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After shelling out $85 billion last month to shore up the books of financial giant AIG — which is
heavily invested in the huge, shadowy and wholly unregulated market for “credit default swaps” — the Fed authorized another $38 billion in government-backed loans yesterday.

That action may well be a small but necessary step in protecting the larger economy, but it is extremely hard to swallow given that 70 AIG execs went on a half-million dollar junket to a resort spa just a week after the last bailout. Included in the tab at the tony St. Regis resort on the California coast was $150,000 for meals and almost 25 grand worth of spa treatments.

According to the Washington Post, Martin Sullivan, the former AIG chief executive whose “three-year tenure coincided with much of the company’s ill-fated risk-taking,” is receiving a $5 million dollar performance bonus, and Joe Casano, “the financial products manager whose complex investments led to American International Group’s near collapse,” is raking in $1 million per month in consulting fees. His task? Sorting out the obscure investment instruments created on his watch.

Imagine how much easier this “bailout” process would be if we weren’t dealing with some of the most privileged, arrogant bastards this country has ever produced, and if many of them weren’t still living the high-life. The gall of the titans of the financial sector is simply unprecedented.

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How Credit Default Swaps Work

Credit default swaps (CDSs) are essentially insurance policies issued by banks (sellers) and taken out by investors (buyers) to protect against failure among their investments. Insurers are forced to open their books to regulators to show that they have the collateral to pay out on every one of their policies. The credit default swap market is not regulated by anyone — at all.

Credit default swaps are derivatives — any kind of financial instrument whose value is based on the value of another financial instrument [source: Risk Glossary]. The value of credit default swaps is derived from whether or not a company goes south. They can be valuable if it doesn’t through premium payments, or they can be valuable as insurance if the company goes under. Think of it in terms of loans. When you invest in a company, you essentially give it a loan. It repays the loan in dividends, increased share prices or both. If a company goes bankrupt and its shares become worthless, then it’s defaulted on the loan you gave it. Bankruptcy is one of several credit events — triggers that allow a credit default swap buyer to call in the coverage it took out on its investment.

This type of swap was initially created in the late 1990s to protect against defaults on extremely safe investments like municipal bonds (loans made to cities to finance projects). Monthly premium payments made these swaps a steady source of extra cash flow for the issuers. As a result, they became increasingly popular among the huge issuing banks and the investors who realized they could be traded as bets on the health of a company. Anyone confident about a company’s health can purchase seller swaps and rake in premiums from swap buyers. Those who doubt a company’s health can purchase buyer swaps, make premium payments on the swaps and cash them in when the company goes under.

Unregulated financial instruments like derivatives can be sold over the counter (OTC), meaning they can be purchased outside of the formal exchange markets, like the New York Stock Exchange. Since no regulation exists on the derivatives, they can be traded from one party to another. There’s also no requirement that purchasers of the policies prove they had the cash available to pay out on the policy, should it be called in. A purchaser of a CDS or any OTC instrument can buy it from anyone who owns one. They can also be sold by the policy’s issuer or the purchaser, and either can sell their end of the policy without notifying the other. This can make it difficult to track down the person holding the seller swap in a credit event.

Even worse, if the CDSs protecting a company’s investments turn out to be worthless, the company is forced to rewrite their balance sheet to reflect the losses, since the failed investment wasn’t covered by the swaps. Heavy losses can cause the value of an institution to plummet. If this happens to many institutions at the same time — and the CDSs each institution took out can’t be paid out — then the situation can become dire for entire markets in a chain reaction.

This is the situation world markets faced in 2008.

Caracas, Venezuela
Population: 3.2 million
Murder rate: 130 per 100,000 residents (official)
What’s happening: The capital of Chávez country, Caracas has become far more dangerous in recent years than any South American city, even beating out the once notorious Bogotá. What’s worse, the city’s official homicide statistics likely fall short of the mark because they omit prison-related murders as well as deaths that the state never gets around to properly “categorizing.” The numbers also don’t count those who died while “resisting arrest,” suggesting that Caracas’s cops—already known for their brutality against student protesters—might be cooking the books. Many have pointed the finger at El Presidente, whose government has failed to tackle the country’s rising rates of violent crime. In fact, since Chávez took over in 1998, Venezuela’s official homicide rate has climbed 67 percent—mostly due to increased drug and gang violence. Ramón Rodríguez Chacín, who recently resigned as interior minister, claimed in July that homicide has dropped 27 percent since January—but experts say he’s just playing with numbers. As for Caracas, some speculate that its murder rate is closer to 160 per 100,000.

Cape Town, South Africa
Population: 3.5 million
Murder rate: 62 per 100,000 inhabitants
What’s happening: A European bastion in the heart of turbulent South Africa, picturesque Cape Town nonetheless has the country’s highest murder rate. The city’s homicides usually take place in suburban townships rather than in the more upscale urban areas where tourists visit. According to the South African Police Service, most of the Cape Town area’s violent crimes happen between people who know one another, including a horrific case last year in which four males doused a female friend in gasoline and lit her on fire. Occurring just outside city limits, the incident apparently happened after the assailants had taken hard drugs, the use of which has risen along with Cape Town’s violent crime rate. The whopping 12.7 percent rise in the city’s murder rate from 2006 to 2007 certainly has local politicians worried, especially as South Africa prepares to host the 2010 World Cup. The government has hired more police officers to prepare for the tournament, which could help cut crime in soccer-fan hot spots. But until better efforts are made to police Cape Town’s poverty-stricken townships, it’s unlikely that the murder rate—an average of 5.9 per day—will see any major drop.

New Orleans, United States
Population: 220,614 to 312,000 (2007); estimates vary due to displacement of people after Hurricane Katrina in 2005.
Murder rate: Estimates range from 67 (New Orleans Police Department) to 95 (Federal Bureau of Investigation) per 100,000
What’s happening: With its grinding poverty, an inadequate school system, a prevalence of public housing, and a high incarceration rate, the Big Easy has long been plagued with a high rate of violent crime. Katrina didn’t help. Since the hurricane struck in 2005, drug dealers have been fighting over a smaller group of users, leading to many killings. On just one four-block stretch of Josephine Street, in the city center, four people were murdered in 2007 and 15 people shot, including a double homicide on Christmas day. A precise murder rate is hard to pinpoint because the population is swelling quickly, approaching its pre-Katrina numbers. Whether you use New Orleans’s own figures or the FBI’s, however, the city remains the most deadly in the United States, easily surpassing Detroit and Baltimore with 46 and 45 murders per 100,000 people, respectively.

Moscow, Russia
Population: 10.4 million
Murder rate: 9.6 per 100,000 (estimate)
What’s happening: Moscow’s murder rate is nothing compared with that of Caracas or Cape Town, but the city still ranks way above other major European capitals. London, Paris, Rome, and Madrid, for instance, all had rates below 2 murders per 100,000 in 2006. The Russian capital’s homicide rate is down 15 percent this year from last, but the recent surge in hate crimes—including the deadly beating of a Tajik carpenter by a gang of youths on Valentine’s Day—suggests that the lull might be temporary. Sixty ethnically motivated killings have already happened this year, part of a sixfold increase in hate crimes committed in the city during 2007. Several of the murders have been attributed to ultranationalist skinhead groups like the “Spas,” who killed 11 people in a 2006 bombing of a multiethnic market in northern Moscow. The Russian government has finally stepped up to combat the problem, assisting migrant groups and cracking down on street gangs. Still, the continued rise in extremist attacks is worrisome. And along with migrants, journalists and other high-profile people in Moscow might also want to be a little wary in Russia—62 contract murders took place in the country in 2005, according to official statistics.

