How Qatar seized control of the Syrian revolution

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 FT

Left: PlayStation Dictator., Right: OBomber

A short drive from the rising skyscrapers of Doha’s West Bay, emblems of the once-sleepy Qatari capital’s frenetic growth, the three-starred flag of the Syrian revolution can be seen fluttering over a modern villa guarded by police cars. The villa is the new Syrian Arab Republic embassy in Qatar, representing not the regime of Bashar al-Assad, but opponents fighting for his removal. It is the only such embassy in the world, inaugurated by a Qatari minister two months ago with the usual diplomatic pomp, after hard lobbying by Qatar led the 22-member Arab League to hand over Syria’s seat to the opposition.

The diplomats working inside have recourse to neither a government nor a bureaucracy to serve Syrians abroad, lacking even the means to renew a passport. “Maybe soon,” mutters a hopeful junior diplomat. But Qatar is not a country that allows details to get in the way of ambition.

The opening of the embassy was a theatrical expression of this small, massively rich country’s single-minded lurch into Syria’s crisis. When it comes to backing Syria’s rebels, no one can claim more credit than the gas-rich Gulf state. Whether in terms of armaments or financial support for dissidents, diplomatic manoeuvring or lobbying, Qatar has been in the lead, readily disgorging its gas-generated wealth in the pursuit of the downfall of the House of Assad.

Yet, as the Arab world’s bloodiest uprising grinds on into its third year, Qatar finds itself pulled into a complicated and fractured conflict, the outcome of which has a decreasing ability to influence, while simultaneously becoming a high-profile scapegoat for participants on both sides. Among the Syrian regime’s numerous but fragmented opponents the small Gulf state evokes a surprisingly ambivalent – and often overtly hostile – response.

The opening of the Syrian Arab Republic embassy in Qatar, March 2013

In the shell-blasted areas of rebel-held Syria, few appear to be aware of the vast sums that Qatar has contributed – estimated by rebel and diplomatic sources to be about $1bn, but put by people close to the Qatar government at as much as $3bn. However, a perception is taking root among growing numbers of Syrians that Qatar is using its financial muscle to develop networks of loyalty among rebels and set the stage for influence in a post-Assad era. “Qatar has a lot of money and buys everything with money, and it can put its fingerprints on it,” says a rebel officer from the northern province of Idlib interviewed by the FT.

Khalid al-Attiyah, Qatar’s minister of state for foreign affairs, and the point man on Syria, dismisses this criticism as nothing more than noise. “We’re a state, we’re mature … If we were concerned about what people say, we wouldn’t be here today and Qatar wouldn’t be as prosperous.” But Qatar’s role in Syria seems uncharacteristically prominent for a country that lacks the diplomatic experience and traditional heavyweight status of a more discreet Saudi Arabia.

To some extent, the fact that Qatar is so exposed reflects the reluctance of western governments to intervene in Syria. However, for Qatar, Syria is also the culmination of an opportunistic foreign policy which saw Doha become the unlikely backer of other Arab revolts in north Africa – and a friend of those who emerge as winners, in most cases Islamists.


Qatar’s ruling family, the al-Thanis, have no ideological or religious affinity with the Islamists – they are simply not choosy about the beliefs held by useful friends. Qatar has supported the Muslim Brotherhood in Egypt and Tunisia’s Islamist al-Nahda party, which won the first elections after the popular revolts. Some politicians in the region believe the emir is trying to position himself as the “Islamist [Gamal] Abdel Nasser”, as one Arab politician put it, referring to the late Egyptian president and the Arab world’s only true pan-Arab leader.

Most of Doha’s neighbours in the Gulf are hostile to the Islamist trend in the region, but this is of little consequence to a state that takes pleasure in being contrarian. Nor are the al-Thanis embarrassed by the contradictions of an autocracy cheerleading for revolution. “The Qataris say if there’s a tsunami coming your way you ride it, not let it hit you,” says a western diplomat describing Qatar’s attitude towards Islamists.
It is this kind of dynamism and risk-taking at an executive level that has enabled Doha to act as a regional power only a few years after being a diplomatic nobody. But the military stalemate of the Syrian uprising, in which more than 70,000 people have died, has also revealed the recklessness and political impotence that ultimately undermine Qatar’s objectives.

“The Qataris are overextended – their system runs on a few people at the top, and there isn’t much in terms of a bureaucracy,” comments another diplomat. In the case of Syria, those key players have been the emir, Sheikh Hamad bin Khalifa al-Thani, his son and crown prince, Sheikh Tamim bin Hamad, the prime minister Sheikh Hamad bin Jassim, plus Attiyah, the minister for foreign affairs.

As the Qataris have attempted to unite the political opposition by championing the formation of the Syrian National Coalition (the main front) they have been accused of dividing it – just as their efforts to shape a fragmented rebel army into a more coherent form by helping to unify the brigades under one command have contributed to its incoherence.

Not all of the criticism is fair. Partly it is driven by the irritation of many Arabs, at both state and street level, with what they see as an ambitious, nouveau riche state overreaching itself. “You can criticise them for hijacking the opposition but who else is helping?” acknowledges an independent-minded Syrian opposition member who, like many others in the region who were interviewed for this article, requested anonymity.

But the disapproval levelled at Qatar is pervasive. A senior rebel commander who has dealt with the Qataris suggests that Doha should look long and hard at why its role has also sparked so much animosity. “After two years it is time for everyone involved in Syria to review their actions and engage in self-correction,” he says.

For Sheikh Hamad, the 61-year-old emir who has ruled Qatar since 1995 after deposing his father, the road to Damascus has involved a spectacular U-turn. It wasn’t long ago that Bashar al-Assad and his wife Asma were regular visitors to Doha, as guests of the emir and his second wife, Sheikha Moza. Qatari institutions were big investors in Syria, with a $5bn joint holding company set up in 2008 to develop everything from power stations to hotels. The emir also championed the international rehabilitation of Assad during his gradual ostracisation by the US, Europe and his Arab peers; Sheikh Hamad was instrumental in restoring Syrian relations with France in the years before the uprising, when he counted the former president Nicolas Sarkozy as a friend. Back then Syria was part of an alliance – with Iran and Lebanon’s Hizbollah – that seemed on the ascendant, and Qatar, with typical pragmatism and opportunism, saw a chance to ride the wave as well as to moderate Assad’s policies.

When the Syrian revolt erupted in March 2011, Qatar, like Turkey, reacted cautiously; Al Jazeera, the Qatari-owned television channel, was criticised for downplaying the first protests. Behind the scenes, both the emir and crown prince Sheikh Tamim advised Assad against a military solution. But when prime minister Hamad bin Jassim went to visit Assad a month after the outbreak of protests, it became clear to Qatar that the Syrian hardman wanted “to kill people”, as bin Jassim recently recalled at a Brookings Institution meeting.

