September 1, 2012
Islamists Struggle to Run North Mali
By ADAM NOSSITER
DAKAR, Senegal — The radical Islamists who control northern Mali appear incapable of managing basic services — including electricity, water and schools — and in some cases are asking for the return of state functionaries to run them, according to a delegation that went to the region for talks recently.
The Islamists allied with Al Qaeda appear to have gained a firm military hold in the north, and have subdued the local population with a brutal application of Shariah law, including public beatings, amputation and a stoning death. What is left of the Malian Army, divided by a military coup, has made no move to dislodge them after five months of occupation, and a talked-about West African regional intervention has yet to coalesce.
But the Islamists’ grasp on administering the vast desert region, which is larger than France, seems much less secure, members of the delegation said. The delegates — members of an unofficial group of concerned citizens called the Coalition for Mali — unexpectedly found themselves listening to demands from the Islamists that the government in Bamako send back bureaucrats to run state services.
“They asked for the state to resume its functions, because it’s too complicated for them to manage,” said Daouda Maïga, who used to run a state development program in Kidal, a region of nearly 70,000 people before the Islamist takeover emptied it. “They are not used to running things.”
About 400,000 people have fled the north since the Islamist takeover, creating a vacuum of talent that the Islamists have apparently been unable to fill. “Five months after the state, its services, and NGOs were all forced out, there is a strong need for state services,” a report issued by the coalition said last week, referring to nongovernment workers. “The new masters have themselves come to realize that they cannot replace the state.”
The Bamako government still controls the southern rump of Malian territory, while the north is in the hands of radical jihadi factions that took over last spring, after a military coup in the capital left the Mali Army rudderless and unable to defend the vast northern region.
While Western governments have expressed concern about the Islamist takeover, fearing a potential Talibanization of a big chunk of West Africa, little concrete has been done so far to counter it.
The West African regional bloc, Economic Community of West African States, has drawn up a military intervention plan that it presented to the United Nations Security Council on Aug. 2. The plan calls for an intervention force of about 3,000 troops at a cost of more than $400 million, with no strike before February.
Security Council diplomats thought the plan was both too imprecise and too drawn out in its timetable, according to a diplomat on the council who spoke on the condition of anonymity.
The diplomat said the group had been asked to go back to the drawing board. In addition, Malian military officials have expressed hostility to the idea of significant outside help, insisting, contrary to the evidence so far, that they can handle the task of retaking the north themselves.
The plan by the Economic Community does little more than note that the critical end of the operation would be the “launching of operations of the Mali security forces to regain the north with support” of the bloc. That lack of detail drew critical scrutiny from the Security Council, the diplomat said. “There was a feeling you need to have more thorough and more adapted planning,” he said.
In Mali, officially there are no relations between the two parts of the divided country. But the Bamako government recently instituted a new Department of Religious Affairs, in what has been interpreted as a nod to the Islamists who control the north.
And individual citizen initiatives, like the trip organized by the Coalition for Mali, have been on the rise. The delegation — which included Malian elected officials, development specialists and members of nongovernment organizations — made the trip from Bamako two weeks ago.
Some of the delegates were surprised by the supplicatory tone of the Islamists, many of them religiously indoctrinated guerrilla fighters used to living lives of isolation in the desert.
“There are so many things that the state does, that they cannot do,” Mr. Maïga said. “Run the water system, the electricity, schools.” In Kidal, there is electricity one night a week at most, he said, and the same was true for water and telephone service.
Delegates said the Islamists wanted help running all state services except justice and security. Factions like Ansar Dine (Defenders of the Faith), which controls Kidal and Timbuktu, have made their mark so far not by providing services to citizens, but by beating them publicly for allegedly contravening Shariah, destroying religious monuments in the historic city of Timbuktu, amputating the hand of an accused thief, and even stoning to death a couple said to have had children out of wedlock.
“They said it was the couple who demanded to be purified,” Mr. Maïga recalled from his talks with the militants in Kidal, adding that he was skeptical of their explanation.
Mr. Maïga said he was struck by the Islamists’ complaints about the difficulty of even applying Shariah consistently by their standards, the impracticability, for example, of amputating hands of all of the approximately 200 thieves they have captured. “They are really in a bind,” Mr. Maïga said. “They are really having trouble replacing the state.”
In Timbuktu, also controlled by Ansar Dine, where members of Al Qaeda’s regional franchise, Al Qaeda in the Islamic Maghreb, have been seen, there have also been demands for the resumption of basic services. “They asked for the return of certain services, of course,” said Abdramane Wangara, a member of the delegation. “Electricity is very spotty,” he said. “We’ve got to listen to these people.”
But whether what remains of the Malian state is looking for a compromise, and whether such a compromise would be accepted by outside powers, is open to question. “They are continuing to recruit,” Mr. Maïga said of the Islamists. “They have all the strength of AQIM behind them,” he added, referring to Al Qaeda in the Islamic Maghreb. “There must be constant military pressure on them. We can’t have everything by negotiation.”
Online universities blossom in Asia
By Agence France-Presse
Saturday, September 1, 2012 16:14 EDT
Thousands of kilometers from Kuala Lumpur in Cameroon, doctoral student Michael Nkwenti Ndongfack attends his Open University Malaysia classes online and hopes to defend his final thesis by Skype.
A government worker, Ndongfack could not find the instructional design and technology course he wanted in his own country, so is paying a foreign institution about $10,000 for the degree instead.
Online university education is expanding quickly in Asia, where growth in technology and Internet use is matched by a deep reverence for education.
“I chose e-learning because it is so flexible,” Ndongfack, 42, told AFP via Skype from his home in the Cameroonian capital Yaounde.
Web-based courses dramatically boost opportunities for students and are often cheaper than those offered by traditional bricks-and-mortar institutions.
But online learning has also caught the eye of some of the world’s most prestigious universities, with Harvard and the Massachusetts Institute of Technology recently teaming up to offer free courses over the Internet.
“With the improvement in technology, the number of institutions offering online education has increased, both in terms of numbers and the kind of classes offered,” said Lee Hock Guan, senior fellow at the Institute of Southeast Asian Studies in Singapore.
The Malaysian government said about 85,000 people took online courses in the country last year, both at web-based institutions and traditional universities offering Internet teaching.
In high-tech South Korea more than 112,000 students at 19 institutions are taking web-based classes, all of which have begun since 2002.
China embraced the concept of online learning in the late 1990s to expand access to education, particularly in its vast rural regions, and there are now scores of providers, with 1.64 million people enrolled in 2010.
Online courses are changing the way students learn, educators say, placing less emphasis on the rote learning that has long characterized education in parts of Asia, and harnessing modern consumer technologies.
And “open” universities, which typically offer courses primarily through the Internet, allow anyone to enrol for online programs regardless of prior qualification or degrees.
At Kuala Lumpur-based Asia e University, students download course materials from an online forum and virtual library. They are in contact with teachers and fellow students mostly through email, online chats, phone and text messages.
Assignments typically include illustrating what they have learned with videos and other presentations made with smartphones, iPads or other devices and uploading them to YouTube.
Academics say such interactive learning helps students engage with the material more than they would sitting passively in a lecture hall, and opens a window to learning through a medium they know and love – the latest gadgets.
“Everyone is a front-row student,” said Ishan Abeywardena, who teaches information technology at Wawasan Open University, based in northern Malaysia.
Students who might be too shy to ask questions or otherwise engage with their class in a traditional setting are much bolder online, Ishan said.
“Can you imagine the iPad, iPod and iPhone generation today, who are going to enter the university say, in 15 years’ time, going for a chalk-and-talk kind of model of learning? You learn by doing,” said Ansary Ahmed, Asia e University’s president.
But even those in favor of online learning admit face-to-face interaction – which can also help keep students motivated and personally engaged – is lost.
Ndongfack, whose web-only institution opened in 2000, said online studies were not easy, leaving him feeling isolated.
“There is no one there to give you instant support,” he said.
The growth of online degree programs is also constrained by poor Internet accessibility in parts of Asia and beyond.
More than 80 percent of South Koreans and 60 percent of Malaysians have online access, but in China the rate slips to about 40 percent and it slumps to around 10 percent in India.
Other criticisms include inadequate regulation, allegations of poor-quality teaching, student cheating, and the fact that online degrees are still not as widely recognized as traditional ones in the marketplace, say industry experts.
But Asia e University’s Ansary says such teething problems will be addressed over time, and in a few decades students will no longer attend just one university but several, picking and choosing from online offerings.
“These are early days,” he said. “The window is just opening.”
Woman beats the odds to make Saudi Arabia’s first film
By Agence France-Presse
Saturday, September 1, 2012 18:32 EDT
The female director of Saudi Arabia’s first feature film, showing at the Venice film festival, has explained how she beat the odds to produce the heartwarming tale of a girl’s quest to own a bicycle.
In Haifaa Al Mansour’s landmark film “Wadjda,” 10-year-old Waad Mohammed plays a girl who is also testing the boundaries of a woman’s place in a highly conservative society where her love for Western music and fashions land her in trouble.
Mohammed’s impish personality and resilience in the face of adversity add to the poignancy of the story and left some of the film’s first viewers in tears.
“She had this vulnerability and she embodied what a Saudi teenager is,” Al Mansour said, speaking in the lush courtyard of the Excelsior hotel.
“I wanted to show the tension between modernity and tradition,” she said.
Al Mansour said she was forced to direct what is her first feature film from a van with a walkie-talkie in some of the more conservative neighborhoods where she could not be seen in public together with male crew and cast members.
In some areas, screaming local residents would block shooting altogether.
She said finding financing also posed a problem in a country where cinemas are officially banned and any film is considered a commercial risk.
“Wadjda” will only be available in the kingdom on DVD or on television.
“There is no film in Saudi Arabia. Showing films in public is illegal so we don’t have this culture of filmmaking. I was never able to go on a film set and get training and see how things are. It was very difficult,” she said.
Al Mansour grew up in a small Saudi town as one of 12 siblings and she said her parents were always very supportive of her career even though they came under pressure from relatives who said filmmaking was “not honorable.”
“They are very traditional Saudis but they gave me all the space to be creative and that does not happen to a lot of girls,” she said.
Born in 1974, Saudi Arabia’s first female filmmaker studied literature at the American University in Cairo and film at the University of Sydney.
She has previously directed three shorts and the award-winning documentary “Women Without Shadows” which explores the hidden lives of Gulf women.
“Wadjda” was co-produced by Germany’s Razor Film and several Saudi companies including Rotana Studios which is linked to the Saudi royal family.
The rights have already been sold in France, Germany and Switzerland.
For all the implicit criticism of the state of women’s rights in Saudi in the film, Al Mansour said things are gradually changing and having a Saudi prince on board showed that officialdom was supportive of this shift.
“The fact that we shot a flim in Saudi Arabia with permission and everything says a lot about the country. It says the country is embracing art,” she said.
“I think the authorities really want to see more films,” she added.
“It is changing at a very slow pace. It’s still a very conservative, tribal society, very religious,” she said, adding: “I think women need to stick together in places like this and fight together and empower each other.”
Skipping along the halls of the Excelsior with headphones firmly on, a smiling curly-haired Mohammed said she was just having the time of her life.
“I’m very excited! This is my first time outside of Saudi Arabia and my first time in a film and I’m the lead actress,” she gushed.
Mohammed, who was selected through scouts as an open casting call for women would not be possible in Saudi, said her nature fit the character.
“The naughtiness is me. It’s the real me. I do things I’m not supposed to!”
[Photo via Agence France-Presse]
In the USA..
Originally published Saturday, September 1, 2012 at 4:16 PM
Baby boomers retiring to rural areas struggle to find doctors
There are several reasons boomers, the 78 million Americans born between 1946 and 1964, could face difficulties finding a doctor if they retire to small towns over the next 20 years.
By JEFF BARNARD
The Associated Press
GRANTS PASS, Ore. — Nina Musselman had no trouble finding a family doctor when she retired to rural Oregon nine years ago to be closer to her children. But then that doctor moved away, leaving her to search for another who would take Medicare.
After a year of going from doctor to doctor, she finally found one who stuck.
As record numbers of baby boomers go into retirement, many are thinking about moving from the places they needed to live to make a living, and going someplace warmer, quieter or prettier.
If they choose small towns like Grants Pass, 250 miles south of Portland, they could well have a hard time finding a family doctor willing to take Medicare, even supplemental plans, rather than private insurance.
"It's a sad situation for seniors," she said.
There are several reasons boomers, the 78 million Americans born between 1946 and 1964, could face difficulties finding a doctor if they retire to small towns over the next 20 years.
First, many primary-care doctors prefer to live and work in urban areas because of greater cultural opportunities, better schools and job opportunities for spouses.
Also, Medicare pays rural doctors less per procedure than urban physicians because their operating costs are supposedly less. That makes rural doctors less likely to accept Medicare patients.
With cuts to Medicare reimbursement for doctors targeted under the federal health-care overhaul, the shortage is likely to get even worse, said Mark Pauly, professor of health-care management at the University of Pennsylvania.
That is, unless increasing reimbursements for nurse practitioners and physicians' assistants encourages those providers to take up the slack, Pauly said.
If the Medicare cuts go through, "the doctors are saying: 'We're out of here,' " Pauly said. "The least they are saying is: 'We'll treat Medicare patients like we treat Medicaid patients,' which is mostly not."
Still, there is some good news, depending on where you live.
Pauly said the Affordable Care Act "puts a lot of emphasis on wellness programs and primary care. Nurses, especially nurse practitioners, are intended to play a major role there."
In Oregon, Washington and 14 other states, nurses and nurse practitioners "can operate independently of doctors, writing prescriptions, ordering tests and even running clinics," Pauly said.
Nationwide, the 22.5 percent of primary-care doctors who practice in rural areas roughly matches the 24 percent of Medicare patients living there, said Dr. Roland Goertz, chairman of the American Academy of Family Physicians board.
