Toxic Dollar: Why Nobody Seems to Want US Currency - CNBC

Toxic Dollar: Why Nobody Seems to Want US Currency - CNBC

Traders are warning of a dramatic change in dollar selling. They fear central banks from the Middle East may force their Asian rivals to more aggressively drive the dollar down.

Too Many Dollars

In 10 months, the Dollar Index has lost 14% because the world keeps accumulating dollars it doesn’t want and sells them. Asian central banks are key.

Gaetan Charbonneau | Getty Images

Many Asian central banks have been forced into waging wars to keep their currencies from appreciating because of the influx of investors to emerging markets. They sell waves of their own currencies into the market in an attempt to keep exports competitive.

In return they often receive dollars. But with the Federal Reserve printing dollars and the greenback’s value continually falling, the Asians sell those dollars in order to preserve the value of their reserves.

“Asia Pacific banks are renowned for their strict diversification” says Neil Mellor at BNY Mellon. “They hold a level with China in order to be competitive. Beyond that it’s very strict ratios. They need to swap-out of dollars.”

Euro Benefits

When they sell dollars they often buy euros.

“China and Taiwan have tried looking further afield in their diversification, to the Australian and South Korean bond markets” says Mellyor. “But there are only two places that are deep enough to absorb reserves of this magnitude: the Euro Zone and the US. When ever you see emerging markets perform well you will see the euro perform well.”

Three months ago central banks in Latin American joined the Asians as “currency wars” became more widespread.

Euro/Dollar [EUR=X 1.4478 0.0179 (+1.25%) ] is now up 19% in 10 months. In fact there’s a growing realization that the ascent of the euro more to do with Asian bank diversification than anything happening within the Euro Zone.

“Euro/Dollar is trading without reference to the underlying debt markets” says Mellor. “In fact it’s our contention at BNY Mellon that the entire move in the Euro since 2001 have been driven by the Asian central banks need to diversify.”

Importantly however some believe the banks have deliberately sought to control the speed of the dollar’s decline by passively working bids to simply add liquidity on existing moves.

“They have been working bids below the market, relying on the market to come to them, as Europe’s sovereign debt fears and interest rate differentials trigger bouts of temporary dollar strength,” says Douglas Borthwick at Faros Trading.

But Borthwick says the Asians may be forced to abandon that because of fresh, aggressive dollar selling from the Middle East.

Middle East

US crude prices have risen 30 percent since Libya’s “Day of Rage” Feb. 14 above $100 a barrel. The International Energy Agency says OPEC nations will net one trillion dollars a year. The political tension also demands petrodollars are sold and the proceeds increasingly repatriated, as Saudi King Abdullah’s $93bn-worth of handouts demonstrates.

“The Middle Eastern players seem to be willing to chasing the market higher,” says Borthwick. “When the EUR/USD rallies 30 pips on air you can be assured this is a Middle Eastern reserve manager diversifying out of Dollars they have received from the higher price of oil.”

If the Arabs keeps “front running” their orders the Asians may be forced to abandon their passive approach and raise their euro/dollar bids.

“If Asian central banks are passive, they miss buying the EUR/USD at 1.4040,” says Borthwick. “Through frustration the they are moving from set bids to rolling bids...i.e. set a bid 50 pips below today's high.”

Analysts say that would prove even more toxic for the dollar.

“Euro/dollar is massively overvalued but we keep calling the top and it doesn’t work,” says Paul Bednarczyk at 4-Cast. “We could top out at 1.50. And then wait to see what the Fed does with QE.”

Correction: US crude prices have risen 30 percent since Feb. 14. An earlier version of this article incorrectly had them rising 54 percent.

White House report reflects U.S.-Pakistan's mistrust

by Muhammad Tahir

ISLAMABAD, April 9 (Xinhua) -- A recent new White House report, which claims that Pakistan has "no clear path" to defeat militants on its soil, has once again reflected mistrust between the two close allies in the war on terror.

The April 6 White House report said that Pakistan's fight against militancy is making little progress despite increased military cooperation between Pakistan and the United States in the last three months.

The report assessing the war against militants in Pakistan and neighboring Afghanistan was submitted by the Obama administration to the Congress. The United States had tied the annual non- military aid of 1.5 billion U.S. dollars aid to Pakistan with progress against the Taliban militants.

Some observers are of the opinion that the White House assessment report could have some negative impact on the conditional U.S. aid.

Pakistan was quick to react to the report angrily and the Foreign Office rejected the White House assessment of the country' s anti-terror role.

"The references to Pakistan are unwarranted. I would like to emphatically state that we do not entirely share the U.S. assessment," Pakistan Foreign Ministry spokesperson Tehimna Janjua said.

She said Pakistan has its own assessment of the strengths and weakness of the strategy and approach implemented by US/ISAF vis-a- vis counter terrorism and on issues of peace and security in Afghanistan.