Port Moresby, Papua New Guinea
Population: 254,200 (2000 census)
Murder rate: 54 per 100,000 (2004 official figure)
What’s happening: The capital of island country Papua New Guinea, Port Moresby might seem like a surprising addition to this list. But its high violent crime rates, along with high levels of police corruption and gang activity, helped earn the city the dubious title of “worst city” in a 2004 Economist Intelligence Unit survey. With gangs called “raskols” controlling the city centers and unemployment rates hovering around 80 percent, it’s easy to see how Port Moresby beat out the 130 other survey contenders. Port Moresby’s police don’t seem to be helping the crime situation—last November, five officers were charged with offenses ranging from murder to rape. And in August, the city’s police barracks were put on a three-month curfew due to a recent slew of bank heists reportedly planned inside the stations by officers and their co-conspirators. Rising tensions between Chinese migrants and native Papua New Guineans are also cause for alarm, as are reports of increased activity of organized Chinese crime syndicates.

The New Corporate Threat to Our Water Supplies
http://waterconsciousness.com/

In the last few years, the world’s largest financial institutions and pension funds, from Goldman Sachs to Australia’s Macquarie Bank, have figured out that old, trustworthy utilities and infrastructure could become reliable cash cows — supporting the financial system’s speculative junk derivatives with the real concrete of highways, water utilities, airports, harbors, and transit systems.

The spiraling collapse of the financial system may only intensify the quest for private investments in what is now the public sector. This flipping of public assets could be the next big phase of privatization, and it could happen even under an Obama administration, as local and state governments, starved during Bush’s two terms in office, look to bail out on public assets, employees, and responsibilities. The Republican record of neglect of basic infrastructure reads like a police blotter: levees in New Orleans, a major bridge in Minneapolis, a collapsing power grid, bursting water mains, and outdated sewage treatment plants.

Billions in private assets are now parked in “infrastructure funds” waiting for the crisis to mature and the right public assets to buy on the cheap. The first harbingers of a potential fire sale are already on the horizon. The City of Chicago has leased its major highway and Indiana its toll road. Private companies are managing major ports and bidding for control of local water systems across the country. Government jobs are also up for sale. For the first time in American history, the federal government employs more contract workers than regular employees.

This radical shift to the private sector could become one of history’s largest transfers of ownership, control, and wealth from the public trust to the private till. But more is at stake. The concept of democracy itself is being challenged by multinational corporations that see Americans not as citizens, but as customers, and government not as something of, by, and for the people, but as a market to be entered for profit.

How the Water Revolt Began

And a huge market it is. About 85% of Americans receive their water from public utility departments, making water infrastructure, worth trillions of dollars, a prime target for privatization. To drive their agenda, water industry lobbyists have consistently opposed federal aid for public water agencies, hoping that federal cutbacks would drive market expansion. So far, the strategy has worked. In 1978, just before the Reagan-era starvation diet began, federal funding covered 78% of the cost for new water infrastructure. By 2007, it covered just 3%.

As a result, local and state governments are desperately trying to figure out how to make up the difference without politically unpopular rate increases. A growing number of mayors and governors, Republicans and Democrats, are turning to the industry’s designated solution: privatization.

Providing clean, accessible, affordable water is not only the most basic of all government services, but throughout history, control of water has defined the power structure of societies. If we lose control of our water, what do we, as citizens, really control?

The danger is that most citizens don’t even know there’s a problem. Water systems are generally underground and out of sight. Most of us don’t think about our water until the tap runs dry or we flush and it doesn’t go away. That indifference could cost us dearly, but privatization is not yet destiny.

A citizens’ water revolt has been slowly spreading across the United States. The revolt is not made up of “the usual suspects,” has no focused ideology, and isn’t the stuff of headlines. It often starts as a “not-in-my-backyard” movement but quickly expands to encompass issues of global economic justice.

It didn’t take long for the feds to get their hands on Samuel Israel III after he faked his death on the Bear Mountain Bridge just north of New York City. Israel, a former hedge fund manager sentenced to 20 years in prison for defrauding $400 million from investors, just walked into a Southwick, Mass., police station in July after a month on the run. Other white-collar thieves have proved much harder to catch.

White-collar crime is serious business, and some fraudsters are able to elude facing the consequences of their actions. Commodities trader Marc Rich fled the U.S. for Switzerland in the 1980s to avoid tax evasion charges and an allegation of illegally doing business with Iran. He will never be brought to justice after securing a pardon from President Bill Clinton.

Robert Vesco bounced around Latin America for more than 30 years, managing to evade, among other things, U.S. securities charges for stealing $200 million. He did get imprisoned in Cuba in 1996 and is believed to have died there last year.

Now a new breed of financial fugitives is on the run, epitomized by Jacob “Kobi” Alexander, the stock scammer who is currently living well in Namibia. Many white-collar fugitives, like Russian Boris Berezovsky, are controversial because the charges against them are believed by some to be driven more by politics than anything else. Either way, financial fugitives can live free and prosper if they are smart, like Ghaith Pharaon, the wealthy Saudi wanted by the FBI for 17 years.

“These individuals show high intelligence and tend to put together very complex schemes,” says Sharon Ormsby, the Federal Bureau of Investigations’ financial crimes section chief. “They understand international markets–some have multiple passports–and are familiar with the laws.”

Pharaon was indicted for fraud charges by the U.S. government in 1991 for his alleged role in the mammoth collapse of the Bank of Credit and Commerce International. A large shareholder of BCCI, Pharaon was accused of being a frontman for unlawful purchases of American banks. The Federal Reserve fined Pharaon $37 million for his role in secretly taking over banks, and the Harvard University graduate lost his legal challenge of that fine.

Still, Pharaon has had little trouble operating his business empire, which includes a luxury resort hotel in Jordan and the Attock Group, made up of refinery and cement companies in Pakistan. Attock Refinery was even able to snag an $80 million contract from the U.S. government, ABC News reported in June.

The members of our list of white-collar fugitives have followed different paths. Chinese financial fugitives have made a bee-line for Canada, taking advantage of liberal entry rules and refugee laws. Lai Changxing is wanted in China for allegedly masterminding a $6 billion fraud, while Chinese banker Gao Shan is on the hook for allegedly embezzling $150 million. Both men are living relatively unencumbered lives in the Vancouver area.

London also seems to be a destination of choice; it’s currently home to Berezovsky and former Thai prime minister Thaksin Shinawatra, who recently fled to avoid accusations of financial crimes back home. American telemarketing scammer James Eberhart is just sailing round the world in his boat.

Forbes.com consulted with law enforcement agencies to identify the top 10 most wanted white-collar fugitives, who are listed in no significant order.

Distinguishing white-collar criminals from organized criminals remains challenging 69 years after sociologist Edwin Sutherland coined the term “white-collar crime.” But we tried to stick to Sutherland’s definition of “a crime committed by a person of respectability and high social status in the course of his occupation.” All of the Forbes.com top 10 white-collar fugitives are criminally indicted, convicted or have arrest warrants outstanding–and are wanted by a national government.

http://www.forbes.com/2008/08/27/legal-crime-fbi-biz-cz_nv_0827fugitives_slide_2.html?thisspeed=25000

There is no such thing as a free lunch, and there is no such thing as a free war. The Iraq adventure has seriously weakened the U.S. economy, whose woes now go far beyond loose mortgage lending. You can’t spend $3 trillion — yes, $3 trillion — on a failed war abroad and not feel the pain at home.