A survey of academy members nationwide shows 83 percent take new Medicare patients. But there is an overall shortage of primary-care physicians, which still makes it hard for retirees to find a family doctor.
The real problem, he said, is that the health-care system "has not supported a robust, adequate primary-care workforce for over 30 years."
According to the American Association of Medical Colleges, rural areas need about 20,000 primary-care doctors to make up for the shortages, but only about 16,500 medical doctors and 3,500 doctors of osteopathy graduate yearly.
"We are always trying to recruit doctors. We are barely keeping even," said Lyle Jackson, the medical director at the Mid-Rogue Independent Physician Association, a cooperative of doctors in Josephine County, where Musselman lives.
Taking part in the Medicare Advantage program, which pays a higher rate to doctors than standard Medicare, helps, but is still not enough, said Jackson, a former family physician.
A 2009 survey of doctors in the Oregon Medical Association showed concern over Medicare reimbursement rates topping the list of 23 issues, with 79 percent rating it as very important, said Joy Conklin, an official at the association.
The survey showed 19.1 percent of Oregon doctors had closed their practices to Medicare, and 28.1 percent had restricted the numbers of Medicare patients.
That really becomes evident in Josephine County, which attracted retirees after the timber industry collapsed.
Low taxes, cheap housing, wineries, a symphony and low traffic put it in top 10 lists for retirement communities. The 2010 census puts the number of people older than 65 at 23 percent, compared with 14 percent for the state.
But the website County Health Rankings & Roadmaps, which gathers a wide range of health-care data nationwide, shows 933 patients for every primary-care physician in the county, nearly 50 percent higher than the national 631-to-one rate.
At the Grants Pass Clinic, Dr. Bruce Stowell said they are no longer taking new Medicare patients. Medicare pays about 45 percent of what commercial insurance pays.
As it is, their proportion of Medicare patients is double that of a similar Portland practice.
"We used to get a steady stream of high-quality (resumes) from U.S.-trained and U.S.-born physicians," he said. "Over the last year, that stream has declined into a trickle. Very few (doctors) are choosing to go into primary care."
Schools are turning out more nurse practitioners and physician assistants.
How well they fill the doctor gap will depend largely on how much independence states give them to practice, said Tay Kopanos, director of health-care policy for state affairs at the American Academy of Nurse Practitioners.
Dr. Atul Grover, chief of public policy for the American Association of Medical Colleges, said the nation is facing a tough time recruiting for primary care as well as other specialties that treat Medicare patients, such as oncologists.
When he decided to become a primary-care doctor in the 1990s, it was because of a widespread belief that health-maintenance organizations were going to be hiring all the doctors.
He said they wanted primary-care doctors to emphasize wellness and prevention. Now, many graduates are moving into specialties that do procedures, such as surgery, because Medicare pays more for them than plain-old office visits.
Also, the Balanced Budget Act of 1997 capped the number of residencies paid by Medicare, so there is no quick way to increase the numbers of doctors in general, let alone in rural areas, he said.
"An entire year's worth of doctor production is needed to deal with the (rural-area) shortage just today," he said.
Police admit to infiltrating Occupy Austin, may have acted as provocateurs
By Muriel Kane
Friday, August 31, 2012 21:26 EDT
When the local offshoot of Occupy Wall Street began a five-month encampment in Austin, Texas last fall, the Austin police assigned at least three undercover officers to infiltrate the group and gather information on potentially illegal actions.
According to the Austin Statesman, court documents and interviews show that the infiltrators “camped with other participants in the movement, marched in rallies and attended strategy meetings.”
They may also have gone further, acting as provocateurs to encourage the use of lockboxes or “sleeping dragons” — lengths of PVC pipe into which protestors insert their arms to make it harder for police to remove them during a demonstration.
Seven protestors who used the devices while blocking a port entrance in Houston last December 12 have been charged with a felony and face jail terms of from two to ten years under what the Statesman calls “an obscure statute that prohibits using a device that is manufactured or adapted for the purpose of participating in a crime.”
The question of the lockboxes came up during a district court hearing in Harris County this week at which one of those seven, Ronnie Garza, sought to have the charge against him dropped. It was disclosed at the hearing that Austin Police Detective Shannon Dowell — known to Occupiers as “Butch” — had purchased the necessary pipe and other materials using funds supplied by Occupy Austin, constructed the devices himself, and provided them to demonstrators.
According to Occupy Austin supporter Kit OConnell, the occupiers figured out “Butch’s” true identity after their encampment was evicted last winter. Affadavits from Occupy Austin members have pointed to Dowell as the person who pushed for the use of the lockboxes and allege that he would regularly pull participants aside “in order to express his frustration with debate and eagerness for more aggressive and provocative actions.”
Garza’s attorney, Greg Gladden of the National Lawyer’s Guild, has accused the police of entrapment and possible misconduct. Judge Joan Campbell, who had initially dismissed the case until prosecutors obtained indictments from a grand jury, says she will decide next week whether to allow the proceeding to go forward.
At the hearing, Dowell told the judge that he had could not produce subpoenaed documents because emails he had sent about the operation from his work computer had been deleted and he had lost a thumb drive containing photos when it dropped out of his pocket and fell in the gutter.
The Statesman reports that Judge Campbell expressed frustration with Dowell, while Garza’s attorney remarked, “I think he decided it was time the dog ate his homework.”
Judge Campbell has threatened to dismiss the case unless the required documents and the real names of the two other undercover officers, “Dirk” and “Rick,” are presented at the next hearing on September 5.
Police officials declined to comment on the question of it was Dowell who first proposed using the lockboxes, but they did confirm that their department had ordered the infiltration.
Austin Police Chief Sean Mannix said that his department had begun receiving reports from confidential informants that the occupiers might be planning illegal protests. “We obviously had an interest in ensuring people didn’t step it up to criminal activity,” he said. “There is obviously a vested public interest to make sure that we didn’t allow civil unrest, violent actions to occur.”
Mannix does not believe any laws or departmental policies were violated, but he confirmed that the infiltration effort is the subject of a high-level internal review which is “absolutely looking into all aspects of what their undercover work was.”
Ryan claims faulty memory behind marathon lie
By David Ferguson
Saturday, September 1, 2012 13:31 EDT
Vice presidential candidate Rep. Paul Ryan (R-WI) has been forced to admit that he lied in an interview with conservative columnist Hugh Hewitt when he said that he once completed a marathon in under three hours. According to Huffington Post, Ryan’s campaign has admitted to Runner’s World magazine that the congressman’s claim to have finished a marathon in “two hours and fifty-something” minutes was a fabrication.
In a prepared statement, Ryan blamed a faulty memory of the event. He claimed to have been corrected by his brother, rather than by reporters from Runner’s World, who began asking questions about Ryan’s claim when they could not find any record of Ryan running a three-hour marathon in Wisconsin or anywhere else.
“The race was more than 20 years ago, but my brother Tobin—who ran Boston last year—reminds me that he is the owner of the fastest marathon in the family and has never himself ran a sub-three,” he said. ”If I were to do any rounding, it would certainly be to four hours, not three. He gave me a good ribbing over this at dinner tonight.”
The only record of Ryan running a marathon is from the “Grandma’s Marathon” in Duluth, Minnesota in 1990, in which a Paul D. Ryan (Rep. Ryan’s middle name is “Davis.”) finished the race in just over 4 hours.
New York Times columnist Paul Krugman wrote that while the falsehood might seem trivial, “I remember the 2000 campaign, when Al Gore was constantly hounded by claims of fibbing on trivial issues — claims that, by the way, were all, as far as I could tell, fabricated. These alleged fibs supposedly showed some deep defect in his character. So if Ryan is making false claims about his physical prowess, this is absolutely fair game.”
From the American magazine Perspectives....
Sept 1, 2012
How We Built Bain Capital
Among the things absent thus far from the 2012 Republican National Convention has been any mention of Bain Capital and any fidelity to the truth. After just the first day, the GOP's twin frauds about welfare and "we built that" were once again demolished, prompting Team Romney to protest that "we're not going to let our campaign be dictated by fact checkers." Adding to the embarrassment was a prime-time presentation on how to build your small business by selling to the government.
As it turns out, the silence about Mitt Romney's old company and the Republican sham that "you didn't build it" are related. Because when it comes to Bain Capital, in a very real sense you did build it. After all, your United States tax code doesn't merely allow the "carried interest exemption" that enables the likes of Mitt Romney to pay a lower rate than many middle class families. Without the public subsidy that is the corporate debt interest deduction, there might not be a Bain Capital--or a private equity industry as we know it--at all.
As the history shows, on his road to becoming a $250 million captain of private equity at Bain Capital, Mitt Romney had a lot of help from his uncle. Uncle Sam, that is. Writing in Rolling Stone, Matt Taibbi explained how:
Essentially, Romney got rich in a business that couldn't exist without a perverse tax break, and he got to keep double his earnings because of another loophole - a pair of bureaucratic accidents that have not only teamed up to threaten us with a Mitt Romney presidency but that make future Romneys far more likely. "Those two tax rules distort the economics of private equity investments, making them much more lucrative than they should be," says Rebecca Wilkins, senior counsel at the Center for Tax Justice. "So we get more of that activity than the market would support on its own."
Then-Bain Capital CEO Mitt Romney concluded as much when he acknowledged, "There's a lot greater risk in a startup than there is in acquiring an existing company." So he fatefully redirected his firm from venture investments in new companies like Staples and instead became a leveraged buyout king. To understand both why he did that and how all American taxpayers helped make it possible, a little background is in order.
Private equity owes its success in no small part to that uniquely American provision of the corporate tax code. The New York Times recently helped explain why:
Companies can finance investment from either debt or equity. Companies can finance investment from either debt or equity. But profit on an investment financed with equity -- stock issued by the company -- is taxed. In contrast, if the project is financed with debt, then only the profit after interest payments are made is taxed. This means debt-financed investments are cheaper than equity.
And not just a little cheaper. As the Treasury Department recently explained, "The effective corporate marginal tax rate on new equity-financed investment in equipment is 37 percent in the United States. At the same time, the effective marginal tax rate on the same investment made with debt financing is minus 60 percent--a gap of 97 percentage points." The result:
This creates a bias by corporations toward debt.
Or, for the likes of Mitt Romney, a business model.
For the leveraged buyout (LBO) kings of the 1970's and 1980's, that was the pot of the gold at the end of the rainbow. Because the same interest deduction applied whether debt was taken on for a new factory or just to pay investors, Josh Kosman detailed in The Buyout of America, the early corporate raiders and their private equity successors could almost mint money as they bought firms for a fraction of the overall deal size:
Kohlberg saw a way to make debt far less onerous for the company being acquired. He would have the company treat its debt the way businesses handle capital expenditures--as operating expenses deduced from profits through the depreciation tax schedules, thereby greatly reducing taxes. With far less to pay the government, his companies could use the money that formerly went to Uncle Sam to retire these huge loans at an unusually fast rate. Bear's equity would rise with every dollar the companies paid back in debt, even if the value of the businesses only remained the same. The final step in the plan was to sell these companies, usually within four to six years.
In January, The Economist explained how the perverse incentives work:
From 2004 to 2011 private-equity firms piled more debt onto their companies so they could take out $188 billion in dividends to pay themselves. The deals got bigger and bigger. The largest ever, in 2007, was the $44 billion purchase of TXU, an electricity company. The market worries the company will go under.
But though the private-equity people may have walked off with the loot, America's tax code was partly to blame, because it encourages this behaviour. The tax deductibility of interest payments on debt gives private-equity executives an incentive to pile extra debt onto the companies they buy, thereby risking the health of these firms for the sake of a tax benefit and the prospect of higher returns.
"In the majority of these deals," Lynn Turner, former chief accountant of the Securities and Exchange Commission explained, "the tax deduction has a big enough impact on the bottom line that the takeover wouldn't work without it." And that interest," Turner said, "just sucks the profit out of the company." As Taibbi rightly noted, "You almost have to start firing people immediately just to get your costs down to a manageable level."
"Traditionally," Kosman noted in 2009, "cash-rich public companies have paid dividends to lure and reward investors." But private equity firms, he explained, stand this process on its head. "Fourteen of the largest American private equity firms had more than 40 percent of the North American companies they bought from 2002 until September 2006 pay them dividends," Kosman pointed out, adding, "In thirty-two of the eighty-three case, 38 percent, they took money out in the first year." And the innovator behind the business model?
Mitt Romney was a pioneer of this strategy. His private equity firm, Bain Capital, was the first large PE firm to make a serious portion of its money not from selling its companies or listing them on the stock exchange, but rather by collecting distributions and dividends, which in this context is the exact opposite of reinvesting in a company. Bain Capital is notorious for failing to plow profits back into its businesses.
So much for candidate Mitt Romney's 2007 claim, "Don't forget that when companies earn profit, that money is supposed to be reinvested in growth."
During his tenure as CEO from 1984 to 1999, Bain invested in 40 companies in the U.S. While seven later went bankrupt, in June the New York Times reported that "In some instances, hundreds of employees lost their jobs. In most of those cases, however, records and interviews suggest that Bain and its executives still found a way to make money." That mirrors a January 2012 analysis by the Wall Street Journal, which revealed:
Bain produced stellar returns for its investors--yet the bulk of these came from just a small number of its investments. Ten deals produced more than 70% of the dollar gains.
Some of those companies, too, later ran into trouble. Of the 10 businesses on which Bain investors scored their biggest gains, four later landed in bankruptcy court.
Put another way, Mitt Romney's investing was almost risk-free. He won when his portfolio companies won and often when they lost. Thanks in large part to the dangerous incentives unleashed by the U.S. tax code.
