Pakistan the first sixty years

Pakistan the first sixty years

Sixty years ago nobody could have foretold that Afghanistan would become the center of the world as far as influencing world events. Two earth shaking events both involving Afghanistan have shaped the identity of Pakistan.

The "Global War on Terror" has been uncritically accepted by most in this country. But terrorism is a tactic, not an enemy. You cannot declare war on a tactic. The way to combat terrorism is by identifying and targeting its root causes, including poverty, lack of education, and foreign occupation

Pakistan was born out of the policy of the British to divide and rule. It was also born out of the tussle of two men to do things their own way.

Undivided India today would boast half the Muslim population of the world. Nehru was mindful of this and wanted Pakistan as a separate state as much as Jinnah did. He just did not want to give up Kashmir. Nehru did not want to share power with the Muslims as much as Jinnah did not want to share power with the Hindus.

Pakistan was not economically viable nor Geographically compatible. It suited the Americans to develop a client state as a look out for Soviet intention in the region. They may not have helped in Pakistan’s creation but they soon latched on to Pakistan. They found a needy and admiring country.

The Pakistan Army built up by the US to fight the Soviets and by the Pakistanis to fight India has ruled the country for 50 of it’s 60 years. First General Ayub and then Gen Yahya took them into two humiliating wars with India.

As a military state more intent on arming itself and less on nation building Pakistan has emerged as a state which is still economically unsound. It relies on renting it’s army or selling Nuclear blue prints for its survival, if the US stops supporting it. It is equally desirous of becoming free of dependence on the US. Like India, it would like to meet the US as an equal but that has not been possible. Ayub, the first dictator that Pakistan had wrote a book titled “Friends not Masters”.

Twenty five years ago, Bhutto, Benazir’s father decided that Pakistan needed a Nuclear bomb to protect itself from almost certain annexure by India. When AQ Khan, a metallurgist working in Holland approached him, Bhutto jumped at the opportunity and set in motion a plan to secretly develop Nuclear capability.

Almost certainly the facility could have been taken out by the Israelis or the Indians but for US protection. Twice the countries destinies were altered as a result of events, not of it’s making. The Soviet invasion of Afghanistan forced it into a position of being a front line state.

The US decided to look the other way in return for it’s cooperation. Regan repeatedly certified to Congress that Pakistan did not have nor possessed the capability for it’s own Nuclear bomb when the CIA knew differently.

The second time this happened was when Pakistan had already tested the bomb and had become an outcast state. September 11 changed all that and Pakistan once again became an indispensable ally of the US in it’s war on terror.

Effectively Pakistan has been a US colony from Day 1 . On both sides there has been a pretence that this is not so. The Army has been addicted to the military toys it got and have always dreamed of capturing Kashmir by a combination of subterfuge and force. The US has known for some time that Pakistan had the ability not only to build the bomb but to sell it on the open market , including to Osama. However other priorities have kept the US from dealing with this as a priority. Iraq has been central to US policy and not Afghanistan. It is often said that the US attacked the wrong country but how can you justify attacking your own colony. For the last 8 years it is the US who decides who rules Pakistan. Unfortunately their chosen successor Benazir was assassinated.

It is well known that the money that should have been spent on Education, Health Care, poverty alleviation, infrastructure went in to the Defense Budget. Today Pakistan is as in the past on the brink of economic disaster. The political leadership never had a chance. They spent a lot of time avoiding coups and only helped precipitate them. First Bhutto selected a simpleton( Zia) who would yes sir him , only to be toppled by him, then Nawaz fired Musharraf, only to be toppled by him.

Pakistan has a unique position in the world today. A country of 150 million people, with a huge standing army and armed to the teeth with nuclear weapons listed as a failed country. It cannot be allowed to go bankrupt. The people of Pakistan and many of its politicians and Generals have long come to the conclusion that America does not have its best interests at heart. They are desperate to stand up on their own feet and like its neighbour next door desperate to join in getting the benefit from the Asian resurgence but America will not let go. America has chosen to fight wars against faceless enemies, which America cannot win. The question is whether it will take Pakistan down with it.

Pakistan has very little experience of democracy. It’s politicians appear to be authoritarian by nature and the Army by training sees things in black and white. The Judiciary has consistently treated military coups as fait accompli and legitimized the army rule. The one instance where the Judiciary stood up to a dictator, it was summarily and unconstitutionally dismissed and the Chief Justice and his family put under house arrest. To his credit, Musharraf did hold elections and has tolerated a free press. The public resoundingly voted against the king’s party mostly because of the way Musharraf treated the Judiciary.

The people want Musharraf to go, they want the Judiciary of Iftekhar Chaudhry restored and they want the US to stop interfering in it’s affairs. None of this is happening. The decision of the future of Pakistan seems to rest in the hands of people who have not been elected and are basically unelectable. Asif Ali Zardari, Nawaz Sharif, Altaf Hussein, Pervez Musharraf and the US are today the main players and none of them have a seat in Parliament. The people taking the decisions are all godfather types who will stop at nothing including murder to have their way. All of them have in fact been responsible for killing or disappearing their opponents. The Army and the ISI have a mind of their own and will not listen to any one. They and the Bureaucracy represent an anti India stance which in today’s world is no better than a piece of fiction.

Like in many other countries where the US sabotages Democracy because it may not bring about the desired results, Pakistan’s hopes of ever becoming a democracy are very limited. This in spite of the fact that the Islamic parties who are not favored by the US have never done well in elections in Pakistan. This has nothing to do with the desire of the people to move towards a more Islamic country. They just do not trust the clergy.
The current situation is one where inflation is running at 25% and likely to go higher. The stock market has come down at least 40% YTD, there is load shedding in the major cities of 8 hours and above. Businesses are closing down for lack of electricity. A water shortage problem is looming ahead. Politics is at a stalemate over the restoration of judges and whether Musharraf should go. Inflation alone can cause serious day to day problems, with jobs not available. These are ideal grounds for recruitment by the Taliban. In the mosques and streets democracy is getting a bad name and each infraction by Americans of Pakistani territory is causing rising anger and increased anti Americanism.

As an agricultural Country Pakistan can be self sufficient as it produces enough wheat rice, cotton, sugar cane and milk. Cattle and Poultry are also available. Fruit and vegetable are plentiful. Mismanagement, however can even cause the country to import food. Trade with India could be a plus for Pakistan and China and the Middle East are friendly markets. US aid is a curse for Pakistan because it comes with so many strings attached. If you visit Pakistan, there is the facade of progress. Poverty is not on display as it is in India but the cities and cantonements that cater to the elite are just oasis in a desert and more mirages than reality. A nation where literacy is only 30-40% has lots of room to grow but is not allowed to.

“There are three interrelated power blocs in Pakistan . Of these the US lobby is the most influential, the most public and the most hated. It is currently running the country. The Saudis, who use a combination of wealth and religion to get their way, are second in the pecking order and less unpopular. The Chinese lobby is virtually invisible, never interferes in internal politics and for that reason is immensely respected, especially within the army; but it is also the least powerful outside military circles.In Cold War times, the interests of the three lobbies coincided. Not now.The War on Terror has changed all that..."


Pakistan has yet to produce a leader that can stand up to America. This is so critical for Pakistan that there is always the danger of the Military producing that leader but as America’s grip on the world weakens, Pakistan’s prospect of becoming a proud nation increase.

Sixty years is a short time in the life of a young nation. That nation is still striving to define it’s identity sandwiched between India and the USA. It has played it’s India card, it’s Nuclear card and is right now playing it’s Taliban card. It has survived against all odds by being in the right place at the right time. There is only one card left to play after this is over and that is the Muslim card. A secular leaning country in the grip of fundamentalist Islam will either convert itself into a battle field ala Afghanistan or convert it’s fundamentalists to become less rigid.

As a country twice the size of Iran, which is already Nuclear, the US has everything to gain by keeping it on it’s side. Pakistan has learnt to survive against big odds. It is the US which is in deep trouble.

Bhutto Widower with clouded past

"Zardari is a businessman,” said a Western diplomat. “He says to himself: ‘I know I need American support. What do they want? They want this,’ ” meaning a stance against the Taliban."

Zardari seems to have brought over to his side the Haroons ( Dawn) and Najam Sethi ( The Friday Times). Salman Taseer( Governor Punjab and owner of the Times ) is already a pipliya. With the media behind him, he has established a firm ground for selling the "new" Zardari. The past misdeeds, suspected misdeeds ( including murder) of this man are splashed across the International media.

