Eric Margolis

NO ONE TO FILL BHUTTO’S SHOES

The assassination of former prime minister Benazir Bhutto marks the accelerating slide of Pakistan into political instability and spreading violence. Welcome the first major crisis of the new year.
Pakistan's government blames al-Qaida for Bhutto's death. Her followers, by contrast, are convinced the Pervez Musharraf regime was behind the attack.
Bhutto narrowly escaped an attempt to kill her upon her return from self-imposed exile to Pakistan on Oct. 18. The following day, she told me high-ranking Musharraf officials were behind the attack.
In fact, she named the culprits in her mind: A powerful Punjabi family, long-time rivals and foes of the Bhutto clan, whom, she claimed, were responsible for tormenting members of her family. Bhutto made it clear her intent, once she regained power, was to exact revenge.
But that's not proof they were involved. Indeed, this week's fatal attack had all the hallmarks of al-Qaida.

If it was al-Qaida, then Osama bin Laden and his deputy, Dr. Ayman al-Zawahiri, have just delivered a stunning defeat to the western powers. In one blow, they have wrecked the Bush administration's plans to keep strategic Pakistan under U.S. influence and bring in Bhutto to give a democratic veneer to Musharraf's dictatorship.
So where does Bhutto's murder leave Pakistan and its 165 million people? Her People's Party has been decapitated. No strong leader has emerged. It will be impossible to fill Bhutto's shoes. Her adoring supporters saw her as a combination of saint, martyr and redeemer.
Former prime minister Nawaz Sharif is left as the leading political figure, and his party, the Muslim League, as the primary political force. But Musharraf banned Nawaz from running for office. Nawaz's backers, the Saudis, were furious.
I interviewed Nawaz at length. A wealthy industrialist-turned-politician, he has zero charisma and modest support. He is disliked by Washington, which has been active in barring him from office and undermining his party as too Islamist. Nawaz has yet to show strong or competent leadership.
This leaves a group of feuding Islamist parties who rarely command over 10-12% of the national vote, and a small party led by sports star Imran Khan. Meanwhile, the U.S. continues to fund Musharraf with anywhere from $100 million to $1 billion a month in both overt and secret payments used to rent the army's loyalty and pay it to fight Taliban and Islamist rebels in the Northwest Frontier and Baluchistan provinces.
Even so, the Punjabi-dominated army is increasingly reluctant to fight anti-Musharraf insurgents.
Some recent polls suggest Pakistan's most respected figure is Osama bin Laden, and the most unpopular, President Musharraf, whose approval ratings hover below 10%. Musharraf is even more unpopular in Pakistan than President George Bush, no mean feat.
U.S. and NATO policy in Pakistan has run into a dead end. Having put all its eggs in Musharraf's basket, the U.S. finds itself with no Plan B and nowhere to turn -- except to cultivate a new potential military dictator in the army. The army's new chief of staff, Gen. Ashfaq Kiyani, may well fit this role, as this column has previously reported. He is the man to watch in Pakistan.
Claims that Pakistan's nuclear arsenal will fall into the hands of extremists are overblown. The nukes are safely under the guard of the army and intelligence service. Besides, extremists could not assemble or arm the devices and Pakistan has no long-ranged delivery systems.
As Musharraf becomes increasingly isolated and both urban violence and armed insurrection spread across Pakistan, it seems likely the armed forces, however reluctantly, may be compelled to again seize power, as it has so many times since this turbulent nation's birth in 1947.
The only person who must be pleased by the chaos now engulfing Pakistan is bin Laden, who vowed to bring down its western-backed regime and suck the United States into yet another debilitating, no-win war there.

A COURAGEOUS SOUL

I spent an afternoon in London with Benazir Bhutto and her chief security advisor just before she returned to Pakistan. `You cannot afford to go into crowds,’ I told her. `Yes, Eric, I know that, but I must. My people want to see me and know I am not afraid.’

On Thursday, the courageous former prime minister of turbulent Pakistan again risked her life, this time in an open car, and was killed by an assassin. Some years back, she told me, `I am fatalistic. What will happen will happen.’

