Tuesday, April 12, 2016

Obama Hides His Iraq War

The White House pretends that Marines fighting ISIS aren’t really there.


By William McGurn
The Wall Street Journal
April 11, 2016


Are Marines combat troops?

In Barack Obama’s world, the answer is apparently not—not even when they are on the ground exchanging fire with the enemy. This is the fiction supported by Hillary Clinton and largely unchallenged by any of the three Republican candidates for president.

A recent headline in the Marine Corps Times summed it up this way: “Marines in Iraq technically not in combat but still getting some.”

Welcome to Mr. Obama’s hidden war.

Forty-five years ago this month, in testimony before the Senate Foreign Relations Committee, a young war vet named John Kerry complained that the whitewashing of the reality of American involvement in Vietnam meant that each day “someone has to give up his life so that the United States doesn’t have to admit something that the entire world already knows, so that we don’t have to admit a mistake.”

Today, as secretary of state, Mr. Kerry travels about the world rationalizing an Iraq policy designed to keep President Obama from having to admit his mistake: that he has only made worse a war he claimed to have ended. The entire world knows this too.

In an interview aired Sunday on Fox News, President Obama declared that his “number one priority right now” is defeating Islamic State. But how does the man who sees himself as the guy who gets America out of its wars deal with the contradiction?

Part of the answer seems to be fudging the troop numbers. Officially U.S. troop levels in Iraq and Afghanistan are capped at 3,870 and 9,800 respectively. But after a Marine in northern Iraq—Staff Sgt.Louis F. Cardin—was killed in an ISIS rocket attack, the Pentagon was forced to admit there are as many as 5,000 U.S. troops in Iraq. Only then did Americans learn that men such as Staff Sgt. Cardin are not included in the official troop count because they were rotated in on a temporary basis.

Mrs. Clinton has her own version of the charade. “I will not send American combat troops to Iraq or Syria,” she has declared in more than one primary debate. Instead, she says, “we will continue to use Special Forces.”

It’s pure hooey, of course. For one thing, it is based on the ridiculous idea that special ops forces are also not combat troops. Which is part of the larger Obama fable that ISIS can be knocked off with only a handful of American fighters.

So we are left with a war in which the president continues to tell us more about what our troops won’t do than what they will, even as he sends more of them back to Iraq. In the Fort Worth Star-Telegram, columnist Cynthia Allen notes how ironic it would be if the cumulative effect of Mr. Obama’s increasing deployments would be “the kind of long-term stabilizing force in Iraq that he so vehemently opposed.”

Meanwhile, the chairman of the House Armed Services Committee, Texas Rep. Mac Thornberry, confirms that Congress has no real idea of how many U.S. troops are in fact in Iraq. Unfortunately, he says, there is “a political reluctance to speak forthrightly on what’s at stake and what is required” to defeat ISIS—and he senses “some of that reluctance in both parties.”

It’s a good point. Take Donald Trump, who entered the race touting his opposition to President Bush’s invasion of Iraq and fretting about anything that might get us “bogged down” there. More recently Mr. Trump suggested that, if the generals were right, he might have to send as many as 30,000 troops to defeat ISIS. Later he denied saying he would send them.

Ted Cruz has declared that “we need to put whatever ground power is needed.” But the Texas senator has also called for making the sands glow around ISIS, feeding the impression we can do most of it with air power. As for John Kasich, though he’s been the most forthright about putting “boots on the ground,” he offers few details.

In Congress, general after general has testified that more troops are likely to be needed to defeat ISIS. What these men have not yet recognized is that their commander in chief’s main priority is not victory over ISIS. It’s to do nothing that would jolt the American people into recognizing what Staff Sgt. Cardin’s death exposed: Americans are still fighting and dying in Iraq.

In 1971, a much younger John Kerry complained to Congress about the phony distinction between ground troops and helicopter crews in Vietnam, and an American people who “accepted a differentiation fed them by the administration.”

How fitting that Mr. Kerry, who recently returned from Baghdad, now serves as secretary of state for an administration feeding us the whopper that Marines fighting ISIS in Iraq are not combat troops.


Article Link to the Wall Street Journal:

Today's Stock In Play is Odyssey Marine Exploration -- Symbol #OMEX

North Carolina May Never See a Celebrity Again

From entertainers like Bruce Springsteen to production studios like Lionsgate, Hollywood has promised to boycott North Carolina in light of its discriminatory HB 2 law.


By Samantha Allen
The Daily Beast
April 12, 2016


When it comes to fighting anti-LGBT legislation in North Carolina and Mississippi, the entertainment industry has been running laps around sports leagues and putting corporate America to shame.

Yes, PayPal withdrew 400 planned jobs from the Tar Heel State in response to HB 2, which banned local LGBT nondiscrimination ordinances and required transgender people to use public bathrooms matching their birth certificates, but most major companies have simply signed a strongly-worded letter to Governor Pat McCrory asking for the law to be repealed.

After Mississippi’s HB 1523 was passed, many of these same companies sent a similar letter to Governor Phil Bryant, urging him to repeal the law without detailing any specific consequences for leaving it in place.

But an emerging crew of entertainers isn’t content with this wait-and-see approach. By taking swift and decisive steps, they’re proving how little pro-LGBT press releases mean without concrete actions to back them up.

As soon as HB 2 was passed, for instance, actor and filmmaker Rob Reiner promised that he would “not film another production in North Carolina” until the law is repealed. CEOs take note: Reiner took action immediately and listed a punishment along with a specific condition.

Then, last week, Bruce Springsteen canceled a North Carolina show, highlighting the law’s horrifying anti-transgender provision in his statement. By contrast, the multi-company letter coordinated by the Human Rights Campaign (HRC) and Equality North Carolina does not specifically address this first-in-the-nation attack on transgender rights.

The Boss called his announcement “the strongest means I have for raising my voice in opposition to those who continue to push us backwards instead of forwards.”

Canadian singer Bryan Adams followed in Springsteen’s footsteps shortly thereafter,nixing a scheduled Mississippi concert to protest the state’s sweeping anti-LGBT law. On Facebook, he explained that he “cannot in good conscience perform in a state where certain people are being denied their civil rights due to their sexual orientation.”

And this past weekend, comedian and Community star Joel McHale went ahead with a North Carolina performance but wore an “LGBTQ” shirt and donated all of his proceeds to a local LGBT center. In video taken from the show, McHale asks, “What the fuck is wrong with your government here, you guys?”

It’s not just individual celebrities who are taking decisive steps, either. Lionsgate canceled Charlotte shooting plans and A+E Studios has promised “not [to] consider North Carolina for any new productions” once shooting ends on a new show they are filming around Wilmington. Even porn giant xHamster is now banning all North Carolina IP addresses in order to put pressure on the state to change course.

Outside of the entertainment world, however, condemnation of the anti-LGBT laws may have been sudden and widespread but punitive actions have been fewer and further between.

The NBA could have summarily pulled the 2017 All-Star game from Charlotte. It didn’t. Instead, the league sent out a statement calling HB 2 discriminatory but also cautiously noting that they “do not yet know what impact it will have” on the All-Star plans.

The NCAA is set to host Division I basketball tournament games in North Carolina over the next two years but, instead of relocating the games, the association pledged to “continue to monitor current events.”

The NFL is moving ahead with a May team owners meeting in Charlotte, justifying their decision based on the city council’s support of LGBT rights.

In sum, the major leagues are talking a big game but that’s about it. Their equivocating statements prompted Outsports’ Jim Buzinski to write that “sports leagues shouldn’t say another word about their ‘support’ unless it’s accompanied by action.” Or, as any good coach will tell you, talk is cheap.

Major corporations haven’t been much bolder, largely threatening to “reconsider” or “reevaluate” business in the offending states. Over one hundred businesses have signed on to the HRC letters but the more time passes, the emptier their words become. So far, only a select few businesses have gone beyond mere criticism of HB 2 and HB 1523.

The High Point Market Authority, which has been estimated to have an annual economic impact of $5.38 billion in North Carolina, warned last month that they could lose “hundreds and perhaps thousands of customers” at their annual spring furniture market. And Google Ventures CEO Bill Maris indicated in early April that he would not greenlight investments in any North Carolina startups “until the voters there fix this.”

Springsteen set a high bar for courage that few in the business world have been able to match.

This isn’t the first time that the entertainment industry has taken point in anti-LGBT legislative tussles. In March, Disney—and by extension Marvel—promised to end film production in Georgia if Governor Nathan Deal did not veto a so-called “religious freedom” law that passed the state legislature.

“[W]e will plan to take our business elsewhere should any legislation allowing discriminatory practices be signed into state law,” the company wrote in a definitive statement.

The NFL, on the other hand, vaguely hinted that they might not host the Super Bowl in Georgia but their official statement was embarrassingly circumlocutory.

“Whether the laws and regulations of a state and local community are consistent with [NFL non-discrimination] policies would be one of many factors NFL owners may use to evaluate potential Super Bowl host sites,” said league spokesman Brian McCarthy.