What damage he can do Pakistan pales in comparison to the damage done to America and the World by George Bush. Yet Bush was elected twice. So much for Democracy.

If Zardari will have his hand on the nuclear trigger in Pakistan, there is a possibility that McCain will have his hand on the nuclear trigger in America. Unlike Zardari, McCain is trigger happy. My point is that the world is going through its most dangerous phase since the Second World War. I have been predicting wholesale massacres to come for the last two years. The gathering clouds confirm that this will happen and not through the use of Nuclear weapons.

The number of Muslim casualties and homelessness will probably double from the great numbers that have already happened. The stakes in Pakistan are very high. The American ( not Nato) incursions into Pakistani territory time and again result in the deaths of women and children and not Al Qaida or the Taliban. Economically Pakistan has lost the ability to deny the US this privilege. With only three months of reserves left they are desperate for US money.

As Russia shows its muscle and the plan to attack Iran has misfired, whose blood can be given to an American public thirsty for some ones blood? Pakistan presents itself as the natural victim for an American ritual which started with Iraq. American power cannot be reconfirmed if it keeps losing wars against weak countries. The Americans understand that if they kill Betullah Meshud and Osama Bin Laden and Aiman Al Zawahiri, their problems will not be solved but look at the propoganda value of these kills with the public.

With an election around the corner, propaganda is all that matters. Let us kill a thousand Pakistani women and children by November and show the American public how tough we are. If we cannot have Musharraf, let us have Zardari because Nawaz is not an option. If Zardari is a killer so are we. There will be a meeting of minds unlike with Musharraf. Why did we not think of this before?

Khusro


--- http://www.nytimes. com/2008/ 09/05/world/ asia/05zardari. html?_r=1&th&emc=th&oref=slogin

Bhutto Widower With Clouded Past Is Set to Lead

Aamir Qureshi/Agence France-Presse — Getty Images
Asif Ali Zardari, the widower of former Prime Minister Benazir Bhutto, is expected to become president of Pakistan on Saturday.

By JANE PERLEZ
Published: September 4, 2008
ISLAMABAD, Pakistan — Asif Ali Zardari, the widower of Benazir Bhutto, is set to become president on Saturday, an accidental ascent for a man known more as a wheeler-dealer than a leader. He will start his tenure burdened by a history of corruption allegations that cloud his reputation even as they remain unproved.
Though he has won the reluctant support of the Bush administration, which views him as a willing partner in the campaign against terrorism, Mr. Zardari will assume the presidency with what many consider untested governing skills as a tough Taliban insurgency threatens the very fabric of Pakistan, a nuclear-armed state of 165 million people....
http://www.nytimes. com/2008/ 09/05/world/ asia/05zardari. html?_r=1&th&emc=th&oref=slogin

Islam and Modern Economic System

Islamic scholars have been seeking to devise a global banking system that would serve as an alternative to the usury-based scheme now in control internationally, and Iran has led the way in devising that model. Iran is characterized as a democratic Islamic republic, which enforces Islamic principles not only morally but legally and politically.
The Iranian government is among the few to have very little foreign debt. It uses its state-owned banks to make loans and credits available to industrial and agricultural projects. The most unique feature of the banking system, however, is that it follows the Islamic proscription against usury.*

*That means loans are made interest-free."

The recent sub prime crises in the US has shown what happens when predatory lending practices, which had so far been applied to nations, is applied to individuals.

Predatory lending is the practice of giving loans when it is clear that there is no hope of the loan being repaid. In this way the borrower becomes indebted for life to the lender. It creates rights for the lender on the borrowers property and most importantly lifestyle. The IMF ( as an agent of the US) has used this to lend to needy third world countries.

These Loans were usually accompanied by formulas which would enable the countries to get out of the debt trap. Those formulas usually had the opposite effect. Most countries ended up as serfs of the IMF/US for life. Their sole purpose in life is to work hard so that they can pay interest on these loans or otherwise face severe punishments.

On an individual level we are today witnessing in the US the same happening to individuals, who were given loans which turned bad on day one. This is likely to result in these people being thrown out of their homes or working hard to stay in their homes but never being able to pay off even the interest on these loans.

Like money lenders in the villages of Indo Pakistan, institution like Bank of America, Cit Bank, JP Morgan Chase and of course the IMF went looking for the down and outs so that they could develop annuities for themselves for ever.

El Dewani writes, "Relieved of their annual debt repayments, the severely indebted countries could use the funds for investments that in Africa alone would save the lives of about 21 million children by 2000 and provide 90 million girls and women with access to basic education."

The world needs Islamic Banking today like a man lost in the desert needs water. The only problem is that except for countries like Iran, the rest of the Muslim world is indebted to the US and the IMF. This is not a relationship that any one can get out of if they wished. On the other hand no one is more indebted to the rest of the world than the US. In many ways the shoe is on the other foot.

However people have never lent to the US thinking that they would never be able to repay. That prospect now looms over the horizon. The cries of the poor and the marginalised can be heard seeking retribution. Lenders to the US no longer want to lend, it money they would much rather own a piece of its assets.