That's why Romney's former Bain colleague Marc Wolpow fretted, "I believed he was making a mistake by framing himself as a job creator." In reality, he insisted, "That was not his or Bain's or the industry's primary objective. The objective of the LBO business is maximizing returns for investors."
And it's also why other countries like Denmark, the UK and Germany either don't offer--or are trying to limit--the "public subsidy" that William D. Cohan deemed "the mother's milk of a leveraged buyout". As Felix Salmon noted, the United States could lower the rate at which debt interest can deducted or cap the amount of debt to which it applies. (The Obama administration is considering those kinds of changes in its recently proposed "Framework for Business Tax Reform.") In its January 30, 2012 editorial, the Financial Times lamented:
"The system could be made fairer and more efficient by taxing debt and equity at the same rate...Most of [Romney's] money was made at Bain Capital, which, like all private equity groups, benefits from a federal debt subsidy. It should be eliminated."
Reflecting on his private equity career, Romney in 2007 sounded almost remorseful that the pain from Bain fell mainly on the plain:
"It is one thing that if I had a chance to go back I would be more sensitive to," Mr. Romney said. "It is always a balance. Great care has got to be taken not to take a dividend or a distribution from a company that puts that company at risk." He added that taking a big payment from a company that later failed "would make me sick, sick at heart."
Not so sick at heart, though, to make President Romney change the two key elements of the federal tax code that keep the American private equity gravy train running at full speed. The first is the tax deductibility of corporate debt. The second is the notorious "carried interest exemption" that allows him and fellow fund managers to pay only the 15 percent capital gains rate- and not the 35 percent rate on income- to Uncle Sam. It is that rule that allowed Mitt to pay a lower effective tax rate on his $45 million (much of it still from Bain Capital) over the past two years, a rate below that of many middle class families.
As Alec McGillis noted in the New Republic, even the likes of Stephen Moore and Pete Peterson have grudgingly come to the conclusion that it's time for the carried interest exemption, "which allows fund managers to have their compensation for investing other people's money taxed as capital gains, not earned income," to go. But what makes Congress' largesse to Mitt Romney's ilk so glaring is the historically low capital gains tax rate he and his gilded colleagues now pay.
It's worth noting Bain Capital has come under increasing scrutiny for getting carried away with carried interest. The practice isn't just immoral; in Bain's case, its use of "fee conversion" to evade taxes may also have been illegal:
Private equity funds are usually paid like this: They get a 2 percent management fee, which is taxed as ordinary income at a 35 percent rate, and a 20 percent share at the profits, called carried interest, that's taxed at as capital gains at a 15 percent rate, as University of Colorado law professor Victor Fleischer explains. But since those 2 percent fees can still be a lot of money, funds convert this into carried interest, too, by waiving the management fee in exchange for the chance to skim off the top of future profits. Fleischer writes, "Unlike carried interest, which is unseemly but perfectly legal, Bain's management fee conversions are not legal. If challenged in court, Bain would lose." The New York Times' Nicholas Confessore, Floyd Norris, and Julie Creswell report that the funds converted $1.05 billion in fees that would have been taxed at the higher rate. That saved $200 million in income taxes and $20 million in Medicare taxes.
Leaving that question aside, there's little doubt, as a Washington Post analysis detailed last year, that "capital gains tax rates benefiting wealthy feed [the] growing gap between rich and poor." As the Post explained, for the very richest Americans the successive capital gains tax cuts from Presidents Clinton (from 28 to 20 percent) and Bush (from 20 to 15 percent) have been "better than any Christmas gift":
While it's true that many middle-class Americans own stocks or bonds, they tend to stash them in tax-sheltered retirement accounts, where the capital gains rate does not apply. By contrast, the richest Americans reap huge benefits. Over the past 20 years, more than 80 percent of the capital gains income realized in the United States has gone to 5 percent of the people; about half of all the capital gains have gone to the wealthiest 0.1 percent.
The tax rate on capital gains and dividend income used to be much higher. In the late 1970's, it reach 40 percent. Even as late as 1986 the IRS treated the top taxpayers' investment and earned income the same way. (It is worth noting that lower capital gains tax rates raise income inequality, not investment.) This convenient chart tells the tale:
All of which has--and continues--to work to the great advantage of the one Willard Mitt Romney. To be sure, other codicils of the United States tax code, like overseas tax havens and vagaries of the gift tax have allowed Romney to, among other things, generate a $100 million IRA for his sons, tax-free. (Getting state tax breaks or having the U.S. bail out the pension funds of firms he acquired didn't hurt, either.) To be sure, Mitt Romney is very smart, very hard working and, to use his words, "extraordinarily successful." But without the policy choices of our elected United States government, Mitt Romney would not have gotten nearly as rich as he did at Bain Capital. As Matt Taibbi put it, "the way Romney most directly owes his success to the government is through the structure of the tax code."
In other words, the government actually incentivizes the kind of leverage-based takeovers that Romney built his fortune on. Romney the businessman built his career on two things that Romney the candidate decries: massive debt and dumb federal giveaways. "I don't know what Romney would be doing but for debt and its tax-advantaged position in the tax code," says a prominent Wall Street lawyer, "but he wouldn't be fabulously wealthy."
Not without us, that is. After all, we built Bain Capital.
September 2, 2012
Venezuela Finds No Sign of Massacre
By THE ASSOCIATED PRESS
CARACAS, Venezuela (AP) — Venezuelan officials who traveled to the Amazon to investigate a report of a mass killing in an indigenous community found no evidence of any killings, the government said over the weekend.
Venezuela’s minister for indigenous peoples, Nicia Maldonado, said Saturday that the team of officials traveled by helicopter to a remote jungle area where a Yanomami Indian group reported last week that it had received word of a massacre committed by gold miners in July.
“No evidence of any death was found,” Ms. Maldonado told state television. She said officials had not found a burned communal hut, which the indigenous group said had been reported by people who visited the community and talked with residents.
The Venezuelan government on Sunday released a statement saying its investigators had found no evidence to support the massacre claims, which it called “information generated by some media outlets and destabilizing sectors seeking to generate uncertainty in the population.”
Leaders of the Horonami Yanomami Organization, the community group that released the account last week, could not be reached for comment on Sunday.
Christina Haverkamp, an indigenous rights activist in Germany, said it was possible that the officials who traveled to the area simply did not find the correct community and should keep investigating. Based on the indigenous group’s account, she said, “I think there were killings.”
“If they want to find the truth, they will only find the truth together with the Yanomami,” Ms. Haverkamp said in a telephone interview on Sunday.
Ms. Haverkamp, who has worked among the Yanomami for two decades, said that finding out what happened would be complicated in part because the Yanomami generally avoid talking about the dead and typically say “a lot” to describe any number greater than three.
September 2, 2012
Rebels Bomb Heavily Guarded Damascus Neighborhood
By DAVID D. KIRKPATRICK and RICK GLADSTONE
BEIRUT, Lebanon — Rebels set off two bombs among a cluster of military headquarters buildings in the Syrian capital, Damascus, on Sunday, as the new United Nations envoy for Syria pointedly refused to call for President Bashar al-Assad to give up power.
“It is too early to speak about who should go and who should stay,” the new envoy, Lakhdar Brahimi, told the pan-Arab news network Al Jazeera on the eve of his first visit to Damascus since taking up the post. “Mr. Assad is there, and is the president of the present government.”
The previous envoy, Kofi Annan, who resigned in frustration last month, had joined Western leaders in calling for Mr. Assad’s exit as a prerequisite to peace.
Inside Syria, the Assad government and the armed opposition demonstrated the tenacity, violence and increasing cunning that has made the prospect of resolving the conflict seem remote.
The dual bombings, set off around 1 p.m. in the most heavily guarded neighborhood in Damascus, were the second rebel strikes in less than six weeks to land deep within the most secure corridors of the Assad government’s military machine. A bombing on July 18 killed Mr. Assad’s brother-in-law and two other top commanders of the crackdown.
Syrian state media said on Sunday that four people were injured in the blasts, but a spokesman for the rebel brigade that claimed responsibility for the bombings said the toll was higher. He insisted in a telephone interview that more than a dozen victims were taken by stretcher to the hospitals of the Syrian elite. A shopkeeper in the neighborhood recalled hearing loud explosions and seeing huge clouds of smoke and many ambulances.
The rebel spokesman claimed that officers still in the ranks of the Syrian Army had helped his group, the Brigade of the Grandsons of the Prophet, carry out the attack. “It is a message that this regime is deeply infiltrated,” he said.
Residents of the area said the explosions went off near the Defense Ministry and the headquarters of the general staff and the air forces, as well as the regional division of the ruling Baath Party. One bomb hit the office specifically responsible for military security. The attackers managed to detonate the explosives despite an especially dense and fortified concentration of military checkpoints, which have proliferated around the capital and have all but choked off traffic in the city (though soaring fuel prices have been a factor as well).
“It is very dangerous to carry out a blast in this area,” a nearby shopkeeper said, speaking anonymously for his safety. “I have to cross seven checkpoints, and the guards are checking my ID and my small truck very carefully, when I bring some boxes of goods to my shop.
“I feel the government of Assad is losing its control of the capital,” he added. “It is the most important district in Damascus, and there are explosions. I feel there is no secure region in Syria any more — the armed opposition can reach to every district and the suburbs in Damascus.”
Elsewhere, Syrian state media reported that a car bomb was detonated Saturday night outside a mosque near a Palestinian refugee camp, killing 15 people. The report could not be confirmed.
Despite the attacks in the capital, the Assad government has showed no difficulty in mounting military operations simultaneously against several areas of armed opposition around the country. In the south, troops and warplanes continued to blast civilian populations that had harbored rebels in and around Dara’a, the provincial capital and birthplace of the uprising. Residents told Reuters on Sunday that after artillery shelling over the weekend, troops were burning and bulldozing hundreds of homes left by residents who had fled to Jordan. “Old Dara’a is deserted,” a resident, Ahmad Abu Nabout, told Reuters.
In the north, the military used more focused attacks to stymie a rebel advance on Aleppo, the country’s commercial capital, and to punish rebel supporters there. At the same time, the army drew from existing troop strength in the area to attack opponents around Homs and the Damascus suburbs.
Witnesses said that on Sunday, soldiers used bulldozers to demolish dozens of homes near the Iranian Embassy, in an area of informal housing considered a haven of support for the rebels. Near Hama, opposition activists said that 35 people — most of them said to be civilians — were killed by gunfire in the village of Al Fan Al Shamali. The reports also could not be confirmed.
While the fighting continued, Mr. Brahimi, a veteran diplomat for Algeria and the United Nations, reintroduced himself to the Arab world in interviews over the weekend with Al Jazeera and a rival news network, Al Arabiya. “Change is necessary, indispensable, unavoidable,” he told Al Jazeera. But he said it was too soon to talk about the form of that change, its stages, or where it might leave Mr. Assad.
Mr. Brahimi noted that his predecessor, Mr. Annan, had spoken directly with Mr. Assad, just as he intends to do.
“I call on parties inside Syria to halt the fighting,” Mr. Brahimi said. “Undoubtedly, this call is primarily directed to the government. More than others, it is the duty of governments — under any circumstances and anywhere, not just in Syria — to ensure security and stability for their people.”
In 1989, Mr. Brahimi helped to broker an end to a decade-long civil war in Lebanon, acting as a special envoy for the Arab League. He later led the United Nations observer mission during the 1994 elections in South Africa that followed the end of apartheid. And he has served as a special representative for the United Nations in Afghanistan and Iraq.
In an interview with The New York Times last week, Mr. Brahimi, who is 78, noted that he had known Mr. Assad’s late father, Hafez al-Assad, who ruled Syria for 29 years before his death in 2000.
The younger Mr. Assad, who turns 48 on Sept. 11, “is more the age of my son,” Mr. Brahimi said. “I’m not close to him or anything. But I did meet him several times. So I know him, and he knows me.”
Mr. Brahimi said he sympathized with Mr. Annan’s frustrations as the Syria envoy, particularly over the diplomatic deadlock at the Security Council that left him without much real muscle to back up his efforts.
But Mr. Brahimi said he believed the council’s members were now more intent on helping the diplomatic effort succeed. “I think they’re all very much aware that they had not supported Kofi Annan as much as he needed,” Mr. Brahimi said. “And I presume that these are very responsible people, and they would like to do better.”
He said he hoped to avoid any form of foreign military intervention in Syria; at the moment, Turkey has proposed imposing a no-fly zone and establishing safe havens within Syria for opponents of the government and civilians displaced by the conflict. When force becomes involved in diplomacy, Mr. Brahimi said, “it means failure.”
September 2, 2012
To Calm Israel, U.S. Offers Ways to Restrain Iran
By DAVID E. SANGER and ERIC SCHMITT
WASHINGTON — With Israel openly debating whether to strike at Iran’s nuclear facilities in the coming months, the Obama administration is moving ahead with a range of steps short of war that it hopes will forestall an Israeli attack, while forcing the Iranians to take more seriously negotiations that are all but stalemated.
Already planned are naval exercises and new antimissile systems in the Persian Gulf, and a more forceful clamping down on Iranian oil revenue. The administration is also considering new declarations by President Obama about what might bring about American military action, as well as covert activities that have been previously considered and rejected.
Later this month the United States and more than 25 other nations will hold the largest-ever minesweeping exercise in the Persian Gulf, in what military officials say is a demonstration of unity and a defensive step to prevent Iran from attempting to block oil exports through the Strait of Hormuz. In fact, the United States and Iran have each announced what amounted to dueling defensive exercises to be conducted this fall, each intended to dissuade the other from attack.
The administration is also racing to complete, in the next several months, a new radar system in Qatar that would combine with radars already in place in Israel and Turkey to form a broad arc of antimissile coverage, according to military officials. The message to Iran would be that even if it developed a nuclear weapon and mounted it atop its growing fleet of missiles, it could be countered by antimissile systems.
