The Bait-and-Switch White House

January 27, 2007
Editorial
The Bait-and-Switch White House

We often wonder whether there is a limit to the Bush administration’s obsession with secrecy, its assault on the rule of law, its disdain for the powers of Congress, its willingness to con the public and its refusal to heed expert advice or recognize facts on the ground. Events of the past week suggest the answer is no.

In his State of the Union speech, Mr. Bush stuck to his ill-conceived plans for Iraq, but at least admitted the situation was dire. He said he wanted to work with Congress and announced a bipartisan council on national security.

That lasted a day. By Wednesday evening, Vice President Dick Cheney was on CNN contradicting most of what Mr. Bush had said. We were left asking, once again, Who exactly is running this White House?

While Mr. Bush has been a bit more forthright lately about how badly things have gone in Iraq, Mr. Cheney spoke of “enormous successes” there and refused to pay even curled-lip service to consulting Congress. Whatever votes Congress takes on Iraq, Mr. Cheney said, “it won’t stop us.”

Whenever the vice president does this sort of thing, and it’s pretty often, Americans are faced with an unpleasant choice: Are Mr. Bush and Mr. Cheney running a bait-and-switch operation, or does the vice president simply feel free to cut the ground out from under Mr. Bush?

All of that was distressing enough. But in Friday’s Times, Adam Liptak gave an account of the way the administration — after grandly announcing that it was finally going to obey the law on wiretapping — is trying to quash lawsuits over Mr. Bush’s outlaw eavesdropping operations by imposing outrageous secrecy and control over the courts.

Justice Department lawyers are withholding evidence from plaintiffs and even restricting the access of judges to documents in cases involving Mr. Bush’s decision to authorize the warrantless interception of e-mail and phone calls. In one suit, Justice Department lawyers tried to seize computers from the plaintiffs’ lawyers to remove a document central to their case against the government.

In response to these and other serious concerns, the Justice Department offered only the most twisted excuses, which a federal judge rightly compared to “Alice in Wonderland.”

When government lawyers tried to take back a document that has circulated around the world, the judge asked a Justice Department lawyer, “Who is it secret from?” The answer: “Anyone who has not seen it.”

These are not isolated events. The government has made the same Orwellian claims of secrecy in a lawsuit over the president’s decision to create secret C.I.A. prisons for terrorism suspects. Attorney General Alberto Gonzales routinely stonewalls legitimate Congressional requests for documents and information on a wide range of issues. He negotiated a secret agreement to give supposed judicial oversight to Mr. Bush’s wiretapping program, with a court that does not permit anyone into its hearings to argue against the government.

Mr. Bush and Mr. Cheney claim that they are protecting the powers of the presidency. At least that’s the bait they use to explain their trampling on civil liberties and the constitutional balance of power. But by abusing the government’s legitimate right to claim secrecy in court hearings, they will make it harder for other presidents to do that when it is actually justified. And with that switch, they have done grievous harm to the credibility of the Oval Office and the country.


Copyright 2007 The New York Times Company
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January 27, 2007
Editorial
The Bait-and-Switch White House

We often wonder whether there is a limit to the Bush administration’s obsession with secrecy, its assault on the rule of law, its disdain for the powers of Congress, its willingness to con the public and its refusal to heed expert advice or recognize facts on the ground. Events of the past week suggest the answer is no.

In his State of the Union speech, Mr. Bush stuck to his ill-conceived plans for Iraq, but at least admitted the situation was dire. He said he wanted to work with Congress and announced a bipartisan council on national security.

That lasted a day. By Wednesday evening, Vice President Dick Cheney was on CNN contradicting most of what Mr. Bush had said. We were left asking, once again, Who exactly is running this White House?

While Mr. Bush has been a bit more forthright lately about how badly things have gone in Iraq, Mr. Cheney spoke of “enormous successes” there and refused to pay even curled-lip service to consulting Congress. Whatever votes Congress takes on Iraq, Mr. Cheney said, “it won’t stop us.”

Whenever the vice president does this sort of thing, and it’s pretty often, Americans are faced with an unpleasant choice: Are Mr. Bush and Mr. Cheney running a bait-and-switch operation, or does the vice president simply feel free to cut the ground out from under Mr. Bush?

All of that was distressing enough. But in Friday’s Times, Adam Liptak gave an account of the way the administration — after grandly announcing that it was finally going to obey the law on wiretapping — is trying to quash lawsuits over Mr. Bush’s outlaw eavesdropping operations by imposing outrageous secrecy and control over the courts.

Justice Department lawyers are withholding evidence from plaintiffs and even restricting the access of judges to documents in cases involving Mr. Bush’s decision to authorize the warrantless interception of e-mail and phone calls. In one suit, Justice Department lawyers tried to seize computers from the plaintiffs’ lawyers to remove a document central to their case against the government.

In response to these and other serious concerns, the Justice Department offered only the most twisted excuses, which a federal judge rightly compared to “Alice in Wonderland.”

When government lawyers tried to take back a document that has circulated around the world, the judge asked a Justice Department lawyer, “Who is it secret from?” The answer: “Anyone who has not seen it.”

These are not isolated events. The government has made the same Orwellian claims of secrecy in a lawsuit over the president’s decision to create secret C.I.A. prisons for terrorism suspects. Attorney General Alberto Gonzales routinely stonewalls legitimate Congressional requests for documents and information on a wide range of issues. He negotiated a secret agreement to give supposed judicial oversight to Mr. Bush’s wiretapping program, with a court that does not permit anyone into its hearings to argue against the government.

Mr. Bush and Mr. Cheney claim that they are protecting the powers of the presidency. At least that’s the bait they use to explain their trampling on civil liberties and the constitutional balance of power. But by abusing the government’s legitimate right to claim secrecy in court hearings, they will make it harder for other presidents to do that when it is actually justified. And with that switch, they have done grievous harm to the credibility of the Oval Office and the country.


Copyright 2007 The New York Times Company
Privacy Policy

Search

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First Look

Help

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January 27, 2007
Editorial
The Bait-and-Switch White House

We often wonder whether there is a limit to the Bush administration’s obsession with secrecy, its assault on the rule of law, its disdain for the powers of Congress, its willingness to con the public and its refusal to heed expert advice or recognize facts on the ground. Events of the past week suggest the answer is no.

In his State of the Union speech, Mr. Bush stuck to his ill-conceived plans for Iraq, but at least admitted the situation was dire. He said he wanted to work with Congress and announced a bipartisan council on national security.

That lasted a day. By Wednesday evening, Vice President Dick Cheney was on CNN contradicting most of what Mr. Bush had said. We were left asking, once again, Who exactly is running this White House?

While Mr. Bush has been a bit more forthright lately about how badly things have gone in Iraq, Mr. Cheney spoke of “enormous successes” there and refused to pay even curled-lip service to consulting Congress. Whatever votes Congress takes on Iraq, Mr. Cheney said, “it won’t stop us.”

Whenever the vice president does this sort of thing, and it’s pretty often, Americans are faced with an unpleasant choice: Are Mr. Bush and Mr. Cheney running a bait-and-switch operation, or does the vice president simply feel free to cut the ground out from under Mr. Bush?

All of that was distressing enough. But in Friday’s Times, Adam Liptak gave an account of the way the administration — after grandly announcing that it was finally going to obey the law on wiretapping — is trying to quash lawsuits over Mr. Bush’s outlaw eavesdropping operations by imposing outrageous secrecy and control over the courts.

Justice Department lawyers are withholding evidence from plaintiffs and even restricting the access of judges to documents in cases involving Mr. Bush’s decision to authorize the warrantless interception of e-mail and phone calls. In one suit, Justice Department lawyers tried to seize computers from the plaintiffs’ lawyers to remove a document central to their case against the government.

In response to these and other serious concerns, the Justice Department offered only the most twisted excuses, which a federal judge rightly compared to “Alice in Wonderland.”

When government lawyers tried to take back a document that has circulated around the world, the judge asked a Justice Department lawyer, “Who is it secret from?” The answer: “Anyone who has not seen it.”

These are not isolated events. The government has made the same Orwellian claims of secrecy in a lawsuit over the president’s decision to create secret C.I.A. prisons for terrorism suspects. Attorney General Alberto Gonzales routinely stonewalls legitimate Congressional requests for documents and information on a wide range of issues. He negotiated a secret agreement to give supposed judicial oversight to Mr. Bush’s wiretapping program, with a court that does not permit anyone into its hearings to argue against the government.

Mr. Bush and Mr. Cheney claim that they are protecting the powers of the presidency. At least that’s the bait they use to explain their trampling on civil liberties and the constitutional balance of power. But by abusing the government’s legitimate right to claim secrecy in court hearings, they will make it harder for other presidents to do that when it is actually justified. And with that switch, they have done grievous harm to the credibility of the Oval Office and the country.


Copyright 2007 The New York Times Company
Privacy Policy

From the Financial Times: Fortress Baghdad

US twists civilian arms to fill Fortress Baghdad
By Guy Dinmore in Washington
Published: January 7 2007 19:28 | Last updated: January 7 2007 19:28
At the heart of George W. Bush’s “new way forward” – which the president is expected to announce on Wednesday and involve substantial troop reinforcements – is the plan already under way to expand the US civilian presence across Iraq and complete the world’s largest embassy in Baghdad.

Construction of what critics call “Fortress Baghdad” has led to arguments inside the State Department amid fears that the overwhelming diplomatic presence will perpetuate a sense of US occupation and become a focus of local anger.

US diplomats say that just as the armed forces are being stretched to breaking point, the US foreign service is suffering from low morale and operations in the rest of the world are being damaged by the diversion of resources to Iraq.

Officials are also questioning why the Bush administration is sending more civilians into a deteriorating war zone, and the effectiveness of the work they can do.

The embassy compound being built inside Baghdad’s Green Zone covers 104 acres, making it six times larger than the United Nations compound in New York. A city within a city for more than 1,000 people, it will have its own water, sewers and electricity, six apartment buildings, a Marine barracks, swimming pool, shops and some walls 15 feet thick.

