TBR News April 4, 2016
The Voice of the White House
Washington, D.C., April 4, 2016: “The growing revelations concerning the Panamanian tax fraud company are causing spastic colon here in Washington. Why? I think the answer should be obvious. A significant number of important people here have been hiding assets for years and these people now fear exposure. Many are elected representatives in both the Senate and House and reelections are looming. Major economic scandals could well determine the political make-up of both houses as well as seeing prominent leaders suddenly resigning their high offices to spend more time with their families, usually out of the country. The more things change, the more they stay the same.”
Conversations with the Crow
On October 8th, 2000, Robert Trumbull Crowley, once a leader of the CIA’s Clandestine Operations Division, died in a Washington hospital of heart failure and the end effects of Alzheimer’s Disease. Before the late Assistant Director Crowley was cold, Joseph Trento, a writer of light-weight books on the CIA, descended on Crowley’s widow at her town house on Cathedral Hill Drive in Washington and hauled away over fifty boxes of Crowley’s CIA files.
Once Trento had his new find secure in his house in Front Royal , Virginia, he called a well-known Washington fix lawyer with the news of his success in securing what the CIA had always considered to be a potential major embarrassment. Three months before, July 20th of that year, retired Marine Corps colonel William R. Corson, and an associate of Crowley, died of emphysema and lung cancer at a hospital in Bethesda, Md. After Corson’s death, Trento and his Washington lawyer went to Corson’s bank, got into his safe deposit box and removed a manuscript entitled ‘Zipper.’ This manuscript, which dealt with Crowley’s involvement in the assassination of President John F. Kennedy, vanished into a CIA burn-bag and the matter was considered to be closed forever
After Crowley’s death and Trento’s raid on the Crowley files, huge gaps were subsequently discovered by horrified CIA officials and when Crowley’s friends mentioned Gregory Douglas, it was discovered that Crowley’s son had shipped two large boxes to Douglas. No one knew their contents but because Douglas was viewed as an uncontrollable loose cannon who had done considerable damage to the CIA’s reputation by his on-going publication of the history of Gestapo-Mueller, they bent every effort both to identify the missing files and make some effort to retrieve them before Douglas made any use of them.
Douglas had been in close contact with Crowley and had long phone conversations with him. He found this so interesting and informative that he taped and later transcribed them.
These conversations have been published in a book: ‘Conversations with the Crow” and this is an excerpt.
Conversation No. 25
About the Panama Papers
by Frederik Obermaier, Bastian Obermayer, Vanessa Wormer and Wolfgang Jaschensky
Süddeutsche Zeitung
Over a year ago, an anonymous source contacted the Süddeutsche Zeitung (SZ) and submitted encrypted internal documents from Mossack Fonseca, a Panamanian law firm that sells anonymous offshore companies around the world. These shell firms enable their owners to cover up their business dealings, no matter how shady.In the months that followed, the number of documents continued to grow far beyond the original leak. Ultimately, SZ acquired about 2.6 terabytes of data, making the leak the biggest that journalists had ever worked with. The source wanted neither financial compensation nor anything else in return, apart from a few security measures.
The data provides rare insights into a world that can only exist in the shadows. It proves how a global industry led by major banks, legal firms, and asset management companies secretly manages the estates of the world’s rich and famous: from politicians, Fifa officials, fraudsters and drug smugglers, to celebrities and professional athletes.
A group effort
The Süddeutsche Zeitung decided to analyze the data in cooperation with the International Consortium of Investigative Journalists (ICIJ). ICIJ had already coordinated the research for past projects that SZ was also involved in, among them Offshore Leaks, Lux Leaks, and Swiss Leaks. Panama Papers is the biggest-ever international cooperation of its kind. In the past 12 months, around 400 journalists from more than 100 media organizations in over 80 countries have taken part in researching the documents. These have included teams from the Guardian and the BBC in England, Le Monde in France, and La Nación in Argentina. In Germany, SZ journalists have cooperated with their colleagues from two public broadcasters, NDR and WDR. Journalists from the Swiss Sonntagszeitung and the Austrian weekly Falter have also worked on the project, as have their colleagues at ORF, Austria’s national public broadcaster. The international team initially met in Washington, Munich, Lillehammer and London to map out the research approach.
Making of the data
The Panama Papers include approximately 11.5 million documents – more than the combined total of the Wikileaks Cablegate, Offshore Leaks, Lux Leaks, and Swiss Leaks. The data primarily comprises e-mails, pdf files, photo files, and excerpts of an internal Mossack Fonseca database. It covers a period spanning from the 1970s to the spring of 2016.
Moreover, the journalists crosschecked a large number of documents, including passport copies. About two years ago, a whistleblower had already sold internal Mossack Fonseca data to the German authorities, but the dataset was much older and smaller in scope: while it addressed a few hundred offshore companies, the Panama Papers provide data on some 214,000 companies. In the wake of the data purchase, last year investigators searched the homes and offices of about 100 people. The Commerzbank was also raided. As a consequence of their business dealings with Mossack Fonseca, Commerzbank, HSH Nordbank, and Hypovereinsbank agreed to pay fines of around 20 million euros, respectively. Since then, other countries have also acquired data from the initial smaller leak, among them the United States, the UK, and Iceland.
The system
The leaked data is structured as follows: Mossack Fonseca created a folder for each shell firm. Each folder contains e-mails, contracts, transcripts, and scanned documents. In some instances, there are several thousand pages of documentation. First, the data had to be systematically indexed to make searching through this sea of information possible. To this end, the Süddeutsche Zeitung used Nuix, the same program that international investigators work with. Süddeutsche Zeitung and ICIJ uploaded millions of documents onto high-performance computers. They applied optical character recognition (OCR) to transform data into machine-readable and easy to search files. The process turned images – such as scanned IDs and signed contracts – into searchable text. This was an important step: it enabled journalists to comb through as large a portion of the leak as possible using a simple search mask similar to Google.
The journalists compiled lists of important politicians, international criminals, and well-known professional athletes, among others. The digital processing made it possible to then search the leak for the names on these lists. The “party donations scandal” list contained 130 names, and the UN sanctions list more than 600. In just a few minutes, the powerful search algorithm compared the lists with the 11.5 million documents.
The research
For each name found, a detailed research process was initiated that posed the following questions: what is this person’s role in the network of companies? Where does the money come from? Where is it going? Is this structure legal?
Generally speaking, owning an offshore company is not illegal in itself. In fact, establishing an offshore company can be seen as a logical step for a broad range of business transactions. However, a look through the Panama Papers very quickly reveals that concealing the identities of the true company owners was the primary aim in the vast majority of cases. From the outset, the journalists had their work cut out for them. The providers of offshore companies – among them banks, lawyers, and investment advisors – often keep their clients’ names secret and use proxies. In turn, the proxies’ tracks then lead to heads of state, important officials, and millionaires. Over the course of the international project, journalists cooperated with one another to investigate thousands of leads: they examined evidence, studied contracts, and spoke with experts.
Among others, Mossack Fonsecas’ clients include criminals and members of various Mafia groups. The documents also expose bribery scandals and corrupt heads of state and government. The alleged offshore companies of twelve current and former heads of state make up one of the most spectacular parts of the leak, as do the links to other leaders, and to their families, closest advisors, and friends. The Panamanian law firm also counts almost 200 other politicians from around the globe among its clients, including a number of ministers.
The company
The company at the center of all these stories is Mossack Fonseca, a Panamanian provider of offshore companies with dozens of offices all over the world. It sells its shell firms in cities such as Zurich, London, and Hong Kong – in some instances at bargain prices. Clients can buy an anonymous company for as little as USD 1,000. However, at this price it is just an empty shell. For an extra fee, Mossack Fonseca provides a sham director and, if desired, conceals the company’s true shareholder. The result is an offshore company whose true purpose and ownership structure is indecipherable from the outside. Mossack Fonseca has founded, sold, and managed thousands of companies. The documents provide a detailed view of how Mossack Fonseca routinely accepts to engage in business activities that potentially violate sanctions, in addition to aiding and abetting tax evasion and money laundering.
