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**Armenian** · 09-17-2008, 09:27 AM

Re: America's Financial Crisis

Here is an interesting piece from Yesterday's New York Times.

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Wall Street�s Next Big Problem

WHEN I drove to the Beverly Hills offices of Drexel Burnham Lambert on Feb. 13, 1990, the last thing I expected to hear was that the investment bank where I worked was going under. Yet early that morning, we were told that the company was filing for bankruptcy. I was, to put it mildly, blown away. At the time, Drexel had $3.5 billion in assets and was the biggest underwriter of junk bonds. It all seemed like a very big deal at the time. But what�s happening this week makes me pine for the good old days. When Lehman Brothers filed for bankruptcy on Monday, it became the latest but surely not the last victim of the subprime mortgage collapse. Lehman owned more than $600 billion in assets. Financial institutions around the world have already reported more than half a trillion dollars of mortgage-related losses and that figure will most likely double or triple before the crisis exhausts itself.

But there is a bigger potential failure lurking: the American International Group, the insurance giant. It poses a much larger threat to the financial system than Lehman Brothers ever did because it plays an integral role in several key markets: credit derivatives, mortgages, corporate loans and hedge funds. Late Monday, A.I.G. was downgraded by the major credit rating agencies. This credit downgrade could require A.I.G. to post billions of dollars of additional collateral for its mortgage derivative contracts. Fat chance. That�s collateral A.I.G. does not have. There is therefore a substantial possibility that A.I.G. will be unable to meet its obligations and be forced into liquidation. A side effect: Its collapse would be as close to an extinction-level event as the financial markets have seen since the Great Depression.

A.I.G. does business with virtually every financial institution in the world. Most important, it is a central player in the unregulated, Brobdingnagian credit default swap market that is reported to be at least $60 trillion in size. Nobody knows this market�s real size, or who owes what to whom, because there is no central clearinghouse or regulator for it. Credit default swaps are a type of credit insurance contract in which one party pays another party to protect it from the risk of default on a particular debt instrument. If that debt instrument (a bond, a bank loan, a mortgage) defaults, the insurer compensates the insured for his loss. The insurer (which could be a bank, an investment bank or a hedge fund) is required to post collateral to support its payment obligation, but in the insane credit environment that preceded the credit crisis, this collateral deposit was generally too small.

As a result, the credit default market is best described as an insurance market where many of the individual trades are undercapitalized. But even worse, many of the insurers are grossly undercapitalized. In one case in the New York courts, the Swiss banking giant UBS is suing a hedge fund that said it would insure nearly $1.5 billion in bonds but was unable to do so. No wonder � the hedge fund had only $200 million in assets. If A.I.G. collapsed, its hundreds of billions of dollars of mortgage-related assets would be added to those being sold by other financial institutions. This would just depress values further. The counterparties around the world to A.I.G.�s credit default swaps may be unable to collect on their trades. As a large hedge-fund investor, A.I.G. would suddenly become a large redeemer from hedge funds, forcing fund managers to sell positions and probably driving down prices in the world�s financial markets. More failures, particularly of hedge funds, could follow. Regulators knew that if Lehman went down, the world wouldn�t end. But Wall Street isn�t remotely prepared for the inestimable damage the financial system would suffer if A.I.G. collapsed.

While Gov. David A. Paterson of New York on Monday allowed A.I.G. to borrow $20 billion from its subsidiaries, that move will only postpone the day of reckoning. The Federal Reserve was also trying to arrange at least $70 billion in loans from investment banks, but it�s hard to see how Wall Street could come up with that much money. More promisingly, A.I.G. asked the Federal Reserve for a bridge loan. True, there is no precedent for the central bank to extend assistance to an insurance company. But these are unprecedented times, and the Federal Reserve should provide A.I.G. with some form of financial support while the company liquidates its mortgage-related assets in an orderly manner. The Fed cannot afford to stand on principle. The myth of free markets ended with the takeover of Fannie Mae and Freddie Mac. Actually, it ended with their creation.

Source: http://www.nytimes.com/2008/09/16/op...ml?ref=opinion

**Armenian** · 09-17-2008, 09:31 AM

Re: America's Financial Crisis

Naturally, oil plays an immense factor in all this...

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Portrait of an Oil-Addicted Former Superpower

How Rising Oil Prices Are Obliterating America's Superpower Status

Nineteen years ago, the fall of the Berlin Wall effectively eliminated the Soviet Union as the world's other superpower. Yes, the USSR as a political entity stumbled on for another two years, but it was clearly an ex-superpower from the moment it lost control over its satellites in Eastern Europe. Less than a month ago, the United States similarly lost its claim to superpower status when a barrel crude oil roared past $110 on the international market, gasoline prices crossed the $3.50 threshold at American pumps, and diesel fuel topped $4.00. As was true of the USSR following the dismantling of the Berlin Wall, the USA will no doubt continue to stumble on like the superpower it once was; but as the nation's economy continues to be eviscerated to pay for its daily oil fix, it, too, will be seen by increasing numbers of savvy observers as an ex-superpower-in-the-making. That the fall of the Berlin Wall spelled the erasure of the Soviet Union's superpower status was obvious to international observers at the time. After all, the USSR visibly ceased to exercise dominion over an empire (and an associated military-industrial complex) encompassing nearly half of Europeand much of Central Asia. The relationship between rising oil prices and the obliteration of America's superpower status is, however, hardly as self-evident. So let's consider the connection.

Dry Hole Superpower

The fact is, America's wealth and power has long rested on the abundance of cheap petroleum. The United States was, for a long time, the world's leading producer of oil, supplying its own needs while generating a healthy surplus for export. Oil was the basis for the rise of the first giant multinational corporations in the U.S., notably John D. Rockefeller's Standard Oil Company (now reconstituted as Exxon Mobil, the world's wealthiest publicly-traded corporation). Abundant, exceedingly affordable petroleum was also responsible for the emergence of the American automotive and trucking industries, the flourishing of the domestic airline industry, the development of the petrochemical and plastics industries, the suburbanization of America, and the mechanizationof its agriculture. Without cheap and abundant oil, the United States would neverhave experienced the historic economic expansion of the post-World War II era. No less important was the role of abundant petroleum in fueling the global reach of U.S. military power. For all the talk of America's growing reliance on computers, advanced sensors, and stealth technology to prevail in warfare, it has been oil above all that gave the U.S. military its capacity to "project power" onto distant battlefields like Iraq and Afghanistan. EveryHumvee, tank, helicopter, and jet fighter requires its daily ration of petroleum, without which America's technology-driven military would be forced to abandon the battlefield. No surprise, then, that the U.S. Department of Defense is the world's single biggest consumer of petroleum, using more of it every day than the entire nation of Sweden.

From the end of World War II through the height of the Cold War, the U.S. claim to superpower status rested on a vast sea of oil. As long as most ofour oil came from domestic sources and the price remained reasonably low, the American economy thrived and the annual cost of deploying vast armies abroad was relatively manageable. But that sea has been shrinking since the 1950s. Domestic oil production reached a peak in 1970 and has been in decline ever since -- with a growing dependency on imported oil as the result. When it came to reliance on imports, the United States crossed the 50% threshold in 1998 and now has passed 65%. Though few fully realized it, this represented a significant erosion of sovereign independence even before the price of a barrel of crude soared above $110. By now, we are transferring such staggering sums yearly to foreign oil producers, who are using it to gobble up valuable American assets, that, whether we know it or not, we have essentially abandoned our claim to superpowerdom. According to the latest data from the U.S. Department of Energy, the United States is importing 12-14 million barrels of oil per day. At a current price of about $115 per barrel, that's $1.5 billion per day, or $548 billion per year. This represents the single largest contribution to America's balance-of-payments deficit, and is a leading cause for the dollar's ongoing drop in value. If oil prices rise any higher -- in response, perhaps, to a new crisis in the Middle East (as might be occasioned by U.S. air strikes on Iran) -- our annual import bill could quickly approach three-quarters of a trillion dollars or more per year. While our economy is being depleted of these funds, at a moment when credit is scarce and economic growth has screeched to a halt, the oil regimes on which we depend for our daily fix are depositing their mountains of accumulating petrodollars in "sovereign wealth funds" (SWFs) -- state-controlled investment accounts that buy up prized foreign assets in order to secure non-oil-dependent sources of wealth. At present, these funds are already believed to hold in excess of several trillion dollars; the richest, the Abu Dhabi Investment Authority (ADIA), alone holds $875 billion.

The ADIA first made headlines in November 2007 when it acquired a $7.5 billion stake in Citigroup, America's largest bank holding company. The fund has also made substantial investments in Advanced Micro Systems, a major chip maker, and the Carlyle Group, the private equity giant. Another big SWF, the Kuwait Investment Authority, also acquired a multibillion-dollar stake in Citigroup, along with a $6.6 billion chunk of Merrill Lynch. And these arebut the first of a series of major SWF moves that will be aimed at acquiring stakes in top American banks and corporations. The managers of these funds naturally insist that they have no intention of using their ownership of prime American properties to influence U.S. policy. In time, however, a transfer of economic power of this magnitude cannot help but translate into a transfer of political power as well. Indeed, this prospect has already stirred deep misgivings in Congress. "In the short run, that they [the Middle Eastern SWFs] are investing here is good," Senator Evan Bayh (D-Indiana) recently observed. "But in the long run it is unsustainable. Our power and authority is eroding because of the amounts we are sending abroad for energy=80�."