Khusro

Behind the Drums of War with Iran: Nuclear Weapons or Compound Interest
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By Ellen Brown
On October 25, 2007, the United States announced harsh new penalties on the Iranian military and its state-owned banking systems. Sanctions, bellicose rhetoric and the implicit threat of military action are goads for another war, one that critics fear is more likely to ignite a nuclear holocaust than prevent one. The question is, what makes Iran such a serious threat? The official explanation is that it is planning to develop nuclear weapons, but the head of the UN watchdog agency IAEA says he has “no concrete evidence” of an Iranian weapons program.1 Moreover, even if there were one, a number of countries have tested or possess nuclear weapons outside the Nuclear Non-Proliferation Treaty, including Pakistan, North Korea, India, and probably Israel; yet we don’t consider that grounds for military action. Iran would just be joining a long list of nuclear powers.
Another theory says the push for war is all about oil; but Iran supplies only 15 percent of total Persian Gulf oil exports, and its oil is already for sale.22 We don’t need to go to war for it. We can just buy it.
A third theory says the saber-rattling is all about defending the dollar. Iran is threatening to open its own oil bourse, and it is already selling about 85 percent of its oil in non-dollar currencies. Iran has broken the petrodollar stranglehold imposed in the 1970s, when OPEC entered into a covert agreement with the United States to sell oil only in U.S. dollars. As Dr. Krassimir Petrov explained this potential motive in a 2006 editorial in Gold-Eagle.com:
As long as the dollar was the only acceptable payment for oil, its dominance in the world was assured, and the American Empire could continue to tax the rest of the world. If, for any reason, the dollar lost its oil backing, the American Empire would cease to exist. Thus, Imperial survival dictated that oil be sold only for dollars. . . . If someone demanded a different payment, he had to be convinced, either by political pressure or military means, to change his mind.3
An interesting theory, but it still fails to explain all the facts. In a March 2006 editorial in Asia Times Online, William Engdahl noted that war with Iran has been in the cards as part of the U.S. Greater Middle East strategy since the 1990s, long before Iran threatened to open its own oil bourse.4 And Iran is not alone in wanting to drop the dollar as its oil currency. To curb currency risks, Russia is planning to open an Energy Stock Exchange in St. Petersburg next year to trade oil in rubles, something that will have significantly more impact on the dollar than Iran’s oil bourse. Central bankers in Venezuela, Indonesia, and the United Arab Emirates have all said they will be investing less of their reserves in dollar assets due to the dollar’s weakening global position.5 Those countries are liable to switch to other currencies for their oil trades as well. Will the United States feel compelled to invade them all?
Each of these theories has some merit, but none of them seems to adequately explain the war drums. What is so special about Iran that keeps it squarely in the cross-hairs of the U.S. military? Here is another possibility: besides oil and the dollar, Iran poses a serious threat to a secret financial weapon that keeps a global banking empire in power . . . .
The Bankers’ Financial Weapon of Mass Destruction
Around 1980, when interest rates were soaring, Johnny Carson quipped on The Tonight Show that “Scientists have developed a powerful new weapon that destroys people but leaves buildings standing - it’s called the 17% interest rate.” Compound interest is the secret weapon that has allowed a global banking cartel to control most of the resources of the world. The debt trap snapped shut for many countries in 1980, when international interest rates shot up to 20 percent. At 20 percent interest compounded annually, $100 doubles in under 4 years; and in 20 years, it becomes a breathtaking $3,834.66 The devastating impact on Third World debtors was underscored by President Obasanjo of Nigeria, speaking in 2000 about his country’s mounting burden to international creditors. He said:
All that we had borrowed up to 1985 was around $5 billion, and we have paid about $16 billion; yet we are still being told that we owe about $28 billion. That $28 billion came about because of the injustice in the foreign creditors’ interest rates. If you ask me what is the worst thing in the world, I will say it is compound interest.7
In the late 1970s, the World Bank and International Monetary Fund began imposing “conditionalities” on loans to Third World debtor countries, requiring them to open up their capital markets, privatize their industries, and slash spending on social programs to insure that international lenders got their interest. By 2001, enough money had flowed back to First World banks from Third World debtors to pay the principal due on these loans six times over; but interest had consumed so much of those payments that the total debt actually quadrupled during the same period.88 In 1980, median income in the richest 10 percent of countries was 77 times greater than in the poorest 10 percent. By 1999, that gap had grown to 122 times greater. In December 2006, the United Nations released a reported titled “World Distribution of Household Wealth,” which concluded that 50 percent of the world’s population now owns only 1 percent of its wealth, while the richest 10 percent of adults owns 85 percent. Under current conditions, the debts of the poorer nations can never be repaid but will just continue to grow.
Miracle or Crime?
What bankers call the “miracle” of compound interest is called “usury” under Islamic law and is considered a crime. In the sixteenth century, Martin Luther redefined “usury” to mean the taking of “excess” interest; but under Old English law, taking any amount of interest was a crime. Modern Islamic thinkers are not averse to a profitable return on investment if it takes the form of “profit-sharing,” with investors taking some risk and sharing in business losses; but the usurer gets his interest no matter what. In fact he does better when the borrower fails. The borrower who cannot afford to pay off his loans sinks deeper and deeper into debt, as interest compounds annually to the lender. In The Coming First World Debt Crisis (2006), Ann Pettifor gives this modernized definition of “usury”:
Usury is the practice of exalting money values over human and environmental values; of creating money at no cost and lending at rates of interest intended not to foster and maintain humanity or the ecosystem, but to
a) accumulate reserves of unearned income;
b) extract wealth from the productive sector in a manner that is parasitic;
c) extract wealth from those who lack wealth (the asset-less); and
d) make a claim on the future.
It is this debt scheme, with its lethal weapon of interest compounded annually, that has allowed a small clique of financiers to dominate the business of the world. In Tragedy and Hope, Professor Carroll Quigley, Bill Clinton’s mentor at Georgetown University, wrote from personal knowledge of this group, which he called “the international bankers.” He said their aim was “nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole,” a system “to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements.”99 The key to the bankers’ success was that they would control and manipulate the money systems of the world while letting them appear to be controlled by governments.
The majority of the world has now been brought into this private central banking scheme, with private banks creating most of the money of most countries as interest-bearing loans. In the United States, the only money created by the government today consists of coins, which compose only about one one-thousandth of the total money supply. Federal Reserve Notes (dollar bills) are created by the Federal Reserve, a private banking corporation, and lent to the government; while the vast bulk of the money supply is created by commercial banks when they make loans, something they do by advancing “credit” created with accounting entries. Similar arrangements prevail in most countries. Even where the central bank is technically state-owned (as in the United Kingdom and Canada), it creates only the nation’s paper currency, leaving 95% or more of the money supply to be created by commercial banks.10
The alternative to this independent “central bank” system is what used to be called “national banking.” The nation’s state-owned central bank issued the national currency as an agent of the government, and spent the money or lent it into the economy for internal development and public needs. The goal of the international bankers was to “privatize” these state-owned banks and other state-owned or locally-owned assets, making them available for purchase and control by international finance capital. At a 1968 meeting in Canada of the secretive globalist group known as the Bilderbergers, George Ball, U.S. Undersecretary of State for Economic Affairs, spoke of creating a “world company.” Ball was also a managing director of banking giants Lehman Brothers and Kuhn Loeb. The world company of which he spoke would be a new form of colonialism, in which global assets would be acquired by economic rather than military coercion. The company would extend across national boundaries, aggressively engaging in mergers and acquisitions until the assets of the world were subsumed under one privately-owned corporation, with nation-states subservient to a private international central banking system.11
The first step in the process of prying resources loose from local economies was to induce national leaders to open up their capital and currency markets. In 1971, President Nixon took the U.S. dollar off the gold standard, making it the world’s “reserve currency” without the tether of gold. Dollars could then be created and lent to whatever extent lenders could find borrowers for them. In 1974, OPEC was induced to enter into an agreement to trade its oil only in U.S. dollars, and the price of oil then suddenly quadrupled. Countries that did not have the dollars they needed to buy oil had to borrow them. The IMF then imposed its “conditionalities,” including the privatization of state-owned oil industries and banks. In the ensuing decades, this and other predatory lending schemes brought most of the world under the heel of the international bankers.11
When Dominoes Won’t Fall
Iran was among the few nations to have escaped this global privatization scheme. Iran had its own oil. It managed to avoid the trap of letting its currency be devalued by speculators by imposing foreign exchange restrictions and price controls on its national currency (the rial), something it could afford to do because it had adequate foreign exchange reserves from its oil sales.12 Iran’s state-owned oil industry has allowed its economy to perform well, despite economic sanctions and rumors to the contrary.13 A “reformist” movement toward increased privatization ended in 2005, when Mahmoud Ahmadinejad was elected to the presidency. Ahmadinejad is a “populist” who has promised to redistribute Iranian oil wealth more expansively and has committed the government to funding public-sector projects and charitable investments.14
Islamic scholars have been seeking to devise a global banking system that would serve as an alternative to the usury-based scheme now in control internationally, and Iran has led the way in devising that model. Iran is characterized as a democratic Islamic republic, which enforces Islamic principles not only morally but legally and politically. The 1979 revolution overthrowing the American-backed Shah of Iran ended 2,500 years of monarchical rule. All domestic Iranian banks were then nationalized, and the government called for the establishment of an Islamic banking system that would replace interest payments with profit-sharing. Its state-owned central bank issues the national currency, with the “seigniorage” (the difference between the cost of producing money and its face value) accruing to the government rather than to private banks.15 The Iranian government is among the few to have very little foreign debt. It uses its state-owned banks to make loans and credits available to industrial and agricultural projects. The most unique feature of the banking system, however, is that it follows the Islamic proscription against usury. That means loans are made interest-free.16
At least, that is true in principle. To make their system work with the prevailing scheme, Islamic economists have had to come up with some creative definitions of “interest.” Assuming Iran can develop a workable alternative model, however, it might well threaten the usury-based banking system that now dominates international finance and trade. If governments were to start doing what banks do now - advancing “credit” created out of nothing with accounting entries - they could sidestep the hefty interest that is the principal cost of most government programs today.
Estimates are that eliminating interest charges could cut the cost of infrastructure, sustainable energy development and other government programs in half.17 Third World economies might then escape the grip of the global bankers, bringing a 300-year global banking empire crashing down.
The size of the stakes was suggested by Tarek El Diwany, a British expert in Islamic finance and the author of The Problem with Interest (2003). In a presentation at Cambridge University in 2002, he quoted a 1997 United Nations Human Development Report which said:
Relieved of their annual debt repayments, the severely indebted countries could use the funds for investments that in Africa alone would save the lives of about 21 million children by 2000 and provide 90 million girls and women with access to basic education.
El Diwany commented, “The UNDP does not say that the bankers are killing the children, it says that the debt is. But who is creating the debt? The bankers are of course. And they are creating the debt by lending money that they have manufactured out of nothing. In return the developing world pays the developed world USD 700 million per day net in debt repayments.” He concluded his presentation:
But there is hope. The developing nations should not think that they are powerless in the face of their oppressors. Their best weapon now is the very scale of the debt crisis itself. A coordinated and simultaneous large scale default on international debt obligations could quite easily damage the Western monetary system, and the West knows it. There might be a war of course, or the threat of it, accompanied perhaps by lectures on financial morality from Washington, but would it matter when there is so little left to lose? In due course, every oppressed people comes to know that it is better to die with dignity than to live in slavery. Lenders everywhere should remember that lesson well.18
That could explain the big guns trained on Iran. The intent may not be to thwart the development of nuclear weapons so much as to pluck a budding economic alternative out by its roots before it has a chance to spread. Dominoes that won’t fall into the debt trap must be pushed. Like in the brutal attacks in Lebanon in July 2006, the military targets in Iran are liable to be economic ones - ports, bridges, roads, airports, refiners.1920 The threat posed by Iran’s economic model will be obliterated by blasting it back into the Stone Age.
Ellen Brown, J.D., developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her eleven books include the bestselling Nature’s Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies. Her websites are www.webofdebt. com and www.ellenbrown. com.
Notes
1. “U.S.: Iran Seeks Nuclear Weapons,” http://news. yahoo.com (October 31, 2007).
2. Rob Kirby, “The Looming Fiat Currency Train Wreck,” www.financialsense. com (January 16, 2006).
3. Krassimir Petrov, “The Propose Iranian Oil Bourse,” www.gold-eagle. com (January 15, 2006).
4. William Engdahl, “Why Iran’s Oil Bourse Can’t Break the Buck,” Asia Times Online (March 10, 2006).
5. Julian Phillips, “Gold Positive: Iran Wants Yen from Japan Not the U.S. $ for Oil,” www.goldseek. com (July 27, 2007).
6. “Compound Interest Week,” www.lazymanandmoney .com; Fido Compound Investment Tool Kit, www.fido.asic. gov.au.
7. Rodney Shakespeare, The Modern Universal Paradigm (2007), pages 63-64.
8. Achin Vanaik, “Cancel Third World Debt,” The Hindu (August 18, 2001), www.hindu.com.
9. Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (New York: Macmillan Company, 1966), page 324.
10. See Ellen Brown, “Dollar Deception: How Banks Secretly Create Money,” www.webofdebt. com/articles (July 3, 2007); Ellen Brown, Web of Debt (2007), chapter 2.
11. Daniel Estubin, “Bilderberg 2007 - Towards a One World Government?”, Nexus Magazine (August-September 2007).
11. E. Brown, Web of Debt, op. cit.
12. Taylor & Francis Group, The Middle East and North Africa (2003), pages 405-07; “Iran’s Exchange Rate Freeze,”www.farsinet. com (July 2003).
13. Kelly Campbell, “Is Iran Facing an Economic Crisis?”, www.usip.org (May 2007).
14. “Iran Profile,” www.austrade. gov.au (July 2007).
15. Kamran Dadkhah, “Reform of Exchange Market in Iran,” www.economics. northeastern. edu/papers/ documents/ 03-015.pdf (2003), page 4 (“Seigniorage” ); Clifford Thies, “Radioactive Money,” www.mises.org (March 2007).
16. “Economy of Iran,” http://en.wikipedia .org; “Iran Banking,” www.photius. com (2004).
17. Margrit Kennedy, Interest and Inflation-free Money (1995), discussed in Deidre Kent, “Margrit Kennedy Inspires New Zealand Groups to Establish Regional Money Systems,” McKeever Institute of Economic Policy Analysis, www.mkeever. com (2002).
18. Tarek El Diwany, “Third World Debt,” presentation at Cambridge University’s “One World Week” in February 2002, citing UNDP Human Development Report (1997), page 93; “A Debate on Money,” www.islamic- banking.com (July 2001).
19. “Lebanon’s Infastructure Dismantled,” www.democracynow. org (July 17, 2006). See John Perkins, Confessions of an Economic Hit Man (San Francisco: Berrett-Koehler Publishers, Inc., 2004).

