What Should Be Done in Palestine

Israel Shamir’s Talk at the Ankara Conference…

Dear Turkish friends and fellow guests from abroad,

I am glad to speak again to you, the people of our great neighbour and former sovereign Turkey. Your latest developments inspire optimism. You are doing fine! Turkey is growing stronger and more independent; your leaders’ obsession with joining the European Union has been exorcised. You have restored the power of the parliament, bridled military excesses, streamlined your economy and improved relations with Syria and Iran. Turkey is no longer an American colony. You stopped joint air force exercises with Israel and the US. You expressed your clear anger over the horrors of Gaza. Now you pay more attention to the area where you live; you play an important role already and are destined to play an even greater role. So much depends on you! We feel it every day in Palestine.

I will not waste your time describing the horrors of Zionist rule in Palestine. You already know them, you’ve seen them on TV – dreadful pictures of burned schools and napalmed children, of the Gaza blockade, of check points, of night arrests. It is now exactly one year since the Jewish onslaught on Gaza, last year’s Christmas war which Israel began while the world was holidaying. Your president, Mr Gul, said a few days ago to our president, Mr Peres, that he will not visit Israel while the siege of Gaza continues, and that was a very good decision. Indeed, it is urgent to lift the Gaza siege, because no building materials are being allowed to enter Gaza for the repair of homes. Instead, the Israeli siege is being tightened with active help of Egypt. However beyond Gaza problem we must look for a bigger picture.

We are being told that the Gaza problem is that of Hamas intransigence, that it is Gaza’s own fault. If only Gaza wouldn’t embrace radical Islam, Israel would accommodate Gaza’s needs. Let us have a look outside of Gaza, at the West Bank’s jewel, el Bireh, the twin city of Ramallah, the seat of Israel-approved ruler Mahmud Abbas. This is a most prosperous city of wonderful villas with a lot of greenery and purring Mercedes cars, and a beautiful view. El Bireh decided to build a football stadium; they asked for money and they received funds from France, Germany and the World Football Association, FIFA. The football stadium was built within the city of el Bireh’s limits. Immediately, the Israeli court ruled: the stadium must be destroyed, because it is within the eyesight of a Jew.

Do you understand this? Mahmud Abbas is the most compliant Palestinian leader now or ever; he is doing everything that Israel asks. His police kindly retreat when Israeli security jeeps drive into his cities to arrest whomever they wish. He arrests every activist who speaks against Israeli excesses. He even fired the most senior Palestinian diplomat, Dr. Afif Safieh, the former ambassador to Washington, London, Vatican and Moscow because he spoke out against the Israeli war on Gaza. Every Islamist, every supporter of Islam in the West Bank is (or was) in Abbas’ jail. Abbas is an implacable enemy of radical Islam. You can’t be more conciliatory towards Israel than Mahmud Abbas. And still, he can’t even build a stadium for kids to kick ball in his own city, because the Jews will not allow it.

So, although Gaza is in a dreadful situation, the problem is not only Gaza. Islam or not Islam is not even a question we should be pondering. It makes no difference. Islamists are in Abbas’ jail, yet Abbas can’t even build a stadium. Stadium, not medreseh. Fatah member Marwan Barghuti and leftist PFLP leader Ahmed Sadat are in Israeli jails together with Hamas MPs.

The problem is the Jewish state. Not only does it besiege Gaza and destroy a football stadium in el Bireh. These are local problems, painful but local. The Jewish state focuses Jewish power all over the world into action. Without a Jewish state, this power would disperse; it would remain local, it would remain chaotic, probably it would be subdued by the forces of assimilation. Israel focuses these chaotic forces and concentrates them into action.

This action is against Islam. Not only against Islam, but Dar ul Islam (the Islamic world) is a prime target. In the US, the Jewish Neocons led their country into a crusade against Iraq and Afghanistan; now they are spearheading the push against Iran. They have formed a powerful front against President Obama and have turned him into a laughing stock after he uttered a few words of wisdom about Palestine. In Europe, if you inspect the coffers of anti-Muslim neo-Nazi groups, you’ll find that they thrive on Jewish support. In Russia, Jewish nationalists and Zionists try to rally the Russians against their Muslim brethren. Sometimes they do it under cover of the Russian Church, or of Russian nationalism. I wrote about this recently, as I had discovered that the most fervently anti-Muslim forces in Russia are organised by crypto-Zionists.

Even if a Palestinian state were to be established and recognised, it wouldn’t stop Israeli attempts to undermine its neighbours, to bomb Iran, to sow the seeds of discord from Russia to France, from Turkey to India. Israel’s too powerful intelligence services would keep meddling. Neither would it neutralise the armed forces of Israel, and you know as well as anybody that the generals do not give up their toys, their privileges or their influence easily. The Israeli military machine is so powerful that it would seek to exercise its might. Remember the Israel-Egypt peace treaty: when it was concluded, the first thing Israel did was invade Lebanon.

The bad influence of Zionism on Jews all over the world would not vanish in case of a “two states’ solution. In 1920, Winston Churchill published an article (Illustrated Sunday Herald, February 8, 1920, pg 5) titled: «Zionism or Bolshevism». (http://www.library.flawlesslogic.com/ish.htm ). There he noted that many Jews tend to embrace the cause of social equality (for him it was “impossible equality”), and the best way to stop by far too dynamic and powerful Jews from promoting equality is to infect them with Zionism. His project was supported by the might of the British Empire and by money of wealthy anti-equality Jews. Zionism won. Equality was defeated. If we defeat Zionism, equality will have another chance. And a two states’ solution will not defeat Zionism.

In short, even if Mahmud Abbas’s dream of limited independence were to be realised, it wouldn’t be good enough for the region, and it wouldn’t be good enough for the world: Israel in its form of Jewish-supremacist state can’t become a peaceful neighbour.

Supremacism leads to wars. Only a democratic state, the successor of Israel and the PNA, would be able to live in peace. Compare it to South Africa: as long as it was a white-supremacist state, it was the source of warfare and trouble all over Africa. After its supremacism was exorcized, it became peaceful. In the same vein, independent Palestine would be just another Bantustan of the type rightly rejected by South Africans.

But I do not think that even this very limited cause of limited independence for Palestine is likely to be achieved. We have been told – for sixteen years! – that there is a peace process that will lead to a “two states solution”. This is a fairy tale. If the Jews will not allow even the most loyal and obedient of el Bireh’s kids to play football, do you think they will allow them to have an independent state? Why would they?

The Jews write frequently of how they envisage Palestinian independence. (I refer here to the most enlightened left-wing Jewish politicians!) They speak of a Palestine broken into a few enclaves surrounded by a wall and barbed wire, its airspace and all of its borders controlled by Israel; its water to remain under Jewish control. And this is the best they can dream of.

If you want to have Two States, it can happen only if the Jews plead for it like they did in 1947. They did so then, and they will do so again only if they feel that the alternative, a single democratic state for all inhabitants of Palestine, is on the table. This is what they are afraid of: full democracy, full equality in the whole of the land. So even for practical reasons, we should call, not for independence of some partitioned bits and pieces, but for the whole lot: Let Palestine be united, let all of its inhabitants have equal rights, and afterwards they can discuss two states for ever and ever. The first thing is equality, the rest can wait.

Speaking frankly, this mythic Two State Solution can’t even be envisaged. Jews and Palestinians live all over Palestine, and they can’t be physically separated without a huge turmoil that would remind us of 1921 in Turkey and Greece, with Turks leaving Salonika and Greeks leaving Smyrna. This is not something one would like to see happen.

The West gave Nansen his Nobel Peace prize for the transfer of Greeks and Turks. In my view, this was a terrible calamity, never to be repeated. Partitions are awful; it is like sawing a living man into two parts. Nor is it necessary. Greeks and Turks could live together as they did for four hundred years; separation did nothing good for them. Separation of Israelis and Palestinians would be equally evil.

Now, Zionists often remind Turks of your so-called “Kurd problem”. This comparison is wrong, because every Kurd in Turkey has Turkish citizenship and has all the rights every Turkish citizen has; while Palestinians usually have no citizenship of the state of Israel and enjoy no rights. But in one sense this comparison is right: it is impossible to separate Kurds from Turkey, because people of Kurdish descent live everywhere from Diyarbakir to Istanbul. Likewise, it is impossible to separate Palestinians from the immigrant populations which are called “Jews”.

Indeed, the whole story of Palestine is a story of immigrants taking over a country. Such things happen: immigrants from Britain took over North America and Australia. This is a sad thing, but it happened. Now it is not realistic to hope that they will sail back to England – they won’t. It is wrong to try and create an “independent state” for the native Americans – such independent states are called “reservations”. The right answer is equality for native and immigrant alike. Some Jews would complain that they want a state of their own. We shall answer them: you have built on sand, and a house built on sand can’t stand forever. If you want a state of your own without anybody else, find yourself a lonely uninhabited island. Palestine was, and is, populated; the best you can wish is to be equal citizens in Palestine with everybody else.

I spoke about this solution in the year 2001, when our country was torn by intifada al Aksa. It was right then, and it is right now. At that time I said: there is no other solution but a one-state solution. People, and even good people, activists, friends of Palestine said: no, we are very close to the two states’ solution. I did not believe it then, I do not believe it now. There is only one good way out, and that is the way of equality and democracy, of deconstructing the Jewish state by forcing it to give full rights to all Palestinians under its rule.

So this is the goal we should strive for: full equality and integration of Palestine and Israel, South African style. Nothing less.

This does not mean that there is nothing to be done until that moment. Turkey can do a lot even now, even today, beyond expressions of solidarity. The Jewish state is a horrible example of injustice gone unpunished. For instance, an Israeli officer Captain R murdered a 13-year old girl, Iman al Hams. He shot her within eyesight of his soldiers and said that even a three-year-old Palestinian should be killed if she comes close to Jewish positions. The Jewish court absolved Captain R of all guilt; the Israeli Army promoted him to major and another court awarded him damages for the mere discussion of his crime. Last week, yet another Jewish judge gave another huge compensation to the same murderer.

Turkey, as the former ruler of Palestine, could fill in the void of justice by bringing this Captain R to trial. Sooner or later he will leave the sanctuary of the Jewish state and travel somewhere for a holiday. A Turkish warrant for his arrest should await him wherever he goes. And not only him, but the Jewish ‘judges’ who covered up his crime and became accessories after the murder should be tried too. This is not a job for amateurs, but for a state with all its tools. If present Turkish law does not allow for this, let the law be updated by taking a leaf from the Israeli book. According to Israeli law, if a Turk does wrong to a Jew in Turkey, he may be snatched, arrested, tried and punished in Israel. Turkey should introduce a symmetrical law, covering offences against Palestinians who otherwise are not protected by law.

Turkey could also take the initiative to stop the still looming Israeli-American aggression against Iran. If they do take Iran, Turkey will be encircled and cut off. The fate of Palestine also depends on the fate of Tehran.

My New Year’s wish to you: be yourself, be Turks, and live in harmony and friendship with your neighbours, with Russia, Iran, Syria, Greece and with all the successor states of the Ottoman Empire. You are needed for the world and for Palestine.

Russia’s Daring Vote

Russia’s vote to endorse the Goldstone Gaza report in the United Nations Human Rights Council last Friday was an important, milestone event both for Palestine and for Russia. For Palestine, this vote opened a way to try and sentence Israeli mass-murderers, and thus ushered Israel into a new era of responsibility after a long period of Wild West-style, Colt-45 justice. For Russia, this vote has proved to its own country and to the world that it is free from American and Zionist diktat and able to navigate its own policy.

This story began on Christmas with the Israeli onslaught on defenceless Gaza. Taking advantage of the holiday lull, the Israeli army killed hundreds of Palestinian children and other civilians by indiscriminate use of white phosphorus and artillery. The world was horrified, and the UN Human Rights Council appointed Judge Richard Goldstone, a former prosecutor for Rwanda and Yugoslavia, to find out the facts.

Many people doubted his impartiality: Goldstone is a Jew — a self-described Zionist, well-connected to Israel – he sits on the board of its University and his daughter even lived in Tel Aviv for a while. Goldstone was guided by his conscience and not by his blood. He went to Gaza, invested a lot of time and effort, and concluded: Israel has committed war crimes and crimes against humanity. He recommended the case be transferred to the ICC court in the Hague. Israel did not cooperate and tried to undermine and block the report, but failed. That was the first Israeli defeat.

The second defeat occurred a few days later. The Fatah chairman, Ramallah PNA ruler Mahmud Abbas, was ready to do anything in order to remain in power after his electoral defeat. Netanyahu threatened him with taking away the broadcasting frequency for a second mobile phone provider – Abbas promptly called his representative in Geneva and ordered him to put the Goldstone report on a slow, very slow burner. Popular indignation was furious; he was called `traitor’ and worse. Facing revolt and sure political demise, Abbas u-turned once again and ordered his ambassador to proceed at full speed. Thus Bibi undermined and delegitimised his agent Abbas, while the report made its way to the council anyway. That was the second defeat.

Israel was infuriated by this development. The Jewish State considered itself invulnerable behind the triple defense of the Sixth Fleet, the US Senate and the Holocaust Museum. President Obama’s soft request to freeze the settlement building was met in Tel Aviv by what Internet chat calls “lol”. He was ridiculed. Ehud Barak and Bibi Netanyahu even sped up their building plans in the West Bank and East Jerusalem in order to show that they could not care less. And now, all of a sudden, Jewish ministers of state are going to be judged as if they were Serbs or Sudanese.

Israeli leaders activated their main reserves, the US State Department and the Lobby. A few days ago I spoke with Martin Indyk, former US ambassador to Tel Aviv, and he confirmed that the US State Department will do all it can to stop the Goldstone report before it gets to the Security Council. Another American veto would not look good. Worse, an insulted and hurt Obama might just forget to veto an anti-Israeli decision.

Israel began courting Russia, hoping to build bridges and to enlist Moscow in its cause. Avigdor Lieberman, Israeli Moldova-born Foreign minister, met ten times with his Russian counterpart Sergey Lavrov; Netanyahu flew to Moscow on a “secret mission” for a talk with Medvedev, and President Peres met with Medvedev in Sochi. They wanted Russian support for Iran sanctions and for silencing the Goldstone report. They said to the Russians that it would create a dangerous precedent: If today they judge Israeli ministers and generals for Gaza, tomorrow they will judge Russian ministers and generals for Chechnya. This is a false comparison: Chechens are Russian citizens with full rights, Gazans have no rights at all; Chechens are free to travel and live in Moscow or elsewhere, Gazans are not allowed to leave their concentration camp. Though Russia’s campaign against Chechen separatists was bloody and cruel, it could not be compared with the cold-blooded murder the Israelis unleashed on Gaza.

Moreover, the precedents were established a long time ago, when Milosevic the Serb was tried in The Hague. The question is whether the Jews are indeed above the law. Israeli observers were certain that Russia would stand by them. There is a small but profitable trade between the two countries; there is a Russian immigrant community in Israel; there are many bilateral relations. Beside, Russia has traditional interests in the Holy Land, and hundreds of thousands of Russian pilgrims make their way to the Holy Sepulchre.

On top of all this, Russia was interested in hosting a Moscow Middle East Peace Conference, in direct continuity with the Madrid Conference of 1989. There is also a powerful Zionist lobby in Moscow. True, some of the most obnoxious oligarchs are gone, whether to a Siberian jail or to exile in Tel Aviv or London. Power is now concentrated in the hands of Putin and Medvedev, and money is respected but not more than that. But there are many very wealthy Russian Jews who like to play the Jewish Lobby game.

Some arguments by the Zionist Lobby for supporting Israel were spectacularly feeble. They said that Russia should be forever grateful to Israel because it had allowed a few Russian wives to leave Gaza just before their homes were bombed to smithereens. If you buy that one, you may also buy their argument for bombing Iran: in 1836 (sic!), the Persians had lynched Russian playwright and diplomat Alexander Griboedov, who had sneaked into a harem and gotten caught.

Notwithstanding, the Russians disregarded the US and Israel’s overtures and stalwartly voted to endorse Goldstone’s report. They were joined by their three allies, China, India and Brazil, together representing the lion’s share of mankind’s human resources – of oil, of industry.

The Chinese sage Mencius (or Mengzi 372-289 BC) went to see t King Hui who said: “Old man, since you dared the distance of 1000 li to come here, you may know of a way to profit my state.” Mencius replied: “Why should you ever mention the word `profit’? What counts is benevolence and righteousness. If the King says `How can I profit my country?’ the high officials will say, `how can we profit our fiefs?’, and the intellectuals and the commoners will say: `How can we profit ourselves?’ If the upper and lower classes strive to snatch profit one from another, the state will be endangered.”

Apparently the Eurasian landmass of Russia, China and India prefer benevolence and righteousness, while the Anglo-American world prefers lust for gain. Russian leaders Putin and Medvedev were very outspoken in their objections to the Israeli plans to attack Iran. They spoke against the sanctions, too, and here they were fully supported by China. At the same time, Turkey refused to let the Israeli Air Force join its joint maneuvers with the US. The Zionist-run US immediately withdrew from the maneuvers as well. The position of Turkey is extremely relevant: This is the old imperial power that protected and controlled the Middle East for centuries. Turkey, together with Russia and Greece, are the main heirs to Byzantium. If we want to help Turkey to support the Palestinian cause we must not allow the Zionists to play the Armenian card right now. When Turkey joins Russia and China, they can decide quite a bit. They have put paid to the notion of Israeli impunity. One can’t overestimate the importance of the Russian vote:

1. This vote confirmed the principle of equality. All human beings are equal. If the ICC can judge Milosevic and Burundians and Sudanese, they can also judge Jewish ministers and generals.
2. This vote demonstrated that Russia is independent, not only of Washington, but even of Tel Aviv. The Zionist Lobby in Russia is powerful, but not omnipotent.
3. This vote saved innumerable children, women and men from death. After this vote, an Israeli general will have to think twice before dropping a bomb on a civilian target. This will save Israeli children as well from retaliation.
4. Russia regained its position lost by Gorbachev and Yeltsin. Russia became again a leader of the free world, I mean the world free of US bases. Moscow’s position was decisive in forming China’s position as well.
5. It seems that the main weapon of Zionists, their voice, has worn out. Once upon a time they could convince individuals and nations as easily as the sirens by the charm of their persuasion. Now the witch of Zion had lost her charm.

A few years ago I wrote: “The world needs Russia, for since her star was obscured in 1990, for almost twenty years the runaway train of the US and the loose cannon of Israel made a mess on the planet. Russia must stop their orgy of aggression and regain its place as the ultimate protector of the weak and the meek. This is her manifest destiny”. The Geneva vote proved that Russia has done just that. We may once again connect our hopes with Russia in her friendship with China. They also can stop Israel from hurting itself and others.

So many people in the US and France, in Egypt and Palestine are tired of Israeli intransigence, egotism, hypocrisy and impunity. That is why so much hope was invested in Barack Obama after his Cairo talk. Obama had promised to cut Israel down to size, but meanwhile Israel cut him down to smaller-than-life. That is why the US is going down just like the Titanic, undermined by a Lobby iceberg and fleeced by financial wizards. Now Russia is coming under tremendous pressure from the US and other Zionist-led groups and states. We should pray she will withstand it and maintain her and our dignity.

Translating the Bible into Hebrew

Or, How We Can Upset the Elders of Zion Conspiracy…

[A Talk at Rhodes Conference, 8-12 October 2009]

They say that at a press-conference before departing from Israel, President George W. Bush was asked: “What impressed you most of all in Israel?” The Texan replied: “The Bible in my room. It was in your tongue! Despite the wars and terrorism, you did not begrudge the effort and translated the Holy Bible into Hebrew in such a short time! That impressed me the most”.

Besides ridiculing proverbial Texan ignorance, this Israeli joke aims to remind us that the Old Testament was written in Hebrew, and every Old Testament book that you find in your hotel room is a translation from the ancient Hebrew text. There is a far-reaching implication: the Jews are the guardians and keepers of a primary sacred text of Christendom. This implication is subliminally or even consciously accepted by the West.

The consequences of this implication go far beyond textual details. India’s Brahmins are guardians of the Vedas, and this brings them influence, money, ministerial positions. Likewise in the West, the Jewish guardians of the Scripture possess by this right such extraordinary influence – totally out-of-sync with their demographic numbers – that can’t be explained in any other way.

Money, clannishness, media ownership – all are frequently mentioned among the reasons for this disproportionate Jewish influence. Here’s the problem, though: This influence is greatest in the US in particular and in the West in general. The Jews of Serbia and Greece, of Turkey and Syria, of India and China are not poor either, and are no less clannish, but they are much less influential. We may propose a different reason, then: the Texan-Israeli joke wouldn’t have been immediately understood in these countries, because for Muslims, for Hindus, for the Chinese as well as for Orthodox Christians, Jews have no sacred function – they are not the guardians of a holy text. Non-Christians have their own scriptures. And for Orthodox Christians, the Old Testament is the Septuagint, the Greek text composed some two hundred years before Christ and one thousand years before the present Jewish Bible (called MT, Masoretic Text) was completed.

Though the schism between the Eastern and the Western churches is usually connected with the filioque controversy, the true bifurcation point between the Christian East and the Christian West is located in their choice of the primary text (aside from the New Testament). Westerners (Catholics and Protestants) use the Old Testament they translated from the Jewish MT; Easterners use the Greek text as the original. This is an extremely important difference. When St Paul said that the opposites are united in Christ, he mentioned man and woman, Jew and Hellene (Galatians 3:28). Indeed, the ideal Jew and Hellene are as opposed to each other as the ideal man and woman, and the Jewish and Hellenic texts are equally opposed to each other. Moreover, translations from either of these texts carry the imprint of the original spirit with them. The Hellenic spirit found its expression in the Septuagint, while the Judaic spirit was expressed in the Masoretic Hebrew text, the MT. Christianity as a whole treads a narrow path between its Judaic and Hellenic tendencies, which are locked in an eternal fight like the Yin and the Yang. Their choice of primary text for the Old Testament caused the Eastern churches to favour the Hellenic, and the Western the Judaic tendency.

Before continuing, a full disclosure: until fairly recently, I was not aware of the problem, and like everybody else, I thought that the Old Testament in every language was a translation from the Hebrew MT original. A few months ago, I visited Moscow where I thoroughly enjoyed the fabulous hospitality of the Muscovites, who can turn every friendly meeting over a couple of vodkas into a Platonic symposium – a banquet of reason and a celebration of the soul. Once, my friend Michael, a Moscow University teacher, told me that a famous Starets wanted to receive me. “Starets,” the Russian equivalent of Greek gerōn, or “elder”, means, in Eastern Orthodoxy, a monastic spiritual leader – a charismatic spiritual guide who can aid others in attaining spiritual progress and success, as the Encyclopaedia Britannica tell us. The Starets is well known in Moscow as a confessor and heart-reader – a man who understands the human soul and its way to salvation. I was immensely touched and flattered by the invitation, for people normally wait months on end to see him and receive his blessing. Though I have met with princes of the Church – with bishops and cardinals, with the monks of Athos and Jerusalem – the elders are the hidden heart of the faith.

We drove out of Moscow to the monastery at four a.m. The road was empty, and there were only a few pilgrims in front of the monastery waiting for the heavy gates to open. This is neither the time nor the place to relate everything that happened at this meeting, but I’ll tell you the most important thing: the Starets told me of his desire to publish the Old Testament in Hebrew, corrected in accordance with the Queen Elizabeth Bible of the Russian Orthodox Church. At first, I was deeply shocked and confused. The Queen Elizabeth Bible (1751), or the QEB, is a translation, and a translation of the Greek translation into the Old Church Slavonic. Wasn’t this rather too daring a project, to correct the original according to a translation? Its scope would eclipse any post-modernist project!

Here another, even fuller disclosure is called for: the idea of translating a translation or even reconstructing the original according to a translation was not totally foreign to me. Translations are not machine-made neutral reproductions; they carry with them the twin loads of the original culture and of the translator’s culture. A translation can be translated. I was aware of this complexity – some years ago I had translated the Odyssey into Russian from the English translations of Lawrence (1932) and Rieu (1946) instead of from the Greek original. (It was published by Aletheia, the Heidegger-inspired St Petersburg publishers of Greek classics in AD 2000). I did it that way in order to convey Jorge Luis Borges’ idea that for the modern reader Joyce’s Ulysses precedes Homer’s Odyssey. The English post-Joyce translations of the Odyssey carried this subliminal message, and I tried to preserve it in my translation into Russian. (More on this in Russian on http://www.israelshamir.net/ru/odysseia0.htm )

The longer I considered the words of the Starets, the more sense they made to me. Practically, he was proposing to reconstruct the H70, the lost Hebrew original of the Septuagint, while using the QEB to select between numerous versions. You will see soon why this could begin the reversal of a long-term Judaisation and degradation process, and start the healing of the schism between the West and the East, while at the same time helping the Jews to overcome their hubris and to make peace with the nations. The Jews have translated the Bible into the languages of the nations in order to influence them; the world is indebted to them, and it’s time to pay them back by giving them the true original Hebrew text of the Old Testament, free from censorship and later additions, just as it was read in the days of the Second Temple.

Why will this bookish project influence the real world? Sacred matters influence our world far more than is acceptable to admit in polite society. The dummies believe that all things are done out of pecuniary considerations, but in truth, it is spiritual authority that decides. The world based on the Jewish Bible is not the same as would be a world based on the Greek Bible. Its priorities would be different. Even the texts themselves are different. The Hebrew text used today by Jews (and by tiny communities of Hebrew-speaking Christians), usually called MT (Masoretic text) is not the same text that was read by Christ and His apostles.

If you open the New Testament you’ll see that its references to the Old Testament do not fit. For instance, Matt. 12:21 quotes Isaiah: “in His name will the Gentiles trust”. But if you look up Isaiah 42:4, you’ll see something completely different: “the isles shall wait for his law”. Or (Acts 7:14) Stephen says “seventy-five” souls went down to Egypt with Jacob. But look up your Old Testament (Gen. 46:27; Deut. 10:22) – it says that only seventy people went to Egypt. This does not mean that the translators of King James, or any other translators of the Old Testament, made a mistake. They translated correctly, but from the wrong version, from the MT, while Jesus, His apostles and the New Testament writers in general had read and quoted the Septuagint (LXX) or its Hebrew Source (H70).

The transposition of the MT in place of the Septuagint (LXX) or its Hebrew Source (H70), making it the source for all subsequent Western translations, was the biggest coup the Jewish scholars ever pulled off, and this is the deep-lying cause of Judaisation of the West.

The MT is not particularly old. The oldest complete manuscript of the MT – The Leningrad Codex (1008) – is just over a thousand years old, whilst the LXX is much, much older. The LXX translation was created in a very different era – not only before Christ, but even before the Maccabee revolt. In those days, in the third century BC, the Hellenistic world embraced Palestine, Egypt, Syria and their neighbours. The Jews were integrating well into this Hellenic world, and the long struggle between the two spirits of the ancient faith of Israel had just started:

One was the inward-looking nationalist exclusivist spirit. It claimed private ownership over the Divine Law and exclusive access to the Creator for the Chosen of Israel. A stranger reading the Law was to be executed. A translation of the Bible into Greek was a most serious sin, equivalent to fashioning a golden calf (Ex 32:4), they said.

The other spirit proclaimed universality and led to Christ. The Law and God’s mercy were to be given to all.

In modern terms, these are the spirits of privatisation and nationalisation. The battle was fought in the three seats of ancient wisdom, – Alexandria, Babylon and Jerusalem. Alexandria was the most universalistic, Babylon the most proprietary – Jerusalem was their battleground. In Alexandria, a happy synthesis of Jewish and Hellenic ideas was reached in the translation of Seventy Elders appointed by the High Priest. Thus came the revelation of Israel to the world, preparing the way for Christ.

