Posts Tagged ‘Foreign Policy’

On Friday, I explained why UBS was the only bank that offered to take a hit on its contracts with AIG during the government’s backdoor bailout of the ailing insurer. The reason? A looming US investigation of UBS that meant the Swiss banking behemoth was in no position to play hardball. In an interview this weekend, one of Switzerland’s justice ministers revealed the extent to which the fate of UBS—and the entire Swiss economy—is again in the hands of the American government.

As Mother Jones reported in November 2008, UBS helped wealthy Americans hide billions of dollars from the Internal Revenue Service (IRS) in violation of a 2001 agreement signed by the bank promising to identify and document customers with any US sources of income. The agreement was a major departure from historic Swiss banking secrecy laws—one which Swiss courts recently deemed to be illegal. The high court’s decision could also prevent UBS from fulfilling its plea deal with the US government, in which it promised to provide more names of US customers with illegal accounts. If UBS fails to live up to its side of the agreement, the bank could face the revocation of its license to operate in America. Now, Swiss Justice Minister Eveline Widmer-Schlumpf warns, “the Swiss economy and the job market would suffer on a major scale should UBS fail as a result of its license being revoked in the United States.”

If there ever was a bank that’s too big to fail, it’s UBS. It is the biggest bank in Switzerland and—before massive subprime mortgage write-downs and the attention of the IRS scared many of its wealthy customers away—it was the largest provider of high-net worth private banking services in the world. (In an ironic twist, Bank of America has since taken its wealth management crown.) UBS and its chief domestic competitor, Credit Suisse, are six times larger than Switzerland’s entire economy—an imbalance reminiscent of the failed banks that decimated the economy and currency of Iceland. Last year the $2 trillion balance sheet of UBS alone was roughly four times the size of the total Swiss output. As Investment International magazine observed at that time, “a UBS ‘blow up’ would be catastrophic to Switzerland’s financial stability.”

Click here to read about the US response or to make a comment on this MoJo blog post.

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I’m working on a larger piece on the UBS whistleblower, Bradley Birkenfeld, so I’ve been following news of the bank rather closely. One exchange from the Congressional hearings on AIG regarding UBS caught my eye so I decided to put the piles of research I’ve done on it to good use. My editor liked the blog post and promoted it to the Top Stories slider. (I led the site for about an hour—the bureau chief’s Twitter-heavy review of the Obama and GOP question session knocked me into the second slot.)

UPDATE: Like my previous post on waterboarding, this piece was the top story on a conspiracy theory website, New World Order Report–this time in the Economics section. Any traffic is good traffic?

UPDATE 2: My reporting was featured in a Media Consortium post about the implications of the Citizens United Supreme Court decision, which has allowed unlimited corporate cash in US elections. Their post was republished on the Huffington Post, AlterNet, FireDogLake, Daily Kos, Open Salon, MyDirectDemocracy, and the Canadian site Rabble.

At this week’s congressional hearings on the AIG bailout, Swiss bank UBS received some undeserved praise.

UBS was one of eight large investment banks that benefited from the now-infamous backdoor bailout of AIG—resulting in government cash infusions totaling $182.5 billion—in the dark days of September 2008. At the hearing, the Special Inspector General for the Troubled Asset Relief Program, Neil Barofsky, revealed to the House Oversight and Government Reform Committee that UBS was the only bank willing to settle its soured credit default swaps (CDS) contracts for less than their face value. Why did UBS play ball when all the other banks didn’t? As the Washington Independent reported, “Barofsky speculated that the firm probably simply recognized that the American taxpayers ‘had taken the global economy on its back.'”

The financial crisis has proved time and again, big banks don’t account for taxpayers—except when they need their help. And that’s the more likely explanation for UBS’ good behavior during the AIG rescue. Like the rest of the global financial industry, UBS was hurting from the subprime mortgage meltdown. (The bank’s colossally bad bet on the US housing market—it had already written down $38 billion in bad loans as of April 2008—earned UBS the nickname Used to Be Smart.) But unlike its intransigent peers on Wall Street, the Swiss banking giant also faced the mounting threat of a US federal investigation. It was in no position to play hardball.

Click here to read the rest of this MoJo Top Story and to make a comment.

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This MoJo blog post was assigned by the bureau chief. It’s both amazing and depressing that the full story hasn’t been more widely told.

UPDATE: The story got out: Kevin Drum, the most popular blogger on MotherJones.com, also featured the news on his blog after seeing it on Time magazine’s Swampland blog.

UPDATE 2: My post got picked up by the amusing conspiracy theory site Question Everything.

A prominent backer of waterboarding has quietly walked back his endorsement of the torture technique. In December 2007, recently retired CIA operative John Kiriakou told ABC News that 30 to 35 seconds of simulated drowning was all it took to make senior al Qaeda commander Abu Zubaydah sing like a bird. “From that day on, he answered every question,” Kiriakou said. “The threat information he provided disrupted a number of attacks, maybe dozens of attacks.”