Bhutto’s death is an earthquake for Pakistan’s political landscape and derails US efforts to forge a political cohabitation between her and former military, and now civilian dictator, President Pervez Musharraf. In Washington’s laboriously developed plans, Musharraf was to retain de facto dictatorship with support from the army, while Benazir was to provide democratic window dressing for the regime. Benazir’s plan, as she told me, was to regain the prime ministership, and then slowly marginalize Musharraf.

Shortly after the first attempt on her life in Karachi, Benazir, who always wrote to me as `Bibi,’ told me that she suspected Punjabi politicians in Musharraf’s Muslim League-Q Party were behind the attempt. Her supporters will now repeat these charges. Angry mobs have been attacking pro-Musharraf party locations. But the attack also bore all the hallmarks of al-Qaida or one of its local Pakistani allies. Other Pakistanis accused the army and its intelligence agency, ISI. Bhutto had enemies across the political spectrum.

Bhutto’s murder leaves her party, the Pakistan People’s Party, in disarray and without strong leadership. She surrounded herself with pliant yes-man and brooked no competition in the party. The party has been decapitated.

As I write, I’m trying to analyze this frightful news with proper journalistic detachment. But it’s very hard after knowing this unique woman for 20 years. Having uncovered a major corruption scandal involving her in-laws, I was long on her black list. But in the past decade I have come to admire her brilliant mind, willpower, courage and determination.

`Bibi’ and I spent a good deal of time after she was ousted for a second time by the army, when she was in exile in the political wilderness. It was in this, her darkest hour, that her character and grit really came through. She certainly won my admiration. Some angry Pakistani readers claimed she had `bewitched me.’ We spoke or corresponded regularly. Shortly before her death, she asked me to develop a political strategy for her and her party. One of my recommendations was for her to extend an olive branch to her old foes, the Islamist parties, who denounced her as a western tool.

Her death this week appears to end the tragic saga of the benighted Bhutto family. Her flamboyant father Zulfikar Ali Bhutto, Pakistan’s former prime minister, was hanged. Her two brothers were murdered, one by poison. Her mother has Alzheimers. Her husband was jailed for years and severely tortured. Now, her party will try to sustain the dynasty by pushing her children into Pakistan’s political inferno. I was with her son in London. There is no way he is ready for the murderous melee of political life. In India, Sonia Gandhi, whose mother-in-law and husband were assassinated, faces the same dilemma: her party is pushing her son and daughter into the dangers of Indian politics.

It is inexpressibly tragic that so gifted, brave and vivacious a woman has been snuffed out at this time of supreme danger in Pakistan’s life. While many Pakistanis disliked or even detested her as a cat’s paw of the west, and as a closet scorner of traditional Islam – which she probably was – all must recognize that she was the most remarkable woman in her nation’s history and a towering historical figure who set a standard for South Asia’s women. Pakistan’s murderous politics has taken its latest victim. Worse is likely to follow.
30 MARGOLIS

THE GREED STAMPEDE

NEW YORK – Western nations have been rightly scourging China for flooding world markets with toxic food, toys, nutritional products, clothing and other tainted goods. China’s government closed its eyes to this malefaction.

But meanwhile, Wall Street was exporting toxic financial instruments called sub-prime mortgages around the globe. Washington’s regulatory monkeys saw no more evil than those in Beijing.

Here’s how the sub-prime mess developed. A single mother, say in East St Louis, was peddled an initially low interest adjustable mortgage by a flim-flam broker. When rates rose sharply, she couldn’t pay and was forced to abandon the home she should never have bought to begin with. Multiply this little human tragedy by hundreds of thousands, and, voilà, the spreading sub-prime mortgage crisis.

Meanwhile, the world’s leading financial institutions built a $500 billion to $1 trillion house of cards based on these sleazy mortgages. They were bundled, chopped up like stolen cars, and peddled everywhere as secure, high-yielding American securities.

Once the sub-prime crisis broke, banks holding such `Chinese paper,’ to use an old Wall Street term, panicked. Not only couldn’t they find any more stupid buyers, the wildly inflated values they gave these securities turned out to be totally bogus. This, in turn, gravely undermined the asset base of lending institutions holding `Chinese paper.’

