OurFuture.org Blogs: Philip Palij

Electric Cars, Jobs and Re-election Of Mayor Virg Bernaro

Philip Palij — Fri, 09 Oct 2009 13:32:48 -0700

Here are two contrasting messages about the future, The first illustrates the French vision and action implemented through the Nissan-Renault alliance. Next the Mayor of Lansing in Michigan appeals for support in his re-election as Mayor of Lansing. He wants to keep American jobs in the US by highllghting the expansion of Ford into China.

Electric Cars From Green Chip Review

The future of electric cars got a nice boost last week when the French government announced that it would spend about $2.2 billion to create a network of battery charging stations for electric cars. One million charging stations will be built under the plan by 2015, with 90% of them in private homes and the rest in parking lots and other sites. Additionally, all apartment buildings with parking lots will be required to install the charging stations after 2012, and all office parking lots must install them by 2015. This should result in a total of four million charging points by 2020.

The new charging network will support France's goal of putting two million electric and hybrid cars on the road by 2020. Currently, the country has only a few thousand such vehicles. To jump-start their deployment, the government will give carmaker Renault €125 million to develop of a new battery manufacturing plant and a €150 million loan to build an electric car factory. Another €100 million will be made available for other electric carmakers. Fleet orders for electric vehicles are expected to reach 100,000 units by 2015.

It's a far more ambitious plan than Cash for Clunkers, and will deliver a lot more bang for French buck.

In partnership with Nissan, Renault is planning to invest €4 billion in electric vehicle technology. Renault also has an agreement with Better Place to build at least 100,000 electric cars for Israel and Denmark by 2016, using the latter's battery switching technology.

The plan comes on the heels of a new commitment by the French government to spend $10 billion on freight transport by rail. If you saw my article last week, you'll know that I believe investing in rail is the smartest strategy governments can pursue to address the peak oil threat.

Though it pales in comparison, the best recent news on electric vehicle deployment in the U.S. was that Nissan will deploy 5,000 of its Leaf EV cars and 12,750 charging stations in Oregon, Arizona, California, Tennessee, and Washington by 2012 under a program sponsored by the Department of Energy. Hopefully, the results will speak for themselves and lead to a much larger rollout of EVs in America.

Friends and fellow supporters of American manufacturing, An appeal for re-election from Mayor Virg Bernaro, Lansing, Michigan

Last month Ford announced plans to build a new $490 million assembly plant in China, it's third in the country. Too many of our jobs, along with our standard of living, are being shipped overseas. We need to bring manufacturing back to the US and put the "P" back in GDP. A country cannot succeed if it only consumes and does not produce anything. But the United States cannot produce things and compete in a free trade global economy when our trade partners are allowed to exploit their land and their people.

We need our leaders in D.C. to take a stand for American jobs and American manufacturing by demanding fair trade policies rather than free trade policies. And in the mean time Virg on FOX Businesswe need to get back to buying American-made products even when they may cost a little more.

As the mayor of a city dependent on manufacturing and the auto industry I feel it is my duty to speak out for American workers. Just a few days ago I went on FOX Business again to discuss Ford's new Chinese assembly plant. Check out the clip here

The fight for American manufacturing and American jobs is extremely important to me. I want to continue this fight, but I need your help. My position as Mayor of Lansing, Michigan has allowed me to speak out and organize the Mayors & Municipalities Automotive Coalition so we can advocate together for American jobs and families.

I'm currently nearing the homestretch of my campaign for re-election. On November 3rd Lansing voters will decide if I will lead them for another term. I'm campaigning hard because I love serving as the Mayor of Lansing and I want to keep fighting for the people of Lansing and American workers all over this country.

Please consider contributing to my campaign and helping me keep my job for four more years. In return, I vow to keep fighting for American manufacturing so thousands of Americans can keep their jobs.

Thank you for your support in this fight - I will not stop fighting for American jobs and families!

For America's Future,

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Ford's decision does need to be questioned. The Chinese market for cars is four times larger than the US so it makes sense to be investing in that market with an eye on potential profits in the future. But what is their strategy for the existing American market and jobs. If it turns out that American capacity is reduced by importing Chinese cars from its new plants in China then what is going to happen to American manufacturing?

And indeed its future

ACLU, Sincerely

Philip Palij — Sat, 03 Oct 2009 01:16:47 -0700

Ever wondered what the ACLU gets up to? I have taken the liberty of posting their newsletter under my name, forgive me but you will see why.

Phil

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ACLU Online
October 2, 2009
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In This Issue:

Do You Read Banned Books?

It's Time to Reform the Patriot Act

Obama Administration Will Not Seek Indefinite Detention Legislation

New State Secrets Policy: Like the Fox Guarding the Henhouse

ENDA Hearing Marks a Momentum-Boosting Turning Point

Fighting for Free Speech at the G20 Summit in Pittsburgh

Law & Order Tackles Accountability for Torture. Will We Have It in
Real Life?

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Do You Read Banned Books?

What do The Grapes of Wrath, Little Red Riding Hood, Webster's Ninth
New Collegiate Dictionary and Playboy have in common?

Every one of these works has been censored somewhere in the United
States. Censorship comes in many forms. Whenever a school board
librarian, newspaper editor, politician, or store owner tries to take
away your right to decide what you want to see, hear or read, that is
censorship.

In honor of Banned Books Week, which ends to tomorrow, October 3, take
our quiz to see which of the following classic novels of the 20th
century have also been banned or challenged.
http://action.aclu.org/site/R?i=1g00HPZKVu-C4LMEC7_LFw..

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It's Time to Reform the Patriot Act

Three provisions of the USA PATRIOT Act are set to expire on December
31, 2009. These impending sunsets are a perfect opportunity for
Congress to re-assess the government's unchecked spying powers
and to make crucial changes to ensure that innocent Americans'
most private information will remain just that -- private. The Senate
Judiciary Committee just marked up a bill that would amend the Patriot
Act and the NSL statute on Thursday. Legislation to reform the Patriot
Act is moving fast. Let your members of congress know that you support
bold action on Patriot Act reform.
Take Action: Please contact your members of Congress right now
and tell them it is high time to reform the PATRIOT Act and do away with overbearing surveillance policies.
http://action.aclu.org/site/R?i=E9GwyXItjpwV9xk8qUEysA..
Learn more about the Patriot Act.
http://action.aclu.org/site/R?i=8mky4XQLtUo_gUJXQ3Ug5A..
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Obama Administration Will Not Seek Indefinite Detention Legislation

It was reported last week that the Obama administration will not seek
legislation or issue an executive order to institute a system of
indefinite detention without charge or trial which would have made it
more permanent and harder to end. According to the reports, the
administration backed away from seeking legislation because it
believes the federal government already has the power to detain
terrorism suspects indefinitely under the congressional resolution
passed after 9/11 authorizing the president to use force against Al
Qaeda and the Taliban.

This isn't the end of this issue by a long shot. The U.S. is
still holding people without charge at Guantánamo Bay, and it's
critical that once the prison camp is closed, the administration does
not continue to indefinitely imprison detainees elsewhere for
terrorism crimes. The ACLU has filed a lawsuit seeking more
information about indefinite detention at Bagram Air Force Base which
could become the new Guantánamo -- except with more prisoners, in
harsher conditions, and no access to lawyers.

"While the Obama administration is wise not to seek legislation or
issue an executive order that would formalize an unconstitutional
system of indefinite detention, it remains deeply troubling that the
administration continues to maintain a de facto system in which
detainees are held indefinitely without charge or trial,"
commented Anthony D. Romero, ACLU Executive Director.

Locking people up indefinitely without charge or trial violates our
most fundamental laws and values. The American system of justice
demands that we don't simply imprison people when they are suspected
of a crime; we try them in a court of law where real justice can be
achieved without compromising fundamental rights.
Last week, the ACLU filed a lawsuit seeking more information about the
indefinite detention and treatment of detainees at Bagram Air Force Base, which could become the next Guantánamo -- except with more
prisoners, in harsher conditions, and no access to lawyers. Learn more.
http://action.aclu.org/site/R?i=QHcnJwR1G7qRtT6Z3lkRHw..