One person who influenced the emir’s thinking at the time is Azmi Bishara, a prominent former Arab Israeli MP, exiled in Qatar (like many other Arab dissidents) after the Israeli government accused him of passing information to the Lebanese group Hizbollah during Israel’s onslaught on Lebanon in 2006 – a charge Bishara denies.

An adviser to the emir and the crown prince, Bishara has become something of a court intellectual in Doha. He is said to have been involved in the formation of the Syrian National Coalition, now the main opposition umbrella group, and to have been used to “test” opposition figures. He, too, had known Bashar al-Assad well, but then became an avid enthusiast of Arab revolts and the people’s thirst for democracy. Writing in July 2011, Bishara said that Assad could have stayed in power had he led the reforms that people wanted: “The regime chose not to change, and so the people will change it.” (Bishara was not available for comment.)

Although the emir did not make his position public until Saudi Arabia broke its silence over Syria in August 2011, the conviction took hold in Qatar throughout that bloody first summer that Syria’s was as much a revolution as anywhere else in the region. Following the pattern of the other Arab uprisings, Qatar’s instinct was to bet on the opposition. In January 2012, the emir told a US television network that Arab troops should be sent to Syria “to stop the killings”.

Doha’s leaders were particularly emboldened by the revolt in Libya, where Qatar had played the lead Arab role in the Nato-led intervention. Although they knew that Assad’s downfall would not be as easy as Muammer Gaddafi’s, they expected western partners would eventually step in on the side of the opposition. One senior Qatari official suggested in late 2012 that Syria would go the way of Libya, but over a much longer term. Assad’s removal, after all, served the strategic purpose of weakening Iran, his closest regional ally. So far at least, this gamble has proved a miscalculation. “We didn’t want to take the lead. We begged a lot of countries to start to take the lead and we’ll be in the back seat. But we find ourselves in the front seat,” lamented prime minister bin Jassim recently.

Even within the Arab world, Qatar found much stronger resistance to action than was the case with Libya. “Before we get disappointed by the west, we should ask ourselves as an Arab nation what we’ve done – it [Syria] is an Arab issue in the first place,” says Attiyah, the minister for foreign affairs.

In the years before the Arab uprisings, Qatar had cultivated its role as a mediator, capable of talking to all sides on the divisions that polarised the Middle East. It hosted the US’s biggest military air base in the region, while maintaining cordial relations with Iran; it held contacts with Israel while simultaneously backing the Palestinian group Hamas and Lebanon’s Hizbollah. On Syria, Qatar soon emerged as one of the few angry voices at Arab summits, pushing for a tougher line. “In Syria, Qatar became an active protagonist,” says a western diplomat. Having worked to become a kind of Norway of the Gulf, he adds, it also wanted to be “the Gulf version of the UK and France, and you can’t be both at the same time”.

Ahfad al-Rasoul is a source of envy among other brigades fighting in Syria. A relatively new player put together from several fighting groups, it is often linked to the gas riches of Qatar. Ahfad al-Rasoul is one of the few fighting coalitions in Syria that can be considered “effective”, boasts Khaled, a smartly dressed, laptop-carrying “liaison” officer for the group, interviewed by the FT in southern Turkey, near the Syrian border.

Not so, says Abu Samer, a commander from a rival group, who complains about shortages of weapons and ammunition. “If I was getting 15 per cent of what they’re getting, I’d do a lot,” he grumbles. Though Khaled insists his battalion’s good fortunes are thanks to a mix of funding sources, others such as Abu Samer see the hand of Qatar at work.

Supporting the armed rebellion was the inevitable next stage of Qatar’s deepening involvement in Syria. By early 2012, as peaceful protests gave way to an armed opposition, Qatar was scouring around for light weaponry, buying arms in Libya and in eastern European states, and flying them to Turkey, where intelligence services helped deliver them across the border. At first, say people with direct knowledge of the arms shipments, Qatar worked through Turkish intelligence to identify recipients, and then, as Saudi Arabia joined the covert military effort, through Lebanese mediators. The Stockholm International Peace Research Institute, which tracks arms transfers, says that between April 2012 and March this year, more than 70 military cargo flights from Qatar landed in Turkey.

Elizabeth O’Bagy, an analyst at the US Institute for the Study of War, which has published extensive studies of Syria’s fragmented rebel movement, says that as the conflict progressed, the Qataris worked through members of the exiled Muslim Brotherhood to identify rebel factions that should be supported. For example, she says, that is how they linked up with the Farouq brigades, one of the largest and more mainstream factions. Meanwhile, opposition sources say the Qataris have also sent their own special forces to find insurgent groups, and people involved in the weapons business say a Qatari general has been the point man on arms deliveries, travelling to the “operations” room that was set up first in Istanbul and then in Ankara.

However, it is difficult to point to rebel brigades that are exclusively Qatari-funded or backed. Ahfad al-Rasoul, for example, is also thought to be receiving support from Saudi Arabia. Equally, the erratic and limited nature of weapons shipments means that even recipients of Qatari support are not always aware of Doha’s role. Mahmoud Marrouch, a young fighter from Liwaa al-Tawhid, the rural Aleppo group that is believed to have been a major recipient of Qatari arms, says Qatar is like the rest of the world – promising weapons but not delivering. What the fighters have, he says, was seized from regime bases, or purchased on the black market. “The Qataris and the Saudis need a green light from America to help us,” he adds.

A rebel leader in the northern Aleppo province, who works with Liwaa al-Tawhid, says he has also received a Saudi intermediary who goes around rebel-held areas distributing funds. “Groups get funding from both Qatar and Saudi Arabia and they deceive sponsors sometimes,” comments O’Bagy. Indeed, if Qatar is, as its detractors say, seeking to build up a proxy force in Syria to implement its regional agenda, it is doing so in an environment which is not conducive to either loyalty or cohesion. With so many different outside sources of sponsorship and no stable organisational structures, rebel groups lurch from alliance to alliance and continually rebrand themselves in the search for support.

Ironically, although the relationship between Riyadh and Doha has long been characterised by mutual suspicion, in many ways they have worked very closely on Syria. However, a crucial division over the Muslim Brotherhood has undoubtedly led to the pursuit of divergent agendas on the Syrian battlefield, with harmful consequences for an opposition in desperate need of unity. For the Saudis, the handful of secular rebel factions, plus the Salafi groups that espouse a stricter Wahabi Islam practised in Saudi Arabia, are vastly preferable to the Brotherhood, a more organised political group and therefore a greater political threat. “The Saudis say ‘No to the Brotherhood,’” says Riad al-Shaqfa, the leader of the Syrian Muslim Brotherhood. Qataris, on the other hand, are “playing a positive role”, though Shaqfa insists that his group’s funding is from its own members, not from Doha.

Khalid al-Attiyah denies any tensions with Saudi Arabia, saying co-operation is much closer than people assume, with daily consultations. However, rebel sources and analysts say that by September last year, the rivalry had intensified to the point where the Qataris and Saudis were creating separate military alliances and structures. As complaints poured in from opposition leaders and western officials, the two states agreed to bring the structures together under the supreme military command, headed by the western-backed general Selim Idriss.

