President insists wealthy must pay their share and says he will not extend Bush-era tax cuts for wealthiest 2% of Americans
Barack Obama adopted a tougher approach to the fiscal cliff showdown on Wednesday when he made an unequivocal pledge that he will not cave in to Republican demands for tax cuts for the wealthy.
Apparently emboldened by his election victory and free from the pressure of another campaign, Obama told a White House press conference that while almost everything else was up for discussion, the wealthiest Americans would have to pay their share.
During last year’s showdown with Republican leaders in Congress that almost brought Washington to a standstill, Obama was forced to accept a compromise just days before Christmas that included extending tax cuts for the richest Americans, introduced by George W Bush.
Asked at the press conference if he could offer an assurance that he would not cave in again, Obama said: “What I said at the time is what I meant. Which is: this was a one-time proposition. What I have told leaders privately as well as publicly is that we can not afford to extend the Bush tax cuts for the wealthy.”
The press conference was his first formal, televised appearance before the White House press corps in eight months. He used it to take a swipe at two senior Republican senators, John McCain and Lindsey Graham, who criticised the UN ambassador, Susan Rice, over comments she made about the September 11 attack on the US consulate in Benghazi.
He also addressed the scandal over General David Petraeus for the first time in detail, said that tackling climate change would be a priority in his second term, and promised to press ahead with immigration reform.
One of the biggest criticisms of Obama in his first term from fellow Democrats is that he was too passive in dealing with Republicans and failed to show sufficient leadership.
Speaking in the East Room of the White House, Obama was more confident in dealing with the media than some of his laboured performances in the past. He indicated that he understood the criticisms of his first term: “I hope and intend to be a better president in the second term than I was in the first,” he said.
Democrats in Congress as well as many activists and supporters regard the tax issue as a touchstone. Many of them were dismayed that Obama appeared to be too passive, and at times too willing to bend, in his dealings with Republicans in Congress over the last two years. But given the unequivocal nature of his comments on Wednesday, Obama will find it hard to row back from his promises on tax.
The Republican leader in the House, John Boehner, and other senior members of the party have adopted a more conciliatory tone since the election. But they have gone on to say that they remain opposed to any tax rises for the wealthy.
At the press conference, Obama reiterated that there were only two options facing the nation on January 1: either everyone’s taxes go up, or just those of the top-earning 2% of Americans.
Although he repeated he was seeking compromise with the Republicans, Obama combined with this with a new-found air of determination not to bend on the 2%. He is putting the pressure on the Republicans in a way he failed to so last year, suggesting that if everyone faces tax rises on 1 January, it will be the GOP’s fault.
Obama is seeking a quick bill before Christmas to guarantee that taxes will not go up for the the other 98%. “What we can do is make sure that middle-class taxes don’t go up. And so the most important important step we can take right now – and I think the foundation for a deal that helps the economy, creates jobs – is if right away that 98% of Americans are not going to see their taxes go up, 97% of small businesses are not going to see their taxes go up.
“If we get that in place, we are actually removing half the fiscal cliff. Half of the danger to our economy is removed by that single step.”
The showdown has potential ramifications beyond just the next few months.
If Obama can win this confrontation, it might make it easier to get other legislation through over the next two years until the mid-term congressional elections. If he does not, Republicans, who retain control of the House, will feel more confident of being able to fend off other legislative initiatives.
Obama said that as long as the tax cuts for the top 2% were dealt with, he was open to discussion of the whole tax system, particularly loopholes, and – a contentious point for some Democrats – consider serious reform of entitlements, in particular health costs.
“There is a package to be shaped, and I am confident that folks of goodwill in both parties can make it happen. But what I am not going to do is extend Bush tax cuts for the wealthiest 2% that we can’t afford and, according to economists, have the least impact on our economy.”
He added: “I want a big deal, a comprehensive deal.”
Reflecting his new-found confidence, Obama rounded on McCain and Graham for a press conference at Congress earlier in the day in which they said they would block any attempt by the president to nominate Rice as secretary of state in place of Hillary Clinton, because of what they claim is a misleading account she gave of the Benghazi attack.
Obama accused them of “besmirching” her with their “outrageous” comments. He told the press conference he would nominate whoever he wanted as secretary of state.
On immigration, which most Republicans have long opposed but which they might now be willing to consider given the importance of Latinos in the election, Obama promised reform “very soon” after his inauguration on January 21.
“I am very confident we can get immigration reform done,” he said. He wanted to “seize the moment”, adding that he was “already seeing signs” that some Republicans are beginning to come round.
He favoured strong border controls and a pathway to legal status for those already living in the US, provided they paid taxes and were not engaged in criminal activity.
One of the biggest foreign policy challenges in his second term is Iran, and Obama said there is still a window for a diplomatic solution, insisting he will push for dialogue between Iran and the US and other countries. He denied a pre-election report that the US would engage in direct, one-to-one talks with Iran.
On Syria, he said the US is not yet ready to recognise the coalition of rebels that has just been formed as an alternative government. He would not go beyond describing them as representing the “legitimate” aspirations of the Syrian people. His concern was that extremists elements might infiltrate the coalition and he did not want to supply arms that might then be used against Americans.
Obama hinted again at a possible role for his Republican challenger, Mitt Romney, praising his handling of the 2002 Winter Olympics in Salt Lake City and acknowledging that he had good ideas on the campaign trail. But he added: “I am not suggesting I have a specific assignment.”
As an oil industry whistleblower, I know the energy sector is even more flawed than this week’s exposé of gas prices reveals
The Guardian’s investigation into the alleged “Libor-like” fixing of UK gas prices was doubly ironic for me. The first irony is that, as director of compliance and market supervision of the International Petroleum Exchange (now ICE Futures Europe) in the 1990s, I was heavily involved in the development and legal architecture of the gas-market contract that has now allegedly been manipulated.
The second painful irony is that in 2000 the Guardian published detailed allegations made by me on very similar micro-manipulation of the International Petroleum Exchange’s Brent futures contract-settlement prices. This systemic manipulation was so pervasive that traders referred to the on-exchange profits they made at the expense of the manipulators – who profited “off-exchange” – as “grab a grand”.