Britain’s Northern Rock (aka `Northern Wreck’) suffered a run on the bank and is now clinically dead. CIBC lost up to $2 billion. Two of the world’s biggest banks, Citicorp and UBS, lost $9 and $10 billion respectively. They nearly capsized, and had to be rescued by Gulf Arabs and Singapore. Merrill Lynch and Morgan Stanley face $9-10 billion of write-downs. More banks will soon reveal billions of losses, all thanks to `innovate finance.’

How could the brightest Wall Street’s financiers, who claim unrivaled expertise in managing client’s assets, be so stupid and incompetent?

After the flu and bad taste, few diseases are more contagious than greed. So began the greed stampede as Wall Street bulls charged into the sub-prime Valley of Death.

Blame begins with the Bush Administration. Faced with hugely expensive foreign wars and the dot com bubble, the White House got Alan Greenspan at the Federal Reserve to lower interest rates to nearly nothing. This produced the monster property bubble that is now bursting. Cheap credit became a dangerous drug, financial `speed’ arousing false economic euphoria that helped keep Republicans in power and fueled swarms of unregulated, parasitic hedge funds.

Rock bottom US interest rates made bankers and investors search out higher paying investments. Sub-prime mortgages were Wall Street’s answer. In a giant Ponzi scheme, new investor money was used to pay off old investors, building a giant pyramid that collapsed this past fall.

The US Federal Reserve, which is supposed to regulate mortgages, failed its duty. So did other US financial regulators, like Treasury and the SEC. They, and auditing firms, allowed banks to egregiously misvalue their mortgage holdings and create `conduits’ and `off balance sheet’ vehicles that were new forms of accounting fraud.

Many bankers and managers simply failed to understand the mind-numbing complexity of financial derivatives. President George Bush lauded `the new finance’ as the model of Republican economic policy. It turned out to be – the financial equivalent of Iraq. Worryingly, no one knows how much the world’s rickety financial structure now depends on these arcane financial alchemies. We enter 2008 threatened by the prospect of new financial earthquakes and recession.

Instead of facing fraud indictment, CEO’s of the big peddlers of `Chinese paper’ got millions worth of golden handshakes, or raises. While government was busy prosecuting Conrad Black over $3 million, the public was defrauded of tens of billions. No one has yet been prosecuted for these outrageous crimes.

If there was a time for government to justify its existence, it’s now. Prosecute the sub-prime fraudsters, from salesmen to CEO’s. Forget golden handshakes. They deserve steel handcuffs.
30 MARGOLIS

BELGIUM’S ROCKY MARRIAGE

Little Belgium is in serious political trouble. The historically shaky marriage between 6.3 million Flemish in Belgium’s north and 4 million French-speaking Walloons in the south are at the point of dissolution.

Political tribal warfare between Flemish and Francophone Walloons has lately become so intense that Belgium, a constitutional monarchy, has been without a government for the past six months.

The French TV/radio network RTBF ran a spoof of a national divorce called `Bye, Bye Belgium,’ that enraged Flemish. There are increasing calls on both sides to split the troubled nation along linguistic lines. In an act of political desperation, a provisional government under former PM Guy Verhofstadt is about to be appointed. If that fails, King Albert II might be forced to take over.

It’s not easy being Belgian. The snooty Dutch look down on neighboring Flemish Belgians as country bumpkins who speak a corrupted dialect of haut Dutch. Flemish insist they speak perfectly good Dutch. Afrikaans, the language spoken by South Africa’s Boers, comes from Flemish, not Dutch, as most believe. Flemish have little love for their Dutch cousins, against whom they once battled.

At least historically rich Flanders is booming. The southern Francophone region of Wallonia is a rust belt suffering chronic high unemployment and crime. French never tire of insulting the poor French-speaking Belgians.

A widely held view in France is that Belgians cannot drive.
When driving in France, Belgians must endure a storm of insults like `miserable petit Belge!’ and very rude gestures. Many French look down on Belgians in the same patronizing way they do on French-speaking Canadian Quebeckers – as backwards rustics with a debased though amusing patois. Walloons insist they speak perfectly good French, which they do.

In fact, Belgium’s linguistic conflict recalls the ill feelings between English and French-speaking Canadians. Flemish regard Walloons as lazy, unreliable and priest-ridden. Walloons call the Flemish arrogant and pig-headed boors with cold Protestant hearts. None of these stereotypes are true. Both Flemish and Walloons are decent, industrious peoples. But old prejudices run very deep as this writer found when covering Belgium’s election races.