However, commanders who work with Idriss say that neither country is following through with its promise to bolster the supreme military command, instead continuing to work independently. One reason could be that the Gulf states worry that their limited supplies would be distributed too broadly by the supreme command, instead of reaching only the most effective factions.

But the behaviour has bred resentment. “Qatar and Saudi Arabia … are playing out their rivalries here, they are dividing people,” says Abdul Jabbar Akaidi, the head of the Aleppo revolutionary military council. Speaking from one of his bases on the Syrian side of the border with Turkey, he adds: “People will remember those who gave without having an agenda. The Syrians are clever, they know when there is an agenda.”

By late 2012 a new factor was emerging in Syria, one that had the potential to complicate Qatar’s relationship with the west. The extremist group Jabhat al-Nusrah was gaining ground, playing a prominent role in dislodging the regime from military facilities in northern Syria. In December, the US felt sufficiently alarmed to add Nusrah to its global terrorist list.

Concerned that Qatar’s level of tolerance for radical Islamists was higher than theirs, western governments also wanted safeguards in place to ensure that weapons did not end up in the hands of jihadi groups like Nusrah. The problem, says one former senior US official, was that “the Qataris felt it didn’t matter who you give to, what’s important is to bring down Bashar.”

According to him, the objective in Washington became “to keep the Qataris from doing whatever they want”. So the US instituted a “consultative process”. Two “operations” rooms that oversee weapons deliveries were set up, one in Turkey, the other, more recently, in Jordan. They include representatives from nearly a dozen countries. The Qataris, says the former US official, were co-operative.

Yet allegations that the Qataris have – directly or indirectly – helped Jabhat al-Nusrah have not gone away. At least one Arab government recently said as much, although experts on jihadi movements say the extremist group’s funding comes from al-Qaeda in Iraq and from private donors in the Gulf, not from governments.

Yet even with the “consultative process” in place, leakage might be inevitable, whether through the funding of rebels or through the massive charitable contributions from the Gulf that reach Syria. “Because the Free Syrian Army [FSA] groups work so closely with non-FSA groups these weapons are spreading just because they are fighting side by side – and maybe the groups trade arms with each other as well,” says Eliot Higgins, who examines and records weapons used in the Syrian conflict on his well-followed Brown Moses blog.

Attiyah says Doha has never backed Nusrah, and blames the international community’s inaction on Syria for allowing it to flourish. “Is it the Security Council’s delay in taking a firm resolution against Bashar al-Assad and his regime that has made [Nusrah] emerge? In my opinion, yes,” he says. Sheikh Hamad bin Jassim, the prime minister, is even more dismissive of allegations of Qatari support for extremists, joking in his Brookings presentation that such rumours are spread by jealous neighbours to tease Qatar.

Beneath the quips, however, are signs that Qatar’s influence over military supplies to the rebellion may be waning, as its role in weapons deliveries takes second place to that of Saudi Arabia. Riyadh has more developed networks to source weapons and it has been working closely with Jordan to bolster rebel groups in southern Syria that are not tied to Nusrah.

Many Syrians have probably never heard of Mustafa Sabbagh, though he is considered the most powerful man in the political opposition. The owner of a building material and contracting company, the 48-year-old secretary-general of the National Coalition lived in Saudi Arabia for much of the past decade. He doesn’t make many speeches, or issue statements, but he does oversee the coalition’s budget, to which the Qataris are the biggest donors, and is responsible, as one western official says, “for writing the cheques”. While seen by both friends and detractors as a shrewd man who appealed to Qatar officials’ business-minded attitude, Sabbagh has come under criticism for supposedly using his position to control the opposition and further Qatari influence.

Tensions between him and some of the secular members of the coalition exploded into the open recently after the controversial election of an interim prime minister, Ghassan Hitto, in March. The row over Hitto’s appointment was so bitter it caused tension between Qatar and Saudi Arabia and pushed the Saudis to become more active in opposition politics, which they had largely left to the Qataris. According to pro-Saudi opposition figures, negotiations are now under way to resolve the dispute.

Qatar’s involvement with Syria’s political opposition has generated even more controversy than its support of rebel groups. The dissidents are a fractious assortment of cliques, but they play an important role in shaping international policy. While it was Turkey that helped form the first credible opposition umbrella group, the Syrian National Council [SNC], in August 2011, Qatar quickly embraced it and contributed to its funding. The SNC, however, fell victim to infighting, which gave the Muslim Brotherhood, the only organised bloc within it, the greatest influence. As secular voices began dropping out of the SNC, western nations, led by the US, pressured the Qataris to help form a broader opposition based on an initiative proposed by Riad Seif, a well-respected Syrian dissident. The new body, the National Coalition, was announced in Doha in November 2012.

It was no secret that Qatari officials were less convinced of the need to improve the SNC. Their view appeared to be that dominance of the Muslim Brotherhood was neither as great as claimed, nor an issue. A former US official who tracked the process of the creation of the coalition said dealing with the Qataris at the time was like a “war of attrition”.

However, claims of Qatari dominance of the opposition persisted, even after the coalition was created. True, the Muslim Brotherhood was no longer the main component, but a new bloc of more than a dozen members, brought in by Sabbagh as representatives of local communities in Syria, sparked new disagreements. It was seen as another bloc that was loyal to Qatar.

Each of these members was supposed to represent a local council in Syria’s different provinces, and together the councils received $8m from Qatar soon after the formation of the coalition. Qatar was also the first – and possibly the only – country to provide funding for the coalition budget, to the tune of $20m, and it delivered the first $10m out of a pledged $100m package for the organisation’s new humanitarian assistance unit.

In an interview with the FT, Sabbagh said that the Qatar label that has stuck to him is inaccurate and unfair.

Peppering his words with praise for Saudi Arabia’s contribution to the Syrian cause, he says his relationship with Qatar is confined to what he calls “logistics” support for a business forum that he founded after the revolt against Assad broke out. The forum had mobilised funds from merchants inside and outside Syria to support the Free Syrian Army. Sabbagh insists that the representatives of local councils that he invited into the coalition were an attempt, even if imperfect, to raise the representation of people inside the country in the main opposition front. “It’s inevitable [that there should be controversy about them] because there are no elections. It was an experience that needed maturing,” he says.

Attiyah, meanwhile, says he has no closer relationship with Sabbagh than anyone else in the coalition. He also points out that the coalition with its various components, including the local representatives, was not created by Qatar alone but with the help and blessing of Arab and western officials.

