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Demystifying US and Israeli Power

Susan Cain and Mark Mason

By Susan Cain and Mark Mason

Government is the entertainment division of the military-industrial complex. ~ Frank Zappa


If paying attention to the mass media, one would think that politicians have power, that the President of the USA has power, or even that AIPAC has power -- They don't. He doesn't. AIPAC doesn't. Few people understand American imperial power because it's difficult to comprehend the unprecedented concentration of vast wealth in the hands of a few dozen individuals, and the ramifications for the rest of the world. Never before have so few people possessed so much wealth, and thus so much power over everything, including the US government, Israel, AIPAC, and --- everything within the imperial American sphere of corporate influence. The Earth is under the control of a few hundred corporations, and a few thousand capitalists. The apparent power of AIPAC to influence US policy is based upon the intense media presence AIPAC does have while real power remains present but pushed into the media background. In this paper, we examine the power relationship between the USA and Israel. We present evidence supporting the claim that state power is subordinate to corporate power, and corporate power is driven by the rewards of expanding profits through manipulating state policies. US transnational corporations, particularly those assigned to the military-industrial complex (MIC: arms manufacturers and others engaged in military and police-state support) join banks and other corporations at the top of USA political power. We remind ourselves that in the USA and Israel, money is political power, not religion or the people.

The US corporate-state is an imperial system comprised of and dependent upon multiple public-relations illusions, hardly none more accepted than the frequent claim that Israel controls US foreign policy. Proponents of this claim include, among others, Grant F. Smith of the Institute for Middle Eastern Policy and more generally the BDS movement (boycott, divest, and sanction), two which apply attention to AIPAC ascribing to AIPAC the power to control the USA Congress. [1]

The Israel-controls-the-US argument asserts that manipulation of the US Congress is achieved by the force of rhetoric, controlling US media, and through lobbying monies funneled through AIPAC (the American Israel Public Affairs Committee, pro-Israel lobbyists in Washington who work to strengthen ties between the two countries in support of Israel). We entertain the question, does Israel control US Middle East policy? The illusion of Israeli political power ------- that it is believed by most of the actors who present this stage show to us such as members of Congress, the White House and its cabinet members, department heads, and the Israeli government itself from the top down -- the Prime Minister, President, and members of the Knesset. Not only do mainstream media journalists pander to and spread this myth, but also many of our best investigative journalists in alternative media never question this claim. All states serve the interests of a privileged class. When we examine the service Israel and AIPAC provide to US corporate imperialist goals, the value of creating a mythical robust independent Israeli state is revealed.

As pointed clarification, it is useful to present an overt disclaimer, that Jews and Judaism are religious doctrines which demand the respect and protection of free speech and freedom of religious belief. Our concerns are directed toward the policies and actions of the state of Israel, a political institution fully open to examination and criticism, as is a universal truth. All states are subject to policy evaluation. Debate regarding state policies are the core of Western democratic politics. Zionism attracted the US wealthy ruling class to the “Israel Project.” Zionism is a combination of Euro-American classic military settler-colonialism and modern corporate neocolonialism. It goes like this: kill and kick out the native peoples, blame the victims, label them savages or barbarians or terrorists, steal the land and the natural resources, claim religious justification, truth, justice, and democracy, use as a base for boundless imperial expansion and interference into neighboring countries in the name of national security. Zionism compliments Western European and American capitalist imperialism, and poses as a useful ideological cover for corporate invasion. Understanding US power dynamics is instructive. If Israel were not such a profitable enterprise and excellent cover for US actions, US support for the client state would end. This illusion has nothing to do with religion or anti-Semitism. US foreign policy toward Israel is not substantially different from that of US policy towards Saudi Arabia or Egypt. The US government is looking for power and profits, through the force of a corporate invasion, following on the heels of military invasion. Invasion by force can be direct, as in the Iraq invasion of 2003, or by proxy army, such as is the case for Israel, Egypt, and far-flung South Korea. One can assemble the power pieces first, with the recognition that US government foreign policy is crafted, not by the US State Department, but by Wall Street banks, military arms manufacturers, high tech firms, pharmaceuticals, oil conglomerates, and other ancillary players in the US domestic corporate power system.

Israel is operating in many ways at the expense of Israeli taxpayers. Wages, building expenses and maintenance, and all the usual overhead costs associated with business/military operations are paid by Israeli taxpayers. US aid, grants, and gifts are used for equipment, munitions, and technologies, not operating expenses. Funds provided by the US are primarily for US corporate sales and net profits. Israeli taxpayers foot the bill for the overhead costs of their military.

Israel is a subsidiary, a brand-name logo to disguise US corporate imperialism. Israel is a neo-colonial outpost of the American Empire, operating as the US did when first establishing itself as a country on the North American continent -- killing and kicking out the indigenous peoples, stealing their land and resources, and profiting from the takeover. Israel is an outpost of US banking and other corporations, and it serves as a land-based aircraft carrier for thinly-disguised US imperial expansion.


$trategic Benefits of a 51st State

When Israel bombs Palestinians and maintains a police state in both the West Bank and Gaza, the US reaps two benefits: 1) US elites and their corporations reap huge profits, and 2) the violence of the Israeli state acts as the local Mafia boss for the Middle East, maintaining obedience to Israeli power, and thus indirectly (because the USA is funding the Israeli violence) by association, what Israel says is what the USA says, without the US having to take direct responsibility for the war crimes and crimes against humanity perpetrated by Israel.

International power dynamics sets the US as near-global imperial power, funding client states such as Israel for the purpose of colonial expansion. It’s useful to conceive of Israel as the 51st state, united with the other 50 states comprising the USA. The Sun never sets on the American Empire. Israel is a covert branch of the US government, functioning as a massive military outpost but operating as a sovereign state in the Middle East, committing acts that would not be possible if they were “officially” committed by the US government. Per a July 2014 article in Haaretz, the “U.S. stores munitions in a classified location in Israel to which the Israeli army can request access - if Obama (or any current president)  approves…”
“The War Reserves Stock Allies-Israel program (WRSA-I, sometimes referred to as the War Reserve Stock Ammunition-Israel program), which is capped at $1.2 billion, has a stockpile of missiles, armored vehicles and artillery ammunition...”
These are US owned and managed weapons and equipment stockpiles not only for use by the US army if a need for them arises in the region, but also by the Israeli army in cases of emergency. [2]

In September 2014, a bipartisan bill passed Congress which upgraded Israel’s status to a “major strategic partner” and allowed for a $200 million increase in the weapons stored in Israel. They must either reimburse the US for the cost of weapons used or replace them by buying new supplies. Whether the US is reimbursed or the weapons replaced, it is the US arms manufacturers who benefit from the requirements. [3] A brief but more detailed summary about the origins and uses of this program can be found in an August 2014 article of Politico. [4] Although this program initially required Israel to obtain US presidential approval before accessing this “Fort Knox of Weaponry,” the Politico article explains how a mid-level Pentagon bureaucrat, Keith Rowe, repurposed the WRSA-I, fashioning it more for the benefit of the Israelis and circumventing presidential approval. It is more accurate to say that the WRSA-I was tweaked so that it better-served US MIC interests. Israel more regularly depletes the supplies which equates to higher sales and profits for US missile manufacturers like Raytheon and other corporations that supply a wide variety of military and technical equipment which makes up the stockpiles of the WRSA-I. One should also note that Israel is not alone in having a WRSA-I program. A similar arrangement exists between the US and South Korea.


Iron Dome Dollars

Another cash cow for the MIC is our client state’s Iron Dome project, a missile defense system allegedly capable of destroying incoming missiles targeting Israel. Whether or not it is truly effective is not important. It’s an opportunity for US arms manufacturers and technology corporations to make billions of dollars in profit. According to a Times of Israel article in May, 2015,
“Earlier this month, the US House of Representatives Armed Services Committee approved $474 million for Israel’s anti-missile systems. Included in the US-Israel cooperative missile defense funds is $41.4 million for the short-range Iron Dome rocket defense system, $165 million for David’s Sling, another short-range system, and the longer-range Arrow-3 missile defense programs, as well as $267.6 million in research and development funds.” That same article also states that the US State Department is set to approve a $1.9 billion arms sale package to Israel. It is important to note that “Israel receives $3 billion per year in US military aid, most of which must be spent on American-made arms.” [5] An earlier article appearing in Bloomberg’s business section confirms “The Israeli government has agreed to spend more than half the funds the Pentagon provides for its Iron Dome system in the U.S., bolstering the political appeal of the missile-defense system in America.” US corporation Raytheon, the world’s biggest missile manufacturer, is “under contract with Iron Dome’s Israeli maker, government-owned Rafael Advanced Defense Systems, to find suitable U.S. suppliers.” [6]

It is obvious that the primary purpose of our 51st state is to provide a huge market for the various industries of the MIC. The message to the public from mainstream media and Congress is that the US “gives” Israel billions of dollars of aid to benefit the Israeli state; their security and safety depend upon it. The truth is that the US gives taxpayer dollars to Israel which immediately return to the US in the form of corporate sales and profit, and the primary beneficiaries of this “aid” are US corporations of the MIC.


Making the 51st State Tow the Line

As more proof that it is US corporate interests controlling US foreign policy in Israel, eleven years ago Israel agreed to sell the Chinese technology to upgrade their drone aircraft. Page 21 of a Congressional Research Service study of US foreign aid to Israel tells what became of those sales, “As previously mentioned, Israel has become a global leader in arms exports and, over the last two decades, the United States and Israel have periodically disagreed over Israeli sales of sensitive U.S. and Israeli technologies to third party countries, most notably China. In 2005, the United States suspended Israel from participating in the development of the Joint Strike Fighter (JSF) and imposed other restrictions in defense ties because of Israeli plans to upgrade Chinese Harpy Killer drone aircraft. Israel ultimately canceled the sale.” [7]

The following cannot be stated too often because it is not a message that is found in any media: the message of US corporate media to the public is that we must help Israel to defend itself, that US and Israeli interests are connected, that we must defend the real (only?) democracy in the MIddle East. However after examining who benefits from this relationship, one must conclude that what we “must” do is to support sales and profits for the US MIC at all costs. One must also conclude that it is not the Israelis who are in charge of the US/Israel relationship.


Follow the Money

Israel and AIPAC haven’t any real power although no one thinks to question how it could be possible for a country of 8.3 million to control 312+ million in the world’s dominant military and economic powerhouse, the US. Believers in this illusion of control cite money as the means by which the Israelis exert their “power” over the US. Per the Open Secrets Organization, AIPAC spent $3.1 million on lobbying Congress in 2014. [8] Very few candidates directly receive campaign contributions from AIPAC, less than $5,500 in 2014. However, the US defense industry contributed over $144 million to candidates in 2014 per Follow the Money Organization. [9] Lockheed Martin (manufacturer of the problem-plagued F-35 fighter jet) alone gave over $4 million directly to congressional candidates in 2014. [10] That is one million more than AIPAC spent lobbying Congress in the whole of 2014, and Lockheed Martin is only one of dozens of US military contractors lining the campaign coffers of our congressional “representatives.” General Electric coughed up $3.9 million for various candidates. [11] Honeywell International is known for its heating products but has a huge business in the aerospace and military industries, spreading out $5.2 million among various candidates. [12] Northrop Grumman, a military contractor specializing in “unmanned defense and surveillance systems” (drones), gave congressional candidates over $4 million in 2014. [13] AIPAC serves in deflecting attention away from the real centers of power. No one notices the vast amounts of money pouring into campaign coffers from US military corporate partners because AIPAC and its stage shows are guaranteed top billing in media.

