TBR News March 9, 2016

Mar 09 2016

The Voice of the White House

Washington, D.C., March 9 2016: “Fairly soon, all public urinals will be equipped with spy cameras to protect America against evil foreign terrorists. There are secret cameras now on all US Federal highways, drones spy on every sector of the public, telephone conversatins are transparent, credit cards scrutinized, computer messages routinely read, library book check-outs reported, all mail scanned by the FBI and on and on. Soon enough, the public will rebel against this sort of thing and the results will be terrifying in the extreme as bottled-up anger gushes out.”

The FBI Has a New Plan to Spy on High School Students Across the Country

Under new guidelines, Muslim students will be disproportionately targeted – but all young people will be suspect.

March 2, 2016

by Sarah Lazare

Alternet

Under new guidelines, the FBI is instructing high schools across the country to report students who criticize government policies and “western corruption” as potential future terrorists, warning that “anarchist extremists” are in the same category as ISIS and young people who are poor, immigrants or travel to “suspicious” countries are more likely to commit horrific violence.

Based on the widely unpopular British “anti-terror” mass surveillance program, the FBI’s “Preventing Violent Extremism in Schools” guidelines, released in January, are almost certainly designed to single out and target Muslim-American communities. However, in its caution to avoid the appearance of discrimination, the agency identifies risk factors that are so broad and vague that virtually any young person could be deemed dangerous and worthy of surveillance, especially if she is socio-economically marginalized or politically outspoken.

This overwhelming threat is then used to justify a massive surveillance apparatus, wherein educators and pupils function as extensions of the FBI by watching and informing on each other.

The FBI’s justification for such surveillance is based on McCarthy-era theories of radicalization, in which authorities monitor thoughts and behaviors that they claim to lead to acts of violent subversion, even if those people being watched have not committed any wrongdoing. This model has been widely discredited as a violence prevention method, including by the U.S. government, but it is now being imported to schools nationwide as official federal policy.

Schools as hotbeds of extremism

The new guidelines depict high schools as hotbeds of extremism, where dangers lurk in every corner. “High school students are ideal targets for recruitment by violent extremists seeking support for their radical ideologies, foreign fighter networks, or conducting acts of violence within our borders,” the document warns, claiming that youth “possess inherent risk factors.” In light of this alleged threat, the FBI instructs teachers to “incorporate a two-hour block of violent extremism awareness training” into the core curriculum for all youth in grades 9 through 12.

According to the FBI’s educational materials for teenagers, circulated as a visual aide to their new guidelines, the following offenses constitute signs that “could mean that someone plans to commit violence” and therefore should be reported: “Talking about traveling to places that sound suspicious”; “Using code words or unusual language”; “Using several different cell phones and private messaging apps”; and “Studying or taking pictures of potential targets (like a government building).”

Under the category of domestic terrorists, the educational materials warn of the threat posed by “anarchist extremists.” The FBI states, “Anarchist extremists believe that society should have no government, laws, or police, and they are loosely organized, with no central leadership… Violent anarchist extremists usually target symbols of capitalism they believe to be the cause of all problems in society—such as large corporations, government organizations, and police agencies.”

Similarly, “Animal Rights Extremists and Environmental Extremists” are placed alongside “white supremacy extremists”, ISIS and Al Qaeda as terrorists out to recruit high school students. The materials also instruct students to watch out for  extremist propaganda messages that communicate criticisms of “corrupt western nations” and express “government mistrust.”

If you “see suspicious behavior that might lead to violent extremism,” the resource states, consider reporting it to “someone you trust,” including local law enforcement officials like police officers and FBI agents.

This terrorist threat does not stay within the geographic bounds of high schools, but extends to the Internet, which the FBI guidelines describe as a “playground” for extremism. The agency warns that online gaming “is sometimes used to communicate, train, or plan terrorist activities.” Encryption, ominously referred to as “going dark,” is often used to facilitate “extremism discussions,” the agency states. In reality, encryption is a commonly used form of protection against government spying and identity theft and is often employed to safeguard financial transactions.

Young Muslims are the real targets

At the surface level, the FBI’s new guidelines do not appear to single out Muslim students. The document and supplementary educational materials warn of a broad array of threats, including anti-abortion and white supremacist extremists. The Jewish Defense League is listed alongside Hizbollah and Al Qaeda as an imminent danger to young people in the United States.

But a closer read reveals that the FBI consistently invokes an Islamic threat without naming it. Cultural and religious differences, as well as criticisms of western imperialism, are repeatedly mentioned as risk factors for future extremism. “Some immigrant families may not be sufficiently present in a youth’s life due to work constraints to foster critical thinking,” the guidelines state.

The document aims to encourage schools to monitor their students more carefully for signs of radicalization but its definition of radicalization is vague,” said Arun Kundnani, author of The Muslims are Coming! Islamophobia, extremism, and the domestic War on Terror and an adjunct professor at New York University. “Drawing on the junk science of radicalization models, the document dangerously blurs the distinction between legitimate ideological expression and violent criminal actions.”

In practice, schools seeking to implement this document will end up monitoring Muslim students disproportionately,” Kundnani told AlterNet. “Muslims who access religious or political material will be seen as suspicious, even though there is no reason to think such material indicates a likelihood of terrorism.”

The Obama administration’s Countering Violent Extremism (CVE) program is heavily influenced by its British counterpart, which exclusively focuses on spying on Muslim communities and has been deeply controversial from the onset.

Launched in the wake of the 2005 London bombings, the British the “Preventing Violent Extremism” (Prevent) program monitors and surveils Muslim communities and people, including mosque-goers and members of community organizations who have committed no wrongdoing. The iniative has been broadly criticized as oppressive and stigmatizing of British Muslims, including by a committee of British lawmakers in 2010.

Yet Prevent has expanded since implementation, and as of summer 2015, British public schools are now mandated to report students for supposed early warning signs of extremism. According to the advocacy organization CAGE, this program has led to the wide-scale interrogation of children without parental consent. Just last month, a Luton high school student was questioned by police for wearing a “Free Palestine” badge.

The first public iteration of the U.S. counterpart to this program emerged five years ago to “address ideologically inspired violence in the Homeland,” uniting a broad array of government agencies, including the FBI and Department of Homeland Security. In 2015, Attorney General Eric Holder announced a CVE summit at the White House and unrolled three “pilot programs” in Boston, Minneapolis and Los Angeles. According to the Council on American-Islamic Relations, these initiatives solely target Muslims in each of these cities.

Muslim communities and human rights campaigners have raised profound concerns about civil rights violations. “Past injustices have taught us to be wary when the government redefines its moral and legal authority in response to overbroad national security concerns,” reads a statement from nearly 50 Muslim organizations in the Minneapolis area. “It is our recommendation that the government stop investing in programs that will only stigmatize, divide and marginalize our communities further.”

But instead, the government is expanding CVE programming into high schools across the country.

Using discredited science to identify danger everywhere

The whole concept of CVE is based on the conveyor belt theory – the idea that ‘extreme ideas’ lead to violence,” Michael German, a fellow with the Brennan Center for Justice’s Liberty and National Security Program, told AlterNet. “These programs fall back on the older ‘stages of radicalization’ models, where the identified indicators are the expression of political grievances and religious practices.”