The question of how explicit Mr. Obama’s warnings to Iran should be is still a subject of internal debate, closely tied to election-year politics. Some of Mr. Obama’s advisers have argued that Israel needs a stronger public assurance that he is willing to take military action, well before Iran actually acquired a weapon. But other senior officials have argued that Israel is trying to corner Mr. Obama into a military commitment that he does not yet need to make.
On Sunday, Prime Minister Benjamin Netanyahu appeared to criticize Mr. Obama for being too vague about how far Iran can go. “The international community is not setting Iran a clear red line, and Iran does not see international determination to stop its nuclear project,” he told his cabinet. “Until Iran sees a clear red line and such determination, it will not stop the progress of its nuclear project — and Iran must not be allowed to have nuclear weapons.”
None of the steps being taken by the Obama administration addresses the most immediate goal of the United States and its allies: Slowing Iran’s nuclear development. So inside the American and Israeli intelligence agencies, there is continuing debate about possible successors to “Olympic Games,” the covert cyberoperation, begun in the Bush administration and accelerated under Mr. Obama, that infected Iran’s nuclear centrifuges and, for a while, sent them spinning out of control. An error in the computer code alerted Iran to the attack in 2010, and since then many of the country’s nuclear sites have been modified to defend against such attacks, according to experts familiar with the effort.
All of these options are designed to buy time — to offer Israeli officials a credible alternative to a military strike that would almost certainly trigger an Iranian reaction and, the White House and Pentagon fear, could unleash a new conflict in the Middle East. While Mr. Obama’s national security team has been very closed-mouthed about the tense discussions with Mr. Netanyahu, the chairman of the Joint Chiefs of Staff, Gen. Martin E. Dempsey, gave voice to the concerns in London on Thursday.
General Dempsey repeated the familiar American position that an Israeli attack would “clearly delay but probably not destroy Iran’s nuclear program.”
But then he went beyond any warning that Mr. Obama has given to Israel in public, saying that the international coalition of countries applying sanctions against Iran “could be undone” if the country was attacked “prematurely.” He added: “I don’t want to be accused of trying to influence, nor do I want to be complicit if they choose to do it.”
United States intelligence officials have said they have no evidence that Iran’s top leaders have decided to take the final steps toward a weapon. Iran’s intentions remain unclear, intelligence officials say.
Last week, the International Atomic Energy Agency reported an increase in the number of centrifuges that Iran has installed in an underground enrichment plant that is largely invulnerable to Israeli attack, but also indicated that Iran has converted some of its most highly enriched fuel to a form that would be difficult to use in a weapon.
The administration has already quietly proposed a “stop the clock” agreement to get Iran to halt production of the fuel that is closest to bomb-grade — and to ship it out of the country, according to diplomats from several countries involved in the discussions. But Iranian officials have rejected those calls, insisting on a lifting of all sanctions, and there has been no talk of a broader, more permanent deal.
Mitt Romney, Mr. Obama’s Republican challenger, has taken a harder line, saying he would never agree to allow Iran to enrich uranium at any level — a restriction even many Republicans, including some of Mr. Romney’s advisers, say there is virtually no chance Iran will accept, since it has a legal right to peaceful enrichment.
One option the administration has already approved is the military exercise, scheduled for Sept. 16-27, in which the United States and its allies will practice detecting and destroying mines with ships, helicopters and robotic underwater drones. The ships will stay out of the narrow Strait of Hormuz, to avoid direct interaction with Iran’s navy.
In advance of the exercise, the United States Navy earlier this summer doubled the number of minesweepers in the region, to eight vessels. The deployments are part of a larger series of military reinforcements into the Persian Gulf in recent months, all described by the United States as defensive.
That is also the explanation for the American efforts to create a regional missile defense system across the Gulf to protect cities, oil refineries, pipelines and military bases from an Iranian attack. The latest element is a high-resolution missile defense radar in Qatar, meant to stress that Iran’s Arab neighbors are as concerned about Tehran’s abilities as is Israel.
Military specialists said offensive military options, including strikes against Iran’s refineries and power grid, could also be telegraphed to the Iranians.
“The United States does not have to threaten preventive strikes,” Anthony H. Cordesman, a longtime military analyst at the Center for Strategic and International Studies, wrote in a recent paper, “Iran: Preventing War by Making It Credible.” “It simply has to make its capabilities clear in terms of a wide range of possible scenarios.”
But there is concern among American strategists that Iran could interpret these actions as encirclement, and that the actions could encourage those elements in the country that want to move faster to a nuclear “capability,” if not a weapon itself. Even one of the options that many Democrats and Republicans advocate to shake Iran — to help topple President Bashar al-Assad of Syria, Iran’s only real friend in the region — could have the same effect.
Inside the Obama White House, there has also been debate about whether Mr. Obama needs to reshape his negotiating strategy around clear “red lines” for Iran — steps beyond which the United States would not allow the country to go. Earlier this year Mr. Obama said he believed that the United States and its allies could not simply accept a nuclear Iran, largely because of the high risk that other Arab states would seek weapons.
Even if Mr. Obama set a clear “red line” now, its credibility may be questionable. According to a tally by Graham Allison, the Harvard expert on nuclear conflict, the United States and its allies have allowed Iran to cross seven previous “red lines” over 18 years with few consequences. That leaves one other option that officials are loath to discuss: new covert action.
The “Olympic Games” attack on Iran’s centrifuges was chosen over another approach that the Bush administration explored: going after electrical grids feeding the nuclear operations. But Mr. Obama has rejected any attacks that could risk affecting nearby towns or facilities and thus harm ordinary Iranians. Other plans considered in the past, and now reportedly back under consideration, focus on other targets in the nuclear process, from making raw fuel to facilities involved in missile work. One missile plant blew up last year, and Israeli sabotage was suspected, but never proven. American officials say the United States was not involved.
One other proposal circulating in Washington, advocated by some former senior national security officials, is a “clandestine” military strike, akin to the one Israel launched against Syria’s nuclear reactor in 2007. It took weeks for it to become clear that site had been hit by Israeli jets, and perhaps because the strike was never officially acknowledged by Israel, and because its success was so embarrassing to Syria, there was no retaliation.
But Iran’s is a much higher-profile program. “At best this would buy you a few years,” one administration official said, without acknowledging such a strike was under consideration by the United States or Israel. Even if an explosion at an Iranian facility was accidental, the official said, “the Iranians might well see it as a provocation for an attack of their own.”
September 2, 2012
South Africa Lifts Charges of Murder in Mine Strike
By LYDIA POLGREEN
JOHANNESBURG — Prosecutors provisionally dropped murder charges against the 270 jailed miners who had been accused under an obscure legal doctrine of killing 34 of their own colleagues when the police opened fire on them while engaged in a wildcat strike.
The police fired live ammunition into a crowd of about 3,000 platinum miners armed with clubs and machetes while trying to disperse the illegal strike on Aug. 16. When the firing stopped, 34 miners were dead and South Africa was outraged by the bloodiest confrontation between the police and civilians since the end of apartheid. The police have claimed they acted in self-defense.
The outrage grew when prosecutors announced last week that under a legal doctrine known as “common purpose,” the miners would be charged with murdering their colleagues. Under the doctrine, which was frequently used in the waning days of apartheid to charge members of protesting crowds with serious crimes committed by a few individuals, people in a mob can be charged as accomplices.
In a hastily arranged news conference Sunday, officials from the National Prosecuting Authority said that they would await the outcome of further investigations into the shootings, but they did not rule out bringing murder charges again.
“Final charges will only be made once all investigations have been completed,” Nomgcobo Jiba, the acting national director of prosecutions, told reporters. “The murder charges against the current 270 suspects will be formally withdrawn provisionally in court.”
Prosecutors also said they had not ruled out charges against the police.
“The actions of the police will be sorted out still,” Johan Smit, a provincial prosecutor in the region where the strike took place, told reporters. “We’re not ignoring that.”
The murder charges against the miners, who remain in jail pending a hearing this week, had caused considerable consternation among the top leaders of the African National Congress, who were already being criticized for acting too slowly to end the wildcat strike peacefully and not responding quickly enough once the killings took place.
Justice Minister Jeff Radebe said last week that the decision to charge the miners with murder “has induced a sense of shock, panic and confusion within the members of the community and the general South African public,” and demanded an explanation from prosectors.
Lawyers for the jailed miners sent a letter to President Jacob Zuma demanding that he intervene. Mr. Zuma had earlier created a commission of inquiry with broad powers to investigate the shooting.
The miners went on strike in Marikana, a town 80 miles northwest of Johannesburg, in early August to demand higher wages from the company that owns the mine, Lonmin of London.
The strike and the government’s iron-fisted response laid bare the frustration with the slow pace of transforming South Africa’s economy, deepening the sense among many of the nation’s poor and jobless that the A.N.C. and its allies have become too cozy with big business, disconnected from the masses who put them in office.
The sight of heavily armed police officers shooting into a charging crowd of workers at the strike — a scene replayed endlessly on television — reminded many South Africans of the days when the police opened fire on protesters during the apartheid era.
Then when prosecutors said they would charge the miners in the murder of their colleagues, legal experts and Cosatu, the federation of trade unions that is one of the A.N.C.’s main allies, denounced the move as “absurd.”
September 2, 2012
In Pivotal Week for Euro Zone, a Test for the Central Bank’s Leader
By JACK EWING
FRANKFURT — The last time Mario Draghi addressed the news media after a meeting of the European Central Bank, on Aug. 2, he disappointed investors who wanted him to crack his whip and immediately bring bond markets to heel. The markets dropped even before Mr. Draghi was done speaking.
Only in subsequent days and weeks did the bond markets calm down, as investors evidently absorbed his underlying message: that the central bank intended to take meaningful action against the euro debt crisis even if quick remedies were not possible.
But this Thursday, when the central bank meets again, Mr. Draghi, the bank’s president, could have a far harder time reconciling the expectations of twitchy financial markets with the limitations of his power. Although investors are counting on bold action, analysts say the bank probably needs more time to resolve internal differences and deliver on a promise to use its financial clout to tame runaway borrowing costs for the most troubled euro zone countries.
“Market expectation of Draghi’s ability to maneuver may be exaggerated,” said Marie Diron, a former economist at the central bank who advises the consulting firm Ernst & Young. “That could lead to a sell-off.”
Some analysts do expect the central bank to cut the benchmark interest rate to 0.5 percent on Thursday, from its already record low level of 0.75 percent. Although that reduction might not impress investors as much as a bold intervention in the bond market, it could at least indicate Mr. Draghi’s commitment to his July promise of doing whatever it takes to preserve the euro.
The bank meeting is probably the central event, but not the only one, in what is likely to be a busy week for the euro zone. Political leaders will also continue making the rounds of one another’s capitals to plot crisis strategy.
One of the most closely watched meetings, also on Thursday, will take place when Angela Merkel, the German chancellor, visits the Spanish prime minister, Mariano Rajoy, in Madrid. Spain’s debt drama seems to have entered a dangerous phase, with some of the country’s biggest regions requesting financial aid from a central government already staggered by its own high borrowing costs.
Mr. Draghi at least temporarily mollified markets last week with an opinion piece in the German newspaper Die Zeit that was widely interpreted as signaling the central bank’s determination to begin buying the bonds of troubled euro zone governments, despite resistance from Germany. Exceptional measures may be required, Mr. Draghi wrote, “when markets are fragmented or influenced by irrational fears.”
Top European Central Bank officials have indicated that they are working overtime to determine how best to keep borrowing costs for countries like Spain and Italy affordable. Mr. Draghi and other members of the bank’s executive board even canceled plans to attend the annual meeting this past weekend of global central bankers in Jackson Hole, Wyo., saying there was too much to do in Frankfurt.
So far, the mere promise of central bank action has had an effect. Since spiking in late July, bond yields, a measure of a government’s borrowing costs, have fallen below 6 percent on 10-year debt for Italy and below 7 percent for Spain — levels considered acceptable, if not exactly comfortable.
But the yields, which have begun to edge higher again in recent days, are linked to expectations that Mr. Draghi will provide specifics of the central bank’s bond-buying strategy at the news conference Thursday after the meeting of the central bank’s governing council.
Mr. Draghi is thought to have the support of most of the council’s 23 members. But he must contend with stiff and vocal resistance to bond buying from Jens Weidmann, the president of the German Bundesbank.
The Bundesbank declined to comment Friday on a report in Bild, a German newspaper, that Mr. Weidmann had even threatened to resign in protest over the bond buying, a course of action that has become something of a tradition among disgruntled German central bankers.
The Bundesbank would only refer to an interview published in Der Spiegel magazine last week, in which Mr. Weidmann said, “I can carry out my duty best if I remain in office.”
While Mr. Weidmann has been the only member of the governing council to object publicly to bond buying by the central bank, some others are likely to share some of his concerns. That group probably includes Yves Mersch, governor of the Central Bank of Luxembourg, and Erkki Liikanen, governor of the Bank of Finland. Spokesmen for the two men declined to comment.
These quiet dissenters may already have won concessions from Mr. Draghi that could constrain a new bond-buying program. For example, their objections may well be the reason Mr. Draghi said last month that any bond purchases would focus on short-term debt.
By buying bonds that mature in two years or less, the central bank would keep the pressure on countries to continue reducing debt and improving economic performance. Governments would know they needed to face investors again in a fairly short time.
The concern is that constraints imposed by Mr. Weidmann and others could dilute the effects of bond buying, rendering it less effective.
In any case, actual bond buying by the central bank is probably at least several weeks away. Mr. Draghi said in August that the bank would intervene in bond markets only in concert with the new European Union rescue fund, the European Stability Mechanism, or E.S.M.
