's current uranium enrichment program to be reorganized as a multinationally owned, operated, and managed program with enhanced international monitoring and verification.

Sanctions and threats have failed to force Iran to abandon its enrichment program and by themselves are unlikely to do so even with Iran's recent economic problems.

Today in Opinion
Search urgently for a way out of GazaJustice underminedMore tax questions for Treasury nomineeIran has expanded its centrifuges from none to roughly 5,000 over the past three years of UN Security Council sanctions. To believe that a proud country like Iran is simply going to dismantle all its centrifuges is wishful - and ultimately dangerous - thinking.

Agreement on the multinational enrichment option would lead to greater assurance about Iran's nuclear activities, and it would open the door to serious discussions with Iran on other issues of great importance to the U.S.

On Iraq and Afghanistan, direct U.S. engagement with Iran and other key regional and international players, including the United Nations, will be necessary if the United States hopes to draw down its forces and bring stability to these war-torn nations.

This process must be truly multinational and cannot be seen as another, purely American initiative.

Diplomatic discussions must focus on support for Iraq's territorial integrity; national reconciliation; ending military support for non-state groups in Iraq and Afghanistan; the resettlement of millions of refugees; and the establishment of confidence-building measures that include Iran's neighbors.

Achieving serious commitments from the relevant governments will not be easy and will take time, but such an approach will be essential to provide stability as U.S. troops are drawn down. No such regional arrangement is possible, however, without the inclusion of Iran.

Preparing the ground for negotiations with Iran on these critical issues will take time and patience. This process could include a series of steps such as changing the tone of public discourse, working to build confidence that a new, positive approach has been adopted and establishing direct, official contacts with Tehran to explore reciprocal actions and responses while working to avoid misunderstandings.

More formal direct negotiations with Iran should then begin late this summer following the Iranian elections with whomever is elected president of Iran.

As General David Petraeus, commander of the U.S. Central Command, recently observed, Iran has many common interests with the United States in Iraq and Afghanistan. Both the United States and Iran support the Iraqi and Afghan central governments, seek to establish stability, oppose Sunni terrorists such as Al Qaeda and the Taliban, want to reduce drug trafficking, and, perhaps most importantly, need to prevent these countries from descending into chaos and civil war.

Of course, there are issues on which Washington and Tehran disagree, such as Hamas, Hezbollah and human rights. But treating Iran as a donkey that must be dealt with carrots and sticks is unlikely to work.

It is time to begin dealing with Iran as a serious, proud and influential nation with a deep culture and history, one whose common interests with the U.S. and other countries in the region should be recognized and acted on before events make success impossible.

3a) Engaging N Korea Did Not Work for Japan
By MELANIE KIRKPATRICK

In her confirmation hearing this week, Secretary of State-designate Hillary Clinton said the Obama administration would use the six-party talks with China, South Korea, Japan and Russia to press North Korea to give up its nuclear program. With U.S. negotiator Christopher Hill reportedly staying on at State, it looks like déjà vu for U.S. policy.

The Sankei Shimbun
Kyoko Nakayama returns from North Korea with a group of abductees, October, 2002.
Somewhere in Pyongyang, a little man in a boiler suit must be must be smiling -- and marveling at how often Washington falls for his negotiating legerdemain. Dictator Kim Jong Il's latest diplomatic coup came in October when he got the U.S. to take North Korea off the State Department's list of terror-sponsoring countries. What did Pyongyang do in return? The six-party talks collapsed last month when the North said it wouldn't abide by the verbal commitments it had made on verification of its nuclear program. Thus ended Secretary of State Condoleezza Rice's attempt at engagement with the North.

Since Mrs. Clinton is promising to pursue much the same policy, perhaps it's a good moment to review an even longer-running negotiation with dictator Kim Jong Il that has also faltered: Japan's attempt to get information about its citizens who were abducted by North Korea in the 1970s and 1980s. Most of the victims, including a 13-year-old girl, were grabbed by North Korean agents on the streets or beaches near their homes in western Japan, hidden in ships bound for North Korea, and pressed into service training the North's spies to pass as Japanese nationals. The North also kidnapped South Koreans; several hundred are still missing.