In March of 2015, when Indiana Governor Mike Pence signed an anti-LGBT “Religious Freedom Restoration Act,” a few companies like the business review website Angie’s List, which axed a $40 million expansion, made powerful moves.

But in what should by now be a familiar pattern, many corporate leaders chastised the governor without deploying any economic sanctions. The discrepancy prompted Fast Company to make a list of the “companies that are actually boycotting Indiana, not just tweeting about it.”

Among the only key players who actually acted before the Indiana legislature revised the discriminatory law were musicians and actors. The indie rock group Wilco pulled the plug on a show in Indianapolis. Parks and Recreation star Nick Offerman announced he would donate his proceeds from an Indiana University show to the HRC and canceled a subsequent performance in the state.

Repeated entanglements over LGBT rights in the South have proved that governors may not sympathize with LGBT rights but they do respond to economic pressure. So long as corporate leaders remain hesitant to pull out of North Carolina, they will be locked in a game of economic chicken with a state government that does not seem eager to reverse HB 2.

Governor McCrory’s re-election campaign has claimed that many businesses support the anti-transgender law and one state representative, Ken Goodman, seems more than willing to see if anyone will make good on their threats.

“April Market is not a vacation,” he tweeted in response to the High Point story. “It is critical for buyers. They’ll come.”

It has been illegal for many transgender people to use the right public restrooms in North Carolina for nearly three weeks. Anti-LGBT discrimination has been not just legal, but endorsed by the state of Mississippi, for almost two. At this point, signing a letter is no longer a proportional response to bigotry.

As Bruce himself once sang, “Walk tall, or baby, don’t walk at all.”


Article Link to the Daily Beast:

Ten Billion Risks in Greece's Summer of Discontent

By Mark Gilbert
The Bloomberg View
April 12, 2016


Europe is gearing up for a summer of discontent. There's the U.K. referendum on European Union membership, a simmering refugee crisis and an increasingly desperate European Central Bank. Taken together, this list gives reason enough to be fearful about the health of the European project in the coming months.

But there is also Greece, which is caught in a spat between Germany and the International Monetary Fund over debt relief as it seeks yet more bailout money. Greece -- whose economic crisis already threatened to destroy the irrevocable nature of euro membership -- still seems to be dragging its feet over state asset sales and pension reform. It is hemorrhaging cash from its banking system. Athens has to find more than 5 billion euros ($5.7 billion) to meet its debts in June -- and another 5 billion euros in July.

That's 10 billion euros Greece doesn't have; not, perhaps, a princely sum for a larger, healthier European state but that's 20 percent of Greece's annual tax income. Now, there's an argument that with so much else going on in the European theatre, Brussels will be keen to fudge a solution just to get Greece off the agenda. The IMF may not be so willing to oblige, however. If May comes and goes without a deal -- be it because of German intransigence on debt relief, IMF stubbornness on budget targets, or Greek brinkmanship -- Greece and its creditors may run out of time to avoid default.

As Greece's debt repayment deadlines approach, EU officials may be busy fighting fires kindled by Britain's June 23 referendum on EU membership. The outcome of that vote is far from certain. Bloomberg's composite tracker of opinion polls puts votes to remain in the EU at 39 points, those wanting to leave at 38, with "don't knows" holding the balance of power at 23.

With Prime Minister David Cameron embroiled in a domestic row about his personal taxes in the wake of the so-called Panama Papers, government popularity is likely to take a hit. That can only help the anti-EU campaign; it won’t take many undecided voters to swing the outcome.

The European Commission's regular survey of attitudes to the EU, known as the eurobarometer, has already taken a turn for the worse, with the most recent poll showing rising discontent:

The proportion of Europeans for whom the EU conjures up a negative image has risen to 23 percent (+4); before this, it had declined continuously in the four previous surveys.

Renewed concern about the European project is just starting to surface in the bond market. Investors are now charging Portugal 3.3 percentage points more for 10-year money than they demand from Germany, a spread that's well above its six-month average of 2.2 points. Italy's risk premium rose to 1.3 points last week, up from December's low of 0.9 points, while Spain is at 1.4 points, up from 1.2 points a month ago. That's not enough to ring alarm bells; but it's odd at a time when the ECB is increasing its sovereign bond purchases.

While last week's Dutch rejection of a treaty between the EU and Ukraine hinged on a very low turnout about a very specific policy, it does hint at the disquiet rumbling through the EU. A British decision to quit may prompt other countries to hold ballots on their own membership (Marine Le Pen has already promised referendums as part of her campaign strategy for the 2017 French presidential elections).

So the timing could turn out to be disastrous. The IMF, which says Greece can't turn itself around without debt relief, may be unable to reconcile its differences with Germany, which says further relief is irrelevant to a solution. The EU may find itself trying to hand money over to its weakest and most begrudging member just when one of Europe's most important participants, if the Brexit vote goes against the government, has called it quits. Instead of hitting the beach this summer, Europe's leaders may find themselves trying to stop their sandcastle from crumbling.


Article Link to the Bloomberg View:

Why Paul Ryan Won't Run For President

His every utterance stokes 2016 speculation, but the speaker's inner circle says everyone's misreading him.


By Jake Sherman
Politico
April 12, 2016


Paul Ryan’s confidants see it as one of the great, strange conspiracy theories of 2016. Somehow, by deciding against running for president, and repeatedly saying he has no interest in running for president, Paul Ryan is secretly running for president.

Raising money in New York? Ryan is running! Except it’s just a National Republican Congressional Committee event with rich GOP donors. Met with Benjamin Netanyahu in Jerusalem — he must be fortifying his foreign policy chops for the Oval Office. Except the trip was long planned, and most senior politicians — and many no-name, back-bench members of Congress — get an audience with the Israeli prime minister.

His staff released a bunch of well-produced videos, so he must be running. Actually, Ryan said when he ran for the speakership that he would step up his communications apparatus. Then there was the Donald Trump criticism — of course he was preparing to take on the New York mogul! In reality, Ryan and other top Republicans not running for president want to ensure the party they’ve dedicated their adult lives to isn’t transformed by Trump.

In fact, in Ryan’s universe — among the small group of insiders who know Ryan’s thinking firsthand — the sentiment is resolute: Ryan will not accept his party’s nomination. He simply doesn’t want to be president right now. One aide said “over my dead body” would Ryan emerge from Cleveland with the GOP nomination. In an interview with Politico last month, Ryan was perplexed that the issue hadn’t been put to bed, saying, “I am not going to become the president through Cleveland.”

Ryan’s orbit firmly believes that, in a few months, everyone will look at this bubble and realize just how ridiculous it was.

They say the national media are misreading his moves. Even if Ryan did have an itch to run for president, he could not swipe the nomination from a front-runner with 1,000 delegates, give or take, or a field of 17 candidates that spent months and millions of dollars vying for the job. If Ryan wants some sort of future in Republican politics, he cannot be seen as going to the party convention in July and stealing the nomination from Trump or Texas Sen. Ted Cruz.

Every public utterance has stoked the 2016 speculation. Yet Ryan promised at the outset to have a communications-focused speakership. He’s followed through with a nearly endless stream of television and radio appearances, and a series of well-produced videos from his in-house videographer. Much of what Ryan is doing isn’t aimed at cultivating a following for a national ticket — but it does help Ryan’s House Republicans focus on something other than Trump.

Ryan did sound a similar reluctance about running for speaker. But his aides point out that there were no other options besides the Wisconsin Republican, who is just now beginning to get his groove with the gavel.

Despite the overwhelming evidence that Ryan has no interest in the job, he has not managed to convince many people that he’ll take a pass in July. On-the-record comments by Ryan haven’t worked in tamping down the flames. So Ryan’s team has had to put out word to top Republican officials that he is not an option for the nomination this time around.

Of course, Ryan isn’t saying he’ll never run for the White House. If Hillary Clinton wins — most Republicans in Congress are convinced she will — he might take a look at a 2020 bid. But even then, those close to him aren’t convinced he’d take the plunge.

One thing is certain: Ryan does not want to be president right now. In 2014 and 2015, Ryan was seen as a leading contender for the White House, and he deliberately took a pass.

The backdrop of all his denials is the political reality that Ryan would likely lose. Most public polling has him faring relatively poorly in a potential matchup with Clinton. Of course, polls shift, but Ryan would be forced to launch and run a presidential campaign in three months. His experience from 2012 would help, but even the most talented campaigner would be at a disadvantage on such a compressed timetable.

Of course, there’s a touch of wishful thinking involved in the narrative. Current projections have Trump getting trounced by Clinton, and Cruz doesn’t fare much better. Gov. John Kasich, who says he would do the best against Clinton, has won only his home state of Ohio, leaving him an outside shot at the nomination.

Ryan, who as speaker will preside over the convention, is beginning to plan to campaign in August. Following in John Boehner’s footsteps, he’ll use the month not to campaign for president, but to hit the road for House lawmakers as he tries to keep the chamber in GOP hands.


