The Worsening Debt Crisis

The Worsening Debt Crisis

by Mike Whitney / September 9th, 2008 (0)

Michael Hudson is a former Wall Street economist specializing in the balance of payments and real estate at the Chase Manhattan Bank (now JP Morgan Chase & Co.), Arthur Anderson, and later at the Hudson Institute (no relation). In 1990 he helped established the world’s first sovereign debt fund for Scudder Stevens & Clark. Dr. Hudson was Dennis Kucinich’s Chief Economic Advisor in the recent Democratic primary presidential campaign, and has advised the U.S., Canadian, Mexican and Latvian governments, as well as the United Nations Institute for Training and Research (UNITAR). A Distinguished Research Professor at University of Missouri, Kansas …
(Full article …)
http://www.dissidentvoice.org/2008/09/the-worsening-debt-crisis/

The Airline Bomb Plot & the Visa Waiver Program By Michael Cutler

The Airline Bomb Plot & the Visa Waiver Program
By Michael Cutler

ABC Nightline aired a news story last night about the conviction of the British citizens who were involved in a conspiracy to carry out terrorist attacks to bring liquid explosives on board a number of airliners that were destined to arrive in the United States. This plot is the reason that we are restricted to bring no more than 3 ounce bottles of shampoo and other fluids on airliners. It is the reason that so many seemingly bizarre measures have been taken by TSA officials, such as when nursing women were reportedly required to drink their own breast milk brought to feed their infant children.

The timing of this news story is coincidental but it is certainly worth remembering that this week our nation will mark the seventh anniversary of the terrorist attacks of September 11, 2001. What is, in my judgement, utterly unacceptable is that fact that even with all of these concerns about potential future devastating terrorist attacks, our nation still permits aliens from some 27 countries to seek to enter the United States without first applying for and receiving a visa.

Those British terrorists, not unlike Richard Reid, the so-called "Shoe Bomber," would not require visas in order to board an airliner destined for the United States. The point is that while far from perfect, the visa requirement could well have kept Richard Reid off the airliner he had planned to destroy by detonating explosives secreted in his shoes. The point is that these British terrorists could have sought to board an airliner they were intent on destroying without first securing visas. The visa requirement also provides other significant benefits to law enforcement and hence, represent a vital, additional layer of security that is being ignored by our government, even as the administration pushes forward with plans to expand the Visa Waiver Program to include additional countries.

Last year I was interviewed by Mike Ahlers of CNN for a news report he was writing about the Visa Waiver Program and the fact that the executives of the travel and hospitality industries advocating that our government expand the Visa Waiver Program. As you read these articles and my commentaries you should be asking yourself, "Are we safer today than we were on September 10, 2001?" Our government is supposed to represent the best interests of We the People and the best interests of our nation. That our government would ratchet up security at airport and other vulnerable venues makes good sense, if those measures are truly effective and enhance our safety and the security of our nation. These measures must make a "real world" difference and not simply create an illusion of addressing vital national security issues.
September 9, 2008 01:34 PM Link http://counterterrorismblog.org/

The "Not so Just in Time" Note from Steve Clemons: Lincoln Chafee, Zbig & Brent & Ignatius, Convention Events and more

Greetings Colleagues and Friends:

On November 5th, we’ll all have to have a kick off the shoes and ‘veg’ day...we’ll stream it online for those around the world who are equally exhausted from this political season. But I’m writing now to bring a few things to your attention. Hope you enjoy — all the best, Steve Clemons

LINCOLN CHAFEE (TODAY)

First of all, I am hosting former Senator Lincoln Chafee today from 12:15 pm – 1:45 pm EST on the subject of “What Patriotism Looks Like”. Chafee is now a Distinguished Visiting Fellow at Brown University’s Watson Institute and the author of Against the Tide: How a Compliant Congress Empowered a Reckless President. This meeting will STREAM LIVE at www.TheWashingtonNote.com if you would like to join us over the internet. You may also join us at the New America Foundation today if you are in the neighborhood.


BRENT SCOWCROFT, ZBIGNIEW BRZEZINSKI, AND DAVID IGNATIUS

Next, I wanted to announce that today is the release date of a new New America Foundation/Basic Books imprint, America and the World: Conversations on the Future of American Foreign Policy with Zbigniew Brzezinski, Brent Scowcroft, and David Ignatius. We are very proud that this book has been published with support from the New America Foundation/American Strategy Program. You can buy your copy here (and I hope you do): http://www.amazon.com/s/ref=nb_ss_b?url=search-alias%3Dstripbooks&field-keywords=ignatius+scowcroft&x=0&y=0


SHERLE SCHWENNINGER AND BERNARD SCHWARTZ

The New America Foundation has launched its new BIG IDEAS SERIES with a paper and video commentary by Sherle Schwenninger on the America’s post-bubble economy. Check out this cool video here:
http://www.youtube.com/watch?v=x4lUsWJ4SeQ


US-MIDDLE EAST POLICY AT DEMOCRATIC NATIONAL CONVENTION

Here are some great clips from the US-Middle East Policy events we organized in both Denver and St. Paul at the respective political conventions. The Denver meeting featured Senator John Kerry (D-MA), Obama campaign national security adviser Greg Craig, Princeton University Woodrow Wilson School Dean Anne-Marie Slaughter, former German Foreign Minister Joschka Fischer, Aspen Institute President and former CNN Chairman & CEO Walter Isaacson, and former Congressman and Obama campaign adviser Mel Levine. Respondents and commentators included New America Foundation Middle East Policy Initiative Director Daniel Levy, New America Foundation President and New Yorker Staff Writer Steve Coll, International Crisis Group Middle East Program Director Robert Malley, Arab American Institute President James Zogby, Stonebridge International Senior Adviser and former Senate Foreign Relations Committee Senior Staff Member Janice O’Connell.

THE DEM/DENVER EVENT VIDEO CLIP IS HERE (ABBREVIATED): http://www.youtube.com/watch?v=S3Tjs5Ho00k&feature=user


US-MIDDLE EAST POLICY AT REPUBLICAN NATIONAL CONVENTION

The Republican Convention/New America Foundation US-Middle East Policy event featured: Americans for Tax Reform President Grover Norquist, former Bush Administration Asst. Secretary of Energy Alexander Karsner, former Associate Deputy Secretary of Energy and Senior Adviser to Senator Spencer Abraham Randa Fahmy Hudome, Economist International Correspondent Lane Greene, theologian Deal Hudson, Atlantic Associate Editor and New America Foundation fellow Reihan Salam, Al Hayat Senior Diplomatic Correspondent and Columnist Raghida Dergham.

THE REPUBLICAN EVENT VIDEO CLIP IS HERE (NOT ABBREVIATED): http://www.youtube.com/watch?v=RNL8Fd79VS0&feature=user


UPCOMING EVENTS OF NOTE

Beyond Wall Street, Beyond Fannie and Freddie: Financing the Productive Economy
Delore Zimmerman, President, Praxis Strategy Group
Sherle Schwenninger, Director, Economic Growth Program, New America Foundation
Joel Kotkin, Senior Fellow, New America Foundation and Presidential Fellow, Chapman University
Dennis Donohue, Mayor, City of Salinas
12 September, Friday, 12:15 pm – 1:45 pm EST
This event will stream live at The Washington Note

Film Screening
“The Battle in Seattle”
featuring academy award winning actress Charlize Theron
Regal Gallery Place Cinema
701 7th Street, Washington, DC
15 September, Monday, 7:00 pm SHARP
RSVPs required at clemons@newamerica.net

September 03, 2008 Leading Journal Publishes a Desperate Portrait of Israel as a 'Failed European Fragment' Hated by Its Neighbors

Mondoweiss
Iraq comes home: the war of ideas, mostly by Philip Weiss
September 03, 2008
Leading Journal Publishes a Desperate Portrait of Israel as a 'Failed European Fragment' Hated by Its Neighbors

The forthcoming issue of Middle East Policy contains an astonishing piece by Ian Lustick of the University of Pa. on the desperation inside Israel about its future, titled "The Abandonment of the Iron Wall: Israel and the 'Middle Eastern Muck.'" The long piece explores the mistaken ideology that "Israel and Israelis can remain in the Middle East without becoming part of it" and it will surely be grabbed by Barack Obama (and ignored by Sarah Palin), for it pulls together all the narratives that we keep hearing from I/P--the ruthless violence, the hateful fence, the emigration, the "war on terror" as a model for Americans, and not least, the Arabs' hostile passivity and righteous, hardened resistance.

I will never think about the region in the same way. The analysis is sure to find its way to the highest levels. It is not online yet, but here is my summary of the argument.

For the first 90 years of Zionism the Zionists understood that the Arabs didn't want them there and in spite of Arab resistance they were going to just hang in there and pound the heck out of the Arabs till they reluctantly accepted their presence. "The iron wall" strategy of Ze'ev Jabotinsky, which even Rashid Khalidi said recently in the Nation has worked: Israel's there, the Arab states have given in to its presence. Pile up the bodies a little more, sign a peace deal.

But in the wake of the first intifadah, the Iron Wall idea has been cast aside, giving way in a climate of mutual hatred to a sense of existential struggle: that Arabs and Israelis are fundamentally opposed, and that both cannot live in the region. The Israelis have yielded to irrational uses of violence typical of the French in Algeria and other pariah states. And meantime, the Arabs have gotten over the insuperable Iron Wall idea themselves--and begun to believe that if they just last the Israelis out, they will go away.

Neither side really believes in the other's humanity. This explains the hysteria around Iran from Ahmadinejad and Benny Morris too: They want us gone. It explains the World War IV feelings of Norman Podhoretz and other neocons, basically saying that the U.S. has to destroy the Arab world in order to make it safe for Israel. And it explains the triumphalism of Hezbollah and Hamas, and also the growing support for a one-state solution even in leftwing Arabist circles in the U.S.--because it sure is feeling like the long Zionist nightmare is about to end. Israel is another "failed European fragment," like the Crusaders or South Africa or India, but the last one to go.