In Syria itself, the number of dead continues to rise and Bashar al-Assad is still stubbornly clinging on to power. Whether Qatar’s venture into Syrian opposition politics will have any returns will depend on whether Syria survives as a country – something that is by no means assured. Perhaps for the Qatari emir, the demise of Assad will be sufficient satisfaction. In theory, Qatar could also emerge with multiple points of influence through Islamists and loyal brigades. But it has already created many enemies inside Syria, and not just among pro-regime supporters. So torn apart is the fabric of Syria’s society, and so radicalised and suspicious its battered population, that the Qataris are more likely to find that they are neither thanked – nor even wanted – there.

 http://www.ft.com/intl/cms/s/2/f2d9bbc8-bdbc-11e2-890a-00144feab7de.html#axzz2TYzyWVZt

How Dangerous is the S-300 "Syria is About to Receive?"

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by admin

What are the implications of Moscow delivering S-300 air-defense systems to Syria, could one weapon system decide the outcome of the Syrian power struggle, is the Russian missile system as invincible as it is described? Alexey Eremenko from the Russian news agency Novosti provides some answers. Defense-Update reports.

“The missile batteries would give Syrian President Bashar al-Assad’s regime a powerful weapon against foreign air strikes” Eremenko comments, “one of the options being bounced around as a form of international intervention – and could fracture the fragile accord on Syria reached last week between Moscow and Washington, which hope to get the warring sides to negotiate.”

According to Eremenko, “Verifiable information about the S-300 deal is desperately scant: Was there a deal at all? What did it cover? Has any part of it been implemented? For now, what we know about the S-300 saga, from its origins to its implications, has been based on disappearing documents, anonymous sources, rumors, approximations and misunderstandings.”

Is there really a deal to sell Russian S-300 systems to Syria?

Technically, it’s all hearsay, according to Eremenko. The single evidence was a 2011 annual report by S-300’s manufacturer, the Nizhny Novgorod Machine Building Plant, which mentioned a contract for such missiles for Syria. However, the report has since vanished from the plant’s website. The Vedomosti business daily that commented about that story said the contract was worth $105 million and that an unspecified number of S-300 systems were slated for delivery between 2012 and early 2013. Based on the quoted price, the alleged contract would cover the infrastructure required for one battery only. (One S-300 missile system is estimated to cost some $115 million, the cost of each missile is over one million US$.)

Other reports commonly attributed to ‘western intelligence sources’ mention that Syria has ordered four S-300 batteries and 144 missiles, thus committing $900 million for such order. Deliveries of the hardware would commence by late summer. Other media sources reported initial shipments were made in December 2012. Russian official sources have stated that a contract covering the delivery of advanced air-defense systems to Syria has been signed two years ago.

Can the international community or any third parties affect the sale?

“The deal is strictly between Moscow and Damascus – which is to say, it’s all in the hands of Russian President Vladimir Putin,” Eremenko wrote, “all attempts to ban arms sales to Syria via the UN Security Council have been blocked by Russia. Of course, there is behind-the-scenes haggling and arm-twisting, but that’s unofficial.”

Why are the S-300s dangerous? They’ve been on the production line since 1978 – aren’t they outdated by now?

The S-300 systems have been modernized repeatedly to remain state-of-the-art airplane- and rocket-destruction machines. The S-300PMU2 Favorit can launch six missiles at once and engage 12 targets simultaneously, both at high and low altitude. The missile interceptors (effectors) used by the S-300 PMU2 outmaneuver any modern fighter, including F-16, F-15, F-18 and F-22, these missiles can also effectively hit cruise missiles at ranges of 40-70km. The same unit can also employ the latest 48N6E2 missiles to intercept short and medium range ballistic missiles that would be targeting the site. This missile having a maximum range of 195km is what makes the system ‘strategic’ When covered by by point defense missile systems, such as the SA-15 Tor or SA-22 Pantsir S1, an S-300 PMU2 would be virtually immune to standoff attack by precision guided weapons. The system is also designed to operate effectively even when subjected to severe countermeasures and electronic attack, which makes it especially difficult to suppress.

Who are the targets?

In addition to engaging fighter aircraft, cruise and ballistic missiles, the S-300 system will also pose acute danger to strategic assets flying well beyond the Syrian border, including Israeli or coalition support aircraft, airborne early warning, electronic warfare and monitoring or aerial refueling aircraft which are part of strike packages or aircraft supporting intelligence gathering and surveillance. “Any attempts by foreign powers to enforce a no-fly zone over Syria, as was done in Libya in 2011.” Eremenko wrote.

What’s the possible time frame? How long until Assad can shoot foreign fighter jets out of the sky?

The S-300 system deploys in five minutes – once it’s paid for, produced, tested, shipped, and manned by trained personnel. Novosti wrote, still, it would likely take a while before Damascus actually gets any missiles. However, there are few issues that would delay delivery. The manufacturer is unlikely to have ready-to-ship S-300 systems lying on the shelves: Whatever leftovers there were from a deal with Iran, scrapped in 2010, were long ago snatched up by other customers such as Algeria, according to Ruslan Pukhov of the Center for Analysis of Strategy and Technologies, a for-profit research group in Moscow. This means the systems would need to be produced and test launches conducted, a job that would take about a year, Pukhov said. “Furthermore, dozens or even hundreds of staff would have to be trained to operate the complicated machinery, which should take about six months. This would push Assad’s most optimistic deadline of owning fully operable S-300 complexes to November at best, with spring of 2014 being a more realistic estimate.”

Source: Defense-Update


How Dangerous is the S-300 Syria is About to Receive? What are the implications of Moscow delivering S-300 air-defense systems to Syria, could one weapon system decide the outcome of the Syrian power struggle, is the Russian missile system as invincible as it is described? Alexey Eremenko from the Russian news agency Novosti provides some answers.

The Pentagon Declares War on America

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By Frank Morales

State Terrorism directed against the American People and Democracy Itself 

Global Editor’s Note

The Department of Defense now authorizes the domestic deployment of US troops  in “the conduct of operations other than war”  including law enforcement activities and the quelling of “civil disturbances”: “Federal military commanders have the authority, in extraordinary emergency circumstances where prior authorization by the President is impossible and duly constituted local authorities are unable to control the situation, to engage temporarily in activities that are necessary to quell large-scale, unexpected civil disturbances…“

These developments –which are currently the object of heated debate– are the result of  more than ten years of “repressive legislation” which increasingly points to the “fusion of the police and military functions both within the US and abroad”.

In a path breaking article published by Global Research in 2003,  award winning author Frank Morales shows how the post 911 “Patriot Act” which he describes as a “repressive coordination” had set the stage for the militarization of America, namely “a form of state terrorism directed against the American people and democracy itself.”

The “domestic war on terrorism” hinges upon the Pentagon’s doctrine of homeland defense. Mountains of repressive legislation are being enacted in the name of internal security. So called “homeland security”, originally set within the Pentagon’s “operations other than war”, is actually a case in which the Pentagon has declared war on America. 

Shaping up as the new battleground, this proliferating military “doctrine” seeks to justify new roles and missions for the Pentagon within America. Vast “legal” authority and funds to spy on the dissenting public, reconfigured as terrorist threats, is being lavished upon the defense, intelligence and law enforcement “community.”