About Süddeutsche Zeitung
Headquartered in Munich, Süddeutsche Zeitung (SZ) is one of Germany’s leading newspapers. SZ has a total readership of 4.4 million for its print and online media. Its investigative journalism team counts five people, three of which are members of the International Consortium of Investigative Journalists (ICIJ). The Süddeutsche Zeitung has won a number of prestigious awards for its research work. Its team has cooperated with other media organizations on a number of projects, including Offshore Leaks, Swiss Leaks, and Lux Leaks, which ICIJ coordinated. At the beginning of 2015, an anonymous source began sending the Süddeutsche Zeitung data from Mossack Fonseca, a provider of offshore companies. This marked the beginning of the Panama Papers project.
Tax evasion probes underway after Panama Papers leak
April 4, 2016
by Jane Wardell and Elida Moreno
Reuters
SYDNEY/PANAMA CITY- Tax authorities in Australia and New Zealand are probing local clients of a Panama-based law firm at the center of a massive data leak for possible tax evasion.
Other jurisdictions are likely to follow suit following the leak over the weekend of details of hundreds of thousands of clients in more than 11.5 million documents from the files of law firm Mossack Fonseca, based in the tax haven of Panama.
The documents are at the center of an investigation published on Sunday by the International Consortium of Investigative Journalists and more than 100 other news organizations around the globe.
The German newspaper Sueddeutsche Zeitung said it received the huge cache of documents and shared them with the other media outlets.
The leaked “Panama Papers” cover a period over almost 40 years, from 1977 until last December, and allegedly show that some companies domiciled in tax havens were being used for suspected money laundering, arms and drug deals and tax evasion.
“I think the leak will prove to be probably the biggest blow the offshore world has ever taken because of the extent of the documents,” said Gerard Ryle, director of the International Consortium of Investigative Journalists.
Britain’s Guardian newspaper said the documents showed a network of secret offshore deals and loans worth $2 billion led to close friends of Russian President Vladimir Putin. Reuters could not independently confirm those details.
Kremlin spokesman Dmitry Peskov did not immediately respond to a request for comment from Reuters on Monday.
Last week, Peskov said reports about the financial dealings of concert cellist Sergei Roldugin, a friend of Putin, and other related reports, were part of a politically motivated campaign to discredit Putin ahead of a cycle of elections.
The Australian Tax Office (ATO) said it was investigating more than 800 wealthy clients of Mossack Fonseca.
“We have now linked over 120 of them to an associate offshore service provider located in Hong Kong,” the Australian tax office said in a statement. It did not name the Hong Kong company.
ATO Deputy Commissioner Michael Cranston said his office was working with the Australian police and the anti-money laundering regulator AUSTRAC to cross-check the data, and some cases may be referred to the Serious Financial Crime Taskforce.
The 800 individuals under investigation include taxpayers who had previously been investigated and others who had reported themselves to the tax office under a voluntary disclosure initiative which allowed people to come forward and avoid steep penalties and criminal charges and has since ended.
However, the ATO said those under investigation also included many taxpayers who had not previously come forward.
DATABASE “HACK”
The head of Mossack Fonseca has denied any wrongdoing but said his firm had suffered a successful but “limited” hack on its database. The firm’s director, Ramon Fonseca, described the hack and leak as “an international campaign against privacy”.
Fonseca, who was up until March a senior government official in Panama, said in a telephone interview with Reuters on Sunday the firm, which specializes in setting up offshore companies, has formed more than 240,000 such companies. The “vast majority” of these have been used for “legitimate purposes”, he said.
The papers also showed the involvement of Pakistini Prime Minister Nawaz Sharif’s family in off-shore companies, including his daughter Mariam and son Hussain. Pakistani Information Minister Pervez Rasheed denied any wrongdoing on the Sharifs’ part.
“Every man has the right to do what he wants with his assets, to throw them in the sea, to sell them, or to establish a trust for them. There is no crime in this in Pakistani law or in international law,” Rasheed said.
Hussain Nawaz, speaking to Geo TV, also said there was nothing illegal either about the family’s ownership of the companies, or about the activities of the companies themselves.
“I have never hidden anything and neither do I have any need to hide them…these companies are allowed under British law so that one does not need to pay unnecessary taxes,” he said.
New Zealand’s tax agency said it was working closely with its tax treaty partners to obtain full details of any New Zealand tax residents who may have been involved in arrangements facilitated by Mossack Fonseca.
Separately, media reports said the leaked data pointed to a link between a member of global soccer body FIFA’s ethics committee and a Uruguayan soccer official who was arrested last year as part of a U.S. probe into corruption in the sport.
FIFA’s ethics committee said on Sunday that Juan Pedro Damiani, a member of the committee’s judgment chamber, was being investigated over a possible business relationship with fellow Uruguayan Eugenio Figueredo, one of the soccer officials arrested in Zurich last year.
Damiani told Reuters in Montevideo he broke off relations with Figueredo when the latter was accused of corruption.
(Additional reporting by Brian Homewood; Writing by Sam Holmes and Angus MacSwan,; Editing by Philippa Fletcher)
A Key Similarity Between Snowden Leak and PanamaPapers: Scandal is What’s Been Legalized
April 4, 2016
by Glenn Greenwald
The Intercept
From the start of the reporting based on Edward Snowden’s leaked document archive, government defenders insisted that no illegal behavior was revealed. That was always false: multiple courts have now found the domestic metadata spying program in violation of the Constitution and relevant statutes and have issued similar rulings for other mass surveillance programs; numerous articles on NSA and GCHQ documented the targeting of people and groups for blatantly political or legally impermissible purposes; and the leak revealed that President Obama’s top national security official (still), James Clapper, blatantly lied when testifying before Congress about the NSA’s activities: a felony.
But illegality was never the crux of the scandal triggered by those NSA revelations. Instead, what was most shocking was what had been legalized: the secret construction of the largest system of suspicionless spying in human history. What was scandalous was not that most of this spying was against the law, but rather that the law – at least as applied and interpreted by the Justice Department and secret, one-sided FISA “courts” – now permitted the U.S. Government and its partners to engage in mass surveillance of entire populations, including their own. As the ACLU’s Jameel Jaffer put it after The Washington Post‘s publication of documents showing NSA analysts engaged in illegal spying: “The ‘non-compliance’ angle is important, but don’t get carried away. The deeper scandal is what’s legal, not what’s not.”
Yesterday, dozens of newspapers around the world reported on what they are calling the Panama Papers: a gargantuan leak of documents from a Panama-based law firm that specializes in creating off-shore shell companies. The documents reveal billions of dollars being funneled to off-shore tax havens by leading governmental and corporate officials in numerous countries (the U.S. was oddly missing from the initial reporting though journalists vow that will change shortly).
Some of these documents undoubtedly reveal criminality: either monies that were illegally obtained (and are being hidden for that reason) or assets being concealed in order to criminally evade tax debts. But the crux of this activity – placing assets off-shore in order to avoid incurring tax liability – has been legalized. That’s because western democracies along with overt tyrannies are typically controlled by societies’ wealthiest, and laws are enacted to serve their interests. Vox‘s Matt Yglesias this morning published a very good explainer of various aspects of this leak and he makes that point clear:
Even as the world’s wealthiest and most powerful nations have engaged in increasingly complex and intensive efforts at international cooperation to smooth the wheels of global commerce, they have willfully chosen to allow the wealthiest members of Western society to shield their financial assets from taxation (and in many cases divorce or bankruptcy settlement) by taking advantage of shell companies and tax havens.