The only thing on which Belgians agree is their excellent national cuisine and heavenly chocolates. Belgium’s food rivals France. Belgians even invented the `French fry’ – which the dastardly French expropriated as their own.

I’m probably going to have my Belgian restaurant privileges cut off for saying this, but modern Belgium is an accidental nation, though one of Europe’s wealthiest and most historic regions, and Belgians distant descendants of ancient Germanic tribes against whom Julius Caesar battled.

In 1815, at the end of the Napoleonic Wars, the Congress of Vienna gave the region of Flanders to Holland. Previously, it had been part of the Spanish Netherlands, then a French protectorate. But the Flemish didn’t want to be ruled by the Dutch, and revolted. As a compromise, Europe’s diplomats were forced to cobble together a new state from Flanders and Wallonia. Luxemburg, historically part of the low countries, went its own way as a grand Duchy.

But the marriage was unhappy from day one as Flemish and Walloons feuded and argued. As Wallonia’s coal and steel-based economy ran down, Flemish increasingly asked why they should be forced to subsidize and support the economically depressed Walloons. Many Flemish wanted divorce.

Belgium’s unwieldy political system makes coalition governments inevitable. But with Flemish politicians squabbling with Walloons, and just as fiercely among themselves, political paralysis ensued. For a modern European nation, Belgium faces the triple embarrassments of being politically unstable, having an inordinate number of ghastly crimes against children, and rampant corruption, notably in the south.

I don’t think Belgium will break up. The EU is pressuring Belgians to calm down and act sensibly. But tribal linguistic, religious and cultural passions often pre-empt rational behavior, as we have too often seen.

Interestingly, many Belgians are feeling they don’t need their own dysfunctional, inept governments. Given the huge, ever growing political and economic superstructure of the European Union transnational government based in Brussels, Belgians could readily do without their own wretched politicians. One senses a similar new political feeling in Spain, where the government in Madrid is becoming increasingly redundant, and even in Scotland, Wales, and parts of highly decentralized Germany.

I have another solution to Belgium’s marital problems. Fire all of Belgium’s useless, feuding politicians. Sign a ten year contract with the Swiss Federal Government to manage Belgium’s political and economic affairs. Switzerland, with 7.5 million citizens, has four official languages and two major religions.

There are no opposition parties in Switzerland. All parties must cooperate at the national level and produce leadership that acts for the good of the country.
Switzerland runs like…well…a Swiss watch. That’s what the fractious Belgians need. A stiff dose of common sense and discipline. Then they can go back to doing what they do best: manufacturing, operating seaports, and brewing beer.

Copyright Eric S. Margolis 2007

REVENGE OF THE SPOOKS

WASHINGTON DC - `Merry Christmas, Mr. President’ hissed the men in cloaks as they plunged a dagger into George Bush’s back.

America’s spooks finally had their revenge. After being forced by the White House in 2002-2003 to concoct a farrago of lies about Iraq, and then get stuck with the blame for the ensuing fiasco there, the 16 US intelligence agencies struck back last week with high drama and devastating effect.

US intelligence chief Mike McConnell made public a bombshell National Intelligence Report(NIE) that concluded `with high confidence’ Tehran had halted its rudimentary nuclear weapons program in 2003. Even if the program was restarted, said the NIE, Iran is unlikely to produce any weapons before 2012-15.

The new NIE is a devastating, humiliating blow to Bush, Dick Cheney and the neocons who have been furiously whipping up war fever and hysteria against Iran. Only two months ago, Bush actually warned Americans that Iran’s secret nuclear program threatened the entire planet and could ignite World War III.

An earlier NIE in 2005 had billed Iran as a major nuclear threat. Now, we learn it was based on fabricated evidence supplied to CIA, `over the transom,’ as the old spy jargon goes. Just like the bogus Niger uranium story used by Bush and Cheney to justify war against Iraq. Who, one wonders, is behind these acts of disinformation?

Bush was given the new NIE on Iran last August. But for the past four months, Bush, Cheney and Condoleeza Rice have been beating the war drums over Iran when their own massed intelligence agencies have been telling them there was no danger from Iran. The White House hid its own intelligence community’s findings from the public until the spooks threatened to leak the report.