Yes, it is indeed money that controls the US Congress, but not the paltry low millions of AIPAC. The US corporate sector, specifically US military contractors, gives 50 times more to Congress members than the campaign contributions and lobbying expenses combined of AIPAC.

However, it is true that AIPAC exerts a limited degree of control over the US Congress functioning as a cheap means to establish members’ obedience. They serve as a corporate sargeant-at-arms for the ruling class, ensuring that Congress keeps the MIC well-funded and highly profitable. AIPAC has been known to slander politicians during political campaigns, revealing inappropriate sexual liaisons and habits of candidates not fully supportive of the Zionist cause or branding them as either anti-American or anti-Semitic when possible. AIPAC campaigns against political candidates can be effective in securing their losses at the polls. The money that AIPAC spends in these endeavors is money that the corporate ruling class does not have to fork over to every individual candidate. It’s a cheap method to ensure a strong backing in Congress for US expenditures benefitting the client state and US military contractors.

The Primary Profiteers
It is the various corporations of the US Military-Industrial Complex that profit most from the client state. In Israel, the MIC has one of the most effective corporate trade shows in existence. Their latest arms, munitions, and technologies are dramatically demonstrated in very real combat expositions as Israel intermittently attacks Palestine in the Gaza Strip. After every Israeli military assault on Gaza, orders to US weapons manufacturers soar from dozens of interested buyers in governments worldwide. What better means of advertising than real-life demonstrations of the latest bombs or mortar rounds and launchers, the latest communications and surveillance technologies, the latest on-ground robots capable of searching around the corners of buildings for the “enemy?”

What Israel is doing to the Palestinians is not different substantively from how the US related to native Americans, Filipinos, Vietnamese, and too many other victims of US imperial aggression for profits. State power. Corporate profits.

It’s not only US corporations who profit from these arms sales, but also the arms manufacturers and military industries of many US allies in Europe and around the world. Even tiny Poland has military corporate interests along with the Netherlands. War and conflict is one of the biggest businesses in the world, and Israel supplies many of the profits for this enterprise.

Lockheed Martin  is one of the biggest, but only one of dozens of such major US corporations benefitting from the client state. Others include Raytheon, Hewlett-Packard, Boeing, McDonnell Douglas, IBM, Caterpillar. For example, high tech Hewlett-Packard supplies computer software to the Israeli security forces, providing the development, maintenance, and installation of biometric technology used at dozens of Israeli checkpoints in the Gaza Strip and West Bank . [14]

Internationally, Accenture Ltd. of Ireland is a US military contractor servicing the US Defense Department’s needs for Electronic Health Records as a configuration specialist. [15] Fabrique Nationale d'Herstal (French for: National Factory of Herstal) in Belgium is a leading firearms manufacturer. They produce an array of hand guns, rifles, machine guns, and helicopter and aircraft weapon systems. Fabrique Nationale is a subsidiary of the Belgian Herstal Group, which also owns US Repeating Arms Company (Winchester) and Browning Arms Company. [16] There are plenty of “war bucks” to be made nationally as well as internationally. That fact probably accounts for the weak international response regarding the Israeli occupation of Palestine.


Bankers Will Be Bankers

The banking industry also profits from Israel, supplying countless loans to various US military contractors for expansion, research and development, and product materials. Investment bankers compile investment portfolios for their wealthy clients consisting of shares in businesses that service the US military. The banking industry in Israel made huge sums of money servicing American clients who wished to evade income taxes, hide property, and launder money back to the US for their clients’ use. Israel, the unknown offshore banking facility for many wealthy Americans. Israel’s second largest bank, Bank Leumi, was a preferred facility for many of them. Sam Antar was the CFO of an electronics corporation in the US called Crazy Eddie. He was prosecuted for and convicted of securities fraud during 1991 - 1992. In exchange for a cushy sentence, he testified against family members. He also informed both the SEC and FBI about the offshore banking business flourishing in Israel. He gave those agencies this information in 1989, but they did not act upon it until late 2014, allowing this criminality to continue another twenty-five years.
Bank Leumi paid $400 million in fines, a mere slap on the wrist from a corporate standpoint, and has agreed to assist in investigating other Israeli banks. It will be interesting to see how or even if this investigation will be reported in US corporate media. [17, 18]


Israel, Corporate Money-Launderer

Israel is not only an investment bonanza for the wealthy ruling class, but also serves as a money-launderer for US taxpayer funds into corporate hands. The US government “gives” the client state X amount of foreign aid for military purposes. That aid is then immediately passed back to the US into corporate hands to purchase military equipment. US taxpayer dollars “indirectly” become sales and profit figures for US corporations using this method of laundering taxpayer money. The same is true when the US simply supplies such equipment to the client state. Taxpayer dollars are used to purchase the arms and munitions “given” by the US government to Israel. The billions that the US “gives” to Israel return to the US as corporate profit at the taxpayers’ expense. Corporations do not “give away” their merchandise. Someone pays for it, and in this case, it is the US government using taxpayer dollars to purchase military hardware and boosting corporate profits to unimaginable amounts.

Discipline For the Israelis

The Israeli government believes in its power over the US government and sometimes acts contrary to US dictates. It is said that no US president has ever defied the Israeli lobby, but that is not true. When the arrogance and “bad behavior” of the Israeli government become unacceptable to the real powers that be, the US government gives the Israelis a public spanking to remind them who is really in control of whom. George H.W. Bush withheld loan guarantees for three months from the Israeli government in 1991 due to their expansion of settlements in Palestinian territories, successfully forcing Israeli Prime Minister Yitzhak Shamir to attend the Madrid Peace Conference. George W. Bush, in 2003, threatened to withhold loan guarantees from the Israelis due to the expansion of their “security fence” into Palestinian territory. [19]

Prior to both Bush’s actions, Ronald Reagan punished the Israeli government several times. He withheld a few US vetoes at the UN Security Council, allowing resolutions against Israel to be passed condemning it, placing their nuclear facilities under international supervision, and demanding that they pay reparations for the damage they had wrought. He also placed an embargo against US sales of F-16 fighter jets to Israel because they had used them for something other than self-defense. Later, the embargo was lifted, but the message that the Israelis had stepped beyond the boundaries allowed to the client state had been delivered and gruffly received. Reagan also sold a large amount of military hardware to Saudi Arabia to which the Israelis strongly objected at the time. [20]


Policy Must Benefit Corporate Over Israeli Interests

There are times that US policy goes against Israeli interests, times which are not related to a US need to chastise the client state, but instead are based on US corporate interests. During the Reagan administration from 1985 - 1987, Dov Zakheim served as Deputy Under Secretary of Defense for Planning and Resources in the Office of the Under Secretary of Defense (Policy). For those believing the “Israel Controls the US myth,” it is important to reveal that Zakheim is an Orthodox Jew and an ordained rabbi. In early 1980, the Israeli government approved plans for an Israeli designed and manufactured fighter jet called the IAI Lavi (IAI being the corporation behind the fighter jet, Israel Aerospace Industries). IAI had decided to use engines made by the US corporation, Pratt and Whitney, because they had a working relationship with Bet Shemesh engine plant in Israel. Pratt and Whitney had agreed to co-produce the engines enabling much of the production to be done domestically in Israel. The first prototype of the plane was successfully tested in December 1986. Three months later, an improved second prototype was also successfully tested. However, soon after these test flights, Dov Zakheim began pushing for Israel to cancel plans for the Lavi and arguing that they should not produce an aircraft that would compete with the US F-16 fighter jet. He also claimed that buying jets from the US would be more efficient and less costly for the Israeli government. He was so convincing that many of the top command in the Israeli Defense Forces agreed, leading to a vote in the Israeli cabinet to decide whether or not to cancel the project. It was cancelled in favor of buying F-16s. Part of the problem with the Lavi project was a lack of financing. Unlike US military aid, the Israeli government was footing the bill for the cost of the jets instead of getting a free ride at US taxpayers’ expense. But worse, from the US corporate point of view, was the fact that General Dynamics (later bought by Lockheed in 1993 which merged with Martin in 1995, thus the current Lockheed Martin Corporation) would be excluded from profiting off of its F-16 were the Israelis to manufacture their own fighter planes in large quantities. The Israeli Air Force was due for an upgrade in 1987, and US corporations wanted to service their needs. Pratt and Whitney certainly wasn’t upset by the cancellation of the Lavi even though they were set to profit by co-producing the engines with Bet Shemesh. Pratt and Whitney made and still makes the engines for the F-16. Not having to co-produce them with another business meant all the profit remained in their hands. Shortly after the Lavi project was cancelled, the Israeli government ordered ninety F-16Cs. Today, the only country with more F-16s than Israel is the US.

Dov Zakheim was reviled by the Israeli press and government and much of the public in Israel. Israeli media had been touting the IAI Lavi as an icon of national pride. Yitzhak Shamir, much of the Knesset, and the IDF command who supported the Lavi felt humiliated when the Israeli cabinet voted (12-11) to discontinue the project. The vote to cancel the Lavi is evidence that US corporate interests control the Israelis: they can get enough support in the Israeli government to cancel an icon of national pride. But instead of placing the blame on the real corporate culprits, the Israelis used Dov Zakheim as their scapegoat and allowed the real source of US corporate power to remain concealed. By blaming one man instead of the US corporate government, the Israelis could cling to the illusion that they controlled the US government. They had simply been betrayed by own of their own; they were victims of Dov Zakheim.

Zakheim is a glaring example of the revolving door between government and industry. He began his career in the Defense Department in 1981 serving in various positions before being tapped as Reagan’s Deputy Under Secretary of Defense. He left government in late 1987 (unknown if it was related to his being declared an enemy by the Israelis) and promptly became CEO of SPC International, a subsidiary of Systems Planning Corporation, a high-tech analytical business. While being their CEO, he also served as a consultant to the Secretary of Defense’s office, sat on many Department of Defense panels, was a member of the Council on Foreign Relations, the International Institute for Strategic Studies, and the US Naval Institute. He was also an adjunct scholar for the Heritage Foundation. Zakheim has also been a consultant for McDonnell Douglas Corporation, on the advisory board of Northrop Grumman, and a former vice-president at Booz Allen Hamilton, all major US military contractors. One might think the US government is controlled by group of corporations serving the MIC rather than the Israelis when examining the evidence. [21]

The public US presidential spankings of Israel make headlines for a day or two, then quietly fade from view and the collective memory of media and the general public. To remember such incidents would create cracks in the Israeli Illusion that the plutocrats will not allow. Instances such as the cancellation of the Lavi fighter jet are rare. Although the story was reported in US media, it was not a headline and did not linger in the news. That, too, was instrumental in keeping corporate power concealed from the public. The subject briefly appeared in US media on the 25th anniversary of the cancellation, but gained no notice by the public.