Countries would need to ask the rescue fund for help, Mr. Draghi said, and the fund would take the lead in bond buying, with the central bank providing backup financial support. But the fund, meant to replace a temporary bailout fund, is in legal limbo at least until the German constitutional court rules Sept. 12 on a challenge to the country’s participation.
While many analysts do not expect the court to block Germany from taking part, some have warned of such a risk. “If the Court bans the German government from joining the E.S.M. for now, this will likely have major repercussions for financial markets,” analysts at Morgan Stanley wrote in a note to clients.
At the news conference this Thursday, Mr. Draghi will most likely need to finesse the difference between investors’ desire for instant gratification and the obstacles that remain before heavy-duty bond buying can start.
The questions on investors’ minds include whether the central bank will set upper limits on bond yields that it would defend at all costs. Probably not, analysts say, because it would be the equivalent of writing a blank check to the government issuing those bonds.
Investors will want to know, too, whether the central bank will continue to consider itself a preferred creditor, which raises the risk for other investors if a country defaults.
Although the bank is expected to give up its privileged status in the debt market, that approach also carries risks. If the bank lost money on any bonds, taxpayers throughout the euro zone might ultimately have to replenish its reserves. (That is one of Mr. Weidmann’s big concerns because Germany is the bank’s biggest contributor.)
A promise to expose itself to future losses might be credible only if the central bank took a hit on its existing holdings, namely an estimated 40 billion euros, or $50 billion, in Greek bonds.
This year, the bank refused to accept the losses on Greek debt that private bondholders agreed to absorb. But a decision to forgive some of Greece’s debt would stir outrage in Germany and some other countries.
Investors will also be asking how the bank, once it relieved market pressure, would ensure that countries like Italy would continue efforts to streamline their economies.
Governments typically have trouble sticking to economic overhaul plans because doing so requires political leaders to challenge labor unions and industry groups that have stakes in the status quo.
One method of punishing a backsliding country would be for the central bank to let that government’s borrowing costs rise again. But that would risk accelerating the crisis.
“The central bank will probably not halt its purchases at the very point when the problems become more serious,” Michael Schubert, an analyst at Commerzbank, said in a note to clients Friday.
Addressing such technical and political questions Thursday, after what may be a contentious debate within the bank’s governing council, could be the biggest public test yet of Mr. Draghi’s rhetorical skills.
He will need to keep his options open while still convincing investors that the central bank is willing to use overwhelming force to contain euro zone borrowing costs.
“Given the damage already done, any recovery in financial stability and economic activity will take time,” analysts at Credit Suisse said in a note last week. “But consistent and effective E.C.B. policy is a necessary condition for that. From what we’ve already heard from E.C.B. President Draghi, the E.C.B. may be prepared to deliver.”
Liz Alderman contributed reporting from Paris.
September 2, 2012
U.S. Companies Brace for an Exit From the Euro by Greece
By NELSON D. SCHWARTZ
Even as Greece desperately tries to avoid defaulting on its debt, American companies are preparing for what was once unthinkable: that Greece could soon be forced to leave the euro zone.
Bank of America Merrill Lynch has looked into filling trucks with cash and sending them over the Greek border so clients can continue to pay local employees and suppliers in the event money is unavailable. Ford has configured its computer systems so they will be able to immediately handle a new Greek currency.
No one knows just how broad the shock waves from a Greek exit would be, but big American banks and consulting firms have also been doing a brisk business advising their corporate clients on how to prepare for a splintering of the euro zone.
That is a striking contrast to the assurances from European politicians that the crisis is manageable and that the currency union can be held together. On Thursday, the European Central Bank will consider measures that would ease pressure on Europe’s cash-starved countries.
JPMorgan Chase, though, is taking no chances. It has already created new accounts for a handful of American giants that are reserved for a new drachma in Greece or whatever currency might succeed the euro in other countries.
Stock markets around the world have rallied this summer on hopes that European leaders will solve the Continent’s debt problems, but the quickening tempo of preparations by big business for a potential Greek exit this summer suggests that investors may be unduly optimistic. Many executives are deeply skeptical that Greece will accede to the austere fiscal policies being demanded by Europe in return for financial assistance.
Greece’s abandonment of the euro would most likely create turmoil in global markets, which have experienced periodic sell-offs whenever Europe’s debt problems have flared up over the last two and a half years. It would also increase the pressure on Italy and Spain, much larger economic powers that are struggling with debt problems of their own.
“It’s safe to say most companies are preparing,” said Paul Dennis, a program manager with Corporate Executive Board, a private advisory firm.
In a survey this summer, the firm found that 80 percent of clients polled expected Greece to leave the euro zone, and a fifth of those expected more countries to follow.
“Fifteen months ago when we started looking at this, we said it was unthinkable,” said Heiner Leisten, a partner with the Boston Consulting Group in Cologne, Germany, who heads up its global insurance practice. “It’s not impossible or unthinkable now.”
Mr. Leisten’s firm, as well as PricewaterhouseCoopers, has already considered the timing of a Greek withdrawal — for example, the news might hit on a Friday night, when global markets are closed.
A bank holiday could quickly follow, with the stock market and most local financial institutions shutting down, while new capital controls make it hard to move money in and out of the country.
“We’ve had conversations with several dozen companies and we’re doing work for a number of these,” said Peter Frank, who advises corporate treasurers as a principal at Pricewaterhouse. “Almost all of that has come in over the transom in the last 90 days.”
He added: “Companies are asking some very granular questions, like ‘If a news release comes out on a Friday night announcing that Greece has pulled out of the euro, what do we do?’ In some cases, companies have contingency plans in place, such as having someone take a train to Athens with 50,000 euros to pay employees.”
The recent wave of preparations by American companies for a Greek exit from the euro signals a stark switch from their stance in the past, said Carole Berndt, head of global transaction services in Europe, the Middle East and Africa for Bank of America Merrill Lynch.
“When we started giving advice, they came for the free sandwiches and chocolate cookies,” she said jokingly. “Now that has changed, and contingency planning is focused on three primary scenarios — a single-country exit, a multicountry exit and a breakup of the euro zone in its entirety.”
Banks and consulting firms are reluctant to name clients, and many big companies also declined to discuss their contingency plans, fearing it could anger customers in Europe if it became known they were contemplating the euro’s demise.
Central banks, as well as Germany’s finance ministry, have also been considering the implications of a Greek exit but have been even more secretive about specific plans.
But some corporations are beginning to acknowledge they are ready if Greece or even additional countries leave the euro zone, making sure systems can handle a quick transition to a new currency.
In Europe, the holding company for Iberia Airlines and British Airways has acknowledged it is preparing plans in the event of a euro exit by Spain.
“We’ve looked at many scenarios, including where one or more countries decides to redenominate,” said Roger Griffith, who oversees global settlement and customer risk for MasterCard. “We have defined operating steps and communications steps to take.” He added: “Practically, we could make a change in a day or two and be prepared in terms of our systems.”
In a statement, Visa said that it too would also be able to make “a swift transition to a new currency with the minimum possible disruption to consumers and retailers.”
Juniper Networks, a provider of networking technology based in California, created a “Euro Zone Crisis Assessment and Contingency Plan,” which company officials liken to the kind of business continuity plans they maintain in the event of an earthquake.
“It’s about having an awareness versus having to scramble,” said Catherine Portman, vice president for treasury at Juniper. The company has already begun moving funds in euro zone banks to accounts elsewhere more frequently, while making sure it has adequate money and liquidity in place so employees and suppliers are paid without disruption.
FMC, a chemical giant based in Philadelphia, is asking some Greek customers to pay in advance, rather than risk selling to them now and not getting paid later. It has also begun to avoid keeping any excess cash in Greek, Spanish or Italian bank accounts, while carefully monitoring the creditworthiness of customers in those countries.
“It’s been a very hot topic,” said Thomas C. Deas Jr., an FMC executive who serves as chairman of the National Association of Corporate Treasurers. Members of his group discussed the issue on a conference call last Tuesday, he added.
American companies have actually been more aggressive about seeking out advice than their European counterparts, according to John Gibbons, head of treasury services in Europe for JPMorgan Chase.
Mr. Gibbons said a handful of the largest American companies had requested the special accounts configured for a currency that did not yet exist.
“We’re planning against the extreme,” he said. “You don’t lose anything by doing it.”
The era of cheap food may be over
By Larry Elliott, The Guardian
Sunday, September 2, 2012 12:01 EDT
The last decade saw the end of cheap oil, the magic growth ingredient for the global economy after the second world war. This summer’s increase in maize, wheat and soya bean prices – the third spike in the past five years – suggests the era of cheap food is also over.
Price increases in both oil and food provide textbook examples of market forces. Rapid expansion in the big emerging markets, especially China, has led to an increase in demand at a time when there have been supply constraints. For crude, these have included the war in Iraq, the embargo imposed on Iran, and the fact that some of the older fields are starting to run dry before new sources of crude are opened up.
The same demand dynamics affect food. It is not just that the world’s population is rising by 1% a year. Nor is it simply that China has been growing at 9% a year on average; it is that consumers in the big developing countries have developed an appetite for higher protein western diets. Meat consumption is rising in China, India and Brazil, and since it takes 7kg of grain to produce 1kg of beef (and 4kg to produce 1kg of pork), this is adding to global demand.
Farmers have been getting more efficient, increasing the yields of land under production, but this has been offset by two negative factors: policies in the US and the EU that divert large amounts of corn for biofuels and poor harvests caused by the weather.
If the World Bank’s projections are anything like accurate, further massive productivity gains from agriculture are going to be needed over the next two decades. There will be an extra 70m mouths to feed every year, which will result in a 50% increase in demand for food by 2030. Meanwhile, the amount of arable land per person will continue its long-run downward trend.
The extent of this challenge has been highlighted by the extreme drought in the US this year. Failure of the maize harvest – down by more than 100m tonnes on what was expected – has had a knock-on impact on wheat, which has not been affected by the lack of rain. Prices of both crops have jumped by $100 a tonne this summer. The latest data from the World Bank showed that food prices rose 10% between June and July and have now exceeded the previous peak in early 2011.
It will take time for these increases to have their full impact on consumers. In the short run, the cost of meat will not be affected because there is glut caused by livestock owners slaughtering their herds in order to save money on expensive feed. But by the end of the year, food will be dearer.
Central banks are unlikely to tighten policy in response to higher inflation, since the increase is seen as an external shock that will have a depressing effect on the spending power of consumers. They should not, however, assume that the spike will be a one-off, since grain stocks are at such low levels that bad harvests in 2013 would see rocketing prices, probably accompanied by panic-buying, export bans and food riots.
A recent report from Oxfam said the US should expect further severe droughts in the coming decades. “The US experienced $14bn-dollar disasters in 2011 – an historical record – including a blizzard, tornadoes, floods, a hurricane, a tropical storm, drought and heatwaves, and wildfires.” The current year has already seen wildfires, a windstorm, heatwaves in much of the country and the most severe drought in half a century.
This seems to be an apt moment for the west to reassess the wisdom of biofuels. The US ethanol distilleries used 120m tonnes of maize in 2011 and there have already been calls from the United Nations Food and Agriculture Organisation for the reduced maize crop to be used for human food. There is also growing political opposition in the US to the country’s Renewable Fuel Standard, which mandates 15.2bn gallons of biofuels for 2012, of which 13.4bn gallons can come from corn-based ethanol. Unsurprisingly, livestock and poultry producers have been at the forefront of calls for the mandate to be suspended.
The whole point about biofuels was that they were supposed to be a cost-free and a pain-free way for developed nations to show that they were responding to climate change. Rising crop yields meant there would be enough grain left over each year to turn into ethanol, and this would mean western consumers could do their bit to save the planet without in any way compromising their living patterns. That now looks like a highly questionable assumption.
So what happens next? A lasting solution to the food question will require either action on the demand side, action on the supply, or more likely both. The two obvious ways of limiting demand are to check population growth or to change dietary habits so that meat consumption is reduced. Neither is going to be easy to achieve.
On the supply side, the short-term response should be to find alternatives to biofuels. Longer term, the hope is that the pressures of a rising population coupled with the incentives provided by rising food prices lead to a second green revolution that will dramatically increase yields in those parts of the world – such as sub-Saharan Africa – where they are currently low. One of the few beneficial impacts of high commodity prices is that farmers will be able to afford to buy fertilisers for their land.
A recent study by Fidelity looked at some of the other recent developments to boost food supply, including precision agriculture – the use of high technology to apply the optimum amounts of seed, water and fertiliser for maximum efficiency – and a wider use of biotechnology and GM crops. The report also highlighted what is known as “fast food” from animal cells, a process by which scientists “create artificial meat by delivering an electric charge to the animal muscle cells in a mixture of amino acids, which causes the cells to multiply”.
Given the predicted growth in consumption in developing countries, Fidelity says this could become an “environmentally acceptable option” as traditional meat becomes more expensive. Whether this approach is “environmentally acceptable” remains to be seen. The Fidelity report does, however, clarify one point, namely that hard choices have to be made.
The current assumption seems to be that the world can have a rising population, ever-higher per capita meat consumption, devote less land to food production to help hit climate change targets and eschew the advances in science that might increase yields. This is the stuff of fantasy. It is possible to have more intensive farming using the full range of technological breakthroughs in order to feed a bigger, meat-hungry population. Or it is possible to have lower yields from a more organic approach to feed a smaller population eating less meat. But not both.
guardian.co.uk © Guardian News and Media 2012
Jailed Pussy Riot leader: ‘I love Russia but I hate Putin’
By Agence France-Presse
Sunday, September 2, 2012 16:33 EDT
BERLIN — One of the three members of punk band Pussy Riot jailed last month for a protest in a Russian cathedral launched a fierce new attack on Russian President Vladimir Putin in a magazine interview.
“I love Russia but I hate Putin,” Nadezhda Tolokonnikova told the German news weekly Der Spiegel, in a handwritten answer to questions the magazine submitted to her via her lawyer from her jail cell.
