TBR News Augustd 1, 2015

Aug 01 2015

The Voice of the White House

Washington, D.C. July 25, 2015: “We are waiting with baited breath for the next news eruption to occupy our boring life. Another lunatic shoots people in a movie theater, the police riddle a black five year old because the lollypop he pointed at one of the just might have been a machinegun, The State of Georgia sues a man for copyright violations because he dared to reprint their state constitution, and the Greeks have left the headlines and are engaged in interior-lihne mud throwing in advance of being booted out of the collapsing EU. The First World War breoke out in August so there is still hope for more excitement for news buffs. Donald Trump is driving most politicians crazy because his anti-immigrant speeches are being well-received from an American public tired of Kumbaya nonsense and rants about brotherood and the loving of neighbors. If Trump ever gets elected to the White House, there will be hell to pay in editorial rooms and other determiners of what the public ought to hear, or not hear. But since Trump’s attitudes do not impinge on the activities of the CIA, he is relatively safe from assassination.”


In Greek crisis, one big unhappy EU family

July 19, 2015

by Paul Taylor


BRUSSELS The latest paroxysm of Greece’s debt crisis has exposed growing rifts in the euro zone which, unless addressed soon, could lead to the break-up of European monetary union, the EU’s most ambitious project.

The most worrying sign for European leaders is that public opinion and domestic politics are pulling them increasingly in opposing directions – not just between Greece and Germany, the biggest debtor and the biggest creditor, but almost everywhere.

Germans, Finns, Dutch, Balts and Slovaks no longer want taxpayers’ money to go to bail out Greeks, while the French, Italians and Greeks feel the euro zone is all about austerity and punishment and lacks solidarity and economic stimulus.

With central and east European states growing more assertive and the Dutch and Finns facing mounting domestic constraints, a compromise between euro zone leaders Germany and France, increasingly hard to find over Greece, is no longer sufficient to settle the problems.

There are so many stakeholders with divergent views that crisis management is becoming ever more difficult. A far-reaching reform of the 19-nation currency area’s flawed structure seems a remote prospect.

After weeks of late-night emergency meetings of leaders and finance ministers, culminating in a tense all-night summit, the euro zone produced a fragile deal to keep Greece afloat by making it a virtual protectorate under intrusive supervision.

Few, if any, of the main protagonists think it will work.

Greek Prime Minister Alexis Tsipras said it was a bad deal that would make life worse for Greece but he had swallowed it because the alternative was worse. German Finance Minister Wolfgang Schaeuble said Athens would have done better to leave the euro zone – “temporarily” – to get a debt write-off.

Chancellor Angela Merkel, Europe’s dominant leader, made clear the main virtue of the deal was to avoid something worse.

“The alternative to this agreement would not be a ‘time-out’ from the euro … but rather predictable chaos,” she said.

A senior EU official involved in brokering the compromise, who spoke on condition of anonymity, said there was now a “20, maybe 30 percent chance of success”.

“When I look at the next two to three years, the next three months, I see only black clouds,” the official said. “All we succeeded in doing was to avoid a chaotic Grexit.”

Problems are likely to resurface in late August or September when it comes to concluding the detailed negotiations on a three-year bailout program. By then Greece’s economy may have gone further off the rails and Greeks may be heading for early elections.

The International Monetary Fund is due to make another analysis of Greek debt before a deal is concluded which may well show that only a “haircut”, or outright write-down of loans, can make it sustainable.

Schaeuble, who says a “haircut” is illegal in the euro zone, will be waiting with his Plan B for debt relief with Greece outside the currency area.

Even if the third Greek bailout in five years does not trip up at that stage, the chances of it being fully implemented and delivering an economic recovery look slim.

The Greek crisis has also widened divisions between euro and non-euro members, with Britain and the Czech Republic insisting on guarantees for their taxpayers’ money in exchange for using an EU-wide bailout fund for bridge finance.

If the Greek crisis were the euro zone’s only worry, it might be easier to isolate and resolve it, since financial markets have shown little sign of the contagion to other weak sovereigns’ bonds that threatened to tear it apart in 2012.

Greece has been such a distraction that leaders barely noted an important report authored by European Commission President Jean-Claude Juncker with the heads of four other EU institutions on how to make the monetary union work better.

That is arguably the biggest challenge facing the EU, yet there is little sign of willingness to contemplate pooling more fiscal sovereignty or sharing more common liabilities as the authors say is required.

The debt crisis that began in 2010 led to the creation of some new institutions to strengthen the currency area – a permanent bailout fund, stricter enforcement of fiscal rules, a single banking supervisor and a joint mechanism for winding down failed banks.

But German-led opposition to mutualising debt, French-led resistance to yielding more control over national budgets and the electoral rise of Eurosceptic populist parties prevented the euro area going further.

In Brussels, there is much talk of how the latest Greek crisis should prompt a leap forward in integration to strengthen the euro zone, but it’s not clear what progress is possible.

Among the quick wins suggested by the “five presidents’ report” is a common deposit insurance scheme for euro zone banks that are under ECB supervision and a fiscal backstop for a bank resolution fund being raised from the finance sector.

Whether such ideas will fly in Berlin remains to be seen. In the longer term, after 2017, the report envisages setting up a euro area treasury accountable at the European level.

French President Francois Hollande suggested this month creating a parliament for the euro zone to give decisions greater democratic legitimacy.

Such ambitious visions stand at odds with frantic nocturnal crisis management and the increasingly divisive nationalist tone of much of the debate in the euro area.


(Writing by Paul Taylor, editing by Richard Mably)


The man who cost Greece billions

July 20, 2015

by Dina Kyriakidou


ATHENS-Once again Alexis Tsipras was struggling to make a decision. For hours on July 13, the Greek prime minister and Europe’s leaders had been trying to thrash out a new deal to bail out bankrupt Greece and keep the country in the euro zone.

Now a clean copy of the latest text had been printed, and German Chancellor Angela Merkel, French President Francois Hollande and European Council President Donald Tusk were satisfied with the terms. So too appeared Tsipras – but he left the room to check the details one more time with colleagues in his leftist party Syriza.

Nearly an hour later he had still not returned. Heads of government and state paced around, fiddling with their phones. The Lithuanian president and Slovenian prime minister said they could wait no longer and left through a backdoor, a diplomat involved in the summit said.

When Tsipras finally reappeared, his response confirmed what Europe’s leaders had suspected for some time: without the full backing of his party, the Greek leader could not commit. The drafting process had to begin anew.

The setback reinforced European doubts that Tsipras could control his party. Friends and associates say the 40-year-old’s calm demeanor belies a man struggling to balance Syriza, Greece’s economic interests and his own leftist ideology. At many points he has turned to a small team of advisers, conferring with them again and again before making major decisions.