Unfortunately, I described the manipulation as “systematic” – taken to mean that some of the players were routinely manipulating the price most of the time – rather than “systemic”, where most of the players manipulate the market some of the time. On this basis the commissioner appointed to investigate my allegations rejected them, and in finest whistleblower tradition my reputation was destroyed: I lost my livelihood, home and marriage. Had the crude oil market been properly investigated at that time, subsequent oil market history would probably have been very different.
One thing I have come to realise since my failed attempt at whistleblowing is that the short-term trading exposed this week is only part of the problem. The malaise runs much deeper. If you want to find out who really has an interest in rigging the market, ask who benefits from medium- and long-term high commodity prices: it’s the producers, stupid. From De Beers’ diamond hoarding to coffee-grower cartels, if the history of commodity markets tells us anything it’s that if producers can find leverage to support commodity prices, they will.
The real problem in the energy market lies not with gas, but crude oil – which is suffering perhaps the greatest market manipulation the world has seen. This is due to financialisation of markets which began in crude oil about 12 years ago, but only became significant from around 2005 onwards. From the mid-90s, a new type of investor entered the markets as investment banks created new vehicles – index funds, exchange traded funds and so on – which enabled investors to invest directly in equities, precious metals; commodities generally and above all, in energy, with a view to “hedging inflation”. Rather than speculatively taking a risk in search of a profit, they sought only the return of their capital, and the preservation of the value of their investment relative to dollars, sterling and so on.
To understand what happened to oil, we just need to look at the Enron scandal. The fundamental scam perpetrated here was based on an ancient financing method known as “prepay”. Quite simply, this occurs when producers sell their product at a discount for cash now, with delivery later. So via intermediary banks such as JP Morgan and Citigroup, Enron were able to opaquely obtain “off-balance sheet” financing disguised as commodity trades of which Enron’s investors and creditors were blithely unaware.Essentially, Enron was borrowing dollars and lending commodities.
A similarly opaque prepay technique has been responsible since 2005 for the inflation of two oil market bubbles. The first – a private sector bubble – culminated in July 2008 in a spike to $147 a barrel, and then a collapse to $35, causing great pain to producers used to high prices. At this point key producers – facilitated by friendly investment banks – resorted to prepay to finance themselves, and a public sector bubble was rapidly inflated during 2009.
In my analysis, the US and Saudis then hit upon a strategy that loosely “pegged” the oil price against the dollar within an agreed trading range, keeping prices relatively stable. But this trick only worked until early 2011, after which Fukushima and supply shocks in Libya and Iran have caused more turmoil.
I believe that there is now virtually nothing holding the oil market up, and that when (not if) Iran reaches an accommodation with the US on terms similar to those spurned by Dick Cheney in 2003, we will see the oil market price fall, possibly dramatically.
I have been warning for some time that risk-averse investors – whose very presence in the market causes the inflation they wish to avoid – are taking a much higher level of market risk than they appreciate. If I am correct, this will – sooner rather than later – give rise to the next Great Regulatory Disaster.
Perhaps worse than this, and particularly relevant to my work on financial market resilience, there is a significant risk of the sort of discontinuity in market price that took place in the tin market in 1985 when the market price collapsed overnight, from the price level supported by producer cartel stockpiling of $8,000 a tonne to the much lower price of $4000 a tonne, which reflected the influx of new low-cost tin supply.
The presence in the market of middlemen who have an interest in volatility and opacity means that we have now reached a stage where market manipulation is no longer an aberration: the market is the manipulation.
So what can be done? In the long term, crude oil prices can only go up, and many would argue that for the sake of the environment it is essential that carbon fuel prices are set at levels at which demand is low. The problem then is how best to distribute interationally and domestically the surplus value thereby created, in particular in investment in renewable energy, and above all in the cheapest energy of all – energy savings.
This will require a new (in fact very old) – and non-toxic – type of market architecture, and the good news is that this are already emerging as the current market paradigm approaches its end.
Sooner or later the Arab despots David Cameron is selling arms to will fall, and the states that backed them will pay the price
On the nauseating political doublespeak scale, David Cameron’s claim to “support the Arab spring” on a trip to sell weapons to Gulf dictators this week hit a new low. No stern demands for free elections from the autocrats of Arabia – or calls for respect for human rights routinely dished out even to major powers like Russia and China.
As the kings and emirs crack down on democratic protest, the prime minister assured them of his “respect and friendship”. Different countries, he explained soothingly in Abu Dhabi, needed “different paths, different timetables” on the road to reform: countries that were western allies, spent billions on British arms and sat on some of the world’s largest oil reserves in particular, he might have added by way of explanation.
Cameron went to the Gulf as a salesman for BAE Systems – the private arms corporation that makes Typhoon jets – drumming up business from the United Arab Emirates, Saudi Arabia and Oman, as well as smoothing ruffled feathers over British and European parliamentary criticism of their human rights records on behalf of BP and other companies.
No wonder the prime minister restricted media coverage of the jaunt. But, following hard on the heels of a similar trip by the French president, the western message to the monarchies was clear enough: Arab revolution or not, it’s business as usual with Gulf despots.
The spread of protest across the Arab world has given these visits added urgency. A year ago, in the wake of the uprisings in Tunisia and Egypt, it seemed the Gulf regimes and their western backers had headed off revolt by crushing it in Bahrain, buying it off in Saudi Arabia, and attempting to hijack it in Libya and then Syria – while successfully playing the anti-Shia sectarian card.
But popular unrest has now reached the shores of the Gulf. In Kuwait, tens of thousands of demonstrators, including Islamists, liberals and nationalists, have faced barrages of teargas and stun grenades as they protest against a rigged election law, while all gatherings of more than 20 have been banned.
After 18 months of violent suppression of the opposition in Bahrain, armed by Britain and America, the regime has outlawed all anti-government demonstrations. In western-embraced Saudi Arabia, protests have been brutally repressed, as thousands are held without charge or proper trial.
Meanwhile, scores have been jailed in the UAE for campaigning for democratic reform, and in Britain’s favourite Arab police state of Jordan, protests have mushroomed against a Kuwaiti-style electoral stitchup. London, Paris and Washington all express concern – but arm and back the autocrats.