The State Department has told the Financial Times that the US civilian presence in Iraq has “grown considerably beyond the numbers projected for the new embassy compound”, which is scheduled for completion by September 1 at a cost of $592m (€455m, £307m).

The department and other agencies, such as the Pentagon and Treasury which also supply staff, are working out how to accommodate the extra numbers that Mr Bush is expected to announce this week. Recruits are being attracted to one-year posts by a mix of cajoling and inducement – an almost doubling of their salary, four trips outside Iraq and guarantees of favourable postings afterwards.

Condoleezza Rice, secretary of state, and other officials have repeatedly sent cables to personnel around the world saying diplomats have a patriotic duty to volunteer for Baghdad and the expanding “provincial reconstruction teams”, where diplomats work out of military bases.

“Baghdad dwarfs everything else. It is becoming a monster that has to be fed every year with a new crop of volunteers,” says one diplomat.

So far the State Department has not resorted to compulsory or “directed” assignments, a practice last used during the Vietnam war. But it has warned it would put assignments elsewhere on hold “if Iraq and Afghanistan and other priority posts are not staffed”.

Among the many recommendations of the bipartisan Baker-Hamilton report on Iraq, issued in December, was that diplomats and other US personnel should be obliged to serve in Iraq if there were not enough volunteers.

Steve Kashkett, vice-president of the American Foreign Service Association, the professional body representing US foreign service officers, questions their logic.

“It makes no sense for the Iraq report authors simultaneously to propose scaling back the US military presence and beefing up the presence of unarmed US diplomats in a combat zone,” he writes this month in the association’s journal.

John Brown, who resigned as a US diplomat in protest against the 2003 invasion and now teaches public diplomacy, says the embassy “will be a symbol of the US occupation and the near-total separation of US embassy staff members from the society with which they are supposed to interact”.

“Indeed, the planned embassy reminds me of the huge, cavernous buildings that housed Soviet missions in eastern Europe during the cold war. They were hated by the local population for all they stood for: secrecy, arrogance and domination.”

Of the 1,000 or so US civilians staffing Baghdad at present – not including large numbers of private-sector bodyguards – there are about 200 career diplomats, plus some 70 in the provincial reconstruction teams that are set to expand.

Many other staffers are so-called “3161s” – recruited ad hoc and, according to the State Department, “fully qualified for their highly technical jobs”. Diplomats question this, saying many are incompetent and have been hired for their loyalty to the Republican effort.

Asked why the US was sending more diplomats into a war zone when such conditions elsewhere in the world would lead to closure or drawdown of embassies, the State Department said such comparisons were “inappropriate”, noting the embassy had suffered “minimal casualties”.

Copyright The Financial Times Limited 2007

Paul Krugman: Universal Healthcare

January 5, 2007
Op-Ed Columnist
First, Do Less Harm

By PAUL KRUGMAN
Universal health care, much as we need it, won’t happen until there’s a change of management in the White House. In the meantime, however, Congress can take an important step toward making our health care system less wasteful, by fixing the Medicare Middleman Multiplication Act of 2003.

Officially, of course, it was the Medicare Modernization Act. But as we learned during the debate over Social Security, in Bushspeak “modernize” is a synonym for “privatize.” And one of the main features of the legislation was an effort to bring private-sector fragmentation and inefficiency to one of America’s most important public programs.

The process actually started in the 1990s, when Medicare began allowing recipients to replace traditional Medicare — in which the government pays doctors and hospitals — with private managed-care plans, in which the government pays a fee to an H.M.O. The magic of the marketplace was supposed to cut Medicare’s costs.

The plan backfired. H.M.O.’s received fees reflecting the medical costs of the average Medicare recipient, but to maximize profits they selectively enrolled only healthier seniors, leaving sicker, more expensive people in traditional Medicare. Once Medicare became aware of this cream-skimming and started adjusting payments to reflect beneficiaries’ health, the H.M.O.’s began dropping out: their extra layer of bureaucracy meant that they had higher costs than traditional Medicare and couldn’t compete on a financially fair basis.

That should have been the end of the story. But for the Bush administration and its Congressional allies, privatization isn’t a way to deliver better government services — it’s an end in itself. So the 2003 legislation increased payments to Medicare-supported H.M.O.’s, which were renamed Medicare Advantage plans. These plans are now heavily subsidized.

According to the Medicare Payment Advisory Commission, an independent federal body that advises Congress on Medicare issues, Medicare Advantage now costs 11 percent more per beneficiary than traditional Medicare. According to the Commonwealth Fund, which has a similar estimate of the excess cost, the subsidy to private H.M.O.’s cost Medicare $5.4 billion in 2005.

The inability of private middlemen to win a fair competition against traditional Medicare was embarrassing to those who sing the praises of privatization. Maybe that’s why the Bush administration made sure that there is no competition at all in Part D, the drug program. There’s no traditional Medicare version of Part D, in which the government pays drug costs directly. Instead, the elderly must get coverage from a private insurance company, which then receives a government subsidy.

As a result, Part D is highly confusing. It’s also needlessly expensive, for two reasons: the insurance companies add an extra layer of bureaucracy, and they have limited ability to bargain with drug companies for lower prices (and Medicare is prohibited from bargaining on their behalf). One indicator of how much Medicare is overspending is the sharp rise in prices paid by millions of low-income seniors whose drug coverage has been switched from Medicaid, which doesn’t rely on middlemen and does bargain over prices, to the new Medicare program.

The costs imposed on Medicare by gratuitous privatization are almost certainly higher than the cost of providing health insurance to the eight million children in the United States who lack coverage. But recent news analyses have suggested that Democrats may not be able to guarantee coverage to all children because this would conflict with their pledge to be fiscally responsible. Isn’t it strange how fiscal responsibility is a big concern when Congress is trying to help children, but a nonissue when Congress is subsidizing drug and insurance companies?

What should Congress do? The new Democratic majority is poised to reduce drug prices by allowing — and, probably, requiring — Medicare to negotiate prices on behalf of the private drug plans. But it should go further, and force Medicare to offer direct drug coverage that competes on a financially fair basis with the private plans. And it should end the subsidy to Medicare Advantage, forcing H.M.O.’s to engage in fair competition with traditional Medicare.

Conservatives will fight fiercely against these moves. They say they believe in competition — but they’re against competition that might show the public sector doing a better job than the private sector. Progressives should support these moves for the same reason. Ending the subsidies to middlemen, in addition to saving a lot of money, would point the way to broader health care reform.


Copyright 2007 The New York Times Company

Robert Fisk reflects on Saddam's death

Robert Fisk: A dictator created then destroyed by America
Published: 30 December 2006
Saddam to the gallows. It was an easy equation. Who could be more deserving of that last walk to the scaffold - that crack of the neck at the end of a rope - than the Beast of Baghdad, the Hitler of the Tigris, the man who murdered untold hundreds of thousands of innocent Iraqis while spraying chemical weapons over his enemies? Our masters will tell us in a few hours that it is a "great day" for Iraqis and will hope that the Muslim world will forget that his death sentence was signed - by the Iraqi "government", but on behalf of the Americans - on the very eve of the Eid al-Adha, the Feast of the Sacrifice, the moment of greatest forgiveness in the Arab world.

But history will record that the Arabs and other Muslims and, indeed, many millions in the West, will ask another question this weekend, a question that will not be posed in other Western newspapers because it is not the narrative laid down for us by our presidents and prime ministers - what about the other guilty men?

No, Tony Blair is not Saddam. We don't gas our enemies. George W Bush is not Saddam. He didn't invade Iran or Kuwait. He only invaded Iraq. But hundreds of thousands of Iraqi civilians are dead - and thousands of Western troops are dead - because Messrs Bush and Blair and the Spanish Prime Minister and the Italian Prime Minister and the Australian Prime Minister went to war in 2003 on a potage of lies and mendacity and, given the weapons we used, with great brutality.

In the aftermath of the international crimes against humanity of 2001 we have tortured, we have murdered, we have brutalised and killed the innocent - we have even added our shame at Abu Ghraib to Saddam's shame at Abu Ghraib - and yet we are supposed to forget these terrible crimes as we applaud the swinging corpse of the dictator we created.

Who encouraged Saddam to invade Iran in 1980, which was the greatest war crime he has committed for it led to the deaths of a million and a half souls? And who sold him the components for the chemical weapons with which he drenched Iran and the Kurds? We did. No wonder the Americans, who controlled Saddam's weird trial, forbad any mention of this, his most obscene atrocity, in the charges against him. Could he not have been handed over to the Iranians for sentencing for this massive war crime? Of course not. Because that would also expose our culpability.

And the mass killings we perpetrated in 2003 with our depleted uranium shells and our "bunker buster" bombs and our phosphorous, the murderous post-invasion sieges of Fallujah and Najaf, the hell-disaster of anarchy we unleashed on the Iraqi population in the aftermath of our "victory" - our "mission accomplished" - who will be found guilty of this? Such expiation as we might expect will come, no doubt, in the self-serving memoirs of Blair and Bush, written in comfortable and wealthy retirement.

Hours before Saddam's death sentence, his family - his first wife, Sajida, and Saddam's daughter and their other relatives - had given up hope.

"Whatever could be done has been done - we can only wait for time to take its course," one of them said last night. But Saddam knew, and had already announced his own "martyrdom": he was still the president of Iraq and he would die for Iraq. All condemned men face a decision: to die with a last, grovelling plea for mercy or to die with whatever dignity they can wrap around themselves in their last hours on earth. His last trial appearance - that wan smile that spread over the mass-murderer's face - showed us which path Saddam intended to walk to the noose.

I have catalogued his monstrous crimes over the years. I have talked to the Kurdish survivors of Halabja and the Shia who rose up against the dictator at our request in 1991 and who were betrayed by us - and whose comrades, in their tens of thousands, along with their wives, were hanged like thrushes by Saddam's executioners.