We bring to the attention of our readers this path-breaking analysis

Michel Chossudovsky, May 17, 2013

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The “PATRIOT Act” is a repressive “coordination” of the entities of force and deception, the police, intelligence and the military. It broadens, centralizes and combines the surveillance, arrest and harassment capabilities of the police and intelligence apparatus. Homeland defense is, in essence, a form of state terrorism directed against the American people and democracy itself. It is the Pentagon Inc. declaring war on America.

The “domestic war on terrorism” hinges upon the Pentagon’s doctrine of homeland defense. Mountains of repressive legislation are being enacted in the name of internal security. So called “homeland security”, originally set within the Pentagon’s “operations other than war”, is actually a case in which the Pentagon has declared war on America. Shaping up as the new battleground, this proliferating military “doctrine” seeks to justify new roles and missions for the Pentagon within America. Vast “legal” authority and funds to spy on the dissenting public, reconfigured as terrorist threats, is being lavished upon the defense, intelligence and law enforcement “community.”

All this is taking place amidst an increasingly perfected “fusion” of the police and military functions both within the US and abroad, where the phenomena is referred to as “peacekeeping”, or the “policization of the military”. Here in America, all distinction between the military and police functions is about to be forever expunged with the looming repeal of the Posse Comitatus Act. The latter, was passed after the Civil War to rein in the military. It bars federal troops from doing police work within United States borders, although strictly speaking, the Act refers only to the Army and the Air Force, not to the Marines or the National Guard in “state status.” According to the New York Times:

“the Bush administration has directed lawyers in the Department of Justice and Defense to review the Posse Comitatus Act of 1878 and any other laws that sharply restrict the military’s ability to participate in domestic law enforcement.”

The Washington Post (7/21/02) put it a bit more starkly, stating that the Bush administration:

“has called on Congress to thoroughly review the law that bans the Army, Navy, Air Force and Marines from participating in arrests, searches, seizure of evidence and other police-type activity on US soil.”

In other words, the “New World Law and Order” based on the repeal of the Posse Comitatus Act, requires a system of domestic and global counterinsurgency led by the Pentagon.

The first requirement of this counterinsurgency, which is directed at all forms of social dissent is the “collection”, “retention” and “dissemination” of information, information on anyone who resists, whether through violent means or otherwise. Recall, that the protests in Seattle and numerous other cities in recent years were more often than not classified within official DoD and FEMA documents as “terrorist events”. 

The objective is to centralize all intelligence gathering under one roof, the Department of Homeland Security and to widely cast the net over all of us, making certain that we all fall in line with the Pentagon Inc. agenda.

To this end the myriad modes of intelligence gathering or “collection” have been beefed up: From CALEA (Communications Assistance for Law Enforcement Act) to Carnivore (e-mail spying), from the NSA’s Echelon (global listening device), to spy satellite imagery, from FBI “roving wiretaps”, to CIA access to grand juries and secret FISA “foreign intelligence” courts, the means, legal sanctions and technology of social control proliferate, are sanctioned, are demanded by a paranoid public. Homeland security requires manufactured insecurity. A bit of anthrax to keep em on their toes and minding their p’s and q’s…

Terrorism Information and Prevention System (TIPS)

Typical of the need for “tactical (on the ground) intelligence” is the creation of TIPS or the Terrorism Information and Prevention System. Set up in January 2002 by Ashcroft’s Justice Department, TIPS is described as a “national system for concerned workers to report suspicious activity”. In fact, TIPS is a hotline to the National White Collar Crime Center, a Justice Department organization that deals with “economic crime” and cyberattack. For a little under a million bucks they plan to register all “suspicious, publicly observable activity that could be related to terrorism” and forward it to law enforcement and other agencies “opting to receive TIPS information.” These agencies “would be responsible for determining how to respond to the tips they receive.”

The “workers” that TIPS is willing to offer its hotline service are those in the transportation, trucking, shipping, maritime, and mass transit industries. The truckers, for their part, are jumping in with both feet. The trucker magazine FleetOwner recently noted (6/1/02) that:

“attempting to stay ahead of Federal regulators charged with securing US transportation networks from terrorist attacks, the American Trucking Assns. has readied a ‘Neighborhood Watch’ program for the nation’s highways.”

The ATA’s “Anti-Terrorism Action Plan”, geared to keeping the “wheels of commerce” rolling, envision a plan in which “a potential 3 million professional truck drivers will be trained to spot and report any suspicious activities that might have terrorism or national security implications.” As if truckers don’t have enough on their minds, although it might be wise for them to keep their eyes wide open.

It seems that the Bush administration concern for workers knows no bounds. According to the New York Times (8/!4/02) President Bush wants to exempt all homeland security coordinated agencies “from collective bargaining requirements if (he) were to determine that our national security demands it.” Little known to the public, the president is seeking not only to “exempt agency employees from federal labor relations rules and prohibit them from joining unions”, but he’s also prepared to force them to work, under the conditions he chooses, if “national security demands it”. The “flexibility” that Bush is calling for, a “fast moving homeland security department unfettered by work rules and red tape” is sure to result in a lot less “flexibility” on the part of workers who may soon be confronted with a form of involuntary employment during “times of war”, all set out in Department of Defense directives.

Financing Homeland Defense

TIPS, which is an integral part of the CitizenCorps/ FreedomCorps/ AmeriCorps axis of patriotic, police loving do-gooders, is buttressed with funds from the Corporation for National and Community Service (CNCS). In the wake of 9/11, CNCS was fully integrated into “homeland defense efforts”. In March 2002, the Corporation issued a “notice of availability of funds to strengthen communities and organizations in using service and volunteers to support homeland security.” With an emphasis on “public safety” and “freeing up police time”, the grants offered under the announcement “are to assist communities in getting involved in the war against terrorism on the home front.” In the area of “public safety” the grants “will help provide members to support police departments…in tasks and other functions that can be performed by non-sworn officers.” Now mind you, the volunteers “are not armed, nor can they make arrests, but they carry out vital tasks including organizing neighborhood watch groups…” They also “organize communities to identify and respond to crime and disorder problems…”

In July 2002, Homeland Security Director Tom Ridge announced, while sitting in a Washington DC police station, the first round of CNCS homeland security grants totaling $10.3 million, an “initiative” that is to involve some 37,000 volunteers nationwide. One recipient of a $484,000 Corporation grant, based in NYC, is the Center for Court Innovation. Linked to the NYC Public Safety Corps, the grant “will enhance homeland security by assisting criminal justice officials (police, probation officers, judges) as they perform their duties…(while) 40 full time AmeriCorps members will…free up police…to address conditions of disorder that if left unchecked create a climate where crime would flourish.”

In NYC, ground zero for the attack, homeland defense equates to the same old thing, cracking down on “disorder” (protest) and “quality of life crimes”, which is a racist police code for arresting and jailing more poor people.