Cameron insists they need weapons to defend themselves. When it comes to the small arms and equipment Britain and the US supply to Saudi Arabia, Bahrain and other Gulf states, he must mean from their own people. But if he’s talking about fighter jets, they’re not really about defence at all.
This is effectively a mafia-style protection racket, in which Gulf regimes use oil wealth their families have commandeered to buy equipment from western firms they will never use. The companies pay huge kickbacks to the relevant princelings, while a revolving door of political corruption provides lucrative employment for former defence ministers, officials and generals with the arms corporations they secured contracts for in office.
Naturally, western leaders and Arab autocrats claim the Gulf states are threatened by Iran. In reality, that would only be a risk if the US or Israel attacked Iran – and in that case, it would be the US and its allies, not the regimes’ forces, that would be defending them. Hypocrisy doesn’t begin to describe this relationship, which has long embedded corruption in a web of political, commercial and intelli gence links at the heart of British public life.
But support for the Gulf dictatorships – colonial-era feudal confections built on heavily exploited foreign workforces – is central to western control of the Middle East and its energy resources. That’s why the US has major military bases in Kuwait, Qatar, the UAE, Oman and Bahrain.
The danger now is of escalating military buildup against Iran and intervention in the popular upheavals that have been unleashed across the region. Both the US and Britain have sent troops to Jordan in recent months to bolster the tottering regime and increase leverage in the Syrian civil war. Cameron held talks with emirates leaders this week about setting up a permanent British military airbase in the UAE.
The prime minister defended arms sales to dictators on the basis of 300,000 jobs in Britain’s “defence industries”. Those numbers are inflated and in any case heavily reliant on government subsidy. But there’s also no doubt that British manufacturing is over-dependent on the arms industry and some of that support could usefully be diverted to, say, renewable technologies.
But even if morality and corruption are dismissed as side issues, the likelihood is that, sooner or later, these autocrats will fall – as did the Shah’s regime in Iran, on which so many British and US arms contracts depended at the time. Without western support, they would have certainly been toppled already. As Rached Ghannouchi, the Tunisian leader whose democratic Islamist movement was swept to power in elections last year, predicted: “Next year it will be the turn of monarchies.” When that happens, the western world risks a new backlash from its leaders’ corrupt folly.
Addressing an influential gathering of the Jewish community at an event in London, Prime Minister David Cameron defined what he perceives as the three key steps to secure Israel’s future: standing up to Iran, seizing the opportunities presented by the Arab Spring to spread democracy and making the hard choices needed to resolve Israel’s conflict with the Palestinians. Read the speech in full.
Speaking on the day that the European Union (EU) agreed to increase the pressure on Iran with another package of sanctions, the Prime Minister expressed his belief that the sanctions should be given time time to work. Mr Cameron added that- in the long term- if Iran does not address the concerns of the international community, “nothing is off the table”.
Mr Cameron said:
“Let’s be clear about the facts. Iran is flouting six United Nations resolutions.The Regime’s claim that its nuclear programme is intended purely for civilian purposes is not remotely credible. And it has shown its violent agenda by exporting terror and violence to Iraq, to Syria, to Gaza, to Lebanon and to many peace-loving countries across the world.
“Iran is not just a threat to Israel. It is a threat to the world. Now there are some who say nothing will work – and that we have to learn to live with a nuclear armed Iran. I say we don’t and we shouldn’t.But at the same time I also refuse to give in to those who say that the current policy is fatally flawed, and that we have no choice but military action.
“A negotiated settlement remains within Iran’s grasp for now. But until they change course, we have a strategy of ever tougher sanctions. Just today, Britain has secured a further round of new sanctions through the EU Foreign Affairs Council. And these relentless sanctions are having an impact no-one expected a year ago.
“They have slowed the nuclear programme. Iranian oil exports have fallen by 45 per cent. That’s 1 million fewer barrels a day. And $8 billion in revenues lost every quarter. The Rial has plummeted – losing around half its value between May and September. Inflation is soaring – thought to be as much as 50 per cent. And the Iranian Regime has had to establish an economic austerity taskforce to manage the pressure they have brought on their own people.
“Most significantly, there are signs that the Iranian people are beginning to question the Regime’s strategy with even pro-regime groups protesting at the actions of the Government. It’s mind boggling that the leaders of a nation so rich in oil have succeeded in turning their country into a banana republic desperately trying to put rockets into space while their people suffer.
“The Iranian regime is under unprecedented pressure and faces an acute dilemma. They are leading their people to global isolation and an economic collapse. And they know it.
“They know too that there is a simple way to bring sanctions to an end – by giving the international community the confidence we need that they are not and will not develop a nuclear weapon.
“I have said to Prime Minister Netanyahu that now is not the time for Israel to resort to military action. Beyond the unpredictable dangers inherent in any conflict, the other reason is this: at the very moment when the Regime faces unprecedented pressure and the people are on the streets; and when Iran’s only real ally in Syria is losing his grip on power, a foreign military strike is exactly the chance the Regime would look for to unite his people against a foreign enemy. We shouldn’t give them that chance.
We need the courage to give these sanctions time to work.
“But let me also say this. In the long term, if Iran makes the wrong choice, nothing is off the table. A nuclear armed Iran is a threat to Israel. And a threat to the world. And this country will work unwaveringly to prevent that from happening.”
Speaking about the Arab Spring, Mr Cameron said that it presents huge challenges but added:
”If we can show the strength and courage to engage with new democratic governments, their chance to establish the building blocks of democracy, fair economies and open societies offers the greatest opportunity for stability and peace in a generation.”
And on relations with Palestine the Prime Minister said:
“I know how hard the concessions needed for peace can be. But the truth is, time is running out for a two state solution – and with it Israel’s best chance to live in peace with its neighbours.”
Mr Cameron concluded by stating that Britain will always stand by Israel, protect Israel, and work with Israel on the path to peace:
“For now, Israel will continue to face acute threats and a hard road to peace. But with strength and courage we can, together, stand up to Iran. We can, together, seize the opportunities presented by the spread of democracy in the wider region. And we can together take the hard choices needed to resolve the conflict with the Palestinians.”
Iran faces more punitive measures against banking and energy sectors as EU tries to close loopholes over nuclear programme
The EU has tightened its sanctions against Iran by imposing stricter measures targeting the country’s banking, trade and energy sectors.