She added that Pakistan has a clear strategy in dealing with these and other issues that is solely guided by its own national interests.

It is not the first U.S. criticism at Pakistan but Washington has long expressed frustration over Pakistan's reluctance to take on militants in the tribal areas.

In a report released in Oct. 2010, the White House accused the Pakistani military of continuing to avoid military engagements that would put it in direct confrontation with Afghan Taliban or al-Qaeda forces in North Waziristan tribal areas. But Pakistan insists that it can not open a new front as its forces are already engaged with the militants in several parts of the country and that the security forces also lack resources.

In January this year, a U.S. strategic review of the war said Pakistan must do more to defeat the militants.

Before the Foreign Ministry's reaction to the report,the army spokesman Major General Athar Abbas in reported remarks had also dismissed it and said that operations against militants have been a great success. Pakistanis always insist that they are proud of the progress the security forces have made against the militants.

The U.S. assessment about Pakistan's role shows its frustration and disappointment, which has annoyed Islamabad, which says its human losses are more than any country in the international coalition, analysts said. Pakistani Prime Minister Yusuf Raza Gilani said that 30,000 Pakistanis have been killed in terrorist attacks in the country since the country joined the U.S.-led coalition in 2001.

Moreover, the White House report has been made public at a time when ties between the security agencies of the close allies have been tense.

The United States is aware of Pakistan's sensitivity and the April 7 visit to Pakistan by U.S. Central Command Commander Gen. James Mattis to consult with Pakistan's military leadership, was considered to be an attempt to remove the misunderstanding.

During his visit, Gen. Mattis met with Chief of the Army Staff, Gen. Ashfaq Kay ani and Chairman of the Joint Chiefs of Staff Committee Gen. Khalid Wynne and exchanged views on regional security issues, including the coalition effort in Afghanistan, the U.S. embassy spokesman said.

Pakistan's intelligence chief Lt. Gen. Ahmad Shuja Pasha is likely to visit the United States for similar talks.

Taliban takes over abandoned US base - Asia - Al Jazeera English

Taliban takes over abandoned US base - Asia - Al Jazeera English

America's Economic Failure

Economic View

It’s 2026, and the Debt Is Due

By N. GREGORY MANKIW

Published: March 26, 2011(From The New York Times, Sunday, March 27, 2011) 

The following is a presidential

address to the nation — to be

delivered in March 2026.

MY fellow Americans, I come to you today with a heavy heart. We have a crisis on our hands. It is one of our own making. And it is one that leaves us with no good choices.

For many years, our nation’s government has lived beyond its means. We have promised ourselves both low taxes and a generous social safety net. But we have not faced the hard reality of budget arithmetic.

The seeds of this crisis were planted long ago, by previous generations. Our parents and grandparents had noble aims. They saw poverty among the elderly and created Social Security. They saw sickness and created Medicare and Medicaid. They saw Americans struggle to afford health insurance and embraced health care reform with subsidies for middle-class families.

But this expansion in government did not come cheap. Government spending has taken up an increasing share of our national income.

Today, most of the large baby-boom generation is retired. They are no longer working and paying taxes, but they are eligible for the many government benefits we offer the elderly.

Our efforts to control health care costs have failed. We must now acknowledge that rising costs are driven largely by technological advances in saving lives. These advances are welcome, but they are expensive nonetheless.

If we had chosen to tax ourselves to pay for this spending, our current problems could have been avoided. But no one likes paying taxes. Taxes not only take money out of our pockets, but they also distort incentives and reduce economic growth. So, instead, we borrowed increasing amounts to pay for these programs.

Yet debt does not avoid hard choices. It only delays them. After last week’s events in the bond market, it is clear that further delay is no longer possible. The day of reckoning is here.

This morning, the Treasury Department released a detailed report about the nature of the problem. To put it most simply, the bond market no longer trusts us.

For years, the United States government borrowed on good terms. Investors both at home and abroad were confident that we would honor our debts. They were sure that when the time came, we would do the right thing and bring spending and taxes into line.

But over the last several years, as the ratio of our debt to gross domestic product reached ever-higher levels, investors started getting nervous. They demanded higher interest rates to compensate for the perceived risk. Higher interest rates increased the cost of servicing our debt, adding to the upward pressure on spending. We found ourselves in a vicious circle of rising budget deficits and falling investor confidence.

As economists often remind us, crises take longer to arrive than you think, but then they happen much faster than you could have imagined. Last week, when the Treasury tried to auction its most recent issue of government bonds, almost no one was buying. The private market will lend us no more. Our national credit card has been rejected.

So where do we go from here?

Yesterday, I returned from a meeting at the International Monetary Fund in its new headquarters in Beijing. I am pleased to report some good news. I have managed to secure from the I.M.F. a temporary line of credit to help us through this crisis.

This loan comes with some conditions. As your president, I have to be frank: I don’t like them, and neither will you. But, under the circumstances, accepting these conditions is our only choice.