Some people will scoff at that number, but we’ve done the math. Senior Bush administration aides certainly pooh-poohed worrisome estimates in the run-up to the war. Former White House economic adviser Lawrence Lindsey reckoned that the conflict would cost $100 billion to $200 billion; Defense Secretary Donald H. Rumsfeld later called his estimate “baloney.” Administration officials insisted that the costs would be more like $50 billion to $60 billion. In April 2003, Andrew S. Natsios, the thoughtful head of the U.S. Agency for International Development, said on “Nightline” that reconstructing Iraq would cost the American taxpayer just $1.7 billion. Ted Koppel, in disbelief, pressed Natsios on the question, but Natsios stuck to his guns. Others in the administration, such as Deputy Defense Secretary Paul D. Wolfowitz, hoped that U.S. partners would chip in, as they had in the 1991 Persian Gulf War, or that Iraq’s oil would pay for the damages.

The end result of all this wishful thinking? As we approach the fifth anniversary of the invasion, Iraq is not only the second longest war in U.S. history (after Vietnam), it is also the second most costly — surpassed only by World War II.

Why doesn’t the public understand the staggering scale of our expenditures? In part because the administration talks only about the upfront costs, which are mostly handled by emergency appropriations. (Iraq funding is apparently still an emergency five years after the war began.) These costs, by our calculations, are now running at $12 billion a month — $16 billion if you include Afghanistan. By the time you add in the costs hidden in the defense budget, the money we’ll have to spend to help future veterans, and money to refurbish a military whose equipment and materiel have been greatly depleted, the total tab to the federal government will almost surely exceed $1.5 trillion.

But the costs to our society and economy are far greater. When a young soldier is killed in Iraq or Afghanistan, his or her family will receive a U.S. government check for just $500,000 (combining life insurance with a “death gratuity”) — far less than the typical amount paid by insurance companies for the death of a young person in a car accident. The stark “budgetary cost” of $500,000 is clearly only a fraction of the total cost society pays for the loss of life — and no one can ever really compensate the families. Moreover, disability pay seldom provides adequate compensation for wounded troops or their families. Indeed, in one out of five cases of seriously injured soldiers, someone in their family has to give up a job to take care of them.

But beyond this is the cost to the already sputtering U.S. economy. All told, the bill for the Iraq war is likely to top $3 trillion. And that’s a conservative estimate.

President Bush tried to sell the American people on the idea that we could have a war with little or no economic sacrifice. Even after the United States went to war, Bush and Congress cut taxes, especially on the rich — even though the United States already had a massive deficit. So the war had to be funded by more borrowing. By the end of the Bush administration, the cost of the wars in Iraq and Afghanistan, plus the cumulative interest on the increased borrowing used to fund them, will have added about $1 trillion to the national debt.

The long-term burden of paying for the conflicts will curtail the country’s ability to tackle other urgent problems, no matter who wins the presidency in November. Our vast and growing indebtedness inevitably makes it harder to afford new health-care plans, make large-scale repairs to crumbling roads and bridges, or build better-equipped schools. Already, the escalating cost of the wars has crowded out spending on virtually all other discretionary federal programs, including the National Institutes of Health, the Food and Drug Administration, the Environmental Protection Agency, and federal aid to states and cities, all of which have been scaled back significantly since the invasion of Iraq.

To make matters worse, the U.S. economy is facing a recession. But our ability to implement a truly effective economic-stimulus package is crimped by expenditures of close to $200 billion on the two wars this year alone and by a skyrocketing national debt.

The United States is a rich and strong country, but even rich and strong countries squander trillions of dollars at their peril. Think what a difference $3 trillion could make for so many of the United States’ — or the world’s — problems. We could have had a Marshall Plan to help desperately poor countries, winning the hearts and maybe the minds of Muslim nations now gripped by anti-Americanism. In a world with millions of illiterate children, we could have achieved literacy for all — for less than the price of a month’s combat in Iraq. We worry about China’s growing influence in Africa, but the upfront cost of a month of fighting in Iraq would pay for more than doubling our annual current aid spending on Africa.

Closer to home, we could have funded countless schools to give children locked in the underclass a shot at decent lives. Or we could have tackled the massive problem of Social Security, which Bush began his second term hoping to address; for far, far less than the cost of the war, we could have ensured the solvency of Social Security for the next half a century or more.

Economists used to think that wars were good for the economy, a notion born out of memories of how the massive spending of World War II helped bring the United States and the world out of the Great Depression. But we now know far better ways to stimulate an economy — ways that quickly improve citizens’ well-being and lay the foundations for future growth. But money spent paying Nepalese workers in Iraq (or even Iraqi ones) doesn’t stimulate the U.S. economy the way that money spent at home would — and it certainly doesn’t provide the basis for long-term growth the way investments in research, education or infrastructure would.

Another worry: This war has been particularly hard on the economy because it led to a spike in oil prices. Before the 2003 invasion, oil cost less than $25 a barrel, and futures markets expected it to remain around there. (Yes, China and India were growing by leaps and bounds, but cheap supplies from the Middle East were expected to meet their demands.) The war changed that equation, and oil prices recently topped $100 per barrel.

While Washington has been spending well beyond its means, others have been saving — including the oil-rich countries that, like the oil companies, have been among the few winners of this war. No wonder, then, that China, Singapore and many Persian Gulf emirates have become lenders of last resort for troubled Wall Street banks, plowing in billions of dollars to shore up Citigroup, Merrill Lynch and other firms that burned their fingers on subprime mortgages. How long will it be before the huge sovereign wealth funds controlled by these countries begin buying up large shares of other U.S. assets?

The Bush team, then, is not merely handing over the war to the next administration; it is also bequeathing deep economic problems that have been seriously exacerbated by reckless war financing. The US faces an economic downturn that’s likely to be the worst in more than a quarter-century.

Until recently, many marveled at the way the United States could spend hundreds of billions of dollars on oil and blow through hundreds of billions more in Iraq with what seemed to be strikingly little short-run impact on the economy. But there’s no great mystery here. The economy’s weaknesses were concealed by the Federal Reserve, which pumped in liquidity, and by regulators that looked away as loans were handed out well beyond borrowers’ ability to repay them. Meanwhile, banks and credit-rating agencies pretended that financial alchemy could convert bad mortgages into AAA assets, and the Fed looked the other way as the U.S. household-savings rate plummeted to zero.

It’s a bleak picture. The total loss from this economic downturn — measured by the disparity between the economy’s actual output and its potential output — is likely to be the greatest since the Great Depression. That total, itself well in excess of $1 trillion, is not included in the estimated $3 trillion cost of the war.

Others will have to work out the geopolitics, but the economics here are clear. Ending the war, or at least moving rapidly to wind it down, would yield major economic dividends.

As we head toward November, opinion polls say that voters’ main worry is now the economy, not the war. But there’s no way to disentangle the two. The United States will be paying the price of Iraq for decades to come. The price tag will be all the greater because we tried to ignore the laws of economics — and the cost will grow the longer the U.S. remains.

In the months leading up to the Republican National Convention, the FBI-led Minneapolis Joint Terrorist Task Force actively recruited people to infiltrate vegan groups and other leftist organizations and report back about their activities. On May 21, the Minneapolis City Pages ran a recruiting story called “Moles Wanted.” Law enforcement sought to pre-empt lawful protest against the policies of the Bush administration during the convention.

Since Friday, local police and sheriffs, working with the FBI, conducted pre-emptive searches, seizures and arrests. Glenn Greenwald described the targeting of protesters by “teams of 25-30 officers in riot gear, with semi-automatic weapons drawn, entering homes of those suspected of planning protests, handcuffing and forcing them to lay on the floor, while law enforcement officers searched the homes, seizing computers, journals, and political pamphlets.” Journalists were detained at gunpoint and lawyers representing detainees were handcuffed at the scene.