This translation was nothing short of miraculous. The translators consisted of six from each tribe of Israel, making altogether seventy-two. But the translation is called the Translation of the Seventy because seventy is the numeric value of “Sod” – “Secret” in Hebrew. The Seventy revealed the secret that the exclusivist Jews did not want to share. “A curse upon him who reveals our secret to the Gentiles”, they had written on the floor of the En-Gedi Synagogue. Three times the daughters of Jerusalem were charged “not to stir or awaken love until she pleases” (Song of Songs 3) and this meant “do not disclose our secret to Gentiles”, says the Talmud. Furious at the disclosure of the secret, the exclusivist Jews destroyed the Hebrew Source of the Septuagint. Every single copy perished. In Jerusalem, the nationalist Jews slaughtered the Hellenised proto-Christian Jews in the Maccabean revolt.

With the coming of Christ, the free Judeo-Hellenic spirit once again found its expression which was hated by the nationalists, who embarked on the long road to regaining full control over the Scripture. For hundreds of years, the scribes worked over the Old Testament, taking advantage of its ambiguous consonant readings, until they eventually achieved a text we know today. Its main paradigm was changed: if the old text led to Christ, the personal/universal Saviour, the new text implanted the nationalist concept of a messiah of and for the people of Israel. The nations of the world were to be seen as sinful semi-animals who had no access to God. The name ‘Jews’ stuck with this small fanatic band, while the Hellenised Jews became known as ‘Christians’ and were no longer called ‘Jews’. What was previously a battle between two schools of thought within the Judaic framework, became known as the battle between Judaic and Christian spirits.

The exclusivist Jews could not destroy the Septuagint – there were too many copies extant among non-Jews, and the LXX had been spread around and had succeeded in bringing the nations to Christ. That is why, in their attempt to force the genie of free spirit back into its bottle, the Jews made – one after another – three translations of the Old Testament into Greek to counter the LXX. These translations were made from their proto-Masoretic version, and were quite tendentious. “The Virgin” in the prophecy became “a young woman” in their rendering. Since then, the Jews have made and/or influenced dozens of translations into all languages, while ferociously defending their own Hebrew version, the MT, as the only legitimate primary source.

The young church had not worried overmuch, as they considered Hebrew only a language of the scribes, whilst cultured people used Greek, and the local masses spoke Aramaic. The Church dismissed the Hebrew version as an empty cocoon shed by a beautiful butterfly. LXX was considered the God-inspired text, and on its basis, the New Testament and the works of the Fathers of the Church were created. The Eastern Orthodox Church still prefers the Septuagint to the MT, for the translation of the Seventy Elders had been kept in the Church and by the Church, whereas the Hebrew text had been kept and prepared by anti-Christian forces.

When later Christian scholars became interested in the Old Testament, and compared the Judaic translations with the LXX, they unavoidably resorted to the Jewish Bible, for by that time the Jews had the edited Hebrew manuscripts and tools for their interpretation. As you will recall, the H70, the old Hebrew Source of the Septuagint had been destroyed by the nationalists. A great scholar, Origen, therefore turned to the Jews for advice, and they gave him plenty of advice – only their advice was based on their understanding of their text. Origen decided to improve the Septuagint and emended the LXX according to the Jewish Bible of his day. Some of these emendations made their way into the body of the LXX. Still, the Eastern Church remained rather safe, for the Septuagint remained the official version of the Old Testament for the Greek-speaking East from Constantinople to Alexandria.

But the West did not read Greek. For a long while, the West used the Old Latin translations from the Septuagint; the unity of the Church remained strong, but the translations were weak. Eventually Jerome, a wonderful man and a great scholar, who lived for 34 years in Palestine, decided to correct the Old Latin translations and update them. He even began his work using the Septuagint. Afterwards, though, he followed Origen and turned to the Jews for their advice and interpretation. That was his undoing. He got carried away, and took the fateful step that made the West susceptible to Jewish influence. He parted with LXX and made a brand new translation into Latin – from the Hebrew Bible of his day, the proto-MT. The Jews surely liked the result, but St Augustine was shocked by this deed, and wrote in The City of God:

Although the Jews acknowledge this very learned labour [of Jerome translating the Old Testament from the Hebrew] to be fruitful, while they contend that the Seventy translators have erred in many places, still the churches of Christ judge that no one should be preferred to the authority of [the Seventy], and we ought to believe that the prophetic gift is with [the Seventy].

Contemporaries condemned Jerome, as they noticed that he slowly began to appear more and more Jewish in his positions as he got older and his Jewish friends began to have more influence. One of his former friends, Rufinus, publicly attacked Jerome’s Jewish leanings. Jerome, in response to this work of Rufinus, freely admitted the truth of Rufinus’s claims. Jerome wrote in his own Apology: “There is nothing to blame in my getting the help of a Jew in translating from the Hebrew.” He said that he “did not understand how Jewish interpretations here and there would undermine the faith of Christians.” In this way the Jews managed to plant the seed that would eventually blossom into the acceptance of the Hebrew MT and the virtual abolition of the Greek Septuagint, the authentic Christian Scriptures of Christ and His Apostles.

A reason why Jerome, and Origen before him, accepted the Jewish version was their lack of historical perspective. Perspective in the visual art was discovered in 15th century, while the historical perspective was not known until the seventeenth century. Until that time, mankind was not aware of the torrent of Time. Don Quixote considered Achilles and Hector to have been knights like himself or like Lancelot. The Crusaders had thought the Muslim mosque of Jerusalem was the Temple of Solomon. For Origen and Jerome, the Old Testament was the Old Testament, and the Jews were the Jews. They did not understand that the Hebrew text of the OT had been changed since the days of Ptolemy II Philadelphus, when the Septuagint was produced. Some of these changes were tendentious, others were due to scribal errors, and still others were the result of misunderstanding.

Orthodox Bible scholar Nicolas Glubokovsky wrote: “The Greek translation reproduced an independent Hebrew textual type that was not severely censored and redacted by rabbinic authorities. That is why LXX and MT do differ profoundly, and their readings of messianic and Christian spirit are at loggerheads”.

Origen and Jerome believed the myth about careful Jewish stewardship of the OT scrolls. They did not know that the Jews had destroyed the manuscripts of other types. The Church had no such practice, and at Jerome’s time there were “tot exemplaria paene quot codices” — as many versions as there are codices. Islam, however, followed the Jewish way, and all differing versions of the Koran were destroyed, so only one type survived.

Jerome planted the seed of Jewish influence, and it had made its major inroads by the Ninth century, when the Vulgate of Jerome became universally accepted. Still, the Old Testament was not widely read – Latin was not universally understood and its influence remained somewhat limited – that is, until the Protestants began to spread their translations of the Old Testament in the vernacular.

The immediate result can be likened to an outbreak of a long-sleeping disease: Previously unheard-of devastation and massacres of civilians during the Thirty Years’ War were influenced by spread of the MT-based vernacular translations, as the nations were infected by its exclusivist nationalist spirit unknown in Europe until that time. The King James Bible was translated from the MT, and the result was amazing: the Brits began to consider themselves a racial new Israel of the flesh, as opposed to the Church being regarded the New Israel of the spirit. They fought the Church, and inflicted the ethnic cleansing prescribed in the book of Joshua on their colonies in the New World. They privatised the commons and turned ordinary British people into paupers. The German Bible translated from the MT turned the Germans into ferocious nationalists and eventually prepared the ground for Hitler. Thus, the MT and its translations had an enormous, even magical, effect. The petard placed in the second century below the walls of the Christian society went off!

The Jews became the collective Merlin behind the throne of a British King Arthur. People dissatisfied with this pre-eminence of the Jews left Christianity for various heathen cults, or became engrossed with the material side of the world. The Judaisation of the West and the degradation of its spirit accelerated.

Today, the translation battle continues as unabatedly and as one-sidedly as ever. The Jews produce dozens of translations into many languages, each more Judaic than the last. Some are openly Jewish, like the Jewish Publication Society Bible, others are crypto-Jewish or “Christian-Zionist”, like the Scofield Reference Bible that reduces the Christian faith to ‘love of Jews and of the Jewish state”. This long, hard work on these corrosive translations is the real Conspiracy of the Elders of Zion.

Russia was the latest to submit to the Judaising influence of the MT translation. Until the late 19th century, the Russians were exposed only to the QEB, the Old Slavonic translation from the Septuagint, and they were pious, religious, loyal to the throne. In the late 19th century, the pro-British Masonic Bible Society had published a translation of the MT into the Russian vernacular. Very soon, the Jewish influence in Russia began to rise. However, the Russian Church did not accept this Judaised Russian Bible for liturgical purposes, and continues to pray and read from the QEB. This caused a tragic rift between the LXX-orientated Church and MT-induced reading public, a rift that came to forefront with the Revolution.

Let me add yet another disclosure: As an ex-Jew who was received into the Greek Orthodox Church of Jerusalem, I am acutely and personally aware of the continuous struggle of these two spirits in the world. Will the Christian world submit to Judaisation, or will the Jews accept Christ? A few days ago, in a church in the Holy Land, I saw a Bible in Hebrew published by a Christian society for the purpose of bringing the Jews to Christ. However, the Old Testament had been reproduced from the MT. If a Jew sees that Christians actually use the Jewish text prepared by anti-Christian Jewish Rabbis, how can he ever accept the Christian interpretation? The encounter of Jews and Christians should bring Jews to the Church, not lead to Christians leaving the Church in dismay.

Proselytising efforts usually fail because the Jews consider themselves the guardians of the Scripture, while they should be seen as keepers of their own distinct text on a par with the Aramaic Peshitta, the Ethiopian Bible or the Samaritan Torah.

The MT is the petard laid centuries ago under the besieged City of God’s fortifications. The reconstruction of the Hebrew OT according to the LXX would hoist the Jewish sappers on their own petard and relieve the siege. A truly Christian Hebrew Bible has now become a distinct possibility. The H70, the Hebrew Source of the LXX, can be reconstructed on the basis of the textological discoveries of the last hundred years, with the help of the Qumran scrolls. We can do it – we can do it fairly quickly and fairly accurately. We intend to do it, with your help. Such a publication will become the turning point in this millennial struggle. The battle will be carried into the adversary’s territory for the first time since A.D. 128, when Rabbi Akiba’s disciple and convert Aquila produced his Judaic translation of the OT into Greek. If this project had been attempted by the young Church in the second century, the Jewish influence today would be the same as the Samaritan one – negligible. Now it is late, but not too late.

People who doubt the very possibility of reconstructing H70 usually refer to the multiple interpretations and versions within the sea of LXX manuscripts. These objections are not sincere. The Church has an exact answer regarding interpretations and versions, and we can trust Her inspiration. In our dark times of confusion, we can follow the interpretation of the Queen Elizabeth Bible, as I said in the beginning.

Why the Queen Elizabeth Bible, and not any other? Why not the Greek text? The QE Bible was prepared in the least Judaised country of the Christian world, in 18th century Russia, under the royal protection of its least Judaised queen. Queen Elizabeth was asked to permit Jewish traders to enter Russia, as they would bring her much profit, and she replied: “I wish no profit from Christ’s enemies.” Western ideas (and in their guise, Judaic influence) made few inroads then. The QE Bible was edited by churchmen, not by scientists, and edited within the full view of the Church tradition. The QE Bible can be likened to a mammoth unearthed in the frozen tundra – its corpse survived for millennia because it was protected by permafrost. One may dislike permafrost and prefer the tropics, but permafrost is better for preservation. Likewise, one may prefer more Westernised, more Judaised Christianity, but if one wants to discover the pure old Hellene tradition, one can turn to Queen Elizabeth.

The Septuagint has plural interpretations and various versions. The QEB has the great advantage of being a single text based on the LXX and fully approved by the Church. Its language is lucid, its meaning is clear, and this allows us to find and reconstruct its lost Hebrew source. (However, other possible approaches could be considered.) The reconstruction of the Pentateuch can be completed soon – with your help.

In order to receive a few chapters of our tentative reconstruction of H70, send an email to adam@israelshamir.net with subject H70. Your contribution is tax-exempt in the US; for small contributions use PayPal to the email above; for bigger contributions a bank account will be supplied upon request.

From Delusion to Vindictiveness

Interpreting the Zionist Dream…

“The socio-economic structure of the Jewish people differs radically from that of other nations. Ours is an anomalous, abnormal structure.” Ber Borochov – The Economic Development of the Jewish People 1917)

“You [Jews] lack the right notion of honour, feeling for duty, morality, patriotism, idealism….” Max Nordau – Address at the 1^st Zionist Congress 1897)

“But labour is the only force which binds man to the soil… it is the basic energy for the creation of national culture. This is what we do not have, but we are not aware of missing it. We are a people without a country, without a national living language, without a national culture. We seem to think that if we have no labour it does not matter – let Ivan, John or Mustafa do the work…” (A.D. Gordon, “Our Tasks Ahead” 1920)

Early Zionism was indeed a cheerful dream, it was all about the transformation of the ‘Jew’ into a ‘civilised, respectful and authentic human being’. The founders of Zionism were inspired by the notions of ‘people like any other people’ and ‘nation amongst nations’. Reading early Zionists such as Nordau, Borochov and Gordon provides us with some very contemptuous references to Jewish character and identity that would make Nazi ideology look mildly liberal.

However, one is advised to take a short break for a second and to contemplate critically over the above Zionist dream. One may wonder what kind of people dream of ‘becoming human beings’. Can anyone imagine a French, English or Chinese man or woman who dreams of becoming an ordinary ‘human’? We can easily think of oppressed human beings who demand to be treated as humans (Palestinians, Civil Rights movements, anti Apartheid and so on). Yet, the Zionist dream is rather different. It is not just about the desire for recognition or equality, it is not just about being treated appropriately, it is also a dream of ‘self-transformation’. In fact, it is all about a miraculous metamorphosis from a morbid ‘abnormal’ state of being into an acceptable decent human form.

Within the context of a fictional fable we can easily imagine a cow that fantasises to become a dairy farmer, a pig who ‘dies to’ become a Kosher schnitzel, a snake who aspires to take over the Labour party and then to launch a new Zionist illegal war. And yet, it is pretty unusual to think of people who have managed to develop an aspiration to become ‘ordinary humans’.

An intelligible way to explain or interpret that very unusual dream is probably to assume that those who succumb to the Zionist dream are those who happen to believe that, as far as their natural state of being is concerned, they are indeed remotely human. One would rightly assume that those who dream to become humans must be convinced that humanity is somehow not exactly a characteristic that they happen to possess.

Yesterday during a talk at Librairie Résistances, Paris (a fund raising event for Gaza) I was asked for my interpretation of Israeli ‘evolving barbarism’, how is it possible that 84% of the Israelis supported the IDF genocidal crime in Gaza last December. “In order to understand how these Israeli murderous practices emerged” I said, “all we have to do is to trace back and reread the early Zionist ideologists.” We can easily learn from Zionist thinkers about their ‘dream’ and their vision of their fellow brothers. They, the founders of modern Jewish nationalism happened to admit somehow that something was totally corrupted within the Jewish identity, culture and character. However, they genuinely believed that it was amendable.

Zionism was there to bring about a new Jew, a civilised productive human being. It was indeed a very wet and epic dream. As an Israeli youngster I myself succumbed to this dream. I tended to believe that Israel was ‘my’ historic land, I regarded the Biblical protagonists as my direct ancestors. I was sure that, at least in the case of the so called ‘first Israelis’, the ideological transplant operation was a great success. We, the young Israeli natives tended to believe that we were all nothing less than a success story of ‘modified-civilised-humanist-secular-beings’.

Needless to say that the history of Palestine, the Palestinians and the Nakba was totally hidden from us. We didn’t see the Palestinians around us either, we were hardly aware of their suffering not to say their cause. We were in fact totally blind. We tended also to believe that our army was the ‘most humanist army around’. We grew up with the ‘1967 Victorious Diary’, a legendary chunky photo album every Israeli held in a prominent location on his book shelve. There in that glossy propaganda book an Israeli soldier was giving his water to an Egyptian prisoner. We regarded him as a symbol of our people’s endorsement of universal humanism. We were obviously not aware of the horrendous fact that the Sinai Desert was actually a slaughter field for hundreds of Egyptian POWs. Why didn’t we know? This in itself is a very good question. Our fathers who fought in this war must have known something but they kept quiet. Our parents who witnessed the 1948 convoys of Palestinians refugees should have known something about the Nakba but they somehow kept quiet. Interestingly enough, it wasn’t just our parents, we followed the exact same pattern. Once we ourselves matured into IDF soldiers, we did exactly the same, we turned a blind eye (1982 in Lebanon). And this has never changed. The Israeli moral awakening has never happened. By now I allow myself to argue that it won’t happen. The Zionist dream is just too comfortable. After more than one hundred years of moral phantasmic delusion the Israelis are deeply stuck in an ethical coma.

The Zionist dream of a ‘humanist metamorphosis’ has never matured into reality or practice. Quite the opposite, Israelis and Zionists have learned to see themselves through a phantasmic illusionary prism. Rather than being transformed into humanists for real, they have become ‘leading humanists’ in their own extreme judeo-centric dream.

Freud taught us that the dream is there to prolong the sleep: a siren, a baby cry and a dripping tap that takes place in the outside would be incorporated into the dream so we can keep snoozing. The ‘Israeli humanist dream’ operates in a similar manner, it is there to prolong the Zionist snore, it is there to keep Jews aloof to the crimes that are committed by their state, and in their names. The disturbances that come from the ‘outside world’ such as the Goldstone report or Ahmadinejad’s valid criticisms are incorporated into their dream as ‘white noise’ motivated by ‘pathological antisemitism’. Though in reality the Jewish state is barbarian with no comparison, in their dream, it is nothing but ‘business as usual’.

The daily reality of Israeli barbarism in Palestine should bring us back to elaborate over the Zionist dream of transformation. In spite of the great promise, the Jewish state has failed to become a ‘nation like other nations’. Similarly, the Zionist people are not exactly ‘people like other people’ for no other people approve genocide collectively.

The Jewish state that was supposed to be a celebration of identity transformation became instead the ultimate embodiment of the morbid symptoms Zionism was there to heal. Israel has already managed to surround itself by gigantic ghetto walls, it spits fire and WMD on its indigenous population. It locks millions in concentration camps and starves them. As bizarre as it may be, only in the face of Israeli colossal barbarism, can one adequately understand the full meaning of the irony of the Zionist dream of humanist metamorphosis.

Zionism was doomed to fail: it is a blood related project, it is racially orientated and it is supremacist to the bone. The Zionist dream has become a true devastating nightmare for real: the Golem* Jewish State wakes up every morning to commit more and more crimes in the name of the Jewish people. With an arsenal of hundreds of nuclear bombs and motivated by a phantasmic Holocaust religion that preaches nothing but vengeance, there is no greater danger to humanity, humanism and our civilization than Israel and its lobbies around the world.

All I have to say is beware!

*Golem – a Yiddish Frankenstein

Seizing Power and Property

Governments, local, county, state or federal, are artificial entities created by the people. Governments, collective organizations, were created to protect the life, liberty and property of each and every person.

Frederic Bastiat said: “If every person has the right to defend even by force — his person, his liberty, and his property, then it follows that a group of men have the right to organize and support a common force to protect these rights constantly. Thus the principle of collective right — its reason for existing, its lawfulness — is based on individual right. And the common force that protects this collective right cannot logically have any other purpose or any other mission than that for which it acts as a substitute. Thus, since an individual cannot lawfully use force against the person, liberty, or property of another individual, then the common force — for the same reason — cannot lawfully be used to destroy the person, liberty, or property of individuals or groups.” [1]

Individuals cannot transfer rights or powers they do not inherently possess to an artificial government entity. One cannot bestow a right or privilege that one does not possess – those powers that each and every person possessed prior to the establishment of said government. Individuals may not legally plunder the property or resources of others, kill people, impose moral sanctions, or a plethora of other regulations, public and private extortions that governments regularly engage in.

Bastiat said: “Force has been given to us to defend our own individual rights. Who will dare to say that force has been given to us to destroy the equal rights of our brothers? Since no individual acting separately can lawfully use force to destroy the rights of others, does it not logically follow that the same principle also applies to the common force that is nothing more than the organized combination of the individual forces?” [2]

The government, constitutionally, is limited only to those functions in which an individual citizen has a right to act. The government has derived its powers from the governed. People cannot delegate powers it does not possess to its creation. John Locke explained the concept: “For nobody can transfer to another more power than he has in himself and nobody has an absolute arbitrary power over himself, or over any other, to destroy his own life, or take away the life of property of another.” [3]

For instance, if Citizen A has a vehicle and Citizen B doesn’t, Citizen B cannot arbitrarily seize citizen A’s vehicle. That would be stealing! Citizen B, despite the fact that he may lust after Citizen A’s vehicle, cannot legally delegate a government entity to take Citizen A’s vehicle in his behalf. If the government usurps such authority, that would constitute public plundering – the road to tyranny. America is obviously well down that road, given the current pandemic public plundering sanctioned and facilitated by the government.

The vehicle analogy is also applicable to car dealerships, many of which are being illegally seized and transferred to other parties. The following letter appeared in a Florida newspaper in late May 2009: “My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida. My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business. We currently employ 50+ people and before the economic slowdown we employed over 70 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month. All depend on our business for part of their livelihood. We are financially strong with great respect in the market place and community. We have strong local presence and stability. I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees. Sunshine Dodge is my life. On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as “new,” nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory. Our facility was recently totally renovated at Chrysler’s insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank. HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN? THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY. This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong. This atrocity will most likely force my family into bankruptcy. This will also cause our 50+ employees to be unemployed. How will they provide for their families? This is a total economic disaster. HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?

I am certain that George Joseph is just one of many dealers whose businesses have been seized by major car manufacturers, sanctioned by the bankers directing the current administration’s spoils system of rewarding campaign contributors, friends and corporate allies. This is a blatant Communistic redistribution of property. The Elite have no loyalties – other than to each other.

Unfortunately, government power was usurped long ago by the Elite, the majority of them lawyers, who impose laws favorable to themselves and their corporate cohorts but disastrous to the common citizen. To keep us fighting among ourselves, the Elite fashioned political parties. The sincere Republican and Democrat citizens are so preoccupied blaming the specific parties that they fail to recognize that the Elite within both parties utilize the spoils system – no matter which party is in power. Politicians are like professional wrestlers with orchestrated differences who choreograph their moves and celebrate after each match. Citizens naively believe the rhetoric because we hope things will improve while government Elites of both parties plunder our lives, liberties and pockets. We have all become enslaved and ransacked by a government that was “hired” to protect us from such egregious abuse.

In the 1700s the term “slave’ was applied to all indentured servants. Both black and white servants were granted their freedom as serving a specified length of time – typically seven years. Black and white slaves worked, lived, and played together, apparently indifferent to skin color differences. Racism was absent. That mutual acceptance was artificially altered when the minority colonial Elites, concerned about possible rebellion from the majority non-voting lower classes, took firm measures to divide poor whites and blacks “both socially and economically.” The bulk of society was composed of servants, landless tenants or small yeomen who owned inconsequential land that the Elite didn’t want. The Elite established a “divide and conquer” tactic that is still very much in place in most societies. [4]

Historian Edmund S. Morgan pointed out, “For those with eyes to see, there was an obvious lesson in the rebellion. Resentment of an alien race might be more powerful than resentment of an upper class.” [5]

Edward Bernays, the grand master of propaganda stated: “We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized.” [6]

The government and their compliant corporate press mold and manage our perceptions and prefer that we focus our anger and attention on numerous distractions – the illegal aliens, illusive terrorists, same-sex marriages, welfare recipients, North Korean testing, whether the CIA lied or was it Pelosi, Islamic fundamentalism, whether torture photos should be released or the current Supreme Court nominee, as if one court appointment can change the political landscape. The fact is that the government Elite set up this entire environment of contention to divert our attention from their treacherous unconstitutional, criminal activities – in both parties. This is all part of America’s drive into a One World Order, now hyper accelerated under the current administration.

You might ask – how did government Elites create the current environment. Decades ago the government abandoned the constitutional principles of non entanglement with foreign countries. Government officials are no longer public servants but private servants to deep-pocketed multinational corporations whose money keeps ego-driven politicians in power. Those same multinational corporations control the media flow of information in order to keep the people in an ignorant trance. Character-challenged politicians, mesmerized by power and money, cater to the insatiable greed of the privileged Elite under the pretext of spreading democracy, ousting cruel dictators, restricting the spread of Communism, Nazism, Fascism or terrorism.

The CIA created al Qaeda, the database and instigated Islamic fundamentalism by training 100,000 fundamentalist Muslim Mujahadeen. The CIA-friendly Zbigniew Brzezinski revealed that, unbeknownst to the American public and Congress, that Trilateralist Jimmy Carter authorized $500 million on July 3, 1979 to create an international terrorist movement that would spread Islamic fundamentalism throughout Central Asia in order to destabilize the Soviet Union, another made-in-America enemy that had served the purpose of its creation and now had to be dismantled. The CIA called this Operation Cyclone and functioned from 1979 to 1989 at a cost of $20-30 million per year beginning in 1980 which rose to $630 million per year in 1987. The U.S. poured another $4 billion into setting up Islamic training schools in Pakistan (Taliban means student). Young zealots were recruited and sent to the CIA’s spy training camp in Virginia, where future members of al Qaeda were taught sabotage skills – terrorism. Young Afghans, Egyptian and Jordanian Arabs and some African American Muslims were instructed in the latest sabotage skills.Underground Dissident [7]

Taxpayer funds financed the I-hate-America textbooks for Muslim students. Prior to 1967, Islamic fundamentalism was a relatively small movement. In the early 1980’s, the U.S. Agency for International Development (AID) gave a taxpayer funded grant to the University of Nebraska-Omaha and it’s Center for Afghanistan Studies to develop specialized textbooks. For more than twenty years the U.S. spent millions of dollars producing fanatical Islamic schoolbooks for distribution in Afghanistan, a country now known for its terrorist training camps. The schoolbooks, used throughout the 1990s for the country’s core curriculum, included illustrations of guns, bullets, soldiers, and mines to indoctrinate young minds towards violent destruction. Who authorized this hateful instruction for young impressionable minds? [8]

For $190,000 a year, Donald Rumsfeld sat on the board and “attended nearly all of the board meetings” of the Swiss-based ABB Company between 1990 and February 2001. [9] In 2000 (based on a Clinton era contract) ABB sold $200 million worth of components to North Korea to allow construction of two nuclear reactors. Currently, there are concerns about their activities. In December 1983 and again in March 1984, Ronald Reagan sent his personal emissary, Donald Rumsfeld, a former Secretary of Defense, to meet with Saddam Hussein along with Reagan’s handwritten note. This first meeting, on December 20, 1983, was for the reestablishment of diplomatic relations between Iraq and the United States, the first since the 1967 war. We formally restored diplomatic relations with Iraq in November 1984. Then, Rumsfeld and his corporate cronies secretly supplied Saddam’s military with the components to build chemical and biological weapons. Rumsfeld is just one example from dozens of Elites who repeatedly shift from boardroom to government office while stuffing their pockets from both positions.

David Rockefeller admitted in his relatively-recent book: “For more than a century, ideological extremists at either end of the political spectrum have seized upon well-publicized incidents such as my encounter with Castro to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure – one world, if you will. If that is the charge, I stand guilty, and I am proud of it.” [10] What further proof do we need of a pervasive conspiracy – just look at the mounting evidence and forget the mesmerizing, feel-good political jargon emanating from Washington.