No Summer Tax Holiday for the Pentagon

Foreign ownership of key nodes of our economy is only one sign of fading American superpower status. Oil's impact on the military is another. Every day, the average G.I. in Iraq uses approximately 27 gallons of petroleum-based fuels. With some 160,000 American troops in Iraq, that amounts to 4.37 million gallons in daily oil usage, including gasoline for vans and light vehicles, diesel for trucks and armored vehicles, and aviation fuel for helicopters, drones, and fixed-wing aircraft. With U.S. forces paying, as of late April, an average of $3.23 per gallon for these fuels, the Pentagon is already spending approximately $14 million per day on oil ($98 million perweek, $5.1 billion per year) to stay in Iraq. Meanwhile, our Iraqi allies, who are expected to receive a windfall of $70 billion this year from the rising price of their oil exports, charge their citizens $1.36 per gallon for gasoline. When questioned about why Iraqis are paying almost a third less for oil than American forces in their country, senior Iraqi government officials scoff at any suggestion of impropriety. "America has hardly even begun to repay its debt to Iraq," said Abdul Basit, the head of Iraq's Supreme Board of Audit, an independent body that oversees Iraqi governmental expenditures. "This is an immoral request because we didn't ask them to come to Iraq, and before they came in 2003 we didn't have all these needs."

Needless to say, this is not exactly the way grateful clients are supposed to address superpower patrons. "It's totally unacceptable to me that we are spending tens of billions of dollars on rebuilding Iraq while they are putting tens of billions of dollars in banks around the world from oil revenues," said Senator Carl Levin (D-Michigan), chairman of the Armed Services Committee. "It doesn't compute as far as I'm concerned." Certainly, however, our allies in the region, especially the Sunni kingdoms of Kuwait, Saudi Arabia, and the United Arab Emirates (UAE) that presumably look to Washington to stabilize Iraq and curb the growing power of Shiite Iran, are willing to help the Pentagon out by supplying U.S. troops with free or deeply-discounted petroleum. No such luck. Except for some partially subsidized oil supplied by Kuwait, all oil-producing U.S. allies in the region charge us the market rate for petroleum. Take that as a striking reflection of how little credence even countries whose ruling elites have traditionally looked to the U.S. for protection now attach to our supposed superpower status. Think of this as a strikingly clear-eyed assessment of American power.

As far as they're concerned, we're now just another of those hopeless oil addicts driving a monster gas-guzzler up to the pump -- and they're perfectly happy to collect our cash which they can then use to cherry-pick our prime assets. So expect no summer tax holidays for the Pentagon, not in the Middle East, anyway. Worse yet, the U.S. military will need even more oil for the future wars on which the Pentagon is now doing the planning. In this way, the U.S. experience in Iraq has especially worrisome implications. Under the military "transformation" initiated by Secretary of Defense Donald Rumsfeld in 2001,the future U.S. war machine will rely less on "boots on the ground" and ever more on technology. But technology entails an ever-greater requirement for oil, as the newer weapons sought by Rumsfeld (and now Secretary of Defense Robert Gates) all consume many times more fuel than those they will replace. To put this in perspective: The average G.I in Iraq now uses about seven times as much oil per day as G.I.s did in the first Gulf War less than two decades ago. And every sign indicates that the same ratio of increase will apply to coming conflicts; that the daily cost of fighting will skyrocket; and that the Pentagon's capacity to shoulder multiple foreign military burdens will unravel. Thus are superpowers undone.

[...]

Source: http://www.tomdispatch.com/post/1749...ica_out_of_gas

**Armenian** · 09-17-2008, 09:32 AM

Re: America's Financial Crisis

An interesting analysis that can help one place current geopolitical situations around the world in a better perspective.

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The Rise of the Rest

It's true China is booming, Russia is growing more assertive, terrorism is a threat. But if America is losing the ability to dictate to this new world, it has not lost the ability to lead.

Fareed Zakaria NEWSWEEK

Americans are glum at the moment. No, I mean really glum. In April, a new poll revealed that 81 percent of the American people believe that the country is on the "wrong track." In the 25 years that pollsters have asked this question, last month's response was by far the most negative. Other polls, asking similar questions, found levels of gloom that were even more alarming, often at 30- and 40-year highs. There are reasons to be pessimistic�a financial panic and looming recession, a seemingly endless war in Iraq, and the ongoing threat of terrorism. But the facts on the ground�unemployment numbers, foreclosure rates, deaths from terror attacks�are simply not dire enough to explain the present atmosphere of malaise.

American anxiety springs from something much deeper, a sense that large and disruptive forces are coursing through the world. In almost every industry, in every aspect of life, it feels like the patterns of the past are being scrambled. "Whirl is king, having driven out Zeus," wrote Aristophanes 2,400 years ago. And�for the first time in living memory�the United States does not seem to be leading the charge. Americans see that a new world is coming into being, but fear it is one being shaped in distant lands and by foreign people.

Look around. The world's tallest building is in Taipei, and will soon be in Dubai. Its largest publicly traded company is in Beijing. Its biggest refinery is being constructed in India. Its largest passenger airplane is built in Europe. The largest investment fund on the planet is in Abu Dhabi; the biggest movie industry is Bollywood, not Hollywood. Once quintessentially American icons have been usurped by the natives. The largest Ferris wheel is in Singapore. The largest casino is in Macao, which overtook Las Vegas in gambling revenues last year. America no longer dominates even its favorite sport, shopping. The Mall of America in Minnesota once boasted that it was the largest shopping mall in the world. Today it wouldn't make the top ten. In the most recent rankings, only two of the world's ten richest people are American. These lists are arbitrary and a bit silly, but consider that only ten years ago, the United States would have serenely topped almost every one of these categories.

These factoids reflect a seismic shift in power and attitudes. It is one that I sense when I travel around the world. In America, we are still debating the nature and extent of anti-Americanism. One side says that the problem is real and worrying and that we must woo the world back. The other says this is the inevitable price of power and that many of these countries are envious�and vaguely French�so we can safely ignore their griping. But while we argue over why they hate us, "they" have moved on, and are now far more interested in other, more dynamic parts of the globe. The world has shifted from anti-Americanism to post-Americanism.

I. The End of Pax Americana

During the 1980s, when I would visit India�where I grew up�most Indians were fascinated by the United States. Their interest, I have to confess, was not in the important power players in Washington or the great intellectuals in Cambridge. People would often ask me about � Donald Trump. He was the very symbol of the United States�brassy, rich, and modern. He symbolized the feeling that if you wanted to find the biggest and largest anything, you had to look to America. Today, outside of entertainment figures, there is no comparable interest in American personalities. If you wonder why, read India's newspapers or watch its television. There are dozens of Indian businessmen who are now wealthier than the Donald. Indians are obsessed by their own vulgar real estate billionaires. And that newfound interest in their own story is being replicated across much of the world.

How much? Well, consider this fact. In 2006 and 2007, 124 countries grew their economies at over 4 percent a year. That includes more than 30 countries in Africa. Over the last two decades, lands outside the industrialized West have been growing at rates that were once unthinkable. While there have been booms and busts, the overall trend has been unambiguously upward. Antoine van Agtmael, the fund manager who coined the term "emerging markets," has identified the 25 companies most likely to be the world's next great multinationals. His list includes four companies each from Brazil, Mexico, South Korea, and Taiwan; three from India, two from China, and one each from Argentina, Chile, Malaysia, and South Africa. This is something much broader than the much-ballyhooed rise of China or even Asia. It is the rise of the rest�the rest of the world.

We are living through the third great power shift in modern history. The first was the rise of the Western world, around the 15th century. It produced the world as we know it now�science and technology, commerce and capitalism, the industrial and agricultural revolutions. It also led to the prolonged political dominance of the nations of the Western world. The second shift, which took place in the closing years of the 19th century, was the rise of the United States. Once it industrialized, it soon became the most powerful nation in the world, stronger than any likely combination of other nations. For the last 20 years, America's superpower status in every realm has been largely unchallenged�something that's never happened before in history, at least since the Roman Empire dominated the known world 2,000 years ago. During this Pax Americana, the global economy has accelerated dramatically. And that expansion is the driver behind the third great power shift of the modern age�the rise of the rest.

At the military and political level, we still live in a unipolar world. But along every other dimension�industrial, financial, social, cultural�the distribution of power is shifting, moving away from American dominance. In terms of war and peace, economics and business, ideas and art, this will produce a landscape that is quite different from the one we have lived in until now�one defined and directed from many places and by many peoples. The post-American world is naturally an unsettling prospect for Americans, but it should not be. This will not be a world defined by the decline of America but rather the rise of everyone else. It is the result of a series of positive trends that have been progressing over the last 20 years, trends that have created an international climate of unprecedented peace and prosperity.