Article Link to Politico:

Where Israel Bashing Pays Off

By Jonathan S. Tobin
Commentary
April 11, 2016


For casual political observers, it may have seemed counter-intuitive. As the campaign for the New York primary heats up, presidential candidates usually go into full pander protocol when it comes to Jewish voters in the only state where this group may actually have a real impact on the outcome. For most of them that usually consists of eating food, paying homage to religion (Ted Cruz went through the motion of trying to learn how to bake matzah) and, of course, reminding voters of their undying friendship for the state of Israel. But Bernie Sanders isn’t reciting the usual script about the Jewish state. After delivering a Middle East policy speech last month that was highly critical of Israel that he chose not to give at the AIPAC conference (the only presidential candidate to avoid their annual event this year) and then making a staggering exaggeration about the 2014 Gaza war that amounted to an accusation of a massive war crime during an interview with the New York Daily News, Sanders walked part of it back but actually doubled down on the underlying attack on Israel during another interview yesterday on CNN’s “State of the Nation.”

Asked by Jake Tapper about his claim that Israel had killed “10,000 innocent civilians” — a number that was five times the inaccurate claims made by Hamas and more than ten times the actual toll of those used as human shields by the Islamist terror group — Sanders admitted the number was inaccurate (something he seemed to want to blame on his interviewer rather than himself) but then insisted that the basic premise of his critique of Israel was correct.

Sanders again said that Israel’s counter-attack on the terrorist group, which was raining down thousands of rockets on Israeli towns and cities and sending killers through tunnels to kidnap and murder, was “disproportionate.” Though he coupled this assertion with a claim of supporting Israel’s right to exist and to defend itself against terror, he failed to explain why a weaker response to an active threat would have either worked or been more appropriate. Instead, he again shifted the conversation from what the Palestinians are doing to what he believes is Israel’s responsibility for the conflict. He said Israel must “treat Palestinians with dignity and respect” and address the poverty in Gaza. His point was that to be really pro-Israel you have to do more than be concerned about the Jewish state’s security.

This is the sort of thinking that is common on the American left, including left-wing Jews, who cling to their preconceptions about Israeli perfidy and ignore the reality of the Middle East. Sanders doesn’t bother to consider that poverty in Gaza is the result of Hamas misrule, especially since Israel withdrew from the strip in 2005. If their poverty is to be blamed on the partial blockade of the area enforced by Israel and Egypt (though Israeli convoys of food and medicine kept flowing into Gaza even while Hamas was firing at Israel), it is because that independent Palestinian state in all but name is a terrorist enclave.

Though he is right to say Palestinians are deserving of respect and dignity, but if they think the lack of a state and the continuing Israeli presence in the West Bank is the problem, then why doesn’t Sanders ponder why they have repeatedly refused Israeli offers of statehood and independence? Even now, Palestinian Authority leader Mahmoud Abbas refuses to recognize the legitimacy of a Jewish state no matter where its borders are drawn and speaks (when addressing Palestinians in Arabic as opposed to speaking to Westerners in English) of all of Israel as being “occupied” territory.

Sanders’ distortions about Israel would not have earned him cheers from a pro-Israel audience like that at the AIPAC conference and they aren’t likely to do so from similar Jewish audiences in New York. Why then is Sanders doubling down on a controversial approach to the Middle East just as the largest number of Jewish primary voters are about to have their say about the Democratic race?

The answer isn’t that complicated. Though most politicians believe they must leave no doubts about their pro-Israel bona fides when competing in New York, Sanders seems to understand that a large number of Jewish voters don’t really care about that much about Israel. The idea that Jews are one-issue pro-Israel voters has always been a myth. Most are liberal Democrats who may care about Israel but are more concerned about domestic issues. But among Sanders’ core audience, the alienation from Israel goes much further than that. Their embrace of the J Street-style attack of Israeli policies may show how out of touch they are from what even the center-left in Israel understands to be the reality of the conflict. But it is also a product of distancing from support for Zionism that has far more to do with larger demographic trends that are leading to the disintegration of non-Orthodox Jewry in this country. As Elliot Abrams writes this month in Mosaic Magazine, the drifting apart of Israel and American Jewry is a function of the trends that were illustrated in the 2013 Pew Survey of Jewish Americans more than it is a coherent critique of the policies of the Netanyahu government or shifts in Israeli opinion.

It must be acknowledged that a lot of New York Jews are aware that Sanders’ point of view is wrong and understand that Israel is currently under siege from a wave of bloody Palestinian terrorism that is just one manifestation of the rising tide of global anti-Semitism. Hillary Clinton, who during her eight years representing New York in the U.S. Senate showed herself to be a practiced panderer to pro-Israel sentiments that she dropped while at the State Department, will win some of those votes. But it will not have escaped the notice of many New Yorkers that, though often presented with disclaimers about support for Israel like those put forward by Sanders, his talk of “disproportionate” self-defense and blame on Israel is the sort of distorted point of view about the Middle East that we have come to expect from the Obama administration during the last eight years.

For the base of the Democratic Party, this seeking of “daylight” between the positions of Israel and the United States is popular. Moreover, for young Jews and others who have lost any sense of Jewish peoplehood and who have internalized the distortions about the Middle East conflict that are commonplace in the liberal mainstream media, Sanders’ attacks on Israel resonate. While Clinton and the Republicans seek to show that they are Israel’s friends, Sanders understands a crucial New York voting block wants something different. For the Jewish left, Sanders’ refusal to understand the reality of Palestinian intransigence or to acknowledge the facts about rejected Israeli efforts to make peace isn’t dumb politics. Whether or not, they can help the Vermont senator win New York they believe their views will ultimately prevail among Democrats. It is that possibility, more than the negligible possibility that Sanders will become president that should worry friends of Israel.


Article Link to Commentary:


Tuesday, April 12, Morning Global Market Roundup: Gloomy start to results season hits shares

By Patrick Graham
Reuters
April 12, 2016


A downbeat first batch of corporate results prodded European stock markets lower on Tuesday while oil prices held above $40 ahead of a meeting of major producers to discuss freezing output.

The mood among investors in Europe and the United States has been subdued in the run-up to the second quarter earnings season, and sales numbers from France-based luxury goods producer LVMH were poor, helping push European markets 0.3 percent lower in early trade.

While analysts greeted Italy's plans for a $5 billion resolution fund to deal with billowing bad debts, that was also not enough to generate much optimism about European banks as they launch another round of restructuring.

Metals company Alcoa (AA.N) reported lower profits.

"LVMH's numbers were not that good, and the problem with the Italian bank fund is that it is not big enough and it risks compromising the banks that are already in a much better shape," said Francois Savary, chief investment officer at Geneva-based investment and consultancy firm Prime Partners.

Asian markets had done better. Japan's Nikkei .N225 rose more than 1 percent after a rally in the yen against the dollar stalled on Monday following three weeks of consistent gains.

The more robust performance of oil helped commodities-linked currencies like the Australian and New Zealand dollars, both up around half a percent against their U.S. equivalent.

The U.S. dollar index, which measures its strength against a basket of currencies, fell 0.2 percent to 93.754. The euro was trading back above $1.14, touching a six-month high on a batch of sales of the dollar in early trade in London.

The yen dipped 0.2 percent to 108.16 per dollar. JPY=

"Oil prices holding above $40 a barrel overnight has got the dollar on the back foot, more than anything else, so we have the yen and the dollar at the bottom, and everything else at the top," said Societe Generale macro strategist Kit Juckes, in London.

"I think dollar/yen will get back to 120 at some point. We might want to sell it again there, but I think this move is way overdone."

While concerns over tepid global growth and the inability of policymakers in Europe and Japan to kick-start their economies have dominated financial markets this year, some of the big risks have eased along with a fall in the dollar over the past month.

While relieving pressure on developing economies that have borrowed heavily in dollars, that fall has also helped global commodities prices to stabilise.

Expectations that oil producers will agree in Doha on Sunday to curb output kept U.S. crude prices CLc1 above $40 a barrel. Brent LCoc1 popped above $43 to a four-month peak overnight.


Oil prices hold steady on strong China demand, ahead of producer meeting

SINGAPORE | BY HENNING GLOYSTEIN

Reuters
April 12, 2016


Oil prices were stable on Tuesday, with U.S. crude futures holding above $40 per barrel and Brent approaching $43 ahead of a meeting of major producers to discuss freezing output levels to rein in ballooning oversupply.

U.S. West Texas Intermediate (WTI) crude futures were trading at $40.45 per barrel at 0651 GMT, up 9 cents from their last settlement.

International Brent crude futures were up 5 cents at $42.88 a barrel, only 18 cents off their 2016-high reached the previous day.

Major oil producers from the Middle East and Russia, but excluding the United States, plan to meet in Qatar's capital Doha next Sunday. They will discuss measures to rein in ballooning oversupply which sees as many as 2 million barrels of crude produced every day in excess of demand, leaving storage tanks around the world filled to the rims with unsold and unwanted fuel.

Most analysts expect producers to freeze output around current levels, which being beyond consumption and close to record levels would do little to address the glut.

Reflecting a widespread view that oil prices will stay low for some time, the Brent forward price curve has significantly flattened, with the timespread between front-month futures and those for delivery in December 2017 narrowing to just $4.70 a barrel currently from $8.70 in early March.