The new punitive package, which includes an embargo on Iranian natural gas, was agreed at the EU foreign affairs council in Luxembourg on Monday. Its aim is to close major loopholes that allow Iran to circumvent sanctions and secure funds for its disputed nuclear programme.
“The EU has today increased the pressure on Iran through another substantial package of sanctions,” said Britain’s foreign secretary, William Hague, who along with his French and German counterparts called for tighter sanctions last month.
“These are a direct response to Iran’s continued refusal to take concrete steps to address our concerns about its nuclear programme.”
The west suspects a military dimension to Tehran’s nuclear activities, but Iran has remained adamant in saying the programme is only for peaceful purposes.
The White House welcomed the new EU sanctions, with press secretary Jay Carney saying: “Rallying the world to isolate Iran and increasing the pressure on its leadership so that they stop pursuing a nuclear weapon has been a top priority for the president.”
The move “further strengthens international efforts to pressure and isolate the Iranian government”, Carney added.
Six UN security council resolutions call on Iran to halt enriching uranium, address questions about its nuclear programme and be more transparent. Despite this, Iran has defied sanctions and threats of an Israeli military strike by continuing to enrich uranium. Meanwhile, talks between Tehran and world’s major powers have reached stalemate.
“[Iran] is enriching uranium on a scale that has no plausible civilian justification and increasing its enrichment capacity at a heavily protected site that it originally sought to keep secret,” Hague said.
“Today we have taken steps to prohibit financial transactions with Iranian banks, to intensify restrictions in the energy sector and to limit some areas of trade, in order to choke off revenue that Iran is using for its nuclear programme, prevent it from accessing materials for the programme, and prevent it from circumventing existing sanctions.”
The EU has imposed an embargo on the imports of Iranian oil – among other measures – since July.
Iran’s supreme leader, Ayatollah Ali Khamenei, addressing crowds in the north-eastern city of Shirvan on Monday, said enemies would not be able “to disrupt the calmness in the country”. Last week, he described western sanctions as “barbaric” and “a war against a nation”.
The new banking measures prohibit any transactions with Iranians banks and financial institutions unless specifically authorised or exempted, such as for humanitarian purposes.
Iran will also face a ban imposed on the purchase, import and transport of its natural gas. The sanctions prohibit the construction of oil tankers for Iran, the flagging and classification of Iranian oil tankers and cargo vessels.
Hague warned “the choices being made by Iran’s leaders are already having a profound impact,” a possible reference to Iran’s recent financial problems. Earlier this month, its currency, the rial, was sent into a tailspin, hitting an all-time low.
Trita Parsi, president of the National Iranian American Council, reacted to the news by drawing a comparison between “the important principle” the EU had adopted and the one the UN had settle on with sanctions against Iraq. “With Iraq, that of course ended up with 500,000 Iraqi children dead, resulted in the shortage of medicine, and other needs, and ended up ultimately to forceful invasion and war.”.
Referring to continuing pressure on Iran from the west, Parsi said: “There’s nothing peaceful about economic warfare at the end of the day and particularly when the embargo is as broad as this is, everything is forbidden unless explicitly permitted, that’s the opposite of smart sanctions, when you don’t have smart sanctions, you have economic warfare
“The EU says this is aimed at getting Iran back to negotiate more seriously, to be frank it appears not to be about getting Iran to negotiate seriously but rather getting Iran to capitulate quickly.”
Police use teargas and batons on demonstrators and Tehran bazaar closes as value of rial plunges
Hundreds of demonstrators in the Iranian capital clashed with riot police on Wednesday, during protests against the crisis over the country’s currency. Police used batons and teargas to try to disperse the crowds.
The day after President Mahmoud Ahmadinejad appealed to the market to restore calm, the Grand Bazaar – the heartbeat of Tehran’s economy – went on strike, with various businesses shutting down and owners gathering in scattered groups chanting anti-government slogans in reaction to the plummeting value of the rial, which has hit an all-time low this week.
“Mahmoud [Ahmadinejad] the traitor … leave politics,” shouted some protesters, according to witnesses who spoke to the Guardian. Other slogans were “Leave Syria alone, instead think of us,” said opposition website Kaleme.com.
Iran’s alleged financial and military support for the regime of Bashar al-Assad appears to have infuriated protesters in the wake of the country’s worst financial crisis since the Iran-Iraq war in the 1980s.
Angry protesters and foreign exchange dealers were demonstrating near the bazaar in the south of the capital, where many exchange bureaux are located.
“The Bazaaris shouted ‘Allahu Akbar’ [God is great] as they closed down their shops in the morning,” said a witness. “It’s impossible to do business in the current situation.” Amateur videos posted on YouTube which appeared to have been taken from Wednesday’s protests, showed demonstrators encouraging Bazaaris to close down shops in solidarity. Security forces were soon sent to quell the protests.
“They used teargas to disperse demonstrators in Ferdowsi Street and also blocked the streets close to the protests in order to prevent people joining them,” said another witness, who asked to remain anonymous. “Some shop windows in that area have been smashed and dustbins set on fire.” A number of demonstrators had been arrested, according to Kaleme.
A bazaar official, Ahmad Karimi Esfahani, denied that the “turbulences” were linked to the business owners, claiming said shops were closed for security reasons and not as part of a strike. “The bazaar will open tomorrow as normal,” he told the semi-official Ilna news agency. A conservative website, Baztab, described the clashes as “suspicious”, denying Bazaaris were involved.
The devaluation of the rial and soaring prices of staple goods are the latest signs that western sanctions – targeting the regime’s nuclear programme – and government mismanagement are compounding the country’s economic woes.
On Wednesday, many foreign exchange dealers and bureaux across the country refused to trade dollars and some currency-monitoring websites refused to announce exchange rates.
Some Iranians expressed anger on social networking websites over the national TV blackout of the protests, saying it discussed the European financial crisis with little if any coverage of Tehran’s unrest. The authorities were also reported to have jammed signals of the BBC’s Persian service as the protest unfolded.
The government has failed to bring the rial under control despite several attempts. It has lost 57% of its value in the past three months and 75% in comparison with the end of last year. The dollar is now three times stronger than early last year. The economy minister, Shamseddin Hosseini, said the government planned to “gather up” the unofficial currency market in the latest desperate ditch to curb the crisis.