The Distraction of Scripted Stage Shows

The incidents the public is encouraged to remember are the endless stage shows titillatingly presented to us by the media outlets of the wealthy US ruling class. Uniform plots and performances are easy to achieve because six corporations control 90% of US media. [22, 23] The same illusions are repeated in all sources. The assumption of the public is that if all sources are reporting the same stories or more appropriately, broadcasting the same show, then what is being viewed is real. The performances of the various politician-actors are highly convincing and realistic because so many of them believe the roles they play. Netanyahu believes he, acting as Prime Minister of Israel, controls the US government because this is the message presented by US corporate media as well as alternative and international media.

The US-Iran nuclear agreement has provided the basic plot for the current TV-like dramas unfolding weekly before our eyes. One of the strangest performances was recently given by John Kerry, US Secretary of State. If one watched his two opposing performances, on one day, 2 March 2015, he appeared to be afflicted by either a split personality or bipolar disorder. He was the quintessential American Good Cop/Bad Cop - a police interrogation/intimidation tactic normally carried out by two policemen, one playing the role of the “good cop” who feigns empathy with the suspect being questioned and presents himself as a friend, and the other playing the role of the “bad cop” who threatens and sometimes physically attacks the suspect. John Kerry played both roles in the drama presented to us in March. He first held a news conference in which he uttered thinly-veiled threats against Netanyahu if he dared to leak details concerning the specifics of the US/Iran nuclear negotiations. Later the same day, he appeared before the UN where he ardently defended Israel against what he called biased attacks against them in UN reports critical of Netanyahu’s military excursions against Palestine. [24, 25]
These shows made for excellent drama, but the good cop/bad cop performance was ignored by media. There were no political analyses of the verbal attacks against Israel versus the praise heaped upon them by John Kerry.

President Obama has also been center stage for many recent performances. Numerous articles in US and Israeli press have lamented the “tension” between Obama and Netanyahu, many speculating that Netanyahu’s blatant interference in US politics could be cause for many US congressmen to be labeled as treasonous, supporting the needs of a foreign government over the needs and safety of the USA. Some sources warned that this tension would result in the Democratic Party abandoning the Israeli cause. All of this political posturing is obvious fakery if one understands the real US/Israel relationship. There is no possibility of a weakening of support for Israel in the US Congress because such real tension would negatively affect the profit margins of too many US corporations doing business with the MIC. It’s also important to note the real reason behind AIPAC’s media show against a US/Iranian nuclear agreement. The highly hyped script was centered on Israel’s safety, what a danger an agreement would present to the people of Israel. AIPAC’s real concern was about losing their biggest lobbying and fundraising tool - fear of “the bomb” from Iran. [26]


The Israelis Made Us Do It
Israel, the client state, is not solely a financial pot of gold for the wealthy and their corporations. Israel is cover for the US government. Israel is a Euro-American colonial project existing only because it is a front for US imperialism. It is an effective imperial tool using the Israeli government as a proxy agent for US imperialism. This strategic ploy gives political cover for US imperial expansion, allowing the US to deny responsibility for Israeli war crimes. “The Israelis made us do it” is an illusion bought by all media and spread throughout the world and accepted as fact. However, when one dares to follow the money -- the vast sums of at play in this illusion, that “fact” becomes an intentionally manufactured fiction by the wealthy plutocrats who really control the US government and desire to keep Israel’s client state status hidden. The whole facade allows the rich and their influence to hide behind the Israeli Illusion.

The US benefits from the illusion by presenting Israel as an independent state. The US avoids taking responsibility for Israeli war crimes and illegal territorial expansion, and the US benefits by the cover provided by Israel as US corporations rush in to expand operations inside illegally occupied territories.


Israel and Syria: Policy & Power Playgrounds

In examining a portion of Israeli/Syrian history, one can see how Israel is used by the US to accomplish small feats that could not be done openly under the banner of the US government. The high plateau region of the Golan Heights offered much better protection for our client state than the UN designated border with Syria. The Six Day War launched by Israel in 1967 saw the Israelis capturing the Golan Heights from Syria. Israel annexed the Golan Heights in 1981. To date, this territory is not internationally recognized as being part of Israel although it is occupied by them, and Israeli law is administered there. Tens of thousands of Syrian Druze have been displaced by Israeli “settlers.” [27]

In 1982, Hafez al-Assad, president of Syria from 1971 - 2000 and father of the current president Bashar al-Assad, “assisted” the IDF (Israeli Defense Forces) and the Phalange (a predominantly Lebanese Christian right-wing party in the Sabra neighborhood and the adjacent Palestinian Shatila refugee camp in Beirut, Lebanon) by blocking the Syrian border so that the refugees under attack could not escape. Estimates vary between 750 - 3500 Palestinian refugees and Lebanese Shiites were massacred during this attack. Prior to this tragedy, Hafez al-Assad had also “assisted” in Palestinian deaths during Jordan’s “Black September.” [28]

More recently, in September 2007, Israel bombed and destroyed a suspected Syrian nuclear facility, suffering no consequences. Bashar al-Assad even helped the Israelis cover up the attack, claiming it never happened. Most Syrians believed al-Assad’s denials broadcast by state media. [29]

Seizure of foreign territory by force and its eventual annexation, the massacre of thousands of Palestinian refugees and Shiites, destruction of a foreign nuclear facility - these are all things that could never have been accomplished under the banner of the US government, but easily carried out by the client state.


The Golan Heights Oil and Water Bonanza

Currently, the Golan Heights is set to bring big rewards to both Israeli and US corporate energy interests. In April 2013, Afek Oil obtained a drilling license in the Golan Heights. To date, they have three drilling sites (Ness-3, Ness-5, Ness-6). The three-year drilling program allows Afek Oil to explore and drill for oil at up to ten sites in the Golan. Due to delays by protests from environmental groups, the actual drilling did not begin until February 2015. The presence of a huge supply of oil was just confirmed October 7, 2015. [30]

Afek Oil and Gas (as well as a second Israeli energy company IEI, Israeli Energy Initiatives) both have as their parent company Genie Israel. Per The Times of Israel, “Genie Energy, which is chaired by Howard Jonas, has some heavyweight investors. Former US vice president Dick Cheney, Michael Steinhardt, Jacob Rothschild, and Rupert Murdoch are all reportedly connected to the company. It also has connections within the Israeli political establishment: The chairman of Genie Israel is Effie Eitam, a former member of the Knesset who also served as the minister of national infrastructures in 2002-2003.” [31]

Not only does the discovery of billions of barrels of oil in the Golan Heights probably guarantee the Israelis a source for their oil needs (they consume 270,000 barrels a day per the above referenced Globes article), but also the Golan Heights is a major natural resource for fresh water that feeds the Jordan River, providing a third of Israel’s water needs. Fresh water sources are scarce in this arid region. It would be difficult for the Israelis to survive without control of this freshwater source in this occupied territory. Water is the new oil, a rapidly diminishing resource as it becomes a source of privatized, corporate profit. The near future will bring further human conflicts over water. [32, 33, 34]

The Boycott, Divestment, Sanctions Movement
Until such time that the Us-Israeli relationship no longer benefits the wealthy elite of the US, it will remain unchanged. The BDS Movement began in Palestine in 2005. The movement seeks to encourage boycotts of corporations that benefit from the illegal occupation of Palestine, divestment from investments in such companies, and sanctions against the state of Israel. The BDS movement has succeeded at various colleges, resulting in some of these institutions removing prominent companies from their investment portfolios. Soda Stream closed its factory in the West Bank, and Veolia, a multinational infrastructure company, has pulled out of Israel completely. [35, 36]

Foreign investments in Israel dropped 15% in 2014 as compared to 2013. The BDS Movement and Israel’s latest assault on Gaza, Operation Protective Edge, are credited as the main reasons for this drop. [37] Decreasing investment in Israel plus boycotts of many corporations seen as aiding the illegal occupation hold out the possibility that ties with Israel will hurt corporate profits of many US and international businesses. Hewlett-Packard, Volvo, Caterpillar, Hyundai, Ahava Cosmetics, and Eden Springs bottled water are only a few corporations being targeted by BDS supporters. Academic and cultural boycotts have also been called for, resulting in several popular bands and musicians cancelling shows in Israel.[38] As Israel steadily becomes an international pariah, association with our client state will become a negative instead of a positive for the wealthy elite who profit from Israel today.



The material presented in this paper is offered as partial evidence for the following claims:

●     Money is power. Religion, human rights, law, ethics, state sovereignty, and the will of the people are all subordinate to the power of the gun. The rich own and control most of the guns. The state, and the corporations the state protects, exist only by violence and the constant threat of violence.

●     Money rents parliamentary government offices for politicians who represent the interests of the people  providing the rent money. This process is called a democratic election, but the electoral system is normalized, legalized bribery.

●     Money rents government policies through legalized lobbying and election campaign funding, otherwise known as unethical influence peddling by elected officials.

●     Money buys ownership of the mass media, and thus the rich implement social controls, controlling public opinion by controlling the messages emanating from the mass media. The mass media function under a business model, dependent upon advertising for existence. Media do not publish facts or opinions which offend the people and corporations paying the media bills. [39] The state is a neutral agent bent toward obedience to the narrow interests of the rich because of the money-political power of the rich. Parliamentary governments are open to power struggles among factions of the ruling class as they engage in pitched battles over state policy. The people have minimal power to influence state policy.

●     All this is well known, but too often, the corporate media intentionally get lost in petty personality conflicts and celebrity cults, with emphasis on speculating upon what elected officials might be thinking. What elected officials are thinking doesn’t matter although media create the illusion that it does matter so that we don’t ask about what is important. What the managers of Lockheed-Martin and Hewlett-Packard are thinking does matter, but rarely reported. The individual politician has only tangential power to influence government policies. The wealthy individual has only tangential influence on how the money-chasing social system works. All substantive state and corporate policies and actions serve the interests of the money system, as wealthy individuals choose to opportunistically participate in the money system, or choose not to do so. Neither the political class, the ruling-class rich, nor does the educated class of professional servants of power, act as individuals. The socio-economic system shapes the men and women to meet the constraints of the institutions and their power hierarchies based upon the illusion of money. -- The rules of the game reward the winners of the money-chasing game. Others are either passive losers, or actively choose to not participate, relegated to the margins of formal society.  Increased power and profits are the tokens of cultural success distributed by the rules of the socio-economic game.

The money-power system operates globally. For example,

what happens to Syria will not likely be decided by Syrians, but more likely decided by the complex power struggle for profits and control of natural resources by a few capitalists.

Then it follows that the state of Israel has little or no power because they have little or no independent money. We show the money-power relationships between the USA and Israel in the following chart at the end of this essay. All the personal drama we witness in the mass media are empty theatrics.

To grasp the value of the drama is to observe that the arm-waving, flailing about on camera, and the boasting is mere scripted bluff and bluster. The actual actions of the Israeli government serve the US imperial neocolonial control. The Israeli government, as is often claimed, does not harm US interests. US interests are the expansion of state power for the purpose of expanding the profits of US transnational corporations, as we have documented here.