Kiriakou’s stunning account—made in an exclusive interview with ABC’s Brian Ross—was seized upon by torture proponents as proof that they’d been right all along. But the New York Times discovered last April that Kiriakou “was not actually in the secret prison in Thailand where Mr. Zubaydah had been interrogated but in the CIA headquarters in Northern Virginia.” Now, Jeff Stein of Foreign Policy magazine has discovered Kiriakou himself retracting the waterboarding claims in his recently released memoir, The Reluctant Spy:

“What I told Brian Ross in late 2007 was wrong on a couple counts,” he writes. “I suggested that Abu Zubaydah had lasted only thirty or thirty-five seconds during his waterboarding before he begged his interrogators to stop; after that, I said he opened up and gave the agency actionable intelligence.”

But never mind, he says now.

“I wasn’t there when the interrogation took place; instead, I relied on what I’d heard and read inside the agency at the time.”

In a word, it was hearsay, water-cooler talk.

“Now we know,” Kiriakou goes on, “that Zubaydah was waterboarded eighty-three times in a single month, raising questions about how much useful information he actually supplied.”

Indeed. But after his one-paragraph confession, Kiriakou adds that he didn’t have any first hand knowledge of anything relating to CIA torture routines, and still doesn’t. And he claims that the disinformation he helped spread was a CIA dirty trick: “In retrospect, it was a valuable lesson in how the CIA uses the fine arts of deception even among its own.”

Two years after Kiriakou went public with his ill-considered support for waterboarding, public opinion has turned in favor of the formerly controversial tactic. In the wake of the attempted Christmas Day airplane bombing, Rassmussen polling found “58% of US voters say waterboarding and other aggressive interrogation techniques should be used to gain information” from the underwear bomber—who spoke readily to authorities without the threat of torture.

Stein goes on to get a priceless response from the CIA and lays into ABC’s shoddy investigative reporting. (In the transcript of the interview, Ross fails to ask Kiriakou if he actually witnessed the questioning of Zubaydah.) The whole piece is worth a read.

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In his post, reflecting on the fleeting chance of a global climate agreement, Nick writes, “there simply isn’t much precedent in human history for comprehensive global agreement on tough issues.” I disagree. As the Montreal Protocol to prevent the depletion of the ozone layer and the tattered Nuclear Non-Proliferation Treaty have (thus far) proven, when the world has a profitable solution or nuclear-armed gun to its head, it can agree to do the right thing.

The effort to close the polar ozone holes is an imperfect but instructive global success story. The ozone hole was caused by one type of industrial chemical (chlorofluorocarbons) with limited commercial applications. A profitable replacement chemical made the shift to a planet with fewer CFCs comparatively easy. Climate change is vastly more complicated but there are still ample opportunities for profit from the reworking of the world economy, which is required to prevent widespread catastrophe.

The world succeed in avoiding a nuclear holocaust largely because of a military doctrine known as “mutually assured destruction” (the acronym of which was, appropriately enough, “MAD”). One problem with global warming is that while climate chaos is assured, it will be unevenly distributed across the globe. As African negotiators in Copenhagen have pointed out to little avail, countries in the global south will bear the brunt of the effects of global climate change—despite little historic responsibility for the greenhouse gas emissions that are slowly baking the globe. The disproportionately assured destruction climate change will produce weakens the negotiating positions of these already disadvantaged nations. Case in point: developed nations secretly negotiated for a politically acceptable agreement to only raise global temperatures by 3 degrees Celsius—a scenario that would turn southern Africa into a massive desert.

Indeed, avoiding nuclear war is easier than halting climate change…

Click here to read the rest of the MoJo blog post and to make a comment.

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For some reason the editors-in-chief, who have been closely following this case because Bauer last wrote for Mother Jones, wanted me to chop the last two paragraphs. I’ve included that upbeat bit added-value reporting to this version of the post. (The Daily Show segment I link to at the end is funny, fascinating, and highly recommended.)

UPDATE: My update was included on today’s Must Reads list.

Investigative journalist Shane Bauer and two companions “will be tried by Iran’s judiciary system and verdicts will be issued,” the Islamic republic’s foreign minister, Manouchehr Mottaki, announced at a news conference Monday. The group was arrested in July after allegedly straying into Iran during a hiking trip near the Iraqi city of Sulaimaniya. While Abbas Jafari Dowlatabadi, Tehran’s chief prosecutor, accused the three University of California-Berkeley grads of espionage in November—a charge that can carry the death sentence—Mottaki said only that “relevant sentences” would be issued.