The fate of their countrymen is understandably an emotional issue for the Japanese. The names of the 12 people on the official list of the still-missing are well known throughout the country. Prime Minister Taro Aso is often spotted wearing a blue-ribbon pin in their honor. Virtually every political leader supports Japan's longstanding policy: No aid for North Korea unless it releases information on the abductees.

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Kyoko Nakayama, special adviser to the prime minister on the abduction issue, was in the U.S. last week to gain support for Tokyo's stance. "The abductions are a state-sponsored crime," she says. "One of the keys to resolving the abduction issue is for the U.S. and Japan to work together." She uses the word "disappointed" -- Japanese understatement for "outraged" -- in reference to President Bush's decision to take North Korea off the terror list.

Tokyo first raised the issue of the abductions with Pyongyang in 1991, Ms. Nakayama says. "We had had our suspicions for years but we couldn't prove [them]." In 2002, when then-Prime Minister Junichiro Koizumi was in Pyongyang, "Kim Jong Il acknowledged they [the abductees] existed, and apologized." Kim's admission "opened a door and we could really start negotiating."

Later that year "we were able to get five people back." Of the remaining 12 kidnap victims on Japan's list, Ms. Nakayama says, "the North Koreans told us that eight had passed away and four had never entered the country." Pyongyang sent a funeral urn containing what it said were the remains of one: Megumi Yokota, the 13-year-old girl. DNA sampling showed the remains not to be Megumi's, Ms. Nakayama says. When Tokyo confronted Pyongyang on the deception, "first of all they said they wanted the bones back. . . . Then they said the DNA test had been trumped up." Since that time "there has been no progress."

Given that background, what is Ms. Nakayama's view of dealing with Pyongyang? "Our experience with negotiating with the North Koreans is that they denied [that they had] abducted citizens for years, and they were very comfortable doing so," she says. "Our experience with agreements with the North Koreans is that they'll make excuses for not fulfilling them."

If that sounds familiar, consider the North's denials and obfuscations on its uranium-enrichment program, which it trumpeted in 2002 and subsequently denied. In 2007, the Bush administration backed off its claims about the North's uranium program. Now, in a valedictory speech this month, National Security Adviser Stephen Hadley warned of "increasing concerns" in the U.S. intelligence community that the North has "an ongoing, covert uranium-enrichment program."

Like the Japanese abductees, the North's uranium program was not a priority of the Bush administration at the six-party talks. Both belong high on Mrs. Clinton's to-do list when she opens her North Korea file.

4) The Bush Economy Article


President Bush is leaving office amid the worst recession in 25 years, and naturally his economic policies are getting the blame. But before we move on to the era of Obamanomics, it's important to understand what really happened during the Bush years -- not least so we don't repeat the same mistakes.

APMr. Bush has tried to explain events with one of his populist aphorisms: "Wall Street got drunk and we got a hangover." The remark is ruefully amusing and has an element of truth. But it also reveals how little the President comprehends about the source of his Administration's economic undoing. To extend his metaphor, Who does Mr. Bush think was serving the liquor?

Democrats like to claim the 1990s were a golden age while the Bush years have been disastrous. But, Mr. Bush inherited a recession. The dot-com bubble had burst in 2000, and the economy was sinking even before the shock of 9/11, the corporate scandals and Sarbanes-Oxley. Mr. Bush's original tax-cut proposal was designed in part as insurance against such a downturn.

However, to win over Senate Democrats, Mr. Bush both phased in the tax rate reductions and settled for politically popular but economically feckless tax rebate checks. Those checks provided a short-term lift to consumer spending but no real boost to risk-taking or business investment, which was still recovering from the tech implosion. By late 2002, the economy was struggling again -- which is when Mr. Bush proposed his second round of tax cuts.