Lustick admits that he doesn't know the full range of Arab attitudes, but he ruthlessly explores the spiritual sickness in Israeli society, the resort to horrifying violence (wanting to turn Lebanon's clock back 20 years), the lack of faith in Zionism, and the desertion of Israel by as many as 1 million of its citizens who would prefer to live in Europe or the U.S. Oh exile, where is thy sting!

Lustick concludes by saying that the moment is truly desperate and the key is to reimagine Israeli existence, to reach some actual modus vivendi with the Palestinians through some real acknowledgement of Palestinian humanity and rights. He fully articulates something I've repeated here: that the Israelis want nothing to do with Arabs, though they live in the Arab world, 500 miles east of Istanbul. And that going forward requires asking, What do Palestinians want?

Below I'm going to sample choice bits of the piece, which is getting passed with excitement among followers of Middle East policy. As soon as it's online, I'll let you know. Ian Lustick:

Among Israelis, a natural and very
prominent result of this deep-seated
alienation from the region, its peoples and
its cultures is an urge to escape. It takes
many forms. Consider the construction of
the "security barrier," a network of fencing,
concrete walls, barbed wire, trenches
and embankments intended to surround the
Jewish state. One can usefully imagine the
barrier as transforming Israel into a kind of
"gated community" sealed off from the
Middle East as hermetically as possible.

However, it must also be noted that
the effect of the barrier, and perhaps more
of its purpose than is commonly acknowledged,
is not to keep Middle Easterners
out of Israel, but to physically and psychologically
remove Israel from the Middle
East....

Israelis with the training, skills and
wealth to do so are also literally "escaping"
from the Middle East and from those parts
of Israel that are more Middle Eastern.

There is significant evidence that,
since the collapse of the Oslo peace
process and the outbreak of the al-Aqsa
Intifada, the emigration of Israeli Jews has
increased, as have activities that would
make future emigration easier. In February
2007, Israel's minister of immigrant
absorption, Zeev Boim, acknowledged that
there were between 700,000 and 1 million
Israeli expatriates worldwide, with some
600,000 in North America alone...

The core idea [of the Iron Wall] was not to
avoid war, but to insure victories of such
vividness and consequence that Arabs
would come to regard Israel's existence an
immutable, if unpleasant, fact of Middle
Eastern life. Once that attitude was
instilled, the objective was to combine the
stick of coercion with the carrot of compromise
to achieve negotiated peace
agreements....

What Arabs learned from the
Lebanon War was not the inevitability of
accommodating themselves to Israeli
diktats, but the vulnerability of the Israeli
army and Israeli society to determined
Arab and Muslim political and military
action...

As I have stressed, Zionism's use of
violence against Arabs was traditionally
conceived as a pedagogical device to
convince Arabs of the Jewish National
Home's indestructibility, and then to
persuade some among them to negotiate
mutually acceptable deals based on the
alternative of suffering painful defeats. It
is natural, then, that, as images of a future
in which Arabs and Muslims can come to
accept the Jewish state fade from Israeli
consciousness, the rationale for violence
also changes. Instead of being conceived
as a persuasive instrument in service of
political or diplomatic aims, force against
Arabs and Muslims is increasingly treated
as a kind of rattonade. This was the term
used to characterize the French practice in
Algeria of entering casbahs and other
Muslim quarters, killing inhabitants, and
then quickly returning to European areas or
bases. Its literal meaning is "rat hunt."
More generally, it refers to a violent strike
against the enemy "on the other side of the
wall" for purposes of punishment, destruction
and psychological release....

Israel, of course, is the only survivor in
this list [of outposts of European settlement].Counting from the state's establishment,
it is almost 60 years old. Counting
from the first arrival of Zionist settlers
in Palestine, it is 125 years old — compared
to almost two hundred years for the
Crusaders; about 80 years for the white
version of the Union, then Republic, of
South Africa; 120 years for French Algeria;
and 34 years for independent (white)
Rhodesia. Israel's biggest challenge,
indeed the biggest challenge facing Zionism
and its descendants, is to escape the fate
of all other polities falling within this
category. Can Israel do what no other
country in this category has done —
establish itself as a commonsensical,
naturalized, and presumptively permanent
feature of a non-European landscape?

The argument set forth here has
been that Israel and Jewish Israelis are
deep into the process of abandoning any
image of the state or of themselves as part
of the Middle East. Instead of hoping to
transform Arab/Muslim attitudes toward
the Jewish state by a pedagogy of force
followed by diplomacy (the Iron Wall
strategy), or of transforming the cultural
content of the region via modernization
cum Westernization, Israelis are seeking
isolation or escape....

[I]t may be noted that in each of the modern cases of
failed European fragments, international
pariah status preceded the polity's demise.
There is ample evidence that Israel is
assuming this image..

Certainly it is
true that some Arab regimes continue to
express their willingness to sign peace
treaties with Israel. But in a region whose
deepest and strongest political sentiments
are those of religion, it would seem that, if
democracy does take hold in the Middle
East, it may simply accelerate the rise to
power of forces unwilling to accept Israel
as a long-term partner in the future of the
region...


[If] Israelis are so disconnected from Middle
Eastern realities as to have lost the empathy
with Palestinians necessary to convince
them that negotiations will lead to a satisfying
outcome, and if Arabs and Muslims in
the Middle East are as intransigently hostile
to Israel as most Israelis believe them to
be, then, in effect, a two-state solution has
been rendered impossible. This is not
because of the oft-discussed supposed
impossibility of actually establishing a
Palestinian state next to Israel (Hamas, for
its part, is perfectly ready to accept one as
a prelude to a 20-year lull in the battle.).
The impossibility of a the two-state solution
hangs, instead, on the question of whether
the belief in the rationale behind it —
achieving some semblance of a comprehensively
stable and peaceful end to the
Arab-Israeli dispute — will have vanished
from inside Israeli political life. Why
should Israelis tear themselves to pieces to
produce a state that will satisfy the Pales
tinians if they come to believe that the rest
of the Middle East hates Israel more than
they care for the Palestinians?

...Having abandoned the Iron Wall,

Israelis are increasingly confused and even
distraught about the future. Yet they face
a stark choice: engagement with the real
Middle East and the demands it makes
upon Israel for justice, democracy and
territory, or escape from it.

The danger for the Jewish state is that, given the choice between convincing Middle Easterners that Israel can be a good neighbor and leaving the neighborhood, more and more Israelis are attracted to the latter...

Most unsettling of all is the interaction between two logical but mutually reinforcing trends. Israelis are embracing coercive and unilateralist policies that destroy whatever is left of its
image as a potential good neighbor. Arabs and Muslims can be expected to treat signs
of Jewish abandonment of the region as encouragement to forget any inclination
they may still have to make peace with the Jews rather than wait them out....


_______________________________________________

Palestinians lose faith in two-state solution Study group calls for new form of resistance to Israeli occupation with goal of single, bi-national stat

Palestinians lose faith in two-state solution
Study group calls for new form of resistance to Israeli occupation with goal of single, bi-national state
Rory McCarthy in Jerusalem
Thursday September 4 2008
guardian.co.uk


A group of prominent Palestinian figures has proposed a radical change in strategy to demand a single, bi-national state if the current round of Middle East peace talks fails.

The Palestinian Strategy Study Group, an EU-funded project written by 27 leading Palestinian figures from across the political spectrum, argued that the current two-state framework for peace talks is failing to bring the promised independent state. Instead, it suggested ending the negotiation process that has gone on now for nearly 20 years, reconstituting the Palestinian Authority into what might become a "Palestinian Resistance Authority", and developing a form of "smart" resistance.

"The central aim will be to maximise the cost of continuing occupation for Israel, and to make the whole prospect of unilateral separation unworkable," it said. The final, and most striking proposal, is to shift to a "single state outcome" as the Palestinians' preferred goal. This, it said, would regain the strategic initiative for the Palestinians.

"Although many Palestinians may still prefer a genuine negotiated two-state solution, a failure of the present Annapolis initiative will greatly strengthen those who argue against this," the report said. "Most Palestinians are then likely to be convinced that a negotiated agreement is no longer possible."

It is not the first time a bi-national state has been proposed as a Palestinian goal, but the new report signals a marked shift in Palestinian thinking at a time when the latest peace talks between Israel and the Palestinians are yet again struggling to make any headway. Questions are now being asked on both sides about the future of the two-state solution that for so long has been the framework of Middle East peacemaking.

The greatest disquiet is on the Palestinian side, where even moderates are now beginning to sense the two-state formula is moving out of reach.

"I feel that a two-state solution is losing currency amongst both our peoples and with the world community beyond," said Salam Fayyad, the Palestinian prime minister and former World Bank and IMF economist, in a speech he wrote for a meeting of former Israeli diplomats yesterday and which was delivered by Riad Malki, the Palestinian foreign minister.

Malki himself admitted that, despite 10 months of talks between Israeli and Palestinian leaders, which began in Annapolis, in the United States, not a single word of agreement had been put on paper. The Annapolis process, the first such peace talks in seven years, were supposed to produce a peace agreement by the end of this year - a goal that has proved wildly unrealistic.

Another group, the Israel-Palestine Centre for Research and Information, published a policy document this week with proposals for the Palestinians to change the status quo. Among the options it said were available were dissolving the Palestinian Authority, calling for a one-state solution and making a Kosovo-style unilateral declaration of independence.

However, it noted that the chief risk of calling for a single, bi-national state was that nothing would change and the status quo would simply worsen given how deeply unpopular the idea is among Israelis. "With so little support from the more powerful neighbour, it seems unlikely that the Palestinian call for unity will bring many positive results in the near term," it said. Instead, it concluded: "We feel that a tightly coordinated non-violent campaign toward statehood is the best option."