Footnotes:

1, The Law, The Classic Blueprint for a Just Society by Frederic Bastiat, Foundation for Economic Research, New York, pp. 2-3
2, The Law, The Classic Blueprint for a Just Society by Frederic Bastiat, Foundation for Economic Research, New York, pp. 2-3
3, Locke, John, 1632-1704. Two Treatises of Government: of Civil Government Book II, p. 135
4, Divided, the South’s Inner Civil War by David Williams, The New Press, New York, 2008, p. 15
5, American Slavery, American Freedom by Edmund S. Morgan, W.W. Norton & Co., 2003, pp. 269-270
6, Propaganda by Edward Bernays, Organizing Chaos, p. 37
7, How Jimmy Carter and I Started the Mujahadeen: Interview with Zbigniew Brzezinski, Interview of Zbigniew Brzezinski Le Nouvel Observateur (France), January 15-21, 1998, p. 76; The CIA’s “Operation Cyclone” – Stirring the Hornet’s Nest of Islamic Unrest, October 27, 2002,
8, From U.S., the ABC’s of Jihad; Violent Soviet-Era Textbooks Complicate Afghan Education Efforts by Joe Stephens and David B. Ottaway, Washington Post, March 23, 2002
9, Rumsfeld was on ABB board during deal with North Korea
10, David Rockefeller: Memoirs by David Rockefeller, Random House, owned since 1998 by the large German private media corporation Bertelsmann, 2002, p. 405

Has the U.S. Played a Role in Fomenting Unrest During Iran’s Election?

Following the announcement of victory for Mahmoud Ahmadinejad over his main opponent Mir Hossein Mousavi in Iran’s presidential election on June 12, the country erupted in turmoil as supporters of Mousavi flocked to the streets to protest what they claimed was a fraudulent election, while state security and militia forces cracked down on dissenters, sometimes violently. Iran claimed that the unrest was being fueled by foreign interference, a charge reported but generally dismissed in Western media accounts. But there is ample reason to believe that the U.S. likely had a hand in fomenting the chaos that has since plagued the country many commentators have compared to the 1979 revolution that overthrew the Shah.

The role of the U.S. in overthrowing the democratically elected Prime Minister of Iran Mohammed Mossadegh in 1953 and installing the brutal regime of Shah Mohammad Reza Pahlavi is by now well known. In his speech in Cairo last month, President Barack Obama even referenced the CIA-backed coup, acknowledging that “In the middle of the Cold War, the United States played a role in the overthrow of a democratically elected Iranian government.”[1]

The U.S. lost their principle ally in the Middle East, however, when the Shah was in turn overthrown as a result of the Islamic revolution that swept the country in 1979, resulting in the clerical regime that continues to this day under Supreme Leader Grand Ayatollah Ali Khamenei, who took over the title from the leader of the revolution, Ayatollah Ruhollah Khomeini.

During the Reagan administration, the U.S. illegally sold arms to the Iranian regime even while supporting Saddam Hussein in Iraq’s devastating war against the Islamic Republic. And while neoconservatives in Washington had their eye on Iran as a target for regime change throughout the Clinton years, it wasn’t until George W. Bush came to be president that a strategy for bringing this about began in earnest. Whether the policy of regime change implemented under Bush has been quashed or continued by the administration of President Barack Obama remains to be seen, but what is incontrovertible is that the U.S. has a long and sordid history of interference in Iranian affairs.

The National Endowment for Democracy

One mechanism by which the U.S. interferes in the internal political affairs of other nations is the National Endowment for Democracy (NED), a quasi-governmental agency with funding from both Congress and private individuals whose purpose is to support foreign organizations sympathetic to U.S. foreign policy goals.

NED’s website states that its creation in the early 1980s was “premised on the idea that American assistance on behalf of democracy efforts abroad would be good both for the U.S. and for those struggling around the world for freedom and self-government.”[2]

The idea behind NED was to create an organization to do overtly what the CIA had long been doing clandestinely, and the organization has developed its own history of foreign interference. “A lot of what we do today was done covertly 25 years ago by the CIA,” acknowledged Allen Weinstein, one of NED’s founders.[3]

In Nicaragua, for instance, the CIA provoked opposition activities in the hopes that it would prompt an “overreaction” from the Sandinista government. The NED was there, also, providing money to opposition groups while the CIA armed contra terrorists (using money from the sale of arms to Iran, incidentally).[4]

In the Bulgarian elections of 1990, NED spent over $1.5 million in an effort to defeat the Bulgarian Socialist Party (BSP). When the effort failed and the BSP won, NED backed opposition groups that sowed chaos in the streets for months until the president and prime minister finally resigned. [5]

The NED was in Albania supporting the opposition to the communist government that was elected in 1991. Once again, turmoil in the streets led to the collapse of the government, forcing a new election in which the U.S.-backed Democratic Party won.[6]

Between 1990 and 1992, NED financed the Cuban-American National Foundation, an anti-Castro group out of Miami that in turn funded Luis Posada Carriles, a terrorist harbored by the U.S. who was responsible for the bombing of a Cuban airliner in 1976 that killed 73 people.[7]

NED was present in Mongolia helping to unite opposition parties under the National Democratic Union to defeat the Mongolian People’s Revolutionary Party that had won elections in 1992. With backing from NED, the NDU won in 1996 and U.S. media lauded the economic “shock-therapy” that the new pro-West government would implement. Under the new government, the National Security Agency (NSA) also set up shop with listening posts to spy on China. [8]

During the Clinton administration, NED was in Haiti working with the opposition to ousted president Jean-Bertrand Aristide.[9]

And NED was in Venezuela financing the opposition to President Hugo Chavez, including groups involved in the attempted coup in 2002 that nearly succeeded in his overthrow.[10]

NED is also active in Iran, granting hundreds of thousands of dollars to Iranian groups. From 2005 to 2007, NED gave $345,000 to the Abdorrahman Boroumand Foundation (ABF).[11] The group claims “no political affiliation” on its website, but is named for the founder of the National Movement of the Iranian Resistance (NAMIR), an opposition group to the clerical regime founded in 1980. According to the group’s website, Boroumand was murdered by agents of the Iranian government in Paris, France, in 1991.[12] The website is registered to the Boroumand Foundation, listed at Suite 357, 3220 N ST., NW, Washington, D.C.[13]

Another recipient of NED grants is the National Iranian American Council (NIAC), which received $25,000 in 2002, $64,000 in 2005, and $107,000 in 2006. The 2002 grant was to carry out a “media training workshop” to train participants representing various civic groups in public relations. The 2005 money was given in part to “strengthen the capacity of civic organizations in Iran”, including by advising Iranian groups on “foreign donor relations.” The 2006 grant was similarly designed to “foster cooperation between Iranian NGOs and the international civil society community and to strengthen the institutional capacity of NGOs in Iran.”[14]

The group’s president is Dr. Trita Parsi, whose parents fled political repression in Iran when he was four. He studied for his Doctoral thesis at the Johns Hopkins’ School for Advanced International Studies under Professor Francis Fukuyama.[15]

Fukuyama wrote in 2007 that “Ahmadinejad may be the new Hitler”, but that the use of military force against Iran “looks very unappealing”, and that airstrikes “would not result in regime change”, which was “the only long-term means of stopping” Iran’s alleged nuclear weapons program.[16] The NIAC similarly opposes the use of military force against Iran, and instead “supports the idea of resolving the problems between the US and Iran through dialogue in order to avoid war.”[17]

Following the Iranian election and subsequent violence, NIAC issued a statement saying that “The only plausible way to end the violence is for new elections to be held with independent monitors ensuring its fairness.”[18]

Last November, the Iranian ambassador to the United Nations Mohammad-Javad Zarif charged the U.S. with attempting to orchestrate a “velvet revolution” in Iran. One of the means by which this was being carried out, he said, was by means of workshops. “American officials have been inviting Iranian figures to so-called scientific seminars over the past few years”, he said. “However, when the Iranians attend these sessions, they realize they have gathered to discuss measures to topple the Iranian government”.[19]

The Office of Iranian Affairs

In February, 2006, Secretary of State Condoleezza Rice requested emergency funding from Congress to the amount of $75 million, on top of a previously allocated $10 million, “to mount the biggest ever propaganda campaign against the Tehran government”, in the words of The Guardian. The money “would be used to broadcast US radio and television programmes into Iran, help pay for Iranians to study in America and support pro-democracy groups inside the country.” The propaganda effort would include “extending the government-run Voice of America’s Farsi service from a few hours a day to round-the-clock coverage.” In announcing the request, Rice said the U.S. “will work to support the aspirations of the Iranian people for freedom and democracy in their country.”[20]

The Christian Science Monitor reported candidly on the “implicit goal” of the requested funds as being “regime change from within”, and similarly noted that “The money will go toward boosting broadcasts in Farsi to Iran, support for opposition groups, and student exchanges.”

A former specialist on the Middle East from the National Security Council, Raymond Tanter suggested the U.S. could work with an Iranian opposition group, the Mujahideen-e-Khalq (MEK). “If we are serious about working with groups from within,” he said, “it will have to be with the MEK, because there’s no other opposition force the regime cares about.”

Mehdi Marand, a spokesman for the Council for Democratic Change in Iran, similarly said that some in the Congress were ready to remove the MEK from the terrorist list. “If the US really wants to help the democratic forces inside Iran,” he said, “the only way is to remove restrictions from the opposition.”[21]

The problem is that the MEK is on the State Department’s list of terrorist organizations. Based in Iraq, the group came under the sway of the U.S. after the 2003 invasion that overthrew the regime of Saddam Hussein.

According to former U.N. weapons inspector Scott Ritter, who was among a few lone voices pointing out prior to the invasion of Iraq that there was no credible evidence the country still possessed weapons of mass destruction, the U.S. was already working with the MEK. Well prior, in 2005, Ritter wrote that the Bush administration had authorized a number of covert operations inside Iran. “The most visible of these”, he wrote, “is the CIA-backed actions recently undertaken by the Mujahideen-e-Khalq, or MEK, an Iranian opposition group, once run by Saddam Hussein’s dreaded intelligence services, but now working exclusively for the CIA’s Directorate of Operations.” The MEK’s CIA-backed operations within Iran included “terror bombings”, Ritter charged.[22]

A State Department cable unclassified in March, 2006 and entitled “Recruiting the Next Generation of Iran Experts” began by asserting that “Effectively addressing the Iran challenge ranks as one of the highest foreign policy priorities for our Government over the next decade.” The document outlines a plan developed under then Secretary of State Condoleezza Rice to “promote freedom and demoncracy [sic] in Iran.”

To this end, the State Department created the Office of Iranian Affairs (OIA) under the Bureau of Near Eastern Affairs, which would “reach out to the Iranian people” and bring more Iran experts into the Foreign Service and more Persian-speaking officers into the OIA, the Intelligence and Research Bureau (INR), and other branches of the State Department. Part of the “outreach” effort would be based in Dubai, a “natural location” for a regional office due to its “proximity to Iran and access to an Iranian diaspora”.[23]

The Dubai office would be modeled on the listening station in the Latvian capital of Riga, according to the document, which was where the U.S. had a listening station to gather information on the Soviet Union during the 1920s (George Kennan was at one time stationed there). The Iranian media has referred to the station as the “regime-change office.” A State Department official based in Dubai said the office’s purpose “is to get a sense of what’s going on in Iran. It is not some recruiting office and is not organizing the next revolution in Iran.”[24]

But the State Department cable also stated that among responsibilities of the Deputy Director of the Dubai station would be to seek “ways to use USG programs and funding to support Iranian political and civic organizations” and “to alert Washington on [the] need to issue statements on behalf of Iranian dissidents.”

The OIA would also create an International Relations Officer Generalist (IROG) position in Istanbul to advance “U.S. policy objectives with the Iranian [expatriate] community” in Turkey and Israel. A similar position would be created for the same purpose in Frankfurt, London, and Baku.[25]

In an op-ed in the Los Angeles Times critical of the Bush administration’s designs on Iran, Charles A. Kupchan, a professor of international affairs at Georgetown University and senior fellow at the Council on Foreign Relations (CFR), and Ray Takeyh, also a senior fellow at the CFR, observed that the objective was “not just to contain Tehran’s nuclear ambitions but also to topple the Iranian government.” Their main criticism with the new “strategy for regime change” is that it was likely to “backfire and only strengthen Tehran’s hard-liners” by giving them cause to decry “U.S. ‘interference’” and thus lending them political leverage to implement a crackdown on dissidents.[26]

When asked whether the OIA was intended to promote regime change, a State Department senior official told CNN it was “to facilitate a change in Iranian policies and actions” before acknowledging, “Yes, one of the things we want to develop is a government that reflects the desires of the people, but that is a process for the Iranians.”[27]

Then US ambassador to the United Nations John Bolton acknowledged in October 2006 that regime change was the “ultimate objective” of the U.S. sanctions policy, and adding that it “puts pressure on them internally” and “helps democratic forces” within the country and amongst the Iranian diaspora.[28]

Administration officials told the New York Times that then Vice President Dick Cheney was promoting the “drive to bring Iranian scholars and students to America, blanket the country with radio and television broadcasts and support Iranian political dissidents.” The program was to be “overseen by Elizabeth Cheney, a principal deputy assistant secretary for Near Eastern affairs, who is also the vice president’s daughter.”[29]

A Washington Post article on the new office noted money would be spent on “opposition activities” and observed that “Although administration officials do not use the term ‘regime change’ in public, that in effect is the goal they outline as they aim to build resistance to the theocracy.” The Post also noted that a “setback” for the Bush administration had come when Congress cut $19 million from the funding that would mainly affect broadcast operations, thus affecting plans to increase Voice of America (VOA) broadcasts into Iran to 24-hours a day.[30]

The Financial Times reported in April, 2006 that the effort was being coordinated with the U.K. and noted that criticism of the administration’s strategy included some of the same Iranians the program was designed to bolster. “Serious Iranian opposition politicians are virtually unanimous in saying that foreign funding of activities designed to promote democracy, especially by the US or UK, would be counter-productive”, the Financial Times reported. The article also quoted Ali Akbar Javanfekr, a press adviser to President Ahmadinejad, as saying that Iranians are “alert” to the “propaganda of enemies”.[31]

In May, the Los Angeles Times reported that the OIA was headed by David Denehy, a specialist at the International Republican Institute (IRI).[32] The IRI has been a recipient of NED funds, and was active in Venezuela, including the year of the attempted coup, when the IRI received $299,999 from NED to “train” political parties (including the IRI, over $1 million in grants was given by NED to groups operating in Venezuela in 2002).[33]

NIAC president Trita Parsi explained the goal of the U.S. policy by saying, “The administration is trying to make regime change through democratization the policy, instead of making confrontation by military means the policy.”

The L.A. Times also reported that “at the Pentagon, an Iranian directorate will work with the State Department office to undercut the government in Tehran.” The new Iranian directorate, the report noted, “has been set up inside its policy shop, which previously housed the Office of Special Plans [OSP]“.[34]

The OSP was the office headed by Douglas Feith that was created to bypass the normal intelligence review process and stovepipe information bolstering the policy of regime change in Iraq, including information from Iraqi dissidents like Ahmad Chalabi, who was afforded little credibility outside Feith’s office.

In an article for Rolling Stone, author James Bamford revealed how a member of Feith’s cabal at the OSP, Michael Ledeen, set up a meeting with Iranian dissidents to further the goal of regime change in Iran. Ledeen had served as the Reagan administration’s intermediary with Israel during the illegal arms deal that became known as the Iran-Contra Affair.

At the meeting in Rome, Ledeen, along with Larry Franklin and Harold Rhode, met with an Iranian named Manucher Ghorbanifer in a safehouse provided by Nicolò Pollari, the director of Italy’s Military Intelligence and Security Service (SISMI). Pollari had just months before been responsible for providing to that Bush administration what would later be revealed to have been fabricated documents purporting to show that Saddam Hussein had obtained yellowcake uranium from Africa. The men discussed the possibility of using the MEK to further their goal of regime change in Iran, according to Bamford’s sources who were familiar with the meeting.

Additionally, Larry Franklin, who worked under Feith in the OSP, later met with two other men “who were also looking for ways to push the U.S. into a war with Iran.” The two men were Steven Rosen and Keith Weissman of the American Israel Public Affairs Committee (AIPAC). With the FBI watching, Franklin illegally passed classified information on a National Security Presidential Directive dealing with U.S. policy on Iran to AIPAC with the goal of having the influential Israeli lobby exert pressure on the White House to adopt the draft directive.

In the July 24 article, Bamford wrote, “Over the past six months, the administration has adopted almost all of the hard-line stance advocated by the war cabal in the Pentagon…. To back up the tough talk, the State Department is spending $66 million to promote political changes inside Iran-funding the same kind of dissident groups that helped drive the U.S. to war in Iraq.”

Writing in the New York Times Magazine in June, 2007, Negar Azimi wrote about how the Iranian newspaper Kayhan “editorializes almost daily about an elaborate network conspiring to topple the regime. Called ‘khaneh ankaboot,’ or ‘the spider nest,’ the network is reportedly bankrolled by the $75 million and includes everyone from George Soros to George W. Bush to Francis Fukuyama to dissident Iranians of all shades.”

Azimi added, “If the spider’s nest had a headquarters, it might well be the Office of Iranian Affairs, which sits on the second floor of the State Department” and “was charged with outlining, in close consultation with Denehy, how to spend the democracy fund.”

$36.1 million of the funds was to go to VOA Persian and Radio Farda. VOA has often featured Reza Pahlavi, son of the former Shah, who now lives in Maryland. On April 1, 2007, VOA featured the head of the Balochi terrorist group Jundallah, Abdel Malek Rigi, who was “introduced as the leader of an armed national resistance group.”

Mehdi Khalaji, a fellow at the Washington Institute for Near East Policy who previously had worked for three years at Radio Farda, told Azimi that the VOA’s new administrators “do not seem to be able to distinguish between journalism and propaganda…. If you host the head of Jundallah and call him a freedom fighter or present a Voice of America run by monarchists, Iranians are going to stop listening.”[35]

U.S. Covert Operations in Iran

In April, 2006, investigative journalist Seymour M. Hersh wrote in the New Yorker magazine that “The Bush Administration, while publicly advocating diplomacy in order to stop Iran from pursuing a nuclear weapon, has increased clandestine activities inside Iran and intensified planning for a possible major air attack.”

A source with ties to the Pentagon told Hersh that American units were operating in Iran and “working with minority groups in Iran, including the Azeris, in the north, the Balochis, in the southeast, and the Kurds, in the northeast.” The principle goal was to “‘encourage ethnic tensions’ and undermine the regime.”[36]

Asia Times Online reported shortly thereafter that a “former Iranian ambassador and Islamic Republic insider” had provided details “about US covert operations inside Iran aimed at destabilizing the country and toppling the regime – or preparing for an American attack.” According to the source, “The Iranian government knows and is aware of such infiltration.”

Richard Sale, intelligence correspondent for United Press International, corroborated the charges made by Hersh, saying that “The Iranian accusations are true,” but that “it is being done on such a small scale – a series of pinpricks – it would seem to have no strategic value at all.”

The Asia Times Online article continued, noting recent unrest in Iranian ethnic minority communities, including amongst Kurdish, Arab, and Balochi populations. In one incident “in late January, a previously unknown Sunni Muslim group called Jundallah (Soldier of Allah) captured nine Iranian soldiers in the remote badlands of Sistan-Balochistan province that borders Afghanistan and Pakistan.”[37]

In July, Seymour Hersh repeated in an interview with NPR that the U.S. was supporting anti-regime terrorist groups including the MEK, Jundallah, and the Party of Free Life of Kurdistan (PJAK). “The strategic thinking behind this covert operation is to provoke enough trouble and chaos so that the Iranian government makes the mistake of taking aggressive action which will give the impression of a country in acute turmoil”, Hersh said, in order to give the White House a casus belli.[38]

In a July 29 article, Scott Ritter wrote that “American taxpayer dollars are being used, with the permission of Congress, to fund activities that result in Iranians being killed and wounded, and Iranian property destroyed…. The CIA today provides material support to the actions of the MEK inside Iran. The recent spate of explosions in Iran … appears to be linked to an MEK operation….”[39]

Hersh wrote another article in the New Yorker in November noting that the Pentagon was increasingly conducting covert operations that had traditionally been the CIA’s domain and giving further details about its activities in Iran. “In the past six months, Israel and the United States have been working together in support of a Kurdish resistance group known as the Party for Free Life in Kurdistan”, which has conducted raids into Iran. He repeated that the “Pentagon has established covert relationships with Kurdish, Azeri, and Balochi tribesman, and has encouraged their efforts to undermine the regime’s authority in northern and southeastern Iran.”[40]

On Democracy Now! with Amy Goodman, investigative journalist Seymour Hersh joined Scott Ritter in a conversation about the topic of Ritter’s book, Target Iran: The Truth About the White House’s Plans for Regime Change, which claimed the U.S. was conducting operations in Iran using the MEK. Ritter said the Israeli intelligence agency Mossad was building a station in Azerbaijan to work with Iran’s Azeri population and was also working closely with the MEK.[41]

On February 27, 2007, the London Telegraph reported, “America is secretly funding militant ethnic separatist groups in Iran in an attempt to pile pressure on the Islamic regime to give up its nuclear program.

“In a move that reflects Washington’s growing concern with the failure of diplomatic initiatives, CIA officials are understood to be helping opposition militias among the numerous ethnic minority groups clustered in Iran’s border regions.

“The operations are controversial because they involve dealing with movements that resort to terrorist methods in pursuit of their grievances against the Iranian regime.

“In the past year there has been a wave of unrest in ethnic minority border areas of Iran, with bombing and assassination campaigns against soldiers and government officials.

“Such incidents have been carried out by the Kurds in the west, the Azeris in the north-west, the Ahwazi Arabs in the south-west, and the Balochis in the south-east.”

A former high-ranking CIA official told the Telegraph that the CIA’s funding for opposition and separatist groups was “no great secret”.

Fred Burton, a former US State Department counter-terrorism agent and author of Ghost: Confessions of a Counterterrorism Agent (published in 2008), also told the Telegraph that “The latest attacks inside Iran fall in line with US efforts to supply and train Iran’s ethnic minorities to destabilize the Iranian regime.”

And John Pike of the Global Security think tank in Washington said, “The activities of the ethnic groups have hotted up [sic] over the last two years and it would be a scandal if that was not at least in part the result of CIA activity.” Pike also said that “A faction in the Defense Department wants to unleash” the MEK. “They could never overthrow the current Iranian regime but they might cause a lot of damage.”[42]

Journalist and later author of The Iran Agenda: The Real Story of U.S. Policy and the Middle East Crisis (published in October 2007) Reese Erlich told Amy Goodman on Democracy Now! in March 2007 that the U.S. was using Kurdish groups against Iran. “In the case of one group,” he disclosed, “the P.K.K. or the Kurdistan Workers Party and they are, along with Israel, sponsoring them to carry out guerilla raids inside Iran, and it’s part of a much wider plan by the United States to foment discontent and actual terrorist activities by ethnic Iranians in various parts of Iran. And when I was in northern Iraq, I was able to determine that that kind of activity is going on from Iraqi soil under the Kurdish controlled areas of Iraq, into Iran.”

Erlich also explained how the PJAK was formed as a breakaway group from the PKK and added that “they’re playing a very similar game with the Mujahideen-e-Khalq, another Iranian Group, and with groups in Balochistan, which is near the Pakistan Iranian border where some revolutionary guard bus was blown up.” He added that Israel was also “backing various Kurdish groups.”[43]

Further corroboration was given in April, according to the ABC News blog “The Blotter”, which reported that according to U.S. and Pakistani intelligence sources, the Balochi group Jundullah, operating out of the Balochistan province in Pakistan, was carrying out deadly operations inside Iran under the guidance and encouragement of the U.S. Funding for Jundullah was not provided directly, but instead, “Tribal sources tell ABC News that money for Jundullah is funneled to its youthful leader, Abdel Malik Regi, through Iranian exiles who have connections with European and Gulf states.”

Referencing the attack on the bus Erlich spoke of in his interview with Amy Goodman, ABC News noted that Jundullah had taken credit for a number of terrorist attacks and kidnappings, including “an attack in February that killed at least 11 members of the Iranian Revolutionary Guard riding on a bus in the Iranian city of Zahedan.”[44]

Again in May, ABC News reported that “The CIA has received secret presidential approval to mount a covert ‘black’ operation to destabilize the Iranian government,” according to current and former intelligence officials. The presidential finding “reportedly includes a coordinated campaign of propaganda, disinformation and manipulation of Iran’s currency and international financial transactions.”

Retired CIA senior official Bruce Riedel said he couldn’t “confirm or deny whether such a program exists”, but added that “it would be consistent with an overall American approach trying to find ways to put pressure on the regime”.

Vali Nasr, adjunct senior fellow for Mideast studies at the Council on Foreign Relations, told ABC News, “I think everybody in the region knows that there is a proxy war already afoot with the United States supporting anti-Iranian elements in the region as well as opposition groups within Iran”.[45]

The same day as the ABC News report, the Telegraph also reported that “President George W Bush has given the CIA approval to launch covert ‘black’ operations to achieve regime change in Iran, intelligence sources have revealed.” The official document endorsed “CIA plans for a propaganda and disinformation campaign intended to destabilize, and eventually topple, the theocratic rule of the mullahs.” The plan would also include sabotaging Iran’s economy “by manipulating the country’s currency and international financial transactions.”[46]

In July, 2008, former Pakistan Army Chief General Mirza Aslam Baig went public with the charge that the U.S. was backing Jundullah operations based out of Balochistan province.[47]

Jundullah claimed responsibility for the suicide bombing of the Amir al-Mohini mosque in the city of Zahedan on May 14, 2009, and said the target had Revolutionary Guards holding a meeting inside. Iran accused the U.S. of being behind the bombing.[48]

Jalal Sayyah, an official at the governor’s office in Sistan-Baluchestan province, told state radio, “The terrorists, who were equipped by America in one of our neighboring countries, carried out this criminal act in their efforts to create religious conflict and fear and to influence the presidential election”.[49] Interior Minister Sadegh Mahsooli similarly said, “Enemies try to influence the election by terror, just as they did in Zahedan yesterday…. The terror agents are neither Sunni nor Shiite but American and Israeli seeking a Sunni-Shiite divide.” Opposition candidate to President Ahmadinejad Mir-Hossein Mousavi also blamed “foreign forces” for the bombing.[50]

The U.S. naturally denied the charge. “We condemn this terrorist attack in the strongest possible terms,” said State Department spokesman Ian Kelly. “We do not sponsor any form of terrorism in Iran.”[51] White House spokesman Robert Gibbs issued a statement saying, “The United States strongly condemns the recent terrorist attacks in Iran…. The American people send their deepest condolences to the victims and their families. No cause justifies terrorism, and the United States condemns it in any form, in any country, against any people.”[52]

The next day, gunmen attacked President Ahmadinejad’s campaign headquarters in Zahedan, and three men were arrested as they tried to escape.[53] The Islamic Republic News Agency (IRNA) reported that three people, including a child, had been wounded in the attack. According to Al-Arabiya, a Saudi-financed channel in Dubai, Jundullah had claimed responsibility for the attack.[54]

On June 9, 2009, just days before the presidential election, the Iranian state news agency Press TV reported that the brother of Jundullah leader Abdel Malik Rigi, Abdulhamid Rigi, had confirmed in an interview that the U.S. had met with the group since 2005 and helped to arm them. He himself had also met with the Americans in Islamabad, Pakistan, he said, according to the report.[55]

A ‘Velvet Revolution’

Two months before the election, Iran announced that its Revolution Guards Corps (IRGC) had uncovered a plot to overthrow the regime and accused the Netherlands of conspiring with the U.S. and U.K. to provide financial support to opposition groups and websites for “anti-government activities” to bring about a “soft overthrow” of the government.[56]

Following the disputed election that resulted in an overwhelming win for the incumbent candidate President Ahmadinejad, rallies erupted in the streets of Tehran, with protesters charging that the election had been fraudulent and calling for an annulment of the announced result. Protests in some cases turned into riots resulting in property destruction and acts of arson. State security forces responded violently to some protests, and the state-backed Basij militia was blamed for storming Tehran University and killing 13.[57] The Basij was also blamed for other atrocities, including the murder of a young woman identified as Neda Agha Soltan. Neda was captured on a grisly video that has gone viral on the internet showing her lying in the street bleeding to death after apparently having been shot.[58]

Amid the chaos and charges of foreign interference in the elections, Iran cracked down further on dissent, blocking websites and issuing a ban on foreign reporters. During the confusion, the social-networking internet site Twitter reportedly became an important means for protesters to organize and keep each other updated. A Twitter user posts brief updates (“tweets”) via a web browser or cell phone text messaging. Other users may subscribe to that user’s tweets to receive instant updates. Thus, despite efforts to block other internet sites, Iran could not put a stop to Twitter activity without blocking all SMS communications.