With respect to the claim that AIPAC tells the US government what to do, the evidence presented above indicates that AIPAC serves the interests of the state of Israel, and that furthermore, the state of Israel serves the colonial interests of the USA Empire. As the Israeli state kills Palestinians and steals their land, all of this violence is consistent with USA government interests, often mislabeled, US national interests. USA government interests are dictated by USA corporate interests; not representing the interests of the people. AIPAC is a cheerleader for Team USA as the USA explicitly intends to act as an agent of US-based transnational oil companies in their quest to control Middle East oil. The state of Israel functions as a heavily-armed colonial outpost of the US corporate empire. AIPAC is put there to function as a magnet deflecting attention away from the centers of real power which set US foreign policy: transnational corporations.

The US government tolerates much verbal abuse from the agents of the Israeli government because the drama provides a convenient public cover presented in the mass media, presenting the Israeli government as if it were controlling the US Congress and President. Allowing the Israeli government to act, in the mass media, as if it were controlling US foreign policy creates a clever cover for the brutality of US corporate theft of natural resources and labor from within neocolonial states which possess some local autonomy. Murder and theft are the tools of imperial expansion. When all eyes are on the Prime Minister of Israel, a convenient distraction is employed to divert attention away from the flow of huge fortunes traversing the circuitous path from American taxpayer’s pocket, through the US government treasury, through US military-industrial contracting corporations, to the pockets of the rich investors. USA foreign policy and foreign aid are labels for taxpayer subsidies for the rich, combined with imperial expansions of US economic domination of, and theft from, distant peoples. The so-called “US national interest” is state domination of the planet for the purpose of US corporate domination of labor and natural resources, for the purpose of winning the game of accumulation of wealth: astounding profits for the few; unspeakable human suffering for the many.

Behind the dramatic scripted TV acting of elected officials are deadly armaments, including nuclear weapons, but the US government doesn’t care. If we hold on to any single truth about contemporary international affairs is that the talking heads on TV have little connection to the realities of either the potential for global nuclear war, or global ecosystem collapse. Corporations are driven by quarterly profits. States are driven by the melding of the command from the corporations to increase quarterly profits, and the interest of the state itself in imperial powers, which are means to increase quarterly profits. What happens to the working class or the planet is given much rhetorical attention, but no substance. All states are failed states. The global chase for dollars is a social fiction we could discard by consensus, but the global chase for oil is an existential crisis resulting in the tragedy of the deaths of individuals fighting over pipelines, and the planet dying from the deadly atmospheric poisoning, the product of the capitalist economic engines of industrial production for profit, not need.

Politicians, and the mass media direct our attention towards the personalities of heads-of-states and the diplomatic corps. Yet, a cursory examination of history indicates that people come and go--- presidents, prime ministers, priests, and potentates are here today, gone tomorrow-- while the power system remains stable for centuries. USA foreign policy today is no different than it was 200 years ago, with the notation that the names and localities of imperial aggression have changed. These verifiable conditions lead us to examine the dynamics of hierarchical power and the money system.  Replacing the sociopaths occupying the slots at the top of the corporate-state system will achieve nothing. Hoping for more humane heads-of-state and corporate management will get us nowhere. We humans are functional units of cultural systems; few of us challenging the system of dollar-rewards. If we are to have any chance of surviving this century, it will be because we address the reward system inherent in the money-chasing game which utilizes a mystifying fiction called money. The mystification of US and Israeli relations is a product of the tangle of mutually-convenient myths of corporate, state, client state, and colonial power.

Power is displayed variably. The center of power in a monarchy is prominently on public display as manifested in the highly-visible king [40]. The center of power in a parliamentary democracy is hidden, made invisible by the dutiful servants of power. School teachers, journalists, academics, writers, pundits, entertainers, and religious authorities are unified in their functional commonality. They tacitly agree to a unified silence. David Graeber offers an accurate condensation: “Indeed, the most powerful way to represent power has always been to refuse to represent it. […] the way to show that something is truly powerful is to hide it, to render it invisible, ineffable, unknowable, utterly featureless and abstract.”


We thank Dominique Ford for skillful graphic assistance with the single figure accompanying this article.


References Cited







































[39] Herman, Edward S., and Noam Chomsky. 1988. “Manufacturing consent: the political economy of the mass media.” New York: Pantheon Books.

[40] David Graeber, and Foucault quoted therein. David Graeber. 2015. “Dickheads: The paradox of the necktie resolved.” The Baffler number 27.


(See diagram below)

1. The USA military-industrial complex profit machine, international version

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Should journalists care if sources go off to prison?

Norman Solomon

By Norman Solomon. This article was first published on Columbia Journalism Review.

Ask yourself this question: Is it sufficient to protect journalists who report classified information while sources go off to prison?

During the last half decade, a growing roster of national-security reporters has withstood government pressure to reveal confidential sources. They’ve done so with the steady support of news organizations and well-heeled groups that work to protect journalists from threats of jail. Yet those media outfits show scant interest in advocating for the whistleblowers who put themselves at risk. If they go to prison, c’est la vie.

The intertwined cases of New York Times reporter James Risen and former CIA officer Jeffrey Sterling point up the contrast. Risen got broad and repeated support from the media establishment; Sterling got none.

After seven years of government harassment and threats that began in early 2008, Risen prevailed with his steadfast refusal to identify any confidential source for his book State of War. But a year ago, a jury in CIA-friendly Northern Virginia convicted Sterling on multiple counts of the Espionage Act, accepting the prosecution’s claim that he had provided Risen with classified information for a chapter in the book, which included details about a botched CIA operation that provided faulty nuclear weapons design information to Iran.


Just after the verdict, the executive director of the Reporters Committee for Freedom of the Press told The New York Times: “The speed with which the jury reached its verdict shows that reporter’s testimony was not needed for the government to make its case. I think going forward this is going to be a powerful precedent.” Such comments were echoed in celebratory fashion by then-Attorney General Eric Holder and others eager to drive a bigger wedge between journalists and whistleblowers.

In the long run, the intimidation and prosecution of whistleblowers can only hobble investigative journalism. Yet for reporters, the professional norm is to act like solo practitioners who intrepidly run with the truth, without any need to support those charged with handing them the baton. Whistleblowers are left to fend for themselves.

It’s rare to find mainstream American journalists, much less ones near the top of the media power structure, willing to stick their necks out to defend individual whistleblowers. (To his credit, last month Risen went much farther than most prominent journalists when he wrote in a Twitter message: “President Obama should free the American whistleblowers he has imprisoned in the United States.”) To be fair, the media has written much about the Obama administration’s aggressive prosecution of leakers. But it’s usually to complain that these crackdowns make reporters’ jobs more difficult. Generally, the whistleblowers themselves are relegated to the status of non-persons.

Daniel Ellsberg, the first American ever prosecuted for leaking information, has closely tracked the legal, political and media dynamics of whistleblowing in the national-security arena ever since he was arrested for providing the Pentagon Papers to newspapers in 1971. Last spring, at a news conference in Washington sponsored by ExposeFacts (a program for independent journalism and whistleblowing that I coordinate), he commented that American journalists are apt to regard whistleblowers who make unauthorized disclosures of classified information as “snitches.”


Ellsberg said: “I have for a long time … believed that many journalists regard their sources of ‘national security’ information the way police regard their informants, their criminal informants—necessary, important, necessary to their career, necessary to the public—but snitches. Bad guys. Not to be respected, truthfully. Protected in their identity, like their informant, but lawbreakers.”

Snitches—or worse. Some media luminaries have gone beyond even the government’s vilification of whistleblowers. Last year, in a November 8 broadcast of 60 Minutes, CBS anchor Scott Pelley led off a segment by flatly referring to “convicted spy Chelsea Manning.”

The preposterous labeling of Manning as a “spy” by one of the highest-rated TV news programs should have sparked an outcry from major news outlets like The New York Times and Washington Post, which benefited greatly from the cache of state secrets that Manning brought to WikiLeaks. Without such whistleblowing and the unauthorized leaks of classified information, we would know little about the “war on terror” beyond what top officials told us.

Of course, leaks of classified information to reporters are a commonplace in Washington. The vast majority are officially sanctioned to help put the government in a favorable light. The late Senator Daniel Patrick Moynihan’s observation in a September 1998 letter to President Clinton is no less true today; Moynihan pointed out that leaking information to the press had become “a routine aspect of government life.” He added: “An evenhanded prosecution of leakers could imperil an entire administration.”

The winks and nods of selective prosecution mean that working journalists are apt to accept—and help perpetuate—an unjust system designed to flood the media zone with “authorized” leaks of classified information, that is those that spin a positive narrative. By tacitly accepting the government’s decision on which leakers to leave alone and which to prosecute, the media and traditional First Amendment advocates are buying into a narrow concept of press freedom—and a sophisticated form of government manipulation that distorts information flowing to the public.

When alleged sources of unauthorized leaks face imprisonment, journalists should make common cause with them—openly asserting that such leaks are essential for revealing fuller truths about what Washington doesn’t want the public to know. And when whistleblowers are locked up, the news media should provide coverage that counters the government’s efforts to stigmatize them as wrongdoers.


Chelsea Manning is serving a 35-year prison term. Jeffrey Sterling—who continues to deny he provided Risen with any classified information—is eight months into serving a 3.5-year prison term.

As one of the few journalists to attend all of the two-week Sterling trial, I watched with concern the successful prosecution that rested entirely on circumstantial evidence. Prosecutors made effective use of metadata, which showed that communication took place between Sterling and Risen—with the content almost entirely unknown. The prosecution also presented as damaging evidence the fact that the Times had published an article by Risen that quoted Sterling, who is African American, about a subject unrelated to the classified information—his lawsuit against the CIA for racial discrimination.

That a prosecution case could be successfully built around such evidence—merely showing that the defendant had communicated with a reporter—should have been alarming to journalists across the country. But news organizations and the big press-freedom groups weren’t paying attention to the ominous implications. And they scarcely noted that whether or not Sterling was guilty as indicted, he was a whistleblower. In 2003 he earned the ire of top officials in Langley by going through proper channels to express concerns to the Senate Intelligence Committee staff about the CIA’s “Operation Merlin” aimed at Iran.

The conceit that it’s possible to defend press freedom while turning a cold shoulder to whistleblowers is short-sighted—and, in the long run, for independent journalism and true First Amendment advocates, self-defeating.

Norman Solomon is executive director of the Institute for Public Accuracy and co-founder of, which initiated, with Reporters Without Borders, a petition urging a presidential pardon for Jeffrey Sterling. His books include War Made Easy: How Presidents and Pundits Keep Spinning Us to Death. Solomon can be reached at

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Smash Clintonism: Why Democrats, Not Republicans, are the Problem

Andrew Levine

By Andrew Levine. This article was first published on Counterpunch.


Nine times out of ten, or ninety-nine times out of a hundred, electoral politics at the national level these days does more to disable democracy than to enhance it.