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New State Secrets Policy: Like the Fox Guarding the Henhouse

Months after Attorney General Eric Holder said he would release the
Obama administration's new policy on the use of the state
secrets privilege, it's finally out. The thrust of the new rule:
Holder must approve any invocation of the privilege.

Unfortunately, that's not much different from the Bush
administration's policy, which was to invoke the privilege to
terminate entire lawsuits at the outset.

Ben Wizner, staff attorney with the ACLU National Security Project,
filed two cases challenging the CIA's extraordinary rendition
program. In the first case, brought on behalf of Khaled el-Masri, the
district court and appeals court both accepted the government's
state secrets claim, and the Supreme Court refused to hear the case.
In the second case brought against Boeing subsidiary Jeppesen
Dataplan, the district court sided with the government when it invoked
the state secrets privilege, but the appeals court reversed that
decision. The Department of Justice is now asking the appeals court to
rehear the case before a full panel of judges.

"On paper, this is a step forward. In court, however, the Obama
administration continues to defend a broader view of state secrets put
forward by the Bush administration and to demand that federal courts
throw out lawsuits filed by victims of torture and illegal
surveillance," said Wizner. "In recent years, we have seen
the executive branch engage in grave human rights violations, declare
those activities 'state secrets,' and thus avoid any
judicial oversight or accountability. It is critical that the courts
play a meaningful role in deciding whether victims of human rights
abuses will have an opportunity to seek justice. Real reform of the
state secrets privilege must affirm the power of the courts to reject
false claims of 'national security."

Real reform must start in Congress. House and Senate bills were
introduced a few days after DOJ lawyers invoked the state secrets
privilege before the 9th Circuit in our Jeppesen case.
Take Action: It's time for Congress to reassert its role
as a check on executive power. Without state secrets legislation, we'll only have more secrecy and less accountability.
http://action.aclu.org/site/R?i=2l5nhO5A-Kc7Gi2MZxZrfQ..

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You Are Invited: Reckoning with Torture

Writers, artists and others read from recently released secret
documents -- memos, declassified communications, and testimonies by
detainees -- in a public event to promote awareness of acts of torture
and abuse carried out by the U.S. since 9/11.

Featuring special guests: Matthew Alexander, former senior military
interrogator; Jack Rice, former CIA special agent and operations
officer; and Amrit Singh, former ACLU attorney who litigated post 9/11
abuse cases and Senior Legal Officer for the National Security and
Counterterrorism Program at the Open Society Justice Initiative; with
a special presentation by artist Jenny Holzer.

WHEN: Tuesday, October 13 at 7 p.m.
WHERE: The Great Hall, Cooper Union, 7 East 7th Street at Third
Avenue, NYC
TICKETS: $15/$10 for PEN/ACLU Members & Students with valid ID.
Learn more about this event and how to purchase tickets.
http://action.aclu.org/site/R?i=BSzQYOapgKpvQjcjAP5afw..
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ENDA Hearing Marks a Momentum-Boosting Turning Point

Last week, the House Education and Labor Committee held a hearing on
the recently introduced Employment Non-Discrimination Act (H.R. 3017).
This legislation, which now has the bipartisan support of 181 members
of the House of Representatives, would prohibit employment
discrimination against people based on their sexual orientation (which
remains legal in 29 states) and gender identity (which remains legal
in 38 states). The legislation will provide sorely needed and long
overdue federal protection for lesbian, gay, bisexual, and transgender
(LGBT) individuals, who unfortunately still face widespread employment
discrimination.

If the huge line of people attempting to get into the hearing was any
indication, this legislation has certainly generated a lot of interest
on the Hill. From the outset, it was apparent just how far the
momentum had swung to those who support the passage of this critical
legislation.

Representative Tammy Baldwin (D-Wisconsin), one of just three openly
gay Members of Congress, spoke with pride about how Wisconsin was the
first state, in 1982, to ban employment discrimination based on sexual
orientation. Additionally, in her testimony in support of ENDA, she
specifically cited the ACLU's 2007 report entitled
"Working in the Shadows: Ending Employment Discrimination for
LGBT Americans."

There is a very strong possibility that the full House of
Representatives will soon be voting on ENDA, and then it will go to
the Senate which already has 40 co-sponsors for its bill. Please
contact your representative and senators and urge them to support this
common sense legislation. Fundamental fairness demands nothing less!
Take Action: Urge Congress to support the Employment
Non-Discrimination Act. http://action.aclu.org/site/R?i=D3Pq6-GwuPmP9DcskD3VwA..

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Fighting for Free Speech at the G20 Summit in Pittsburgh

After the ACLU successfully sued to force the city of Pittsburgh to
allow several groups to hold demonstrations around the G20 Summit, it
seemed that free speech would prevail in the Steel City.

Unfortunately, that was not the case. Following the court ruling, the
Pittsburgh police department engaged in a pattern of harassment of G20
demonstrators, singling out the Seeds of Peace Collective, one of
several groups providing food support to the protestors.

The police repeatedly tried to intimidate members of the collective,
citing them with minor traffic violations, illegally searching their
bus, towing their legally parked bus, detaining and charging members
walking home with loitering, repeatedly demanding identification, and
pressuring private property owners to rescind their permission for the
collective to park its bus.

Despite evidence of systematic harassment, a federal judge refused to
grant a temporary injunction to stop the harassment in a second
lawsuit.

The ACLU and the National Lawyers Guild dispatched over 150 legal
observers to monitor law enforcement's treatment of the
protestors throughout the week.
Learn more about the ACLU and the G20.
http://action.aclu.org/site/R?i=Ec3WLO9m14--pDJl_HRxRA..
Read The New York Times blog post about the G20 protests, which includes a
video featuring an interview with ACLU-PA Legal Director Vic Walczak. http://action.aclu.org/site/R?i=nmsofEzRCxRu9Q8p2aZWPw..

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Law & Order Tackles Accountability for Torture. Will We Have It in
Real Life?

"Jack, you want to prosecute a member of the Bush administration for
assaulting suspected terrorists?"

"The word is 'torturing.' And yes -- it's about time
somebody did."

If you watched Law & Order last week, you saw that the "Jack"
laying down the gauntlet on accountability for torture is veteran
district attorney Jack McCoy. What McCoy understands is that in
America, the rule of law applies to everyone. No one is above the law,
not even (and some might say especially) the most powerful.

In this fictionalized but typically "ripped from the headlines"
episode, McCoy decides to prosecute an author of a Justice Department
legal memo authorizing torture, as well as his co-conspirators up the
chain of command, including Vice President Cheney.

In real life, there has yet to be an investigation into the high-level
authorization of torture, a crime that has stained the reputation of
our nation at home and abroad.

Last month, Attorney General Eric Holder appointed a special
prosecutor to conduct a preliminary review into whether federal laws
were violated in connection with the interrogation of some specific
detainees. It was a good first step and a positive sign given
President Obama's commitment to "looking forward" at the
unfortunate expense of enforcing the law. But a narrow investigation
limited to interrogators and contractors in the field is woefully
inadequate.

Last Friday's Law & Order episode, through its script, takes
on the need to look ourselves squarely in the eye. "It's
hypocritical to defend our values with torture," says the retired Army
captain. Toward the end of the episode, the assistant D.A. declares,
"[I]t is not disloyal to hold our officials to the highest standards
of conduct."