Tsipras’s strategy going into the bailout talks was to push international partners to the edge, betting they would make concessions to prevent Greece crashing out of the euro zone. In the event, though, he was forced to blink first and then ad-lib his way through the crisis that ensued.

He found himself pressed on the one side by the Germans, who didn’t want to give another penny to prop up Greece, and on the other by his own political party, which opposed the austerity demanded in return for a bailout.

The indecision and delays have cost Greece about 30 billion euros in the last three weeks alone, according to one senior European Union (EU) official. Tsipras’ inability to cut a deal in early July, which forced Greek banks to close their doors and sent the economy plunging, has pushed up the cost of the latest bailout to 86 billion euros, from the 53 billion euros Greece was requesting only a few weeks ago.

Tsipras would not speak to Reuters for this story. But he told Greek state broadcaster ERT on July 15 that he had made mistakes and taken some bad decisions. But at least he was a straight talker, he said. “You can accuse me of many things, that I had illusions that this Europe can be defeated, that the power of what’s right can defeat the power of banks and money. But you cannot accuse me of lying to the Greek people.”

A former Syriza colleague who has known Tsipras since he was a teenager and is now with another party said: “He has grown in leaps politically, but his decisions are a result of his fears. Fear that he will be the prime minister who led Greece out of the euro, fear his party will split, and also fear he is betraying the ideology he has fought for and believed in since he was a child.”




Born in 1974 a few days after Greece’s return to democracy following seven years of military dictatorship, Tsipras joined the youth branch of the Communist Party when he was just 14. Three years later he moved to a more liberal-minded splinter group that would later be renamed Syriza.

Until a renovation a few months ago, a portrait of Che Guevara hung outside Tsipras’ office in Syriza headquarters in Athens. “At 16, I read Marx and believed capitalism would end and we would go to the next stage of society, which is socialism. To me, this was absolute,” he said in a 2008 interview with student paper Schooligans. “I was wrong. Now I know it’s not absolute. It may happen, but it may not.”

Tsipras rose through Syriza’s ranks swiftly. As head of the party’s youth wing he “was a good manager of daily issues but didn’t give the impression he would be a great leader,” said an older Syriza member who has known Tsipras since he was a teenager.

Nevertheless, party president Alekos Alavanos picked him as a candidate in the 2006 race to be mayor of Athens. With youth and sincerity on his side, Tsipras unexpectedly received 10.5 percent of the vote – not enough to win, but a massive gain for what was still a tiny party.

“Alavanos catapulted him to the top. He really fought with others in the party to establish him because he believed Alexis was the only hope for the (Left) Coalition,” said the former Syriza member, referring to a forerunner of the party.

At 33, Tsipras was president of the party, the youngest political leader in the history of modern Greece. By 40, with no experience of national government, he was prime minister, elected on the promise of ending austerity but keeping Greece in the euro zone.

Even his mentor did not think the promise stacked up. Alavanos, now 65, left Syriza years ago and heads a small party that advocates Greece’s exit from the euro zone. He has never publicly discussed Tsipras and refused to comment on their relationship for this story. But he did criticize the idea that Greece can stay in the euro and not implement austerity. “Basic intelligence dictates this is impossible,” Alavanos said.




Like the prime minister, Tsipras’ team of close advisers had little experience of government or international politics. In large part, members of his inner circle are trusted friends of a similar ideology and age.

His closest confidant is Minister of State Nikos Pappas, two years his junior. Pappas, an economist, was living in Scotland with no plans to return to Greece when Tsipras asked him to join him in 2008.

Tsipras also brought in British-trained economist Yanis Varoufakis, who had been an academic in Britain, Australia and the United States. He offered a way to build bridges with Europe and the United States. “(Tsipras) took him in because he broke some barriers for us,” said a Syriza insider. “He was recognizable and he had international connections.”

But Varoufakis was also radical and outspoken. Appointed finance minister after Syriza won power in January, he proved to be less bridge builder and more destroyer as he negotiated with international lenders. He angered many in Europe with his blunt rhetoric and unorthodox ideas. Even Tsipras was shocked to hear about a Varoufakis’ plan to recruit average Greeks and tourists to act as tax inspectors, insiders said.

As negotiations floundered, these two key figures in the Greek government went in different directions. Varoufakis, who would not speak for this story, eventually quit, saying he felt Tsipras was ready to reach a deal with Greece’s creditors at any price.

In all the turmoil, Tsipras also had two confidants of a different nature. One was Minister of State Alekos Flambouraris, who had worked with Tsipras’ late father in the construction industry. People close to Tsipras say the 73-year-old Flambouraris offers emotional support as his leader tries to balance party, country and principles.

Tsipras’ other support was his partner Betty Batziana, his high school sweetheart. At home they still lead a quiet and modest life, little changed from before he became prime minister.

Batziana has studiously stayed out of the limelight. In one of her few contacts with the media during a trip to Moscow, reporters asked whether it was true, as some British media suggested, that she had said she would leave Tsipras if he agreed to a bad deal for Greece. In reply, she laughed.



Tsipras’ inner team started to discuss the idea of a referendum in April, as it became increasingly clear Greece’s creditors would not budge on their austerity demands. Their aim was to use a vote on the EU’s bailout terms as a way to entrench the prime minister as the dominant political figure in Greece, rally public support around him and give him leverage with lenders, insiders say.

While popular support was important, this overlooked two important factors. First, Greece’s only real bargaining chip with its lenders was the threat of the chaos that might ensue if it had to leave the euro zone. Second, Tsipras was struggling to keep Syriza – a motley bunch of 16 groups, ranging from Maoists to environmentalists – united.

Some far-left members wanted Greece to leave the euro zone and go back to the drachma. “In the last few weeks, Tsipras had to keep a balance between keeping Greece in the euro and holding his own party together,” a former senior Syriza official said.

Greece’s international partners grew increasingly frustrated with Tsipras and his lack of decisiveness. On June 24, Tsipras met for hours at European Commission headquarters with International Monetary Fund boss Christine Lagarde, European Commission President Jean-Claude Juncker, European Central Bank chief Mario Draghi and Eurogroup finance ministers.

Two people familiar with the talks said Tsipras appeared to agree at least twice on terms for a bailout, only to request a time-out to consult with his delegation, which included Varoufakis and Pappas.

Each time, he returned to the room without his normal smile and said the package was “unacceptable,” causing immense irritation and loss of trust, the two sources said.

“He brought this busload of Syriza activists with him, and each time we thought we had a deal, he would go next door and consult the comrades, and come back stony-faced saying it was impossible,” one of the sources said.