One of the key obstacles on the Palestinian side now is the bitter infighting between the two leading factions, Fatah and Hamas. Since last year, Hamas, the Islamist group that won elections in 2006, has been in full control of Gaza and daily seems to be dividing ever further from its rival Fatah, which effectively controls the West Bank. Even if a peace agreement was reached this year, it is hard to see how it might be implemented in Gaza without reconciliation between the rival factions, and for now that seems out of their grasp.

Hamas has long argued against negotiations with Israel. "We don't see any fruits from the political negotiations," Ghazi Hamad, a Hamas advisor said in a recent interview in Gaza. "So we have to make an evaluation for the whole Palestinian national project. Since Madrid in 1991 until now it's been 17 years but we've seen nothing on the ground. How can I convince people that we are going in the right direction?"

On the Israeli side, opinion is more mixed. In general the two-state solution is still broadly regarded as a reasonable goal, although there are many on the rightwing who say Israel should not give up the land it captured in 1967 or who say Israelis have a Biblical right to settle in the West Bank that cannot be negotiated away.

Ehud Olmert, the Israeli prime minister who will step down later this month, has pursued negotiations, arguing that a two-state solution is attainable. On Sunday he will discuss with the cabinet a plan to pay compensation to encourage some of the more distant settlers in the West Bank to move either to Israel or to settlements within the West Bank barrier.

Tzipi Livni, the foreign minister who is likely to replace him as head of the ruling Kadima party, also argues in favour of negotiations and has been deeply involved in the latest talks, although she has said she would resist pressure to hurry the negotiations. Ehud Barak, the defence minister, suggested yesterday that some of the Palestinian areas of Jerusalem might become the future capital of a Palestinian state, an idea which has not always been palatable to Israelis.

Yet there are others beginning to voice different ideas. In a newspaper column in the Yedioth Ahronoth this week, Giora Eiland, a former head of the National Security Council and former national security adviser under Ariel Sharon, said the gap between Israel and the Palestinians was "enormous" and growing.

"The maximum that the Israeli government [any government] will be able to offer the Palestinians [and survive politically] falls short of the minimum that the Palestinian government [any government] can agree to accept [and survive politically]," he wrote. Eiland argued that a final status peace deal "will not be achievable in the foreseeable future" and that new ideas should be considered. He suggested returning control of the West Bank to Jordan, who controlled it before the 1967 war.

Copyright Guardian Newspapers Limited 2008

Gearing Up to Strike Iran By: P. David Hornik

Gearing Up to Strike Iran
By: P. David Hornik
Jerusalem sees the eleventh hour approaching. More>

http://frontpagemag.com/Articles/Read.aspx?GUID=F73D2A2E-D81B-4AB8-BF06-A966041E2B99

The Georgias to Come

In the absence ot a Saakashvili to provide the requisite provocation (a difference not addressed by the author), these could indeed provide test cases....

The Georgias to Come

By Michael Radu
*FrontPageMagazine.com 9/5/2008

Those who thought that wayward Georgia marks the end rather than the
beginning of Russia's appetite for regional conquest should consider a
recent headline from a Romanian newspaper: "The other Georgia to come:
The 18 tanks of Transnistria could reach Chisinau in 30 minutes." The
August 22 article went on to warn that Russia now threatens Europe's
easternmost reaches.

This will indeed come as news to Americans, most of whom have never
heard of Transnistria, a breakaway republic in Moldova, or of Chisinau,
Moldova's capital. Moldova, despite being a UN member state, is another
of those legalistic entities – such as Somalia – whose existence is
largely dependent on the willingness of powerful states to recognize it.
Transnistria, a Stalinist creation like the now better known Abkhazia,
South Ossetia, and Nagorno Karabagh, offers a militaristically resurgent
Russia yet another opportunity to flex its muscles and presents the West
with yet another insoluble problem. When it takes just 18 Russian tanks
to reach the capital of a sovereign European country, that is cause for
international concern.

To justify its military presence in Georgia and Transnistria, Russia has
used the Kosovo analogy. Kosovo, it will be remembered, was part of one
internationally recognized country, Yugoslavia, and later of another,
Serbia. Because the local ethnic Albanian majority wanted to separate
and claimed oppression or even "genocide," the EU and NATO, without UN
blessing, used force to expel the legal Serbian authorities. Earlier
this year the same EU/NATO and the United Nations recognized a new state
of Kosovo. Kosovo is in fact no more a viable entity than Abkhazia,
albeit more viable than South Ossetia or Transnistria. Russia would like
it's occupation of sovereign countries to be seen in the same context.

There are, however, important differences between Kosovo and Georgia's
separatist regions that* *Russia prefers not to mention. Albanians in
Kosovo were a clear majority for decades, while the Abkhaz represented
only 17 percent of the region's population by the early 1990s, when
Russia helped evict the majority Georgians from the area. Ossetians in
South Ossetia were about two thirds of the total for a long time, while
Russians in Transnistria were for decades the third largest ethnic
group, after Romanians ("Moldovans") and Ukrainians, and Armenians in
Nagorno Karabagh were always a majority.

Just as Russian ambassador to NATO Dmitri Rogozin's hanging a Stalin
poster in his office is a symbolic demonstration of the continuity of
Russia's imperial ambitions, Transnistria is the most concrete
manifestation of Stalinist tactics. Created on a piece of Ukrainian land
after World War I with a few Romanians on the left bank of the Dniester
after the Soviets lost the historic Romanian province of Bessarabia
(actually eastern Moldova, annexed by the Tsars in 1812), the grandly
named Moldovan Autonomous Soviet Socialist Republic was intended to
create the impression that it represented the "real" Moldova, unjustly
divided by the Romanian annexation of the right bank area. After World
War II, Moscow re-annexed Bessarabia and, with Transnistria attached,
renamed it the Soviet Socialist Republic of Moldova. Today it has an
area of 34,000 square kilometers and 4.3 million inhabitants.

Despite strenuous Soviet efforts at Russification, Bessarabia retained
its Romanian ethnic majority (about 66 percent), even if not a very
strong self-identity. The very term "Moldovan" as a national description
is fictitious. Not only is most of the historic province still in
Romania, but in language and religion Moldovans are as much a distinct
"nation" vis-a-vis Romanians as Kansans are vis-a-vis Americans.

After the Soviet collapse there was a certain amount of pressure,
especially among the young, to bring the area under the Romanian flag.
Moscow, weak as it was at the time, still reacted rapidly, following a
pattern similar to that of Abkhazia and South Ossetia. The Slavic
majority in Transnistria (made up of both Ukrainians and Russians,
despite Romanians being the largest single ethnic group) panicked at the
idea of becoming a marginal minority in a Greater Romania. It proclaimed
"autonomy", requested and immediately received Russian military aid (a
combination of "peacekeepers" and Cossack mercenaries) and annexed the
city of Tighina on the right bank. Moreover, to further ensure that
Moldova will never be a viable state, Moscow encouraged and supported
"autonomy" within the remaining territory for the small Gagauz, an
Orthodox Turkic minority (140,000 people on 1,600 square kilometers).

Russian "peacekeepers" have remained in Transnistria ever since 1993,
despite Moldovan protests and Moscow's promise to withdraw them, first
by 1997 and again by 2002, in effect protecting a Mafia-run enclave,
where, as this author has seen, admiration for Lenin and the Soviet
Union are officially exhibited, giving the "capital" Tiraspol the
atmosphere of an ideological Jurassic Park. Not surprisingly, the local
"authorities," who have repeatedly expressed their desire to join
Russia, receive the enthusiastic support of Russian nationalists and
systematically suppress all manifestations of "Moldovan" (i.e. Romanian)
language and culture. As for the economy, just as in the case of other
such separatist enclaves (South Ossetia, Abkhazia, indeed Kosovo), it
amounts to a Russian subsidized smuggler's paradise, with some arms
exports, controlled or owned by a small clique around "President" Igor
Smirnov, a former Soviet petty bureaucrat from Eastern Siberia who is
still a Russian citizen.

While Moldova is powerless to resist Russian pressure and Transnistrian
threats and blackmail, one should resist the temptation of sympathizing
too much with its regime--or its voters. Government after government in
Chisinau--and they have all been freely elected since 1991--has refused
to make any hard decision regarding the country's future. The best
explanation is the confused identity of the voters themselves and of the
political elites.

Throughout the Tzarist and Soviet* *occupation, the peasants, mostly
ethnic Romanians and, unique in Europe, the majority, did cling to their
language and identity against Russification efforts, but distrust
Romania after two centuries of Russian propaganda. Many of them also
distrusted capitalism to the extent that, when land was offered for
private property, many still preferred Soviet-type collective farms. The
young, while more pro-Romanian, mostly chose the easy option of having
it both ways--obtain Romanian passports and using them to gain access to
the European Union. The clearest manifestation of such behavior is the
election and re-election of Vladimir Voronin, a former KGB Major
General, leader of the Party of Moldovan Communists since 1994 and
president since 2001. That makes Moldova the founding member of a club
of two countries in Europe that have elected openly communist presidents
(the other is Cyprus, which did so earlier this year). Not surprisingly,
Voronin goes through the motions of moving toward "Europe," mostly
seeking economic aid and protection against imaginary Romanian
annexation, while regularly, and more sincerely, expressing his
friendship for Moscow and antipathy toward Bucharest and all things
Romanian.

All of that explains why no serious political or popular pressure exists
to force Chisinau to make the hard choices about Moldova's future. Those
choices are limited, and become more so in light of Russia's newest
demonstrations of military might. In descending order of their realism,
those choices are satellization (worse than Finlandization) by Moscow
and retention of Transnistria as a reward, continuation of the present
situation and the associated realities of a continuous exodus of the
young and deepening poverty, and unification with Romania, leaving
behind the indigestible Transnistria and Gagauzia. Painful as each may
seem, none of these choices is completely in the hands of Chisinau, but
will mostly be decided in Moscow, Kiev and, to a lesser extent,
Bucharest. If the present Russian plan for the federalization of Moldova
– in effect making almost 4 million Romanians constitutionally equal
with half a million Transnistrian Rusophiles is accepted, complete with
a Russian military presence for decades to come, Moscow would complete
its domination – legally, peacefully and at minimal cost.