Indeed. In fact, it is the epitome of loyalty and patriotism to do so.
Now the question is, in real life, will Attorney General Holder rise
to the occasion?
Learn more accountability for torture.
http://action.aclu.org/site/R?i=ADIhvKyHreYdr2TrdR40ew..
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Hybrid Technology and A Foolish Tax Code

Philip Palij — Tue, 23 Jun 2009 16:32:00 -0700

The Alternative Energy website is American it brings to the attention of the public articles on research and development into advances in the thinking and science behind the energy sources of tomorrow. In an article on using the braking of a car to decrease fuel consumption the readers comments are as fascinating as the article itsef. They look at whats happening in Europe and think about why American companies would choose to do such research, development and manufacturing abroad.

A couple of commentators home in on a wicked tax code that impedes the development of ideas in the US and the absence of any policy to address this in Obama's stimulus package. If you browse the site you will come across a multitude of bright ideas and initiatives and you have to wonder why they are in the slow lane to fruition.

Progressives on this site have been talking about tax incentives to move jobs abroad in the service sector and manufacturing. here is a snapshot of what this deflationary policy means in practice.

Article: More Efficient Hybrid Vehicles

If we can control the excess carbon emissions from fossil fuels we can control the global warming to a great extent. When we start our cars and apply brakes using combustion engines we use generous amount of fossil fuel and the carbon emission too is in the direct proportion of the amount of gas used. Now researchers are trying to concentrate on two points: starting a combustion engine and applying breaks. If we start using hybrid cars that use electricity for breaks and then run on fossil fuel for the rest of your journey then we will be able to reduce the emitted carbon quantity. Now companies are paying heed to the green consumers and launching hybrid cars in the market. They produce less pollution.

Toni Font, a recent graduate of the Escola Tècnica Superior d’Enginyers Industrials de Barcelona (ETSEIB) proposed a way to make hybrid vehicles more efficient. They are supposed to reduce fuel consumption by 67%. Toni Font’s proposal focuses on the drawbacks of the conventional mechanism of breaks. While we are driving a fossil fuel car and apply breaks on and off we see the loss of kinetic energy. This act of ours results in very high fuel consumption. So it follows the GIGO principle here, though not exactly the garbage in and garbage out sort of way, but high fuel consumption results in more carbon emissions. Toni Font has focused on solving this problem. He is working under the supervision of Ramon Costa who is the lecturer at the Department of Automatic Control (ESAII). Ramon Costa shares his outlook, “The project modifies the structure of conventional cars to introduce elements that help to recover lost energy and re-inject it into the system. It is made up of two parts: one related to hardware components, and one to software components”.

The whole mechanism is governed by software and the installation of a supercapacitor battery. The supercapacitators assist the battery. Supercapacitators regulate the current peaks. They put a stop to current peaks because that weaken the performance of the battery and also reassign the remaining energy. The software visualizes four operational approaches for the vehicle, which depend on the propulsion system. This technology goes easy on our pockets as we use less fuel and reduces CO2 emissions. In a standard driving cycle, the modifications lead us to 67% less fuel consumption and that will result in 63% less energy consumption than a usual vehicle of the same size with no hybrid apparatus. In addition, it uses 55% less energy than a standard hybrid vehicle.

Toni Font speaks about the possible applications of his proposal, “It could be used in sectors related to energy generation and management that aim to work in the most sustainable and efficient way possible. It could also be applied to the areas of the transport sector that use petrol and diesel motors”.

As a result of this research, Toni Font has received one of the six research grants that Ferrari will award in 2009, in the category of CO2 emissions reduction.

5 Responses to “More Efficient Hybrid Vehicles”

ARGale:

June 23rd, 2009

This isn’t about today’s topic but rather the Electric/Hybrid market in general:

1. Why are we (American inventors, manufacturers, etc.) exporting our talent, ideas and futures instead of producing product here? Ford has announced 2 products that we need and also announced that neither of them will be here! First a small high-efficiency diesel and second a PHEV (?) Escape.

2. When the Stimulus(?) bill was drafted it originally contained a provision/requirement that Stimulus projects use/employ American parts. materials and labor. This was objected to bu the rest of the world. Yesterday China released their declaration, within China, that they required Chinese projects/buyers to buy Chinese! What is the difference - other than being obviously two-faced? (China, not us, or maybe us too?)

We can not borrow our way to prosperity. Neither can we get there on “Service Economy” like we have been told we are doing (then outsource those services also!) It is time we woke up and started seriously recovering our manufacturing base that was once the shining star of the industrial world.

ARGale:

June 23rd, 2009

It seems to me that there are 2 types of hybrid-electric vehicles out there now. One uses an electric motor directly connected to a transmission and the other uses an electric motor mounted to the crankshaft of the gas/diesel engine. The one using the directly connected motor can provide electric-only drive and subsequently uses dynamic (electric) braking as a matter of course. The other can’t easily do that since it needs to brake the gas engine, which is not an efficient way to brake the vehicle unless it uses a manual transmission, which they don’t.

What is it about this “new” idea that is not being done?

Stan:

June 23rd, 2009

ARGale

In case you did not notice, the inventor is from Barcelona, not the US. Cheers.

Kyra:

June 23rd, 2009

I agree with what your saying but 2 wrongs don’t make a right.

Tom G:

June 23rd, 2009

To ARGale:

Not sure this will answer your question but as I understand the tax code - tax incentives are provided to companies who manufacture products outside the U.S. There are also trillions of dollars sitting in overseas accounts [some as the result of the tax code] and nothing in the stimulus has changed this tax benefit that I am aware of. Of course I haven’t read the whole 12,000 pages of the stimulus package either LOL

Historically I believe this all started in the late 80’s or early 90’s when we were all told that it was o.k. for us to become a society of consumers and not manufacturers. Our exports were at the time almost enough to level the playing field. I also think part of the reason was that a lot of people didn’t want all that dirty manufacturing stuff around. Even today just try and get a manufacture plant built in the U.S. If my memory hasn’t completely left me I believe there was a small token effort in 2008 or early 2009 to change some of the tax code to bring home some of the trillions of dollars held in foreign banks but the effort died in committee and I am sure you can guess why LOL

p.s. and yes the use of caps to level the energy profile of hybrids is an excellent idea. They can be charged and discharged almost instantaneously.

Have a great day

tomgarven

There are several points to note here.

Firstly a plausible technical solution exists which has uses far beyond the car and auto industry itself. If combined with other really excellent ideas provide real world cost effective alternatives.
Secondly the commentator highlights a disconnect between the policies of government and the development of new technology on a scale and urgency commensurate with the urgency of the US financial and manufacturing crises.
Thirdly the losers in this scenario if such technology is not developed and introduced in the US, from a US perspective, are the workers and owners of genuine manufacturing businesses along with real investors in the manufacturing economy. An opportunity lost and the economy shrinks.
Fourthly The winner in the scenario is the status quo. If all these bright ideas never see the light of day, Oil, Coal, Nuclear and the international finance lobby win. A formidable alliance.

Brilliant technology does exist. This article and its comments highlight the structural flaws in American policy, largely created and maintained by an over mighty carbon based corporate lobby, which prevents technological advancement. and has retarded the US Economy

The decision to adopt new technology is political as is the decision to ignore it, obfuscate it, rubbish it and let it rot in patent offices also the decision to finance research, development and manufacturing abroad.

Adoption of new energy alternatives has vast geopolitical implications,

How can the US justify a Trillion dollar 'defense' force to start illegal wars in pursuit of oil? What would happen to the US's strategic oil alliances if oil were obsolete? What would happen to the trillions of dollars invested in the ground by big oil, coal and nuclear. This all has profound implications for America and its place in the world

New technology is challenge to the status quo, they know it.. Who was it who said "Turkeys don't vote for Christmas?"

Italian/Swiss Border: GDP Of Indiana State ($134 Billion)Found In Briefcase

Philip Palij — Wed, 17 Jun 2009 15:46:33 -0700

I came across a story on the Japan Today Website "2 Japanese carrying $134 bil worth of U.S. bonds detained in Italy".