But the “Twitter Revolution”, as some Western media have dubbed it, may not be all it appears. Blogs in the U.S. exploded with unconfirmed reports based on anonymously submitted tweets, many ostensibly coming from inside Iran. But as the Washington Post observed, “It is hard to say how much twittering is actually going on inside Iran.”[59]

While much of what was being Twittered has since been confirmed, there has been no shortage of dubious information going around. The New York Times observed that “just as Twitter has helped get out first-hand reports from Tehran, it has also spread inaccurate information, perhaps even disinformation.” Among the false information spread via Twitter and repeated by bloggers were: “That three millon protested in Tehran last weekend (more like a few hundred thousand); that the opposition candidate Mir Hussein Moussavi was under house arrest (he was being watched); that the president of the election monitoring committee declared the election invalid last Saturday (not so).”[60]

The popularity of the latter claim was in no small part due to a post by Andrew Sullivan in his popular blog “The Daily Dish” at The Atlantic. Sullivan reported, “Yes, the president of Iran’s own election monitoring commission has declared the result invalid and called for a do-over. That is huge news: when a regime’s own electoral monitors beak [sic] ranks, what chance does the regime have of persuading anyone in the world or Iran that it has democratic legitimacy?”[61]

Sullivan linked to a Farsi language website as his source, Peykeiran.com,[62] but Sullivan admittedly cannot read Farsi, so he was clearly merely relaying information he saw elsewhere, perhaps on Twitter, without attribution. Sullivan’s relayed claim, whatever its true origin, was promptly repeated in blogs across the net following his posting it at The Daily Dish.

But when shown the post and the linked-to page in Farsi, Kourosh Ziabari, an Iranian journalist and correspondent for Foreign Policy Journal, replied, “Actually, Andrew Sullivan has made a mistake, as far as I see. The one who asserted that the election results were invalid was Ali-Akbar Mohtashami, the Administrator for the Committee of Votes Preservation at the national campaign of Mir-Hossein Mousavi.”[63] This is hardly the same “huge news” Sullivan claimed it to be.

The New York Times also observed that “Not only is it hard to be sure that what appears on Twitter is accurate, but some Twitterers may even be trying to trick you.” An example cited is that of fabricated posts purporting to be from ABC News reporter Jim Sciutto.[64]

In that case, Sciutto said, the Iranian government attempted “to turn technology against the protesters. Officials have started a number of fake opposition pages on Twitter, which are tweeting propaganda and misleading information.”[65]

Sciutto offered no evidence that it was actually the Iranian government that was responsible for Twittering in his name, but then, of course, it is easy to accept that the Iranian government is using Twitter to spread misinformation simply as a matter of faith. And yet, despite the great amount of false or unsubstantiated claims made by apparent supporters of the opposition, there’s reluctance on the part of the mainstream media and bloggers to attribute to it the word “propaganda”, much less to suggest that there might have been a coordinated effort by anti-regime groups or foreign intelligence services to spread misinformation or foment unrest.

Evgeny Morozov, a blogger for Foreign Policy and a fellow at the Open Society Institute, questioned the “Twitter revolution” in an op-ed for the Boston Globe. He pointed out that “social media could do wonders when it comes to making many people aware of government’s abuse or the venue of a rally”, but “organizing protests is quite different from publicizing them; the former requires absolute secrecy, that latter one strives for the opposite.”

“However tempting it might be to attribute the Iranian protests to the power of Twitter, Facebook, and other social media,” Morozov added, “we should be extremely careful in our conclusions, especially given that the evidence we are working with is extremely sparse.”[66]

Morozov also told the Washington Post that it “is not at all certain” that Twitter “has helped to organize protests”, but “in terms of involving the huge Iranian diaspora and everyone else with a grudge against Ahmadinejad, it has been very successful.”

During a live discussion with readers, he observed that many posters had listed their location as Tehran in “solidarity” and that the Iranian diaspora was highly active in using social media. He also pointed out that it isn’t known whether a person with an Iranian sounding name posting content Farsi about events in Tehran was actually “in Tehran or, say, Los Angeles”.[67]

When Twitter Inc scheduled maintenance for the website, the U.S. asked the company to postpone the work so the service would not be interrupted as it was being used to rally people into the streets to protest the election. “One of the areas where people are able to get out the word is through Twitter,” a senior State Department official told reporters. “They announced they were going to shut down their system for maintenance and we asked them not to.”[68]

Iran shortly thereafter summoned the Swiss ambassador, who also represents U.S. interests in the country since the U.S. severed diplomatic relations after the 1979 revolution, to complain about American interference in Iranian affairs.[69]

One might be tempted to argue that the strategy for regime change implemented under the Bush administration that including funding for propaganda, support for Iranian dissident groups, and backing for anti-regime militants and terrorists has changed under the new administration of President Barack Obama. There is no evidence, many have pointed out, of U.S. meddling in the Iranian election.

But then, neither is there any clear indication that Obama ever revoked the policy strategy implemented under Bush. The most likely scenario is that Obama has put the military option favored by some in the Bush administration on the back burner in favor of other means to carry out a change of regime in Iran.

Whatever the case may be, given the record of U.S. interference in the state affairs of Iran and clear policy of regime change, it certainly seems possible, even likely, that the U.S. had a significant role to play in helping to bring about the recent turmoil in an effort to undermine the government of the Islamic Republic.

---

Certain name variants in this report have been changed within quoted text for consistency. British spellings have also been changed to American English.

An earlier version of this report said that Al-Arabiya was a “state owned” channel. It is a Saudi-financed channel operating out of Dubai and the text has been changed to reflect this.

[1] Remarks by President Barack Obama in Cairo, Egypt, White House, June 4, 2009

http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-at-Cairo-University-6-04-09/

[2] David Lowe, “Idea To Reality: A Brief History of the National Endowment for Democracy”, National Endowment for Democracy, Accessed June 22, 2009

http://www.ned.org/about/nedhistory.html

[3] William Blum, Rogue State: A Guide to the World’s Only Superpower (Monroe, Maine: Common Courage Press, 2000), p. 180

[4] Susan F. Rasky, “C.I.A. Tied to Nicaragua Provocations”, New York Times, September 21, 1988

http://www.nytimes.com/1988/09/21/world/cia-tied-to-nicaragua-provocations.html

William Blum, Rogue State, p. 175

[5] William Blum, Rogue State, p. 157

[6] Ibid., p. 157-8

[7] Ibid., p. 183

[8] Ibid., p. 177

[9] Ibid., p. 182

[10] William Blum, “US coup against Hugo Chavez of Venezuela, 2002″ (Excerpted from Freeing the World to death: Essays on the American Empire), KillingHope.org, accessed June 22, 2009

http://killinghope.org/essays6/venez.htm

Eva Golinger, “The Proof is in the Documents: The CIA Was Involved in the Coup Against Venezuelan President Chavez”, VenezuelaiFOIA.info, accessed June 22, 2009

http://venezuelafoia.info/evaenglish.html

[11] Information on grants for years 2005-2007 available on the National Endowment for Democracy website, accessed June 22, 2009

http://www.ned.org

[12] Information from the Abdorrahman Boroumand Foundation website, accessed June 22, 2009

http://www.iranrights.org/

[13] WHOIS domain lookup, accessed June 22, 2009

http://www.whois.net

[14] National Endowment for Democracy website, accessed June 22, 2009

http://www.ned.org/grants/06programs/grants-mena06.html#iran

[15] Information from the National Iranian American Council website, accessed June 22, 2009

http://www.niacouncil.org/index.php?option=com_content&task=view&id=826&Itemid=28

[16] “The neocons have learned nothing from five years of catastrophe”, The Guardian, January 31, 2007

http://www.guardian.co.uk/commentisfree/2007/jan/31/comment.usa

[17] National Endowment for Democracy website, accessed June 22, 2009

[18] “NIAC Calls for New Election in Iran”, National Iranian American Council Press Release, June 20, 2009

http://www.niacouncil.org/index.php?option=com_content&task=view&id=1452&Itemid=2

[19] “US plotting Velvet Revolution in Iran?”, Press TV, November 18, 2008

http://www.presstv.ir/detail.aspx?id=75784&sectionid=351020101

[20] Ewen MacAskill and Julian Borger, “Bush plans huge propaganda campaign in Iran”, The Guardian, February 16, 2006

http://www.guardian.co.uk/media/2006/feb/16/usnews.iran

[21] Howard LaFranchi, “A bid to foment democracy in Iran”, Christian Science Monitor, February 17, 2006

http://www.csmonitor.com/2006/0217/p03s03-usfp.html

[22] Scott Ritter, “The US War with Iran has Already Begun”, Al Jazeera, June 20, 2005

http://www.commondreams.org/views05/0620-31.htm

[23] “Recruiting the Next Generation of Iran Experts: New Opportunities in Washington, Dubai and Europe”, Unclassified State Department Cable, released March, 2006

http://images1.americanprogress.org/il80web20037/ThinkProgress/2006/0293_001.pdf

“New ‘Office of Iranian Affairs’ Outlined in State Department Cable”, Think Progress, March 1, 2006

http://thinkprogress.org/2006/03/01/iran-doc/

[24] Lionel Beehner and Greg Bruno, “Intelligence on Iran Still Lacking”, Council on Foreign Relations, December 4, 2007

http://www.cfr.org/publication/12721/

[25] “Recruiting the Next Generation of Iran Experts”

[26] Charles A. Kupchan and Ray Takeyh, “The wrong way to fix Iran”, Los Angeles Times, February 26, 2006

http://articles.latimes.com/2006/feb/26/opinion/oe-kupchan26

[27] Elise Labott, “U.S. to sharpen focus on Iran”, CNN, March 2, 2006

http://www.cnn.com/2006/POLITICS/03/02/us.iran/

[28] Guy Dinmore and Daniel Dombey, “Bolton: sanctions ‘help regime change’”, Financial Times, October 24, 2006

http://us.ft.com/ftgateway/superpage.ft?news_id=fto102420061730242214&page=2

[29] Steven R. Weisman, “Cheney Warns of ‘Consequences’ for Iran on Nuclear Issue”, New York Times, March 8, 2006

http://query.nytimes.com/gst/fullpage.html?res=9801E0D61531F93BA35750C0A9609C8B63&sec=&spon=&pagewanted=all

[30] Peter Baker and Glenn Kessler, “U.S. Campaign Is Aimed at Iran’s Leaders”, Washington Post, March 13, 2006; A01

http://www.washingtonpost.com/wp-dyn/content/article/2006/03/12/AR2006031201016.html

[31] Guy Dinmore, “US and UK develop democracy strategy for Iran”, Financial Times, April 21, 2006

http://us.ft.com/ftgateway/superpage.ft?news_id=fto042120061741075322&page=1

[32] Laura Rozen, “U.S. Moves to Weaken Iran”, Los Angeles Times, May 19, 2006

http://articles.latimes.com/2006/may/19/world/fg-usiran19

[33] Grant information obtained from the National Endowment for Democracy website, accessed June 23, 2009

http://www.ned.org/grants/02programs/grants-lac.html

[34] Laura Rozen, “U.S. Moves to Weaken Iran”, Los Angeles Times, May 19, 2006

http://articles.latimes.com/2006/may/19/world/fg-usiran19

[35] Negar Azimi, “Hard Realities of Soft Power”, New York Times Magazine, June 24, 2007

http://www.nytimes.com/2007/06/24/magazine/24ngo-t.html?_r=3&oref=slogin&pagewanted=print

[36] Seymour M. Hersh, “The Iran Plans”, New Yorker, April 17, 2006

http://www.newyorker.com/archive/2006/04/17/060417fa_fact

[37] “Tehran insider tells of US black ops”, Asia Times Online, April 25, 2006

http://www.atimes.com/atimes/Middle_East/HD25Ak02.html

[38] “Seymour Hersh On Covert Operations in Iran”, NPR, June 30, 2006

http://www.npr.org/templates/story/story.php?storyId=92025860

[39] Scott Ritter, “Acts of War”, Truthdig, July 19, 2008

http://www.truthdig.com/report/item/20080729_acts_of_war/

[40] Seymour M. Hersh, “The Next Act”, New Yorker, November 27, 2006

http://www.newyorker.com/archive/2006/11/27/061127fa_fact

[41] “Target Iran: Former UN Weapons Inspector Scott Ritter and Investigative Journalist Seymour Hersh on White House Plans for Regime Change”, Democracy Now!, December 21, 2006

http://www.democracynow.org/2006/12/21/target_iran_former_un_weapons_inspector

[42] William Lowther and Colin Freeman, “US funds terror groups to sow chaos in Iran”, Telegraph, February 25, 2007

http://www.telegraph.co.uk/news/worldnews/1543798/US-funds-terror-groups-to-sow-chaos-in-Iran.html

[43] “Report: U.S. Sponsoring Kurdish Guerilla Attacks Inside Iran”, Democracy Now!, March 27, 2007

http://www.democracynow.org/2007/3/27/report_u_s_sponsoring_kurdish_guerilla

[44] “ABC News Exclusive: The Secret War Against Iran”, ABC News ‘The Blotter’, April 3, 2007

http://blogs.abcnews.com/theblotter/2007/04/abc_news_exclus.html

[45] “Bush Authorizes New Covert Action Against Iran”, ABC News ‘The Blotter’, May 22, 2007

http://blogs.abcnews.com/theblotter/2007/05/bush_authorizes.html

[46] Tim Shipman, “Bush sanctions ‘black ops’ against Iran”, The Telegraph, May 27, 2007

http://www.telegraph.co.uk/news/worldnews/1552784/Bush-sanctions-black-ops-against-Iran.html

[47] “Former Pakistan Army Chief General Retired Mirza Aslam Baig says Iran and Pakistan under siege of western conspiracies”, Pakistan Daily, July 8, 2008

http://www.daily.pk/politics/politicalnews/5406-former-pakistan-army-chief-general-retired-mirza-aslam-baig-says-iran-and-pakistan-under-siege-of-western-conspiracies.html

“‘US backs Jundullah to destabilize Iran’”, Press TV, July 9, 2008

http://www.presstv.ir/Detail.aspx?id=63054&sectionid=351020101

[48] ‘Gunmen attack’ south Iran election office”, BBC News, May 29, 2009

http://news.bbc.co.uk/2/hi/middle_east/8074640.stm

[49] “Iran official blames U.S. in deadly mosque bombing”, Reuters, May 29, 2009

http://www.reuters.com/article/topNews/idUSTRE54R5O320090529?feedType=RSS&feedName=topNews

[50] “Gunmen attack Ahmadinejad election office”, Agence France-Presse, May 29, 2009

http://rawstory.com/news/afp/Gunmen_attack_Ahmadinejad_election__05292009.html

[51] “‘Gunmen attack’ south Iran election office”, BBC News, May 29, 2009

http://news.bbc.co.uk/2/hi/middle_east/8074640.stm

[52] “US condemns ‘terrorist attacks’ in Iran”, Agence France-Presse, May 30, 2009

http://www.google.com/hostednews/afp/article/ALeqM5jj8UWc4-2zQ2Ix1VBz_0RwB7iVGQ

[53] “‘Gunmen attack’ south Iran election office”

[54] “Gunmen attack Ahmadinejad election office”

[55] “Rigi’s brother exposes US ties with Jundullah”, Press TV, June 9, 2009

http://www.presstv.ir/detail.aspx?id=97484&sectionid=351020101

[56] “Iran ‘uncovers cyber plot to topple gov’t'”, Press TV, April 11, 2009

http://www.presstv.ir/detail.aspx?id=91129&sectionid=351020101

[57] Johns Lyons, “Students slaughtered in Tehran university attack”, The Australian, June 19, 2009

http://www.theaustralian.news.com.au/story/0,25197,25658596-601,00.html

[58] Michael Weissenstein and Anna Johnson, “Amateur video turns woman into icon of Iran unrest”, Associated Press, June 23, 2009

http://www.google.com/hostednews/ap/article/ALeqM5jeJnPi6AOx5JpqWi2Wwv3AaesBPAD9902QK00

[59] Mike Musgrove, “Twitter Is a Player In Iran’s Drama”, Washington Post, June 17, 2009

http://www.washingtonpost.com/wp-dyn/content/article/2009/06/16/AR2009061603391.html

[60] Noam Cohen, “Twitter on the Barricades: Six Lessons Learned”, New York Times, June 20, 2009

http://www.nytimes.com/2009/06/21/weekinreview/21cohenweb.html

[61] Andrew Sullivan, “Follow-Up On Earlier Posts”, The Atlantic ‘The Daily Dish’, June 13, 2009

http://andrewsullivan.theatlantic.com/the_daily_dish/2009/06/followup-on-earlier-posts.html

[62] Peykeiran.com webpage, accessed June 23, 2009

http://www.peykeiran.com/Content.aspx?ID=2104

[63] E-mail correspondence with Kourosh Ziabari

[64] Noam Cohen

[65] “ABC’s Jim Sciutto’s Twitter Account ‘Hijacked’ By Pro Iranian Government Messengers”, ABC News ‘The World Newser’, June 18, 2009

http://blogs.abcnews.com/theworldnewser/2009/06/abcs-jim-sciuttos-twitter-account-hijacked-by-pro-iranian-messengers.html

[66] Evgeny Morozov, “The repercussions of a ‘Twitter revolution’”, Boston Globe, June 20, 2009

http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2009/06/20/the_repercussions_of_a_twitter_revolution/

[67] Evgeny Morozov, “Iran Elections: A Twitter Revolution?”, Washington Post, June 17, 2009

http://www.washingtonpost.com/wp-dyn/content/discussion/2009/06/17/DI2009061702232.html

[68] Mike Musgrove

[69] Ali Akbar Dareini, “Iran accuses the US of meddling in election crisis”, Associated Press, June 17, 2009

http://news.yahoo.com/s/ap/20090617/ap_on_re_mi_ea/ml_iran_election

Dr. King Spanks Obama: Part 3

“In the days ahead we must not consider it unpatriotic to raise certain basic questions about our national character. We must begin to ask, “Why are there forty million poor people in a nation overflowing with such unbelievable affluence?” Why has our nation placed itself in the position of being God’s military agent on earth, and intervened recklessly in Vietnam and the Dominican Republic? Why have we substituted the arrogant undertaking of policing the whole world for the high task of putting our own house in order? All these questions remind us that there is a need for a radical restructuring of the architecture of American society. For its very survival’s sake, America must re-examine old presuppositions and release itself from many things that for centuries have been held sacred. For the evils of racism, poverty and militarism to die, a new set of values must be born. Our economy must become more person-centered than property- and profit-centered. Our government must depend more on its moral power than on its military power.” [1]

Such was the advice of Dr. Martin Luther King Jr. in 1967. But forty years after King was assassinated by his own government, [2] people are still asking the same questions: “Why is the US making itself impotent fighting wars that have nothing whatsoever to do with its security, wars that are, in fact, threatening its security?” [3] At the 23rd Annual Dr. Martin Luther King, Jr., Holiday Celebration in San Francisco attendees were asked, “What would Dr. King want to say to Barack Obama?” [4] But the best answers to this question can be found in Dr. King’s own book, Where Do We Go From Here: Chaos or Community? This is the third installment of a continuing series which examines Dr. King’s responses to the world around him forty years ago and explores their relevance in the world today. Links to previous installments of this series appear in the notes at the end of this article.

In a recent interview with Amy Goodman, Howard Zinn said if Obama would only listen to Dr. King, “he would be a very different president than he’s turning out to be so far. We have to point to what Obama said in the course of the campaign, when he said we not only have to get out of Iraq, we have to get out of the mindset that brought us into Iraq. Obama, himself, has not gotten out of that mindset yet. And I think we, the people, have to speak to him about that.” [5]

“How?” asks Amy Goodman. “Ethical appeals alone will not bring about justice“, insists Dr. King. Such appeals “must be undergirded by some form of constructive coercive power.” [1] The mere existence of a parasitic ruling class makes this necessary, because their compulsion to passively siphon income away from the productive activities of others directly opposes the interests of every other life form on the planet. [6] This is precisely the “mindset”, referenced above by Howard Zinn, which must be eradicated from society altogether. In fact, Shamus Cooke recently argued, “Obama cannot be ‘pressured’ into doing the right thing. He’s surrounded himself with people representing the big corporations and banks, entities that are intrinsically anti-worker. Labor must now, more than ever, take an independent stance in defending their interests.” [7] But if I correctly understand Cooke’s passion for self-emancipation of the working class, then I see no conflict at all between his views and King’s call for extended (if not permanent) disruption of business-as-usual.

According to Dr. King, if negotiations break down, the next step of “real power” consists of a massive call for economic withdrawal — and accompanying demonstrations if necessary. [1] Contrary to popular belief amongst contemporary “progressives”, marching in the streets with picket signs is *not* nonviolent direct-action. Instead, public demonstrations are more effectively an announcement of ethical appeals that have been previously “undergirded by some form of constructive coercive power“. The purpose of a direct-action program is to create a situation so crisis-packed that it cannot be ignored. [8] “We don’t have to argue with anybody… We just need to go around to these stores, and to these massive industries in our country, and say, ‘God sent us by here, to say to you that you’re not treating his children right. And we’ve come by here to ask you to make the first item on your agenda fair treatment, where God’s children are concerned. Now, if you are not prepared to do that, we do have an agenda that we must follow. And our agenda calls for withdrawing economic support from you.’” [9] Immense as this strategy might seem, it was much simpler to execute in 1967 than it is today. In those days, bus seats, lunch counters and drinking fountains were not the only targets of racial segregation in the US South. Turns out the business community was also sharply divided between black and white. So with boycotts and sit-ins and freedom rides, blacks effectively leveraged those divisions to their own advantage, ironically against racial segregation.

Likewise, progressive activists and environmentalists have rightly insisted for decades that American consumers must boycott multinational conglomerates by supporting local business communities. But this highlights an urgent need for creative and collaborative innovations amongst local firms to provide genuine consumer incentives and to reclaim a competitive advantage within their own regional markets. Just as Dr. King leveraged the black business community against the white, there is today a pressing need for communities to leverage the cooperative against the corporate, the local against the global. This is not an impossible campaign, but as Gary Dorrien explains, it does require an aggressive expansion of the cooperative sector in the United States supported by a network of publicly owned banks. [10] This campaign could certainly facilitate intermediate aims like negotiations with President Obama and increased public awareness. But the ultimate goal, as Dr. King suggests, is permanent restructuring of the economic system. [1] Here again, the inherent injustice of the existing system could ironically play a strategic role in establishing justice.

For example, Argentine workers have reoccupied 1,200 factories (and counting) that were slated for closure after their employers received massive government bailouts. It’s important to note that their extended success seems to stem from an almost unanimous level of community support. But even so, workers must guard those factories with sling-shots 24/7 from their government and the previous owners. [11] While it might seem more sensible to buy the factories from the previous owners at discount prices, it also seems ridiculous for them to seek financing from the same institutions that created the disaster to begin with. [10] So the Argentine worker cooperatives must eventually collaborate to organize an investment fund administered by publicly owned banks that are democratically controlled by the cooperatives and their communities.

According to David Schweickart, the outstanding structural innovation of the Mondragon Group in Spain is its “creation of a network of support institutions — above all, the Caja Laboral Popular, the ‘working people’s bank,’ which interacts with the productive enterprises in various ways: providing capital for expansion, providing technical and financial advice, assisting in the transfer of workers from one enterprise to another, assisting in the creation of new firms.” [12] John Logue’s recent article outlines more recent developments in this regard: “The Spanish system encourages employees who have worked together, but been laid off, to start new businesses that preserve the social capital built over years, capitalize the new firms with lump sum unemployment compensation and/or severance pay, and provide substantial support in the first several years of business. This is obviously not a panacea for the ills of modern economies, but it has helped to create one thousand or so new employee-owned businesses employing 13,000 in a region with the population of greater Cleveland with a survival rate that we can only envy.” [13]

With similar opportunities, however, and with far more freedom than any other nation in the world, workers in the United States seem reluctant to act in their own behalf. To withstand the advancing siege of corporate globalization, American workers and consumers will need to literally become economic terrorists, well organized and highly trained in new guerilla tactics and ready to mobilize at a moment’s notice. The brief sit-in at Chicago’s Republic Windows and Doors looked rather promising. But instead of restarting the machines and reorganizing cooperatively, the workers settled for severance and vacation pay — only to be rehired at minimum wage a couple months later by a new owner. Shamus Cooke reports even worse news from General Motors: “Obama’s autoworker precedent will encourage other companies to destroy union contracts via bankruptcy; the stage is being set for a colossal attack on the American working class. Already wage cuts are being implemented throughout the U.S., alongside massive unemployment — Obama’s technique is simply a way to hasten the process, so that the speed and scope of the recession is equally matched by reductions in wages and benefits. In order for [corporations] to stay ‘viable’ on the world market, they are slashing wages and benefits, led by Obama and the Wall Street insiders among his administration.” [7]

The interests of workers and the interests of investors are directly opposed. Workers in the United States and elsewhere are under attack. This is not a drill. So for labor to take an independent stance in defending their own interests, as Cooke insists, deliberate expansion of the cooperative sector in the United States seems an essential first step. American workers who are serious about self-emancipation will begin to reorganize the workplace cooperatively, and to establish a supporting network of publicly owned banks. There’s nothing new or unpatriotic about these ideas. According to American icons like Thomas Jefferson and Abraham Lincoln, privatization of the banks and the money supply was the worst thing that could possibly happen to this or any other nation. Furthermore, hundreds of worker cooperatives are already thriving in the United States and elsewhere. Their success rate for new startups is much higher than corporate business structures, they typically operate with greater efficiency, they are more responsive to the interests of local communities, and they tend to be far more sustainable in times of economic crisis.

Moreover, at the bottom (or the “trough”) of the current economic crisis lies a rare and fleeting opportunity for the cooperative sector to purchase abandoned factories and equipment at discount prices, to put an army of unemployed people back to work in coop academies, and to beat corporate America at its own game. The Web site for the Worker Cooperative Credit Union provides a wealth of information with regard to both internal and external cooperative financing. [14] But the one possibility not listed there is for existing cooperatives to pool their surplus into a common fund for the specific purpose of expanding the cooperative sector overall. In his theoretical model for “Economic Democracy”, this is what David Schweickart refers to as a “capital assets tax”. But in the real world today, this sort of financial collaboration amongst existing worker cooperatives could establish a network of publicly owned banks to immediately expand the cooperative sector, to empower individuals and strengthen community relationships, and to effectively challenge multinational corporations at the community level. “Now these are some practical things we can do” says Dr. King. “We begin the process of building a greater economic base, and at the same time, we are putting pressure where it really hurts.” [9] I’d like to at least hope somebody within the cooperative movement is beginning to think and act along these lines. Meanwhile, here is more from Dr. Martin Luther King Jr:

Where Do We Go From Here: Chaos or Community?
Excerpts from chapter 4

Living with the daily ugliness of slum life, educational castration and economic exploitation, some ghetto dwellers now and then strike out in spasms of violence and self-defeating riots. A riot is at bottom the language of the unheard. It is the desperate, suicidal cry of one who is so fed up with the powerlessness of his cave existence that he asserts that he would rather be dead than ignored. As long as people are ignored, as long as they are voiceless, as long as they are trampled by the iron feet of exploitation, there is the danger that they, like little children, will have their emotional outbursts which will break out in violence in the streets. For the past year I have been living and working in the ghettos of Chicago. There the problems of poverty and despair are graphically illustrated. The phone rings daily with countless stories of man’s inhumanity to man, and I find myself struggling constantly against the depression and hopelessness which the hearts of our cities pump into the spiritual bloodstream of our lives.