A Greek official said a mini-bus of Greek ministers and Syriza economists was in Brussels. “It is natural that the prime minister consults with his delegation,” the official said.



In the referendum, Greeks voted against tough bailout terms involving austerity. It was a huge victory for Tsipras, but the sense of elation didn’t last. He sought parliament’s approval to go back to the EU negotiating table and, unsure whether he could hold his government together, reached out to his political rivals for support.

The leaders of all Greece’s main parties except far-right Golden Dawn were called to a meeting at the presidential mansion on July 6. It lasted nearly seven hours. Insiders said Tsipras was accused of bringing Greece to the brink of disaster with his erratic behavior. Though Tsipras spent most of the time consulting EU leaders by telephone, he listened to his critics, spoke little and kept copious notes, the insider said. He looked tired and anxious and responded by saying: “We must all exercise self-criticism.”

At the end of the marathon meeting, a joint statement was issued, declaring the referendum’s resounding rejection of a bailout deal as a mandate to negotiate further. During a five-hour parliamentary debate that started after midnight and ended with Tsipras delivering a final appeal in a trembling voice, Syriza was in uproar.

Parliamentary offices filled with cigarette smoke despite a smoking ban. Syriza lawmakers walked the corridors telling reporters the government might not survive the night. Some Syriza lawmakers rebelled, but Tsipras won the vote with the support of other parties.

Wounded, but armed with parliament’s approval, he returned to Brussels for the final showdown. In reality, though, he was losing any leverage to negotiate and decisions were being forced on him.

As EU funding ran out, the government was compelled to close Greek banks and limited people to 60 euros a day from cash machines.

Tsipras looked exhausted. Some European leaders even urged him to get some rest. But with the intervention of the French, a deal was reached under which Greece agreed to accept even tougher economic reforms than had been on offer before. Tsipras announced it to his team calmly: “OK, we signed.”

In Athens, a group of Syriza supporters gathered around wine and meze in the leafy yard of a house in the leftist district of Exarcheia. The group was split between those who had wanted Tsipras to get a bailout deal and keep Greece in the euro, and those who advocated ending austerity – even if it meant going back to the drachma.

What was unanimous, however, was sympathy for Tsipras. “He may not have political experience but he is honorable and a fighter,” said Nikos Kapios, 80, a retired actor at the gathering.

At the weekend Tsipras reshuffled his cabinet, replacing several ministers who opposed the new EU deal. With Syriza divided, Tsipras, who remains popular with voters, may decide to hold another election later this year. “If he doesn’t make it,” said Kapios, “the blame is with his own comrades.”

(Additional reporting by Renee Maltezou, Paul Taylor, Alastair Macdonald and Robert-Jan Bartunek in Brussels; and Elizabeth Pineau and Julien Ponthus in Paris.; Edited by Simon Robinson and Richard Woods)


Fire Next Time

Before Homes Are Even Rebuilt in the Ruins of the Gaza Strip, Another War Looms

by Max Blumenthal


“A fourth operation in the Gaza Strip is inevitable, just as a third Lebanon war is inevitable,” declared Israeli Foreign Minister Avigdor Lieberman in February. His ominous comments came just days after an anti-tank missile fired by the Lebanon-based guerrilla group Hezbollah killed two soldiers in an Israeli army convoy. It, in turn, was a response to an Israeli air strike that resulted in the assassination of several high-ranking Hezbollah figures.

Lieberman offered his prediction only four months after his government concluded Operation Protective Edge, the third war between Israel and the armed factions of the Gaza Strip, which had managed to reduce about 20% of besieged Gaza to an apocalyptic moonscape. Even before the assault was launched, Gaza was a warehouse for surplus humanity — a 360-square-kilometer ghetto of Palestinian refugees expelled by and excluded from the self-proclaimed Jewish state. For this population, whose members are mostly under the age of 18, the violence has become a life ritual that repeats every year or two. As the first anniversary of Protective Edge passes, Lieberman’s unsettling prophecy appears increasingly likely to come true. Indeed, odds are that the months of relative “quiet” that followed his statement will prove nothing more than an interregnum between Israel’s ever more devastating military escalations.

Three years ago, the United Nations issued a report predicting that the Gaza Strip would be uninhabitable by 2020. Thanks to Israel’s recent attack, this warning appears to have arrived sooner than expected. Few of the 18,000 homes the Israeli military destroyed in Gaza have been rebuilt. Few of the more than 400 businesses and shops damaged or leveled during that war have been repaired. Thousands of government employees have not received a salary for more than a year and are working for free. Electricity remains desperately limited, sometimes to only four hours a day. The coastal enclave’s borders are consistently closed. Its population is trapped, traumatized, and descending ever deeper into despair, with suicide rates skyrocketing.

One of the few areas where Gaza’s youth can find structure is within the “Liberation Camps” established by Hamas, the Islamist political organization that controls Gaza. There, they undergo military training, ideological indoctrination, and are ultimately inducted into the Palestinian armed struggle. As I found while covering last summer’s war, there is no shortage of young orphans determined to take up arms after watching their parents and siblings be torn limb from limb by 2,000-pound Israeli fragmentation missiles, artillery shells, and other modes of destruction. Fifteen-year-old Waseem Shamaly, for instance, told me his life’s ambition was to join the Al-Qassam Brigades, the military wing of Hamas. He had just finished recounting through tears what it was like to watch a YouTube clip of his brother, Salem, being executed by an Israeli sniper while he searched for the rest of his family in the rubble of their neighborhood last July.

Anger with Hamas’s political wing for accepting a ceasefire agreement with Israel in late August 2014 that offered nothing but a return to the slow death of siege and imprisonment is now palpable among Gaza’s civilian population. This is particularly true in border areas devastated by the Israelis last summer. However, support for the Al-Qassam Brigades, the military wing of Hamas that carries the banner of the Palestinian armed struggle, remains almost unanimous.

Palestinians in Gaza need only look 80 kilometers east to the gilded Bantustans of the Palestinian Authority (PA) to see what they would get if they agreed to disarm. After years of fruitless negotiations, Israel has rewarded Palestinians living under the rule of PA President Mahmoud Abbas with the record growth of Jewish settlements, major new land annexations, nightly house raids, and the constant humiliation and dangers of daily interactions with Israeli soldiers and fanatical Jewish settlers. Rather than resist the occupation, Abbas’s Western-trained security forces coordinate directly with the occupying Israeli army, assisting Israel in the arrest and even torture of fellow Palestinians, including the leadership of rival political factions.