I have walked round the execution chamber of Abu Ghraib - only months, it later transpired, after we had been using the same prison for a few tortures and killings of our own - and I have watched Iraqis pull thousands of their dead relatives from the mass graves of Hilla. One of them has a newly-inserted artificial hip and a medical identification number on his arm. He had been taken directly from hospital to his place of execution. Like Donald Rumsfeld, I have even shaken the dictator's soft, damp hand. Yet the old war criminal finished his days in power writing romantic novels.

It was my colleague, Tom Friedman - now a messianic columnist for The New York Times - who perfectly caught Saddam's character just before the 2003 invasion: Saddam was, he wrote, "part Don Corleone, part Donald Duck". And, in this unique definition, Friedman caught the horror of all dictators; their sadistic attraction and the grotesque, unbelievable nature of their barbarity.

But that is not how the Arab world will see him. At first, those who suffered from Saddam's cruelty will welcome his execution. Hundreds wanted to pull the hangman's lever. So will many other Kurds and Shia outside Iraq welcome his end. But they - and millions of other Muslims - will remember how he was informed of his death sentence at the dawn of the Eid al-Adha feast, which recalls the would-be sacrifice by Abraham, of his son, a commemoration which even the ghastly Saddam cynically used to celebrate by releasing prisoners from his jails. "Handed over to the Iraqi authorities," he may have been before his death. But his execution will go down - correctly - as an American affair and time will add its false but lasting gloss to all this - that the West destroyed an Arab leader who no longer obeyed his orders from Washington, that, for all his wrongdoing (and this will be the terrible get-out for Arab historians, this shaving away of his crimes) Saddam died a "martyr" to the will of the new "Crusaders".

When he was captured in November of 2003, the insurgency against American troops increased in ferocity. After his death, it will redouble in intensity again. Freed from the remotest possibility of Saddam's return by his execution, the West's enemies in Iraq have no reason to fear the return of his Baathist regime. Osama bin Laden will certainly rejoice, along with Bush and Blair. And there's a thought. So many crimes avenged.

But we will have got away with it.

The War on poverty, British style, Paul Krugman

December 25, 2006
Op-Ed Columnist
Helping the Poor, the British Way

By PAUL KRUGMAN
It’s the season for charitable giving. And far too many Americans, particularly children, need that charity.

Scenes of a devastated New Orleans reminded us that many of our fellow citizens remain poor, four decades after L.B.J. declared war on poverty. But I’m not sure whether people understand how little progress we’ve made. In 1969, fewer than one in every seven American children lived below the poverty line. Last year, although the country was far wealthier, more than one in every six American children were poor.

And there’s no excuse for our lack of progress. Just look at what the British government has accomplished over the last decade.

Although Tony Blair has been President Bush’s obedient manservant when it comes to Iraq, Mr. Blair’s domestic policies are nothing like Mr. Bush’s. Where Mr. Bush has sought to privatize the social safety net, Mr. Blair’s Labor government has defended and strengthened it. Where Mr. Bush and his allies accuse anyone who mentions income distribution of “class warfare,” the Blair government has made a major effort to reverse the surge in inequality and poverty that took place during the Thatcher years.

And Britain’s poverty rate, if measured American-style — that is, in terms of a fixed poverty line, not a moving target that rises as the nation grows richer — has been cut in half since Labor came to power in 1997.

Britain’s war on poverty has been led by Gordon Brown, the chancellor of the exchequer and Mr. Blair’s heir apparent. There’s nothing exotic about his policies, many of which are inspired by American models. But in Britain, these policies are carried out with much more determination.

For example, Britain didn’t have a minimum wage until 1999 — but at current exchange rates Britain’s minimum wage rate is now about twice as high as ours. Britain’s child benefit is more generous than America’s child tax credit, and it’s available to everyone, even those too poor to pay income taxes. Britain’s tax credit for low-wage workers is similar to the U.S. earned-income tax credit, but substantially larger.

And don’t forget that Britain’s universal health care system ensures that no one has to fear going without medical care or being bankrupted by doctors’ bills.

The Blair government hasn’t achieved all its domestic goals. Income inequality has been stabilized but not substantially reduced: as in America, the richest 1 percent have pulled away from everyone else, though not to the same extent. The decline in child poverty, though impressive, has fallen short of the government’s ambitious goals. And the government’s policies don’t seem to have helped a persistent underclass of the very poor.

But there’s no denying that the Blair government has done a lot for Britain’s have-nots. Modern Britain isn’t paradise on earth, but the Blair government has ensured that substantially fewer people are living in economic hell. Providing a strong social safety net requires a higher overall rate of taxation than Americans are accustomed to, but Britain’s tax burden hasn’t undermined the economy’s growth.

What are the lessons to be learned from across the pond?

First, government truly can be a force for good. Decades of propaganda have conditioned many Americans to assume that government is always incompetent — and the current administration has done its best to turn that into a self-fulfilling prophecy. But the Blair years have shown that a government that seriously tries to reduce poverty can achieve a lot.

Second, it really helps to have politicians who are serious about governing, rather than devoting themselves entirely to amassing power and rewarding cronies.

While researching this article, I was startled by the sheer rationality of British policy discussion, as compared with the cynical posturing that passes for policy discourse in George Bush’s America. Instead of making grandiose promises that are quickly forgotten — like Mr. Bush’s promise of “bold action” to confront poverty after Hurricane Katrina — British Labor politicians propose specific policies with well-defined goals. And when actual results fall short of those goals, they face the facts rather than trying to suppress them and sliming the critics.

The moral of my Christmas story is that fighting poverty isn’t easy, but it can be done. Giving in to cynicism and accepting the persistence of widespread poverty even as the rich get ever richer is a choice that our politicians have made. And we should be ashamed of that choice.


Copyright 2006 The New York Times Company

The elephant in the room

It's still about oil in Iraq
A centerpiece of the Iraq Study Group's report is its advocacy for securing foreign companies' long-term access to Iraqi oil fields.
By Antonia Juhasz
ANTONIA JUHASZ is a visiting scholar at the Institute for Policy Studies and author of "The Bush Agenda: Invading the World, One Economy at a Time."

December 8, 2006

WHILE THE Bush administration, the media and nearly all the Democrats still refuse to explain the war in Iraq in terms of oil, the ever-pragmatic members of the Iraq Study Group share no such reticence.

Page 1, Chapter 1 of the Iraq Study Group report lays out Iraq's importance to its region, the U.S. and the world with this reminder: "It has the world's second-largest known oil reserves." The group then proceeds to give very specific and radical recommendations as to what the United States should do to secure those reserves. If the proposals are followed, Iraq's national oil industry will be commercialized and opened to foreign firms.

The report makes visible to everyone the elephant in the room: that we are fighting, killing and dying in a war for oil. It states in plain language that the U.S. government should use every tool at its disposal to ensure that American oil interests and those of its corporations are met.

It's spelled out in Recommendation No. 63, which calls on the U.S. to "assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise" and to "encourage investment in Iraq's oil sector by the international community and by international energy companies." This recommendation would turn Iraq's nationalized oil industry into a commercial entity that could be partly or fully privatized by foreign firms.

This is an echo of calls made before and immediately after the invasion of Iraq.

The U.S. State Department's Oil and Energy Working Group, meeting between December 2002 and April 2003, also said that Iraq "should be opened to international oil companies as quickly as possible after the war." Its preferred method of privatization was a form of oil contract called a production-sharing agreement. These agreements are preferred by the oil industry but rejected by all the top oil producers in the Middle East because they grant greater control and more profits to the companies than the governments. The Heritage Foundation also released a report in March 2003 calling for the full privatization of Iraq's oil sector. One representative of the foundation, Edwin Meese III, is a member of the Iraq Study Group. Another, James J. Carafano, assisted in the study group's work.

For any degree of oil privatization to take place, and for it to apply to all the country's oil fields, Iraq has to amend its constitution and pass a new national oil law. The constitution is ambiguous as to whether control over future revenues from as-yet-undeveloped oil fields should be shared among its provinces or held and distributed by the central government.

This is a crucial issue, with trillions of dollars at stake, because only 17 of Iraq's 80 known oil fields have been developed. Recommendation No. 26 of the Iraq Study Group calls for a review of the constitution to be "pursued on an urgent basis." Recommendation No. 28 calls for putting control of Iraq's oil revenues in the hands of the central government. Recommendation No. 63 also calls on the U.S. government to "provide technical assistance to the Iraqi government to prepare a draft oil law."

This last step is already underway. The Bush administration hired the consultancy firm BearingPoint more than a year ago to advise the Iraqi Oil Ministry on drafting and passing a new national oil law.

Plans for this new law were first made public at a news conference in late 2004 in Washington. Flanked by State Department officials, Iraqi Finance Minister Adel Abdul Mahdi (who is now vice president) explained how this law would open Iraq's oil industry to private foreign investment. This, in turn, would be "very promising to the American investors and to American enterprise, certainly to oil companies." The law would implement production-sharing agreements.

Much to the deep frustration of the U.S. government and American oil companies, that law has still not been passed.

In July, U.S. Energy Secretary Samuel Bodman announced in Baghdad that oil executives told him that their companies would not enter Iraq without passage of the new oil law. Petroleum Economist magazine later reported that U.S. oil companies considered passage of the new oil law more important than increased security when deciding whether to go into business in Iraq.

The Iraq Study Group report states that continuing military, political and economic support is contingent upon Iraq's government meeting certain undefined "milestones." It's apparent that these milestones are embedded in the report itself.

Further, the Iraq Study Group would commit U.S. troops to Iraq for several more years to, among other duties, provide security for Iraq's oil infrastructure. Finally, the report unequivocally declares that the 79 total recommendations "are comprehensive and need to be implemented in a coordinated fashion. They should not be separated or carried out in isolation."

All told, the Iraq Study Group has simply made the case for extending the war until foreign oil companies — presumably American ones — have guaranteed legal access to all of Iraq's oil fields and until they are assured the best legal and financial terms possible.

We can thank the Iraq Study Group for making its case publicly. It is now our turn to decide if we wish to spill more blood for oil.