This is truly an island of poverty in the midst of an ocean of plenty, for Chicago now boasts the highest per capita income of any city in the world. But you would never believe it looking out of the windows of my apartment in the slum of Lawndale. From this vantage point you see only hundreds of children playing in the streets, and when you go out and talk to them you see the light of intelligence glowing in their beautiful dark eyes. Then you realize their overwhelming joy because someone has simply stopped to say hello; for they live in a world where even their parents are often forced to ignore them. In the tight squeeze of economic pressure, their mothers and fathers both must work; indeed, more often than not, the father will hold two jobs, one in the day and another at night. With the long distances ghetto parents must travel to work and the emotional exhaustion that comes from the daily struggle to survive in a hostile world, they are left with too little time or energy to attend to the emotional needs of their growing children.

Too soon you begin to see the effects of this emotional and environmental deprivation. The children’s clothes are too skimpy to protect them from the Chicago wind, and a closer look reveals the mucus in the corners of their bright eyes, and you are reminded that vitamin pills and flu shots are luxuries which they can ill afford. The “runny noses” of ghetto children become a graphic symbol of medical neglect in a society which has mastered most of the diseases from which they will too soon die. There is something wrong in a society which allows this to happen. When a man is able to make his way through the maze of handicaps and get just one foot out of the jungle of poverty and exploitation, he is subject to the whims of the political and economic giants, which move in impersonally to crush the little flower of success that has just begun to bloom. Here the democratic process breaks down, for the rights of the individual voter are impossible to organize without adequate funds, while the business community supplies the existing political machine with enough funds to organize massive campaigns and control mass media. [6]

And yet there are times when life demands the perpetual doing of the impossible. The life of our slave forebears is eternal testimony to the ability of men to achieve the impossible. So, too, we must embark upon this difficult, trying and sometimes bewildering course. With a dynamic will, we must transform our minus into a plus, and move on aggressively through the storms of injustice and the jostling winds of daily handicaps, toward the beaconing lights of fulfillment. Our dilemma is serious and our handicaps are real. But equally real is the power of a creative will and its ability to give us the courage to go on “in spite of.”

There is always the understandable temptation to seek negative and self-destructive solutions. Some seek a passive way out by yielding to the feeling of inferiority; or by allowing the floodgates of defeat to open with an avalanche of despair; or by dropping out of school; or by turning to the escape valves of narcotics and alcohol. Others seek a defiant way out. Through antisocial behavior, overt delinquency and gang warfare, they release their pent-up vindictiveness on the whole society. Meanness becomes their dominating characteristic. They trust no one and do not expect others to trust them. Still others seek to deal with the dilemma through the path of isolation. They have the fantasy of a separate black state or a separate black nation within the nation. This approach is the most cynical and nihilistic of all, because it is based on a loss of faith in the possibilities of American democracy. In spite of uncertainties and vicissitudes we must develop the courage to confront the negatives of circumstance with the positives of inner determination.

The Pharaohs had a favorite and effective strategy to keep their slaves in bondage: keep them fighting among themselves. The divide-and-conquer technique has been a potent weapon in the arsenal of oppression. But when slaves unite, the Red Seas of history open and the Egypts of slavery crumble. This plea for unity is not a call for uniformity. There must always be healthy debate. There will be inevitable differences of opinion. The dilemma that [we] confront is so complex and monumental that its solution will of necessity involve a diversified approach. But [we] can differ and still unite around common goals. This clear onward drive to make full and creative use of the opportunities already available to us will be of immeasurable value in helping us to deal constructively with our agonizing dilemma.

We must get rid of the false notion that there is some miraculous quality in the flow of time that inevitably heals all evils. There is only one thing certain about time, and that is that it waits for no one. If it is not used constructively, it passes you by. Equally fallacious is the notion that ethical appeals and persuasion alone will bring about justice. This does not mean that ethical appeals must not be made. It simply means that those appeals must be undergirded by some form of constructive coercive power.

Our course of action must lie neither in passively relying on persuasion nor in actively succumbing to violent rebellion, but in a higher synthesis that reconciles the truths of these two opposites while avoiding the inadequacies and ineffectiveness of both. With the person relying on persuasion, we must agree that we will not violently destroy life or property; but we must balance this by agreeing with the person of violence that evil must be resisted. By so doing we avoid the nonresistance of the former and the violent resistance of the latter. With nonviolent resistance, we need not submit to any wrong, nor need we resort to violence in order to right a wrong. If one is in search of a better job, it does not help to burn down the factory. If one needs more adequate education, shooting the principal will not help. If housing is the goal, only building and construction will produce that end. To destroy anything, person or property, cannot bring us closer to the goal that we seek.

So far, we have had constitutional backing for most of our demands for change, and this has made our work easier, since we could be sure of legal support from the federal courts. Now we are approaching areas where the voice of the Constitution is not clear. We have left the realm of constitutional rights and we are entering the area of human rights. The Constitution assured the right to vote, but there is no such assurance of the right to adequate housing, or the right to an adequate income. And yet, in a nation which has a gross national product of $750 billion a year, it is morally right to insist that every person have a decent house, an adequate education and enough money to provide basic necessities of one’s family. Achievement of these goals will be a lot more difficult and require much more discipline, understanding, organization and sacrifice. Mass nonviolent action will continue to be one of the most effective tactics of the freedom movement. Nothing could prove more erroneous than to demobilize at this point. It was the mass-action movement that engendered the changes of the decade, but the needs which created it are not yet satisfied.

But mass nonviolent demonstrations will not be enough. They must be supplemented by a continuing job of organization. To produce change, people must be organized to work together in units of power. These units must be political, as in the case of voters’ leagues and political parties; they may be economic, as in the case of groups of tenants who join forces to form a union, or groups of the unemployed and underemployed who organize to get jobs and better wages. More and more, the civil rights movement will have to engage in the task of organizing people into permanent groups to protect their own interests and produce change in their behalf. This task is tedious, and lacks the drama of demonstrations, but it is necessary for meaningful results.

In the days ahead we must not consider it unpatriotic to raise certain basic questions about our national character. We must begin to ask, “Why are there forty million poor people in a nation overflowing with such unbelievable affluence?” Why has our nation placed itself in the position of being God’s military agent on earth, and intervened recklessly in Vietnam and the Dominican Republic? Why have we substituted the arrogant undertaking of policing the whole world for the high task of putting our own house in order? All these questions remind us that there is a need for a radical restructuring of the architecture of American society. For its very survival’s sake, America must re-examine old presuppositions and release itself from many things that for centuries have been held sacred. For the evils of racism, poverty and militarism to die, a new set of values must be born. Our economy must become more person-centered than property- and profit-centered. Our government must depend more on its moral power than on its military power. [15]

_________

Notes:

[1] King, Dr. Martin Luther (1968). “Where Do We Go From Here: Chaos Or Community?”. New York, NY: Beacon Press, pgs 128-129, 133. ISBN 0807005711

[2] Douglass, James W. (March 15. 2000). “The King Assassination: After Three Decades, Another Verdict”. Christian Century. http://www.precaution.org/lib/09/prn_king_assassination_another_verdict.000315.htm

[3] Roberts, Paul Craig. (May 14, 2009). “Who Rules America?”. Information Clearing House. http://informationclearinghouse.info/article22611.htm

[4] Staff. (February 02, 2009). “What would Dr. King want to say to Barack Obama?”. The Martin Luther King, Jr. Research and Education Institute. http://mlk-kpp01.stanford.edu/index.php/news/article/what_would_dr_king_want_to_say_to_barack_obama/

[5] Zinn, Howard. (May 13, 2009). “Howard Zinn: I Wish Obama Would Listen to MLK”. Media with Conscience. Democracy Now!. http://mwcnews.net/content/view/30541/26/

[6] Chandler, David. (2009). “Tour of the US Income Distribution: The L-Curve”. David Chandler. http://www.lcurve.org/
This link appears, not only in the main body of the article, but also in the excerpts from Dr. King’s book because it most clearly illustrates his discussion of a “break down” in the “democratic process”, which I view as an economically skewed distribution of decision-making power.

[7] Cooke, Shamus. (May 22, 2009). “On Obama’s Chopping Block: It’s The Turn of General Motors”. Global Research. http://www.globalresearch.ca/index.php?context=va&aid=13703

[8] King, Dr. Martin Luther. (April 16, 1963). “Letter from a Birmingham Jail [King, Jr.]“. African Studies Center – University of Pennsylvania. http://www.africa.upenn.edu/Articles_Gen/Letter_Birmingham.html

[9] King, Dr. Martin Luther. (April 3, 1968). “”I’ve Been to the Mountaintop”. speech in support of the striking sanitation workers at Mason Temple in Memphis, TN the day before he was assassinated. American Federation of State, County and Municipal Employees (AFSCME). http://www.afscme.org/about/1549.cfm

[10] Dorrien, Gary. (05/18/2008). “A Case For Economic Democracy”. Novakeo. http://novakeo.com/?p=4039

[11] Goodman, Amy. (May 15, 2009). “Argentine Journalist Sergio Ciancaglini on “Sin Patron: Stories from Argentina’s Worker-Run Factories”. Democracy Now!. http://www.democracynow.org/2009/5/15/argentine_journalist_sergio_ciancaglini_on_sin

[12] Schweickart, David. (1996). “Against Capitalism”. Westview Press. pgs 65-66. ISBN 0813331137.

[13] Logue, John. (January 19, 2009). “Can we start new employee-owned companies in Ohio on a mass scale? Tools from Spain”. OpEd News. http://www.opednews.com/articles/Can-we-start-new-employee-by-John-Logue-090118-902.html

[14] Leung, Mike. (June 12, 2009). Worker Cooperative Credit Union. http://workercoopfcu.org/

[15] King, Dr. Martin Luther (1968). “Where Do We Go From Here: Chaos Or Community?”. New York, NY: Beacon Press, excerpts from chapter 4. ISBN 0807005711

Chosen Nukes

The struggle for Korean nuclear independence is extremely relevant for the Middle East, and first of all, for the Iranian nuclear project. The Judeo-American interests want to turn North Korea into an example for Iran. They wish to do something nasty to not-too-relevant Korea so that Iran will fall in line. But a nuclear Iran is likely to check Israeli warmongers and force Israel to proceed with peace process. The balance of fear, or MAD (mutual assured destruction) is still the only way to deal with the Israeli-American threat.

Fry and Laurie (or Laurel and Hardy) could do it nicely:

– The Chosen have got nukes. They’ve gone nuclear!

- Well, is that news? Israel has had hundreds of nuclear bombs for some twenty years, according to Vanunu, but only antisemites ever mention it.

- Sorry, I did not mean the Chosen People, I mean the People of the Chosen, and “Chosen” is the Korean name for North Korea.

- The Chosen? How dare they challenge the international community! Where do these Chosen men get off thinking that they are chosen?

The successful underground nuclear test in North Korea unleashed a huge wave – a wave of hypocrisy, that is. The state with by far the largest nuclear arsenal in the world, the country that has already used A-bombs against civilians, the US, expressed its outrage. U.S. Ambassador Susan Rice said, “The United States thinks that this is a grave violation of international law and a threat to regional and international peace and security and therefore the United States will seek a strong resolution with strong measures.” According to Rice, it is not invasion, it is not occupation, it is not aggression, but rather it is arming oneself against a very probable invasion, aggression and occupation that violates international law. Nor did she remind us of a well-forgotten fact: for many years it was North Korea that called for turning the whole of Korean peninsula into nuclear-weapons-free zone, and it was the US that insisted on having its nukes on North Korea’s doorstep.

North Korea, or the Chosen in its own language, is a country of indomitable men and women. They are strong, independent and hard-working. They shake hands with an iron grip. Their names are short, their cabbage is fiery, their national pride knows no limits – and for good reason: they fought against the US in its prime, and survived the worst onslaught ever engineered by Man. Think Dresden, multiply by Gaza and add Iraq to equal Korea in the 1950s. The US and its satraps dropped more bombs on this small mountainous country than they had dropped on Germany. General Douglas MacArthur wanted to nuke them, but Harry Truman stopped him: there were no objects worth nuking, for every single standing man-made structure had already been destroyed. The Korean War was mass murder writ large: millions of Koreans were killed, burned by napalm, shot and executed by the Americans and their allies. Any Korean village’s death rate could compete with that of Auschwitz.

The Koreans survived and rebuilt their country. But the massive bombing took a heavy toll on the people’s psyche. A nation will never be the same after saturation bombing, any more than will an individual who has been gang raped. Usually they break down into total submission for a generation (that is why gang rape is the prisoners’ way to assume control over a disobedient inmate), so did Serbs, so did Germans, so did the Japanese after being sodomised by US bombs. The Koreans’ own post-traumatic syndrome consisted of withdrawal, extreme self-reliance and endless fear of another attack. This fear was well-grounded in reality: US troops and bases still occupy the south of the Korean peninsula. South Korea is still as far from independence as it was before the WWII, only the US has replaced Japan as the colonising power.

More importantly, the US has carried out relentless sanctions warfare against unvanquished, independent Korea. This well-developed strategy of blockade was utilised with great success against Iraq and Cuba, and now Americans plan to use it against Iran. Noam Chomsky correctly defined the US strategy: never give up; keep destroying countries which do not submit by all means possible including economic warfare. Whoever does not surrender should be pushed back into the Stone Age.

Korea was willing to dismantle its nuclear facilities, provided that the US would cease its economic warfare. They signed an agreement and closed down the reactor, but the US reneged on the agreement and turned up its hostilities. America, as ruled by its “Chicago boys,” is neo-liberal to the bone and cannot tolerate a socialist state. Korea would not let American companies take over its economy, and that is why the US and its satellites kept impounding Korean bank accounts and interfering with its trade. The imperial media were kept busy churning out dreadful stories (actually, regurgitated anti-Communist urban legends from McCarthy’s days) about starving Koreans under commies’ yoke. Korea could not be allowed to live in its own, socialist way.

When the people of South Korea began to express their wish to unite with the independent North, South Korea was robbed by the Mammonites who engineered the great Tiger crisis of 1997. Everything you are experiencing now, during the 2009 crisis, the South Koreans went through twelve years ago. Their great economy was broken to pieces and bought for peanuts by the trans-nationals. All their accumulated labour of many years was snatched by George Soros et al. At the same time, the American offensive against independent Korea was intensified.

President GW Bush (or his speechwriter David Frum) designated Korea, next to Iraq and Iran, as part of the Axis of Evil. In this situation, the Koreans were right to develop the ultimate weapon of defence. And this holds equally true for Iran today. A Korean and Iranian nuclear deterrent would be a defensive shield for these independent countries.

Korea is not taking it lying down. This rather small and far away country, enfeebled by blockade and sanctions, contributes more than its fair share to the most important battle over Palestine. The Koreans, who suffered so much from the American-imposed siege, do help besieged Gaza and other neighbours of the Jewish state to acquire weapons. Not necessarily nukes – even conventional arms interfere with the total freedom of Israelis to kill Palestinians and to fly over Beirut and Damascus.

Using the nuclear issue as a pretext, the pro-Israel Lobby pushed for the decision to search all Korean shipping. They also orchestrated a vast public campaign in the mass media, uniting anti-Communists and nuke-fearing pacifists against socialist Korea. We are supposed to be afraid of Korean A-bombs and call upon Obama and Netanyahu to disarm the rebels.

God knows I am a peaceful man, but I’m not a pacifist. Weapons are needed to defend people from Israeli-American state terrorism. A so-called pacifist who supports American and Israeli attempts to maintain their monopoly on nuclear arms is, in my book, just another supporter of the Judeo-American war machine. If he is an honest man, let him call for the disarmament of the Chosen Peoples of Israel and America, and postpone dealing with the Chosen people of Korea and the Iranians until after Dimona is dismantled and American nukes are turned into plowshares.

The struggle for Korean nuclear independence is extremely relevant for the Middle East, and first of all, for the Iranian nuclear project. It is true that Iran is not seeking military application for its nuclear industry, being perfectly content with peaceful energy. However, the Judeo-American interests want to turn North Korea into an example for Iran. They wish to do something nasty to not-too-relevant Korea so that Iran will fall in line.

Obama could settle with Korea at the quite reasonable price of stopping the interference with its life. Sign a peace treaty, stop the threats, remove the sanctions, terminate the campaign of hate. The Koreans would pay for normalization of their relationship with the US by giving up their nuclear facilities. But that would neither frighten nor seduce Iran. So Obama may choose a violent action including a naval blockade, so that a suitably impressed Iran will close down its reactors.

This would be a pity. A pity for Koreans who deserve, like everybody else, to live their lives the way they like. A pity for Korea’s enemies, for the Koreans are not easy to defeat. And a pity for the Middle East which badly needs the deterring presence of a nuclear-capable Iran.

The Israeli media published a poll claiming that “some 23 percent of Israelis would consider leaving the country if Iran obtains a nuclear weapon”. The idea is to push the US and Europe into a frenzy of anti-Iranian action, for no country would like to absorb two million Israeli refugees. This is the secret Doomsday weapon of Zionist propaganda: if pushed hard, we’ll just go back to your countries and you are not going to like it. However, the fine print in this survey shows that this fear of Iran is spread mainly among suggestible Israelis, 39 percent of women as opposed to 22 percent of men – they swallowed their government’s propaganda — hook, line and sinker.

Paradoxically for us Israelis, nuclear Iran represents hope for peace, not a threat to it. Our greatest danger lies in the aggressive tendency of our generals and politicians. They have already caused so many unneeded wars by attacking Lebanon, Syria, the Palestinians. There is need for a counterbalance, for a great and powerful state that would keep our [Israeli] hawks in check. Since Iraq was subdued by the US army and Egypt by political means, Israeli generals have gone to war every two years. Only a nuclear Iran is likely to check Israeli warmongers and force Israel to proceed with peace process.

No sane Israeli expert, not even an extreme hawk, believes that a nuclear Iran would endanger or threaten Israel. Israel is too powerful, perfectly capable of delivering a deadly second strike. But this mind-boggling freedom of action the Israeli military enjoys would be gone, and that would be a good thing.

The balance of fear, or MAD (mutual assured destruction) is still the only way to deal with the Israeli-American threat. This was the reason for the martyrdom of Julius and Ethel Rosenberg; by helping the USSR to build their nuclear bomb they saved uncounted millions from horrible death, even at the price of their own life.

The Voice of Saruman

It is extremely worrisome that Russia and China, two friends of independent Korea, did not throw the American-sponsored resolution right out the high window of the Security Council. True, they refused the Americans’ call for sanctions, but this is not enough. They should not agree with any sort of condemnation of an independent country acting within its own legitimate rights. Russia and China fought on the side of Pyongyang against the US, and they should not betray their war-tried ally, and with it their own dead soldiers of the People’s Liberation Army and the fallen pilots of the Russian Air Force.

Chinese leaders may remember Mao’s decision to go nuclear. When China exploded its first atom bomb, he declared:

“This is a major achievement of the Chinese people in their struggle to strengthen their national defense and oppose the U.S. imperialist policy of nuclear blackmail and nuclear threats. To defend oneself is the inalienable right of every sovereign state. To safeguard world peace is the common task of all peace-loving countries. China cannot remain idle in the face of the ever-increasing nuclear threats from the United States. China is conducting nuclear tests and developing nuclear weapons under compulsion.

The Chinese Government has consistently advocated the complete prohibition and thorough destruction of nuclear weapons. If this had been achieved, China need not have developed nuclear weapons. But our proposal has met with stubborn resistance from the U.S. The nuclear tests ban treaty of 1963 by the United States, Britain and the Soviet Union was an attempt to consolidate the nuclear monopoly of the three nuclear powers and tie the hands of all peace-loving countries, and that it had increased, and not decreased, the nuclear threat of U.S. imperialism against the people of China and of the whole world. . . .By developing nuclear weapons, China’s aim is to break the nuclear monopoly of the nuclear powers and to eliminate nuclear weapons.”

Every word in this wonderful, ringing declaration is as right today as it was then. Just put ‘Korea’ or ‘Iran’ in place of ‘China’, and you’ll agree that Korea and Iran “cannot remain idle in the face of the ever increasing nuclear threats from the United States”. Korea and Iran are “conducting nuclear tests and developing nuclear weapons under compulsion”. If and when President Obama eliminates American and Israeli arsenals, Korea and Iran’s turn will surely come.

Russia’s leaders Medvedev and Putin should apply their own doctrine of a multipolar world to the case of Korea. If they sincerely dispute the US doctrine of full spectrum dominance and believe in the sovereignty of every state, they should accept the sovereign right of Koreans to self-defence and deterrence. Nuclear monopoly is ethically wrong, for it establishes two tiers of states: these entitled to a nuclear shield and those deemed unworthy of one.

They should reject the ploy of “joint responsibility” that the Russians have repeatedly fallen for. There is no such thing as “joint responsibility” or “joint security” between the Empire and the rebels. Gorbachev was a great adept of joint responsibility and security, and he ruled long enough to see his Russia skinned by creditors and surrounded by NATO bases. Putin was taken in by this ploy in 2001, when he supported George W. Bush’s War on Terror, facilitated his conquest of Afghanistan, and willingly dismantled two important naval bases in Cuba and Vietnam. Later he learned that the US had exploited his credulity to move its own bases forward and undermine Russia’s standing in her own backyard.

Russia and America are interlocked in a zero-sum game, and that is why America promotes the anti-Russian policies of Georgia and the Ukraine, and tries to isolate Russia in the great pipeline competition. Russian leaders should recognise this sad fact of life and give more support to Iran and Korea. They should kick their oh-so-human desire to hobnob with the Western leaders. This is a constant problem of people’s representatives: trade union leaders discover that they do enjoy sumptuous lunches with factory owners more than hanging out with factory hands. Socialist leaders are prone to accept the cajoling of Western leaders and then to sign on the dotted line against the best interest of their people.

Gorbachev has sold his country down the river for the sheer pleasure of being embraced by Ronald Reagan and Margaret Thatcher. Anwar as-Sadat would give up Arab interests for a prime-time interview with Barbara Walters. In the very beginning of his rule, Vladimir Putin was for a while taken in by the bonhommerie of his G8 mates, fellow rulers and shepherds of men.

They listened to the voice of Saruman. In the Lord of the Rings, the evil sorcerer Saruman tries to snatch victory from the jaws of defeat, and he proposes to Gandalf, the leader of the good guys, a “joint responsibility” proposal in front of his friends and foot soldiers:

“Our friendship would profit us both alike. Much we could still accomplish together, to heal the disorders of the world. Let us understand one another, and dismiss from thought these lesser folk! Let them wait on our decisions! For the common good I am willing to redress the past, and to receive you. Will you not consult with me? Will you not come up?”

The good guys got scared. They felt like “stupid servants overhearing the elusive discourse of their elders, and wondering how it would affect their lot. It was inevitable that Gandalf and Saruman should make alliance. Gandalf would ascend into the tower, and they would be left outside, dismissed to await the allotted work or punishment. Even in the mind of Théoden the thought took shape, like a shadow of doubt, “He will betray us; he will go, we shall be lost.”

Then Gandalf laughed. The fantasy vanished like a puff of smoke.”

This is the right reply to the American offers of “joint responsibility”. Russia and China are the leaders of the free world, the world free from American bases and troops, free from Israeli diktat, free from consumerist mania, free from neo-liberal dogma. They are responsible for the Freedom of Man, and they should laugh off every suggestion about what they will do together with the great oppressors.

We would all love to see President Obama taking his soldiers and hardware back home from Iraq and Afghanistan, from Italy and Germany, from Japan and South Korea, and turning the US into a friendly giant. This still can happen: this week, his Pentagon issued a medal for courage to an American soldier who survived the Israeli attack on USS Liberty in June 1967, 42 years after that atrocity was first hidden from the public. This could herald a new turn in American politics and the end of Zionist ascendancy. If and when that happens will be the time for greater cooperation between countries. But meanwhile, it is freedom that is at stake, and North Korea is the place to defend it.

_________________________________________

Appendix

The Atomic Bomb, Statement of the Government of the People’s Republic of China, October 16, 1964

China exploded an atomic bomb at 15:00 hours on October 16, 1964, thereby successfully carrying out its first nuclear test. This is a major achievement of the Chinese people in their struggle to strengthen their national defence and oppose the U.S. imperialist policy of nuclear blackmail and nuclear threats.

To defend oneself is the inalienable right of every sovereign state. To safeguard world peace is the common task of all peace-loving countries. China cannot remain idle in the face of the ever increasing nuclear threats from the United States. China is conducting nuclear tests and developing nuclear weapons under compulsion.

The Chinese Government has consistently advocated the complete prohibition and thorough destruction of nuclear weapons. If this had been achieved, China need not have developed nuclear weapons. But our proposal has met with stubborn resistance from the U.S. imperialists. The Chinese Government pointed out long ago that the treaty on the partial halting of nuclear tests signed in Moscow in July 1963 by the United States, Britain and the Soviet Union was a big fraud to fool the people of the world, that it was an attempt to consolidate the nuclear monopoly of the three nuclear powers and tie the hands of all peace-loving countries, and that it had increased, and not decreased, the nuclear threat of U.S. imperialism against the people of China and of the whole world. . . .

The atomic bomb is a paper tiger. This famous statement by Chairman Mao Tse-tung is known to all. This was our view in the past and this is still our view at present. China is developing nuclear weapons not because it believes in their omnipotence nor because it plans to use them. On the contrary, in developing nuclear weapons, China’s aim is to break the nuclear monopoly of the nuclear powers and to eliminate nuclear weapons.

The Chinese Government is loyal to Marxism-Leninism and proletarian internationalism. We believe in the people. It is the people, and not any weapons, that decide the outcome of a war. The destiny of China is decided by the Chinese people, while the destiny of the world is decided by the people of the world, and not by nuclear weapons. China is developing nuclear weapons for defence and for protecting the Chinese people from U.S. threats to launch a nuclear war.

The Chinese Government hereby solemnly declares that China will never at any time or under any circumstances be the first to use nuclear weapons. . . .

The Chinese Government will, as always, exert every effort to promote, through international consultations, the realization of the lofty aim of complete prohibition and thorough destruction of nuclear weapons. Until that day comes, the Chinese Government and people will firmly and unswervingly follow their own path to strengthen their national defence, defend their motherland and safeguard world peace.

We are convinced that man, who creates nuclear weapons, will certainly be able to eliminate them.

Source:

from Break the Nuclear Monopoly, Eliminate Nuclear Weapons (Peking: Foreign Languages Press, 1965), pp. 1-5.

Israel – Death Of The ‘Jewish’ State?

THE ‘JEWISH’ STATE OF ISRAEL was founded on the premise that Jews and Gentiles cannot get along. Zionist Jews have laid the blame for this upon the Gentiles, although history has proven otherwise. In truth, the Zionists have both fueled and perpetrated this enmity between Jews and Gentiles in their vindication of a ‘Jewish’ homeland in Palestine.

Zionist Jews, with their decades of propaganda via the Jewish-occupied press and media, would have the world believe that the founding and continuation of the Jewish state of Israel is a positive and progressive endeavor. However, in reality, quite the opposite is true. The idea of a Jewish state, is, at its roots, a negative conception that militates against the brotherhood of man.

In 1925, the most vehement protagonist of a Jewish homeland, Jacob Klatzkin, the co-editor of the Encyclopaedia Judaica, laid down the full implications of the Zionist approach to a Jewish homeland.

Klatzkin argued that the only meaningful goal for Zionism was regaining the land of Israel. Along with this goal, Klatzkin called all Jewish assimilationists, “traitors to their Judaism.” Klatzkin maintained, in opposition to the assimilationists, that the spiritual definition of Judaism should lead to national chauvinism:

“In the face of Anti-Semitism, we Jews must insist on the rightfulness of our own nationalism. To possess our own national life, we must see ourselves as an alien body within the nations we reside, and thus insist on our own distinct identity.” View Entire Story Here.

However, the problem of this “alien body” residing as a hated people in the Gentile nations that host them, has not been solved by the “rightfulness of Jewish nationalism.” Instead, the problem has expanded into a global pandemic.