"The potential risk for prices is for the downside as freezing output at current levels would be more of a symbolic act rather than a real market intervention. But you need to be open to surprises in this market," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

While Spooner said that a production freeze would do little to address the immediate glut, he added that keeping key Middle East and Russian output around current levels might start leading to a more balanced market, especially if demand stays strong.

Vehicle sales in China rose 8.8 percent in March from a year earlier to 2.4 million, the China Association of Automobile Manufacturers said on Tuesday, supporting strong gasoline demand in the country.

"There is demand growth, and production in the U.S. is falling, so if against that background there was a freeze, markets could get tighter at some stage," he said.

Analysts at Energy Aspects said there was "little doubt" that fundamentals would improve markedly from June because of maintenance in the North Sea and Russia as well as falling output in Brazil and also the United States.


Article Link to Reuters:

Brazil congressional committee recommends impeaching Rousseff

BRASILIA | BY MARIA CAROLINA MARCELLO AND LISANDRA PARAGUASSU

Reuters
April 12, 2016


A committee of Brazil's lower house of Congress voted 38-27 on Monday to recommend the impeachment of President Dilma Rousseff, who faces charges of breaking budget laws to support her re-election in 2014.

A vote in the full lower house is expected to take place on Sunday. If two-thirds vote in favor, the impeachment will be sent to the Senate.

If the upper house decides by a simple majority to put Rousseff on trial, she will immediately be suspended for up to six months while the Senate decides her fate, and Vice President Michel Temer will take office as acting president.

It would be the first impeachment of a Brazilian president since 1992 when Fernando Collor de Mello faced massive protests for his ouster on corruption charges and resigned moments before his conviction by the Senate.

A former leftist guerrilla, Rousseff has denied any wrongdoing and rallied the rank and file of her Workers' Party to oppose what she has called a coup against a democratically elected president.

Speaking to thousands of supporters in Rio de Janeiro, Rousseff's predecessor and Workers' Party founder Luiz Inacio Lula da Silva said Brazilian business elites were pressuring lawmakers to remove the president. Lula, who is under investigation in a graft probe, said he had convinced Rousseff to return to policies that favored Brazil's poor.

Caught in a political storm fueled by Brazil's worst recession in decades and the country's biggest corruption scandal, Rousseff has lost key coalition allies in Congress, including her main partner, vice president Temer's PMDB party.

The rift between Rousseff and her vice president reached breaking point on Monday after an audio message of Temer calling for a government of national unity was released apparently by mistake, further muddying Brazil's political water.

Temer's 14-minute audio message sent to members of his own PMDB party via the WhatsApp messaging app showed he was preparing to take over if Rousseff is forced from office.

The audio was posted on the website of the Folha de S.Paulo newspaper and confirmed to Reuters by Temer's aides as authentic. Aides said it was accidentally released and they quickly sent another message asking legislators to disregard it.

In his message, Temer said he did not want to get ahead of events, but he had to show the country he was ready to lead it if needed.

"We need a government of national salvation and national unity," Temer said in the audio. "We need to unite all the political parties, and all the parties should be ready to collaborate to drag Brazil out of this crisis."

Rousseff's chief of staff Jaques Wagner called the vice president a "conspirator" and said he should resign if Rousseff survives impeachment.

"Having joined the conspiracy, he should resign when it is defeated, because the climate will become unbearable," Wagner told reporters.

Wagner said the government will continue working to muster enough votes to block impeachment in the lower house, encouraged by the fact that in committee the opposition had not won the two thirds it will need in the plenary.

The committee vote, however, is expected to sway undecided lawmakers to vote for Rousseff's removal, said Claudio Couto, a politics professor at the Fundacao Getulio Vargas think tank.

"It has a snowball effect. With each approval, the chances of impeachment clearing the next chamber increases," Couto said. "The wider the margin, the more momentum impeachment will gather."

The Brasilia-based consultancy Arko Advice said committee votes for impeachment were higher than expected and it raised to 65 percent the odds of Rousseff being unseated by Congress.

Polarized Country


The latest moves in Brazil's political crisis have the country on edge as it faces not only a government meltdown but its worst recession in decades. The political chaos in the capital, Brasilia, is playing out less than 100 days before the nation plays host to the first Olympic Games to be held in South America - an event that will cast the world's eyes on Brazil.

The battle over Rousseff's impeachment has polarized the nation of 200 million people and brought the government of Latin America's largest economy to a virtual standstill.

The proposed impeachment is also taking place as Brazil faces its largest corruption investigation, targeting a sprawling kickback scheme at state-run oil company Petrobras.

Prosecutors say billions in bribes were paid over several years and have implicated not only members of Rousseff's Workers' Party but members of the opposition leading the charge to impeach her.

Eduardo Cunha, the speaker of Brazil's lower house, a Rousseff enemy who is guiding the impeachment proceedings, faces charges of accepting millions in bribes in connection to the Petrobras case, while the head of Brazil's Senate is also caught up in the investigation.

To battle to prevent impeachment approval in the full lower house vote, Rousseff's government is trying to win over lawmakers by offering government jobs that became vacant when the PMDB quit her governing coalition two weeks ago.

The Brazilian real BRBY strengthened nearly 3 percent before Monday's vote to an eight-month peak on expectations that the committee would decide to impeach Rousseff. Investors are betting that her removal will issue in more business-friendly policies to pull Brazil's economy out of a tailspin.


Article Link to Reuters:

As ISIS is Pushed Back In Iraq, Worries Exist About What's Next

WASHINGTON | BY JONATHAN LANDAY, WARREN STROBEL AND PHIL STEWART

Reuters
April 12, 2016


As U.S.-led offensives drive back Islamic State in Iraq, concern is growing among U.S. and U.N. officials that efforts to stabilize liberated areas are lagging, creating conditions that could help the militants endure as an underground network.

One major worry: not enough money is being committed to rebuild the devastated provincial capital of Ramadi and other towns, let alone Islamic State-held Mosul, the ultimate target in Iraq of the U.S.-led campaign.

Lise Grande, the No. 2 U.N. official in Iraq, told Reuters that the United Nations is urgently seeking $400 million from Washington and its allies for a new fund to bolster reconstruction in cities like Ramadi, which suffered vast damage when U.S.-backed Iraqi forces recaptured it in December.

"We worry that if we don't move in this direction, and move quickly, the progress being made against ISIL may be undermined or lost," Grande said, using an acronym for Islamic State.

Adding to the difficulty of stabilizing freed areas are Iraq's unrelenting political infighting, corruption, a growing fiscal crisis and the Shiite Muslim-led government's fitful efforts to reconcile with aggrieved minority Sunnis, the bedrock of Islamic State support.

Some senior U.S. military officers share the concern that post-conflict reconstruction plans are lagging behind their battlefield efforts, officials said.

"We're not going to bomb our way out of this problem," one U.S. official said, speaking on condition of anonymity.

Islamic State is far from defeated. The group still controls much of its border-spanning "caliphate," inspires eight global affiliates and is able to orchestrate deadly external attacks like those that killed 32 people in Brussels on March 22.

But at its core in Iraq and Syria, Islamic State appears to be in slow retreat. Defense analysis firm IHS Janes estimates the group lost 22 percent of its territory over the last 15 months.

Washington has spent vastly more on the war than on reconstruction. The military campaign cost $6.5 billion from 2014 through Feb. 29, according to the Pentagon.

The United States has contributed $15 million to stabilization efforts, donated $5 million to help clear explosives in Ramadi and provided "substantial direct budget support" to Iraq's government, said Emily Horne, a National Security Council spokeswoman.

Secretary of State John Kerry acknowledged the need for more reconstruction aid while in Baghdad last week.

"As more territory is liberated from Daesh, the international community has to step up its support for the safe and voluntary return of civilians to their homes," Kerry said, using an Arabic acronym for Islamic State.

Kerry, who announced $155 million in additional U.S. aid for displaced Iraqis, said U.S. President Barack Obama planned to raise the issue at a summit of Gulf Arab leaders on April 21.

"PILE OF RUBBLE"


Ramadi's main hospital, train station, nearly 2,000 homes, 64 bridges and much of the electricity grid were destroyed in fighting, a preliminary U.N. survey found last month. Thousands of other buildings were damaged.

Some 3,000 families recently returned to parts of the city cleared of mines, according to the governor, Hameed Dulaymi, but conditions are tough. Power comes from generators. Water is pumped from the Euphrates River. A few shops are open, but only for a couple of hours a day.

Ahmed Saleh, a 56-year-old father of three children, said he returned to find his home a "pile of rubble," which cannot be rebuilt until the government provides the money. With no indication of when that might happen, authorities have resettled his family in another house whose owner is believed unlikely to return before this summer.

Saleh earns less than $15 a day cleaning and repairing other people's homes. There are no schools open for his children, and he lacks funds to return to a camp for internally displaced outside Baghdad where he says life was better.

Obama administration officials say they have been working to help stabilize Iraq politically and economically since the military campaign against Islamic State began in 2014.

"The success of the campaign against ISIL in Iraq does depend upon political and economic progress as well," Defense Secretary Ash Carter said on Monday. "Economically it's important that the destruction that's occurred be repaired and we're looking to help the Iraqis with that."