My dormant righteous anal rectitude piqued I tried to put that figure into human terms and figure out what it all means.

First from Japan Today

2 Japanese carrying $134 bil worth of U.S. bonds detained in Italy

Thursday 11th June, 06:18 AM JST

ROME —

Two Japanese nationals were detained by Italian financial police last week after trying to enter Switzerland with $134 billion worth of undeclared U.S. bonds, mostly Treasury bonds, an Italian daily said Wednesday. The Japanese consulate general in Milan confirmed that the detention had taken place and said it was trying to confirm with Italian authorities whether the two were indeed Japanese nationals and their identities.

According to the report in il Giornale, two unidentified Japanese in their 50s concealed the bonds, including 249 U.S. Treasury bonds each worth $500 million, in a suitcase with a false bottom that was searched by the Italian authorities June 3 when they were in Chiasso, at the border with Switzerland, about 50 kilometers north of Milan. The daily did not say on what charges they have been detained, but the two may have been detained on suspicion of attempting to take a large amount of securities out of Italy without declaring it because the paper said they had not declared the bonds.

© 2009 Kyodo News. All rights reserved. No reproduction or republication without written permission.

After a few moments reflection on the appearance of this new wormhole in the financial firmament and in a mood of anything but sombre reflection I made the following observations....

Suitcase with a false bottom..... Hmmmm.....
$134 Billion...... Hmmmm........
Swiss - Italian Border. Porus. Normaly a gold lamee streaker with his hair on fire could get through. Hmmm.......
$500 Million Denomination. Who exactly would be interested in or indeed capable of handling bonds of this size. Hmmmm......
If its a government don't they have diplomatic bags for this sort of thing. Hmmmmm.....
Perhaps some nameles autonomous government department somewhere in a nameless state might be being audited soon and want to get their errant goodies back home. Who knows? don't you just love speculation? :-)

A fellow observer and fan of the growing Wall St and Fed surreal financialists movement alluded to a ringside seat at the mad hatters tea-party

It seems that almost daily, I see something weirder than the day before. This would be weird if it was $1B but $134B? Bizarre. Just how deep does this rabbit hole go?

It's very strange that this is one of those stories where there is essentially just one big weird unbelievable fact, and then the story goes cold. There is no explanation, and no more details are forthcoming.

"These aren't the bonds you're looking for."
"These aren't the bonds we're looking for."

"We're free to go."
"You're free to go."

"Move along."
"Move along."

Now I have a difficult time imagining what US$134,000,000,000, actually means in terms of the US Economy so I had a look at the Bureau of Economic Analysis (BEA) and found enlightenment.

In coming up with the figures the BEA summarizes the output from all industries in this picklist,

Its an impressive list: What would happen happen if the entire population of Indiana its corporations, government (maybe the same thing but I digress) Judiciary, cattle and livestock resident in the fine state of Indiana turned up with their GDP divided equaly among them and wanted to cross the border?

Can you see where I an going with this Financial Surrealists movement thing?

I sat back and watched carefully for a follow up. Sure enough it did appear in the financial blogosphere a few days later. Leaving the mainstrem press a study of studied silence. This wonderingly written piece from J.S Kim speculates further and I share with you now.

Strange Inconsistencies in the $134.5 Billion Bearer Bond Mystery

Here’s yet another huge financial story that has been virtually blacked out by the US financial media. Although on the surface, this story appears to be a non-event, if we consider some of the released facts about this case, you will understand why I consider it to be a huge story. On June 8th, the Asia News reported the following story:

“Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollars each. Italian authorities have not yet determined whether they are real or fake, but if they are real the attempt to take them into Switzerland would be the largest financial smuggling operation in history; if they are fake, the matter would be even more mind-boggling because the quality of the counterfeit work is such that the fake bonds are undistinguishable from the real ones.”

Here are just a few fascinating facts about this case (at least they are being reported as “facts” at this current time):

(1) Though the smugglers have been identified in the press as “Japanese nationals” there has yet to be any confirmation if the smugglers were indeed Japanese or of some other ethnicity. How difficult is it to confirm the ethnicity of the smugglers and why is this information being kept secret?

(2) According to a brief Bloomberg article regarding this story, the seized bearer bonds allegedly were dated as of 1934. Since bearer bonds in denominations of $500 million did not exist in 1934, the bonds were deduced as fake, though the Italian police are still waiting for a declaration regarding the bonds’ authenticity from the SEC. There is something truly “off” about this declaration. How can the quality of the forged bearer bonds be so meticulous that they “are indistinguishable from the real ones”, yet the people involved in the alleged forgery so ill-informed as to not date the bearer bonds with a more recent year that would not immediately identify them as fraudulent? How hard would it have been to date the bearer bonds with a more recent year? An equivalent analogy would be if an expert art forger meticulously re-created a Picasso oil canvas and then erroneously signed the work with the wrong artist’s name. This story just does not add up.

(3) The Bloomberg story also reported that there is no known existence of the alleged 10 Kennedy bonds that were discovered in the smuggler’s suitcases, each with a denomination of $1 billion. Again, this discovery defies any logical explanation. Why would expert counterfeiters make 249 bearer bonds with denominations of $500 million apiece, each indistinguishable from the real thing, and then instead of just making 20 more such bonds, decide to make 10 bonds in denominations of $1 billion a piece in a bearer bond design that has never existed? Were the alleged counterfeiters just too lazy to confirm if Kennedy bearer bonds were ever a legitimately issued security? Again, this story makes no sense.

(4) On March 30, 2009, the US Treasury Department announced that USD $134.5 billion remained in its Troubled Asset Relief Program [TARP]. The stated amount of seized bearer bonds was $134.5 billion. Coincidence?

(5) The two well-dressed Japanese men opted to travel to Chiasso on a local train normally full of Italian manual laborers commuting to Switzerland. If they were really intent on successfully smuggling these bonds, counterfeit or real, why would they not take more care to select a travel route in which it was literally impossible for them not to stick out like two sore thumbs? Again, this part of the story defies all logic.

(6) The bearer bonds were discovered in a hidden briefcase compartment after a customs inspection. Again, if the bonds were indeed authentic and owned by a nation state, they could have been transported in a diplomatic pouch exempt from customs searches that would have guaranteed transport without detection.
Thus, all of the above irreconcilable and illogical points, other than the coincidence of the amount of the bearer bonds exactly matching the remaining TARP fund amount declared on March 30th, seem to indicate that not only were the seized bearer bonds counterfeit, but also that the smugglers were intent on being caught.
Before I continue, let’s review the purpose of bearer bonds.

Here is the Wikipedia definition of bearer bonds:

“A bearer bond is a debt security issued by a business entity, such as a corporation, or by a government. It differs from the more common types of investment securities in that it is unregistered – no records are kept of the owner, or the transactions involving ownership. Whoever physically holds the paper on which the bond is issued owns the instrument. This is useful for investors who wish to retain anonymity. The downside is that in the event of loss or theft, bearer bonds are extremely difficult to recover.”

If you recall the Michael Mann movie “Heat”, starring Robert DeNiro and Al Pacino, during a daring daytime armored car robbery, the criminals specifically targeted millions of dollars of bearer bonds for theft precisely because of the above qualities of bearer bonds that make them very difficult to trace. Again, due to the properties of bearer bonds, it seems highly unlikely that $134.5 billion of bearer bonds would be transported, if they were real, by two men with no security, since theft almost guarantees that they would be lost forever.

Thus far, about the only piece of information that appears to be reliable as reported by various news sources regarding this huge mystery is the remarkable authenticity of the 249 seized bearer bonds in denominations of USD $500 million. If any of the other facts, as they are being reported, are remotely accurate, then the bearer bonds were likely counterfeit. Still, the interesting part of this story, at least to me, is that the smugglers seemed intent on being caught with the counterfeit bonds. This leads me back to my previous question. What possible reason would the smugglers have for wanting to be caught? One of the quickest ways to sabotage and usher in the death of a currency is to raise legitimate questions about its ability to withstand counterfeiting efforts. Prove that counterfeiting is not only possible but highly likely, and the world’s confidence in the sabotaged currency will undoubtedly plummet.