I know. That's not the world that people perceive. We are told that we live in dark, dangerous times. Terrorism, rogue states, nuclear proliferation, financial panics, recession, outsourcing, and illegal immigrants all loom large in the national discourse. Al Qaeda, Iran, North Korea, China, Russia are all threats in some way or another. But just how violent is today's world, really? A team of scholars at the University of Maryland has been tracking deaths caused by organized violence. Their data show that wars of all kinds have been declining since the mid-1980s and that we are now at the lowest levels of global violence since the 1950s. Deaths from terrorism are reported to have risen in recent years. But on closer examination, 80 percent of those casualties come from Afghanistan and Iraq, which are really war zones with ongoing insurgencies�and the overall numbers remain small. Looking at the evidence, Harvard's polymath professor Steven Pinker has ventured to speculate that we are probably living "in the most peaceful time of our species' existence."

Why does it not feel that way? Why do we think we live in scary times? Part of the problem is that as violence has been ebbing, information has been exploding. The last 20 years have produced an information revolution that brings us news and, most crucially, images from around the world all the time. The immediacy of the images and the intensity of the 24-hour news cycle combine to produce constant hype. Every weather disturbance is the "storm of the decade." Every bomb that explodes is BREAKING NEWS. Because the information revolution is so new, we�reporters, writers, readers, viewers�are all just now figuring out how to put everything in context.

We didn't watch daily footage of the two million people who died in Indochina in the 1970s, or the million who perished in the sands of the Iran-Iraq war ten years later. We saw little of the civil war in the Congo in the 1990s, where millions died. But today any bomb that goes off, any rocket that is fired, any death that results, is documented by someone, somewhere and ricochets instantly across the world. Add to this terrorist attacks, which are random and brutal. "That could have been me," you think. Actually, your chances of being killed in a terrorist attack are tiny�for an American, smaller than drowning in your bathtub. But it doesn't feel like that.

The threats we face are real. Islamic jihadists are a nasty bunch�they do want to attack civilians everywhere. But it is increasingly clear that militants and suicide bombers make up a tiny portion of the world's 1.3 billion Muslims. They can do real damage, especially if they get their hands on nuclear weapons. But the combined efforts of the world's governments have effectively put them on the run and continue to track them and their money. Jihad persists, but the jihadists have had to scatter, work in small local cells, and use simple and undetectable weapons. They have not been able to hit big, symbolic targets, especially ones involving Americans. So they blow up bombs in caf�s, marketplaces, and subway stations. The problem is that in doing so, they kill locals and alienate ordinary Muslims. Look at the polls. Support for violence of any kind has dropped dramatically over the last five years in all Muslim countries.

Militant groups have reconstituted in certain areas where they exploit a particular local issue or have support from a local ethnic group or sect, most worryingly in Pakistan and Afghanistan where Islamic radicalism has become associated with Pashtun identity politics. But as a result, these groups are becoming more local and less global. Al Qaeda in Iraq, for example, has turned into a group that is more anti-Shiite than anti-American. The bottom line is this: since 9/11, Al Qaeda Central, the gang run by Osama bin Laden, has not been able to launch a single major terror attack in the West or any Arab country�its original targets. They used to do terrorism, now they make videotapes. Of course one day they will get lucky again, but that they have been stymied for almost seven years points out that in this battle between governments and terror groups, the former need not despair.

Some point to the dangers posed by countries like Iran. These rogue states present real problems, but look at them in context. The American economy is 68 times the size of Iran's. Its military budget is 110 times that of the mullahs. Were Iran to attain a nuclear capacity, it would complicate the geopolitics of the Middle East. But none of the problems we face compare with the dangers posed by a rising Germany in the first half of the 20th century or an expansionist Soviet Union in the second half. Those were great global powers bent on world domination. If this is 1938, as some neoconservatives tell us, then Iran is Romania, not Germany.

Others paint a dark picture of a world in which dictators are on the march. China and Russia and assorted other oil potentates are surging. We must draw the battle lines now, they warn, and engage in a great Manichean struggle that will define the next century. Some of John McCain's rhetoric has suggested that he adheres to this dire, dyspeptic view. But before we all sign on for a new Cold War, let's take a deep breath and gain some perspective. Today's rising great powers are relatively benign by historical measure. In the past, when countries grew rich they've wanted to become great military powers, overturn the existing order, and create their own empires or spheres of influence. But since the rise of Japan and Germany in the 1960s and 1970s, none have done this, choosing instead to get rich within the existing international order. China and India are clearly moving in this direction. Even Russia, the most aggressive and revanchist great power today, has done little that compares with past aggressors. The fact that for the first time in history, the United States can contest Russian influence in Ukraine�a country 4,800 miles away from Washington that Russia has dominated or ruled for 350 years�tells us something about the balance of power between the West and Russia.

Compare Russia and China with where they were 35 years ago. At the time both (particularly Russia) were great power threats, actively conspiring against the United States, arming guerrilla movement across the globe, funding insurgencies and civil wars, blocking every American plan in the United Nations. Now they are more integrated into the global economy and society than at any point in at least 100 years. They occupy an uncomfortable gray zone, neither friends nor foes, cooperating with the United States and the West on some issues, obstructing others. But how large is their potential for trouble? Russia's military spending is $35 billion, or 1/20th of the Pentagon's. China has about 20 nuclear missiles that can reach the United States. We have 830 missiles, most with multiple warheads, that can reach China. Who should be worried about whom? Other rising autocracies like Saudi Arabia and the Gulf states are close U.S. allies that shelter under America's military protection, buy its weapons, invest in its companies, and follow many of its diktats. With Iran's ambitions growing in the region, these countries are likely to become even closer allies, unless America gratuitously alienates them.

[...]

Source: http://www.newsweek.com/id/135380/output/print

**Armenian** · 09-17-2008, 09:32 AM

Re: America's Financial Crisis

�Velvet Revolutions� Backfire in Central Asia

Central Asia was the scene of several British-sponsored and American-sponsored attempts at regime change. The latter were characterised by velvet revolutions similar to the Orange Revolution in Ukraine and the Rose Revolution in Georgia. These velvet revolutions financed by the U.S. failed in Central Asia, aside from Kyrgyzstan where there had been partial success with the so-called Tulip Revolution. As a result the U.S. government has suffered major geo-strategic setbacks in Central Asia. All of Central Asia�s leaders have distanced themselves from America.

Russia and Iran have also secured energy deals in the region. America�s efforts, over several decades, to exert a hegemonic role in Central Asia seem to have been reversed overnight. The U.S. sponsored velvet revolutions have backfired. Relations between Uzbekistan and the U.S. were especially hard hit. Uzbekistan is under the authoritarian rule of President Islam Karamov. Starting in the second half of the 1990s President Karamov was enticed into bringing Uzbekistan into the fold of the Anglo-American alliance and NATO. When there was an attempt on President Karamov�s life, he suspected the Kremlin because of his independent policy stance. This is what led Uzbekistan to leave CSTO. But Islam Karamov, years later, changed his mind as to who was attempting to get rid of him.

According to Zbigniew Brzezinski, Uzbekistan represented a major obstacle to any renewed Russian control of Central Asia and was virtually invulnerable to Russian pressure; this is why it was important to secure Uzbekistan as an American protectorate in Central Asia. Uzbekistan also has the largest military force in Central Asia. In 1998, Uzbekistan held war games with NATO troops in Uzbekistan. Uzbekistan was becoming heavily militarized in the same manner as Georgia was in the Caucasus. The U.S. gave Uzbekistan huge amounts of financial aid to challenge the Kremlin in Central Asia and also provided training to Uzbek forces. With the launching of the �Global War on Terror,� in 2001, Uzbekistan, an Anglo-American ally, immediately offered bases and military facilities to the U.S. in Karshi-Khanabad.

The leadership of Uzbekistan already knew the direction the �Global War on Terror� would take. To the irritation of the Bush Jr. Administration, the Uzbek President formulated a policy of self-reliance. The honeymoon between Uzbekistan and the Anglo-American alliance ended when Washington D.C. and London contemplated removing Islam Karamov from power. He was a little too independent for their comfort and taste. Their attempts at removing the Uzbek President failed, leading eventually to a shift in geo-political alliances.

The tragic events of Andijan on May 13, 2005 were the breaking point between Uzbekistan and the Anglo-American alliance. The people of Andijan were incited into confronting the Uzbek authorities, which resulted in a heavy security clampdown on the protesters and a loss of lives. Armed groups were reported to have been involved. In the U.S., Britain, and the E.U., the media reports focused narrowly on human rights violations without mentioning the covert role of the Anglo-American alliance. Uzbekistan held Britain and the U.S. responsible accusing them of inciting rebellion.

M. K. Bhadrakumar, the former Indian ambassador to Uzbekistan (1995-1998), revealed that the Hezbut Tahrir (HT) was one of the parties blamed for stirring the crowd in Andijan by the Uzbek government. [9] The group was already destabilizing Uzbekistan and using violent tactics. The headquarters of this group happens to be in London and they enjoy the support of the British government. London is a hub for many similar organizations that further Anglo-American interests in various countries, including Iran and Sudan, through destabilization campaigns. Uzbekistan even started clamping down on foreign non-governmental organizations (NGOs) because of the tragic events of Andijan.