Asked about the upcoming $400 million U.N. request, Horne said the United States welcomed the new fund's establishment and "will continue to lead international efforts to fund stabilization operations." The United States hasn't yet announced what it will contribute.

U.S. officials said Washington is also pushing for an International Monetary Fund arrangement that the head of the fund's Iraq mission has said could unlock up to $15 billion in international financing. Baghdad has a $20 billion budget deficit caused by depressed oil prices.

Washington has helped train 15,000 Sunni fighters who are now part of the Iraqi government's security forces.

But there has been little movement on political reforms to reconcile minority Sunnis, whose repression under former prime minister Nuri al-Maliki's Shiite-led government led thousands to join Islamic State.

Unless that happens, and Sunnis see that Baghdad is trying to help them return home to rebuild, support for the militants will persist, experts said.

"If you don't get reconciliation, the Sunnis will turn back to ISIS," said former CIA and White House official Kenneth Pollack, who is now at the Brookings Institution think tank and conducted a fact-finding mission in Iraq last month.

"It's just inevitable."

The United States has prevailed militarily in Iraq before, only to see the fruits of the effort evaporate.

President George W. Bush invaded Iraq in 2003, deposed dictator Saddam Hussein and disbanded his army without a comprehensive plan for post-war stability. Civil war ensued.

REBUILDING GETS HARDER


International funding to rebuild towns and cities ravaged by Islamic State has always been tight, said Grande, deputy special representative of the UN Assistance Mission for Iraq.

"This meant we had to come up with a model that could be implemented quickly and at extremely low cost," she said.

International donors contributed $100 million to an initial fund to jump-start local economies, restoring power and water and reopening shops and schools.

The model worked in Tikrit, the first major city reclaimed from Islamic State in March 2015, Grande said. After initial delays, most residents returned, utilities are on and the university is open. Total spending was $8.3 million.

But Ramadi, a city of some 500,000 people before the recent fighting, poses a much greater challenge.

"Much of the destruction that's happening in areas that are being liberated ... far outstrips our original assumptions," Grande said.

Restoring normality to Mosul, home to about 2 million people before it fell to Islamic State, could prove even more difficult.

It remains to be seen whether Islamic State digs in, forcing a ruinous battle, or faces an internal uprising that forces the militants to flee, sparing the city massive devastation.

If Islamic State is defeated militarily, it likely will revert to the guerrilla tactics of its predecessor, al Qaeda in Iraq (AQI), current and former officials said.

AQI and its leaders, including Islamic State chief Abu Bakr al-Baghdadi, "survived inside Iraq underground for years and there’s no reason they couldn’t do it again," a U.S. defense official said.


Article Link to Reuters:

Did Led Zeppelin steal the opening notes to ‘Stairway to Heaven?’

The Associated Press
April 12, 2016


LOS ANGELES — A trial is needed to determine if Led Zeppelin’s “Stairway to Heaven” copies its opening notes from a song performed by the rock band Spirit, a federal judge has ruled.

U.S District Judge R. Gary Klausner ruled Friday that lawyers for the trustee of late Spirit guitarist Randy Wolfe had shown enough evidence to support a case that “Stairway to Heaven” copies music from the Spirit song “Taurus.”

“Taurus” was written by Wolfe in either 1966 or 1967, years before Led Zeppelin released “Stairway to Heaven” in 1971. Klausner wrote that while the songs have some differences, lawyers for Wolfe’s trustee may be able to prove they are substantially similar.

Led Zeppelin and Spirit performed at some concerts and festivals around the same time, but not on the same stage. Klausner wrote that the evidence presented so far represented a circumstantial case that Led Zeppelin may have heard “Taurus” performed before “Stairway to Heaven” was created.

After-hours phone and email messages sent to Helene M. Freeman, Led Zeppelin’s attorney, were not immediately returned. Experts hired by the band contend both “Stairway to Heaven” and “Taurus” use notes that have been used in music for centuries.

Francis Alexander Malofiy, attorney for Wolfe’s trustee Michael Skidmore, praised the ruling. He said while many copyright cases are an uphill battle, Klausner’s ruling brings his client one step closer to getting Wolfe credit for helping create one of the most recognizable song introductions in rock history.

Skidmore was able to overcome statute-of-limitations hurdles to sue over “Stairway to Heaven” because the song was remastered and re-released in 2014.

A jury trial is scheduled for May 10 in Los Angeles. Klausner’s ruling removed Zeppelin band member John Paul Jones from the case. Bandmates Robert Plant and Jimmy Page remain defendants in the case.

A trial would represent the third time in recent months that a Los Angeles federal jury has heard a copyright-infringement case involving a hit song. In March 2015, a jury found that Robin Thicke and Pharrell Williams had copied a Marvin Gaye song to create their 2013 hit, “Blurred Lines” and awarded Gaye’s children $7.4 million. A judge trimmed the award, and the verdict is under appeal.

Later in the year, another jury was empaneled to determine whether the Jay-Z hit “Big Pimpin'” copied the work of an Egyptian composer, but a judge ruled in the rapper’s favor before deliberations began.


Why Is the Search for MH370 Debris Being Left to Amateurs?

The only bits of the missing airliner have been found by tourists and part-time sleuths on beaches. Meanwhile, the $180 million underwater search is running out of time.


By Clive Irving
The Daily Beast
April 12, 2016


A little fragment of paradise named Rodrigues Island in the Indian Ocean has become part of an unfolding controversy about how vital clues to the fate of Malaysia Airlines Flight 370 could have been discovered much sooner than they were—and whether many more are waiting to be found.

Even on the largest and most detailed maps of the Indian Ocean, Rodrigues barely shows up. It is only 41.6 square miles in area—literally the tip of an extinct volcano, part of a ridge that extends for hundreds of miles, mostly underwater.

Like many other volcanic islands, Rodrigues is encircled by a coral reef that works as a natural breakwater, creating broad and shallow lagoons between it and land, and protecting many golden beaches.

Two weeks ago two guests at a budget hotel on the southeastern coast were enjoying one of those beaches when they spotted a piece of gray metal among some flotsam. When they examined it more closely they realized that they might have found a piece of debris from Flight 370.

Although the coral reef would naturally inhibit flotsam reaching the island’s inner coast, there is a gap in the reef close to the Mourouk Ebony Hotel where the guests were staying, resulting in a small channel allowing tidal movement to the beaches.

That piece of debris is now on its way to Australia, where it will be examined by experts who have already confirmed that other pieces of debris found on beaches in the western Indian Ocean were from the Malaysian Boeing 777.

If the debris from Rodrigues does turn out to be from Flight 370 the location of the island is particularly significant. It is part of the Republic of Mauritius but lies some 450 miles east of the main island of Mauritius—and around 550 miles east of the island of La Reunion, where the first piece of Flight 370 debris, a part of the wing called a flaperon, was discovered last July.

Any debris from the airplane will have drifted on currents across the Indian Ocean from east to west, originating in the area some 1,700 miles west of the Australian coast where searchers are looking for main parts of the wreckage presumed to be laying at great depths. Rodrigues would therefore have been, in all probability, the first landmass to intercept any debris.

Computer models run to estimate the time and course taken for wreckage to cross the Indian Ocean toward Africa have allowed 500 days as a rule-of-thumb number for the duration of the crossing. The flaperon was found 509 days from the date of Flight 370’s disappearance, March 8, 2014. By that measure, debris could first have reached Rodrigues in markedly less than 500 days.

Australian experts noted that wreckage found early this year in the Mozambique Channel (a broad sea passage between the Mozambique coast and Madagascar) was found 716 days after the disaster. But, they pointed out, “it had taken possibly much less time to get there.” And it had “probably spent a significant length of time either weathering in the sun and, or, washing back and forth in the sand at this or some other location.”

In saying this, the Australians explained what seemed to be an anomaly: the metal surface of the debris from Mozambique was scrubbed clean (clean enough to read the words “NO STEP” on its edge) whereas the much larger flaperon found on La Reunion was encrusted with barnacles, gathered during its passage. This seems to confirm that the flaperon was discovered within days of washing ashore, before it could be subjected to weathering and scrubbing on a beach.

Even if the wreckage found on Rodrigues proves not to be from Flight 370 the random nature of the confirmed discoveries and the fact that many miles of shoreline in the western Indian Ocean are unpopulated suggests, as one expert told The Daily Beast: “Useful pieces of wreckage for analysis could very well be laying somewhere on a beach, undiscovered and untouched.”

David Griffin of the Commonwealth Scientific and Research Organization, CSIRO, based in Australia, who worked on the computer modeling of debris drift patterns, told The Daily Beast, somewhat cryptically: “One way to think of it is this: If there were just three pieces to have landed on beaches, it’s pretty amazing that all three have been found.”

In fact, the total found so far could be five: the flaperon, two pieces in the Mozambique Channel, all confirmed as being from the Boeing 777, a fragment of a Rolls Royce engine casing found on a South African beach and the piece found on Rodrigues, both of these awaiting expert inspection in Australia.