Copyright 2006 Los Angeles Times

Paul Krugman: As Bechtel goes (or cuts and runs)

November 3, 2006
Op-Ed Columnist
As Bechtel Goes

By PAUL KRUGMAN
Bechtel, the giant engineering company, is leaving Iraq. Its mission — to rebuild power, water and sewage plants — wasn’t accomplished: Baghdad received less than six hours a day of electricity last month, and much of Iraq’s population lives with untreated sewage and without clean water. But Bechtel, having received $2.3 billion of taxpayers’ money and having lost the lives of 52 employees, has come to the end of its last government contract.

As Bechtel goes, so goes the whole reconstruction effort. Whatever our leaders may say about their determination to stay the course complete the mission, when it comes to rebuilding Iraq they’ve already cut and run. The $21 billion allocated for reconstruction over the last three years has been spent, much of it on security rather than its intended purpose, and there’s no more money in the pipeline.

The failure of reconstruction in Iraq raises three questions. First, how much did that failure contribute to the overall failure of the war? Second, how was it that America, the great can-do nation, in this case couldn’t and didn’t? Finally, if we’ve given up on rebuilding Iraq, what are our troops dying for?

There’s no definitive way to answer the first question. You can make a good case that the invasion of Iraq was doomed no matter what, because we never had enough military manpower to provide security. But the lack of electricity and clean water did a lot to dissipate any initial good will the Iraqis may have felt toward the occupation. And Iraqis are well aware that the billions squandered by American contractors included a lot of Iraqi oil revenue as well as U.S. taxpayers’ dollars.

Consider the symbolism of Iraq’s new police academy, which Stuart Bowen, the special inspector general for Iraq reconstruction, has called “the most essential civil security project in the country.” It was built at a cost of $75 million by Parsons Corporation, which received a total of about $1 billion for Iraq reconstruction projects. But the academy was so badly built that feces and urine leak from the ceilings in the student barracks.

Think about it. We want the Iraqis to stand up so we can stand down. But if they do stand up, we’ll dump excrement on their heads.

As for how this could have happened, that’s easy: major contractors believed, correctly, that their political connections insulated them from accountability. Halliburton and other companies with huge Iraq contracts were basically in the same position as Donald Rumsfeld: they were so closely identified with President Bush and, especially, Vice President Cheney that firing or even disciplining them would have been seen as an admission of personal failure on the part of top elected officials.

As a result, the administration and its allies in Congress fought accountability all the way. Administration officials have made repeated backdoor efforts to close the office of Mr. Bowen, whose job is to oversee the use of reconstruction money. Just this past May, with the failed reconstruction already winding down, the White House arranged for the last $1.5 billion of reconstruction money to be placed outside Mr. Bowen’s jurisdiction. And now, finally, Congress has passed a bill whose provisions include the complete elimination of his agency next October.

The bottom line is that those charged with rebuilding Iraq had no incentive to do the job right, so they didn’t.

You can see, by the way, why a Democratic takeover of the House, if it happens next week, would be such a pivotal event: suddenly, committee chairmen with subpoena power would be in a position to investigate where all the Iraq money went.

But that’s all in the past. What about the future?

Back in June, after a photo-op trip to Iraq, Mr. Bush said something I agree with. “You can measure progress in megawatts of electricity delivered,” he declared. “You can measure progress in terms of oil sold on the market on behalf of the Iraqi people.” But what those measures actually show is the absence of progress. By any material measure, Iraqis are worse off than they were under Saddam.

And we’re not planning to do anything about it: the U.S.-led reconstruction effort in Iraq is basically over. I don’t know whether the administration is afraid to ask U.S. voters for more money, or simply considers the situation hopeless. Either way, the United States has accepted defeat on reconstruction.

Yet Americans are still fighting and dying in Iraq. For what?


Copyright 2006 The New York Times Company

The most unaccountable government in the Middle East

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LRB | Vol. 28 No. 21 dated 2 November 2006 | Ed Harriman

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The Least Accountable Regime in the Middle East

Ed Harriman

US Special Inspector General for Iraq Reconstruction
| Link: http://www.sigir.mil
US Government Accountability Office
| Link: http://www.gao.gov
US Congressional Research Service
| Link: http://www.crs.gov
US Department of State
| Link: http://www.state.gov
Kurdistan Regional Government
| Link: http://www.krg.org
Platform
| Link: http://www.platformlondon.org
American military spending on Iraq is now approaching $8 billion a month. Accounting for inflation, this is half as much again as the average monthly cost of the Vietnam War; the total spent so far has long surpassed the cost of the entire Apollo space programme. Three and a half months of occupation costs the equivalent of Iraq’s estimated oil revenues for the current financial year. We now know, thanks to the leaked report of James Baker’s Iraq Study Group, that if US troops withdrew, they would in all probability be redeployed to neighbouring countries, increasing the already massive expenditure and inevitably threatening new arenas of conflict. Here’s an unimaginable alternative. If the US army left the region, and if the money was instead handed out to every Iraqi man, woman and child, they would each receive more than $300 a month.

They need it: Iraq has run out of reconstruction money. The funds in the so-called Development Fund for Iraq – some $20 billion of Iraqi money – were spent by Paul Bremer’s Coalition Provisional Authority in the first year of the occupation. The US Embassy in Baghdad has spent virtually all of the $18.4 billion that Congress appropriated for ‘rebuilding’ the country; $5.6 billion of it was used to run the embassy, promote American ‘values’ and set up the new armed forces and police. Most of the American money never even gets to Iraq. The bulk of it has gone to American consultants, or into American contractors’ international bank accounts.

‘Most of the projects planned in sewerage, irrigation, drainage and dams have been cancelled,’ the auditors of the US Special Inspector General for Iraqi Reconstruction (SIGIR) report. Others have been ‘descoped’. A 238 km canal brings fresh water to Basra from the Gharraf river, a tributary of the Tigris. The long neglected banks of the canal are crumbling. There was a plan to line its entire length with concrete; the idea now is merely to repair one badly damaged 20 km stretch. This is what ‘descoped’ means. In July, SIGIR could find no evidence of emergency repairs or even routine maintenance. According to the increasingly implausible State Department, Iraq’s basic utilities – its electricity, oil production and water supply – have reached standards close to or above those under Saddam. The US General Accountability Office (GAO), however, says these claims are meaningless, since they are based on numbers of completed projects, without indicating how much has been done of what was originally planned.

One thing is certain: the Coalition has created and fostered the least accountable and least transparent regime in the Middle East. It’s impossible to say whether it’s also the most corrupt, because so little is known about how Iraq’s ministers spend their government’s revenue. The US Embassy says it’s trying to find out, but it hasn’t had much success. Paul Bremer handed over $8.8 billion in cash to the interim government in the first year of occupation; it has never been accounted for. American auditors are also still in the dark about Iraq’s reconstruction budget for the two years that followed: another $14 billion. ‘SIGIR has no further information about how much of these funds has been expended.’ Iraqis don’t know either, since there are no meaningful public accounts.

Public opinion polls show that Iraqis list corruption as one of their three biggest worries, along with power cuts and violence. The inspector general for the Ministry of Health recently estimated that corruption costs Iraq $4 billion each year. World Bank officials told the GAO that putting contracts out for tender is still an ‘alien concept’ for Iraqi ministries. There are countless allegations of ‘ghost employees’ on ministry payrolls, of kickbacks, cronyism, nepotism and fraud that reach right up to the president, Jalal Talabani. SIGIR says that ‘corruption is a virtual pandemic in Iraq.’ The embassy’s ‘expenditure on anti-corruption has been modest’ – some $65 million, or 0.3 per cent of its reconstruction budget. It’s spending more than $1 billion on ‘democracy building’ activities, however, such as pro-American propaganda and PR.

The propaganda keeps quiet about the torture of prisoners in secret jail cells, and about the infiltration of the security forces by sectarian militias. These activities are overseen by the Interior Ministry, which reportedly employs at least a thousand ghost employees, whose wages amount to more than $1 million a month. The US Embassy has lost track of the weapons, radios and other hardware it has supplied over the past two years, and the auditors talk of ‘uncertain property ownership’ and ‘political difficulties’. The ministry’s audit director, who is responsible for police activities throughout Iraq, has six staff and one computer. Much of the equipment intended for government use is probably with sectarian militias, or has been sold.

Iraq has a Commission on Public Integrity, along with the Iraqi Board of Supreme Audit and inspector generals in the ministries, which is supposed to investigate corruption. Arrest warrants were issued last year for several former cabinet ministers. The defence minister Hazem Shaalan, accused of being party to corruption involving more than $1.3 billion, fled to London. He is now said to be in Iraqi Kurdistan. The transport minister Louay Hatim Sultan al-Aris disappeared. The electricity minister Abdul Muhsin Shalash is reportedly living in Jordan. There are signs that efforts to prosecute these people are finally being stepped up. The labour minister Laila Abdul Latif at least went to court, though she was only convicted of a minor offence and given a suspended sentence. Another ex-electricity minister, Aiham al-Sammarai, has now been convicted of corruption and embezzlement and sentenced to two years in prison. But he’s also an American citizen so he isn’t in an Iraqi jail.

The chairman of the Commission on Public Integrity, Radhi Hamza al-Radhi, says he’s keen to prosecute at least forty former cabinet ministers and senior officials. Yet ‘it is impossible to bring to justice a high-level official without the permission of his minister and if he is implicated as well, then he does not give this permission.’ Influential suspects either have immunity from prosecution or get tipped off so they can slip out of the country. As of July, the Commission had sent 1370 cases to the central criminal courts. Only 40 yielded convictions, and only one of those convicted was a senior ministry official. Many judges are corrupt; others are frightened, and with good reason: more than twenty have been assassinated.