The Anglo-American alliance had played its cards wrong in Central Asia. Uzbekistan officially left the GUUAM Group, a NATO-U.S. sponsored anti-Russian body. GUUAM once again became the GUAM (Georgia, Ukraine, Azerbaijan and Moldava) Group on May 24, 2005. On July 29, 2005 the U.S. military was ordered to leave Uzbekistan within a six-month period.[10] Literally, the Americans were told they were no longer welcome in Uzbekistan and Central Asia. Russia, China, and the SCO added their voices to the demands. The U.S. cleared its airbase in Uzbekistan by November, 2005.

Uzbekistan rejoined the CSTO alliance on June 26, 2006 and realigned itself, once again, with Moscow. The Uzbek President also became a vocal advocate, along with Iran, for pushing the U.S. totally out of Central Asia. [11] Unlike Uzbekistan, Kyrgyzstan continued to allow the U.S. to use Manas Air Base, but with restrictions and in an uncertain atmosphere. The Kyrgyz government also would make it clear that no U.S. operations could target Iran from Kyrgyzstan.

Source: http://www.payvand.com/news/07/sep/1274.html

**Armenian** · 09-17-2008, 09:33 AM

Re: America's Financial Crisis

The geopolitical perspective.

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Europe and America: Sharing the Spoils of War

The �Pivotal Area� Discovered: Defining Geo-Strategic Boundaries

The �pivotal area� was used in Sir Halford J. Mackinder�s �Heartland� to describe the area of Eurasia that formed the pivotally important core of the global geo-strategic and geo-political environment. We now find that through geo-political realities and necessity the area in question must be redefined. Halford Mackinder coined the term to define an area within the Eurasian landmass, but it is apparent that the �pivotal area� in the truest sense of the word and possibly the �Heartland� itself is a much broader and diverse area that not only lies in Eurasia, but extends into Africa. The global environment is not static. It seems that this area is anchored by geographic reality, but is shifting because of socio-economic, demographic, and political factors. To define the pivotal area, we must look at the area(s) in which � in the course of the post-Cold War era � the U.S. military has been heavily involved in, from low spectrum to high spectrum warfare and operations. This also includes hostile economic actions and covert intelligence operations.

After pinpointing these areas one can set a conceptual boundary. This subject area is of vast geography, it includes the Balkans, the Caucasus, Central Asia, the Middle East, and East Africa. These regions, arguably, together form the tectonic plate that holds the globe together in a geo-political sense. It is this geographic stretch that has been, and continues, to be a geo-strategic chessboard for competitions of expansion and repulsion. These areas are also some of the most important cultural bridges on the face of the earth. The cultures and knowledge of different civilizations have interacted here for thousands of years. Intense cultural diffusion has also taken place within this geographic stretch as a global cross-road.

Zbigniew Brzezinski has also stipulated that an area roughly corresponded in geographic boundaries to the area that has just been defined is pivotal to global power and Eurasian security. Henry Kissinger has also more or less made similar statements by explaining the importance of neutralizing Iraq and Afghanistan (before its pro-Soviet government was overthrown), both Soviet allies, and containing an Iran fresh with revolutionary fervor in 1979. This was according to Henry Kissinger because of the pivotal importance of the area. [2] Global security encompasses this vast and �pivotal� area as a singularity and it is the Middle East that is the focal point of this geographic stretch.

From �Pivotal Area� to �Arc of Instability�

An arc of uncertainty and instability has been generated by Britain, Israel, the U.S., and their partners, including their intelligence apparatus, from East Africa and the Balkans to the Middle East, the Caucasus, and Central Asia. Decades of American-led military confrontations, low-intensity warfare, sanctions, economic manipulation, and intelligence operations have undermined the nation-states of the subject area. From the remains of the former Yugoslavia, Sudan, war-torn Somalia, and Anglo-American occupied Iraq to Afghanistan, Kashmir, and the South Federal District of the Russian Federation where Chechnya is located the U.S. has fomented instability. This area roughly corresponds to what Zbigniew Brzezinski calls the �Eurasian Balkans� an area that the U.S. must seek to manipulate and ultimately control should it continue to be a superpower. [3] The pivotal area has also synthetically been manufactured into a zone of instability that can be called the �Arc of Instability.�

In 1993, Zbigniew Brzezinski stated that, �The tragedies of Lebanon of the 1980s, or of Kurdistan and the former Yugoslavia of the early 1990s are previews of things to come within the Eurasian oblong of maximum danger.� [4] What was implied by Brzezinski was balkanization ranging from sectarianism to ethnic clashes. The situation in Iraq is part of this process, as are the tensions in Lebanon, Kosovo, Turkey, and Caucasia. A classical �divide and conquer� strategy is at play. The underlying objective is to provoke ethnic clashes across the Middle East and Central Asia. This venture, which is linked to Bzezinski�s forecast, is part of an agenda which consists in literally redrawing the map of this broader region. Moreover, there have also been attempts at sparking sectarian and ethnic differences in Iran from adjoining areas in Anglo-American occupied Iraq and NATO-garrisoned Afghanistan that implicate America and its allies.

CENTCOM and the Rimland: Encircling Russia, China, and Central Asia

CENTCOM more or less corresponds to what Brzezinski calls a �large geographic oblong that demarcates the central zone of global instability� which runs from the Balkans through the Middle East and Central Asia to Kashmir and East Africa. [5] This �central zone of global instability� is also linked to the central area of Nicholas Spykman�s �Rimland.� It must be noted that, during the Cold War, Nicholas Spykman was also known as a master of containment theory. The Rimland is the concept of a geographic area adjacent to the �Heartland� that is comprised of most of Europe, the Middle East, the Indian sub-continent, Southeast Asia, and the Far East. This area forms an enveloping geographic ring around Mackinder�s �Heartland.� In other words, the Rimland essentially surrounds the central, core region of Eurasia. CENTCOM lies in the axis or midpoint of Spykman�s Rimland. This area, the Rimland, was central to Cold War containment theories in regards to the Soviet Union and China, the �Red Giants.� The concept of this area was also used in geo-strategic planning in regards to Iraq, Iran, and Afghanistan. This is an important fact to remember, because it deeply influences American geo-strategy in regards to the Iraq-Iran War and the Soviet-Afghan War. The encirclement of the Eurasian core, which was where the Soviet Union was geographically placed, is still a U.S. objective after the end of the Cold War. Containment theory it appears may really have been more about �penetration.�

Penetration of the Eurasian core is underway. NATO is a bridgehead from Europe that is pushing towards Russia. An Asiatic sister-alliance of NATO is being forged against China. The axis of the Rimland, which includes the Middle East and Afghanistan, is being militarily infiltrated and mobilized by NATO and its allies. CENTCOM indeed is an appropriate and suitable name for this mid-area that is crucial and �central� to connecting the Asiatic and European flanks of any trans-Eurasian military network surrounding Russia and China. Furthermore, this area can also be used for creating a wedge between the European portion of Russia, which is the nerve of Russia, and China. Additionally, if one also examines the geographic position of U.S. and NATO military bases they are concentrated in the Rimland.

The Geo-Strategic Importance of the Middle East in regards to Eurasia

The Middle East, formerly called the Near East, is an abstract geographic concept that has been shifting with geo-strategic, political, and socio-economic policy. For example, there was a time when academics, map makers, and geographers considered the Balkans as a part of the region. In the mind of many the Middle East is a synonym for Arab World or for Southwest Asia, but both terms are different. The Middle East includes non-Arab countries like Iran, Turkey, and Cyprus. The term Southwest Asia also excludes Egypt, the European portion of Turkey in Thrace and even Greece, depending if you categorize it as a part of the region. The Middle East is a region that embraces three continents (two if you look at Europe and Asia as Eurasia); Europe, Asia, and Africa. It is from here that Anglo-American geo-strategists believed they could establish global hegemony by controlling Eurasia.

Three important maritime passages and five important bodies of water also are located or embrace the area around the Middle East. The important maritime passages and straits can be used to manipulate, cut, and control global navigation, international trade, maritime traffic, and energy supplies. Theses strategic maritime passages are the Suez Canal of Egypt, the Bosphorus/Bosporus of Turkey, and the Gate of Tears (Bab al-Mandeb) located between Djibouti and Yemen at the southern tip of the Red Sea. The five important bodies of water in this area are the Black Sea, the Caspian Sea, the Persian Gulf, the Red Sea, and the eastern end of the Mediterranean Sea. Control over these maritime passages would have grave ramifications for Russia, China, Iran, and any adversaries of NATO in regards to trade, naval movements, and energy supplies.