“I was personally present and saw officers with riot gear and assault rifles, pump action shotguns,” said Bruce Nestor, the president of the Minnesota chapter of the National Lawyers Guild, who is representing several of the protesters. “The neighbor of one of the houses had a gun pointed in her face when she walked out on her back porch to see what was going on. There were children in all of these houses, and children were held at gunpoint.”

The raids targeted members of “Food Not Bombs,” an antiwar, anti-authoritarian protest group that provides free vegetarian meals every week in hundreds of cities all over the world. They served meals to rescue workers at the World Trade Center after 9/11 and to nearly 20 communities in the Gulf region following Hurricane Katrina.

Also targeted, were members of I-Witness Video, a media watchdog group that monitors the police to protect civil liberties. The group worked with the National Lawyers Guild to gain the dismissal of charges or acquittals of about 400 of the 1,800 who were arrested during the 2004 Republican National Convention in New York. Pre-emptive policing was used at that time as well. Police infiltrated protest groups in advance of the convention.

Nestor said that no violence or illegality has taken place to justify the arrests. “Seizing boxes of political literature shows the motive of these raids was political,” he said.

Further evidence of the political nature of the police action was the boarding up of the Convergence Center, where protesters had gathered, for unspecified code violations. St. Paul City Council member David Thune said, “Normally we only board up buildings that are vacant and ramshackle.” Thune and fellow City Council member Elizabeth Glidden decried “actions that appear excessive and create an atmosphere of fear and intimidation for those who wish to exercise their First Amendment rights.”

“So here we have a massive assault led by Federal Government law enforcement agencies on left-wing dissidents and protesters who have committed no acts of violence or illegality whatsoever, preceded by months-long espionage efforts to track what they do,” Greenwald wrote on Salon.

Preventive detention violates the Fourth Amendment, which requires that warrants be supported by probable cause. protesters were charged with “conspiracy to commit riot,” a rarely-used statute that is so vague, it is probably unconstitutional. Nestor said it “basically criminalizes political advocacy.”

On Sunday, the National Lawyers Guild and Communities United Against Police Brutality filed an emergency motion requesting an injunction to prevent police from seizing video equipment and cellular phones used to document their conduct.

During Monday’s demonstration, law enforcement officers used pepper spray, rubber bullets, concussion grenades and excessive force. At least 284 people were arrested, including Amy Goodman, the prominent host of “Democracy Now!,” as well as the show’s producers, Abdel Kouddous and Nicole Salazar. “St. Paul was the most militarized I have ever seen an American city to be,” Greenwald wrote, “with troops of federal, state and local law enforcement agents marching around with riot gear, machine guns, and tear gas cannisters, shouting military chants and marching in military formations.”

Bruce Nestor said the timing of the arrests was intended to stop protest activity, “to make people fearful of the protests, but also to discourage people from protesting,” he told Amy Goodman. Nevertheless, 10,000 people, many opposed to the Iraq war, turned out to demonstrate on Monday. A legal team from the National Lawyers Guild has been working diligently to protect the constitutional rights of protesters.

Police Wednesday held a Washington man with a history of mental problems in a series of shootings that killed six people, including a sheriff’s deputy.

Isaac Zamora, 28, of Alger, Wash., was being held in the Skagit County Jail after surrendering to police following a shooting rampage Tuesday that left two people wounded in addition to the six dead.

Police said the shootings began after 2 p.m. Tuesday near the home of the suspect’s mother. Two bodies, including that of sheriff’s deputy Anne Jackson, 40, were found there. Two construction workers had been shot to death nearby and another body was found a few houses away, police said.

Zamora allegedly drove away and “was just going down the road shooting at people,” Trooper Keith Leary said. One motorist was killed and two others wounded in those shootings.

Police said they chased the suspect at speeds of up at 90 mph on Interstate 90 before he surrendered about two hours after the initial shooting reports.

The suspect’s mother said her son was “extremely mentally ill” and had been living in the woods on and off for years.

1947 to 1951, FRANCE

According to Alfred W. McCoy in The Politics of Heroin in Southeast Asia, CIA arms, money, and disinformation enabled Corsican criminal syndicates in Marseille to wrestle control of labor unions from the Communist Party. The Corsicans gained political influence and control over the docks — ideal conditions for cementing a long-term partnership with mafia drug distributors, which turned Marseille into the postwar heroin capital of the Western world. Marseille’s first heroin laboratones were opened in 1951, only months after the Corsicans took over the waterfront.

EARLY 1950s, SOUTHEAST ASIA

The Nationalist Chinese army, organized by the CIA to wage war against Communist China, became the opium barons of The Golden Triangle (parts of Burma, Thailand and Laos), the world’s largest source of opium and heroin. Air America, the ClA’s principal airline proprietary, flew the drugs all over Southeast Asia. (See Christopher Robbins, Air America, Avon Books, 1985, chapter 9)

1950s to early 1970s, INDOCHINA During U.S. military involvement in Laos and other parts of Indochina, Air America flew opium and heroin throughout the area. Many Gl’s in Vietnam became addicts. A laboratory built at CIA headquarters in northern Laos was used to refine heroin. After a decade of American military intervention, Southeast Asia had become the source of 70 percent of the world’s illicit opium and the major supplier of raw materials for America’s booming heroin market.

1973-80, AUSTRALIA

The Nugan Hand Bank of Sydney was a CIA bank in all but name. Among its officers were a network of US generals, admirals and CIA men, including fommer CIA Director William Colby, who was also one of its lawyers. With branches in Saudi Arabia, Europe, Southeast Asia, South America and the U.S., Nugan Hand Bank financed drug trafficking, money laundering and international arms dealings. In 1980, amidst several mysterious deaths, the bank collapsed, $50 million in debt. (See Jonathan Kwitny, The Crimes of Patriots: A True Tale of Dope, Dirty Money and the CIA, W.W. Norton & Co., 1 987.)

1970s and 1980s, PANAMA

For more than a decade, Panamanian strongman Manuel Noriega was a highly paid CIA asset and collaborator, despite knowledge by U.S. drug authorities as early as 1971 that the general was heavily involved in drug trafficking and money laundering. Noriega facilitated ”guns-for-drugs” flights for the contras, providing protection and pilots, as well as safe havens for drug cartel otficials, and discreet banking facilities. U.S. officials, including then-ClA Director William Webster and several DEA officers, sent Noriega letters of praise for efforts to thwart drug trafficking (albeit only against competitors of his Medellin Cartel patrons). The U.S. government only turned against Noriega, invading Panama in December 1989 and kidnapping the general once they discovered he was providing intelligence and services to the Cubans and Sandinistas. Ironically drug trafficking through Panama increased after the US invasion. (John Dinges, Our Man in Panama, Random House, 1991; National Security Archive Documentation Packet The Contras, Cocaine, and Covert Operations.)