The lineage of this model can be traced to the first red scare in America, as well as J. Edgar Hoover’s crackdown on civil rights and anti-war activists. In the post-9/11 era, the conveyor-belt theory has led to the mass surveillance of Muslims communities by law enforcement outfits ranging from the FBI to the New York Police Department.

U.S. government agencies continue to embrace this model despite the fact that it has been thoroughly debunked by years of scholarly research, Britain’s M15 spy agency and an academic study directly supported by the Department of Homeland Security.

Even the FBI’s new guidelines claim that the agency “does not advocate the application of any psychological or demographic ‘profiles’ or check lists of indicators to identify students on a pathway to radicalization.”

Yet in the same breath, the FBI freely lists “concerning behaviors” that indicate an individual is “progressing on a trajectory to radicalization and/or future violent action in furtherance of an extremist cause.” In other words, the FBI is using new terminology to call for students to be profiled as potential future terrorists.

As Hugh Handeyside, staff attorney for the ACLU’s national security project, told AlterNet, “Broadening the definition of violent extremism to include a range of belief-driven violence underscores that the FBI is diving head-first into community spying. Framing this conduct as ‘concerning behavior’ doesn’t conceal the fact that the FBI is policing students’ thoughts and trying to predict the future based on those thoughts.”

If the FBI’s criteria are to be believed, children who exhibit “development delay or disorders, resulting from low quality supportive environments” are at greater risk. So too are the “disenfranchised – student feeling lost, lonely, hopeless, or abandoned.” The FBI calls for greater scrutiny of students with mental health disorders and identifies neighborhoods families, and socio-economic status as factors to watch out for.

There are already reasons to be concerned about who will be most vulnerable under this mass surveillance plan. In what is popularly known as the “school-to-prison pipeline”, students of color and young people with disabilities are already disproportionately suspended, expelled, arrested and funneled into juvenile prisons for alleged behavioral infractions at school.

The FBI’s instructions to surveil and report young people not for wrong they have committed, but for violence they supposedly might enact in the future, is likely to promote an intensification of this draconian practice. Using a program initiated to spy on Muslim-American communities, the government is calling for sanctuaries of learning to be transformed into panopticons, in which students and educators are the informers and all young people are suspect.

Hating on Trump

It could be about Israel

March 8, 2016

by Philip Giraldi

The UNZ Review

Now we all know that many of those who are hating on Donald Trump are doing so because he is threatening the cozy-crony-politico-predatory-capitalist system that has made so many of them fat and rich. He is intending to break their rice bowls as the Chinese would put it or, in a more American vernacular, the gravy train might be ending. To be sure The Donald is warning that he will do just that, even if he will find in practice, if elected, that turning the ship of state around might well be a task beyond the ability of any aspirant to the presidency.

But while pure self-interest might well be driving many of the chattering nonentities that populate our congress and the senior political appointee ranks in government there is something nevertheless extraordinary in the level of venom and sheer hatred that is being spewed at random about a potential Trump administration. It is not uncommon to read or hear that Trump is seeking to overturn the Constitution of the United States and establish a dictatorship that will promote his allegedly warped views of what must be done to correct America’s domestic and foreign policies, suggesting that our form of government is so fragile that it can be subverted by one man.

The anger directed against Trump is unique, one might note, as it also includes demands to somehow overturn the popular will expressed in primaries and caucuses to obtain a candidate that is more in tune with what the Republican establishment is seeking to promote as the “national consensus.” That Trump is voicing an overwhelming American middle class perspective on the evils of mass illegal immigration matters not a whit to the Mandarins whose only concerns on that issue center on the availability of a supply of cheap labor to clean their McMansions and swimming pools.

The anti-Trump effort is being well funded, has included notable defections to the Democratic Party, has led to lists of Republican politicians who will not accept a Trump nomination or support a President Trump, and has even produced calls for a third party neo-Republican entity to run against him. Some other reactions are stupid, including Canadian neocon Mark Dubowitz of the Foundation for Defense of Democracies, calling for even more immigrants to the U.S., while talk radio extremist Glenn Beck has tweeted that if he had a knife and were able to get close to Trump he would have to keep on stabbing him.

To be sure, Trump has provided considerable fuel for the fire through his extraordinary ad libs about banning Muslims from the U.S., killing the families of terrorists and using torture. But mainstream politicians have already recommended and even done that much and more without the level of censure that Trump is receiving. Presidents Barack Obama and George W. Bush have engaged in widespread killing of civilians, torture and assassinating families of suspected militants, to include American citizens, without any of the invective being leveled at Trump.

Indeed, Trump would appear to have a more sensible foreign policy in mind, consisting of avoiding unnecessary wars and “regime changes,” honoring the multilateral negotiated agreement with Iran, engaging diplomatically even with heads of state that we consider to be adversaries and encouraging Russia to fight ISIS. His three current opponents have recommended “carpet bombing” areas controlled by ISIS, fusing Syrian sand into nuclear radiating glass, provoking wars with both Russia and China, arming Ukraine, punching Vladimir Putin in the nose and sending in thousands of American soldiers to the Middle East. They are not in the least bothered by fattening up the already fat national security state with trillions more dollars while domestic needs go unaddressed. So who is the crazy one?

But there is one significant difference between Trump and the “establishment,” be they Democrats or Republicans that has not been highlighted. I would suggest that quite a lot of the depth and intensity of what we are experiencing is actually about Israel. Trump is the first high level politician aspirant within living memory to challenge the notion that the United States must stand by Israel no matter what Israel does. Even while affirming his affection for Israel, he has said that Washington must be even handed in its efforts to bring about peace between Israelis and Palestinians, implying that Tel Aviv might have to make concessions.

Trump has also added insult to injury by delinking himself from the blandishments of Jewish political mega-donors, who largely call the tune for many in the GOP and among the Democrats, by telling them he doesn’t need their money and can’t be bought. His comments have challenged conventional interest group politicking in American and have predictably produced a firestorm reaction in the usual circles. Robert Kagan announced that he would be supporting Hillary, who famously has declared that she would immediately call Israeli Prime Minister Benjamin Netanyahu upon taking office as a first step in moving the relationship with Tel Aviv to “the next level.” It is to be presumed that Kagan and his fellow neocons will be experiencing a welcoming vibe from at least some of the Democrats as the neoconservatives have always been liberals at heart on nearly all issues except foreign policy, rooted by them in the “unshakable and bipartisan bond” with Israel.

It is my opinion that the “I” word should be banned from American political discourse. Ironically, many American Jews are themselves uneasy about the place occupied by Israel in ongoing political debates, recognizing that it is both unhealthy in a democracy and reflective only of the extreme views of the hardline members of their own diaspora community. It is also unpleasantly all about Jews and money since the Republicans and other mouthpieces now piling on Trump are motivated largely by their own sinecures and the Sheldon Adelson type donations that might be forthcoming to the politically savvy candidates who say the right things about the conflict in the Middle East.