The Daily Beast asked a spokesman for the Australian Transport Safety Board, ATSB, which leads both the underwater search and the inspection of debris, whether in view of the value of even the smallest piece of debris once that it is established that it is from Flight MH370, it is not time for a more systematic search to be made of the coastlines where the highest likelihood exists of finding debris.

He declined to reply and recommended that the question should be put to the Malaysian authorities in charge of the investigation in Kuala Lumpur. This was done, but following a familiar pattern, the Malaysians did not respond to several requests for a reply.

After the discovery of the flaperon on La Reunion there was a short and perfunctory search by airplanes and helicopters of surrounding coastlines but it turned up nothing.

All of the debris has so far been found by a combination of amateur sleuthing, beachcombers and observation by people on vacation.

The ATSB has told the Daily Beast that the current undersea search will have cost as much as $180 million at its conclusion. Australia committed $60 million, China committed $20 million in assets and finance and the balance, in both assets and finance, came from Malaysia.

Experts I have spoken to argue that if only a small fraction of the money and resources devoted to the undersea search were devoted to a more systematic search of the coastlines where more debris almost certainly remains undiscovered it would surely be justified.

That said, finding the main body of the wreckage, and particularly the flight data recorders, remains by far the most important part of the search, and the only hope of ever really explaining what happened to create the greatest mystery in modern aviation history.

Of the 48, 263 square miles of the total undersea search area, 9,600 square miles remains to be searched—that is an area more or less exactly the size of Vermont. In February the ATSB said that they anticipated that the search will be completed by June.

“In the absence of credible new information leading to a specific location of the aircraft there will be no further expansion of the search area,” they said.

If—heaven forbid—the search is unsuccessful it will be a tough moment of reckoning and there will doubtless be pressure to reexamine the premise on which the search area was based.

That would also leave the floating debris as the only surviving evidence. And that, at the very least, does prove that the airplane crashed into the Indian Ocean, and did not—as some conspiracy theories proposed—get snatched by some unseen hand to be diverted to a hidden location on land.

Each piece of floating debris, no matter how small, has its own story to tell when investigators examine it. The more pieces that are discovered, the more that can be understood about, for example, how different parts of the airplane were torn away on impact with the water and, possibly, in what sequence. And, based on what has been found, there is no evidence of fire or an explosion playing a role. It is not enough, but in the absence of anything else it is better than knowing nothing.


Article Link to the Daily Beast:

Panama Papers’ Russian Mob Connection

The trove of leaked documents has already revealed the billions swirling around Putin. Now a Swiss firm named in the papers appears to have links to Russian organized crime.


By Michael Weiss
The Daily Beast
April 12, 2016


A Swiss law firm implicated in the Panama Papers also has links to an alleged Russian mafia, The Daily Beast has discovered.

As reported last week in the disclosure of leaked documents from the Panamanian law firm Mossack Fonseca, the Zurich-based firm Dietrich, Baumgartner & Partner played an integral role in the transfer of some $2 billion from a close circle of friends and associates of Vladimir Putin—money widely thought to belong at least in part to the Russian president.

Dietrich, Baumgartner is known in Switzerland for its influential Russian client base. It even keeps code names for the ones whose notoriety demands a commensurate lack of transparency. The firm’s founding partner Andres Baumgartner is quite ostentatious about his Eastern connections. He’s quoted in the Guardian as having told his colleagues: “I have relationships with people from the KGB. Right up to Vladimir Putin.”

There are also two known connections between Baumgartner’s firm and the so-called Klyuev Group, which U.S. Sen. John McCain has called a “dangerous transnational criminal organization” that has “colluded with senior Russian officials to engage in bribery, fraud, embezzlement, company thefts, and other serious financial crimes.”

Members of the Klyuev Group have been sanctioned by the U.S. government under a law named for its most high-profile victim: Russian tax lawyer Sergei Magnitsky. In 2007 and 2008, Magnitsky uncovered a $230 million tax fraud allegedly perpetrated by ex-convict Dmitry Klyuev and his confederates, which included state tax officials and Interior Ministry investigators. Magnitsky was then framed by the very men he exposed; he was beaten to death in a Moscow prison hospital in 2009.

Documents seen by The Daily Beast show that on April 13, 2011, Altem Invest Ltd., a Cyprus-registered company controlled by Dmitry Klyuev, transferred $4,499 into a Swiss bank account belonging to Dietrich, Baumgartner & Partner. The law firm has also represented Vladlen Stepanov in a money laundering case opened in 2011 by the Swiss attorney general in relation to the Magnitsky affair. Stepanov, said to be a member of the Klyuev Group, is the ex-husband of Olga Stepanova, who formerly headed Moscow Tax Office No. 28, which processed part of the fraudulent $230 million refund.

Leaked documents available at the website Russian Untouchables show that, prior to the Stepanovs’ divorce in 2010, they jointly controlled nearly $39 million in assets, including multiple offshore companies, an award-winning Moscow dacha, a seaside villa in Montenegro, and a six-bedroom, seven-bathroom “signature villa” in Dubai’s artificial archipelago Palm Jumeirah, as well as two luxury apartments in the Kempinski Resort on the same Gulf island chain. This, despite the couple’s official combined salary at the time equaling $38,381.

Dietrich, Baumgartner featured in the Panama Papers scandal as the main law firm used by the controlling interests of Bank Rossiya, the central Russian financial institution that moved huge sums of money to offshore companies owned by Dmitry Roldugin, Putin’s best friend and a concert cellist. Bank Rossiya was sanctioned in March 2014 after Russia’s invasion and annexation of Crimea because, as the U.S. government stated, it is “the personal bank for senior officials of the Russian Federation.”

One White House official named Yuri Kovalchuk, single largest shareholder of Bank Rossiya, as the “personal banker” for many of these same officials, including Putin. Kovalchuk was part of the Ozero Cooperative, a lakeshore district in St. Petersburg where a coterie of Putin’s associates from the 1990s once lived and, apparently, pooled their collective fortunes. All members of the cooperative are today on-paper billionaires. Roldugin was not one of them, and the musician’s true portfolio as seven-figure bagman for the president was mostly speculative, until the Panama Papers came to light.

Vladimir Khotimsky, an investment manager at Bank Rossiya, would email Andres Baumgartner instructions at the latter’s Zurich office. Baumgartner “would pass on Khotimsky’s orders—to enact loans or make share deals—to Mossack Fonseca’s branch office in the same town,” as the Guardian reported last week. “The Panamanian firm then used its own network of offices in far-flung jurisdictions to operate anonymous shell companies, in the [British Virgin Islands], Panama itself, or Belize.”

Roldugin was also one of the few members of Putin’s inner circle to evade U.S. sanctions in 2014; as such, his prominence in Bank Rossiya’s offshore network only grew in the last two years. Dietrich, Baumgartner registered a new Swiss bank account in his name.

The “linchpin of the entire Putin-linked network,” according to to the International Consortium of Investigative Journalists (ICIJ), is a Roldugin-owned company called Sandalwood Continental Limited. It borrowed huge sums from Russian Commercial Bank, the Cyprus-based subsidiary of the Russian state bank VTB.

From 2009 to 2012, Sandalwood had $800 million in credit lines; it lent $600 million in 2009 and $350 million in 2010 “to a borrower who had no discernible business model that would allow it to pay back the money,” ICIJ found. “The loans carried no security. Most did not require installment payments but instead relied on a promise that the entire amount would be returned after a certain time span.”

In one particularly dubious loan, Sandalwood borrowed $103 million from RCB at a 4.7 percent interest rate and transferred it immediately to Horwich Trading, a Cypriot company, at a 7.8 percent rate. Jurgen Mossack, a founding partner of Mossack Fonseca, wrote: “I believe this is delicate…we could be witnessing payments of questionable origin and purpose.”

Dietrich, Baumgartner & Partner processed some of the loan’s paperwork, as its reputation was enlisted the Panamanian firm to legitimate the transaction. “As we are working with this client from a reputable Russian bank for some years now, and our legal client of reference is a well-known Swiss law office, I think we can accept the explanations and go ahead,” one attorney at Mossack’s Lichtenstein office wrote.

The Russian Commercial Bank denies being a clearinghouse for any high-ranking Russian officials. Putin has blamed the Panama Papers revelations on a U.S. disinformation campaign designed to destabilize Russia, citing a conspiratorial tweet published by WikiLeaks founders Julian Assange. As for Roldugin, Putin insists that his lifelong friend has spent “almost all the money he earned on acquiring musical instruments from abroad and bringing them to Russia.”


Article Link to the Daily Beast:

Why Saudi Arabia is Hammering Yemen

Riyadh hopes to put the Shia Awakening to bed.


By Matt Purple
The National Interest
April 12, 2016


When Saudi Arabia began bombing Yemen last year, many observers speculated that it was sending a message to its neighbors. Now, as the violence drags on, the Saudi campaign is calling to mind another country, one half a continent away.