It is safe to say the post-Cold War objective of the United States in Eurasia is penetration. The different geographic regions of Europe and Asia are important, but they are not as pivotal in geo-strategic value as the Middle East and its geographic periphery (including Central Asia), which are also important energy hubs. If one scrutinizes a map of the earth or Eurasia they will notice that Indo-China or Japan or the Korean Peninsula cannot lead to any meaningful �penetration� of Eurasia. The Russian Federation also acts as a barrier to any drive from Eastern Europe that would be meaningless unless Ukraine fell into NATO�s orbit and Russia lost its Caucasian territories. Due to political realities India, the giant of the Indian sub-continent, can only be used as a counter-weight to China or to spoil the formation of a Eurasian alliance led by Russia, China, and Iran. Whatever value these geographic areas have in regards to containment theory is lost in regards to penetration, aside from India and Ukraine under the proper circumstances. It is from the Middle East and the area that has been mandated to the U.S. military under CENTCOM that Eurasian penetration can commence. Thus, it is by way of instability and war in this region that the U.S. and NATO have a pretext and justification for their military presence. It is also this area that will be the linkage between the military flanks being created against Russia, China, and their allies on the outer edges of Eurasia.

The Outer Peripheries of the �Arc of Instability� are manned by NATO

The hub of the �Arc of Instability� is where Iraq, Iran, Eastern Syria, and portions of Anatolia are geographically situated. This area is the most dangerous and volatile section of the �Arc of Instability.� Should a crisis with Iran and Syria be lit then the whole �Arc of Instability� can be lit ablaze like a powder keg. Iraq and the Persian Gulf are currently active and tense military zones of operation. This hub within the �Arc of Instability� is distinctly Anglo-American in its characteristic. It is the Anglo-American alliance that manages and oversees this war zone. Several European countries had initially posted their troops in Anglo-American occupied Iraq, but gradually reduced and removed their military contingents. Italy and Spain were amongst these countries. The European troop movements were publicly correlated to political changes in national governments within the respective capitals of these European countries. The aim of the troop movements was to portray the departures as acts of opposition to the war in Iraq. Angry European populations were misled into believing that a shift in foreign policy was underway, but this was an act of public deception. These nations compensated the broader war effort and agenda by deploying or re-shuffling their troops to Afghanistan or to Lebanon. Their actions were almost inconsequential to the broader war effort.

NATO members, such as Germany, are also involved and present in military operations in the Horn of Africa. The military activities of NATO and its members, including their almost perfectly coinciding military operations in the Eastern Mediterranean, the Red Sea, and the Arabian Sea, discloses advanced insight about a larger war agenda. The whole �Arc of Instability� is manned by NATO and close NATO allies, such as Australia and Israel. NATO as a whole is involved in the war project and American, British, Polish, Danish, Czech, and Romanian troops are present in Anglo-American occupied Iraq. Moreover, NATO is also responsible for certain aspects of military training inside Iraq. Additionally, there is a Franco-German presence in the Persian Gulf and NATO also has made security arrangements in the Persian Gulf with nations such as Kuwait.

However, what gives a particular NATO characteristic to the outer peripheries (tiers) of the �Arc of Instability� (in reality the area of military operations) is that greater numbers of NATO countries are involved in the military operations in these zones. Also NATO has an official mandate in these areas and has a role in the so-called �post-conflict� phase of operations in these areas. This phase in reality is the occupational and restructuring phase of the conflicts ensuing in the �Arc of Instability.� This form of �post-conflict� participation could also be linked to the low tolerance the populations of many of these NATO states would have in regards to casualties or supporting the war effort. The bulk of NATO troops have been positioned within the eastern and western outer peripheries of the military theatre of operations. Once again, the war zones almost precisely correspond to what is defined by the U.S. military as CENTCOM. It is only the former Yugoslavia that falls outside CENTCOM�s borders. It is from the Balkans that academics get the geo-political term �balkanization,� meaning to divide. The Balkans constitutes the westernmost periphery of the �Arc of Instability.�

[...]

Source: http://www.globalresearch.ca/index.p...xt=va&aid=6423

**Armenian** · 09-17-2008, 09:34 AM

Re: America's Financial Crisis

The Sino-Russian Alliance: Challenging America's Ambitions in Eurasia

Global Research, September 23, 2007

�But if the middle space [Russia and the former Soviet Union] rebuffs the West [the European Union and America], becomes an assertive single entity, and either gains control over the South [Middle East] or forms an alliance with the major Eastern actor [China], then America�s primacy in Eurasia shrinks dramatically. The same would be the case if the two major Eastern players were somehow to unite. Finally, any ejection of America by its Western partners [the Franco-German entente] from its perch on the western periphery [Europe] would automatically spell the end of America�s participation in the game on the Eurasian chessboard, even though that would probably also mean the eventual subordination of the western extremity to a revived player occupying the middle space [e.g. Russia].�

-Zbigniew Brzezinski (The Grand Chessboard: American Primacy and Its Geostrategic Imperatives, 1997)

Sir Isaac Newton�s Third Law of Motion states that �for every action there is an equal and opposite reaction.� These precepts of physics can also be used in the social sciences, specifically with reference to social relations and geo-politics. America and Britain, the Anglo-American alliance, have engaged in an ambitious project to control global energy resources. Their actions have resulted in a series of complicated reactions, which have established a Eurasian-based coalition which is preparing to challenge the Anglo-American axis.

Encircling Russia and China: Anglo-American Global Ambitions Backfire

�Today we are witnessing an almost uncontained hyper use of force � military force � in international relations, force that is plunging the world into an abyss of permanent conflicts. As a result we do not have sufficient strength to find a comprehensive solution to any one of these conflicts. Finding a political settlement also becomes impossible. We are seeing a greater and greater disdain for the basic principles of international law. And independent legal norms are, as a matter of fact, coming increasingly closer to one state�s legal system. One state and, of course, first and foremost the United States, has overstepped its national borders in every way.�

-Vladimir Putin at the Munich Conference on Security Policy in Germany (February 11, 2007)

What American leaders and officials called the �New World Order� is what the Chinese and Russians consider a �Unipolar World.� This is the vision or hallucination, depending on perspective, that has bridged the Sino-Russian divide between Beijing and Moscow. China and Russia are well aware of the fact that they are targets of the Anglo-American alliance. Their mutual fears of encirclement have brought them together. It is no accident that in the same year that NATO bombarded Yugoslavia, President Jiang Zemin of China and President Boris Yeltsin of Russia made an anticipated joint declaration at a historic summit in December of 1999 that revealed that China and the Russian Federation would join hands to resist the �New World Order.� The seeds for this Sino-Russian declaration were in fact laid in 1996 when both sides declared that they opposed the global imposition of single-state hegemony.

Both Jiang Zemin and Boris Yeltsin stated that all nation-states should be treated equally, enjoy security, respect each other�s sovereignty, and most importantly not interfere in the internal affairs of other nation-states. These statements were directed at the U.S. government and its partners. The Chinese and Russians also called for the establishment of a more equitable economic and political global order. Both nations also indicated that America was behind separatist movements in their respective countries. They also underscored American-led amibitions to balkanize and finlandize the nation-states of Eurasia. Influential Americans such as Zbigniew Brzezinski had already advocated for de-centralizing and eventually dividing up the Russian Federation.

Both the Chinese and Russians issued a statement warning that the creation of an international missile shield and the contravention of the Anti-Ballistic Missile Treaty (ABM Treaty) would destabilize the international environment and polarize the globe. In 1999, the Chinese and Russians were aware of what was to come and the direction that America was headed towards. In June 2002, less than a year before the onslaught of the �Global War on Terror,� George W. Bush Jr. announced that the U.S. was withdrawing from the ABM Treaty. On July 24, 2001, less than two months before September 11, 2001, China and Russia signed the Treaty of Good-Neighbourliness and Friendly Cooperation. The latter is a softly worded mutual defence pact against the U.S., NATO, and the U.S. sponsored Asian military network which was surrounding China. [1]

The military pact of the Shanghai Treaty Organization (SCO) also follows the same softly worded format. It is also worth noting that Article 12 of the 2001 Sino-Russian bilateral treaty stipulates that China and Russia will work together to maintain the global strategic balance, �observation of the basic agreements relevant to the safeguard and maintenance of strategic stability,� and �promote the process of nuclear disarmament.� [2] This seems to be an insinuation about a nuclear threat posed from the United States. Standing in the Way of America and Britain: A �Chinese-Russian-Iranian Coalition� As a result of the Anglo-American drive to encircle and ultimately dismantle China and Russia, Moscow and Beijing have joined ranks and the SCO has slowly evolved and emerged in the heart of Eurasia as a powerful international body.

The main objectives of the SCO are defensive in nature. The economic objectives of the SCO are to integrate and unite Eurasian economies against the economic and financial onslaught and manipulation from the �Trilateral� of North America, Western Europe, and Japan, which controls significant portions of the global economy. The SCO charter was also created, using Western national security jargon, to combat �terrorism, separatism, and extremism.� Terrorist activities, separatist movements, and extremist movements in Russia, China, and Central Asia are all forces traditionally nurtured, funded, armed, and covertly supported by the British and the U.S. governments. Several separatist and extremist groups that have destabilized SCO members even have offices in London.