Tolokonnikova, considered the leader of the group, also told the weekly she wanted to see a revolution in Russia.
“The Putin system… does not belong in the 21st century,” she wrote.
“It is much more reminiscent of primitive societies or the dictatorial regimes of the past,” she added.
A Moscow court jailed Tolokonnikova, Maria Alyokhina and Yekaterina Samutsevich for two years last month for “hooliganism motivated by religious hatred”.
They had burst into Russia’s main cathedral wearing their trademark balaclavas and shouted out a few lines of their protest song on February 21, in which they call on the Holy Virgin to drive Putin from power.
Tolokonnikova and Alyokhina, 22 and 24 respectively, are both mothers of young children. Fellow band member Samutsevich is 30 years old.
The judge ruled that the performance displayed “clear disrespect toward society”.
But in her interview with Der Spiegel, Tolokonnikova insisted she had no regrets.
“When all is said and done, I think that the trial against us was important because it showed the true face of the Putin system,” she argued.
“This system has handed down a judgment on itself by condeming us for two years in prison without our having committed a crime,” she added.
“Obviously, that delights me,” she insisted.
During the trial itself she showed her defiance by wearing a t-shirt that bore the revolutionary slogan “No pasaran!” (“They shall not pass!”).
“I am fighting so that my (four-year-old) daughter can grow up in a free country,” she added in her response to Der Spiegel.
Conditions in the prison were bearable, she told the weekly.
“Despite everything it is a Russian prison with all its Soviet charm,” she wrote. “There hasn’t been a lot of progress: the prison is a mix of barracks and hospital.”
She spent a lot of her spare time reading, she added: from the Bible to the works of the Slovenian Marxist philosopher Slavoj Zizek.
“The lack of freedom of movement does not restrict the freedom to think,” she wrote.
Lawyers for the trio said last week that they were appealing the sentence against them.
Their conviction has already been sharply condemned by the United States and major European powers as another example of freedoms coming under pressure with Putin in power.
Photo AFP/File, Natalia Kolesnikova
09/03/2012 11:41 AM
Praise for Hitler: Secret Files Build Case for Banning Far-Right Party
By Hubert Gude and Holger Stark
The question of whether to try to ban the far-right NPD party is one of the most controversial issues in German politics. Now the authorities have compiled a dossier of over a thousand pages in an attempt to prove that the NPD is anti-democratic. The file, which SPIEGEL has seen, provides a shocking exposé of an anti-Semitic and racist party whose members glorify the Nazis.
The stack of paper is thicker than a brick and heavier than the Berlin phone book. It contains 3,051 exhibits and 1,147 pages of classified information.
These pages could soon form the basis for a decision to make a new attempt to ban Germany's far-right National Democratic Party (NPD). Only a little over a week ago, on Aug. 28, German President Joachim Gauck urged such bold action against neo-Nazis during his speech to mark the 20th anniversary of racist riots in the northeastern city of Rostock. Gauck spoke of a state that "is able to defend itself."
Now, this dossier, which has been in its final version since late last week, is supposed to be the weapon in that fight. It is the weapon of a democracy that defends itself against its enemies -- a democracy that is vigilant and alert, not frail and weak.
Bavarian Governor Horst Seehofer, who heads the conservative Christian Social Union (CSU), wants to deploy this weapon at all costs. He is determined to show decisiveness in the fight against right-wing extremism, and thus add momentum to his campaign ahead of the Bavarian state election in the fall of 2013 -- "if necessary, single-handedly," as he says. By contrast, his fellow party member, Hans-Peter Friedrich, who bears responsibility for the initiative as German interior minister, is afraid that the bid to ban the NPD will be rejected by the German Constitutional Court in Karlsruhe, as happened with a previous attempt to ban the party in 2003. Typically, German Chancellor Angela Merkel remains noncommittal. She is merely observing.
In the 1,147-page dossier, which SPIEGEL has analyzed, the interior ministries of the German states and officials from Germany's domestic intelligence agency, the Office for the Protection of the Constitution, have compiled a catalogue of speeches, acts of violence and public appeals that could prove that the far-right NPD not only disdains the German state, but is also aggressively combating it.
This collection is currently the most explosive dossier in German domestic politics. It forms the basis for one of the major domestic policy debates of this fall -- and it promises to be a major issue during 2013 when both national and a number of state elections will be held.
The debate focuses on the question of how decisively the state must act to ban its opponents -- and how much freedom it may grant to the enemies of freedom. The NPD is the largest and most important organization on the right-wing fringe of German society. It has seats in two state parliaments and receives millions of euros in government funding. Its representatives deny the Holocaust, ridicule the parliament as a "conformist talking shop" and bitterly complain about the "damn Jews."
The demise of this protest party would have a considerable impact on the neo-Nazi scene and other right-wing radicals. After "evaluating the evidence," the two houses of the German parliament, the Bundestag and Bundesrat, and the German government "should submit a joint petition to ban the party," says Thomas Oppermann, parliamentary secretary for the center-left Social Democrats (SPD).
Tainted by Connections
But the state has already failed once on this front. In 2003, the Federal Constitutional Court rejected an attempt to ban the NPD because the Office for the Protection of the Constitution had infiltrated the party with too many informants. The court argued that it was possible that the party's policies had partly been shaped by the state. Right-wing extremists rejoiced in the victory.
If another ban attempt was now overturned, it would guarantee that the NPD could pursue its political agenda even more openly and aggressively for decades to come. "We should only strive for a ban if we can be certain that a ban will ultimately be the result," says German Justice Minister Sabine Leutheusser-Schnarrenberger of the business-friendly Free Democratic Party (FDP). "We simply cannot afford to fail a second time."
To prevent the intended court case from being tainted once again by the massive presence of moles inside the NPD, the state interior ministers have severed ties with some 20 informants in the party leadership who had previously been providing information. The idea is to prevent it from appearing, once again, as if the government were pulling the strings when top-ranking right-wing extremists rant about foreigners. Now, the intelligence agencies no longer receive much information about the inner workings of the party. That is the price that the ministers have to pay.
Indeed, the new dossier has been largely purged of classified information. It predominantly relies on information that was collected without the help of paid informants. Only 65 pages rated as "classified" list wiretap transcripts and informers' reports that were compiled using intelligence resources. "If we want to win this case in the German Constitutional Court, then we should only refer to open sources," says Lower Saxony Interior Minister Uwe Schünemann, a member of Chancellor Merkel's conservative Christian Democratic Union (CDU). In other words, there should be nothing in the evidence presented that might lead the judges to view the proceedings as tainted by possibly dubious informants from the shadowy world of the intelligence services. The aim here is to present convincing arguments based on what NPD functionaries have actually said and done.
'The Extended Arm of USrael'
The dossier paints a picture of a deeply racist party that has a close affinity for historical Nazism and -- as Saxony NPD parliamentary staff member Karl Richter once put it -- sees modern-day Germany as a "completely pathologized" state that is already in its "last days," as can be read in exhibit 2900.
Rejection of the despised democratic system pervades the daily political life of this party. It sounded like a policy statement when Udo Pastörs, NPD parliamentary floor leader in the eastern state of Mecklenburg-Western Pomerania, spoke in Saarbrücken in 2009: "The sole purpose of the NPD is to serve as a tool, a political tool." He went on: "We want to inflict the maximum possible damage to this party state, which is nothing other than the extended arm of USrael." In right-wing extremist jargon, USrael is the symbiosis of the US and Israel, which supposedly represents all the evil in the world.
Other NPD functionaries such as the neo-Nazi Thomas Wulff, who managed to rise to the NPD executive board, spout rhetoric that sounds just as militant as Pastörs. "A sick system is shaking in its bones," Wulff said on May 7, 2009. "The symptoms of putrefaction permeate the order created by the war profiteers of 1945 and their German cronies."
In October 2009, the national chairman of the NPD youth organization Young National Democrats, Michael Schäfer, openly called for the overthrow of Germany's political system at a demonstration in Leipzig. "Comrades, one state has already met its end in Leipzig in the past," he said, in a reference to the Leipzig demonstrations that helped to bring down communist East Germany. "Why shouldn't it happen again? Why shouldn't today be the beginning of the end for the Federal Republic of Germany project?"
Open Threats and Cynicism
The official party line of the NPD is that it rejects violence and distances itself from the terror cell of the National Socialist Underground (NSU), which is believed to have murdered at least 10 people between 2000 and 2006. It has even occasionally expelled party members who take things too far. But the abundance of examples gathered by investigators makes a different impression.
Parliamentary floor leader Pastörs made open threats at an NPD conference in the southern German town of Günzburg in March 2011: "If we say that Europe is the land of the white race and should remain that way, then we have a right to safeguard this, if necessary with military force." This could have come straight from the mouth of Norwegian mass murderer Anders Breivik. The Office for the Protection of the Constitution recorded Pastörs' speech and listed it as exhibit 3021.
An even harder line was taken by Hans Püschel, an independent candidate for the NPD for elections in the state of Saxony-Anhalt. In November 2011, only days after the story broke that the so-called "Döner Killings" had apparently been carried out by NSU terrorists Uwe Böhnhardt and Uwe Mundlos, Püschel cynically asked: "Are the 'döner murderers' legitimate insurgents?" And, as if that weren't bad enough, he added: "The two Uwes don't deserve to be dragged through the muck like this."
Is There an Imminent Threat?
Anyone who reads page after page of such tirades can have no doubt about the true character of the NPD. But would it be enough to uphold a ban? Does this prove that there is an "imminent" threat to democracy, a condition which the European Court of Human Rights considers necessary to uphold a ban?
Already in its written statement on the first failed attempt to ban the party, the judges in Karlsruhe made reference to their European colleagues in Strasbourg, who have set high legal hurdles. In the case of the forced dissolution of the Islamist Welfare Party in Turkey, the judges in Strasbourg concurred with the arguments presented by the Turkish courts, which found that due to the party's high popularity ratings, it was on the verge of implementing its plans. But the NPD is nowhere near that stage.
In a catalogue of criteria that forms the basis for the collected evidence, the ministers write that the participation of NPD functionaries "in violent and criminal activities, and more than coincidental links between the party and terrorist underground structures," could count as justification for a ban. But neither the dossier nor the investigations into the NSU series of murders have provided proof of this.
What's more, in contrast to the Turkish Welfare Party, the NPD has recently been shaken by crises. The party is shrinking, not growing. Over 1,100 individuals have left the party over the past four years, and in November 2011 the organization only had 5,900 members. And it's in major financial trouble. According to the collected evidence, the "net assets of the entire party" amounted to debts of €1.064 million ($1.338 million) in 2010. From the perspective of the court in Strasbourg, these are arguments that would call into question the necessity of a ban.
Consequently, Germany's state interior ministers are pinning their hopes primarily on another aspect: the affinity of the NPD with historical Nazism. The reasoning here is that if it's possible to depict the party as Hitler's political heirs, it will convince the judges in Strasbourg. Indeed, the collected evidence contains rather bizarre statements by elected party officials that reveal a nostalgia for the Nazi Germany of the 1930s.
Dirk Bahlmann, a member of the municipal council in the town of Löcknitz in Mecklenburg-Western Pomerania, was convicted of vandalizing a Holocaust memorial plaque. Later, Bahlmann gave an interview in which he described the memorial plaque as an "insult to all good Germans." He contended that the Holocaust was a Jewish fabrication, and that it was the Jews who started both world wars. Furthermore, he says that he stands "fully behind Adolf Hitler."
Sometimes the anti-Semitism is veiled, sometimes it's open, as with Siegfried Gärttner, an NPD candidate for the 2009 Bundestag election, who said: "A private Jewish clique is forcing its own country or the countries of the world into bankruptcy." And Rigolf Hennig, who was a member of the district and city council member for the NPD in Verden in the northern state of Lower Saxony until 2011, said that "the influence of international Zionism has to be broken."
The arguments have now been placed on the table, and they are fairly good ones. Now, it's up to the politicians to decide how far they dare to take it. Until now, the debate has been primarily pursued by the state governors. The heads of Germany's states are pushing for new legal proceedings, even at the risk of failing again. Taking the case to the constitutional court in Karlsruhe is "an important step in the fight against right-wing extremism," argues the Social Democratic governor of Mecklenburg-Western Pomerania, Erwin Sellering, in a commentary published in the mass-circulation Bild am Sonntag newspaper. "We should take this step now," he says.
Sellering wrote these comments before he even had an opportunity to read the collected evidence, which shows that the political goal supersedes objective arguments. It's a similar story with Olaf Scholz, the Social Democratic mayor of Hamburg, who told the conservative Die Welt newspaper that if the federal government didn't lend its support, "the states should take the risk of going alone."
Over the coming weeks, the state interior ministers intend to form an opinion on the matter and assess the collected evidence. The decisive meeting is scheduled for early December, when they will also have to consider whether their case is strong enough without the 65 classified pages that, at least in part, stem from informants inside the party. "If we need the material from our informants to make our case in Karlsruhe, I would be prepared, if necessary, to also reveal the identity of our sources to the judges," says the interior minister of Saxony-Anhalt, Holger Stahlknecht of the CDU. (Revealing the true identity of intelligence agency informants is generally considered taboo.)
But before it comes to a court case, his counterpart in Lower Saxony, Uwe Schünemann, intends to commission former constitutional court judge Hans-Joachim Jentsch to write an expert opinion on the material. If Jentsch comes out in favor of pursuing a ban, says Schünemann, "then nobody can refuse to get on board."
One week after the interior ministers' meeting, the state governors will also meet, this time together with Merkel. By then, at the very latest, the chancellor will have to show where she stands on the issue.