The State Department is unforthcoming about the real cost of the corporate armies operating in Iraq: the mercenaries, or ‘private security contractors’, who guard US officials and international contractors ensuring that Coalition forces are free to fight insurgents. The GAO estimated last year that there were more than 25,000 of these ‘contractors’, significantly outnumbering British troops. A former squaddie, kitted out with dark glasses, automatic pistol, rifle, body armour and radio, working for a construction team, can earn at least $12,000 a month. A former special forces NCO protecting a Coalition official or construction firm boss can make more than twice that. The State Department says the cost of security makes up 16 to 22 per cent of the overall outlay on big reconstruction projects, but this may be an underestimate. The GAO has observed that the State Department’s reports to Congress ‘do not identify the magnitude or impact of the costs associated with security providers on reconstruction efforts or available funding’. When asked why not, embassy officials in Baghdad claimed that ‘such requests can be burdensome for both the contractors and agency officials.’ Publishing the true cost of ‘security contractors’ would mean admitting to the American public that what has become a deeply unpopular occupation is also even more expensive than it currently appears.

American officials talk of travelling ‘the last tactical mile’, by which they mean completing the work of hooking up Iraqi neighbourhoods and houses to the electricity grid, water mains and sewage systems. But that hasn’t happened across much of the country, and it’s not likely to happen soon. SIGIR estimates that the Iraqi government needs to spend almost $1 billion next year just to keep the projects going. But the government is short of cash: American advisers within the ministries say that they are making do with only a third of the budget they asked for. The auditors asked the State Department’s development arm, the US Agency for International Development (USAID), for ‘reliable and transparent’ estimates of how much it will cost to complete its projects. An answer was not forthcoming.

American reconstruction programmes are failing for reasons the audit reports make very clear, despite USAID’s refusal to co-operate. Many of Iraq’s dilapidated power stations, bombed during the first Gulf War, were kept functioning throughout the years of UN sanctions by resourceful engineers using makeshift spare parts. After the invasion in 2003, while Coalition forces stood by, looters trashed much of what little still worked. The Coalition planned to change all that. Initially, $5.56 billion of the $18.4 billion voted by Congress was budgeted for electricity. Then, in the summer of 2004, the embassy in Baghdad appropriated $1.25 billion of that to pay for the escalating costs of the war. This June, electricity output finally exceeded – just – the prewar level. Today, Baghdadis are lucky to get eight hours of electricity a day uninterrupted by power cuts, and many depend on their own generators, but for that they have to scrabble together the cash to buy one – around $200. The embassy says there isn’t much American money left for electricity.

The privately-owned California-based engineering company Bechtel was contracted in 2o03 ‘on an urgent basis’ to build two new 250 megawatt diesel-fired generating stations near Baghdad, enough to supply 1.5 million homes. It was soon discovered, however, that ‘there was insufficient fuel and no fuel delivery system of any kind in the Baghdad area.’ So there was a change of plan. The Coalition decided to use natural gas from the Mansuria gas fields 105 kilometres north-east of Baghdad. Costs shot up from $78 million to $381 million. They bought two General Electric gas turbine generators, for $25 million each. Then they cancelled the project. The gas has never been collected, so there is no infrastructure for delivering it from the oilfields to power stations. American advisers working with the CPA knew all along that the infrastructure wasn’t in place. So, too, did the then electricity minister, Aiham al-Sammarai, the minister who faces a prison sentence for embezzlement, and who ran a successful energy consultancy near Chicago before the invasion. Still, there was no way the Coalition was going to spend millions of dollars building new gas pipelines. So the gas continues to be burned off in the oilfields. Iraq’s gas turbines now run on fuel oil, which, according to the GAO, makes them half as efficient, requires three times more maintenance, and is likely to result in damage or failure of equipment. The new electricity minister, Kareem Waheed, says that his budget ‘is only a fraction of what the ministry needs’, and SIGIR says Iraq needs to invest $20 billion in power plants over the next four years. Getting the electricity into Iraqi homes depends on massive transmission projects, more than a third of which have yet to be started on. The last tactical mile is a long way off.

Before 1991, Iraq had one of the best health services in the Middle East. Baghdad’s doctors and nurses provided care often comparable to that of their counterparts in Tel Aviv or Cairo. A decade of sanctions scuppered that: by 2002 the Health Ministry budget had been reduced by 90 per cent. According to both the UN and the World Bank, the health system needed $1.6 billion just to resume normal operation. The CPA set aside less than a quarter of that.

A new children’s hospital in Basra was to be a showcase for American generosity. It was a joint venture of Bechtel and Project Hope, one of Laura Bush’s favourite charities, overseen by USAID. Congressional Democrats questioned whether Iraq needed a state of the art 94-bed paediatric unit when existing hospitals were in dire need of basic repairs and medical supplies. The contract was signed anyway: $50 million was set aside for construction and $30 million for supplies and training. The project was to be finished by 31 December 2005. This June, the embassy finally ordered work to stop: $150 million had been spent, and Bechtel estimated that a further $98 million would be needed. Part of the problem was security on the site, but SIGIR auditors were more concerned about the ‘lack of effective programme management and oversight’ by the embassy. But the auditors also found that USAID had cooked the books and that the State Department had withheld details of delays and increased costs in its reports to Congress. In the meantime, Iraq’s existing hospitals are in dire condition. In May, the renovation of twenty maternity and children’s hospitals was halted. The contracts have been ‘descoped’ and the work won’t be finished for at least a year. The al-Hillah general hospital still lacks basic equipment, and medicines; Yarmuk hospital in southern Baghdad is in desperate need of repair.

The centrepiece of the Coalition’s health programme was to be 150 new primary care centres: at $243 million, this was the largest US-funded reconstruction project in Iraq – oil-related programmes aside. The contract was given to Parsons Global Services, which quickly subcontracted most of the work. The centres were supposed to be open and treating patients by last December. By March this year, three-quarters of the budget had been spent. Of the 150 centres, 135 were partially constructed. Only six had been finished. The embassy blamed Parsons; Parsons blamed the embassy. The subcontractors, it turned out, had further subcontracted the work ‘through a system of layered brokers’. The Iraqi construction firms at the bottom of the chain regularly went on strike, cut corners and ignored Parsons’s engineers. As a result, the buildings suffer from ‘roof failures . . . low strength concrete and poor foundations that are now costly to repair’. In April, the estimated cost of finishing 121 of the remaining centres was $36 million. So far, only two clinics are receiving patients. Meanwhile, the auditors, worried that medical equipment would go missing if delivered to the Iraqi health ministry, had it sent instead to a secure US-run warehouse at Abu Ghraib. Even so, several of the containers were found to have been broken into and the supplies stolen.

Parsons has 9000 employees and an annual turnover of $2.4 billion; its board includes James McNulty, the former director of the Pentagon’s Star Wars programme, and Admiral ‘Zap’ Zlatoper, the former commander-in-chief of the US Pacific fleet, as well as directors who have held senior positions in leading banks and universities. DynCorp, which won the contract to train the Iraqi police in Jordan, where staff rioted over pay, is one of the world’s largest private security contractors. On its board have sat former senior officials from Nasa, the FBI, the Federal Communications Commission and the US army. Bechtel has been one of the world’s largest overseas contractors for decades; other US firms which have earned more than $1 billion in Iraqi contracts include Fluor, Washington Group International and Kellogg, Brown and Root, which is owned by Dick Cheney’s former firm, Halliburton. Three years on, America’s corporate giants look stretched and exhausted in Iraq. They have proved quick at subcontracting and overrunning on costs, slower at meeting deadlines and on-site management. The auditors have also found evidence of corruption and gross incompetence in some of their dealings.

Take the question of oil pipelines. Oil from the southern oilfields is exported through a terminal port south of Basra. From the northern oilfields in Iraqi Kurdistan it goes by pipeline to the Turkish Mediterranean port of Ceyhan. To defend Iraq’s oil and electricity networks from attacks by insurgents, the CPA decided in the summer of 2003 to create ‘Task Force Shield’. This would protect 810 key oil installations, 7000 km of oil pipeline and 14,000 km of electricity cables. Erinys, a British security business which employs several of Ahmed Chalabi’s family, would train and equip 14,400 guards for an Oil Protection Force (OPF). A few months later, an American security firm was contracted to train and equip 6000 guards for an Electrical Power Security Service (EPSS). It was a disaster. The Task Force ‘ultimately proved unsuccessful’, the auditors say. ‘Although the OPF showed some initial success, the EPSS programme barely got started before it was cancelled.’ Some $147 million, two-thirds of it Iraqi money from the Development Fund, had been spent. Today, the Iraqi Defence Ministry guards the pipelines and the Oil Ministry guards all other installations. The Oil Ministry’s inspector general says its security forces are undermanned, poorly equipped and unco-ordinated. Acts of sabotage go uninvestigated. The Electricity Ministry fares even worse. The auditors discovered that ‘tribal chiefs are paid to protect transmission lines . . . but are reportedly selling materials from downed lines and exacting tariffs for access to repair lines.’

Secure pipelines are useful only if oil flows through them. Coalition aircraft bombed the bridge carrying the main pipelines from the Kirkuk oilfields over the Tigris at al-Fatah. As well as carrying oil to Turkey, the lines supplied two of Iraq’s biggest refineries. A temporary pipe was laid across the bridge until a new, sabotage-proof pipeline could be constructed. Kellogg, Brown and Root (KBR) won the contract to rebuild the crossing and three others over nearby irrigation canals. The job was expected to cost $220 million, and was supposed to be completed by March 2004. By August 2004, KBR had claimed $75.7 million for the al-Fatah crossing alone, all 600 feet of it, but the drilling was a mess. The boreholes under the river kept caving in. A geologist hired by KBR said that the riverbed was unstable and needed further testing. KBR insisted its drilling subcontractors carry on regardless, and refused to let them talk to the Army Corps of Engineers. Finally, the contract was reassigned to Parsons, who, for another $29 million, dug a trench in the riverbed and buried the pipe.

That was the easy part. SIGIR inspectors found one irrigation canal crossing half finished. The US army engineer in Kirkuk reckoned another was about a tenth complete. Parsons again had the contract, but had not inspected the crossing because, the firm said, its Iraqi subcontractor ‘would only perform the work with the guarantee of no American presence at either site’. The workers were afraid of insurgent attacks. SIGIR questioned whether the site was quite as dangerous as all that, and wondered why Parsons was paid $13 million for three months when no one was working in the area. SIGIR has also found evidence that some of the buried pipelines are smaller than the contracts stipulated. The plan now is for a subcontractor from the Republic of Georgia to finish the crossing, protected by US paratroopers.