We have to cut Social Security immediately, especially for higher-income beneficiaries. Social Security will still keep the elderly out of poverty, but just barely.

We have to limit Medicare and Medicaid. These programs will still provide basic health care, but they will no longer cover many expensive treatments. Individuals will have to pay for these treatments on their own or, sadly, do without.

We have to cut health insurance subsidies to middle-income families. Health insurance will be less a right of citizenship and more a personal responsibility.

We have to eliminate inessential government functions, like subsidies for farming, ethanol production, public broadcasting, energy conservation and trade promotion.

We will raise taxes on all but the poorest Americans. We will do this primarily by broadening the tax base, eliminating deductions for mortgage interest and state and local taxes. Employer-provided health insurance will hereafter be taxable compensation.

We will increase the gasoline tax by $2 a gallon. This will not only increase revenue, but will also address various social ills, from global climate change to local traffic congestion.

AS I have said, these changes are repellant to me. When you elected me, I promised to preserve the social safety net. I assured you that the budget deficit could be fixed by eliminating waste, fraud and abuse, and by increasing taxes on only the richest Americans. But now we have little choice in the matter.

If only we had faced up to this problem a generation ago. The choices then would not have been easy, but they would have been less draconian than the sudden, nonnegotiable demands we now face. Americans would have come to rely less on government and more on themselves, and so would be better prepared today.

What I wouldn’t give for a chance to go back and change the past. But what is done is done. Americans have faced hardship and adversity before, and we have triumphed. Working together, we can make the sacrifices it takes so our children and grandchildren will enjoy a more prosperous future.

N. Gregory Mankiw is a professor of economics at Harvard.

A version of this article appeared in print on March 27, 2011, on page BU4 of the New York edition.

http://www.nytimes.com/2011/03/27/business/27view.html?adxnnl=1&ref=todayspaper&adxnnlx=1302336071-4SGE8I6XRRjSO2qhuCMY3A

 

Tony Blair to Council of Foreign Relations: You will take our "Advisment" or we will Kill you..

Look at how he mocks the respect the Middle East holds for "democracy" despite its failures at home...

Egypt: After the revolution, allegations of military abuse

Two months on from the revolution, Channel 4 News hears powerful allegations of torture, arbitrary detention and sham trials by the Egyptian armed forces once hailed as heroes.

Inside story: Power change in Yemen

An Open Meeting with Sheikh Abu Baseer Al-Tartousi: Q and A in Paltalk

Noam Chomsky on BBC

IMF, US aim at Debt Peonage, Financial Invasion in Egypt

A report from this morning states, 

U.S. and International Monetary Fund officials are in Cairo this week for talks on how to avert an economic crisis in a country where revolutionary fervor has left government finances reeling and cast a broad cloud of suspicion over the nation’s business class.

The protests that have upended the Arab world’s politics have had a broad economic spillover as well, from high world oil prices to an abrupt increase in spending by countries such as Saudi Arabia on public subsidies in hopes of tamping down public dissatisfaction. It has also touched off a broad debate about whether nations such as Egypt can find strategies to create jobs and better distribute the gains of economic growth even as it faces pressing financial problems and a political backlash against reforms encouraged by the developed world and institutions such as the IMF.

Another article states that the US is looking for a means of control as well.... 

Egypt’s Minister of Finance Samir Radwan discussed with US Assistant Secretary of the Treasury Charles Collyns means to promote bilateral cooperation in the economic, financial and developmental domains.

The two sides also tackled possible contributions which can be offered by the US to Egypt at this crucial transitional period.

Radwan said the Egyptian economy has strong foundations, but it is now facing some temporary challenges, which he added, requires the assistance of all friendly countries including the US, a key economic partner to Egypt.

The Egyptian official added he discussed with Collyns vistas of cooperation such as giving sovereign guarantees by the US to its investors who want to do business in Egypt, a move that contributes to boosting economic growth rates and attracting foreign investments.

In reality, this is exactly what we expected to happen  as most in the world do not understand the economic complications as cause of political repression in the international order. These uprisings could be exploited to create new stimulus for traditional colonialist powers or in the event Islamist parties were able to advocate for economic policy and a paradigm shift toward a riba-free order, the  beginning of the end for financial imperialism.... the real expectations are that a regime still very much active in all these countries will alter reform so that it is cosmetic and not real, there are many possible alternatives but we should start to utilize this time to educate about IMF peonage and the international monetary order and then to educate about other alternatives that are derived from Islam's riba and gharar. Unfortunately, we have just completed a series of documents on this phenomenom and predicted it but they are the property of some conferences and journals for the next few months at which time we will release them, biidhniAllah... Until then, please think through these complications. We will be discussing them in upsoming State of the Ummah series and in the Shariah Compliant Finance Course. These next few months will prove enlightening for those seeking to understand the nature of the beast we are war with, an insiduous financial slimemold that most experience the after-effects of but cannot pinpoint the cause. Politicla repression and dictatorial regimes like Mubarek are a side effect and not the cause. Unfortunately, until we understand the cause and the cure for it, we are almost certain to suffer everywhere. As Rosa Luxemburg says in Accumulation of Capital, "usurious loans are the means by which empires retain control" and "militarism is the executor of the accumaulation of capital". Still, there are many reasons to remian optimistic. Here is to a real islamic awakening, inshaAllah