The euphemism of “homeland defense”, codified within the halls of the Pentagon as early as the mid-1990′s, long before 9/11, buttressed with various Presidential Decision Directives and Executive Orders, includes, within the doctrinal rubric of “operations other than war”, continual training to suppress dissent, or as it is conveniently phrased, to put down “civil disturbance.” The decades old “Garden Plot” operation, which is the Pentagon’s stand alone “civil disturbance” plan, has become generalized in the “homeland defense” concept and it’s focus on the “asymmetric threat”. With the creation of the Department of Homeland Defense, Homeland Security Council etc. the Bush administration is seeking to institutionalize it’s “permanent war” against “terrorism”, dovetailed with it’s ongoing war against dissent.

So while Garden Plot directives, geared for domestic use, are exported to “peacekeeping” troops abroad, “homeland defense” tightens the grip at home. The recent appointment of General Ralph E. Eberhart and the creation of a Northern Command within the Pentagon reflect the depth of commitment the elite have to maintaining “full spectrum dominance” at home.

With “the PATRIOT Act” and other legal monstrosities foisted upon the people, what emerges is a repressive “coordination” (as the Nazis used to call it) of the entities of force and deception, the police, intelligence and the military, in the interests of a “permanent” counterinsurgency, by way of the centralization and broadening of surveillance capabilities, arrest capabilities, and harassment capabilities, which target anyone corporate America doesn’t like. Homeland defense is, in essence, a form of state terrorism directed against the American people and democracy itself. It is the Pentagon Inc. declaring war on America.

Global Counterinsurgency

The “war on terrorism” is a global counterinsurgency whose aim is to wipe out any and all resistance to US global hegemony and corporate domination. Utilizing “operations other than war” (OOTW), corporate America and it’s military are taking a more direct, hands on approach to the needs and requirements of corporate globalization. OOTW, with its host of new missions (e.g. peacekeeping and civil disturbance operations), is based on a pre-emptive doctrine. In this new war, which relies on both standard means of killing along with so-called non-lethal weapons, so-called ” non-combatants” (i.e. civilians) become the primary target. And in so doing, the military, via its OOTW doctrine, is violating one of the sacred tenets of the so-called “laws of war”, namely, that militaries not target civilian populations. But after all, as Defense Secretary Rumsfeld noted in a (12/12/01) statement to the Senate Armed Services Committee, the “enemy” “hides in caves abroad”, and more importantly, “among us here at home.”

Now, despite the fact that both the Presidential and military directives target “non-United States citizens” (as if that’s not bad enough), in June 2002, the Bush administration jailed a New York City man of Puerto Rican descent, Jose Padilla – or as he now calls himself – Abdullah al Muhajir, and is holding him in a military brig in South Carolina. He has yet to be charged with any crime. Like the hundreds of Muslim immigrants still being held in detention since September 11, he is considered a “material witness” to the investigation of the attack. And yet, rather than have him subject to the discretion of Federal courts, he was handed over to the military as an “enemy combatant” after Ashcroft and the Pentagon talked it over. At that moment, Padilla was taken out of his New York prison cell and transferred to a US Navy brig in South Carolina. His attorney, Donna Newman of NYC was not informed of his transfer and has been denied access to her client. Even the Washington Post, which has backed virtually all of the repressive measures of the Bush administration since September 11, wrote at the time of Padilla’s jailing that:

 ”the governments actions in this latest case cut against basic elements of life under the rule of law” and that “if its positions are correct, nothing would prevent the president – even in the absence of a formal declaration of war – from designating any American as an enemy combatant…If that’s the case, nobody’s constitutional rights are safe.”

This “chilling legal precedent” is but the tip of the iceberg of the complete subsuming of normal judicial processes to the growing militarization of law enforcement and jurisprudence.

“Homeland defense”, as we experience it today, has been percolating in the bowels of the Pentagon and corporate think tanks like the Center for Strategic and International Studies, and the Council on Foreign Relations, along with their Congressional counterparts, for nearly a decade. What it required was an emergency situation. The “homeland security” apparatus presently being constructed is modeled roughly after the military’s “combatant command structure” and is –in the wake of 9/11– set within the context of the “laws and customs of war”, hence the introduction of military courts and the shifting of jurisdictions for so-called “crimes associated with terrorism”. The Northern Command, based at Peterson Air Force Base, Colorado, whose job as of October 1st is to patrol America, will head up this homeland defense “command structure”.

Concurrent with the round-up of over a thousand people following the September 11 attack, many of whom have been held in solitary confinement, with no charges being filed, President Bush signed in November 2991 order, establishing military “tribunals” for those non-citizens accused, anywhere, of “terrorist related crimes”. According to the National Legal Aid & Defender Association, the order violates the constitutional separation of powers:

 ”[It] has not been authorized by the Congress and is outside the President’s constitutional powers”… the order strips away a variety of checks and balances on governmental power and the reliability and integrity of criminal judgments… [T]he order undermines the rule of law worldwide, and invites reciprocal treatment of US nationals by hostile nations utilizing secret trials, a single entity as prosecutor, judge and jury, no judicial review and summary executions.”

Department of Defense Military Commission Order No.1, issued March 21, 2002, is concerned with “procedures for trials by military commissions of certain non-United States citizens in the War Against Terrorism.” The “commissions”, according to the order, “shall have jurisdiction over violations of the laws of war and all other offenses triable by military commission.” Overseen by a “military officer” who will “admit or exclude evidence at trial”, the “prosecutor” would be a “special trial counsel of the Department of Justice.” On the defense side, well, one could opt to go with the DoD’s version of the public defender, namely another “military officer”, or one could secure an attorney.

Although “the Accused may also retain the services of a civilian attorney of the Accused’s own choosing…at no expense to the United States Government”, this would only be possible once it “has been determined” that the civilian attorney is “eligible for access to information classified at the level of SECRET or higher…”

In other words, to get any kind of impartial and efficient legal representation in Mr.Rumsfeld’s court, your attorney has to be cleared by the Pentagon.

 http://www.globalresearch.ca/homeland-defense-the-pentagon-declares-war-on-america/5335483

 

Gangster state America

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By Paul Craig Roberts

There are many signs of gangster state America. One is the collusion between federal authorities and banksters in a criminal conspiracy to rig the markets for gold and silver.

My explanation that the sudden appearance of an unprecedented 400 ton short sale of gold on the COMEX in April was a manipulation designed to protect the dollar from the Federal Reserve's quantitative easing policy has found acceptance among gold investors and hedge fund managers.

The sale was a naked short. The seller had no gold to sell. COMEX reported having gold only equal to about half of the short sale in its vaults, and not all of that was available for delivery. No one but the Federal Reserve could have placed such an order, and the order came from one of the Fed's bullion banks, one of the entities "too big to fail."

Bill Kaye of the Greater Asian Hedge Fund in Hong Kong and Dave Kranzler of Golden Returns Capital have filled in the details of how the manipulation worked. Being sophisticated investors of many years of experience, both Kaye and Kranzler understand that the financial press runs with the authorized story planted to serve the agenda that has been put into play.