1980s, CENTRAL AMERICA

The San Jose Mercury News series documents just one thread of the interwoven operations linking the CIA, the contras and the cocaine cartels. Obsessed with overthrowing the leftist Sandinista government in Nicaragua, Reagan administration officials tolerated drug trafficking as long as the traffickers gave support to the contras. In 1989, the Senate Subcommittee on Terrorism, Narcotics, and International Operations (the Kerry committee) concluded a three-year investigation by stating:

“There was substantial evidence of drug smuggling through the war zones on the part of individual Contras, Contra suppliers, Contra pilots mercenaries who worked with the Contras, and Contra supporters throughout the region…. U.S. officials involved in Central America failed to address the drug issue for fear of jeopardizing the war efforts against Nicaragua…. In each case, one or another agency of the U.S. govemment had intormation regarding the involvement either while it was occurring, or immediately thereafter…. Senior U S policy makers were nit immune to the idea that drug money was a perfect solution to the Contras’ funding problems.” (Drugs, Law Enforcement and Foreign Policy, a Report of the Senate Committee on Foreign Relations, Subcommittee on Terrorism, Narcotics and Intemational Operations, 1989)

In Costa Rica, which served as the “Southern Front” for the contras (Honduras being the Northern Front), there were several different ClA-contra networks involved in drug trafficking. In addition to those servicing the Meneses-Blandon operation detailed by the Mercury News, and Noriega’s operation, there was CIA operative John Hull, whose farms along Costa Rica’s border with Nicaragua were the main staging area for the contras. Hull and other ClA-connected contra supporters and pilots teamed up with George Morales, a major Miami-based Colombian drug trafficker who later admitted to giving $3 million in cash and several planes to contra leaders. In 1989, after the Costa Rica government indicted Hull for drug trafficking, a DEA-hired plane clandestinely and illegally flew the CIA operative to Miami, via Haiti. The US repeatedly thwarted Costa Rican efforts to extradite Hull back to Costa Rica to stand trial. Another Costa Rican-based drug ring involved a group of Cuban Amencans whom the CIA had hired as military trainers for the contras. Many had long been involved with the CIA and drug trafficking They used contra planes and a Costa Rican-based shnmp company, which laundered money for the CIA, to move cocaine to the U.S. Costa Rica was not the only route. Guatemala, whose military intelligence service — closely associated with the CIA — harbored many drug traffickers, according to the DEA, was another way station along the cocaine highway.

Additionally, the Medellin Cartel’s Miami accountant, Ramon Milian Rodriguez, testified that he funneled nearly $10 million to Nicaraguan contras through long-time CIA operative Felix Rodriguez, who was based at Ilopango Air Force Base in El Salvador. The contras provided both protection and infrastructure (planes, pilots, airstrips, warehouses, front companies and banks) to these ClA-linked drug networks. At least four transport companies under investigation for drug trafficking received US govemment contracts to carry non-lethal supplies to the contras. Southern Air Transport, “formerly” ClA-owned, and later under Pentagon contract, was involved in the drug running as well. Cocaine-laden planes flew to Florida, Texas, Louisiana and other locations, including several militarv bases Designated as ‘Contra Craft,” these shipments were not to be inspected. When some authority wasn’t clued in and made an arrest, powerful strings were pulled on behalf of dropping the case, acquittal, reduced sentence, or deportation.

1980s to early 1990s, AFGHANISTAN

ClA-supported Moujahedeen rebels engaged heavily in drug trafficking while fighting against the Soviet-supported govemment and its plans to reform the very backward Afghan society. The Agency’s principal client was Gulbuddin Hekmatyar, one of the leading druglords and leading heroin refiner. CIA supplied trucks and mules, which had carried arms into Afghanistan, were used to transport opium to laboratories along the Afghan Pakistan border. The output provided up to one half of the heroin used annually in the United States and three-quarters of that used in Western Europe. US officials admitted in 1990 that they had failed to investigate or take action against the drug operabon because of a desire not to offend their Pakistani and Afghan allies. In 1993, an official of the DEA called Afghanistan the new Colombia of the drug world.

MlD-1980s to early 199Os, HAITI

While working to keep key Haitian military and political leaders in power, the CIA turned a blind eye to their clients’ drug trafficking. In 1986, the Agency added some more names to its payroll by creating a new Haitian organization, the National Intelligence Service (SIN). SIN was purportedly created to fight the cocaine trade, though SIN officers themselves engaged in the trafficking, a trade aided and abetted by some of the Haitian military and political leaders.

William Blum is author of Killing Hope: U.S Military and CIA Interventions Since World War ll available from Common Courage Press, P.O. Box 702, Monroe, Maine, 04951

A girl accuses the officer who killed a 20-year-old Irishman during a recent burglary call.

A cop from Silverton who fatally shot an Irish national while making a burglary call two weeks ago was jailed early Sunday on charges that he sexually abused an underage girl.

The allegations surfaced Saturday, when a woman and her daughter dropped in to the Keizer police station, accusing Silverton officer Tony Gonzalez, 35, of sexually abusing the girl on multiple occasions.

Authorities declined to identify the girl, other than to say she was younger than 18. They provided no details about when or where the sexual incidents allegedly occurred.

Gonzalez was held on two counts of sexual abuse in the first degree, a felony that carries a 75-month minimum sentence, and three counts of third-degree sex abuse.

The officer remains on administrative leave from the Silverton Police Department pending the outcome of an investigation into the June 30 shooting of Andrew “A.J.” Hanlon. The 20-year-old Irishman, described by family members as mentally disturbed, had lived with his sister for about a year in the town east of Salem.

Gonzalez was responding to a burglary call when he spotted Hanlon, yelled a warning, then shot him to death. Authorities have declined to release details of the incident.

Hanlon’s brother-in-law, Nathan Heise, has said the young man had a habit of banging on their door when he wanted to be let in. Heise and his wife believe that Hanlon had mistakenly gone to the wrong house, startling the residents and prompting the call to police.

Marion County Deputy District Attorney Matt Kemmy, the prosecutor handling the official investigation of the shooting, said he expects to present the case before a grand jury in the next two weeks. That panel will decide whether the shooting of Hanlon was justified.

Kemmy, who suddenly found himself looking into the sex-abuse charges against Gonzalez on Saturday night, said the two cases are unrelated. It was happenstance, he said, that the girl stepped forward with her allegations against Gonzalez after news media carried accounts of Hanlon’s shooting.

“It will be more clear as time goes on,” he said, but the two cases “are independent.”

Silverton police declined comment Sunday about the allegations Gonzalez faces, but police are expected to issue a statement today.

Hanlon’s family, intrigued by news of Gonzalez’s arrest, referred comments about the development to their Portland lawyer, Kelly Clark.

“It would be odd to say this morning’s developments don’t change anything, because they raise all kinds of questions,” Clark said on Sunday. “But we just think now is not the time for us to be asking questions or making public comments.”

Hanlon’s family, which wept through his funeral in Silverton on Saturday afternoon, will wait until the district attorney’s office and Silverton police conclude their investigations of the young man’s shooting, Clark said.

“Let’s assume the officer is charged with some sort of a crime in the shooting of A.J.; that’s going to leave them — the family — with one set of reactions,” Clark said. “If nothing happens, or the response comes back that the authorities believe he was fully justified, then the family will be probably in a completely different frame of mind.”

Gonzalez was held for a little more than an hour in the Marion County jail early Sunday before he was taken to Polk County and booked into jail there.

“It was for his safety,” said Polk County communications supervisor Ian Wilson. “He had made arrests in that county and it wouldn’t be safe for him to be in Marion County Jail.”

Kemmy said he will file a district attorney’s information against Gonzalez today, which will formally charge him with sex abuse. The prosecutor said he expects to take the allegations before a grand jury sometime before July 22.

Gonzalez will be arraigned Tuesday in Marion County Circuit Court and “will not have an opportunity to make bail until arraignment,” said Marion County Sheriff’s Office Commander Jason Myers.

Fiji and Papua New Guinea have been added to a United States blacklist of countries trafficking in people.

The Tier Three blacklist is contained in the US State Department’s annual Trafficking in Persons report.

The report analyses efforts in 170 countries to combat trafficking for forced labour, prostitution, military service and other purposes.

Pacific correspondent, Campbell Cooney, says the report claims Fiji is a source country for children trafficked for sexual exploitation, and a destination for women from China and India for forced labour and exploitation.