Decline of the American Empire

I have been saying pretty much the same thing for two years in fact my horizon goes beyond that of Dr. Roubini, the difference is that Roubini is a Harvard Graduate, a PhD and a professor of Economics at NYU. It is getting difficult to ignore him and last Sunday the New York Times ran an article on his views in their Magazine .
http://www.nytimes. com/2008/ 08/17/magazine/ 17pessimist- t.html?ref= magazine

To quote from the article posted:

"US policy mistakes in economic, financial and foreign policies will steadily erode the power of the American Empire. This process will not be sudden and will take a couple of decades. But the trend is clear: the brief period of unipolar power of the American hyperpower is now over and a new age of balance of great powers is starting in the world. Also, the rise of non governmental actors – multinational corporations, NGOs, terrorist groups, non-nation state powers, failed and unstable states, non-traditional global players – will radically change the traditional balance of power as the power of nation states will shrink relative to that of other global players."

His comment about the rising influence of non state powers is right on. One group that he forgets to mention is the internet. Our own yahoogroup is a microcosm of thousands who are no longer just exchanging jokes,health tips and articles of interest. They are expressing their own views and opinions and they are expressing them without fear of censorship. Many nation states fearing the impact of the internet are trying without success to curb them.

Governments are too afraid to tell things as they are for fear of losing power or simply to avoid panic. The state of the world today is no more dangerous than at other momentous times, the difference is that because of the information explosion it is there for all to see. If we are more aware then it places on us the responsibility to act. Whether this reaction is in the form of protecting our financial assets, our retirement nest egg or looking for a safe haven to live in will depend on each individual. The most common reaction is to go into denial and hope that the world that we have become trained in will never change.

I do not agree with the hope that Roubini expresses that there will be an equilibrium achieved by a balancing of power. The US will never allow this. They will continue to be in denial up to their last breath and unwittingly create a greater catastrophe then would happen with an orderly transition. We are already beginning to see that Obama and McCain are fighting to become the next Imperial President.

Khusro



Recent economic, financial and geopolitical events suggest that the decline of the American Empire has started. After the collapse of the Soviet Union there was a brief period where the world switched from a bipolar balance of two superpowers to a unipolar world with one economic, financial, geostrategic superpower, or better, hyperpower, i.e the United States. But by now three factors suggest that the US has squandered its unipolar moment and that the decline of the American Empire – as the US was in effect a global empire – has started.

Let us explain how and why...First, the US squandered its power by relying excessively on its hard military power in the wars of Iraq and Afghanistan and in its unilateralist foreign policy – including economic issues such as global warming - rather than relying more on its soft power of diplomacy and multilateralist approaches to global policy issues.

Second, regardless of mistaken US policies the rise of other economic and financial powers – the rise of China, the recent resurgence of Russia, the process of economic and political integration in the European Union, the emergence of India, and the rise of other regional powers such as Brazil, South Africa and Iran – implies that the relative economic, financial and geopolitical power of the US will be reduced over time. We are indeed slowly moving towards a multipolar world where there will be a balance of Great Powers rather than the hegemony of a single hyperpower. While on military terms the US is still the only superpower even its military power is now restricted by imperial overstretch and its armed forces being bogged down in Iraq and Afghanistan; thus, Russia has now been able to flex its muscle in its Central Asian backyard and humiliated the US – not just Georgia – in the latest conflict on South Ossetia. For the Bush administration having supported Georgia by words only and show its impotence – or unwillingness - to support an ally in spite of the administration push to have Georgia join NATO shows the limits of the American power. The US is at fault for effectively letting Georgia start a reckless attack on South Ossetia. Russia has scary and dangerous neo-imperial goals but deeply flawed US foreign policy of encircling a paranoid Russia allowed the worst nationalist tendencies of the Russian bear to reemerge.

Third, and more important, the US squandered its economic and financial power by running reckless economic policies, especially its twin fiscal and current account deficits. The last time around the current account started to go into negative territory in 1991 after a brief surplus during the 1990-91 recession. In the 1990s the growing US current account deficit was driven by a private investment boom – the internet technological revolution – and thus the accumulation of foreign liabilities of the US was driven by FDI and M&A activity, i.e the US accumulated foreign liabilities in the form of equity rather than debt. But since 2001 the further worsening of the US current account deficit was driven instead by growing fiscal deficits - especially in the 2001-2004 period – caused by unsustainable tax cuts and by the buildup of spending on foreign wars and on domestic security and since 2002 by the collapse of household savings and boom in investment in unproductive stock of housing capital that the housing bubble induced. And while the weak dollar is now inducing a modest improvement of the external deficit the looming sharp increase in fiscal deficits - that the current recession and financial crisis is inducing - will cause a return of twin deficits in the coming years. By now the US is the biggest net borrower in the world – running current account deficits still in the 700 billion dollars range – and the biggest net debtor20in the world with its foreign liabilities now over 2.5 trillion dollars.