Taliban Spokesman in America Giving Lecture in March 2001

Zionist Running Dog Obama and the UN Veto

Jihan Hafiz on Reporting From Libya Pt.3

Ex-Congressman In Libya to 'Help' Once Proposed Arming Gadhafi(source)

During the last decade, former Congressman Curt Weldon traveled repeatedly to Libya, becoming so close with the Gadhafi regime that the firm Weldon worked for even floated the idea of selling arms to Tripoli.
So now that Gadhafi is under assault from NATO airstrikes and rebel ground troops, it should come as no surprise that Weldon is back in Libya, “to try to help negotiate a political settlement with Gadhafi and family,” according to CNN.

And while Weldon’s there, the controversial former vice chair of the House Armed Services Committee is looking to do a little image re-polishing for himself.

It wasn’t long ago — April, 2008, to be exact — that Weldon was boasting in a report that he had become the “1st non-Libyan Board Member of the Ghadaffi Foundation [sic].” During a trip to Tripoli the month before, the self-proclaimed “friend of Libya” carried “a personal letter from Libyan Chamber [of Commerce] President to US Chamber President.” Weldon also visited with with the country’s “Nuclear Ministry Leadership and agreed to reinforce US nuclear cooperation/collaboration.”

Finally, Weldon agreed “to quickly return to Libya for meetings with [Moammar Gadhafi's] son Morti regarding defense and security cooperation.”


Two weeks later, Defense Solutions — a company which, at the time, counted Weldon as a key executive and adviser — drew up a proposal to refurbish the country’s fleet of armored vehicles, including its T-72 tanks, BMP-1 infantry fighting vehicles, and BTR-60 armored personnel carriers.

“Besides refurbishing these vehicles, we are capable of providing a full logistics support package, including a two year supply of spare parts, maintenance and repair services, and operator, maintenance, and repair training,” the letter states.

(As Danger Room’s Sharon Weinberger reported at the time, the deal was never carried out. Defense Solutions CEO Timothy Ringgold denied sending the proposal, and claimed his signature on it was a forgery.)
Weldon doesn’t mention any of these interactions, in an op-ed in today’s New York Times. Nor does Weldon — – whose congressional career was marred by repeated criminal probes — disclose that many of his earlier visits to Libya were paid for by the Gadhafi Foundation. Instead, he complains that “Washington has squandered many opportunities” to “hel[p] the Libyans build a new government.”

But not all hope is lost, Weldon adds. “First, we must engage face-to-face with Colonel Qaddafi and persuade him to leave, as my delegation hopes to do. I’ve met him enough times to know that it will be very hard to simply bomb him into submission.”

Of course, it would’ve been considerably harder to do so, had Gadhafi received the military help Weldon’s associates had once proposed.

Oil near 2-1/2-year peak on Middle East, weak dollar

By Dmitry Zhdannikov and Seng Li Peng

LONDON (Reuters) - Oil prices stayed near a 2-1/2 year peak on Wednesday supported by widespread unrest in the Middle East and North Africa and dollar weakness ahead of Europe's central bank rate decision on Thursday.

Brent crude traded above $122 a barrel at 0830 GMT and U.S. crude was at $108.5 a barrel, broadly flat versus Tuesday's close.

The European central bank is expected to raise interest rates by 0.25 percent on Thursday in the first hike since the 2008 financial crisis. The expectations have propelled the euro to a 14-month high while the dollar index was down 0.37 percent at 0835 GMT.

"Central bankers will always claim that they have no influence on oil prices but recent history has repetitively shown that in the new world where commodities are a global asset, central bankers can have a greater influence on oil prices than OPEC," said Olivier Jakob from Petromatrix.

The rally in the euro took place even though Moody's rating agency downgraded several Portuguese banks.

Analysts noted that a wide return of risk appetite amid expectations of strong recovery in the United States has outweighted yet another increase in China's interest rates on Tuesday, the fourth since October, to tame inflation.

"China is supposed to be leading the commodity complex but an increase of Chinese rates is not anymore a trading input for more than a few minutes," said Jakob.

Singapore-based Serene Lim of ANZ said the impact from the hike would be mitigated by the turmoil in Libya.

"It is a stalemate in Libya and this will give support to oil prices, which are trading at a very tight range," she said.

In Libya, the head of the rebel army said NATO had been too slow to order air strikes to protect civilians.