In fact, this very tactic was applied during World War II when the Nazis launched Operation Bernhard in an attempt to crash the British economy by producing, by 1945, 132 million expertly counterfeited British pounds, a figure that represented roughly 15% of all real British pounds in circulation at the time. The counterfeit pounds were produced by expert printers and engravers supervised by an SS officer named Bernhard Krueger. As well, historical evidence exists that the Allies considered launching a counter-counterfeit plan against the Nazis as well. During this time, it was also alleged that the Bank of Italy counterfeited their own money by issuing the same securities twice with identical registered numbers and codes in order. The purpose of this counterfeiting was to secretly expand monetary supply without public transparency or accountability. Perhaps then, this $134.5.billion bearer bond mystery was an attempt of a nation state to shake the world’s confidence in the position of the US dollar as the world’s reserve currency.

There should be little debate that the world’s emerging economies in Russia, Brazil, China and certain Gulf Nations are at economic war today with the world’s Western nations and their economic allies. The currency war being fought today is sure to get much uglier in the foreseeable future, in both open tactics as well as secretly executed tactics. Currently, if the currency war were the world series of poker, the US and the UK would be holding a pair of 2s and relying on nothing but bluffs to keep the rest of the world at bay. Conversely, the Chinese and other emerging nations with large surpluses would be holding straight or royal flushes, and likely quietly maneuvering to go “all in” at some point.

Given that the discovery of $134.5 billion of bearer bonds in the suitcases of two Japanese nationals in Chiasso, Italy on the border of Switzerland qualifies as one of the largest smuggling operations in history, and given the various implications of such an act and the possible players involved, the silence regarding this huge story is simply stunning. It is not a huge story, per se, because of the counterfeiting operation, because accusations and revelations of massive money counterfeiting operations have occured in the past. It is a huge story, rather, due to all the inconsistencies of the story and the potential explanations that could explain these inconsistencies. The larger story at hand is, who are the players (nations) involved, and what was the intention of this likely counterfeiting operation? Maybe the future will reveal the answers to these questions. But maybe not.

Please if anybody gets an update, or idea, of what is going on this let me know. Thanks to the citizens of Indiana for all their hard work in making this comparison possible.

###

Notes

Anal retentive - From Wikipedia

The term anal-retentive (or anally retentive, anal retentive), commonly abbreviated to "anal", is used conversationally to describe a person with such attention to detail that the obsession becomes an annoyance to others, and can be carried out to the detriment of the anal-retentive person. The term derives from Freudian psychoanalysis.

Rectitude - Straightness.

Rightness of principle or practice; exact conformity to truth, or to the rules prescribed for moral conduct, either by divine or human laws; uprightness of mind; uprightness; integrity; honesty; justice.

Surrealism

Surrealist works feature the element of surprise, unexpected juxtapositions and non sequitur; however, many Surrealist artists and writers regard their work as an expression of the philosophical movement first and foremost, with the works being an artifact. Leader André Breton was explicit in his assertion that Surrealism was above all a revolutionary movement.

Simon & Garfunkel - Bridge Over Troubled Water

Philip Palij — Sun, 14 Jun 2009 20:15:54 -0700

From a different age a different America, one I hold dear.

Simon and Garfunkel In Concert

Bless You....

GM: The Management Apologists Point Of View

Philip Palij — Tue, 31 Mar 2009 12:02:49 -0700

Mr Wagoner got the boot because he didn't get it.

This OPINION from a financial newsletter Money Morning summarises the management apologists view.

The truth is GM and Chrysler Management couldn't handle the competition, they are not competitive, their boards have demonstrated they cannot tell the difference between an exhaust pipe and a camel's arsehole and yet they persist in deluding themselves with the aid of apologist media that they are victims of forces beyond their control conspiring to do them in. There is an air of unreality about this article which accurately reflects the delusional behavior of GM, Ford and Chrysler management in recent times.

Shape up or ship out, no one owes you a living GM, Ford and Chrysler.

Mr Wagoner gets it now.

I just wish the delusional, incompetent and damaging behaviour of the financial industry management would receive the same reality therapy as Mr Wagoner. GM's mismanagement is bad but the deliberate, reckless, destruction of the worlds economic wealth is far worse. There is always hope.

######################################################################

The Slow Death of General Motors

By Martin Hutchinson
Contributing Editor
Money Morning

U.S. President Barack Obama’s firing of General Motors Corp. (GM) Chief Executive Officer G. Richard Wagoner Jr. may be the beginning of the final act of a long and sad drama - the slow death of GM. The company nameplate may soldier on in some form, but it seems increasingly likely that unless Ford Motor Co. (F) can forever avoid government intervention, the once-unique capabilities of the U.S. automotive industry will be forever lost.

In 1970, GM had nearly 60% of the U.S. automobile market, and imports’ share was below 10%. Today GM’s market share is little more than 20%, and imports and domestically produced automobiles of foreign brands) dominate the market.

There are three reasons for GM’s decline, none of them easily reversible:

The first is notorious - GM has a major cost disadvantage: When foreign automakers had no automobile factories on U.S. soil, GM could - and did - allow the United Auto Workers (UAW) union to ramp up costs ad infinitum. Any cost disadvantage that GM thereby acquired compared to foreign brands produced in cheaper-labor economies could be overcome through careful lobbying to provide barriers against excessive imports.

However, the arrival and establishment of foreign-owned manufacturers in America’s less-unionized states - combined with the inexorable aging of GM’s former and current work force, which greatly increased the U.S. automaker’s health and pension costs - shackled GM with an impossible cost disadvantage against its competitors. Some of that disadvantage is now being slowly negotiated away, but without a GM bankruptcy it seems most unlikely that the company’s costs can be brought down to competitive levels.

Second, GM has been bedeviled by government regulation: One great example is the Corporate Average Fuel Economy (CAFÉ) standards introduced in 1975. As a specialist in the traditional large cars that the U.S.-consuming public favored, GM was badly affected by the CAFÉ standards that, by mandating average fuel economy ratings for the entire fleet, enormously benefited Japanese and other makers that specialized in small cars. Eventually, GM and the other U.S. manufacturers found a loophole, and developed the sports utility vehicle (SUV) that, being based on a truck chassis, was not subject to the CAFÉ restrictions. By the time Chrysler, Ford and GM made that discovery, however, the damage - in terms of market share - had been done.

A further round of tighter CAFE restrictions introduced in 2007, this time including SUVs, has once again imposed gigantic development costs on GM, making its entire product range obsolete. A moderate gasoline tax, particularly one introduced over a lengthy period, would have been far less disruptive to the market, and to GM’s operations. It would also probably have achieved rather more in terms of fuel economy and combating global warming. “Cap-and-trade” regulations, as proposed by the Obama administration, will further increase GM’s costs, providing the biggest relative benefits to manufacturers in such low-wage countries as China and India that are not subject to such impositions.

However, the principal threat to GM’s competitive position, one which Wagoner’s departure will intensify, is the “culture war” between the upscale bi-coastal opinion formers and the general U.S. public: In 1970, the standard upscale car for all but the very rich was a Cadillac, a Lincoln, or a Chrysler Imperial. This was as true in New York as it was in Detroit or Dallas; only a small minority of consumers bought top-of-the-line foreign cars, generally with academic pretensions. Equally, for the upper-middle bracket, Buick or Mercury was the choice of the vast majority.