Slate’s Isaac Chotiner has noted a particularly odd speech by Senator Marco Rubio in which he spoke of his single electoral triumph in Minnesota before immediately jumping to the issue of Israel, as if on cue or by rote. It is a tendency that is not unique to him. I read through the transcript of the GOP debate that preceded Rubio’s sole victory, which in part reflected a competition to see who could promise to do most for Israel. Senator Ted Cruz stated that he “would stand unapologetically with the nation of Israel…and the alliance with Israel.” Governor John Kasich declared that he’s “been a supporter of Israel – a strong supporter of Israel longer than anyone on this stage.” Senator Marco Rubio indicated that “I will be on Israel’s side every single day because they are the only pro-American, free enterprise democracy in the entire Middle East.” Ben Carson called Israel not only a strategic partner but also an element in America’s “Judeo Christian foundation” that can never be rejected.

Quite a few assertions about Israel made by politicians are, of course, nonsense. It is not in alliance with the United States and is not a democracy for starters, but the real question becomes why is Israel part of the debate at all? It is because of concerns that the deep pocketed donors like Sheldon Adelson will join his good friend Haim Saban in funding Hillary if candidates do not say what he expects to hear. Saban has referred to Trump as a “clown” and attacked him because he would be “dangerous for Israel.”

And then there is the recent attack of the Beltway Midgets, a “a strongly worded letter” orchestrated by Eliot Cohen, a former Condoleezza Rice State Department appointee whose attachment to Israel might well be regarded as demented, that attracted the signatures of more than one hundred self-described GOP foreign policy “leaders,” declaring that “We are unable to support a party ticket with Mr. Trump at its head.” Quite a few of the signatories are well known neocons, including Max Boot, Robert Zoellick, Michael Chertoff, Eric Edelman, Reuel Marc Gerecht, Daniel Pipes, Michael Rubin, Kori Schake, Randy Scheunemann, Gary Schmitt, Ray Takeyh and Philip Zelikow. Boot has vilified Trump as “emerging as the number one threat to American security.” All the signatories were passionate supporters of the Iraq War, which Trump has correctly disparaged as a catastrophic foreign policy failure, and all of them are describable as strong supporters of Israel.

The friends of Benjamin Netanyahu in the United States rightly fear that someday the American people and government will come to their senses and regard Israel as just another friendly foreign state, without any “special relationship” attached. To counter that possibility, the lashing out against any public figure who dares to criticize Israel is both immediate and visceral. Note, for example, the fate of former President Jimmy Carter who was virtually excommunicated by the Democratic Party after he condemned Israeli treatment of the Palestinians.

But what the neocon subset of Israel’s powerful lobby fears most is something quite different – becoming irrelevant. They have weathered being wrong about nearly everything but what they particularly fear is finding themselves without a major political party whose foreign policy they can manipulate because that would cut off their funding from defense contractors and pro-Israel zealots. They will have to give up the emoluments that they have accumulated since hijacking the GOP under Ronald Reagan. They might have to abandon their corner offices and secretaries and could even have to find real jobs. And what would the Sunday morning talk shows be like without the Cheshire cat grin of Bill Kristol?

The end of the hypocrisy driven neocon ascendancy in foreign policy will be welcomed by many. Dan McAdams of the Ron Paul Institute has described the Trump hating neocons as “…soft skinned and well-perfumed keyboard warriors who eagerly send America’s sons and daughters to be slaughtered in wars that achieve nothing but the ascendance of new ‘bad guys’ used to justify ever more wars. And all of it pays very nicely for them.” Exactly.

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 conversatins 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.

 

http://www.amazon.com/Conversations-Crow-Gregory-Douglas-ebook/dp/B00GHMAQ5E/ref=sr_1_1?ie=UTF8&qid=1450147193&sr=8-1&keywords=conversations+with+the+crow

Conversation No. 71

Date: Friday, February 28, 1997

Commenced: 9:50 AM CST

Concluded: 10:12  AM CST

RTC: Top of the morning to you, Gregory. How are you today?

GD: Functioning, Robert. And with you?

RTC: The usual. Listen, Gregory, I had a phone call yesterday from someone at the Agency about you. I am afraid I became annoyed with this creature and said harsh things to them.

GD: Anyone I know?

RTC: I doubt it. Aside from a few broken down academics, a blank face. Someone named Hayden Peake. Have you ever heard of him?

GD: No. Is he someone important?

RTC: No, except in his own mind. He’s one of our librarians. He whined to me that you were pure evil and I shouldn’t talk to you. He’s a friend of Critchfield who is frantically trying to shut off your comments about Mueller’s survival and, worse, work for us after the war. I don’t know whether Peake got put up to this by Jim or by Kimmel. Maybe both. At any rate, when he told me that he had proof that Mueller died in ’45, I told him he was fuller of shit than a Christmas turkey and that I knew personally, and could prove, that Mueller not only worked for the Swiss after the war but for Jim after ’48. I told him that I personally had met Mueller in the late ‘40s, here in D.C and that whatever his so-called proof consisted of he could shove it up his ass. For a denizen of P Street here, he might have enjoyed that exercise.

GD: P Street?

RTC: That’s a street much beloved by many of our leading lights here, Gregory. Leather bars, whipping salons, way-stations for muscular young servicemen wanting to make a few dollars on the side, or on their backs. You know what I mean. I asked Bill about this asshole and he did some checking and mentioned an establishment called the Fireplace. You know, the Company used to be an inspiring place to work when we got started. Hell, if the D.C. police ever raided the P Street places, half the senior people at Langley would be in custody, along, of course, with a number of top military people and not to mention certain key Congressmen. The other half of our new leadership would be in synagogues. Jews and fairies, Gregory. It’s sad. At any rate, I have had it up to here with these people.

GD: What does this Peake person do? RTC: I said he was a librarian.

GD: Wolfe is a librarian.

RTC: A pair of scumbags, Gregory. Peake thinks he’s a great historical writer and Wolfe has dreams of glory as a fake PhD. And they all loathe and despise you. Why? Because, Gregory, you are a much better writer, and certainly a researcher, than either of them and for some unknown reason, they think their useless opinions impress me. I know you and they don’t. Kimmel is probably behind some of this and he does the same thing. You see, as I said once before, if the Jews get it into their slimy heads that the evil chief of the Gestapo worked for our CIA, they would leave shit all over the sidewalks in D.C. I know for a fact they are screeching, like the rest of the old faggots, to the Army to keep Mueller’s files closed from the likes of you. You see, you are not part of the game, Gregory. The game? They all run around in circles, bent over with their trousers down around their ankles and their noses stuck up the asshole of the one in front. A bunch of incompetent idiots. They can squeal like little pigs to each other but by God, I won’t have them squealing to me and I told Peake, and I will call up Tom with the same message which is to stop bothering me with their envy or I will be forced to take some action against them.

GD: A machinegun? RTC: No, worse. I know enough about these whiners to destroy them and if they want some fun and games, they can just continue their feeble trashing attempts. And I am now determined to go through my files and send you a number of them. That way, if anything happens to me, you will have lots of ammunition for your gun.

GD: Oh, I doubt if they’ll shoot you.