The entire world has been in a state of chaos ever since the founding of the Jewish state of Israel in 1948. Indeed, the Zionist argument for a ‘Jewish’ state has been exposed for the hoax and anti-human conception that it is. The world continually witnesses atrocities upon atrocities against the Palestinian people committed by the Israelis and supported by Zionist Jewry worldwide, even up to the present hour.

TWO THREATS TO PRESENT-DAY ZIONISM and the bestial ‘Jewish’ state it has produced, has now come to the fore. Zionist Jews are currently working around the clock to deal with these threats.

The first threat to Zionism is the geopolitical realignment which is now occurring with regard to the nation of Iran and its economic and socio/religious influence globally and in the Middle East.

The second threat to Zionism is an internal threat within Jewry itself, especially within American Jewry. A division is now taking place amongst American Jews which threatens to spread beyond American shores. This division within American Jewry draws a line between Zionist-Jews and Anti-Zionist Jews.

This Great Divide within Jewry began to manifest itself with the recent atrocities committed by the Israelis against innocent Palestinians in Gaza. Outraged by the actions of the Israelis and the support from global Zionist Jewry, many American Jews began calling for the end of US military aid to Israel. And this especially, (which will mean the death of the ‘Jewish’ state), will surely become a matter of contention within Jewry in the months to come. View Entire Story Here.

THE POWERS BEHIND PUPPET-PRESIDENT BARACK OBAMA have reformulated a new White House policy – a “Grand Middle East Design” – which focuses on Iran as an emerging power to be reckoned with.

This was brought home to all the players in the Middle East when US Defense Secretary, Robert Gates, told Egyptian leaders during his May 5, 2009 visit, that the “US will persist with Iran overtures.” Middle East analysts say that Washington’s objective is to negotiate with Iran in order to set the boundaries of its growing influence in the Middle East and as a global power. The White House also seeks to pull Iran away from Russia’s influence as well.

No longer is Iran looked upon as a “rogue” nation by the power elites who control Obama, namely, David Rockefeller, Zbigniew Brzezinski, and his protege, David Gates, (all Trilateralists), but rather a nation to be approached through dialogue. This new policy has put the Israelis and World Jewry on “alarm mode.”

The Obama administration is preparing to welcome Prime Minister Benjamin Netanyahu in Washington on May 18, 2009, with pressing demands to follow its Trilateralist line. Indeed, Obama is set to be the first US president in decades to risk colliding directly with the Israeli government and the bulk of US Jewry with regard to Middle East policy.

ISRAEL AND AMERICAN JEWRY WILL SEE the US president no longer prioritizing the suspension of Iran’s nuclear aspirations, but bent on establishing a new Persian Gulf order that formalizes Iran’s rising power. Israel will have no say in this process. By elevating Iran to a premier regional power, America will be sidelining the ‘Jewish’ state of Israel in spite of its sabre-rattling to engage in a military strike on Iran’s nuclear installations.

Netanyahu will resist being cast into a peripheral role in the strategic processes going forward with regard to Iran, which Israel sees as a threat to its future existence. Thus, Netanyahu is marshalling all Israel’s resources, including an active role for President Peres, to avoid dropping into the role of a third-rate Middle East power whom no one consults.

A final arrow in Netanyahu’s quiver is his ability to canvass support among Zionist-bought politicians in the US Congress with the help of their sponsors, the powerful Jewish Lobby. But Zionist Jews now fear that American public opinion, which traditionally has been sympathetic to Israel, will have a ‘change of heart’ – especially due to the current economic downturn. View Entire Story Here.

http://www.realzionistnews.com/?p=400

The Financial War Against Iceland

Being defeated by debt is as deadly as outright military warfare.

by Prof Michael Hudson

Global Research – Iceland is under attack – not militarily­ but financially. It owes more than it can pay. This threatens debtors with forfeiture of what remains of their homes and other assets. The government is being told to sell off the nation’s public domain, its natural resources and public enterprises to pay the financial gambling debts run up irresponsibly by a new banking class. This class is seeking to increase its wealth and power despite the fact that its debt-leveraging strategy already has plunged the economy into bankruptcy. On top of this, creditors are seeking to enact permanent taxes and sell off public assets to pay for bailouts to themselves.

Being defeated by debt is as deadly as outright military warfare. Faced with loss of their property and means of self-support, many citizens will get sick, lead lives of increasing desperation and die early if they do not repudiate most of the fraudulently offered loans of the past five years. And defending its civil society will not be as easy as it is in a war where the citizenry stands together in coping with a visible aggressor. Iceland is confronted by more powerful nations, headed by the United States and Britain. They are unleashing their propagandists and mobilizing the IMF and World Bank to demand that Iceland not defend itself by wiping out its bad debts. Yet these creditor nations so far have taken no responsibility for the current credit mess. And indeed, the United States and Britain are net debtors on balance. But when it comes to their stance vis-à-vis Iceland, they are demanding that it impoverish its citizens by paying debts in ways that these nations themselves would never follow. They know that it lacks the money to pay, but they are quite willing to take payment in the form of foreclosure on the nation’s natural resources, land and housing, and a mortgage on the next few centuries of its future.

If this sounds like the spoils of war, it is – and always has been. Debt bondage is the name of this game. And the major weapon in this conflict of interest is how people perceive it. Debtors must be convinced to pay voluntarily, to put creditor interests above of the economy’s prosperity as a whole, and even to put foreign demands above their own national interest. This is not a policy that my country, the United States, follows. But popular discussion in Iceland to date has been one-sided in defense of creditor interests, not that of its own domestic debtors.

Ultimately, Iceland’s adversary is not a nation or even a class, but impersonal financial dynamics working globally and domestically. To cope with its current debt pressure, Iceland must recognize how uniquely destructive an economic regime its bankers have created, through self-serving legislation and outright fraud. With eager foreign complicity, its banks have managed to create enough foreign debt to cause chronic currency depreciation and hence domestic price inflation for many decades to come.

To put Iceland’s financial dilemma in perspective, examine how other countries have dealt with huge debt obligations. Historically, the path of least resistance has been to “inflate their way out of debt.” The idea is to pay debts with “cheap money” in terms of its reduced purchasing power. Governments do this by printing money and running budget deficits (spending more than they take in through taxes) large enough to raise prices as this new money chases the same volume of goods. That is how Rome depreciated its currency in antiquity, and how America managed to erode much of its own debt in the 1970s – and how the dollar’s falling international value has wiped out much of the U.S. international debt in recent years. This price inflation reduces the debt burden – as long as wages and other income rise in tandem.

Faced with an unprecedented explosion of debt obligations – many of them apparently fraudulent, and certainly in violation of traditional credit practice – Iceland has turned this inflationary solution inside out. Instead of permitting the classic credit cure of inflating the currency, it has created a dream economy for creditors, preventing the classical escape from debt. Iceland has found a way to inflate its way into debt, not out of it. By indexing debt to the rate of inflation, it has guaranteed a unique windfall for banks that vastly increases what they receive in a “down market,” at the expense of wage earners and industrial profits. Linking mortgage loans to the consumer price index (CPI) in the face of a depreciating currency and heavy balance-of-payments drain to foreigners can have only one result: destruction of Iceland’s society and its traditional way of life.

Iceland needs to repudiate this debt bomb. Under present policy its debts will never lose value, because they are indexed to inflation. This in turn is being caused in large part by foreign debt service collapsing the currency, raising import prices and thus causing even larger debt payments in an endless treadmill. The economy shrinks, wages fall and assets lose value, yet debt obligations continue to grow and grow. The resulting evisceration of wages, living standards and consumer spending will further shrink the economy – a prescription for economic virus that threatens to plague Iceland for many decades if it is not reversed now. Capital formation will plunge as consumers lack money to spend. Many may not have enough to survive. The economy will be “crucified on a cross of gold,” to use William Jennings Bryan’s famous phrase in the 1896 American presidential election when he advocated an inflationary coinage of silver to alleviate debt pressure on U.S. farmers and labor.

Another side to the discussion?

Despite having spent the past half-century focusing on countries with balance-of-payments problems, even I find Iceland’s uniquely self-destructive financial regime shocking. Before you dismiss my candor, I should offer a short personal résumé so that you understand that my conclusions are based mainly on having been an insider to the game of imperial-style plundering of nations for forty years. In the mid-1960s I was the balance-of-payments economist for the Chase Manhattan Bank and then for Arthur Anderson, and later for the United Nations Institute for Training and Research (UNITAR). I have taught international economics at the graduate level since 1969, and now head an international group on economic and financial history based at Harvard. In 1990 at Scudder Stevens and Clark, I organized the world’s first sovereign-debt fund. All these jobs involved analyzing the limited ability of debtor countries to pay – how much could be extracted from them through foreign-currency loans and how much public infrastructure was available to be sold off in a voluntary virtual foreclosure process by countries willing to submit to creditor-dictated rules.

I first wrote about monetary imperialism in the 1970s in my book Super Imperialism. It should have been entitled “Monetary Imperialism” because it detailed how replacing gold with paper dollar IOUs for trade and balance-of-payments deficits in 1971 allowed the United States to exploit the rest of the world without limit. Phasing out gold payments among central banks in favor of fiat paper money allowed the United States to run up massive debts equal to its cumulative payments deficit, far beyond its ability to pay. It currently owes over $4 trillion, while running a chronic trade deficit with enormous overseas military spending, financed entirely by other countries through their central banks. This is euphemized as the “international monetary system.”

I also was an advisor to the Canadian government in the 1970s. My main work was to write a monograph explaining why countries should not borrow in foreign currencies, but should monetize their own credit for domestic spending and investment. In recent years I have taught in Latvia and given this same advice to its officials. I provide this background because it has obvious relevance to Iceland’s financial situation today. It has broken the cardinal rule of international finance: Never borrow in a foreign currency for credit that you can create freely at home. Governments can inflate their way out of domestic debt – but not out of foreign debt. That is a large part of the problem that Iceland now faces.

The main thrust of my comments therefore will focus on the international dimension of Iceland’s debt problem, especially with regard to its relations with Europe. It therefore is relevant to look at what is happening in today’s “expanded Europe.” As the financial press has been reporting, post-Soviet economies have met with disastrous results after having moved to join the European Union during the past decade. The recent riots of debtors, farmers and labor union members from the Baltics to Hungary are symptomatic of the deep economic woes surging over these countries. Resentment is growing that instead of helping them industrialize and become more efficient, Europe and its Lisbon Treaty simply handed matters over to its bankers, who looked at these countries simply as credit customers to be loaded down with debt – not for loans to build up manufacturing and the infrastructure sorely needed by these countries, but loans mainly against existing real estate and infrastructure collateral already in place. That is the quickest way to make money, after all – and finance traditionally has lived in the short run.

This problem was bound to arise, given Europe’s postindustrial faith that whatever increases “wealth” – even by the trick of puffing up real estate and other asset prices – is as productive as building new industrial capacity and infrastructure. The result of this ideology was a set of bubble economies built on debt-financed real estate and stock market inflation. Such bubbles always burst at some point. Only belatedly are nations re-discovering the classical axiom that the only way to pay for imports on a sustainable basis is to produce exports.

Unfortunately, neither foreign banks nor European advisors encouraged this. Their policy de-industrialized the post-Soviet countries, which financed deepening trade deficits by borrowing in foreign currency against their real estate. The Baltic States borrowed euros, sterling and Swiss francs, mainly from Swedish banks to finance a real estate bubble, while Hungary and its Central European neighbors borrowed heavily from Austrian banks. Their economies are shrinking now that their casino economies gambling on asset-price inflation have burst. Rental income and hence property prices are plunging, and exchange rates are following suit. This makes a foreign-currency mortgage cost more than local property is yielding. The result is widespread mortgage default, causing severe losses for Swedish and Austrian banks.

Bad real estate debts also are pulling down banks in the two leading creditor nations, Britain and the United States. Real estate prices, stock market prices and employment are going down in a straight line unprecedented even in the Great Depression of the 1930s. This has turned the neoliberal financial dream of “creating wealth” by inflating asset prices, by creating credit without actually increasing tangible capital formation (wages and living standards) into a nightmare. Just as individuals can’t live off a credit card forever, neither can nations. As any classical economist knows, societies that only manufacture debt are unsustainable. Casinos may be fun places to visit (customers pay by losing their money), but no place to live. The same is true of casino economies.

No help from the EU or the current global economy

The European Union is not in a position to offer much help in solving Iceland’s financial problems. The continent’s integration in the 1950s was pioneered by social democrats and pro-industrial idealistic capitalists such as Konrad Adenauer and Charles de Gaulle hoping to end the continent’s internecine wars forever. They succeeded, by forming the seven-nation Common Market in 1957. But further European expansion occurred largely on the financial sector’s terms. That is the source of problems fracturing “old” and “new” Europe today. It is the context in which Iceland’s debt problem is now being played out.

It seems natural enough for people to pay debts that have been taken on honestly. The normal expectation is that people will borrow – and banks will make loans – only for sound investments, ones that are able make a profit enabling the debtor to pay back the lender with interest. This is how banks have worked for many centuries – hence, the image of the prudent bankers who says “no” to any questionable deals brought before them.

At least that was the old way of doing things. Almost nobody anticipated a world in which bankers would create credit irresponsibly, leading to the massive defaults we are seeing throughout the world today. In the United States, for example, no less than a third of home mortgages have fallen into a state of Negative Equity. That is to say, the mortgage exceeds the market price of the real estate pledged as collateral. The U.S. national debt has tripled during the past year, from $5 trillion to $15 trillion as a result of financial bailouts including the government taking on the $5.2 trillion mortgage-packaging giants, Fannie Mae and Freddie Mac. A single insurance company, A.I.G., has been slated to receive a quarter-trillion dollars of bailout money, and a single bank, Citibank, has received over $70 billion and still counting. The stocks of these hitherto financial giants have fallen to just pennies, and Congress is now debating whether finally to nationalize them and wipe out their stockholders and even their bondholders.

In Britain much the same has occurred. Sitting in the lounge of Heathrow airport last month, I watched the hearings on BBC where members of Parliament expressed amazement that the most seriously affected banks were not led by bankers but by marketing men. Their job was not to calculate prudent loans, but to sell as much debt as possible, without regard for the debtor’s ability to pay. The result is that the Bank of England – like the U.S. Treasury – is printing new bonds whose interest charges will have to be paid by taxes on labor and industry.

How can Iceland be expected to cope in this kind of financial environment? To get a perspective on what would be a dystopian future, one may look at the dress rehearsal for the so-called financial “reforms” played out in the 1990s in Russia and other post-Soviet countries. These are reforms that creditors – including the European banks, I’m sorry to say – now wish to impose on Iceland. In Russia, life expectancies sharply declined, while health, prosperity and hope withered as outside forces imposed austerity measures and high interest rates. Russians woke up to find that the devastation of the reforms foisted on them were as severe as the Second World War in reducing population, destroying industry, spreading disease and losing control of their economy. Living standards plunged, especially for retirees, while employment prospects closed for the young. Much the same occurred throughout the former Soviet Union.

This policy remains the “fix” for debtor countries: Sell off assets for pennies on the dollar to kleptocrats across the globe, and gut the nation’s social welfare programs just at a time they are needed most. By contrast, look at the nations calling most loudly for Iceland to pay the loans made by global speculators and arbitrageurs. They include the largest debtor nations, headed by the United States and Britain, led by politicians who never would dream of imposing such hardship on themselves. While cutting their own taxes and increasing their own government budget deficits, these nations are attempting to extricate financial tribute from smaller, weaker countries that they can bully, as they did to Third World debtors in the 1980s and ’90s.

Dismantling industrial capitalism

This is a crisis that calls for blunt truths. What creditor nations and their international financial institutions are promoting is not capitalism as traditionally understood. Instead of helping industrialize the countries to which they extended credit so as to make them viable and self-reliant with new means of paying for their imports – and indeed, paying the debts taken on to rebuild their productive capacity – European planners oversaw the dismantling of manufacturing.

Even worse, they did so in a way that empowered a neo-feudal set of financial oligarchs. Indebted economies have been turned into a gaggle of casinos, with special games (e.g., opaque financial instruments such as credit-default swaps) reserved exclusively for insiders. Even to get into this game, one must be at last a millionaire, signing legal releases that one can afford to lose the entire investment and still survive economically. The European Union thus adds insult to injury by presenting its financial agencies euphemistically as donors bringing aid. They turn out to be the same ideologues that have crippled industrial capitalism across the globe by proliferating debt-leveraged gambles that have redistributed wealth upwards wherever they have operated.

This policy creates debt peonage for most citizens, above all in the newer countries seeking to join the European Union. Even in the richest nation on earth – the United States – nearly half of all citizens now have no net worth, and the gulf between the wealthiest 10 percent and the rest of society has widened geometrically since 1980. This is the unfair system that the world’s top creditors would export to Iceland – if they can convince its voters to accept neoliberal debt pyramiding as a way to get rich. The recent riots throughout the post-Soviet states suggest that this plan is not working. Their populations are now feeling how deeply the so-called financial reforms (e.g., financial deregulation) promoted by European banks and the Lisbon Agreements have polarized their economies.

Recognizing the enemy within

The only defense against such disastrous policy is to recognize that there are better alternatives. It simply is not possible for today’s astronomically indebted economies to “work their way out of debt” with the old trick of inflating the money supply. Trying to do so will collapse the currency’s exchange rate and divert so much revenue to pay creditors – and transfer so much property out of local hands – that a new kind of post-capitalist, non-production/consumption economy will be created, one less and less able to be self-reliant and independent, to say nothing about being just and sustainable.

Iceland’s financial crisis today is less an issue of international law as of outright lawlessness perpetrated by the purveyors of so-called free market democracy. Nations pressing Iceland for payment impose one set of laws for others while following quite a different set for themselves. Preaching to Iceland about international law, the United States and Great Britain themselves have broken the clearest of international laws – those against waging aggressive war. Their propagandists are skillful at using the language of capitalism and morality, yet they are neither capitalist nor moral. Their financial strategy is to play an ages-old psychological game. Make countries like Iceland feel guilty about being debtors rather than recognizing they have been victims of an international Ponzi scheme. In a nutshell, the game is to lay down “laws” for debtors in the form of destructive austerity programs fashioned by irresponsible and indeed, parasitic creditors. This “aid advice” ends in outright asset stripping, both public and private.

Asset stripping to pay debts has caused collapse time and again in history, but is strangely downplayed in today’s academic curriculum as an “inconvenient truth” as far as vested financial interests are concerned. Income is siphoned off by a scheme that is elegant and simple. Hapless victims – and now entire economies, not just individuals – are maneuvered onto a debt treadmill from which there is no escape. Creditors pile on credit and let the debts grow at the “magic of compound interest,” knowing that their loans cannot be repaid – except by asset sell-offs. No economy’s productivity can keep pace with exponentially compounding debt. Whatever was owned (and indeed, financed originally by public debt but now paid off) is stripped away for interest payments that never end. The aim is for these payments to absorb as much of the surplus as possible, so that the national economy in effect works to pay tribute to the new global financial class – bankers and money managers of mutual funds, pension funds and hedge funds.

The product they are selling is debt. They build up their own wealth by indebting others, and then forcing sell-offs to buyers who take on their own debt in the hope of making asset-price gains as property prices are impossibly inflated relative to the wages of living labor. This has become the new, euphemistically dubbed post-industrial form of wealth creation – a strategy that is now collapsing economies throughout the world.

The role of the United States

The United States has trapped other countries into a nightmarish system in which they have little practical choice but to recycle their excess balance-of-payments dollar inflows back to the United States, mainly in the form of loans to the U.S. Treasury. When foreign central banks receive dollars for their exports (or for the sale of their companies), they are limited in what they can do with these dollars. The U.S. Congress will not let them buy up important domestic companies or resources, and will not part with U.S. gold holdings. So foreign central banks are obliged to buy Treasury bonds – or, as the supply of these bonds has run out (being limited by the domestic budget deficit), mortgage-backed securities issued by the now-public Fannie Mae and Freddie Mac packagers of subprime mortgages. These two semi-official agencies were formally nationalized last year after a series of financial frauds and disastrous investments wiped out their capital, obliging the U.S. Government to step in and mollify governments from China to Israel whose central banks had been recycling their surplus dollar inflows into these securities.

Icelanders should keep one basic principle uppermost in their minds. The United States is the world’s largest debtor nation, and will never repay its own foreign debt. Over and above its presently outstanding four trillion dollars, its Treasury intends to keep on issuing new paper IOUs in exchange for the goods, services and real assets of China, Japan and other creditor nations – until governments stuck with these paper dollars turn their back on this Madoff-Ponzi scheme (note that these schemes always are named for American operators), recognizing what Adam Smith explained in The Wealth of Nations: No nation has ever repaid its debts. Small nations like Iceland, along with small taxpayers in wealthy countries, may be coerced with propaganda, mind games and outright threats into paying – until they have no assets left to hand over. But the big boys are above the law. They control the courts (which often rule without much regard for the actual law), just as they write history and newspaper coverage – and business school curricula – to serve their own interests.

The second important principle is how radically today’s post-capitalist order has inverted traditional ways of making money. Instead of making profits on new capital investment, the easiest path to quick riches in today’s global financial system is to foreclose at pennies on the dollar, and make a “capital gain” by flipping property onto world financial markets that are being inflated by central banks. While financial spokespersons promise that “there is no such thing as a free lunch,” today’s hit-and-run financial bubble, fraud and insider privatizations culminating in public-sector bailouts (“socializing the risk” while privatizing the profits and capital gains) – has become all about obtaining a free lunch.

Iceland’s zero-sum financial gamble

But it is a zero-sum gambling game, with losers on the other side of the table from the winners. One party’s gain is another’s loss – and indeed, this kind of game ends up shrinking the economy by diverting resources away from real investment in tangible capital formation. Unlike industrial capitalism, which employs labor and invests in capital equipment to turn raw materials into salable commodities, today’s post-industrial financialized system only offers the virtual (and temporary) wealth of asset bubbles. Its financial managers claim to be acting in the tradition of classical economists and share their concept of free markets, but in actuality they have been part of an intellectual fraud that depicts their system as something other than the financialized wealth extraction on the real economy of production and consumption that it is. Financialized wealth is extractive, not productive. That is because loans, stocks and bond securities are claims on wealth, not real wealth itself.

This is the context in which today’s financial war against Iceland is being waged. Homeowners are paying tribute, not in the form of taxes to an invading occupying force, but in interest to local sponsors of the debt pyramiding that has got Iceland into such deep trouble, and to the international creditors and enablers of this over-financialization of the economy. The nation’s public domain, its land and geothermal resources, its tourist industry and public assets are being eyed by foreign creditors as prey to be seized in the way that has occurred in many Third World countries. It is what ruined Turkey and Egypt in the late 19^th century and brought down other kingdoms for centuries before that. Yet many Icelanders are heading into this future voluntarily, as if it somehow is fair rather than an exercise in predatory finance led by nations that have shown no willingness (or ability) to pay their own international debts.

Nations know when they are being attacked militarily. Defense forces fight to prevent invaders from seizing their land and imposing tribute. No country would think of welcoming a foreign army to do what William the Conqueror did to England after 1066. He ordered his accountants to compile the Domesday Book within thirty years (it was ready by 1086), calculating the rental value of English land in order to tax it for the Crown.

That is how most of Europe’s kingdoms were created. The rent was paid to the companions of military warlords, and their heirs ruled as absentee Lords for nine centuries. They quickly moved to keep what started out as royal revenue for themselves, celebrating this as the victory for free-market “democracy” in the Magna Carta liberatum (1215) and subsequent Revolt of the Barons (1258-65). Today, these lords of the land and those who have bought their property have run up mortgage debt, paying creditors what formerly was paid first as taxes and then taken as rent.

What took centuries to achieve in feudal Europe is now being threatened in Iceland, compressed into the space of just a decade or so. And in many ways this financial situation doesn’t make sense – unless one looks through history to see how the same tragedy has happened again and again.

The United States, Britain and the International Monetary Fund (“the global investment community”) are couching their demands for draconian austerity policies in the language of capitalism. But what they actually are promoting is a financial system that threatens to end in debt peonage, not democratic capitalism. Across the globe, from the Baltics to Hungary in Europe, and indeed from Russia to China, riots and wildcat strikes recently have broken out to protest this post-capitalist financial dynamic. It already has destroyed the industrial capacity of debtor countries subjected to the cruel austerity programs imposed by the IMF as acting agent for the global financial class. This merely repeats what the British did in India. Industrial growth has been replaced with a financialized real estate bubble. The “final stage” of this dynamic is to foreclose and sell off the assets of debtors at giveaway prices. Talk about democracy from the financial elite is a public-relations cover story. Their “magic of compound interest” sales pitch threatens to destroy entire nations.

Fortunately, this need not happen in countries that do not impose debt leveraging on themselves, but only in countries that let the public utility of money and credit creation be privatized in the hands of a cosmopolitan financial class. Iceland still has an alternative future before it, if voters recognize this in time. But to achieve the better future that most of its citizens want, it must understand the predatory debt trap into which it has fallen – or more accurately, been pushed by believing in the same illegitimate financial doctrine that has ruined Russia and other post-Soviet economies, as well as Third World countries before them under decades of IMF “austerity plans” designed to stifle domestic growth (and competition) and economic stability to pay foreign creditors. History provides tragic examples – the aftermath of World War I, and England itself in the centuries of its seemingly perpetual wars with France.

Industrial economies reverting to “tollbooth economies”

The world is plunging “back to the future,” to an epoch of neo-feudalism and debt peonage. It is a travesty of the promise of industrial capitalism as it seemed to be evolving on the eve of the 20^th century and the Progressive Era of social democracy. What was not recognized was the financial time bomb implanted in the DNA of Europe as it evolved out of the Middle Ages.

As European feudalism gave way to the formation of nation-states, most kingdoms became dependent on foreign loans to fight their wars – starting with the Crusades, whose looting of Byzantium provided an enormous influx of gold and silver. This is what broke down Church bans on usury. Once governments paid interest to elite Church orders such as the Templars and Hospitallers, it became permissible for banks to join in lending at interest – to kings, the nobility and the merchant classes as major customers.

The birth of international post-medieval banking proved disastrous for many family banks that foundered on what turned out to be bad loans to the leading powers of early Europe, from Spain to France and England. The historian Richard Ehrenberg notes that Spanish bankruptcies “occurred at intervals of about twenty years – 1557, 1575, 1596, 1607, 1627, 1647,” often being rationalized by pious allusions to Church prohibitions against usury. England declared bankruptcy under Edward III in 1339, and Charles II shut down the Exchequer in 1672 and suspended payment on its floating debt. Wiping out debts was the only way to retain basic economic and political relations and national independence. In view of this long experience, England’s advice to Iceland today is in the character of “Do as we say, not as we ourselves have done and are doing.”

Central banks were formed to advance credit to governments, and commercial banks to help finance the Industrial Revolution’s expanding trade and related infrastructure spending, mining and shipping, capped by infrastructure monopolies such as canals, railroads and ports, and later by fuel and power. The medieval epoch’s “primitive accumulation” – the extraction of revenue by military seizure – was replaced by the more peaceful and seemingly civilized practice of creditors appropriating the economic surplus by making interest-bearing loans, and by foreclosing on property when the interest charges could not be paid.

In recent years financial managers have persuaded many countries to sell off public enterprises like their water or energy supplies, mainly to raise the money to pay debts or to cut taxes on the highest wealth brackets. This sale of the “commons” by naïve, myopic leaders (and the “useful idiots” promoted by financial lobbyists to be their economic advisors) turns debtor countries into “tollbooth economies” in which basic services become a vehicle to extract greater and greater portions of national income and wealth for the benefit of the few. This is the antithesis of “free markets” as classical economists understood the term. They are markets designed and controlled by the financial sector to appropriate for itself the surplus produced by labor and tangible capital investment.