For Moscow, the present situation is perfectly acceptable. Russia
controls Moldova's energy supplies, is by far the dominant market for
its exports (mostly wine and fruits), and can manipulate the
Transnistria issue should Chisinau exhibit any uppity behavior. The only
problem may appear if Ukraine succeeds in safeguarding its independence,
because then Transnistria, and by implication Moldova, would be cut off
from Russia and become hostages of Kiev, rather than Moscow. From
Russia's perspective, the fate of Moldova is not just secondary but will
be practically decided by the nature of relations between Moscow and Kiev.

For Ukraine, which has long behaved as if Moldova and Transnistria are
of marginal interest, compared to its territorial dispute with Romania
in the Black Sea and the Danube Delta, the events in Georgia should
bring home the fact that a Russian-controlled Transnistria (and/or
Moldova) on its west adds to the security threat of its long eastern
border with Russia proper. That is a situation no independent government
in Kiev could live with, but Kiev could handle it simply by isolating,
and thus suffocating, Transnistria (and a satellized Moldova), probably
in cooperation with Romania. Kiev could also remember that historically
Transnistria was part of its territory--and that there are as many
Ukrainians as there are Russians in that region.

On the other hand, if Moscow's ultimate goal of bringing Ukraine into
its area of control succeeds, the problem of Transnistria--or of
Moldova's sovereignty and territorial integrity--will cease to be relevant.

Romania, albeit one of Moldova's two neighbors and ethnically identical,
has played a much smaller role than one could have expected. True
enough, Romanian politicians have expressed concern, the Romanian
Orthodox Patriarchate has detached a minority of Moldovans from under
Moscow's religious authority, and Moldavians have received scholarships
and, most importantly, passports, but Chisinau has resisted any closer
cooperation, military or political, and, judging by this author's
observations, beyond a nostalgic solidarity that is more regional than
widespread, the overwhelming majority of Romanians do not seem very
excited about events beyond the Prut River--or prepared to do much to
influence them. They instinctively realize that Romania does not really
need and cannot really afford reunification with 3 million poor and
resentful relatives, especially if the already high cost could include
over a million inassimilable and hostile Slavs.

For a Europe that is largely unable to offer a strong and coherent
response to Moscow's mutilation of Georgia--which is pro-Western, much
larger and more strategically important, and which has a well-defined
national identity--the notion peddled by some in Chisinau and Bucharest
of Moldova's admission into the European Union (and NATO) is simply and
realistically inconceivable. All that is left is, in effect, the next
move by Moscow and the inevitably ineffective protests and expressions
of concern from Brussels to follow.

The little-known developments in Moldova since the early 1990s should
have rung alarm bells in Europe and Washington. They served as a model
for what has been done in Georgia recently. The "international
community" did nothing as a Russophile remnant of Stalinist political
mapmaking was strengthened by Russian forces disguised as
"peacekeepers"; a local puppet clique was installed, encouraged and
subsidized by Moscow; and the legitimate government was blackmailed and
threatened into tolerating the situation. Yeltsin's Russia was too weak
to fully apply this pattern beyond Moldova, but Putin's has now taken it
to its logical and intended consequences in Georgia, and very likely we
shall see it repeated, on a much larger and more dangerous scale, in
Ukraine.

All the ingredients are there. Crimea has a restive Russian majority,
used to belong to Russia (after being taken from the Ottomans), the
would-be "peacekeepers" are already there as the Russian Navy's largest
Black Sea base in Sevastopol, and Kiev's ability to resist is undermined
by the large pro-Russian sector of Ukraine's population, its dependence
on Russian energy and markets and the divisions in the country's
political class. The lessons of Moldova were not learned by Europe or
Washington, and it may be too late to apply them to the coming Ukrainian
crisis.

------------------------------
------------------------------------------
Michael Radu is Senior Fellow and Co - Chair, Center on Terrorism and
Counterterrorism, at the Foreign Policy Research Institute in Philadelphia

US shrinks from arming Georgia

US shrinks from arming Georgia
The George W Bush administration has so far resisted making military pledges to embattled ally Georgia, but as the conflict heats up as an election issue, neo-conservative advisors to US presidential candidate John McCain say Georgia should be supplied with advanced weaponry to deter Russia. - Jim Lobe (Sep 8,'08)

http://www.atimes.com/atimes/Central_Asia/JI09Ag01.html

Azerbaijan at crosswinds of a new cold war

Azerbaijan at crosswinds of a new cold war
As Azerbaijan's presidential elections near, the political direction of the country is more than ever influenced by the United States-Russia power struggle. Baku wants to cultivate military ties with the US, but if it looks to the West, it must be prepared for serious blowback from its powerful neighbors, Iran and Russia. - Kaveh L Afrasiabi (Sep 8,'08)

http://www.atimes.com/atimes/Central_Asia/JI09Ag02.html

Credit crisis II, a world financial Armageddon?

Credit crisis II, a world financial Armageddon?

Christopher Laird

Where are we now in the credit crisis, and why isn’t the massive Fed and ECB weekly lending working to loosen interbank lending? Why is the credit crisis not really improving? Where is this going next? We describe what may happen next as Credit Crisis II in this article.

Now that the credit crisis that started in 2007 is a year old, there has been a debate about whether the financial system will recover, or will the Western/world financial system end up like the Japanese financial system after the stock and real estate crashes in the 1990’s. In that case, the Japanese banks more or less carried their tremendous losses for ten years, and Japan entered a mild but painful decade of deflation. To this day, Japan is battling some of the deflationary forces from that time.

The question now becomes, will the Western financial system recover some normalcy, or are things merely going to get worse and the world end up with a financial malaise lasting ten years like Japan’s?

If the second alternative is the case, then the central banks which are merely propping up the financial institutions with their ‘temporary’ lending will find they are taking the losses off the banks hands, taking them on to their balance sheets, and effectively monetizing the losses.

The ECB and the Fed are both hoping to find a way out of having to keep the bad assets they took as collateral. They have lent hugely to financial institutions, taking their bad mortgage bonds, securities, derivatives as collateral. And at the same time, the financial institutions in question are carrying a sum total of $500 billion of losses on their books, the losses they admit so far, while estimates of ongoing losses from these bad assets runs well over $1 trillion. In effect, the Western credit industry is still crippled. Why is it so crippled still?

Either the financial industry earns its way out (will take ten or more years) and drastically pull back credit, or they find enough new investors to pony up new capital infusions, perhaps through stock sales. And new such investors are becoming increasingly hard to find. Hence, the central banks are the only alternative.

A theme now arises where it is becoming apparent that it is impossible to actually purge the escalating losses from the financial system, and that even big public bailouts don’t purge the losses because of interlinkages between stocks, bonds and derivatives. If one class or institution is bailed out, the losses of capital merely move to the other class. And the losses are clearly so huge as of now, that they weigh on the currencies themselves and cause a fall in their exchange rates.

It is estimated that the USTreasury/Fed/FHLB has infused a total of $2 trillion and counting since Aug 07 to the various credit infusions to the US financial system, and that the ECB is in at similar levels. And even after $ 4 trillion worth of infusions over the last year has been thrown out by the Fed and ECB, the world credit/financial system is actually getting worse. What will be the outcomes into 09?

Bankrupt en masse

In effect, this means the Western banks, etc are bankrupt en masse. The only thing propping up the entire Western financial system, and its respective stock markets has been massive ‘temporary’ lending, on an ongoing basis, by the Fed and ECB. Both central banks are beginning to balk at this situation. Even as they are starting to have second thoughts, the Western financial institutions continue to borrow more money than ever on a weekly basis. Why aren’t things loosening up?

Can’t stop or else

And, if the ECB or the Fed stops the emergency infusions, or even admit who the borrowers are, another round of collapsing banks/bank runs ensues as investors flee and pull their money out. In other words, the central banks have no choice but to continue the weekly $30-50 billion or so of infusions each for the Fed and the ECB, or else face a cascade of bank runs around the world.

…And each week the Fed and the ECB are effectively taking on another $30 or $50 billion of the bad assets from the various and sundry financial institutions scattered across the EU and the US. So, week after grueling week, the Fed and the ECB keep adding another $50 to $100 billion of bad assets to their balance sheets, as ‘collateral’ and making ‘temporary’ loans they keep having to roll over and extend the repayment on. Ie, the junk stuff is becoming a permanent resident on the central bank’s balance sheets. If either the Fed or the ECB stop the weekly infusions, quite possibly the entire Western financial system stops dead. And we get a massive world stock crash.

The question now becomes, what happens when these two central banks finally decide they have to let go? You are not going to tell me they are going to keep infusing a combined $50 to $100 billion worth of financial bailouts each week forever? This massive temporary lending certainly has to end at some point.

And even with all this new money every week, the credit system is barely functional anyway right now. And this half dead world credit system is dragging economies downward, as there is less and less and less credit. This is a paltry return for all the bailouts and massive temporary lending.

Probably what is happening is that this is a classic case of a parabolic world credit peak, as more and more money is needed each week merely to keep the bubble from collapsing. And the only ones left to infuse this money are the central banks. No one else is willing to step in. Financial institutions won’t lend to each other, and investors won’t recapitalize the crippled banks. As financial institution’s stocks fall, issuing new stock becomes prohibitively expensive.

Parabolic peak

One could say all that is happening is that all financial institutions in the world don’t really trust each other, and won’t lend to each other. And that an astounding $50 to $100 billion of weekly infusions from the Fed and the ECB is not fixing the situation, and that we are witnessing the final parabolic peak of the world credit bubble that has built up for the 63 years after WW2 ended. That, and the end of the USD and Yen driven credit/asset/finance bubble which ensued from the early 1970’s.