In Bahrain, firms have fired hundreds of mostly Shi'ite Muslim workers who went on strike to support pro-democracy protesters, an opposition group said on Tuesday, in what appeared to be part of a government crackdown.

A forecasts for a rise in U.S. stockpiles in government data due out later on Wednesday could dampen sentiment after Brent's four-day, 6-percent rally.

Technical analysis showed Brent could rise above $126, said Reuters analyst Wang Tao.

"Technically, it is possible for Brent to go to $125 a barrel within this week," said Ken Hasegawa, commodity derivatives manager at Japan's Newedge brokerage.

Brent's rally to above $120 a barrel could soon fizzle out, according to a majority of traders and analysts in a Reuters poll released on Wednesday. But they expected Brent to roar back above $130 in the second half of this year.

Sharp Drop in American Enthusiasm for Free Market, Poll Shows

So much for capitalism's most friendly state - perhaps Americans should be tuning into our free curse on shariah compliant finance, LOL!!! Capitalism, the system only the victor supports.. now that Americans are the victims I guess they'll just go blame their local masajids.
Source April 6, 2011

American public support for the free market economy has dropped sharply in the past year, and is now lower than in China, according to a GlobeScan poll released today.

The findings, drawn from 12,884 interviews across 25 countries, show that there has been a sharp fall in the number of Americans who think that the free market economy is the best economic system for the future.

When GlobeScan began tracking views in 2002, four in five Americans (80%) saw the free market as the best economic system for the future--the highest level of support among tracking countries. Support started to fall away in the following years and recovered slightly after the financial crisis in 2007/8, but has plummeted since 2009, falling 15 points in a year so that fewer than three in five (59%) now see free market capitalism as the best system for the future.

GlobeScan Chairman Doug Miller commented: "America is the last place we would have expected to see such a sharp drop in trust in the free enterprise system. This is not good news for business."

The results mean that a number of the world's major emerging economies have now matched or overtaken the USA in their enthusiasm for the free market. The Chinese and Brazilians, 67 percent of whom regard the free market system as the best on offer, are now more positive about capitalism than Americans, while enthusiasm in India now equals that in the USA, with 59 percent rating the free market as the best system for the future.

Among the 20 countries polled in both 2009 and 2010, an average of 54 percent today rate the free market economy as the best economic system, unchanged from 2009.

Americans with incomes below $20,000 were particularly likely to have lost faith in the free market over the past year, with their support dropping from 76 percent to 44 percent between 2009 and 2010. American women have also become much less positive, with 52 percent backing the free market in 2010, down from 73 percent in 2009.

The poll was conducted by telephone in China and the US, and by telephone, in-person, or online in the 23 other countries between June 24 and September 18, 2010 by the international polling firm GlobeScan and its national partners. Before today's public release, only clients of GlobeScan's "Radar" reports have had access to these results. National results are considered accurate within +/- 3.0 to +/- 4.9 percent, 19 times out of 20.

GlobeScan Chairman Doug Miller added: "The poll suggest that American business is close to losing its social contract with average American families that has enabled it to prosper in the world. Inspired leadership will be needed to reverse this trend."

Fieldwork was conducted in Argentina, Australia, Brazil, Canada, Chile, China, Colombia, Ecuador, Egypt, France, Germany, Ghana, India, Indonesia, Italy, Japan, Kenya, Mexico, Nigeria, Pakistan, Peru, the Philippines, Russia, Spain, Turkey, the United Kingdom, and the USA. Interviews were conducted via face-to-face, by telephone, or online (Japan only) between June 24 and September 18, 2010. Polling was conducted by GlobeScan and its research partners in each country. Some urban-only surveying was conducted in certain developing countries, following generally accepted research standards in each country. The margin of error per country ranges from +/-3.0 to 4.9 percent, 19 times out of 20.

For more information about GlobeScan see www.GlobeScan.com

Brothers in Tunisia Working for Islam

Libya: the disappearance of the rebellion in Zawiyah

Time to End the Liberal Lie that Afghanistan is a Just War

Today the Christian Science Monitor ran a post on why the Taliban benefits from Pastor Jones Quran Burning...

They included this image:

And this caption: An Afghan protestor (r.) hits the burning effigy of the American pastor, Terry Jones during a demonstration in Shinwar, Nangarhar province, east of Kabul, Afghanistan, on Monday, April. 4. Protests erupted in Afghanistan again Monday against a Florida pastor's burning of the Quran, making four straight days of demonstrations some deadly against the destruction of Islam's holy book in a country struggling to beat back an insurgency led by Taliban religious extremists.


However, in reality they were not burning an effigy of Pastor Jones at all but rather US President Barack Obama:

American Liberals continue to tell themselves false lies that they are in Afghanistan to create a more liberal or democratic society. It is the last lie that holds the occupation firm with American people... However, even Afghan liberals denounce Obama and call him a war criminal... see this recent speech from Malalai Joya in Minneapolis... it is time to stop the nonsense and admit that Obama is a war criminal complicit in crimes against humanity. 