RTC: Shoot me? No, I mean if God calls me. That’s what I mean. I am not as well as I could be, Gregory, and one day, I won’t be around. I would like to think you are provided for. I know why they are yammering at me and why odious little shits like Wolfe and bombastic frauds like Kimmel and pubcrawlers like old Peake keep whining at me. They know I am someone who knows too much and they are terrified that I am getting senile and am talking to you.

GD: Well, you’re talking to me but I doubt if you’re senile, Robert.

RTC: Well, thank you for the consideration but I am getting a little forgetful at times and it’s harder to get around these days. No, I’m not ga-ga yet but if I get any more calls from the rat brigade members, they’ll find out how senile I am. If I chose to do so, there would be bodies heaped up chest high on the Mall. Ah, well, Gregory, a bit of my Irish temper clears the air.

GD: I heard from someone that you were a terrifying person, Robert, but I never saw it.

RTC: You did once. That was when Bill wanted to get your son a job at the CIA to try to stop your publishing things they didn’t like. You remember that? GD: Oh yes. You were not nasty to me, though.

RTC: I said terrible things to Bill and I thought he would cry when I was done. My God, all the weird stories floating around about you. Fifteen different names, robbing banks, selling nuns

to Arabs, faking official documents on an old Remington, anti-Semitism, loving the Nazis and on and on. No, Jim is absolutely livid I put him in touch with you. Jim is a shit and I understand he wrote you compromising letters that he wants back. Is that true?

GD: Oh, yes, quite true. Ink-signed. In the original envelopes as well.

RTC: A word of advice here, Gregory. Put them in a very safe place. And not in a safe deposit box either. Our people can get into those with ease. No, some really safe place. Jim wants to lay his hands on these so bad he can taste them. They don’t know what to do with you, Gregory. They can’t con you because you are way smarter than they are and, to be honest, they are all dumb as posts.

GD: And how about Trento? RTC: Oh, God, another one. They won’t attack you to your face because not only are they third class assholes but they are also cowards and you have a reputation for ferocity equaled only by a very hungry lion. No, they sneak around, like that turd from Justice that Kimmel got to yammer at me about you. I gave you his number just after he called me. You did call him back as I recall.

GD: Oh yes, I did. He was shocked that you gave me his number and I had a conversation with him.

RTC: Now you mustn’t threaten a Justice Department man, Gregory. What did you say to him? GD: Only that I would credit him with the writing of some awful article. I say that to many people and since I have done this from time to time, they usually get the message.

RTC: The all remind me of a bunch of old women. Just like old aunties chattering and gossiping about everyone else. Chatter, chatter and shit. People wear bullet proof vests on their backs here inside the Beltway because the standard game is to stab everyone in the back. Starting with your friends and moving outwards.

GD: And upwards?

RTC: I think the brass keeps some of these yammering turds around for the same reason that a whore keeps a pimp around. She wants someone she can look down on. Not like it used to be, Gregory. We were men then, not old gossiping queers. Oh yes, and bitter, treacherous old Jews like Wolfe and his friends. I don’t know what is worse, a treacherous and plotting Jew or a spiteful old queer. Ah well, let us go on to other things less annoying. How is the next Mueller book coming along? Did you get the file on Diem and his brother?

GD: I did. I don’t know where I can fit it in but perhaps a footnote on officially sanctioned assassinations.

RTC: And JFK has become a blessed saint in heaven. He ordered the Diems offed just like Nixon and Kissinger ordered Allende done in. Pious frauds, one and all. Now that’s what I mean by my being able to do terrible damage to them and their precious jobs. I was in the Army during the war and I would like to think that I and my friends were able to help this country, even if just a little but I found it was easier to cope with the professionals from the KGB rather than the rank amateurs we have now. Peake once wanted me to ghost write a paper on the KGB and I told him I would not. If I write something now, based on my experience and knowledge, I am not going to let some pseudo-academic try to take credit for it.

GD: Oh, the academic world is just the same. More backstabbing, gossip, innuendo and pure malice than you could imagine. And these academic papers are worthless for anything but to use as toilet paper. Bad, stilted writing and full of official lies which most of them write to impress their grandchildren and awed middle-class morons with. Robert, in my research, I have learned to totally discount any of these academic papers.

RTC: Oh yes, Peake told me breathlessly….

GD: Some sailor giving him a run for his money.

RTC: (Laughter) No, but I have been told that the great David Irving says you are a fraud. My God, what a compliment.

GD: Irving is the  fraud and writes at a high school level. Historian? Gas bag. I had dealings with him once and I would never let something like that in my house other than to fix the plumbing. Or around my children, either. Peake actually used Irving as a prop? RTC: The blind leading the blind. I’ve never read any of Irving’s material but they do tell me that he’s a lightweight.

GD: A legend in his own mind. It is said his ma was Jewish but I don’t think that’s been proven. Lower middle class oaf with delusions of grandeur and reference.

RTC: Ah, my, what a wonderful morning, full of the milk of human kindness.

GD: I think the milk has gone bad, Robert.

RTC: It’s too bad you weren’t around in the early days, I mean actually old enough to work for me. We would have gotten along wonderfully well. I would have had to warn you to be a little restrained in some areas but I think we could have worked well together.

GD: Well, I do respect you Robert, which is more than I can say for the rest of the zoo creatures I’ve encountered since I started tilting at D.C. shithouses. Oh and yes, do you know how many fairies you can get on a bar stool? RTC: I assume this is a joke.

GD: Why of course, Robert, always the jester. If you turn it upside down, you can seat four comfortably.

RTC: (Prolonged laughter) Well, now I’m back in a good mood.

GD: Don’t pass this on to your callers. You might hurt their feelings.

(Concluded at 10:12 AM CST)

Exclusive: Saudi Arabia seeks $6-8 billion bank loan to shore up state coffers

March 9, 2016

by Ardhana Narayanan

Reuters

Dubai-Saudi Arabia is seeking a bank loan of between $6 billion and $8 billion, sources familiar with the matter told Reuters, in what would be the first significant foreign borrowing by the kingdom’s government for over a decade.

Riyadh has asked lenders to submit proposals to extend it a five-year U.S. dollar loan of that size, with an option to increase it, the sources said, to help plug a record budget deficit caused by low oil prices.

The sources declined to be named because the matter is not public. Calls to the Saudi finance ministry and central bank seeking comment on Wednesday were not answered.

Last week, Reuters reported that Saudi Arabia had asked banks to discuss the idea of an international loan, but details such as the size and lifespan were not specified.

The kingdom’s budget deficit reached nearly $100 billion last year. The government is currently bridging the gap by drawing down its massive store of foreign assets and issuing domestic bonds. But the assets will only last a few more years at their current rate of decline, while the bond issues have started to strain liquidity in the banking system.

London-based boutique advisory firm Verus Partners, set up by former Citigroup bankers Mark Aplin and Andrew Elliot, is advising the Saudi government on the loan, the sources said.

The firm has sent requests for proposals to a small group of banks on behalf of the Saudi Ministry of Finance, the sources said. They added that banks participating in the loan would have a better chance of being chosen to arrange an international bond issue that Saudi Arabia may conduct as soon as this year.