On Tuesday Iranian authorities announced they would send security services to calm the market but Wednesday’s developments appear to show that the move has backfired.
Ahmadinejad was bombarded with questions about the currency crisis on Tuesday as he spoke to reporters in a press conference but the embattled president, who is under fire from his conservative rivals, rejected the suggestion that it was the result of his economic policies or government incompetence.
Instead, he blamed the rial’s slump on his enemies abroad and opponents at home, saying his government was the victim of a “psychological war”. Ahmadinejad acknowledged western sanctions have contributed to the crisis.
An opinion poll posted on a conservative website, Khabaronline.ir, showed that more than 90% of those participated were not convinced with Ahmadinejad’s responses on Tuesday.
Iran’s supreme leader, Ayatollah Ali Khamenei, speaking to elites on Wednesday, said the country was under pressure because “it did not yield to the demands of tyrannies”.
Iran is one of the world’s largest oil producers and relies on crude sales as the main source of its the foreign currency reserves. The latest US and EU embargo on the imports of Iranian oil has affected that reserve, sending the rial tailspinning and making the dollar hard to come by.
Commenting on Iran’s currency slump, the US secretary of state, Hillary Clinton, said that sanctions could be “remedied” swiftly if Tehran were cooperating with the international community to address the questions about its disputed nuclear programme.
“They have made their own government decisions – having nothing to do with the sanctions – that have had an impact on the economic conditions inside of the country,” Clinton told reporters.
“Of course the sanctions have had an impact as well, but those could be remedied in short order if the Iranian government were willing to work with the P5+1 [the five security council members plus Germany] and the rest of the international community in a sincere manner,” she added.
Israel’s prime minister tells UN general assembly that Iran is more than 70% of the way to producing a nuclear weapon
Israel’s prime minister, Binyamin Netanyahu, called on the international community on Thursday night to set a “clear, red line” to stop the progress of the Iranian nuclear programme, which he claimed was little more than a year away from making its first bomb.
In a demonstration of his fears, he presented the UN general assembly in New York with a crude diagram of a bomb with a burning fuse and used a red marker pen to indicate where he thought the line should be drawn.
Netanyahu argued that the Iranians, by producing tonnes of low-enriched uranium and beginning to make medium-enriched uranium, were well over 70% of the way to producing a nuclear weapon. By as early as next summer, he said, they would be 90% of the way to that goal. He drew his red line along that 90% line.
“I believe that, faced with a clear red line, Iran will back down,” the Israeli leader said, arguing that would give more time for sanctions and diplomacy to work towards the dismantling of the Iranian programme.
Netanyahu has attempted, without success, to persuade the Obama administration to agree to such red lines. US officials have rejected his proposal, arguing that such a declaration would represent an invitation to Iran to develop its programme up to that line and would limit the president’s choices at a critical moment. Iran denies that its programme is intended for making weapons.
There has been considerable speculation in the past few months that Israel might take unilateral military action aimed at setting back the Iranian programme. That threat appears to have receded with Netanyahu’s presentation, which put the “red line” back into next year. Obama has said that he would not allow Iran to build nuclear weapons and US intelligence has found no evidence that Iran has made a political decision to build such weapons.
Netanyahu sought to counter US arguments that the world would have notice of any Iranian attempt to put a warhead together. He said a nuclear detonator could be made in a workshop the size of a classroom, and a warhead could be assembled in a small space that would also be very hard to find in a country the size of a large part of Europe. He said that although he had great faith in his intelligence agencies, the security of the planet could not be made dependent on them finding such a facility in such a vast area.
Therefore, he argued, the red line had to be drawn on the Iranian uranium enrichment programme, which requires large plants. “Iranian plants are visible and they are still vulnerable,” Netanyahu said.
He rejected suggestions that a nuclear-armed Iran could be contained, claiming that there was no real difference between contemplating a nuclear-armed Iran and a nuclear-armed al-Qaida, as both were dangerous terrorists.
Netanyahu devoted almost all his UN address to the Iranian nuclear threat, and only a couple of minutes to the Israeli-Palestinian conflict. Some European and US officials have conceded that by his increasingly dire warnings about the Iranian programme, the Israeli leader may not have persuaded the US to take military action but he has succeeded to marginalising the plight of the Palestinians, significantly reducing the international pressure on him to stop the spread of Jewish settlements across occupied Palestinian territory.
Barely an hour before Netanyahu took the lectern, the Palestinian leader, Mahmoud Abbas, addressed the general assembly and accused the Israeli government of carrying out a campaign of “ethnic cleansing” by the demolition of Palestinian homes in East Jerusalem.
However, in a reflection of Palestinian weakness in the current international climate, he put off a call for Palestine to be granted observer status at the UN, saying only that consultations were under way to that end. Palestinian officials said that a vote might take place in November.
Facing the diplomats at the UN general assembly, he asked that if Iran succeeded in making a nuclear weapon, “who among of you would feel safe in the Middle East? Who would be safe in Europe? Who’d be safe in America? Who’d be safe everywhere?”
Western governments have significantly increased sanctions on Iran this year because of its continued refusal to heed security council calls to suspend uranium enrichment, and because of its failure so far to explain evidence presented by inspectors from the International Atomic Energy Agency (IAEA) of past experimentation with nuclear weapons design.
Netanyahu argued that the sanctions, which include a EU embargo on purchasing Iranian oil, had badly damaged the Iranian economy but had not slowed the progress of the nuclear programme. Therefore, he said, the setting of red lines was the last peaceful means of stopping it.
“The hour is getting late, very late,” he said. “The Iranian nuclear calendar doesn’t take time out for anyone or anything. Its not only my right to speak out, it’s my duty to speak out.”
Group pledging retaliation for controversial online video claims it has targeted several US banks
US banking company Wells Fargo is believed to have become the latest victim of a cyber-attack launched by a group pledging retaliation for the controversial Innocence of Muslims video that has triggered anger and violence across the Muslim world.