We authored a piece a while back that called on "true" progressives to recognize that the Taliban are the only just and effective solution to Afghanistan's future. Here is our article that outlines a plan we still see unfolding for a withdrawal that will create neoliberal machinations that will decimate Afghanistan and contribute further to civil war and ethnic strife. Please forward this entire post over facebook, social networking sites, email mailing lists and etcetera. The Afghan people want Obama out, and Americans supporting him and his wars will only to further animosity and violence.  Please demand the immediate withdrawal of foreign forces from Afghanistan and join slowly increasing number of liberals that can see through the deception of the liberal lie.

Younus Abdullah Muhammad
IslamPolicy.com

The article referenced above is here:
http://www.informationclearinghouse.info/article26700.htm  

23 Things They Don't Tell You About Capitalism

Asia Times Online :: Middle East News, Iraq, Iran current affairs

Asia Times Online :: Middle East News, Iraq, Iran current affairs

You invade Bahrain. We take out Muammar Gaddafi in Libya. This, in short, is the essence of a deal struck between the Barack Obama administration and the House of Saud. Two diplomatic sources at the United Nations independently confirmed that Washington, via Secretary of State Hillary Clinton, gave the go-ahead for Saudi Arabia to invade Bahrain and crush the pro-democracy movement in their neighbor in exchange for a "yes" vote by the Arab League for a no-fly zone over Libya - the main rationale that led to United Nations Security Council resolution 1973.

The revelation came from two different diplomats, a European and a member of the BRIC group, and was made separately to a US scholar and Asia Times Online. According to diplomatic protocol, their names cannot be disclosed. One of the diplomats said, "This is the reason why we could not support resolution 1973. We were arguing that Libya, Bahrain and Yemen were similar cases, and calling for a fact-finding mission. We maintain our official position that the resolution is not clear, and may be interpreted in a belligerent manner."

As Asia Times Online has reported, a full Arab League endorsement of a no-fly zone is a myth. Of the 22 full members, only 11 were present at the voting. Six of them were Gulf Cooperation Council (GCC) members, the US-supported club of Gulf kingdoms/sheikhdoms, of which Saudi Arabia is the top dog. Syria and Algeria were against it. Saudi Arabia only had to "seduce" three other members to get the vote.

Translation: only nine out of 22 members of the Arab League voted for the no-fly zone. The vote was essentially a House of Saud-led operation, with Arab League secretary general Amr Moussa keen to polish his CV with Washington with an eye to become the next Egyptian President.

Thus, in the beginning, there was the great 2011 Arab revolt. Then, inexorably, came the US-Saudi counter-revolution.

Profiteers rejoice
Humanitarian imperialists will spin en masse this is a "conspiracy", as they have been spinning the bombing of Libya prevented a hypothetical massacre in Benghazi. They will be defending the House of Saud - saying it acted to squash Iranian subversion in the Gulf; obviously R2P - "responsibility to protect" does not apply to people in Bahrain. They will be heavily promoting post-Gaddafi Libya as a new - oily - human rights Mecca, complete with US intelligence assets, black ops, special forces and dodgy contractors.

Whatever they say won't alter the facts on the ground - the graphic results of the US-Saudi dirty dancing. Asia Times Online has already reported on who profits from the foreign intervention in Libya (see There's no business like war business, March 30). Players include the Pentagon (via Africom), the North Atlantic Treaty Organization (NATO), Saudi Arabia, the Arab League's Moussa, and Qatar. Add to the list the al-Khalifa dynasty in Bahrain, assorted weapons contractors, and the usual neo-liberal suspects eager to privatize everything in sight in the new Libya - even the water. And we're not even talking about the Western vultures hovering over the Libyan oil and gas industry.

Exposed, above all, is the astonishing hypocrisy of the Obama administration, selling a crass geopolitical coup involving northern Africa and the Persian Gulf as a humanitarian operation. As for the fact of another US war on a Muslim nation, that's just a "kinetic military action".

There's been wide speculation in both the US and across the Middle East that considering the military stalemate - and short of the "coalition of the willing" bombing the Gaddafi family to oblivion - Washington, London and Paris might settle for the control of eastern Libya; a northern African version of an oil-rich Gulf Emirate. Gaddafi would be left with a starving North Korea-style Tripolitania.

But considering the latest high-value defections from the regime, plus the desired endgame ("Gaddafi must go", in President Obama's own words), Washington, London, Paris and Riyadh won't settle for nothing but the whole kebab. Including a strategic base for both Africom and NATO.

Round up the unusual suspects
One of the side effects of the dirty US-Saudi deal is that the White House is doing all it can to make sure the Bahrain drama is buried by US media. BBC America news anchor Katty Kay at least had the decency to stress, "they would like that one [Bahrain] to go away because there's no real upside for them in supporting the rebellion by the Shi'ites."