This time the tax rate reductions were immediate, and they included cuts in capital gains and dividends designed to spur business incentives. As the tax cuts became law in late May 2003, the recovery began in earnest. Growth averaged nearly 4% over the next three years, the jobless rate fell from 6.3% in June 2003 to 4.4% in October 2006, and real wages began to grow despite rising food and energy prices. The 2003 tax cut was the high point of Bush economic policy.

Mr. Bush's spending record is less admirable, especially during his first term. He indulged the majority Republicans on Capitol Hill, refusing to veto overspending and giving in to their demand that the Medicare prescription drug benefit include only modest market reforms. Even those reforms have helped to restrain drug costs, but now Democrats are set to repeal them and the main Bush legacy will be the new taxpayer liabilities.

Nonetheless, the budget deficit did fall mid-decade, as tax revenues soared with the expansion. In fiscal 2007, the deficit hit $161 billion, or an economically trivial 1.2% of GDP. That seems like a distant memory after the bailout blowout of the last few months, but the point is that the Bush tax cuts aren't responsible for the deficits. Before the recession hit, federal tax revenues had climbed above their postwar average of 18.3% of GDP.

Which brings us back to Mr. Bush's "hangover." While his Administration was handling the fiscal levers, the Federal Reserve was pushing the monetary accelerator to the floor. In reaction to the dot-com implosion and the collapse in business investment, Alan Greenspan rapidly cut interest rates to spur housing and consumer spending. In June 2003, even as the tax cuts were passing and the economy took off, he cut the fed funds rate to 1% and kept it there for a year.

His stimulus worked -- far too well. The money boom created a commodity price spike as well as a subsidy for credit across the economy. Economist John Taylor of Stanford has analyzed the magnitude of this monetary mistake in a new paper that assesses government's contribution to the financial panic. The second chart compares the actual fed funds rate this decade with what it would have been had the Fed stayed within the policy lanes of the previous 20 years.

"This extra easy policy was responsible for accelerating the housing boom and thereby ultimately leading to the housing bust," writes Mr. Taylor, who worked in the first-term Bush Treasury, though not on monetary affairs, and is known for the "Taylor rule" for determining how central banks should adjust interest rates.
By pushing all of this excess credit into the economy, the Fed created a housing and mortgage mania that Wall Street was only too happy to be part of. Yes, many on the Street abandoned their normal risk standards. But they were goaded by an enormous subsidy for debt. Wall Street did get "drunk" but Washington had set up the open bar.

For that matter, most everyone else was also drinking the free booze: from homebuyers who put nothing down for a loan, to a White House that bragged about record home ownership, to the Democrats who promoted and protected Fannie Mae and Freddie Mac. (Those two companies helped turbocharge the mania by using a taxpayer subsidy to attract trillions of dollars of foreign capital into U.S. housing.) No one wanted the party to end, though sooner or later it had to.

Whilethe Fed is most to blame, the Administration encouraged the credit excesses. It populated the Fed Board of Governors with Mr. Greenspan's protégés, notably Ben Bernanke and Donald Kohn, who helped to create the mania and even now deny all responsibility. Meantime, Mr. Bush's three Treasury Secretaries knew little about the subject, and if anything were inclined to support easier money and a weaker dollar in the name of reducing the trade deficit. We know because numerous Bush officials sneered at the monetary warnings in these columns going back to 2003.
When the bust finally arrived with a vengeance in 2007, the political timing couldn't have been worse. Mr. Bush tried to rally with one more fiscal "stimulus," but he repeated his 2001 mistake and agreed to another round of tax rebates. They did little good. The Administration might have prevented the worst of the panic had it sought some sort of TARP-like financing for the banking system months or a year earlier than it did last autumn. But neither the Treasury nor the FDIC seemed to appreciate how big the banking system's problems were. Their financial triage was well meaning but came too late and in a frenzy that invited mistakes.
This history is crucial to understand, both for the Democrats who now assume the levers of power and for Republicans who will want to return to power some day. Mr. Bush and his team did many things right after inheriting one bubble. They were ruined by monetary excess that created a second, more dangerous credit mania. They forgot one of the main lessons of Reaganomics, which is the importance of stable money.