It also claims Papua New Guinea is the destination for women and children from Malaysia, the Philippines, Thailand, and China for sexual exploitation in cities, towns and isolated logging and mining camps.

Remaining on the Tier Three list are Sudan, Syria, Algeria, Iran, Burma and Cuba, while Malaysia and Bahrain have been removed.

In introducing the report, US Secretary of State Condoleezza Rice said human trafficking deprives people of their human rights and dignity, and “bankrolls the growth of organised crime”.

“The petty tyrants who exploit their labourers rarely receive serious punishment,” she said.

“We and our allies must remember that a robust law enforcement response is essential.”

Meanwhile, the Netherlands has allocated $US2.5 million for the elimination of child labour in Papua New Guinea.

The National newspaper reports the funding is part of a 36-month program that also covers Kiribati, Samoa, Solomon Islands and Vanuatu.

PNG acting deputy secretary for Labour and Industrial Relations, Martin Kase, says the program will help determine the extent of child labour in the country.

He says current data is inadequate.

The US has been operating “floating prisons” for the detention of suspects held without trial in the so called “war on terror” in order to conceal their numbers and locations. An analysis of the operation of prison ships, set to be published this year by the human rights organization Reprieve, has been compiled from the statements of the US military, the Council of Europe and related parliamentary bodies, and the testimonies of prisoners themselves.

The Reprieve study includes the account of a prisoner released from Guantánamo Bay, who described a fellow inmate’s story of detention on an amphibious assault ship. “One of my fellow prisoners in Guantánamo was at sea on an American ship with about 50 others before coming to Guantánamo … he was in the cage next to me. He told me that there were about 50 other people on the ship. They were all closed off in the bottom of the ship. The prisoner commented to me that it was like something you see on TV. The people held on the ship were beaten even more severely than in Guantánamo.”

Clive Stafford Smith, Reprieve’s legal director, said: “They choose ships to try to keep their misconduct as far as possible from the prying eyes of the media and lawyers. We will eventually reunite these ghost prisoners with their legal rights. By its own admission, the US government is currently detaining at least 26,000 people without trial in secret prisons, and information suggests up to 80,000 have been ‘through the system’ since 2001. The US government must show a commitment to rights and basic humanity by immediately revealing who these people are, where they are, and what has been done to them.”

Reprieve says that the US may have used up to 17 ships since 2001. The report also claims there have been more than 200 new cases of rendition since President George Bush declared in 2006 that the practice had stopped.

The FBI has agreed to drop its demand that a San Francisco-based Internet library turn over subscriber information, according to court documents unsealed Monday. As part of a settlement, the FBI also agreed that its previously secret efforts could be publicized.

The bureau served the Internet Archive — whose Wayback Machine page allows viewers to see old versions of millions of Web pages — with a national security letter in November 2007, but under the terms of a settlement reached between the two in April, the FBI has withdrawn the letter and agreed to make most of its contents public.

Kurt Opsahl, a staff attorney with San Francisco’s Electronic Frontier Foundation who helped represent the archive, said he believes the victory is only the fourth successful challenge to a national security letter.

The FBI said the letter to the archive was part of a national security investigation and that they “permit the FBI to gather the basic building blocks for our counterterrorism and counterintelligence investigations,” according to a statement by Assistant Director John Miller.

The letters, often compared to subpoenas, don’t need approval from a judge and contain gag orders prohibiting their recipients from even speaking of their existence. The settlement in the Northern District federal court comes less than a year after New York District Court Judge Victor Marrero found national security letters unconstitutional, though his decision is under appeal.

“One of the most important victories here is that we can even say this letter was received,” said Opsahl.

The Internet Archive sued the FBI in December, arguing that the gag orders in the letters violate the First and Fifth amendments. The suit asked the court to find the letters unconstitutional and order the FBI to stop sending them.

After four months of negotiating, the FBI decided to settle, Opsahl said.

“The consequences [of litigating] would be that a second court would find that the statute was unconstitutional and that it was not applicable to libraries under this circumstance,” he said.

The use of national security letters has skyrocketed since 2001, according to the American Civil Liberties Union. A March 2007 report by the Department of Justice’s inspector general said the FBI issued more than 192,000 requests between 2003 and 2006.

In the letter served on the Internet Archive, the FBI sought the name, address and e-mail exchanges of a subscriber to the archive’s services. Opsahl said the archive only gave agents public information that they could have gotten themselves from the nonprofit’s Web site. He said the archive keeps a record only of registered patrons’ e-mail addresses.

Opsahl said that although the 2nd U.S. Circuit Court of Appeals, which is reviewing Marrero’s decision, will now have the most say over the constitutionality of national security letters, he hopes the Internet Archive’s challenge will encourage other groups to take on the FBI.

The archive agreed to redact portions of the letter, but the FBI must prove to Judge Claudia Wilken by Dec. 1 that those sections pose a national security threat, otherwise the entire document will become public. Among the still-secret contents are the name of the targeted subscriber, the name of the FBI agent pursuing the target and more specifics about the kind of information the agent was seeking.

Last Friday, three New York City police officers were acquitted for the killing of
23-year old Sean Bell, early in the morning on what was to be his wedding day, in
November of 2005. Bell’s 50-bullet murder sparked outrage in a city that is no
stranger to police brutality; the list of police killings of unarmed black men over
the years is long and familiar.

People like to treat police shootings as “tragic” isolated incidents, but the ugly
truth is that police officers inflict violence on black communities on a regular
basis. And they get away with it, time and time again. “When cops go on trial for
overuse of deadly force, their victims are generally young blacks and Latinos,” writes
one commentator. “The attorneys that defend them are top gun defense attorneys and
have had much experience defending police officers accused of misconduct. Police
unions pay them and they spare no expense in their defense. The cops rarely serve any
pre-trial jail time, and are released on ridiculously low bail.”

Bell, meanwhile, was handcuffed while mortally injured. Is this really what we call
“justice for all”?

The only surprising thing about the global food crisis to Jim Goodman is the notion that anyone finds it surprising. “So,” says the Wisconsin dairy farmer, “they finally figured out, after all these years of pushing globalization and genetically modified [GM] seeds, that instead of feeding the world we’ve created a food system that leaves more people hungry. If they’d listened to farmers instead of corporations, they would’ve known this was going to happen.” Goodman has traveled the world to speak, organize and rally with groups such as La Via Campesina, the global movement of peasant and farm organizations that has been warning for years that “solutions” promoted by agribusiness conglomerates were designed to maximize corporate profits, not help farmers or feed people. The food shortages, suddenly front-page news, are not new. Hundreds of millions of people were starving and malnourished last year; the only change is that as the scope of the crisis has grown, it has become more difficult to “manage” the hunger that a failed food system accepts rather than feeds.

We must rein in the global food giants who reap profits at the expense of the planet and the poor.

The current global food system, which was designed by US-based agribusiness conglomerates like Cargill, Monsanto and ADM and forced into place by the US government and its allies at the World Bank, the International Monetary Fund and the World Trade Organization, has planted the seeds of disaster by pressuring farmers here and abroad to produce cash crops for export and alternative fuels rather than grow healthy food for local consumption and regional stability. The only smart short-term response is to throw money at the problem. George W. Bush’s release of $200 million in emergency aid to the UN’s World Food Program was appropriate, but Washington must do more. Rising food prices may not be causing riots in the United States, but food banks here are struggling to meet demand as joblessness grows. Congress should answer Senator Sherrod Brown’s call to allocate $100 million more to domestic food programs and make sure, as Representative Jim McGovern urges, that an overdue farm bill expands programs for getting fresh food from local farms to local consumers.