For his part the emir of Qatar, Sheikh Hamad bin Khalifa al Thani, showed up on al-Jazeera and said that action was needed because the Libyan people were attacked by Gaddafi. The otherwise excellent al-Jazeera journalists could have politely asked the emir whether he would send his Mirages to protect the people of Palestine from Israel, or his neighbors in Bahrain from Saudi Arabia.

The al-Khalifa dynasty in Bahrain is essentially a bunch of Sunni settlers who took over 230 years ago. For a great deal of the 20th century they were obliging slaves of the British empire. Modern Bahrain does not live under the specter of a push from Iran; that's an al-Khalifa (and House of Saud) myth.

Bahrainis, historically, have always rejected being part of a sort of Shi'ite nation led by Iran. The protests come a long way, and are part of a true national movement - way beyond sectarianism. No wonder the slogan in the iconic Pearl roundabout - smashed by the fearful al-Khalifa police state - was "neither Sunni nor Shi'ite; Bahraini".

What the protesters wanted was essentially a constitutional monarchy; a legitimate parliament; free and fair elections; and no more corruption. What they got instead was "bullet-friendly Bahrain" replacing "business-friendly Bahrain", and an invasion sponsored by the House of Saud.

And the repression goes on - invisible to US corporate media. Tweeters scream that everybody and his neighbor are being arrested. According to Nabeel Rajab, president of the Bahrain Center for Human Rights, over 400 people are either missing or in custody, some of them "arrested at checkpoints controlled by thugs brought in from other Arab and Asian countries - they wear black masks in the streets." Even blogger Mahmood Al Yousif was arrested at 3 am, leading to fears that the same will happen to any Bahraini who has blogged, tweeted, or posted Facebook messages in favor of reform.

Globocop is on a roll
Odyssey Dawn is now over. Enter Unified Protector - led by Canadian Charles Bouchard. Translation: the Pentagon (as in Africom) transfers the "kinetic military action " to itself (as in NATO, which is nothing but the Pentagon ruling over Europe). Africom and NATO are now one.

The NATO show will include air and cruise missile strikes; a naval blockade of Libya; and shady, unspecified ground operations to help the "rebels". Hardcore helicopter gunship raids a la AfPak - with attached "collateral damage" - should be expected.

A curious development is already visible. NATO is deliberately allowing Gaddafi forces to advance along the Mediterranean coast and repel the "rebels". There have been no surgical air strikes for quite a while.

The objective is possibly to extract political and economic concessions from the defector and Libyan exile-infested Interim National Council (INC) - a dodgy cast of characters including former Justice minister Mustafa Abdel Jalil, US-educated former secretary of planning Mahmoud Jibril, and former Virginia resident, new "military commander" and CIA asset Khalifa Hifter. The laudable, indigenous February 17 Youth movement - which was in the forefront of the Benghazi uprising - has been completely sidelined.

This is NATO's first African war, as Afghanistan is NATO's first Central/South Asian war. Now firmly configured as the UN's weaponized arm, Globocop NATO is on a roll implementing its "strategic concept" approved at the Lisbon summit last November (see Welcome to NATOstan, Asia Times Online, November 20, 2010).

Gaddafi's Libya must be taken out so the Mediterranean - themare nostrum of ancient Rome - becomes a NATO lake. Libya is the only nation in northern Africa not subordinated to Africom or Centcom or any one of the myriad NATO "partnerships". The other non-NATO-related African nations are Eritrea, Sawahiri Arab Democratic Republic, Sudan and Zimbabwe.

Moreover, two members of NATO's "Istanbul Cooperation Initiative" - Qatar and the United Arab Emirates - are now fighting alongside Africom/NATO for the fist time. Translation: NATO and Persian Gulf partners are fighting a war in Africa. Europe? That's too provincial. Globocop is the way to go.

According to the Obama administration's own official doublespeak, dictators who are eligible for "US outreach" - such as in Bahrain and Yemen - may relax, and get away with virtually anything. As for those eligible for "regime alteration", from Africa to the Middle East and Asia, watch out. Globocop NATO is coming to get you. With or without dirty deals.

Libya and the World of Oil -- In These Times

Libya and the World of Oil -- In These Times Noam Chomsky

Last month, at the international tribunal on crimes during the civil war in Sierra Leone, the trial of former Liberian president Charles Taylor came to an end.

The chief prosecutor, U.S. law professor David Crane, informed The Times of London that the case was incomplete: The prosecutors intended to charge Moammar Gadhafi, who, Crane said, “was ultimately responsible for the mutilation, maiming and/or murder of 1.2 million people.”

But the charge was not to be. The U.S., U.K. and others intervened to block it. Asked why, Crane said, “Welcome to the world of oil.”

Another recent Gadhafi casualty was Sir Howard Davies, the director of the London School of Economics, who resigned after revelations of the school’s links to the Libyan dictator.