Sometimes, though, elections can be good for something. This may be one of those times.

Until recently, it seemed that the 2016 Presidential election, a factor in American politics since at least 2014, would, as usual, deflect democratic impulses into useless electoral pursuits – and, as if that weren’t bad enough, that it would do so in a boring, unedifying way: by pitting two pro-corporate, interventionist-minded, military-industrial complex friendly political families, the Clintons and the Bushes, against one another.

It seemed that the only redeeming feature of the impending spectacle would be that one or the other of those god-awful families would finally be done in.

But the gods took pity. Defying all expectations, the campaigns of Donald Trump and Bernie Sanders came from out of nowhere and changed everything.

Leave Trump aside for now. Even after losing to Ted Cruz in Iowa, he is still the man to beat in the GOP. But, for reasons I’ll go on to explain, he has already discharged his historical mission; his work is done.

Trump broke the Republican Party. But, even if he hadn’t, there would be no need to worry about the Republicans who are running for President in 2016. In Presidential elections these days, Republicans are irrelevant.

However, with media babblers going on endlessly about the horse race for the GOP nomination, those irrelevant Republicans are hard to ignore. I will therefore have more to say about the three leading Republican candidates, and Jeb Bush, presently. While they are all irrelevant, it can be instructive to comment on their respective situations.

That the time is past due for Democrats and “independents” to stop worrying about Republicans was clear before the Iowa caucuses, and it is no less clear now.

What was not clear until now is potentially as important. In Iowa it was demonstrated, beyond a reasonable doubt, that it is possible, here and now, to stave off a Clintonite Restoration – possible, that is, to free the country and the world from the thrall of neoliberal-neoconservative politics.

For anyone who cares about economic, racial and gender equality, and about restoring basic rights and liberties and establishing a just and humane social order – and for anyone who wants to diminish murder and mayhem and terrorism around the world, and to protect the earth and everything in it from the ravages of capitalist greed – getting the United States off the neoliberal-neoconservative track that it has been on since at least the late 1970s should be Priority Number One.

This means that the first order of business now is defeating Hillary Clinton. The larger goal of ridding the world of Clintonism, Clinton-style neoliberal-neoconservative politics, will require a protracted struggle lasting years, but sending Hillary packing, the sooner the better, is a good first step.

The Iowa caucuses proved what was only suspected before: that this is an eminently achievable goal. They also showed that the way to make it happen, the only way, is by helping Bernie Sanders win – in primary after primary, for as many times as it takes.


Sanders is not really a socialist, just an old fashioned liberal; and his views on foreign policy are more or less of a piece with those of conventional Democrats. But even in these areas, he is a whole lot better than Clinton, and as good as anyone else who could run for national office as a Democrat

On economic, environmental, and social policies, his views are not only better than Clinton’s; they are better than we Americans have any right to expect – after having wallowed for so long in the neoliberal-neoconservative miasma that the Clintons promote.

I can therefore live with Sanders’ politics; it is more than good enough. My problem with the candidate is instead that he is too nice, too gentlemanly, where the Clintons are concerned. It is his nature, I suppose; but I wish he would give in more to his inner Trump.

I concede, however, that I may be wrong. Having had to read about the Clintons and to see them in the news for so many years, I can no longer think about them dispassionately. This is why I sometimes find myself thinking that maybe Sanders’ way, though distasteful, is better; that you catch more flies with honey than with vinegar. Then I remind myself that you can catch more flies still with manure.

In any case, even Sandersnistas who think that all the Clinton-bashing should come from the Right and be for the wrong reasons, can do more than just promote better ideas, the way their candidate does.

As kindly and gently (or not) as they please, they could expose the fatuousness of the media-driven idea that many well-meaning Democratic voters seem to have internalized: that while the heart says “Bernie,” the brain says “Hillary” – because, of the two of them, she is more seasoned by experience and more electable.

Seriously? Maybe, First Lady, Senator, and Secretary of State count for more than Mayor, Congressman, and Senator (holding that office for many more years than Clinton did). But can anyone with a brain really believe that how well she did in those offices doesn’t have to be factored in?

As First Lady, Hillary’s most notable achievement was setting the cause of health care reform back a generation. She didn’t do it all by herself, but she contributed more than her share.

Then, after being parachuted into New York to run for the Senate in 2000, she did a thoroughly lackluster job. Her tenure is remembered mainly for her support of the Iraq War.

She didn’t do too well running against Barack Obama in 2008 either. But Obama seemed to feel that he needed her to establish his bona fides with the foreign policy establishment as a champion of the status quo, and he wanted to smooth over rumpled feathers in the Democratic Party. He therefore made her his Secretary of State.

What a remarkably bad choice! Hillary was the worst Secretary of State in living memory, worse even than her husband Bill’s choice picks: the hapless Warren G. Christopher and Madeleine (Mad Maddy) Albright.

Her cluelessness and incompetence were monumental. This point has been made countless times, and yet her defenders keep citing her Foggy Bottom days as a reason for supporting her. In Clinton-land, public relations is all.

To be sure, the chaos roiling the Middle East today is not all on her shoulders. George Bush’s Iraq War, which Hillary supported, is the root cause of much of what is still unfolding.

But the chaos in Libya since 2011 is largely on her, and she is to some extent culpable too for the horrors brought on by the Syrian civil war – the rise of the IS among them. She has had many helpers, including President Drone himself, but Hillary has done more than her share to keep the chaos mounting, and Islamist terrorism going strong.

She must therefore be credited too for helping to set the European refugee crisis in motion, ruining tens of thousands of lives, and putting the European Union itself in jeopardy.

Worse still, by engaging Russia, a major nuclear power, in the manner of a picador provoking a bull, she helped put American diplomacy on an especially reckless course. In a nuclear world, life on earth “as we know it,” as they say in Clintonese, is always in jeopardy; but, as Secretary of State, Hillary made the problem worse by many orders of magnitude.

There is more – in Latin America especially: Honduras, Haiti, Venezuela and so on. Those who praise her “pragmatism,” her ability to get good things done, are either deluded, duped or living in an alternate universe.

Even if Bernie wants to remain mum about all of this, surely his supporters can deftly draw attention to Hillary’s numerous failures. When it comes to diplomatic skills and foreign policy smarts, the Empress has no clothes. Point this out in a way that doesn’t get drowned out by media prattle, and anybody with a heart or a brain will draw the obvious conclusions.

It shouldn’t take much effort either to convince anybody with a brain that the electability issue is bogus too. There is an abundance of polling data that suggests that Sanders does as well or better than Clinton in one-on-one contests with any likely Republican candidate. Nevertheless, media pundits say otherwise, beclouding the brains of voters who prefer Bernie in their hearts with nefarious sophistries.

To the extent that there is any merit at all in the electability argument, it is because Hillary has the Democratic Party’s corporate paymasters and apparatchiks on her side. But however much the Party establishment wants to maintain a Clintonite status quo, they will be the ones who find themselves with nowhere else to go if and when the race for the White House comes down to a contest between Bernie and Trump or Cruz or Rubio or whichever other miscreant the Republicans finally settle upon.

Without putting too much of a kink in their civility, Sandersnistas could easily point this out. Bernie could too.

In short, those who do think that the brain says “Hillary” can easily be disabused of their illusions. But for this to happen, people whose hearts are in the right place and who see what’s what need to speak out — clearly and distinctly over the din of the media myth machine.

And when, in desperation, Clinton supporters who should know better say that Hillary has always been on the side of the angels, but that she got diverted or, alternatively, that she has turned over a new leaf, Sandersnistas who want to quash the heart versus brain nonsense once and for all could also easily point out – civilly, if they insist, otherwise in the spirit of the Donald – that if recent history has taught us anything about the Clintons, it is that they lie; that’s what they do.

If it suits her purpose, Hillary will fake left; she will even say that she too is a “progressive.” With her support limited mainly to the geezer class and, insofar as there is a difference, to women who think that electing a woman is not only the most important thing, but the only thing, she has few other options than to follow Bernie leftward – verbally. But if it should come to pass that Bernie drops out or is defeated, the pressure will be off; and only the lies will be left.


The heart versus the brain issue is not the only nonsense that needs to be cleared away; there are also illusions about Hillary and African Americans, Latinos and other persons of color.

Because the Clintons have been so visible for so long, and because they have spent years cultivating the leaders of minority communities, rank-and-file African Americans, Latinos and others are inclined to support Hillary or, at least, to think that she is on their side. Sanders is someone of whom they know little and care less.

How could they not? He represents a small, mostly white, mainly rural New England state; and, even now, national media ignore him as best they can.

But persons of color who fall as if by nature into the Clinton camp are making a big mistake – not just because Bernie really is and always has been with them, and not just with the notables among them, but also, more importantly, because neoliberalism harms brown and black people most.

Therefore, those who get it, as more and more do with each passing day, have a special responsibility.

If Sanders were a tad more Trump-like, he could dwell on Clinton’s ineptitude himself. But there is little he could do, beyond talking about his policies and his record, to show how much better than Clinton he would be for majority minority voters.

This is why black and Latino intellectuals have to step up to the plate. Many already have; but time is short and the need is urgent.

Somehow, the idea is out that the contest between Sanders and Clinton divides progressives. It doesn’t; it divides Democrats, very few of whom are progressive at all.

Even so, the idea that Hillary is someone progressives could reasonably support persists – not just in left-liberal publications like The Nation magazine, or among pro-Clinton “socialist feminists” in denial, but even in such bona fide left venues as “Democracy Now.”

And so it was that, on the morning before the Iowa caucuses, Amy Goodman aired a debate of sorts between a Sanders supporter, Ed Fallon, and Wayne Ford, the African American co-founder and co-chair of the Iowa Brown and Black Presidential Forum. A former Iowa state representative and local notable, Ford is a Clinton supporter whose example perspicuously illustrates the problem Sanders and his supporters face.

Ford went on about how the main reason that he is for Hillary is that she is “really concerned” about the criminal justice system as it affects black male youth. No doubt, she is; no doubt Bernie is too. Who, this side of Ted Cruz, is not?

But what does Ford think that a Clinton in the White House could do to reform police practices in Des Moines? Perhaps something that Obama and Eric Holder and Loretta Lynch never thought of, or something that arch-Clintonite Rahm Emanuel never got around to doing in Chicago? Gimme a break.

Maybe Ford never bothered to check out the Clintons’ record on incarceration and urban police practices in the nineties, when husband Bill was in the White House. Or maybe he, and others like him, need to follow their brains a little more assiduously.

So much mindless confusion, and so little time!

By the way, it was mentioned during that debate that the Clintons had lately had Ford over for a schmooze. Surprise, surprise.


Neoconservatism is an imperialist ideology with a Cold War tinge, and neoliberalism took hold thanks mainly to the exigencies of capitalist development in the final decades of the twentieth century. The structural factors behind both are still in place, but there is more popular opposition to both of those nefarious ideologies than in the past; neoliberalism, especially, is thoroughly unloved by ninety-nine percent of the population.

Why then is it so hard to shake free from it, even in formally democratic countries with free, fair and competitive elections? Lesser evil thinking is a large part of the reason.