To promote this siphoning off of surplus income, the rich have funded extensive disinformation (propaganda) campaigns around the world. Their tactic is to use familiar and revered ideological terms such as “free markets,” “economic democracy” and “fairness” to win the hearts and minds of the population while actually imposing a set of policies in stark contrast to Enlightenment ideology, classical political economy, Progressive Era reform and 20^th century social democracy – the ideals of freedom-loving peoples everywhere. Financial lobbyists have spent billions of dollars spent on public-relations think tanks to achieve this ideological con job. They have endowed business schools and gained control of government agencies to promote their creditor-oriented point of view, headed by central banks to serve as the ideological wedge for today’s anti-democratic forces. This is the ideology that has pushed much of the Third World into poverty since the 1960s, as well as today’s tragically debt-ridden post-Soviet economies.

Financial warfare

Finance seems at first sight to be quite different from outright warfare. Everyone knows well enough that invading armies do not come on friendly terms. Foreign navies and troops are not welcomed, even if they promise to help build up the economy by constructing new roads and bridges (the better for their tanks and troops to travel on), hydropower and geothermal stations to export electricity (keeping the earnings for themselves), hotels and spas for themselves and foreigners to enjoy (and keep the rental incomes and site values), and create detailed statistical analyses (such as the Domesday Book alluded to above) to manage the economy in their favor.

Today this financial strategy has become multilateral. The IMF acts as enforcer for global creditors to appropriate the income of real estate, national infrastructure and industry as a financial boondoggle. What is remarkable is that countries throughout the world are losing their economic and fiscal independence peacefully – at least it is peaceful when target countries do not fight back. (Chile, Cuba and Iran are object lessons for the punitive economic sanctions imposed on countries that do not accept today’s predatory economic ethic.) Financial conquest is thus more covert than military warfare. It relies more on the educational and psychological dimension, and is most successful when the victim does not even realize it is being attacked.

But the effects are as devastating on human life as what Russia suffered at the hands of Western “reformers” in the 1990s. The financial austerity imposed by creditor-run regimes shortens life spans, reduces birth rates, and increases labor flight, suicide rates, disease, alcoholism and drug abuse. Just as war kills an economy’s males of fighting age (25-35), financial austerity drives them to emigrate to find work. This is why U.S. investor Warren Buffett has called collateralized debt obligations (CDOs), credit default swaps and similar debt-leveraging instruments “weapons of mass financial destruction.”

Consider the role of banking in this neo-feudal order. Banks do not create credit to finance manufacturing – that is done mainly out of retained earnings and equity. Banks create credit primarily to lend against collateral already in place – loans that simply extract money from the economy. This is an inherently destructive act, one that is anti-capitalist in the sense that it undercuts industrial growth in favor of interest extraction and short-term speculative gains.

The trick is to get this policy welcomed as if it were progress, as “post-industrial” rather than a lapse backward. Only today is it becoming apparent that the collateral-based lending of banks “creates wealth” mainly by inflating asset-price bubbles, especially in real estate. Bankers calculate how much debt a given flow of residential or commercial real estate income can support, and create enough credit to make a loan large enough to absorb this surplus revenue. Bankers do the same with industry by lending corporate raiders enough money in take-over “junk” bonds to turn profits into a flow of interest payments for themselves, and with capital gains for the raiders. Central banks fuel this process by swamping economies with easy credit (that is, debt) that keeps the financial sector fat while impoverishing the increasingly indebted nation.

Finance thus is the historical antithesis of property, sanctifying its own right to expropriate indebted property owners. Originally denounced by Christianity, Judaism and Islam, interest-bearing debt has sanctified itself as the predominant form of wealth. This is not what the classical economists and democratic political reformers expected to see. They explained how to avoid this economic dystopia by appropriate government tax policy and regulation to minimize the economic role and political power of post-feudal bankers and rentiers. (Rentiers are people who live off interest and rents, that is, off absentee incomes paid on a regular basis. A rente was a French government bond paying interest at regular intervals; the idea was extended to landlords.)

How banks and the financial sector gained dominant power

This supremacy of the banks and the financial sector took thousands of years to achieve. It was not easy to overthrow traditional social values and to impoverish so many economies by subordinating customary property relations with legal priority for creditors. Iceland only recently has come under this kind of financial attack by creditors operating globally. Bankers managed to convince ambitious fortune-seekers that the way to wealth and economic growth lay in debt leveraging, not in staying free of debt. Selling debt as their product, banks and speculators at the world’s financial core needed to prepare for what they must have known would lead to economic collapse and destroyed economies throughout history. They prepared the path to ruin by ideological engineering aimed at shaping how populations think about history, so as to accept debt pyramiding as a good economic strategy.

As an example of their warped thinking, consider an attractively priced home. Would you rather own 100% of a home free of all debt with a market value of 100,000 euros if free of debt – or, would you rather own 60% of the same home at an inflated market price valued at 250,000 euros? In the second scenario you would have 50,000 euros of “surplus wealth” (60% x 250,000 = 150,000 euros, compared to 100,000 in the first example). People across the globe have been convinced that the second scenario represents “wealth creation.” What is overlooked is that the higher-priced home carries interest charges on its higher market price. This charge would amount to 6,000 euros a year, or 500 euros a month, at 6% interest. The same property is worth more, but includes a much larger debt overhead – income for the financial sector.

In Iceland – but nowhere else – home mortgages have a uniquely bad twist. Creditors have managed to protect the weight of their claims on debtors by indexing mortgage loans to the nation’s consumer price inflation (CPI) rate. Each month the debt principal is increased by the CPI increase – and so is the interest charge. During 2008 that index rose by 14.2%, so a 100,000-euro mortgage at the start of 2008 would have grown to 114,230 euros by yearend. These monthly adjustments also would added an entire percentage point onto the interest payment – an extra 100 euros to be paid to creditors monthly, in addition to the growing principal to be amortized. Talk about making money without effort …!

Such heavy debt charges would shrink any economy, and that is what is happening in Iceland. Prices for real estate declined by an estimated 21 percent for housing in 2008. So in the above example, the market price of the house worth 100,000 euros at the beginning of the year would have been worth only 79,000 at yearend, while the mortgage would have grown by 14% to 114,230. This would have plunged the homeowner 35,000 euros into negative equity – a remarkable 35% change.

In every other country, investors lose out when prices decline for real estate, stocks and bonds, while creditors find the purchasing power of their loans eroded by inflation. That is how most countries have “inflated their way out of debt” for many centuries. But Iceland’s creditors have created a system in which their position actually is improved as the rest of the economy suffers inflationary price erosion. Their claims rise in proportion to the rate at which consumer-price inflation eats away at wages and business profits. Where is the sense in this?

What makes this so ironic is that the purpose of calculating the consumer-price index in all countries has been to support consumer income. It was to protect wage earners and retirees against inflation eating away at their ability to maintain their standard of living. That is why in the United States, Social Security retirees receive an annual cost-of-living adjustment based on the CPI. But Iceland inverts this political aim, protecting the claims of creditors against debtors (and hence against most wage-earners). The creditor’s objective is to maximize the power of debt over living labor. That is the literal meaning of “mortgage:” a “dead hand” of the past over the present, of past wealth and credit over the living. For Iceland the debts run up during the “wealth creation” phase of the financial bubble are to be left in place and even grow at an accelerating rate reflecting the pace of currency depreciation and hence import prices and consumer prices generally. Debtors lose out as prices plunge for the homes they own, while creditors maintain their economic grip intact and even strengthen their hand by increasing their take.

Turning economic power into political power

Creditors in most countries have been able to turn their economic power into political power with the aim of shifting the tax burden off themselves and onto labor and industry. The final coup de grace occurs when they get the government to bail them out from their losses on bad loans. In the United States, Congress has tripled the national debt in less than a year to bail out creditors with little thought of helping debtors, or even of prosecuting the massive financial fraud involved in its subprime real estate bubble and the sale of junk mortgages to gullible foreign buyers.

Iceland’s citizens will own a smaller and smaller proportion of their homes as its banks become the main claimants on the nation’s property value. By subjecting Iceland to this unique kind of financial squeeze, Icelandic policy stands in diametrical contrast to that of the United States. The U.S. policy is to stabilize its economy and avoid depression by writing down debts to bring them in line with today’s lower market prices and, more specifically, to bring carrying charges on mortgage debt within the ability of homeowners to pay no more than 32% of their income. Other countries also are writing down their debts to bring them in line with the ability to pay. But Iceland is subjecting its own homeowners and consumers into debt deflation and plunging them into Negative Equity status – by law!

The only way its banks can succeed in this ploy is to keep Iceland’s voters unaware of what is happening in the rest of the world – and indeed, to block the government from drawing up a balance sheet of the nation’s debts, a roster of whom these debts are owed to, and a calculation of the economy’s ability to pay.

Iceland’s present policy will lower disposable income for homeowners and other debtors – the great majority of its citizens – while wealth gushes to the top of the economic pyramid, to those who are creating as much credit as they can find borrowers for. The result is not what former Federal Reserve chairman Alan Greenspan and President George W. Bush claimed to be creating in America – an “ownership” society. It really is a “loanship” society, an economy of ersatz assets in which debt pyramiding – owning less and less of a home or other asset – seemed to be a strategy for growing richer instead of the debt trap it is. Has Iceland fallen into a similar semantic trap?

Pensions and retirement

As in the United States, Iceland has convinced labor to “prefund” its retirement. The idea is to save up in advance, so as to provide for retirement in a purely financial way. Of course, the most important way to support retirees is to see that they can afford the basic goods and services needed to live. To the extent that “financializing” an economy ends up eroding the “real” economy, pension funding – and government Social Security funds (regressive taxes that enable the Treasury to cut taxes for the higher wealth brackets) – tends to shrink the economy rather than provide for the expansion in output needed to support an aging population. As matters stand, pension savings are mobilized to increase the volume of interest-extracting debt and fuel financial bubbles (as in America’s “pension-fund capitalism” that pushed up stock markets in the past). Pension savings works against employment most visibly when they are lent to corporate raiders who pay off their bondholders by downsizing the work force and squeezing more “productivity” out of the remaining employees. Economic “growth” under such circumstances takes the form of a financial and property-sector overhead, not growth or stability in living standards or the capacity to produce.

Allowing economies to be crippled with interest payments was unthinkable until recently. To achieve so radical a break in the public’s idea of prosperity and self-reliance, it has been necessary for creditors to wipe out knowledge of how legal systems have been amended to put creditor interests above those of debtors over the past eight centuries – and how the leading classical economists and Enlightenment cultural and religious leaders sought to subordinate creditor interests to those of growth and prosperity for the economy at large. But the new banking class has been clever enough to hire the best propagandists money can buy while remaining blind to the havoc they are wreaking with people’s lives.

The debt game

Like many people, Icelanders tend to think of debt in personal terms, as if creditors are neighbors much like themselves. The normal thing to do when problems arise would be to sit down and reach a common agreement. But Iceland’s creditors are impersonal billion-dollar financial conglomerates, and creditor-debtor relations under such conditions are inherently adversarial, as anyone who has had a recent disagreement with a bank can attest. Whatever creditors can gain in today’s highly politicized, legalistic and ideological tug-of-war will be the debtor’s loss. And the magnitude of Iceland’s prospective loss threatens to plunge its economy into depression for generations, turning it into a Third World oligarchy, or worse, a dictatorship. The price of paying its debts thus threatens to be loss of its national identity and a loss of its future.

The trick is to fool debtors into thinking that “free markets” means paying one’s debts. Creditors can succeed in letting debt leveraging and “the magic of compound interest” empty out economies only by diverting attention from what Adam Smith and other classical economists warned against. For them, a free market was one free of debt – especially foreign debt. In The Wealth of Nations (especially Book V, chapter 3), Smith warned against creditors becoming “free” enough to disable the ability of governments to protect citizens from creditors – especially the Dutch, who were the major investors in British monopolies created to be sold to pay for that nation’s seemingly eternal wars with France. The problem was that creditors sought to extract the wealth of nations for themselves, not to create wealth. Their greed was destructive to society as a whole, because it was easier to simply strip assets than to create real capital.

That is the problem with creditors historically. They tend to care only about how to extract as much as they can, as quickly as possible. “A creditor of the public, considered merely as such,” wrote Smith, “has no interest in the good condition of any particular portion of land, or in the good management of any particular portion of capital stock. As a creditor of the public he has no knowledge of any such particular portion. He has no inspection of it. He can have no care about it. Its ruin may in some cases be unknown to him, and cannot directly affect him.” The problem obviously is worst with absentee creditors.

Smith concluded: “When national debts have once been accumulated to a certain degree, there is scarce, I believe, a single instance of their having been fairly and completely paid. The liberation of the public revenue, if it has ever been brought about is by bankruptcy; sometimes by an avowed one, but always by a real one, though frequently by a pretended payment.”

Adam Smith’s portrait is engraved on England’s £20-pound note, and Andrew Jackson on the US $20 bill. The irony is that Smith denounced public debts and urged wars to be financed on a pay-as-you-go basis so that people would feel their burden – and stay out of debt. As for Andrew Jackson, he closed down the Second Bank of the United States, accusing bankers of ruining the nation and seeking to destroy democracy. Bankers and finance therefore leave something important out of the account when it comes to the views of their own patron saints of democratic free markets.

As noted above, creditors for many centuries now have suffered bankruptcies when foreign countries default. That is the norm, not the exception. Yet today’s popular media greet every new default as “unanticipated” and “surprising,” as if it were not the bankers’ fault that they failed to understand the market’s inability to pay. Dumbed-down economics textbooks chime in with their inbred ignorance voiced by the financial sector’s proverbial “useful idiots” prattling about “equilibrium” and “automatic stabilizers.” These un-learned academics are useful to the bankers because of the passion with which they proclaim that all debts should and can be paid by suitable “adjustments” (including what turns out to be economic and demographic collapse). The question being asked with a straight face is: If it is the fault of victims rather than the bankers, then is it not proper for governments to bail out the banks?

The tacit assumption is not that bankers’ exorbitant greed is achieved at the expense of the economy at large, but that the financial sector’s prosperity is a precondition for the economy to grow. The bankers try to cap matters by trotting out poor retirees (like the widows and orphans of old – presumably those living on “fixed incomes” in the form of trust funds) whose meager savings should be supported. Doing so just happens to save the financial oligarchy of billionaires at the top of the economic pyramid, but not the proverbial victims.

The use of human shields such as union members concerned about the investments of their pension funds to protect the wealth of the kleptocrats is likewise shameless. Wall Street sages in the United States, for example, shed crocodile tears over the fate of the working people suffering from the stock market collapse, knowing full well that financial assets are heavily concentrated at the top of the economic pyramid, with workers having, only a meager share of those stocks and bonds. Ignored is the fact that the government could bail out failing pension funds (like Social Security) directly at just a small fraction of the cost of propping up the assets of the affluent.

Likewise, the volume of government bailout money for the financial sector ostensibly to deal with the subprime mortgage crisis – about $13 trillion during 2008-09 – clashes with the fact that the total value of mortgage debt owed by all households in the entire United States is only $11 trillion as of yearend 2008! The bailout funds ended up being used mainly to buy other banks to create even larger financial conglomerates “too big to fail,” to pay executives whose greed for short-term gains and bonuses caused the financial meltdown, and to pay dividends to stockholders to support their stock price and hence the value of stock options that financial managers gave themselves. The closest parallel to this scandal is the “watered stock” practices of Wall Street’s railroad barons and other financial manipulators in the late 19^th-century Gilded Age.

There was a time when banks hesitated to make loans irresponsibly, that is, beyond the ability of debtors – and entire national economies – to generate a surplus to pay their creditors. My job as balance-of-payments economist for the Chase Manhattan Bank in the 1960s was to calculate how much export earnings and other foreign exchange the major Latin American countries could generate. Their balance-of-payments surplus represented how much they could afford to borrow. The aim of New York banks was to lend Third World countries money to absorb their entire economic surplus. From the bankers’ point of view, that was what a national surplus was for – not to sustain higher living standards or invest in becoming economically self-sufficient, but simply to pay creditors. And “wealth” was defined as the capitalized value of the entire economic surplus they could generate – discounted at the going rate of interest, as if it all could be paid as debt service, so that the entire surplus would be paid to carry the debt.

This certainly is not a model of human progress. But it was that decade’s version of “wealth creation,” and it is the concept of “wealth creation” in terms of the market value of debt-financed asset prices that Alan Greenspan would foist on the United States in the 1990s to convince it that an asset bubble was the path to postindustrial wealth, not the road to debt serfdom.

So Adam Smith was right. Today, creditors and bondholders care about foreign economies only to the extent that they can charge interest that will absorb their entire economic surplus. Until recently, creditors thought that lending more than can be repaid would be “irresponsible.” Not any more.

Political checks and balances on the economy

The best path for nations is to put their own economic growth before the interests of creditors. For many generations this ethic supported a set of political checks and balances that kept the growth of international debt in terms considered to be tolerable – much too heavy by the free-market standards of Smith and John Stuart Mill, but not so high as to prompt widespread defaults and debt repudiation.

This ethic has changed in recent years. Countries have accepted creditor propaganda that debts are a “point of honor,” much as the poor believe that paying their debts – even when they are in negative equity – is the “honest thing to do.” Obviously this ethic is not self-applied to the world’s largest financial institutions or real estate speculators. But Iceland accepted it in what is a characteristic of small, closely-knit communities where the word of neighbors is their bond. The root of Iceland’s ethic is mutual aid and prosperity for all. It is a fine, highly socialized attitude, and therefore tragic that it has helped lead the nation to fall prone to the snake oil of debt peonage.

Political leaders who fail to recognize the fact that checks and balances are a proper function of government are liable to sacrifice their nation’s hope for economic growth and rising living standards in a vain attempt to pay creditors. Such attempts must be in vain, because “the magic of compound interest” is a cruel myth: In reality every rate of interest implies a doubling time, and no economy’s “real” growth ever has been able to grow exponentially at a fast enough rate to pay the debts that keep accruing interest.

In today’s deregulated environment where “the sky’s the limit,” these accruals have been recycled in yet new loans. These then are packaged and resold, loading the economy down with more and more debt that so far has been almost impossible to track. And to cap matters, financial speculators then place trillions of dollars of bets on whether the debts can be paid or not, and how much their market prices are likely to change. What was supposed to be a financial system designed to fund new capital investment to produce more and raise living standards has turned into a casino economy – where gamblers are staked by the bankers to play the debt game, with the government standing by to make the winners “whole” in cases where the debtors have lost too much of their play-money to pay up.

Debts that can’t be paid, won’t be

Every economist who has looked at the mathematics of compound interest has pointed out that in the end, debts cannot be paid. Every rate of interest can be viewed in terms of the time that it takes for a debt to double. At 5%, a debt doubles in 14½ years; at 7 percent, in 10 years; at 10 percent, in 7 years. As early as 2000 BC in Babylonia, scribal accountants were trained to calculate how loans principal doubled in five years at the then-current equivalent of 20% annually (1/60^th per month for 60 months). “How long does it take a debt to multiply 64 times?” a student exercise asked. The answer is, 30 years – 6 doubling times.

No economy ever has been able to keep on doubling on a steady basis. Debts grow by purely mathematical principles, but “real” economies taper off in S-curves. This too was known in Babylonia, whose economic models calculated the growth of herds, which normally taper off. A major reason why national economic growth slows in today’s economies is that more and more income must be paid to carry the debt burden that mounts up. By leaving less revenue available for direct investment in capital formation and to fuel rising living standards, interest payments end up plunging economies into recession. For the past century or so, it usually has taken 18 years for the typical real estate cycle to run its course.

Nations that have not paid their debts

Let us draw up a roster of nations that have annulled their debts – or run them up with no intention of paying. The list starts with the world’s largest debtor, the United States. Its government owes $4 trillion to foreign central banks. A moment’s thought will show that there is no way it can pay, even if it wanted to do so. The United States is running a chronic trade deficit, on top of which is a deepening outflow of military spending. In addressing this chronic living beyond the nation’s international financial means, American diplomats are almost the only ones in the world who conduct international diplomacy the way that textbooks assume that all countries should do: They act purely and ruthlessly in their own national interest. This interest lies in getting the proverbial free lunch, by giving IOUs for other countries’ real resources and assets, with no intention or ability to pay.

U.S. officials already have suggested that this debt be wiped out. Their plan would convert it into “paper gold.” Foreign central banks would simply stamp their U.S. Treasury bonds “good only for payment among central banks and the International Monetary Fund.” No other nation would be allowed to wipe out its debts in this way. Only the debtor at the center would be able to continue issuing debt-money without foreign constraint.

To be sure, U.S. diplomats have freed countries from debt when they have a political reason to do so. The most famous modern example of an economy-wide debt cancellation is that of Germany in 1947. The Allies cancelled German personal and business debt, on the ground that most were owed to former Nazis. The only debts left on the books were current wage-debts that employers owed to their work force, and basic working balances for companies and families.

A generation earlier, in 1931, the Allies wiped out Germany’s reparations debt stemming from World War I, and negotiated a moratorium on their arms debts to the United States. The world’s leading governments realized that keeping these debts on the books would collapse the global economy. But by the time they reached this conclusion it already was too late. The combination of Inter-Ally arms debts owed to the United States and the reparations debts imposed by the Allies largely to pay America already was one of the major factors pushing the world into a depression.

The U.S. economy was collapsing under the weight of its domestic debt pyramiding. Other countries had used less debt leveraging, but all ended up writing off large swaths of real estate and business debts during the Depression Years. By the time the Second World War ended in 1945, most countries were free of debt. Prices reflected direct production costs, with minimum diversion of revenue to pay banks, absentee property owners and other rentiers.

In the postwar period the World Bank lent dollars for governments to build infrastructure – only to turn around a generation later and help loot what it had financed. After Mexico and other Latin American governments announced that they were insolvent in 1982, U.S. diplomats organized a debt write-down in the form of “Brady bonds.” By 1990, Argentina and Brazil had to pay 45% on new dollarized foreign debt, and Mexico paid 23%.

Having stuck Third World countries with debts beyond their ability to pay, the IMF and World Bank used their creditor leverage to force governments to impose draconian austerity plans that had the effect of preventing growth toward industrial and agricultural self-sufficiency, thereby also crushing prospects for competitiveness. The IMF and World Bank then demanded that debtor countries sell off their public infrastructure, land, subsoil rights and other assets to pay the debts that these institutions sponsored so irresponsibly. (If IMF loans were not simply irresponsible, then they knowingly crippled debtor-country economies.) It is an age-old story of conquest, now accomplished without conventional warfare.

Two thousand years ago Rome stripped Asia Minor and other provinces and colonies of money using military force. Its financial oligarchy then translated their economic power into political power, destroying democracy and bringing on centuries of Dark Ages. The historical lesson is that economies taken over by creditors are plunged into depression as predatory lending strips away the surplus, leaving nothing remaining for subsistence, let alone capital renewal. This prevents nations from paying their debts, leading to widespread foreclosure, an extreme polarization of property and wealth, and impoverishment of its people. The ensuing lack of prosperity ends up crippling the ability to sustain a military overhead, and such countries tend to be conquered, as the Goths overran Rome. Outsiders always were at the gates – but it was the hollowing out of Rome’s domestic economy that left it prone to conquest.

Most recently, creditor-sponsored dirigiste takeover of national economic and social institutions has turned Russia, the Baltic States and other post-Soviet economies into neoliberal kleptocracies, driving skilled labor abroad in tandem with capital flight. Latvia is being pushed back toward subsistence life on the land. Creditor mismanagement is the most important problem that any country today should strive to avert.

Creditors play the terrorism card

9/11 signaled the beginning of a new power grab in the United States and Britain. U.K. officials have used anti-terrorist legislation to seize Icelandic assets abroad. What makes this so ironic is that throughout history it has been creditors who have used violence against debtors, not the other way around. I know of only one exception, and it did not involve bloodshed: Jesus overthrew the tables of the moneychangers in Jerusalem’s temple. It is the only record of a violent act in his life.

Psychologists have explained the creditor proclivity for violence by the tendency for rentiers to fight for unearned income – inheritance, or other “free wealth” that they have obtained without effort of their own. People who work for a living and are able to support themselves believe that they can survive, and so there is less of the kind of panic that creditors and other free lunchers feel at the thought that their extractive revenue may end. They fight passionately against the prospect of having to live on what they produce or earn by their own merits. So the last thing that rentiers really want is a free market. In a shameless irony, they tend to accuse populations of being terrorists if they seek to defend themselves against predatory creditors and land-grabbers!

Describing creditor violence, Plutarch describes how Sparta’s king Agis IV and his successor Cleomenes III sought to cancel the debts late in the 3^rd century BC. The city-state’s creditors murdered Agis, drove Cleomenes to suicide in exile, and killed Sparta’s next leader, Nabis – and then called in Rome to fight against pro-debtor democracies throughout Greece. Livy and other Roman historians describe how a century later, in 133 BC, the Roman Senate responded to the Gracchi Brothers attempt at debt and land reform by pushing the democratic Senators over the cliff to their death, inaugurating a century of bloody civil war.

In the 19^th century the United States sent gunboats to collect debts from Latin American countries, installing collectors at the local customs houses. England applied similar imperial force to ruin India, Egypt and Turkey, stripping their assets with debt and plunging their populations into poverty that persists to the present day. More recently, America’s hand in the violence that overthrew Chile’s elected president Salvador Allende has continued this policy. Having south to isolate the Soviet Union, Cuba and other countries that rejected creditor-oriented rules and rentier property interests, the United States then capped its Cold War victory over the Soviet Union by promoting a flat-tax regime that imposed the fiscal burden entirely on labor and industry, not on finance and real estate. Instead of being democratized, the post-Communist countries were steered directly into oligarchic kleptocracies that ran up rising debts to the West.

This is just the opposite of the free markets that were promised them back in 1990-91. Instead of economic growth, the “real” economy of production and consumption shrunk, even as foreign financial inflows inflated property prices for housing and office space, fuel and public utilities. Real estate and utility services hitherto provided freely or at subsidy to the economy at large were turned into a predatory vehicle for foreigners to extract income, putting the domestic population on rations, much as what occurs under military occupation. Yet the public media, academic centers and parliaments have persuaded populations that this is part of a natural order, even the product of how a free-market is supposed to operate, rather than a retrogression back to quasi-feudal institutions. The simplistic idea is that making money is itself “capitalist” ipso facto, regardless of whether industrial capital is being created or dismantled and stripped.

How hard times affect people

Public health reports throughout the world document how lifespans shorten as economic inequality and poverty increase. The moral is that “debt kills,” by impoverishing and destroying populations. Those who try to defend themselves are branded as terrorists by their financial predators. Malthus’s population doctrine, after all, was composed to rationalize the free lunch of his landlord class, and World Bank policies to reduce the populations of indebted Third World countries likewise was the natural complement to the financial asset stripping it endorsed. Fewer people to feed, clothe and house in a situation where investors seek mainly the public enterprises for whose construction governments have already run into foreign debt, plus land and resources supplied by nature rather than by human labor.

Nowhere is the violence of creditors more pronounced than in their destruction of education, especially economic studies and knowledge of history. The first act of the Chicago Boys (University of Chicago monetarists, headed by Nobel Prize winner Milton Friedman) in Pinochet’s Chile after the 1974 military coup was to close down every economics and social science department in the nation, except for the monetarist stronghold at the Catholic University where they held sway. The idea was to strip academia of any alternative point of view. Matters are not much different in other countries. At a post-Keynesian economics conference in Berlin on “financialization” last November, I heard many complaints that alternative views to Chicago School orthodoxy were unable to get a hearing in the leading European academic journals. And just this March at the Eastern Economic Association’s annual meeting in New York City, I heard similar complaints that alternative economic ideas were excluded from the major refereed journals in which aspiring academics must gain entry in order to be promoted to tenure track jobs at most U.S. universities. An intellectual Iron Curtain has been lowered by dysfunctional “free market” orthodoxy. Evidently a free market in ideas is anathema to financial free marketers. With such strong intellectual control, of course, overt violence is unnecessary.