After the statement by Mottaki, Secretary of State Hillary Clinton made another call for the release of Bauer, 27, Sarah Shourd, 31, and Josh Fattal, 27. “The three young people who were detained by the Iranians have absolutely no connection with any kind of action against the Iranian state or government,” Clinton told reporters. “We appeal to the Iranian leadership to release these three young people and free them as soon as possible.”

“When we hear this, the roller coaster goes again,” Shourd’s mother, Nora told the New York Times. “It’s like we just have to pull ourselves back and realize that nothing has happened yet. They’re waiting in their way, and we’re waiting impatiently in ours.”

Diplomatic tensions have complicated the fate of the wayward hikers. For several years, Iran has been pursuing nuclear power in the face of opposition from Western governments, which suspect it is trying to assemble materials for a nuclear bomb. In a September interview with NBC News, Iranian President Mahmoud Ahmadinejad alleged that America is holding several Iranian citizens “in US prisons right now with no good reason.”

The US has relied on Swiss diplomats for updates on Bauer and his friends. The US government ended direct diplomatic relations in the wake of Iranian hostage crisis and now works with Switzerland’s embassy in Tehran to communicate with the Iranian goverment. The Swiss, who have visted Bauer and the hikers twice in the infamous Evin prison where they are being held, say the Americans are healthy.

In spite of the troubling announcement from Iran, there is still reason to believe the three prisoners could be released soon. A handful of other foreigners and journalists have been freed in recent months after being detained under similar circumstances.

Last month five British sailors, who were picked up by the Revolutionary Guards when their yacht strayed into Iranian waters, were let go after only a week in custody. In May Iranian-American journalist Roxana Saberi was convicted of espionage and sentenced to eight years in prison before being released on appeal three months after her arrest. Iranian-Canadian Newsweek reporter Maziar Bahari was released on bail in October, even though he called Ahmadenajad “a moron” in a Daily Show segment prior to the disputed election in Iran.

The MoJo blog post is available here. Go to FreeTheHikers.org to learn more about the plight of Shourd, Fattal, and Bauer, who is a fellow Minnesotan.

Photo courtesy of the Bauer family.

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I’ve been researching the issue of climate change economics for months now so I’m happy to finally publish something on the subject–and just in time for the kick off of the Copenhagen Climate Conference. The piece was radically reduced so it could run as a blog instead of an article, but it was still newsworthy enough to be immediately promoted to the Must Reads.

UPDATE: This piece was republished by Democrats in Texas, which is interesting because I did not realize there were any.

The climate fight in Congress this year has been dominated not by arguments about science, but economics. Opponents of cap-and-trade legislation have issued dire predictions that regulating carbon will cripple the economy and inflict soaring energy prices on already struggling consumers. They’ve been able to get away with such attacks by exploiting widespread confusion about what economists really think about the subject. While the scientific consensus of climate change has been well established by the Intergovernmental Panel on Climate Change, the economics of climate change aren’t nearly as well understood. Recently, however, New York University’s Institute for Policy Integrity released a groundbreaking survey of top US economists revealing that there is a surprisingly high level of agreement among economists on the dangers of climate change as well as an overwhelming consensus that curbing emissions will help, not hurt, the economy.

“Outside academia the level of consensus among economists is unfortunately not common knowledge,” NYU Dean Richard Revesz said at a press conference following the release of the study. “The results are conclusive—there is broad agreement that reducing emissions is likely to have significant economic benefits.” The 144 economists who responded to the 12-question survey have all published an article relating to climate change in one of the top economic journals in the past 15 years.

Click here to read the study’s three key conclusions on MoJo blog.

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With a 10-1 record unrivaled since their historic 15-0 season in 1998, the Minnesota Vikings have this long-suffering fan feeling a bit strange.

Watching the football game this afternoon, I found myself emitting the same sort of smug laughs President Bush must have made when given progress updates during the invasion of Iraq. Will the end result of the Vikings season be “Mission Accomplished” or, with the franchise’s first-ever NFL championship, a real mission accomplished?

Much depends on the health of their 40-year-old warhorse and erstwhile enemy Brett Favre. The future-Hall of Fame quarterback is having a banner year with this afternoon’s resounding victory over the Chicago Bears being no exception. Indeed, he very nearly broke his personal passing yard record. Last year, his backup Tavaris Jackson couldn’t even pilot the team into the playoffs–in spite of having Adrian Peterson, the most dangerous running back in football, to carry the ball every couple plays.

At the beginning of the regular season when the surprise signing of Favre–the longtime leader of the hated Wisconsin Packers–was announced, I predicted he would get us within a game of the playoffs, throw a season-ending interception, and then rip off his jersey to reveal his familiar green and yellow number 4 sweater underneath. Now it is difficult for me to imagine such a scene anywhere outside of the Superbowl.

Like Bush after the capture of Baghdad, Vikings fans like me continue to hope all will end well–in spite of what history and premonition might suggest.

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