The war, intended to stop the progress of local Houthi militias, is being waged by Prince Mohammed bin Salman, Saudi Arabia’s powerful and precocious defense minister, and whispers have been circulating for months that Yemen is his Vietnam. It wouldn’t be the first time. During the 1960s, Egyptian president Gamal Abdel Nasser intervened in the North Yemen Civil War to stop a dethroned imam from reclaiming power, and quickly found himself trapped in a quagmire. Afghanistan may be the “Graveyard of Empires,” but Yemen has also bogged down its share of foreign invaders.

Military metaphors aside, the real problem now is that Yemen is starving to death. Already the poorest country in the Middle East, Yemen has for months been subjected to a Saudi blockade, creating shortages of essential goods, including food. This has, not surprisingly, bred hostility—Riyadh is now losing the battle of hearts and minds, as it were. So why would the Saudis do this? Why pulverize a country to stop the Houthis? Given the devastation that’s been wrought, it seems like squashing a fly with a sledgehammer.

Part of the reason is that Yemen sits on Saudi Arabia’s back doorstep, and a hostile government there could put southern Saudi communities in danger. But the campaign in Yemen has actually worsened Saudi security, as Houthi militants retaliate by firing rockets at Saudi villages and staging border raids. And while Al Qaeda has menaced Saudi Arabia in the past, its presence in Yemen has never elicited a major military mobilization—that’s been left to the United States. So why intervene now?

To understand the war in Yemen, you have to assume the perspective of a Saudi elite and zoom the camera outwards. Once upon a time, the Shia-majority nations of the Middle East were ruled by monarchs and strongmen who were largely unsympathetic to the idea of Shia power—Iraq under the Sunni Saddam Hussein, Bahrain under the Saudi-backed Khalifa dynasty, and Iran under the Pahlavis. Islam was governed as it had been for centuries, with Sunnis wielding power and Shia awaiting the end times. America viewed the Middle East through the lens of regnant Sunnis, and collaborated with many of them, most notably the Saudi royal family.

That’s all changed over the past thirty-five years, first with the Islamic Revolution in Iran, which produced an aggressively Islamist Shia government, and then with the American occupation of Iraq, which effectively transferred governance away from the Sunnis. As Iraqi Shia queued up to vote and Iranian pilgrims spilled over the border to visit the holy city of Najaf, the Middle East underwent an awakening that gave real autonomy to Islam’s long-oppressed minority (Shia are only 10–15 percent of the Muslim population). Vali Nasr has expertly chronicled this revolution in his 2007 book The Shia Revival.

That revival triggered a ferocious counterreaction from Sunnis, who streamed into Iraq for a chance to spill the blood of heretical Shia. And while the region’s Sunni states didn’t actively oppose the awakening, they watched the course of events with a good deal of nervousness. In 2004, King Abdullah of Jordan spoke for many when he warned about a “Shia crescent” sprawling across the Middle East, from Bahrain to Iran to Iraq through the Alawite Assad regime in Syria and into Hezbollah-friendly districts of Lebanon. Tehran was on the eastern side of this swath, but it was the political center—Abdullah’s fear was that a Shia crescent would inevitably become an Iranian empire.

So it came as no surprise when the Saudis helped the Sunni monarchy in Bahrain squash a Shia uprising during the Arab Spring, or when many of the Sunni powers leapt behind efforts to depose the Iran-linked Assad regime. Their real aim was blunting Iranian power. This aversion to Iran courses deeply through the remaining Sunni rulers, especially in Saudi Arabia. A New York Times analysis of Saudi Foreign Ministry documents uncovered through Wikileaks found, as the Times put it, “a near obsession with Iran, with diplomats in Africa, Asia and Europe monitoring Iranian activities in minute detail and top government agencies plotting moves to limit the spread of Shiite Islam.” This is why the Saudis often seem reluctant to put their full energies into the war on terrorism. Sunni jihadist groups like Al Qaeda are manageable and often home-brewed nuisances; Iran is an exterior geopolitical threat.

So when the Shiite Houthi rebels captured the Yemeni capital of Sana in late 2014, a shock was sent through the Middle East’s Sunni nervous system. It mattered little that the Houthis were schismatic Zaydi Shia out of step with Iran’s mainstream Twelver Shiism, or that the Iranians warnedthat Sana shouldn’t be seized, or that the Houthis aren’t an Iranian proxy in the same way that Hezbollah is. The Saudis immediately blamed Iran. They, along with many of the Sunni states, went to war, pulling their militaries away from the campaign against the Islamic State. Once again, fighting Salafist terrorism was dismissed as an American concern.

The problem for Saudi Arabia now is that its attempt to stymie the Shia awakening has backfired. After over a year of bombing, the Houthis still control Sana, and international sentiment has been roused against the war. The Saudi economy is treading water thanks to low oil prices, and while Iran is facing similar challenges, the nuclear deal has given the Iranians a boost in both revenue and credibility. When Saudi Arabia suddenlyexecuted prominent Shia sheikh Nimr al-Nimr earlier this year, it was intended as a show of defiance, a message to Iran and the restive Shia in its own eastern provinces that the old paradigm of Sunni governance still had some stick. Instead, it brought more international condemnation and the torching of the Saudi embassy in Tehran.

The Saudis are also contending with a freshly disputatious President Obama, who last month accused them of free riding off American security guarantees. Prince Turki al-Faisal quickly countered the free rider claim, and was followed by Prince Abdullah al-Saud who wrote an op-ed in theWall Street Journal that defended the war in Yemen. The Saudis clearly perceive that they have a PR problem, that America is growing skeptical and that the Shia are gaining strength. Yet it’s their pushback against the Shia—their inhumane war in Yemen—that helped arouse the negative PR in the first place.

The question now is whether the Saudis can work through this briar patch of crises. But one thing is certain: the Shia are awake and they aren’t returning to sleep anytime soon. The Middle East as we know it has changed.


Article Link to the National Interest:

April Showers Bring...Growing Violence In Southeast Turkey?

Both the Turkish government and the Kurdistan Workers Party are feverishly preparing for expected heavy clashes in the spring.


Al-Monitor
April 12, 2016


This year, the coming of spring has not brightened the lives of people in Turkey's southeastern towns, where violence continues. The coming of spring means heavy winter conditions and melting snow are replaced by green trees and many rainy, foggy days. It also means a probable increase and expansion of clashes.

The milder meteorological conditions will allow the Kurdistan Workers Party (PKK) to become more mobile. With improved logistics support, the PKK could integrate its urban units, which have been operating independently, and transform them into a regional force and escalate fighting. Security forces, which are aware of these realities, are frantically preparing.

Security officials in Ankara expect multiple, simultaneous PKK operations on the ground or actions in the cities at the end of April. Ankara has reacted by increasing the number of special operations teams trained in urban warfare, appropriate vehicles and weaponry.

Al-Monitor has learned from its sources in Ankara that one extraordinary step taken was to shorten the training periods of police special operations teams. Gendarmerie special operations teams in the region that today total 12,500 will be boosted to at least 20,000. Police special operations teams that today have 7,800 personnel will be increased to 20,000.

The Turkish Armed forces (TSK) also appear to be making similar redeployments and changes. For example, infantry brigades at Bingol, Sarikamis, Tatvan and Denizli have been transformed entirely to commando brigades. These four brigades, made up of 20,000 professional and specially trained soldiers, have been deployed to critical areas of Tunceli, Bingol, Agri, Hakkari, Sirnak and Mardin. Two commando battalions have been temporarily redeployed from Cyprus to defend some permanent bases in the region.

The TSK’s increasing need for manpower this spring to set up permanent regional bases may force it to stray from its established principle of fielding only professional troops in anti-terror operations and not using conscripts.

In short, Turkish security forces are planning to double their presence in the region to sustain their control of towns and to dominate the rural terrain.

The PKK is also active, reinforcing its mountain units. Turkish intelligence has reports that the PKK may shift its operations to the calmer Van region and rural areas to ease the pressure it is currently under in Nusaybin, Sirnak and Yuksekova, and to launch attacks in western cities. The PKK, which appears to have learned well from the first wave of combat in Silopi, Cizre, Idil and Sur, is hunting tanks and armored vehicles using snipers, planting roadside bombs and digging tunnels.

In the past two weeks, about 50 security personnel have lost their lives in Nusaybin, a scene of heavy clashes. Normally a town of 90,000, its population is now down to 30,000. In this town, which abuts the Syrian border across from the Kurdish town of Qamishli, there are wide avenues and four- and five-story concrete buildings, unlike in Cizre, Sur and Silopi, where there are mostly narrow streets with trenches dug and barricades backed by roadside bombs.

In Nusaybin, clashes take place mostly inside buildings. The PKK, which has prepared well and deployed experienced units, plants explosives at the foundations of buildings likely to be searched by security forces and sets them off by remote control. Reports say there are about 300 PKK militants from its rural units in Nusaybin, in addition to 700-800 local Civil Defense Units militants.

In six neighborhoods of Nusaybin where operations continue, security forces have identified about 200 buildings the PKK uses for safe houses, medical stations, ammunition storage and supply warehouses. After many personnel lost their lives in building collapses, the security forces are now considering the use of heavy fire from a distance to demolish all those buildings in the six neighborhoods, after first evacuating civilians.