A spokesman for Verus Partners was not immediately available to comment.

RATING CUT

Analysts say sovereign borrowing by the six wealthy Gulf Arab oil exporters could total $20 billion or more in 2016 – a big shift from years past, when the region had a surfeit of funds and was lending to the rest of the world.

All of the six states have either launched borrowing programs in response to low oil prices or are laying plans to do so. With money becoming scarcer at home, Gulf companies are also expected to borrow more from abroad.

In mid-February, Standard & Poor’s cut Saudi Arabia’s long-term sovereign credit rating by two notches to A-minus. The world’s other two major rating agencies still have much higher assessments of Riyadh, but last week Moody’s Investors Service put Saudi Arabia on review for a possible downgrade.

Nevertheless, bankers said a sovereign loan from Saudi Arabia could attract considerable demand, given the kingdom’s wealth; its net foreign assets still total nearly $600 billion, while its public debt levels that are among the world’s lowest.

The pricing of the loan is likely to be benchmarked against international loans taken out by the governments of Qatar and Oman in the last few months, according to bankers.

Because of banks’ concern about the Gulf region’s ability to cope with an era of cheap oil, those two loans took considerable time to arrange and the pricing was raised during that period.

Oman’s $1 billion loan was ultimately priced at 120 basis points over the London interbank offered rate (Libor), while Qatar’s $5.5 billion loan was priced at 110 bps over, with both concluded in January.

“The indications are that a Saudi deal would have to price higher than that, as the world has changed significantly since those deals,” one Middle East-based banker said, referring to the rating agencies’ actions.

(Additional reporting by Marwa Rashad in Riyadh and Sandrine Bradley in London; Editing by Andrew Torchia and Pravin Char)

Dead in the Sand? Saudi Arabia Running Out of Water

February 24, 2016

Sputnik

Saudi Arabia may suffer a major environmental disaster within the next thirty years as the kingdom’s unsustainable and extravagant use of water is rapidly depleting the country’s nonrenewable groundwater reserves, Business Insider news portal reported.

“Saudi Arabia is facing a catastrophe if agricultural practices don’t change. The remaining groundwater needs to be preserved,” Business Insider quoted Ali al-Takhees, the former undersecretary of the Saudi ministry of agriculture, as saying.

Al-Takhees said that Saudi Arabia is running through its groundwater at a perilous rate and if this practice continues at a present rate, could soon lead to a nationwide drought and a social catastrophe.

Saudis on average consume much more water than residents of the water-rich Europe.

Saudi residents drink more than double the amount of water each day than those in the European Union.

Some experts warn that if the existing patterns of water consumption do not change the country’s groundwater could run out already within the next 13 years.

Many water reservoirs in central Saudi Arabia have already turned into sand pits.

To curb the use of water in the country, the government is now taxing its citizens for water use, Business Insider wrote.

‘Special relationship’ between Britain and US turns normal

Seventy years ago, Winston Churchill coined the term “special relationship” to describe the close ties between Britain and the United States. Today the relationship is no longer that special anymore.

March 8, 2016

DW

In his historic “Iron Curtain” speech delivered in Missouri 70 years ago, Britain’s former Prime Minister Winston Churchill predicted the beginning of the Cold War and popularized the term “iron curtain” for the division of Europe.

In the same speech, Churchill, whose mother was American, also coined the term “special relationship” to describe the unique ties between Britain and the US. While the relationship had been close before, World War II only deepened the ties between Washington and London.

“The British wanted to continue the very close cooperation and consultation and joint decision-making that had developed during World War II,” said John Harper, a professor of American foreign policy at Johns Hopkins University’s School of Advanced International Studies in Bologna. “It has always been more of a British idea than an American idea.”

Wars in Afghanistan and Iraq

During the ensuing Cold War, ties between both countries remained exceptionally close, not just in military but also in political and economic terms. Even after the Cold War had ended, the special relationship reached a new peak under British Prime Minister Tony Blair and US Presidents Bill Clinton and George W. Bush, with London playing a key role in the US-led wars in Afghanistan and Iraq.

One of the reasons that the nature of the relationship has changed considerably since then is partly a consequence of British public opinion, which has “turned against the link with the United States a bit because of the wars,” said Anand Menon, a scholar on British foreign policy at King’s College in London.

But it is not just British sentiment that has cooled toward the US.

Britain’s increasing skepticism about the European project, which has led to a heated discussion about a so called ‘Brexit’ and will culminate in a referendum over the country’s membership in the EU in June, has not gone unnoticed across the pond.

Brexit and China

“The Americans are not happy about that,” said Harper. Washington has always supported Britain’s membership in Europe and wants London to play a strong role in European affairs, if only out of self-interest, because traditionally Britain’s positions on economic and political matters were more aligned with those of Washington than with many other European countries. As a result, “if Britain were to leave Europe that would definitely strain the relationship with the US.”

What also ruffled feathers in Washington is Britain’s strong effort to cultivate close financial ties with Beijing and woo Chinese investments. Last September, Britain’s Chancellor of the Exchequer George Osborne urged his Chinese hosts in Shanghai to “create a golden decade for the UK-China relationship.” One month later, British Prime Minister David Cameron rolled out the red carpet for Chinese President Xi Jinping in London.”The message to the Americans is we are going to have our economic relationship with China and we won’t necessarily support you with your problems with China regarding the territorial disputes in the South China Sea,” said Harper. “That really goes against the spirit of the special relationship.”

“David Cameron, partly because of domestic political pressure, is determined to show that the current British government is very keen to be very good friends with China,” said Menon. “It is very keen to show that we are a global player. And there is less emphasis than in the past that we are America’s best friend and that that relationship completely dominates our foreign policy.”

Other partners

The Chinese president’s visit in London raised eyebrows in the US

Washington for its part has also looked elsewhere for partners in Europe for some time now – to Germany and France.

“When it comes to foreign policy over Ukraine and economics, they talk to Merkel, and when it comes to military stuff, they will talk to the French,” Menon noted.

The fact that both Britain and the US have downgraded the importance of the special relationship does not mean, however, that it is defunct. In the military and intelligence arena, the ties between both countries remain uniquely close, which is partly due to the fact that in these areas the cooperation is very much institutionalized.

But beyond those spheres, the US and Britain have grown apart since Churchill’s remarks 70 years ago, Harper said. “It would be wrong to say the special relationship is dead, but at the moment it is not very vibrant.”

Russia warns North Korea over threats of nuclear strike

One of Pyongyang’s few remaining allies says country is in danger of creating legal grounds for international military intervention. NK News reports

March 8, 2016

by Chad O’Carrol/ NK News

The Guardian

Russia has warned North Korea that threats to deliver “preventive nuclear strikes” could create a legal basis for the use of military force against the country, suggesting that even Pyongyang’s few remaining friends are growing concerned about its increasingly confrontational stance.

The Russian foreign ministry statement, which follows a North Korean threat to “annihilate” the US and South Korea, also criticises Washington and Seoul for launching the largest joint military drills yet to be held on the peninsula.