As punishing as life in Gaza might be, the West Bank model does not offer a terribly attractive alternative. Yet this is exactly the kind of “solution” the Israeli government seeks to impose on Gaza. As former Interior Minister Yuval Steinitz declared last year, “We want more than a ceasefire, we want the demilitarization of Gaza… Gaza will be exactly like [the West Bank city of] Ramallah.”


Keeping Gaza in Ruins

Behind the quasi-apocalyptic destruction exacted on Gaza by the Israeli military during Operation Protective Edge lies a sadistic strategy whose aim is to punish residents of the besieged coastal enclave into submission. The “Dahiya Doctrine,” named after a southern Beirut neighborhood the Israeli air force decimated in 2006, is focused on punishing the civilian populations of Gaza and southern Lebanon for supporting armed resistance movements like Hamas and Hezbollah. In “Disproportionate Force,” a 2008 paper published by the Institute for National Security Studies, a think tank closely linked to the Israeli military, Colonel Gabi Siboni spelled out its punitive, civilian-oriented logic clearly: “With an outbreak of hostilities, the [Israeli army] will need to act immediately, decisively, and with force that is disproportionate to the enemy’s actions and the threat it poses. Such a response aims at inflicting damage and meting out punishment to an extent that will demand long and expensive reconstruction processes.”

In the aftermath of Protective Edge’s massive destruction of civilian infrastructure in Gaza, the Israeli government set out to obstruct any reconstruction process and extend the suffering of Gaza’s civilian population. When diplomats including American Secretary of State John Kerry gathered in Cairo last October to discuss repairing and rebuilding some of the $7 billion in damage caused by Protective Edge, then-Israeli Transportation Minister Yisrael Katz assured them that their efforts were ultimately futile. “The Gazans must decide what they want to be: Singapore or Darfur,” Katz said, ominously invoking the threat of Sudanese-style genocide. “If one missile will be fired, everything will go down the drain.” The nature of his warning was not lost on the diplomats in Cairo, where one complained of “considerable donor fatigue.”

No one can expect us to go back to our taxpayers for a third time; to ask for contributions for reconstruction and then we simply go back to where we were before all this began,” a diplomat complained to a reporter. Another conceded: “There isn’t a terrible amount of political commitment or hope.”

In the end, only a minuscule fraction of the $5 billion pledged at the conference has actually made its way to Gaza’s devastated masses. Instead, much of it has been diverted into the coffers of the Palestinian Authority on the West Bank, whose mission requires it to spend around 30% of its budget on “security,” or policing fellow Palestinians, on behalf of their occupier.

Earlier this year, as funds for reconstruction dried up entirely, the United Nations Special Coordinator for the Middle East Peace Process Robert Serry attempted to compel Palestinians in Gaza to accept a rebuilding plan he concocted in cooperation with the Israeli military, the Egyptian military junta of Abdel Fattah el-Sisi, and the PA. Described by Israeli military correspondent Ron Ben-Yishai as a model of “the conflict management approach,” the plan amounts to the internationalization of the siege of Gaza and the perpetual imprisonment of Palestinians there. Needless to say, it proved a non-starter among those whose lives it would have controlled.

Though Hamas has stringently maintained the ceasefire it inked when hostilities ended last August, Israel has repeatedly attacked Gaza’s fishermen as well as farmers working in areas near the Israeli border wall. As despair spreads, the previously minute ranks of Salafist extremists are expanding and pledging allegiance to the Islamic State (IS), the brutal theocratic crew that has established a “caliphate” in parts of Syria and Iraq and whose followers in Gaza have declared war on Hamas.

Gaza’s IS-allied factions have adopted a simple formula for undermining Hamas that begins with the launching of a crude rocket or mortar usually into an unpopulated area of southern Israel. That these do little or no damage hardly matters, since IS followers know that Israel will respond with airstrikes targeting Hamas-controlled facilities. Through these provocations, IS in Gaza has established an alliance of convenience with the Israeli military, with each relying on the other to tighten the vise on Hamas. Though IS has no chance now of toppling Hamas, its presence — and Israel’s apparent eagerness to play its game — has injected a volatile new element into an already unstable post-war landscape.


Field Testing the Brand

Hamas and allied militant groups like Palestinian Islamic Jihad entered last summer’s war with a set of conditions that were entirely humanitarian in nature. They called for the right to construct a seaport in Gaza, rebuild the airport Israel destroyed, and freely import and export goods, as well as for Gaza’s stateless residents to obtain travel permits. In exchange, Hamas offered Israel a 10-year truce. Rather than accept any of these conditions, which would have promoted a dramatic reduction in tensions, Israel and its allies in Cairo and Washington opted for 51 days of brutal warfare, knowing that Gaza’s civilians would pay the steepest price — and that an elite sector of Israeli society would reap handsome rewards.

Unlike the rulers of Gaza, Israel’s upper classes thrive off war. The assaults on Gaza since 2005 have invigorated one of the country’s leading industries and been a boon to the 150,000 Israeli families who earn their livelihoods from it. Thanks in large part to the wars in Gaza and the ongoing occupation of Palestine, Israel’s weapons industry has tripled its profits to more than $7 billion a year over the past decade, making a country about the size of New Jersey into the fourth largest weapons exporter in the world.

A salesman for the IAI [Israel Aerospace Industries] told me that assassinations and operations in Gaza bring about an increase of tens of percentage points in company sales,” said Yotam Feldman, the Israeli journalist whose documentary film, The Lab, provides a disturbing look at the country’s weapons industry and how it has transformed Israeli society. According to Feldman, “the war in Gaza has become inherent to the Israeli political system, possibly a part of our system of government.”

Members of the Israeli elite have benefitted directly from the Gaza wars by orchestrating the assaults as generals and politicians and then taking jobs as lobbyists, marketing to foreign militaries the newest weaponry and battlefield tactics tested on Gaza’s civilian population. Ehud Barak, for instance, was the defense minister who directed Israel’s disproportionate attacks on Gaza in 2008-2009 and again in 2012. He was also one of the closest associates of Michael Federman, a former member of his Sayeret Matkal commando unit and a political advisor who also happened to be the owner of Israel’s largest weapons manufacturer, Elbit Systems. It was perhaps unsurprising then that, after leading the Defense Ministry during so many wars deploying and promoting Elbit’s latest weaponry, Barak’s name suddenly wound up on the Forbes list of Israel’s wealthiest politicians in 2012.

A quick browse through Israel Defense News, the leading English-language trade publication of Israel’s weapons industry, offers perhaps the best look at how new tactics and weaponry are marketed. In its latest issue, dedicated to the “new age warfare” practiced in Gaza, readers are assured that “2015 will be good for Israeli Defense Industries.” Uri Vered, general manager of Elbit Systems, promises that “land field systems” — the tanks and armored combat vehicles deployed in the recent conflict — will experience record growth.