So, before we continue, it might be said that the present development of the credit crisis, from August 07 to now, is Credit Crisis I. And the present state of affairs is that the Fed and the ECB have to infuse a weekly $50-100 billion plus into their respective financial regions merely to prevent a world finance implosion.

I also have noticed that the Credit Crisis I has had a one year periodicity of major new developments, ie that if one major sector had a problem on a given month, that the next year the same sector seems to reinvent a new worse manifestation.

I made a graphic to describe the general situation:

So, when the central banks stop this massive weekly lending, what happens? Massive forced deleveraging and probably world financial Armageddon. This would be Credit Crisis II, or Phase II. We will look into Credit Crisis II in a moment.

This is the conclusion we came to here at PrudentSquirrel, trying to ascertain where we are in the big picture on the Credit Crisis now. It is that the Central Banks are desperately trying to stave off Credit Crisis II, and they are losing, and probably knowing this, they will at some point confer together and pick a time to let the credit system implode, and try to weather the stock/financial crashes that will occur at that time. Likely, some currencies can collapse as well, and a great deal of FX (foreign exchange) chaos and restrictions will ensue for several years after the fatal date.

If it is true, as we suspect, that we are at the peak of a credit/financial bubble that started right after WW2 ended, and it is at a parabolic peak and cannot be sustained, then the world’s central banks already know this too. They probably are trying to decide when to let go…They all don’t have to agree, it only will take one major Central Bank to let go, then the others will be forced to follow.

The central banks in question would be the BOJ, the US Fed and the ECB, and likely the BOC. The Russian central bank is an odd man out and is a wild card, but not as central to the equation. Either all the major central banks listed keep up the same rate of infusions, or the end of the world credit system comes in a week or two after one ‘lets go’.

Now as to the USD strengthening now, and gold’s vexing $100 plus volatility, it just seems best to make any protective moves well ahead of the fatal day. Once the situation gets out of control, Credit Crisis II begins, in a week from that point you will find it hard to make any changes. I view gold’s present volatility as a total side issue, compared to what would happen if all one’s money was tied to the financial system, the USD and so on, and then one’s financial situation was frozen if the central banks decide to let go, and world foreign exchange restrictions are instituted. Gold is still one of the best ways to ride out what may come to pass.



Our present state of affairs in Credit Crisis I

Let’s look at a few examples of why I am saying the world is at a parabolic credit bubble peak, and why the Central banks are finding they have no choice but to keep pumping out $50 plus billion a week of new ‘temporary’ lending, or else face a real financial Armageddon…

The ECB, Spanish banks, and North-South EU dissention

How Spanish banks are creating mortgage securities to get ECB funding is a perfect example of our present financial crisis…and how the ECB seems to have no choice but to continue the short term funding of the entire EU financial system, and it is causing big dissention between the North EU and South.

By Ambrose Evans-Pritchard

Last Updated: 3:06pm BST 21/08/2008



The European Central Bank has issued the clearest warning to date that it cannot serve as a perpetual crutch for lenders caught off-guard by the severity of the credit crunch.

Not Wellink, the Dutch central bank chief and a major figure on the ECB council, said that banks were becoming addicted to the liquidity window in Frankfurt and were putting the authorities in an invidious position.

"There is a limit how long you can do this. There is a point where you take over the market," he told Het Finacieele Dagblad, the Dutch financial daily.

"If we see banks becoming very dependent on central banks, then we must push them to tap other sources of funding," he said.

While he did not name the chief culprits, there are growing concerns about the scale of ECB borrowing by small Spanish lenders and 'cajas' with heavy exposed to the country's property crash. Dutch banks have also been hungry clients at the ECB window.

One ECB source told The Daily Telegraph that over-reliance on the ECB funds has become an increasingly bitter issue at the bank because the policy amounts to a covert bail-out of lenders in southern Europe.

"Nobody dares pinpoint the country involved because as soon as we do it will cause a market reaction and lead to a meltdown for the banks," said the source.

This "soft bail-out" is largely underwritten by German and North European taxpayers, though it is occurring in a surreptitious way. It has become a neuralgic issue for the increasingly tense politics of EMU.

The latest data from the Bank of Spain shows that the country's banks have increased their ECB borrowing to a record €49.6bn (£39bn). A number have been issuing mortgage securities for the sole purpose of drawing funds from Frankfurt.

These banks are heavily reliant on short-term and medium funding from the capital markets. This spigot of credit is now almost entirely closed, making it very hard to roll over loans as they expire.

The ECB has accepted a very wide range of mortgage collateral from the start of the credit crunch. This is a key reason why the eurozone has so far avoided a major crisis along the lines of Bear Stearns or Northern Rock.

While this policy buys time, it leaves the ECB holding large amounts of questionable debt and may be storing up problems for later.

The practice is also skirts legality and risks setting off a political storm. The Maastricht treaty prohibits long-term taxpayer support of this kind for the EMU banking system.

Few officials thought this problem would arise. It was widely presumed that the capital markets would recover quickly, allowing distressed lenders to return to normal sources of funding. Instead, the credit crunch has worsened in Europe…” Bold emphasis is mine

Telegraph.co.uk



Fannie and Freddie rescue dilemma- their stocks and debt are held by other banks

Another perfect example of the impossible state of affairs in the world credit crisis is Fannie/Freddie. And that means that if the Fed/Treasury does a bailout, their stocks collapse in value, and all the other financial institutions take losses on that because they hold lots of Fannie and Freddie stock. Of course the stock is already in the tank, but the issue is still there and shows the interlinkages.

Then there is the question of the Fannie and Freddie bonds out. That is another can of worms, and the Chinese just stated this week that a collapse of Fannie-Freddie could lead to an economic catastrophe – their Central Bank advisor Yu Yongding stated. The Chinese hold hundreds of billions ($376 billion mostly in US agency bonds) of Fannie and Freddie debt and stock.

In many respects, because of all these cross holdings of the Fannie Freddie bonds and stocks by banks everywhere, and by Central Banks, it would seem that the losses cannot really be removed from the financial system – ie purged. If Fannie and Freddie are bailed out, their stocks collapse and those losses now translate to all these other banks and central banks that hold them. It’s virtually a no win situation.

These cross linkages reveal that it is virtually impossible, even with bailouts, to purge the ever growing $500 billion and counting losses of capital from the banking/financial system. The latest numbers being speculated on are the losses will be over $1 trillion (IMF) and $2 trillion or more (Roubini).

Now, maybe $2 trillion doesn’t sound like a lot compared to the entire world economy. The trouble is, that capital is leveraged anywhere from 10 to 50 times by the financial system. Fannie and Freddie have 60 to 1 leverage.

Losing $2 trillion of capital will totally wipe out the entire world financial system for a decade because of the leverage at 60 to 1. Basically, unless those losses can be purged in some way, it has to be earned back over a period of years/decades. That essentially cripples the entire world financial system.

I remember a very well put quote from a banker last Fall 07 about the credit crisis then. (I’m sorry, I don’t remember his name.) He stated “The credit deleveraging will not be denied.” I think that sums things up very well.

It appears that a relentless unwinding of the world credit/finance bubble with many dimensions and twists and turns cannot be avoided, even if the central banks were willing to try. The issue is the cross linkages and the fact that the capital losses in every corner of the world will not and maybe cannot be purged from the financial system, even with big public bailouts. There is possibly no way to do it other than to allow things to just unwind and try to re earn it all back the hard way.

Even if it appeared the central banks could figure out a way to purge the losses from the financial system, and take them on their books, then their currencies are in danger. The capital losses are there – period. The deleveraging of 60 to 1 credit is happening – period. The financial institutions don’t trust each other – period.

The Fannie – Freddie bailout proposals are being discussed in the light that the US government/Treasury can just about double the so called national debt from $9 trillion by possibly adding another $5 plus trillion, as they effectively have to guarantee those GSE bonds. That is now playing into a debate on the US fiscal situation….as if the USD needed another problem.

In short, once again, we see that it appears impossible to purge the effects of so much lost capital to the world financial system. The deleveraging will not be denied. We see this a year after the Credit Crisis I exploded worldwide Aug 07.

End of a huge world bubble

If that is true, then the theory I laid out above, that we are witnessing a peak in a parabolic finance/asset/stock bubble of world proportions, is going to pan out. I think the entire credit crisis can be looked at from that perspective. We are merely witnessing the relentless unwinding of the biggest financial bubble in history. And, ominously, this particular bubble has grown from the end of WW2 to the present. That is one HUGE economic bubble, and this one envelops the entire world. This is not just a bubble in one country’s economy.

The point of emphasizing it’s from the end of WW2 is that we are not talking merely about a banking crisis, or whatever. We are talking about the deleveraging of the greatest economic/finance bubble in history. Once the level of leverage reached 60 to 1, it becomes impossible to stay ahead of the deleveraging, even for central banks. The implications are staggering. Every major economy in the world is involved. The outcomes of deleveraging this monster bubble, represented by the green oval, will be what I term Credit Crisis II. At 60 to 1 leverage, a loss of 1 to 2% wipes out the capital.

Whether it’s the Chinese Central Bank (BOC), the Fed, the ECB, and then all the other world financial institutions of every type, insurance companies, gigantic retirement funds, other banks, you name it, the present losses of capital to the world financial system is pervasive worldwide.

Nobody will escape the wrath of this deleveraging, and that is why I call it Credit Crisis II. Credit Crisis I was only the preliminary round…Credit Crisis II is characterized by the realization that the gigantic losses of capital cannot be purged from the financial system, even with big public bailouts. And that this deleveraging cannot be stopped. There are too many interlinkages. And, without writing a book on this, the next victim when Credit Crisis II unfolds, will be massive world currency instability. This will make any of the banking and currency crises we have seen since WW2 look like child’s play. It is not clear when Credit Crisis II begins but it is threatening already.