The trouble with these twin deficits is multi-fold. First, superpowers and empires - like the British Empire at its peak - tend to be net lenders – i.e run current account surpluses – and be net creditors, not net debtors; The decline of the British Empire started in World War II when the British fiscal deficits in the war and the current account deficits turned that empire into a net borrower and a net debtor both in its public debt and external debt. That financial switch into an external debtor and borrower position was also the reason for the decline of the British pound as the leading reserve currency. And the British twin deficits were being financed by a rising economic and financial power that was a net lender and a net creditor, the US.

Second, the last time the US was running large twin deficits in the 1980s the main financers of these deficits were the friends and allies of the US, i.e Japan, Germany and Europe as the US external deficit was against these economies. Today instead the economic powers financing the US twin deficits are the strategic rivals of the US – China and Russia – and unstable petro-states, i.e Saudi Arabia, the Gulf States and other shaky petro-states. This system of vendor financing – with these US creditors providing both the goods being imported and the financing of such deficits – has led to a ba lance of financial terror: if these creditors were to pull the plug on the financing of the US twin deficits the dollar would collapse and US interest rates would go through the roof.

Third, while it is unlikely that China, Russia and other powers would suddenly pull the rug from under the US feet – as such action would lead to a sharp appreciation of their currency and negatively affect their export led growth model – relying excessively on the kindness of strangers – especially that of your strategic rivals – is extremely risky. Since almost 100 percent of all US fiscal deficits since 2001 have been financed by non-residents – as US residents net holdings of US Treasuries have been flat since 2001 - by now the total stock of US Treasuries held by non-residents is getting close to 60 percent. And the foreign financing of the US current account deficits has also become more risky: less FDI and equity, more debt, more short term debt, more debt held by official political actors – central banks and sovereign wealth funds – , less debt held by foreign private investors, and more debt held by politicals rivals rather than allies of the US. This change makes the US vulnerable to such rivals using the financial terror weapon – dumping US assets and or reduicing their financing of the US twin deficits – in situations of geostrategic tension.

Suppose Russia flexes further its muscle in its backyard20– under the pretense of defending abused Russian minorities in Ukraine, the Baltics and other former Soviet Union or Iron Curtain countries. Then Russia could use its financial power – the ability to dump hundreds of billions of dollar assets – to exert both financial and military influence. So could China over time if trouble in Taiwan or other disputed Asian territories become big geopolitical issues. Russia and China are already winning the new war for the control of commodities and ressources through their investments in Africa and Latin America - in the case of China – and its domestic and foreign control of energy and pipelines in Central Asia in the case of Russia. China and Russia are indeed winning the new Scramble for Resources.

Fourth, the foreign creditors of the US are getting tired of financing the US in the form of low-yielding US Treasuries. Thus the switch of such reserve holdings to SWFs that are planning to make large equity investments possibly with actual control of corporate firms and financial institutions that are desperate for capital to recapitalize themselves. But this desire of our creditors to get equity investments – the gems of the US corporate world - rather than low yield debt instruments is hitting the political backlash of financial protectionism as the UNOCAL- CNOOC, the Dubai Ports cases and the likely protectionist reform of the CIFIUS process of approving FDI in the US suggest. But a country that needs to borrow from abroad 700 to 800 billion dollar a year to finance its external deficit cannot afford to be too choosy on the ways – equity rather than debt – that its lenders and creditors want to finance those deficits. The first rule of good manners if you are a guest is that you don't spit on the plate from which your host is feeding you. But in its creeping financial protectionism the US thinks it can dictate to other countries the form and the terms of the financing of its twin deficits. This attitude will not be allowed by such creditors to last much longer.

The ensuing decline of the US dollar as the main reserve currency will take time and will not occur overnight; but it is inexorable given the relative fall in US economic, financial and geopolitical power. Already Russia is flexing its muscle and pushing for an international role of the ruble; the euro is rising as a major reserve currency; central banks and SWFs will slowly but surely start to diversify away from dollar assets especially as the Bretton Woods 2 regime starts to unravel; and even the RMB may become the dominant currency in Asia in the next decade as capital controls are slowly removed in China. It will take little time – if the secular decline of the value of the dollar continues – for oil and other commodities to be priced in currencies other than the dollar or in a basket of currencies.

All these changes in the economic, financial, reserve c urrency and geopolitical role and relative power of the US will not occur overnight. But the trend is clear. The rise of the BRICs and other emerging market economies; the continuation of the process of economic and political integration in Europe; the US policy mistakes in economic, financial and foreign policies will steadily erode the power of the American Empire. This process will not be sudden and will take a couple of decades. But the trend is clear: the brief period of unipolar power of the American hyperpower is now over and a new age of balance of great powers is starting in the world. Also, the rise of non governmental actors – multinational corporations, NGOs, terrorist groups, non-nation state powers, failed and unstable states, non-traditional global players – will radically change the traditional balance of power as the power of nation states will shrink relative to that of other global players.

Whether the decline of an hegemonic power providing global public goods – security, free trade, freer mobility of capital and people, inducements to free markets and democracy, better environment, peace – will lead to a more stable world with many powers multilaterally cooperating on these global economic, financial and geopolitical issues; or whether the absence of such stable hegemonic power will lead to a more unstable world characterized by conflicts – economic, political and even military – among traditional nation states, great powers and non-traditional20ac tors is an open and difficult issue. But it is certain that the decline of the American Empire has started.

The proposed impeachment of Musharraf

Musharraf is no longer going to Beijing, instead Gilani will go.

Zardari has promised to reinstate the Judiciary after Musharraf has been succesfully impeached. Surely if the Judiciary is reinstated now, they will force Musharraf out.

Zardari probably argues that Musharraf is more likely to sack the Government( and he has the power to do that) if there is a chance of the Judiciary being reinstated rather than if he is being impeached. Musharraf on the other hand promises that he will not sack the Government.

The hand of Zardari is written large on this latest move. He is too clever for Nawaz and has succeeded once again in delaying any action on restoring the judges. Nawaz's hatred for Musharraf and his need to take revenge for his ouster makes him a pliable object in Zardaris hand.

Within 5 months of the elections, Zardari has placed his men in strategic positions, Nawaz has been sidelined to the Punjab, Musharraf has been made powerless and the restoration of judges has been postponed indefinitely. There was a failed attempt to put the ISI under civilian control but no doubt he will try again.

Zardari has been able to achieve all this in spite of intense pressure from the lawyers to restore the judges, pressure from the Americans to keep Musharraf, pressure from Nawaz to get rid of Musharraf, pressure from dissidents within his own party who have been sidelined and reported pressure from his own children to restore the judges. In the game of power, Zardari is winning so far by keeping all the balls in the air. He reckons that time is on his side as he will agree to anything and do nothing. By neutralising Nawaz, he has taken the air out of the lawyers balloon which desperately need the support of a political party to show street strength.

The street smart Zardari recognises no ideology except power and money. His strength is that his opponents are weak and equally without ideology. The pretense of ideology in fact places a heavy weight on their shoulders and makes him more nimble. At the end of all this Musharraf will not be impeached, the Judges will not be restored, the ISI will continue to function independently of the civilians, America will pump in more money to keep the Economy going and Zardari will have made more money than in his previous incarnation.

Khusro

The thirty year war revisted

"US army and air-force plans for operations in Iraq each imply that Washington intends to establish a near-permanent presence that will remain almost independent of the wishes of any future administration; most analysts believe that even if the violence does continue to decline, the Pentagon envisages a total US military presence of around 50,000 for many years to come, backed up by many thousands more across the border in Kuwait as well as other forces in Qatar and Oman (see "The Iraq project", 30 January 2008). "

An interesting summary of a lot that has been written on the so called war on terror lately. Two things emerge from all the analyses. First the US intends to stay in Iraq with a reduced but still sizable presence. Second the theater of activity will shift to Afghanistan. Since this involves Pakistan, the stakes are going to be higher because of the population involved. Negroponte representing the diplomatic thrust and Mike Mullen the military, almost have second homes in Islamabad.

America has no patience for the civilian process and is keeping Musharraf in cold storage for when he is needed. Pakistan and the US have a joint interest in having a pipeline run from Turkmenistan through Afghanistan, Pakistan and even to the Arabian Sea. Pakistan's domestic dependence on natural gas is huge after having invested in the infrastructure.

The news for Pakistan is good and bad. The good news is that Pakistan's economy will be flooded with dollars, hyping the stock market and Real Estate. The bad news is if this backfires, then Pakistan will be taken over by forces not friendly to America and there will be American boots in parts of Pakistan and all hell will break loose.