Iran, India, Pakistan, and Mongolia are all SCO observer members. The observer status of Iran in the SCO is misleading. Iran is a de facto member. The observer status is intended to hide the nature of trilateral cooperation between Iran, Russia, and China so that the SCO cannot be labeled and demonized as an anti-American or anti-Western military grouping. The stated interests of China and Russia are to ensure the continuity of a �Multi-Polar World.� Zbigniew Brzezinski prefigured in his 1997 book The Grand Chessboard: American Primacy and the Geostrategic Imperatives and warned against the creation or �emergence of a hostile [Eurasian-based] coalition that could eventually seek to challenge America�s primacy.� [3] He also called this potential Eurasian coalition an ��antihegemonic� alliance� that would be formed from a �Chinese-Russian-Iranian coalition� with China as its linchpin. [4] This is the SCO and several Eurasian groups that are connected to the SCO.

In 1993, Brzezinski wrote �In assessing China�s future options, one has to consider also the possibility that an economically successful and politically self-confident China � but one which feels excluded from the global system and which decides to become both the advocate and the leader of the deprived states of the world � may decide to pose not only an articulate doctrinal but also a powerful geopolitical challenge to the dominant trilateral world [a reference to the economic front formed by North America, Western Europe, and Japan].� [5]

Brzezinski warns that Beijing�s answer to challenging the global status quo would be the creation of a Chinese-Russian-Iranian coalition: �For Chinese strategists, confronting the trilateral coalition of America and Europe and Japan, the most effective geopolitical counter might well be to try and fashion a triple alliance of its own, linking China with Iran in the Persian Gulf/Middle East region and with Russia in the area of the former Soviet Union [and Eastern Europe].� [6] Brzezinski goes on to say that the Chinese-Russian-Iranian coalition, which he moreover calls an �antiestablishmentarian [anti-establishmentarian] coalition,� could be a potent magnet for other states [e.g., Venezuela] dissatisfied with the [global] status quo.� [7] Furthermore, Brzezinski warned in 1997 that �The most immediate task [for the U.S.] is to make certain that no state or combination of states gains the capacity to expel the United States from Eurasia or even to diminish significantly its decisive arbitration role.� [8] It may be that his warnings were forgotten, because the U.S. has been repealed from Central Asia and U.S. forces have been evicted from Uzbekistan and Tajikistan.

�Velvet Revolutions� Backfire in Central Asia

Central Asia was the scene of several British-sponsored and American-sponsored attempts at regime change. The latter were characterised by velvet revolutions similar to the Orange Revolution in Ukraine and the Rose Revolution in Georgia. These velvet revolutions financed by the U.S. failed in Central Asia, aside from Kyrgyzstan where there had been partial success with the so-called Tulip Revolution. As a result the U.S. government has suffered major geo-strategic setbacks in Central Asia. All of Central Asia�s leaders have distanced themselves from America. Russia and Iran have also secured energy deals in the region. America�s efforts, over several decades, to exert a hegemonic role in Central Asia seem to have been reversed overnight. The U.S. sponsored velvet revolutions have backfired. Relations between Uzbekistan and the U.S. were especially hard hit.

Uzbekistan is under the authoritarian rule of President Islam Karamov. Starting in the second half of the 1990s President Karamov was enticed into bringing Uzbekistan into the fold of the Anglo-American alliance and NATO. When there was an attempt on President Karamov�s life, he suspected the Kremlin because of his independent policy stance. This is what led Uzbekistan to leave CSTO. But Islam Karamov, years later, changed his mind as to who was attempting to get rid of him. According to Zbigniew Brzezinski, Uzbekistan represented a major obstacle to any renewed Russian control of Central Asia and was virtually invulnerable to Russian pressure; this is why it was important to secure Uzbekistan as an American protectorate in Central Asia. Uzbekistan also has the largest military force in Central Asia. In 1998, Uzbekistan held war games with NATO troops in Uzbekistan. Uzbekistan was becoming heavily militarized in the same manner as Georgia was in the Caucasus. The U.S. gave Uzbekistan huge amounts of financial aid to challenge the Kremlin in Central Asia and also provided training to Uzbek forces.

With the launching of the �Global War on Terror,� in 2001, Uzbekistan, an Anglo-American ally, immediately offered bases and military facilities to the U.S. in Karshi-Khanabad. The leadership of Uzbekistan already knew the direction the �Global War on Terror� would take. To the irritation of the Bush Jr. Administration, the Uzbek President formulated a policy of self-reliance. The honeymoon between Uzbekistan and the Anglo-American alliance ended when Washington D.C. and London contemplated removing Islam Karamov from power. He was a little too independent for their comfort and taste. Their attempts at removing the Uzbek President failed, leading eventually to a shift in geo-political alliances.

The tragic events of Andijan on May 13, 2005 were the breaking point between Uzbekistan and the Anglo-American alliance. The people of Andijan were incited into confronting the Uzbek authorities, which resulted in a heavy security clampdown on the protesters and a loss of lives. Armed groups were reported to have been involved. In the U.S., Britain, and the E.U., the media reports focused narrowly on human rights violations without mentioning the covert role of the Anglo-American alliance. Uzbekistan held Britain and the U.S. responsible accusing them of inciting rebellion.

M. K. Bhadrakumar, the former Indian ambassador to Uzbekistan (1995-1998), revealed that the Hezbut Tahrir (HT) was one of the parties blamed for stirring the crowd in Andijan by the Uzbek government. [9] The group was already destabilizing Uzbekistan and using violent tactics. The headquarters of this group happens to be in London and they enjoy the support of the British government. London is a hub for many similar organizations that further Anglo-American interests in various countries, including Iran and Sudan, through destabilization campaigns. Uzbekistan even started clamping down on foreign non-governmental organizations (NGOs) because of the tragic events of Andijan. The Anglo-American alliance had played its cards wrong in Central Asia. Uzbekistan officially left the GUUAM Group, a NATO-U.S. sponsored anti-Russian body. GUUAM once again became the GUAM (Georgia, Ukraine, Azerbaijan and Moldava) Group on May 24, 2005.

On July 29, 2005 the U.S. military was ordered to leave Uzbekistan within a six-month period. [10] Literally, the Americans were told they were no longer welcome in Uzbekistan and Central Asia. Russia, China, and the SCO added their voices to the demands. The U.S. cleared its airbase in Uzbekistan by November, 2005. Uzbekistan rejoined the CSTO alliance on June 26, 2006 and realigned itself, once again, with Moscow. The Uzbek President also became a vocal advocate, along with Iran, for pushing the U.S. totally out of Central Asia. [11] Unlike Uzbekistan, Kyrgyzstan continued to allow the U.S. to use Manas Air Base, but with restrictions and in an uncertain atmosphere. The Kyrgyz government also would make it clear that no U.S. operations could target Iran from Kyrgyzstan.

[...]

Source: http://www.globalresearch.ca/index.p...xt=va&aid=6688

**Armenian** · 09-17-2008, 09:48 AM

Re: America's Financial Crisis

A very illuminating news report about the plunder of Iraq's natural resources currently going on by a consortium of Western powers. History is repeating once again, and once again it's more-or-less the same players. As the stress on global oil/gas reserves increases so will global wars. With the Russian Federation controlling a large percentage of these reserves, as well as having great influence in the oil/gas rich regions such as Central Asia and the Caspian Sea region, the emphasis on oil/gas exploitation will be placed upon other more vulnerable regions, namely Africa, the Middle East and South America. For those with a keen understanding of geopolitics it was obvious why the US and its allies went to war in Iraq and Afghanistan. Increasingly the masses are beginnings to see this obvious fact as well. So, the question remains: Will there be indignation or mass protests throughout the West? I'm afraid the answer is, no. With oil and gas prices rising higher and higher the masses will be made to comply.

Armenian

*****************************

Deals With Iraq Are Set to Bring Oil Giants Back

Four Western oil companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization as Saddam Hussein rose to power. Exxon Mobil, Shell, Total and BP � the original partners in the Iraq Petroleum Company � along with Chevron and a number of smaller oil companies, are in talks with Iraq�s Oil Ministry for no-bid contracts to service Iraq�s largest fields, according to ministry officials, oil company officials and an American diplomat. The deals, expected to be announced on June 30, will lay the foundation for the first commercial work for the major companies in Iraq since the American invasion, and open a new and potentially lucrative country for their operations.

The no-bid contracts are unusual for the industry, and the offers prevailed over others by more than 40 companies, including companies in Russia, China and India. The contracts, which would run for one to two years and are relatively small by industry standards, would nonetheless give the companies an advantage in bidding on future contracts in a country that many experts consider to be the best hope for a large-scale increase in oil production. There was suspicion among many in the Arab world and among parts of the American public that the United States had gone to war in Iraq precisely to secure the oil wealth these contracts seek to extract. The Bush administration has said that the war was necessary to combat terrorism. It is not clear what role the United States played in awarding the contracts; there are still American advisers to Iraq�s Oil Ministry.

Sensitive to the appearance that they were profiting from the war and already under pressure because of record high oil prices, senior officials of two of the companies, speaking only on the condition that they not be identified, said they were helping Iraq rebuild its decrepit oil industry. For an industry being frozen out of new ventures in the world�s dominant oil-producing countries, from Russia to Venezuela, Iraq offers a rare and prized opportunity. While enriched by $140 per barrel oil, the oil majors are also struggling to replace their reserves as ever more of the world�s oil patch becomes off limits. Governments in countries like Bolivia and Venezuela are nationalizing their oil industries or seeking a larger share of the record profits for their national budgets. Russia and Kazakhstan have forced the major companies to renegotiate contracts.