Among the high tech weaponry being touted by the magazine is a drone “capable of loitering over the target and attacking it.” This is a reference to Israeli Aerospace Industries’ Harop, a “suicide drone” first tested in southern Lebanon that hovers over its target before diving into it with 10 kilograms of explosives packed into its nose. With militaries around the world snapping up the Harop by the hundreds, Israel’s weapons sector is eager to roll out a next generation vehicle that includes its own launch pad. In order to brand the newfangled drone with the magical marketing label of “field tested,” IAI simply needs another war.


The Point of No Return

To be sure, there are figures within Israel’s military-intelligence apparatus keen on averting another war with Gaza’s armed factions, at least in the near term. They recognize that Hamas has become a stabilizing force in Gaza capable of maintaining ceasefires in good faith. As it did with the Fatah-controlled Palestine Liberation Organization during the 1970s and 1980s, the Israeli military establishment has attempted to domesticate Hamas by assassinating “irreconcilables” like former Al-Qassam commander Ahmed Jaabari, while allowing more conciliatory and politically ambitious figures like Gazan Prime Minister Ismail Haniyeh to rise. Its strategy is aimed at cultivating within Hamas the kind of docile leadership that now makes up the Palestinian Authority in the West Bank, thereby transforming another self-proclaimed Palestinian resistance organization into an occupation subcontractor.

Yet as Israel (relying on international mediators) engages in negotiations with Hamas over a range of issues including the release of a captured Israeli citizen, there is no sense that its domestication strategy is working. And whatever accommodations the gatekeepers of Israel’s military-intelligence sector had in mind, the chaos unleashed by Operation Protective Edge has probably pushed Jewish Israeli society beyond the point of no return. Indeed, the wartime atmosphere proved a godsend for far-right mobilization, electrifying religious nationalist elements in the government and fascist goons in the streets of Tel Aviv. This January, the 45% of Jewish Israelis who complained that their military had not used enough force against Gaza went on to elect the most right-wing government in Israeli history.

Among the leaders of Israel’s increasingly dominant religious nationalist movement is Naftali Bennett, the 43-year-old head of the pro-settler Jewish Home Party. Bennett spent much of last summer’s war railing against Prime Minister Benjamin Netanyahu for refusing to order a full reoccupation of Gaza and the violent removal of Hamas — a potentially catastrophic move that Netanyahu and the Israeli military brass vehemently opposed. While Bennett accused Palestinians of committing “self-genocide,” his youthful deputy, Ayelet Shaked, declared that Palestinian civilians “are all enemy combatants, and their blood shall be on all their heads.” According to Shaked, the “mothers of the martyrs” should be exterminated, “as should the physical homes in which they raised the snakes. Otherwise, more little snakes will be raised there.”

In the current Israeli governing coalition, Bennett serves as Minister of Education, overseeing the schooling of millions of Jewish Israeli youth. And Shaked has been promoted to Minister of Justice, giving her direct influence over the country’s court system. Once one of the young Turks of the right-wing Likud Party, Netanyahu now finds himself at the hollow center of Israeli politics, mediating between factions of hardline ethno-nationalists and outright fascists.

Where Gaza is concerned, Israel’s loyal opposition differs little from the country’s far-right rulers. In the days before the January national elections, Tzipi Livni, a leader of the left-of-center Zionist Union, proclaimed, “Hamas is a terrorist organization and there is no hope for peace with it… the only way to act against it is with force — we must use military force against terror… and this is instead of [Prime Minister Benjamin] Netanyahu’s policy to come to an agreement with Hamas.” Livni’s ally, Labor Party leader Isaac Herzog, reinforced her militaristic position by declaring, “There is no compromising with terror.”

Months after the cessation of hostilities, even as foreign correspondents marvel at the “quiet” that has prevailed along Gaza’s borders, the Israeli leadership is ramping up its bloody imprecations. At a conference this May sponsored by Shurat HaDin, a legal organization dedicated to defending Israel from war crimes charges, Defense Minister Moshe Yaalon warned that another crushing assault was inevitable, either in Gaza, southern Lebanon, or both. After threatening to drop a nuclear bomb on Iran, Yaalon pledged that “we are going to hurt Lebanese civilians to include kids of the family. We went through a very long deep discussion… we did it then, we did it in [the] Gaza Strip, we are going to do it in any round of hostilities in the future.”

Yaalon went on to boast to his audience about how one year before Operation Protective Edge, he furnished his commanders with maps of “certain neighborhoods in Gaza” to hit. They included Shujaiya, an area east of Gaza City where over 120 civilians were killed in a matter of hours, and which now lies in utter ruin. Gaza still reels from last summer’s assault, yet there is no reason to doubt that the Israeli military will fulfill Yaalon’s terrifying vow — perhaps sooner than anyone expects.

For Israel, war is no longer an option. It is a way of life.


Trump towers over Republicans and Democrats, Beltway goes ballistic

July 23, 2015

by Robert Bridge


Donald Trump, the billionaire real estate mogul who tossed his famous brand name into the 2016 presidential race, has catapulted himself to the top of the US political dung heap by hitting a raw nerve among disenchanted voters.

Trump’s stunning success in public opinion polls – he has about twice the likeability of his nearest rival – required no huge sums of money, no inordinate political flair or genius and no Karl Rove to launch him straight into the hearts and minds of Main Street, USA, which is still awaiting reimbursement for Obama’s Hope & Change Show that never premiered as promised.

So how did Trump, who gave up hosting The Apprentice television program so he could, in his own words, “save America,” shake the US political system to its very rotting foundation? With nothing more sophisticated than child’s play, that’s how. Personal charisma and humungous ego notwithstanding, Trump simply tapped into an active volcano of anger and frustration many Americans are feeling over Washington’s astounding failure to shut down the border with Mexico – kind of like children taking a principle-based stand when tough kids from another neighborhood invade their sandbox. It’s really that simple.

But not simple enough for the Obama administration, it seems. Once safely across the Rio Grande, millions of Mexican line-jumpers are being feted at hundreds of ‘sanctuary cities’ across the country, all funded by Joe Taxpayer, of course. Not surprisingly, Americans have protested the nation’s slow-motion crack-up, yet not a single wannabe presidential candidate from the Democrat-Republican business cartel has addressed the issue. Nor has the obsequious media pressured the powers-that-be over it. So – surprise-surprise – gross political negligence and media complicity opened up a yawning vacuum for somebody like ‘The Donald’ to stand in as political midwife, delivering the baby of illegal immigration kicking and screaming into the public domain.