Lesser evilism encourages a race to the bottom; but this isn’t its only shortcoming. Among other things, it is inherently myopic.

Consider the last time that a Clinton first ran for President. In 1992, the conventional wisdom in Democratic circles was that George H.W. Bush was worse than Hillary’s husband Bill. Perhaps he was in some respects, though in retrospect this is far from clear. But had Bush not Clinton, been President in 1994, it is doubtful that the Democrats would have lost control of the Congress as they did. All kinds of evil came from that. Who, then, was the lesser evil all things considered?   The answer is far from clear.

The sad fact, though, is that it is all but impossible to disabuse people of the lesser evil idea. No matter how compelling the case against lesser evilism may be, when faced with a Clinton versus Cruz choice, what sane person would not succumb?

But with this election this time, this shouldn’t matter – because even if the Republican candidate is indisputably the greater evil, that Republican is not going to win. It won’t happen.

I say this because, unless the gods revert to their usual mischievousness and mess with us again, the Republicans will nominate either a Republican or Donald Trump, a fine showman who plays one on TV. Whichever way they go, their nominee will scare the bejesus out of the two-thirds of the electorate that is not mindlessly angry, God besotted, or insane.

Even if, as I suspect, Trump plays the vileness card only to work his marks, his express views on Hispanics, Muslims and on women make him a non-starter in the general election.

No matter that even as he flaunts his latest “populist” persona, piling on all the vileness he can muster, his positions on many issues – trade, education, military interventions abroad, infrastructure investment, tax breaks for banksters, hedge fund managers and others of their ilk, impunity for corporate criminals, and so on — are more progressive by far than Hillary’s or Obama’s.

No matter too that where Hillary would provoke Russia and otherwise destabilize the world order, risking annihilating nuclear war, Trump, for all his irascibility and off-the-wall ranting almost seems like a safer choice.

Ted Cruz is more vile than Trump by any conceivable measure. Moreover, it seems that only certifiable members of the God squad, and a few doctrinaire libertarians, can stomach the man at all.

It is said that if you ask people who have worked with Cruz why everyone takes an instant dislike to him, they will tell you that they do it — to save time.

Better Trump than Cruz, but you can bet the ranch that neither one of them could even come close to winning in November.

Since Iowa, conventional wisdom has it that the GOP establishment is falling in line behind Marco Rubio, the other gusano in the race. In an only slightly better possible world, he and Cruz would be met with “Viva Fidel” and “Viva Che” signs every time they set foot in public!

I doubt that the Rubio option will remain viable for long. For one thing, the candidate is an insubstantial twit, a laughing stock waiting to happen.

But maybe I am giving establishment Republicans too much credit; maybe their decision making is guided less by self-respect and rational self-interest than I think. Insubstantial twits can go far in the GOP; think, for example, of George W. Bush.

In any case, if, for want of a better alternative, Party bigwigs decide to bless Rubio’s candidacy and he then falters, his shortcomings will not be what mainly does him in.

A more important reason is that he got to where he now is he is by being a Jeb Bush protégé and then turning against his patron.

The Bushes, like less respectable crime families, demand respect; and, when they feel betrayed, they exact their pound of flesh.   Witness the case of Saddam Hussein.

Since Jeb is a dunce, even worse than his brother, and since most Bush family fixers are getting too long in the tooth to be of much use, one might wonder what Jeb can do about Marco’s lèse-majesté. The short answer is – quite a bit.

Back when George W’s presidency was the only obvious mark against him, the good folks in what Bernie Sanders calls “the billionaire class,” along with quite a few of their millionaire friends, hurled money Bush’s way.

Their goal, apparently, was to elect one of their own, and to ward off the kind of situation that they are now facing. Bush still has a lot of that money, and he and his handlers seem intent on using it to bring Rubio down.

In Iowa, they paid big bucks for political advertisements attacking the renegade Rubio; Trump and Cruz and all the single-digit bozos still in the race got off scot-free. Some of those anti-Rubio advertisements were spot on good, by the way; Bush must have some skilled publicists in his employ. His former protégé can therefore expect to be supplied with memorable teachable moments from now to Convention Day. Jeb is motivated, and he has the means.

With Trump faltering in Iowa, Jeb’s ads didn’t do much harm to Rubio or good for Bush. Quite to the contrary, Rubio was the only candidate in the Republican fold who could actually spin the results in a way that bolstered his cause, notwithstanding his third place finish. He beat expectations that much!

However, there is another Bush family tradition that is now coming into play: that if at first, you don’t succeed, surge, surge again. That strategy didn’t work out too well in Iraq, but against such a feckless antagonist as Marco Rubio, it just might work in New Hampshire and South Carolina and in the primaries beyond.

Rubio also has more than Jeb’s animosity to worry about; there are also scandals that are sure to come to light if and when more media attention comes his way. There have already been damaging investigations into his personal finances; stay tuned for more!

Finally, there is another little problem with efforts to turn Rubio into the GOP establishment’s last best hope: that on “the issues,” there is little light between the positions Rubio endorses and those of his over the top rivals, Trump and Cruz.

Now that he has seen fit to pander to the Know Nothing nativists in the Republican base, this is even true of his formerly more decent (less indecent) views on immigration and citizenship.


Count on Democratic Party functionaries and their media flacks to do their best to keep lesser evil thinking alive. Theirs is a fool’s errand, however, because this time the greater evil has almost no chance of coming to pass.

This is why the main problem now is the Democratic Party, not the GOP. Republicans can still be counted on to be as bad as they ever were, or worse, in Congress and in State Houses, but they have made themselves irrelevant in Presidential elections.

This is bound to hurt them across the board – if not significantly in 2016, then in the years ahead.

Watch out, though, for the Debbie Wasserman Schultzes of the world and the Chuck Schumers and the Nancy Pelosis.   They will do what they can to win the nomination for Hillary, but if they fail, as they might, they will do everything in their power to keep the Democratic Party on what the corporate media echo chamber calls its “pragmatic” course.

In much the way that leading Communists did their best to keep Stalinist politics going after Stalin was gone, the goal of most Democrats, if and when the Clintons are put out to pasture, will be to keep Clintonism alive.

They will fail eventually – because now, for the first time in decades, there is an alternative: the up-dated version of New Deal-Great Society liberalism that Bernie Sanders champions.

Not only is his “democratic socialism” better by far than Clintonite politics, it also less of a dead end.

The point of the New Deal was to save capitalism, not to move beyond it. But, in those brief periods when New Dealers were able to lead the Roosevelt administration on a more radical course than FDR and his closest associates envisioned, it became possible to see the New Deal moving society beyond capitalism’s horizons. Right or wrong, this was not an unreasonable view.

It is not unreasonable now to be similarly optimistic about what Sanders’ up-dated version of New Deal politics could lead to – if the forces that the Sanders campaign has mobilized keep “feeling the Bern,” with or without Bernie’s cooperation.

Defeating Clinton won’t be easy – not with the Democratic Party behind her. Smashing Clintonism will be harder still.

The Republican Party collapsed under the weight of its cultural contradictions; all it needed was a little Trumpian bluster to bring the structure down.

The Democratic Party’s foundations are more secure; it is likely to survive, in more or less its present form, for a long time to come. Just ridding it of its Clintonism could take years. But, for genuine progressives, nothing is more important.

Even if progress stalls – even if the Party’s grandees prevail and Clinton comes out on top – the world has already changed: its demise may still be far off, but Clintonism has been struck a blow from which it will never fully recover. Thank Trump and Sanders for that.

Thank the Donald for breaking the GOP – significantly, maybe fatally. It is as if History assigned him that task, and he discharged it well. Thanks to Trump, lesser evilism has lost its sting, making it possible for genuinely progressive politicians to put non-Clintonite politics back onto the mainstream agenda.

That has been Sanders’ goal all along.

He too has so far discharged his task well. He made himself a pole of attraction for people who are outraged at the status quo and determined to change it fundamentally for the better.

Twenty-first century New Dealers – call them “democratic socialists,” if you like – are now back in business thanks to him; and, with the national Republican Party a hollowed out shell of its former self, there is no organized political force in the United States capable of holding them back decisively enough for the genie to be forced back into the bottle.

This is why fear of Trump or Cruz or Rubio need no longer force progressives, real ones, to pull their punches, and why Democratic voters should be able finally to take Hillary Clinton’s measure without lesser evil thinking disabling their critical faculties.

When they do, they will find that her vaunted “pragmatism” is actually a cover for, what else, her Clintonism – for what we cannot rid ourselves of soon enough.

ANDREW LEVINE is a Senior Scholar at the Institute for Policy Studies, the author most recently of THE AMERICAN IDEOLOGY (Routledge) and POLITICAL KEY WORDS (Blackwell) as well as of many other books and articles in political philosophy. His most recent book is In Bad Faith: What’s Wrong With the Opium of the People. He was a Professor (philosophy) at the University of Wisconsin-Madison and a Research Professor (philosophy) at the University of Maryland-College Park.  He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press).

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Russia Cries Dyadya (Uncle), Is Saudi Arabia Listening?

Dalan McEndree

By Dalan McEndree. This article was first published on Oilprice.

In recent days, signs of a possible breakthrough in the year-long stand-off between Russia and Saudi Arabia on crude production strategy have emerged. Saudi Arabia, OPEC’s dominant member, has long insisted OPEC (read Saudi Arabia) would not reduce output to balance supply and demand absent corresponding cuts from non-OPEC members (read Russia), while Russia has consistently insisted harsh climactic conditions prevent Russian producers from reducing output and in any case Russia insists it could withstand low prices as well as any other country.

January 27, however, Russia announced, in a roundabout way, its willingness to cut. According to Bloomberg, the Russian Energy Ministry issued a statement that “Energy Minister Alexander Novak and the heads of Russia’s biggest oil companies discussed the possibility of working with OPEC.” The article also reported that Deputy Prime Minister Yury Trutnev told President Vladimir Putin that:

“There was a series of meetings with other governments last week on the issue of oil prices during the World Economic Forum in Davos, Switzerland. Oil exporters are talking about coordination because the current price is “unacceptable” to justify spending on exploration and field development”.

These Russian comments were not the only signs of potential movement in the past week. At a conference in Kuwait City, Iraq’s Oil Minister Adel Abdul Mahdi stated that “Saudi Arabia and Russia, the world’s biggest oil producers, are now more flexible about cooperating to cut output as crude prices have fallen to levels that hydrocarbon-rich nations didn’t foresee.

Many observers, however, have been quick to dismiss the significance of these public statements. John Kilduff, founding partner of Again Capital, and frequent CNBC oil contributor, commented January 29 on CNBC that:

"This whole story line about there being a coordinated production cut plan is just rubbish").

More generally, as this quote from a recent Bloomberg article shows, observers believe simply both sides are committed to their current (over)production strategy:

“There’s little sign the countries themselves are ready to reach an agreement despite the economic damage wrought by the lowest prices since 2003. Long-standing obstacles remain -- Saudi Arabia’s desire to defend market share, Russia’s inability to cut production in winter months -- and analysts say talk of a deal probably reflects the hope of producers in pain rather than the expectation of concrete action”.