A group calling itself Izz ad-Din al-Qassam Cyber Fighters has claimed responsibility for the online attacks on US banks in protest against the online video. The attacks were launched last week under the name Operation Ababil, meaning “swarm”, and have already affected banks including JP Morgan and Bank of America.
Wells Fargo acknowledged via Twitter that its website was having difficulties. The website Sitedown.co received hundreds of complaints from customers who were locked out of Wells Fargo’s website on Wednesday.
Bank of America and JP Morgan were targeted on Tuesday, leading to widespread complaints from customers unable to access their accounts online. Sitedown received nearly a 1,000 complaints about outages at JP Morgan’s site last week.
Dmitri Alperovitch, chief executive of CrowdStrike, a private security firm investigating the attacks, known as denial of service or DDoS, said: “It’s important to note that nobody’s information has been compromised and no data has been stolen.”
Alperovitch said the group claiming responsibility also launched attacks in early summer, long before the release of the video. “We believe claiming this has something to do with the video is a ruse,” he said.
He said the attacks, while not sophisticated, were massive in scale and well co-ordinated. Some of the attacks have flooded the bank’s websites with information at up to 100 gigabits a second; the usual DDoS attack is in the order of 5-10 gigabits a second.
Senator Joe Lieberman blamed Iran last week for the recent cyber-attacks. “I believe it was a response to increasingly strong economic sanctions the US and its allies have put on Iranian financial institutions. It is, if you will, a counterattack by Iran against American financial institutions,” he told C-Span.
Alperovitch said he had not seen anything that would confirm or deny Lieberman’s allegations.
US policy change on banned Iranian group came after extraordinary fundraising operation to transform its image
To the US government, the People’s Mojahedin Organisation of Iran (MEK) was a terrorist group alongside al-Qaida, Hamas and the Farc in Colombia. The MEK landed on the list in 1997 with American blood on its hands and by allying itself with Saddam Hussein along with a long list of bombings inside Iran.
But the organisation is regarded very differently by a large number of members of Congress, former White House officials and army generals, and even one of the US’s most renowned reporters, Carl Bernstein. They see the MEK as a victim of US double dealings with the regime in Tehran and a legitimate alternative to the Iran’s Islamic government.
That difference is in no small part the result of a formidable fundraising operation and campaign to transform the MEK’s image led by more than 20 Iranian American organisations across the US. These groups and their leaders have spent millions of dollars on donations to members of Congress, paying Washington lobby groups and hiring influential politicians and officials, including two former CIA directors, as speakers.
In a highly sensitive political game, MEK supporters have succeeded in pressing the state department into removing the group from the list of terrorist organisations after winning a court order requiring a decision to be made on the issue before the end of this month. But its supporters were forced to tread a careful path so as not to cross anti-terrorism laws.
Only a few years ago, the US authorities were arresting pro-MEK activists and freezing the assets of front groups for “material support for a terrorist organisation”. Now members of Congress openly praise the group in apparent contradiction of the anti-terrorism legislation many of them supported. Nearly 100 members of the House of Representatives backed a resolution calling on the US government to drop the MEK from the terrorist list.
At the forefront of the campaign are several Iranian American organisations across the US. They are:
• The Iranian American Society of Texas. It paid more than $110,000 in fees last year to a Washington lobby firm, DiGenova & Toensing, to campaign for the lifting of the ban on the MEK and the protection of its supporters still in camps in Iraq.
The Texas group’s president, Ali Soudjani, has personally donated close to $100,000 to members of Congress and their political campaigns over the past five years because, he told the Guardian, of their positions on the MEK and Iran. Among the beneficiaries were Ted Poe, a member of the House foreign affairs committee, and Sheila Jackson Lee, who have been vocal supporters of delisting the MEK. The pair appeared at a House event at Congress earlier this year also attended by Soudjani at which Poe gave support to the MEK in calling for “freedom-loving Americans [to] support a regime change in Iran”. Jackson Lee described the group as the “voices of freedom”. Soudjani also gave to John Boehner, speaker of the House of Representatives as well as the National Republican Congressional Committee and the Obama Victory Fund.
• Colorado’s Iranian American Community. One of its leaders, Saeid Ghaemi, paid close to $900,000 of his own money to a Washington lobby firm, DLA Piper, for its work to get the MEK unbanned, the protection of its members in Iraq and human rights issues. Ghaemi’s brother, Mehdi, who is president of the Colorado group, paid $14,000 to fly a member of Congress, Bob Filner, to meet MEK leaders in Paris and attend the group’s rallies. In the weeks before Filner spoke at an event in support of delisting the MEK last year he was the recipient of several thousand dollars in donations from Iranian Americans living outside his district.
• The Iranian American Community of Northern California. It paid $400,000 over the past year to a Washington lobby group, Akin Gump Strauss Hauer & Feld, to work on Capitol Hill to work for the removal of the MEK from the list of foreign terrorist organisations. The company assigned several former members of Congress to the account. The IACNC has also organised events in support of unbanning the MEK with appearances by Ros-Lehtinen and other prominent members of Congress as well as former White House officials.
Its director, Ahmad Moeinimanesh, has made personal financial donations to Ileana Ros-Lehtinen, the chair of the House of Representatives foreign affairs committee even though her congressional district is on the other side of the country in Florida, as well as to her reelection committee. She has accepted more than $20,000 in political contributions from activists who support the MEK’s delisting.
The IACNC’s registered address is at a photocopying shop in Albany, California, owned by Behnam Mirabdal who has made financial donations to Ros-Lehtinen and Dana Rohrabacher, a subcommittee chairman who is among the most vigorous proponents of unbanning the MEK.
• The Iranian Society of South Florida (ISSF). The group came to the notice of US authorities eight years ago as one of the sponsors of a fundraiser in Washington ostensibly to help victims of the Bam earthquake which killed 30,000 people. The FBI concluded it was a front for raising funds for the MEK.
The ISSF’s president and vice-president, Bahman Badiee and Akbar Nikooie, have for years made regular donations to Ros-Lehtinen. The Florida congresswoman boasts on her website of receiving an award from the ISSF.
Nikooie also spent at least $130,000 in 2009 to pay a lobby firm, DLA Piper, to promote “human rights” in Iran, including pressing for the unbanning of the MEK in the US. Badiee contributed $3,200 to Ros-Lehtinen. He gave $2,000 to congressman Mario Diaz-Balart in March the day after he made a speech in Congress in support of the MEK.