We consider it to be absolutely impermissible to make public statements containing threats to deliver some ‘preventive nuclear strikes’ against opponents,” the Russian foreign ministry said in response to North Korea’s threats.

Pyongyang should be aware of the fact that in this way the DPRK will become fully opposed to the international community and will create international legal grounds for using military force against itself in accordance with the right of a state to self-defense enshrined in the United Nations Charter,” continued the statement, translated by Itar Tass news agency.

Washington and Seoul launched their annual joint military exercises on the peninsula on Monday, stepping up the manoeuvres in response to North Korea’s fourth nuclear test in January and rocket launch in February.

But while the statement said Moscow was opposed to the tone of North Korea’s response, it also said the scale of the American-South Korean joint exercise put “unprecedented … military and political pressure on Pyongyang”.

Naturally, as a state, which is directly named as an object of this kind of military activities, the Democratic People’s Republic of Korea (DPRK) cannot but feel reasonably concerned for its security,” the statement said.

Pyongyang had said the drills, which are set to run to the end of April, are rehearsals for invading.

Russia has historically had close relations with North Korea, making its warning that the country may be laying itself open to military action particularly notable.

But one observer said Moscow’s response could be expected, given the tone of North Korea’s recent public statements.

Pyongyang should be learning that the types of threats they continue to make will have consequences,” said Daniel Pinkston, a Seoul-based North Korea researcher at Troy University.

The security dilemma dynamics that the behaviour and rhetoric set in motion are making Son’gun Korea less secure, not more secure,” he said. “This is the flaw in their national security strategy, and it will continue to be exposed in the future.”

Another North Korea watcher said the statement might be better viewed as a warning to Pyongyang of what others might do, rather than Russian actions in particular.

Russia is pointing out to North Korea that its inflammatory rhetoric risks giving its opponents – primarily South Korea and the US – just cause to pursue military action against it,” said regional expert Christopher Green.

Inter-Korean relations have worsened significantly in recent weeks, with Pyongyang showing particular sensitivity to the UN sanctions agreed last week.

A version of this article first appeared on NK News – North Korean news

Trump crushes Ronald Reagan’s Republican Party

March 9, 2016

by Joe Scarborough

Washington Post

Friday morning, America and the world will say goodbye to Nancy Reagan in California. But Tuesday, it was Michigan and Mississippi that may have signaled the end of Ronald Reagan’s fabled coalition that ruled Republican politics for 40 years.

After absorbing a brutal wave of attacks from the GOP establishment, including a nasty broadside from Mitt Romney, a thrice-married Manhattan billionaire who once loyally supported Hillary Clinton and who continues to lavish praise on Planned Parenthood swept to victory Tuesday night. Donald Trump easily won the night on the strength of a working-class coalition that included evangelicals in Mississippi and Reagan Democrats across Michigan. These are the same working-class voters who feel abandoned by their president, by their government and by the Republican Party.

Bible-toting Sen. Ted Cruz (R-Tex.) should have won Mississippi. Ohio Gov. John Kasich should have won nearby Michigan. Sen. Marco Rubio (R-Fla.) should have finished as a runner-up somewhere, anywhere.

Instead, Rubio and rest of the GOP field were left watching in horror as Trump crushed all comers at the polls and then used his victory speech to hawk steaks, wine and the most fabulous magazines you will ever read.

So long to Morning in America. Say hello to Tuesday Nights at QVC.

Trump’s big wins in Michigan and Mississippi were not the worst news of the night for the GOP ruling class. Instead, that dubious distinction was saved for the complete collapse of Rubio’s campaign one week before Florida’s crucial primary. For Republican leaders, Rubio’s timing could not have been worse.

Florida’s winner-take-all primary was rigged by the establishment to provide a firewall for Jeb Bush or Rubio back when wise men spoke knowingly of an “establishment lane.” Instead, as with most of the maneuvers masterminded by the Republican National Committee, the Florida firewall now seems to be playing into the hands of the man Beltway Republicans hate the most. And after tonight, the only politician who has any chance of stopping Trump seven days from now is the second-most hated politician in Washington, Ted Cruz.

Reviving Napoleon’s Army

Cry havoc, and Let Slip the Frogs of Yore’

March 9, 2016

by Fred Reed

AntiWar

It is curious how little military men know about war. You would think they would think about it more. Yet, oddly, they regularly misjudge practically everything concerning the dismal trade. Their errors are not the sort that inevitably must occur in a contest, as when a quarterback doesn’t pick up a blitz. They are fundamental misappreciations of war itself.

The foregoing sounds both arrogant and improbable, like saying that dentists do not understand teeth. Actually it is neither.

The reasons are several. First, the military attracts certain kinds of men – authoritarian, hierarchical, conformist – who are not imaginative and do not think independently. Second, the appeal of the military is visceral, emotional, hormonal. Neither of these things is true of dentists.

This explains why wars monotonously turn out not to resemble expectations. In WWI, the German command expected a lightning victory via the Schlieffen Plan. It failed, but the foolishness does not lie in the failure. Rather it is in the complete incapacity to foresee that the failure would result in four years of inconclusive static war. Trenches, barbed wire, and machine guns took them by surprise. Yet the existence of all of these things was well known.

This sort of blindness is common, almost normal. At First Manassas in the American Civil War, the armies had no faint idea that they might be embarking on four years of horrendous war, or of the kind of war it would be. When America invaded Vietnam, the Pentagon did not foresee ten years of a losing war. Nor did it have any notion of what would happen in Iraq and Afghanistan.

Militaries regularly underestimate the enemy and overestimate their own capacities. The reasons I think are several. One is that morale is important in war and a sober estimation of reality often does not conduce to high morale. For example, you do not tell your troops, “You are mediocre infantry and inferior man for man to the enemy but we have better technology and will rely on this.” Thus American troops are always the finest, best trained and best armed the world has ever seen.

Another and important reason is the Star Wars Effect. In movie theaters watch the audience, and particularly the male part, when the good space ships swoop in, dodging, maneuvering, firing, just on the edge of defeat, the music coming up, and blow the bad guy away. The watchers grip the armrests, sway with the turns of the hero’s spaceship. This visceral, adrenal response to war runs through humanity: The Ride of the

Valkyries, The Sands of Iwo Jima, and the Charge of the Light Brigade.

Military training aims at the inculcation of a sense of invincibility. Years back at Parris Island a sign read, “The Most Dangerous Thing in the World: A Marine and his Rifle.” It was nonsense, the marines then being decent light infantry but no more, yet we were told endlessly that were unique in the annals of war. This sort of overconfidence has consequences. Sometimes it provides the elan needed to win. Sometimes it leads to disaster.

The unrealistic sense of power is instilled in training by, for example, running in close formation. The rhythmic thumpthumpthump of fifty pairs of boots unleashes something deep in males. It is the pack instinct, a call to savagery intensified by calling cadence, “Luke the gook comes marching by, stick your bayonet in his eye, lefryelefrylefryelef….” We are the toughest of the tough.