The Prudent Squirrel newsletter is our financial and gold commentary. Subscribers get 44 newsletters a year on Sundays, and also mid week email alerts as needed. We alerted our subscribers April 20 that the USD was bottoming. The USD has strengthened significantly since. The alerts include quick notification of important financial news developments by email. Subscribers tell us that the alerts alone are worth subscribing for.

I had one potential subscriber ask me if the newsletter has much more content than these public articles, ie, if it was worth subscribing. The answer is that the public articles have less than 10% of our research and conclusions that subscribers see, not to mention the subscriber email alerts of important breaking financial news. We have anticipated many significant market moves in the last year, such as imminent drops in world stock markets within days of them happening, and big swings in the gold markets within days of them occurring. We have also made a number of good calls on big currency swings, such as with the USD, the Euro and the Yen.



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Copyright 2008

Christopher Laird

Editor in Chief

www.PrudentSquirrel.com

http://www.prudentsquirrel.com/breakingnews/25_08_08.htm

Chris Laird is not an investment advisor/professional. This article, and the PrudentSquirrel newsletter and alerts, are general market commentary only. They are not intended as specific advice. You should talk to your own investment professionals for specific advice.

The U.S. 2008 Presidential Election: An Evaluation

The U.S. 2008 Presidential Election: An Evaluation

by Prof. Rodrigue Tremblay

Global Research, September 6, 2008
thenewamericanempire.com/



"Bomb, bomb, bomb Iran."

"The issue of economics is not something I've understood as well as I should.. ... I know a lot less about economics than I do about military and foreign policy issues. I still need to be educated."
“I think that [to be rich] if you are only talking about income, how about $5 million?”

John McCain, 2008 Republican presidential candidate

"Our national leaders are sending them [American soldiers to Iraq] out on a task that is from God. ...That's what we have to make sure that we're praying for, that there is a plan and that plan is God's plan."

Alaska Gov. Sarah Palin (June 2008)

"She's not prepared to be governor. How can she be prepared to be vice president or president? Look at what she's done to this state. What would she do to the nation?” [About Gov. Sarah Palin, McCain's choice for a running mate]

Lyda Green, Republican Alaska State Senate President

“If my guesses are confirmed, then that raises the suspicion that somebody in the U. S. purposefully created this conflict [the August 7-8 Georgia-Russia conflict] with the aim of aggravating the situation and creating an advantage...for one of the candidates in the battle for the post of U.S. president.”

Vladimir Putin, Russian Prime Minister and former President (August 28, 2008)


T
raditionally, American presidential elections get into full gear after Labor Day, once the political conventions have been completed, major speeches made and vice president running mates chosen. It is therefore a good time to make a general assessment of where this year's election stands, what political camp has the momentum (or is losing it) and what good or bad decisions have been made by either of the two major presidential candidates.

1. Let us start with the polls.

Three months ago, in mid June, at the end of the primary season, here was the standing in the polls of the two then presumptive main presidential candidates. The polls at that time showed Democratic candidate Sen. Barack Obama leading his Republican opponent Sen. John McCain by a comfortable margin. This was on the aftermath of Obama's primary victory over Sen. Hillary Clinton. For instance, the USA Today/Gallup typically showed Sen. Obama leading Sen. McCain on the order of 50% to 44%, among likely voters.

In late August, according to the same USA Today/Gallup Poll, Sen. Obama still had a 48%–45% edge over his opponent among likely voters, but a few other polls showed him trailing McCain. A Saturday September 6 Gallup poll showed Obama leading McCain only by 47% to 45%, indicating that the two presidential tickets were statistically neck and neck after the two parties' back-to-back conventions.

It should be mentioned that 10 times out of 12, the presidential ticket ahead after the conventions wins in November. But this year, poll data have to be analyzed in light of a likely negative “Bradley Effect” for the Obama-Biden ticket (see below).

Therefore, the conclusion is clear: This is going to be a close U.S. presidential election, much closer than it should have been expected after eight years of crisis-prone Republican rule. Why is this so?

2. The Attacks on the Persona of the Democratic Candidate

It is generally recognized that if Americans elect Sen. Barack Obama president, it will be considered some sort of a political miracle. This is because Sen. Obama is not your usual American presidential candidate. A junior U.S. senator with little administrative experience, he has to counteract the charge that he is inexperienced and untested. Not that his adversary, Sen. John McCain, has had much more administrative experience, but being younger, it is assumed that Sen. Obama is less experienced. Because of that, his choice of vice-presidential running mate was crucial. This was a test he could not afford to fail (see below).

Sen. Obama is also the first person of African-American ancestry to run as a presidential candidate for one of the two dominant American political parties. This in itself is an historical challenge since he does not fit totally with the image that many Americans have of their president. Indeed, it was said by some observers that some segments of the American public are not completely comfortable with candidate Obama and his convoluted personal history.

More importantly, perhaps, is the fact that Sen. Obama is considered a progressive and on the left of many domestic policy issues. This may be less of a handicap with the average American voter, who has suffered miserably under the rule of far right politicians, than it is with the neoconservative nomenklatura who control the levers of many propaganda machines.

As with previous democratic presidential candidates of the recent past, it should have been expected that the ruling political cartel in the U.S. would be less than enthusiastic in allowing a relatively unknown and thus a somewhat more risky candidate get into the White House. It is obvious that there is a strong coalition of various interests that does not like the prospect of having Senator Obama become President Obama, and they are taking the necessary steps to attempt to deny him a victory.

For that, they have adopted the traditional Republican strategy of “attack and destroy.” The neocon propaganda machine, which controls 90 percent of the American corporate media, has already done an effective job of sabotaging the Obama campaign. Indeed, the mainstream network talking heads, cable paid demagogues and other smear artists have savaged him ferociously with innuendos, half-truths and calumnies in order to distance him from the average voter, whose interests Sen. Obama has espoused.

It is obvious that this powerful propaganda machine is bent on electing a neocon and pro-military-industrial complex candidate, no matter how flawed and unfit that candidate may be, and so far they have used their considerable resources, including those of nonprofit 501(c)4 organizations, to attain that goal. That flawed candidate himself, Sen. John McCain has reached new lows in dirty campaigning, in smears and in political lies, even stooping as low as to accuse Sen. Obama of being responsible for high gas prices, while exonerating as culprits the incumbent Bush-Cheney administration, its ineffective energy policy and its wars of aggression.

3. The Obama Camp's Weak Response

But the Republican “ad hominen” attack strategy was predictable, since they have used it before with success, and the Obama camp should have planned in accordance. It is said that candidate Obama “conceded” the crucial month of August to his adversaries. This is the same month that Democratic presidential candidates Michael Dukakis and John Kerry are also said to have conceded to their attackers during the 1988 and 2004 campaigns. Therefore, the fact that Sen. Obama remained on the defensive and did not strongly counterattack goes a long way in explaining his current lack of political momentum. To win, the Democrats cannot let the corrosive propaganda against them go unanswered, with only sporadic and weak rebuttals, while their opponent's flawed record and character remain largely off screen.

Since this is a mistake made by the Dukakis camp in 1988 and the Kerry camp in 2004, one would think that the Democrats would have learned from these two fiascos. But judging from what happened in August this year, it's obvious that they have not. A question therefore must be raised: Is there an ongoing attempt from within the Democratic Party to sabotage Obama's campaign? When something weird or unexplained happens, one has to ask if there is not a more rational reason that explains it.

4. The Republican Bag of Dirty Tricks

This election has been characterized so far by the McCain camp going deep into the bag of political dirty tricks to destroy the Democratic presidential candidate and derail his campaign. How come the McCain machine has been so amazingly successful in controlling the debate, especially in having foreign affairs and security issues dominate the presidential election campaign, at a time when millions of Americans are losing their homes, when the economy is going through one of the worst financial and banking crisis and is in the midst of an economic slump?

As for the question about the dominance of national security issues, it certainly can be asked whether Sen. Barack Obama has not already been the victim of an astute and wicked “Wag the Dog” scheme. Such a scheme could have been designed by the Bush-Cheney White House to place foreign affairs and security matters front and center at a strategically important time in the U.S. presidential campaign, in the month of August, in order to bolster McCain's campaign and help candidate McCain capitalize on his perceived advantage on such questions.

Indeed, the curious international crisis that McCain's personal friend Mikhail Saakashvili, President of Georgia, created from scratch at the outset of the 2008 Olympic Games, during the night of August 7-8 (a period when Sen. Obama was taking a holiday in Hawaii) has all the appearances of a “Wag the Dog” operation.

Ever since Western countries supported the break-away of the territory of Kosovo from Serbia in February 2008, and created a precedent to be applied elsewhere, Georgia's President Saakashvili knew perfectly well that Russia was prepared to react to any provocation in South Ossetia. Why then did the hothead Saakashvili go ahead and provoke Russia by bombing and invading S. Ossetia? And with American and Israeli “advisers” on the ground, in Georgia, we can rest assured that Saakashvili would never have sent Georgian tanks to South Ossetia without receiving some form of go-ahead signal from Washington. An ominous sign was the presence of a top national security aide to Vice President Dick Cheney in Georgia (Joseph R. Wood), just before the latter country's August 7-8 attack on South Ossetia. Therefore, we can be certain that there was a direct link between the Georgian government and the Dick Cheney White House while George W. Bush was at the Beijing Olympics.

Many consider that the hairy Georgian, Washington-backed plan to attack Russian soldiers in S. Ossetia was “beyond comprehension”. But was it? Was it intended, from Georgia's point of view, to draw the United States into a newly created de facto conflict with Russia, even thinking that the Georgian army could successfully occupy S. Ossetia with Russian soldiers stationed there, as some observers believed initially, or —was it not also, and this is more logical, part of a plan designed to boost Sen. John McCain's campaign for the American presidency, at a time when he was badly trailing in the polls? It is permitted, indeed, to suspect that the office of Vice President Cheney could have been interested in provoking a dispute with Russia over NATO, in order to shift the political debate in the U.S. away from the economy and more towards the issue of national security and international affairs.