In southern Iraq, crude oil flows fairly smoothly from the Rumaila oilfield to the Basra terminal. Yet much of it is diverted along the way into small, illegal ‘sucker’ pipes that snake through palm groves to small huts, where the oil is pumped into waiting tanker lorries. There are bigger scams, too: sometimes the entire contents of oil storage depots disappear. As a centre of oil smuggling, the British-occupied area around Basra is rivalled only by the Niger delta. More than 1600 fishing boats in Basra spirit away 15 million litres of oil a month. Basra is now the most corrupt city in Iraq. Everyone has been accused of smuggling: the Iranian-funded Shia militias, criminal syndicates, the mayor, the Baghdad Oil Ministry. More than two and a half years after the invasion, Iraq still does not meter its oil, despite repeated warnings from the International Advisory and Monitoring Board.

Iraq has the world’s second largest proven reserves of oil after Saudi Arabia, possibly up to 200 billion barrels, worth hundreds of billions of dollars. Shell, BP, Chevron and ExxonMobil all want to have what’s known as a production sharing agreement with the Iraqi government. Under the terms of such an agreement, in return for bearing the cost of getting new oilfields up and running, the companies would be guaranteed long-term access to Iraq’s reserves. Platform, the British oil monitoring group, has worked out that at a cost of production of only $40 a barrel, the companies’ return on investment would be somewhere between 42 per cent and 162 per cent, representing between $74 billion and $194 billion in profits that Platform feels should go to the Iraqi government.

This doesn’t seem likely. The oil companies have been lobbying hard in Baghdad since the first days of the occupation, and a succession of executives have been sent to work as advisers within the Oil Ministry. ‘Coalition officials and other international experts,’ the auditors say, ‘are working with the Iraqi government to craft oil legislation that would promote an efficient, competent, transparent, and investor-friendly oil and gas sector.’ In August, the Kurdish regional government published a draft petroleum act. Under articles 3 and 4, ‘Kurdistan has sole authority in respect of petroleum operations in Kurdistan and in the “Disputed Territories”, where Kurdistan is a party to the dispute, including Kirkuk.’ This has not pleased the Oil Ministry in Baghdad, which is now under intense pressure to publish a petroleum law by the end of the year with terms that British and American oil companies find attractive. If the Coalition’s mission fails, Iraq’s future rulers may prefer to invite tenders from the Chinese, the French and the Russians.

Also in August, the month that the new Baghdad Police Training Academy opened, the Baghdad morgue reported 1535 deaths from violence. SIGIR reports that the police academy is now closed: raw sewage from the toilets was leaking into the overhead light fittings. But construction of the US Embassy compound – the largest and at more than $1 billion the most expensive embassy in the world – is on schedule. So, too, is work on four large permanent US military bases. It isn’t clear how Tony Blair can think Iraq is a country on the verge of being a successful liberal democracy. But we do know what kind of mess will be left behind if the Coalition forces do eventually withdraw.

19 October

Ed Harriman is a journalist and television documentary film-maker.



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Alternative realities, by George Packer

COMMENT
ALTERNATIVE REALITIES
by George Packer
Issue of 2006-10-30
Posted 2006-10-23

When the National Security Council met to discuss Iraq earlier this month, in Washington, the sense of urgency was palpable. The director of national intelligence described the deterioration o security in Baghdad and Basra; the Iraqi Army was near collapse, he said, and another explosion of sectarian violence was imminent. The chairman of the Joint Chiefs of Staff reported that th American commander in Iraq was asking for two new combat brigades immediately and fifty thousand additional troops in the coming months
“We’ve just heard a very dour intel briefing,” the national-security adviser said, opening the floor to discussion. “With more resources, can we really get it right? Can we do it better than we’ve done in the past three and a half years?”
“What is ‘it’?” another participant asked. “What do we mean by success? A democratic Iraq?”
“Can we achieve a stable, unified Iraq?” the national-security adviser persisted. “Does anyone here believe that’s still possible? And, if not, then Plan A has failed and we have to come up with other options.”
“Plan A is dead,” the Secretary of State announced, and sketched out a new strategy to bring Iran, Syria, and Iraq’s other neighboring countries into negotiations, in order to prevent civil war from spreading across borders. “We have to take what is a hugely eroded leadership position in the international community and try to turn it around. It’s a hell of a long shot.”
The meeting was remarkable for its clarity: the principals looked at unpleasant facts from every angle, asked fundamental questions about the choices available, criticized past failures, and agreed on new plans without concern for the political fallout. The old habits of wishful thinking and blind loyalty were gone.
If this discussion had taken place at the White House, one could be a little hopeful, not just for a change of policy but for a change of climate in which new policies might be imagined. Instead, it occurred a mile away, at the Brookings Institution, where a dozen civilian and military officials of previous Administrations had come together for a daylong war game on Iraq.
Conversations like this one are taking place in quiet corners of the government and the military, within small groups of trusted friends, but they are not happening where it matters. Obstacles to critical thinking are not exclusive to this Administration, with its incurious President and its ruthless political “commissars,” as they are known among their colleagues. The fear of leaks, and the damage they can do to an appearance of unity and resolve, makes it almost impossible for top officials in any Administration to speak freely in groups of more than three or four. But the resistance intensifies when the White House is under siege. “The worse the situation gets,” the imaginary national-security adviser said, “the harder it is to make the point that there’s a problem.” When the real Office of Policy Planning at the real State Department proposed writing a memo on the alternatives facing the Administration if its Iraq policy failed, the idea was dismissed by the department’s real leadership.
The President’s Iraq war is lost. Plan A—a unified and democratic Iraq that will be a model in the region—is no longer achievable. The civil war for which the Administration will not consider new responses is already at hand. Because no one in power can admit any of this, the United States is in the position of trying to hold still while the ground shifts violently underfoot. The resistance to thinking about Plans B, C, and D means not only that this country remains stuck while Americans and Iraqis die but that its ability to affect events six or twelve months away is rapidly diminishing.
In the Brookings war game, the mock National Security Council, functioning the way the National Security Council should, responded to the deterioration in Iraq by making certain decisions, and then responded to the consequences of those decisions. By the end of the day, American policy had shifted from the President’s “democracy agenda” to a focus on stabilizing Baghdad and bringing the warring parties to the conference table, to an effort to stem the flow of refugees, to a policy of countering Iranian domination of Iraq. By that point, the American forces were out of Baghdad and positioned along Iraq’s borders and in Kurdistan. It was the revenge of Realpolitik. The chairman of the Joint Chiefs reminded the committee that the new policy meant greatly increased casualties among Iraqis and “a terrible loss for U.S. prestige, credibility, and legitimacy.” But, in an atmosphere of critical thinking and open debate, the officials had to accept it.
Others are trying to fill the vacuum of debate from the outside. Recently, Dennis Ross, who was President Clinton’s Middle East envoy, proposed in an op-ed in the Washington Post that the United States should negotiate its departure with the Iraqi government, basing the timing and manner on whether the factions there can reach a settlement: “If Iraqis are ready to resolve their internal political differences, to adjust to reality and to make the hard choices they face, our presence can help in the transition. But if they continue to avoid reality, our presence will simply prolong both their state of denial and ours.”
Earlier this year, Congress commissioned the Iraq Study Group, a bipartisan panel chaired by former Secretary of State James Baker and former Representative Lee Hamilton, which is looking into Iraq policy and will offer recommendations. Such is the paralysis of official Washington that the course of the war seems to be waiting for the report, which won’t be released until after next month’s elections. News stories suggest that it will call for changes along the lines of the Brookings war game: talk to Iran and Syria, negotiate with armed Iraqi factions in a Dayton-style conference, and, as a last resort, reduce American casualties by shifting from supporting the government in Iraq to containing the fighting.
Every one of the proposals coming from outside the real Administration starts from the assumption that its policy has failed. Plans B, C, and D are also admissions of defeat. They are an acknowledgment that our highest interests in Iraq no longer involve the welfare of Iraqis. For anyone who had hoped that the overthrow of Saddam Hussein would bring a better life to Iraq’s people, these are hard truths to accept. But they also suggest that between the President’s resolve to persist in folly and the public’s instinct to be rid of Iraq there is a range of choices that could prevent the disaster from inflicting permanent damage on American interests. This kind of clear, rational thought is less heartless—even, in the end, less defeatist—than willful blindness.

The Flags of our fathers, Clint Eastwood

October 20, 2006
MOVIE REVIEW | 'FLAGS OF OUR FATHERS'
A Ghastly Conflagration, a Tormented Aftermath

By MANOHLA DARGIS
It seems hard to believe there is anything left to say about World War II that has not already been stated and restated, chewed, digested and spat out for your consideration and that of the Oscar voters. And yet here, at age 76, is Clint Eastwood saying something new and vital about the war in his new film, and here, too, is this great, gray battleship of a man and a movie icon saying something new and urgent about the uses of war and of the men who fight. “Flags of Our Fathers” concerns one of the most lethal encounters on that distant battlefield, but make no mistake: this is also a work of its own politically fraught moment.

The film distills much of the material covered in James Bradley and Ron Powers’s affecting book of the same title about the raising of the American flag during the battle for Iwo Jima. Mr. Bradley’s father, John Bradley, nicknamed Doc and played by an effectively restrained Ryan Phillippe, was one of six men who helped plant the flag (it was the second planted that day) on the island’s highest point on the fifth day of the monthlong American offensive. An Associated Press photographer, Joe Rosenthal, immortalized the moment, and American politicians seized the day, sending the three surviving flag raisers — Doc, Ira Hayes (Adam Beach, delivering heartbreak by the payload) and Rene Gagnon (Jesse Bradford) — on a hugely successful war-bond drive.