Often the belief in invincibility becomes almost mystical. In WWI the French believed in cran, in l’offensive a outrnce, the fighting spirit that was sure to lead to victory. More attention to heavy artillery would have been prudent. In Japan it was bushido. Yamamoto, who had been in the United States and knew what it was, suggested that starting a war with a country having ten times your industrial potential was not unduly bright. The Army ignored him.

Underestimation of the enemy is a military disease bordering at time on a death wish. Before WWII, the US military tended to regard the Japanese as funny little buck-toothed monkeys with thick glasses. The same monkeys had destroyed the Russian fleet in 1905, fought for years in China with an excellent fighter plane – the Zero – and conducted sophisticated carrier operations. None of this occurred to the Americans.

Energy Wars of Attrition

The Irony of Oil Abundance

March 8, 2016

by Michael T. Klare

TomDispatch

Three and a half years ago, the International Energy Agency (IEA) triggered headlines around the world by predicting that the United States would overtake Saudi Arabia to become the world’s leading oil producer by 2020 and, together with Canada, would become a net exporter of oil around 2030. Overnight, a new strain of American energy triumphalism appeared and experts began speaking of “Saudi America,” a reinvigorated U.S.A. animated by copious streams of oil and natural gas, much of it obtained through the then-pioneering technique of hydro-fracking. “This is a real energy revolution,” the Wall Street Journal crowed in an editorial heralding the IEA pronouncement.

The most immediate effect of this “revolution,” its boosters proclaimed, would be to banish any likelihood of a “peak” in world oil production and subsequent petroleum scarcity.  The peak oil theorists, who flourished in the early years of the twenty-first century, warned that global output was likely to reach its maximum attainable level in the near future, possibly as early as 2012, and then commence an irreversible decline as the major reserves of energy were tapped dry. The proponents of this outlook did not, however, foresee the coming of hydro-fracking and the exploitation of previously inaccessible reserves of oil and natural gas in underground shale formations.

Understandably enough, the stunning increase in North American oil production in the past few years simply wasn’t on their radar. According to the Energy Information Administration (EIA) of the Department of Energy, U.S. crude output rose from 5.5 million barrels per day in 2010 to 9.2 million barrels as 2016 began, an increase of 3.7 million barrels per day in what can only be considered the relative blink of an eye. Similarly unexpected was the success of Canadian producers in extracting oil (in the form of bitumen, a semi-solid petroleum substance) from the tar sands of Alberta. Today, the notion that oil is becoming scarce has all but vanished, and so have the benefits of a new era of petroleum plenty being touted, until recently, by energy analysts and oil company executives.

The picture in terms of resources in the ground is a good one,” Bob Dudley, the chief executive officer of oil giant BP, typically exclaimed in January 2014.  “It’s very different [from] past concerns about supply peaking.  The theory of peak oil seems to have, well, peaked.”

The Arrival of a New Energy Triumphalism

With the advent of North American energy abundance in 2012, petroleum enthusiasts began to promote the idea of a “new American industrial renaissance” based on accelerated shale oil and gas production and the development of related petrochemical enterprises.  Combine such a vision with diminished fears about reliance on imported oil, especially from the Middle East, and the United States suddenly had — so the enthusiasts of the moment asserted — a host of geopolitical advantages and fresh life as the planet’s sole superpower.

The outline of a new world oil map is emerging, and it is centered not on the Middle East but on the Western Hemisphere,” oil industry adviser Daniel Yergin proclaimed in the Washington Post.  “The new energy axis runs from Alberta, Canada, down through [the shale fields of] North Dakota and South Texas… to huge offshore oil deposits found near Brazil.”  All of this, he asserted, “points to a major geopolitical shift,” leaving the United States advantageously positioned in relation to any of its international rivals.

If the blindness of so much of this is beginning to sound a little familiar, the reason is simple enough.  Just as the peak oil theorists failed to foresee crucial technological breakthroughs in the energy world and how they would affect fossil fuel production, the industry and its boosters failed to anticipate the impact of a gusher of additional oil and gas on energy prices.  And just as the introduction of fracking made peak oil theory irrelevant, so oil and gas abundance — and the accompanying plunge of prices to rock-bottom levels — shattered the prospects for a U.S. industrial renaissance based on accelerated energy production.

As recently as June 2014, Brent crude, the international benchmark blend, was selling at $114 per barrel.  As 2015 began, it had plunged to $55 per barrel.  By 2016, it was at $36 and still heading down. The fallout from this precipitous descent has been nothing short of disastrous for the global oil industry: many smaller companies have already filed for bankruptcy; larger firms have watched their profits plummet; whole countries like Venezuela, deeply dependent on oil sales, seem to be heading for receivership; and an estimated 250,000 oil workers have lost their jobs globally (50,000 in Texas alone).

In addition, some major oil-producing areas are being shut down or ruled out as likely future prospects for exploration and exploitation.  The British section of the North Sea, for example, is projected to lose as many as 150 of its approximately 300 oil and gas drilling platforms over the next decade, including those in the Brent field, the once-prolific reservoir that gave its name to the benchmark blend.  Meanwhile, virtually all plans for drilling in the increasingly ice-free waters of the Arctic have been put on hold.

Many reasons have been given for the plunge in oil prices and various “conspiracy theories” have arisen to explain the seemingly inexplicable.  In the past, when prices fell, the Saudis and their allies in the Organization of the Petroleum Exporting Countries (OPEC) would curtail production to push them higher.  This time, they actually increased output, leading some analysts to suggest that Riyadh was trying to punish oil producers Iran and Russia for supporting the Assad regime in Syria.  New York Times columnist Thomas Friedman, for instance, claimed that the Saudis were trying to “bankrupt” those countries “by bringing down the price of oil to levels below what both Moscow and Tehran need to finance their budgets.” Variations on this theme have been advanced by other pundits.

The reality of the matter has turned out to be significantly more straightforward: U.S. and Canadian producers were adding millions of barrels a day in new production to world markets at a time when global demand was incapable of absorbing so much extra crude oil.  An unexpected surge in Iraqi production added additional crude to the growing glut.  Meanwhile, economic malaise in China and Europe kept global oil consumption from climbing at the heady pace of earlier years and so the market became oversaturated with crude.  It was, in other words, a classic case of too much supply, too little demand, and falling prices.  “We are still seeing a lot of supply,” said BP’s Dudley last June.  “There is demand growth, there’s just a lot more supply.”

A War of Attrition

Threatened by this new reality, the Saudis and their allies faced a painful choice.  Accounting for about 40% of world oil output, the OPEC producers exercise substantial but not unlimited power over the global marketplace.  They could have chosen to rein in their own production and so force prices up.  There was, however, little likelihood of non-OPEC producers like Brazil, Canada, Russia, and the United States following suit, so any price increases would have benefitted the energy industries of those countries most, while undoubtedly taking market share from OPEC. However counterintuitive it might have seemed, the Saudis, unwilling to face such a loss, decided to pump more oil.  Their hope was that a steep decline in prices would drive some of their rivals, especially American oil frackers with their far higher production expenses, out of business. “It is not in the interest of OPEC producers to cut their production, whatever the price is,” the Saudi oil minister Ali al-Naimi explained.  “If I reduce [my price], what happens to my market share?  The price will go up and the Russians, the Brazilians, U.S. shale oil producers will take my share.”