The Iraqi government�s stated goal in inviting back the major companies is to increase oil production by half a million barrels per day by attracting modern technology and expertise to oil fields now desperately short of both. The revenue would be used for reconstruction, although the Iraqi government has had trouble spending the oil revenues it now has, in part because of bureaucratic inefficiency. For the American government, increasing output in Iraq, as elsewhere, serves the foreign policy goal of increasing oil production globally to alleviate the exceptionally tight supply that is a cause of soaring prices. The Iraqi Oil Ministry, through a spokesman, said the no-bid contracts were a stop-gap measure to bring modern skills into the fields while the oil law was pending in Parliament.

It said the companies had been chosen because they had been advising the ministry without charge for two years before being awarded the contracts, and because these companies had the needed technology. A Shell spokeswoman hinted at the kind of work the companies might be engaged in. �We can confirm that we have submitted a conceptual proposal to the Iraqi authorities to minimize current and future gas flaring in the south through gas gathering and utilization,� said the spokeswoman, Marnie Funk. �The contents of the proposal are confidential.� While small, the deals hold great promise for the companies. �The bigger prize everybody is waiting for is development of the giant new fields,� Leila Benali, an authority on Middle East oil at Cambridge Energy Research Associates, said in a telephone interview from the firm�s Paris office. The current contracts, she said, are a �foothold� in Iraq for companies striving for these longer-term deals.

Any Western oil official who comes to Iraq would require heavy security, exposing the companies to all the same logistical nightmares that have hampered previous attempts, often undertaken at huge cost, to rebuild Iraq�s oil infrastructure. And work in the deserts and swamps that contain much of Iraq�s oil reserves would be virtually impossible unless carried out solely by Iraqi subcontractors, who would likely be threatened by insurgents for cooperating with Western companies. Yet at today�s oil prices, there is no shortage of companies coveting a contract in Iraq. It is not only one of the few countries where oil reserves are up for grabs, but also one of the few that is viewed within the industry as having considerable potential to rapidly increase production.

David Fyfe, a Middle East analyst at the International Energy Agency, a Paris-based group that monitors oil production for the developed countries, said he believed that Iraq�s output could increase to about 3 million barrels a day from its current 2.5 million, though it would probably take longer than the six months the Oil Ministry estimated. Mr. Fyfe�s organization estimated that repair work on existing fields could bring Iraq�s output up to roughly four million barrels per day within several years. After new fields are tapped, Iraq is expected to reach a plateau of about six million barrels per day, Mr. Fyfe said, which could suppress current world oil prices. The contracts, the two oil company officials said, are a continuation of work the companies had been conducting here to assist the Oil Ministry under two-year-old memorandums of understanding. The companies provided free advice and training to the Iraqis. This relationship with the ministry, said company officials and an American diplomat, was a reason the contracts were not opened to competitive bidding.

A total of 46 companies, including the leading oil companies of China, India and Russia, had memorandums of understanding with the Oil Ministry, yet were not awarded contracts. The no-bid deals are structured as service contracts. The companies will be paid for their work, rather than offered a license to the oil deposits. As such, they do not require the passage of an oil law setting out terms for competitive bidding. The legislation has been stalled by disputes among Shiite, Sunni and Kurdish parties over revenue sharing and other conditions. The first oil contracts for the majors in Iraq are exceptional for the oil industry. They include a provision that could allow the companies to reap large profits at today�s prices: the ministry and companies are negotiating payment in oil rather than cash.

�These are not actually service contracts,� Ms. Benali said. �They were designed to circumvent the legislative stalemate� and bring Western companies with experience managing large projects into Iraq before the passage of the oil law. A clause in the draft contracts would allow the companies to match bids from competing companies to retain the work once it is opened to bidding, according to the Iraq country manager for a major oil company who did not consent to be cited publicly discussing the terms. Assem Jihad, the Oil Ministry spokesman, said the ministry chose companies it was comfortable working with under the charitable memorandum of understanding agreements, and for their technical prowess. �Because of that, they got the priority,� he said. In all cases but one, the same company that had provided free advice to the ministry for work on a specific field was offered the technical support contract for that field, one of the companies� officials said.

The exception is the West Qurna field in southern Iraq, outside Basra. There, the Russian company Lukoil, which claims a Hussein-era contract for the field, had been providing free training to Iraqi engineers, but a consortium of Chevron and Total, a French company, was offered the contract. A spokesman for Lukoil declined to comment. Charles Ries, the chief economic official in the American Embassy in Baghdad, described the no-bid contracts as a bridging mechanism to bring modern technology into the fields before the oil law was passed, and as an extension of the earlier work without charge. To be sure, these are not the first foreign oil contracts in Iraq, and all have proved contentious. The Kurdistan regional government, which in many respects functions as an independent entity in northern Iraq, has concluded a number of deals. Hunt Oil Company of Dallas, for example, signed a production-sharing agreement with the regional government last fall, though its legality is questioned by the central Iraqi government. The technical support agreements, however, are the first commercial work by the major oil companies in Iraq.

The impact, experts say, could be remarkable increases in Iraqi oil output. While the current contracts are unrelated to the companies� previous work in Iraq, in a twist of corporate history for some of the world�s largest companies, all four oil majors that had lost their concessions in Iraq are now back. But a spokesman for Exxon said the company�s approach to Iraq was no different from its work elsewhere. �Consistent with our longstanding, global business strategy, ExxonMobil would pursue business opportunities as they arise in Iraq, just as we would in other countries in which we are permitted to operate,� the spokesman, Len D�Eramo, said in an e-mailed statement. But the company is clearly aware of the history. In an interview with Newsweek last fall, the former chief executive of Exxon, Lee Raymond, praised Iraq�s potential as an oil-producing country and added that Exxon was in a position to know. �There is an enormous amount of oil in Iraq,� Mr. Raymond said. �We were part of the consortium, the four companies that were there when Saddam Hussein threw us out, and we basically had the whole country.�

Source: http://www.nytimes.com/2008/06/19/wo...l?ref=business

**Armenian** · 09-17-2008, 06:51 PM

Re: America's Financial Crisis

The Russian connection...

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Putin�s War-whoop: The impending clash with Russia

June 21, 2007, By Mike Whitney

"What is a 'unipolar� world?

It is world in which there is one master, one sovereign--- one center of authority, one center of force, one center of decision-making. And at the end of the day this is pernicious not only for all those within this system, but also for the sovereign itself because it destroys itself from within. It has nothing in common with democracy, which is the power of the majority in respect to the interests and opinions of the minority. In Russia, we are constantly being lectured about democracy. But for some reason those who teach us do not want to learn themselves." Russian President Vladimir Putin�s address to the Munich Conference on Security Policy 2-10-07. The deployment of the US Missile Defense System in Eastern Europe is a de-facto declaration of war on the Russian Federation. As Russian President Putin said in a recent press conference, "If this missile system is put in place, it will work automatically with the entire nuclear capability of the United States. It will be an integral part of the US nuclear capability." This will disrupt the current configuration of international security and force Russia to begin work on a new regime of tactical nuclear weapons. This is a very serious development. Russia will now have to rethink its current policy vis a vis the United States and develop a long-range strategy for fending off further hostile encroachments into former-Soviet states by NATO.

Welcome to the new Cold War.

Putin cannot ignore the gravity of the proposed system or the threat it poses to Russia�s national security. Bush�s Missile Defense is not defensive at all, but offensive. It thrusts US military bases--with nuclear infrastructure and radar--up to Russia�s doorstep giving the US a clear advantage in "first-strike" capability. That means that Washington will be able to intimidate Russia on issues that are of critical international importance. Putin cannot allow this. He must force Bush to remove this dagger held to Moscow�s throat.

Bush�s Pyrrhic Victory at the G-8

The central issues on the docket at the G-8 meetings were downplayed in the media. The press primarily focused its attention on the "anticipated" conflict between Bush and Putin. But, the brouhaha never materialized; both were respectful and gracious. President Bush, however, was adamant that his plan for missile defense in Czechoslovakia and Poland would go ahead according to schedule. Putin, for the most part remained politely silent. His objections were censored in the media. But less than 10 hours after the closing ceremonies of the G-8, Putin fired off the first salvo in what will certainly be remembered as "the war that brought down the Empire". Putin addressed 200 corporate leaders at the International Economic Forum in St. Petersburg and his comments left little doubt that he had already settled on a plan for countering Bush�s missile shield in the Czech Republic. Putin�s speech articulated his vision of a "Moscow-centered" new world order which would create a ``new balance of power''--less dependent on Washington. He said, ``The new architecture of economic relations requires a completely new approach. Russia intends to become an alternative global financial center and to make the ruble a reserve currency for central banks."

"The world is changing before our eyes.'' Countries that yesterday seemed hopelessly behind are today the fastest growing economies of the world. Institutions such as the World Trade Organization and the IMF are ``archaic, undemocratic and inflexible''. They don�t `` reflect the new balance of power.''