Institutional investors who have bullion in their portfolio do not want the expense associated with storing it securely. Instead, they buy into Exchange Traded Funds (ETF) and hold their bullion in the form of a paper claim. The largest, the SPDR Gold Trust or GLD, trades on the New York Stock Exchange. The trustee and custodian is a bankster, and only other banksters are able to turn investments into delivery of physical bullion. Only shares in the amount of 100,000 can be redeemed in gold.

The price of bullion is not set in the physical market where individuals take delivery of bullion purchases. It is set in the paper futures market where short selling can drive down the price even if the demand for physical possession is rising. The paper gold market is also the market in which people speculate and leverage their positions, place stop-loss orders, and are subject to margin calls.

When the enormous naked shorts hit the COMEX, stop-loss orders were triggered adding to the sales, and margin calls forced more sales. Investors who were not in on the manipulation lost a lot of money.

The sales of GLD shares are accumulated by the banksters in 100,000 lots and presented to GLD for redemption in gold acquired at the driven down price.

The short sale is leveraged by the stop-loss triggers and margin calls, and results in a profit for the banksters who placed the short sell order. The banksters then profit again as they sell the released gold into the physical market, especially in Asia, where demand has been stimulated by the sharp drop in bullion price and by the loss of confidence in fiat currency. Asian prices are usually at a higher premium above the spot prices in New York-London.

Some readers have said "don't bet against the Federal Reserve; the manipulation can go on forever." But can it? As the ETFs such as GLD are drained of gold, their ability to cover any of their obligations to investors diminishes. In my opinion, these ETFs are like a fractional reserve banking system. The claims on gold exceed the amount of gold in the trusts. When the ETFs are looted of their gold by the banksters, the gold price will explode, as the claims on gold will greatly exceed the supply.

Kranzler reports that the current June futures contracts are 12.5 times the amount of deliverable gold. If more than 8 percent of these trades were to demand delivery, COMEX would default. That such a situation is possible indicates the total failure of federal financial regulation.

What the Federal Reserve has done in order to maintain its short-run policy of protecting the "banks too big too fail" is to make the inevitable reckoning more costly for the US economy.

Another irony is the benefactors of the banksters sale of the gold leeched from the gold ETFs. Asia is the beneficiary, especially India and China. The "get out of gold line" of the US financial press enables China to unload its excess supply of dollars, accumulated from the offshored US economy, into the gold market at a suppressed price of gold.

Kranzler points out that not only does the Fed's manipulation permit Asia to offload US dollars for gold at low prices, but the obvious lack of confidence in the dollar that the manipulation demonstrates has caused wealthy European families to demand delivery of their gold holdings at bullion banks (the bullion banks are essentially the "banks too big to fail"). Kranzler notes that since January 1, more than 400 tons of gold have been drained from COMEX and gold ETF holdings in order to satisfy world demand for physical possession of bullion.

Again we see that institutions of the US government are acting 100% against the interests of US citizens. Just who does the US government represent?

Paul Craig Roberts

paulcraigroberts.org

New Bretton Woods: The Making of a New World Order

Britain's chancellor of the Exchequer George Osborne, center right, at the start of the G7 finance ministers and central bank governors meeting on Friday, May 10 in Aylesbury, England. The role of central banks in shoring up the global economic recovery is set to be a key point of discussion among top financial officials from the world's seven leading economies when they gather in the UK this weekend.Photo by Alastair Grant - WPA Pool / Getty Images. 

A note Paul Solman: The G7 finance ministers met in England last week and had "intense discussions," said Reuters, about international monetary policy and currency exchange rates, a source of tension in the world economy for, oh, about 100 years now.

According to the economic history books, the one great conference that resolved that tension -- for a quarter century -- was "Bretton Woods," a convocation of 44 countries in the White Mountains of New Hampshire less than a month after D-Day and the beginning of the end for the axis powers in World War II. What would the post-war world economy look like? That was the question in July of 1944. The answers were a loosely dollar-based world currency regime, the International Monetary Fund and what was to become the World Bank.

So, do we need another Bretton Woods today? Benn Steil, editor of the scholarly journal "International Finance," has written a book that ponders this and other questions: "The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order." Paul Volcker has called it "full of lessons relevant today." Alan Greenspan said it's "a must-read work of economic and diplomatic history" and The New York Times wrote that "it should become the gold standard on its topic."

Critics like history professor Eric Rauchway, by contrast, take Steil to task for for overemphasizing Bretton Woods' weaknesses and the Soviet connections of its chief American negotiator, Harry Dexter White.

Benn Steil: In the wake of the great financial crisis of 2008, world leaders, from French President Nicolas Sarkozy to British Prime Minister Gordon Brown, began calling for "a new Bretton Woods" to restore discipline and calm to world financial markets. The very words "Bretton Woods," it seemed, had become shorthand for enlightened globalization. Simply invoking the name of the remote New Hampshire town, where representatives of 44 allied nations came together 65 years earlier, in the midst of the century's second great war, was to put oneself on the side of order, stability, vision, cooperation, and peace. But was the actual 1944 Bretton Woods conference, the most important international gathering since the Paris peace talks a quarter century earlier, really such a kumbaya moment? Could we recreate it? And if we could, would we want to?

Consider the conference itself -- the men who drove it and its goals.

President Franklin Roosevelt told the assembled that their agenda marked "a vital phase" among "the arrangements which must be made between nations to ensure an orderly, harmonious world." He hoped it would speed the war's conclusion by sending the enemy Axis powers the message that it was America and its allies that had the compelling postwar vision.

But FDR had little interest in the actual ins and outs of international economic affairs, and it was his Treasury -- led by Sec. Henry Morgenthau, but powered by his ambitious, temperamental deputy, Harry Dexter White -- which scripted its details.

Morgenthau years later told President Harry Truman that his ambition at Bretton Woods had been "to move the financial center of the world from London and Wall Street to the United States Treasury and to create a new concept between the nations of international finance." That concept was given its flesh by Harry White, and its centerpiece was to be a dollar-based international monetary system overseen by a new U.S.-dominated International Monetary Fund.

With the exception of two delegations, the Soviet and the British, the governments represented at Bretton Woods bowed to this concept with only modest grumbling because they felt they had no choice. The United States controlled nearly 80 percent of the world's monetary gold stock at the time, and U.S. dollars were the only credible surrogate for gold. Without American monetary and financial support, barter was the only way to trade, and therefore to survive.

The Soviets, whose trade with the world was entirely state-controlled, had no practical use for the American scheme, and signed on for reasons which were transparent, but to which White was willfully blind: Stalin had hoped to get cheap American loans, that he could repudiate at his convenience, and liked the idea of the world fixing currencies to a gold-backed dollar because it would boost the value of Russia's large gold stocks. (When the loans were not forthcoming, the Soviets refused to ratify the agreements.)