Naturally this begs the asinine question: Why wasn’t this glaring problem resolved before? What modern nation – to say nothing of a nuclear-armed superpower – would grant millions of illegals (11 million by Washington’s conservative count) rite of passage into its territory? Why is it that US forces can patrol halfway around the world along the Afghan-Pakistan border with drones, satellites and Special Forces – even obliterate bin Laden one messy morning – yet the Mexican border is somehow mission impossible? So was anybody really surprised when the Obama administration’s revolving-door border policy culminated in a series of deadly tragedies across the country involving illegal aliens with criminal records and innocent Americans?

Earlier this month, Kathryn Steinle, 31, was shot dead in San Francisco as she strolled with her father along the waterfront area, a popular tourist destination. Police arrested the suspected murderer, Juan Francisco Lopez-Sanchez, a Mexican native who had accumulated seven felony convictions since 1991 and had been deported from the United States on separate occasions (!).

San Francisco authorities had just released Lopez-Sanchez from prison in April after failing to convict him on drug charges, and despite a request from the Department of Homeland Security, or DHS, that he be deported (a sixth time) to his native Mexico. Are the Feds spending so much time and energy hyperventilating about Islamic jihadists – more Americans die from lightning strikes each year by comparison – that they are ignoring a far more serious problem just over the horizon?

Trump is now pointing gleefully to such tragedies as proof that Mexico is intentionally pushing its most dangerous outlaws towards the American prairie.

One American who certainly agrees with Trump is Jamiel Shaw, whose 17-year-old son was gunned down execution-style in 2008 on the way home from the mall by an illegal alien. Shaw has taken the podium alongside Trump at rallies across the country, where he describes how his son, a promising high school football player, was taken by “invisibles” – those who are in America illegally. Shaw tells crowds that he smiled for the “first time in years” after hearing Trump’s pledge to close the border if elected.

I felt happy for the first time,” Shaw said. “When that happened, I felt good. I felt hope. This is the hope that Obama thought he was gonna get. That was false hope.”

So with the billionaire magnate performing the political equivalent of a smash the backboard slam-dunk, it may seem natural that every establishment lackey on the East Coast is lining up to throw a cheap shot at Trump.

The popular comedian Jon Stewart, for example, has been bashing ‘Trumpizy’ regularly on his satirical political show, while giving the real estate mogul zero credit for dragging the immigration problem into the limelight. Instead, Stewart feigned shock when Trump said that many of the Mexican illegals were “criminals and rapists.”

Why is anyone acting surprised about Trump?” Stewart asked. “The only reason you liked this guy in the first place was because of the terrible things he was willing to say about Obama.”

Trump’s meteoric rise amid a crowd of political has-beens comes as a surprise only for that out-of-touch breed of Washington insiders who have no idea what the American voter wants and needs. For example, Senator John McCain, who also found himself on the receiving end of one of Trump’s no-holds-barred verbal barrages.

“The reality is that John McCain the politician has made America less safe, sent our brave soldiers into wrong-headed foreign adventures, covered up for President Obama with the VA scandal and has spent most of his time in the Senate pushing amnesty,” Trump wrote. “He would rather protect the Iraqi border than Arizona’s.”

Trump initially attracted the ire of Republicans after saying he could not qualify McCain – a fighter pilot in the Vietnam War who spent five years as a prisoner – a war hero “because he was captured.”

If Trump can survive a steady onslaught of Stewart-style disparagement (my 50-cent prediction: he won’t; the multi-pronged attack against him will be simply too overwhelming even for Trump to withstand), then America may emerge from its political paralysis and become great again. But like so many wealthy outsiders (Ross Perot, for example) who attempted to change the US political system beyond the fiefdom of corporate power, Trump will most likely come up short in the greatest gamble of his career.

The real loser, however, will be the American people, who desperately need a progressive outsider – far beyond the rusted Beltway and corporate America’s corrupting purse – to put the country back on track.


China’s Global Ambitions, With Loans and Strings Attached

The country has invested billions in Ecuador and elsewhere, using its economic clout to win diplomatic allies and secure natural resources around the world.


July 24, 2015

by Clifford Krauss and Keith Bradsher

New York Times

EL CHACO, Ecuador — Where the Andean foothills dip into the Amazon jungle, nearly 1,000 Chinese engineers and workers have been pouring concrete for a dam and a 15-mile underground tunnel. The $2.2 billion project will feed river water to eight giant Chinese turbines designed to produce enough electricity to light more than a third of Ecuador.

Near the port of Manta on the Pacific Ocean, Chinese banks are in talks to lend $7 billion for the construction of an oil refinery, which could make Ecuador a global player in gasoline, diesel and other petroleum products.

Across the country in villages and towns, Chinese money is going to build roads, highways, bridges, hospitals, even a network of surveillance cameras stretching to the Galápagos Islands. State-owned Chinese banks have already put nearly $11 billion into the country, and the Ecuadorean government is asking for more.

Ecuador, with just 16 million people, has little presence on the global stage. But China’s rapidly expanding footprint here speaks volumes about the changing world order, as Beijing surges forward and Washington gradually loses ground.

While China has been important to the world economy for decades, the country is now wielding its financial heft with the confidence and purpose of a global superpower. With the center of financial gravity shifting, China is aggressively asserting its economic clout to win diplomatic allies, invest its vast wealth, promote its currency and secure much-needed natural resources.It represents a new phase in China’s evolution. As the country’s wealth has swelled and its needs have evolved, President Xi Jinping and the rest of the leadership have pushed to extend China’s reach on a global scale.

China’s currency, the renminbi, is expected to be anointed soon as a global reserve currency, putting it in an elite category with the dollar, the euro, the pound and the yen. China’s state-owned development bank has surpassed the World Bank in international lending. And its effort to create an internationally funded institution to finance transportation and other infrastructure has drawn the support of 57 countries, including several of the United States’ closest allies, despite opposition from the Obama administration.

Even the current stock market slump is unlikely to shake the country’s resolve. China has nearly $4 trillion in foreign currency reserves, which it is determined to invest overseas to earn a profit and exert its influence.

China’s growing economic power coincides with an increasingly assertive foreign policy. It is building aircraft carriers, nuclear submarines and stealth jets. In a contested sea, China is turning reefs and atolls near the southern Philippines into artificial islands, with at least one airstrip able to handle the largest military planes. The United States has challenged the move, conducting surveillance flights in the area and discussing plans to send warships.

China represents “a civilization and history that awakens admiration to those who know it,” President Rafael Correa of Ecuador proclaimed on Twitter, as his jet landed in Beijing for a meeting with officials in January.