Today on the East and West coasts, consumer tastes are very different. Saloon Cadillacs and Lincolns are rare; the upscale driver generally chooses a Mercedes, BMW or Lexus. Only among those with families (such as the Obamas) is a large SUV sometimes chosen, although generally an imported one. Buick now sells far more cars in China than in the United States; the traditional Buick or Mercury driver on the East or West coast has migrated almost entirely to import models. Before his presidency, then-Sen. Obama himself drove a Chrysler 300C followed by a Ford Escape hybrid, but one has to guess that his choice of U.S. vehicles was strongly influenced by his political ambitions.

This preference for foreign automobiles is reflected in the media commentary (media bigwigs being almost entirely upscale and bi-coastal). GM and other U.S. manufacturers are persistently accused of “poor management,” although there is little or no evidence given, or discussion of what they might have done better.

Objectively, GM and Ford products perform extremely well in quality surveys, and represent much better value for money than most imported brands, yet without support from opinion-formers they are terminally unfashionable, with the upscale models destined to sell relatively poorly except between Pittsburgh and Boise. Even technological breakthroughs like the Chevy Volt electric car seem unlikely to change this.

President Obama’s decision to get rid of Wagoner reflects this attitude. His announcement was full of denunciations of poor management, with no acknowledgement that overblown union contracts are GM’s No. 1 problem (at least, the No. 1 problem that there is any possibility of solving in the short term). There appears to be little recognition in the Obama administration as a whole that recalcitrant unions and media-induced disdain for GM’s product range were far more important causes of GM’s decline than any shortcomings in Wagoner’s management moves.

Over his eight years as GM’s CEO, Wagoner has done about as well as he could have. He has overseen a considerable and successful restructuring of GM’s operations, together with an extraordinary success story in the Chinese market, where GM has emerged as one of the leading competitors in the world’s fastest-growing car market.

With the Obama administration overseeing GM’s operations, the company will move towards producing the cars that opinion formers want it to produce: cramped, dangerous and uncomfortable, but fuel-efficient or powered by subsidized energy sources. However, the “New GM” will reap little reward for its docility; unless it files for Chapter 11 bankruptcy, it still will have excessive costs, and it will find itself competing in a market crowded with foreign producers, but containing only a minority of the U.S. consuming public.

This is bad news for consumers between Pittsburgh and Boise, and for those on the coasts seeking low-cost, high-comfort transportation, but possibly very good news for Ford, if it can somehow avoid being caught in the government maw. If GM is emasculated by the government and Chrysler is downsized and sold to the small-car-oriented Fiat, Ford will have a huge market to itself, that of U.S. consumers wanting traditional U.S. automotive qualities.

Wagoner doubtless now wishes that in December he had chosen a GM bankruptcy over government aid. In the long run, the U.S. car-consuming public, its automobile industry and the U.S. economy (let alone U.S. taxpayers) may come to share that view.

In closing, let me offer a personal note of disclosure - and a final thought: Being “bi-coastal” but determinedly not “upscale” I drive an ancient Buick.

It’s a wonderful car …

Perspective: A Warning From Africa

Philip Palij — Sat, 21 Mar 2009 13:27:09 -0700

In the land of President Obama's ancestors there is a tragedy that he and we should heed.

At a time of intense suffering for many Americans perhaps a view of life in another world is timely, where daily survival and the right to life itself is the hope of desperate human beings in Africa's troubled lands.

What has this to do with the American condition you might ask? This is where corruption, fuedalism, Genetic Modification, and the systematic erosion of constitutional law will lead.

The never-ending story of Africa’s hunger tragedy: where lies food safety?

By Ruth Oniang'o, Editor-in-Chief Ajfand Online

A January 9,2009 story in the local press reports that Kenya shilling 83million (equivalent 8 million US dollars) worth of maize was ordered destroyed by a local court. The maize totalling about 32,000 90kg bags was tested and found positive for unacceptable levels of aflatoxin; the maize was unfit for human consumption.The destruction of the maize comes at a time when rains have failed and nearly 10 million Kenyans in a population of 36 million face starvation.There is a major shortage of maize, the main staple in the country. The story in the newspaper was small, mixed up with other corruption stories but the headline was big.The National Cereals and Produce Board of Kenya (NCPB), supposedly the gate keeper of Kenya’s food grain systems had to wait to be taken to court before they could decide what to do with grain which clearly was now poison to Kenyans.

The worry for many Kenyans should be: If it has to take one government agency to report another, what more is being hidden from Kenyans regarding the quality of their marketed food? After the court ruling that the maize should be burnt, NCPB pleaded to have the maize sold to a glue making company to get funds to cover storage and handling costs.This clearly is very worrying, that a government agency whose responsibility includes ensuring a safe maize supply for Kenyans is more concerned with the storage costs than with their own failure and inability to safeguard Kenyans’ health.The other question is: What guarantee is there that other stored maize is not contaminated? In the same province ( Eastern) where Siakago is people have died before from aflatoxin poisoning after consuming contaminated maize. At the time, about a year ago, and more times before there was big publicity about the lethal contamination, and deaths being blamed on the quality of maize with some terming it as GM ( genetically modified) maize. As it is now there is little information as to the type of maize and the strain of aflatoxin and the actual levels of contamination.
The Kenyan story surely cannot be unique. The food systems in Africa are in dire need of serious attention. Facilities and personnel to monitor and maintain a safe food supply are in short supply.

Not much investment has been put in this area, unfortunately.As it is now, we need to preserve as much food as possible. It just does not make sense to call for increased food productivity, or for food aid when capacity to store what is given or harvested is not adequate.Who should be trusted with a country’s food safely?What systems need to be put in place to ensure what people eat is safe and protected from metal, bacterial and fungal poisoning?A country which knows what it is doing will invest in the training of personnel in the area of food safety and allied fields.The kind of report I have just alluded to in the case of Kenya gives the country a very bad image in interntional trade. Food is the most traded commodity internationally and can give producing countries good foreign exchange income, but only if the commodities do not get rejected out of safety concerns by recipient countries.Many developing countries lack the human resource capacity to be able to compete in international food trade.As such, whatever capacity exists gets focused on trying to meet recipient country standards requirements.The result is that internal food systems are highly threatened by exposure to contaminating forces and thus food associated morbidity and mortality rise rapidly.

Africa still has a chance to undertake effective agriculture: crop, livestock and aquaculture to enhance not only internal food security but to produce enough to trade internationally.This, however, will not happen if Africa’s food production systems are not safeguarded against contamination.Safeguard facilities require policy prioritization and budgetary investment.

I am well known for the quote: Food is the first medicine. Likewise, Food can be poison.

By Ruth Oniang'o, Editor-in-Chief

Help Please, I Want To Be a Thieving Banker

Philip Palij — Tue, 24 Feb 2009 16:43:27 -0800

After watching the financial meltdown I have decided on a career in banking though I realize I am a bit too honest at the moment and need to sleaze down a bit. Well a lot actually.

Unfortunately I am not an amoral grasping greedy psychopath so I will need to work on this. I was hoping there was a University course in 'Greedy Bastardism' or 'evil psychotic investment strategies' or perhaps 'Shafting Democracy For Profit'

Does anyone have any suggestions about courses and any helpful tips?

Emerging From The Darkness

Philip Palij — Wed, 21 Jan 2009 15:49:17 -0800

This is how they, George W. Bush and Richard B. Cheney will be remembered. They have brought shame to America's door, they have brought war, starvation, suffering and death to an unknowable number of human beings. Menace, brutality, contempt for their own people, their laws, constitution and the world. This is their work, they have done these things.

Going back to the days of chaos following the attack on the World Trade Centre one of the abiding tokens of that time will be a phrase uttered by Vice President Cheney in a Meet the Press interview with Tim Russert and at Camp David on September 16, 2001.

"...We also have to work, though, sort of the dark side..."

One which fairly represents what the White House and the American Government have done and stood for during this Bush Administration.