In Cambridge, Mass., the Monitor Group, a consultancy firm founded by Harvard professors, was well paid for such services as a book to bring Gadhafi’s immortal words to the public “in conversation with renowned international experts,” along with other efforts “to enhance international appreciation of (Gadhafi’s) Libya.”

The world of oil is rarely far in the background in affairs concerning this region.

For example, as the dimensions of the U.S. defeat in Iraq could no longer be concealed, pretty rhetoric was displaced by honest announcement of policy goals. In November 2007 the White House issued a Declaration of Principles insisting that Iraq must grant indefinite access and privilege to American investors.

Two months later President Bush informed Congress that he would reject legislation that might limit the permanent stationing of U.S. armed forces in Iraq or “United States control of the oil resources of Iraq” – demands that the U.S. had to abandon shortly afterward in the face of Iraqi resistance.

The world of oil provides useful guidance for western reactions to the remarkable democracy uprisings in the Arab world. An oil-rich dictator who is a reliable client is granted virtual free rein. There was little reaction when Saudi Arabia declared on March 5, “Laws and regulations in the Kingdom totally prohibit all kinds of demonstrations, marches and sit-in protests as well as calling for them as they go against the principles of Shariah and Saudi customs and traditions.” The kingdom mobilized huge security forces that rigorously enforced the ban.

In Kuwait, small demonstrations were crushed. The mailed fist struck in Bahrain after Saudi-led military forces intervened to ensure that the minority Sunni monarchy would not be threatened by calls for democratic reforms.

Bahrain is sensitive not only because it hosts the U.S. Fifth Fleet but also because it borders Shiite areas of Saudi Arabia, the location of most of the kingdom’s oil. The world’s primary energy resources happen to be located near the northern Persian Gulf (or Arabian Gulf, as Arabs often call it), largely Shiite, a potential nightmare for Western planners.

In Egypt and Tunisia, the popular uprising has won impressive victories, but as the Carnegie Endowment reported, the regimes remain and are “seemingly determined to curb the pro-democracy momentum generated so far. A change in ruling elites and system of governance is still a distant goal” – and one that the West will seek to keep far removed.

Libya is a different case, an oil-rich state run by a brutal dictator, who, however, is unreliable: A dependable client would be far preferable. When nonviolent protests erupted, Gadhafi moved quickly to crush them.

On March 22, as Gadhafi’s forces were converging on the rebel capital of Benghazi, top Obama Middle East adviser Dennis Ross warned that if there is a massacre, “everyone would blame us for it,” an unacceptable consequence.

And the West certainly didn’t want Gadhafi to enhance his power and independence by crushing the rebellion. The U.S. joined in the U.N. Security Council authorization of a “no-fly zone,” to be implemented by France, the U.K. and the U.S.

The intervention prevented a likely massacre but was interpreted by the coalition as authorizing direct support for the rebels. A cease-fire was imposed on Gadhafi’s forces, but the rebels were helped to advance to the West. In short order they conquered the major sources of Libya’s oil production, at least temporarily.

On March 28, the London-based Arab journal Al-Quds Al-Arabi warned that the intervention may leave Libya with “two states, a rebel-held, oil-rich East and a poverty-stricken, Gadhafi-led West. … Given that the oil wells have been secured, we may find ourselves facing a new Libyan oil emirate, sparsely inhabited, protected by the West and very similar to the Gulf’s emirate states.” Or the Western-backed rebellion might proceed all the way to eliminate the irritating dictator.

It is commonly argued that oil cannot be a motive for the intervention because the West had access to the prize under Gadhafi. True but irrelevant. The same could be said about Iraq under Saddam Hussein, or Iran and Cuba today.

What the West seeks is what Bush announced: control, or at least dependable clients, and in the case of Libya, access to vast unexplored areas expected to be rich in oil. U.S and British internal documents stress that the “virus of nationalism” is the greatest fear, since it might breed disobedience.

The intervention is being conducted by the three traditional imperial powers (though we may recall – Libyans presumably do – that, after World War I, Italy conducted genocide in eastern Libya).

The western powers are acting in virtual isolation. States in the region – Turkey and Egypt – want no part of it, nor does Africa. The Gulf dictators would be happy to see Gadhafi gone – but, even as they’re groaning under the weight of advanced weapons provided to them to recycle petrodollars and ensure obedience, they barely offer more than token participation. The same is true beyond: India, Brazil and even Germany.

The Arab Spring has deep roots. The region has been simmering for years. The first of the current wave of protests began last year in Western Sahara, the last African colony, invaded by Morocco in 1975 and illegally held since, in a manner similar to East Timor and the Israeli-occupied territories.

A nonviolent protest last November was crushed by Moroccan forces. France intervened to block a Security Council inquiry into the crimes of its client.

Then a flame ignited in Tunisia that has since spread into a conflagration.