Collectively hailed as heroes from sea to shining sea, Rene embraced the spotlight, Doc settled into stoic unhappiness, while Ira, a Pima Indian shattered by Iwo Jima and its dead, sobbed and drank himself into oblivion. The efforts of Doc’s adult son (Tom McCarthy) to tell his father’s story years later give the film its scaffolding, but it is Mr. Beach’s Ira, with his open face and vulnerability, who haunts it. Tears mixing with booze, he floods his scenes with raw emotion that serves as a rebuke to gung-ho fictions like “Sands of Iwo Jima,” a 1949 bad joke in which John Wayne hands an American flag to the real Ira, Doc and Rene so they can raise Old Glory once more, this time over the sands of Southern California.

Mr. Eastwood’s cinematic deconstruction takes a considerably darker view of the historical record. The Air Force had repeatedly bombed Iwo Jima before the American landing on Feb. 19, 1945; by D-Day, barely a blade of grass survived, even as more than 20,000 Japanese soldiers remained dug in. To replicate that scorched earth, Mr. Eastwood drains much of the color from the film’s already muted palette, so much so that many of the scenes on the island look as if they were shot in black and white. It seems impossible that anything living could survive long in this charred, spooky place, and it isn’t long after the invasion that American bodies begin piling up amid the orange-red explosions and dull-red sprays of blood.

During these anxious moments, Mr. Eastwood characteristically keeps his sights (and ears) on the troops and the choreographed chaos of their movements; the focus remains on them, not the filmmaking. When the men hit the shore, the cameras stick close to them, moving and then, during a sudden hailstorm of bullets, running alongside the men as if similarly searching for cover. Despite the occasional bird’s-eye view that underscores the staggering scale of the operation — the hundreds of boats hugging the coast, the thousands of men dotting the land — the filmmaking retains a devastating intimacy, as in a quiet shot of dead soldiers lying facedown on the beach, the water under their bodies receding as if it were blood.

The scenes on Iwo Jima are harrowing, borderline surreal, and even after Doc, Ira and Rene leave the island, they never fully escape it. During the bond drive, the pop of a camera bulb, a flash of lightning and the bang of a backfiring car engine instantly return the three to the island and its horrors, a blurring between past and present that, with seamless, ruthless efficiency, Mr. Eastwood and his longtime editor, Joel Cox, turn into a dreadful memory loop. In Mr. Bradley and Mr. Powers’s book, one Iwo Jima veteran describes seeing his dead friends while sitting in class at medical school; the flashbacks, he says, were “like a movie screen wrapped around me.” We see a version of that movie here, and it is terrible.

Most war movies, even those that claim to be antiwar, overtly or implicitly embrace violence as either a political or cinematic means to an end. Few filmmakers can resist the thrill of the rocket’s red glare and the spectacle of death; the violence is simply too exciting. There are plenty of big bangs in “Flags of Our Fathers,” but because the screenplay, by William Broyles Jr. and Paul Haggis, oscillates among three separate time frames — Iwo Jima, the bond tour and, less successfully, contemporary scenes involving Doc and his son — and because the flag raisers were pulled off the field before fighting ended, the violence of their war remains at a frenzied pitch. It doesn’t build, evolve, recede; it terrifies and keeps terrifying.

What do we want from war films? Entertainment, mostly, a few hours’ escape to other lands and times, as well as something excitingly different, something reassuringly familiar. If “Flags of Our Fathers” feels so unlike most war movies and sounds so contrary to the usual political rhetoric, it is not because it affirms that war is hell, which it does with unblinking, graphic brutality. It’s because Mr. Eastwood insists, with a moral certitude that is all too rare in our movies, that we extract an unspeakable cost when we ask men to kill other men. There is never any doubt in the film that the country needed to fight this war, that it was necessary; it is the horror at such necessity that defines “Flags of Our Fathers,” not exultation.

In this respect, the film works, among other things, as a gentle corrective to Steven Spielberg’s “Saving Private Ryan,” with its state-of-the-art carnage and storybook neatness. (Mr. Spielberg, whose company bought the film rights to “Flags of Our Fathers,” is one of its producers.) Where “Saving Private Ryan” offers technique, Mr. Eastwood’s film suggests metaphysics. Once again, he takes us into the heart of violence and into the hearts of men, seeing where they converge under a night sky as brightly lighted with explosions as any Fourth of July nocturne and in caves where some soldiers are tortured to death and others surrender to madness. He gives us men whose failings are evidence of their humanity and who are, contrary to our revolted sensitivities, no less human because they kill.

One view of Mr. Eastwood is that he has mellowed with age, or at least begun to take serious measure of the violence that has been an animating force in many of his films. In truth, the critical establishment caught up with the director, who for decades has been building a fascinating body of work that considers annihilating violence as a condition of the American character, not an aberration. “Flags of Our Fathers” is an imperfect addition to that body of work, though its flaws are minor and finally irrelevant in a film in which ambivalence and ambiguity are constituent of a worldview, not an aftereffect. Notably, Mr. Eastwood’s next film, “Letters From Iwo Jima,” set to open early next year, revisits the same battle, this time from the point of view of the Japanese.

“Flags of Our Fathers” is rated R (Under 17 requires accompanying parent or adult guardian). The representation of war and its battlefield atrocities is extremely graphic.

FLAGS OF OUR FATHERS

Opens today nationwide.

Directed by Clint Eastwood; written by William Broyles Jr. and Paul Haggis, based on the book by James Bradley with Ron Powers; director of photography, Tom Stern; edited by Joel Cox; music by Mr. Eastwood; production designer, Henry Bumstead; produced by Mr. Eastwood, Steven Spielberg and Robert Lorenz; released by Paramount Pictures. Running time: 132 minutes.

WITH: Ryan Phillippe (John Bradley), Jesse Bradford (Rene Gagnon), Adam Beach (Ira Hayes), John Benjamin Hickey (Keyes Beech), John Slattery (Bud Gurber), Barry Pepper (Mike Strank), Jamie Bell (Ralph Ignatowski), Paul Walker (Hank Hansen) and Robert Patrick (Col. Chandler Johnson).


Copyright 2006 The New York Times Company

Don't make nice, Paul Krugman

October 23, 2006
Op-Ed Columnist
Don’t Make Nice

By PAUL KRUGMAN
Now that the Democrats are strongly favored to capture at least one house of Congress, they’re getting a lot of unsolicited advice, with many people urging them to walk and talk softly if they win.

I hope the Democrats don’t follow this advice — because it’s bad for their party and, more important, bad for the country. In the long run, it’s even bad for the cause of bipartisanship.

There are those who say that a confrontational stance will backfire politically on the Democrats. These are by and large the same people who told Democrats that attacking the Bush administration over Iraq would backfire in the midterm elections. Enough said.

Political considerations aside, American voters deserve to have their views represented in Congress. And according to opinion polls, most Americans are actually to the left of Congressional Democrats on issues such as health care.

In particular, the public wants politicians to stand up to corporate interests. This is clear from the latest Newsweek poll, which shows overwhelming public support for the agenda Nancy Pelosi has laid out for her first 100 hours if she becomes House speaker. The strongest support is for her plan to have Medicare negotiate with drug companies for lower prices, which is supported by 74 percent of Americans — and by 70 percent of Republicans!

What the make-nice crowd wants most of all is for the Democrats to forswear any investigations into the origins of the Iraq war and the cronyism and corruption that undermined it. But it’s very much in the national interest to find out what led to the greatest strategic blunder in American history, so that it won’t happen again.

What’s more, the public wants to know. A large majority of Americans believe both that invading Iraq was a mistake, and that the Bush administration deliberately misled us into war. And according to the Newsweek poll, 58 percent of Americans believe that investigating contracting in Iraq isn’t just a good idea, but a high priority; 52 percent believe the same about investigating the origins of the war.

Why, then, should the Democrats hold back? Because, we’re told, the country needs less divisiveness. And I, too, would like to see a return to kinder, gentler politics. But that’s not something Democrats can achieve with a group hug and a chorus of “Kumbaya.”

The reason we have so much bitter partisanship these days is that that’s the way the radicals who have taken over the Republican Party want it. People like Grover Norquist, who once declared that “bipartisanship is another name for date rape,” push for a hard-right economic agenda; people like Karl Rove make that agenda politically feasible, even though it’s against the interests of most voters, by fostering polarization, using religion and national security as wedge issues.

As long as polarization is integral to the G.O.P.’s strategy, Democrats can’t do much, if anything, to narrow the partisan divide.

Even if they try to act in a bipartisan fashion, their opponents will find a way to divide the nation — which is what happened to the great surge of national unity after 9/11. One thing we might learn from investigations is the extent to which the Iraq war itself was motivated by the desire to have another wedge issue.

There are those who believe that the partisan gap can be bridged if the Democrats nominate an attractive presidential candidate who speaks in uplifting generalities. But they must have been living under a rock these past 15 or so years. Whoever the Democrats nominate will feel the full force of the Republican slime machine. And it doesn’t matter if conservatives have nice things to say about a Democrat now. Once the campaign gets serious, they’ll suddenly question his or her patriotism and discover previously unmentioned but grievous character flaws.

The truth is that we won’t get a return to bipartisanship until or unless the G.O.P. decides that polarization doesn’t work as a political strategy. The last great era of bipartisanship began after the 1948 election, when Republicans, shocked by Harry Truman’s victory, decided to stop trying to undo the New Deal. And that example suggests that the best thing the Democrats can do, not just for their party and their country, but for the cause of bipartisanship, is what Truman did: stand up strongly for their principles.