Unwilling to Sign
A decision taken last week reveals just how controversial this issue remains, despite the impact of the dossier's 1,147 pages. In a letter accompanying the collected evidence, German Interior Minister Friedrich and his staff asked each interior minister to provide written confirmation to the court that the material had not been obtained from informants. It was intended as a kind of pledge to the judges that the state's case was not undermined by the sort of connections that toppled the ban attempt in 2003.
But the interior ministers turned out to be not so courageous after all. They quickly agreed that it would be preferable if such a confirmation was not linked to their names. Now, their department heads will have to sign the documents.
In the USA..
‘Super Wi-Fi’ poised for growth in U.S., elsewhere
By Agence France-Presse
Sunday, September 2, 2012 8:11 EDT
Move over Wi-Fi, there’s a new wireless technology coming.
So-called “Super Wi-Fi,” which offers a bigger range than existing hotspots, is being deployed in the United States and generating interest in a number of countries, including Britain and Brazil.
Super Wi-Fi is not really Wi-Fi because it uses a different frequency and requires specially designed equipment, but it offers some of Wi-Fi’s advantages, and more.
The name was coined by the US Federal Communications Commission in 2010, when it approved the deployment of unused broadcast television spectrum, or so-called “white spaces,” for wireless broadband.
The long range and use of the broadcast spectrum could allow wireless signals to travel farther than Wi-Fi — in theory as far as 100 miles (160 kilometers) — although for practical reasons the range will probably be only a few miles.
Michael Calabrese, director of the Wireless Future Project at the New America Foundation, said that is an advantage of using the broadcast spectrum.
“Wi-Fi has been booming, but it has been limited by the frequencies it operates on, which go only a few hundred meters,” said Calabrese, who has been pressing for the use of “white spaces” since 2002.
In contrast, “television frequencies travel long distances at low power and penetrate through buildings, trees and bad weather,” Calabrese said.
This could provide high-speed Internet to sparsely populated rural areas which lack broadband. It could also allow consumers to create their own hotspots, which could be used on devices while away from their homes.
The first deployment of Super Wi-Fi came last year by Rice University in Houston, Texas, followed by another earlier this year in Wilmington, North Carolina.
A coalition of organizations has announced plans to deploy Super Wi-Fi to college campuses in rural areas starting early next year in a project called AIR.U, backed by Google and Microsoft.
Super Wi-Fi would be on “unlicensed” spectrum, like Wi-Fi, so companies would not bid on exclusive spectrum rights. This can lower costs. And there is often excess capacity, especially in rural areas, where fewer TV stations operate.
Mobile phone companies could use Super Wi-Fi, as they do now with Wi-Fi, to relieve some of the “spectrum crunch” from the explosion of mobile devices like smartphones and tablets.
But in order for Super Wi-Fi to gain traction, manufacturers of PCs and other devices would have to make chipsets that could operate on both systems.
Dan Lubar of the WhiteSpace Alliance, an association dedicated to new wireless technology, said he sees Super Wi-Fi gaining momentum in the US and other countries with unused broadcast spectrum.
“Everybody understands the value of this spectrum,” he said. “It is the biggest swath of spectrum and has the most favorable characteristics.”
Chipmaker Texas Instruments recently joined the alliance, suggesting that equipment makers are ready to start making Super Wi-Fi equipment.
“It’s definitely going to be here in visible ways by the middle of next year,” Lubar said.
Calabrese said that because of a lack of compatible equipment, most of the early Super Wi-Fi deployments are being back converted to regular Wi-Fi signals. At some point soon, he said, people may start using air cards or dongles to capture Super Wi-Fi.
Gerry Purdy, an analyst and consultant with MobileTrax LLC, was more cautious about prospects for Super Wi-Fi, saying it may take several years to gain traction.
“It’s a good utilization of spectrum, but I’m more conservative than some people,” he said.
“Building chipsets takes times, software standards take time; I don’t think people should have false expectations.”
The most vocal criticism comes from the Wi-Fi Alliance, which has a trademark on the name Wi-Fi and fears consumers will be confused by incompatible technical norms.
The group said it supports the use of unlicensed spectrum for broadband but that Super Wi-Fi “does not inter-operate with the billions of Wi-Fi devices in use today” and does not “deliver the same user experience as is available in Wi-Fi hotspots and home networks.”
Although the name is the most controversial part of Super Wi-Fi, that did not come from the backers of the technology, but from the FCC and chairman Julius Genachowski.
“I wish we had thought of that. We had been calling it Wi-Fi on steroids,” said Calabrese.
Sep 2, 2012 1:45pm
Biden Calls Romney ‘Out of Touch’ on Foreign Policy
YORK, Pa. –Vice President Joe Biden went on the attack today against Mitt Romney’s foreign policy positions, calling the Republican presidential candidate “out of touch.”
“Listen to what he says about foreign policy, you caught some of it in his speech. He said it was a mistake to end the war in Iraq and bring all of our warriors home. He said it was a mistake to set an end date for our warriors in Afghanistan and bring them home. He implies by the speech that he’s ready to go to war in Syria and Iran,” Biden, kicking off his Labor Day weekend campaign spree, told a crowd at West York Area High School
“He wants to move from cooperation to confrontation with Putin’s Russia. And these guys say the president’s out of touch? Out of touch? Swiss bank account, untold millions in the Cayman Islands. Who’s out of touch, man?” Biden continued.
Romney briefly touched on foreign policy in his acceptance speech Thursday at the Republican National Convention, saying “every American is less secure today” because the president has failed to deal with Iran’s nuclear weapons and criticized the president’s handling of issues in Israel and Russia.
“He’s eager to give Russia’s president Putin the flexibility he desires after the election,” Romney said Thursday. “Under my presidency our friends will see more loyalty and Mr. Putin will see a little less flexibility and more backbone.”
Biden detailed how he believes Romney and Paul Ryan’s budget plans hurt the middle class and quoted former President Bill Clinton in calling the Republican ticket “Bush on steroids.” The vice president also tweaked one of Ryan’s lines from his speech Wednesday in which he said, “The truest measure of any society is how it treats those who cannot defend or care for themselves.”
“I’d like to change the quote of my distinguished colleague, Congressman Ryan,” Biden said. “I think the truest measure of a political party is how it treats those who cannot defend or care for themselves.”
When Biden referred to Ryan’s false claim that a Janesville, Wis., General Motors plant closed under Obama’s watch — the plant actually closed while President George W. Bush was still in office — the crowd booed, but the vice president took a line from his boss to quiet them down.
“I don’t need you booing, I need you voting,” Biden said.
Biden’s stop in York, which drew a crowd of 1,400 according to the superintendent of schools, was the first of the vice president’s two-day “Road to Charlotte” tour ahead of the Democratic National Convention in Charlotte, N.C. this week. President Obama is conducting a “Road to Charlotte” tour of his own in the days before the DNC.
One Million Moms attacks ABC Family over ‘anti-family programs’
By Eric W. Dolan
Sunday, September 2, 2012 10:58 EDT
The group One Million Moms has called for a boycott of the ABC Family Channel over an allegedly “anti-family” show being produced by singer Jennifer Lopez.
“Obviously, ABC has lost their minds,” the group said in a statement. “They haven’t let up so neither will we. ABC’s Family Channel has several anti-family programs, and they are planning on adding to that growing list.”
ABC’s The Fosters is a hour-long drama about two mothers raising a mix of foster and biological kids.
One Million Moms said that adoption was “wonderful” but accused the show of “attempting to redefine marriage.”
The organization, which is a part of the American Family Association, urged its members to boycott the show and ABC Family’s sponsors. They hope to stop the show “dead in it its tracks.”
One Million Moms has launched numerous campaign against companies that it claims violated their interpretation of Biblical teaching.
“Hollywood is continuing to push an agenda that homosexuality is acceptable when scripture states clearly it is a sin,” the group explained.
Earlier this year, the group launched a campaign against JC Penney for the store using popular and openly gay talk show host Ellen DeGeneres as their spokesperson. But when JC Penney refused to back down, One Million Moms announced it was moving on to other issues.
New York AG investigating Bain Capital, other firms for tax evasion
By Jonathan Terbush
Sunday, September 2, 2012 11:27 EDT
New York Attorney General Eric Schneiderman has launched an investigation into whether some large private equity firms—among them Bain Capital, the firm founded by Republican presidential candidate Mitt Romney—took advantage of a tax loophole to avoid paying hundreds of millions of dollars in taxes.
According to the New York Times, who first reported the story, executives with knowledge of the investigation said Schneiderman had subpoenaed around a dozen firms in the past few weeks seeking any documents that could shed light on their tax-writing procedures. At issue is whether those firms used a shady, legally-dubious practice of labeling certain fees as investments, thus allowing them to be taxed at a far lower rate to produce huge savings over the long run.
Last month, Gawker obtained and posted nearly one thousand pages of Bain’s finances, revealing that the firm utilized the controversial tax strategy to classify at least $1 billion in fees as capital gains-producing investments. While the fees could have been taxed at up to a 35 percent rate, as investments they were subject to a more modest 15 percent rate, saving Bain around $200 million.
Sources told the Times that the subpoenas predate the publication of those financial documents, though the timing of both, with the election two months away, draws attention to a potential abuse of tax law at a time when Democrats are eager to push a narrative about top-earners not paying their fair share of taxes. The investigation could also serve as a new weapon for President Obama’s campaign team, which has sought to paint Romney as a profiteering executive in campaign ads by pointing the finger at some of Bain’s more controversial business practices, such as outsourcing and leveraged buyouts.
The subpoenas are sure to strike some as being politically motivated and deliberately timed to tarnish Romney’s image just before November. Schneiderman is a popular figure among progressives who applaud his eagerness to take on powerful financial interests, and President Obama appointed him in January to head a new committee tasked with investigating the recession’s mortgage crisis.
“The American people deserve a robust and comprehensive investigation into the global financial meltdown to ensure nothing like it ever happens again, and today’s announcement is a major step in the right direction,” Schneiderman said of his appointment at the time.
September 3, 2012
Elephants Dying in Epic Frenzy as Ivory Fuels Wars and Profits
By JEFFREY GETTLEMAN
GARAMBA NATIONAL PARK, Democratic Republic of Congo — In 30 years of fighting poachers, Paul Onyango had never seen anything like this. Twenty-two dead elephants, including several very young ones, clumped together on the open savanna, many killed by a single bullet to the top of the head.
There were no tracks leading away, no sign that the poachers had stalked their prey from the ground. The tusks had been hacked away, but none of the meat — and subsistence poachers almost always carve themselves a little meat for the long walk home.
Several days later, in early April, the Garamba National Park guards spotted a Ugandan military helicopter flying very low over the park, on an unauthorized flight, but they said it abruptly turned around after being detected. Park officials, scientists and the Congolese authorities now believe that the Ugandan military — one of the Pentagon’s closest partners in Africa — killed the 22 elephants from a helicopter and spirited away more than a million dollars’ worth of ivory.
“They were good shots, very good shots,” said Mr. Onyango, Garamba’s chief ranger. “They even shot the babies. Why? It was like they came here to destroy everything.”
Africa is in the midst of an epic elephant slaughter. Conservation groups say poachers are wiping out tens of thousands of elephants a year, more than at any time in the previous two decades, with the underground ivory trade becoming increasingly militarized.
Like blood diamonds from Sierra Leone or plundered minerals from Congo, ivory, it seems, is the latest conflict resource in Africa, dragged out of remote battle zones, easily converted into cash and now fueling conflicts across the continent.
Some of Africa’s most notorious armed groups, including the Lord’s Resistance Army, the Shabab and Darfur’s janjaweed, are hunting down elephants and using the tusks to buy weapons and sustain their mayhem. Organized crime syndicates are linking up with them to move the ivory around the world, exploiting turbulent states, porous borders and corrupt officials from sub-Saharan Africa to China, law enforcement officials say.
But it is not just outlaws cashing in. Members of some of the African armies that the American government trains and supports with millions of taxpayer dollars — like the Ugandan military, the Congolese Army and newly independent South Sudan’s military — have been implicated in poaching elephants and dealing in ivory.
Congolese soldiers are often arrested for it. South Sudanese forces frequently battle wildlife rangers. Interpol, the international police network, is now helping to investigate the mass elephant killings in the Garamba park, trying to match DNA samples from the animals’ skulls to a large shipment of tusks, marked “household goods,” recently seized at a Ugandan airport.
The vast majority of the illegal ivory — experts say as much as 70 percent — is flowing to China, and though the Chinese have coveted ivory for centuries, never before have so many of them been able to afford it. China’s economic boom has created a vast middle class, pushing the price of ivory to a stratospheric $1,000 per pound on the streets of Beijing.
High-ranking officers in the People’s Liberation Army have a fondness for ivory trinkets as gifts. Chinese online forums offer a thriving, and essentially unregulated, market for ivory chopsticks, bookmarks, rings, cups and combs, along with helpful tips on how to smuggle them (wrap the ivory in tinfoil, says one Web site, to throw off X-ray machines).
Last year, more than 150 Chinese citizens were arrested across Africa, from Kenya to Nigeria, for smuggling ivory. And there is growing evidence that poaching increases in elephant-rich areas where Chinese construction workers are building roads.
“China is the epicenter of demand,” said Robert Hormats, a senior State Department official. “Without the demand from China, this would all but dry up.”
He said that Secretary of State Hillary Rodham Clinton, who condemned conflict minerals from Congo a few years ago, was pushing the ivory issue with the Chinese “at the highest levels” and that she was “going to spend a considerable amount of time and effort to address this, in a very bold way.”
Foreigners have been decimating African elephants for generations. “White gold” was one of the primary reasons King Leopold II of Belgium turned Congo into his own personal fief in the late 19th century, leading to the brutal excesses of the upriver ivory stations thinly fictionalized in Joseph Conrad’s novel “Heart of Darkness” and planting the seeds for Congo’s free fall today.
Ivory Coast got its name from the teeming elephant herds that used to frolic in its forests. Today, after decades of carnage, there is almost no ivory left.