China’s leaders portray the overseas investments as symbiotic. “The current industrial cooperation between China and Latin America arrives at the right moment,” Prime Minister Li Keqiang said in a visit to Chile in late May. “China has equipment manufacturing capacity and integrated technology with competitive prices, while Latin America has the demand for infrastructure expansion and industrial upgrading.”

But the show of financial strength also makes China — and the world — more vulnerable. Long an engine of global growth, China is taking on new risks by exposing itself to shaky political regimes, volatile emerging markets and other economic forces beyond its control.

Any major problems could weigh on China’s growth, particularly at a time when it is already slowing. The country’s stock market troubles this summer are only adding to the pressure, as the government moves aggressively to stabilize the situation.

While China has substantial funds to withstand serious financial shocks, its overall health matters. When China swoons, the effects are felt worldwide, by the companies, industries and economies that depend on the country as the engine of global growth.

In many cases, China is going where the West is reluctant to tread, either for financial or political reasons — or both. After getting hit with Western sanctions over the Ukraine crisis, Russia, which is on the verge of a recession, deepened ties with China. The list of borrowers in Africa and the Middle East reads like a who’s who of troubled regimes and economies that may have trouble repaying Chinese loans, including Yemen, Syria, Sierra Leone and Zimbabwe.

With its elevated status, China is forcing countries to play by its financial rules, which can be onerous. Many developing countries, in exchange for loans, pay steep interest rates and give up the rights to their natural resources for years. China has a lock on close to 90 percent of Ecuador’s oil exports, which mostly goes to paying off its loans.

“The problem is we are trying to replace American imperialism with Chinese imperialism,” said Alberto Acosta, who served as President Correa’s energy minister during his first term. “The Chinese are shopping across the world, transforming their financial resources into mineral resources and investments. They come with financing, technology and technicians, but also high interest rates.”

China also has a shaky record when it comes to worker safety, environmental standards and corporate governance. While China’s surging investments have created jobs in many countries, development experts worry that Beijing is exporting its worst practices.

Chinese mining and manufacturing operations, like many American and European companies in previous decades, have been accused of abusing workers overseas. China’s coal-fired power plants and industrial factories are adding to pollution problems in developing nations.


Issues have already surfaced in Ecuador.

A few miles from the site of the hydroelectric plant, the Coca River vaults down a 480-foot waterfall and cascades through steep canyons toward the Amazon. It is the tallest waterfall in Ecuador and popular with tourists.

When the dam is complete and the water is diverted to the plant, the San Rafael falls will slow to a trickle for part of the year. With climate change already shrinking the Andean glacier that feeds the river, experts debate whether the site will have enough water to generate even half the electricity predicted.

Ecuadoreans on the Chinese-run project have repeatedly protested about wages, health care, food and general working conditions. “The Chinese are arrogant,” said Oscar Cedeno, a 20-year-old construction worker. “They think they are superior to us.”

Last December, an underground river burst into a tunnel at the site. The high-pressure water flooded the powerhouse, killing 14 workers. It was one of a series of serious accidents at Chinese projects in Ecuador, several of them fatal.


The Rise of China

When the research arm of China’s cabinet scheduled an economic development conference this spring, the global financial and corporate elite came to Beijing. The heads of major banks and pharmaceutical, auto and oil companies mingled with top Chinese officials.

Some had large investments in the country and wanted to protect their access to the domestic market. Others came to court business, as Beijing channeled more of its money overseas.

At the event, the managing director of the International Monetary Fund, Christine Lagarde, commended China’s efforts to engage globally through investment and trade, as well as to enact economic reforms. It “is good for China and good for the world — their fates are intertwined,” she said in her keynote address.

China’s pull is strong.

It is the world’s largest buyer of oil, which gives China substantial sway over petropolitics. It is also increasingly the trading partner of choice for many countries, taking the mantle from Western nations. China’s foreign direct investment — the money it spends overseas annually on land, factories and other business operations — is second only to the United States’, having passed Japan last year.

Chinese companies are at the center of a worldwide construction boom, mostly financed by Chinese banks. They are building power plants in Serbia, glass and cement factories in Ethiopia, low-income housing in Venezuela and natural gas pipelines in Uzbekistan.

This striking evolution happened in a short time.

While China made some economic progress under Mao Zedong, his policies left the country turbulent and isolated. Hundreds of thousands of people were executed after the Communist takeover in 1949, accused of opposing the revolution or owning too much land. Famine killed tens of millions starting in the late 1950s. The Cultural Revolution, beginning in 1966, unleashed a decade of violence and economic stagnation.

When China started to open its economy in the late 1970s, it was among the poorest nations. Beijing had to court companies and investors.

One of the first multinationals to enter was the American Motors Corporation, which built a factory in Beijing. The project was initially aimed at producing Jeeps for export to Australia, rather than building cars for Chinese consumers, who still largely rode bicycles.

The Chinese market seemed unimportant, said Gerald Meyers, then the chief executive of the carmaker. He didn’t even bother to visit the country. “We didn’t devote a lot of our boardroom discussions to it,” he said. “We were really trying to scrape out a living in our domestic market.”

Today, China produces two million cars a month, far more than any other country. It mirrors the broader transformation of the economy from an insular agrarian society to the world’s largest manufacturer.

The change has showered wealth on China. But it has also brought new demands, like a voracious thirst for energy to power its economy. The confluence of trends has compelled China to look beyond its borders to invest those riches and to satisfy its needs.

Oil has been on the leading edge of this investment push. Energy projects and stakes have accounted for two-fifths of China’s $630 billion of overseas investments in the last decade, according to Derek Scissors, an analyst at the American Enterprise Institute.

China is playing both defense and offense. With an increased dependence on foreign oil, China’s leadership has followed the United States and other large economies by seeking to own more overseas oil fields — or at least the crude they produce — to ensure a stable supply. In recent years, state-controlled Chinese oil companies have acquired big stakes in oil operations in Cameroon, Canada, Kazakhstan, Kyrgyzstan, Iraq, Nigeria, São Tomé and Príncipe, Sudan, Uganda, the United States and Venezuela.

“When utilizing foreign resources and markets, we need to consider it from the height of national strategy,” Prime Minister Li said in 2009, when he was a vice premier. “If the resources mainly come from one country or from one place with frequent turmoil, national economic safety will be under shadow when an emergency happens.”

Road to Dependence

For President Correa of Ecuador, China represents a break with his country’s past — and his own.

His father was imprisoned in the United States for cocaine smuggling and later committed suicide. At the University of Illinois at Urbana-Champaign, Mr. Correa focused his doctoral thesis on the shortcomings of economic policies backed by WShut out from borrowing in traditional markets, Ecuador turned to China to fill the void. PetroChina, the government-backed oil company, lent Petroecuador $1 billion in August 2009 for two years at 7.25 percent interest. Within a year, more Chinese money began to flow for hydroelectric and other infrastructure projects.