Copyright 2006 The New York Times Company

Paul Krugman: The war against wages: Walmart



October 6, 2006
OP-ED CONTRIBUTOR
The War Against Wages
By PAUL KRUGMAN
Should we be cheering over the fact that the Dow Jones Industrial Average has finally set a new record? No. The Dow is doing well largely because American employers are waging a successful war against wages. Economic growth since early 2000, when the Dow reached its previous peak, hasn’t been exceptional. But after-tax corporate profits have more than doubled, because workers’ productivity is up, but their wages aren’t — and because companies have dealt with rising health insurance premiums by denying insurance to ever more workers.
If you want to see how the war against wages is being fought, and what it’s doing to working Americans and their families, consider the latest news from Wal-Mart.
Wal-Mart already has a well-deserved reputation for paying low wages and offering few benefits to its employees; last year, an internal Wal-Mart memo conceded that 46 percent of its workers’ children were either on Medicaid or lacked health insurance. Nonetheless, the memo expressed concern that wages and benefits were rising, in part “because we pay an associate more in salary and benefits as his or her tenure increases.”
The problem from the company’s point of view, then, is that its workers are too loyal; it wants cheap labor that doesn’t hang around too long, but not enough workers quit before acquiring the right to higher wages and benefits. Among the policy changes the memo suggested to deal with this problem was a shift to hiring more part-time workers, which “will lower Wal-Mart’s health care enrollment.”
And the strategy is being put into effect. “Investment analysts and store managers,” reports The New York Times, “say Wal-Mart executives have told them the company wants to transform its work force to 40 percent part-time from 20 percent.” Another leaked Wal-Mart memo describes a plan to impose wage caps, so that long-term employees won’t get raises. And the company is taking other steps to keep workers from staying too long: in some stores, according to workers, “managers have suddenly barred older employees with back or leg problems from sitting on stools.”
It’s a brutal strategy. Once upon a time a company that treated its workers this badly would have made itself a prime target for union organizers. But Wal-Mart doesn’t have to worry about that, because it knows that these days the people who are supposed to enforce labor laws are on the side of the employers, not the workers.
Since 1935, U.S. workers considering whether to join a union have been protected by the National Labor Relations Act, which bars employers from firing workers for engaging in union activities. For a long time the law was effective: workers were reasonably well protected against employer intimidation, and the union movement flourished.
In the 1970’s, however, employers began a successful campaign to roll back unions. This campaign depended on routine violation of labor law: experts estimate that by 1980 employers were illegally firing at least one out of every 20 workers who voted for a union. But employers rarely faced serious consequences for their lawbreaking, thanks to America’s political shift to the right. And now that the shift to the right has gone even further, political appointees are seeking to remove whatever protection for workers’ rights that the labor relations law still provides.
The Republican majority on the National Labor Relations Board, which is responsible for enforcing the law, has just declared that millions of workers who thought they had the right to join unions don’t. You see, the act grants that right only to workers who aren’t supervisors. And the board, ruling on a case involving nurses, has declared that millions of workers who occasionally give other workers instructions can now be considered supervisors.
As the dissent from the Democrats on the board makes clear, the majority bent over backward, violating the spirit of the law, to reduce workers’ bargaining power.
So what’s keeping paychecks down? Major employers like Wal-Mart have decided that their interests are best served by treating workers as a disposable commodity, paid as little as possible and encouraged to leave after a year or two. And these employers don’t worry that angry workers will respond to their war on wages by forming unions, because they know that government officials, who are supposed to protect workers’ rights, will do everything they can to come down on the side of the wage-cutters.


Copyright 2006 The New York Times Company
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NYT Editorial: Kicked while down



October 7, 2006
EDITORIAL
Kicked While Down
In a blow to labor unions, the National Labor Relations Board recently expanded the pool of workers exempted from union membership. Specifically, the labor board found that registered nurses who assigned others to some shifts or tasks were supervisors, and thus not eligible to join unions. It was a bad decision, not only because of the specifics of the case, but also in its broader ramifications.
There are good reasons to bar managers from unionizing. It is extremely difficult to run a large organization efficiently if the people at the top are unable to easily hold their managers accountable for overall success or failure. But responsibilities like making out a schedule do not amount to management. If they did, interns would be the only non- managers in many of today’s workplaces.
Companies facing unionization drives have long found it convenient to discover that employees who are basically rank-and-file workers are actually managers. That seems to be the case with the nurses. The board’s decision opens the door for possibly millions of health-care workers and other professionals to be disqualified from the option of union protection.
This is one more step curbing the power of organized labor since President Bush came to office. The administration’s philosophical vendetta against unions has come at a time when their power is already on the wane. Membership has fallen to 7.8 percent of the private work force in this country, from over a third in the 1950’s. Far from balancing the scales, the anti-union drive comes when workers are already at a historic low in bargaining strength. Despite a growing economy and rising productivity, hourly wages adjusted for inflation have declined 2 percent since 2003. Corporate profits, meanwhile, are at their highest share of gross domestic product since the 1960’s.
We are getting closer and closer to a work force with no benefits and no substantive protections. Some unions succumbed to corruption and contributed to their own decline. But their role in giving common workers a voice is essential to a functioning society.
Copyright 2006 The New York Times Company

Borrowing During the Bush Years - Deeper and Deeper - New York Times

Borrowing During the Bush Years - Deeper and Deeper - New York Times
Editorial
Deeper and Deeper

There is fresh evidence, if any more were needed, that excessive borrowing during the Bush years will make the nation poorer.

For most of the past five and a half years, interest rates have been low, allowing the government to borrow more and more — to cut taxes while fighting two expensive wars — without having to shoulder higher interest payments.

That’s over now. For the first time during President Bush’s tenure, the government’s interest bill is expected to rise in 2006, from $184 billion in 2005 to $220 billion this year, up nearly 20 percent. That increase — $36 billion — makes interest the fastest-growing component of federal spending, and continued brisk growth is likely. According to projections by Congress’s budget office, the interest bill will grow to $249 billion in 2007, and $270 billion in 2008.

All of that is money the government won’t have available to spend on other needs and priorities. And much of it won’t even be recycled back into the United States economy. That’s because borrowing from foreign countries has exploded during the Bush years. In 2005, the government paid about $77 billion in interest to foreign creditors in China, Japan and elsewhere.

And that’s not the worst of it. While foreign investors were putting up most of the $1.5 trillion the federal government has borrowed since 2001, they were also snapping up hundreds of billions of dollars in private sector securities, transactions that have been a big source of the easy money that allowed Americans to borrow heavily against their homes.

The result, as The Wall Street Journal reported last week, is that for the first time in at least 90 years, the United States is now paying noticeably more to foreign creditors than it receives from its investments abroad. That is a momentous shift. It means that a growing share of America’s future collective income will flow abroad, leading to a lower standard of living in the United States than would otherwise have been achieved. Americans deserve better than this financial mess.

Bush seeks immunity for violating War Crimes Act

Bush seeks immunity for violating War Crimes Act

Insurance Horror Stories - New York Times

Insurance Horror Stories - New York Times
September 22, 2006
Op-Ed Columnist
Insurance Horror Stories

By PAUL KRUGMAN
“When Steve and Leslie Shaeffer’s daughter, Selah, was diagnosed at age 4 with a potentially fatal tumor in her jaw, they figured their health insurance would cover the bulk of her treatment costs.” But “shortly after Selah’s medical bills hit $20,000, Blue Cross stopped covering them and eventually canceled her coverage retroactively.”

So begins a recent report in The Los Angeles Times titled “Sick but Insured? Think Again,” which offers a series of similar horror stories, and suggests that these stories represent a growing trend: more and more health insurers are finding ways to yank your insurance when you get sick.

This trend helps explain something that has been puzzling me: why is the health insurance industry growing rapidly, even as it covers fewer Americans?

Between 2000 and 2005, the number of Americans with private health insurance coverage fell by 1 percent. But over the same period, employment at health insurance companies rose a remarkable 32 percent. What are all those extra employees doing?

Now we know at least part of the answer: they’re working harder than ever at identifying people who really need medical care, and ensuring that they don’t get it. In the past, they mainly concentrated on screening out applicants likely to get sick. Now, it seems, they’re also devoting a lot of effort to finding pretexts for revoking insurance after they’ve already granted it. They typically do this by claiming that they weren’t notified about some pre-existing condition, even if the insured wasn’t aware of that condition when he or she bought the policy.

Welcome to the ugly world of American health care economics.

Health care is poised to become America’s largest industry. Employment in manufacturing, which once dominated the economy, has fallen 18 percent since 2000, to 14.2 million. Meanwhile, employment in the private health services industry has risen 16 percent, to 12.6 million. Another 1.3 million people are employed at government hospitals. So we’re quickly approaching the point at which more Americans will be employed delivering health care than are employed producing manufactured goods.

Yet even as health care becomes the core of the American economy, our system of paying for health care remains sick, and is getting sicker.

Because everyone faces some risk of incurring huge medical costs, only the superrich can afford to be without health insurance. Yet private insurers try to refuse coverage to those most likely to need it, and deny payment whenever they can get away with it.

The point isn’t that they’re evil or greedy (although you do wonder how the people who cut off the Schaeffers can look themselves in the mirror). The fact is that cruelty and injustice are the inevitable result of the current rules of the game. Blue Shield of California is a nonprofit insurance provider, yet as a spokesman put it, if his organization doesn’t follow the for-profit practice of selectively covering only the healthiest people, “we will end up with all the high-risk people.”

Now, before you panic about the state of your own coverage, you should know that the horror stories in The Los Angeles Times article all involve individual insurance; if your coverage comes via your employer, you’re reasonably secure against sudden cancellation.

But employment-based insurance is in rapid decline, as employers balk at the cost and more and more companies adopt Wal-Mart-style minimal-benefit policies. That’s why many people are turning to individual insurance — only to find out, in some cases, that they didn’t get what they thought they paid for.

And here’s the thing: it’s all unnecessary.

Every other wealthy nation manages to provide almost all its citizens with guaranteed health insurance, while spending less on health care than we do. And there’s no mystery why: we’re paying the price for pointless, destructive reliance on private insurers. Medicare, which is a universal health insurance program for older Americans, spends less than 2 cents of every dollar on administrative costs, leaving 98 cents to pay for medical care. By contrast, private insurance companies spend only around 80 cents of each dollar in premiums on medical care; much of the remaining 20 cents is spent denying insurance to those who need it.

If we had a universal system — Medicare for everyone — there would be no more horror stories like those reported by The Los Angeles Times. And we’d almost certainly spend less on health care than we do now.

Cheney: The Fatal Touch

The New York Review of Books: Cheney: The Fatal Touch