In adopting this strategy, the Saudis knew they were taking big risks. About 85% of the country’s export income and a staggeringly large share of government revenues come from petroleum sales.  Any sustained drop in prices would threaten the royal family’s ability to maintain public stability through the generous payments, subsidies, and job programs it offers to so many of its citizens. However, when oil prices were high, the Saudis socked away hundreds of billions of dollars in various investment accounts around the world and are now drawing on those massive cash reserves to keep public discontent to a minimum (even while belt-tightening begins). “If prices continue to be low, we will be able to withstand it for a long, long time,” Khalid al-Falih, the chairman of Saudi Aramco, the kingdom’s national oil company, insisted in January at the World Economic Forum in Davos, Switzerland.

The result of all this has been an “oil war of attrition” — a struggle among the major oil producers for maximum exposure in an overcrowded energy bazaar. Eventually, the current low prices will drive some producers out of business and so global oversupply will assumedly dissipate, pushing prices back up. But how long that might take no one knows. If Saudi Arabia can indeed hold out for the duration without stirring significant domestic unrest, it will, of course, be in a strong position to profit when the price rebound finally occurs.

It is not yet certain, however, that the Saudis will succeed in their drive to crush shale producers in the United States or other competitors elsewhere before they drain their overseas investment accounts and the foundations of their world begin to crumble. In recent weeks, in fact, there have been signs that they are beginning to get nervous.  These include moves to reduce government subsidies and talks initiated with Russia and Venezuela about freezing, if not reducing, output.

An Oil Glut Unleashes “World-Class Havoc”

In the meantime, there can be no question that the war of attrition is beginning to take its toll.  In addition to hard-hit Arctic and North Sea producers, companies exploiting Alberta’s Athabasca tar sands are exhibiting all the signs of an oncoming crisis.  While most tar sands outfits continue to operate (often at a loss), they are now postponing or cancelling future projects, while the space between the future and the present shrinks ominously.

Just about every firm in the oil business is being hurt by the new price norms, but hardest struck have been those that rely on “unconventional” means of extraction like Brazilian deep-sea drilling, U.S. hydro-fracking, and Canadian tar sands exploitation. Such techniques were developed by the major companies to compensate for an expected long-term decline in conventional oil fields (those close to the surface, close to shore, and in permeable rock formations).  By definition, unconventional or “tough oil” requires more effort to pry out of the ground and so costs more to exploit.  The break-even point for tar sands production, for example, sometimes reaches $80 per barrel, for shale oil typically $50 to $60 a barrel.  What isn’t a serious problem when oil is selling at $100 a barrel or more becomes catastrophic when it languishes in the $30 to $40 range, as it has over much of the past half-year.

And keep in mind that, in such an environment, as oil companies contract or fail, they take with them hundreds of smaller companies — field services providers, pipeline builders, transportation handlers, caterers, and so on — that benefitted from the all-too-brief “energy renaissance” in North America.  Many have already laid off a large share of their workforce or simply been driven out of business.  As a result, once-booming oil towns like Williston, North Dakota, and Fort McMurray, Alberta, have fallen into hard times, leaving their “man camps” (temporary housing for male oil workers) abandoned and storefronts shuttered.

In Williston — once the epicenter of the shale oil boom — many families now line up for free food at local churches and rely on the Salvation Army for clothes and other necessities, according to Tim Marcin of the International Business Times.  Real estate has also been hard hit.  “As jobs dried up and families fled, some residential neighborhoods became ghost towns,” Marcin reports. “City officials estimated hotels and apartments, many of which were built during the boom, were at about 50-60% occupancy in November.”

Add to this another lurking crisis: the failure or impending implosion of many shale producers is threatening the financial health of American banks which lent heavily to the industry during the boom years from 2010 to 2014.  Over the past five years, according to financial data provider Dealogic, oil and gas companies in the United States and Canada issued bonds and took out loans worth more than $1.3 trillion. Much of this is now at risk as companies default on loans or declare bankruptcy.  Citibank, for example, reports that 32% of its loans in the energy sector were given to companies with low credit ratings, which are considered at greater risk of default.  Wells Fargo says that 17% of its energy exposure was to such firms.  As the number of defaults has increased, banks have seen their stock values decline, and this — combined with the falling value of oil company shares — has been rattling the stock market.

The irony, of course, is that the technological breakthroughs so lauded in 2012 for their success in enhancing America’s energy prowess are now responsible for the market oversupply that is bringing so much misery to people, companies, and communities in North America’s oil patches.  “At the beginning of 2014, [the U.S.] was pumping so much oil and gas that experts foresaw a new American industrial renaissance, with trillions of dollars in investments and millions of new jobs,” commented energy expert Steve LeVine in February.   Two years later, he points out, “faces are aghast as the same oil instead has unleashed world-class havoc.”

The Geopolitical Scorecard From Hell

If that promised new industrial renaissance has failed to materialize, what about the geopolitical advantages that new oil and gas production was to give an emboldened Washington? Yergin and others asserted that the surge in North American output would shift the center of gravity of world production to the Western Hemisphere, allowing, among other things, the export of U.S. liquefied natural gas, or LNG, to Europe.  That, in turn, would diminish the reliance of allies like Germany on Russian gas and so increase American influence and power.  We were, in other words, to be in a new triumphalist world in which the planet’s sole superpower would benefit greatly from, as energy analysts Amy Myers Jaffe and Ed Morse put it in 2013, a “counterrevolution against the energy world created by OPEC.”

So far, there is little evidence of such a geopolitical bonanza.  In Saudi attrition-war fashion, for instance, Russia’s natural gas giant Gazprom has begun lowering the price at which it sells gas to Europe, rendering American LNG potentially uncompetitive in markets there.  True, on February 25th, the first cargo of that LNG was shipped to foreign markets, but it was destined for Brazil, not Europe.

Meanwhile, Brazil and Canada — two anchors of the “new world oil map” predicted by Yergin in 2011 — have been devastated by the oil price decline.  Production in the United States has not yet suffered as greatly, thanks largely to increased efficiency in the producing regions.  However, pillars of the new industry are starting to go out of business or are facing possible bankruptcy, while in the global war of attrition, the Saudis have so far retained their share of the market and are undoubtedly going to play a commanding role in global oil deals for decades to come (assuming, of course, that the country doesn’t come apart at the seams under the strains of the present oil glut).  So much for the “counterrevolution” against OPEC. Meanwhile, the landscapes of Texas, Pennsylvania, North Dakota, and Alberta are increasingly littered with the rusting detritus of a brand-new industry already in decline, and American power is no more robust than before.

In the end, the oil attrition wars may lead us not into a future of North American triumphalism, nor even to a more modest Saudi version of the same, but into a strange new world in which an unlimited capacity to produce oil meets an increasingly crippled capitalist system without the capacity to absorb it.

Think of it this way: in the conflagration of the take-no-prisoners war the Saudis let loose, a centuries-old world based on oil may be ending in both a glut and a hollowing out on an increasingly overheated planet. A war of attrition indeed.

No responses yet

Leave a Reply