Right now Oil in the Caspian and Kazakhastan and Gas in Turkmenistan is a prize which will tempt every American President. The whole strategy is so Pakistan dependant that it is almost certain to fail but failure will bring renewed chaos to a world still reeling from the Iraqi Invasion. Right now American has no realisation that a Nuclear weapon in the hands of Iran is far safer than a Nuclear weapon in the hands of Pakistan.

Khusro

The thirty-year war, revisited
Paul Rogers
The "war on terror" and the "long war" are losing their potency as shorthand guides to the global conflict. But the United States remains trapped by a military logic that guarantees an endless and unwinnable campaign, says Paul Rogers
31 - 07 - 2008
What is the most realistic description of the conflict the United States launched after the attacks of 11 September 2001? As the seventh anniversary of this founding event approaches, and with no end to the conflict in sight, leading analysts are seeking to consign the formerly potent notions of a "war on terror" (or its sobering successor the "long war") to early retirement. Some offer in their place a focus on "counter-terrorism" that argues against the idea that a "battlefield solution" to the military campaign is possible. A new report by the RAND Corporation, for example, concludes that "the U.S. approach to countering al Qa'ida has focused far too much on the use of military force. Instead, policing and intelligence should be the backbone of U.S. efforts" (see Seth G Jones & Martin C Libicki, How Terrorist Groups End: Lessons for Countering al Qa'ida, RAND Corporation, July 2008).
Paul Rogers is professor of peace studies at Bradford University, northern England. He has been writing a weekly column on global security on openDemocracy since 26 September 2001
This linguistic and intellectual shift might in principle be a small sign of an encouraging willingness to review the policy reactions and choices that have brought the United States and the world to this point - and to look for a better way. The problem, however, is twofold. First, the logic of the military definition of the conflict - and all the exercise of power and control that it implies - is so deeply rooted that it would take an immense effort of argument and will to reverse (see "A world beyond control", 22 May 2008).
Second, the current evidence on the ground in the two areas where US forces are engaged in large-scale operations - Iraq and Afghanistan - is cited by many subscribers to this logic as supporting the need to intensify, not reverse, the search for military solutions. The result is a double-bind: to extend even further the likely timespan of war, and to ensure that it remains even in its own terms unwinnable.
The near horizon
The case for progress in the two main theatres of war does not seem a harmful illusion to those who continue to make it. The latest statistic welcomed in support of it is that the United States's military death-toll in Iraq in July 2008 is on course to be the lowest since the war began in March 2003. The five American soldiers killed in combat in Iraq as of 31 July - a decline from May's total of fifteen and June's of twenty-three - is greeted by politicians, military strategists and (especially conservative) commentators hungry to find confirmation of the prevailing narrative of 2008: that the military "surge" strategy promoted by the George W Bush administration in early 2007 has been vindicated (see Dylan Matthews & Ezra Klein, "How important was the surge?", American Prospect, 28 July 2008).
The Pentagon is even hoping to begin a modest withdrawal of forces from the country in the autumn, enabling it to move more troops into Afghanistan during the winter. The prospect that this trend of events ostensibly holds out is that victory in the administration' s still-championed "war on terror" is now more or less assured - with a return to security and stability in Iraq making available the forces at last to defeat the Taliban in Afghanistan.
This anyway is the impression being given by those analysts in the United States who still cleave to the notion that this is the kind of conflict where "victory" in the classic sense of a vanquishing of a military enemy is possible. The surge's success in its aim of transforming "the conflict over power in Iraq from a military to a political struggle" is in this view a key index of current progress (see Kimberly Kagan, "The Future of Iraq: the decline of violence, the rise of politics", Weekly Standard, 28 July 2008).
The military knot
In addition to his weekly openDemocracy column, Paul Rogers writes an international security monthly briefing for the Oxford Research Group; for details, click here Paul Rogers's most recent book is Why We're Losing the War on Terror (Polity, 2007) - an analysis of the strategic misjudgments of the post-9/11 era and why a new security paradigm is needed
The pattern of incidents in the first half of 2008 suggested that the violence across most of Iraq was indeed abating, raising hopes of a definite turning of the page towards peace and security. Iraqi army units were also taking a larger role in operations, albeit they were still dependent on US air power, logistics and combat-support. This makes the sudden and unexpected escalation of violence represented by the bombings and subsequent violence in Baghdad and Kirkuk on 27 July 2008 all the more shattering.
The attacks on Shi'a pilgrims and Kurdish protestors respectively killed at least fifty-five people and wounded about 240; they were almost certainly perpetrated by Sunni militants and seem designed (as was the bombing of the al-Askari mosque in Samarra in February 2006 which opened the most ferociously sectarian phase of the war) to incite a vigorous counter-reaction from Shi'a militias (see "Iraq's burning season", 23 February 2006).
This is also a departure from the previous period of intense violence, the conflict between the Iraqi army and the (Shi'a) Mahdi army of Muqtada al-Sadr in Basra and Baghdad in April 2008. The combination shows how much potential for new outbreaks remain, and now narrow and fragile is the true margin of confidence that Iraq is moving beyond war (see Patrick Cockburn, Muqtada Al-Sadr and the Fall of Iraq, Faber, 2008).
The Baghdad and Kirkuk assaults have been followed by others, for example a suicide-bomb attack in Qayara (south of Mosul) on 31 July that killed three policemen and wounded four others - the fifth suicide-bomb in Iraq in as many days. These operations are a reminder that the most extreme elements of the Sunni paramilitary groups have not been brought under control. They also display the potential for a new and broader upsurge of violence, especially if some US forces are reassigned to Afghanistan (see Jennifer Koons, "Al-Qaeda in Iraq Down - But Not Out", Institute of War & Peace Reporting [IWPR], Iraqi Crisis Report 266, 25 July 2008). Even if these attacks do not provoke large-scale reprisals, they will still provide US negotiators with strong arguments to seek to persuade the Nouri al-Maliki government - against his expressed wish - that the United States must have an extended military presence in the country.
The Bush administration intended to complete negotiations on a long-term force agreement by now, but the al-Maliki government has been far stronger in its negotiating stance than had been expected, leading just to some short-term proposals with almost everything else on hold (see Gareth Porter, "'Pushover' Maliki stands his ground", Asia Times, 30 July 2008).
These problems do not in anyway diminish the determination of the US military to plan for a sustained involvement in Iraq (see "Iraq: a far horizon", 25 October 2007). Two recent developments confirm this: the US army's proposal to build new power-plants costing $184 million at five main bases in Iraq, and the US air-force training programme for long-term support of US troops on the ground.
If and when US troop numbers do decrease, their function is meant to change from a mixture of direct combat operations and the training of Iraqi forces to just the latter role. Yet the Iraqi forces cannot provide logistical support, they do not undertake aerial intelligence gathering and they have no capacity for close air support of combat troops. (Thom Shanker, "Air Force Plans Altered Role in Iraq", New York Times, 29 July 2008).
US forces will be embedded with Iraqi army units, but should they come under attack there will not be US ground forces to provide reinforcement. The air force thus expects to play a more direct role at this point - even though this is likely to mean close air-support operations in urban areas, with all the risks of civilian casualties that these entail.
The tightened grip
This probable development in Iraq comes at a time of increased US air operations in Afghanistan that as ever is accompanied by civilian casualties (see David Wood, "Afghan Air War Grows in Intensity", Baltimore Sun, 28 July). The intensity of the air war is one indication of the deterioration in security across southern and southeastern Afghanistan; in the week of 21-27 July 2008 there was an average of sixty-eight air-strikes each day, compared with thirty-five a year ago. This increased activity has entailed controversial incidents involving civilian deaths; US and Nato officials are currently investigating three incidents of such suspected "collateral damage" between 4 July and 20 July 2008 in which seventy-eight civilians were killed (see Candace Rondeaux, "Civilian Airstrike Deaths Probed", Washington Post, 25 July).
US army and air-force plans for operations in Iraq each imply that Washington intends to establish a near-permanent presence that will remain almost independent of the wishes of any future administration; most analysts believe that even if the violence does continue to decline, the Pentagon envisages a total US military presence of around 50,000 for many years to come, backed up by many thousands more across the border in Kuwait as well as other forces in Qatar and Oman (see "The Iraq project", 30 January 2008).
In itself this forward planning is hardly a surprise, given the long-term strategic significance of the region - and especially its oil reserves - to the United States. The country's need and vulnerability in this regard are highlighted by the steep oil-price rises and the intense competition for resources at a time of breakneck economic development. But a determined focus by Washington on the pursuit of its own perceived interests in Iraq - especially in the context of its close relationship with Israel - will also create further antagonism to the American presence in Iraq and the wider region.
The additional worry that an entrenched commitment to Iraq would raise is whether a lengthy occupation of Iraq will be paralleled by a drawn-out war in Afghanistan. All the signs of the June-July 2008 period are that Taliban and al-Qaida paramilitaries on both sides of the Afghanistan/ Pakistan border are growing in strength (see "Haqqani emerging as new leader of a resurgent Taliban", Times of India, 31 July 2008). Al-Qaida itself is reportedly reconfiguring its energies from Iraq to Afghanistan - in effect back to its home base, except this time the key areas will be on both sides of the Afghanistan/ Pakistan border (see Robert Burns, "Al Qaeda Shifting Focus from Iraq", Washington Times, 20 July 2008).
The loose affiliation of networks is also proving successful in recruiting many new potential paramilitaries - from Turkey, central Asia and across the middle east (see Kathy Gannon, "Al-Qaeda Recruiting Scores of New Jihadis", Philadelphia Inquirer, 18 July 2008). Most of them are entering Pakistan and are receiving their training there rather than (as with an earlier generation of militants) in Afghanistan. Such is the control that the Pakistani Taliban groups have in the border areas that camps are now operating just a few miles from the regional capital, Peshawar (see Zahid Hussain, "In Pakistan Mountains, Jihadis train for War", Wall Street Journal, 28 July 2008).
Indeed, Peshawar itself is now surrounded on three sides by territory controlled be Taliban militias. Pakistan's capital, Islamabad, and its main military city, Rawalpindi, are only ninety minutes' drive down the eastern highway on the fourth side (see Jackie Northam, "Taliban Tightens Grip Near Northern Pakistan Border", National Public Radio, 25 July 2008).
The far horizon
For the Pentagon, the deteriorating situation in Afghanistan and related problems in western Pakistan demand a substantial military expansion: in effect, a new phase in the overall war. This will be heralded by an additional US combat brigade of 3,500 troops in autumn 2008, but it could yet involve many thousands more troops over the next year. It also comes at a time when US intelligence agencies are becoming more questioning of the loyalties of their putative allies in Pakistan (see "CIA cites Pakistan spy agency's ties to militants", International Herald Tribune, 30 July 2008).
A greater western presence in Afghanistan, and / or an increase in US action in Pakistan, could - according to some experienced Pakistani civil servants as well as many independent analysts in the region - be deeply counterproductive, in that these measures are likely to produce a strong reaction against what is already widely seen as a foreign occupation (see Ahmed Rashid, Descent into Chaos: The United States and the Failure of Nation Building in Pakistan, Afghanistan, and Central Asia, Penguin, 2008). But in political terms the momentum is towards such escalation: there is, for example, bipartisan support in the United States for an expanded military commitment in the region, with both Barack Obama and John McCain seeing this as an essential part of the US's response to current pressures.
The war in Afghanistan started in October 2001, achieved the overthrow of the the Taliban regime in November and was assumed to have been won by January 2002. By that time, an extension of the war to Iraq was becoming foreseeable. In three months' time, the combatants will enter the eighth year of a conflict that has already lasted far longer than the full span of the second world war (see "Afghanistan' s Vietnam portent", 17 April 2008).
The likelihood is that in 2008-09 the conflict will intensify as it extends to western Pakistan. This, alongside other developments in Iraq and Afghanistan, suggests a different perspective on its overall timeframe which can draw a number of indicators to substantiate it: that this is a war still in its early stages, and that it will continue irrespective of whether John McCain or Barack Obama wins the United States presidential election on 4 November 2008 (see Anthony Cordesman, "The presidential campaign, the Iraq and Afghan-Pakistan wars, and the coming year of uncertainty", CSIS, 21 May 2008).
Indeed, predictions of a thirty-year war made at the time of the initial occupation of Iraq - which may then have seemed outlandish, given the euphoria at the apparent success of the short-sharp invasion - remain all too plausible (see "A thirty-year war" [4 April 2003] and "Permanent occupation?" [24 April 2003]). Whatever the answer to the question about the most realistic description of the conflict launched after 9/11, this conflict may indeed - unless there is a decisive shift towards a different security paradigm - be measured in decades not years.