The excerpt in context

MR. RUSSERT:

When Osama bin Laden took responsibility for blowing up the embassies in Kenya and Tanzania, U.S.embassies, several hundred died, the United States launched 60 tomahawk missiles into his training sites in Afghanistan. It only emboldened him. It only inspired him and seemed even to increase his recruitment. Is it safe to say that that kind of response is not something we're considering, in that kind of minute magnitude?

VICE PRES. CHENEY:

I'm going to be careful here, Tim, because I--clearly it would be inappropriate for me to talk about operational matters, specific options or the kinds of activities we might undertake going forward. We do, indeed, though, have, obviously, the world's finest military. They've got a broad range of capabilities. And they may well be given missions in connection with this overall task and strategy.

We also have to work, though, sort of the dark side, if you will. We've got to spend time in the shadows in the intelligence world. A lot of what needs to be done here will have to be done quietly, without any discussion, using sources and methods that are available to our intelligence agencies, if we're going to be successful. That's the world these folks operate in, and so it's going to be vital for us to use any means at our disposal, basically, to achieve our objective.

The Dark Side

The true content of what Vice President Cheney has said and done in office may never be fully known by the public or brought to justice. However there is enough information in the public domain to damn Vice President Cheney , President Bush, their administration and their weakining of the already ailing American system of justice. They have manipulated it seemingly at will.

See the articles of impeachment for George W. Bush

See the articles of impeachment for Richard B. Cheney

Top of the list of charges were the lies told to start a war with Iraq and the authorisation of the use of torture which Cheney has subsequently admitted, also involvement in a list of constitutional violations involving warrantless wiretapping amongst others.

Using the pretext of national security along with an assertion that the vice presidents office was not part of the executive branch hence not within the remit of Congressional scrutiny Cheney was able to bar any meaningful oversight. The commitment to secrecy contained within the interview and subsequently within the Vice Presidents office are legendary, one of many dead spots in the lawful and orderly conduct of the affairs of state. The product of what went on there was enough to create passionate calls for his impeachment from Senators and Representatives notably Kucinich who to his eternal credit got the charges on the Congressional record, all shamefully unheeded and left to rot in the House.

If anything defines the subversion and suppression of the American system of justice and the rule of law it is the failure to impeach. There is no way round this one; Charges brought to the house of representatives of war crimes, crimes against the constitution and crimes against its own people have to date been obstructed. Collectively the representatives elected to uphold the law and the constitution have not done so. The system of justice has been subverted, publicly. The consquences for the cohesion of society will be immense.

TheIr images forever the face of a detested regime.

Emerging From The Darkness

Looking at the Obama Transition website www.change.gov the contrast could not be more vivid. There is a sense of energy dynamism and purpose on every page. One sentence on one page in particular is jaw dropping. It sits humbly on the donors page amidst the talk of strategy and Tactics but is the most profound in terms of the honesty, openess and integrity of Obama's future administration.

"The Obama-Biden Transition project only accepts contributions from individuals' personal funds -- we refuse all donations from corporations, labor unions and PACs. Individuals may not donate more than $5,000. We also refuse all contributions from registered federal lobbyists and registered foreign agents."

This is a statement of intent.

Unnaccountable, undemocratic, backchannell communication with government and its administration at all levels by Wealthy Corporations, foreign agents, Wealthy individuals and families, is the single most corrosive cause of corruption. Left unchecked is burning through, in its entirity, the fabric of the American Republic and its institutions. If this policy were to be carried through to all branches of the administration, Congress and Senate it will cut off at a stroke a good portion of the illegal access to power and influence cultivated by America's emerging Plutocracy enjoyed through their ambassadors the Lobbyists.

I wish you well President Obama, we are all hoping.

Noli nothis permittere te terere.

References

The full Interview transcript can be found HERE
You can view a revealing analysis at the Frontline website

Obama Enters The Great Game

Philip Palij — Tue, 20 Jan 2009 01:57:01 -0800

The major challenge he faces is not Gaza; the Israeli-Palestinian dispute is not one any U.S. president intervenes in unless he wants to experience pain. As we have explained, that is an intractable conflict to which there is no real solution. Certainly, Obama will fight being drawn into mediating the Israeli-Palestinian conflict during his first hundred days in office. He undoubtedly will send the obligatory Middle East envoy, who will spend time with all the parties, make suitable speeches and extract meaningless concessions from all sides. This envoy will establish some sort of process to which everyone will cynically commit, knowing it will go nowhere. Such a mission is not involvement — it is
the alternative to involvement, and the reason presidents appoint Middle East envoys. Obama can avoid the Gaza crisis, and he will do so.

Obama’s Two Unavoidable Crises

The two crises that cannot be avoided are Afghanistan and Russia. First, the situation in Afghanistan is tenuous for a number of reasons, and it is not a crisis that Obama can avoid decisions on. Obama has said publicly that he will decrease his commitments in Iraq and increase them in Afghanistan. He thus will have more troops fighting in Afghanistan. The second crisis emerged from a decision by Russia to cut off natural gas to Ukraine, and the resulting decline in natural gas deliveries to Europe. This one obviously does not affect the United States directly, but even after flows are restored, it affects the Europeans greatly. Obama therefo
re comes into office with three interlocking issues: Afghanistan, Russia and Europe. In one sense, this is a single issue — and it is not one that will wait.

Obama clearly intends to follow Gen. David Petraeus’ lead in Afghanistan. The intention is to increase the number of troops in Afghanistan, thereby intensifying pressure on the Taliban and opening the door for negotiations with the militant group or one of its factions. Ultimately, this would see the inclusion of the Taliban or Taliban elements in a coalition government. Petraeus pursued this strategy in Iraq with Sunni insurgents, and it is the likely strategy in Afghanistan.

But the situation in Afghanistan has been complicated by the situation in Pakistan. Roughly three-quarters of U.S. and NATO supplies bound for Afghanistan are delivered to the Pakistani port of Karachi and trucked over the border to Afghanistan. Most fuel used by Western forces in Afghanistan is refined in Pakistan and delivered via the same route. There are two crossing points, one near Afghanistan’s Kandahar province at Chaman, Pakistan, and the other through the Khyber Pass. The Taliban have attacked Western supply depots and convoys, and Pakistan itself closed the routes for several days, citing government operations a
gainst radical Islamist forces.

Meanwhile, the situation in Pakistan has been complicated by tensions with India. The Indians have said that the individuals who carried out the Nov. 26 Mumbai attack were Pakistanis supported by elements in the Pakistani government. After Mumbai, India made demands of the Pakistanis. While the situation appears to have calmed, the future of Indo-Pakistani relations remains far from clear; anything from a change of policy in New Delhi to new terrorist attacks could see the situation escalate. The Pakistanis have made it clear that a heightened threat from India requires them to shift troops away from the Afghan border and toward the east; a small number of troops already has been shifted.

Apart from the direct impact this kind of Pakistani troop withdrawal would have on cross-border operations by the Taliban, such a move also would dramatically increase the vulnerability of NATO supply lines through Pakistan. Some supplies could be shipped in by aircraft, but the vast bulk of supplies — petroleum, ammunition, etc. — must come in via surface transit, either by truck, rail or ship. Western operations in Afghanistan simply cannot be supplied from the air alone. A cutoff of the supply lines across Pakistan would thus leave U.S. troops in Afghanistan in crisis. Because Washington can’t predict or control the future actions of Pakistan, of India or of terrorists, the United States must find an alternative to the routes through Pakistan.

When we look at a map, the two routes through Pakistan from Karachi are clearly the most logical to use. If those were closed — or even meaningfully degraded — the only other viable routes would be through the former Soviet Union.