Beyond humanitarian responses, the cure for what ails the global food system–and an unsteady US farm economy–is not more of the same globalization and genetic gimmickry. That way has left thirty-seven nations with food crises while global grain giant Cargill harvests an 86 percent rise in profits and Monsanto reaps record sales from its herbicides and seeds. For years, corporations have promised farmers that problems would be solved by trade deals and technology–especially GM seeds, which University of Kansas research now suggests reduce food production and the International Assessment of Agricultural Science and Technology for Development says won’t end global hunger. The “market,” at least as defined by agribusiness, isn’t working. We “have a herd of market traders, speculators and financial bandits who have turned wild and constructed a world of inequality and horror,” says Jean Ziegler, the UN’s right-to-food advocate. But try telling that to the Bush Administration or to World Bank president (and former White House trade rep) Robert Zoellick, who’s busy exploiting tragedy to promote trade liberalization. “If ever there is a time to cut distorting agricultural subsidies and open markets for food imports, it must be now,” says Zoellick. “Wait a second,” replies Dani Rodrik, a Harvard political economist who tracks trade policy. “Wouldn’t the removal of these distorting policies raise world prices in agriculture even further?” Yes. World Bank studies confirm that wheat and rice prices will rise if Zoellick gets his way.

Instead of listening to the White House or the World Bank, Congress should recognize–as a handful of visionary members like Ohio Representative Marcy Kaptur have–that current trends confirm the wisdom of the Institute for Agriculture and Trade Policy’s call for “an urgent rethink of the respective roles of markets and governments.” That’s far more useful than blaming Midwestern farmers for embracing inflated promises about the potential of ethanol–although we should re-examine whether aggressive US support for biofuels is not only distorting corn prices but harming livestock and dairy producers who can barely afford feed and fertilizer. Instead of telling farmers they’re wrong to seek the best prices for their crops, Congress should make sure that farmers can count on good prices for growing the food Americans need. It can do this by providing a strong safety net to survive weather and market disasters and a strategic grain reserve similar to the strategic petroleum reserve to guard against food-price inflation.

Congress should also embrace trade and development policies that help developing countries regulate markets with an eye to feeding the hungry rather than feeding corporate profits. This principle, known as “food sovereignty,” sees struggling farmers and hungry people and says, as the Oakland Institute’s Anuradha Mittal observes, that it is time to “stop worshiping the golden calf of the so-called free market and embrace, instead, the principle [that] every country and every people have a right to food that is affordable.” As Mittal says, “When the market deprives them of this, it is the market that has to give.”

China defended its use of the death penalty Tuesday, after an Amnesty International report said it carried out the most executions worldwide in 2007.

Chinese authorities executed at least 470 people last year but may have killed as
many as 8,000, according to a report by Amnesty International. The human rights
group says executions were often hidden and that on average China secretly executes
22 prisoners a day, with most killed by a gunshot to the back of the head or by lethal injection.

China responded to the report by saying it tightly controls the use of the death penalty and has no plans to abolish it.

“We have strictly controlled and taken a prudent attitude toward the death penalty to ensure that the death penalty only applies to a small number of criminals who commit serious crimes,” said Foreign Ministry spokeswoman Jiang Yu.

“Conditions are not right” to abolish the death penalty, said Jiang, adding that such a move wouldn’t be accepted by the Chinese people.

Amnesty International said some of the executions were for non-violent crimes such as tax evasion, smuggling and organizing prostitution.

While China’s total number of executions is down from 1,010 in 2006, Amnesty International warned the 2007 number could be higher because China considers death penalty data a state secret and doesn’t make the information public.

“The secretive use of the death penalty must stop: the veil of secrecy surrounding the death penalty must be lifted. Many governments claim that executions take place with public support. People therefore have a right to know what is being done in their name,” said Amnesty International.

Activists have used protests against the Olympic torch relay to draw attention to China’s human rights record, including a recent crackdown in Tibet.

The report said 88 per cent of all known executions took place in five countries:

* China (at least 470).
* Iran (at least 317).
* Saudi Arabia (at least 143).
* Pakistan (at least 135).
* U.S. (42).

Saudia Arabia carried out the most executions per capita, while Iran, Saudia Arabia and Yemen violated international law by executing people younger than 18, said the report.

The organization said at least 1,252 people were executed in 24 countries. Around the world, up to 27,500 people are estimated to be on death row.

“The International Monetary Fund (IMF) said on Wednesday … [that] the global slump could prove worse than predicted. There is a one-in-four chance that a global recession — seen when world economic growth falls below 3.0 percent — will ensue, it said.

“‘The financial market crisis that erupted in August 2007 has developed into the largest financial shock since the Great Depression,’ it said.

“Latin America and countries linked to the plummeting U.S. dollar will be hardest hit as the U.S.-led
slump spreads around the globe, the IMF said.

“Rapidly growing emerging economies, such as China and India, will suffer the least pain, it said.
However, even they will feel a sting as rich countries cut their imports.”

Economist Dean Baker has said that he could see average American incomes fall by as much as 40 percent before we hit bottom.

The Jubilee Act, a bill currently moving through Congress, would extend debt
cancellation to 67 low-income countries, provided they demonstrate plans to spend the
money wisely on poverty reduction programs.

Despite debt relief agreements in 1999 and 2005, countries of the Global South continue
to spend $100 million every day to pay foreign debts, often incurred by undemocratic
governments and under unfair lending practices. In 2005, Mexico spent $44 billion to
service debt, more than the entire budget allocated for education. Such a tremendous
outflow of money to rich countries clearly contradicts the international community’s
commitment to end poverty. Instead, debt payments limit a country’s ability to create
opportunities for people to live the lives they choose at home and force millions to
migrate in search of work.

Debt cancellation stimulates economies. For example, Uganda has invested its 2006 debt
relief savings of $57.9 million in primary education, healthcare and infrastructure
upgrades. Newly available resources can also support agricultural advancements and
other critical economic development projects. Greater economic prospects result from
debt cancellation and fair economic policies

MANAGUA, Nicaragua — At a secret location somewhere in Nicaragua, shoulder-fired missiles capable of taking down a jetliner lie behind heavy fencing and locked double doors.

The missiles are dangerous artifacts of another era, a time before the end of the Cold War, when the Soviet Union fed arms to Marxist Sandinistas then in power, and the United States surreptitiously countered by organizing and arming an anti-Sandinista force known as the contras. The bloody conflict between the Sandinistas and contras during the 1980s is long gone, but the Soviet weapons remain, locked in a kind of limbo between Nicaragua and the United States, which fears the missiles could fall into the hands of terrorists.

Nicaraguan President Daniel Ortega, a former Sandinista rebel, has proposed exchanging the missiles for medical supplies, an offer that a U.S. State Department official, speaking on condition of anonymity, called “unprecedented.” Paul A. Trivelli, the U.S. ambassador to Nicaragua, immediately pronounced the offer “very good.”

But the deal hasn’t happened, and since Trivelli’s initial remark, U.S. officials have been reluctant to speak publicly on the matter. The reasons, some Nicaraguan and American observers say, are that the proposal has not been put on paper and that suspicions remain in both countries that Ortega — who frequently taunts the United States — might be luring the Bush administration into an embarrassing diplomatic trap by making a complex offer that might never come to fruition.

“Ortega’s going to go around six months to a year from now and be able to say, ‘We made this generous offer and the U.S. ambassador came out the next day and said ‘great idea,’ and what have we gotten for it?’ ” said Eduardo Gamarra, director of the Latin American and Caribbean Center at Florida International University. “Yes, he’s playing them.”

Manuel Coronel Kautz, Nicaragua’s vice minister of foreign relations, said in an interview that “Daniel Ortega has never made a proposal that wasn’t serious.”