In fact, skeptical observers dismiss these statements’ implications at their own peril. Both the Saudis and the Russians are serious, as both have powerful motivations to agree on measures to balance the market through production cuts, reduce crude inventories, and increase prices.

The real question, instead, is whether their interests are sufficiently congruent to agree to simultaneous moves to balance the market.

With Their Economic Situation Dire, Are the Russians Desperate?

Over the last several months, as crude prices have renewed their plunge and taken the Ruble with them, Russian economic prospects have deteriorated sharply. Even a cursory review of press reports reveals the intensity of the economic pain.

At the World Economic Forum in Davos last week, Alexei Kudrin, Russia’s respected former Finance Minister, stated—or perhaps warned—“We have two years in reserve [to overcome the economic crisis] when social sentiments will be stable. There are still social protests, they are growing, but they aren’t bursting into something out of control”.

Until recent weeks, the Russian government had some basis to harbor hope that GDP, after contracting ~3.5 percent in 2015, would return to growth within this two year window. As late as Q3 2015, the IMF estimated that in 2016, GDP would grow, if only anemically at below 1 percent.

Recent crude price action, however, has dashed such hopes and instead has raised the prospect of a deeper and longer recession. In a “stress” test it conducted in November, the Russian Central Bank estimated that with Ural crude prices below $40 per barrel between 2016-2018, the Russian economy would contract five percent in 2016, inflation would run at 7-to-9 percent, and that these conditions “would also raise risks to inflation and financial stability.

Central Bank efforts to stabilize the Ruble and contain inflation are one reason the “stress” test results may prove prescient. The plunge in crude prices is preventing the Central Bank from easing monetary policy to stimulate the economy. Friday, January 29, it announced that it would keep its benchmark interest rate at 11 percent, to support the Ruble (which fell as low as ~R82.5/US$ last week before recovering to ~RUB75.5/US$ on January 29) and contain inflation. In its announcement, it noted that its next move could be to raise rather than lower the benchmark rate, were inflationary pressures to increase.

Facing crude prices below $30 per barrel, Russian Finance Minister Anton Siluanov in a January 16 television interview said Russia now faced a RUB 1.5 trillion budget deficit ($38.6 billion at the time of the interview) and that this would force the government to rework the budget it approved in December, which was based on $50 Ural crude prices. Reworking, according to Siluanov, will entail cutting RUB 500 million in spending (from which the military, national security, and agriculture would be exempted) and finding RUB 1 trillion in additional revenue.

Finding this RUB 1 trillion confronts the Russian government with unpalatable choices. Russia’s sovereign wealth/reserve funds have been proposed as sources—but in September, Siluanov warned that they would be depleted in sixteen months.

Related: Russian-OPEC Production Cut Remains A Long Shot

The Russian government is also contemplating asset sales (including part of its stake in Rosneft and in VTB, a major bank), but such sales would provide one-time boosts to revenue and in any case would take time to organize. Borrowing is a possibility, since Russia’s sovereign debt is low, but the Russian government can’t access U.S. and European capital markets, closed to it due to U.S. and EU sanctions related to the conflict over Ukraine).

The Russian energy industry is also a target—and potentially a lucrative one, given the structure of Russian taxes on the industry. In 2015’s first three quarters, for example, low crude prices decreased the revenues the Russian government collected in export customs duties from Rosneft, Russia’s largest producer, by RUB 520 billion (RUB 1058 billion to RUB 738 billion), while taxes other than income taxes increased only RUB 80 billion, from RUB 919 billion to RUB 1009 billion).

It is therefore not surprising that in September, the Russian Finance Ministry attempted to increase the mineral extraction tax. Industry opposition and opposition from other Russian ministries—citing the negative impact on investment and output—forced it to back down (Venezuela is an example, admittedly extreme, of what happens when government raids on industry revenues to fund current operations squeezes investment). It proposed instead to slow down the planned decrease in crude export duty rate (from 42 percent to 36 percent. Also under consideration is a windfall profits tax on Russian energy exporters benefitting from the Ruble’s depreciation.

Deteriorating Energy Industry Conditions

The situation of Russian energy producers is also difficult. The Telegraph (UK) in early January quoted Russia's deputy finance minister, Maxim Oreshkin, as telling TASS earlier this month that low crude prices could lead to “hard and fast closures in coming months.” The article also said noted that in the key Soviet-era fields in western Siberia, the annual rate of depletion is averaging 8 percent to 11 percent, while new projects are being curtailed.

According to the Telegraph, Transneft, the Russian crude and product pipeline monopoly, estimated that Russian crude exports could decrease in 2016 by some 460,000 barrels per day, based on producer applications for pipeline capacity.

In an interview with TASS, the Russian news agency last week, Lukoil Vice President Leonid Fedun commented that Lukoil was unlikely to produce the one hundred million tons it produced in 2015. He also said that it made more economic sense to sell one barrel of oil for $50 than two barrels for $30.

Gazprom, Russia’s natural gas giant, shows signs of stress. In recent weeks, it has instituted a series of cuts in investments. January 11, Reuters reported Gazprom cancelled one tender in December and three tenders in January for work on the construction of the Ukhta-Torzhok pipeline, a domestic key component of pipeline system which will transport natural gas directly to Germany through the Nord Stream II pipeline. According to Reuters, Gazprom Neft (of which Gazprom is the majority shareholder) recently terminated negotiations to acquire a 49 percent stake in Vietnam’s Binh Son Refining and Petrochemical, a subsidiary of Vietnam’s state-owned PetroVietnam.

A January 15 Reuters article quoted “sources close to Gazrpom” as saying that Chinese economic problems and low energy prices have reduced the volume of natural gas Gazprom expects to export to China via the Power of Siberia pipeline—the project on which Gazprom has bet its future—when it is completed. Given the already questionable economics of the Power of Siberia project, reduced volumes will intensify doubts about the project’s financial viability and future (Putin Is Taking A Big Risk With China Gas Deals).

Overleveraged, Rosneft’s Pain is Particularly Acute

The pain for Rosneft, the company which the Russian government hoped would gain the size necessary to compete on equal terms with Western oil majors, is particularly acute. As part of its effort to gain scale, the company in 2013 took on massive debt—$40 billion according to Reuters—to finance its acquisition of Russian competitor TNK-BP for $55 billion.

To help pay down debt, Rosneft, also in 2013, concluded an agreement with Chinese National Petroleum Corporation to supply 400 million metric tons of crude over twenty five years, under which Rosneft was entitled to receive prepayment equal to 30 percent of the contract’s value (Rosneft received RUB 1027 billion in 2015 Q3).

At the end of Q3, Rosneft’s net debt stood at $24 billion. Yet, Alexey Bulgakov, a fixed income analyst at Sberbank CIB estimates that Rosneft may already have accessed the maximum amount of cash it can under the deal, given the decline in price from ~$100-plus per barrel in 2013 to ~$30 per barrel now and the terms of the agreement.

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And, should crude prices remain at current levels, Rosneft likely cannot generate the cash to cover its investment, interest, and debt repayment obligations.

Russian government officials and energy producers argue that a depreciating Ruble has attenuated the impact of lower crude prices, since each US$ generates more Rubles, which is important given that the bulk of their expenses are in Rubles. This, however, isn’t the only impact of a weak Ruble. It can also cause inflation, and this has been the case in Russia. The following table, from Rosneft’s quarterly Management’s Discussion and Analysis reports, provides the Russian Central Bank data for cumulative inflation over 2015’s first three quarters:

For Rosneft, inflation has contributed to increased costs in all but one expense category compared to 2014’s corresponding quarter (percentage change in red font in column 2 in the table below) and, because revenues declined in 2015, increased the ratio of that cost to revenue compared to the corresponding 2014 period (last two columns).

These two effects caused operating income through Q3 2015 to fall to RUB 455 billion from RUB 539 billion in 2014 (and, of course, in US$ terms, the value of the operating income decreased even more, since the respective average exchange rates were RUB 59.28/US$ and RUB 35.59/US$ in 2015 and 2014). In addition, if not for the 41.3 percent decrease in export customs duty—RUB 520 billion in absolute terms—operating income would have been negative RUB 65 billion through 3Q 2015 (RUB 455 billion minus RUB 520 billion).

(Click to enlarge)

Reduced revenues and increased costs in 2015’s first three quarters also reduced the amount of cash Rosneft generated to cover investment, dividends, and net finance expense (which includes interest paid, interest received, and operations with derivative financial instruments). The following table shows that the cash remaining after Rosneft’s spending on net finance expense, investment, and dividends, after adding non-cash depreciation, depletion, and amortization expense back into operating income, declined significantly through three, six, and nine months of 2015 compared to 2014 in Ruble terms and, of course, even more in US$ terms given Ruble depreciation (RUB 59.28/US$ in 2015 versus RUB 35.59/US$ in 2014):

Related: LukOil Back In Iran As Russia’s Output Faces Decline

(Click to enlarge)

Given that average crude prices in Q4 2015 were substantially lower than in Q3 and that they likely will even lower in Q1 2016, Rosneft’s financial operating results should also deteriorate substantially in these quarters. The following table projects Rosneft’s revenues in Rubles in Q4 2015 and Q1 2016 using the Ruble’s Q4 average US$ exchange rate and a guesstimate of the Ruble’s Q1 US$ average exchange rate; an estimate of sales in volume terms, assuming output in 4Q 2015 continued to outpace 2014 levels by 2 percent and stayed constant in Q1 2016; and guesstimates of crude prices, taking into account Ural crude’s discount to Brent, Rosneft’s price competition in Europe with Saudi Arabia, and the impact on Rosneft prices in Europe and Asia from a prepayment agreement with Transneft that lowered its realized price per barrel (in Q1, Q2, and Q3, a reduction of RUB 200, RUB 40, and RUB 180 in Europe and RUB 170, RUB 350, and RUB 190 Rubles in Asia).

In the following table, 4Q costs are estimated using 4Q 2014 figures, multiplied by the percentage increase in costs in Q4 2015 from Q3 2015 (except for taxes and export custom’s duty, which are the average quarterly cost in 2015).

This rough guesstimate of Rosneft’s 4Q 2015 and 1Q 2016 performance suggests that the company will not generate sufficient cash to fund investment, dividends, and interest, and pay down debt.

From the Saudi Point of View

The Saudis and their Gulf Arab allies also have compelling reasons to consider production cuts to balance the global crude market and raise prices. They depend on revenues from crude and crude product exports as much as if not more so than the Russian government to fund government spending. Like the Russian government, they face serious domestic and international challenges—including wars and domestic tensions—that they counted on the export of crude and crude products to fund.

As a result of lost revenues and deteriorating budget numbers, the government are drawing on foreign currency and sovereign wealth resources, seeking to cut spending, including in such politically sensitive areas as subsidies for individuals and businesses, and to defer or cancel important investment projects (the UAE in recent days suspended the tender process for stage two of a project to build a 1,350 mile railroad from Kuwait the Indian Ocean along the Persian Gulf).