If Panama or the Cayman Islands were acting to undermine the integrity of the global pharmaceutical patent system, the United States would stop them. But political elite of powerful western nations has not acted to stop relatively puny Caribbean nations from undermining the integrity of the global tax system — largely because western economic elites don’t want them to. . . .
But even though various criminal money-laundering schemes are the sexiest possible use of shell companies, the day-to-day tax dodging is what really pays the bills. As a manager of offshore bank accounts told me years ago, “people think of banking secrecy as all about terrorists and drug smugglers, but the truth is there are a lot of rich people who don’t want to pay taxes.” And the system persists because there are a lot of politicians in the west who don’t particularly want to make them. . . .
Incorporating your hedge fund in a country with no corporate income tax even though all your fund’s employees and investors live in the United States is perfectly legal. So is, in most cases, setting up a Panamanian shell company to own and manage most of your family’s fortune.
Tax avoidance is an inevitable feature of any tax system, but the reason this particular form of avoidance grows and grows without bounds is that powerful politicians in powerful countries have chosen to let it happen. As the global economy has become more and more deeply integrated, powerful countries have created economic “rules of the road” that foreign countries and multinational corporations must follow in order to gain lucrative market access.
Proving that certain behavior is “legal” does not prove that it is ethical or just. That’s because corrupted political systems, by definition, often protect and legalize exactly the behavior that is most unjust. Vital journalism does not only expose law-breaking. It also highlights how corrupted political and legal systems can be co-opted by the most powerful in order to legally sanction atrocious and destructive behavior that serves their interests, typically with little or no public awareness that it’s been done.
In such cases, as Jaffer put it, “the deeper scandal is what’s legal, not what’s not.” The key revelation is not the illegality of the specific behavior in question but rather the light shined on how our political systems function and for whose benefit they work. That was true of the Snowden leak, and it’s true of the PanamaPapers as well
Russia, Pakistan and others on defensive following release of ‘Panama Papers’
Public figures from around the world have reacted to the leak, which exposes a vast network of offshore entities. 12 current and former leaders are among those named in the trove of documents.
April 4, 2016
DW
Reactions from leaders around the globe have begun to trickle out in the wake of the leak, and most of them, predictably, have been struck a defensive tone.
Icelandic Prime Minister Sigmundur David Gunnlaugsson and the family of Pakistani Prime Minister Nawaz Sharif were among those who defended themselves after being named in the “Panama Papers,” a giant leak of offshore fianancial records first published by German newspaper “Süddeutsche Zeitung” on Sunday
For Gunnlaugsson, who was elected prime minister in 2013, the revelation came in one of the most awkward ways imaginable.
During a television interview for Swedish channel SVT, Gunnlaugsson was asked if he’d ever had illicit dealings with an offshore company.
“As I say, my assets have always been on the table,” said Gunnlaugsson, growing visibly uncomfortable.
When the journalist then confronted the prime minister about his connections to a company called Wintris, Gunnlaugsson denied knowledge of it and walked out of the interview. Since then, pressure has been mounting in Iceland for him to resign, including from former Prime Minister Johanna Sigurdardottir.
‘There is nothing wrong with it’
The family of Sharif denied any wrongdoing after the leak revealed that several of his children own London real estate through offshore firms.
Sharif’s son Hussain told a Pakistani broadcaster that his family had done nothing illegal.
“Those apartments are ours and those offshore companies are also ours,” he said. “There is nothing wrong with it and I have never concealed them, nor do I need to do that.”
Opposition leader Imran Khan, however, referred to the revelations as “vindication.”
‘Attacks’ on Russia
Officials in the Russian government also responded to the leak, which named people with close ties to President Vladimir Putin as having prospered from various shadow companies.
Irina Yarovaya, head of the anti-corruption committee in Russia’s lower house of parliament, was quoted by a state news agency as likening the leak’s “informational attacks” to “poison” in attempt to “demoralize” Russia.
The Kremlin also dismissed the leak. “Putin, Russia, our country, our stability and the upcoming elections are the main target, specifically to destabilize the situation,” a spokesperson told reporters on Monday.
French President Francois Hollande, on the other hand, praised the efforts of whistleblowers.
“All the information revealed will lead to investigations brought by the tax authorities and to legal proceedings,” Hollande said.
Ties between Germany and Russia enter new chill
April 4, 2016
by Paul Carrel and Andreas Rinke
Reuters
BERLIN-At an hour-long meeting in Moscow on March 23, Russian Foreign Minister Sergei Lavrov irritated his German counterpart by raising the case of a German-Russian girl who said she was raped by migrants in Berlin earlier this year.
After the girl’s claims were reported by Russian media in January, Lavrov accused Germany of “sweeping problems under the rug.” The Berlin public prosecutor’s office, though, said a medical examination had found the girl had not been raped.
That was why Germany’s Foreign Minister Frank-Walter Steinmeier was so upset when Lavrov raised the issue again. “I can only hope that such incidents and difficulties, as we had in that case, aren’t repeated,” he told reporters afterwards.
The rape case is indicative of the mutual suspicion that officials from both countries say extends to the highest levels of government. At the root of those tensions lie opposing visions for Europe and the Middle East. Those rival visions have led to clashes at diplomatic negotiating tables, in cyberspace and in the media.
German and other European security officials accuse Russian media of launching what they call an “information war” against Germany. By twisting the truth in reports on Germany’s migrant crisis, the officials say, Russia hopes to fuel popular angst, weaken voters’ trust in Chancellor Angela Merkel, and feed divisions in the European Union so that it drops sanctions against Moscow.
“Russian propaganda is a danger to the cohesion of our society,” Ole Schroeder, German deputy interior minister and a member of Merkel’s conservatives, told Reuters.
Russian officials deny their country is mounting a campaign against Germany. “These accusations are atrocious,” said one Russian official, who said Moscow is the victim of an “indiscriminate information war” being waged from Germany.
In February, Dmitry Peskov, a spokesman for Russian President Vladimir Putin, denied the Kremlin had exploited the rape case to stir up tensions around immigration in Germany.
“We cannot agree with such accusations,” Peskov said. “On the contrary, we were keen that our position be understood, we were talking about a citizen of the Russian Federation. Any country expresses its concerns (in such cases). It would be wrong to look for any hidden agenda.”
But officials in Berlin say Russia’s aim is to muddy what is true and what is not and shake Germans’ trust in Merkel. “The idea today is to get disinformation, which means you don’t believe anything,” Hans-Peter Hinrichsen, a Foreign Ministry official, told a recent meeting on Russia’s role in Europe at the German Council on Foreign Relations (DGAP).
German and European officials say Russia’s aim is two-fold: To exaggerate the problems the migrant crisis is causing Germany and to push Germany to relax its backing for European sanctions on Russia over Moscow’s interference in Ukraine. While EU governments last month extended asset freezes and travel bans on Russians and Russian companies, there is less consensus on whether to prolong more far-reaching sanctions on Russia’s banking, defence and energy sectors from July.
Both sides agree on one point: relations between the two countries are at their lowest point since the early days of the Cold War.
BIKINI TROLLS?
Beginning in the late 1960s, the then West Germany pursued a policy of ‘Ostpolitik’, which encouraged warmer ties with Russia. After the collapse of the Soviet Union, the two countries grew even closer thanks to trade and cultural ties. But those ties began unraveling when Vladimir Putin returned as Russian president in 2012, and worsened further after the Ukraine crisis began in late 2013.
“All the networks, all the personal ties – they just don’t work anymore,” said Stefan Meister, at the DGAP.
The accusations of disinformation have spawned a whole new vocabulary. Officials at NATO now talk about the ‘weaponization of information’ by Russia. Colonel Aivar Jaeski, deputy director at the NATO Strategic Communications Centre of Excellence, says Russia’s campaign against Europe uses “angry trolls” who produce online hate speech, and “bikini trolls” to lure followers and then sow discord and doubt about news events.