Capitalism and Islam

A lecture delivered by me in New York in March of this year. The lecture does not mention that India , China . Russia have made great strides in modern times by adopting Capitalism. Obviously Capitalism cannot be so bad except in all of these countries, the economic inequality of people is perpetuated. The rich become rich through access to power and once there they keep out the competition through access to power and capital. Adam Smith must be turning in his grave with disgust.

The idea of Islam presenting a better solution could be hilarious to many considering the lack of Islamic contributions to anything in modern times. I do believe Islam to be a very forward looking religion in spite of the retrogade practices of it's followers in recent times. I expect to write more in this subject in future. In the meantime feel free to circulate this lecture to your Capitalist friends.

Khusro

Date: Monday, March 31, 2008, 11:36 PM
Capitalism and Islam


Introduction

Capitalism is a modern concept for many practices which have been going on for centuries. In the olden days there was Feudalism which relied on a tribe financing itself with Taxes, levies and penalties. Then came Mercantilism which was the opening of new trade and new markets. This was backed by Governments and resulted in the discovery of America .

Islam practiced Capitalism mush earlier, between the 9th and 12 th Centuries. There were trading companies, Bills of Exchange, contracts, Mudarabas ( Limited Partnerships) Profit, Capital ( al-Mal).

The concept of private property was not introduced until the 15th – 18th Centuries. The economics of the world got modified as it moved from Agricultural to Maritime to Industrial societies.

As we know it today Capitalism means the right of an individual to become an entrepreneur for the purpose of making profit. This profit is made by making goods and services available to buyers in a free market environment where prices are set by supply and demand. It is assumed that a free market will allow competition which in turn will result in productivity and efficiency . It is assumed that there will be no Government intervention except to make sure that there is no cheating and the market is truly free.

Adam Smith, The rise of Capitalism

“Adam Smith's great book, The Wealth of Nations, was published in 1776, at a time when the power of free trade and competition as stimulants to innovation and progress was scarcely understood. Governments granted monopolies and gave subsidies to protect their own merchants, farmers and manufacturers against 'unfair' competition. The guilds operated stern local cartels: artisans of one town were prevented from travelling to another to find work. Local and national laws forbade the use of new, labour-saving machinery. And, not surprisingly to us today, poverty was accepted as the common, natural, and inevitable lot of most people. Adam Smith railed against this restrictive, regulated, 'mercantilist' system, and showed convincingly how the principles of free trade, competition, and choice would spur economic development, reduce poverty, and precipitate the social and moral improvement of humankind. To illustrate his concepts, he scoured the world for examples that remain just as vivid today: from the diamond mines of Golconda to the price of Chinese silver in Peru ; from the fisheries of Holland to the plight of Irish prostitutes in London . And so persuasive were his arguments that they not only provided the world with a new understanding of the wealth-creating process; they laid the intellectual foundation for the great era of free trade and economic expansion that dominated the Nineteenth Century. The Wealth of Nations changed our understanding of the economic world just as Newton 's Principia changed our understanding of the physical world and Darwin 's Origin of Species. “

Victory over Communism

After the second world war, Capitalism as represented by the US and Western Europe, clashed with Communism as represented by the USSR and Eastern Europe and for almost 50 years the cold war raged on as to which system would survive. As we know Capitalism was victorious and Communism collapsed and disintegrated. All this means is that Capitalism was better than Communism, to my mind it does not mean that Capitalism is the best Economic system. There are huge differences between the theory preached by Adam Smith and it's practice..
Nowhere in the world is it more seriously practiced than in the US . While Europeans are inclined to mix it with some form of Socialism, for the Americans it is almost a religious belief to keep it pure.

Does Capitalism create Wealth

Amongst the people rooting for free markets, competition and profits was myself until I became more aware of what was really driving Capitalism. It was not until I looked more deeply into Capitalism that I realized that the two things that were driving Capitalism as we know it are Greed and Exploitation. Individualism is driven by self interest and self interest is driven by selfishness.