“What Ecuador wants are sources of capital with fewer political strings attached, and that goes back to the personal history of Rafael Correa, who holds the United States directly or indirectly responsible for his father’s death and suffering,” said R. Evan Ellis, professor of Latin American studies at the United States Army War College Strategic Studies Institute. “But there is also a desire to get away from the dependence on the fiscal and political conditions of the I.M.F., World Bank and the West.”ashington and Western banks.

As a politician, he embraced Venezuela’s socialist revolution. During his 2006 campaign, Mr. Correa joked that the Venezuelan president Hugo Chávez’s comparison of President George W. Bush with Satan was disrespectful to the devil.

In an early move as president, Mr. Correa expelled the Americans from a military base in Manta, an important launching pad for the Pentagon’s war on drugs.

“We can negotiate with the United States over a base in Manta if they let us put a military base in Miami,” President Correa said at the time.

Next, he severed financial ties. In late 2008, Mr. Correa called much of his country’s debt, largely owned by Western investors, “immoral and illegitimate” and stopped paying, setting off a default.

At that point, Ecuador was in a bind. The global financial crisis was taking hold and oil prices collapsed. Ecuador and Petroecuador, its state-owned oil company, started running low on money.

The Ecuadorean foreign minister calls the shift to China a “diversification of its foreign relations,” rather than a substitute for the United States or Europe. “We have decided that the most convenient and healthy thing for us,” said the foreign minister, Ricardo Patiño, is “to have friendly, mutually beneficial relations of respect with all countries.”

The Chinese money, though, comes with its own conditions. Along with steep interest payments, Ecuador is largely required to use Chinese companies and technologies on the projects.

International rules limit how the United States and other industrialized countries can tie their loans to such agreements. But China, which is still considered a developing country despite being the world’s largest manufacturer, doesn’t have to follow those standards.

It is one reason that China’s effort to build an international development fund, the Asian Infrastructure Investment Bank, has faced criticism in the United States. Washington is worried that China will create its own rules, with lower expectations for transparency, governance and the environment.

While China has sought to quell those fears over the infrastructure fund, its portfolio of projects around the world imposes tough terms and sometimes lax standards. Since 2005, the country has landed $471 billion in construction contracts, many tied to broader lending agreements.

In Ecuador, a consortium of Chinese companies is overseeing a flood control and irrigation project in the southern Ecuador province of Cañar. A Chinese engineering company built a $100 million, four-lane bridge to span the Babahoyo River near the coast.

Such deals typically favor the Chinese.

PetroChina and Sinopec, another state-controlled Chinese company, together pump about 25 percent of the 560,000 barrels a day produced in Ecuador. Along with taking the bulk of oil exports, the Chinese companies also collect $25 to $50 in fees from Ecuador for each barrel they pump.

China’s terms are putting countries in precarious positions.

In Ecuador, oil represents roughly 40 percent of the government’s revenue, according to the United States Energy Department. And those earnings are suddenly plunging along with the price of oil. With crude at around $50 a barrel, Ecuador doesn’t have much left to repay its loans.

Of course we have concerns over their ability to repay the debts — China isn’t silly,” said Lin Boqiang, the director of the Energy Economics Research Center at Xiamen University in China’s Fujian province and a government policy planner. “But the gist is resources will ultimately become valuable assets.”

If Ecuador or other countries can’t cover their debts, their obligations to China may rise. A senior Chinese banker, who spoke only on the condition of anonymity for diplomatic reasons, said Beijing would most likely restructure some loans in places like Ecuador.

To do so, Chinese authorities want to extend the length of the loans instead of writing off part of the principal. That means countries will have to hand over their natural resources for additional years, limiting their governments’ abilities to borrow money and pursue other development opportunities.

China has significant leverage to make sure borrowers pay. As the dominant manufacturer for a long list of goods, Beijing can credibly threaten to cut off shipments to countries that do not repay their loans, the senior Chinese banker said.

With its economy stumbling, Ecuador asked China at the start of the year for an additional $7.5 billion in financing to fill the growing government budget deficit and buy Chinese goods. Since then, the situation has only deteriorated. In recent weeks, thousands of protesters have poured into the streets of Quito and Guayaquil to challenge various government policies and proposals, some of which Mr. Correa has recently withdrawn.

“China is becoming the new company store for developing oil-, gas- and mineral-producing countries,” said David Goldwyn, who was the State Department’s special envoy for international energy affairs during President Obama’s first term. “They are entitled to secure reliable sources of oil, but what we need to worry about is the way they are encouraging oil-producing countries to mortgage their long-term future through oil-backed loans.”

Plagued by Problems

A pall of acrimony surrounds the Coca Codo Sinclair hydroelectric plant, Ecuador’s largest construction project.

Few of the Chinese workers speak Spanish, and they live separately from their Ecuadorean counterparts. When the workers leave their camp in the village of San Luis at noon for lunch, they walk down the main street in separate groups. At night, they also walk in separate groups up the hill to the local brothel. (Prostitution is legal in Ecuador.) The workers sit at separate tables drinking bottles of the Ecuadorean beer, Pilsener.

When the Chinese and Ecuadorean workers return to camp, typically drunk, there have been shoving matches. Once a Chinese manager threw a tray at an Ecuadorean worker at mealtime.

“You make a little mistake, and they say something like, ‘Get out of here,’ ” said Gustavo Taipe, an Ecuadorean welder. “They want to be the strongmen.”

Like other workers, Mr. Taipe, 57, works 10 consecutive days. Then he drives seven hours home to spend four days with his family, then returns for another 10 days. Mr. Taipe and others have complained about low pay for grueling work. He initially made $600 a month. After work stoppages, he now earns $914 a month, a decent wage by Ecuadorian standards.

Kevin Wang, a Chinese supervisory engineer at the project, played down the issues, saying, “Relations are friendly.” He predicted that the project would be a success. “We can do something here really important,” he said.

The hydroelectric project — led by Sinohydro, the Chinese engineering company, and financed by the Chinese Export-Import Bank — was supposed to be ready by late 2014. But the project has been plagued by problems.

A drilling rig jammed last year, suspending the excavation for a critical tunnel. Then in December, 11 Ecuadorean and three Chinese workers were killed and a dozen were hurt when an underground river burst into the tunnel and flooded the powerhouse. Workers drowned or were crushed by flying rocks and metal bars.

At a legislative hearing after the accident, one worker, Danny Tejedor, told the lawmakers, “I am a welder, and on various occasions I have been obligated to work in extreme conditions of high risk, deep in water.”



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