Jaeski pointed to a NATO StratCom report on trolling, which says the Guardian newspaper’s online edition was targeted “in a troll attack that is considered to have been ordered by the Kremlin” over its reporting on the downing of Malaysia Airlines flight MH17 over Ukraine.
The Kremlin has repeatedly denied funding or backing online trolls, and has specifically denied any connection with a company based in St Petersburg whose ex-employees have said they were paid to spread disinformation, praise Putin and criticize the West.
A GERMAN CAMPAIGN?
In the rape case, Russian media reported the German-Russian girl – under German law she can only be identified as Lisa F. – had been abducted by ‘Arab-looking men’ and raped repeatedly over a 30-hour period. Janis Sarts, director of the NATO Strategic Communications Centre of Excellence, said Russian media continued to report that even after the Berlin authorities said the girl had not been raped.
Europe’s East StratCom Task Force has collected dozens of examples of Russian reporting on the migrant crisis that it says are clear cases of deliberate disinformation.
German daily Bild reported in March that Germany’s foreign and domestic intelligence agencies were warning of increasing Russian interference in German politics.
Moscow rejects the idea of any coordinated campaign. One Russian official said there was a German media campaign to paint Russia in a bad light and “demonize” it. The official said that Russian media had formerly been too positive about Germany and were now more objective. “This ends the discrepancy that saw the German media be very critical of Russia and the Russian media paint a very favorable picture of Germany,” he said.
BLACK BOX
At the March 23 meeting, the two countries reached an “academic cooperation accord.” Both sides also continue to emphasize cultural ties.
But repairing political ties may be harder. Germany’s Social Democratic Party (SPD) – junior members in Merkel’s ruling coalition and the party behind “Ostpolitik” all those decades ago – seems increasingly ready to compromise with Moscow. Sigmar Gabriel, an SDP member and Germany’s Economy Minister, said recently that the EU should try to lift sanctions on Russia by this summer.
Merkel, though, has refused to ease the sanctions, insisting that Russia first needs to comply with an agreement to enforce a ceasefire, pull back heavy weapons, exchange prisoners, and hold internationally monitored local elections in eastern Ukraine.
German officials say Merkel speaks to Putin more than any other Western leader and recognizes better than most that the Russian leader respects firmness.
But the governments still struggle to understand each other.
“The Kremlin is like a Black Box: we have a rough idea of who sits in the Black Box but we have no idea what they are thinking, what they are worried about, what they are thinking for 5-10 years’ time,” a senior German official said.
(Additional reporting by Sabine Siebold in Berlin, Robin Emmott in Brussels and Andrew Osborne in Moscow; Edited by Simon Robinson)
FBI to help US law enforcement unlock iPhones, report says
Leaked FBI advisory tells state and local law enforcement that they are ‘in this together’ and federal agency will aid unlocking of iPhones where possible
April 4, 2016
by Samuel Gibbs
The Guardian
The FBI has told other US law enforcement agencies that it will help them to unlock the iPhones of suspected criminals.
In a memo sent to law enforcement agencies, published by BuzzFeed, the FBI said that following the successful unlocking of the San Bernardino shooter’s iPhone 5C without Apple’s help, it will consider any tool that will aid its “partners”.
Kerry Sleeper, assistant director of the FBI’s partnership engagement office said: “In mid-March, an outside party demonstrated to the FBI a possible method for unlocking the iPhone. That method for unlocking that specific iPhone proved successful.
“As has been our longstanding policy, the FBI will of course consider any tool that might be helpful to our partners. Please know that we will continue to do everything we can to help you consistent with our legal and policy constraints.”
The FBI has a notoriously rocky partnerships with non-federal law enforcement agencies, typically portrayed as the feds swooping in and taking over cases, leaving local police floundering. But the improvements within encryption, the move to make mobile devices secure against criminals can also lock out law enforcement from what they consider crucial information.Since the San Bernardino case, the FBI has reportedly been inundated with requests for assistance in various local cases. It had previously rebuffed claims that it was helping in local cases, including a murder in Arkansas. The FBI has yet to widely divulge how it accessed the data on the iPhone 5C.
Sleeper said: “We know that the absence of lawful, critical investigative tools due to the “Going Dark” problem is a substantial state and local law enforcement challenge that you face daily.”
Whatever the lengths of help the FBI is likely to extend to local law enforcement, it is widely believed that Apple’s smartphones newer than the iPhone 5C – those that utilise the company’s Touch ID system – are likely to be much harder to break into.
Apple and other smartphone manufacturers have committed to encryption as a way to keep criminals out, and those breaking the law will use any and all techniques that law enforcement are likely to find, making it a three-way arms race between the smartphone manufacturers, criminals and law enforcement.
Sleeper said: “You have our commitment that we will maintain an open dialogue with you. We are in this together.”
Nagorno-Karabakh: The April Fool’s War
Another “triumph” of US diplomacy
April 4, 2016
by Justin Raimondo
AntiWar
Last Thursday US Secretary of State John Kerry met with Azerbaijan’s dictator Ilham Aliyev in Washington and called for “an ultimate resolution” of the decades-old conflict in the disputed province of Nagorno-Karabakh. On Friday, as the hereditary Azeri despot was on the plane back to Baku, Azeri troops were already launching an offensive against the breakaway Republic of Nagorno-Karabakh. One of the first casualties was a 12-year-old Armenian boy.
Naturally, the Azeris claim they were attacked first, but this seems unlikely. The front lines in the simmering conflict have been pretty stable since the conclusion of the post-Soviet war between Armenia and Azerbbaijan, which ended in victory for the former and de facto independence for the primarily Armenian region of Nagorno-Karabakh. Already in possession of the disputed territory, the Nagorno-Karabakhians had nothing to gain by restarting the fighting — and it seems more than coincidental that fresh hostilities commenced immediately upon Kerry’s rather absurd pronouncement.
Absurd because the “crisis’ has already been resolved – today Nagorno-Karabakh is an independent state, in spite of the refusal of the United States to recognize it, and it has enjoyed this status since 1994, when the last Azeri troops were driven from the territory. That the Secretary of State would choose to intervene at this point seems, at best, highly suspicious. Did Kerry give the green light to the Azeris?
I wouldn’t be the least bit surprised. After all, the US has consistently stood with the Azeris no matter which party is in the Oval Office. Washington’s reasons are two-fold: geopolitics and money, not necessarily in that order.
The geopolitical factor involves the US policy of encircling Russia. Ever since the fall of the Soviet Union, Washington has sought to extend its sphere of influence deep into the territory of the former USSR by courting the Oriential despots, like the Aliyev clan, who rule over these former communist “republics.” Which brings us to the second, albeit no less influential factor: money. The central Asian states like Azerbaijan, Kazakhstan, etc. are a rich source of Caspian Sea oil, where huge deposits have been discovered. The problem is how to transport the oil to European and US markets – without pumping it through Russian pipelines.
The solution: the BTC (Baku to Ceyhan, Turkey) pipeline. In 1994, Ilham Alivey’s father, Heydar, announced what he called “the Contract of the Century” in a speech to the Harriman Institute in New York City. His government had just signed an agreement with a consortium of oil companies and investment bankers, giving the biggest oil companies in the world – Amoco, Pennzoil, British Petroleum, Unocal, McDermott, Statoil, Lukoil, and the state-owned oil companies of Turkey and the Saudi Kingdom – exclusive rights to Azerbaijan’s oil and gas reserves. A few years later, Aliyev senior was at the White House with Vice President Al Gore presiding over a ceremony announcing a contract with Chevron, Exxon/Mobil and Azerbaijan’s State Oil Company (SOCAR).