Ironically, Iran’s leader, Mahmoud Ahmadinejad, was telling the truth all along when he said Iran was not working on nuclear arms, while Bush & Company was lying through its teeth, just as it did over Iraq and Afghanistan. Just, in fact, as Saddam Hussein was also telling the truth while Washington was producing a litany of lies that would have made the old Soviet agitprop boys blush.

This column has been reporting for two years growing opposition at CIA, the Pentagon, and the State Department to Bush/Cheney’s plans to launch a war against Iran. I repeatedly heard the term `fifth column’ used to describe the fanatical neocon ideologues pressing American into a second Mideast war.

Now, America’s national security community is telling the White House to cease and desist before it drags the nation into another foreign catastrophe. While not a military-intelligence attempted coup as in the wonderful film, `Seven Days in May,’ it was the next closest thing.

At the heart of this drama lies the disturbing fact that Bush/Cheney & Co. were simply ignoring their own $40-billion plus a year intelligence community. When the White House didn’t get the answers it wanted on Iran, it turned to Israel, whose renowned intelligence agency, Mossad, became a primary source of reports about Iran. Mossad still insists Iran will have a nuclear bomb by 2008.

Israel’s defense minister, Ehud Barak, declared the US NIE report a `blow to the groin.’ Israel and its powerful American supporters, who have come to dominate US Mideast policy, have been straining every sinew to get the US to destroy Iran’s growing nuclear infrastructure. Whether Israel, which has a large nuclear arsenal, will attack Iran on its own remains uncertain. The Bush Administration is supplying Israel with 2,000 BLU-109 deep earth penetrator bombs, and 50 5,000 lb GBU-28 for use against underground Iranian targets.

America’s intelligence has been poor in the past, and might be wrong again. But UN nuclear inspectors confirm the US NIE findings. So does SVR, Russia’s foreign intelligence agency. Iran’s civilian nuclear power program could eventually produce highly enriched uranium for weapons, but there is no sign of Iran developing any long-range delivery capability.

Nuclear warheads without long-ranged delivery systems are useless. Claims by US neocons that Iran is developing intercontinental ballistic missiles are yet more lies. If Iran was indeed developing a limited nuclear arsenal, it was clearly to forestall potential nuclear attack or nuclear blackmail by the US or Israel, not to attack North America or Europe, as Bush so absurdly claimed.

In the midst of all the furor over Iran’s supposed nuclear weapons, not one peep has come from Washington calling for Mideast regional nuclear disarmament – the surest way of ending the nuclear arms race between Israel and its neighbors.

The new NIE is likely to ease sanctions on besieged Iran, and undermine the anti-Iran coalition the US, Israel and their new ally, France were assembling. It should put an end to Bush’s idiotic plans for an anti-missile system in Poland and the Czech Republic designed to shoot down missiles Iran does not possess. Sanity seems to be slowly creeping back to Washington.

Copyright Eric S. Margolis 2007

PUTIN’S LANDSLIDE

As expected, Vladimir Putin’s United Russia Party won a landslide victory in yesterday’s parliamentary elections, garnering over 63% of the vote as of this writing, which will give it 70% of the seats in the Duma, or national assembly.

The Communist Party won only 11.6%. Its leader, Gennady Zuganov, cried foul, claiming the elections were fraudulent, a pretty rich accusation from the party that never held an honest vote in its entire history.

Two other small parties that vote with Putin’s United Russia gained about 15% of the vote. One of them is led by the Russian neo-fascist Vladimir Zhirinovsky. Liberal, western-oriented parties were shut out.

President Vladimir Putin’s earthy phrases seemed to have captured Russia’s current muscular mood. Reacting to sharp western criticism of Russia’s parliamentary elections, Putin, playing `Vlad the Bad,’ warned western powers not to `poke their snotty noses’ in his nation’s business.

Putin, who has been increasingly outspoken of late, mocked President George Bush’s double standard in accusing Russia of dubious elections, squashing opposition, and roughing up dissenters while ignoring similar behavior by US ally Georgia. He could have also added other key US clients like Pakistan, Egypt, Algeria, Iraq, Morocco, Afghanistan, and Uzbekistan.

The decision by the US-backed dictator of Pakistan, former Gen. Pervez Musharraf, to exclude former Prime Minister Nawaz Sharif from January elections made Washington’s rebuking of Moscow look particularly two-faced.