The principal lobbyist on the account was the former leader of the Republicans in the House of Representatives, Dick Armey, who a decade ago wielded considerable power and played a major role in the Republican takeover of Congress. He went on to head the Tea Party-supporting group, Freedom Works.
Armey used his relationship with sitting members of Congress five years ago to press them to urge the then secretary of state Condoleezza Rice to unban the MEK and to support legislation that would effectively have resulted in US sponsorship of the group. He also lobbied the Pentagon, the White House and the state department in support of unbanning the MEK.
• The California Society for Democracy in Iran. Its founder and president is Nasser Sharif who has called for the US government to “engage the Iranian people and their organized resistance“. Sharif is listed as donating thousands of dollars to Rohrabacher and Filner.
Sharif called the MEK’s banning an “injustice” in an article in the Orange Country Register in which he quotes Rohrabacher in support of his cause. He has organised events at which the speakers include Ros-Lehtinen, Rohrabacher, Filner and Poe.
Several of the groups also poured money into persuading leading politicians and former administration officials to speak on behalf of unbanning the MEK. Among those who have addressed meetings arranged by the Iranian American Community of Northern California are the former Democratic presidential candidate, Howard Dean; the former FBI director, Louis Freeh; the ex-attorney general, Michael Mukasey; and Tom Ridge, the former homeland security secretary. They have been joined by members of Congress including Ros-Lehtinen, Poe and Jackson Lee.
Sharif’s California Society for Democracy in Iran has organised meetings at which John Bolton, the former US ambassador to the UN; Andrew Card, President George W Bush’s chief of staff; Mukasey, Ros-Lehtinen, Rohrabacher and other members of Congress have spoken. Several prominent former officials have acknowledged being paid significant amounts of money to speak about the MEK. The former Pennsylvania governor, Ed Rendell, has accepted more than $150,000 in speaking fees at events in support of unbanning the MEK.
Among others who have spoken in support of delisting the group are two former CIA directors, James Woolsey and Porter Goss. Some speakers have been flown to Paris and Brussels.
The US authorities have at times scrutinised efforts in support of unbanning the group, including launching investigations in to whether they breached laws against financial dealings with banned organisations or legislation barring material support for terrorism.
Three years ago, seven people in California pleaded guilty to “providing material support to a designated foreign terrorist organisation”, and a parallel conspiracy charge, after fundraising for the MEK. Among other things the seven admitted to raising several hundred thousand dollars in collections at Los Angeles airport and other public locations in the name of a charity, the Committee for Human Rights.
Following an investigation by the FBI’s joint terrorism task force and the convictions, the US attorney’s office said “the CHR was simply a front organisation for MEK fund-raising operations in the United States” and that the money was going in part to support the group’s “terrorist activities”.
“We cannot allow any terrorist organisation to fundraise on our shores or to steal money from our own citizens so that they can finance their own terrorism operations,” said the prosecuting US attorney, Thomas O’Brien.
In 2004 Bush administration officials examined whether a fundraising event at a Washington DC convention centre, ostensibly on behalf of victims of the Bam earthquake, was in fact a cover for collecting money for the MEK. The organisers, the Iranian-American Community of Northern Virginia, described the $35 a head event as a “night of solidarity with Iran” and a “referendum for regime change in Iran”.
Among those paid to speak at the event was Richard Perle, at the time a defence adviser to the Bush administration and a strong advocate of invading Iraq. Perle later said he was unaware of any connection to the MEK.
The organisers claimed the money was going to the Red Cross but even before the event was held the Red Cross said it did not want the proceeds because the fundraiser was political. The FBI concluded that the Iranian-American Community of Northern Virginia was a front for the MEK and the treasury department froze the funds raised by the event.
Those groups cosponsoring the fundraiser included several that the FBI described as MEK front organisations or as linked to prominent supporters. These included Iranian Society of South Florida, the Iranian-American Society of Texas and Colorado’s Iranian-American Community.
The Iranian-American Society of Northern Virginia is now defunct.
Soudjani pointedly said that the money was not intended to support the MEK but it’s unbanning “in the name of freedom and justice”.
“The MEK is supporting a free Iran. That is what we are supporting,” he said.
Sharif makes a similar argument.
“None of us are involved in illegal activities. All we’re doing is bringing the issue to the attention of members of Congress,” he said.
Asked if his donation to Filner, who has a district about 2,500 miles from where Sharif lives, was because of his position on Iran and the MEK, Sharif said that it was.
“Yes. If you see members of Congress with a good position on Iran, you can support them. This is a voluntary thing. Members of the community do this. If they feel like members of Congress have a good position in supporting these issues they are willing to support those members of Congress”.
Moeinimanesh and several other leaders of Iranian American organisations did not respond to questions. Neither did Ros-Lehtinen and other members of Congress did not respond to questions. But Rohrabacher did speak to the Guardian.
The California congressman said he is comfortable accepting donations from MEK supporters.
“If they want to contribute to me because I believe strongly in human rights and stand up in cases like this, that’s fine. I don’t check their credentials,” he said.
Rohrabacher said he is not concerned at potentially being at odds with the law.
“When you have a person or an organisation that has been legally labelled something that is not just then you should take that label off. It doesn’t undermine efforts to label terrorists when they are indeed committing acts of terrorism,” he said.
The congressman also denounced the treasury investigation of payments to speakers in support of the MEK.
“It seems to be me this is an example where somebody’s challenging a government policy and the government is trying to intimidate those who don’t believe in the policy into closing their mouths. Because someone is advocating a certain position, and it goes against government policy, it doesn’t mean the government should start focussing on them and try to find something they can hurt them with. That’s a damper on freedom of speech,” he said.
Human rights campaigners are increasingly worried that funding to combat the narcotics trade is providing indirect assistance to a judicial system that is engaged in what has been described as ‘a killing spree of staggering proportions’
In Vakilabad prison, northern Iran, there is a long beam that can take up to 60 nooses. The condemned are made to stand on stools which are then kicked away. Vakilabad’s record is 89 executions in one day.