Such intellectual intolerance is in the DNA of the creditor mentality because it cannot withstand awareness and understanding of its destructive effects. The “miracle of compound interest” is not achievable in practice beyond the short run. To pretend that it may form the basis for a sustainable model of wealth creation does violence to rationality and economic logic. This is why the economic theory that creditors prefer – and subsidize – is learned ignorance propagated by useful idiots. Its role is to distract attention from society’s most important economic dynamics, those of finance and property polarization via debt, evidently on the premise that what is not seen or analyzed will not be regulated or taxed. One is reminded of Baudelaire’s quip: “The devil wins at the point where he convinces people that he does not exist.” A “free market” for rentiers thus is one “free” of alternative ideas.

That is the political function of mainstream economic theory today. And to cap matters, the creditor-oriented worldview does similar violence to the teachings of world’s major religions.

Christian endorsement of debt cancellation and Clean Slates

From at least as early as 2400 BC it was normal for Sumerian and Babylonian rulers to annul the population’s personal and agrarian “barley” debts upon taking the throne for their first full year of rule. In addition to annulling these debts, Mesopotamian Clean Slates freed bondservants and restored self-support land to former owners who had forfeited their crop rights to foreclosing creditors. The Babylonian word for these Clean Slates was andurarum, and Jewish law adopted them with the cognate Hebrew word deror. But by the first millennium BC, kings had come to represent local oligarchies, so Mosaic Law took Clean Slates out of the hands of rulers and placed them at the center of Judaic religion in the Jubilee Year of Leviticus 25. Like Babylonian law, it cancelled personal debts, freed bondservants and restored land tenure to its “original” holders.

Debt cancellation is at the heart of the laws of Exodus, Leviticus and Deuteronomy calling for debts to be cancelled periodically, and to liberate indebted bondservants. Ezra and Nehemiah describe how they returned from Babylon to restore order by canceling the debts – and re‑discovering the Book of Deuteronomy. But creditor oligarchies were on the rise throughout the Mediterranean region in the centuries that followed. By the time of Jesus the mainstream of Jewish leadership had mounted an attack on the Jubilee Year, endorsing Rabbi Hillel’s prosbul, a legal clause by which creditors forced debtors to sign away their rights to debt annulment at the Jubilee. In his first sermon, Jesus sought to retain the Jubilee year by unrolling the scroll of Isaiah and announcing that he had come to proclaim the Year of Our Lord.

The Jewish oligarchy appealed to Rome to crucify Jesus. As he and his followers gained adherents by advocating debt forgiveness, Rome used violence against them. But Christianity grew by creating communities of mutual aid. Upon achieving political power, the new religion’s most important economic achievement was to outlaw debt bondage throughout Western civilization. However, the idea of a Clean Slate had to be postponed until the Day of Judgment at the end of history.

As creditors drove the post-Roman economy into a Dark Age, Christians banned the charging of interest altogether, even on commercial “silver” loans. Ancient languages had no words to distinguish “interest” from “usury.” This distinction was drawn only in the 13^th century, as Church theologians applied the term “interest” to commercial loans in which “silent backers” advanced money to entrepreneurs. It was permissible for bankers to charge a foreign-exchange agio premium (that typically included an interest charge in practice), as long as the charge could be justified by their own labor and related outlays to provide money-transfer and loans. However, mortgages loans and personal loans were deemed usurious. The 13^th-century Churchmen treated usury as theft and hence in violation of the Eighth Commandment: “Thou shalt not steal.”

From antiquity through medieval European times, most theft took the form of usury, getting debtors to forfeit collateral they had pledged in exchange for emergency funds. Thomas Aquinas and Martin Luther in 1516 warned that this practice destroyed cities much as a worm destroys an apple from within its core. John Calvin in 1565, the last year of his life, likewise defined usury and fraud as theft on a plane with highwaymen and robbers. This ethic produced a line of development extending down to only a generation ago as Western law became more humane toward debtors. Debtors unable to pay are no longer turned into bondservants to their creditors, and debtors’ prisons have been closed down. Bankruptcy laws permit individuals (and corporations) to annul debts when they cannot pay.

But this eight-century-long historical trend is now being confronted with an anti-Enlightenment threatening to reverse it. In the United States, credit card companies have given enormous sums of campaign contributions to politicians willing to rewrite the bankruptcy laws to make home mortgage debts permanent and beyond the power of judges to write down. Wealthy individuals with more than one home can have their own mortgage debts on these properties written down, but homeowners with just a single residence are confronted with a lifetime of debt peonage. This is just the reverse of ancient law that protected the self-support land of citizens, but not their townhouses and other surplus property.

Credit without oligarchy

Most societies throughout history have sought to provide credit legally in ways that do not permit creditor oligarchies to emerge. Today’s creditor advocates are at war with the spirit of this idea. And in taking this position, they reject the thrust of the Enlightenment’s anti-usury laws, classical political economy’s distinction between productive and sterile investment, the St. Simonian attempt at financial reform, and the Progressive Era’s attempt to mobilize national credit to fund productive industrial investment rather than being extractive, benefiting only the few. The classical idea of economic freedom itself was formulated as the antithesis to feudal-epoch finance. And the ideal of freedom from predatory finance is what is being threatened today, as if society has forgotten how long and hard the reform struggle has been.

The fight to end debt bondage and debtors prisons took many centuries to achieve its humanitarian objective. Handel’s Messiah is a staple of the Christmas and Easter season celebrating the life and teachings of Jesus Christ. What has been forgotten is the context in which Handel arranged the first performance of this oratorio in Dublin, on April 13, 1742. It was a charity concert for the benefit “of the Prisoners in several Gaols, and for the Support of Mercer’s Hospital in Stephen Street, and of the Charitable Infirmary on the Inn’s Quay.” Enough money was raised to free a hundred and forty two prisoners. The oratorio’s text accordingly contained references to “breaking bonds asunder” and “casting away yokes,” recalling the early Christian belief that the Messiah’s reign would bring liberty (Hebrew deror or debt cancellation) and release (Greek aphesis) from debt bondage. The “redeemer” was literally the redeemer from debt.

This recalls the original, literal meaning of the Lord’s Prayer. It refers not only to forgiving sins and sinners in the abstract, but specifically to “forgive us our debts” – a translation distorted in much modern reading. “Sin” was the word for “debt” in all Indo-European languages: Schuld (the root of German sollen and English should), and devoir, the root of English debt. It meant obligation – referring in ancient practice to the obligation of an offender to make good payment to atone for his offense, as in European wergild tradition. The original debts were not paid to the rich, but by them, for manslaughter or physical wergild injury to their victims (who typically had to settle for payment rather than taking revenge). Today’s offenders disrupting social harmony are wealthy creditors, but society is paying money to them, not fining them. Seen from the ancient perspective, it is as if indebted society owes retribution to the rich. No wonder the spirit of modern religion has so thoroughly overturned that of its origins!

It therefore seems remarkable that in our own epoch – strained as it is by unprecedented and questionably created debt overhead that reduces not just individuals but entire nations to debt servitude – no major opposition has appeared on religious grounds. Churches have avoided the issue that was the cornerstone of so much of their earlier concern, and moved toward other concerns rather than remaining on the high ground of alleviating the debt burden.

Back to basics, and a call for transparent statistics

The classical economics of Adam Smith and John Stuart Mill, the Progressive Era reforms and Social Democracy are rooted in the moral philosophy of the 17^th- and 18^th-century Enlightenment. The labor theory of value can be traced from the 13^th-century Schoolmen via John Locke to Adam Smith and the Scottish Deists, via David Ricardo’s isolation of economic rent (what Mill called the “unearned increment” that landowners and others receive “in their sleep” rather than through their own labor) as an element of price in excess of cost-value. The distinction between intrinsic value and market price led to socialist and progressive theories of a just society free of economic privilege, free of prices in excess of socially necessary costs of production and of rentier income and wealth without effort.

The common thread in these ideas is that people deserve to receive the fruits of their labor. This means bringing prices in line with actual labor-costs of production. It also means that one’s wealth should be limited to only what one creates – not land and natural resources, or monopoly privileges to extract income via control of roads, the right to create money and other natural monopolies. The aim of social reform for many centuries has been to purge capitalism of its legacy of absentee rentier property ownership patterns and creditor-oriented laws inherited from medieval times. The way to do this is to treat banking like transportation and the broadcasting spectrum, as a public utility to form a just fiscal base, not something to be privatized so that individual rentiers can tax society at large for what rightly is a public utility.

Beyond creating a travesty of international law, rentier interests have turned seemingly empirical statistics into a fictitious set of accounts that understate actual returns to the finance, insurance and real estate (FIRE) sector and the magnitude and information on land and other wealth ownership and distribution. Recent U.S. news has seen a fight by Wall Street to count short-term trading gains in stocks, bonds and financial derivatives as “capital” gains taxed at only a fraction of wages and profits. The financial managers in charge of national statistics likewise describe economy’s largest asset category, real estate, in largely fictitious economic terms. U.S. Federal Reserve statistics on asset values meanwhile depict the rise in real estate prices not as higher land valuation – which the land-price maps of major cities show to be the cause of rising prices, fueled by an exponentially expanding pyramid of credit relative to a fairly fixed land area – but as “replacement cost” of buildings. The inflation of real estate prices is assigned to “capital,” not land. This enables real estate owners to avoid paying income tax by depreciating their property as if it is wearing out, not rising in value. Buyers can start writing off the price of an already written-off building as soon as they buy it, treating its “wearing out” as a tax credit – even though older buildings bring a premium over today’s cost-cutting construction practices. This write-off, of course, is not granted to homeowners, only to absentee owners.

In the sphere of financial wealth, banks have fought truth-in-lending regulations for years in order to conceal the real interest rate their customers are having to pay when all the fees and other charges are added on. They are fighting tooth-and-nail against “mark to market” accounting practices that would oblige them to let depositors and investors know how much their assets actually are worth – and hence, how much they have lost by irresponsible gambling. Whereas economic textbooks claim that a precondition of market efficiency is full knowledge of the market (otherwise, how can a market be deemed to be provide informed choice?), the financial sector always has fought tooth and nail against realizing this condition in practice.

Today the financial sector claims that the U.S. crisis was brought on not by bad investments by bank conglomerates and pension funds or misleadingly high credit ratings given to securities belatedly admitted to be junk, but by banks having to admit that the collateralized debt obligations (CDOs) and credit-default swaps they had been selling to global investments were in fact worthless from the outset. On March 12, 2009, the U.S. Congressional subcommittee in charge of financial reporting backed the bank lobbyists in “freeing” them from having to reveal their actual condition and (lack of) value of the securities they have been pawning off. As a New York Times reporter summed up the issue: “Next time you hear a banker denounce mark-to-market rules, ask if he runs his business that way. Will he offer you a mortgage loan based on what you think your home should be worth, which you can repay only if you make a lot more money than anyone will pay you? … maybe that is not such a good idea. The banks already tried that, with liars’ loans. Those loans did not work out so well.”[1]

This helps explain why every new press release of bad financial news is greeted with the adjectives “unexpected,” “surprising,” “unforeseeable,” “once-in-a-century” and kindred terms. The financial sector seeks to free itself from criticism rather than taking the blame for having plunged headlong over the debt cliff. It can succeed in this economic fiction in proportion to the degree to which the public can be blocked from understanding just what is going on and how the financial sector gains at the expense of the economy at large. Shaping popular perception becomes the name of the game, and statistics are depicted as “empirical” reality rather than the result of intensive lobbying to promote politicians willing to back a distorted economic roadmap.

The problem goes to the very foundation of economic theory. Any set of statistics reflects categories in economic theory, and in recent years the Chicago School has taken the lead in what is now a nationwide trend to exclude the history of economic thought from the academic curriculum. One can get all the way through a Ph.D. without having surveyed the evolution of classical economics from the Physiocrats through Adam Smith, John Stuart Mill and the Progressive Era reformers. The essence of social reform throughout the Enlightenment, and indeed extending all the way back to the Church Schoolmen is no longer taught – the distinctions between earned and unearned income and wealth, and productive and unproductive (or “sterile”) employment and investment. Post-classical thought insists that all income is productive in proportion to whatever it earns – including the collection of economic rent or extortion of monopoly super-profit, or financial charges for interest and credit card fees, and the exorbitant salaries and bonuses that financial managers pay themselves. All revenue – and therefore, all wealth – appears to be “earned.” By their definition. This denies the concept of “investment in zero-sum activities that merely transfer income into the unproductive sector’s pockets, in contrast to creating income.

As a guide to policy reform, classical economics aimed at creating an economic and fiscal system that would bring market prices in line with technologically necessary costs of production. All such costs ultimately are reducible to labor. The necessary complement to the labor theory of value (adjusted for different grades of labor, the cost of their education and the linkage between wage levels and productivity) was the analysis of economic rent – an institutional add-on reflecting property ownership patterns, financial charges and taxes, not inherent costs of production. The classical reform program was to minimize the cost of production and of living, making economies more competitive by purifying industrial capitalism and removing its remaining feudal legacies, above all the right of hereditary absentee owners (landlords) to siphon off a rental charge for access to land for sites supplied by nature and given value by local public spending (e.g., “location, location, and location,” as real estate agents explain matters to prospective buyers) – and the right of bankers to charge for creating credit that governments could freely create themselves.

Fighting against progressive reforms, banks and other financial institutions have sought to preserve their special privileges by law, minimizing taxes on themselves by shifting the burden onto labor and industry. What they have achieved by financializing economies is (1) to raise the cost of living and the cost of doing business; (2) to free their major customers – mortgage borrowers – from taxation so as to leave as much surplus as possible available to be paid as interest; (3) to collect revenue hitherto used to finance the public sector by capitalizing it into interest charges and to inflate the price of housing and other real estate and privatized monopolies; (4) to effectively shift taxes onto labor and industry, thereby raising prices and undermining the competitive power of financialized economies. This is a travesty of classical “free market” policy. It is a policy for predators that mainly burdens economies with high interest and fees while also making the tax burden more oppressive while they reap the benefits.

John Maynard Keynes believed that the proper task of governments was to prevent over-indebtedness from leading to economic depression. He concluded his General Theory (1936) with a call for “euthanasia of the rentier.” Hoping to make credit productive, not extractive, his followers have advocated making banking a public utility so as to steer debt creation to fund growth in the means of production, not economic overhead by inflating property bubbles. Radical as this may appear today, this was the aim of the 19^th century classical economists, and underlay the financial reforms that shaped the 20^th-century economic takeoff. Only quite recently has the global financial press rediscovered this logic in the wake of today’s bubble meltdown. In a recent Financial Times column, Martin Wolf pointed out that in view of the huge bailouts that banks are demanding from the government to make the industrial economy and labor force pay for their losses, “banks are not commercial operations; they are expensive wards of the state and must be treated as such.” He concludes: “The UK government has to make a decision. If it believes that costly bail-out must be piled upon ever more costly bail-out, then the banking system can never be treated as a commercial activity again: it is a regulated utility – end of story. If the government does want it to be a commercial activity, then defaults are necessary, as some now argue. Take your pick. But do not believe you can have both. The UK cannot afford it.”[2] Neither can Iceland or any other country.

Backed by global creditors, the IMF wants to keep its power

But the financial sector is fighting back. Its global lobbyist, the International Monetary Fund, has sought to consolidate financial control of economies irreversibly. Article VIII of its charter, drawn up in a period of reaction against the blocked currency practices and tariff protectionism of the 1930s, rules that once a country has removed controls on its “current account” transactions, it is not legal to re-impose any new controls. The current account is defined to include not only import and export trade in goods and services, but also interest on foreign debt and the remittance of profits on foreign-owned investment. In the 1930s, interest payments were conceptually integrated with credit and debts on capital account. But in the 1940s the IMF and other countries changed their balance-of-payments accounting formats away from this logic.

Ostensibly aimed at freeing trade, the IMF’s Article VIII in reality created “free capital movements,” that is, the ability of financial gangs to freely raid currencies such as occurred in the 1997 Asian crisis and similar speculations. Governments were not permitted to protect their currency and exchange rates by limiting such raids or erecting barriers to predatory credit and destructive debt (or from U.S.-subsidized agricultural exports, for that matter). The legal effect of the IMF’s ruling was to block governments from regulating their financial sector, despite its rentier role as a public utility. For Iceland, this means that the government cannot keep the nation’s international debt within the economy’s ability to carry. The most basic criterion for national sovereignty thus is ruled illegal!

In practice, nearly every country has simply added the interest accrual onto its national debt balance each year. Nominally, it “borrows the interest,” but the effect is more like an accrual than a true new loan. Over time these public debts grow at an exponential rate – far in excess of the “real” economy’s rate of growth, a recurring theme in today’s post-classical economies.

Lessons for Icelandic financial policy

The first thing that Iceland needs to do is to realize that it is under financial attack from outside as well as from within – by foreigners supported by a domestic banking class. To succeed, these creditors are trying to convince the population that all debt is productive, and that the economy benefits to the extent that its net worth rises (the price of assets in excess of debt). The fatal error is the assumption that prices will never go down, and if they do, debts should be left in place even when this causes negative equity. To their erroneous way of thinking, a price plunge (recession or depression) is an accident that happens once in a century, not the inevitable result of debts growing at compound interest without a concurrent increase in earning power to pay higher prices and interest.

This deceptive mythology is capped by a mind game being played with Icelandic voters. The game is to promote the myth that there is no alternative but to pay the debts that a few insiders have rung up, debts that accrue interest when they go unpaid. This myth can be dispelled by recognizing that the volume of debt payments being demanded is beyond the country’s capacity to pay. The financial strategy is to postpone awareness of this fact as long as is possible, so as to proceed with the foreclosure and voluntary pre-bankruptcy sell-off of national assets to pay creditors. The one question that creditors do not want to be asked is, “Just how do you propose that we should pay you?” Creditors hesitate to come right out and answer, “By shrinking your economy, by shifting your wealth and property into the hands of a small and shrinking financial oligarchy, and by pricing your labor and industry out of world markets as a result of the heavy financial charges built into your pricing system.” They prefer to act “surprised” when economic force majeur obliges economies to replace defined-benefit pension programs with “defined contribution” plans in which all that workers know is how much they pay into the plan, not what they will end up with.

Iceland as a model test case for economic justice

The realization of the impossibility of paying its debts while maintaining a fair society with a financially level playing field in which people live by what they produce (rather than a debt peonage society headed by creditors) will help Iceland confront reality sooner rather than later. Some form of Clean Slate moratorium should be inevitable. The extent cannot be known until an accounting of who owes what to whom is made. But as a sovereign nation, Iceland can apply whatever economic laws it wishes, as long as these do not discriminate specifically against foreigners. (That can be the result of a general law, as long as foreigners are subject to the same laws as domestic citizens.)

Global creditors will complain mightily, hoping to convince Iceland to let finance make itself an extra-legal sector, beyond the scope of national law to regulate – or to tax. The aim is to place financial dynamics beyond the ability of legal systems throughout the world to contain or otherwise control, so as to make debt collection autonomous from democratic regulation. To achieve this victory, financial interests seek to dismantle the power of governments to limit the ability of creditors to engage in predatory lending and foreclosure. Financial lobbyists accuse government power of being a “road to serfdom,” whereas in reality only governments can protect populations from creditor-imposed debt peonage.

As another tactic in today’s debt crisis, creditors are trying to rush matters. The United States provides an object lesson in the pitfalls of not giving the government enough time to reason things through so as trace how the losses came to be suffered. Treasury Secretary Paulson represented the interest of his own firm, Goldman Sachs, in ramming through an $800 billion “bailout” giveaway package to Wall Street’s leading investment bankers. The sum included $180 billion dispersed so far to A.I.G. to pay speculators in derivatives (including $12 billion to its largest counterparty, Paulson’s own firm,), and $45 billion for Citigroup to pay its counterparty gamblers on the winning side of casino-style bets.

95% of American voters opposed this giveaway. The Treasury Secretary made the usual glib promises that this package would be used largely for debt relief and mortgage renegotiation. It was all a lie -which Mr. Paulson clearly knew to be a lie, because the terse three-page draft law he sent to Congress demanded that no government or law enforcement agency could punish financial lying under his program. The bankers took the money and ran. They used the money to pay themselves enormous bonuses and dividends to stockholders in a vain effort to support the stock price – and to buy smaller banks so as to create yet more giant financial conglomerates “too big to fail,” that is, too big to fail without bringing the entire U.S. financial system crashing down.

Unfortunately, a rush to judgment will give money to bankers irrecoverably. They then will do like U.S. Federal Reserve Chairman Ben Bernanke has done, and wring their hands and offer crocodile tears of apology. Such talk is costly! American voters are now angrier than ever at the government for voting this giveaway.

On national television on March 15, Mr. Bernanke used a false analogy already popularized by President Obama. He asked what people should do if an irresponsible smoker let his bed catch fire so that the house burn down. Should the neighbor say, “it’s his fault, let the house burn”? This would threaten the whole neighborhood, Mr. Bernanke said. The implication, he said, was that economic recovery required a strong banking and financial system.

But banking houses are not in the same neighborhood where most people live. In effect the United States is taking over houses that have not burned down, throwing out their owners and occupants to turn over to the culprits who burned down their own house. To Mr. Bernanke the “solution” to the debt problem is to get the banks lending again. They are to lend enough money so that their clients can borrow the money to pay them the stipulated interest charges. The aim is a return to “normalcy,” defined as new exponential growth in the volume of debt – more of the bubble economics that has just crashed all around us!

Iceland can lead the way

This clearly is not something that Iceland can afford. In fact, the United States cannot afford it either, as much real estate already has sunk into negative equity so that banks are not going to be willing to lend in any event. Fortunately, Iceland’s situation is so extreme that it may be saved even from the thought of creating yet new debt. It can face the financial problem and start to write down the debt overhead, to bring it in line with the economy’s ability to pay or in many cases simply write it off altogether.

First, Iceland needs to take a census of the magnitude of debts owed at home and abroad, and of the institutions to which these debts are owed. Second, it needs to assess the economy’s ability to pay these debts. This was the principle on which the world’s creditor nations founded the Bank for International Settlements in 1931, to assess Germany’s capacity to pay. Reference must be made both to the magnitude of debt relative to current price trends for the collateral supposedly backing this debt, and to the economy’s ability to produce a domestic-currency and foreign-exchange surplus over and above basic needs, including capital replenishment to grow at historical rates over time.

By insisting on a fully transparent financial analysis of who owes how much to whom, Iceland can toss the ball back into the creditors’ court and ask the bankers to explain just how they propose that Iceland should pay – and what they anticipate will be the economy-wide effect of such payment. How much can Iceland afford to pay in the next few years without losing its democratic home ownership and property ownership patterns and without abandoning its social democratic public policies? How can Iceland pay its debts without bankrupting itself, abandoning its social democracy and polarizing its hitherto homogeneous population between a tiny creditor oligarchy and the rest of the population? The island is in danger of creating a new ruling class that will control its destiny for the next century. Again, Adam Smith warned that financial oligarchies act with concern only for how much they can extract, not what they can help produce. They are not good forward planners and do not act responsibly because it is easier for creditors to strip assets than to create new capital.

In taking this position Iceland will simply be following the moral philosophy laid down by every major religion and every body of ancient and modern law as a core principle: the idea that credit must be kept within the ability to pay. It is obvious enough that global lenders have extended credit far beyond Iceland’s ability to pay. For over two centuries the United States has an excellent tradition in how to deal with this problem. Already in the colonial period New York State enacted the Fraudulent Conveyance law, which has remained on the books ever since New York joined the new nation. The problem it faced was British creditors and speculators coming to upstate New York to cheat local farmers out of their rich, well-situated land. The ploy was to extend a loan to a needy farmer, and then call it in just before harvest-time when the debtor lacked the money to pay. Alternatively, the speculator might simply lend more than the farmer could afford to pay even under normal conditions. So New York blocked this predatory practice by passing a law saying that if a bank or other creditor made a loan without knowing just how the debtor was to repay it, the loan would be declared null and void. It would be wiped off the books.

This law received considerable attention in the 1980s when Drexel Burnham and its emulators began providing junk-bond credit to corporate raiders. Companies defended themselves by pointing out that the only way that these high-interest bonds could be paid was by breaking up the target company and downsizing its labor force. But most of all, the law has international relevance. Most U.S. bank consortia have a New York City lead bank negotiate with Third World governments and other foreign borrowers. So far, none of these debtors have sought to annul their loans on the ground that the only way they can pay is to sell off their public enterprises and other government assets. But the enabling legislation is there, and provides an excellent model for Iceland to emulate. By pursuing this policy Iceland would achieve the kind of economic freedom defined by the classical economists – a market free of technologically unnecessary overhead charges, headed by surplus extraction by a vested oligarchy.

For financial interests, by contrast, their idea free market is one that leaves them free to do the economic planning “free” from government regulation and democratic constraint on their extractive, predatory credit and foreclosure practices. Wherever they have gained sway they have shrunk economies. Since the 1960s their proxies at the IMF and World Bank have imposed austerity programs on Third World countries, extending foreign-currency loans whose effect has been to make these countries more dependent and driven them even deeper into debt. In the post-Soviet economies since 1991, financial strategists have focused on prying away public enterprise, selling it off or using it as collateral for loans. The result of “financializing” these economies has been to provide a free field for predatory vested interests in league with globalized domestic financial oligarchies. In sum, the neoliberal model victimizes debtors, preventing them from paying their debts. Instead of funding new capital formation, it strips economies of their assets and empties them out. Ultimately this drags down the creditor economies themselves, as occurred in ancient Rome, medieval Spain, and the United States and Britain in the Great Depression (not to mention what is unfolding today).

Iceland is facing a bold con job. Should it feel obliged to pay countries that have no intention of ever paying their own debts? To get paid, creditors must convince their prey to accept the falsehood that debts can and indeed should be paid. The lie is that they can be paid without dismantling social democracy, selling off the public domain and polarizing society between creditors and debtors.

The point of reference should be Iceland’s broad long-term picture – the economy’s survival and growth prospects for the future. Foreign-currency loans should be denominated in domestic currency at written-down (and de-indexed) interest rates, or repudiated outright. The guiding principle should be to annul debts taken out under terms that are destructive and extractive.

As for the nitty-gritty of negotiating a resolution to Iceland’s debt crisis, the nation needs to re-frame the terms of the debate by removing fictitious assumptions that have no basis in reality. The first trammel of the mind is the assumption that Iceland needs to negotiate in a way that wins the creditors’ approval in a compromise. It is not possible for any fair agreement to be reached in this way. Any negotiation between creditors and debtors is adversarial, and creditors have spent many decades refining demagogic public relations ploys to divert attention to abstractions about “fairness.” A typical ploy is to ask whether it is fair for some debtors to receive larger write-offs than others. Is it fair for the most highly indebted individuals to gain the most – more than people who were more responsible? The aim here is to inflame popular resentment that some debtors will get a bigger write-off than others (and some debtors are indeed as as guilty as the perpetrators who sold them on the idea that home prices only go up), so as to blame the poor and most highly indebted rather than reckless creditors.

The real issue is the health of the overall economy. The parties seeking the most are not the most indebted individuals, but the largest creditors. Their aim is to increase their dominion over the rest of society. Above all, their aim is to maximize the power of debt over labor. The worse the economy does, the stronger the creditor position will grow. This is a recipe for economic suicide that will lead to outright debt peonage as domestic depression intensifies. Creditors everywhere else in the world are writing down their claims for payment to reflect plunging property values. Iceland has an opportunity to make itself a model test case for economic justice. What better time to post the basic principle of what is to be saved – an unsupportable debt burden that must collapse in the end, or a society’s survival? Will the government defend its citizens from financial predators, or turn the economy over to them? That is the question.

NOTES

[1] Floyd Norris, “The Problem? Bankers Point to the Rules,” The New York Times, March 13, 2009.

[2] Martin Wolf, “Big risks for the insurer of last resort,” Financial Times, March 6, 2009.

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