To raise revenue, they are introducing new taxes (such as on unoccupied land in Saudi cities) and contemplating asset sales (or which the Saudi plan to sell shares in Saudi Aramco and/or its downstream subsidiaries is a prime example).

OPEC dynamics are another important consideration. Other OPEC members—Venezuela, Algeria, Nigeria, Angola and Libya—repeatedly have called for output to be cut. In response, the Saudis have argued that OPEC cuts would be ineffective in the absence of simultaneous cuts from non-OPEC countries members. Were the Saudis and their Gulf Arab allies to reject a sincere Russian commitment to cut production, their credibility and authority within OPEC would suffer perhaps irreparable damage.

Related: More Oil and Gas Bankruptcies Are Assured

Also, for the Saudis, the plans to sell shares in Saudi Aramco and/or its downstream operations could play an important role. The price investors will be willing to pay for shares in these entities will depend on the value they place on the entities, and this value will depend on their assessment of the entities’ management, strategy, and prospects. If, for example, potential investors believe that management, at the behest of the Saudi government, will sacrifice growth, profits, and dividends to achieve Saudi foreign policy goals through low prices, investors’ interest might be tepid at best.

A Narrow Window of Opportunity for Russia for Coordinated Cuts

The Russians potentially enter any discussions with a weaker hand. The Saudis and their Gulf Arab allies probably can withstand lower prices longer than the Russians. Russia lacks the financial resources the Saudis and their Gulf Arab allies have at their disposal.

Their sovereign wealth funds and foreign currency reserves in absolute and per capita terms exceed Russia’s, the value of their government owned energy assets are greater than the value of the Russian government’s energy assets (which are already partially privatized), and Saudi Arabia and its Gulf Arab allies have access to international capital markets, whereas the Russian government, because of U.S. and EU sanctions, does not.

They also have the means to pressure Russia. The Saudis have spare capacity (according to the IEA have some `1.5~2.0 million barrels per day which they can bring on line within three months), while the Russians lack spare capacity. Finally, Russia’s major energy companies report quarterly results, whereas with a few exceptions, Saudi and Gulf Arab energy companies do not. Thus, the Saudis have access to critical Russian microeconomic financial data, whereas the Russians do not have such access to Saudi and Gulf Arab data.

Possibly, if the Russian government believes its hand is weaker, it might consider it advisable to reach agreement expeditiously. After all, the Russian government should take into account that if Russian data during the first quarter shows declines in output and exports, as comments from Russian government and company officials cited above suggest might happen, and Q1 2015 financial reports show intensifying financial pressures on Russian energy companies, Saudis and their Gulf Arab allies might be tempted to decide to maintain pressure on prices and force Russia to absorb the cuts necessary to balance the global crude markets.

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The Super Bowl Promotes War

David Swanson

By David Swanson. This article was fist published on teleSUR.

The military routinely endorses and promotes the NFL.

Super Bowl 50 will be the first National Football League championship to happen since it was reported that much of the pro-military hoopla at football games, the honoring of troops and glorifying of wars that most people had assumed was voluntary or part of a marketing scheme for the NFL, has actually been a money-making scheme for the NFL. The U.S. military has been dumping millions of our dollars, part of a recruitment and advertising budget that's in the billions, into paying the NFL to publicly display love for soldiers and weaponry.

Of course, the NFL may in fact really truly love the military, just as it may love the singers it permits to sing at the Super Bowl halftime show, but it makes them pay for the privilege too. And why shouldn't the military pay the football league to hype its heroism? It pays damn near everybody else. At $2.8 billion a year on recruiting some 240,000 "volunteers," that's roughly $11,600 per recruit. That's not, of course, the trillion with a T kind of spending it takes to run the military for a year; that's just the spending to gently persuade each "volunteer" to join up. The biggest military "service" ad buyer in the sports world is the National Guard. The ads often depict humanitarian rescue missions. Recruiters often tell tall tales of "non-deployment" positions followed by free college. But it seems to me that the $11,600 would have gone a long way toward paying for a year in college! And, in fact, people who have that money for college are far less likely to be recruited.

Despite showing zero interest in signing up for wars, and despite the permanent presence of wars to sign up for, 44 percent of U.S. Americans tell the Gallup polling company that they "would" fight in a war, yet don't. That's at least 100 million new recruits. Luckily for them and the world, telling a pollster something doesn't require follow through, but it might suggest why football fans tolerate and even celebrate military national anthems and troop-hyping hoopla at every turn. They think of themselves as willing warriors who just happen to be too busy at the moment. As they identify with their NFL team, making remarks such as "We just scored," while firmly seated on their most precious assets, football fans also identify with their team on the imagined battlefield of war.

The NFL website says: "For decades the NFL and the military have had a close relationship at the Super Bowl, the most watched program year-to-year throughout the United States. In front of more than 160 million viewers, the NFL salutes the military with a unique array of in-game celebrations including the presentation of colors, on-field guests, pre-game ceremonies and stadium flyovers. During Super Bowl XLIX week [last year], the Pat Tillman Foundation and the Wounded Warriors Project invited veterans to attend the Salute to Service: Officiating 101 Clinic at NFL Experience Engineered by GMC [double payment? ka-ching!] in Arizona. ..."

Pat Tillman, still promoted on the NFL website, and eponym of the Pat Tillman Foundation, is of course the one NFL player who gave up a giant football contract to join the military. What the Foundation won't tell you is that Tillman, as is quite common, ceased believing what the ads and recruiters had told him. On September 25, 2005, the San Francisco Chronicle reported that Tillman had become critical of the Iraq war and had scheduled a meeting with the prominent war critic Noam Chomsky to take place when he returned from Afghanistan, all information that Tillman's mother and Chomsky later confirmed. Tillman couldn't confirm it because he had died in Afghanistan in 2004 from three bullets to the forehead at short range, bullets shot by an American. The White House and the military knew Tillman had died from so-called friendly fire, but they falsely told the media he'd died in a hostile exchange. Senior Army commanders knew the facts and yet approved awarding Tillman a Silver Star, a Purple Heart, and a posthumous promotion, all based on his having died fighting the "enemy." Clearly the military wants a connection to football and is willing to lie as well as to pay for it. The Pat Tillman Foundation mis-uses a dead man's name to play on and prey on the mutual interest of football and the military in being connected to each other.

Those on whom the military's advertising succeeds will not typically die from friendly fire. Nor will they die from enemy fire. The number one killer of members of the U.S. military, reported yet again for another year this week, is suicide. And that's not even counting later suicides by veterans. Every TV pundit and presidential debate moderator, and perhaps even a Super Bowl 50 announcer or two, tends to talk about the military's answer for ISIS. What is its answer for people being stupidly ordered into such horrific hell that they won't want to live anymore?

It's in the ads

At least as big a focus of the Super Bowl as the game itself is the advertising. One particularly disturbing ad planned for Super Bowl 50 is an ad for a war video game. The U.S. military has long funded war video games and viewed them as recruiting tools. In this ad Arnold Schwarzenegger shows what fun it is to shoot people and blow up buildings on the game, while outside of the game people are tackling him more or less as in a football game. Nothing here is remotely warlike in a realistic sense. For that I recommend playing with PTSD Action Man instead. But it does advance the equation of sport with war -- something both the NFL and the military clearly desire.

An ad last year from Northrop Grumman, which has its own "Military Bowl," was no less disturbing. Two years ago an ad that appeared to be for the military until the final seconds turned out to be for Jeeps. There was another ad that year for Budweiser beer with which one commentator found legal concerns:

"First, there's a violation of the military's ethics regulations, which explicitly state that Department of Defense personnel cannot 'suggest official endorsement or preferential treatment' of any 'non-Federal entity, event, product, service, or enterprise. ... Under this regulation, the Army cannot legally endorse Budweiser, nor allow its active-duty personnel to participate in their ads (let alone wear their uniforms), any more than the Army can endorse Gatorade or Nike."

Two serious issues with this. One: the military routinely endorses and promotes the NFL. Two: despite my deep-seated opposition to the very existence of an institution of mass murder, and my clear understanding of what it wants out of advertisements (whether by itself or by a car or beer company), I can't help getting sucked into the emotion. The technique of this sort of propaganda (here's another ad) is very high level. The rising music. The facial expressions. The gestures. The build up of tension. The outpouring of simulated love. You'd have to be a monster not to fall for this poison. And it permeates the world of millions of wonderful young people who deserve better.

It's in the stadium

If you get past the commercials, there's the problem of the stadium for Super Bowl 50, unlike most stadiums for most sports events, being conspicuously "protected" by the military and militarized police, including with military helicopters and jets that will shoot down any drones and "intercept" any planes. Ruining the pretense that this is actually for the purpose of protecting anyone, military jets will show off by flying over the stadium, as in past years, when they have even done it over stadiums covered by domes.

The idea that there is anything questionable about coating a sporting event in military promotion is the furthest thing from the minds of most viewers of the Super Bowl. That the military's purpose is to kill and destroy, that it's recent major wars have eventually been opposed as bad decisions from the start by a majority of Americans, just doesn't enter into it. On the contrary, the military publicly questions whether it should be associating with a sports league whose players hit their wives and girlfriends too much.

My point is not that assault is acceptable, but that murder isn't. The progressive view of the Super Bowl in the United States will question the racism directed at a black quarterback, the concussions of a violent sport that damages the brains of too many of its players (and perhaps even the recruitment of new players from the far reaches of the empire to take their place), sexist treatment of cheerleaders or women in commercials, and perhaps even the disgusting materialism of some of the commercials. But not the militarism. The announcers will thank "the troops" for watching from "over 175 countries" and nobody will pause, set down their beer and dead animal flesh and ask whether 174 countries might not be enough to have U.S. troops in right now.

The idea that the Super Bowl promotes is that war is more or less like football, only better. I was happy to help get a TV show canceled that turned war into a reality game. There is still some resistance to that idea that can be tapped in the U.S. public. But I suspect it is eroding.

The NFL doesn't just want the military's (our) money. It wants the patriotism, the nationalism, the fervent blind loyalty, the unthinking passion, the personal identification, a love for the players to match love of troops -- and with similar willingness to throw them under a bus.

The military doesn't just want the sheer numbers of viewers attracted to the Super Bowl. It wants wars imagined as sporting events between teams, rather than horrific crimes perpetrated on people in their homes and villages. It wants us thinking of Afghanistan not as a 15-year disaster, murder-spree, and counter-productive SNAFU, but as a competition gone into double quadruple overtime despite the visiting team being down 84 points and attempting an impossible comeback. The military wants chants of "USA!" that fill a stadium. It wants role models and heroes and local connections to potential recruits. It wants kids who can't make it to the pros in football or another sport to think they've got the inside track to something even better and more meaningful.

I really wish they did.


David Swanson is an author, activist, journalist, and radio host. He is director of and campaign coordinator for Swanson's books include War Is A Lie. He blogs at and He hosts Talk Nation Radio. He is a 2015 Nobel Peace Prize Nominee.

Follow him on Twitter: @davidcnswanson and FaceBook.

War Is A Lie: Second Edition, published by Just World Books on April 5, 2016. Please buy it online that day. I'll come anywhere in the world to speak about it. Invite me!

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