American officials have been pressing Nicaragua for several years to get rid of its stockpile of more than 1,000 shoulder-fired, anti-aircraft missiles — one of the largest caches in the Western Hemisphere outside the United States. Ortega is offering to destroy 651 of his nation’s missiles, while keeping 400 that his military advisers say are necessary to maintain a balance of power with other Central American nations. Still, the destruction of more than 600 missiles would be a major coup for U.S. diplomats, and more than 22 times the number of missiles the United States helped destroy in Bolivia in 2005.

The diplomatic push to destroy Nicaraguan missiles is part of a worldwide effort that has led to the destruction of 17,000 shoulder-fired missiles in the past five years, according to State Department figures. More than 1 million of the weapons have been manufactured in countries around the world, including the United States, and while many of those have been destroyed, no one knows how many are still in circulation.

The campaign to eradicate missiles gained momentum after a 2002 attack in which two SA-7 missiles nearly struck an Israeli airliner in Mombasa, Kenya, and again after a 2003 strike on a cargo plane in Iraq that caused damage but no fatalities.

The following year the United States, concerned that the Nicaraguan missiles were vulnerable to theft, began paying to build a facility to store them. The missiles that American officials want to destroy are now kept in state-of-the-art bunkers that cost the United States $130,000 for construction and staff training, according to a State Department source. The United States also has funded weapons storage facilities in Cambodia and Bosnia, the source said.

Ortega offered to exchange missiles for medical supplies on July 31, saying “this won’t be a gift, but simply a barter with them.” Ambassador Trivelli, who declined multiple requests through a spokeswoman to be interviewed, told Nicaragua’s La Prensa newspaper that he would pass the offer along to U.S. authorities “with great pleasure.”

The offer has puzzled some in Nicaragua, particularly because Ortega has spent the ensuing weeks bashing the United States and trading broadsides with Trivelli in the Nicaraguan press. On Aug. 13, Ortega called the Sept. 11, 2001, terrorist attacks “insignificant” compared with the U.S. nuclear attacks on Hiroshima and Nagasaki during World War II. Trivelli said Ortega’s remark was “disappointing.”

Ortega lost the Nicaraguan presidency in 1990 after 11 years in office, then staged a comeback in last year’s presidential election, winning the top job in the Western Hemisphere’s second-poorest nation. Some U.S. officials believe that Ortega’s antagonistic rhetoric is an attempt to appeal to his left-leaning base and that his actions behind the scenes are much less hostile.

“This offer is an encouraging sign,” Avil Ramarez Valdivia, a former Nicaraguan defense minister who now heads an American chamber of commerce in Managua, said in an interview. “Ortega needs a justification for turning over the missiles, and the medicine deal could be it.”

A former Nicaraguan official who has been involved in past missile negotiations said the only way he could see the deal working would be if the Bush administration slipped additional money into an aid program, such as the U.S. government’s Millennium Challenge Corp., without openly admitting a quid pro quo.

Political posturing aside, the Nicaraguan leader might have the biggest incentive to make the missile deal happen, said Roger F. Noriega, the former top Western Hemisphere official at the State Department.

“If they get into the wrong hands,” Noriega said, “he’s going to be the one held accountable.”

MONKEY POINT, Nicaragua — The second military helicopter in as many days hovered over the jungle and then landed to a most unwelcome reception from several dozen angry Rama Indian and Creole villagers.

Rupert Allen Clear Duncan, a leader of some 400 Creole who live along the shoreline, confronted the foreigners dressed in suits and military uniforms that day in March and demanded to know the purpose of their aerial trespasses.

“This is our land; we have always lived here, and you don’t have our permission to be here,” Duncan spat, when refused the courtesy of an explanation.

Not until Duncan threatened to have his machete-waving followers damage the aircraft did they learn that some of the men were from the Islamic Republic of Iran and had come promising to establish a Central American foothold in the middle of their territory.

As part of a new partnership with Nicaragua’s Sandinista President Daniel Ortega, Iran and its Venezuelan allies plan to help finance a $350 million deep-water port at Monkey Point on the wild Caribbean shore, and then plow a connecting “dry canal” corridor of pipelines, rails and highways across the country to the populous Pacific Ocean. Iran recently established an embassy in Nicaragua’s capital.

In feeling threatened by Iran’s ambitions, the people of Monkey Point have powerful company. The Iranians’ arrival in Nicaragua comes as the Bush administration and some European allies hold the threat of war over Iran to force an end to its uranium enrichment program and alleged help to anti-U.S. insurgents in Iraq.

What worries state department officials, former national security officials and counterterrorism researchers is that, if attacked, Iran could stage strikes on American or allied interests from Nicaragua, deploying the Iranian terrorist group Hezbollah and Revolutionary Guard operatives already in Latin America. Bellicose threats by Iran’s clerical leadership to hit American interests worldwide if attacked, by design or not, heighten the anxiety.

“The bottom line is if there is a confrontation with Iran, and Iran gets bombed, I have absolutely no doubt that Iran is going to lash out globally,” said John R. Schindler, a veteran former counterintelligence officer and analyst for the National Security Agency.

“The Iranians have that ability, particularly from South America. Hezbollah has fronts all over Latin America. That is not new. But it’s certainly something we’re starting to care about now.”

American policymakers already had been fretting in recent years over Tehran’s successful forging of diplomatic relations, direct air routes and embassy swaps with populist South American governments that abhor the U.S., such as President Hugo Chávez’s Venezuela, Bolivia and Ecuador. But Iran’s latest move places it just a few porous borders from Texas, where illegal Nicaraguan laborers routinely travel…

This is a special problem for small islands that have served as
military bases for the major powers. . . . When such bases are
abandoned or returned by the United States military services there is
a unique problem — the terms and conditions under which the local
country is assisted or endemnified for environmental or toxic
problems being left behind are NOT set by US Government law or
general regulation, but by negotiated agreements reached by the
military commander AT THE BASE at the time of closure. This form of
plausible deniability allows the US Government to say that they fully
comply with the law (there isn’t any!), and that the local host
government is in full agreement with the arrangements made.

Dumped chemical weapons missing at sea

THE last thing you might expect to encounter exploring the ocean
floor is a chemical weapon. But it seems hundreds of thousands of
tonnes of them have been dumped into the sea, and no one knows
exactly where the weapons are. Now, scientists are calling for
weapons sites to be mapped for safety’s sake.

Between 1946 and 1972, the US and other countries pitched 300,000
tonnes of chemical weapons over the sides of ships or scuttled them
along with useless vessels, according to public reports by the Medea
Committee, a group of scientists given access to intelligence data
so they can advise the US government on environmental issues.

But the military have lost track of most of the weapons because of
haphazard record keeping combined with imprecise navigation. Even
the exact chemicals were not always noted, though there are records
of shells, rockets and barrels containing sulphur mustard and nerve
agents such as sarin.

The Chemical Weapons Convention does not cover the destruction of
the sea-dumped weapons, which are considered abandoned. “There’s no
piece of legislation or treaty that deals with this stuff,” says
Peter Brewer, an ocean chemist at the Monterey Bay Aquarium Research
Institute in Moss Landing, California. “It’s in limbo.”

If the chemicals leak from their containers, they will break down
slowly in the cold seawater. But it is unclear what will happen if
the chemicals bind to sediment or sink into anoxic zones, says
Brewer (Environmental Science and Technology, vol 42, p 1394).

A team led by Roy Wilkens at the University of Hawaii in Manoa is
planning to look for munitions dumped off the island of Oahu.
Records only note that the weapons were dumped about “five miles
south of Pearl Harbour”. Finding them will involve a search of 60
square kilometres, says Wilkens.