President Putin was right to tell off western critics and limit foreign observation of Russian elections. Russia is a great, historic power, not some banana republic. If western observers were really needed to supervise votes in Moscow, Omsk and Kaluga, then why shouldn’t Russian observers supervise America’s sometimes dodgy elections? For example, in Chicago, where the dead routinely vote; in Florida, where blacks are turned away; or Ohio where rigged voting machines gave Republicans victory in 2004 elections.

It would be better if we dropped the pretense that Russia conducts free, fair, western-style elections. Elections under former US protégé Boris Yeltsin were all rigged or voters bought. Today, Russian opposition parties have almost no funding, they are excluded from most media, which is largely government controlled. Parties winning less than 7% of the vote are excluded, and there is no independent electoral commission.

Sunday’s vote was really a referendum on President Putin’s popularity. Most polls show him with 70-80% approval, making Putin one of the world’s most successful and admired leaders. Election returns confirmed this fact, particularly among young Russians.

Former intelligence officer Putin and his KGB old boys network have worked wonders for Russia. After a coup that ousted the sick, besotted Yeltsin, Putin inherited a bankrupt, demoralized nation subsisting on cash handouts from Washington. So low did `Weimar’ Russia sink, much of its advanced military technology was sold to the US for large cash payoffs.

Thanks to tough management, nationalizations, and rising oil prices caused in part by George Bush’s foolhardy invasion of Iraq, Russia’s national income more than tripled under Putin, and the ruble became a hard currency. Equally important, Putin restored pride and sense of dignity to this fiercely chauvinistic nation.

In the process, he centralized all power in the Kremlin, muzzled the independent press, intimidated opponents, jailed oligarchs, and created a cult of personality. He ruthlessly crushed the life out of independence-seeking Chechnya, thrilling Muslim-hating Russians by vowing to `kill the Chechen bandits in their shithouses.’ Russians simply didn’t care about the atrocities their soldiers and police committed against the Chechen, whom they branded `terrorists,’ any more than Americans cared about the vast suffering they inflicted on Iraq and Afghanistan.

Most Russians couldn’t care less about the feeble little liberal parties clamoring for western-style democracy. It’s a sad truism that Russians want order, economic progress and national pride, not democracy. Judo champion, abstemious Putin fits this bill perfectly as the historic `white czar,’ a good, fatherly autocrat who is strong, manly, and pure.

To most Russians, `democracy’ is associated with the thieving oligarchs who pillaged Russia’s industries and resources during Yeltsin’s rule, and the ivory-tower economists who debauched Russia’s currency, leaving millions of pensioners to starve.

Democracy is also seem by many Russians as a Trojan Horse the US used to assert financial and political influence over Russia, and later in Ukraine, Georgia and Central Asia. Meanwhile, President Bush’s policies of ordering NATO around the way the Soviets treated the old Warsaw Pact, pushing NATO to Russia’s western borders, and the daft scheme to emplace US ABM systems in the Czech Republic and Poland enflamed Russia’s nationalist passions and reignited its historic fears of western threats.

Putin says he wants to continue leading Russia. But he is constitutionally banned from a third presidential term. So does Putin plan to run Russia as an all-powerful prime minister? As leader of his United Russia Party? Will he become a youthful elder statesman? Or will he simply get the Duma to change the constitution?

He may follow the example of Czar Ivan the Terrible, temporarily withdrawing from public life until throngs of supplicants beg him to return to Moscow as Czar.

Or he could just remain Citizen Vladimir Putin. The only formal title the great Deng Xiaoping held when he so brilliantly ruled China was Chairman of the Chinese Bridge Association. But no one doubted for a second who ran China.

Whatever Putin’s near-term political plans, he clearly intends to restore Russia’s role as a world power, and to challenge US global domination. Russia’s withdrawal last week from the European conventional arms treaty is the latest ominous sign.

President Putin wants to restore the old Soviet Union’s borders, but minus the Communist Party, which has sunk miserably low public support. Putin believes Russia’s vast energy and mineral resources will eventually make it the world’s leading power. Only 55 years old, Putin might even live to see this triumphant day for Mother Russia.

copyright Eric S. Margolis 2007