The Clinton administration took up this project with alacrity: in the summer of 1998, Bill Clinton created the Office of the Special Advisor to the President and the Secretary of State for Caspian Basin Energy Diplomacy – a portentous title for what was one of the most brazenly mercantilist US government projects since the Export-Import Bank. Morningstar started off his career as a corporate lawyer and rose to become President and CEO of Costar Corporation, a maker of plastics and other oil-based byproducts. Clinton appointed him to head up the Overseas Private Investment Corporation, another crony capitalist slush fund, and he went on to become Undersecretary of State on Assistance to the New Independent States of the Former Soviet Union and US Ambassador to the European Union. His background as a crony-capitalist and committed internationalist certainly suited him for the Caspian Basin gig, during which time billions of taxpayer dollars were doled out to Big Oil and attendant contractors to fund the BTC pipeline. He was appointed US Ambassador to Azerbaijan by President Barack Obama, in 2012, stepping down in 2015 for a job at Madeleine Albright’s Stonebridge-Albright Group.
Morningstar’s career outlines the corporate and political interests that have been manipulating governments and juggling the fate of nations along the so-called Great Silk Road – the southern Caucasus region that promises great riches to whoever can control it. Long a crossroads of conquering armies, it is today the scene of simmering ethnic and religious conflicts that threaten the best laid plans of the most powerful men on earth – the national aspirations of the people of Nagorno-Karabakh being only one of them.
The original – and cheapest – route for the BTC pipeline went through Armenia, but this was vetoed by Aliyev, and so a more circuitous (and expensive) route was charted: Aliyev gloated that Yerevan would be “isolated.” Yet the pipeline snakes just a few miles from Nagorno-Karabakh, and it isn’t hard to see that this fresh outbreak of violence might endanger operations – and the US government’s hefty investment. It’s not hard to imagine the renewed conflict triggering that old standby of the interventionists: “American interests” (i.e. the financial interests of major corporate donors to the war chests of political candidates) are “threatened”!
Washington has consistently sided with the Azeris in their claim to Nagorno-Karabakh. As I wrote in 1999:
“The US State Department’s tilt toward Azerbaijan on the Nagorno-Karabakh issue was expressed, albeit rather obliquely, in a recent statement: “Armenia’s observance of international law and obligations and OSCE commitments in this respect has been marred by the ongoing conflict over Nagorno-Karabakh. Karabakh Armenians, supported by the Republic of Armenia, now hold about one fifth of Azerbaijan and have refused to withdraw from occupied territories until an agreement on the status of Nagorno-Karabakh is reached.” But Azerbaijan is a Soviet fiction, created by Stalin who fixed its border to keep the Armenians down and the Azeris fully occupied. But the idea that the borders of the phony Soviet “republics” are permanent, and represent anything even approximating justice, is absurd. Yet this is the position the US government has taken in the past, and continues to take.”
The US position has been consistent to this day, with the State Department demanding the withdrawal of Armenian forces from Nagorno-Karabakh and the deployment of Western-backed “peacekeepers” to make sure the Armenians don’t get out of hand with impudent demands for self-determination. The referendum held in 1991 – in which the locals voted for secession from Azerbaijan — is contemptuously disdained by US officials, just as the Crimean referendum in which voters overwhelmingly chose secession from Ukraine is denounced as “illegitimate.”
Indeed, the Crimean analogy fits Nagorno-Karabakh to a tee. As in Ukraine, which Soviet despot Nikita Khrushchev rewarded with Crimea in 1954, so in the Caucasus, where Joseph Stalin – before his rise to absolute power – handed Nagorno-Karabakh to Azerbajian, with Lenin’s approval. As the Soviets marched into Central Asia, subjugating Armenia and Azerbaijan, the Communists decided that it would be better to placate Kemal Ataturk’s regime in Turkey than to allow the Nagorno-Karabakhians the right to set up their own autonomous “republic.” The Stalinist policy of divide and conquer – splitting up the Armenian-populated areas so as to tamp down “anti-Soviet” nationalist sentiment – persisted until Communist rule imploded.
In Ukraine, the US government insists on the legitimacy of Khrushchev’s decision to sever Crimea from Russia and make a gift of it to Ukraine: in Nagorno-Karabakh, they uphold the legacy of Stalin and Lenin, who sought to keep the Armenians in line by making them live under Azeri rule.
Like Lenin and the Bolsheviks, part of Washington’s reason for this latter stance is to placate Turkey, which unequivocally takes the side of their “Turkic” allies, the Azeris. The current conflict is just another dimension of the unfolding Russo-Turkish conflict, which started in Syria and is now being extended into Nagorno-Karabakh (Armenia, for its part, is aligned with Russia). The ultra- nationalistic Turks, whose ideology of “Pan-Turkism” foresees Turkey as a rising superpower expanding its influence all the way across Central Asia until it reaches the border of China (!), are involved in this up to their eyeballs. And remember: Turkey is a NATO member. In any conflict between Turkey and Russia, the US is obligated by treaty to come to their defenseNow there’s yet another reason why Donald Trump is right about NATO being “obsolete.”
What did Kerry say to Aliyev Junior that precipitated this crisis? We’ll never know for sure, but of one thing we can be certain: Washington’s meddling in this mess can only result in disaster. Will the April Fool’s War, otherwise known as Kerry’s Provocation, go down in history as yet another blundering intervention by the Americans in a troubled region where they have no business interfering?
I’d bet the ranch on it.
Saudi Arabia to boost non-oil income by 2020
April 4, 2016
RT
To ease the burden of lower crude prices, the Saudi government plans to accelerate subsidy cuts and introduce more taxes. The step is intended to raise $100 billion a year by 2020, according to Deputy Crown Prince Mohammed bin Salman cited by Bloomberg.
Last year, the country’s non-oil revenue grew 35 percent to $44 billion (163.5 billion riyals), according to preliminary data. “It’s a large package of programs that aims to restructure some revenue generating sectors,” said the prince.
The proposed measure will include restructuring subsidies, imposing a value added tax and a levy on luxury items as well as energy and sugary drinks. The government is also discussing plans to introduce a program similar to the US Green Card to raise more revenue.
Last week, the Saudi government said it was considering selling a stake in the state-owned energy company Saudi Aramco and transform it into an industrial conglomerate.
Riyadh also wants to create a $2 trillion sovereign wealth fund to help the kingdom shift away from oil.
Prince Mohammed expects the value added tax to bring about $10 billion a year by 2020 with restructured subsidies raising over $30 billion a year. Permission for companies to hire more foreigners than the quota stipulates for a fee along with the Green Card-like program would make $10 billion a year each.
The country currently has a record budget deficit which is expected to reach $87 billion this year. Saudi Arabia’s foreign reserves, the third-largest in the world after China and Japan, plunged to $640 billion last year from $737 billion in 2014.
The country’s debt level might climb 30-35 percent of gross domestic product by 2020 from less than two percent in 2014, according Minister of State Mohammad bin Abdulmalik Al-Sheikh. “We’re going to borrow but, by 2020, our plan is that we will have a balanced budget,” said the Minister.
As oil sales account for almost 80 percent of the kingdom’s revenue, the crude price crisis has had a huge impact on the economy.
How we’re unwittingly letting robots censor the Web
March 29, 2016
by Caitlin Dewey
Washington Post
YouTube is infamously circumspect about these sorts of things, so Mike Michaud can’t prove his suspicions for certain. But the chief executive of the Web entertainment empire Channel Awesome is pretty sure that, earlier this year, his eight-year-old company was almost killed by algorithm.
Channel Awesome, which was founded in 2008, produces a number of podcasts and Web series about music, movies, TV shows and video games. The company sells DVDs and publishes on platforms like Vessel, but it makes most of its money through YouTube advertising.
On Jan. 5, Michaud received notice that YouTube would no longer pay Channel Awesome the ad revenue it relies on to pay studio rent, production costs and the salaries of its five employees. The reason, as explained via automated email, was a single copyright complaint by the Japanese animation house Studio Ghibli.