The fact that the Georgian military incursions into S. Ossetia were followed with ready-made declarations by candidate McCain (“We are all Georgians”) in the aftermath of this provoked and gratuitous crisis points to a possibly more cynical political scenario. —It is said that when something looks like a duck, walks like a duck and goes “Quack! Quack!” like a duck, there is a good chance that it's a duck. At the very least, this is a hypothesis which deserves to be investigated with all the available clues. It is also a hypothesis that has received support from Russian President Vladimir Putin.

And you can rest assured that if the Bush-Cheney White House were to launch a gratuitous attack against Iran in the coming weeks, it would also be done with the current presidential election in mind. That's why there is always the fear that a miscalculation could lead to World War III.

5. An Assessment of the Republican Candidate

As compared to Sen. Barack Obama, it would seem obvious that Sen. John McCain would be a ticking time bomb as president. The man is an old style militarist who confesses that he doesn't know anything about economics ("I still need to be educated").

These are the worst attributes one would like to see in a leader at this time of economic and financial stress, and with costly lingering wars in far away Iraq and Afghanistan draining the public budget. Indeed, if we study his pronouncements, all indicate that Sen. McCain would be a trigger-happy “roll-the-dice” president. He would be an interventionist president, who would gleefully start new wars, while his willingness to reinstitute the military draft would wreck havoc with thousands of families. That message does not seem to have been effectively conveyed to the American electorate. Why?

6. The Choice of Vice Presidential Candidates

On Saturday August 23, Sen. Barack Obama announced that he had chosen as running mate an old-timer senator. Indeed, Sen. Joe Biden (D. Del), the Democratic Vice President nominee, is an insider and a master of Washington politics, having been in the U.S. Senate some 35 years. A lawyer and an international affairs specialist, Sen. Biden is undoubtedly as qualified to be president as anyone can be.

But, the choice has the effect of somewhat negating Obama's central promise of a fundamental change in government. Moreover, since Sen. Biden supported the neocon-inspired October 2002 “Iraq War Resolution”, his selection removed, to a large extent, the rationale for those opposed to the Iraq war to work extra hard on behalf of the Democratic ticket.

Let's keep in mind that one of Obama's most serious and effective charges against Sen. Hillary Clinton during the primaries was the fact that, from the start, he had shown “better judgment” than her in opposing the Iraq War. It has become much more difficult to make this charge against Sen. McCain, now that Sen. Biden is at his side. Also, on foreign policy, Sen. Obama wants to draw down American troops in Iraq at the same time that he proposes a military “surge” in Afghanistan, by sending two more American brigades into that ravaged country, and even possibly into Pakistan. All this blurs Sen. Obama's overall message and his pretense that he represented the hope for a fundamental change in American foreign policy.

Therefore, Sen. Obama's Vice Presidential choice, while not a bad choice, was certainly a conservative one. It could reinforce the idea, in the minds of some younger voters, that when it comes to American foreign policy there is really a single bipartisan and right wing pro-war party in Washington. This image is in contradiction to that projected earlier by Sen. Barack Obama when he was running for the Democratic nomination.

Indeed, many of his supporters may have trouble understanding how Sen. Obama could present himself as an anti-Establishment and an anti-war presidential candidate and then turn around and choose an Establishment and pro-war Vice Presidential candidate who has had a long and close association with the pro-war AIPAC organization. The rationale, of course, was that an insider senator such as Sen. Biden would help an Obama administration deal with Congress ...once elected. But before governing, one has to win the election. And on this score, it is questionable whether the chosen running mate was the best choice to unite a badly divided party between the Obama camp and the Clinton camp.

To close the gap and introduce energy into the Democratic party, Sen. Obama could have called on former Vice President Al Gore and brought him into the campaign. It is understandable that a young senator could have been afraid that such a high profile Democratic running mate might cast a shadow upon himself. But a decision in this direction would have electrified the Democratic Convention and gone a long way toward uniting the party.

Of course, the other obvious choice that could have united the Democratic Party would have been for Sen. Obama to swallow his pride and overcome his inferiority complex and choose as a running mate Sen. Hillary Clinton (D. NY), an adversary who received nearly as much support (18 million primary votes) as himself within the party. Indeed, Sen. Clinton could have helped the Democratic ticket win a strong majority of the crucial female vote, especially the vote of older white women, since it is widely acknowledged that Sen. Obama is not going to win the white male vote.

In 1960, for example, Sen. John F. Kennedy was less than personally enamored with Sen. Lyndon B. Johnson of Texas, but he needed to win that southern state to win the election. He overcame his personal feelings, and thanks to winning Texas, Kennedy won the election and became president. Therefore, in the end, it can be said that Sen. Obama has decided not to be audacious but to play it safe in his choice of a vice presidential running mate.

—The contrary can be said of Sen. McCain. In a cynical and blatantly calculated political move, John McCain announced on Friday, August 29, that he had chosen a relatively unknown and a relatively inexperienced woman, 44-year-old Sarah Palin, a former Miss Alaska beauty contest finalist in 1984 and a former sports reporter. This was reminiscent of George H. Bush who, in 1988, chose an obscure senator named Dan Quayle, then 41, to be his running mate. In the case of Ms. Palin, she is the former mayor of a small town and the recently elected Governor of Alaska, and has not an ounce of experience in world affairs. This is a good example of the dumbing-down of American politics where anything can be said (“She has foreign affairs experience because she lives in a state next to Russia”), done or sold, for expediency.

Therefore, since according to Sen. McCain himself he has no competence in economics or finance, one could have expected that he would have chosen someone better prepared in this crucial area. A candidate who fits the requirements would have been former Massachusetts Governor Mitt Romney, who has considerable business and executive experience. Instead, Sen. McCain chose a woman who has no background in economics or finance. Why? Essentially, because in the USA, religion trumps economics anytime. And, that's the problem.

7. A Republican Ticket as the Religious Far Right Likes It

In fact, what attracted candidate McCain to Sarah Palin was her far right religious credentials, being a fervent Pentecostal Christian who is anti-abortion (even for rape and incest victims), pro-state-imposed-death penalty, anti-sexual education, anti-same-sex marriage, anti-environment, pro-creationism, pro-censorship, pro-gun ownership, and pro-war. More to the right than that, and one falls over the cliff!

To get the evangelical vote, evangelical leaders had to be wooed. For the religious far right leaders, indeed, such as James Dobson, president of the Focus on the Family movement, the only issue that really matters is for them to take absolute control of the U.S. Supreme Court in order to impose their far right domestic cultural agenda. They particularly want the Court to repeal the 1973 decision of Roe v. Wade that gave American women control over their own body. Any politician who can help them achieve this goal is bound to receive their support, whatever his or her qualifications.

That is why Dobson declared upon learning that their favorite candidate had been selected, "I would pull that lever" [for John McCain – Sarah Palin],” after he had said earlier that he “cannot and will not vote for Senator John McCain.”

In 2004, the Dobson religious far right machine put its considerable media power (7 million American radio listeners) behind the disastrous Bush – Cheney ticket for a second term. And it won. In 2008, if the flawed and controversial McCain – Palin ticket were to win, it would be due in a large measure to the same religious far right support. People outside the United States must know such things if they are to understand American politics.

But was not Sen. McCain playing crass politics and demonstrating again a lack of judgment with such a surprising choice as a running mate? Indeed, if he had placed the welfare of his country first, would he have chosen such an inexperienced person to be a heartbeat away from the presidency, to be commander-in-chief, especially considering that he is himself already 72 years old and that, if elected, he would be the oldest American president ever inaugurated? [N.B.: Sen. John McCain's father (70) and grandfather (61) both died suddenly of heart attacks.]

The truth is that the American religious far right had its doubts about candidate McCain and was about to sit the election out. Something had to be improvised to get the religious far right aboard. —And Ms. Palin fit the bill. Her far right credentials were bound to “energize” a strategic part of the Republican base. That was the calculation.

Of course, there was also the hope of killing two birds with one stone by attracting some inattentive pro-Hillary Clinton Democrats and Independent women who could have felt somewhat snubbed by Obama's choice of Sen. Joe Biden as his running mate. But considering how far right politically Ms. Palin is, it is dubious that many Democratic or Independent leaning American women are going to fall in the trap that the McCain camp has opened for them.

While it is true that the campaign that Sen. Hillary Clinton ran gave legitimacy to the possibility of a woman as president, this does not apply to any woman. Not to a woman because she is a woman. She has to be qualified for the job. In fact, the choice of Ms. Sarah Palin as his running mate and his sell-out to the far right may have been a major blunder on Sen. McCain's part, because such a rash and impulsive decision puts his judgment in doubt.

Overall, religion continues to be the most politically divisive factor in the United States. Gallup found, for example, that nearly two thirds (65%) of highly religious American white voters would vote Republican, no matter what their interests in other issues are. They are one-issue voters and their political behavior explains to a large extent why relatively poor people and those of the middle class in the U. S. continue to vote for far right policies which mainly profit the rich. And that one single issue is an unhealthy desire to infuse religious dogma into the law of the land, no matter what the U.S. Constitution says about the division between Church and State and the requirement not to have a religious litmus test for any public office [Article 6, clause 3 of the U.S. Constitution says: ... “no religious Test shall ever be required as a Qualification to any Office or public Trust under the United States.”]. The constitution says one thing, but the churches say another. That explains why candidate McCain felt obliged to pander to the American religious right movement.

Since economic studies show that when Democrats were in the White House, lower-income American families experienced slightly faster income growth than higher-income families, and that the reverse was true when Republicans were in control, one would expect the Democrats to be favorite in this year of economic hardship. That is if people vote rationally their economic interests rather than voting along religious lines.

8. The “Bradley Effect” cannot be underestimated

Because of the nature of the Democratic nominee, it would be imprudent to dismiss the possibility of a strong “Bradley effect.” To the contrary, a Pew Research Center poll taken during mid-August could indicate that this is going to be the case. For instance, a majority of McCain supporters (53%) rejected candidate Obama overwhelmingly and found nothing positive about him, while many Obama supporters are able to say something positive about candidate McCain. To me, this smells like a somewhat racist stand on the part of many American voters who are attracted to candidate McCain. They simply cannot stomach the idea of having a black person as their president.