“If necessary, we should think of totally evacuating the places, which are not anymore habitable anyway, and pulverize them from a distance. We should totally raze these locations and rebuild them,” President Recep Tayyip Erdogan said recently. “We won’t sacrifice even a finger of our police and soldiers for all the piles of concrete and iron there. We are sustaining martyrs because of this.”

According to security experts quoted by Turkish media, what is happening in Nusaybin is not a classic terror operation, so the buildings the PKK is using for combat purposes should be collectively flattened by heavy-caliber fire from a distance.

As the clashes and casualties in Nusaybin have become a main agenda item recently, Turkey has devised a new strategy to handle the problems in that town. After reports of coordination discord between the governor of Mardin province and security units on the ground, the authority for operational decisions in the town was transferred from the civilian decision-makers to the military, which means consolidating intelligence and decisions to a single military command. For the first time since July 22, when the clashes began, command and control in Nusaybin will be exclusively in the hands of senior military officers.

Al-Monitor consulted technical experts who said it won’t be easy to destroy the concrete-and-steel structures with tank and 155-mm artillery fire from a distance. These experts, who spoke with us on the condition of anonymity, said one option is to use penetration ammunition similar to laser-guided, 2,000-pound MK-84 ammunition fired from planes. Another option would be to use concentrated barrages of 203-mm artillery. The last option would be to send in armored bulldozers protected by tanks. Given the sharp increase in public sensitivity and the political pressure exerted from Ankara, security forces may have to make a decision soon.

Nusaybin may well be the harbinger of a new phase of wider and more violent clashes in the spring. The use of tanks, heavy armor, antitank weapons, snipers and roadside bombs are amplifying, increasing the destruction. Turning over the decision-making to the military could mean even the use of combat planes might be on the agenda.

No wonder, then, that the coming spring isn't bringing the usual joy and happiness, but more fear and anguish in the region.


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April Showers Bring...Growing Violence In Southeast Turkey?

Foreign Investors Give Up On Abenomics

The Asia Times
April 12, 2016


Bye, bye Abenomics.

Global investors have given up on Abenomics, the three-tiered economic plan of fiscal and monetary stimulus and structural reform by Japan’s Prime Minister Shinzo Abe.

Over the past 13 weeks, overseas traders have pulled $465 billion in shares out of Tokyo’s stock market, reported Bloomberg. This is the longest stretch since 1998. Since the start of the year, the benchmark Topix index has fallen 18%, the world’s steepest decline behind Italy.

Foreign investors no longer believe the program can halt Japan’s three-decades-long decline. Almost daily, they receive reports of a deteriorating economy, and watch the Bank of Japan’s stimulus backfires only to send the yen rising, which in turn hurts exporters.

When Abenomics was introduced in 2013, consumer prices steadily rose toward the BOJ’s goal of 2% inflation until mid-2014. It also sent Japanese shares to an eight-year high. Now about half of those gains are gone.

Today there’s little sign of inflationary pressure in Japan. Prices in February didn’t rise, wage growth is slow and the economy contracted last quarter.

“We’re about to see a world where everything achieved through the BOJ’s easing will vanish,” Hitoshi Ishiyama, chief strategist at Sumitomo Mitsui in Tokyo told Bloomberg. “The lack of trust in Abenomics, zero results from the BOJ’s stimulus, risks of sliding profits from a stronger yen — it’s not surprising foreign investors will want to re-evaluate their investments in Japanese stocks.”

Surprisingly, the things that have helped other equities markets around the world have hurt Japan. The US Federal Reserve Bank’s cautious tone on interest rates helped the Standard & Poor’s 500 Index recover most of its losses since the beginning of the year. At the same time, it weakened the dollar and pushed up the yen. Investors who have been worried about global growth have actually been buying the Japanese currency in a flight to safety. The yen is now trading near its strongest level since October 2014.

Even BlackRock, the world’s largest money manager, has stopped putting out bullish calls on Japan equities.

Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui Asset Management, told Bloomberg he fears a downward spiral. Foreign investors are needed to boost the stock market, and if equities don’t rise the public will lose confidence and curb spending, as he sees it. That could send Japan back into deflation.

According to a Merrill Lynch survey, overweight positions on Japanese stocks fell for a third straight month in March, with investors’ outlook on the economy dimming and concern over earnings growing. They’ve sold a net 5 trillion yen since the second week of January, the longest stretch since 16 weeks of selling in 1998 and the most in records going back to 1993.


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Obama’s Biggest Mistake Isn’t Libya. It’s Syria.

By Josh Rogin
The Bloomberg View
April 11, 2016


President Barack Obama said Sunday that his biggest mistake as president was failing to plan for the day after the fall of the Qaddafi regime in Libya. But as bad as Libya looks today, Syria is faring far worse, in part because of the Obama administration’s failings -- which the president has not yet acknowledged.

On Libya, Obama regrets not staying engaged “after what I think was the right thing to do in intervening,” he said on “Fox News Sunday.” It’s worth noting that at the time, the White House was proud of the approach it took during the 2011 Libya intervention, which centered around sharing the burden with European allies, avoiding the deployment of U.S. ground troops, and leaving the toppling of Qaddafi as well as the political and physical reconstruction to Libyans.

“While there will be huge challenges ahead, one of the positive aspects here is that the Libyans are the ones who are undertaking the regime change and the ones leading the transition,” Deputy National Security Adviser Ben Rhodes told me in 2011.

Rhodes explained that the principles of burden sharing and letting indigenous forces take the lead were “characteristics of how the president approaches foreign policy and military intervention.” A White House staffer later called that approach “leading from behind.”

The Libya intervention, which was heavily supported by Hillary Clinton when she was secretary of state, is now derided because five years on, Libya is still struggling to establish stability and democracy. Militias have failed to yield power, a shaky unity government has yet to gain widespread legitimacy, and the Islamic State is expanding on the ground.

But Libya is faring better than Syria, which is also five years into its Arab Spring revolution, only without a U.S. or NATO-led military intervention. Whereas Libya may have as many as 6,000 Islamic State soldiers, in Syria there are 20,000 to 30,000 Islamic State fighters, according to the CIA. Human rights groups on the ground estimate as many as 50,000.

More important, Syria and Iraq represent the Islamic State’s core, where they control major cities and from where they export their ideology and fighters to places like Libya. Syria is also where terror operations in Europe are prepared; the attackers in Paris and Brussels were trained in Syria, not Libya.

Politically, Libya is faring much better than Syria. After a long negotiation led by the U.N., a Government of National Accord is working to consolidate power. Success is not assured, but there is a clear path forward, a growing consensus around that path, and a reasonable chance of real political reconciliation.

In Syria, the ongoing Geneva talks show few signs of solving the crisis. Under the best scenario, President Bashar al-Assad would stay in power for as long as 18 more months until elections can be held, and he might stand in those elections. A more realistic assessment is that the Assad regime will not concede any power and will continue attacks on civilians for years.

When he decided to attack the Qaddafi regime in 2011, the reason President Obama gave was that intervention was necessary to prevent Qaddafi from perpetrating genocide against the civilians in Benghazi.

“If we waited one more day, Benghazi, a city nearly the size of Charlotte, could suffer a massacre that would have reverberated across the region and stained the conscience of the world,” Obama said after he decided to attack. “It was not in our national interest to let that happen. I refused to let that happen.”

Today, Libyan civilians are much better off than their Syrian counterparts. The Assad regime’s campaign of airstrikes and starvation sieges has decimated cities larger than Benghazi. At least 300,000 civilians have been killed. Over 10,000 were tortured while in the custody of the regime. Twelve million have been internally displaced. Four million have fled Syria, flowing into neighboring countries and Europe, spreading destabilization well beyond Syria’s borders. In Libya, about 1,500 people died as a result of the fighting last year.

In his recent interview with The Atlantic, President Obama boasted about his resolve in avoiding more American involvement in the Syrian crisis. He said that in Syria, he had resisted following the “playbook in Washington,” that comes out of “the foreign policy establishment.” He called that playbook a trap that leads to bad decisions.

At various times, Obama and his aides have given several other reasons why Libya was a good place to intervene but Syria was not. In Libya there was a United Nations and NATO agreement to attack. Libya was a more manageable mission. Qaddafi didn’t have strong backers in Russia and Iran.

All these facts miss a larger point. Syria is more important strategically and symbolically. Syria’s failure more directly impacts American national security interests and those of our allies, especially Turkey and Israel. And rebuilding Syria someday will cost the international community hundreds of billions of dollars.

Another difference between Libya and Syria for future U.S. presidents will be America’s influence there. Whatever happens in Libya, there will be some residual goodwill toward the U.S. and a recognition that when civilians were in danger of being slaughtered, America chose to not to look the other way. Not so in Syria, where an entire generation of young people are growing up in a war zone, feeling abandoned by the leading nations of the world.

In terms of what’s good for the U.S. national interest, the region, and the world, President Obama’s Libya policy, while imperfect, was hugely more successful than his Syria policy. Even leading from behind to solve a problem is better than leading a policy that allows the problem to spiral dangerously out of control.


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