The complaint was clearly flawed, Michaud and his lawyer agreed: It disputed Channel Awesome’s right to use short clips of Studio Ghibli animation in a review of a film, something generally regarded as fair use — an important exception to copyright law that lets people excerpt protected material for parody, commentary or criticism. If someone at YouTube just took a moment to review it, Michaud earnestly believed, they would see the error, too.
Michaud tried to file a copyright counter-claim, but the website was broken and returned repeat error messages. He sent emails and certified letters to YouTube but only got form letters back.
Michaud Thedidn’t realize it at the time, but he had just stumbled upon the open secret of the modern online copyright system: When it comes to matters of leaving content up or taking it down, algorithms frequently make the most crucial decisions. That can leave everyday users scrambling to save their work and business.
“I understand that YouTube isn’t in the position to monitor every copyright complaint it gets,” said Michaud, who — after a month without revenue — went public with his story. “But once they’re considering an action that will hurt someone’s livelihood, that should be monitored by a person.”
Now more than ever before, however, that’s simply not the case. In fact, a new report on the effectiveness of online takedown procedures, published online today, finds that, particularly at large companies, decisions about whether content stays up or disappears are increasingly being made entirely by software — with room for serious error.
During a single six-month period, the reports finds, the companies tracked by the Lumen copyright database received 30.1 million obviously questionable takedown requests would have “benefit from human review.” Of those, 8 million takedown requests targeted content that, like Michaud’s, arguably constituted fair use.The report is the culmination of two years of research and the first truly comprehensive review of online takedown procedures since the current policy regime came into effect in the late 1990s. It’s the product of three discrete studies, two of them drawing largely from Google, as well as dozens of interviews with copyright-holders, takedown enforcement organizations and online platforms.
“The sites that get a lot of takedown requests have very sophisticated processes in place to handle them,” said Joe Karaganis, the vice president of Columbia University’s American Assembly and the co-author, with University of California at Berkeley’s Jennifer Urban and Brianna Schofield, of the new report. “Still, millions of errors go through. … And we should weigh the limitations on speech as the system spins further out of control.”
Thanks to a recent proliferation of illegal (often foreign) streaming video and direct download sites, as well as the continued growth of peer-to-peer networks and increased Internet speeds, virtually every major movie, TV show, album, software program and ebook is available illegally as soon as it’s released. A widely circulated 2013 report, which found that a quarter of all Internet bandwidth is devoted to illegal piracy, underscored the enormous, superhuman scale of the pirate economy. In all of 2009, Google received 4,000 takedown notices; they now register 19 million per week.
“In an automated world, you can’t compete manually,” said Nate Glass, the outspoken owner of the porn-focused copyright firm Takedown Piracy. “You could never keep up that way. It’s crazy.”
And yet, as people on both sides of the process adopt more and more sophisticated automation, it becomes less clear — both to users and concerned observers — whether a human ever reviews takedown requests before punitive action is taken.
On the complaint side, major rights-enforcement organizations, like Takedown Piracy, MarkMonitor and DMCA Force, employ search spiders to crawl thousands of Web pages, searching for keywords or movie stills that match their client’s intellectual property. Once compiled, the links funnel to a database where they can hypothetically be triaged and escalated by human moderators.
But the degree of human moderation varies: Even at the largest and best-reputed REOs, most decisions about takedown notices are defaulted to the algorithm, the new report finds.
A senior manager at one leading firm, who agreed to speak to The Post on condition of anonymity because he has received death threats over his work, said that while his company stresses accuracy and fairness, it’s impossible for seven employees to vet each of the 90,000 links their search spider finds each day. Instead, the algorithm classifies each link as questionable, probable or definite infringement, and humans only review the questionable ones before sending packets of takedown requests to social networks, search engines, file-hosting sites and other online platforms.
Meanwhile, on the platform’s end, copyright law requires sites to process each and every complaint they receive, and to do it “expeditiously” — or risk serious, and quite expensive, legal liability. Karaganis, Urban and Schofield find that the vast majority of all sites still use humans to do this sort of processing. But among large social networks, search engines and file-hosts — in other words, the ones that get the most complaints — it’s increasingly common to rely on automated triage-and-escalation systems, similar to the ones used by third-party rights-enforcement organizations.
YouTube says, for instance, that it uses a mix of “algorithmic and human review” to assess takedown requests. (A spokesperson declined to elaborate on at what point in the process, and how often, humans step in.) Through a separate, proprietary system called Content ID, which goes above and beyond current copyright law, YouTube also automatically scans new uploads against a database of copyrighted material, which allows rights-holders to block or monetize matches
YouTube’s parent company, Google, also relies to some degree on algorithmic review, and processes takedown requests from certain “trusted” reporters with no human review at all. Glass, who belongs to Google’s Trusted Copyright Removal Program, says that Google delists roughly 97 percent of the links that he reports within seconds.
Social networks tend to be more secretive about their copyright procedures: None of the major platforms agreed to discuss automation with The Post. But high-profile mistakes made in the past suggest that many of them also employ some sort of automated copyright system. In October, for instance, Instagram unfairly suspended the accounts of dozens of users in response to an overzealous copyright complaint by Janet Jackson’s management; later, the company blamed the suspensions on a “bug,” and declined to answer questions on whether human moderators had ever reviewed them.
Meanwhile, Twitter manually processes copyright complaints in the order that they’re received, and does not take any action without human review. But according to the site’s latest transparency report, takedown notices spiked 89 percent between July and December 2015 — which means that, even if Twitter manually vets complaints now, it might not always have the luxury.
“Bots are much more likely to make mistakes I think,” said Ernesto Van der Sar, the editor-in-chief of the piracy news site TorrentFreak and a long-term observer of this space. “We have spotted dozens of errors that humans could have easily avoided. Some automated systems are set up pretty badly, allowing for very simple mistakes.”
Despite the margin of error, most major players seem to be trending away from human review. The next frontier in the online copyright wars is automated filtering: Many rights-holders have pressed for tools that, like YouTube’s Content ID, could automatically identify protected content and prevent it from ever publishing. They’ve also pushed for “staydown” measures that would keep content from being reposted once it’s been removed, a major complaint with the current system.
“The best way to minimize the cost of sending and responding to so many notices of infringement is to use automated techniques,” wrote the Information Technology and Innovation Foundation, a tech policy think tank, in a recent statement to the Copyright Office on the notice-and-takedown issue. “In particular, online service providers can use automated filtering systems that check content as it is uploaded to stop a user from reposting infringing content.”
That alarms both small platforms that can’t afford filtering technology and Internet rights groups who fear the silencing of legitimate speech and creative activity. Just last September, they point out, a landmark copyright case affirmed that copyright-holders must consider fair use before sending takedown notifications. While it’s unclear how that would work in practice, it doesn’t seem consistent with filtering or other types of unmoderated automation.
“No computer program can make accurate calls on what’s free speech and what’s not,” said Mitch Stoltz, a senior staff attorney at the Electronic Frontier Foundation. “You can’t encode the Supreme Court into a computer program.”
Michaud and his colleagues at Channel Awesome agree — and now, they’re going on the offensive. On Feb 16, one of Channel Awesome’s flagship shows, “Nostalgia Critic,” published a 20-minute rant about fair use and YouTube that’s since been viewed more than 1.5 million times and earned a tweet from YouTube chief executive Susan Wojcicki. They plan to announce some kind of initiative in the near future that will further the cause of fair use and notice-and-takedown review online.
“Fair use creates content, and content creates jobs,” said Michaud, who has had to delay hiring a sixth employee because of the company’s January loss. “But nobody’s watching. Nobody’s looking out.”
Until someone does watch, Michaud and Channel Awesome aren’t taking any chances: They’ve voluntarily deleted all of their reviews of Studio Ghibli films, even though they think they have a valid fair use defense. It’s grating, Michaud acknowledges, but the company already lost a full month’s revenue. Who knows how much damage another bad copyright claim would do.