This is a political fact that Obama's advisers have to deal with. Come November, indeed, the Obama-Biden ticket will have to be 2 or 3 percentage points ahead of the Republican ticket to counteract the expected “Bradley effect” in order to win.

Thus, one can wonder if their strategy of putting the emphasis on an “Obama: The Celebrity” campaign, rather than on an “issues-based” campaign is really what the situation would require. In other words, is it a good idea to turn the 2008 election into a popularity contest between Sen. Obama and Sen. McCain?

The reality is that Sen. Obama is also a candidate who has a high profile and outspoken wife who is certainly not your typical self-effacing American first lady (at least, before the election!). This may unduly reinforce the “celebrity” tone of the Democratic campaign. On the same level, it can be disputed whether the idea of having the Democratic candidate accept the nomination of his party before an imposing crowd of 75,000 at the Denver Broncos' football Invesco Field Stadium, Mount Olympus-Parthenon-style, was the greatest. This has also reinforced the “celebrity” message. —It is too early to know if that was the wrong message at the wrong time. The answer will be delivered on November 4.

9. Obama the Good One vs. McCain the Nasty One?

Finally, on the character issue, I have the feeling that there is some appearance of a lack of moral fortitude on the part of Candidate Obama. Some may have the impression that Sen. Obama is not his own man. That he says and does what others tell him to say and do and that this may explain his occasional flip-flops. This image, even if unfair and untrue, can be dangerous in politics because voters sometime value character above everything else in a candidate to public office.

On the other hand, even though John McCain has often been referred to ever since his high school days by those who know him well as John “McNasty”, the Democrats seem incapable of conveying this information about McCain's character flaws to the public. If they do not do it themselves, they surely cannot rely on the neocon corporate media to do it in their place! So far, Obama's advisers have been pulling their punches. They keep repeating that “You have to be careful about attacking McCain." Well, the McCain camp has no such restraint in attacking Sen. Obama. They did exactly the same thing to Sen. John Kerry in 2004. In American politics, nice guys have the habit of finishing last.

10. Conclusion

The 2008 American presidential election is a most unusual and interesting election, and it will be studied intensively in the coming years. My preliminary assessment is that this is still a presidential election for the Democrats to lose, but they may lose it, at least at the strategic presidential level.

Of course, the Democrats have not yet lost the 2008 presidential election, far from it, but they must quickly regain the momentum and take control of the political agenda by reorienting their strategy and tactics. As President John Kennedy once said, “an error is not a mistake unless you refuse to correct it.”

For strategy, for instance, they would be wise to place less emphasis on the persona of Sen. Obama and his wife and more on issues. They must demonstrate to the American electorate that they are better prepared to tackle them, while their adversaries are likely to make matters worse.

Are Americans better off today than eight years ago? By most measures, they are not. It should be no surprise that Americans are eager for a change in leadership, especially as it is related to their number one preoccupation, the economy. If they were to vote for four more years of the same, it would only be by default. How could it be otherwise with the incumbent Republican George W. Bush having the highest disapproval rating (69%) ever of any American president?

Amazingly, however, the Democrats seem to have some problem zeroing in on a slogan. Perhaps they could adopt a slogan such as: “For a Better and More Prosperous America”. —I may be wrong, but I think that's what a majority of Americans want.

Rodrigue Tremblay is professor emeritus of economics at the University of Montreal and can be reached at rodrigue.tremblay@yahoo.com

He is the author of the book 'The New American Empire'

Visit his blog site at: www.thenewamericanempire.com/blog.

Author's Website: www.thenewamericanempire.com/

Check Dr. Tremblay's coming book "The Code for Global Ethics" at: www.TheCodeForGlobalEthics.com/



Rodrigue Tremblay is a frequent contributor to Global Research. Global Research Articles by Rodrigue Tremblay

The Most Important Election Since 1980 - Conrad Black, National Post

The Most Important Election Since 1980 - Conrad Black, National Post

http://comments.realclearpolitics.com/read/42323/178706.html

Russia: A Partner and an Adversary - Bernard-Henri Levy, New Republic

Russia: A Partner and an Adversary - Bernard-Henri Levy, New Republic

http://comments.realclearpolitics.com/read/42323/178722.html

Building a Security Framework for a Nuclear Tehran - David Kay, Washington Post

Building a Security Framework for a Nuclear Tehran - David Kay, Washington Post

http://comments.realclearpolitics.com/read/42323/178707.html

Charting the world of tomorrow Patrick Seale

Monday, 08 September 2008 - 08 Ramadan 1429 H

Charting the world of tomorrow
Patrick Seale
Vast changes are taking place in the world's geo-political landscape. Events this past month have cast a sharp light on these changes, which are impinging on almost every corner of the planet.

China and Russia have given remarkable demonstrations of national resurgence. The Beijing Olympics and Russia's punishment of Georgia are not isolated phenomena but are, in both cases, the reward of long years of hard national endeavour.

China has proved – in spectacular fashion – that it has thoroughly remade itself in the three decades since the murderous madness of Mao's Cultural Revolution, while Russia, in turn, has hauled itself back into the great power league after the physical dismemberment, financial collapse and national humiliation that followed the collapse of Communism.

Both countries have evidently managed to harness the fierce national pride and loyalty of the great majority of their citizens, which is an essential ingredient for national renewal.

After the amazing television pictures from Beijing, who today would dare challenge China's millions of disciplined men and women? And, after the swift crushing of Georgia's U.S. and Israeli-trained army, who could doubt Russia's determination to restore its influence over its 'near abroad', as well as firm control over the transport to Europe of Russian and Central Asian oil and gas? The revival of Chinese and Russian power – both economic and military –has long been evident, but it had not been fully absorbed into Western strategic thinking. Now it can no longer be ignored.

NATO, a Western relic of the Cold War, needs to rethink its role and even to consider whether its continued existence does more harm than good. It has suffered –or is suffering – a double defeat: in Afghanistan (where it has been sucked into an unwinnable war against a tribal enemy, and should pull out before taking further losses) and in the Caucasus (where, foolishly and unnecessarily, it provoked Russia by seeking to expand its membership to Russia's very borders.)

Most members of the European Union know this. But Europe's dilemma is acute. It depends vitally on an energy partnership with Russia – which supplies 40 % of the gas Europe consumes – but, at the same time, it wants to remain in close alliance with the United States (in spite of the widely-shared distaste for George W Bush and his Administration.) It is not easy for a Union of 27 members – of very different interests and orientation – to arrive at a common policy, a difficulty which accounts for Europe's relative lack of political weight. But the EU is, on the whole, a rich man's club, less concerned to play a great- power game than to protect its peace and prosperity from the problems and conflicts of the world outside its borders.
Changes in the world's geo-political landscape are of far greater importance to the United States, still the reigning superpower in spite of the body-blows it has suffered from President George W Bush's monumental errors and from the emergence of powerful rivals.

However, America's democratic genius is its ability to change course and to re-invent itself – even when it finds itself on the very brink of catastrophe. This is what Barack Obama, the Democratic candidate for the Presidency, has understood and why millions of Americans have rallied to his banner.
If Barack Obama were to win the election next November, major changes in U.S. foreign policy can be expected. The United States will involve itself resolutely – and as a real 'honest broker' this time – in Arab-Israeli peace-making; it will withdraw militarily from Iraq but will help that country's rebuilt itself after the devastation of war; it will engage in a global dialogue with Iran, offering it security guarantees and recognition of its regional role in exchange for abandoning its nuclear weapons ambitions; more generally, it will drop Bush's 'Global War on Terrorism' and seek to build bridges of confidence and cooperation with the Muslim world.

Obama's foreign policy advisers seem to have grasped that the uncritical U.S-Israeli alliance of the Bush years has been bad for both sides and needs correction. It has served to drag the U.S. into war with Iraq, into hostility with Iran, and into a dangerous confrontation with much of Arab and Muslim opinion. It has also emboldened Israel to wage war on its neighbours, rather than make peace with them, and has encouraged Israeli hard-liners to believe that, with American backing, their small country can subdue the whole region militarily, and continue its territorial expansion at the Palestinians' expense.

These are grave mistakes because the Arab world is not what it was in 1948, 1967, 1973 or even a decade ago. Profound changes are taking place – in economic development, in education, in diversification away from oil, in armament – as important in their way as those which have transformed China and Russia.
Resistance movements to Israel have also arisen – like Hezbollah and Hamas, deeply rooted among the people – that cannot easily be defeated. In a word, it is more than time for Israel to rethink its security doctrines and settle with its neighbours.

Any visitor to the Gulf or Saudi Arabia – the Arab world's power-houses – cannot fail to be impressed by the spectacular development of the last thirty years – and by the grandiose plans for expansion in the next thirty. The International Monetary Fund gives the following GDP figures for 2007: Israel $162bn; the United Arab Emirates – one of the fastest growing economies in the world –$192bn; Saudi Arabia $376bn. These figures alone should cause Israel and its backers to reflect.

Obama's one mistake so far in his foreign policy ideas is to want to pour more US military resources into fighting the Taliban, not only in Afghanistan but also in Pakistan's North West Frontier Province, where Osama Bin Laden and his colleagues are thought to be hiding. There can be no military solution to the Afghan problem. A tribal society, deeply attached to its traditions and religion, will not accept to have a Western model of society imposed on it by force, and will fight to the death to prevent it.

The world's geo-political landscape is still dotted with potential flashpoints – in Kashmir, in Kirkuk, in Gaza and the West Bank, in the Caucasus, and in the troubled border region between Afghanistan and Pakistan, to name only a few – but the potential for radical change in the leadership and foreign policy of the United States in 2009 is probably the best news to look forward to as this year draws to a close.

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