True the glitter and riches that we see in the US appear to be fruits of Capitalism but the wealth that has been created has been through the exploitation of the labor of the poor and the downtrodden. The fundamental theory of Capitalism is to create surplus by exploiting the true price of labor. Stealing the land of the American Indian and profiting from the labor of the African Slave and then exploiting Mexican and South American Labor are the foundations of US Prosperity.

Does Capitalism create Poverty

Capitalism creates great wealth but only for a few. Today 1% of the worlds Population controls 80% of the worlds resources.( Vandana Shiva quoting from the Helsinki reports). The income distribution of Capitalism is so lopsided that Capitalism has actually created poverty. The Rich will keep getting richer and the poor will keep getting poorer. The rich once they achieve wealth also achieve power and they make sure that the rules are written in their favor. The Auto Industry in the US joined hands with the rubber and glass Industry to make sure that the railroad system never took off. The US has the most miserable public transport system because GM and the tire Industry made sure that people relied on cars for transportation.
The Defence Industry makes sure that there is a war every few years so that they can sell arms. The oil Industry created a revolution in Iran to make sure that oil prices were kept low.

We have been here before when the "System" tried to manipulate markets.

Silver ( 1980), When the Hunt's had begun accumulating silver back in 1973 the price was in the $1.95 / ounce range. Early in '79, the price was about $5. Late '79 / early '80 the price was in the $50's, peaking at $54.
The collapse of the silver market meant countless losses for speculators. The Hunt brothers declared bankruptcy. By 1987 their liabilities had grown to nearly $2.5 billion against assets of $1.5 billion. In August of 1988 the Hunts were convicted of conspiring to manipulate the market.
S& L Scandal The US Savings and Loan crisis of the 1980s and 1990s was the failure of several savings and loan associations in the United States. More than 1,000 savings and loan institutions (S&Ls) failed in "the largest and costliest venture in public misfeasance, malfeasance and larceny of all time."[1] The ultimate cost of the crisis is estimated to have totaled around USD$160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government -- that is, the U.S. taxpayer, either directly or through charges on their savings and loan accounts-- [2], which contributed to the large budget deficits of the early 1990s.
The resulting taxpayer bailout ended up being even larger than it would have been because moral hazard and adverse-selection incentives compounded the system’s losses. [3]

The debts of Third World Countries ( 1983). In the 1960s and 1970s many Latin American countries, notably Brazil, Argentina, and Mexico, borrowed huge sums of money from international creditors for industrialization; especially infrastructure programs. These countries had soaring economies at the time so the creditors were happy to continue to provide loans. Between 1975 and 1982, Latin American debt to commercial banks increased at a cumulative annual rate of 20.4 percent. This heightened borrowing led Latin America to quadruple its external debt from $75 billion in 1975 to more than $315 billion in 1983, or 50 percent of the region's gross domestic product (GDP). Debt service (interest payments and the repayment of principal) grew even faster, reaching $66 billion in 1982, up from $12[ billion in 1975.[1]

1960s saw the US spend more than it had, resulting in the printing of more dollars.
Oil-producing countries, pegged to the dollar were affected as the value of the dollar decreased.
In 1973, the oil-producing countries hiked their prices as a result, earning a lot of money, which they put in to western banks.
Interest rates started to plummet resulting in more lending by banks to try and prevent a crisis.
A lot of the borrowed money went to western-backed dictators, resulting in little benefit for most people.
In 1982 Mexico defaulted on its debt payment, threatening the international credit system.
The IMF and World Bank stepped in to Mexico and other nations facing similar problems, prescribing their loans and structural adjustment policies to ensure debt repayment.
The poor have suffered the most as a result of the harsh conditions of structural adjustment.

the currencies of third world countries ( 1996), In 1996 international investors poured perhaps $100 billion into East Asia . East Asian economies were the darlings of the world capital market: it seemed as if everyone who wanted to lay claim to any financial sophistication was diversifying into these fast-growing economies. op-ed writers opine about "crony capitalism" and "unsustainable investment" and "weak financial systems" and "over lending. "


Enron ( 2001), “The rise and fall of Enron is an instant classic in the annals of capitalism because, in one calamitous stroke, it wipes out so many sanctified illusions that rule in the magic marketplace. Enron embodies Nobel-class hubris like that of the market sophisticates who brought Long-Term Capital Management to ruin in 1998. It also smells of the raw monopolistic greed common a century ago. An energy-trading company that Wall Street had valued at $80 billion ten months ago is now a penny stock.” - William Greider.
Stockholders lost $60 billion in market value, long-serving employees lost more than $2 billion in pension money, and 5,600 people lost their jobs.
In just 15 years, Enron grew from nowhere to be America 's seventh largest company, employing 21,000 staff in more than 40 countries. But the firm's success turned out to have involved an elaborate scam. Enron lied about its profits and stands accused of a range of shady dealings, including concealing debts so they didn't show up in the company's accounts.
There was widespread collusion between Banks, Auditors and Enron’s management to perpetrate this fraud.

Sub prime loans. 2007 Sub prime lending is a general term that refers to the practice of making loans to borrowers who do not qualify for market interest rates because of problems with their credit history or the inability to prove that they have enough income to support the monthly payment on the loan for which they are applying.
The value of U.S. sub prime mortgages was estimated at $1.3 trillion as of March 2007, [10] with over 7.5 million first-lien sub prime mortgages outstanding. [11]Approximately 16% of sub prime loans with adjustable rate mortgages (ARM) were 90-days delinquent or in foreclosure proceedings as of October 2007, roughly triple the rate of 2005. [12] By January of 2008, the delinquency rate had risen to 21%.

The Government, the regulators, the rating agencies were all complicit in creating a crisis which now dwarfs other financial crises.


Colonisations have all exploited the colonised, whether it was by the Ottomans, the British, The French, The Belgians, the Spaniards, the Dutch or the Americans. The colonisation of the American Indian or of Black Africa or of India never benefited the colonised but enriched the coloniser beyond all reason.
The theme of greed, fraud, exploitation and collusion runs through all the above examples.
Capitalism has become a disease. There is no free market, there are simply monopolies. More over Capitalism has become Imperialism.

Capitalism and Islam

What I call run away Capitalism, What Naomi Klein calls Disaster Capitalism and Dr Reich calls Super Capitalism cannot be recognized by Islam. Greed and Exploitation are considered sin in Islam and virtues in Capitalism. The short term benefits of Capitalism have created long term disasters for mankind. The erosion of the environment, the stealing of other peoples land and resources, the creation of mass poverty are crimes of the highest order.

The urgent need to replace Capitalism

They are there because the culture of God has been replaced by a culture of Materialism. All the benefits of Capitalism vanish when Capitalism becomes master and the Capitalist becomes the slave.
Today Islam has no greater role to play than to come up with an alternative to a system that is no longer in the hands of the Capitalist, it has become the god of the Capitalist. While we can say that the goal of the Capitalist is to make money, let us leave them alone and get on with the other issues, it might have been fine, but Capitalism’s corrosive effect is so deep that it has tainted Democracy and other things valued by Humans. Today there is so much money in Democracy that the representatives are no longer the representatives of people but represent Corporations. The media is owned by Capitalists , who write what sells their ads rather than what is real news.

The role of Islam

This is a tall order. What we want to address is not just Capitalism but Imperialism, Journalism, Democracy and Poverty. Before we do that let us salute the energy generated by greed. The profit motive has unleashed the desire to take risk and innovate. Islam encourages Entrepreneurship, it encourages profits, it encourages risk taking and innovation. The question is, is greed the only way to make this happen. The question is are human beings driven by self interest or are they driven by something bigger than themselves.
That is the contribution that Islam has to make. Islam says and Allah says Worship me and no other. Islam says, the return is to Allah. The wealth that you create will not go with you. The end of life is not how big your house will be or how many cars you will own. The end will be determined by whether you have cheated, killed, exploited your fellow humans and how you will be held accountable for it.
If Islam were defining the issues, it would be a war on Poverty and not a war on Terrorism. Terrorism is a by product of the exploitation of the poor and the weak. It is a by product of the injustices of Imperialism. The answer is not to kill the poor but to recognize injustice and address it.

How can we even begin to address an alternative to Capitalism when Islam today funds the war on terrorism? Saudi Arabia through funds and Pakistan through it’s army are in the forefront of the fight to kill other Muslims. We have a long way to go before we can all get on the same agenda.
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