Putin's speech is defiant rejection of the present system. We can be sure that it has not passed unnoticed by anxious mandarins in the US political establishment. Russia is announcing the beginning of an asymmetrical war; designed to cripple the United States economically, weaken the institutions which have traditionally enhanced its wealth, and precipitate a shift of global power away from Washington. Putin�s challenge to the US dollar is particularly worrisome. He emphasizes the inherent unfairness of the current system, which relies almost entirely on the dollar and which has an extremely negative effect on many smaller countries� economies and financial reserves.

"There can be only one answer to this challenge," he said. "The creation of several world currencies and several financial centers."

Putin�s remarks are a direct attack on the dollar and its position as the de facto international currency. He imagines a world where goods and resources are traded in rubles or "baskets of currencies"--not just greenbacks. This would create greater parity between the countries and, hence, a more even distribution of power. Putin's vision is a clear threat to America�s ongoing economic dominance. Already, in the last few months, Norway, Iran, Syria, UAE, Kuwait, and Venezuela have announced that they are either cutting back on their USD reserves or converting from the greenback to the euro or a "basket of currencies". Dollar hegemony is at the very center of American power, and yet, the downturn is visible everywhere. If the dollar loses its place as the world�s "reserve currency"; the US will have to pay-down its monstrous current account deficit and live within its means. America will lose the ability to simply print fiat money and use it in exchange for valuable resources and manufactured goods. Putin is now openly challenging the monetary-system that provides the flow of oxygen to the American superpower.

Can he carry it off?

What kind of damage can Russia really inflict on the dollar or on the many lofty-sounding organizations (WTO, World Bank, IMF, NATO and Federal Reserve) which prop up the US Empire? Russia�s power is mushrooming. Its GDP is leaping ahead at 8% per annum and by 2020 Russia will be among the five biggest economies in the world. It now has the third largest Forex reserves in the world and it is gradually moving away from the anemic dollar to euros and rubles. Nearly 10% of its wealth is currently in gold. Russia has also overtaken Saudi Arabia as the world�s leading supplier of petroleum. It produces 13% of the world�s daily output and has the world�s largest reserves of natural gas. In fact, Putin has worked energetically to create the world�s first Natural Gas cartel�an alliance between Russia, Qatar, Iran and Algeria. The group could potentially control 40% of the world�s remaining natural gas and set prices as it sees fit. Putin�s ambitions are not limited to the energy sector either---although he has strengthened the country by turning away foreign investment and "re-nationalization" vital resources. As Pavel Korduban says in his recent article "Putin Harvests Political Dividends from Russian Economic Dynamism"; Putin intends to expand beyond energy and focus on technological modernization:

"The shift in official discourse to "innovations" reflects an attempt to reorient economic policy from the goal of consolidating the status of "energy superpower" to the emphasis on industrial modernization and catching up with the technological revolution. The key role in formulating this new policy is given to Sergei Ivanov, who promised that by the year 2020 Russia would gain leadership (measured as 10% of the world market) in such high-technology sectors as nuclear energy, shipbuilding, aircraft, satellites and delivery systems, and computer software."

Putin has also strengthened ties with his Central Asian neighbors and engaged in "cooperative" military maneuvers with China. "Last month it signed deals with Turkmenistan, Uzbekistan and Kazakhstan to revive the Soviet-era united system of gas pipelines, which will help Russia strengthen its role of the monopoly supplier from the region". (Reuters) He has transformed the Commonwealth of Independent States (CIS) into a formidable economic-military alliance capable of resisting foreign intervention in Central Asia by the United States and NATO. The CIS is bound to play a major role in regional issues as the real motives behind the "war on terror" are exposed and America's geopolitical objectives in Central Asia become clearer. So far, Washington has established its military bases and outposts throughout the region with impunity. But the mood is darkening in Moscow and Beijing and there may be changes in the future. We should also remember that Putin is surrounded by ex-KGB agents and Soviet-era hardliners. They�ve never trusted America's motives and now they can point to the new US bases, the "colored-coded" revolutions, the broken treaties and the projected missile defense system--to prove that Uncle Sam is "up to no good".

Putin sees himself as leading a global insurgency against the US Empire. He represents the emerging-market economies of China, India and Brazil. These 4 nations will progressively overtake the "old order". Last year 60% of the world's output was produced outside the G-7 countries. According to Goldman Sachs, by 2050 Brazil, Russia, India and China will be the world's leading economies. The transition from "superpower rule" is already underway. The centers of geopolitical power are shifting like giant tectonic plates. The trend is irreversible. The deployment of Bush�s missile defense system will only hasten the decline of the "unipolar-model" by triggering an asymmetrical war, where Forex reserves, vital resources and political maneuvering will be used as the weapons-of-choice. War with Russia is pointless and preventable. There are better choices than confrontation.

Source: http://uruknet.info/?p=m33894&s1=h1

**Armenian** · 09-17-2008, 07:13 PM

Re: America's Financial Crisis

The South American connection...

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Doing It Their Own Way: Venezuela, Argentina, Bolivia, Ecuador

A new wave of Latin American leaders is changing the face of the region and its relations with the United States, multilateral institutions, international financial markets and foreign investors. While this is often seen in Washington in political terms, as the rise of populism or anti-Americanism, much can be explained by looking at the economics of these changes. Rafael Correa, Ecuador's newly elected president, is a case in point. Correa recently sent the country's bond markets tumbling by announcing that he would seek to restructure Ecuador's foreign debt. He is looking toward a 75 percent debt reduction, and will use the savings on debt service to increase social spending.

Correa, who got his Ph.D. in economics at the University of Illinois in Urbana, understands very well that foreign capital can, in some circumstances, contribute to development. But when a country is borrowing simply to pay off debt, it may make more sense to clear some debt off the books and start over, just as someone who declares bankruptcy in the United States does. Argentina defaulted on its debt in December 2001. The government drove a hard bargain with its foreign creditors and with the International Monetary Fund, which wanted the government to pay more to the defaulted bondholders and to follow more orthodox macro- economic policy prescriptions. In the end the Argentines were proven right. The economy shrank for only about three months after the default; it has since grown at an annual rate of more than 8 percent, pulling more than 8 million people out of poverty in a country of 36 million.

President N�stor Kirchner of Argentina has pursued these policies outside of the international spotlight. But the way he led Argentina out of its depression of 1998-2002 is comparable to President Franklin D. Roosevelt's leadership in the United States during the Great Depression. Like Roosevelt, Kirchner had to reject the advice of the majority of the economics profession (Roosevelt did this even before Keynes had published his General Theory), stand up to powerful interests (foreign bondholders and utility companies, the IMF and World Bank), and do what was best for the country. A stable and competitive exchange rate, reasonable interest rates and the use of unorthodox measures to control inflation were some of the policies that Argentina needed to produce its remarkable economic recovery.

Venezuela's Hugo Ch�vez is a more controversial leader, but his government's economic policies are working. The year 2006 will be the second in a row in which Venezuela has a 10 percent growth rate, the highest in the region, after a 17.8 percent jump in 2004. To put the country on a solid growth path, the government needed to get control over the national oil company PDVSA, which is the source of nearly half the government's revenues and 80 percent of the country's export earnings. The opposition resisted fiercely, with a U.S.-backed military coup and an oil strike that devastated the economy in 2002-2003. But since the government prevailed it has been able to assure not only rapid growth but vastly expanded social programs for the poor, including free health care, subsidized food and increased access to education.

Some say this is just an oil boom that will collapse when oil prices drop, but the Ch�vez government has budgeted conservatively for oil prices that were about half of what they are now. The governments of Argentina and Venezuela are transforming not only their own countries but also the region by finally breaking the IMF's control over credit. Only a few years ago, a government that did not agree to IMF conditions would find itself denied credit not only from the Fund but from the much larger World Bank, Inter-American Development Bank, G-7 governments and even the private sector. This was the major instrument of Washington's influence in the region, and helped bring higher interest rates, tighter budgets, privatization, indiscriminate liberalization of international trade and capital flows and the abandonment of development strategies.

Venezuela has now provided an alternative source of credit, with no economic policy strings attached, to Argentina, Bolivia, Ecuador and other countries. The dissolution of the IMF's "creditors' cartel" is the most important change in the international financial system since the collapse of the Bretton Woods system of fixed exchange rates in 1973. Now even poor countries like Bolivia can say no to the "Washington consensus," capture billions of dollars of additional revenues from resources like natural gas, and use them to deliver on their promises of a New Deal for the region's poor.

The region's first indigenous president, Evo Morales, is also making history as he completes his first year in office. President Luiz In�cio Lula da Silva of Brazil has continued the neoliberal policies (and resultant sluggish economic growth) of his predecessor. But he has been a team player internationally, forging a close alliance with Argentina and Venezuela that has buried Washington's proposed "Free Trade Area of the Americas," and pursuing increased regional economic integration. Latin America has clearly taken a turn in a new economic direction, and it looks to be overwhelmingly positive. After 26 years of slow economic growth, it would be difficult for the new leaders to do worse.

Source: http://www.venezuelanalysis.com/analysis/2156

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