The Most Dangerous Place on Earth
A Nuclear Armageddon in the Making in South Asia
by Dilip Hiro
TomDispatch
Undoubtedly, for nearly two decades, the most dangerous place on Earth has been the Indian-Pakistani border in Kashmir. It’s possible that a small spark from artillery and rocket exchanges across that border might – given the known military doctrines of the two nuclear-armed neighbors – lead inexorably to an all-out nuclear conflagration. In that case the result would be catastrophic. Besides causing the deaths of millions of Indians and Pakistanis, such a war might bring on “nuclear winter” on a planetary scale, leading to levels of suffering and death that would be beyond our comprehension.
Alarmingly, the nuclear competition between India and Pakistan has now entered a spine-chilling phase. That danger stems from Islamabad’s decision to deploy low-yield tactical nuclear arms at its forward operating military bases along its entire frontier with India to deter possible aggression by tank-led invading forces. Most ominously, the decision to fire such a nuclear-armed missile with a range of 35 to 60 miles is to rest with local commanders. This is a perilous departure from the universal practice of investing such authority in the highest official of the nation. Such a situation has no parallel in the Washington-Moscow nuclear arms race of the Cold War era.
When it comes to Pakistan’s strategic nuclear weapons, their parts are stored in different locations to be assembled only upon an order from the country’s leader. By contrast, tactical nukes are pre-assembled at a nuclear facility and shipped to a forward base for instant use. In addition to the perils inherent in this policy, such weapons would be vulnerable to misuse by a rogue base commander or theft by one of the many militant groups in the country.
In the nuclear standoff between the two neighbors, the stakes are constantly rising as Aizaz Chaudhry, the highest bureaucrat in Pakistan’s foreign ministry, recently made clear. The deployment of tactical nukes, he explained, was meant to act as a form of “deterrence,” given India’s “Cold Start” military doctrine – a reputed contingency plan aimed at punishing Pakistan in a major way for any unacceptable provocations like a mass-casualty terrorist strike against India.
New Delhi refuses to acknowledge the existence of Cold Start. Its denials are hollow. As early as 2004, it was discussing this doctrine, which involved the formation of eight division-size Integrated Battle Groups (IBGs). These were to consist of infantry, artillery, armor, and air support, and each would be able to operate independently on the battlefield. In the case of major terrorist attacks by any Pakistan-based group, these IBGs would evidently respond by rapidly penetrating Pakistani territory at unexpected points along the border and advancing no more than 30 miles inland, disrupting military command and control networks while endeavoring to stay away from locations likely to trigger nuclear retaliation. In other words, India has long been planning to respond to major terror attacks with a swift and devastating conventional military action that would inflict only limited damage and so – in a best-case scenario – deny Pakistan justification for a nuclear response.
Islamabad, in turn, has been planning ways to deter the Indians from implementing a Cold-Start-style blitzkrieg on their territory. After much internal debate, its top officials opted for tactical nukes. In 2011, the Pakistanis tested one successfully. Since then, according to Rajesh Rajagopalan, the New Delhi-based co-author of Nuclear South Asia: Keywords and Concepts, Pakistan seems to have been assembling four to five of these annually.
All of this has been happening in the context of populations that view each other unfavorably. A typical survey in this period by the Pew Research Center found that 72% of Pakistanis had an unfavorable view of India, with 57% considering it as a serious threat, while on the other side 59% of Indians saw Pakistan in an unfavorable light.
This is the background against which Indian leaders have said that a tactical nuclear attack on their forces, even on Pakistani territory, would be treated as a full-scale nuclear attack on India, and that they reserved the right to respond accordingly. Since India does not have tactical nukes, it could only retaliate with far more devastating strategic nuclear arms, possibly targeting Pakistani cities.
According to a 2002 estimate by the U.S. Defense Intelligence Agency (DIA), a worst-case scenario in an Indo-Pakistani nuclear war could result in eight to 12 million fatalities initially, followed by many millions later from radiation poisoning. More recent studies have shown that up to a billion people worldwide might be put in danger of famine and starvation by the smoke and soot thrown into the troposphere in a major nuclear exchange in South Asia. The resulting “nuclear winter” and ensuing crop loss would functionally add up to a slowly developing global nuclear holocaust.
Last November, to reduce the chances of such a catastrophic exchange happening, senior Obama administration officials met in Washington with Pakistan’s army chief, General Raheel Sharif, the final arbiter of that country’s national security policies, and urged him to stop the production of tactical nuclear arms. In return, they offered a pledge to end Islamabad’s pariah status in the nuclear field by supporting its entry into the 48-member Nuclear Suppliers Group to which India already belongs. Although no formal communiqué was issued after Sharif’s trip, it became widely known that he had rejected the offer.
This failure was implicit in the testimony that DIA Director Lieutenant General Vincent Stewart gave to the Armed Services Committee this February. “Pakistan’s nuclear weapons continue to grow,” he said. “We are concerned that this growth, as well as the evolving doctrine associated with tactical [nuclear] weapons, increases the risk of an incident or accident.”
Strategic Nuclear Warheads
Since that DIA estimate of human fatalities in a South Asian nuclear war, the strategic nuclear arsenals of India and Pakistan have continued to grow. In January 2016, according to a U.S. congressional report, Pakistan’s arsenal probably consisted of 110 to 130 nuclear warheads. According to the Stockholm International Peace Research Institute, India has 90 to 110 of these. (China, the other regional actor, has approximately 260 warheads.)
As the 1990s ended, with both India and Pakistan testing their new weaponry, their governments made public their nuclear doctrines. The National Security Advisory Board on Indian Nuclear Doctrine, for example, stated in August 1999 that “India will not be the first to initiate a nuclear strike, but will respond with punitive retaliation should deterrence fail.” India’s foreign minister explained at the time that the “minimum credible deterrence” mentioned in the doctrine was a question of “adequacy,” not numbers of warheads. In subsequent years, however, that yardstick of “minimum credible deterrence” has been regularly recalibrated as India’s policymakers went on to commit themselves to upgrade the country’s nuclear arms program with a new generation of more powerful hydrogen bombs designed to be city-busters.
In Pakistan in February 2000, President General Pervez Musharraf, who was also the army chief, established the Strategic Plan Division in the National Command Authority, appointing Lieutenant General Khalid Kidwai as its director general. In October 2001, Kidwai offered an outline of the country’s updated nuclear doctrine in relation to its far more militarily and economically powerful neighbor, saying, “It is well known that Pakistan does not have a ‘no-first-use policy.’” He then laid out the “thresholds” for the use of nukes. The country’s nuclear weapons, he pointed out, were aimed solely at India and would be available for use not just in response to a nuclear attack from that country, but should it conquer a large part of Pakistan’s territory (the space threshold), or destroy a significant part of its land or air forces (the military threshold), or start to strangle Pakistan economically (the economic threshold), or politically destabilize the country through large-scale internal subversion (the domestic destabilization threshold).
Of these, the space threshold was the most likely trigger. New Delhi as well as Washington speculated as to where the red line for this threshold might lie, though there was no unanimity among defense experts. Many surmised that it would be the impending loss of Lahore, the capital of Punjab, only 15 miles from the Indian border. Others put the red line at Pakistan’s sprawling Indus River basin.
Within seven months of this debate, Indian-Pakistani tensions escalated steeply in the wake of an attack on an Indian military base in Kashmir by Pakistani terrorists in May 2002. At that time, Musharraf reiterated that he would not renounce his country’s right to use nuclear weapons first. The prospect of New Delhi being hit by an atom bomb became so plausible that U.S. Ambassador Robert Blackwill investigated building a hardened bunker in the Embassy compound to survive a nuclear strike. Only when he and his staff realized that those in the bunker would be killed by the aftereffects of the nuclear blast did they abandon the idea.
Unsurprisingly, the leaders of the two countries found themselves staring into the nuclear abyss because of a violent act in Kashmir, a disputed territory which had led to three conventional wars between the South Asian neighbors since 1947, the founding year of an independent India and Pakistan. As a result of the first of these in 1947 and 1948, India acquired about half of Kashmir, with Pakistan getting a third, and the rest occupied later by China.