One route, along which a light load of fuel is currently transported, crosses the Caspian Sea. Fuel refined in Armenia is ferried across the Caspian to Turkmenistan (where a small amount of fuel is also refined), then shipped across Turkmenistan directly to Afghanistan and through a small spit of land in Uzbekistan. This route could be expanded to reach either the Black Sea through Georgia or the Mediterranean through Georgia and Turkey (though the additional use of Turkey would require a rail gauge switch). It is also not clear that transports native to the Caspian have sufficient capacity for this.
Another route sidesteps the issues of both transport across the Caspian and the sensitivity of Georgia by crossing Russian territory above the Caspian. Kazakhstan, Uzbekistan (and likely at least a small corner of Turkmenistan) would connect the route to Afghanistan. There are options of connecting to the Black Sea or transiting to Europe through either Ukraine or Belarus.
Iran could provide a potential alternative, but relations between Tehran and Washington would have to improve dramatically before such discussions could even begin — and time is short.

Many of the details still need to be worked out. But they are largely variations on the two main themes of either crossing the Caspian or transiting Russian territory above it.

Though the first route is already partially established for fuel, it is not clear how much additional capacity exists. To complicate matters further, Turkmen acquiescence is unlikely without Russian authorization, and Armenia remains strongly loyal to Moscow as well. While the current Georgian government might leap at the chance, the issue is obviously an extremely sensitive one for Moscow. (And with Russian forces positioned in Azerbaijan and the Georgian breakaway regions of Abkhazia and South Ossetia, Moscow has troops looming over both sides of the vulnerable route across Georgia.) The second option would require crossing Russian territory itself, with a number of options — from connecting to the Black Sea to transiting either Ukraine or Belarus to Europe, or connecting to the Baltic states.

(click image to enlarge)

Both routes involve countries of importance to Russia where Moscow has influence, regardless of whether those countries are friendly to it. This would give Russia ample opportunity to scuttle any such supply line at multiple points for reasons wholly unrelated to Afghanistan.

If the West were to opt for the first route, the Russians almost certainly would pressure Azerbaijan and Turkmenistan not to cooperate, and Turkey would find itself in a position it doesn’t want to be in — namely, caught between the United States and Russia. The diplomatic complexities of developing these routes not only involve the individual countries included, they also inevitably lead to the question of U.S.-Russian relations.

Even without crossing Russia, both of these two main options require Russian cooperation. The United States must develop the option of an alternative supply route to Pakistan, and in doing so, it must define its relationship with Russia. Seeking to work without Russian approval of a route crossing its “near abroad” will represent a challenge to Russia. But getting Russian approval will require a U.S. accommodation with the country.

The Russian Natural Gas Connection

One of Obama’s core arguments against the Bush administration was that it acted unilaterally rather than with allies. Specifically, Obama meant that the Bush administration alienated the Europeans, therefore failing to build a sustainable coalition for the war. By this logic, it follows that one of Obama’s first steps should be to reach out to Europe to help influence or pressure the Russians, given that NATO has troops in Afghanistan and Obama has said he intends to ask the Europeans for more help there.

The problem with this is that the Europeans are passing through a serious crisis with Russia, and that Germany in particular is involved in trying to manage that crisis. This problem relates to natural gas. Ukraine is dependent on Russia for about two-thirds of the natural gas it uses. The Russians traditionally have provided natural gas at a deep discount to former Soviet republics, primarily those countries Russia sees as allies, such as Belarus or Armenia. Ukraine had received discounted natural gas, too, until the 2004 Orange Revolution, when a pro-Western government came to power in Kiev. At that point, the Russians began demanding full payment. Given the subsequent rises in global energy prices, that left Ukraine in a terrible situation — which of course is exactly where Moscow wanted it.

The Russians cut off natural gas to Ukraine for a short period in January 2006, and for three weeks in 2009. Apart from leaving Ukraine desperate, the cutoff immediately affected the rest of Europe, because the natural gas that goes to Europe flows through Ukraine. This put the rest of Europe in a dangerous position, particularly in the face of bitterly cold weather in 2008-2009.

The Russians achieved several goals with this. First, they pressured Ukraine directly. Second, they forced many European states to deal with Moscow directly rather than through the European Union. Third, they created a situation in which European countries had to choose between supporting Ukraine and heating their own homes. And last, they drew Berlin in particular — since Germany is the most dependent of the major European states on Russian natural gas — into the position of working with the Russians to get Ukraine to agree to their terms. (Russian Prime Minister Vladimir Putin visited Germany last week to discuss this directly with German Chancellor Angela Merkel.)

The Germans already have made clear their opposition to expanding NATO to Ukraine and Georgia. Given their dependency on the Russians, the Germans are not going to be supporting the United States if Washington decides to challenge Russia over the supply route issue. In fact, the Germans — and many of the Europeans — are in no position to challenge Russia on anything, least of all on Afghanistan. Overall, the Europeans see themselves as having limited interests in the Afghan war, and many already are planning to reduce or withdraw troops for budgetary reasons.

It is therefore very difficult to see Obama recruiting the Europeans in any useful manner for a confrontation with Russia over access for American supplies to Afghanistan. Yet this is an issue he will have to address immediately.

The Price of Russian Cooperation

The Russians are prepared to help the Americans, however — and it is clear what they will want in return.

At minimum, Moscow will want a declaration that Washington will not press for the expansion of NATO to Georgia or Ukraine, or for the deployment of military forces in non-NATO states on the Russian periphery — specifically, Ukraine and Georgia. At this point, such a declaration would be symbolic, since Germany and other European countries would block expansion anyway.

The Russians might also demand some sort of guarantee that NATO and the United States not place any large military formations or build any major military facilities in the former Soviet republics (now NATO member states) of Estonia, Latvia and Lithuania. (A small rotating squadron of NATO fighters already patrols the skies over the Baltic states.) Given that there were intense anti-government riots in Latvia and Lithuania last week, the stability of these countries is in question. The Russians would certainly want to topple the pro-Western Baltic governments. And anything approaching a formal agreement between Russia and the United States on the matter could quickly destabilize the Baltics, in addition to very much weakening the NATO alliance.

Another demand the Russians probably will make — because they have in the past — is that the United States guarantee eventual withdrawal from any bases in Central Asia in return for Russian support for using those bases for the current Afghan campaign. (At present, the United States runs air logistics operations out of Manas Air Base in Kyrgyzstan.) The Russians do not want to see Central Asia become a U.S. sphere of influence as the result of an American military presence.

Other demands might relate to the proposed U.S. ballistic missile defense installations in the Czech Republic and Poland.

We expect the Russians to make variations on all these demands in exchange for cooperation in creating a supply line to Afghanistan. Simply put, the Russians will demand that the United States acknowledge a Russian sphere of influence in the former Soviet Union. The Americans will not want to concede this — or at least will want to make it implicit rather than explicit. But the Russians will want this explicit, because an explicit guarantee will create a crisis of confidence over U.S. guarantees in the countries that emerged from the Soviet Union, serving as a lever to draw these countries into the Russian orbit. U.S. acquiescence on the point potentially would have ripple effects in the rest of Europe, too.

Therefore, regardless of the global financial crisis, Obama has an immediate problem on his hands in Afghanistan. He has troops fighting there, and they must be supplied. The Pakistani supply line is no longer a sure thing. The only other options either directly challenge Russia (and ineffectively at that) or require Russian help. Russia’s price will be high, particularly because Washington’s European allies will not back a challenge to Russia in Georgia, and all options require Russian cooperation anyway. Obama’s plan to recruit the Europeans on behalf of American initiatives won’t work in this case. Obama does not want to start his administration with making a massive concession to Russia, but he cannot afford to leave U.S. forces in Afghanistan without supplies. He can hope that nothing happens in
Pakistan, but that is up to the Taliban and other Islamist groups more than anyone else — and betting on their goodwill is not a good idea.

Whatever Obama is planning to do, he will have to deal with this problem fast, before Afghanistan becomes a crisis. And there are no good solutions. But unlike with the Israelis and Palestinians, Obama can’t solve this by sending a special envoy who appears to be doing something. He will have to make a very tough decision. Between the economy and this crisis, we will find out what kind of president Obama is.

And we will find out very soon.

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