The true number of those executed in Iran is impossible to quantify, especially for those convicted of drug offences, but it is clear there is a large disjunction between official figures and the reality. In 2010 the Iranian authorities acknowledged that 172 people had been executed for drugs offences. However, the Foreign Office is aware of credible reports suggesting the real figure could be at least 590.
In the 12 months to November last year, there were at least 600 executions, according to Amnesty International, 81% of which were for drugs offences.
And, among increasingly vocal human rights groups, the concern now is that the UK has unwittingly helped fuel the killing machine.
There is no shortage of those awaiting execution. It is estimated that as many as 4,000 Afghans alone are on death row in Iran for drugs offences. There are reports that some are executed without a trial and that others are juveniles. Human rights groups claim that many of those executed come from the most disadvantaged sectors of society. Some are women. Many of those arrested have been duped into carrying drugs for others.
One man who was executed is believed to have been Haj Basir Ahmed, a 40-year-old Afghan, hanged at Taybad prison on 15 September 2011. He phoned his family at eight in the evening to say he had learned he was to be executed the following hour. His family have heard nothing since and his body has not been returned because Iran demands £10,000 for the repatriation of the executed. His is a typical case, according to human rights groups.
Such draconian treatment of pawns in the drugs trade would find little or no support in the UK, which abolished capital punishment in 1969. The foreign secretary, William Hague, has called the human rights situation in Iran “shameful”. But it has emerged that the UK has provided indirect assistance to an Iranian judicial system engaged in what Amnesty describes as a “killing spree of staggering proportions”.
Why the death toll is rising in Iran is open to conjecture. Some believe that the Iranian authorities are nervous about the Arab spring and are using drugs laws as an excuse to eliminate their opponents. But there is also a greater resolve in Iran to tackle the drugs trade which, the country’s authorities claim, has led to 1.2 million addicts. According to Iran’s annual Drug Control Report, in 2011 there was a “41% increase in arresting narcotics traffickers and distributors”. The report says that some 8,000 foreign nationals were arrested for drugs offences in 2010 and 2011.
Bordering Afghanistan, a country responsible for 93% of the world’s opium production, Iran faces a formidable challenge in combating trafficking. Those efforts have been given a considerable boost by the introduction of 200 sniffer dogs at airports and ports. Seizures attributed to the dogs jumped from 23,912kg in 2010 to 42,500kg in 2011.
According to documents obtained by the Observer, the UK was one of five donor countries that, via the United Nations Office on Drugs and Crime (UNODC), gave almost $3.4m (£2m) to train the dogs. The four-and-a-half year project, which started in 2007, also provided specialised vehicles, satellite phones, drug testing kits and body scanners. It was not the UK’s only contribution to Iran’s counter-trafficking operations. In 2009 the Foreign Office confirmed that it had spent more than £3m between 2000 and 2009 providing counter-narcotics assistance in Iran.
Another UNODC document reveals that in August 2010 the UK and France pledged almost $730,000 to fund a two-year, intelligence-led, anti-trafficking programme targeting Iran’s borders with Pakistan and Afghanistan that “resulted in seizures of six tons of different types of drugs and arrests of drug traffickers”.
It is understood that much of the pledged money for the programme was distributed to another project outside Iran. However, UNODC documents reveal it provided the model for its “Iran Country Programme for 2011-2014″, suggesting it has left an impact.
Tackling trafficking through Iran – particularly heroin – is seen as crucial by western governments. UNODC estimates that 140 tonnes (37%) of the 380 tonnes of heroin produced in Afghanistan is trafficked annually through Iran and on to the European market. But human rights groups are concerned that the UK has supported a programme that has resulted in excessive punishments for often minor players in the drugs trade.
Even trafficking small amounts can prove fatal. In 2010 Iran introduced a new law prescribing corporal punishment for most drug crimes and the death penalty for anyone who “imports, produces, distributes, exports, deals in, puts on sale, keeps or stores, conceals and carries” more than 30 grams of a number of listed drugs, including psychotropic substances. “We’re talking about hundreds of people being killed by Iran every year because they carried some drugs across a border,” said Damon Barrett, deputy director of the charity Harm Reduction International. “These are mostly people living in poverty with no other options. Meanwhile, western donors, including the UK, as well as the United Nations, provide money and assistance to the Iranian authorities for drug enforcement.”
Iran is not the only country that uses the death penalty to have received UK aid. The UK was one of six countries that, via the UNODC, gave $6m to Pakistan last year and a further $11m in 2010 to support anti-drug trafficking programmes. The UNODC also has a counter-trafficking memorandum of understanding with six east Asian countries, of which five retain the death penalty for drug offences. At least $26m has gone to these countries’ counter-narcotics programmes via the UNODC, almost a quarter of which came from the UK.
Now, however, politicians are questioning the wisdom of a policy that appears contrary to the UK’s own guidance to officials, who are warned that prior to providing assistance they must obtain assurances confirming that “anyone found guilty would not face the death penalty”.
As Hague writes in a foreword to the guidance, it is “in police stations, detention centres and court houses that the state exerts its greatest powers over individuals and so where fairness, human dignity, liberty and justice are most critical.” The European parliament has passed a motion expressing concern that money and assistance from member states “could lead towards increased death sentences and executions”. An early day motion signed by MPs has raised similar fears.
In May the UNODC published a paper that acknowledged it placed itself “in a very vulnerable position vis-à-vis its responsibility to respect human rights” if it funded countries that actively supported the death penalty for drug trafficking. The UN’s human rights council has warned that “co-operative assistance … could facilitate the apprehension of alleged drug offenders, who may be subject to the death penalty in violation of international human rights law”.
A government spokesman declined to give details about which countries’ counter-narcotics programmes it had funded. “We provide aid to a range of international partners to tackle the international drugs trade and minimise the threat it poses to the UK,” the spokesman said. “We take human rights very seriously and provide clear guidance to our officials. It is our policy not to disclose details about specific programmes or locations as to do so may reduce the effectiveness of this work.”
But human rights groups said that there was an urgent case for greater transparency. “We know that human rights abuses are rife in the war on drugs,” Barrett said. “At a time when every penny is being shaved off budgets, we deserve to know how much money the UK is providing for drug enforcement overseas, and what that money has achieved, beyond risking the UK’s complicity in abuse.”