The demand for ivory has surged to the point that the tusks of a single adult elephant can be worth more than 10 times the average annual income in many African countries. In Tanzania, impoverished villagers are poisoning pumpkins and rolling them into the road for elephants to eat. In Gabon, subsistence hunters deep in the rain forest are being enlisted to kill elephants and hand over the tusks, sometimes for as little as a sack of salt.
Last year, poaching levels in Africa were at their highest since international monitors began keeping detailed records in 2002. And 2011 broke the record for the amount of illegal ivory seized worldwide, at 38.8 tons (equaling the tusks from more than 4,000 dead elephants). Law enforcement officials say the sharp increase in large seizures is a clear sign that organized crime has slipped into the ivory underworld, because only a well-oiled criminal machine — with the help of corrupt officials — could move hundreds of pounds of tusks thousands of miles across the globe, often using specially made shipping containers with secret compartments.
The smugglers are “Africa-based, Asian-run crime syndicates,” said Tom Milliken, director of the Elephant Trade Information System, an international ivory monitoring project, and “highly adaptive to law enforcement interventions, constantly changing trade routes and modus operandi.”
Conservationists say the mass kill-offs taking place across Africa may be as bad as, or worse than, those in the 1980s, when poachers killed more than half of Africa’s elephants before an international ban on the commercial ivory trade was put in place.
“We’re experiencing what is likely to be the greatest percentage loss of elephants in history,” said Richard G. Ruggiero, an official with the United States Fish and Wildlife Service.
Some experts say the survival of the species is at stake, especially when many members of the African security services entrusted with protecting the animals are currently killing them.
“The huge populations in West Africa have disappeared, and those in the center and east are going rapidly,” said Andrew Dobson, an ecologist at Princeton. “The question is: Do you want your children to grow up in a world without elephants?”
‘We Shoot First’
Garamba National Park is a big, beautiful sheet of green, 1,900 square miles, tucked in the northeastern corner of Congo. Picture a sea of chest-high elephant grass, swirling brown rivers, ribbons of papyrus and the occasional black-and-white secretary bird swooping elegantly through rose-colored skies. Founded in 1938, Garamba is widely considered one of Africa’s most stunning parks, a naturalist’s dream.
But today, it is a battlefield, with an arms race playing out across the savanna. Every morning, platoons of Garamba’s 140 wildlife rangers suit up with assault rifles, machine guns and rocket-propelled grenades. Luis Arranz, the park manager, wants to get surveillance drones, and the nonprofit organization that runs the park is considering buying night-vision goggles, flak jackets and pickup trucks with mounted machine guns.
“We don’t negotiate, we don’t give any warning, we shoot first,” said Mr. Onyango, the chief ranger, who worked as a game warden in Kenya for more than 20 years. He rose to a high rank but lost his job after a poaching suspect died in his custody after being whipped.
“Out here, it’s not michezo,” Mr. Onyango said, using the Swahili word for games.
In June, he heard a burst of gunfire. His rangers did a “leopard crawl” on their bellies for hours through the scratchy elephant grass until they spied poachers hacking several elephants. The instant his squad shot at the poachers, the whole bush came alive with crackling gunfire.
“They opened up on us with PKMs, AKs, G-3s, and FNs,” he said. “Most poachers are conservative with their ammo, but these guys were shooting like they were in Iraq. All of a sudden, we were outgunned and outnumbered.”
Both of the rangers’ old belt-fed machine guns jammed that day, and they narrowly escaped (11 have been killed since 2008 and some of the rangers’ children have even been kidnapped). Later investigation showed that the poachers were members of the Lord’s Resistance Army, a brutal rebel outfit that circulates in central Africa, killing villagers and enslaving children. American Special Operations troops are helping several African armies hunt down the group’s phantom of a leader, Joseph Kony, who is believed to be hiding in a remote corner of the Central African Republic.
Ivory may be Mr. Kony’s new lifeline.
Several recent escapees from the L.R.A. said that Mr. Kony had ordered his fighters to kill as many elephants as possible and send him the tusks.
“Kony wants ivory,” said a young woman who was kidnapped earlier this year near Garamba and did not want to be identified because she was still terrified. “I heard the other rebels say it many times: ‘We need to get ivory and send it to Kony.’ ”
She said that in her four months in captivity, before she ran away one night when the rebels got drunk, she saw them kill 10 elephants, wrap the tusks in cloth sacks and send them to Mr. Kony at his hiding place.
Other recent escapees said that the group had killed at least 29 elephants since May, buying guns, ammunition and radios with the proceeds. Mr. Kony may be working with Sudanese ivory traders. One ivory retailer in Omdurman, Sudan, who openly sells ivory bracelets, prayer beads and carved tusks, said the Lord’s Resistance Army was one source of the ivory he saw.
“The L.R.A. works in this, too; that’s how they buy their weapons,” the shopkeeper said matter-of-factly. That made sense, American officials said, given Mr. Kony’s few sources of income.
Several Sudanese ivory traders said the ivory from Congo and the Central African Republic moved overland across Sudan’s vast western desert region of Darfur and then up to Omdurman, all with the help of corrupt Sudanese officials. There is a well-worn practice in Sudan called “buying time,” in which smugglers pay police officers and border guards for a specified amount of time to let a convoy of illegal goods slip through checkpoints.
But there are many routes. On Africa’s east coast, Kenya’s port city of Mombasa is a major transshipment center. A relatively small percentage of containers in Mombasa is inspected, and ivory has been concealed in shipments of everything from avocados to anchovies. Sometimes it is wrapped in chili peppers, to throw off the sniffer dogs.
On the west coast, in the Gulf of Guinea, “there is a relatively recent phenomenon of well-armed, sophisticated poachers who load their ivory onto Chinese fishing ships,” one senior American official said.
Chinese officials declined to discuss any aspect of the ivory trade, with one representative of the Forestry Ministry, which handles ivory issues, saying, “This is a very sensitive topic right now.”
Several Sudanese ivory traders and Western officials said that the infamous janjaweed militias of Darfur were also major poachers. Large groups of janjaweed — the word means horseback raider — were blamed for killing thousands of civilians in the early 2000s, when Darfur erupted in ethnic conflict. International law enforcement officials say that horseback raiders from Darfur wiped out thousands of elephants in central Africa in the 1980s. Now they suspect that hundreds of janjaweed militiamen rode more than 600 miles from Sudan and were the ones who slaughtered at least 300 elephants in Bouba Ndjida National Park in Cameroon this past January, one of the worst episodes of elephant slaughter recently discovered.
In 2010, Ugandan soldiers, searching for Mr. Kony in the forests of the Central African Republic, ran into a janjaweed ivory caravan. “These guys had 400 men, pack mules, a major camp, lots of weapons,” a Western official said. A battle erupted and more than 10 Ugandans were killed.
“It just shows you the power of poaching, how much money you can make stacking up the game,” the official said.
Businessmen are clearly bankrolling these enormous ivory expeditions, both feeding off and fueling conflict, Western officials and researchers say.
“This is not just freelance stuff,” said Mr. Hormats, the State Department official. “This is organized crime.”
Paul Elkan, a director at the Wildlife Conservation Society, said that the janjaweed sweeping across central Africa on ambitious elephant hunts “goes much deeper than a bunch of guys coming in on horses. It has to do with insecurity and lawlessness.”
Perhaps no country in Africa is as lawless as Somalia, which has languished for more than 20 years without a functioning central government, spawning Islamist militants, gunrunners, human traffickers and modern-day pirates. Ivory has entered this illicit mix.
Several Somali elders said that the Shabab, the militant Islamist group that has pledged allegiance to Al Qaeda, recently began training fighters to infiltrate neighboring Kenya and kill elephants for ivory to raise money.
One former Shabab associate said that the Shabab were promising to “facilitate the marketing” of ivory and have encouraged villagers along the Kenya-Somalia border to bring them tusks, which are then shipped out through the port of Kismayo, a notorious smuggling hub and the last major town the Shabab still control.
“The business is a risk,” said Hassan Majengo, a Kismayo resident with knowledge of the ivory trade, “but it has an exceptional profit.”
That profit is not lost on government soldiers in central Africa, who often get paid as little as $100 a month, if they get paid at all.
In Garamba, the park rangers have arrested many Congolese government soldiers, including some caught with tusks, slabs of elephant meat and the red berets often worn by the elite presidential guard.
“An element of our army is involved,” acknowledged Maj. Jean-Pierrot Mulaku, a Congolese military prosecutor. “It’s easy money.”
Congolese soldiers have a long history of raping and killing civilians and pilfering resources. According to a report written in 2010 by John Hart, an American scientist and one of the top elephant researchers in Congo, the “Congolese military are implicated in almost all elephant poaching,” making the military “the main perpetrator of illegal elephant killing in D.R.C.”
The Garamba rangers and a Congolese government intelligence officer said that they also routinely battled soldiers from the Sudan People’s Liberation Army, the military of South Sudan. A South Sudanese military spokesman denied that, saying that the soldiers “didn’t have time” for poaching.
The American government has provided $250 million in nonlethal military assistance to South Sudan during the past several years. In May, the Garamba rangers said they had opened fire on four South Sudanese soldiers who had poached six elephant tusks. The rangers said they killed one soldier, though they did not seem to think too much about it.
“I’ve killed too many people to count,” said Alexi Tamoasi, a veteran ranger.
But the suspected helicopter poaching is something new.
Mr. Onyango said the strange way the elephant carcasses were found, clumped in circles, with the calves in the middle for protection, was yet another sign that a helicopter had corralled them together because elephants usually scatter at the first shot.
African Parks, the South Africa-based conservation organization that manages Garamba, has photographs of an Mi-17 military transport helicopter flying low over the park in April and said it had traced the chopper’s registration number to the Ugandan military.
Col. Felix Kulayigye, a spokesman for the Ugandan military, acknowledged that the helicopter was one of its aircraft. But he said that the poaching allegation was a “baseless rumor” and that he knew “for sure” that Lord’s Resistance Army members were “well known” poachers in that area.
John Sidle, an American from Nebraska who works as a pilot at Garamba, said, “What bothers me is that it’s probably American taxpayer money paying for the jet fuel for the helicopter.”
The United States has paid tens of millions of dollars in recent years for fuel and transport services for the Ugandan Army to hunt down Mr. Kony in central Africa, while training Congolese and South Sudanese to help. But the State Department said it had no evidence that the Ugandan military was responsible for the Garamba killings, nor knowledge that any of the African soldiers involved in the Kony hunt had engaged in poaching. It did not address the broader history of poaching by American-supported militaries.
In June, 36 tusks were seized at the Entebbe airport in Uganda. Eighteen of the 22 elephants killed in Garamba in March were adults that had their ivory hacked out, which would usually mean 36 tusks. The little stubs of ivory on the dead calves had been left untouched.
In 1989, the Convention on International Trade in Endangered Species passed a moratorium on the international commercial trade of African elephant ivory, except under a few rare circumstances. No one knows how many elephants are being poached each year, but many leading conservationists agree that “tens of thousands” is a safe number and that 2012 is likely to be worse than 2011.
The total elephant population in Africa is a bit of a mystery, too. The International Union for Conservation of Nature, a global conservation network, estimates from 472,269 to 689,671. But that is based on information from 2006. Poaching has dramatically increased since then, all across the continent.
Some of the recently poached elephants had been sexually mutilated, with their genitals or nipples cut off, possibly for sale — something researchers said they had not encountered before.
“It’s very disturbing,” said Iain Douglas-Hamilton, the founder of Save the Elephants, who recently testified at a Senate hearing on ivory and insecurity.
‘Like the Drug War’
Mr. Arranz, Garamba’s director, has an exhausted look in his eyes. History is against him. Garamba was founded more than 70 years ago, in part to protect the rare northern white rhinoceros, which used to number more than 1,000 here. But many people in Asia believe that ground rhino horn is a cure for cancer and other ills, and it fetches nearly $30,000 a pound, more than gold. In the past few decades, as Congo has descended into chaos, rhino poachers have moved into Garamba. The park’s northern white rhinos were among the last ones in the wild anywhere, but rangers have not seen any for the past five years.
Garamba faces a seemingly endless number of challenges, many connected to the utter state failure of Congo itself. Some of the rangers are poachers themselves, killing the animals they are entrusted to protect, saying their salaries are too low to live on.
“I was hungry,” explained Anabuda Bakuli, a ranger jailed for killing a waterbuck.
It does not help that many Garamba rangers are, by their own admission, alcoholics and run up debts at the bar not far from park headquarters. Mr. Onyango, the chief, is known to drink several liters of beer in a single sitting. He talks about “the stress.”
Poaching rates are now the highest here in central Africa, a belt of some of the most troubled countries in the world. In Chad, heavily armed horsemen, who many conservationists say were janjaweed, recently killed 3,000 elephants in just a few years.
Garamba once had more than 20,000 elephants. Last year, there were around 2,800. This year, maybe 2,400.
Every morning, if the skies are clear, Mr. Arranz flies above Garamba in a small two-seat plane, the equivalent of a Mazda Miata with wings. The emerald green savanna stretches out below him, a breathtaking sight at dawn.
But the other day, he saw something that furrowed his brow: vultures.
The next day, after a hike through the tall grass, the stench grew unbearable and the air reverberated with the sizzle of thousands of flies. “Poached,” Mr. Arranz said, as he discovered a dead elephant, its face cut off.
Nearby were the ashes of a small campfire.
“These guys were out here for a while,” he said. “If they were willing to do this for one elephant. ...” His voice trailed off.
“It’s like the drug war,” he said later. “If people keep buying and paying for ivory, it’s impossible to stop it.”
Isma’il Kushkush contributed reporting from Omdurman, Sudan; Mia Li from Beijing; and a Somali journalist from Mogadishu, Somalia.