Kashmir, the Root Cause of Enduring Enmity
The Kashmir dispute dates back to the time when the British-ruled Indian subcontinent was divided into Hindu-majority India and Muslim-majority Pakistan, and indirectly ruled princely states were given the option of joining either one. In October 1947, the Hindu maharaja of Muslim-majority Kashmir signed an “instrument of accession” with India after Muslim tribal raiders from Pakistan invaded his realm. The speedy arrival of Indian troops deprived the invaders of the capital city, Srinagar. Later, they battled regular Pakistani troops until a United Nations-brokered ceasefire on January 1, 1949. The accession document required that Kashmiris be given an opportunity to choose between India and Pakistan once peace was restored. This has not happened yet, and there is no credible prospect of it taking place.
Fearing a defeat in such a plebiscite, given the pro-Pakistani sentiments prevalent among the territory’s majority Muslims, India found several ways of blocking U.N. attempts to hold one. New Delhi then conferred a special status on the part of Kashmir it controlled and held elections for its legislature, while Pakistan watched with trepidation.
In September 1965, when its verbal protests proved futile, Pakistan attempted to change the status quo through military force. It launched a war that once again ended in stalemate and another U.N.-sponsored truce, which required the warring parties to return to the 1949 ceasefire line.
A third armed conflict between the two neighbors followed in December 1971, resulting in Pakistan’s loss of its eastern wing, which became an independent Bangladesh. Soon after, Indian Prime Minister Indira Gandhi tried to convince Pakistani President Zulfikar Ali Bhutto to agree to transform the 460-mile-long ceasefire line in Kashmir (renamed the “Line of Control”) into an international border. Unwilling to give up his country’s demand for a plebiscite in all of pre-1947 Kashmir, Bhutto refused. So the stalemate continued.
During the military rule of General Zia al Haq (1977-1988), Pakistan initiated a policy of bleeding India with a thousand cuts by sponsoring terrorist actions both inside Indian Kashmir and elsewhere in the country. Delhi responded by bolstering its military presence in Kashmir and brutally repressing those of its inhabitants demanding a plebiscite or advocating separation from India, committing in the process large-scale human rights violations.
In order to stop infiltration by militants from Pakistani Kashmir, India built a double barrier of fencing 12-feet high with the space between planted with hundreds of land mines. Later, that barrier would be equipped as well with thermal imaging devices and motion sensors to help detect infiltrators. By the late 1990s, on one side of the Line of Control were 400,000 Indian soldiers and on the other 300,000 Pakistani troops. No wonder President Bill Clinton called that border “the most dangerous place in the world.” Today, with the addition of tactical nuclear weapons to the mix, it is far more so.
Kashmir, the Toxic Bone of Contention
Even before Pakistan’s introduction of tactical nukes, tensions between the two neighbors were perilously high. Then suddenly, at the end of 2015, a flicker of a chance for the normalization of relations appeared. Indian Prime Minister Narendra Modi had a cordial meeting with his Pakistani counterpart, Nawaz Sharif, on the latter’s birthday, December 25th, in Lahore. But that hope was dashed when, in the early hours of January 2nd, four heavily armed Pakistani terrorists managed to cross the international border in Punjab, wearing Indian Army fatigues, and attacked an air force base in Pathankot. A daylong gun battle followed. By the time order was restored on January 5th, all the terrorists were dead, but so were seven Indian security personnel and one civilian. The United Jihad Council, an umbrella organization of separatist militant groups in Kashmir, claimed credit for the attack. The Indian government, however, insisted that the operation had been masterminded by Masood Azhar, leader of the Pakistan-based Jaish-e Muhammad (Army of Muhammad).
As before, Kashmir was the motivating drive for the anti-India militants. Mercifully, the attack in Pathankot turned out to be a minor event, insufficient to heighten the prospect of war, though it dissipated any goodwill generated by the Modi-Sharif meeting.
There is little doubt, however, that a repeat of the atrocity committed by Pakistani infiltrators in Mumbai in November 2008, leading to the death of 166 people and the burning of that city’s landmark Taj Mahal Hotel, could have consequences that would be dire indeed. The Indian doctrine calling for massive retaliation in response to a successful terrorist strike on that scale could mean the almost instantaneous implementation of its Cold Start strategy. That, in turn, would likely lead to Pakistan’s use of tactical nuclear weapons, thus opening up the real possibility of a full-blown nuclear holocaust with global consequences.
Beyond the long-running Kashmiri conundrum lies Pakistan’s primal fear of the much larger and more powerful India, and its loathing of India’s ambition to become the hegemonic power in South Asia. Irrespective of party labels, governments in New Delhi have pursued a muscular path on national security aimed at bolstering the country’s defense profile.
Overall, Indian leaders are resolved to prove that their country is entering what they fondly call “the age of aspiration.” When, in July 2009, Prime Minister Manmohan Singh officially launched a domestically built nuclear-powered ballistic missile submarine, the INS Arihant, it was hailed as a dramatic step in that direction. According to defense experts, that vessel was the first of its kind not to be built by one of the five recognized nuclear powers: the United States, Britain, China, France, and Russia.
India’s Two Secret Nuclear Sites
On the nuclear front in India, there was more to come. Last December, an investigation by the Washington-based Center for Public Integrity revealed that the Indian government was investing $100 million to build a top secret nuclear city spread over 13 square miles near the village of Challakere, 160 miles north of the southern city of Mysore. When completed, possibly as early as 2017, it will be “the subcontinent’s largest military-run complex of nuclear centrifuges, atomic-research laboratories, and weapons- and aircraft-testing facilities.” Among the project’s aims is to expand the government’s nuclear research, to produce fuel for the country’s nuclear reactors, and to help power its expanding fleet of nuclear submarines. It will be protected by a ring of garrisons, making the site a virtual military facility.
Another secret project, the Indian Rare Materials Plant, near Mysore is already in operation. It is a new nuclear enrichment complex that is feeding the country’s nuclear weapons programs, while laying the foundation for an ambitious project to create an arsenal of hydrogen (thermonuclear) bombs.
The overarching aim of these projects is to give India an extra stockpile of enriched uranium fuel that could be used in such future bombs. As a military site, the project at Challakere will not be open to inspection by the International Atomic Energy Agency or by Washington, since India’s 2008 nuclear agreement with the U.S. excludes access to military-related facilities. These enterprises are directed by the office of the prime minister, who is charged with overseeing all atomic energy projects. India’s Atomic Energy Act and its Official Secrets Act place everything connected to the country’s nuclear program under wraps. In the past, those who tried to obtain a fuller picture of the Indian arsenal and the facilities that feed it have been bludgeoned to silence.
Little wonder then that a senior White House official was recently quoted as saying, “Even for us, details of the Indian program are always sketchy and hard facts thin on the ground.” He added, “Mysore is being constantly monitored, and we are constantly monitoring progress in Challakere.” However, according to Gary Samore, a former Obama administration coordinator for arms control and weapons of mass destruction, “India intends to build thermonuclear weapons as part of its strategic deterrent against China. It is unclear, when India will realize this goal of a larger and more powerful arsenal, but they will.”
Once manufactured, there is nothing to stop India from deploying such weapons against Pakistan. “India is now developing very big bombs, hydrogen bombs that are city-busters,” said Pervez Hoodbhoy, a leading Pakistani nuclear and national security analyst. “It is not interested in… nuclear weapons for use on the battlefield; it is developing nuclear weapons for eliminating population centers.”
In other words, as the Kashmir dispute continues to fester, inducing periodic terrorist attacks on India and fueling the competition between New Delhi and Islamabad to outpace each other in the variety and size of their nuclear arsenals, the peril to South Asia in particular and the world at large only grows.