The British delegation head, the storied John Maynard Keynes, tussled with White for two years in the run-up to the conference, trying with increasing desperation to sustain some remnant of an international role for the pound sterling, which functioned as the monetary foundation of Britain's fraying global empire.
The world's first-ever celebrity economist, Keynes was an unlikely diplomat: he was eloquent and quick-witted, yet also irascible and condescending. But with war-torn Britain on the verge of bankruptcy, its colonies braying for London to start paying its way in dollars, Keynes emerged as London's last-ditch financial ambassador because he had what the Americans respected: star power.

For his part, White had a longstanding obsession with Britain and its currency, having as early as 1935, nine years before Bretton Woods, begun working actively to undermine the sterling's status by, for example, forcing China to unpeg its currency from sterling in favor of a peg to the dollar. All this was to pave the way for an international conference at which the dollar would be enthroned as the world's unrivaled monetary standard.

Bretton Woods was ultimately part of a Faustian bargain that Britain was obliged to make with FDR's Treasury. In return for American [Lend-Lease] (http://www.ourdocuments.gov/doc.php?flash=true&doc=71) aid to survive the war, and a transitional loan to get through the immediate post-war period, Britain was told to:

End imperial trade preference, the arrangement by which Britain gave itself privileged access to the markets of its colonies and dominions Make the pound sterling fully convertible into dollars at a fixed rate by July 15, 1947 (a day that lives in infamy for the British, as it triggered a collapse of the country's dollar reserves) Accept the U.S. dollar as the global unit of account. It was a brutal deal, but as British economist and Bretton Woods delegate Lionel Robbins put it at the time, "we need[ed] the cash."

The Americans triumphed at Bretton Woods. Yet, looking back nearly 70 years later, it is clear that it was a pyrrhic victory.

There had been four pillars to White and Morgenthau's postwar vision:

Britain's empire could be peaceably dismantled The Soviet Union could be co-opted into a permanent peacetime alliance Germany could be safely deindustrialized and dismembered (the so-called Morgenthau Plan) Short-term IMF loans would be sufficient to restart international trade. Three years after Bretton Woods, the Marshall Plan repudiated all of this.

These beliefs, it turned out, had been based on "misconceptions of the state of the world around us." Future secretary of State Dean Acheson later reflected, "both in anticipating postwar conditions and in recognizing what they actually were when we came face to face with them ... Only slowly did it dawn upon us that the whole world structure and order that we had inherited from the nineteenth century was gone and that the struggle to replace it would be directed from two bitterly opposed and ideologically irreconcilable power centers."

By early 1947, Britain was no longer seen as a political and economic rival but as a desperate ally that needed to be saved from communism and collapse. The Soviets could not be co-opted, and needed now to be contained (in George Kennan's famous word). West Germany had to be built into a vital bulwark against Soviet expansion -- this through rehabilitation and resurrection as the industrial engine of a new integrated Western Europe ("Western Europe" being an American conception). Finally, the IMF, together with its loan-based salvation mechanism, would be mothballed in favor of massive U.S. grants-in-aid to its allies.
(Note to Angela Merkel, Germany's iron chancellor: do you not see parallels with your handling of today's eurozone crisis?)

Although the quarter-century period from 1945-1971 is typically referred to as "the Bretton Woods era," the monetary regime called for in the conference agreements could not be said to have become operative until 1961, when the first nine European countries met the requirement that their currencies be convertible into dollars. By this time, however, the system was already coming under strain owing to a deteriorating U.S. balance of payments and corresponding loss of gold reserves.

"There is no likelihood," White had insisted when urging congressional ratification of Bretton Woods in 1945. "The United States will, at any time, be faced with the difficulty of buying and selling gold at a fixed price freely." Yet this is precisely what transpired after his system entered into normal operation in the 1960s.
On Aug. 15, 1971, President Richard Nixon made a dramatic announcement. Following on the heels of a French battleship arriving in New York to take home its gold from the New York Federal Reserve, Nixon announced the closing of the American "gold window." Facing imminent depletion of the once-vast U.S. gold stock, Nixon would remove the foundation of the Bretton Woods international monetary system - never again would the dollar be convertible into gold.

One strange and fascinating legacy of the 1940s that lives on at the IMF today is one which no one present at Bretton Woods could ever have imagined. My archival research uncovered some remarkable new evidence that the Fund's architect, Harry White, despite being a staunch American monetary nationalist, was a passionate believer in the success of Soviet socialist economics, and was bitterly critical of what he saw as western hypocrisy towards Soviet Russia. President Truman was certainly unaware of this when he nominated White to be the first American executive director of the IMF in 1946. He was also on the verge of nominating him to be the first head (managing director) of the Fund when he received a long memorandum from FBI director J. Edgar Hoover warning him not to. Hoover charged that White was actually a Soviet spy.

Truman did not trust Hoover, but knew he had a political problem on his hands. In order to avoid the questioning that would follow appointing another American above White at the IMF, he had his Treasury secretary, Fred Vinson, tell Keynes that, despite White being a "natural" for the Fund's top post, the administration had decided to back an American for the top World Bank post instead. And it would not be "proper," they had concluded with uncharacteristic fair-mindedness, "to have Americans as the heads of both bodies."

In 1997, after exhaustively reviewing a trove of recently declassified Soviet intelligence cables from the 1940s, intercepted and decrypted by wartime U.S. military intelligence, a Senate commission headed by the late Democrat Daniel Patrick Moynihan declared that "the complicity of Alger Hiss of the State Department seems settled. As does that of Harry Dexter White of the Treasury Department."

To this day it is a European, and not an American, who runs the IMF.

Bretton Woods was truly a fascinating saga, but it was most surely not the triumph of economic thinking and international comity it is often painted to be. An ascendant anti-colonial superpower, the United States, used its economic leverage over an insolvent allied imperial power, Great Britain, to set the terms by which the latter would cede its dwindling dominion over the rules and norms of foreign trade and finance. Britain cooperated because the overriding aim of survival seemed to dictate the course.

The monetary architecture that Harry White designed, and powered through an international gathering of dollar-starved allies, ultimately fell of its own contradictions: The United States could not simultaneously keep the world adequately supplied with dollars and sustain the large gold reserves required by its gold-convertibility commitment. The IMF, the institution through which it was launched, though, endures -- however much its objectives have metamorphosed -- and many hope that it can be a catalyst for a new and more enduring "Bretton Woods."

Yet history suggests that a new cooperative monetary architecture will not emerge until the United States, the world's largest creditor nation in the 1940s, but now the world's largest debtor, and China, today's dominant creditor nation, each comes to the conclusion that the consequences of muddling on, without the prospect of correcting the endemic imbalances between them, are too great. Even more daunting are the requirements for building an enduring system; monetary nationalism was the downfall of the last great effort in 1944.

Benn Steil is Director of International Economics at the Council on Foreign Relations in New York.

http://www.netnebraska.org/node/856242